0000030697-95-000020.txt : 19950816 0000030697-95-000020.hdr.sgml : 19950816 ACCESSION NUMBER: 0000030697-95-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19950809 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19950814 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIARC COMPANIES INC CENTRAL INDEX KEY: 0000030697 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 380471180 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02207 FILM NUMBER: 95563900 BUSINESS ADDRESS: STREET 1: 900 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 4076534000 MAIL ADDRESS: STREET 1: 900 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: DWG CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DWG CIGAR CORP DATE OF NAME CHANGE: 19680820 FORMER COMPANY: FORMER CONFORMED NAME: DEISEL WEMMER GILBERT CORP DATE OF NAME CHANGE: 19680820 8-K 1 08/09/95 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) August 9, 1995 TRIARC COMPANIES, INC. ---------------------------------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 1-2207 38-0471180 -------------- ----------- ------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 900 Third Avenue New York, New York 10022 ---------------------------------------- ------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code:(212)230-3000 ----------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. On August 9, 1995, the Registrant, through Mistic Brands, Inc., a wholly-owned subsidiary ("Mistic"), acquired (the "Acquisition") from Joseph Victori Wines, Inc., a New York corporation ("JVWNY"), Best Flavors, Inc., a Nevada corporation ("Best Flavors"), Nature's Own Beverage Company, a Delaware corporation ("Nature's Own" and, together with JVWNY and Best Flavors, collectively, the "Companies") and Joseph Umbach, all of the tangible and intangible assets and operations of the Companies, subject to related liabilities, other than the assets and operations of the Companies relating to their alcoholic wine business. The aggregate purchase price for the assets, which is subject to certain post-closing adjustments, consisted of the following: (i) $93 million in cash, (ii) certain deferred payments in the aggregate amount of $3 million, to be made in cash over three and a quarter years following the closing of the Acquisition, and (iii) a promissory note in the original principal amount of $1,000,000. As of the closing date of the Acquisition, none of the Companies or Joseph Umbach had any material relationship with the Registrant or any of its affiliates, any director or any officer of Registrant or any associate of any such director or officer. The cash portion of the Acquisition purchase price was financed through (a) a $25,000,000 capital contribution by the Registrant to Mistic from the proceeds of a loan to the Registrant from its subsidiary, Graniteville Company, and (b) $71,500,000 of borrowings under a new $80,000,000 senior debt financing (the "Mistic Facility") provided to Mistic by The Chase Manhattan Bank (National Association), as Agent, and certain other banks who are signatories to the Credit Agreement providing for such financing. In connection with the Acquisition, Graniteville Company increased its borrowings by $41 million under its credit facility provided by The CIT Group/Commercial Services, Inc. The Mistic Facility consists of a $20,000,000 revolving credit facility (which includes a Letter of Credit facility of up to $5 million) and a $60,000,000 term credit facility. A copy of the Asset Purchase Agreement relating to the Acquisition, the documents providing for the financing for the Acquisition and the press release with respect to the Acquisition are being filed herewith as exhibits hereto and are incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Businesses Acquired The financial statements of the business acquired in the Acquisition are not being provided herewith since it is impracticable for the Registrant to do so at the time this Report is filed. Such required financial statements will be filed as soon as practicable and in no event later than 60 days after the date this Report must be filed. (b) ProForma Financial Information The proforma financial information required pursuant to Article 11 of Regulation S-X is not being furnished herewith since it is impracticable for the Registrant to do so at the time this Report is filed. Such required proforma financial information will be filed as soon as practicable and in no event later than 60 days after the date this Report must be filed. (c) Exhibits 2.1 Asset Purchase Agreement, among Mistic Brands, Inc., the Companies, and Joseph Umbach, dated as of August 9, 1995 10.1 Credit Agreement, among Mistic Brands, Inc., The Chase Manhattan Bank (National Association), as Agent, and other banks who are a party thereto, dated as of August 9, 1995 10.2 Amendment No. 6 to Revolving Credit, Term Loan and Security Agreement, among Graniteville Company, C.H. Patrick & Co., Inc., The CIT Group/Commercial Services, Inc., as agent, and other financial institutions who are a party thereto, dated as of August 3, 1995 99.1 Press release dated August 9, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRIARC COMPANIES, INC. Date: August 14, 1995 By: Joseph A. Levato ----------------------- Joseph A. Levato Executive Vice President and Chief Financial Officer Exhibit Index Exhibit No. Description Page No. -------- ------------ -------- 2.1 Asset Purchase Agreement, among Mistic Brands, Inc., the Companies, and Joseph Umbach, dated as of August 9, 1995 Exhibit No. Description Page No. -------- ------------ -------- 10.1 Credit Agreement, among Mistic Brands, Inc., The Chase Manhattan Bank (National Association), as Agent, and other banks who are a party thereto, dated as of August 9, 1995 10.2 Amendment No. 6 to Revolving Credit, Term Loan and Security Agreement, among Graniteville Company, C.H. Patrick & Co., Inc., The CIT Group/Commercial Services, Inc., as agent, and other financial institutions who are a party thereto, dated as of August 3, 1995 99.1 Press release dated August 9, 1995 EX-10.1 2 CREDIT AGMT 8/9/95 EXHIBIT 10.1 CREDIT AGREEMENT Dated as of August 9, 1995 among MISTIC BRANDS, INC. THE LENDERS SIGNATORY HERETO and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) as Agent Table of Contents ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. . . . . . . . . . . . Section 1.01. Definitions. . . . . . . . . . . . . . . . . Section 1.02. Accounting Terms . . . . . . . . . . . . . . . ARTICLE 2. THE CREDIT . . . . . . . . . . . . . . . . . . . . . . Section 2.01. Loans. . . . . . . . . . . . . . . . . . . . . Section 2.02. The Notes. . . . . . . . . . . . . . . . . . . Section 2.03. Purpose. . . . . . . . . . . . . . . . . . . . Section 2.04. Borrowing Procedures . . . . . . . . . . . . . Section 2.05. Optional Prepayments and Conversions . . . . . Section 2.06. Mandatory Prepayments. . . . . . . . . . . . . Section 2.07. Interest Periods; Renewals . . . . . . . . . . Section 2.08. Changes of Commitments . . . . . . . . . . . . Section 2.09. Certain Notices. . . . . . . . . . . . . . . . Section 2.10. Minimum Amounts. . . . . . . . . . . . . . . . Section 2.11. Interest . . . . . . . . . . . . . . . . . . . Section 2.12. Fees . . . . . . . . . . . . . . . . . . . . . Section 2.13. Payments Generally . . . . . . . . . . . . . . ARTICLE 3. THE LETTERS OF CREDIT. . . . . . . . . . . . . . . . . Section 3.01. Letters of Credit. . . . . . . . . . . . . . . Section 3.02. Purposes . . . . . . . . . . . . . . . . . . . Section 3.03. Procedures for Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.04. Participating Interests. . . . . . . . . . . . Section 3.05. Payments . . . . . . . . . . . . . . . . . . . Section 3.06. Further Assurances . . . . . . . . . . . . . . Section 3.07. Obligations Absolute . . . . . . . . . . . . . Section 3.08. Cash Collateral Account. . . . . . . . . . . . Section 3.09. Letter of Credit Fees. . . . . . . . . . . . . ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC. . . . . . . . . . . Section 4.01. Additional Costs . . . . . . . . . . . . . . . Section 4.02. Limitation on Fixed Rate Loans . . . . . . . . Section 4.03. Illegality . . . . . . . . . . . . . . . . . . Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03 . . . . . . . . . . . . . . . . . Section 4.05. Certain Compensation . . . . . . . . . . . . . Section 4.06. Lending Office Designations. . . . . . . . . . ARTICLE 5. CONDITIONS PRECEDENT.. . . . . . . . . . . . . . . . . Section 5.01. Documentary Conditions Precedent . . . . . . . Section 5.02. Additional Conditions Precedent. . . . . . . . Section 5.03. Deemed Representations . . . . . . . . . . . . ARTICLE 6. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . Section 6.01. Incorporation, Good Standing and Due Qualification. . . . . . . . . . . . . . . . . . . . . . Section 6.02. Corporate Power and Authority; No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . Section 6.03. Legally Enforceable Agreements . . . . . . . . Section 6.04. Litigation . . . . . . . . . . . . . . . . . . Section 6.05. Financial Statements . . . . . . . . . . . . . Section 6.06. Ownership and Liens. . . . . . . . . . . . . . Section 6.07. Taxes. . . . . . . . . . . . . . . . . . . . . Section 6.08. ERISA. . . . . . . . . . . . . . . . . . . . . Section 6.09. Subsidiaries and Affiliates. . . . . . . . . . Section 6.10. Capitalization . . . . . . . . . . . . . . . . Section 6.11. Credit Arrangements. . . . . . . . . . . . . . Section 6.12. Operation of Business. . . . . . . . . . . . . Section 6.14. Hazardous Materials. . . . . . . . . . . . . . Section 6.15. No Default on Outstanding Judgments or Orders . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.16. No Defaults on Other Agreements. . . . . . . . Section 6.17. Labor Disputes and Acts of God . . . . . . . . Section 6.18. Governmental Regulation. . . . . . . . . . . . Section 6.19. No Forfeiture. . . . . . . . . . . . . . . . . Section 6.20. Solvency . . . . . . . . . . . . . . . . . . . Section 6.21. Representations and Warranties in the Mistic Acquisition Documents . . . . . . . . . . . . . . ARTICLE 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . Section 7.01. Maintenance of Existence . . . . . . . . . . . Section 7.02. Conduct of Business. . . . . . . . . . . . . . Section 7.03. Maintenance of Properties. . . . . . . . . . . Section 7.04. Maintenance of Records . . . . . . . . . . . . Section 7.05. Maintenance of Insurance . . . . . . . . . . . Section 7.06. Compliance with Laws . . . . . . . . . . . . . Section 7.07. Right of Inspection. . . . . . . . . . . . . . Section 7.08. Reporting Requirements . . . . . . . . . . . . Section 7.09. Interest Rate Protection Agreements. . . . . . Section 7.10. Additional Guarantors. . . . . . . . . . . . . ARTICLE 8. NEGATIVE COVENANTS.. . . . . . . . . . . . . . . . . . Section 8.01. Debt . . . . . . . . . . . . . . . . . . . . . Section 8.02. Guaranties . . . . . . . . . . . . . . . . . . Section 8.03. Liens. . . . . . . . . . . . . . . . . . . . . Section 8.04. Leases . . . . . . . . . . . . . . . . . . . . Section 8.05. Investments. . . . . . . . . . . . . . . . . . Section 8.06. Distributions. . . . . . . . . . . . . . . . . Section 8.07. Sale of Assets . . . . . . . . . . . . . . . . Section 8.08. Transactions with Affiliates . . . . . . . . . Section 8.09. Mergers. . . . . . . . . . . . . . . . . . . . Section 8.10. Acquisitions . . . . . . . . . . . . . . . . . Section 8.11. No Activities Leading to Forfeiture. . . . . . Section 8.12. Capital Expenditures . . . . . . . . . . . . . Section 8.13. Management Fees. . . . . . . . . . . . . . . . Section 8.14. Borrower Capital Stock . . . . . . . . . . . . Section 8.15. Rights under Other Agreements. . . . . . . . . Section 8.16. Restrictions . . . . . . . . . . . . . . . . . Section 8.17. Special Trademark Subsidiaries . . . . . . . . Section 8.18. No Foreign Trademarks. . . . . . . . . . . . . Section 8.19. Fiscal Year. . . . . . . . . . . . . . . . . . ARTICLE 9. FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . Section 9.01. Interest Coverage Ratio. . . . . . . . . . . . Section 9.02. Fixed Charge Coverage Ratio. . . . . . . . . . Section 9.03. Leverage Ratio . . . . . . . . . . . . . . . . Section 9.04. Minimum Net Worth. . . . . . . . . . . . . . . Section 9.05. Current Ratio. . . . . . . . . . . . . . . . . ARTICLE 10. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . Section 10.01. Events of Default . . . . . . . . . . . . . . Section 10.02. Remedies. . . . . . . . . . . . . . . . . . . Section 10.03. Cure. . . . . . . . . . . . . . . . . . . . . ARTICLE 11. THE AGENT.. . . . . . . . . . . . . . . . . . . . . . Section 11.01. Appointment, Powers and Immunities of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . Section 11.02. Reliance by Agent . . . . . . . . . . . . . . Section 11.03. Defaults. . . . . . . . . . . . . . . . . . . Section 11.04. Rights of Agent as a Lender . . . . . . . . . Section 11.05. Indemnification of Agent. . . . . . . . . . . Section 11.06. Documents . . . . . . . . . . . . . . . . . . Section 11.07. Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . . . . . . . . . Section 11.08. Failure of Agent to Act . . . . . . . . . . . Section 11.09. Resignation or Removal of Agent . . . . . . . Section 11.10. Amendments Concerning Agency Function . . . . Section 11.11. Liability of Agent. . . . . . . . . . . . . . Section 11.12. Transfer of Agency Function . . . . . . . . . Section 11.13. Non-Receipt of Funds by the Agent . . . . . . Section 11.14. Withholding Taxes . . . . . . . . . . . . . . Section 11.15. Several Obligations and Rights of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . Section 11.16. Pro Rata Treatment of Loans, Etc. . . . . . . Section 11.17. Sharing of Payments Among Lenders . . . . . . Section 11.18. Security Documents. . . . . . . . . . . . . . Section 11.19. Collateral. . . . . . . . . . . . . . . . . . Section 11.20. Amendment of Article 11 . . . . . . . . . . . ARTICLE 12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . Section 12.01. Amendments and Waivers. . . . . . . . . . . . Section 12.02. Usury . . . . . . . . . . . . . . . . . . . . Section 12.03. Expenses. . . . . . . . . . . . . . . . . . . Section 12.04. Survival. . . . . . . . . . . . . . . . . . . Section 12.05. Assignment; Participations. . . . . . . . . . Section 12.06. Notices . . . . . . . . . . . . . . . . . . . Section 12.07. Setoff. . . . . . . . . . . . . . . . . . . . SECTION 12.08. JURISDICTION; IMMUNITIES. . . . . . . . . . . Section 12.09. Table of Contents; Headings . . . . . . . . . Section 12.10. Severability. . . . . . . . . . . . . . . . . Section 12.11. Counterparts. . . . . . . . . . . . . . . . . Section 12.12. Integration . . . . . . . . . . . . . . . . . SECTION 12.13. GOVERNING LAW . . . . . . . . . . . . . . . . Section 12.14. Confidentiality . . . . . . . . . . . . . . . Section 12.15. Treatment of Certain Information. . . . . . . EXHIBITS Exhibit A Revolving Credit Note Exhibit B Term Note Exhibit C Unconditional Guaranty Exhibit D1 Borrowing Base Certificate Exhibit D2 Compliance Certificate Exhibit E Opinion of Counsel to the Borrower and the Guarantor Exhibit F Security Agreement Exhibit G Trademark Security Agreement Exhibit H Pledge Agreement Exhibit I Management Agreement Exhibit J Affiliate Subordination Agreement SCHEDULES Schedule I Commitments Schedule II Affiliates Schedule III Credit Arrangements Schedule IV Litigation CREDIT AGREEMENT CREDIT AGREEMENT dated as of August 9, 1995 among MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower"), each of the lenders which is a signatory hereto or which shall become a party hereto from time to time (individually a "Lender" and collectively the "Lenders") and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association organized under the laws of the United States of America, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "Agent"). WHEREAS, the Borrower has been organized by Triarc Companies, Inc., a Delaware corporation (the "Guarantor"), for the purpose of effectuating the Mistic Acquisition; WHEREAS, the Borrower shall, on the terms and conditions set forth herein, incur Debt hereunder to finance the Mistic Acquisition and for general working capital purposes; and WHEREAS, the Guarantor shall unconditionally guaranty the Debt of the Borrower incurred hereunder and the performance of the Borrower hereunder. NOW THEREFORE, the parties hereto agree as follows: ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. Section 1.01. Definitions. As used in this Agreement the following terms have the following meanings (terms defined in the singular to have a correlative meaning when used in the plural and vice versa): "Acceptable Acquisition" means any Acquisition which meets all of the following conditions: (a) such Acquisition relates to the Business and has been approved in good faith by the Board of Directors of the Person making such Acquisition; (b) no Default or Event of Default exists or would exist after giving effect to such Acquisition; and (c) after considering the pro forma position of the Consolidated Entities subsequent to such Acquisition, the Borrower will continue to be in compliance with the financial covenants contained in Article 9. "Acquisition" means any transaction pursuant to which any Consolidated Entity (a) acquires equity securities (or warrants, options or other rights to acquire such securities) of any Person, (b) causes or permits any Person to be merged into any Consolidated Entity, in any case pursuant to a merger, purchase of assets or any reorganization providing for the delivery or issuance to the holders of such Person's then outstanding securities, in exchange for such securities, of cash or securities of any Consolidated Entity, or a combination thereof, (c) purchases all or substantially all of the business or assets of any Person or (d) purchases assets of any Person other than raw materials, inventory and equipment purchased in the ordinary course of business. "Additional Costs" shall have the meaning assigned to such term in Section 4.01 hereof. "Adjusted Working Capital" means, at any date of determination thereof, the amount, if any, by which (a) Consolidated Current Assets (other than cash and Cash Equivalents) exceed (b) Consolidated Current Liabilities (other than (i) the outstanding principal amount of the Notes, (ii) the current portion of Consolidated Funded Debt and (iii) any accrued Management Fees). "Affiliate" means any Person: (a) which directly or indirectly controls, or is controlled by, or is under common control with, any Consolidated Entity; (b) which directly or indirectly beneficially owns or holds 10% or more of any class of voting stock of any Consolidated Entity; (c) 10% or more of the voting stock of which is directly or indirectly beneficially owned or held by any Consolidated Entity; or (d) which is a partnership in which any Consolidated Entity is a general partner. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. "Affiliate Subordination Agreement" means the Affiliate Subordination Agreement substantially in the form of Exhibit J to be delivered by the Guarantor under the terms of this Agreement, as amended or supplemented from time to time. "Agent" shall have the meaning assigned to such term in the introductory paragraph hereof. "Agreement" means this Credit Agreement, as amended or supplemented from time to time. References to Articles, Sections, Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and the like of this Agreement unless otherwise indicated. "Arkansas Litigation" means Raleigh Spring Water Company d/b/a Clear Mountain Spring Water v. Joseph Victori Wines, Inc., Ouachita Coca-Cola Bottling and Coca-Cola Bottling Company of Arkansas, Docket No. 92-4357, Circuit Court of Pulaski County, Arkansas, Fifth Division. "Assigned Agreements" means each and every one of the leases, contracts, permits, licenses, franchises and other agreements to which any Obligor is a party or pursuant to which any Obligor has been granted rights, including, without limitation, all supply contracts, co-packer agreements, distribution agreements, all Mistic Acquisition Documents, all leases and all policies of property, casualty and liability insurance pursuant to which any Obligor is a beneficiary. "Banking Day" means any day on which commercial banks are not authorized or required to close in New York, New York and whenever such day relates to a Fixed Rate Loan or notice with respect to any Fixed Rate Loan, a day on which dealings in Dollar deposits are also carried out in the London interbank market. "Borrower" shall have the meaning assigned to such term in the introductory paragraph hereof. "Borrowing Base" means, at any date of determination thereof, an amount determined by the Agent with reference to the most recent Borrowing Base Certificate to be equal to the sum of (a) 80% of the aggregate book value (net of credit balances) of Eligible Receivables, plus (b) 50% of the aggregate book value of Eligible Inventory. "Borrowing Base Certificate" means the borrowing base certificate substantially in the form of Exhibit D1 to be delivered by the Borrower under the terms of this Agreement. "Business" means the business of researching, developing, formulating, producing, marketing and selling of non-alcoholic beverages including, without limitation, carbonated and noncarbonated fruit drinks, ready-to-drink brewed iced teas and naturally flavored sparkling waters or the ownership and/or licensing of Trademarks in connection therewith. "Capital Expenditure" means, with respect to any Person, any expenditure made or obligation incurred by such Person to purchase, acquire or construct fixed assets, plant and equipment (including renewals, improvements, replacements and incurrence of obligations under Capital Leases), but excluding expenditures made or obligations incurred in connection with an Acquisition. "Capital Lease" means any lease which has been or should be capitalized on the books of the lessee in accordance with GAAP. "Cash Equivalents" means: (a) direct obligations of the United States of America or any agency or instrumentality thereof with maturities of one year or less from the date of acquisition; (b) commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.; (c) certificates of deposit and other time deposits with maturities of one year or less from the date of acquisition issued by any commercial bank operating within the United States of America having a combined capital and surplus in excess of $100,000,000; (d) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate or Subsidiary of the Guarantor or the Borrower) organized and existing under the laws of the United States of America or any State thereof with a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's Investors Service Inc. or any successor rating agency, or "A-1" (or higher) according to Standard & Poor's Corporation or any successor rating agency; (e) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any financial institution; and (f) money market or mutual funds whose sole investments are comprised of investments permitted under the foregoing clauses (a) through (e). "Change of Control" means (a) the Guarantor or Nelson Peltz and Peter May or any of the affiliates controlled by them, including DWG Acquisition, L.P. or any affiliate thereof, shall have ceased to own, directly or indirectly, at least 51% of the Fully Diluted Outstanding Common Stock, (b) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rules 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of (i) more than 10% of the Fully Diluted Outstanding Common Stock (other than (w) the Guarantor, (x) any Affiliate, including, without limitation, Nelson Peltz and Peter May and any of their respective affiliates controlled by them including DWG Acquisition Group, L.P. or any affiliate thereof, so long as all such shares shall remain subject to the Lien of the Pledge Agreement, (y) Michael Weinstein, any member of his immediate family and any trust for the benefit of any such family member or (z) Ernest Cavallo, any member of his immediate family and any trust for the benefit of any such family member) or (ii) more than 50% of the outstanding shares of the common stock of the Guarantor (other than Nelson Peltz and Peter May and any of their respective affiliates controlled by them including DWG Acquisition Group, L.P. or any affiliate thereof), (c) Michael Weinstein or Ernest Cavallo shall have ceased to continue to serve in the operational and managerial capacities in which they now serve or in enhanced operational or managerial capacities with the Borrower and a successor shall not be appointed within 180 days thereafter with the prior consent of the Required Lenders (such consent not to be unreasonably withheld or delayed) or (d) during any period of 12 consecutive months, individuals who at the beginning of such 12- month period were directors of the Borrower cease for any reason to constitute a majority of the Board of Directors of the Borrower, unless their successors shall have been approved by a majority of the continuing directors. "`class' of Loans" shall have the meaning assigned to such term in Section 2.01(c). "Closing Date" means the date upon which the initial borrowing or initial issuance of a Letter of Credit hereunder occurs. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" means all of any Obligor's or the Guarantor's right, title and interest in and to Property in which such Obligor or the Guarantor has granted a Lien to the Agent under any Facility Document. "Commitments" means the Revolving Credit Commitments and the Term Loan Commitments. "Common Stock" shall mean (a) the common stock of the Borrower, par value $1.00 per share, as authorized on the Closing Date, (b) any other capital stock of any class or classes (however designated) of the Borrower, authorized on or after the Closing Date, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and the holders of which shall ordinarily, in the absence of contingencies or in the absence of any provision to the contrary in the charter of the Borrower, be entitled to vote for the election of a majority of directors of the Borrower (even though the right so to vote has been suspended by the happening of such a contingency or provision) and (c) any other securities into which or for which any of the securities described in (a) or (b) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. "Compliance Certificate" means the compliance certificate substantially in the form of Exhibit D2 to be delivered by the Borrower under the terms of this Agreement. "Consolidated Capital Expenditures" means, with respect to any fiscal period, the aggregate amount of Capital Expenditures made by the Consolidated Entities for such period, as determined on a consolidated basis in accordance with GAAP. "Consolidated Current Assets" means, at any date of determination thereof, all assets of the Consolidated Entities treated as current assets, as determined on a consolidated basis in accordance with GAAP. "Consolidated Current Liabilities" means, at any date of determination thereof, all liabilities of the Consolidated Entities treated as current liabilities, as determined on a consolidated basis in accordance with GAAP. "Consolidated Debt" means, at any date of determination thereof, the aggregate amount of Debt of the Consolidated Entities (other than Debt attributable to any Permitted SAR prior to the time of exercise of such Permitted SAR), as determined on a consolidated basis in accordance with GAAP. "Consolidated EBIT" means, with respect to any fiscal period, the sum of (a) Consolidated Net Income for such period, plus (b) the aggregate amount of (i) income taxes and (ii) Consolidated Interest Expense, to the extent that such aggregate amount was deducted in the computation of Consolidated Net Income for such period. "Consolidated EBITA" means, with respect to any fiscal period, the sum of (a) Consolidated EBIT for such period, plus (b) the aggregate amount of amortization, to the extent that such aggregate amount was deducted in the computation of Consolidated EBIT for such period. "Consolidated EBITDA" means, with respect to any fiscal period, the sum of (a) Consolidated EBITA for such period, plus (b) the aggregate amount of depreciation, to the extent that such aggregate amount was deducted in the computation of Consolidated EBITA for such period. "Consolidated Entities" means, collectively, the Borrower and each Subsidiary of the Borrower whose accounts are or are required to be consolidated or included with the accounts of the Borrower in accordance with GAAP. "Consolidated Funded Debt" means, at any date of determination thereof, the result of (a) the aggregate amount of Consolidated Debt minus (b) the aggregate amount of Consolidated Debt that is payable on demand or within one year of the creation thereof other than any such Debt that, although payable within one year, constitutes payments required to be made on account of principal of indebtedness expressed to mature more than one year from the date of creation thereof. "Consolidated Interest Expense" means, with respect to any fiscal period, the amount of interest accrued on, and with respect to, Consolidated Debt (including, without limitation, Interest Rate Protection Agreement costs and imputed interest on Capital Leases but excluding any interest accruing on the judgment entered into in connection with the Arkansas Litigation) plus all finance charges, premiums and other fees, charges and expenses accrued with respect to Consolidated Debt during such period, as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means, with respect to any fiscal period, net income of the Consolidated Entities for such period other than (a) extraordinary or nonrecurring gains or losses and (b) expenses associated with any Permitted SAR prior to the time of exercise of such Permitted SAR, as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Worth" means, at any date of determination thereof, the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of the Consolidated Entities at such date, as determined on a consolidated basis in accordance with GAAP. "Consolidated Principal Payments" means, with respect to any fiscal period, all principal due on Consolidated Debt (including, without limitation, imputed principal on Capital Leases) for such period, as determined on a consolidated basis in accordance with GAAP. "Current Ratio" means, at any date of determination thereof, the ratio of (a) Consolidated Current Assets (other than prepaid expenses) to (b) Consolidated Current Liabilities. "Customer" means the account debtor with respect to any of the Receivables or the purchaser of goods, services or both with respect to any contract or contract right, or any Person who enters into any contract or other arrangement with any Obligor, pursuant to which such Obligor is to deliver any personal Property or perform any services. "Debt" means, with respect to any Person (without duplication): (a) indebtedness of such Person for borrowed money; (b) indebtedness for the deferred purchase price of Property or services (except trade payables in the ordinary course of business); (c) Unfunded Benefit Liabilities of such Person; (d) the face amount of any outstanding letters of credit issued for the account of such Person; (e) obligations arising under banker's acceptance facilities; (f) Guaranties of such Person; (g) obligations of other Persons secured by any Lien on Property of such Person; (h) obligations of such Person as lessee under Capital Leases; (i) the net obligations of such Person in respect of Interest Rate Protection Agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging arrangements; and (j) all capital stock of such Person subject to repurchase or redemption during the term of this Agreement, other than at the sole option of such Person. "Default" means any event which with the giving of notice or lapse of time, or both, would become an Event of Default. "Default Rate" means, with respect to the principal of any Loan and, to the extent permitted by law, any other amount payable by any Obligor or the Guarantor under this Agreement, any Note or any other Facility Document, or any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum during the period from and including the due date, to, but excluding the date on which such amount is paid in full equal to two percent (2%) above the Variable Rate as in effect from time to time plus the Interest Margin (if any); provided that, if the amount so in default is principal of a Fixed Rate Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Default Rate" for such principal shall be, for the period from and including the due date and to but excluding the last day of the Interest Period therefor, two percent (2%) above the interest rate for such Loan as provided in Section 2.11 hereof and, thereafter, the rate provided for above in this definition. "Distribution" means, with respect to any Person, the declaration or payment of any dividends by such Person, or the purchase, redemption, retirement or other acquisition for value of any of its capital stock now or hereafter outstanding, or the making of any distribution of assets to its stockholders as such whether in cash, assets or in obligations of such Person, or the allocation or other setting apart of any sum for the payment of any dividend or distribution on, or for the purchase, redemption or retirement of any shares of its capital stock, or the making of any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock; provided that the term "Distribution" shall not include any payments made under the Management Agreement or the Tax Sharing Agreement. "Dollars" and the sign "$" mean lawful money of the United States of America. "Domestic Subsidiary" means any direct or indirect Subsidiary of the Borrower which is not a Foreign Subsidiary. "Eligible Inventory" means, as of any date of determination thereof, all Inventory of the Obligors as to which the Agent holds a first priority perfected security interest, provided that such Inventory: (a) is located in the United States; (b) does not include unsalable goods returned or rejected by a Customer; and (c) does not include goods to be returned to any Obligor's suppliers. "Eligible Receivables" means, as of any date of determination thereof, all Receivables of the Obligors as to which the Agent holds a first priority perfected security interest, provided that such Receivables: (a) arose in the ordinary course of business of the Obligors; (b) do not represent amounts owed to the Obligors for goods shipped on a consignment or "bill and hold" basis; (c) represent amounts owed for goods sold or leased or services rendered to a Customer; (d) are payable in Dollars; (e) do not include any amount which is not due or has not been paid within 90 days of the invoice date; (f) do not have as the Customer a Person that is the subject of any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law; (g) do not have as the Customer any Affiliate, except for Receivables due from any Affiliate that are incurred in the ordinary course of business and in an arm's-length transaction in accordance with Section 8.09 so long as the aggregate amount of such Receivables does not exceed 20% of the aggregate unpaid principal balance of all Receivables due from all Customers; (h) do not have as the Customer a Person located outside the United States unless the Receivable is supported by a letter of credit, FICA insurance or other appropriate credit support; (i) do not include any portion of a Receivable as to which the Customer has asserted any defense; (j) do not include that portion of any Receivable as to which any offset or counterclaim has been asserted or can be asserted by any distributor for any promotional, advertising or other expense; (k) do not include the amount by which the aggregate unpaid principal balance of all Receivables due from any single Customer exceeds 25% of the aggregate unpaid principal balance of all Receivables due from all Customers; (l) do not include any Receivable due from a Customer if 35% or more of the aggregate Receivables due from that Customer have not been paid within 90 days of the invoice date; (m) do not include any Receivable arising out of any Assigned Agreement which by its terms, forbids or prohibits the assignment of such Receivable or such Assigned Agreement for collateral purposes; and (n) do not include any Receivable (or portion thereof) the Agent in the exercise of its good faith business judgment has deemed ineligible because of the impairment of the collateral value thereof to the Lenders, the impairment of the Lenders to realize such value thereof or the significant uncertainty as to the ability of the Customer to make payment thereunder. "Employee SARs" means the stock appreciation rights issued or to be issued at a fair market value base price to directors, officers or employees of or consultants to any Consolidated Entity pursuant to any qualified or non-qualified stock option plan or agreement, employee stock ownership plan, stock purchase agreement, stock plan, stock restriction agreement, employment agreement or consulting agreement or such other options, arrangements, agreements or plans approved by the Board of Directors of the Borrower so long as the aggregate number of the measurement shares to which such appreciation rights apply does not exceed 10% of the Fully Diluted Outstanding Common Stock as of the Closing Date. "Environmental Laws" means any and all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, including any rules and regulations promulgated thereunder. "ERISA Affiliate" means any corporation or trade or business which is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which any Consolidated Entity is a member, or (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which any Consolidated Entity is a member. "Event of Default" shall have the meaning assigned to such term in Section 10.01 hereof. "Excess Cash Flow" means, with respect to any Fiscal Year, Consolidated EBITDA for such Fiscal Year plus the result of (a) the sum of (i) non-cash charges, extraordinary or nonrecurring non-cash losses incurred during such Fiscal Year (including, without limitation, accrued but unpaid Management Fees and expenses attributable to the Permitted SARs during such period) to the extent included in determining Consolidated EBITDA), plus (ii) Management Fees actually paid to the extent exceeding (A) during the Fiscal Years ending on December 31, 1996 and December 31, 1997, $500,000 and (B) during each Fiscal Year ending thereafter, $750,000 during each such Fiscal Year, plus (iii) any decrease in Adjusted Working Capital for such Fiscal Year, minus (b) the sum of (i) extraordinary or nonrecurring non-cash gains realized during such Fiscal Year (to the extent included in determining Consolidated EBITDA), plus (ii) the aggregate of all Consolidated Principal Payments made during such Fiscal Year (other than any Excess Cash Flow payments made pursuant to Section 2.06) on, or with respect to, Consolidated Debt (excluding the Revolving Credit Notes), plus (iii) the aggregate amount of Consolidated Interest Expense paid during such Fiscal Year, plus (iv) income taxes paid, including, without limitation, payments under the Tax Sharing Agreement, by the Consolidated Entities during such Fiscal Year, plus (v) Consolidated Capital Expenditures made during such Fiscal Year not otherwise deducted from Consolidated EBITDA (to the extent that such Consolidated Capital Expenditures were permitted hereunder), plus (vi) any increase in Adjusted Working Capital for such Fiscal Year plus (vii) net gains on asset sales (to the extent included in determining Consolidated EBITDA). "Facility Documents" means this Agreement, the Notes, the Letters of Credit, any Interest Rate Protection Agreement to which a Lender is a party, the SAR Agreement, the SARs and the Security Documents, as each may be amended or supplemented from time to time. "Federal Funds Rate" means, for any day, the rate per annum (expressed on a 365/366 day basis of calculation) equal to the weighted average of the rates on overnight federal funds transactions as published by the Federal Reserve Bank of New York for such day (or for any day that is not a Banking Day, for the immediately preceding Banking Day). "Fiscal Quarter" means any calendar quarter. "Fiscal Year" means any calendar year. "Fixed Base Rate" means with respect to any Interest Period for a Fixed Rate Loan: the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest 1/32 of 1%) of the offered rates for Dollar deposits with a term comparable to such Interest Period that appear on "Page 3750" on the Telerate Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which Dollar deposits are offered by leading banks in the London interbank deposit market) at approximately 11:00 a.m, London time, on the second full Banking Day preceding the first day of such Interest Period; provided, however, that if there shall at any time no longer exist a page on the Telerate Service that displays the rates at which Dollar deposits are offered by leading banks in the London interbank market, "Fixed Base Rate" shall mean, with respect to any Interest Period for a Fixed Rate Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/32 of 1%) quoted as the rate at which Dollar deposits are offered by the Agent to leading banks in the London interbank deposit market at approximately 11:00 a.m., London time, on the second full Banking Day preceding the first day of such Interest Period in an amount substantially equal to the amount of the related Fixed Rate Loan of the Agent (in its capacity as a Lender) for a term equal to such Interest Period. "Fixed Charge Coverage Ratio" means, at any date of determination thereof, the ratio of (a) the result of (i) Consolidated EBITDA for the four most recently ended Fiscal Quarters, minus (ii) the aggregate amount of Consolidated Capital Expenditures during such four most recently ended Fiscal Quarters to (b) the sum of (i) all scheduled payments of principal due during such four most recently ended Fiscal Quarters (excluding any Excess Cash Flow repayments pursuant to Section 2.06) on, or with respect to, Consolidated Debt (including, without limitation, imputed principal on Capital Leases), plus (ii) Consolidated Interest Expense during such four most recently ended Fiscal Quarters; provided that if such date is on or before June 30, 1996, all references to the four most recently ended Fiscal Quarters contained in this definition shall be to the fiscal period beginning on the Closing Date and ending on such date. "Fixed Rate" means, for any Fixed Rate Loan for any Interest Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of one percent (1%)) reasonably determined by the Agent to be equal to the quotient of (i) the Fixed Base Rate for such Loan for such Interest Period, divided by (ii) one minus the Reserve Requirement for such Loan for such Interest Period. "Fixed Rate Loan" means any Loan when and to the extent the interest rate therefor is determined on the basis of the definition "Fixed Rate." "Food and Drug Act" means the Federal Food, Drug and Cosmetic Act, 21 U.S.C. Section 301 et seq., and the rules and regulations promulgated thereunder. "Foreign Subsidiary" means each direct or indirect Subsidiary of the Borrower which was created or organized under the laws of a jurisdiction other than the United States of America, any state thereof or the District of Columbia. "Forfeiture Proceeding" means any action or proceeding affecting any Consolidated Entity or the Guarantor before any Governmental Authority or the receipt of notice which could reasonably be expected to result in the seizure or forfeiture of any of their respective Properties, which could reasonably be expected to have a Material Adverse Effect. "Fully Diluted Outstanding Common Stock" means, at any date of determination thereof, the number of issued shares actually outstanding (excluding any shares of the Borrower held by the Borrower as "treasury stock") at such time together with the number of shares of Common Stock which could be acquired at such time pursuant to all rights, options, warrants or convertible or exchangeable securities entitling the holders thereof to subscribe for or purchase or otherwise acquire shares of Common Stock as if such rights, options, warrants or convertible or exchangeable securities have been fully exercised or converted and the full amount of all Common Stock obtained in connection therewith has been issued. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time, applied on a basis consistent with those used in the preparation of the financial statements referred to in Section 6.05 (except for changes concurred in by the Borrower's independent public accountants). "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantor" shall have the meaning assigned to such term in the first recital hereof. "Guaranty" means, with respect to any Person, guaranties, endorsements (other than for collection in the ordinary course of business) and other contingent obligations of such Person with respect to the obligations of any other Person (including, but not limited to, an agreement to purchase any obligation, stock, assets, goods or services or to supply or advance any funds, assets, goods or services, or an agreement to maintain or cause such Person to maintain a minimum working capital or net worth or otherwise to assure the creditors of any such other Person against loss). "Hazardous Materials" means any and all pollutants, contaminants, toxic or hazardous wastes or any other substances, the removal of which is required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is restricted, prohibited or penalized by any applicable Environmental Law. "Interest Coverage Ratio" means, at any date of determination thereof, the ratio of (a) Consolidated EBITA for the four most recently ended Fiscal Quarters to (b) Consolidated Interest Expense for such four most recently ended Fiscal Quarters; provided that if such date is on or before June 30, 1996, all references to the four most recently ended Fiscal Quarters contained in this definition shall be to the fiscal period beginning on the Closing Date and ending on such date. "Interest Margin" means (a) if such Loan is a Variable Rate Loan, 1.50% per annum or (b) if such Loan is a Fixed Rate Loan, 2.75% per annum. "Interest Period" means, with respect to any Fixed Rate Loan, the period commencing on the date such Loan is made, converted from a Variable Rate Loan or renewed, as the case may be, and ending, as the Borrower may select pursuant to Section 2.07, on the numerically corresponding day in the first, second, third, or sixth calendar month thereafter, provided that each such Interest Period which commences on the last Banking Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Banking Day of the appropriate calendar month. "Interest Rate Protection Agreement" means, with respect to any Person, an interest rate swap, cap or collar agreement or similar arrangement between one or more financial institutions (including, without limitation, the Lenders) and such Person providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Inventory" means all of each Obligor's "inventory" (as such term is defined in the UCC) now owned or hereafter acquired, including, without limitation, all goods, merchandise and other personal Property, whether tangible or intangible, wherever located, furnished under any contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Obligor's business or used in selling or finishing of such goods, merchandise and other personal Property, and all documents of title or other documents representing them. "Investment" means any loan or advance to any Person or any purchase or other acquisition of any capital stock, assets, obligations or other securities of and Person, or any capital contribution to, investment in, or other acquisition of any interest in, any Person. "Issuing Lender" means The Chase Manhattan Bank (National Association), a national banking association organized under the laws of the United States of America, acting in its capacity as a Lender hereunder. "Knowledge" means, with respect to any Person, after reasonable inquiry, no information has come to the attention of such Person, which information has given or should have reasonably given such Person actual or constructive knowledge of facts contrary to the existence of or absence of such facts indicated. "Lender" shall have the meaning assigned to such term in the introductory paragraph hereof. "Lending Office" means, for each Lender and for each type of Loan, the lending office of such Lender (or of an affiliate of such Lender) designated as such for such type of Loan on its signature page hereof or such other office of such Lender (or of an affiliate of such Lender) as such Lender may from time to time specify to the Agent and the Borrower as the office by which its Loans of such type are to be made and maintained. "Letter of Credit Availability" means, at any date of determination thereof, the amount by which (a) the lesser of (i) the result of (A) the aggregate amount of the Revolving Credit Commitments as of such date, minus (B) the unpaid aggregate principal amount of the Revolving Credit Loans then outstanding and (ii) $5,000,000 exceeds (b) the aggregate amount of the Letter of Credit Obligations at such date. "Letter of Credit Funding" shall have the meaning assigned to such term in Section 3.05(b) hereof. "Letter of Credit Obligations" means, at any date of determination thereof, all liabilities of the Borrower with respect to Letters of Credit, whether or not any liability is contingent, including (without limitation) the sum (without duplication) of (a) the aggregate amount available to be drawn under the Letters of Credit then outstanding plus (b) the aggregate amount of all unpaid Reimbursement Obligations; provided that such amount shall be reduced to the extent that (x) the sum of (i) the Letter of Credit Availability plus (ii) the aggregate amount of all Revolving Credit Loans outstanding exceeds (y) the Borrowing Base. "Letters of Credit" shall have the meaning assigned to such term in Section 3.01(a) hereof. "Leverage Ratio" means, at any date of determination thereof, the ratio of (a) Consolidated Funded Debt at such date (after giving effect to any amortization payment made on such date) to (b) Consolidated EBITDA for the four most recently ended Fiscal Quarters; provided that (x) if such date is on or before June 30, 1996, Consolidated Funded Debt shall be equal to the product of (i) Consolidated Funded Debt times (ii) a fraction, the numerator of which is equal to the number of days from the Closing Date to such date and the denominator of which is 366, (y) if such date is on or before June 30, 1996, all references to the four most recently ended Fiscal Quarters contained in this definition shall be to the fiscal period beginning on the Closing Date and ending on such date and (z) there shall be included in Consolidated EBITDA the net income (or loss) plus interest expense, taxes, amortization and depreciation of any Person whose stock or assets were acquired by any Consolidated Entity during such period accrued from the beginning of the period for which Consolidated EBITDA is being measured to the date of such acquisition. "Lien" means any lien (statutory or otherwise), security interest, mortgage, deed of trust, priority, pledge, charge, conditional sale, title retention agreement, financing lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing. "Loan" means any loan made by a Lender pursuant to Section 2.01. "Management Agreement" means the Management Services Agreement dated as of the date hereof between the Borrower and the Guarantor, substantially in the form of Exhibit I, as the same may be amended or supplemented from time to time. "Management Fees" means all fees and other amounts payable by the Consolidated Entities to the Guarantor in respect of "Services" (as such term is defined under the Management Agreement) provided by the Guarantor (including, without limitation, fees due, amounts accrued, and overhead and administrative costs billed by the Guarantor to the Borrower). "Material Adverse Effect" means any material adverse effect on (a) the business, profits, Properties or condition of the Consolidated Entities, taken as a whole, (b) the ability of any Obligor to perform any of its material obligations under each of the Facility Documents to which it is a party, (c) the binding nature, validity or enforceability of any of the Facility Documents or (d) the validity, perfection, priority or enforceability of the Liens in favor of the Agent securing the Obligations hereunder, which, in each case, arises from, or reasonably could be expected to arise from, any action or omission of action on the part of any Consolidated Entity or the Guarantor or the occurrence of any event or the existence of any fact or condition in respect of any Consolidated Entity or any of their respective Properties. "Mistic" means, collectively, Joseph Victori Wines, Inc., a New York corporation, Best Flavors, Inc., a Nevada corporation, and Nature's Own Beverage Company, a Delaware corporation. "Mistic Acquisition" means the acquisition by the Borrower of substantially all of the Business of Mistic pursuant to the terms of the Mistic Acquisition Documents. "Mistic Acquisition Documents" means (a) the Mistic Asset Purchase Agreement, (b) the Consulting Agreement dated as of the Closing Date between the Borrower and Joseph Umbach, (c) the Product and Royalty Agreement dated as of the Closing Date between the Borrower and each of the Mistic Sellers and (d) each of the other agreements and instruments to be executed at the closing of the Mistic Acquisition pursuant to the terms of each of such Mistic Acquisition Documents. "Mistic Acquisition Effective Time" means the time on the Closing Date immediately after the Mistic Acquisition shall have become effective. "Mistic Asset Purchase Agreement" means the Asset Purchase Agreement dated as of the date hereof among the Mistic Sellers, the Borrower and the Guarantor. "Mistic Sellers" means Mistic and Joseph Umbach. "Multiemployer Plan" means, at a particular time, an employee benefit plan (a) which is a "multiemployer plan" as defined in Section 3(37) of ERISA and which is contributed to by any Consolidated Entity or any ERISA Affiliate or (b) with respect to which any Consolidated Entity or any ERISA Affiliate would have liability under Section 4212(c) of ERISA in the event of a withdrawal or plan termination at such time. "Notes" means the Revolving Credit Notes and the Term Notes. "Obligations" means the unpaid principal of and interest on (including interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of any Obligor to the Agent or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any Note, any Letter of Credit, any Interest Rate Protection Agreement to which a Lender is a party, any other Facility Document and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, Guaranties, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or any Lender) or otherwise. "Obligors" means the Borrower and the Subsidiaries of the Borrower which guaranty the Obligations in accordance with Section 7.10 hereof. "Participating Interest" means, with respect to each Letter of Credit, (a) in the case of the Issuing Lender, its interest in such Letter of Credit after giving effect to the granting of any participating interest therein pursuant hereto and (b) in the case of each Participating Lender, its undivided participating interest in such Letter of Credit. "Participating Lender" means, with respect to any Letter of Credit, any Lender (other than the Issuing Lender) with respect to its Participating Interest in each Letter of Credit. "Payor" shall have the meaning assigned to such term in Section 11.13 hereof. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Permitted SARs" means the SARs and the Employee SARs. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan" means, at a particular time, any employee benefit plan (other than a Multiemployer Plan) (i) which is covered by Title IV of ERISA and which is maintained or contributed to by any Consolidated Entity or any ERISA Affiliate or (ii) with respect to which any Consolidated Entity or any ERISA Affiliate would have any liability under Section 4069 of ERISA if such plan were terminated at such time. "Pledge Agreement" means the Pledge Agreement substantially in the form of Exhibit H to be delivered by the Guarantor under the terms of this Agreement, as amended or supplemented from time to time. "Prime Rate" means that rate of interest from time to time announced by the Reference Lender at its Principal Office as its prime commercial lending rate. "Principal Office" means the principal office of the Agent, presently located at 1 Chase Manhattan Plaza, New York, New York 10081. "Pro Forma Balance Sheet" shall have the meaning assigned to such term in Section 6.05(b) hereof. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Purchase Money Lien" means a Lien on any Property acquired by any Consolidated Entity (including Property acquired pursuant to an Acceptable Acquisition) or placed on any Property in order to finance the acquisition of such Property, or the assumption of any Lien on Property existing at the time of the acquisition of such Property or of the Person holding such Property or a Lien incurred in connection with any conditional sale or other title retention agreement or a Capital Lease. "Receivables" means all of each Obligor's accounts, contract rights, instruments, documents, chattel paper, general intangibles relating to accounts, drafts and acceptances, and all other forms of obligations owing to such Obligor arising out of or in connection with the sale or lease of Inventory or for services rendered, all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to the Agent under the Security Agreement or under any other Facility Document. "Reference Lender" means The Chase Manhattan Bank (National Association) (or, with respect to Fixed Rate Loans, if The Chase Manhattan Bank (National Association) no longer quotes on the London interbank market, such successor leading bank in the London interbank market which shall be reasonably appointed by the Agent and shall be reasonably acceptable to the Borrower). "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation G" means Regulation G of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time. "Regulatory Change" means, with respect to any bank, any change after the date of this Agreement in United States federal, state, municipal or foreign laws or regulations (including without limitation Regulation D) or the adoption or making after such date of any written interpretations, directives or requests applying to a class of banks of which such bank is a member, of or under any United States, federal, state, municipal or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Reimbursement Obligation" means the obligation of the Borrower to reimburse the Issuing Lender in accordance with the terms of this Agreement for the payment made by the Issuing Lender under any Letter of Credit. "Required Lenders" means, at any time while no Obligations are outstanding, Lenders having at least 51% of the aggregate amount of the Revolving Credit Commitments and, at any time while Obligations are outstanding, Lenders holding at least 51% of the aggregate principal amount of the Obligations. "Required Payment" shall have the meaning assigned to such term in Section 11.13 hereof. "Reserve Requirement" means for any Fixed Rate Loan for any Interest Period therefor, the average maximum rate (expressed as a decimal) at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks by reason of any Regulatory Change against (i) any category of liabilities which includes deposits by reference to which the Fixed Base Rate for Fixed Rate Loans is to be determined as provided in the definition of "Fixed Base Rate" in this Section 1.01 or (ii) any category of extensions of credit or other assets which include Fixed Rate Loans. "Revolving Credit Commitment" means, with respect to each Lender, the obligation of such Lender to make Revolving Credit Loans hereunder in the aggregate principal amount set forth in Schedule I, as such amount may be reduced or otherwise modified from time to time. "Revolving Credit Commitment Percentage" means, as to any Lender at any date of determination thereof, the percentage of the aggregate Revolving Credit Commitments constituted by such Lender's Revolving Credit Commitment at such date. "Revolving Credit Loan" shall have the meaning assigned to such term in Section 2.01(a) hereof. "Revolving Credit Notes" means the promissory notes issued by the Borrower in the form of Exhibit A hereto evidencing the Revolving Credit Loans made by a Lender hereunder and all promissory notes delivered in substitution or exchange therefor, as amended or supplemented from time to time. "Revolving Credit Termination Date" means the fourth anniversary of the Closing Date. "SAR Agreement" means the Stock Appreciation Right Agreement dated as of the date hereof between the Borrower and the Agent pursuant to which the SARs are issued. "SARs" means the stock appreciation rights issued to the Agent on the Closing Date. "Security Agreement" means the Security Agreement in the form of Exhibit F to be delivered by the Borrower under the terms of this Agreement, as amended or supplemented from time to time. "Security Documents" means the Unconditional Guaranty, the Security Agreement, the Trademark Security Agreement, the Pledge Agreement, the Affiliate Subordination Agreement and each other security document that may from time to time be delivered to the Agent in connection herewith or therewith. "Special Trademark Subsidiaries" means those Wholly-Owned Subsidiaries of the Borrower created for the sole purpose of owning Trademarks. "Subsidiary" means, with respect to any Person, any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by such Person. "Wholly-Owned Subsidiary" means, with respect to any Person, any such corporation or other entity of which all of such securities or other ownership interests are so owned by such Person. "Tax Sharing Agreement" means the Tax Sharing Agreement dated as of the date hereof between the Guarantor and the Borrower, as in effect on the Closing Date, as the same may be amended or supplemented from time to time. "Term Loan" shall have the meaning assigned to such term in Section 2.01(b) hereof. "Term Loan Commitment" means, with respect to each Lender, the obligation of such Lender to make a Term Loan under this Agreement in the aggregate principal amount set forth in Schedule I. "Term Loan Percentage" means, as to any Lender at any date of determination thereof, the percentage of the aggregate outstanding principal amount of Term Loans constituted by the outstanding principal amount of such Lender's Term Loan at such date. "Term Loan Termination Date" means September 30, 2001. "Term Notes" means the promissory notes issued by the Borrower in the form of Exhibit B hereto evidencing the Term Loan made by a Lender hereunder and all promissory notes delivered in substitution or exchange therefor, as amended or supplemented from time to time. "Termination Date" means, with respect to any Revolving Credit Loan, the Revolving Credit Termination Date, and, with respect to any Term Loan, the Term Loan Termination Date. "Trademark Security Agreement" means the Trademark Security Agreement in the form of Exhibit G to be delivered by the Borrower under the terms of this Agreement, as amended or supplemented from time to time. "Trademarks" shall have the meaning assigned to such term in the Trademark Security Agreement. "Transferor Lender" shall have the meaning assigned to such term in Section 12.05(c) hereof. "`type' of Loans" shall have the meaning assigned to such term in Section 2.01(c) hereof. "UCC" means the Uniform Commercial Code as in effect in the State of New York. "UCP" means the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500. "Unconditional Guaranty" means the Unconditional Guaranty in the form of Exhibit C to be delivered by the Guarantor under the terms of this Agreement, as amended or supplemented from time to time. "Unfunded Benefit Liabilities" means, with respect to any Plan, the amount (if any) by which the present value of all benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair market value of all Plan assets allocable to such benefit liabilities, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of any Consolidated Entity or any ERISA Affiliate under Title IV of ERISA. "Variable Rate" means, for any day, the higher of (a) the Federal Funds Rate for such day plus 1/2 of one percent and (b) the Prime Rate for such day. "Variable Rate Loan" means any Loan when and to the extent the interest rate for such Loan is determined in relation to the Variable Rate. Section 1.02. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP, and all financial data required to be delivered hereunder shall, to the extent GAAP is applicable, be prepared in accordance with GAAP. ARTICLE 2. THE CREDIT. Section 2.01. Loans. (a) Subject to the terms and conditions of this Agreement, each of the Lenders severally agrees to make revolving credit loans (the "Revolving Credit Loans") to the Borrower from time to time from and including the Closing Date to but excluding the Revolving Credit Termination Date, in such amounts that the aggregate principal amount of such Lender's Revolving Credit Loans at any one time outstanding does not exceed the amount of its Revolving Credit Commitment. The aggregate amount of the Revolving Credit Loans outstanding at any time shall never exceed the result of (i) the lesser of (A) the Borrowing Base and (B) the aggregate amount of the Revolving Credit Commitments minus (ii) the aggregate amount of Letter of Credit Obligations outstanding at such time. The Revolving Credit Loans shall be due and payable on the Revolving Credit Termination Date. (b) Subject to the terms and conditions of this Agreement, each of the Lenders severally agrees to make a term loan (the "Term Loans") to the Borrower on the Closing Date, in an amount equal to the amount of its Term Loan Commitment. The Term Loans shall be repaid in twenty-four quarterly installments, each such installment to be payable on the last day of each March, June, September and December beginning on December 31, 1995 and ending on the Term Loan Termination Date and to be in the aggregate amounts set forth below, such that on each such payment date, each Lender shall be paid an amount equal to such Lender's pro rata share of the Term Loans (calculated based on its Term Loan Percentage) of the amount set forth below: Aggregate Amount Payment Date of Installments December 31, 1995 $ 1,250,000 March 31, 1996 $ 1,250,000 June 30, 1996 $ 1,250,000 September 30, 1996 $ 1,250,000 December 31, 1996 $ 1,250,000 March 31, 1997 $ 1,250,000 June 30, 1997 $ 1,250,000 September 30, 1997 $ 1,250,000 December 31, 1997 $ 2,500,000 March 31, 1998 $ 2,500,000 June 30, 1998 $ 2,500,000 September 30, 1998 $ 2,500,000 December 31, 1998 $ 2,500,000 March 31, 1999 $ 2,500,000 June 30, 1999 $ 2,500,000 September 30, 1999 $ 2,500,000 December 31, 1999 $ 3,750,000 March 31, 2000 $ 3,750,000 June 30, 2000 $ 3,750,000 September 30, 2000 $ 3,750,000 December 31, 2000 $ 3,750,000 March 31, 2001 $ 3,750,000 June 30, 2001 $ 3,750,000 September 30, 2001 $ 3,750,000 TOTAL $60,000,000 (c) The Loans may be outstanding as Variable Rate Loans or Fixed Rate Loans (each a "type" of Loans) and as Revolving Credit Loans or Term Loans (each a "class" of Loans). Each type of Loans of each Lender shall be made and maintained at such Lender's Lending Office for such type of Loans. Section 2.02. The Notes. The Revolving Credit Loans of each Lender shall be evidenced by a single promissory note in favor of such Lender in the form of Exhibit A, dated the Closing Date, duly completed and executed by the Borrower. The Term Loan of each Lender shall be evidenced by a single promissory note in favor of such Lender in the form of Exhibit B, dated the Closing Date, duly completed and executed by the Borrower. Section 2.03. Purpose. The Borrower shall use the proceeds of the Term Loans solely to finance the Mistic Acquisition and the proceeds of the Revolving Credit Loans to finance the Mistic Acquisition and for general corporate purposes including working capital; provided that no more than $74,000,000 of the aggregate amount of the proceeds of the Loans advanced on the Closing Date are utilized to finance the Mistic Acquisition. Such proceeds shall not be used for the purpose, whether immediate, incidental or ultimate, of buying or carrying "margin stock" within the meaning of Regulation U. Section 2.04. Borrowing Procedures. The Borrower shall give the Agent notice of each borrowing to be made hereunder as provided in Section 2.09. Not later than 12:00 noon New York, New York time on the date specified for such borrowing hereunder, each Lender shall, through its Lending Office, subject to the conditions of this Agreement, make the amount of the Loan to be made by it on such day available to the Agent at the Principal Office in immediately available funds for the account of the Agent. The amount so received by the Agent shall, subject to the conditions of this Agreement, be made available to the Borrower, in immediately available funds, by the Agent by crediting an account of the Borrower designated by the Borrower and maintained with the Agent at the Principal Office. Section 2.05. Optional Prepayments and Conversions. The Borrower shall have the right to make prepayments of principal without penalty or premium (other than compensation payable in accordance with Section 4.05), or to convert one type of Loans into another type of Loans, at any time or from time to time; provided that: (a) the Borrower shall give the Agent notice of each such prepayment or conversion as provided in Section 2.09; and (b) Fixed Rate Loans may be prepaid or converted only on the last day of an Interest Period for such Loans unless the Borrower agrees to provide to the Agent for the account of each Lender compensation in accordance with Section 4.05. In the case of the Term Loans, all prepayments shall be applied to the principal installments of the Term Loans in the inverse order of their maturities. Section 2.06. Mandatory Prepayments. (a) Excess Cash Flow. On the 10th day subsequent to the date on which the Borrower furnishes the financial statements required to be furnished by Section 7.08(a) hereof in respect of each Fiscal Year (or, if the Borrower shall fail to furnish such financial statements as required by Section 7.08(a) hereof, in respect of any Fiscal Year, on the day falling 115 days after the end of such Fiscal Year), the Borrower shall prepay the principal of the Loans in an aggregate amount equal to (i) with respect to the Fiscal Years ending on December 31, 1996 and December 31, 1997, 75% of the Excess Cash Flow for each such Fiscal Year and (ii) with respect to the Fiscal Years ending thereafter, 50% of the Excess Cash Flow for each such Fiscal Year, in each case to be applied (x) first, to the principal installments of the Term Loans in inverse order of their maturities until the Term Loans shall have been paid in full and (y) second, to the Revolving Credit Loans until the Revolving Credit Loans shall have been paid in full. (b) Sale of Assets. On the 180th day subsequent to the date on which any Consolidated Entity shall receive consideration from the sale, lease, assignment, transfer or other disposition of any Property permitted under Section 8.07(a) or otherwise consented to by the Required Lenders (but not including sales of assets permitted pursuant to Section 8.07(b) or Section 8.07(c)), the Borrower shall prepay the principal of the Loans in an aggregate amount equal to (i) with respect to dispositions occurring on or prior to December 31, 1997, 75% of the cash consideration received (net of taxes and transaction expenses, including commissions) and (ii) with respect to dispositions occurring thereafter, 50% of the cash consideration received (net of taxes and transaction expenses, including commissions), in each case to be applied (x) first, to the principal installments of the Term Loans in inverse order of their maturities until the Term Loans shall have been paid in full and (y) second, to the Revolving Credit Loans until the Revolving Credit Loans shall have been paid in full; provided in each case that such net cash proceeds were not used or committed to be used within 180 days from the date of receipt thereof to finance an Acceptable Acquisition. (c) Proceeds of Insurance. On the 180th day subsequent to the date on which any Consolidated Entity shall receive insurance proceeds upon the occurrence of any casualty to any Property of such Consolidated Entity any of which proceeds have not been applied or committed to be applied toward repair or replacement of the damaged Property, the Borrower shall prepay the principal of the Loans in an aggregate amount equal to (i) with respect to casualties occurring on or prior to December 31, 1997, 75% of the proceeds received and not so applied or committed to be applied (net of taxes and transaction expenses, including commissions) and (ii) with respect to casualties occurring thereafter, 50% of the proceeds received and not so applied or committed to be applied (net of taxes and transaction expenses), in each case to be applied (x) first, to the principal installments of the Term Loans in inverse order of their maturities until the Term Loans shall have been paid in full and (y) second, to the Revolving Credit Loans until the Revolving Credit Loans shall have been paid in full. (d) Reversions of Plans. On the 30th day subsequent to the date on which any Consolidated Entity shall receive proceeds upon the reversion of any Plan, the Borrower shall prepay the principal of the Loans in an aggregate amount equal to (i) with respect to reversions occurring on or prior to December 31, 1997, 75% of the proceeds received (net of taxes and transaction expenses) and (ii) with respect to reversions occurring thereafter, 50% of the proceeds received (net of taxes and transaction expenses), in each case to be applied (x) first, to the principal installments of the Term Loans in inverse order of their maturities until the Term Loans shall have been paid in full and (y) second, to the Revolving Credit Loans until the Revolving Credit Loans shall have been paid in full. (e) Initial Public Offering. On the date on which the Borrower shall receive proceeds from the initial public offering of Common Stock (other than an offering on Form S-8, S-4 or other similar or successor registration forms), the Borrower shall prepay the principal of the Loans in an aggregate amount equal to (i) 100% of the proceeds received (net of underwriting commissions and discounts and other transactions costs) until $30,000,000 of the principal of the Loans shall have been prepaid and (ii) 50% of the proceeds received (net of underwriting commissions and discounts and other transactions costs) thereafter, in each case to be applied (x) first, to the principal installments of the Term Loans in inverse order of their maturities until the Term Loans shall have been paid in full and (y) second, to the Revolving Credit Loans until the Revolving Credit Loans shall have been paid in full. (f) Borrowing Base or Commitments Exceeded. If any time prior to the Revolving Credit Termination Date, the aggregate amount of all Revolving Credit Loans shall exceed the result of (i) the lesser of (A) the Borrowing Base and (B) the aggregate amount of the Revolving Credit Commitments minus (ii) the aggregate amount of Letter of Credit Obligations outstanding at such time, the Borrower shall repay the Lenders forthwith such amounts as may be necessary to eliminate such excess (and if the Revolving Credit Loans cannot be repaid to eliminate any such excess which is due to the amounts outstanding under Letters of Credit or if prepayment on such date would cause Borrower to incur costs pursuant to Section 4.05, the Borrower shall deposit, until such prepayment can be made or such additional costs avoided, with the Agent sufficient cash collateral to cover such excess which shall be withdrawn by the Agent upon any drawing under a Letter of Credit for payment of Reimbursement Obligations or upon the expiration of the applicable Interest Period, in each case to eliminate such excess and any remaining funds on deposit in the cash collateral account shall be paid to the Borrower), and the failure of the Borrower to make such payment shall constitute an Event of Default hereunder. (g) Clean-Up Period. The Borrower shall repay the Revolving Credit Loans so that there shall have been at least a thirty day consecutive period between October 1 of each Fiscal Year and March 31 of the immediately subsequent Fiscal Year in which the aggregate outstanding principal balance of the Revolving Credit Loans shall be: (i) between October 1, 1995 and March 31, 1996, less than or equal to $7,000,000, (ii) between October 1, 1996 and March 31, 1997, less than or equal to $5,000,000 and (iii) thereafter, $0, and the failure of the Borrower to make such payment shall constitute an Event of Default hereunder. Section 2.07. Interest Periods; Renewals. (a) In the case of each Fixed Rate Loan, the Borrower shall select an Interest Period of any duration in accordance with the definition of Interest Period in Section 1.01, subject to the following limitations: (i) no Interest Period may extend beyond the Termination Date; (ii) notwithstanding clause (i) above, no Interest Period shall have a duration less than one month, and if any such proposed Interest Period would otherwise be for a shorter period, such Interest Period shall not be available; (iii) if an Interest Period would end on a day which is not a Banking Day, such Interest Period shall be extended to the next Banking Day, unless such Banking Day would fall in the next calendar month in which event such Interest Period shall end on the immediately preceding Banking Day; and (iv) no more than five Interest Periods of each Lender may be outstanding at any one time. (b) Upon notice to the Agent as provided in Section 2.09, the Borrower may renew any Fixed Rate Loan on the last day of the Interest Period therefor as the same type of Loan with an Interest Period of the same or different duration in accordance with the limitations provided above. If the Borrower shall fail to give notice to the Agent of such a renewal, such Fixed Rate Loan shall automatically become a Variable Rate Loan on the last day of the current Interest Period. Section 2.08. Changes of Commitments. (a) Immediately following the making of the Term Loans, the Term Loan Commitments shall be terminated on the Closing Date and shall not be reinstated. (b) The Borrower shall have the right to reduce or terminate the amount of unused Revolving Credit Commitments at any time or from time to time, provided that: (i) the Borrower shall give notice of each such reduction or termination to the Agent as provided in Section 2.09; and (ii) each partial reduction shall be in an aggregate amount at least equal to $1,000,000. The Revolving Credit Commitments once reduced or terminated may not be reinstated. Section 2.09. Certain Notices. Notices by the Borrower to the Agent of each borrowing pursuant to Section 2.04, and each prepayment or conversion pursuant to Section 2.05 and each renewal pursuant to Section 2.07(b), and each reduction or termination of the Revolving Credit Commitments pursuant to Section 2.08 shall be irrevocable and shall be effective only if received by the Agent not later than 11:00 a.m. New York, New York time, and (a) in the case of borrowings and prepayments of, conversions into and (in the case of Fixed Rate Loans) renewals of (i) Variable Rate Loans, given the same Banking Day; and (ii) Fixed Rate Loans, given three Banking Days prior thereto; and (b) in the case of reductions or termination of the Revolving Credit Commitments, given three Banking Days prior thereto. Each such notice shall specify the type and class of the Loans to be borrowed, prepaid, converted or renewed and the amount thereof (subject to Section 2.10) (and, in the case of a conversion, the type of Loan to result from such conversion, and, in the case of a Fixed Rate Loan, the Interest Period therefor) and the date of the borrowing or prepayment, or conversion or renewal (which shall be a Banking Day). Each such notice of reduction or termination shall specify the amount of the Revolving Credit Commitments to be reduced or terminated. The Agent shall promptly notify the Lenders of the contents of each such notice. Section 2.10. Minimum Amounts. Except for borrowings which exhaust the full remaining amount of the Commitments, prepayments or conversions which result in the prepayment or conversion of all Loans of a particular type or class or conversions made pursuant to Section 4.04, each borrowing, prepayment, conversion and renewal of principal of Loans of a particular type shall be in an amount not less than (i) $100,000 in the aggregate in the case of Variable Rate Loans and (ii) $1,000,000 in the aggregate (plus increments of $100,000 in excess thereof) in the case of Fixed Rate Loans unless such minimum amount is waived by the Required Lenders (borrowings, prepayments, conversions or renewals of or into Loans of different types or, in the case of Fixed Rate Loans, having different Interest Periods at the same time hereunder to be deemed separate borrowings, prepayments, conversions and renewals for the purposes of the foregoing, one for each type of Interest Period). Anything in this Agreement to the contrary notwithstanding, the aggregate principal amount of Fixed Rate Loans having concurrent Interest Periods shall be at least equal to $1,000,000. Section 2.11. Interest. (a) Interest shall accrue on the outstanding and unpaid principal amount of each Loan for the period from and including the date of such Loan to but excluding the date such Loan is due at the following rates per annum: (i) for a Variable Rate Loan, at a variable rate per annum equal to the Variable Rate plus the Interest Margin and (ii) for a Fixed Rate Loan, at a fixed rate equal to the Fixed Rate plus the Interest Margin. If an Event of Default shall exist, interest shall accrue on the outstanding principal amount of any Loan and any other amount payable by the Borrower hereunder, under any Note or under any other Facility Document to the fullest extent permitted by law from and including such due date to but excluding the date such amount is paid in full or such Event of Default is cured or waived at the Default Rate. (b) The interest rate on each Variable Rate Loan shall change when the Variable Rate changes and interest on each such Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. Interest on each Fixed Rate Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall notify the Borrower and the Lenders in writing of such determination. (c) Accrued interest shall be due and payable in arrears upon any payment of principal or conversion and (i) for each Variable Rate Loan, on the last day of each March, June, September and December commencing the first such date after such Loan; and (ii) for each Fixed Rate Loan, on the last day of the Interest Period with respect thereto and, in the case of an Interest Period greater than three months or 90 days, at three- month intervals after the first day of such Interest Period; provided that interest accruing at the Default Rate shall be due and payable from time to time on demand of the Agent. Section 2.12. Fees. (a) The Borrower shall pay to the Agent for the account of each Lender a commitment fee on the daily average of the result of (a) the unused Revolving Credit Commitment of such Lender minus (b) such Lender's pro rata share of Letter of Credit Obligations, for the period from and including the Closing Date to the earlier of the date the Revolving Credit Commitments are terminated or the Revolving Credit Termination Date at a rate per annum equal to 1/2 of one percent, calculated on the basis of a year of 360 days for the actual number of days elapsed. The accrued commitment fee shall be due and payable in arrears upon any reduction or termination of the Revolving Credit Commitments and on the last Banking Day of each March, June, September and December, commencing on the first such date after the Closing Date. (b) The Borrower shall pay to the Agent for its own account the fees set forth in the fee letter dated as of the Closing Date between the Borrower and the Agent. Section 2.13. Payments Generally. All payments under this Agreement, the Notes and the other Facility Documents shall be made in Dollars in immediately available funds not later than 1:00 p.m. New York, New York time on the relevant dates specified above (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Banking Day) by, unless the Agent agrees to accept payment by other means, the debiting by the Agent for the account of the applicable Lending Office of each Lender, or by any Lender for whose account any such payment is to be made, of the amount of any such payment from any ordinary deposit account of the Borrower with the Agent or such Lender, as the case may be, and the Agent so doing shall promptly notify the Borrower and any Lender so doing shall promptly notify the Agent which in turn shall promptly notify the Borrower. The Borrower shall, at the time of making each optional payment under this Agreement, any Note or any other Facility Document, specify to the Agent the principal or other amount payable by the Borrower under this Agreement, such Note or such other Facility Document to which such payment is to be applied (and in the event that it fails to so specify, or if a Default or Event of Default has occurred and is continuing, the Agent may apply such payment as provided in Section 11.16). If the due date of any payment under this Agreement, any Note or any other Facility Document would otherwise fall on a day which is not a Banking Day, such date shall be extended to the next succeeding Banking Day (unless, in the case of a Fixed Rate Loan, such extension would carry such due date into another calendar month, in which event such payment shall be due on the immediately preceding Banking Day) and interest shall be payable for any principal so extended or reduced for the period of such extension or reduction. Each payment received by the Agent hereunder, under any Note or any other Facility Document for the account of a Lender shall be paid promptly to such Lender, in immediately available funds, for the account of such Lender's Lending Office. ARTICLE 3. THE LETTERS OF CREDIT. Section 3.01. Letters of Credit. (a) Subject to the terms and conditions of this Agreement, the Issuing Lender, on behalf of the Lenders, and in reliance on the agreement of the Lenders set forth in Section 3.04, agrees to issue on any Banking Day prior to the Revolving Credit Termination Date for the account of the Borrower irrevocable standby and documentary letters of credit in such form as may from time to time be approved by the Issuing Lender acting reasonably (together with the applications therefor, the "Letters of Credit"); provided that on the date of the issuance of any Letter of Credit, and after giving effect to such issuance, the Letter of Credit Obligations shall not exceed the Letter of Credit Availability. (b) Each Letter of Credit shall (i) have an expiry date no later than the earlier of (A) one year from the date of issuance provided that such Letter of Credit may automatically renew for subsequent one year terms upon the failure of the Issuing Lender to provide sixty days prior written notice of termination and (B) the Revolving Credit Termination Date, (ii) be denominated in Dollars, (iii) be in a minimum face amount of $100,000 and (iv) provide for the payment of sight drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described or when such documents are presented, as the case may be. Section 3.02. Purposes. The Borrower shall use the Letters of Credit for the purpose of securing obligations incurred in the ordinary course of business (including, without limitation, to secure obligations under appeal bonds and insurance programs). Section 3.03. Procedures for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its address for notices specified herein an application therefor in such form as may from time to time be approved by the Issuing Lender acting reasonably, completed to the reasonable satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any application, the Issuing Lender will process such application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit, in such customized form as may reasonably be requested by the Borrower (but in no event shall the Issuing Lender issue any Letter of Credit later than three Banking Days after receipt of the application therefor and all such other certificates, documents and other papers and information relating thereto), by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance thereof. Section 3.04. Participating Interests. In the case of each Letter of Credit, effective as of the date of the issuance thereof, the Issuing Lender agrees to allot and does allot to each other Lender, and each such Lender severally and irrevocably agrees to take and does take a Participating Interest in such Letter of Credit in a percentage equal to such Lender's pro rata share of the Letter of Credit Obligations (calculated based on its Revolving Credit Commitment Percentage). On the date that any Lender becomes a party to this Agreement in accordance with Section 12.05, Participating Interests in any outstanding Letter of Credit held by the Transferor Lender from which such transferee Lender acquired its interest hereunder shall be proportionately reallotted between such transferee Lender and such Transferor Lender. Each Participating Lender hereby agrees that its obligation to participate in each Letter of Credit, and to pay or to reimburse the Issuing Lender for its participating share of the drafts drawn thereunder, is absolute, irrevocable and unconditional and shall not be affected by any circumstances whatsoever, including, without limitation, the occurrence and continuance of any Default or Event of Default, and that each such payment shall be made without any offset, abatement, withholding or other reduction whatsoever. Section 3.05. Payments. (a) In order to induce the Issuing Lender to issue the Letters of Credit, the Borrower hereby agrees to reimburse the Issuing Lender, unless such Reimbursement Obligation has been accelerated pursuant to Section 10.02, by not later than 1:00 p.m., New York City time, on each date that the Borrower has been notified by the Issuing Lender that any draft presented under any Letter of Credit is paid by the Issuing Lender, for (i) the amount of the draft paid by the Issuing Lender and (ii) the amount of any taxes, fees, charges or other reasonable costs or expenses whatsoever incurred by the Issuing Lender in connection with any payment made by the Issuing Lender under, or with respect to, such Letter of Credit. Each such payment shall, subject to the next sentence hereof, be made to the Issuing Lender at its office specified in Section 12.06, in lawful money of the United States and in immediately available funds by not later than 1:00 p.m., New York City time, on the day that payment is made by the Issuing Lender (or, if such drawing occurs after 1:00 p.m. New York City time, on the next succeeding Banking Day). If such payment is not made in full, all amounts remaining unpaid by the Borrower under this Section 3.05 shall, to the extent otherwise permitted hereunder, automatically be deemed to be a borrowing as Revolving Credit Loans bearing interest at the Variable Rate plus the Interest Margin. Except as otherwise permitted by the preceding sentence, interest on any and all amounts remaining unpaid by the Borrower under this Section 3.05 at any time from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full shall be payable to the Issuing Lender on demand at a fluctuating rate per annum equal to the Default Rate. (b) In the event that the Issuing Lender makes a payment (a "Letter of Credit Funding") under any Letter of Credit and is not reimbursed in full therefor on the date of such Letter of Credit Funding, in accordance with the terms hereof, the Issuing Lender will promptly through the Agent notify each Participating Lender that acquired its Participating Interest in such Letter of Credit from the Issuing Lender. No later than the close of business on the date such notice is given if such notice is given, each such Participating Lender will transfer to the Agent, for the account of the Issuing Lender, in immediately available funds, an amount equal to such Participating Lender's pro rata share of the unreimbursed portion of such Letter of Credit Funding (calculated based on its Revolving Credit Commitment Percentage), together with interest, if any, accrued thereon from and including the date of such transfer at a rate per annum equal to the Federal Funds Rate. (c) Whenever, at any time after the Issuing Lender has made a Letter of Credit Funding and has received from any Participating Lender such Participating Lender's pro rata share of the unreimbursed portion of such Letter of Credit Funding, the Issuing Lender receives any reimbursement on account of such unreimbursed portion or any payment of interest on account thereof, the Issuing Lender will distribute to the Agent, for the account of such Participating Lender, its pro rata share thereof; provided, however, that in the event that the receipt by the Issuing Lender of such reimbursement or such payment of interest (as the case may be) is required to be returned, such Participating Lender will promptly return to the Agent, for the account of the Issuing Lender, any portion thereof previously distributed by the Issuing Lender to it. Section 3.06. Further Assurances. The Borrower hereby agrees to do and perform any and all acts and to execute any and all further instruments from time to time reasonably requested by the Issuing Lender more fully to effect the purposes of this Agreement and the issuance of the Letters of Credit opened hereunder. Section 3.07. Obligations Absolute. The payment obligations of the Borrower under Section 3.05 shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances: (a) the existence of any claim, set-off, defense or other right which the Borrower may have at any time against any beneficiary, or any transferee, of any Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Lender or any Participating Lender, or any other Person, whether in connection with this Agreement, any other Facility Document, the transactions contemplated herein, or any unrelated transaction; (b) any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, provided that this subparagraph (b) shall not relieve the Issuing Lender of any liability as to any insufficiency determined to have resulted from (i) the gross negligence or willful misconduct of the Issuing Lender or (ii) violations of the standards set forth in the UCP; (c) payment by the Issuing Lender under any Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit, provided that this subparagraph (c) shall not relieve the Issuing Lender of any liability determined to have resulted from (i) the gross negligence or willful misconduct of the Issuing Lender or (ii) violations of the standards set forth in the UCP; or (d) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing, provided that this subparagraph (d) shall not relieve the Issuing Lender of any liability determined to have resulted from (i) the gross negligence or willful misconduct of the Issuing Lender or (ii) violations of the standards set forth in the UCP. Section 3.08. Cash Collateral Account. If the Commitments are duly terminated and all amounts owing under this Agreement, the Notes and the Letters of Credit become due and payable pursuant to Section 10, the Borrower shall deposit with the Agent, on the date such obligations become due and payable, an amount in cash or Cash Equivalents equal to the Letter of Credit Obligations as of such date and the Letter of Credit fees in accordance with Section 3.09. Such amount shall be deposited in a cash collateral account to be established by the Agent, for the benefit of the Issuing Lender and the Participating Lenders, and shall constitute collateral security for the Letter of Credit Obligations and other amounts owing hereunder. All amounts in such cash collateral account shall be maintained pursuant to a cash collateral account agreement which shall grant to the Agent a security interest in all such funds and in any investments made therewith or proceeds thereof to secure payment to the Agent of Reimbursement Obligations with respect to outstanding Letters of Credit. In the event that the Agent pays any drawing under a Letter of Credit, the Agent may withdraw funds on deposit to make reimbursement of such drawing, in an amount equal to such drawing. Upon payment by the Borrower of all Reimbursement Obligations with respect to Letters of Credit or the termination or other expiration of all Letters of Credit, remaining funds on deposit in the cash collateral account shall be returned promptly to the Borrower. Section 3.09. Letter of Credit Fees. (a) The Borrower agrees to pay the Agent, for the account of the Issuing Lender and the Participating Lenders, a non-refundable letter of credit fee (a) of one-half of one percent of the face amount under each documentary Letter of Credit payable on payment thereof and (b) computed at the rate of two percent per annum of the aggregate undrawn amount under each standby Letter of Credit, calculated on the basis of a year of 360 days for the actual number of days elapsed, payable on the last Banking Day of each March, June, September and December, commencing on the first such date after the Closing Date. (b) The Borrower agrees to pay the Issuing Lender, for its own account, its normal and customary administration, amendment, transfer, payment and negotiation fees charged in connection with its issuance and administration of letters of credit. ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC. Section 4.01. Additional Costs. (a) The Borrower shall pay directly to each Lender from time to time on demand such amounts as such Lender may determine (and reasonably substantiate in writing) to be necessary to compensate it for any increased costs which such Lender determines are attributable to its making or maintaining any Fixed Rate Loans under this Agreement or its Notes or its obligation to make any such Loans hereunder, or any reduction in any amount receivable by such Lender hereunder in respect of any such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change relating to any such Loans or such obligation which: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or its Notes in respect of any of such Loans (other than franchise, capital, branch profits taxes or taxes imposed with respect to the net income of such Lender or of its Lending Office for any of such Loans by the jurisdiction in which such Lender is organized or has its principal office or such Lending Office or in any other jurisdiction if not imposed by reason of the presence of the Borrower or its Affiliates in such jurisdiction); or (ii) imposes or modifies any reserve, special deposit, deposit insurance or assessment, minimum capital, capital ratio or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender (including any of such Loans or any deposits referred to in the definition of "Fixed Base Rate" in Section 1.01); provided that no such compensation shall be payable to the extent that the Fixed Rate has been adjusted to account for such increased cost; or (iii) imposes any other similar condition affecting this Agreement or its Notes (or any of such extensions of credit or liabilities). Each Lender will notify the Borrower in writing of any event occurring after the date of this Agreement which will entitle such Lender to compensation pursuant to this Section 4.01(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. If any Lender requests compensation from the Borrower under this Section 4.01(a), or under Section 4.01(c), the Borrower may, by notice to such Lender (with a copy to the Agent), require that such Lender's affected Loans with respect to which such compensation is requested be converted in accordance with Section 4.04. If any taxes are imposed for which the Borrower would be required to make a payment under this Section 4.01, the Lender shall use its best efforts to avoid or reduce such taxes by taking any appropriate action (including, without limitation, assigning its rights hereunder to a related entity or a different Lending Office). (b) Without limiting the effect of the foregoing provisions of this Section 4.01 (but without duplication), in the event that, by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender which includes deposits by reference to which the interest rate on Fixed Rate Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender which includes Fixed Rate Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets which it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Agent), the obligation of such Lender to make or renew, and to convert Variable Rate Loans hereunder shall be suspended until the date such Regulatory Change ceases to be in effect (and all affected Fixed Rate Loans held by such Lender then outstanding shall be converted in accordance with Section 4.04). (c) Without limiting the effect of the foregoing provisions of this Section 4.01 (but without duplication), the Borrower shall pay directly to each Lender from time to time on request such amounts as such Lender may determine to be necessary to compensate such Lender for any costs which it determines are attributable to the maintenance by it pursuant to the adoption, effectiveness or implementation of, or any change in, any law or regulation of any jurisdiction or any written interpretation, directive or request (whether or not having the force of law and whether in effect on the date of this Agreement or thereafter) of any court or governmental or monetary authority of capital in respect of its Loans hereunder, its obligation to make Loans hereunder or its obligation to issue, or participate in, any Letter of Credit (such compensation to include, without limitation, an amount equal to any reduction in return on assets or equity of such Lender to a level below that which it could have achieved but for such law, regulation, interpretation, directive or request). Each Lender will notify the Borrower if it is entitled to compensation pursuant to this Section 4.01(c) as promptly as practicable after it determines to request such compensation. (d) Determinations and allocations by a Lender for purposes of this Section 4.01 of the effect of any Regulatory Change pursuant to subsections (a) or (b), or of the effect of capital maintained pursuant to subsection (c), on its costs of making or maintaining Loans, its obligation to make Loans or its obligation to issue, or participate in, any Letter of Credit, or on amounts receivable by, or the rate of return to, it in respect of Loans or such obligation, and of the additional amounts required to compensate such Lender under this Section 4.01, shall be set forth in a certificate, signed by an officer of such Lender, delivered to Borrower and the Agent, which includes the amount required to be paid by the Borrower to such Lender and the computations made by such Lender to determine such amount. Any such determination and allocation shall be conclusive, absent demonstrable error, provided that such determinations and allocations are made on a reasonable basis. Section 4.02. Limitation on Fixed Rate Loans. Anything herein to the contrary notwithstanding, if: (a) the Agent reasonably determines (which determination shall be conclusive, absent demonstrable error) that quotations of interest rates for the relevant deposits referred to in the definition of "Fixed Base Rate" in Section 1.01 are not being provided in the relevant amounts or for the relevant maturities for purposes of determining the rate of interest for any Fixed Rate Loans as provided in this Agreement; or (b) the Required Lenders reasonably determine (which determination shall be conclusive, absent demonstrable error) and notify the Agent in writing that the relevant rates of interest referred to in the definition of "Fixed Base Rate" in Section 1.01 upon the basis of which the rate of interest for any Fixed Rate Loans is to be determined do not adequately cover the cost to the Lenders of making or maintaining such Loans; then the Agent shall give the Borrower and each Lender prompt written notice thereof, and so long as such condition remains in effect, the Lenders shall be under no obligation to make or renew affected Fixed Rate Loans or to convert Variable Rate Loans into affected Fixed Rate Loans and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding affected Fixed Rate Loans, either prepay such Fixed Rate Loans or convert such Fixed Rate Loans into Variable Rate Loans in accordance with Section 2.05. Section 4.03. Illegality. Notwithstanding any other provision in this Agreement, in the event that it becomes unlawful for any Lender or its Lending Office to honor its obligation to make, maintain or renew Fixed Rate Loans hereunder or convert Variable Rate Loans into Fixed Rate Loans, then such Lender shall promptly notify the Borrower thereof in writing (with a copy to the Agent) and such Lender's obligation to make or renew Fixed Rate Loans and to convert other Variable Rate Loans into Fixed Rate Loans hereunder shall be suspended until such time as such Lender may again make, renew, or convert and maintain such Fixed Rate Loans and such Lender's outstanding Fixed Rate Loans, as the case may be, shall be converted in accordance with Section 4.04. Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03. If Fixed Rate Loans are to be converted pursuant to Section 4.01 or 4.03, such Lender's Fixed Rate Loans shall be automatically converted into Variable Rate Loans on the last day(s) of the then current Interest Period(s) for such Lender's Fixed Rate Loans (or, in the case of a conversion required by Section 4.03, on such earlier date as such Lender may specify in writing to the Borrower with a copy to the Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 4.01 or 4.03 which gave rise to such conversion no longer exist: (a) to the extent that such Lender's Fixed Rate Loans have been so converted, all payments and prepayments of principal which would otherwise be applied to such Lender's Fixed Rate Loans shall be applied instead to its Variable Rate Loans; and (b) all Loans which would otherwise be made or renewed by such Lender as Fixed Rate Loans shall be made instead as Variable Rate Loans and all Variable Rate Loans of such Lender which would otherwise be converted into Fixed Rate Loans shall remain as Variable Rate Loans. If such Lender gives written notice to the Borrower (with a copy to the Agent) that the circumstances specified in Section 4.01 or 4.03 which gave rise to the conversion of such Lender's Fixed Rate Loans pursuant to this Section 4.04 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Fixed Rate Loans are outstanding, such Lender's Variable Rate Loans shall be automatically converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Fixed Rate Loans to the extent necessary so that, after giving effect thereto, all Fixed Rate Loans held by the Lenders holding Fixed Rate Loans and by such Lender are held pro rata (as to principal amounts, types, classes and Interest Periods) in accordance with their respective Commitments. Section 4.05. Certain Compensation. Subject to such Lender's reasonable efforts to mitigate such losses, costs and expenses, the Borrower shall pay to the Agent for the account of each Lender, upon the request of such Lender through the Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost or reasonable expense which such Lender determines is attributable to: (a) any payment, prepayment, conversion or renewal of a Fixed Rate Loan made by such Lender on a date other than the last day of an Interest Period for such Loan (whether by reason of acceleration or otherwise); or (b) any failure by the Borrower to borrow, convert into or renew a Fixed Rate Loan to be made, converted into or renewed by such Lender on the date specified therefor in the relevant notice under Sections 2.04, 2.05 or 2.07, as the case may be. Without limiting the foregoing, such compensation shall include an amount equal to the excess, if any, of: (i) the amount of interest which otherwise would have accrued on the principal amount so paid, prepaid, converted or renewed or not borrowed, converted or renewed for the period from and including the date of such payment, prepayment or conversion or failure to borrow, convert or renew to but excluding the last day of the then current Interest Period for such Fixed Rate Loan (or, in the case of a failure to borrow, convert or renew, to but excluding the last day of the Interest Period for such Fixed Rate Loan which would have commenced on the date specified therefor in the relevant notice) at the applicable rate of interest for such Fixed Rate Loan provided for herein; over (ii) the amount of interest (as reasonably determined by such Lender) such Lender would have bid in the London interbank market (if such Loan is a Fixed Rate Loan) for Dollar deposits for amounts comparable to such principal amount and maturities comparable to such period. A determination of any Lender as to the amounts payable pursuant to this Section 4.05 shall be conclusive absent demonstrable error. Section 4.06. Lending Office Designations. Before giving any notice to the Borrower pursuant to Section 4.01 or Section 4.03, a Lender shall, if possible, designate a different Lending Office if such designation will avoid the need for giving such notice and will not, in the reasonable judgment of the Lender, be otherwise disadvantageous to the Lender. ARTICLE 5. CONDITIONS PRECEDENT. Section 5.01. Documentary Conditions Precedent. The obligations of the Lenders to make the Loans constituting the initial borrowing and of the Issuing Lender to issue the Letters of Credit are subject to the condition precedent that the Agent shall have received on or before the Closing Date each of the following, in form and substance reasonably satisfactory to the Agent: (a) counterparts of this Agreement executed by the Borrower; (b) the Notes duly executed by the Borrower; (c) the Unconditional Guaranty executed by the Guarantor; (d) the Security Agreement duly executed by the Borrower together with (i) executed copies of the financing statements (UCC-1) duly filed under the Personal Property Securities Act and the Uniform Commercial Code of all jurisdictions necessary or, in the reasonable opinion of the Agent, desirable to perfect the security interests created by the Security Agreement; (ii) executed copies of the termination statements (UCC-3) to be filed under the Uniform Commercial Code of all jurisdictions necessary to terminate the security interests of other Persons (other than Persons having Liens permitted under Section 7.03) in and to the collateral purported to be covered by the Security Agreement; and (iii) copies of searches identifying all of the financing statements on file with respect to the Borrower and the Seller in all jurisdictions referred to under (i) of this Section 5.01(d); (e) the Trademark Security Agreement duly executed by the Borrower together with (i) evidence that a trademark assignment has been duly filed in the United States Patent and Trademark Office and in all other jurisdictions as the Agent may reasonably specify and all security interests in the collateral purported to be created by the Trademark Security Agreement have been duly perfected; (ii) evidence of the termination of all assignments to other Persons in and to the collateral purported to be covered by the Trademark Security Agreement; and (iii) copies of searches identifying all trademark assignments on file with respect to the Borrower and the Seller in the United States Patent and Trademark Office and in all other jurisdictions as the Agent may reasonably specify; (f) the Pledge Agreement duly executed by the Guarantor together with (i) executed copies of the financing statements (UCC-1) duly filed under the Uniform Commercial Code of all jurisdictions necessary or, in the opinion of the Agent, desirable to perfect the security interests created by the Pledge Agreement, (ii) copies of searches identifying all of the financing statements on file with respect to the Guarantor in all jurisdictions referred to under (i) of this Section 5.01(f) indicating that no party claims an interest in and to the collateral purported to be covered by the Pledge Agreement and (iii) stock certificates representing all of the outstanding capital stock of the Borrower held by the Guarantor together with undated stock powers executed in blank; (g) the Management Agreement duly executed by the Borrower and the Guarantor; (h) the Affiliate Subordination Agreement duly executed by the Borrower and the Guarantor; (i) certificates or other evidence of casualty insurance policies covering all of the Property subject to the Lien of the Agent under the Security Documents with appropriate loss payable endorsements indicating assignment of proceeds thereunder to the Agent and certificates or other evidence of liability insurance with appropriate endorsements indicating the coverage of the Agent as an additional insured; (j) certificates of the Secretary or Assistant Secretary of each of the Borrower and the Guarantor, dated the Closing Date, (i) attesting to all corporate action taken by each such Person, including resolutions of its Boards of Directors authorizing the execution, delivery and performance of each of the Facility Documents to which it is a party and each other document to be delivered pursuant to this Agreement, (ii) certifying the names and true signatures of the officers of each such Person authorized to sign the Facility Documents to which it is a party and the other documents to be delivered by it under this Agreement and (iii) verifying that the charter and by-laws of each such Person attached thereto are true, correct and complete as of the date thereof; (k) a certificate of a duly authorized officer of the Borrower, dated the Closing Date, stating that the representations and warranties in Article 6 are true and correct on such date as though made on and as of such date (provided that any representations and warranties which speak to a specific date shall remain true and correct in all material respects as of such specific date), all agreements and conditions required to be performed and complied with by such date have been performed and complied with and that no event has occurred and is continuing which constitutes a Default or Event of Default; (l) good standing certificates and certified copies of all charter documents with respect to each of the Borrower and the Guarantor certified by the Secretary of State of its jurisdiction of incorporation, and evidence that it is qualified as a foreign corporation in every other jurisdiction in which it does business and in which the failure to qualify could reasonably be expected to have a Material Adverse Effect; (m) legal opinions of the Vice President and Associate General Counsel of the Guarantor and Fish & Neave, special trademark counsel to the Borrower, in substantially the form of Exhibit E and as to such other matters as the Agent may reasonably request; (n) evidence that the Mistic Acquisition shall have been consummated in accordance with the Mistic Acquisition Documents to be accompanied by opinions of (i) Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the Borrower and the Guarantor, and (ii) Pryor, Cashman, Sherman & Flynn, counsel to the Mistic Sellers, delivered in connection with the Mistic Acquisition; (o) a certificate of a duly authorized officer of the Borrower, dated the Closing Date, attaching true and correct copies of (i) all material consents under any indenture, agreement, lease or instrument obtained in connection with the Mistic Acquisition and (ii) all consents and authorizations required or advisable in connection with the Mistic Acquisition under any law, rule or regulation; (p) evidence that the Guarantor shall deliver or cause to be delivered to the Borrower a capital contribution in an aggregate amount not less than $25,000,000; (q) evidence of the repayment in full of all indebtedness owed by Mistic to Bank of New York (including the retirement of any outstanding letters of credit) and payment of all fees, commissions and expenses payable in connection with such repayment; (r) certified complete and correct copies of the Mistic Acquisition Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any); (s) certified complete and correct copies of the Tax Sharing Agreement; (t) certified complete and correct copies of each of the financial statements referred to in Section 6.05; (u) an independent field audit of the accounts receivable, records, and information systems of Mistic; (v) an initial borrowing notice of the Borrower relating to the Loans to be made and the Letters of Credit to be issued on the Closing Date together with a letter from the Borrower containing wire transfer instructions and account information relating to the funds to be made available by the Lenders to the Borrower on the Closing Date; (w) a Borrowing Base Certificate calculated on the basis of the Borrower's Eligible Receivables as of a date not more than 30 days prior to the Closing Date and the Borrower's Eligible Inventory as of a date not more than 45 days prior to the Closing Date; and (x) evidence of insurance policies issued to the Borrower by reputable insurers, acceptable to the Agent in its reasonable discretion, and in amounts and providing such coverages as are acceptable to the Agent in its reasonable discretion, which insurance shall have been reviewed by one or more of the Agent's risk managers and shall have been endorsed to require at least 30 days prior written notice to the Agent of cancellation, non- renewal or any other material change. Section 5.02. Additional Conditions Precedent. The obligations of the Lenders to make any Loans pursuant to a borrowing which increases the amount outstanding hereunder (including the initial borrowing) or to issue any Letters of Credit shall be subject to the further conditions precedent that on the date of such Loans or the issuance of such Letters of Credit the following statements shall be true: (a) the representations and warranties contained in Article 6 and in each of the other Facility Documents are true and correct on and as of the date of such Loans or the issuance of such Letter of Credit as though made on and as of such date (provided that (x) any representations and warranties which speak to a specific date shall remain true and correct in all material respects as of such specific date, (y) in the case of the initial borrowing and the initial issuance of a Letter of Credit, such representations and warranties shall only be required to be true and correct as of the Mistic Acquisition Effective Time and (z) in the case of subsequent borrowings and subsequent issuances of Letters of Credit, such representations and warranties shall only be required to be true and correct in all material respects as of the date of such borrowings or such issuances); and (b) no Default or Event of Default has occurred and is continuing, or would result from such Loans or the issuance of Letters of Credit. Section 5.03. Deemed Representations. Each notice of borrowing or request for the issuance of a Letter of Credit hereunder and acceptance by the Borrower of the proceeds of such borrowing or the benefit of such Letter of Credit shall constitute a representation and warranty that the statements contained in Section 5.02 are true and correct both on the date of such notice or request and, unless the Borrower otherwise notifies the Agent prior to such borrowing or such issuance, as of the date of such borrowing or such issuance. ARTICLE 6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants that: Section 6.01. Incorporation, Good Standing and Due Qualification. Each of the Consolidated Entities is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its assets and to transact the business in which it is now engaged or proposed to be engaged, and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required, except where the failure to qualify could not reasonably be expected to have a Material Adverse Effect. Section 6.02. Corporate Power and Authority; No Conflicts. The execution, delivery and performance by each of the Obligors of the Facility Documents to which it is a party, the borrowings hereunder and the issuance of the Letters of Credit have been duly authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders; (b) contravene its charter or by-laws; (c) violate any provision of, or require any filing (other than the filing of the financing statements and assignments required pursuant to the terms of the Security Documents), registration, consent or approval under, any law, rule or regulation (including, without limitation, Regulations G, T, U and X of the Federal Reserve Board) or any order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor or any of its Subsidiaries; (d) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Guarantor or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien (other than as created under the Security Documents), upon or with respect to any of the Properties now owned or hereafter acquired by the Guarantor or any of its Subsidiaries; or (f) cause the Guarantor or any of its Subsidiaries to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. Section 6.03. Legally Enforceable Agreements. Each Facility Document to which any Obligor is a party is, or when delivered under this Agreement will be, a legal, valid and binding obligation of such Obligor enforceable against such Obligor in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). Section 6.04. Litigation. Except as set forth on Schedule IV hereto, there are no actions, suits or proceedings pending or, to the Knowledge of the Borrower, threatened in writing against or affecting any Consolidated Entity before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. Section 6.05. Financial Statements. (a) The combined balance sheets of Mistic as at December 31, 1994, 1993, 1992 and 1991, and the related combined income statements and combined statement of cash flows and changes in stockholders' equity of Mistic, for the Fiscal Years then ended, and the accompanying footnotes, together with the opinion thereon of Grant Thornton LLP, independent certified public accountants, and the interim combined balance sheet of Mistic as at June 30, 1995 and the related combined income statement and combined statements of cash flows and changes in stockholders' equity of Mistic for the six month period then ended, copies of which have been furnished to each of the Lenders, to the Knowledge of the Borrower, are complete and correct in all material respects and fairly present the financial condition of Mistic at such dates and the results of the operations of Mistic for the periods covered by such statements, all in accordance with GAAP consistently applied. (b) A true and correct copy of the pro forma balance sheet of the Borrower as of the Closing Date (the "Pro Forma Balance Sheet") has heretofore been delivered to the Agent. The Pro Forma Balance Sheet reflects in all material respects those adjustments to the unaudited interim combined balance sheet of Mistic as of June 30, 1995 to be made in connection with the consummation of the Mistic Acquisition and the transactions contemplated by the Facility Documents, as if such transactions had occurred on June 30, 1995, subject to audit adjustments. (c) The projected balance sheet of the Borrower for its current and subsequent Fiscal Years and its operating plan for such Fiscal Years, including budget, personnel, facilities and Capital Expenditure projections, on a monthly basis, and projected income and cash flows statements for each such Fiscal Year, on a monthly basis, incorporating the items detailed in such operating plan for each such Fiscal Year, and accompanied by a description of the material assumptions used in making such operating plan, have each been prepared as of the Closing Date in good faith and, to the Knowledge of the Borrower, are based on reasonable estimates for the operating performance of the Borrower on and after the Closing Date. (d) Except as set forth on the Pro Forma Balance Sheet, to the Knowledge of the Borrower, as of the Closing Date, there are no liabilities of the Borrower, fixed or contingent, which are material but are not reflected on the Pro Forma Balance Sheet or in the notes thereto and which would be required to be recorded on the Pro Forma Balance Sheet in accordance with GAAP. No information, exhibit or report furnished by the Borrower, the Guarantor or any Affiliate to the Lenders in connection with the negotiation of this Agreement contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not materially misleading. Since December 31, 1994, there has been no change (other than events affecting the general economy of the United States or affecting all participants in the beverage industry) which could reasonably be expected to have a Material Adverse Effect. Section 6.06. Ownership and Liens. Each of the Consolidated Entities has title to, or valid leasehold interests in, all of its material Properties reflected in the financial statements referred to in Section 6.05 (other than any Properties disposed of in the ordinary course of business or otherwise disposed of in accordance with the terms of this Agreement), and none of the Properties owned by any Consolidated Entity and none of its leasehold interests is subject to any Lien, except as may be permitted hereunder and except for the Liens created by the Security Documents. Section 6.07. Taxes. Each of the Consolidated Entities has filed all material tax returns (federal, state and local) required to be filed and has paid all material taxes, assessments and governmental charges and levies shown as due thereon, including interest and penalties, if applicable. The charges, accruals and reserves on the books of the Consolidated Entities in respect of taxes, assessments and other governmental charges are adequate, in the aggregate, under GAAP. Section 6.08. ERISA. Each Plan and, to the Knowledge of the Borrower, Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other applicable federal or state law, and no event or condition is occurring or exists concerning which any Consolidated Entity would be under an obligation to furnish a report to the Lender in accordance with Section 7.08(k) hereof. As of the Closing Date, there exists no Unfunded Benefit Liabilities. Section 6.09. Subsidiaries and Affiliates. As of the Closing Date, the Borrower has no Subsidiaries. As of the Closing Date, Schedule II sets forth the name of (a) each Subsidiary of the Guarantor, in each case showing the jurisdiction of incorporation of each such Subsidiary and percentage of the Guarantor's ownership in such Subsidiary and (b) to the actual knowledge of the Borrower, each Affiliate that has an ownership interest in the Guarantor, in each case showing the percentage of such Affiliate's ownership interest in the Guarantor. All of the outstanding shares of capital stock of each Consolidated Entity are validly issued, fully paid and nonassessable. Except as set forth on Schedule II, no Consolidated Entity owns or holds the right to acquire any shares of stock or any other security or interest in any other Person. Section 6.10. Capitalization. As of the Closing Date, the authorized capital stock of the Borrower consists of 3,000 shares of Common Stock, 884.25 shares of which are issued and outstanding, and all of which are owned by the Guarantor. All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and non-assessable. There are no outstanding preemptive, conversion or other rights, options or warrants granted or issued by or binding upon the Borrower for the purchase or acquisition by any other Person of any shares of capital stock of the Borrower or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of such capital stock. The Borrower is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or such other rights. The Borrower is not a party to any agreement granting registration rights to any person with respect to any of its equity or debt securities. Except as set forth in the Facility Documents, the Borrower is not a party to any agreement restricting the voting or transfer of any shares of the capital stock of the Borrower. Section 6.11. Credit Arrangements. As of the Closing Date, Schedule III is a complete and correct list of all credit agreements, indentures, purchase agreements, guaranties, Capital Leases and other investments, agreements and arrangements presently in effect providing for or relating to extensions of credit (including agreements and arrangements for the issuance of letters of credit or for acceptance financing) in respect of which any Consolidated Entity is in any manner directly or contingently obligated; and the maximum principal or face amounts of the credit in question, outstanding and which can be outstanding, are correctly stated, and all Liens of any nature given or agreed to be given as security therefor are correctly described or indicated in such Schedule. Section 6.12. Operation of Business. Each of the Consolidated Entities possesses all material licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct the Business substantially as being conducted and, to the Knowledge of the Borrower, no Consolidated Entity is in violation of any valid rights of others with respect to any of the foregoing. Section 6.14. Hazardous Materials. Each of the Consolidated Entities is in compliance in all material respects with all Environmental Laws in effect in each jurisdiction where it is presently doing business. No Consolidated Entity is subject to any material liability under any Environmental Law. As of the Closing Date, no Consolidated Entity has received any (i) notice from any Governmental Authority by which any of its present or previously-owned or leased real Properties has been designated, listed, or identified in any manner by any Governmental Authority charged with administering or enforcing any Environmental Law as a Hazardous Material disposal or removal site, "Super Fund" clean-up site, or candidate for removal or closure pursuant to any Environmental Law, (ii) notice of any Lien arising under or in connection with any Environmental Law that has attached to any revenues of, or to, any of its owned or leased real Properties, or (iii) summons, citation, notice, directive, letter, or other written communication from any Governmental Authority concerning any intentional or unintentional action or omission by such Consolidated Entity in connection with its ownership or leasing of any real Property resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, dumping, or otherwise disposing of any Hazardous Material into the environment resulting in any violation of any Environmental Law. Section 6.15. No Default on Outstanding Judgments or Orders. Each of the Consolidated Entities has satisfied all final judgments in all material respects and no Consolidated Entity is in default with respect to any final judgment, writ, injunction, decree, law, rule or regulation of any Governmental Authority which default could reasonably be expected to have a Material Adverse Effect. Section 6.16. No Defaults on Other Agreements. No Consolidated Entity is a party to any indenture, loan or credit agreement or any material lease or other material agreement or instrument or subject to any charter or corporate restriction which could reasonably be expected to have a Material Adverse Effect. No Consolidated Entity is in default in any respect in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any agreement or instrument material to its business to which it is a party which could reasonably be expected to have a Material Adverse Effect. Section 6.17. Labor Disputes and Acts of God. Neither the Business nor the Properties of any Consolidated Entity are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), in each case which could reasonably be expected to have a Material Adverse Effect. Section 6.18. Governmental Regulation. No Obligor is subject to regulation under the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce Act, the Federal Power Act or any statute or regulation limiting its ability in any material respect to incur indebtedness for money borrowed as contemplated hereby. Section 6.19. No Forfeiture. Neither any Consolidated Entity nor the Guarantor is subject to a Forfeiture Proceeding. Section 6.20. Solvency. (a) The present fair saleable value of the assets of each Obligor after giving effect to all the transactions contemplated by the Facility Documents and the funding of the Commitments and the issuance of the Letters of Credit hereunder exceeds the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) of such Obligor as they mature. (b) The Property of each Obligor does not constitute unreasonably small capital for such Obligor to carry out its business as now conducted and as proposed to be conducted including the capital needs of such Obligor. (c) Each Obligor does not intend to, nor does such Obligor believe that it will, incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be received by such Obligor, and of amounts to be payable on or in respect of debt of such Obligor). The cash available to such Obligor after taking into account all other anticipated uses of the cash of such Obligor, is anticipated to be sufficient to pay all such amounts on or in respect of debt of such Obligor when such amounts are required to be paid. Section 6.21. Representations and Warranties in the Mistic Acquisition Documents. The Agent has received a complete and correct copy of the Mistic Acquisition Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. The Mistic Acquisition Documents have been duly executed and delivered by the parties thereto and are in full force and effect. Each of the representations and warranties set forth in each of the Mistic Acquisition Documents of the Borrower, and to the Knowledge of the Borrower, of each such other Person party thereto, is true and correct in all material respects as of the Closing Date. Each Mistic Acquisition Document is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). All transactions contemplated by the Mistic Acquisition Documents to be consummated on or prior to the Closing Date have been consummated without amendment, waiver or modification of the terms thereof. ARTICLE 7. AFFIRMATIVE COVENANTS. So long as any Obligation shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Borrower shall, and shall cause each of its Subsidiaries to: Section 7.01. Maintenance of Existence. Preserve and maintain its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is required, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect. Section 7.02. Conduct of Business. Continue to primarily engage in the Business. Section 7.03. Maintenance of Properties. Maintain, keep and preserve all of its Properties necessary or useful in the conduct of the Business in good working order and condition, ordinary wear and tear excepted, except where the failure to maintain, keep or preserve such Properties could not reasonably be expected to have a Material Adverse Effect. Section 7.04. Maintenance of Records. Keep adequate records and books of account in which true and correct entries will be made reflecting all material financial transactions of each Consolidated Entity and which shall be compiled in such form which will allow the Borrower to prepare its consolidated financial statements in accordance with GAAP. Section 7.05. Maintenance of Insurance. Maintain, or have maintained on its behalf by the Guarantor or the Borrower, insurance with financially sound and reputable insurance companies or associations accorded a rating by A.M. Best Company of "A-" or better and a size rating of "XI" or better in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof. Section 7.06. Compliance with Laws. Comply in all material respects with all applicable laws, rules, regulations and orders (including, without limitation, the Food and Drug Act and any Environmental Law), such compliance to include, without limitation, paying before the same become delinquent all material taxes, assessments and governmental charges imposed upon it or upon its Property, except if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained. Section 7.07. Right of Inspection. At any reasonable time and from time to time, upon prior written notice and during normal business hours (but no prior notice shall be required if a Default or an Event of Default has occurred and is continuing), permit the Agent or any Lender or any agent or representative thereof, to examine and make copies and abstracts from the records and books of account of, and visit the Properties of, any Consolidated Entity, and to discuss the affairs, finances and accounts of such Consolidated Entity with its officers and directors and independent accountants; provided that the Agent and the Lenders agree that they shall use their best efforts to minimize interference with such Consolidated Entity's business. Section 7.08. Reporting Requirements. Furnish directly to each of the Lenders: (a) as soon as available and in any event within 105 days after the end of each Fiscal Year, consolidated and consolidating balance sheets of the Consolidated Entities as of the end of such Fiscal Year and consolidated and consolidating income statements and statements of cash flows and changes in stockholders' equity of the Consolidated Entities for such Fiscal Year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior Fiscal Year (except that comparative figures shall not be required in any financial statements delivered prior to September 30, 1996) and all prepared in accordance with GAAP and accompanied by an unqualified opinion thereon without qualification by Deloitte & Touche LLP or other independent accountants of national standing selected by the Borrower; (b) as soon as available and in any event within 50 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, consolidated and consolidating balance sheets of the Consolidated Entities as of the end of such Fiscal Quarter and consolidated and consolidating income statements and statements of cash flows and changes in stockholders' equity of the Consolidated Entities for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous Fiscal Year (except that comparative figures shall not be required in any financial statements delivered prior to September 30, 1996) and all prepared in accordance with GAAP (subject to year-end adjustments and the fact that there are no footnotes thereto) and certified by the chief financial officer or the chief accounting officer of the Borrower; (c) simultaneously with the delivery of the financial statements referred to in Section 7.08(a) and Section 7.08(b), a Compliance Certificate of the chief financial officer or the chief accounting officer of the Borrower (i) certifying that no Default or Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, and (ii) with computations demonstrating compliance with the covenants contained in Article 9; (d) simultaneously with the delivery of the annual financial statements referred to in Section 7.08(a), a certificate of the independent public accountants who audited such statements to the effect that (i) in making the examination necessary for the audit of such statements, they have obtained no knowledge of any condition or event which constitutes a Default or Event of Default, or if such accountants shall have obtained knowledge of any such condition or event, specifying in such certificate each such condition or event of which they have knowledge and the nature and status thereof and (ii) such statements fairly present the elements of the Borrowing Base (in accordance with the definitions contained herein) as set forth in the Borrowing Base Certificate for the month ending December 31; (e) (i) as soon as available and in any event within 20 days after the end of each calendar month, (A) a Borrowing Base Certificate and (B) a listing of Receivable balances not paid within 90 days of the invoice date and (ii) as soon as available and in any event with 20 days of the end of each Fiscal Quarter, (A) a detailed aged trial balance of the existing Receivables, specifying each Customer by name and the aged balance of all Receivables due from such Customer and (B) a listing of all Customers from which 35% or more of the aggregate amount of Receivables due have not been not paid within 90 days of the invoice date, specifying the names of such Customers and the total amount of Receivables of such Customers; (f) simultaneously with the delivery of the financial statements referred to in Section 7.08(a) and Section 7.08(b), copies of all written agreements and invoices between any Consolidated Entity and any Affiliate during each Fiscal Quarter and a list of all payments made to or by any Affiliate (including all Management Fees) during such Fiscal Quarter; (g) not later than the 30th day subsequent to the commencement of each Fiscal Year, (i) a projected balance sheet of the Consolidated Entities for such Fiscal Year on a monthly basis and (ii) an operating plan for the Consolidated Entities for such Fiscal Year, including budget, personnel, facilities and Capital Expenditure projections, on a monthly basis, and a projected income and cash flows statement for such Fiscal Year, on a monthly basis, incorporating the items detailed in such operating plan for such Fiscal Year, and accompanied by a description of the material assumptions used in making such operating plan; (h) prior to the consummation of any Acceptable Acquisition or, if the consideration for such Acceptable Acquisition is less than $2,000,000, within 10 days after the consummation thereof, all historical financial statements delivered to any Consolidated Entity in connection with such Acceptable Acquisition together with a pro forma balance sheet of the Consolidated Entities on a monthly basis and a pro forma projected income and cash flows statement for the Consolidated Entities for the current and immediately subsequent Fiscal Year on a monthly basis, after giving effect to such Acceptable Acquisition; (i) promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority which could reasonably be expected to result in liability to any Consolidated Entity in excess of $2,000,000; (j) as soon as possible and in any event within 10 days after the occurrence of each Default or Event of Default a written notice setting forth the details of such Default or Event of Default and the action which is proposed to be taken by the Borrower with respect thereto; (k) as soon as possible, and in any event within 10 days after any Consolidated Entity has Knowledge that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan have occurred or exist, a statement signed by a senior financial officer of the Borrower setting forth details respecting such event or condition and the action, if any, which such Consolidated Entity or an ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by such Consolidated Entity or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA, with respect to a Plan with Unfunded Benefit Liabilities in excess of $1,000,000, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA including, without limitation, the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code) and any request for a waiver under Section 412(d) of the Code for any such Plan; (ii) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by such Consolidated Entity or an ERISA Affiliate to terminate any Plan; provided that as a result of such termination, such Consolidated Entity or such ERISA Affiliate will incur liability in excess of $1,000,000; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan with Unfunded Benefit Liabilities in excess of $1,000,000, or the receipt by such Consolidated Entity or any ERISA Affiliate of a notice from a similarly underfunded Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal from a Multiemployer Plan by such Consolidated Entity or any ERISA Affiliate that results in a current payment obligation in excess of $1,000,000 under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt of such Consolidated Entity or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; (v) the adoption of an amendment to any Plan that pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA would result in the loss of tax-exempt status of the trust of which such Plan is a part if such Consolidated Entity or an ERISA Affiliate fails to timely provide security in excess of $1,000,000 to the Plan in accordance with the provisions of said Sections; (vi) any event or circumstance exists which may reasonably be expected to constitute grounds for such Consolidated Entity or any ERISA Affiliate to incur liability in excess of $1,000,000 under Title IV of ERISA or under Sections 412(c)(11) or 412(n) of the Code with respect to any Plan; or (vii) the Unfunded Benefit Liabilities of one or more Plans increase after the date of this Agreement in an amount which is material in relation to the financial condition of the Consolidated Entities; provided, however, that such increase shall not be deemed to be material so long as it does not exceed during any consecutive 3 year period $1,000,000; (l) promptly after the request of any Lender, copies of each annual report filed pursuant to Section 104 of ERISA with respect to each Plan (including, to the extent required by Section 104 of ERISA, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information referred to in Section 103) and each annual report filed with respect to each Plan under Section 4065 of ERISA; provided, however, that in the case of a Multiemployer Plan, such annual reports shall be required to be furnished only if they are reasonably available to any Consolidated Entity or an ERISA Affiliate; (m) subsequent to such Consolidated Entity having a class of equity securities registered with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, promptly after the sending or filing thereof, copies of all proxy statements, quarterly financial statements and reports which any Consolidated Entity sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements which such Consolidated Entity files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or with any national securities exchange; (n) promptly after becoming aware of the existence of any material violation or alleged material violation of any Environmental Law by any Consolidated Entity and with respect to any facility owned or leased by such Consolidated Entity, prompt written notice of and a description of the nature of such violation or alleged violation, what action any Consolidated Entity is taking or proposes to take with respect thereto and, when known, any action taken, or proposed to be taken, by any Governmental Authority with respect thereto; (o) promptly after the commencement thereof or promptly after any Consolidated Entity knows of the commencement or threat thereof, notice of any Forfeiture Proceeding; and (p) such other information respecting the condition or operations, financial or otherwise, of any Consolidated Entity as the Agent or any Lender may from time to time reasonably request. Section 7.09. Interest Rate Protection Agreements. Shall procure within 90 days of the Closing Date and thereafter, so long as the aggregate principal amount of the Term Loans is in excess of $20,000,000, maintain in full force and effect at all times Interest Rate Protection Agreements which may be with one or more of the Lenders to protect itself against fluctuations of interest rates on a notional principal amount of not less than 50% of the aggregate principal amount of the then outstanding Term Loans on terms and conditions reasonably acceptable to the Agent (provided that the term of such Interest Rate Protection Agreements may be as short as two years subject to renewal for subsequent two year terms or such shorter term as may coincide with the remaining period in which the principal amount of the Term Loan (taking into account scheduled repayments hereunder) will exceed $20,000,000). Section 7.10. Additional Guarantors. (a) Promptly upon any Person becoming a Domestic Subsidiary, (i) cause such Domestic Subsidiary to (A) guarantee the Obligations, pursuant to a Guaranty substantially in the form of the Unconditional Guaranty, (B) secure such Guaranty by granting a security interest in all of its personal Property to the Agent, pursuant to a security agreement substantially in the form of the Security Agreement, and (C) secure such Guaranty by pledging all of the equity securities held by such Domestic Subsidiary (provided that any securities of a Foreign Subsidiary pledged will not exceed 65% of such Foreign Subsidiary's voting capital), pursuant to a pledge agreement in form and substance reasonably satisfactory to the Agent, (ii) pledge all of the equity securities of such Domestic Subsidiary owned by any Consolidated Entity to the Agent, pursuant to a pledge agreement in form and substance reasonably satisfactory to the Agent, and (iii) deliver such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by the Borrower pursuant to Article 4 hereof or as the Agent shall have reasonably requested. (b) Promptly upon any Person becoming a Foreign Subsidiary, (i) pledge 65% of the equity securities constituting 65% of such Foreign Subsidiary's voting capital owned by any Consolidated Entity to the Agent, pursuant to a pledge agreement in form and substance reasonably satisfactory to the Agent, and (ii) deliver such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by the Borrower pursuant to Article 4 hereof or as the Agent shall have reasonably requested. ARTICLE 8. NEGATIVE COVENANTS. So long as any Obligation shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Borrower shall not, and shall not permit any Subsidiary to: Section 8.01. Debt. Create, incur, assume or suffer to exist any Debt, except: (a) Debt of the Borrower under this Agreement, the Notes, the Letters of Credit and the other Facility Documents; (b) Debt described on Schedule III and any renewals, extensions or refinancings thereof, provided that any such renewal, extension or refinancing shall not increase the then outstanding principal amount of such Debt; (c) Debt consisting of Guaranties permitted pursuant to Section 8.02; (d) Debt under Interest Rate Protection Agreements; (e) Debt under the Permitted SARs; (f) Debt consisting of accrued Management Fees permitted by Section 8.13 provided that such Debt is subordinated to the Obligations on terms and conditions set forth in the Affiliate Subordination Agreement; (g) accounts payable to trade creditors for goods or services which are not aged more than 90 days from billing date and current operating liabilities (other than for borrowed money) which are not more than 90 days past due, in each case incurred in the ordinary course of business and paid within the specified time, unless contested in good faith and by appropriate proceedings; (h) Debt (including Debt assumed in connection with an Acceptable Acquisition) incurred in accordance with this Section 8.01(h) secured by Purchase Money Liens permitted by Section 8.03(i), provided that the aggregate principal amount of all such Debt for all Consolidated Entities together with all Debt secured by Purchase Money Liens described on Schedule III does not exceed at any time (i) if such time is on or before December 31, 1995, $1,500,000, (ii) if such time is after December 31, 1995 and on or before December 31, 1996, $3,000,000 and (iii) if such time is after December 31, 1996, $5,000,000; and (i) Debt incurred or assumed in accordance with this Section 8.01(i) in connection with any Acceptable Acquisition subordinated to the Obligations on terms and conditions acceptable to the Required Lenders, provided (i) that no such Debt shall be incurred or assumed on or prior to December 31, 1996, (ii) if such Acceptable Acquisition occurs during the Fiscal Year ending on December 31, 1997, the aggregate principal amount of the Debt incurred or assumed in connection with such Acceptable Acquisition and for all prior Acceptable Acquisitions during such Fiscal Year does not exceed $5,000,000 and (iii) if such Acceptable Acquisition occurs during each Fiscal Year ending thereafter, the aggregate principal amount of the Debt incurred or assumed in connection with such Acceptable Acquisition and for all prior Acceptable Acquisitions during each such Fiscal Year does not exceed $7,500,000. Section 8.02. Guaranties. Create, incur, assume or suffer to exist any Guaranty, except: (a) Guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (b) Guaranties by the Subsidiaries of the Borrower of the Obligations; (c) Guaranties by the Borrower of Debt of its Subsidiaries permitted by Section 8.01 and rental obligations of its Subsidiaries under leases permitted under Section 8.04; and (d) Guaranties by the Borrower of the rental obligations of distributors under leases; provided the aggregate amount of such obligations guarantied does not exceed at any time $1,000,000. Section 8.03. Liens. Create, incur, assume or suffer to exist any Lien, upon or with respect to any of its Property, now owned or hereafter acquired, except: (a) Liens in favor of the Agent on behalf of the Lenders securing the Obligations hereunder, under the Notes, under the Letters of Credit and under the other Facility Documents; (b) Liens for taxes or assessments or other government charges or levies if not yet due and payable or if due and payable if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained; (c) Liens imposed by law, such as mechanic's, materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar Liens, securing obligations incurred in the ordinary course of business which are not past due for more than 60 days, or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established; (d) Liens under workmen's compensation, unemployment insurance, social security or similar legislation (other than Liens in excess of $1,000,000 under ERISA or the related provisions of the Code); (e) Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), leases (permitted under the terms of this Agreement), public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds, or other similar obligations arising in the ordinary course of business; (f) judgment and other similar Liens arising in connection with court proceedings; provided that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (g) easements, rights-of-way, restrictions and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use and enjoyment by any Consolidated Entity of the Property encumbered thereby in the normal course of its business or materially impair the value of the Property subject thereto; (h) Liens described on Schedule III provided that such Liens shall secure only those obligations which they secure on the date hereof or any renewals, extensions or refinancings thereof permitted pursuant to Section 8.01(b) but not the extensions of such Liens to other Property; and (i) Purchase Money Liens; provided that: (i) any Property subject to such Purchase Money Lien is acquired by any Consolidated Entity (A) in an Acceptable Acquisition in compliance with Section 8.01(h) or (B) in the ordinary course of its business, and the Lien on any such Property is created contemporaneously with, or assumed in connection with, such acquisition; (ii) the obligation secured by any Lien so created, assumed or existing shall not exceed 100% of the lesser of cost or fair market value as of the time of acquisition of the Property covered thereby to such Consolidated Entity acquiring the same; (iii) each such Lien shall attach only to the Property so acquired and fixed improvements thereon; and (iv) the obligations secured by such Lien are permitted by the provisions of Section 8.01(h) and, in the case of Capital Expenditures, the related expenditure is permitted under Section 8.12. Section 8.04. Leases. Create, incur, assume or suffer to exist any obligation as lessee for the rental or hire of any Property, except: (a) leases existing on the date of this Agreement and any extensions, supplements or renewals thereof; (b) Capital Leases permitted by Section 8.01, Section 8.03 and Section 8.12; and (c) leases (other than Capital Leases) which do not in the aggregate require the Consolidated Entities to make payments (including taxes, insurance, maintenance and similar expense which any Consolidated Entity is required to pay under the terms of any lease) in any Fiscal Year in excess of $500,000. Section 8.05. Investments. Make any Investment, except for: (a) Investments in cash and Cash Equivalents; (b) Investments in Property to be used or useful in the ordinary course of business of any Consolidated Entity; (c) Investments in stock, obligations or securities received in settlement of debts (created in the ordinary course of business) owing to any Consolidated Entity; (d) Investments made in connection with an Acceptable Acquisition of a Foreign Subsidiary; (e) Investments of Property (other than the Trademarks) in any Obligor or in any corporation that concurrently with such Investment becomes an Obligor; (f) Investments of Property (other than the Trademarks) in any Foreign Subsidiary or in connection with an Acceptable Acquisition of a Foreign Subsidiary, provided that the aggregate amount of all such Investments does not exceed $2,000,000; (g) Investments of the Trademarks in any Special Trademark Subsidiary and Investments in certain assets permitted under Section 8.17; and (h) Investments in travel, vacation and similar advances to employees of any Consolidated Entity for the reimbursement of expenses made or incurred in the ordinary course of business. Section 8.06. Distributions. Make any Distribution, except that: (a) any Consolidated Entity may make Distributions payable solely in its common stock; and (b) any Subsidiary of the Borrower may make Distributions to the Borrower or any Wholly-Owned Subsidiary of the Borrower; (c) the Borrower may make Distributions to fulfill its obligations upon the exercise of the Permitted SARs so long as no Default or Event of Default has occurred and is continuing or would occur and be continuing after giving effect to such Distribution; and (d) the Borrower may make Distributions on the Closing Date to the Guarantor not in excess of (a) $100,000 as reimbursement for certain fees and expenses paid by the Guarantor on behalf of the Borrower prior to the Closing Date, (b) $100,000 as reimbursement for legal fees and expenses provided by the Guarantor on behalf of the Borrower prior to the Closing Date and (c) $500,000 as reimbursement for fees and expenses for advisory related services provided by the Guarantor in connection with the Mistic Acquisition, the Loans and the Letters of Credit; provided that the aggregate amount of all such fees and expenses together with all other fees and expenses paid (whether or not paid on the Closing Date) in connection with the Mistic Acquisition, the Loans and the Letters of Credit to be issued on the Closing Date shall not exceed $4,000,000. Section 8.07. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any of its now owned or hereafter acquired Property (including, without limitation, shares of stock and indebtedness, receivables and leasehold interests), except: (a) any sale, lease, assignment, transfer or other disposition of Property during each Fiscal Year for fair market value in cash so long as the aggregate consideration for such disposition and all other dispositions made during such Fiscal Year does not exceed $2,000,000, the proceeds are applied in accordance with Section 2.06(b) and no Default or Event of Default has occurred and is continuing or would occcur and be continuing after giving effect to such disposition; (b) for Inventory disposed of in the ordinary course of business; and (c) the sale or other disposition of assets no longer used or useful in the conduct of its business. Section 8.08. Transactions with Affiliates. (a) Make any Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any Property to any Affiliate; (c) merge into or consolidate with or purchase or acquire Property from any Affiliate; or (d) enter into any other transaction directly or indirectly with or for the benefit of any Affiliate (including, without limitation, guaranties and assumption of obligations of any Affiliate); provided that (x) any Affiliate who is an individual may serve as a director, officer or employee of any Consolidated Entity and receive reasonable compensation for his or her services in such capacity and (y) the Borrower may enter into the Management Agreement, the Tax Sharing Agreement and any Consolidated Entity may enter into other transactions (other than Investments by any Consolidated Entity in any Affiliate) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of inventory and other Property in the ordinary course of business; provided that in each case in the foregoing clause (y) the monetary or business consideration arising therefrom would be substantially as advantageous to such Consolidated Entity as the monetary or business consideration which would be obtained in a comparable arm's length transaction with a Person not an Affiliate. Notwithstanding the foregoing, any Consolidated Entity may make payments to the Guarantor in satisfaction of the Borrower's obligations under employee benefit programs for employees of the Consolidated Entities. Section 8.09. Mergers. Merge or consolidate with, or sell, assign, lease or otherwise dispose of (whether in one transaction or in a series of related transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or acquire all or substantially all of the assets or the business of any Person (or enter into any agreement to do any of the foregoing), except that: (a) any Wholly-Owned Subsidiary may merge into or consolidate with or transfer substantially all of its assets to the Borrower or any other Wholly-Owned Subsidiary of the Borrower; and (b) any Consolidated Entity may effect any Acquisition permitted by Section 8.10. Section 8.10. Acquisitions. Make any Acquisition other than an Acceptable Acquisition. Section 8.11. No Activities Leading to Forfeiture. Engage in or propose to be engaged in the conduct of any business or activity which could reasonably be expected to result in a Forfeiture Proceeding. Section 8.12. Capital Expenditures. Make or commit to make any Capital Expenditure, except for Consolidated Capital Expenditures made in the ordinary course of business (a) during the Fiscal Year ending on December 31, 1995, not exceeding $500,000 in the aggregate, (b) during the Fiscal Years ending on December 31, 1996 and December 31, 1997, not exceeding $1,200,000 in the aggregate for each such Fiscal Year and (c) during each Fiscal Year ending thereafter, not exceeding $1,500,000 in the aggregate for each such Fiscal Year. Section 8.13. Management Fees. Accrue or make any payment with respect to Management Fees; provided that (a) Management Fees may be accrued and paid monthly in accordance with, and subject to the limitations contained in, the Management Agreement; (b) no Default or Event of Default exists or would exist after giving effect to the making of any such payment; (c) during the Fiscal Year ending on December 31, 1995, no Management Fee may be accrued or paid; (d) during the Fiscal Year ending on December 31, 1996 and during each Fiscal Year ending thereafter, no more than $1,500,000 in Management Fees may be accrued for each such Fiscal Year; (e) during the Fiscal Year ending on December 31, 1996, no more than $1,500,000 in Management Fees may be paid during such Fiscal Year; (f) during the Fiscal Year ending on December 31, 1997 and during each Fiscal Year ending thereafter, no more than $1,750,000 of Management Fees may be paid (including amounts accrued and unpaid for prior Fiscal Years) during each such Fiscal Year; and (g) all such Management Fees are subordinate to the Obligations on terms and conditions set forth in the Affiliate Subordination Agreement. Section 8.14. Borrower Capital Stock. Issue, sell or exchange, agree or obligate itself to issue, sell or exchange, any additional shares of capital stock of the Borrower except (a) directors' qualifying shares; (b) Common Stock issued as a stock dividend or upon a stock split to holders of Common Stock or upon any subdivision or combination of shares of Common Stock; (c) shares of Common Stock, or options exercisable therefor, or measurement shares for which stock appreciation rights have been issued, to directors, officers or employees of or consultants to any Consolidated Entity pursuant to any qualified or non-qualified stock option plan or agreement, employee stock ownership plan, stock purchase agreement, stock plan, stock restriction agreement, employment agreement or consulting agreement or such other options, arrangements, agreements or plans approved by the Board of Directors of the Borrower so long as the aggregate number of such shares does not exceed 15% of the Fully Diluted Outstanding Common Stock at the time of proposed issuance; and (d) shares of Common Stock so long as no more than 10% of the Fully Diluted Outstanding Common Stock is issued to any Person or two or more Persons acting in concert (other than (w) the Guarantor, (x) any Affiliate, including, without limitation, Nelson Peltz and Peter May and any of their respective affiliates controlled by them including DWG Acquisition Group, L.P. or any affiliate thereof, so long as all such shares shall remain subject to the Lien of the Pledge Agreement, (y) Michael Weinstein, any member of his immediate family and any trust for the benefit of any such family member or (z) Ernest Cavallo, any member of his immediate family and any trust for the benefit of any such family member) and the Guarantor continues to own, directly or indirectly at least 51% of the Fully Diluted Outstanding Common Stock. Section 8.15. Rights under Other Agreements. Amend, or waive or otherwise relinquish any of its rights or causes of action in a manner adverse (or, in the case of any Mistic Acquisition Document, materially adverse) to the Borrower and its Subsidiaries, taken as a whole, or the Lenders under or arising out of any provision of any Mistic Acquisition Document, the Management Agreement and the Tax Sharing Agreement. Section 8.16. Restrictions. Enter into, or suffer to exist, any agreement with any Person other than the Agent or the Lenders that (a) prohibits, requires the consent of such Person for or limits the ability of (i) any Consolidated Entity to make Distributions, pay liabilities owed to any other Consolidated Entity, make loans or advances to any Consolidated Entity or transfer any of its property to any other Consolidated Entity, (ii) any Consolidated Entity to create, incur, assume or suffer to exist any Lien upon any of its Property or (iii) any Obligor to enter into any modification or supplement of the Facility Documents; or (b) contains financial covenants which, taken as a whole, are more restrictive on the Consolidated Entities than the financial covenants contained in Article 9. Section 8.17. Special Trademark Subsidiaries. Permit any Special Trademark Subsidiary at any time to (i) create, incur, assume or have outstanding any Debt or other liabilities or obligations except for the Guaranty of the Obligations hereunder or liabilities incurred in the ordinary course in connection with the maintenance of its existence or the protection of the Trademarks; (ii) own any asset except the Trademarks, rights under license agreements relating to the Trademarks and assets (including cash and Cash Equivalents) owned in connection with the maintenance of its existence; (iii) enter into any transaction of merger, consolidation or amalgamation other than into the Borrower or into another Special Trademark Subsidiary; (iv) create, incur or permit to exist any Lien on or in respect of (except in favor of the Agent to secure the Obligations or Liens permitted under Section 8.03(b), Section 8.03(d), Section 8.03(e), Section 8.03(f) or Section 8.03(g)), or sell, lease, assign, transfer or otherwise dispose of, any of its of the Trademarks other than to the Borrower; (v) engage in any other business other than, whether directly or indirectly, the holding of and licensing of the Trademarks; or (vi) make or hold any Investment. Section 8.18. No Foreign Trademarks. Permit any Foreign Subsidiary to own a Trademark. Section 8.19. Fiscal Year. Permit the fiscal year of the Consolidated Entities to end on a day other than December 31. ARTICLE 9. FINANCIAL COVENANTS. So long as any Obligation shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment: Section 9.01. Interest Coverage Ratio. The Borrower shall maintain, as determined at the end of each Fiscal Quarter, an Interest Coverage Ratio of not less than the applicable ratio set forth in the following table: If such Fiscal Quarter ends Applicable Ratio on or after December 31, 1995 and on or before September 30, 1996 2.40 to 1.00 after September 30, 1996 and on or before September 30, 1997 2.70 to 1.00 after September 30, 1997 and on or before September 30, 1998 3.00 to 1.00 after September 30, 1998 and on or before September 30, 1999 3.50 to 1.00 after September 30, 1999 4.00 to 1.00 Section 9.02. Fixed Charge Coverage Ratio. The Borrower shall maintain, as determined at the end of each Fiscal Quarter, a Fixed Charge Coverage Ratio of not less than the applicable ratio set forth in the following table: If such Fiscal Quarter ends Applicable Ratio on December 31, 1995 1.60 to 1.00 on March 31, 1996 1.45 to 1.00 after March 31, 1996 and on or before September 30, 1998 1.30 to 1.00 after September 30, 1998 and on or before September 30, 2000 1.15 to 1.00 after September 30, 2000 1.10 to 1.00 Section 9.03. Leverage Ratio. The Borrower shall maintain, as determined at the end of each Fiscal Quarter, a Leverage Ratio of not greater than the applicable ratio set forth in the following table: If such Fiscal Quarter ends Applicable Ratio on December 31, 1995 and on March 31, 1996 4.50 to 1.00 on June 30, 1996 4.70 to 1.00 on September 30, 1996 4.00 to 1.00 after September 30, 1996 and on or before September 30, 1997 3.50 to 1.00 after September 30, 1997 and on or before September 30, 1998 3.00 to 1.00 after September 30, 1998 and on or before September 30, 1999 2.50 to 1.00 after September 30, 1999 and on or before September 30, 2000 2.25 to 1.00 after September 30, 2000 2.00 to 1.00 Section 9.04. Minimum Net Worth. The Borrower shall maintain at all times Net Worth of not less than the applicable amount set forth in the following table: If such time is Applicable Amount on or after the Closing Date and on or before December 30, 1995 $25,000,000 after December 30, 1995 and on or before December 30, 1996 $26,000,000 after December 30, 1996 and on or before December 30, 1997 $29,000,000 after December 30, 1997 and on or before December 30, 1998 $33,000,000 after December 30, 1998 and on or before December 30, 1999 $39,000,000 after December 30, 1999 and on or before December 30, 2000 $45,000,000 after December 30, 2000 $50,000,000 Section 9.05. Current Ratio. The Borrower shall maintain at all times a Current Ratio of not less than the applicable ratio set forth in the following table: If such time is Applicable Ratio on or after the Closing Date and on or before March 31, 1996 1.05 to 1.00 between each April 1 and September 30 thereafter 1.20 to 1.00 between each October 1 and March 31 thereafter 1.10 to 1.00 ARTICLE 10. EVENTS OF DEFAULT. Section 10.01. Events of Default. Any of the following events shall be an "Event of Default": (a) the Borrower shall: (i) fail to pay the principal of any Note or any Reimbursement Obligation on or before the date when due and payable; or (ii) fail to pay interest on any Note or any fee or other amount due hereunder or under any other Facility Document on or before 5 Banking Days after the date when due and payable; (b) any representation or warranty made or deemed made by any Consolidated Entity in this Agreement or in any other Facility Document or which is contained in any written certificate, document, opinion, financial or other statement furnished at any time under or in connection with any Facility Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; (c) (i) the Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.03, Section 3.02, Article 8 or Article 9; or (ii) any Consolidated Entity shall fail to perform or observe any term, covenant or agreement on its part to be performed or observed (other than the obligations specifically referred to elsewhere in this Section 10.01) in any Facility Document to which it is a party and, in each such case, such failure shall continue for 30 consecutive days after the Borrower has obtained Knowledge thereof; (d) any Consolidated Entity shall: (i) fail to pay any Debt in an aggregate amount exceeding $2,000,000 (other than the payment obligations described in (a) above), of such Consolidated Entity, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), taking into account any applicable grace periods; (ii) fail to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any such Debt, when required to be performed or observed, taking into account any applicable grace periods, if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration of, after the giving of notice or passage of time, or both, the maturity of such indebtedness, whether or not such failure to perform or observe shall be waived by the holder of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; (e) any Consolidated Entity: (i) shall generally not, or be unable to, or shall admit in writing its inability to, pay its debts as such debts become due; or (ii) shall make an assignment for the benefit of creditors, petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for it or a substantial part of its assets; or (iii) shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any such petition or application filed or any such proceeding shall have been commenced, against it, in which an adjudication or appointment is made or order for relief is entered, or which petition, application or proceeding remains undismissed for a period of 90 days or more; or (v) shall be the subject of any such proceeding under which all or any substantial part of its Property may be subject to seizure, forfeiture or divestiture (other than a proceeding in respect of a Lien permitted under Section 8.03(b)); or (vi) by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for all or any substantial part of its Property; or (vii) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of 90 days or more; (f) one or more judgments, decrees or orders for the payment of money in excess of $2,000,000 in the aggregate shall be rendered against any Consolidated Entity and such judgments, decrees or orders shall continue unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied or stayed or bonded pending appeal; (g) any event or condition shall occur or exist with respect to any Plan or Multiemployer Plan concerning which any Consolidated Entity is under an obligation to furnish a report to the Lender in accordance with Section 7.08(k) hereof and as a result of such event or condition, together with all other such events or conditions, such Consolidated Entity has incurred or is reasonably likely to incur an obligation to pay in excess of $1,000,000 to a Plan, a Multiemployer Plan, the PBGC, or a Section 4042 Trustee (or any combination of the foregoing) which is material in relation to the financial position of the Consolidated Entities; (h) the Unfunded Benefit Liabilities of one or more Plans have increased after the date of this Agreement by an amount in excess of $1,000,000; (i) a Change of Control shall have occurred; (j) any Forfeiture Proceeding shall have been commenced or any Consolidated Entity shall have given any Lender written notice of the commencement of any Forfeiture Proceeding as provided in Section 7.08(o); (k) an "Event of Default" under and as defined in the Unconditional Guaranty shall have occurred and be continuing; or (l) any of the Security Documents shall at any time after its execution and delivery and for any reason other than pursuant to the terms hereof and thereof cease: (i) to create a valid and perfected first priority security interest in and to the Property purported to be subject to such Agreement; or (ii) to be in full force and effect or shall be declared null and void, or the validity or enforceability thereof shall be contested by any Obligor or the Guarantor or such Person shall deny it has any further liability or obligation under the Security Documents or such Person shall fail to perform any of its material obligations thereunder and such default shall have continued for a period of 30 days after such Person has obtained Knowledge thereof. Section 10.02. Remedies. If any Event of Default shall occur and be continuing, the Agent shall, upon request of the Required Lenders, by notice to the Borrower, (a) declare the Commitments to be terminated, whereupon the same shall forthwith terminate and so shall the obligations of the Issuing Lender to issue any Letter of Credit, (b) declare the outstanding principal of the Notes, all interest thereon and all other amounts payable under this Agreement, the Notes and the other Facility Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower and/or (c) direct the Borrower to pay to the Agent an amount, to be held as cash security in the cash collateral account held by the Agent under Section 3.08, equal to the Letter of Credit Obligations then outstanding; provided that, in the case of an Event of Default referred to in Section 10.01(e) or Section 10.01(i) above, the Commitments and the obligation to issue Letters of Credit shall be immediately terminated, and the Notes, the Letter of Credit Obligations, all interest thereon and all other amounts payable under this Agreement, the Notes, the Letters of Credit and the other Facility Documents shall be immediately due and payable without notice, presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower. Section 10.03. Cure. If as of the end of any Fiscal Quarter the Borrower shall have failed to be in compliance with the provisions of Section 9.01, Section 9.02 or Section 9.03, no Event of Default shall be deemed to have occurred as a result of such failure if, prior to the date that is thirty (30) days (and, in the case of the Fiscal Quarter ending on December 31, sixty (60) days) after the end of such Fiscal Quarter, the Borrower shall have received a cash rebate of Management Fees from the Guarantor in an amount sufficient such that the Borrower would have been in compliance (on a pro forma basis) with the provisions of Section 9.01, Section 9.02 and Section 9.03 had the amount of Management Fees deducted from EBIT been decreased by an amount equal to the amount of such cash rebate received. ARTICLE 11. THE AGENT. Section 11.01. Appointment, Powers and Immunities of Agent. Each Lender hereby irrevocably (but subject to removal by the Required Lenders pursuant to Section 11.09) appoints and authorizes the Agent to act as its agent hereunder and under any other Facility Document with such powers as are specifically delegated to the Agent by the terms of this Agreement and any other Facility Document, together with such other powers as are reasonably incidental thereto. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and any other Facility Document, and shall not by reason of this Agreement be a trustee for any Lender. The Agent shall not be responsible to the Lenders for any recitals, statements, representations or warranties made by any Obligor, the Guarantor or any of their respective officers and officials or by any other Person contained in this Agreement or any other Facility Document, or in any certificate or other document or instrument referred to or provided for in, or received by any of them under, this Agreement or any other Facility Document, or for the value, legality, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Facility Document or any other document or instrument referred to or provided for herein or therein, or for the perfection or priority of any collateral security for the Loans or the Letters of Credit or for any failure by any Obligor or the Guarantor to perform any of its obligations hereunder or thereunder. The Agent may employ agents and attorneys-in-fact and shall not be responsible, except as to money or securities received by it or its authorized agents, for the negligence or misconduct of any such agents or attorneys-in- fact selected by it with reasonable care. Neither the Agent nor any of its directors, officers, employees or agents shall be liable or responsible for any action taken or omitted to be taken by it or them hereunder or under any other Facility Document or in connection herewith or therewith, except for its or their own gross negligence or willful misconduct. Section 11.02. Reliance by Agent. The Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telegram or cable) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Agent. The Agent may deem and treat each Lender as the holder of the Obligations attributable to it for all purposes hereof unless and until a notice of the assignment or transfer thereof satisfactory to the Agent signed by such Lender shall have been furnished to the Agent but the Agent shall not be required to deal with any Person who has acquired a participation in any Obligation from a Lender. As to any matters not expressly provided for by this Agreement or any other Facility Document, the Agent in its capacity as such shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions signed by the Required Lenders, and such instructions of the Required Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and any other holder of all or any portion of any Obligation. Section 11.03. Defaults. The Agent shall not be deemed to have knowledge of the occurrence of a Default or Event of Default (other than the non-payment of principal of or interest on the Loans and the Letter of Credit Obligations to the extent the same is required to be paid to the Agent for the account of the Lenders) unless the Agent has received notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a "Notice of Default." In the event that the Agent receives such a notice of the occurrence of a Default or Event of Default, the Agent shall give prompt notice thereof to the Lenders (and shall give each Lender prompt notice of each such non-payment). The Agent shall (subject to Section 11.08) take such action with respect to such Default or Event of Default which is continuing as shall be directed by the Required Lenders; provided that, unless and until the Agent shall have received such directions, the Agent may take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Lenders; and provided further that the Agent shall not be required to take any such action which it determines to be contrary to law. Section 11.04. Rights of Agent as a Lender. With respect to its Commitments and the Obligations held by it, the Agent in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Agent in its capacity as a Lender. The Agent and its affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to (on a secured or unsecured basis), and generally engage in any kind of banking, trust or other business with, any Consolidated Entity (and any of its Affiliates) as if it were not acting as the Agent, and the Agent may accept fees and other consideration from any Consolidated Entity, the Guarantor and any Affiliate for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. Although the Agent and its affiliates may in the course of such relationships and relationships with other Persons acquire information about any Consolidated Entity, the Guarantor, any Affiliate and such other Persons, the Agent shall have no duty to disclose such information to the Lenders. Section 11.05. Indemnification of Agent. The Lenders agree to indemnify the Agent (to the extent not reimbursed under Section 12.03 or under the applicable provisions of any other Facility Document, but without limiting the obligations of the Borrower under Section 12.03 or such provisions), ratably in accordance with the aggregate unpaid principal amount of the Obligations attributable to the Lenders (without giving effect to any participations, in all or any portion of the Obligations, sold by them to any other Person) (or, if no Obligations are at the time outstanding, ratably in accordance with their respective Commitments), for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement, any other Facility Document or any other documents contemplated by or referred to herein or the transactions contemplated hereby or thereby (including, without limitation, the costs and expenses which the Borrower is obligated to pay under Section 12.03 or under the applicable provisions of any other Facility Document but excluding, unless a Default or Event of Default has occurred, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents or instruments; provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or wilful misconduct of the Agent. Section 11.06. Documents. The Agent will forward to each Lender, promptly after the Agent's receipt thereof, a copy of each report, notice or other document required by this Agreement or any other Facility Document to be delivered to the Agent for such Lender. Section 11.07. Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Consolidated Entities and the Guarantor and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any other Facility Document. The Agent shall not be required to keep itself informed as to the performance or observance by the Consolidated Entities or the Guarantor of this Agreement or any other Facility Document or any other document referred to or provided for herein or therein or to inspect the Properties or books of any Consolidated Entity or the Guarantor. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of any Consolidated Entity or the Guarantor (or any of their respective Affiliates) which may come into the possession of the Agent or any of its affiliates. The Agent shall not be required to file this Agreement, any other Facility Document or any document or instrument referred to herein or therein, for record or give notice of this Agreement, any other Facility Document or any document or instrument referred to herein or therein, to anyone. Section 11.08. Failure of Agent to Act. Except for action expressly required of the Agent hereunder, the Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall have received further assurances (which may include cash collateral) of the indemnification obligations of the Lenders under Section 11.05 in respect of any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Section 11.09. Resignation or Removal of Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving 30 days prior written notice thereof to the Lenders and the Borrower, and the Agent may be removed at any time with or without cause by the Required Lenders; provided that the Borrower and the other Lenders shall be promptly notified thereof. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a bank which has an office in New York, New York. The Required Lenders or the retiring Agent, as the case may be, shall upon the appointment of a successor Agent promptly so notify the Borrower and the other Lenders. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article 11 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent. Section 11.10. Amendments Concerning Agency Function. The Agent shall not be bound by any waiver, amendment, supplement or modification of this Agreement or any other Facility Document which affects its duties hereunder or thereunder unless it shall have given its prior consent thereto. Section 11.11. Liability of Agent. The Agent shall not have any liabilities or responsibilities to any Consolidated Entity or the Guarantor on account of the failure of any Lender to perform its obligations hereunder, except with respect to any claim arising out of the gross negligence or willful misconduct of the Agent, or to any Lender on account of the failure of any Consolidated Entity or the Guarantor to perform its obligations hereunder or under any other Facility Document. Section 11.12. Transfer of Agency Function. Without the consent of the Borrower or any Lender, the Agent may at any time or from time to time transfer its functions as Agent hereunder to any of its offices wherever located, provided that the Agent shall promptly notify the Borrower and the Lenders thereof and such transfer shall not impose any additional costs on the Borrower. Section 11.13. Non-Receipt of Funds by the Agent. Unless the Agent shall have been notified by a Lender or the Borrower (either one as appropriate being the "Payor") prior to the date on which such Lender is to make payment hereunder to the Agent of the proceeds of a Loan or the Borrower is to make payment to the Agent, as the case may be (either such payment being a "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Agent, the Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient on such date and, if the Payor has not in fact made the Required Payment to the Agent, the recipient of such payment (and, if such recipient is the Borrower and the Payor Lender fails to pay the amount thereof to the Agent forthwith upon demand, the Borrower) shall, on demand, repay to the Agent the amount made available to it together with interest thereon for the period from the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to the average daily Federal Funds Rate for such period. Section 11.14. Withholding Taxes. Each Lender represents to the Agent and the Borrower that it is entitled to receive any payments to be made to it hereunder without the withholding of any tax and will furnish, prior to becoming a Lender hereunder, one copy to the Borrower and one copy to the Agent such forms, certifications, statements and other documents as the Agent or the Borrower may request from time to time to evidence such Lender's exemption from the withholding of any tax imposed by any jurisdiction or to enable the Agent or the Borrower to comply with any applicable laws or regulations relating thereto. Without limiting the effect of the foregoing, if any Lender is not created or organized under the laws of the United States of America or any state thereof, in the event that the payment of interest by the Borrower is treated for U.S. income tax purposes as derived in whole or in part from sources from within the U.S., such Lender will furnish to the Agent Form 4224 or Form 1001 of the Internal Revenue Service, or such other forms, certifications, statements or documents, duly executed and completed by such Lender as evidence of such Lender's exemption from the withholding of U.S. tax with respect thereto. Until such Lender shall have furnished to the Agent and the Borrower any requested form, certification, statement or document, the Agent or the Borrower may withhold taxes from any payment to such Lender at applicable rates. Section 11.15. Several Obligations and Rights of Lenders. The failure of any Lender to make any Loan to be made by it on the date specified therefor shall not relieve any other Lender of its obligation to make its Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make a Loan to be made by such other Lender. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and, except where action of the Required Lenders is expressly required hereunder, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement, and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. Section 11.16. Pro Rata Treatment of Loans, Etc. Except to the extent otherwise provided: (a) each borrowing under Section 2.01 shall be made from the Lenders, each reduction or termination of the amount of the Commitments under Section 2.08 shall be applied to the Commitments of the Lenders, and each payment of commitment fee accruing under Section 2.11 shall be made for the account of the Lenders, pro rata according to the amounts of their respective unused Commitments; (b) each conversion under Section 2.05 of Loans of a particular type (but not conversions provided for by Section 4.04), shall be made pro rata among the Lenders holding Loans of such type according to the respective principal amounts of such Loans by such Lenders; (c) each prepayment and payment of principal of or interest on Loans of a particular type, a particular class and a particular Interest Period shall be made to the Agent for the account of the Lenders holding Loans of such type, class and Interest Period pro rata in accordance with the respective unpaid principal amounts of such Loans of such Interest Period held by such Lenders; and (d) each prepayment and payment of fees under Section 3.09(a) and Letter of Credit Obligations shall be made pro rata in accordance with the pro rata share of the Lenders in the Letter of Credit Obligations held by each of them. Section 11.17. Sharing of Payments Among Lenders. If a Lender shall obtain payment of any principal of or interest on any Obligation held by it through the exercise of any right of setoff, banker's lien, counterclaim, or by any other means, it shall promptly purchase from the other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Obligations of the other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable to the end that all the Lenders shall share the benefit of such payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such benefit) pro rata in accordance with the unpaid principal and interest on the Obligations held by each of them. To such end the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness of the Borrower, the Guarantor or their respective Affiliates. Section 11.18. Security Documents. Subject to the foregoing provisions of this Section 11, the Agent shall, on behalf of the Lenders: (a) execute any and all of the Security Documents on behalf of the Lenders; (b) hold and apply any and all Collateral, and the proceeds thereof, at any time received by it, in accordance with the provisions of the Security Documents and this Agreement; (c) exercise any and all rights, powers and remedies of the Lenders under this Agreement or any of the Security Documents, including the giving of any consent or waiver or the entering into of any amendment, subject to the provisions of Section 11.03; (d) execute, deliver and file financing statements, mortgages, deeds of trust, lease assignments and other such agreements, and possess instruments on behalf of any or all of the Lenders; and (e) in the event of acceleration of the Borrower's obligations hereunder, use its best efforts to sell or otherwise liquidate or dispose of the Collateral and otherwise exercise the rights of the Lenders thereunder upon the direction of the Required Lenders. Section 11.19. Collateral. Notwithstanding Section 11.18, the Agent and the other Lenders agree, as among themselves, that the Agent shall not, without the consent of the Required Lenders, make any sale or disposition of the Collateral pursuant to any of the Security Documents. The Agent acknowledges to the other Lenders that it is acting in an agency capacity hereunder and that the security interest in the Collateral granted under the Security Documents secures the Obligations held by all of the Lenders. In the event of any Default or Event of Default, the Agent will apply and/or pay over to the Lenders any net proceeds derived from the Collateral pro rata on the basis of the aggregate unpaid principal amount of the Obligations held by the Lenders. The Agent will be reimbursed or properly indemnified by the Lenders in the event the Agent is requested by the Lenders to take or omit to take any action with respect to the Collateral (any such reimbursement or indemnification to be pro rata as provided in Section 11.05). The Agent shall have the right to retain counsel to advise it as to any action or decision with respect to the Collateral and shall be reimbursed by the other Lenders for the cost of the same (to the extent the Agent is not reimbursed by the Borrower) prior to distributing any of the Collateral or any proceeds thereof (any such reimbursement to be pro rata as aforesaid). Section 11.20. Amendment of Article 11. The Borrower hereby agrees that the foregoing provisions of this Article 11 constitute an agreement among the Agent and the Lenders and that any and all of the provisions of this Article 11, other than Section 11.09, Section 11.11, Section 11.12, Section 11.14 or any other provision the amendment of which would adversely affect the rights and interests of the Borrower or the Guarantor, may be amended at any time by the Required Lenders without the consent or approval of, or notice to, the Borrower. ARTICLE 12. MISCELLANEOUS. Section 12.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Borrower, the Agent and the Required Lenders, or by the Borrower and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) increase or extend the term, or extend the time or waive any requirement for the reduction or termination, of the Commitments; (b) extend the date fixed for the payment of principal of or interest on any Loan, any Letter of Credit Obligation or any fee payable hereunder; (c) reduce the amount of any payment of principal thereof or the rate at which interest is payable thereon or any fee payable hereunder, (d) alter the terms of this Section 12.01; (e) amend the definition of the term "Required Lenders"; (f) waive any of the conditions precedent set forth in Article 5 hereof; (g) discharge the Guarantor from the Unconditional Guaranty; (h) discharge any Obligor from its Guaranty of the Obligations (unless the stock of such Obligor is sold in accordance with the terms of this Agreement); or (i) release all or any part of the Collateral other than pursuant to a disposition of Property permitted under Section 8.07, and provided, further, that any amendment of Article 11 hereof or any amendment which increases the obligations of the Agent hereunder shall require the consent of the Agent. No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof or preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 12.02. Usury. Anything herein to the contrary notwithstanding, the obligations of the Borrower under this Agreement, the Notes and the other Facility Documents shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to a Lender limiting rates of interest which may be charged or collected by such Lender. Section 12.03. Expenses. The Borrower shall reimburse the Agent on demand for all reasonable out-of-pocket costs, expenses and charges (including, without limitation, reasonable fees and charges of external legal counsel for the Agent) in connection with the preparation of, and any amendment, (other than an amendment to Article 12 that does not require the consent of the Borrower) supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any other Facility Document and any other documents prepared in connection herewith or therewith. The Borrower shall reimburse the Agent and each Lender for all reasonable out-of-pocket costs expenses and charges (including, without limitation, reasonable fees and charges of external legal counsel for the Agent and each Lender) in connection with the enforcement or preservation of any rights or remedies during the existence of an Event of Default (including, without limitation, in connection with any restructuring or insolvency or bankruptcy proceeding). The Borrower agrees to indemnify the Agent and each Lender and their respective directors, officers, employees and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages or out-of-pocket expenses reasonably incurred by any of them arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to this Agreement or any other Facility Document or to any actual or proposed use by any Borrower of the proceeds of the Loans or the Letters of Credit or to the performance or enforcement of this Agreement or the other Facility Documents, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or wilful misconduct of the Agent or any of the Lenders). Section 12.04. Survival. The obligations of the Borrower under Sections 4.01, 4.05 and 12.03 shall survive the repayment of the Loans and the Letters of Credit and the termination of the Commitments. Section 12.05. Assignment; Participations. (a) This Agreement shall be binding upon, and shall inure to the benefit of, the Borrower, the Agent, the Lenders and their respective successors and assigns, except that the Borrower may not assign or transfer its rights or obligations hereunder. Each Lender may assign or sell participations in all of its rights and obligations hereunder or any part of its rights and obligations hereunder to another bank or other financial institution provided that each such assignment shall be in a minimum amount equal to $5,000,000 and further provided that any assignment or participation by any Lender of its rights and obligations in respect of the Letters of Credit shall require the prior consent of the Issuing Lender, such consent not to be unreasonably withheld, in which event (i) in the case of an assignment, upon notice thereof by the Lender to the Borrower with a copy to the Agent, the assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights, benefits and obligations as it would have if it were a Lender hereunder; and (ii) in the case of a participation, the participant shall have no rights under the Facility Documents and all amounts payable by the Borrower under the Facility Documents, including, without limitation, under Article 4, shall be determined as if such Lender had not sold such participation. The agreement executed by such Lender in favor of the participant shall not give the participant the right to require such Lender to take or omit to take any action hereunder except action directly relating to (i) the extension of a payment date with respect to any portion of the principal of or interest on any amount outstanding hereunder allocated to such participant, (ii) the reduction of the principal amount outstanding hereunder allocated to such participant or (iii) the reduction of the rate of interest payable on such amount or any amount of fees payable hereunder to a rate or amount, as the case may be, below that which the participant is entitled to receive under its agreement with such Lender. Such Lender may furnish any information concerning any Consolidated Entity, the Guarantor or any of their respective Affiliates in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants); provided that such Lender shall require any such prospective assignee or such participant (prospective or otherwise) to agree in writing to maintain the confidentiality of such information in accordance with the provisions of Section 12.14. In connection with any assignment or sale of a participation interest pursuant to this paragraph (a), the assigning or selling Lender shall pay the Agent an administrative fee for processing such assignment or participation in the amount of $2,500. (b) In addition to the assignments and participations permitted under paragraph (a) above, any Lender may assign and pledge all or any portion of the Obligations held by it to (i) any affiliate of such Lender or (ii) any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (c) The assignor Lender shall be solely responsible for obtaining from any participant or assignee and providing to the Agent and Borrower all forms required under Section 11.14. If, pursuant to this Section 12.05, any interest in this Agreement is transferred to any assignee that is organized under the laws of any jurisdiction other than the United States or any state thereof, the Lender transferring such interest (the "Transferor Lender") shall cause such assignee concurrently with the effectiveness of such transfer, (a) to represent to the Transferor Lender (for the benefit of the Transferor Lender, the Agent and the Borrower) that it is either (i) entitled to the benefits of an income tax treaty with the United States that provides for an exemption from United States withholding tax on interest and other payments which may be made by the Borrower under this Agreement; or (ii) is engaged in the trade or business within the United States and such Loan is effectively connected with such trade or business, (b) to furnish to the Transferor Lender, the Agent and the Borrower either Internal Revenue Service Form 4224 or Internal Revenue Service Form 1001 (wherein such assignee claims entitlement to complete exemption from federal withholding tax of the United States of America on all payments hereunder) and (c) to agree (for the benefit of the Transferor Lender, the Agent and the Borrower) to provide to the Transferor Lender, Agent and Borrower such forms or documentation as may be required from time to time, including a new Form 4224 or Form 1001 upon the obsolescence of any previously delivered form, in accordance with applicable laws and regulations of the United States of America establishing the current status of such assignee with regard to continued entitlement to such complete withholding tax exemption. Section 12.06. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing, by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders and to the Borrower by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of this Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when confirmation of delivery of the telecopy to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. Section 12.07. Setoff. The Borrower agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim a Lender may otherwise have, each Lender shall be entitled, at its option, to offset balances (general or special, time or demand, provisional or final) held by it for the account of the Borrower at any of such Lender's offices, in Dollars or in any other currency, against any amount payable by the Borrower to such Lender under this Agreement, such Lender's Note, any Letter of Credit or any other Facility Document which is not paid when due (regardless of whether such balances are then due to the Borrower), in which case it shall promptly notify the Borrower and the Agent thereof; provided that such Lender's failure to give such notice shall not affect the validity thereof. Payments by the Borrower or the Guarantor hereunder shall be made without setoff or counterclaim. SECTION 12.08. JURISDICTION; IMMUNITIES. (a) EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY NOTE, ANY LETTER OF CREDIT OR ANY OTHER FACILITY DOCUMENT, AND EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 12.06. EACH OF THE BORROWER, THE AGENT AND THE LENDERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWER, THE AGENT AND THE LENDERS FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT OR ANY LENDER SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE BORROWER, THE AGENT AND THE LENDERS WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (b) Nothing in this Section 12.08 shall affect the right of the Borrower, the Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of the Agent or any Lender to bring any action or proceeding against the Borrower or its Property in the courts of any other jurisdictions. (c) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its Property, the Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement, the Notes, the Letters of Credit and the other Facility Documents. Section 12.09. Table of Contents; Headings. Any table of contents and the headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 12.10. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 12.11. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. Section 12.12. Integration. The Facility Documents set forth the entire agreement among the parties hereto relating to the transactions contemplated thereby and supersede any prior oral or written statements or agreements with respect to such transactions. SECTION 12.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UCP AND AS TO MATTERS NOT GOVERNED BY THE UCP, THE LAWS OF THE STATE OF NEW YORK. Section 12.14. Confidentiality. Each Lender and the Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with safe and sound banking practices, any non-public information supplied to it by the Consolidated Entities or the Guarantor pursuant to the Facility Documents, provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by applicable statute, rule, regulation or judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii) to bank examiners, and such Lender's auditors or accountants who agree to keep such information confidential as provided herein, (iv) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) agrees in writing to use reasonable precautions to keep such information confidential as provided herein; and provided finally that in no event shall any Lender or the Agent be obligated or required to return any materials furnished by the Consolidated Entities or the Guarantor. All other parties to whom such information is given, including, without limitation, prospective assignees and participants and the Lenders' auditors and accountants shall be obligated to return all confidential materials. The obligations of the Lenders and the Agent under this Section 12.14 shall survive the repayment of the Loans and the Letters of Credit and the termination of the Commitments. Section 12.15. Treatment of Certain Information. The Borrower (a) acknowledges that services may be offered or provided to it in connection with actions to be taken under this Agreement and the other Facility Documents by each Lender or by one or more of their respective subsidiaries or affiliates and (b) acknowledges that information delivered to each Lender by any Consolidated Entity, the Guarantor or any Affiliate may be provided to each such subsidiary and affiliate; so long as, in each case, each such subsidiary or affiliate agrees to use reasonable precautions to keep such information confidential as provided in Section 12.14. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. MISTIC BRANDS, INC. By: Michael Weinstein Name: Michael Weinstein Title: Chief Executive Officer Address for Notices: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, NY 10801 Attention: Chief Financial Officer Telecopier No.: (914) 637-0020 With a copy to: Triarc Companies, Inc. 900 Third Avenue New York, New York 10022 Attention: Executive Vice President and General Counsel Telecopier No.: (212) 230-3216 AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Michael D. Anthony Name: Michael D. Anthony Title: Vice President Address for Notices: New York Agency 4 Chase Metrotech Center 13th Floor Brooklyn, NY 11245 Attention: Lucy D'Orazio Telecopier No.: (718) 242-6909 with a copy to: 31 Mamaroneck Avenue White Plains, NY 10601 Attention: Michael D. Anthony Telecopier No.: (914) 328-8373 LENDERS: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Michael D. Anthony Name: Michael D. Anthony Title: Vice President Lending Office and Address for Notices: 31 Mamaroneck Avenue White Plains, NY 10601 Attention: Michael D. Anthony Telecopier No.: (914) 328-8373 EX-10.1A 3 REVOLV CREDIT NOTE EXHIBIT A REVOLVING CREDIT NOTE $[_________] New York, New York August 9, 1995 For value received, MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower"), hereby promises to pay to the order of [_______________] (the "Lender") at the principal office of The Chase Manhattan Bank (National Association) at 1 Chase Manhattan Plaza, New York, New York 10081, as agent for the Lender (in such capacity, together with its successors in such capacity, the "Agent"), for the account of the appropriate Lending Office of the Lender, the principal sum of $[__________] or, if less, the amount loaned by the Lender to the Borrower pursuant to the Credit Agreement referred to below, in lawful money of the United States of America and in immediately available funds, on the date(s) and in the manner provided in the Credit Agreement referred to below. The Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, at said principal office for the account of said Lending Office, in like money, at the rates of interest as provided in the Credit Agreement described below, on the date(s) and in the manner provided in said Credit Agreement. The date and amount of each type of Revolving Credit Loan made by the Lender to the Borrower under the Credit Agreement referred to below, and each payment of principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Revolving Credit Note (or, at the discretion of the Lender, at any other time), endorsed by the Lender on the schedule attached hereto or any continuation thereof. This is one of the Revolving Credit Notes referred to in that certain Credit Agreement dated as of August 9, 1995 (as amended or supplemented from time to time, the "Credit Agreement") among the Borrower, each of the lenders which is signatory thereto (including the Lender) and the Agent and evidences the Revolving Credit Loans made by the Lender thereunder which shall, in the aggregate amount among all such Revolving Credit Notes, not exceed $20,000,000. All terms not defined herein shall have the meanings given to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of principal upon the occurrence of certain Events of Default and for prepayments on the terms and conditions specified therein. The Borrower waives presentment, notice of dishonor, protest and any other notice (except as provided in the Facility Documents) with respect to this Revolving Credit Note. This Revolving Credit Note is secured in accordance with, and entitled to the benefits of, the Security Documents. All obligations evidenced by this Revolving Credit Note are guarantied by Triarc Companies, Inc., a Delaware corporation, pursuant to, and subject to the terms and conditions of, the Unconditional Guaranty. This Revolving Credit Note shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York. MISTIC BRANDS, INC. By: Name: Title: Amount of Amount of Balance Notation Date Loan Payment Outstanding By EX-10.1B 4 TERM NOTE EXHIBIT B TERM NOTE $[__________] New York, New York August 9, 1995 For value received, MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower"), hereby promises to pay to the order of [_______________] (the "Lender") at the principal office of The Chase Manhattan Bank (National Association) at 1 Chase Manhattan Plaza, New York, New York 10081, as agent for the Lender (in such capacity, together with its successors in such capacity, the "Agent"), for the account of the appropriate Lending Office of the Lender, the principal sum of $[__________] in lawful money of the United States of America and in immediately available funds, on the date(s) and in the manner provided in the Credit Agreement referred to below. The Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, at said principal office for the account of said Lending Office, in like money, at the rates of interest as provided in the Credit Agreement described below, on the date(s) and in the manner provided in said Credit Agreement. The date and amount of each type of Term Loan made by the Lender to the Borrower under the Credit Agreement referred to below, and each payment of principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Term Note (or, at the discretion of the Lender, at any other time), endorsed by the Lender on the schedule attached hereto or any continuation thereof. This is one of the Term Notes referred to in that certain Credit Agreement dated as of August 9, 1995 (as amended or supplemented from time to time, the "Credit Agreement") among the Borrower, each of the lenders which is signatory thereto (including the Lender) and the Agent and evidences the Term Loan made by the Lender thereunder which shall, in the aggregate amount among all such Term Notes, not exceed $60,000,000. All terms not defined herein shall have the meanings given to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of principal upon the occurrence of certain Events of Default and for prepayments on the terms and conditions specified therein. The Borrower waives presentment, notice of dishonor, protest and any other notice (except as other provided in the Facility Documents) with respect to this Term Note. This Term Note is secured in accordance with, and entitled to the benefits of, the Security Documents. All obligations evidenced by this Term Note are guarantied by Triarc Companies, Inc., a Delaware corporation, pursuant to, and subject to the terms and conditions of, the Unconditional Guaranty. This Term Note shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York. MISTIC BRANDS, INC. By: Name: Title: Amount of Amount of Balance Notation Date Loan Payment Outstanding By EX-10.1C 5 UNCONDITIONAL GUARANTY EXHIBIT C UNCONDITIONAL GUARANTY Dated as of August 9, 1995 by TRIARC COMPANIES, INC. in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) as Agent UNCONDITIONAL GUARANTY UNCONDITIONAL GUARANTY, dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, this "Agreement"), made by TRIARC COMPANIES, INC., a corporation organized under the laws of Delaware (the "Guarantor") in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as agent (in such capacity, together with its successors in such capacity, the "Agent") for the benefit of each of the lenders (the "Lenders") signatory to the Credit Agreement dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Mistic Brands, Inc., a Delaware corporation (the "Borrower"), the Agent and the Lenders. W I T N E S S E T H : WHEREAS, pursuant to the terms of the Credit Agreement and the other Facility Documents, the Lenders have agreed to extend credit to the Borrower upon the terms and subject to the conditions set forth therein to be evidenced by the Notes issued by the Borrower thereunder and the Letters of Credit issued thereunder and to be guarantied by the Guarantor hereunder; WHEREAS, the Borrower is a wholly-owned Subsidiary of the Guarantor and the Guarantor will directly benefit from the making of the Loans and the issuance of the Letters of Credit; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their extensions of credit to the Borrower under the Credit Agreement that the Guarantor shall have executed and delivered this Agreement to the Agent to guaranty the obligations of the Borrower under the Notes, the Letters of Credit, the Credit Agreement and the other Facility Documents. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and to purchase Participating Interests in Letters of Credit issued under the Credit Agreement, the Guarantor hereby agrees with the Agent, as follows: ARTICLE 1. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS. Section 1.01. Guarantied Obligations. The Guarantor, in consideration of the execution and delivery of the Credit Agreement by the Lenders and the Agent, hereby irrevocably and unconditionally guarantees to the Agent, for the benefit of the Lenders, until final payment has been made: (a) the due and punctual payment in full in cash by the Borrower of the Obligations, in each case when and as the same shall become due and payable, whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise, all in accordance with the terms and provisions of the Credit Agreement and the other Facility Documents, it being the intent of the Guarantor that the guaranty set forth in this Section 1.01 (the "Unconditional Guaranty") shall be a guaranty of payment and not a guaranty of collection; and (b) the punctual and faithful performance, keeping, observance, and fulfillment by the Borrower of all duties, agreements, covenants and obligations of the Borrower contained in each of the Facility Documents to which it is a party. Section 1.02. Performance Under This Agreement. In the event the Borrower fails to pay, on or before the due date thereof, any Obligation or if the Borrower shall fail to perform, keep, observe, or fulfill any other obligation referred to in clause (a) or clause (b) of Section 1.01 hereof in the manner provided in the Notes, the Letters of Credit or in any of the other Facility Documents after, in each case, giving effect to any applicable grace periods or cure provisions or waivers or amendments, upon written request from the Agent therefor, the Guarantor shall cause forthwith to be paid the moneys, or to be performed, kept, observed, or fulfilled each of such obligations, in respect of which such failure has occurred. Section 1.03. Waivers. To the fullest extent permitted by law, the Guarantor does hereby waive: (a) notice of acceptance of the Unconditional Guaranty; (b) notice of any borrowings under the Credit Agreement, or the creation, existence or acquisition of any of the Obligations, subject to the Guarantor's right to make inquiry of the Agent to ascertain the amount of the Obligations at any reasonable time and to consent to any amendments to the Credit Agreement; (c) notice of the amount of the Obligations, subject to the Guarantor's right to make inquiry of the Agent to ascertain the amount of the Obligations at any reasonable time; (d) notice of adverse change in the financial condition of the Borrower, any other guarantor or any other fact that might increase the Guarantor's risk hereunder; (e) notice of presentment for payment, demand, protest, and notice thereof as to the Notes or any other Facility Document; (f) notice of any "Default" or "Event of Default" under and as defined in the Credit Agreement; (g) all other notices and demands to which the Guarantor might otherwise be entitled (except if such notice or demand is specifically otherwise required to be given to the Guarantor hereunder or under the other Facility Documents); (h) the right by statute or otherwise to require any or each Lender or the Agent to institute suit against the Borrower or to exhaust the rights and remedies of any or each Lender or the Agent against the Borrower, the Guarantor being bound to the payment of each and all Obligations, whether now existing or hereafter accruing, as fully as if such Obligations were directly owing to each Lender by the Guarantor; (i) any defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally performed and indefeasibly paid) of the Borrower or by reason of the cessation from any cause whatsoever of the liability of the Borrower in respect thereof; and (j) any stay (except in connection with a pending appeal or the automatic stay imposed under 11 U.S.C. Section 362 or any successor or replacement thereof), valuation, appraisal, redemption or extension law now or at any time hereafter in force which, but for this waiver, might be applicable to any sale of Property of the Guarantor made under any judgment, order or decree based on this Agreement, and the Guarantor covenants that it will not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of such law. Until all of the Obligations shall have been paid in full, the Guarantor shall not have any right of subrogation, reimbursement, or indemnity whatsoever in respect thereof and no right of recourse to or with respect to any assets or Property of the Borrower or any of its Subsidiaries. Nothing shall discharge or satisfy the obligations of the Guarantor hereunder except the full and final performance and indefeasible payment of the Obligations by the Guarantor, upon which each Lender agrees to transfer and assign its interest in the Notes and other evidence of indebtedness under the Facility Documents to the Guarantor without recourse, representation or warranty of any kind (other than that such Lender owns the Notes free of all Liens). All of the Obligations shall in the manner and subject to the limitations provided herein for the acceleration thereof forthwith become due and payable without notice. Section 1.04. Releases. The Guarantor consents and agrees that, without notice to or by the Guarantor and without affecting or impairing the obligations of the Guarantor hereunder, each Lender or the Agent, in the manner provided herein, by action or inaction, may: (a) compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not, enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the Notes or the other Facility Documents; (b) grant other indulgences to the Borrower in respect thereof; (c) release or substitute any one or more of the endorsers or guarantors of the Obligations whether parties hereto or not; and (d) exchange, enforce, waive, or release, by action or inaction, any security for the Obligations (including, without limitation, any of the collateral therefor) or any other guaranty of any of the Obligations. Section 1.05. Marshaling. The Guarantor consents and agrees that: (a) the Agent shall be under no obligation to marshal any assets in favor of the Guarantor or against or in payment of any or all of the Obligations; and (b) to the extent the Borrower makes a payment or payments to any Lender, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or required, for any of the foregoing reasons or for any other reason, to be repaid or paid over to a custodian, trustee, receiver, or any other party under any bankruptcy law, common law, or equitable cause, then to the extent of such payment or repayment, the Obligation or part thereof intended to be satisfied thereby shall be revived and continued in full force and effect as if said payment or payments had not been made and the Guarantor shall remain liable hereunder for such Obligation. Section 1.06. Liability. The Guarantor agrees that the liability of the Guarantor in respect of this Article 1 shall not be contingent upon the exercise or enforcement by any Lender or the Agent of whatever remedies such Lender or the Agent may have against the Borrower or the enforcement of any Lien or realization upon any security such Lender or the Agent may at any time possess. Section 1.07. Unconditional Obligation. The Unconditional Guaranty set forth in this Article 1 is an absolute, unconditional, continuing and irrevocable guaranty of payment and performance and shall remain in full force and effect until the full and final payment of the Obligations without respect to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance or assumption of any obligations (including, without limitation, the Notes and the Letter of Credit Obligations) of or by the Borrower, or, except as otherwise provided herein, with respect to the execution and delivery of any agreement (including, without limitation, the Notes and the other Facility Documents) of the Borrower. Section 1.08. Election to Perform Obligations. Any election by the Guarantor to pay or otherwise perform any of the obligations of the Borrower under the Notes or under any of the other Facility Documents, whether pursuant to this Article 1 or otherwise, shall not release the Borrower from any of its other obligations under the Notes, the Letters of Credit or any of the other Facility Documents. Section 1.09. No Election. The Agent shall have the right to seek recourse against the Guarantor to the fullest extent provided for herein for the Guarantor's obligations under this Agreement (including, without limitation, this Article 1) in respect of the Notes, the Letters of Credit and the other Facility Documents. No election to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of the Agent's right to proceed in any other form of action or proceeding or against other parties unless the Agent has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by any Lender or the Agent against the Borrower under any document or instrument evidencing obligations of the Borrower to such Lender or the Agent shall serve to diminish the liability of the Guarantor under this Agreement (including, without limitation, this Article 1) except to the extent that the Agent or such Lender finally and unconditionally shall have realized payment by such action or proceeding, notwithstanding the effect of any such action or proceeding upon the Guarantor's right of subrogation against the Borrower. Section 1.10. Severability. Subject to Article 10 of the Credit Agreement and applicable law, each of the rights and remedies granted under this Article 1 to the Agent may be exercised by the Agent without notice by the Agent to, or the consent of or any other action by, any Lender, provided that the Agent will promptly thereafter give each Lender (and, if applicable, the Borrower) notice of any exercise of rights and remedies by the Agent under this Article 1. Section 1.11. Other Enforcement Rights. The Agent may proceed, as provided in Article 1 hereof, to protect and enforce the Unconditional Guaranty by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement contained herein (including, without limitation, in this Article 1) or in execution or aid of any power herein granted; or for the recovery of judgment for the obligations hereby guarantied or for the enforcement of any other proper, legal or equitable remedy available under applicable law. Section 1.12. Delay or Omission; No Waiver. No course of dealing on the part of any Lender or the Agent and no delay or failure on the part of any such Person to exercise any right hereunder (including, without limitation, this Article 1) shall impair such right or operate as a waiver of such right or otherwise prejudice such Person's rights, powers and remedies hereunder. Every right and remedy given by the Unconditional Guaranty or by law to any Lender or the Agent may be exercised from time to time as often as may be deemed expedient by such Person. Section 1.13. Restoration of Rights and Remedies. If any Lender or the Agent shall have instituted any proceeding to enforce any right or remedy under the Unconditional Guaranty, under any Note held by such Lender, or under any Security Document, and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Lender or the Agent, then and in every such case each such Lender, the Agent, the Borrower and the Guarantor shall, except as may be limited or affected by any determination in such proceeding, be restored severally and respectively to its respective former positions hereunder and thereunder, and thereafter, subject as aforesaid, the rights and remedies of such Lender or the Agent shall continue as though no such proceeding had been instituted. Section 1.14. Cumulative Remedies. No remedy under this Agreement (including, without limitation, this Article 1), the Notes, the Letters of Credit or any of the other Facility Documents is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Agreement (including, without limitation, this Article 1), the Notes, the Letters of Credit or any of the other Facility Documents. Section 1.15. Survival. The obligations of the Guarantor under this Article 1 shall survive the transfer and payment of any Obligation until the indefeasible payment in full of all the Obligations and the expiration and termination of the Commitments. Section 1.16. No Setoff, Counterclaim or Withholding; Gross- Up. Except as otherwise required by law, each payment by the Guarantor shall be made without setoff or counterclaim and, except as provided in the Credit Agreement, without withholding for or on account of any present or future taxes imposed by any Governmental Authority. If any such withholding is so required, such Guarantor shall make the withholding and pay the amount withheld to the appropriate Governmental Authority before penalties attach thereto or interest accrues thereon. Section 1.17. Certain Distributions. The Guarantor agrees that payments and distributions by the Borrower and its Subsidiaries are specifically limited by and in accordance with Section 8.06, Section 8.08 and Section 8.13 of the Credit Agreement. The Guarantor agrees that it will not receive or accept any payment, distribution or security from the Borrower or any of its Subsidiaries if the transfer of such payment, distribution or security would constitute or cause a "Default" or an "Event of Default" under and as defined in the Credit Agreement. The Guarantor agrees that if any payment or distribution of any character (whether in cash, securities or other Property) or any security shall be received by the Guarantor in contravention of the terms of any one or more of the Facility Documents and before the full payment of the Obligations, such payment, distribution or security shall be held in trust for the benefit of, and shall be paid over or delivered and transferred to the Agent for application to the payment of the Obligations. Until the Obligations shall have been paid in full, the Guarantor shall have no right of recourse to or against any assets of the Borrower or any of its Subsidiaries with respect to any payments or distributions made and held in trust for the Agent or paid over to the Agent pursuant to this Agreement. Nothing in this Section 1.17 shall be deemed to relieve the Borrower or any of its Subsidiaries of its obligation to pay any amounts due to the Guarantor that may be paid or accrued in accordance with Section 8.06, Section 8.09 and Section 8.14 of the Credit Agreement. Section 1.18. Management Fees. The Guarantor agrees that, so long as this Unconditional Guaranty shall be in full force and effect, the fees paid to the Guarantor by the Borrower pursuant to the Management Agreement shall not exceed the Borrower's allocable portion of the "Service Costs" (as defined in the Management Agreement) pursuant to the formula set forth in the Management Agreement as in effect on the date hereof. ARTICLE 2. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants as of the Closing Date that: Section 2.01. Incorporation, Good Standing and Due Qualification. The Guarantor is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its assets and to transact the business in which it is now engaged, and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required, except where the failure to qualify could not reasonably be expected to have a material adverse effect on the business, profits, Properties or condition of the Guarantor. Section 2.02. Corporate Power and Authority; No Conflicts. The execution, delivery and performance by the Guarantor of the Facility Documents to which it is a party have been duly authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders; (b) contravene its charter or by-laws; (c) violate any provision of, or require any filing (other than the filing of the financing statements and assignments required pursuant to the terms of the Security Documents), registration, consent or approval under, any law, rule or regulation (including, without limitation, Regulations G, T, U and X of the Federal Reserve Board) or any order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor or any of its Subsidiaries; (d) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Guarantor or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien (other than as created under the Security Documents), upon or with respect to any of the Properties now owned or hereafter acquired by the Guarantor or any of its Subsidiaries; or (f) cause the Guarantor or any of its Subsidiaries to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. Section 2.03. Legally Enforceable Agreements. Each Facility Document to which the Guarantor is a party is a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). Section 2.04. Financial Statements. The consolidated balance sheet of the Guarantor and its Subsidiaries as at December 31, 1994, and the related consolidated income statement and consolidated statement of cash flows and changes in stockholders' equity of the Guarantor and its Subsidiaries, for the Fiscal Year then ended, and the accompanying footnotes, together with the opinion thereon of Deloitte & Touche LLP, independent certified public accountants, and the unaudited interim consolidated balance sheet of the Guarantor and its Subsidiaries as at June 30, 1995 and the related unaudited income statement and statement of cash flows and changes in stockholders' equity of the Guarantor and its Subsidiaries for the three month period then ended, copies of which have been furnished to each of the Lenders, are complete and correct in all material respects and fairly present the financial condition of the Guarantor and its Subsidiaries at such dates and the results of the operations of the Guarantor and its Subsidiaries for the periods covered by such statements, all in accordance with GAAP (subject, in the case of the aforementioned interim financial statements, to year-end adjustments and that no footnotes are provided) consistently applied. Except as set forth on the consolidated balance sheet of the Guarantor and its Subsidiaries as at June 30, 1995, on the Pro Forma Balance Sheet and on Schedule I hereto, there are no liabilities of the Guarantor and its Subsidiaries, fixed or contingent, which are individually in excess of $20,000,000 but are not reflected in the financial statements or in the notes thereto and which would be required to be recorded in such financial statements or notes in accordance with GAAP, other than liabilities arising in the ordinary course of business since June 30, 1995. There is no fact or facts actually known to the Guarantor, other than conditions affecting the United States economy generally and trends affecting generally the industries in which the Guarantor's Subsidiaries do business, that the Guarantor has not disclosed to the Agent that materially adversely affects or, so far as the Guarantor can now reasonably foresee, will materially adversely affect, the condition of the business, Properties or assets of the Guarantor and its Subsidiaries, taken as a whole. ARTICLE 3. FINANCIAL REPORTING REQUIREMENTS. So long as any Obligation shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment, the Guarantor shall deliver to the Agent: (a) as soon as available and in any event within 105 days after the end of each Fiscal Year, a consolidated balance sheet of the Guarantor and its Subsidiaries as of the end of such Fiscal Year and a consolidated income statement and consolidated statement of cash flows and statements of additional capital (or equivalent financial statements) of the Guarantor and its Subsidiaries for such Fiscal Year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior Fiscal Year and all prepared in accordance with GAAP and accompanied by an unqualified opinion thereon by Deloitte & Touche LLP or other independent accountants of national standing selected by the Guarantor; provided that delivery within the period specified above of copies of the Annual Report on Form 10-K of the Guarantor filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this subparagraph (a) so long as such Form 10-K shall contain the information referred to in this subparagraph (a); (b) as soon as available and in any event within 50 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the Guarantor and its Subsidiaries as of the end of such Fiscal Quarter and a consolidated income statement and consolidated statement of cash flows of the Guarantor and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous Fiscal Year and all prepared in accordance with GAAP (subject to year-end adjustments and that no footnotes are provided) and certified by the chief financial officer or the chief accounting officer of the Guarantor; provided that delivery within the period specified above of copies of the Quarterly Report on Form 10-Q of the Guarantor filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this subparagraph (b) so long as such Form 10-Q shall contain the information referred to in this subparagraph (b); and (c) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports which the Guarantor sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements which the Guarantor files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor. ARTICLE 4. EVENTS OF DEFAULT. Section 4.01. Events of Default. Any of the following events shall be an "Event of Default": (a) the Guarantor shall fail to pay any amount on or before such date when due and payable under this Agreement and under the Facility Documents; (b) any representation or warranty made by the Guarantor in this Agreement or in the Pledge Agreement shall prove to have been incorrect in any material respect on or as of the date made; (c) the Guarantor shall fail to perform or observe any term, covenant or agreement on its part to be performed or observed (other than the obligations specifically referred to elsewhere in this Section 4.01) in any Facility Document to which it is a party and such failure shall continue for 30 consecutive days after Knowledge thereof; (d) the Guarantor shall: (i) fail to pay any Debt in an aggregate amount exceeding $20,000,000 (other than the payment obligations described in (a) above), of the Guarantor, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), taking into account any applicable grace periods or waivers; or (ii) fail to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any such Debt, when required to be performed or observed, taking into account any applicable grace periods or waivers, if, in either case, the effect of such failure to pay, perform or observe is to accelerate the maturity of such indebtedness; (e) the Guarantor: (i) shall generally not, or be unable to, or shall admit in writing its inability to, pay its debts as such debts become due; or (ii) shall make an assignment for the benefit of creditors, petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for it or a substantial part of its assets; or (iii) shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any such petition or application filed or any such proceeding shall have been commenced, against it, in which an adjudication or appointment is made or order for relief is entered, or which petition, application or proceeding remains undismissed for a period of 90 days or more; or (v) shall be the subject of any such proceeding under which all or any substantial part of its Property may be subject to seizure, forfeiture or divestiture; or (vi) by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for all or any substantial part of its Property; or (vii) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of 90 days or more; or (f) one or more judgments, decrees or orders for the payment of money in excess of $20,000,000 in the aggregate shall be rendered against the Borrower and such judgments, decrees or orders shall continue unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied or stayed or bonded pending appeal. Section 4.02. Remedies. If an Event of Default shall occur and be continuing, the Agent may exercise all of the rights and remedies conferred in this Agreement and in each of the other Facility Documents; it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies; but each and every remedy shall be cumulative and shall be in addition to every other remedy given in this Agreement and each of the other Facility Documents or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may be deemed expedient by the Agent. ARTICLE 5. MISCELLANEOUS Section 5.01. Defined Terms. The terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. Section 5.02. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Guarantor, the Agent and the Required Lenders, or by the Guarantor and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) discharge the Guarantor from the Unconditional Guaranty; or (b) amend, waive or modify the definition of Obligations. Section 5.03. Expenses. The Guarantor shall reimburse the Agent and each Lender for all reasonable out-of-pocket costs, expenses and charges (including, without limitation, reasonable fees and charges of external legal counsel for the Agent and each Lender) in connection with the enforcement or preservation of any rights or remedies during the existence of an "Event of Default" (including, without limitation, to the extent permitted by law, in connection with any restructuring or insolvency or bankruptcy proceeding) under this Agreement or the Credit Agreement. Section 5.04. Survival. The obligations of the Guarantor under Section 5.03 shall survive the repayment of the Loans and the Letters of Credit and the termination of the Commitments. Section 5.05. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Guarantor, the Agent, the Lenders and their respective successors and assigns. Section 5.06. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing, by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders and to the Guarantor by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of this Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when confirmation of delivery of the telecopy to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. SECTION 5.07. JURISDICTION; IMMUNITIES. (A) EACH OF THE GUARANTOR AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH OF THE GUARANTOR AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH OF THE GUARANTOR AND THE AGENT IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO EACH OF THE GUARANTOR AND THE AGENT AT ITS ADDRESS SPECIFIED IN SECTION 5.06. EACH OF THE GUARANTOR AND THE AGENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE GUARANTOR AND THE AGENT FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE GUARANTOR FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT OR ANY LENDER SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE GUARANTOR AND THE AGENT WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (b) Nothing in this Section 5.07 shall affect the right of the Guarantor, the Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of the Agent or any Lender to bring any action or proceeding against the Guarantor or its property in the courts of any other jurisdictions. (c) To the extent that the Guarantor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Guarantor hereby irrevocably waives such immunity in respect of its obligations under this Agreement. Section 5.08. Headings. The headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 5.09. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 5.10. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 5.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 5.12. Subject to the Credit Agreement. Any and all rights granted to the Agent under this Agreement are to be held and exercised by the Agent for the benefit of the Lenders, pursuant to the provisions of the Credit Agreement. To the extent set forth in the Facility Documents, each of the Lenders shall be a beneficiary of the terms of this Agreement. Any and all obligations under this Agreement of the parties to this Agreement, and the rights granted to the Agent under this Agreement, are created and granted subject to the terms of the Credit Agreement. Section 5.13. Term of Agreement. This Agreement shall be and remain in full force and effect so long as any Obligation shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. GUARANTOR: TRIARC COMPANIES, INC. By: Name: Title: Triarc Companies, Inc. 900 Third Avenue New York, New York 10022 Attention: Executive Vice President and General Counsel Telecopier No.: (212) 230-3216 AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Name: Title: Address for Notices: New York Agency 4 Chase Metrotech Center 13th Floor Brooklyn, NY 11245 Attention: Lucy D'Orazio Telecopier No.: (718) 242-6909 with a copy to: 31 Mamaroneck Avenue White Plains, NY 10601 Attention: Michael D. Anthony Telecopier No.: (914) 328-8373 EX-10.1D1 6 BORROWING BASE CERTIFICATE EXHIBIT D1 BORROWING BASE CERTIFICATE I. BOOK VALUE OF RECEIVABLES OF THE OBLIGORS $__________ II. AGGREGATE INELIGIBLE RECEIVABLES ((a)+(b)+(c)+(d)+(e)+(f)+(g)) $__________ (a) Over 90 Days Aged Receivables $__________ (b) Uninsured Foreign Receivables $__________ (c) Bankrupt Receivables $__________ (d) Disputed Receivables $__________ (e) Portion of Receivables Subject to Set-Off $__________ (including distributor reimbursements) (f) Over 90 Days Cross-Aged Receivables $__________ (g) Other Ineligible Receivables (see attached)$__________ III. ELIGIBLE RECEIVABLES (I-II) $__________ IV. BOOK VALUE OF INVENTORY OF THE OBLIGORS $__________ V. AGGREGATE INELIGIBLE INVENTORY ((a)+(b)+(c)) $__________ (a) Foreign Inventory $__________ (b) Unsalable Inventory $__________ (c) Unusable Supplies $__________ VI. ELIGIBLE INVENTORY (IV-V) $__________ VII. TOTAL BORROWING BASE ((III*.80)+(VI*.50)) $__________ VIII. TOTAL REVOLVING CREDIT COMMITMENTS $__________ IX. AVAILABILITY (LESSER OF VII AND VIII) $__________ X. TOTAL REVOLVING CREDIT LOANS OUTSTANDING $__________ XI. TOTAL LETTER OF CREDIT OBLIGATIONS OUTSTANDING $__________ XII. UNUSED PORTION OF THE BORROWING BASE AVAILABILITY (IX-X-XI) (if negative, our check for said amount is attached) $__________ I, [_______________], the [_______________] of Mistic Brands, Inc., in my capacity as such, hereby certify that, to the best of my knowledge, the information contained herein is true and correct and no Default has occurred and is continuing on the date hereof. Date: [______] [__], 199[_] MISTIC BRANDS, INC. By:___________________________ Name: Title: EX-10.1D2 7 COMPLIANCE CERT EXHIBIT D2 COMPLIANCE CERTIFICATE For the Fiscal Period Ending [____________] [____], 19[____] INTEREST COVERAGE RATIO (calculated for the period of the four most recently ended Fiscal Quarters) (a) Consolidated Net Income $____________ (b) Consolidated Income Taxes $____________ (c) Consolidated Interest Expense $____________ (d) Consolidated EBIT ((a)+(b)+(c)) $____________ (e) Consolidated Amortization $____________ (f) Consolidated EBITA ((d)+(e)) $____________ (g) Interest Coverage Ratio ((f)/(c)) _____________ (h) Required Ratio (i) on or after December 31, 1995 and on or before September 30, 1996 2.40 (ii) after September 30, 1996 and on or before September 30, 1997 2.70 (iii) after September 30, 1997 and on or before September 30, 1998 3.00 (iv) after September 30, 1998 and on or before September 30, 1999 3.50 (v) after September 30, 1999 4.00 FIXED CHARGE COVERAGE RATIO (calculated for the period of the four most recently ended Fiscal Quarters) (a) Consolidated EBITA $____________ (b) Consolidated Depreciation $____________ (c) Consolidated EBITDA ((a)+(b)) $____________ (d) Consolidated Capital Expenditures $____________ (e) Consolidated Principal Payments $____________ (f) Consolidated Interest Expense $____________ (g) Fixed Charge Coverage Ratio (((c)-(d))/((e)+(f))) _____________ (h) Required Ratio (i) on December 31,1995 1.60 (ii) on March 31, 1996 1.45 (iii) after March 31, 1996 and on or before September 30, 1998 1.30 (iv) after September 30, 1998 and on or before September 30, 2000 1.15 (v) after September 30, 2000 1.10 LEVERAGE RATIO (calculated as of the end of the most recently ended Fiscal Quarter) (a) Consolidated Funded Debt $____________ (b) Consolidated EBITDA for the Four Most Recently Ended Fiscal Quarters $____________ (c) Leverage Ratio ((a)/(b)) _____________ (d) Required Ratio (i) on December 31, 1995 and on March 31, 1996 4.50 (ii) on June 30, 1996 4.70 (iii) on September 30, 1996 4.00 (iv) after September 30, 1996 and on or before September 30, 1997 3.50 (v) after September 30, 1997 and on or before September 30, 1998 3.00 (vi) after September 30, 1998 and on or before September 30, 1999 2.50 (vii) after September 30, 1999 and on or before September 30, 2000 2.25 (viii) after September 30, 2000 2.00 NET WORTH (calculated as of the end of the most recently ended Fiscal Quarter) (a) Consolidated Net Worth $____________ (b) Required Amount (i) on or after the Closing Date and on or before December 30, 1995 $25,000,000 (ii) after December 30, 1995 and on or before December 30, 1996 $26,000,000 (iii) after December 30, 1996 and on or before December 30, 1997 $29,000,000 (iv) after December 30, 1997 and on or before December 30, 1998 $33,000,000 (v) after December 30, 1998 and on or before December 30, 1999 $39,000,000 (vi) after December 30, 1999 and on or before December 30, 2000 $45,000,000 (vii) after December 30, 2000 $50,000,000 CURRENT RATIO (calculated as of the end of the most recently ended Fiscal Quarter) (a) Consolidated Current Assets (other than Prepaid Expenses) $____________ (b) Consolidated Current Liabilities $____________ (c) Current Ratio ((a)/(b)) _____________ (d) Required Ratio (i) on or after the Closing Date and on or before March 31, 1996 1.05 (ii) between each April 1 and September 30 thereafter 1.20 (iii) between each October 1 and March 31 thereafter 1.10 MANAGEMENT FEES (paid during the most recently ended Fiscal Quarter) $____________ PAYMENTS TO AFFILIATES (paid during the most recently ended Fiscal Quarter) $____________ CAPITAL EXPENDITURES (calculated for the most recently ended Fiscal Quarter) $____________ EXCESS CASH FLOW-MANDATORY PREPAYMENT (calculated for the most recently ended Fiscal Year) (a) Consolidated EBITDA $____________ (b) Consolidated Non-cash Charges and Losses $____________ (c) Management Fees Paid (i) in FY 1996, FY 1997 in excess of $500,000$____________ (ii) after FY 1997 in excess of $750,000 $____________ (d) Change in Adjusted Working Capital $____________ (e) Consolidated Non-cash Gains $____________ (f) Consolidated Principal Payments Paid $____________ (g) Consolidated Interest Expense $____________ (h) Consolidated Income Taxes $____________ (i) Consolidated Capital Expenditures $____________ (j) Consolidated Gains on Asset Sales $____________ (k) Excess Cash Flow (((a)+(b)+(c))-((d)+(e)+(f)+(g)+(h)+(i)+(j)) _____________ (l) Mandatory Prepayment (i) FY 1996, FY 1997 (.75*f) $____________ (ii) after FY 1997 (.50*f) $____________ I, [_______________], the [_______________] of Mistic Brands, Inc., in my capacity as such, hereby certify that, to the best of my knowledge, the information contained herein is true and correct and no Default or Event of Default has occurred and is continuing on the date hereof. Date: [______] [__], 199[_] MISTIC BRANDS, INC. By:___________________________ Name: Title: EX-10.1E 8 OPIN OF COUNSEL TO BORROWER EXHIBIT E August 9, 1995 The Lenders Parties to the Credit Agreement Referred to Below c/o The Chase Manhattan Bank (National Association), as Agent 4 Chase Metrotech Center Brooklyn, N.Y. 11245 Ladies and Gentlemen: I am Vice President and Associate General Counsel of Triarc Companies, Inc. (the "Guarantor") and in my capacity as such have represented the Guarantor and its wholly-owned subsidiary Mistic Brands, Inc. (the "Borrower"), in connection with the execution and delivery of that certain Credit Agreement dated as of August 9, 1995 (the "Credit Agreement") among the Borrower, each of the lenders signatory thereto (the "Lenders") and The Chase Manhattan Bank (National Association), as Agent (the "Agent"), and the various other agreements and instruments referred to in the next following paragraph. Except where otherwise indicated, capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Credit Agreement. This opinion is being furnished to you pursuant to Section 5.01(m) of the Credit Agreement. In connection with this opinion, I have examined originals, or copies certified or otherwise identified to my satisfaction, of the following documents, each dated the date hereof: a. the Credit Agreement; b. the Notes; c. the Unconditional Guaranty; d. the Security Agreement; e. the Trademark Security Agreement; f. the Pledge Agreement; g. the SAR Agreement; h. the Affiliate Subordination Agreement; and i. the uniform commercial code financing statements being executed and delivered pursuant to Section 5.01(d) and (f) of the Credit Agreement, copies of forms of which are attached hereto as Exhibit A (collectively, the "Financing Statements"). The documents referred to in clauses (a) to (h) above are hereinafter sometimes referred to collectively as the "Credit Documents." The agreements referred to in clauses (d) to (f) are collectively referred to as the "Security Documents." The Guarantor and the Borrower are herein collectively referred to as the "Obligors." In addition, I have examined originals or copies of originals, certified or otherwise identified to my satisfaction, of (i) such corporate records and resolutions of the board of directors of each Obligor and (ii) such other agreements, documents, instruments, certificates of public and governmental officials and corporate officers and other representatives of entities referred to herein, and have made such inquiries of such officers and other representatives, as I have deemed relevant or appropriate as a basis for the opinions hereinafter expressed. In my examination of the aforesaid documents, I have assumed, without independent investigation, the genuineness of all signatures, the enforceability of the Credit Documents against each party thereto, other than the Obligors, the legal capacity of all individuals who have executed any of the Credit Documents, the authenticity of all documents submitted to me as originals, the conformity to the original documents of all documents submitted to me as certified, photostatic, reproduced or conformed copies of valid existing agreements or other documents and the authenticity of all such latter documents. In expressing the opinions set forth herein, I have relied upon the factual matters contained in the representations and warranties of the Obligors made in the Credit Documents and upon certificates of public officials. Based upon the foregoing and subject to the assumptions, exceptions and qualifications set forth herein, I am of the opinion that: 1. Each of the Borrower and the Guarantor is duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and authority to own its assets and to transact the business in which it is now engaged, and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction set forth on Schedule 1 hereto. 2. The execution, delivery and performance by each of the Borrower and the Guarantor of the Facility Documents to which is a party, the borrowings by Borrower thereunder and the issuance of the Letters of Credit and the issuance of the SARs have been duly authorized by all necessary corporate action on the part of Borrower and the Guarantor and do not and will not: (a) require any consent or approval of its stockholders; (b) contravene its charter or by-laws; (c) violate any provision of, or require any filing (other than the filing of the Financing Statements and assignments required pursuant to the terms of the Security Documents), registration, consent or approval under, any law, rule or regulation (including, without limitation, Regulations G, T, U and X of the Federal Reserve Board) or, to my knowledge, any order, writ, judgment, injunction, decree, determination or award presently in effect binding upon the Guarantor or any of its Subsidiaries; (d) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Guarantor or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected; (e) to my knowledge, result in, or require, the creation or imposition of any Lien (other than as created under the Security Documents), upon or with respect to any of the Properties now owned or hereafter acquired by the Guarantor or any of its Subsidiaries; or (f) to my knowledge, cause the Guarantor or any of its Subsidiaries to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. 3. Each Facility Document to which it is a party has been duly executed and delivered by each of the Borrower and the Guarantor. Each Facility Document to which the Borrower or the Guarantor is a party is a legal, valid and binding obligation of such Person enforceable against such Person in accordance with its terms. 4. Except as disclosed in Note 25 to the consolidated financial statements of the Guarantor contained in the Guarantor's Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1995, or as otherwise disclosed on Schedule I to the Guaranty, to the best of my knowledge, there are no actions, suits or proceedings pending or threatened in writing, against or affecting the Borrower, the Guarantor or any of its Subsidiaries before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. 5. After giving effect to the making of the Loans on the date hereof, and assuming that the Lenders are entering into the Credit Documents in good faith without notice of any adverse claim, the Security Documents are effective to create, in favor of the Agent for itself and the other Lenders, a valid security interest under the Uniform Commercial Code as in effect in the State of New York (the "Uniform Commercial Code") in all of the right, title and interest of the Borrower in, to and under the Collateral (as defined in the Security Documents) to the extent that Article 9 of the Uniform Commercial Code as in effect on the date hereof is applicable thereto, except that (a) the security interest in Collateral in which the Borrower or the Guarantor acquires rights after the commencement of a case under the Bankruptcy Code in respect of the Borrower or the Guarantor may be limited by Section 552 of the Bankruptcy Code and (b) the creation of a security interest in any "security" (as defined in Section 8-102 of the Uniform Commercial Code) requires the transfer of such security interest therein to the Agent pursuant to Section 8-313(1) of the Uniform Commercial Code, which transfer in the case of a "certificated security" (as defined in said Section 8-102) may be effected in the manner contemplated by paragraph 6(b) below. 6. The security interest referred to in paragraph 5 above in the types of Collateral described below will be perfected as described below: (a) such security interest in that portion of the Collateral consisting of "indebtedness" owing to the Borrower that is not evidenced by an "instrument" within the meaning of such term in Section 9-105 of the Uniform Commercial Code, "accounts" (as defined in the Uniform Commercial Code) and "general intangibles" (as defined in the Uniform Commercial Code) may be perfected by filing Financing Statements in the appropriate offices in New York, the state in which the Borrower has its chief executive office; (b) such security interest in that portion of the Collateral consisting of instruments or securities in certificated form will be perfected when such instruments and the certificates representing such securities are delivered to the Agent in New York on behalf of itself and the Lenders; provided that the perfection of such security interest may cease if the Agent fails to maintain continuous possession of such securities; (c) such security interest in that portion of the Collateral consisting of "goods" or "documents covering goods" (as defined in the Uniform Commercial Code) may be perfected by filing Financing Statements in the appropriate offices in the states in which such goods are located; and (d) such security interest in that portion of the Collateral consisting of "proceeds" (as defined in the Uniform Commercial Code) may be perfected as and to the extent provided in Section 9-306 of the Uniform Commercial Code. 7. The authorized capital stock of the Borrower consists of (a) 3,000 shares of Common Stock, 884.25 shares of which are issued and outstanding, all of which are owned by the Guarantor. All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and non-assessable. To my knowledge, there are no outstanding preemptive, conversion or other rights, options or warrants granted or issued by or binding upon the Borrower for the purchase or acquisition by any other Person of any shares of capital stock of the Borrower or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of such capital stock. 8. Neither the Borrower nor the Guarantor is subject to regulation under the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce Act, the Federal Power Act or any statute or regulation limiting is ability in any material respect to incur indebtedness for money borrowed as contemplated hereby. The foregoing opinion is subject to the following assumptions, exceptions and qualifications: a. The enforceability of each of the Credit Documents may be: (i) subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally; (ii) subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing; and (iii) subject to the qualification that certain remedial provisions of the Credit Documents are or may be unenforceable in whole or in part under the laws of the State of New York, but the inclusion of such provisions does not make the remedies afforded by the Credit Documents inadequate for the practical realization of the rights and benefits purported to be provided thereby, except for the economic consequences resulting from any delay imposed by, or any procedure required by, applicable New York laws, rules, regulations and court decisions and by constitutional requirements in and of the State of New York. b. I express no opinion as to: (i) the enforceability of any provisions contained in the Credit Documents that purport to establish (or may be construed to establish) evidentiary standards; (ii) the enforceability of any provisions contained in the Security Documents or the Unconditional Guaranty that constitute waivers which are prohibited under the Uniform Commercial Code prior to default; (iii) the enforceability of any provisions in the Unconditional Guaranty purporting to preserve and maintain the liability of any party thereto despite the fact the guaranteed obligations are unenforceable due to illegality; or (iv) the enforceability of forum selection clauses in the federal courts. c. In giving the opinion set forth in paragraph 6 above, I express no opinion as to (i) any Obligor's right, title or interest in or to any Collateral or the description of such Collateral in the Security Documents; (ii) the laws of any other state or the perfection and effect of perfection or non- perfection of a security interest in the Collateral subject to the laws of any state other than New York; (iii) the perfection of security interests in fixtures, equipment used in farming operations, farm products, consumer goods, timber or minerals or the like, or accounts resulting from the sale thereof; or (iv) the creation, validity, perfection, priority or enforceability of any security interest sought to be created in any patents, trademarks, trade names, service marks, copyrights, deposit accounts, insurance policies, real property or any other items of property to the extent that a security interest therein is excluded from the coverage of Articles 8 or 9 of the Uniform Commercial Code. In addition, except as specifically set forth in paragraphs 6 and 7 above, I express no opinion as to the perfection of any security interest. I express no opinion as to the priority of any security interest. d. I wish to point out that, in the case of proceeds (as defined in Article 9 of the Uniform Commercial Code), the continuation of perfection of any security interest therein (i) is limited to the extent set forth in Section 9-306 of the Uniform Commercial Code, (ii) if such proceeds consist of property in which a perfect security interest cannot be obtained or maintained by the filing of Uniform Commercial Code financing statements in New York, will require additional compliance with applicable provisions of the Uniform Commercial Code. e. I call to your attention the fact that (i) Article 9 of the Uniform Commercial Code requires the filing of continuation statements within the period of six months prior to the expiration of each five year period from the date of the original filing of financing statements, as applicable, in order to maintain the effectiveness of any filings in New York and (ii) additional filings may be necessary if an Obligor changes its name, identity or corporate structure or the jurisdictions in which its places of business, its chief executive office or the Collateral are located. f. I express no opinion with respect to any Collateral of the type described in Section 9-401(1)(a) or (b) of the Uniform Commercial Code or represented by a certificate of title. The opinions expressed above are limited to the laws of the State of New York, the federal laws of the United States and the Delaware General Corporation Law. My opinions are rendered only with respect to the laws, and the rules, regulations and orders thereunder, which are currently in effect. Please be advised that I am not admitted to practice in the State of Delaware. This letter is furnished by me solely for your benefit in connection with the transactions referred to in Credit Documents and may not be relied upon it or circulated to any other person or entity. Very truly yours, Stuart I. Rosen Vice President and Associate General Counsel August 9, 1995 WRITER'S DIRECT LINE: (212) 596-9152 The Chase Manhattan Bank (National Association), as Agent 4 Chase Metrotech Center Brooklyn, New York 11245 Ladies and Gentlemen: We have acted as special trademark counsel to Mistic Beverage, Inc., a Delaware corporation ("the Borrower"), and Triarc Companies, Inc., a Delaware corporation (the "Guarantor") in connection with the Borrower's acquisition of certain assets from Best Flavors, Inc. In our role as special trademark counsel to the Borrower and the Guarantor, we were provided with and have reviewed the following documents: (1) the Asset Purchase Agreement dated as of August 9, 1995, by and among Mistic Brands, Inc. and Joseph Victori Wines, Inc., Best Flavors, Inc., Nature's Own Beverage Company and Joseph Umbach ("Asset Purchase Agreement"); and (2) the Trademark Security Agreement dated as of July 31, 1995 by Mistic Brands, Inc. in favor of The Chase Manhattan Bank (National Association) as Agent ("Trademark Security Agreement"). The Asset Purchase Agreement and the Trademark Security Agreement are hereinafter collectively referred to as the "Documents." Other terms defined (or incorporated by reference) in the Asset Purchase Agreement are used herein as therein defined. In rendering our opinion, we have assumed without independent investigation the legal capacity of all individuals who have executed any of the Documents, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies. We have further assumed, but have not verified, that each United States trademark registration and application for registration identified in Schedule A to the Trademark Security Agreement is not subject to any agreement prohibiting the grant of a security interest in such trademark registration or application for registration. We have also relied upon the specific representations and warranties of the Borrower made in the Documents, including without limitation those representations and warranties made in Section 3 of the Trademark Security Agreement and Sections 5.11 and 5.17 of the Asset Purchase Agreement. We have further relied upon the representations of the Borrower as to the location of its chief executive office as that term is used in Uniform Commercial Code ("UCC") Section 9- 103(3)(d). Upon the basis of the foregoing, and subject to the assumptions, exceptions and qualifications set forth herein, we are of the opinion that: 1. Schedule A to the Trademark Security Agreement completely and accurately lists all of the Trademarks in which the Borrower has any right, title or interest as of the Closing. To our knowledge, each of the registrations listed on that schedule is currently subsisting, valid and enforceable. 2. The Trademark Security Agreement creates a valid security interest in favor of the Agent in the Collateral as defined in the Trademark Security Agreement, as security for the payment of the "Secured Obligations" described therein, and, upon the filing of the UCC-1 Financing Statements with the appropriate authorities in the State of New York, the Agent will have a perfected security interest in such "Collateral, and such security interest will be senior to all other Liens, security interests and encumbrances. It is also permissible, although not mandatory, to record the Trademark Security Agreement in the United States Patent and Trademark Office. While such a filing has no effect on the perfection of the security interest, it provides notice to third parties of the existence of the security interest. We exclude from our opinion the effect of any antitrust and bankruptcy issues that may arise under the laws of the United States, or any foreign jurisdiction, as to which issues we express no opinion. The enforceability of the Guarantor's and the Borrower's obligations under the Trademark Security Agreement is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). We are qualified to practice law in the State of New York, and we do not purport to be experts on, or to express any opinion herein concerning, any law other than the law of the State of New York and the Federal law of the United States insofar as it applies to intellectual property. We do not give any opinion except as set forth above. In accordance with our firm's policy, this letter is furnished by us solely for your information in connection with the subject transaction and may be relied upon solely in connection therewith. This letter may not be circulated to, or relied upon by, any other Person, other than the Secured Parties, and is not to be (i) quoted in whole or in part, or otherwise referred to, in any public disclosure document or financial statement, of (ii) filed with any governmental agency. Very truly yours, Susan Progoff EX-10.1F 9 SECURITY AGMT EXHIBIT F SECURITY AGREEMENT Dated as of August 9, 1995 by MISTIC BRANDS, INC. in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) as Agent SECURITY AGREEMENT SECURITY AGREEMENT, dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, this "Agreement"), made by MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower") in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as agent (in such capacity, together with its successors in such capacity, the "Agent") for the benefit of each of the lenders (the "Lenders") signatory to the Credit Agreement dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrower, the Agent and the Lenders. W I T N E S S E T H : WHEREAS, pursuant to the terms of the Credit Agreement and the other Facility Documents, the Lenders have agreed to extend credit to the Borrower upon the terms and subject to the conditions set forth therein to be evidenced by the Notes issued by the Borrower thereunder and the Letters of Credit issued thereunder and to be guarantied by Triarc Companies, Inc., a corporation organized under the laws of Delaware (the "Guarantor") under the Unconditional Guaranty; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their extensions of credit to the Borrower under the Credit Agreement that the Borrower shall have executed and delivered this Agreement to the Agent to secure the obligations of the Borrower under the Notes, the Letters of Credit, the Credit Agreement and the other Facility Documents. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and to purchase Participating Interests in Letters of Credit issued under the Credit Agreement, the Borrower hereby agrees with the Agent, as follows: ARTICLE 1. DEFINITIONS. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; and the following terms have the following meanings: "Assigned Agreements" means each and every one of the leases, contracts, permits, licenses, franchises and other agreements to which the Borrower is a party or pursuant to which the Borrower has been granted rights, including, without limitation, all supply contracts, co-packer agreements, distribution agreements, all Mistic Acquisition Documents, all leases and all policies of property, casualty and liability insurance pursuant to which the Borrower is a beneficiary. "Code" means the Uniform Commercial Code as in effect in the State of New York. "Collateral" means all of the Borrower's right, title and interest in and to all the following, whether now owned or hereafter acquired: (a) all of the Receivables; (b) all of the Equipment; (c) all of the General Intangibles and all of the right, title and interest of the Borrower in and to, and all benefits of the Borrower pursuant to, the Assigned Agreements; (d) all of the Inventory; (e) (i) all of the Borrower's right, title and interest in and to the goods and other Property, including but not limited to all merchandise returned or rejected by Customers, represented by or securing any of the Receivables; (ii) all of the Borrower's rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin and reclamation; (iii) all additional amounts due to the Borrower from any Customer relating to the Receivables, irrespective of whether such additional amounts have been specifically assigned to the Agent; (iv) all of the Borrower's right, title and interest in other Property, including warranty claims, relating to any goods whatsoever securing this Agreement; (v) if and when obtained by the Borrower, all of the Borrower's interest in personal Property of third parties in which the Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; and (vi) any other goods or personal Property now owned or hereafter acquired in which the Borrower has expressly granted a security interest or may in the future grant a security interest to the Agent for the ratable benefit of the Lenders, in any amendment or supplement hereto; (f) all cash held as cash collateral by the Agent or any Lender to the extent not otherwise constituting Collateral, or other cash or Property at any time on deposit with or held by the Agent or any Lender for the account of the Borrower (whether for safekeeping, custody, pledge, transmission or otherwise), all present and future deposit accounts (whether time or demand or interest or non-interest bearing) of the Borrower with the Agent or any Lender or any other Person including those to which any such cash may at any time or from time to time be credited, all amounts and reinvestments (however evidenced) of amounts from time to time credited to such accounts, and all interest, dividends, distributions and other proceeds payable on or with respect to (A) such investments and reinvestments and (B) such accounts; provided that until a Default or Event of Default shall have occurred and be continuing, the Borrower shall have the right to withdraw all such amounts from all such accounts not specifically designated as cash collateral accounts without the consent of the Agent or such Lender; (g) all proceeds and products of the Collateral referred to in the foregoing clauses (a), (b), (c), (d), (e), (f), and in this clause (g), in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including, without limitation, hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements or documents; and (h) all of the Borrower's ledger sheets, files, records, books of account, business papers, computers, computer software and programs, and documents relating to the Collateral referred to in the foregoing clauses (a), (b), (c), (d), (e), (f) or (g). "Customer" means the account debtor with respect to any of the Receivables or the purchaser of goods, services or both with respect to any contract or contract right, or any Person who enters into any contract or other arrangement with the Borrower, pursuant to which the Borrower is to deliver any personal Property or perform any services. "Equipment" means all of the Borrower's "equipment" (as such term is defined in the Code) now owned or hereafter acquired and wherever located, including, without limitation, all machinery, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto. "General Intangibles" means all of the Borrower's choses in action, causes of action and all other "general intangibles" (as such term is defined in the Code) now owned or hereafter acquired, including, without limitation, goodwill, customer lists, copyrights, Trademarks, tradenames, tradestyles, equipment formulations, manufacturing procedures, quality control procedures, product specifications, patents, copyrights, licenses, franchises and tax refund claims. "Inventory" means all of the Borrower's "inventory" (as such term is defined in the Code) now owned or hereafter acquired, including, without limitation, all goods, merchandise and other personal Property, whether tangible or intangible, wherever located, furnished under any contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in the Borrower's business or used in selling or finishing of such goods, merchandise and other personal Property, and all documents of title or other documents representing them. "Permitted Liens" means and includes any Lien or Liens which the Borrower is permitted, by the terms of the Credit Agreement, to create, incur, assume or suffer to exist. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Receivables" means all of the Borrower's accounts, contract rights, instruments, documents, chattel paper, general intangibles relating to accounts, drafts and acceptances, and all other forms of obligations owing to the Borrower arising out of or in connection with the sale or lease of Inventory or for services rendered, all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically pledged or assigned to the Agent hereunder or under any other Facility Document. "Secured Obligations" means the unpaid principal of and interest on (including interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of any Obligor to the Agent or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Note, any Letter of Credit, any Interest Rate Protection Agreement to which a Lender is a party, any other Facility Document and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or any Lender) or otherwise. "Security" has the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. "Trademarks" shall have the meaning assigned to such term in the Trademark Security Agreement. ARTICLE 2. COLLATERAL Section 2.01. Grant of Security Interest. As security for the payment by the Borrower of the Secured Obligations and the performance by the Borrower of its other obligations and undertakings under this Agreement and under the other Facility Documents, the Borrower does hereby grant, bargain, convey, assign, transfer, mortgage, hypothecate, pledge, confirm and grant a continuing security interest to the Agent in and to all right, title and interest of the Borrower (but none of its obligations) in the Collateral. Section 2.02. Collateral Assignment of Contract Rights. (a) To the extent permitted by each Assigned Agreement, the Borrower hereby assigns and transfers to the Agent, in trust, nevertheless, for the benefit of the Lenders, as collateral security for the Secured Obligations, all right, title and interest of the Borrower in and to, and all benefits accruing to the Borrower pursuant to, each of the Assigned Agreements; provided, however, that, unless an Event of Default shall be continuing and the Agent shall have given the Borrower written notice of its intention to enforce its rights, on behalf of the Lenders, under this Section 2.02, the Borrower shall have the right to exercise any and all of its rights under the Assigned Agreements to the same extent as if this Agreement had not been executed (including, without limitation, the right to enter into possession of and use any and all Property leased or licensed to the Borrower, as lessee or licensee, the right to use any or all of the facilities made available to the Borrower and the right to make all waivers and agreements, to give all notices, consents and releases, to take all action upon the happening of any default giving rise to a right in favor of the Borrower, under any of the Assigned Agreements, and to do any and all other things whatsoever which the Borrower is or may become entitled to do under any of the Assigned Agreements, including, without limitation, the right to terminate or not renew any of the Assigned Agreements); and provided, further, that during the continuance of any Event of Default, upon written notice to the Borrower, the Agent shall, to the extent permitted by each Assigned Agreement, have the right to exercise any and all of the Borrower's rights under the Assigned Agreements (including, without limitation, all rights set forth in the parenthetical in the immediately preceding proviso). The Borrower shall make a good faith and reasonable effort to insert appropriate provisions and to avoid the insertion of prohibitions or restrictions so that each Assigned Agreement may be freely assignable and transferable. (b) This Agreement is executed as security for the Secured Obligations, and, therefore, the execution and delivery of this Agreement shall not subject the Agent to, or transfer or pass to the Agent, or in any way affect or modify, the liability of the Borrower under any or all of the Assigned Agreements, it being understood and agreed that notwithstanding this Agreement, all of the obligations of the Borrower to each and every other party under each and every one of the Assigned Agreements shall be and remain enforceable by such other party, its successors and assigns, against, but only against, the Borrower or Persons other than the Agent, the Lenders and their respective successors and assigns. (c) To further protect the security afforded by this Agreement, the Borrower agrees, subject to paragraph (a) above, as follows: (i) the Borrower will faithfully abide by, perform and discharge each and every obligation, covenant, condition, duty and agreement pursuant to each or any of the Assigned Agreements the non-performance of which could reasonably be expected to have a Material Adverse Effect; (ii) the Borrower shall not amend, modify, otherwise change or terminate any Assigned Agreement if such amendment, modification, other change or termination could reasonably be expected to have a Material Adverse Effect; (iii) at the Borrower's sole cost and expense, the Borrower will appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the obligations, covenants, conditions, duties, agreements or liabilities of the Borrower under any of the Assigned Agreements, the non-performance of which could reasonably be expected to have a Material Adverse Effect; and (iv) should the Borrower fail to make any payment, do any act or refrain from any act which this Agreement requires the Borrower to make, do or refrain from, then the Agent may, upon reasonable prior written notice to the Borrower (unless, in the reasonable judgment of the Agent, the security provided hereby, including the Collateral, taken as a whole, may be materially harmed or impaired as a result of the Borrower's failure to pay, act or refrain from acting, in which case the Agent need not so notify the Borrower), but the Agent shall have no obligation to (and shall not thereby release the Borrower from any obligation hereunder), make, do or prevent the same in such manner and to such extent as the Agent may deem necessary or advisable to protect the security provided hereby, which rights of the Agent shall specifically include, without limiting the Agent's general powers herein granted, the right to appear in and defend any action or proceeding purporting to affect the security hereof and the rights or powers of the Agent hereunder (or any of them), and upon the occurrence and during the continuance of an Event of Default, the right to perform and discharge each and every one, or any one or more, of the obligations, covenants, conditions, duties and agreements of the Borrower contained in any one or more of the Assigned Agreements; in exercising any such powers, the Agent may pay necessary or advisable costs and expenses, employ counsel and incur and pay reasonable attorneys' fees, and the Borrower will reimburse the Agent for such costs, expenses and fees after delivery of invoices or other evidences of the same. Section 2.03. Sharing of Collateral. The Collateral shall be held subject to the conditions and agreements in this Agreement and in the other Facility Documents set forth for the common and equal use, benefit and security of all and singular Person or Persons who shall from time to time be Lenders and, except to the extent specifically set forth in the Credit Agreement, without preference of any of the Secured Obligations over any of the others by reason of priority in time of issue, sale or negotiation thereof or otherwise howsoever. ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING SECURITY Section 3.01. Representations and Warranties. The Borrower hereby represents and warrants: (a) The Collateral in which the Borrower holds an interest is owned solely by the Borrower and no other Person has any right, title, interest, claim or Lien, other than Permitted Liens. (b) The Liens granted pursuant to this Agreement constitute perfected Liens on the Collateral in favor of the Agent, for the ratable benefit of the Lenders, which are prior to all other Liens on the Collateral created by the Borrower and in existence on the date hereof, other than Permitted Liens, and which are enforceable as such against all creditors of and purchasers from the Borrower and its predecessors in interest. (c) No amount payable to the Borrower under or in connection with any Receivable is evidenced by any instrument or chattel paper which has not been delivered to the Agent. No amount payable to the Borrower under or in connection with any Assigned Agreement is evidenced by any instrument which has not been delivered to the Agent. Section 3.02. Sale of Collateral; Liens. Except as specifically permitted herein or by the other Facility Documents, the Borrower (a) will not sell, assign or otherwise transfer any of the Collateral, (b) will keep all Collateral in existence on the date, and all Collateral acquired after the date, of execution of this Agreement, free from all Liens other than Permitted Liens, and (c) will pay and discharge, when due, all taxes, levies and other charges upon any Collateral, and shall defend all Collateral against all claims of any Person (other than, with respect to any Permitted Lien, the holder thereof) other than the Agent, except if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained. Section 3.03. Collection of Receivables. The Borrower may collect its Receivables, but only until such time as the Agent shall exercise its right under Section 4.02(b) to notify Customers or other third parties to pay amounts owing under such Receivables directly to the Agent. Upon the occurrence and during the continuance of an Event of Default, the Borrower agrees to take such action with respect to the collection of its Receivables and the proceeds thereof as the Agent may direct. Section 3.04. Offices, Location of Collateral, etc. (a) The office where the Borrower keeps its records concerning the Collateral and the Borrower's principal place of business and chief executive office are located at are set forth in Part 1 of Schedule A hereto; all of the Borrower's other places of business are located at the addresses set forth in Part 2 of Schedule A hereto and the Collateral is currently located only at the locations referred to in this Section 3.04, except that certain item(s) of Equipment and Inventory are located at the places specified for such items in Part 3 of Schedule A hereto. (b) Without the prior written consent of the Agent (which consent shall not be unreasonably withheld or delayed), the Borrower will not change the location of its chief executive office; provided, however, that the Borrower may, upon not less than thirty (30) days' prior written notice to the Agent, relocate its chief executive office to any location in any jurisdiction in the United States (each such jurisdiction being hereinafter called a "Permitted Jurisdiction"). (c) The Borrower may relocate any item(s) of Inventory or Equipment within (i) any Permitted Jurisdiction, and (ii) any other jurisdiction so long as (in the case of this clause (ii)), the Agent shall have a perfected first priority security interest (or, if applicable, the foreign equivalent thereof) in such item(s) and the aggregate value of such item(s) in such foreign jurisdictions does not exceed 10% of the aggregate value of all such item(s); provided, however, that the Borrower provides notice of such relocation to the Agent on or before the date that is 60 days after such relocation took place. The Borrower will with respect to each and every relocation of the Borrower's chief executive offices or any item(s) of the Collateral, take such action, at the Agent's reasonable request and direction and at the Borrower' expense as provided in Section 3.09 (and including, without limitation, the preparation and filing where appropriate of new or amended financing statements), as may then be necessary or desirable to ensure the uninterrupted continuation of the Agent's security interest in all of the Collateral with the same priority as it had prior to any such relocation. Section 3.05. Financing Statements. The Borrower hereby agrees to execute such financing statements as the Agent may reasonably request, and to take such other action (including, without limitation, the execution and filing, at its own expense, of all continuation statements) as may be required to perfect and to keep perfected the Agent's security interest in, and Lien upon, the Collateral, and, unless prohibited by law, the Borrower hereby authorizes the Agent to execute and file any such financing statements and continuation statements on behalf of the Borrower. Section 3.06. Insurance for Collateral. The Borrower agrees to maintain, or cause to be maintained, policies of insurance as required by the Credit Agreement, and to deliver to the Agent one or more certificates evidencing such policies naming the Agent as loss payee (and to the extent such policies are provided by co- packers utilized by the Borrower, the Borrower shall use good faith and reasonable efforts to ensure that the Agent is named as loss payee thereunder) and, if requested by the Agent, the certified copies of such policies. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than thirty (30) days' notice to the Agent in the event of cancellation of the policy for any reason whatsoever and a clause that the interest of the Agent shall not be impaired or invalidated by any act or neglect of the Borrower nor by the occupation of the premises where the Collateral is located for purposes more hazardous than are permitted by such policy. If the Borrower fails to provide such insurance, the Agent may, at the Borrower's expense, procure the same, but shall not be required to do so. The Borrower agrees to deliver to the Agent, promptly as rendered, two copies of all reports made to any insurance company by it that relate to the Collateral. Section 3.07. Certain Information, etc. The Borrower will deliver to the Agent at such times and in such form as shall be reasonably designated by the Agent, assignments, schedules and reports relating to the Collateral, and will furnish such other information relevant to the Collateral as the Agent shall from time to time reasonably request, including, without limitation, the original delivery or other receipts for Inventory sold and duplicate invoices relating to the Receivables. At the request of the Agent, the Borrower will also promptly deliver to the Agent any and all bills of sale for, certificates of title to or other comparable evidence of ownership of, each item of the Equipment. The Borrower will mark its books and records to reflect the security interest of the Agent in Receivables and General Intangibles. Section 3.08. Protection of Collateral; Reimbursement. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, and all excise, property, sales and use taxes imposed by any state, federal or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by the Borrower; and if the Borrower fails so to pay any portion thereof when due unless such taxes are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained, the Agent may, after notice to the Borrower and opportunity to cure, at its option, but shall not be required to, pay the same and charge the Borrower therefor, and the Borrower agrees to reimburse promptly the Agent therefor with interest at a rate equal to the Default Rate. The Borrower shall pay all sums so paid or incurred by the Agent for any of the foregoing and all costs and expenses (including reasonable attorneys' fees, legal expenses and court costs) that the Agent may reasonably incur in evaluating, asserting, enforcing, defending or protecting its Lien on, or rights and interest in, the Collateral, or any of its rights or remedies under this Agreement or any other Facility Document, and, until paid by the Borrower such sums shall be considered as additional obligations owing by the Borrower under this Agreement and, as such, shall be secured by all of the Collateral and the proceeds from the sale thereof and by any and all other collateral, security, assets, reserves or funds of the Borrower in or coming into the hands of or inuring to the benefit of the Agent. Subject to the provisions of the Credit Agreement and except to the extent limited by applicable law, the Agent shall not be liable or responsible in any way for the safekeeping of the Collateral or for any loss or damage thereto (except any loss or damage caused by the gross negligence or willful misconduct of the Agent) or for any diminution in the value thereof, or any act or default of any warehouseman, carrier, forwarding agency or other Person. Section 3.09. Further Assurances. So long as any of the Secured Obligations or any Commitment shall be outstanding upon the written request of the Agent, the Borrower, at its expense, will timely execute, acknowledge, deliver, file and record, or will cause to be executed, acknowledged, delivered, filed or recorded, all such further instruments, deeds, conveyances, mortgages, transfers, financing statements, continuation statements and assurances as may be necessary or appropriate (and, in any event, as may be reasonably requested by the Agent) to subject to the Lien of this Agreement, and to preserve, continue and protect the Lien of this Agreement on, the Collateral, including, without limitation, any Collateral acquired after the date of this Agreement, and for perfecting the Agent's rights in, every part of the Collateral, or as may be required in order to transfer to, or perfect the rights of any new agent or agents in, the Collateral. ARTICLE 4. DEFAULTS -- REMEDIES Section 4.01. Nature of Events. An "Event of Default" shall exist if any Event of Default under, and as defined in, the Credit Agreement occurs and is continuing. Section 4.02. Default Remedies. (a) If an Event of Default exists and is continuing, the Agent may exercise all of the rights and remedies conferred in this Agreement and in each of the other Facility Documents, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies; but each and every remedy shall be cumulative and shall be in addition to every other remedy given in this Agreement or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time as often as may reasonably be deemed expedient by the Agent. (b) If an Event of Default exists and is continuing, the Agent shall have the right, at any time and from time to time during such default period, (i) to notify all Customers and other third parties holding or otherwise concerned with the Collateral that Receivables have been assigned to the Agent and that the Agent has a security interest therein; (ii) to direct all such Persons to make payments to the Agent of all or any part of the sums owing the Borrower by such Persons; (iii) to enforce collection of any of the Receivables by suit or otherwise; (iv) to surrender, release or exchange all or any part of such Receivables; or (v) to compromise, settle, extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. (c) If an Event of Default exists and is continuing, the Agent shall have the right, at any time or from time to time during such default period, to take immediate possession of any or all Collateral that is tangible personal Property, and may require the Borrower to assemble such Collateral, at the expense of the Borrower, and to make it available to the Agent at a place to be designated by the Agent that is reasonably convenient to both parties, and may enter any of the premises of the Borrower with or without force or process of law, and keep and store the same on such premises until sold (and if such premises be the Property of the Borrower, the Borrower agrees not to charge the Agent for storage thereof for a period of at least ninety (90) days after sale or disposition of such Collateral). (d) The Borrower and the Agent agree that ten (10) Banking Days' prior written notice to the Borrower of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such reasonable locations as the Agent shall designate in such notice. Except as expressly set forth in any Facility Document, any other requirement of notice, demand or advertisement for sale is, to the extent permitted by law, waived by the Borrower. Sales for cash, or on credit to a wholesaler, retailer or user of the Collateral, at any public or private sale, if made in good faith, are all hereby deemed (without limitation) to be commercially reasonable (as defined in the Code). The Agent shall have the right to bid at any such sale on behalf of any one or more Lenders (who shall also have the right to bid individually). Proceeds arising from any such sale shall be applied to the repayment of the Secured Obligations in the manner set forth in the Credit Agreement. (e) If an Event of Default exists and is continuing, the Agent may also, with or without proceeding with sale or foreclosure or demanding payment of the Secured Obligations, without prior notice, appropriate and apply to the payment of the Secured Obligations and the other obligations secured under this Agreement any and all Collateral in its possession and any and all balances, credits, deposit accounts, reserves or other moneys due or owing to the Borrower held by the Agent under this Agreement or otherwise. The Agent shall promptly notify the Borrower of any such appropriation by the Agent. (f) Anything in this Agreement contained to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Collateral that consists of Securities may be effected after an Event of Default, the Borrower agrees that upon the occurrence and during the existence of an Event of Default, the Agent may, from time to time, attempt to sell all or any part of such Collateral by means of a private placement restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Agent to assure compliance with applicable securities laws. The Agent shall give the Borrower written notice prior to making any such offer of any such Collateral. Each of the Agent and the Borrower may solicit offers to buy such Collateral, or any part of it, for cash, from a limited number of investors deemed by the Agent, in its reasonable business judgment, to be responsible parties who might be interested in purchasing such Collateral, and if the Agent and the Borrower collectively solicit such offers from not less than five (5) such investors, then the acceptance by the Agent of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition (as defined in the Code) of such Collateral unless applicable law provides otherwise. (g) All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of the Borrower contained in this Agreement or any other Facility Document or contained in any agreement supplementary to this Agreement or any other Facility Document, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions or agreements of the Borrower contained in this Agreement or any other Facility Document. (h) The Borrower will pay to the Agent all reasonable expenses (including court costs and reasonable attorneys' fees and expenses) of, or incident to, the enforcement of any of the provisions of this Agreement and all other charges due against the Collateral, including, without limitation, taxes (other than income taxes imposed upon the Agent in connection therewith), assessments, security interests, Liens or encumbrances upon the Collateral and any expenses, including transfer or other similar taxes, arising in connection with any sale, transfer or other disposition of Collateral. Section 4.03. Other Enforcement Rights. The Agent may proceed to protect and enforce this Agreement by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement in this Agreement contained or in execution or aid of any power in this Agreement granted, or for foreclosure under this Agreement, or for the appointment of a receiver or receivers for the Collateral or any part thereof, for the recovery of judgment for the obligations secured by this Agreement or for the enforcement of any other proper, legal or equitable remedy available under applicable law. Section 4.04. Effect of Sale, etc. (a) Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or thereby or pursuant to any legal proceedings, shall operate to divest the Borrower of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, and any Property so sold shall be free and clear of any and all rights of redemption by, through or under the Borrower. At any such sale any Lender may bid for and purchase the Property sold and may make payment therefor as set forth in clause (b) of this Section 4.04, and any such Lender so purchasing any such Property, upon compliance with the terms of sale, may hold, retain and dispose of such Property without further accountability. (b) The receipt by the Agent, or by any Person authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, any Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to use and apply such Collateral to its Secured Obligations by crediting thereon the net proceeds of such sale. Section 4.05. Delay or Omission; No Waiver. No course of dealing on the part of the Agent nor any delay or failure on the part of the Agent to exercise any right shall impair such right or operate as a waiver of such right or otherwise prejudice the Agent's rights, powers and remedies. No waiver by the Agent of any Default or Event of Default, whether such waiver be full or partial, shall extend to or be taken to affect any subsequent Default or Event of Default, or to impair the rights resulting therefrom except as may be otherwise expressly provided in this Agreement. Upon the occurrence and during the existence of an Event of Default, every right and remedy given by this Agreement, by any other Facility Document or by law to the Agent may be exercised from time to time as often as may be deemed expedient by the Agent. Section 4.06. Restoration of Rights and Remedies. If the Agent shall have instituted any proceeding to enforce any right or remedy under this Agreement or under any other Facility Document and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Agent, then and in every such case the Agent, the Borrower and the Lenders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions under this Agreement and under the other Facility Documents, and, unless otherwise determined in such proceeding, thereafter all rights and remedies of the Agent shall continue as though no such proceeding had been instituted. Section 4.07. Application of Proceeds. The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to and applied in accordance with the provisions of the Credit Agreement. If there is a deficiency, the Borrower shall, subject always to the other provisions of this Agreement, remain liable therefor and shall forthwith pay the amount of any such deficiency to the Agent. If there is an excess, such excess shall be returned to the Borrower. Section 4.08. Waivers by the Borrower. (a) To the extent permitted by applicable law, the Borrower hereby waives notice of acceptance of this Agreement and of extensions of credit, loans, advances or other financial assistance under the Facility Documents or under any other agreement, note, document or instrument now or at any time or times hereafter executed by the Borrower and delivered to the Agent or any Lender in connection with or pursuant to a Facility Document. To the extent permitted by applicable law, the Borrower further waives presentment and demand for payment of any of the Secured Obligations, protest and notice of dishonor or default with respect to any of the Secured Obligations, and all other notices to which the Borrower might otherwise be entitled, except as otherwise expressly provided in this Agreement or in the other Facility Documents. (b) The Borrower (to the extent that it may lawfully do so) covenants that it will not at any time insist upon or plead, or in any manner claim or take the benefit or advance of, any stay (except in connection with a pending appeal or the automatic stay imposed under 11 U.S.C. Section 362 or any successor or replacement thereof), valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made under any judgment, order or decree based on this Agreement or any other Facility Document; and the Borrower (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advance of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Agent, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted. Section 4.09. Consent. The Borrower hereby consents that from time to time, before or after the occurrence or existence of any Event of Default, with or without notice to or assent from the Borrower, any security at any time held by or available to the Agent for any of the Secured Obligations, or any other security at any time held by or available to the Agent for any obligation of any other Person secondarily or otherwise liable for any of the Secured Obligations, may be exchanged, surrendered, or released, and the Borrower shall remain bound under this Agreement notwithstanding any such exchange, surrender or release. ARTICLE 5. DEFEASANCE Section 5.01. Satisfaction and Discharge. If the Borrower shall pay and discharge the entire indebtedness on all Secured Obligations outstanding by paying or causing to be paid the principal of, and interest on, all Secured Obligations outstanding; and if the Borrower shall also pay or cause to be paid all other sums payable under this Agreement with respect to the Secured Obligations and all sums payable under any one or more of the other Facility Documents; and if all Commitments shall have been terminated, then and in that case all of the right, title and interest of the Agent in the Collateral created hereby shall cease and terminate, and thereupon the Agent, upon written request of the Borrower, shall forthwith execute and deliver, without recourse, proper deeds, assignments and other instruments acknowledging satisfaction or and discharging all of the right, title and interest of the Agent in the Collateral created hereby (subject to any disposition thereof that may have been previously made by the Agent pursuant to any of the Facility Documents). Section 5.02. Disposal of Assets; Release of Lien. So long as no Default or Event of Default shall exist and be continuing or be created as a result thereof, if the Borrower shall sell, lease, transfer or otherwise dispose of its Property in accordance with the provisions of the Credit Agreement, then the Agent, upon payment to it of all amounts then due and owing as fees and expenses under this Agreement, shall forthwith execute proper instruments releasing the interests in such Property so disposed of from the Lien of the Agent created under this Agreement. ARTICLE 6. MISCELLANEOUS Section 6.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Borrower, the Agent and the Required Lenders, or by the Borrower and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) permit the creation of any Lien with respect to any of the Collateral (other than Permitted Liens) that is prior or equal to the Lien of the Agent; (b) effect the deprivation of any Lender of the benefit of any Lien upon all or any part of the Collateral; (c) create any priority with respect to any portion of the Secured Obligations over any other portion with respect to the Lien upon all or any part of the Collateral; or (d) amend, waive or modify the definition of Secured Obligations. Section 6.02. Survival. The obligations of the Borrower under Section 3.08 or Section 4.02(h) shall survive the repayment of the Secured Obligations and the termination of the Commitments. Section 6.03. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Borrower, the Lenders and their respective successors and assigns. Section 6.04. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing, by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders and to the Borrower by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of the Credit Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when confirmation of delivery of the telecopy is transmitted to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. SECTION 6.05. JURISDICTION; IMMUNITIES. (A) EACH OF THE BORROWER AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH OF THE BORROWER AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH OF THE BORROWER AND THE AGENT IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO EACH OF THE BORROWER AND THE AGENT AT ITS ADDRESS SPECIFIED IN SECTION 6.04. EACH OF THE BORROWER AND THE AGENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWER AND THE AGENT FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT OR ANY LENDER SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE BORROWER AND THE AGENT WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (b) Nothing in this Section 6.05 shall affect the right of the Borrower, the Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of the Agent or any Lender to bring any action or proceeding against the Borrower or its property in the courts of any other jurisdictions. (c) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement. Section 6.06. Headings. The headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 6.07. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 6.08. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 6.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 6.10. Subject to the Credit Agreement. Any and all rights granted to the Agent under this Agreement are to be held and exercised by the Agent for the benefit of the Lenders, pursuant to the provisions of the Credit Agreement. To the extent set forth in the Facility Documents, each of the Lenders shall be a beneficiary of the terms of this Agreement. Any and all obligations under this Agreement of the parties to this Agreement, and the rights granted to the Agent under this Agreement, are created and granted subject to the terms of the Credit Agreement. Section 6.11. Power of Attorney. The Borrower hereby makes, constitutes and appoints the Agent the true and lawful agent and attorney in fact of the Borrower, with full power of substitution (a) if an Event of Default exists and is continuing, and to the fullest extent permitted by applicable law, to receive, open and dispose of all mail addressed to the Borrower relating to the Collateral and remove therefrom any notes, checks, acceptances, drafts, money orders or other instruments included in the Collateral, with full power to endorse the name of the Borrower upon any such notes, checks, acceptances, drafts, money orders, instruments or other documents relating to the Collateral and to effect the deposit and collection thereof, and the further right and power to endorse the name of the Borrower on any document relating to the Collateral; (b) if an Event of Default exists and is continuing, to sign the name of the Borrower to drafts against its debtors, to notices to such debtors, to assignments and notices of assignments, financing statements, continuation statements or other public records or notices and all other instruments and documents; and (c) to do any and all things necessary to take such action in the name and on behalf of the Borrower to carry out the provisions of this Agreement, including, without limitation, the grant of the security interest granted to the Agent with respect to the Collateral and the Agent's rights created under this Agreement after a request by the Agent to take any action, and the failure or refusal of the Borrower to comply with such request within five (5) Banking Days. The Borrower agrees, in the absence of willful wrongdoing or gross negligence, that neither the Agent nor any of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission, or for any good faith error of judgment or mistake of fact or law with respect to the exercise of the power of attorney granted under this Section 6.11. The power of attorney granted under this Section 6.11 is coupled with an interest and shall be irrevocable so long as any Secured Obligation, Letter of Credit or Commitment remains outstanding. Section 6.12. Term of Agreement. This Agreement shall be and remain in full force and effect so long as any Secured Obligation, Letter of Credit or Commitment is outstanding. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. BORROWER: MISTIC BRANDS, INC. By: Name: Title: AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Name: Title: EX-10.1G 10 TRADEMARK SECURITY AGMT EXHIBIT G TRADEMARK SECURITY AGREEMENT Dated as of August 9, 1995 by MISTIC BEVERAGE, INC. in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) as Agent TRADEMARK SECURITY AGREEMENT TRADEMARK SECURITY AGREEMENT, dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, this "Agreement"), made by MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower") in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as agent (in such capacity, together with its successors in such capacity, the "Agent") for the benefit of each of the banks (the "Banks") signatory to the Credit Agreement dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrower, the Agent and the Lenders. W I T N E S S E T H : WHEREAS, pursuant to the terms of the Credit Agreement and the other Facility Documents, the Lenders have agreed to extend credit to the Borrower upon the terms and subject to the conditions set forth therein to be evidenced by the Notes issued by the Borrower thereunder and the Letters of Credit issued thereunder and to be guarantied by Triarc Companies, Inc., a corporation organized under the laws of the State of Delaware (the "Guarantor") under the Unconditional Guaranty; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their extensions of credit to the Borrower under the Credit Agreement that the Borrower shall have executed and delivered this Agreement to the Agent to secure the obligations of the Borrower under the Notes, the Letters of Credit, the Credit Agreement and the other Facility Documents. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and to purchase Participating Interests in Letters of Credit issued under the Credit Agreement, the Borrower hereby agrees with the Agent, as follows: ARTICLE 1. DEFINITIONS. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; and the following terms have the following meanings: "Code" means the Uniform Commercial Code as in effect in the State of New York. "Collateral" means all of the right, title and interest of the Borrower in, to and under the Trademarks, whether now owned or hereafter acquired, together with all the proceeds thereof and any replacements, additions or substitutions thereof or thereto and all accounts arising from the sale or disposition thereof. "Secured Obligations" means the unpaid principal of and interest on (including interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post- petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of any Obligor to the Agent or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Note, any Letter of Credit, any Interest Rate Protection Agreement to which a Lender is a party, any other Facility Document and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or any Lender) or otherwise. "Trademarks" means, collectively, all of the Borrower's right, title and interest in and to the trademarks and trademark applications and registrations listed on Schedule A hereto, and all other trademarks and trademark applications and registrations in which the Borrower has or shall now or hereafter have any right, title or interest, and all proceeds of the foregoing (including, without limitation, license royalties and proceeds of infringement suits); and all general intangibles associated with the foregoing, including, without limitation, all goodwill associated with the trademarks, the trademark applications and registrations and the business of the Borrower to which such trademarks and trademark applications and registrations relate, the right to sue for past, present and future infringements, all rights corresponding thereto throughout the world and all divisions, renewals and extensions thereof. ARTICLE 2. COLLATERAL Section 2.01. Grant of Security Interest. As security for the payment by the Borrower of the Secured Obligations and the performance by the Borrower of its other obligations and undertakings under this Agreement and under the other Facility Documents, the Borrower does hereby grant, bargain, convey, assign, transfer, mortgage, hypothecate, pledge, confirm and grant a continuing security interest to the Agent in and to all right, title and interest of the Borrower (but none of its obligations) in the Collateral. ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING SECURITY Section 3.01. Trademarks, etc. The Borrower represents, warrants and covenants that: (a) Schedule A hereto completely and accurately lists all of the Trademarks in which the Borrower has any right, title or interest; (b) to its Knowledge, except as set forth on Schedule B, the Trademarks are subsisting and have not been adjudged invalid or unenforceable, in whole or in part; (c) to its Knowledge, except as set forth on Schedule B, each of the Trademarks is valid and enforceable; (d) except as set forth on Schedule B, the Borrower is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each of the "Mistic" and "Royal Mistic" Trademarks and, to its Knowledge, all of the other Trademarks in which the Borrower holds an interest, free and clear of any Liens, charges and encumbrances, including without limitation, licenses and covenants by the Borrower not to sue third persons; (e) the Borrower has registered, or applied to register, and recorded each of the material Trademarks in which the Borrower holds an interest that could be registered and recorded with the United States Patent and Trademark Office and has not taken any action or failed to take any action which action or failure to act could or might impair or diminish any Trademarks and the Borrower has delivered to the Agent true, correct and complete copies of all trademark registration certificates, assignments, renewal certificates, and all other instruments filed with United States Patent and Trademark Office or otherwise relevant to the chain of title of the Trademarks; (f) the Borrower has the unqualified right to enter into this Agreement and perform its terms; (g) as it determines in its good faith and reasonable business judgment, the Borrower will use for the duration of this Agreement appropriate standards of quality in the manufacture, promotion, advertisement, sale or distribution of its products sold under the Trademarks; and (h) to its Knowledge, except as set forth on Schedule B, there are no claims against the Borrower asserting the invalidity, misuse, unenforceability or ownership of any Trademarks owned or used by the Borrower, no such claims are threatened and there are no grounds for the same. Section 3.02. No Inconsistent Agreements. Except for licenses of the Trademarks granted in the ordinary course, until all of the Secured Obligations and the Letters of Credit shall have been satisfied in full and the Commitments terminated, no Grantor will, without the Agent's prior written consent, enter into any agreement (including, without limitation, a license agreement) that materially and adversely affects the Agent's rights under this Agreement. Section 3.03. After-Acquired Trademarks Subject to this Agreement. (a) If the Borrower shall obtain rights to any new trademarks, or become entitled to the benefit of any trademark or trademark application or registration for any renewal or extension or of any Trademark, the same shall automatically be deemed subject to this Agreement and included within the term "Trademark," and the Borrower shall give to the Agent notice thereof in writing at the end of each Fiscal Quarter. (b) The Borrower grants the Agent a power-of- attorney, irrevocable so long as any Secured Obligation, any Letter of Credit or Commitment remains outstanding, to amend Schedule A (without requirement of any consent or further action on the part of the Borrower) to include any future registered trademarks and trademark applications that are Trademarks under the definition of such term in Section 1.01 or under Section 3.03(a). Section 3.04. Trademark Applications. The Borrower shall have the duty to prosecute diligently any trademark application of the Trademarks pending as of the date of this Agreement or thereafter and to preserve and maintain all rights in trademark applications and registrations of the Trademarks unless the Borrower, so long as no Default or Event of Default shall then exist, determines in its good faith and reasonable business judgment to discontinue the use of or the application for any such Trademark other than the "Mistic" and "Royal Mistic" Trademarks. Any expenses incurred in connection with such an application shall be borne by the Borrower. Section 3.05. Further Assurances. So long as any of the Secured Obligations, any Letter of Credit or any Commitment shall be outstanding, upon the written request of the Agent, the Borrower, at its expense, will timely execute, acknowledge, deliver, file and record, or will cause to be executed, acknowledged, delivered, filed or recorded, all such further instruments, agreements, assignments and assurances (including, without limitation, all continuations, statements of use and declarations of noncontestability) as may be necessary or appropriate (and, in any event, as may be reasonably requested by the Agent): (a) to preserve and continue in force each of the Trademarks (including the continued use of such Trademarks) and to pay any and all fees and expenses in connection therewith (including, without limitation, payment of such maintenance fees, if any, as may be imposed by the United States Patent and Trademark Office or by any other Governmental Authority in any jurisdiction) unless the Borrower, so long as no Default or Event of Default shall then exist, determines in its good faith and reasonable business judgment to discontinue the use of or the application for any such Trademark other than the "Mistic" and "Royal Mistic" Trademarks; and (b) subject to this Agreement, to preserve, continue and protect the Lien of this Agreement on, and the right of the Agent in and to, the Trademarks. ARTICLE 4. DEFAULTS -- REMEDIES Section 4.01. Nature of Events. An "Event of Default" shall exist if any Event of Default under, and as defined in, the Credit Agreement occurs and is continuing. Section 4.02. Default Remedies. (a) If an Event of Default exists and is continuing, the Agent may exercise all of the rights and remedies of a secured party under the Code and all of the rights and remedies in this Agreement or in any other Facility Document conferred, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given in this Agreement or in any other Facility Document or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time, during such period, as often as may reasonably be deemed expedient by the Agent. Without limiting the foregoing, this Agreement is executed in furtherance of, and supplementary to, the provisions of the Security Agreement, the terms and conditions of which are incorporated hereby as if set forth in full herein. (b) The Borrower and the Agent agree that ten (10) Banking Days' prior written notice to the Borrower of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such reasonable locations as the Agent shall designate in such notice. Except as expressly set forth in any Facility Document, any other requirement of notice, demand or advertisement for sale is, to the extent permitted by law, waived by the Borrower. Sales for cash, or on credit to a wholesaler, retailer or user of the Collateral, at any public or private sale, if made in good faith, are all hereby deemed (without limitation) to be commercially reasonable (as defined in the Code). The Agent shall have the right to bid at any such sale on behalf of any one or more Lenders (who shall also have the right to bid individually). Proceeds arising from any such sale shall be applied to the repayment of the Secured Obligations in the manner set forth in the Credit Agreement. (c) If an Event of Default exists and is continuing, the Agent shall have the right, but shall in no way be obligated to, bring suit in its own name to enforce the Trademarks and any license thereunder, in which event the Borrower shall at the request of the Agent do any and all lawful acts and execute any and all proper documents reasonably required by the Agent in aid of such enforcement, and the Borrower shall promptly, upon demand, reimburse and indemnify the Agent for all reasonable costs and expenses incurred by the Agent in the exercise of its rights under this Section 4.02(c). (d) All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of the Borrower contained in this Agreement or any other Facility Document, or contained in any agreement supplementary to this Agreement or any other Facility Document, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions or agreements of the Borrower contained in this Agreement or any other Facility Document. (e) The Borrower will pay to the Agent all reasonable expenses (including court costs and reasonable attorneys' fees and expenses) of, or incident to, the enforcement of any of the provisions of this Agreement and all other charges due against the Collateral, including, without limitation, taxes (other than income taxes imposed upon the Agent in connection therewith), assessments, security interests, Liens or encumbrances upon the Collateral and any expenses, including transfer or other similar taxes, arising in connection with any sale, transfer or other disposition of Collateral. Section 4.03. Other Enforcement Rights. The Agent may proceed to protect and enforce this Agreement by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement in this Agreement contained or in execution or aid of any power in this Agreement granted, or for foreclosure under this Agreement, or for the appointment of a receiver or receivers for the Collateral or any part thereof, for the recovery of judgment for the obligations secured by this Agreement or for the enforcement of any other proper, legal or equitable remedy available under applicable law. Section 4.04. Application of Proceeds. The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to and applied in accordance with the provisions of the Credit Agreement. If there is a deficiency, the Borrower shall, subject always to the other provisions of this Agreement, remain liable therefor and shall forthwith pay the amount of any such deficiency to the Agent. If there is an excess, such excess shall be returned to the Borrower. ARTICLE 5. DEFEASANCE Section 5.01. Satisfaction and Discharge. If the Borrower shall pay and discharge the entire indebtedness on all Secured Obligations outstanding by paying or causing to be paid the principal of, and interest on, all Secured Obligations outstanding; and if the Borrower shall also pay or cause to be paid all other sums payable under this Agreement with respect to the Secured Obligations and all sums payable under any one or more of the other Facility Documents; and if all Commitments shall have been terminated, then and in that case all of the right, title and interest of the Agent in the Collateral created hereby shall cease and terminate, and thereupon the Agent, upon written request of the Borrower, shall forthwith execute and deliver, without recourse, proper deeds, assignments and other instruments acknowledging satisfaction or and discharging all of the right, title and interest of the Agent in the Collateral created hereby (subject to any disposition thereof that may have been previously made by the Agent pursuant to any of the Facility Documents). Section 5.02. Disposal of Assets; Release of Lien. So long as no Default or Event of Default shall exist and be continuing or be created as a result thereof, if the Borrower shall sell, lease, transfer or otherwise dispose of its Property in accordance with the provisions of the Credit Agreement, then the Agent, upon payment to it of all amounts then due and owing as fees and expenses under this Agreement, shall forthwith execute proper instruments releasing the interests in such Property so disposed of from the Lien of the Agent created under this Agreement. ARTICLE 6. MISCELLANEOUS Section 6.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Borrower, the Agent and the Required Lenders, or by the Borrower and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) permit the creation of any Lien with respect to any of the Collateral (other than Permitted Liens) that is prior or equal to the Lien of the Agent; (b) effect the deprivation of any Lender of the benefit of any Lien upon all or any part of the Collateral; (c) create any priority with respect to any portion of the Secured Obligations over any other portion with respect to the Lien upon all or any part of the Collateral; or (d) amend, waive or modify the definition of Secured Obligations. Section 6.02. Survival. The obligations of the Borrower under Section 4.02(c) or Section 4.02(e) shall survive the repayment of the Secured Obligations and the termination of the Commitments. Section 6.03. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Borrower, the Agent and their respective successors and assigns. Section 6.04. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders and to the Borrower by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of the Credit Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when confirmation of delivery of the telecopy is transmitted to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. SECTION 6.05. JURISDICTION; IMMUNITIES. (A) EACH OF THE BORROWER AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH OF THE BORROWER AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH OF THE BORROWER AND THE AGENT IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO EACH OF THE BORROWER AND THE AGENT AT ITS ADDRESS SPECIFIED IN SECTION 6.04. EACH OF THE BORROWER AND THE AGENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWER AND THE AGENT FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE BORROWER AND THE AGENT WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (b) Nothing in this Section 6.05 shall affect the right of the Borrower, the Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of the Agent or any Lender to bring any action or proceeding against the Borrower or its property in the courts of any other jurisdictions. (c) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement. Section 6.06. Headings. The headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 6.07. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 6.08. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 6.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 6.10. Subject to the Credit Agreement. Any and all rights granted to the Agent under this Agreement are to be held and exercised by the Agent for the benefit of the Lenders, pursuant to the provisions of the Credit Agreement. To the extent set forth in the Facility Documents, each of the Lenders shall be a beneficiary of the terms of this Agreement. Any and all obligations under this Agreement of the parties to this Agreement, and the rights granted to the Agent under this Agreement, are created and granted subject to the terms of the Credit Agreement. Section 6.11. Power of Attorney. The Borrower hereby makes, constitutes and appoints the Agent the true and lawful agent and attorney in fact of the Borrower, with full power of substitution (a) if an Event of Default exists and is continuing, to sign the name of the Borrower to drafts against its debtors, to notices to such debtors, to assignments and notices of assignments, financing statements, continuation statements or other public records or notices and all other instruments and documents; and (b) to do any and all things necessary to take such action in the name and on behalf of the Borrower to carry out the provisions of this Agreement, including, without limitation, the grant of the security interest granted to the Agent with respect to the Collateral and the Agent's rights created under this Agreement after a request by the Agent to take any action, and the failure or refusal of the Borrower to comply with such request within five (5) Banking Days. The Borrower agrees, in the absence of willful wrongdoing or gross negligence, that neither the Agent nor any of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission, or for any good faith error of judgment or mistake of fact or law with respect to the exercise of the power of attorney granted under this Section 6.11. The power of attorney granted under this Section 6.11 is coupled with an interest and shall be irrevocable so long as any Secured Obligation, Letter of Credit or Commitment remains outstanding. Section 6.12. Term of Agreement. This Agreement shall be and remain in full force and effect so long as any Secured Obligation, Letter of Credit or Commitment is outstanding. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. BORROWER: MISTIC BRANDS, INC. By: Name: Title: AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Name: Title: STATE OF NEW YORK ) )ss. COUNTY OF NEW YORK ) The foregoing instrument was acknowledged before me this ____ day of __________, 1995, by _____________, the _________ of Mistic Brands, Inc., a Delaware corporation, on behalf of the corporation. _________________________________ Notary Public STATE OF NEW YORK ) )ss. COUNTY OF NEW YORK ) The foregoing instrument was acknowledged before me this ____ day of __________, 1995, by _____________, the _________ of The Chase Manhattan Bank (National Association), a national banking association, on behalf of the association. ________________________________ Notary Public EX-10.1H 11 PLEDGE AGMT EXHIBIT H PLEDGE AGREEMENT Dated as of August 9, 1995 by TRIARC COMPANIES, INC. in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) as Agent PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, this "Agreement"), made by TRIARC COMPANIES, INC., a corporation organized under the laws of Delaware (the "Guarantor"), in favor of THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as agent (in such capacity, together with its successors in such capacity, the "Agent") for the benefit of each of the lenders (the "Lenders") signatory to the Credit Agreement dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Mistic Brands, Inc., a corporation organized under the laws of Delaware (the "Borrower"), the Agent and the Lenders. W I T N E S S E T H : WHEREAS, pursuant to the terms of the Credit Agreement and the other Facility Documents, the Lenders have agreed to extend credit to the Borrower upon the terms and subject to the conditions set forth therein to be evidenced by the Notes issued by the Borrower thereunder and the Letters of Credit issued thereunder and to be guarantied by the Guarantor under the Unconditional Guaranty; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their extensions of credit to the Borrower under the Credit Agreement that the Guarantor shall have executed and delivered this Agreement to the Agent to secure the Unconditional Guaranty by the Guarantor of the obligations of the Borrower under the Notes, the Letters of Credit, the Credit Agreement and the other Facility Documents. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make its loans and to purchase Participating Interests in Letters of Credit issued under the Credit Agreement, the Guarantor hereby agrees with the Agent, as follows: ARTICLE 1. DEFINITIONS. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; and the following terms have the following meanings: "Code" means the Uniform Commercial Code as in effect in the State of New York. "Collateral" means all of the right, title and interest of the Guarantor in, to and under the Pledged Stock, whether now owned or hereafter acquired, together with all the proceeds thereof and dividends thereon and any replacements thereof, additions thereto or substitutions therefor and all accounts arising from the sale or disposition thereof. "Equity Rights" means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including, without limitation, any stockholders' or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class. "Pledged Stock" means all of the Guarantor's right, title and interest, if any, in and to all of the issued and outstanding shares of capital stock and all Equity Rights in the Borrower owned by the Guarantor, together with its rights to receive dividends and distributions by the Borrower whether in cash, stock, securities or other property, and whether during the continuance of or on account of the liquidation of the Borrower, and all of its other rights as stockholder or holder of other securities of the Borrower. "Secured Obligations" means the unpaid principal of and interest on (including interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of any Obligor to the Agent or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Note, any Letter of Credit, any Interest Rate Protection Agreement to which a Lender is a party, any other Facility Document and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or any Lender) or otherwise. "Security" has the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. ARTICLE 2. COLLATERAL Section 2.01. Grant of Security Interest. As security for the payment by the Guarantor of its Unconditional Guaranty of the Secured Obligations and the performance by the Guarantor of its other obligations and undertakings under this Agreement and under the other Facility Documents, the Guarantor does hereby grant, bargain, convey, assign, transfer, mortgage, hypothecate, pledge, confirm and grant a continuing security interest to the Agent in and to all right, title and interest of the Guarantor in the Collateral. Section 2.02. Delivery of Certificates; Delivery of Financing Statements. (a) The Guarantor hereby delivers to the Agent all of the certificates evidencing the Pledged Stock owned by the Guarantor, in each case, endorsed in blank or accompanied with appropriate undated stock powers duly executed in blank. The Guarantor has caused the Lien of the Agent in and to the Pledged Stock to be registered upon the books of the Borrower. All other shares of the Pledged Stock subsequently acquired by the Guarantor shall be pledged and delivered to the Agent promptly upon the acquisition thereof, accompanied by stock powers duly executed in blank. (b) The Guarantor has executed and delivered to the Agent such financing statements as the Agent has requested, with respect to that portion of the Collateral in which a Lien may be perfected by the filing of a financing statement against the Guarantor. ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING SECURITY Section 3.01. Title; Liens. The Guarantor represents, warrants and covenants that Schedule A hereto completely and accurately lists all of the Pledged Stock held by the Guarantor and the Collateral in which the Guarantor holds an interest is owned solely by the Guarantor and, except as contemplated by the Facility Documents, no other Person has any right, title, interest, claim or Lien thereon, or thereto. Section 3.02. Sale of Collateral; Liens. So long as Guarantor shall have any obligations under the Unconditional Guaranty, the Guarantor (a) will not sell, assign or otherwise transfer any of the Collateral if a Default or Event of Default exists or would exist after giving effect to such transfer; (b) will keep all Collateral in existence on the date, and all Collateral acquired after the date, of execution of this Agreement, free from all Liens, and (c) will pay and discharge, when due, all taxes, levies and governmental charges upon any Collateral, and shall defend all Collateral against all claims of any Person other than the Agent, except if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained. Section 3.03. Voting Rights Concerning Collateral; Proxy. (a) During the term of this Agreement, and so long as no Event of Default shall have occurred and be continuing, the Guarantor shall have the right to vote the Collateral on all corporate questions for all purposes as if this Agreement had not been executed. (b) Upon the occurrence and during the continuance of an Event of Default, the Agent, upon prior written notice to the Guarantor, shall be permitted to exercise all voting powers pertaining to the Collateral. After the occurrence and during the continuance of any such Event of Default, this Section 3.03(b) shall constitute and grant an irrevocable proxy which shall become effective and shall entitle the Agent, at its election, to vote the Collateral upon any and all corporate matters. Section 3.04. Chief Executive Office. The office where the Guarantor keeps its records concerning the Collateral in which the Guarantor holds an interest and the Guarantor's principal place of business and chief executive office is located at the location set forth in Schedule B. So long as the Guarantor provides the Agent with written notice within thirty (30) days of any such relocation, the Guarantor may relocate its principal place of business and chief executive office, respectively. Section 3.05. No Restrictions. The Guarantor represents and warrants that, except as contemplated by the Facility Documents, each of the shares of the Pledged Stock is fully paid and non- assessable, that there are no restrictions upon the transfer (other than pursuant to state and federal securities laws) of, or the right to vote in respect of, any of the Collateral and that the Guarantor has the right to pledge and grant a security interest in or otherwise transfer such Collateral free of any Lien. Section 3.06. Subsequent Changes Affecting Collateral. The Guarantor hereby represents and warrants that it has made its own arrangements for keeping informed of changes or potential changes affecting the Collateral (including, without limitation, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights of the Pledged Stock), and the Guarantor agrees that the Agent shall have no responsibility or liability for informing the Guarantor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. The Agent may, upon the occurrence and during the continuance of an Event of Default, without prior notice and at its option, transfer or register the Collateral or any part thereof, into its or its nominee's name without any indication that such Collateral is subject to the security interest hereunder. The Agent will promptly notify the Guarantor of any such action taken by the Agent. Section 3.07. Adjustments with Respect to Collateral. In the event that, during the term of this Agreement, any stock dividend, reclassification, adjustment or other change is declared or made in the capital structure of the Borrower, or any option included with the Collateral is exercised, or both, all new, substituted and additional shares, or other Securities, issued by reason of any such change or exercise shall be delivered and held by the Agent under the terms of this Agreement in the same manner as the Collateral originally pledged hereunder; provided, however, that nothing contained in this Section 3.07 shall be deemed to permit the issuance of any warrants or other rights or options by the Borrower that is prohibited by the Facility Documents. Section 3.08. Equity Rights with Respect to Collateral. In the event that during the term of this Agreement any Equity Rights shall be issued or exercised in connection with the Collateral, such warrants, rights and options and all new stock or other Securities acquired by the Guarantor in connection therewith shall be assigned and delivered to the Agent to be held under the terms of this Agreement in the same manner as the Collateral originally pledged hereunder; provided, however, that nothing contained in this Section 3.08 shall be deemed to permit the issuance of any Equity Rights by the Borrower that is prohibited by the Facility Documents. Section 3.09. Reimbursement. The Guarantor shall pay any and all reasonable costs, including, without limitation, reasonable attorneys' fees, legal expenses and court costs, that the Agent may incur in enforcing, defending or protecting its Lien on, or rights and interests in, the Collateral, or any its rights and remedies under this Agreement and, until paid by the Guarantor, such sums shall be considered as additional obligations owing by the Guarantor hereunder and, as such shall be secured by all of the Collateral. Subject to the terms of the Credit Agreement and except to the extent limited by applicable law and except for the gross negligence and willful misconduct of the Agent, the Agent shall not be liable or responsible in any way for the safekeeping of the Collateral or for any loss or damage thereto or for any diminution in the value thereof. Section 3.10. Further Assurances. So long as any of the Secured Obligations or any Commitment shall be outstanding, upon the written request of the Agent, the Guarantor, at its expense, will timely execute, acknowledge, deliver, file and record, or will cause to be executed, acknowledged, delivered, filed or recorded, all such further instruments, conveyances, transfers, financing statements, continuation statements and assurances as may be necessary or appropriate (and, in any event, as may be reasonably requested by the Agent) to subject to the Lien of this Agreement, and to preserve, continue and protect the Lien of this Agreement on, the Collateral, including, without limitation, any Collateral acquired after the date of this Agreement, or as may be required in order to transfer to, or perfect the rights of any new agent or agents in, the Collateral. ARTICLE 4. DEFAULTS -- REMEDIES Section 4.01. Nature of Events. An "Event of Default" shall exist if any Event of Default under, and as defined in, the Credit Agreement or the Unconditional Guaranty occurs and is continuing. Section 4.02. Default Remedies. (a) If an Event of Default exists and is continuing, the Agent may exercise all of the rights and remedies conferred in this Agreement and in each of the other Facility Documents and any and all of the rights and remedies of a secured party under the Code, it being expressly understood that no such remedy is intended to be exclusive of any other remedy or remedies; but each and every remedy shall be cumulative and shall be in addition to every other remedy given in this Agreement or now or hereafter existing at law or in equity or by statute, and may be exercised from time to time, during such period, as often as may reasonably be deemed expedient by the Agent. (b) If an Event of Default exists and is continuing, the Agent shall have the rights, at any time or from time to time, to sell any or all of the Collateral. (c) The Guarantor and the Agent agree that ten (10) Banking Days' prior written notice to the Guarantor of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such reasonable locations as the Agent shall designate in such notice. Except as expressly set forth in any Facility Document, any other requirement of notice, demand or advertisement for sale is, to the extent permitted by law, waived by the Guarantor. Sales for cash, at any public or private sale, if made in good faith, are all hereby deemed (without limitation) to be commercially reasonable (as defined in the Code). The Agent shall have the right to bid at any such sale on behalf of any one or more Lenders (who shall also have the right to bid individually). Proceeds arising from any such sale shall be applied to the repayment of the Secured Obligations in the manner set forth in the Credit Agreement. (d) Anything in this Agreement contained to the contrary notwithstanding, and in view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of the Collateral that consists of Securities may be effected after an Event of Default, the Guarantor agrees that upon the occurrence and during the continuance of an Event of Default, the Agent may, from time to time, attempt to sell all or any part of such Collateral by means of a private placement restricting the bidders and prospective purchasers to those who will represent or agree as to their investment intent or method of resale or both in a manner reasonably required by the Agent to assure compliance with applicable securities laws. The Agent shall give the Guarantor written notice prior to making any such offer of any such Collateral. Each of the Agent and the Guarantor may solicit offers to buy such Collateral, or any part of it, for cash, from a limited number of investors deemed by the Agent, in its reasonable business judgment, to be responsible parties who might be interested in purchasing such Collateral, and if the Agent and the Guarantor collectively solicit such offers from not less than five (5) such investors, then the acceptance by the Agent of the highest offer obtained therefrom shall be deemed to be a commercially reasonable method of disposition (as defined in the Code) of such Collateral unless applicable law provides otherwise. (e) All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of the Guarantor contained in this Agreement or any other Facility Document or contained in any agreement supplementary to this Agreement or any other Facility Document, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions or agreements of the Guarantor contained in this Agreement or any other Facility Document. (f) The Guarantor will pay to the Agent all reasonable expenses (including court costs and reasonable attorneys' fees and expenses) of, or incident to, the enforcement of any of the provisions of this Agreement and all other charges due against the Collateral, including, without limitation, taxes (other than income taxes imposed upon the Agent in connection therewith), assessments, security interests, Liens or encumbrances upon the Collateral and any expenses, including transfer or other taxes, arising in connection with any sale, transfer or other disposition of Collateral. Section 4.03. Other Enforcement Rights. The Agent may proceed to protect and enforce this Agreement by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement in this Agreement contained or in execution or aid of any power in this Agreement granted, or for foreclosure under this Agreement, or for the appointment of a receiver or receivers for the Collateral or any part thereof, for the recovery of judgment for the obligations secured by this Agreement or for the enforcement of any other proper, legal or equitable remedy available under applicable law. Section 4.04. Effect of Sale, etc. (a) Any sale or sales pursuant to the provisions of this Agreement, whether under any right or power granted hereby or thereby or pursuant to any legal proceedings, shall, except as may otherwise be prohibited by law, operate to divest the Guarantor of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Collateral, or any part thereof, so sold, except as may otherwise be prohibited by law, and any Collateral so sold shall be free and clear of any and all rights of redemption by, through or under the Guarantor. At any such sale any Lender may bid for and purchase the Collateral sold and may make payment therefor as set forth in clause (b) of this Section 4.04, and any such Lender so purchasing any such Collateral, upon compliance with the terms of sale, may hold, retain and dispose of such Collateral without further accountability. (b) The receipt by the Agent, or by any Person authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, any Lender is the successful purchaser, it shall be entitled, for the purpose of making settlement or payment, to use and apply such Collateral to the Secured Obligations by crediting thereon the net proceeds of such sale. Section 4.05. Delay or Omission; No Waiver. No course of dealing on the part of the Agent nor any delay or failure on the part of the Agent to exercise any right shall impair such right or operate as a waiver of such right or otherwise prejudice the Agent's rights, powers and remedies. No waiver by the Agent of any Default or Event of Default, whether such waiver be full or partial, shall extend to or be taken to affect any subsequent Default or Event of Default, or to impair the rights resulting therefrom except as may be otherwise expressly provided in this Agreement. Upon the occurrence and during the continuance of an Event of Default, every right and remedy given by this Agreement, by any other Facility Document or by law to the Agent may be exercised from time to time as often as may be deemed expedient by the Agent. Section 4.06. Restoration of Rights and Remedies. If the Agent shall have instituted any proceeding to enforce any right or remedy under this Agreement or under any other Facility Document and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Agent, then and in every such case the Agent and the Guarantor and the Lenders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions under this Agreement and under the other Facility Documents, and, unless otherwise determined in such proceeding, thereafter all rights and remedies of the Agent shall continue as though no such proceeding had been instituted. Section 4.07. Application of Proceeds. The proceeds of any exercise of rights with respect to the Collateral, or any part thereof, and the proceeds and the avails of any remedy under this Agreement shall be paid to and applied in accordance with the provisions of the Credit Agreement. If there is a deficiency, the Guarantor shall, subject always to the other provisions of this Agreement, remain liable therefor and shall forthwith pay the amount of any such deficiency to the Agent. If there is an excess, such excess shall be returned to the Borrower. Section 4.08. Waivers by the Guarantor. (a) To the extent permitted by law, the Guarantor hereby waives notice of acceptance of this Agreement and of extensions of credit, loans, advances or other financial assistance under the Facility Documents or under any other agreement, note, document or instrument now or at any time or times hereafter executed by the Guarantor and delivered to the Agent or any Lender in connection with or pursuant to a Facility Document. To the extent permitted by law, the Guarantor further waives presentment and demand for payment of any of the Secured Obligations, protest and notice of dishonor or default with respect to any of the Secured Obligations, and all other notices to which the Guarantor might otherwise be entitled, except as otherwise expressly provided in this Agreement or in the other Facility Documents. (b) The Guarantor (to the extent that it may lawfully do so) covenants that it will not at any time insist upon or plead, or in any manner claim or take the benefit or advance of, any stay (except in connection with a pending appeal or the automatic stay imposed under 11 U.S.C. Section 362 or any successor or replacement thereof), valuation, appraisal, redemption or extension law now or at any time hereafter in force that, but for this waiver, might be applicable to any sale made under any judgment, order or decree based on this Agreement or any other Facility Document; and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives and relinquishes all benefit and advance of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power in this Agreement or therein granted and delegated to the Agent, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted. Section 4.10. Consent. The Guarantor hereby consents that from time to time, before or after the occurrence or existence of any Event of Default, with or without notice to or assent from the Guarantor, any security at any time held by or available to the Agent for any of the Secured Obligations, or any other security at any time held by or available to the Agent for any obligation of any other Person secondarily or otherwise liable for any of the Secured Obligations, may be exchanged, surrendered, or released and any of the Secured Obligations may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as the Agent or any holder thereof may see fit (except that the Guarantor shall have the right to consent prior to any amendment of the Secured Obligations), and the Guarantor shall remain bound under this Agreement notwithstanding any such exchange, surrender, release, change, alteration, renewal, extension, continuance, compromise, waiver or release. ARTICLE 5. DEFEASANCE Section 5.01. Satisfaction and Discharge. If the Borrower or the Guarantor shall pay and discharge the entire indebtedness on all Secured Obligations outstanding by paying or causing to be paid the principal of, and interest on, all Secured Obligations outstanding; and if the Borrower or the Guarantor shall also pay or cause to be paid all other sums payable under this Agreement with respect to the Secured Obligations and all sums payable under any one or more of the other Facility Documents; and if all Commitments shall have been terminated, then and in that case all of the right, title and interest of the Agent in the Collateral created hereby shall cease and terminate, and thereupon the Agent, upon written request of the Guarantor, shall forthwith execute and deliver, without recourse, assignments and other instruments (including stock certificates and termination statements) acknowledging satisfaction and discharging all of the right, title and interest of the Agent in the Collateral created hereby (subject to any disposition thereof that may have been previously made by the Agent pursuant to any of the Facility Documents). Section 5.02. Disposal of Assets; Release of Lien. So long as no Default or Event of Default shall exist or be created as a result thereof, if the Guarantor shall sell, assign or transfer the Pledged Stock to a Person other than an Affiliate, then the Agent, upon payment to it of all amounts then owed to it as fees and expenses under this Agreement resulting from such sale, shall forthwith return the certificates evidencing the Pledged Stock so sold and shall forthwith execute proper instruments releasing the interest in such Pledged Stock so sold from the Lien of the Agent created under this Agreement. ARTICLE 6. MISCELLANEOUS Section 6.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Guarantor, the Agent and the Required Lenders, or by the Guarantor and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) permit the creation of any Lien with respect to any of the Collateral that is prior or equal to the Lien of the Agent; (b) except as provided herein, effect the deprivation of any Lender of the benefit of any Lien upon all or any part of the Collateral; (c) create any priority with respect to any portion of the Secured Obligations over any other portion with respect to the Lien upon all or any part of the Collateral; or (d) amend, waive or modify the definition of Secured Obligations. Section 6.02. Survival. The obligations of the Guarantor under Section 3.09 or Section 4.02(h) shall survive the repayment of the Loans and the termination of the Commitments. Section 6.03. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Guarantor, the Lenders and their respective successors and assigns. Section 6.04. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing, by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders and to the Guarantor by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of the Credit Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when the confirmation and delivery of the telecopy is transmitted to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. SECTION 6.05. JURISDICTION; IMMUNITIES. (A) EACH OF THE GUARANTOR AND THE AGENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH OF THE GUARANTOR AND THE AGENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH OF THE GUARANTOR AND THE AGENT IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO EACH OF THE GUARANTOR AND THE AGENT AT ITS ADDRESS SPECIFIED IN SECTION 6.04. EACH OF THE GUARANTOR AND THE AGENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE GUARANTOR AND THE AGENT FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE GUARANTOR FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT OR ANY LENDER SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE GUARANTOR AND THE AGENT WAIVES ANY RIGHT THEY MAY HAVE TO JURY TRIAL. (b) Nothing in this Section 6.05 shall affect the right of the Guarantor, the Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of the Agent or any Lender to bring any action or proceeding against the Guarantor or its property in the courts of any other jurisdictions. (c) To the extent that the Guarantor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Guarantor hereby irrevocably waives such immunity in respect of its obligations under this Agreement. Section 6.06. Headings. The headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 6.07. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 6.08. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 6.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 6.10. Subject to the Credit Agreement. Any and all rights granted to the Agent under this Agreement are to be held and exercised by the Agent for the benefit of the Lenders, pursuant to the provisions of the Credit Agreement. To the extent set forth in the Facility Documents, each of the Lenders shall be a beneficiary of the terms of this Agreement. Any and all obligations under this Agreement of the parties to this Agreement, and the rights granted to the Agent under this Agreement, are created and granted subject to the terms of the Credit Agreement. Section 6.11. Power of Attorney. The Guarantor hereby makes, constitutes and appoints the Agent the true and lawful agent and attorney in fact of the Guarantor, with full power of substitution (a) if an Event of Default exists and is continuing, and to the fullest extent permitted by applicable law, to transfer any of the Collateral on the books of the issuer thereof to the name of the Agent or its nominee, and to indorse for negotiation its name on any of the Collateral; and (b) to do any and all things necessary to take such action in the name and on behalf of the Guarantor to carry out the provisions of this Agreement, including, without limitation, the grant of the security interest granted to the Agent with respect to the Collateral and the Agent's rights created under this Agreement after a request by the Agent to take any action, and the failure or refusal of the Guarantor to comply with such request within five (5) Banking Days. The Guarantor agrees, in the absence of willful wrongdoing or gross negligence, that neither the Agent nor any of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission, or for any good faith error of judgment or mistake of fact or law with respect to the exercise of the power of attorney granted under this Section 6.11. The power of attorney granted under this Section 6.11 is coupled with an interest and shall be irrevocable so long as the Unconditional Guaranty remains outstanding. Section 6.12. Term of Agreement. This Agreement shall be and remain in full force and effect so long as the Unconditional Guaranty is outstanding. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. GUARANTOR: TRIARC COMPANIES, INC. By: Name: Title: AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Name: Title: SCHEDULE A Corporation Class of Shares No. of Shares Certificate Number Mistic Brands, Common 884.25 1 Inc. SCHEDULE B 900 Third Avenue New York, NY 10022 EX-10.1I 12 MGMT AGMT EXHIBIT I MANAGEMENT SERVICES AGREEMENT This MANAGEMENT SERVICES AGREEMENT (the "Agreement") is made as of August ___, 1995 by and between Triarc Companies, Inc., a Delaware corporation ("Triarc"), and Mistic Brands, Inc. a Delaware corporation (the "Company"). Triarc currently provides certain contract management services to certain of its subsidiaries (the "Subsidiaries"), and the Company wishes to have Triarc provide management services to it. Triarc and the Company desire to enter into this Agreement to set forth the terms and conditions upon which Triarc will provide certain management services to the Company. Accordingly, the parties hereto agree as follows: 1. Term. The term of this Agreement shall be effective as of January 1, 1996 and shall continue until December 31, 1996 (the "Original Term"), and thereafter shall automatically be extended for successive one year periods (the Original Term, as so extended, the "Term") unless either party hereto notifies the other party hereto at least 90 days prior to the then scheduled end of the Term of its desire that this Agreement be terminated; provided, however, that if any of the Subsidiaries decides not to renew its respective management services agreement with Triarc, then Triarc shall notify the Company of such decision and the Company shall have the right, exercisable within 30 days after receiving such notice from Triarc, not to renew this Agreement. 2. Services to be Provided. Triarc shall provide to the Company during the Term the services listed in this Agreement and such other management services as the Company may reasonably request (collectively, the "Services"). Such Services shall include the following: a. Legal. Expertise and assistance in legal matters, including any reporting obligations of the Company under the Securities Exchange Act of 1934, and the services of a Corporate Secretary and such other support staff as Triarc shall reasonably consider to be appropriate and necessary to handle such matters. b. Accounting. Expertise and assistance in financial presentation and planning and such services as are reasonably necessary for the Company to comply with its financial reporting obligations to third parties, including report preparation, compliance with Generally Accepted Accounting Principles, footnote disclosure, compilation and review. c. Finance. Expertise and assistance in treasury functions, (including ensuring that the Company is in compliance with current lender requirements, monitoring of debt covenants, negotiation of waivers and exceptions, monitoring of cash flow and negotiation of lines of credit), expertise and assistance in evaluating and facilitating financing sources and opportunities, and providing of such other financial expertise as may be required from time to time. d. Tax. Services and expertise required for all federal, state and local tax preparation, planning and audits. e. Risk Management. Services of a risk manager and appropriate support staff to obtain and maintain insurance policies covering property and casualty, workers compensation, comprehensive general liability and other risks. f. Information Technology. Expertise and assistance in connection with the design, installation and maintenance of computer and data systems. g. Benefits Design and Administration. Services and expertise relating to the design and administration of employee benefit plans, including executive compensation arrangements, retirement plans, and health insurance programs. h. Investor Relations. Expertise and assistance in connection with investor relations and other communications. i. Other. Such other services as the parties hereto may agree are necessary for the efficient and profitable operations of the Company. 3. Fees. In consideration for the providing of the Services, the Company agrees to pay with respect to each fiscal quarter of Triarc (each a "Triarc Quarter") a service fee (the "Fee") equal to the product of (i) 1.05 and (ii) the product of (1) the Service Cost (as defined in Section 4 below) incurred during such Triarc Quarter and (2) a fraction, the numerator of which is the greater of (x) the Company's EBITDA (as defined in this Section 3 below) for the most recent period consisting of four full fiscal quarters of the Company which ended immediately prior to the first day of the Triarc Quarter for which the Fee is being computed (the "Reference Period") and (y) 10% of the Company's net sales for such Reference Period, and the denominator of which is the sum of the numerators for all of the Subsidiaries for such Triarc Quarter. For example, the Fee for the fiscal quarter of Triarc beginning January 1, 1996 and ending March 31, 1996 shall be computed based on the Service Cost incurred by Triarc during such period, and the numerator for the Company shall be the greater of the Company's EBITDA or 10% of its net sales for the period of four fiscal quarters ended December 31, 1995. For purposes of this Agreement, EBITDA for any time period means operating profit (loss) for such period plus depreciation for such period, amortization during such period and non-recurring charges such as restructuring charges for such period. The parties hereto agree and acknowledge that the Fee payable hereunder will be subordinated in the manner and to the extent set forth in that certain Affiliate Subordination Agreement between the Company and The Chase Manhattan Bank (National Association), as Agent, and shall be subject to Sections 8.08 and 8.13 of that certain Credit Agreement, among the Company, the lenders signatory thereto and The Chase Manhattan Bank (National Association), as Agent. 4. Service Cost. The term "Service Cost" with respect to any Triarc Quarter means 94.8% of the aggregate of (i) all direct and indirect cash costs which are incurred by Triarc during such Triarc Quarter and which are, in the reasonable business judgment of Triarc, necessary for the efficient and profitable operations of the Subsidiaries (including but not limited to all cash costs of (a) personnel, (b) operating expenses (such as office costs, travel and entertainment), (c) overhead costs (such as costs for office space and assets), (d) fees and other amounts paid to third parties, and (e) any and all cash costs incurred in connection with the termination or maintenance of any services or expenses incurred under this Agreement or any prior agreement that Triarc in its business judgment no longer considers appropriate or useful to the long term benefit of the Subsidiaries); provided, however, that service costs shall not include costs to acquire or place in service any capital assets; and (ii) depreciation charged to the profit and loss statement of Triarc during such Triarc Quarter in respect of any capital assets in accordance with generally accepted accounting principles. 5. Billing. Triarc shall submit to the Company on or before the 25th day of the first month within each Triarc Quarter its good faith estimate of the Service Cost Triarc expects to incur with respect to such Triarc Quarter and the estimated Fee payable by the Company with respect to such Triarc Quarter. The Company shall pay one-third of the estimated Fee, up to a maximum of $166,650 per month, on the last day of each month during such Triarc Quarter, with any portion of the estimated Fee for any Triarc Quarter in excess of $500,000 to be paid on the last day of such Triarc Quarter. Within 45 days after the end of each Triarc Quarter, Triarc shall submit a statement to the Company reconciling the differences, if any, between the estimated Fee paid by the Company with respect to such Triarc Quarter and the actual Fee payable by the Company with respect to such Triarc Quarter. Such difference, if any, shall be added to or subtracted from, as the case may be, the first monthly payment due following the Company's receipt of such statement. For example, for the Triarc Quarter beginning January 1, 1996 and ending March 31, 1996, Triarc will submit an estimate of the Service Cost for such quarter to the Company by January 25, 1996. The estimated Fee payable by the Company will be computed by reference to the greater of the Company's EBITDA or 10% of its net sales for the period of the four fiscal quarters ended December 31, 1995. The Company will pay one-third of the estimated Fee on each of January 31, February 28 and March 31. Triarc will submit a statement to the Company reconciling the actual fee with the estimated Fee on or before May 15, 1996. The reconciling amount will be added to or subtracted from, as the case may be, the amount payable by the Company to Triarc on May 31, 1996. The full amount of all costs to acquire or place in service capital assets shall be billed by Triarc at the time it acquires such capital assets. The Company shall advance to Triarc its allocable share of such capital assets, computed in accordance with the fraction described in Section 3 hereof. Such advances shall be deemed repaid to the extent of the depreciation charged to the profit and loss statement of Triarc in respect of such capital assets. 6. Limitation on Liability. Triarc will use commercially reasonable efforts, skill and judgment to discharge properly its duties hereunder, but shall have no liability with respect to, and shall not be obligated to indemnify or hold harmless the Company, or the officers, directors, employees, agents or other representatives of the Company from or against any cost, loss, expense, damage or liability arising out of or otherwise in respect of the performance of the Services, except any such cost, loss, expense, damage or liability resulting from the gross negligence, willful misfeasance, willful malfeasance or fraud of Triarc or its officers, employees or agents. 7. Not Employees of the Company. Employees of Triarc engaged in performing the Services shall under no circumstances be considered to be employees of the Company. 8. Independent Contractor. In performing the Services, Triarc shall be an independent contractor, and neither party hereto shall be deemed to be an agent, partner or co-venturer of the other due to the terms and provisions of this Agreement. 9. Entire Agreement; Waivers and Amendments. This Agreement sets forth the entire understanding between the Company and Triarc relating to the subject matter hereof. Except as provided herein, this Agreement shall not be modified or amended, and no provision hereof shall be waived, except by an instrument in writing signed by both parties hereto, or in the case of a waiver, by the party hereto against whom such waiver is sought to be enforced. 10. Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York, without regard to the conflict of laws principles thereof. 11. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or overnight express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or, if mailed by overnight mail, the day after the date of deposit with a reputable courier service, or if mailed by non-overnight certified or registered mail, five days after the date of deposit in the United States mails, as follows: (i) if to the Company to: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, NY 10801 Attention: President Facsimile: (914) 637-0020 (ii) if to Triarc to: Triarc Companies, Inc. 900 Third Avenue New York, NY 10022 Attention: Executive Vice President and General Counsel Facsimile: (212) 230-3216 Any party may by notice given in accordance with this Section to the other parties designate another address or person for receipt of notices hereunder. 12. Headings. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have executed this Agreement effective as of the date first above written. TRIARC COMPANIES, INC. MISTIC BRANDS, INC. By: Brian L. Schorr By: Michael Weinstein Name: Brian L. Schorr Name: Michael Weinstein Title: Executive Vice Title: Chief Executive President and Officer General Counsel EX-10.1J 13 AFFIL SUB AGMT EXHIBIT J AFFILIATE SUBORDINATION AGREEMENT AFFILIATE SUBORDINATION AGREEMENT, dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, this "Agreement") among TRIARC COMPANIES, INC., a corporation organized under the laws of Delaware (the "Guarantor"), MISTIC BRANDS, INC., a corporation organized under the laws of Delaware (the "Borrower"), and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as agent (in such capacity, together with its successors in such capacity, the "Agent") for the benefit of each of the lenders (the "Lenders") signatory to the Credit Agreement dated as of August 9, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrower, the Agent and the Lenders. W I T N E S S E T H : WHEREAS, pursuant to the terms of the Credit Agreement and the other Facility Documents, the Lenders have agreed to extend credit to the Borrower upon the terms and subject to the conditions set forth therein to be evidenced by the Notes issued by the Borrower thereunder and the Letters of Credit issued thereunder and to be guarantied by the Guarantor under the Unconditional Guaranty; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their extensions of credit to the Borrower under the Credit Agreement that the Guarantor shall have executed and delivered this Agreement to the Agent to subordinate certain obligations of the Borrower to the Guarantor to the Senior Obligations. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and to purchase Participating Interests in Letters of Credit issued under the Credit Agreement, each of the Guarantor, the Borrower and the Agent agree as follows: ARTICLE 1. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The following terms, as used herein shall have the following meanings: "Default" means any event which with the giving of notice or lapse of time, or both would become an Event of Default. "Event of Default" means any "Event of Default" under the Credit Agreement, the Unconditional Guaranty or any other Facility Document. "Management Agreement" means the Management Agreement dated as of the date hereof between the Borrower and the Guarantor, in the form of Exhibit I, as the same may be amended or supplemented from time to time. "Management Fees" means all fees and other amounts payable by the Borrower to the Guarantor in respect of "Service Costs" under and as defined in the Management Agreement (including, without limitation, fees due, amounts accrued, and overhead and administrative costs billed by the Guarantor to the Borrower). "Security Documents" means the Unconditional Guaranty, the Security Agreement, the Trademark Security Agreement, the Pledge Agreement, this Agreement and each other security document that may from time to time be delivered to the Agent in connection with the Credit Agreement. "Senior Obligations" means the unpaid principal of and interest on (including interest accruing on or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post- petition interest is allowed in such proceeding), the Notes and all other obligations and liabilities of any Obligor to the Agent or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Note, any Letter of Credit, any Interest Rate Protection Agreement to which a Lender is a party, any other Facility Document and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or any Lender) or otherwise. "Subordinated Obligations" means all obligations from time to time owing by the Borrower to the Guarantor in respect of Management Fees. ARTICLE 2. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants that: Section 2.01. Incorporation, Good Standing and Due Qualification. The Guarantor is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its assets and to transact the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required, except where the failure to qualify could not reasonably be expected to have a material adverse effect on the business, profits, Properties or condition of the Guarantor. Section 2.02. Corporate Power and Authority; No Conflicts. The execution, delivery and performance by the Guarantor of this Agreement have been duly authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders; (b) contravene its charter or by- laws; (c) violate any provision of, or require any filing, registration, consent or approval under, any law, rule or regulation or any order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor or any of its Subsidiaries; (d) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Guarantor or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien (other than as created under the Security Documents), upon or with respect to any of the Properties now owned or hereafter acquired by the Guarantor or any of its Subsidiaries; or (f) cause the Guarantor or any of its Subsidiaries to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. Section 2.03. Legally Enforceable Agreement. Each Facility Document to which the Guarantor is a party is a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). ARTICLE 3. SUBORDINATION PROVISIONS. It is intended by the Lenders that the subordination provisions contained in this Agreement shall benefit the Lenders equally (in priority) and ratably in order that the Senior Obligations rank equally in right of payment over the Subordinated Obligations. To implement the foregoing (but without limiting the generality thereof as it may apply to other provisions of this Agreement), the Guarantor agrees as follows: Section 3.01. Subordination. The Guarantor hereby agrees that, except as and to the extent hereinafter provided, the Subordinated Obligations are and shall be subordinate and subject in right of payment to the prior payment in full of all of the Senior Obligations, whether or not such Senior Obligations have been voided, disallowed or subordinated pursuant to Section 548 of the United States Bankruptcy Code or any applicable state fraudulent conveyance laws, whether asserted directly or under Section 544 of the United States Bankruptcy Code. Without limiting the foregoing, the Guarantor also hereby agrees that, (a) except as otherwise provided in Section 3.02 of this Agreement, it will not ask, demand, sue for, take or receive from the Borrower (other than directing the Borrower to make payment directly to the holders of the Senior Obligations for the purpose of causing the Senior Obligations to be paid), by set-off or in any other manner, payment of the whole or any part of the Subordinated Obligations, or any security therefor, and (b) it will not accelerate all or any portion of the Subordinated Obligations or otherwise implement any remedy it may have in respect of the Subordinated Obligations (provided that the Guarantor may accelerate the Subordinated Obligations if all outstanding Senior Obligations shall have been previously accelerated), in each case unless and until all of the Senior Obligations shall have been fully, finally and indefeasibly paid in cash, whether or not such Senior Obligations have been voided, disallowed or subordinated pursuant to Section 548 of the United States Bankruptcy Code or any applicable state fraudulent conveyance laws, whether asserted directly or under Section 544 of the United States Bankruptcy Code. The Guarantor hereby irrevocably directs the Borrower to make such prior payment. The Guarantor further agrees that it will not institute against the Borrower any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law until such time as the Senior Obligations have been fully, finally and indefeasibly paid in cash. Section 3.02. Certain Payments Permitted. So long as no Default or Event of Default has occurred and is continuing (and only to the extent not prohibited by the provisions of the Facility Documents), the Guarantor may from time to time receive from the Borrower payments of all accrued and unpaid Subordinated Obligations. Nothing in this Agreement shall limit the right of the Guarantor to receive payments of the Subordinated Obligations so long as the Senior Obligations shall have been indefeasibly paid in full. Section 3.03. Distributions, etc. In furtherance of, and to make effective, the subordination provided for herein, the Guarantor further agrees as follows: (a) In the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Borrower or the proceeds thereof, to creditors of the Borrower, or upon any indebtedness of the Borrower, by reason of (1) the liquidation, dissolution or other winding up, partial or complete, of the Borrower or the Borrower's business, (2) any receivership, insolvency or bankruptcy proceeding, or assignment for the benefit of creditors, or (3) any proceeding by or against the Borrower for any relief under any bankruptcy or insolvency law or laws relating to the relief of debtors, readjustment of indebtedness, arrangements, reorganizations, compositions or extensions, then and in any such event: (i) any payment or distribution of any kind or character, whether in cash, securities or other property which but for this Agreement would be payable or deliverable upon or with respect to any or all of the Subordinated Obligations, shall instead be paid or delivered directly to the Agent for application to the Senior Obligations, whether then due or not due, until the Senior Obligations shall have first been fully, finally and indefeasibly paid in cash and satisfied; and (ii) the Guarantor hereby irrevocably authorizes and empowers the Agent to demand, sue for, collect and receive every such payment or distribution and give acquittance therefor, and to file and/or vote claims and take such other proceedings, in the Agent's own name or in the name of the Guarantor, or otherwise, as the Agent may deem necessary or advisable for the enforcement of this Agreement (including, without limitation, the filing of any proof of claim in respect of the Subordinated Obligations in any bankruptcy or insolvency proceeding of the Borrower). In furtherance of the foregoing, the Guarantor agrees duly and promptly to take such action as may be reasonably requested by the Agent to assist in the collection of the Subordinated Obligations for the account of the Agent and/or to file appropriate proofs of claim in respect of the Subordinated Obligations, and to execute and deliver to the Agent on demand such powers of attorney, proofs of claim, assignments of claim or other instruments as may be reasonably requested by the Agent to enable the Agent to enforce any and all claims upon or with respect to the Subordinated Obligations, and to collect and receive any and all payments or distributions which may be payable or deliverable at any time upon or with respect to the Subordinated Obligations. (b) If any payment, distribution of security or proceeds of any security are received by the Guarantor upon or in respect of the Subordinated Obligations in contravention of the provisions of this Article 3, the Guarantor will forthwith deliver the same to the Agent in precisely the form received (except for the endorsement or assignment of the Guarantor where necessary), for application to the Senior Obligations, whether then due or not due, and, until so delivered, the same shall be held in trust by the Guarantor as property of the Agent. In the event of the failure of the Guarantor to make any such endorsement or assignment, the Agent, or any of its officers or employees, are hereby irrevocably authorized to make the same. (c) The Guarantor agrees that it will not transfer, assign, pledge or encumber the Subordinated Obligations or any part thereof or any instrument evidencing the same unless the respective instrument of assignment specifically provides that the assignee takes the Subordinated Obligations subject to the provisions of this Agreement and such assignee executes and delivers to the Agent an instrument in form and substance satisfactory to the Agent pursuant to which such assignee agrees to be bound by the provisions of this Agreement. From and after the occurrence of any Default or Event of Default, and for so long as the same shall be continuing, the Guarantor agrees that it will not exchange, forgive, waive or cancel the Subordinated Obligations or any part thereof or reduce the amount of the Subordinated Obligations in whole or in part. (d) Without limiting the effect of any of the other provisions hereof, during the continuance of any Default or Event of Default with respect to any Senior Obligation or any default in the payment of any Senior Obligation, no payment shall be made with respect to the Subordinated Obligations. Section 3.04. Continuing Subordination, etc. The subordination effected by this Agreement is a continuing subordination, and the Guarantor hereby agrees that at any time and from time to time, without prior notice to it: (a) the time for the Borrower's performance of or compliance with any of its obligations contained in the Credit Agreement or any of the other Facility Documents may be extended or such performance or compliance may be waived by the applicable Lenders; (b) any of the acts permitted under the Credit Agreement or any of the other Facility Documents may be done; (c) payment of any of the Senior Obligations or any portion thereof may be extended; and (d) any collateral security for the Senior Obligations may be exchanged, sold, surrendered, released or otherwise dealt with, in accordance with the terms of any of the Facility Documents or any other present or future agreement between the Borrower and the Lenders; all without impairing or affecting the obligations of the Guarantor hereunder. Section 3.05. Waiver of Notice. The Guarantor hereby unconditionally waives notice of the incurring of the Senior Obligations or any part thereof in accordance with the terms of the Facility Documents and reliance by any Lender upon the subordination of the Subordinated Obligations to the Senior Obligations. Section 3.06. Application of Payments. Whenever any payment or distribution shall be paid or delivered to the Agent pursuant to the provisions of this Section 3 for application on the Senior Obligations, such payment or distribution shall be applied by the Agent to the repayment of the Senior Obligations in accordance with the priorities set forth in the Credit Agreement. Section 3.07. Subrogation. Subject to the prior indefeasible payment in full in cash of the Senior Obligations, the Guarantor shall not be subrogated to the rights of the Agent and the Lenders to receive payments or distributions in cash, property or securities of the Borrower applicable to the Senior Obligations until all amounts owing on the Senior Obligations shall be paid in full, and as between and among the Borrower, its creditors other than the Agent and the Lenders, and the Guarantor, no such payment or distribution made to the Agent or the Lenders by virtue of this Agreement which otherwise would have been made to the Guarantor shall be deemed to be a payment by the Borrower on account of the Senior Obligations, it being understood that the provisions of this Section 3 are intended solely for the purpose of defining the relative rights of the Guarantor, the Agent and the Lenders. Nothing herein will relieve the Borrower of its obligations to the Guarantor with respect to the Subordinated Obligations. Section 3.08. Certain Agreements. The Guarantor agrees that: (a) all holders of Senior Obligations, in determining to acquire and retain Senior Obligations, have relied upon the subordination of the Subordinated Obligations to the Senior Obligations as provided herein; (b) promptly upon the written request of the Agent, the Guarantor shall execute and deliver to the Agent a written instrument by which the Guarantor affirms and agrees that the Subordinated Obligations is subordinated and junior in right of payment to such Senior Obligations on the terms and conditions provided herein; (c) promptly upon the written request of the Agent, the Guarantor shall take such other action as may be reasonably requested by the Agent to effectuate the subordination provided herein; and (d) the Subordinated Obligations shall not at any time be secured by any Lien or security interest on Property of the Borrower. ARTICLE 4. MISCELLANEOUS. Section 4.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Guarantor, the Agent and the Required Lenders, or by the Guarantor and the Agent acting with the consent of the Required Lenders and any provision of this Agreement may be waived by the Required Lenders or by the Agent acting with the consent of the Required Lenders; provided that no amendment, modification or waiver shall, unless by an instrument signed by the Guarantor and all of the Lenders or by the Agent acting with the consent of all of the Lenders: (a) release the Guarantor from the subordination hereunder; or (b) amend, waive or modify the definitions of Subordinated Obligations or Senior Obligations. Section 4.02. Expenses. The Guarantor shall reimburse the Agent and each Lender for all reasonable out-of-pocket costs, expenses and charges (including, without limitation, reasonable fees and charges of external legal counsel for the Agent and each Lender) in connection with the enforcement or preservation of any rights or remedies during the existence of an Event of Default (including, without limitation, in connection with any restructuring or insolvency or bankruptcy proceeding) under this Agreement. Section 4.03. Survival. The obligations of the Guarantor under Section 4.02 shall survive the repayment of the Loans and the Letters of Credit and the termination of the Commitments. Section 4.04. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Guarantor, the Borrower, the Agent, the Lenders and their respective successors and assigns. Section 4.05. Notices. Unless the party to be notified otherwise notifies the other party in writing as provided in this Section, and except as otherwise provided in this Agreement, notices shall be given to the Agent in writing, by telex, telecopy or other writing or by telephone, confirmed by telex, telecopy or other writing, and to the Lenders, to the Borrower and to the Guarantor by ordinary mail, hand delivery, overnight courier or telecopier addressed to such party at its address on the signature page of this Agreement. Notices shall be effective: (a) if given by mail, 72 hours after deposit in the mails with first class postage prepaid, addressed as aforesaid; and (b) if given by telecopier, when confirmation of delivery of the telecopy to the telecopier number as aforesaid is transmitted; provided that notices to the Agent and the Lenders shall be effective upon receipt. Section 4.06. Headings. The headings and captions hereunder are for convenience only and shall not affect the interpretation or construction of this Agreement. Section 4.07. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 4.08. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 4.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Section 4.10. Subject to the Credit Agreement. Any and all rights granted to the Agent under this Agreement are to be held and exercised by the Agent for the benefit of the Lenders, pursuant to the provisions of the Credit Agreement. To the extent set forth in the Facility Documents, each of the Lenders shall be a beneficiary of the terms of this Agreement. Any and all obligations under this Agreement of the parties to this Agreement, and the rights granted to the Agent under this Agreement, are created and granted subject to the terms of the Credit Agreement. Section 4.11. Term of Agreement. This Agreement shall be and remain in full force and effect so long as any Obligation, any Letter of Credit or any Commitment is outstanding. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TRIARC COMPANIES, INC. By: Name: Title: Triarc Companies, Inc. 900 Third Avenue New York, New York 10022 Attention: Executive Vice President and General Counsel Telecopier No.: (212) 230- 3216 MISTIC BRANDS, INC. By: Name: Title: Address for Notices: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, NY 10801 Attention: Chief Financial Officer Telecopier No.: (914) 637- 0020 With a copy to: Triarc Companies, Inc. 900 Third Avenue New York, New York 10022 Attention: Executive Vice President and General Counsel Telecopier No.: (212) 230- 3216 AGENT: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By: Name: Title: Address for Notices: New York Agency 4 Chase Metrotech Center 13th Floor Brooklyn, NY 11245 Attention: Lucy D'Orazio Telecopier No.: (718) 242- 6909 with a copy to: 31 Mamaroneck Avenue White Plains, NY 10601 Attention: Michael D. Anthony Telecopier No.: (914) 328- 8373 EX-10.2 14 AMEND NO 6 8/3/95 Exhibit 10.2 AMENDMENT NO. 6 TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT THIS AMENDMENT NO. 6 ("Amendment No. 6") is entered into as of August 3, 1995, by and among GRANITEVILLE COMPANY ("Graniteville"), a corporation organized under the laws of the State of South Carolina, C.H. PATRICK & CO., INC. ("Patrick"), a corporation organized under the laws of the State of South Carolina (Graniteville and Patrick each a "Borrower" and, jointly and severally, the "Borrowers"), the undersigned financial institutions (jointly and severally, the "Lenders") and THE CIT GROUP/COMMERCIAL SERVICES, INC. ("CIT"), a corporation organized under the laws of the State of New York, as agent for the Lenders (CIT in such capacity, the "Agent"). BACKGROUND Borrowers, Lenders and Agent are parties to a Revolving Credit, Term Loan and Security Agreement dated as of April 23, 1993 (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement") pursuant to which Lenders provide Borrowers with certain financial accommodations. Borrowers have requested, among other things, that Lenders (a) increase the Maximum Loan Amount, (b) increase the Advance Rates and (c) decrease the Contract Rate, and Lenders are willing to do so on the terms and conditions hereafter set forth. NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrowers by Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Amendment to Loan Agreement. Subject to satisfaction or waiver of the conditions precedent set forth in Section 5 below, the Loan Agreement is hereby amended as follows: (a) Section 1.1 of the Loan Agreement is hereby amended by deleting the date "March 1, 1992" appearing in the last full line thereof and inserting "January 1, 1995" in its place and stead. (b) Section 1.2 of the Loan Agreement is hereby amended as follows: (i) the following defined terms are inserted in the appropriate alphabetical order: "Additional Term Loan Commitment Percentages" shall mean the percentages set forth on Schedule B to Amendment No. 6. "Amendment to Mortgages" shall mean the First Amendment to Master Mortgage and Deed to Secure Debt with Uniform Commercial Code Security Agreement and with Assignment of Leases, Rents and Profits with respect to the Real Property owned by Graniteville in Georgia and South Carolina dated as of the Amendment No. 6 Effective Date together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements thereto and thereof. "Amended and Restated Note" shall mean collectively, the Amended and Restated Revolving Credit Note and the Amended and Restated Term Note. "Amended and Restated Revolving Credit Note" shall mean, collectively, the promissory notes dated as of the Amendment No. 6 Effective Date referred to in Section 2.1(a) hereof. "Amended and Restated Term Note" shall mean, collectively, the promissory notes dated as of the Amendment No. 6 Effective Date described in Section 2.4 hereof. "Amendment No. 6" shall mean Amendment No. 6 to this Agreement. "Amendment No. 6 Effective Date" shall mean the date on which the conditions precedent set forth in Section 5 of Amendment No. 6 are satisfied. "Fee Letter" shall mean that certain letter dated as of the Amendment No. 6 Effective Date between Agent and Borrowers. "Graniteville Holdings" shall mean Graniteville Holdings, Inc., a Delaware corporation. "GS Holdings" shall mean GS Holdings, Inc., a Delaware corporation. "GVT Holdings" shall mean GVT Holdings, Inc., a Delaware corporation. "Mill Risk Receivables" shall mean those Receivables which have not been approved by CIT under the Factoring Agreement(s). "Mistic Acquisition" shall mean the acquisition by Mistic Brands, Inc., a subsidiary of Triarc, of substantially all of the assets, subject to certain related liabilities, of the non-alcoholic beverage business of Joseph Victori Wines, Inc., Best Flavors, Inc. and Nature's Own Beverage Company. "Original Triarc Loan" shall have the meaning set forth in Section 7.5 of the Loan Agreement. (ii) the following defined terms are hereby amended in their entirety to provide as follows: "Financial Covenants" shall mean the covenants set forth in Sections 6.5 through 6.9 of the Loan Agreement. "Graniteville Sublimit" shall mean $130,000,000 less the outstanding amount of Revolving Advances made to Patrick. "Guarantors" shall mean (a) Graniteville with respect to the Obligations of Patrick, (b) Patrick with respect to the Obligations of Graniteville, and (c) Triarc, Graniteville International, GS Holdings, GVT Holdings and Graniteville Holdings with respect to the Obligations of Borrowers. "Maximum Loan Amount" shall mean $216,000,000. "Maximum Revolving Advance Amount" shall mean $130,000,000. "Revolving Interest Rate" shall mean an interest rate per annum equal to (a) the sum of the Chemical Rate plus one percent (1.00%) with respect to Chemical Rate Loans, and (b) the sum of the Eurodollar Rate plus two and three- quarters percent (2.75%) with respect to Eurodollar Rate Loans. "Term" shall mean the Closing Date through August 1, 2000. "Term Loan Rate" shall mean an interest rate per annum equal to (a) the sum of the Chemical Rate plus one and one-half percent (1.50%) with respect to Chemical Rate Loans, and (b) the sum of the Eurodollar Rate plus three and one-quarter percent (3.25%) with respect to Eurodollar Rate Loans; provided, however, at such time as aggregate principal repayments of the Term Loan from and after August 1, 1995 arising out of the normal operations of Borrowers equal or exceed $14,000,000, the interest rate per annum with respect to Eurodollar Rate Loans shall be the sum of the Eurodollar Rate plus three percent (3.00%); provided, further, at such time as aggregate principal repayments of the Term Loan from and after August 1, 1995 arising out of the normal operations of Borrowers equal or exceed $29,000,000, the interest rate per annum with respect to Eurodollar Rate Loans shall be the sum of the Eurodollar Rate plus two and three- quarters percent (2.75%). "Triarc" shall mean Triarc Companies, Inc., a Delaware corporation. (iii) Sub-paragraph (j) of the definition of Eligible Receivables is hereby amended by deleting the parenthetical "(31 U.S.C. Sub-Section 203 et seq.)" and inserting "(31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.)" in its place and stead. (iv) the definitions of "Facility Increase Period" and "Maximum Inventory Advance Amount" are hereby deleted. (v) all references in the Loan Agreement and the Other Documents to the Term Note, the Revolving Credit Note and the Mortgages are hereby amended to be references to the Amended and Restated Term Note, Amended and Restated Revolving Credit Note and the Amended and Restated Mortgages, respectively. (c) Section 2.1(a)(II) of the Loan Agreement is hereby amended in its entirety to provide as follows: "(II) an amount equal to the sum of: (i) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, up to 95%, and thereafter up to 90% (in each case subject to the provisions of Section 2.1(b) hereof) ("Credit Approved Receivables Advance Rate") of the net face amount of Eligible Receivables which have been credit approved by CIT under the Factoring Agreement(s), plus (ii) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date up to 90%, and thereafter up to 85% (in each case subject to the provisions of Section 2.1(b) hereof) ("Mill Risk Receivables Advance Rate") of the net face amount of Eligible Receivables which have not been credit approved by CIT under the Factoring Agreement(s), (provided, however, in no event shall the sum of outstanding Revolving Advances against Mill Risk Receivables exceed $18,000,000 in the aggregate) plus (iii) up to the lesser of (x) $42,000,000 or (y) up to 65%, (subject to the provisions of Section 2.1(b) hereof) ("Inventory Advance Rate") of the value of the Eligible Inventory (the Credit Approved Receivables Advance Rate, Mill Risk Receivables Advance Rate and Inventory Advance Rate shall be referred to collectively as the "Advance Rates"), minus (iv) the aggregate amount of outstanding Letters of Credit; minus (v) the Excess Cash Flow Reserve; minus (vi) such reserves as Agent may establish in its reasonable discretion including, without limitation, reserves established by CIT under the Factoring Agreements (collectively, the "Reserves"). The sum of the amounts derived from Sections 2.1(a)(i) plus (a)(ii) plus (a)(iii) minus (a)(v) minus (a)(vi) at any time and from time to time shall be referred to as the "Formula Amount". The Revolving Advances shall be evidenced by amended and restated secured promissory notes substantially in the form attached hereto as Exhibit 2.1(a)." (d) Section 2.1(c)(II) of the Loan Agreement is hereby amended in its entirety to provide as follows: "(II) an amount equal to the sum of: (i) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, up to 95%, and thereafter, up to 90% (in each case subject to the provisions of Section 2.1(b) hereof) of the net face amount of Eligible Receivables which have been credit approved by CIT under the Graniteville Factoring Agreement, plus (ii) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, up to 90%, and thereafter, up to 85% (in each case subject to the provisions of Section 2.1(b) hereof) of the net face amount of Eligible Receivables which have not been credit approved by CIT under the Graniteville Factoring Agreement (provided, however, in no event shall the sum of outstanding Revolving Advances against Mill Risk Receivables of Graniteville and Patrick exceed $18,000,000 in the aggregate), plus (iii) up to 65% (subject to the provisions of Section 2.1(b) hereof) of the value of Eligible Inventory of Graniteville (provided, however, in no event shall the sum of outstanding Revolving Advances against Eligible Inventory of Graniteville and of Patrick exceed $42,000,000, minus (iv) the aggregate amount of outstanding Letters of Credit issued on behalf of Graniteville, minus (v) the portion of Excess Cash Flow Reserve reasonably determined by Agent to be applicable to Graniteville, minus (vi) such Reserves as Agent may establish in its reasonable discretion. The sum of the amounts derived from Sections 2.1(c)(i) plus (c)(ii) plus (c)(iii) minus (c)(v) minus (c)(vi) at any time and from time to time shall be referred to as the 'Graniteville Formula Amount'." (e) Section 2.1(d)(II) of the Loan Agreement is hereby amended in its entirety to provide as follows: "(II) an amount equal to the sum of: (i) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, up to 95%, and thereafter, up to 90% (in each case subject to the provisions of Section 2.1(b) hereof) of the net face amount of Eligible Receivables which have been credit approved by CIT under the Patrick Factoring Agreement, plus (ii) for the period commencing on the Amendment No. 6 Effective Date and continuing through the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, up to 90%, and thereafter, up to 85% (in each case subject to the provisions of Section 2.1(b) hereof) of the net face amount of Eligible Receivables which have not been credit approved by CIT under the Patrick Factoring Agreement (provided, however, in no event shall the sum of outstanding Revolving Advances against Mill Risk Receivables of Graniteville and Patrick exceed $18,000,000 in the aggregate), plus (iii) up to 65% (subject to the provisions of Section 2.1(b) hereof) of the value of Eligible Inventory of Patrick (provided, however, in no event shall the sum of outstanding Revolving Advances against Eligible Inventory of Graniteville and of Patrick exceed $42,000,000, minus (iv) the aggregate amount of outstanding Letters of Credit issued on behalf of Patrick, minus (v) the portion of Excess Cash Flow Reserve reasonably determined by Agent to be applicable to Patrick; minus (vi) such Reserves as Agent may establish in its reasonable discretion. The sum of the amounts derived from Sections 2.1(d)(i) plus (d)(ii) plus (d)(iii) minus (d)(v) minus (d)(vi) at any time and from time to time shall be referred to as the 'Patrick Formula Amount'." (f) The second to last sentence of Section 2.2(b) of the Loan Agreement is hereby amended in its entirety to provide as follows: "In no case, however, may Borrowers obtain Eurodollar Rate Loans with respect to Revolving Advances if the aggregate outstanding amount of such Eurodollar Rate Loans would exceed seventy-five percent (75%) of outstanding Revolving Advances. With respect to the Term Loan, Borrowers shall maintain as Chemical Rate Loans an amount representing the principal amount of the next two (2) quarterly payments which are due and payable." (g) Section 2.4 of the Loan Agreement is hereby amended in its entirety to provide as follows: "2.4. Term Loan. (a) On the Closing Date, CIT (which was the only Lender as of such date) made a Term Loan to Borrowers in the principal amount of $80,000,000 which, as of the Amendment No. 6 Effective Date, has an outstanding principal balance of $55,000,000. Subject to the terms and conditions of this Agreement, each Lender, severally and not jointly, will make an additional term loan equal to its Additional Term Loan Commitment Percentage of $31,000,000 (the "Additional Term Loan") on the Amendment No. 6 Effective Date which Additional Term Loan shall be consolidated with the original Term Loan. The Additional Term Loan shall be advanced on the Amendment No. 6 Effective Date and the consolidated Term Loan shall be, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under this Agreement or the termination of this Agreement: (i) on November 1, 1995, a principal installment in an amount equal to $800,000; (ii) on February 1, 1996, a principal installment in an amount equal to $2,300,000; and (iii) commencing on May 1, 1996 and continuing on the first day of each August, November, February and May thereafter, quarterly principal installments each in an amount equal to $3,100,000 until August 1, 2000 when the unpaid principal balance of the Term Loan shall be due and payable. The Term Loan (following the consolidation of the original Term Loan and the Additional Term Loan) shall be evidenced by and subject to the terms and conditions set forth in amended and restated secured promissory notes substantially in the form attached hereto as Exhibit 2.1(a). (h) Section 2.4(b)(ii) of the Loan Agreement is hereby amended by deleting the reference to "February 27, 1994" in the fourth line thereof and inserting "December 31, 1995" in its place and stead. (i) A new Section 2.4(b)(iii) is hereby added following Section 2.4(b)(ii) of the Loan Agreement which provides as follows: "In the event that the Mistic Acquisition is not consummated on or before August 31, 1995, Borrowers shall prepay Advances in an amount equal to $35,000,000, which amount shall be applied first to principal installments pro rata on the Term Loan and which payments may not be reborrowed and then to the remaining Advances in such order as Agent may determine subject to Borrowers' ability to reborrow Revolving Advances in accordance with the terms hereof." (j) Section 2.10(b) of the Loan Agreement is hereby amended by deleting "(1983 Revision), International Chamber of Commerce Publication No. 400" in the last sentence thereof and inserting "(1993 Revision), International Chamber of Commerce Publication No. 500" in its place and stead. (k) Section 2.11(d) of the Loan Agreement is hereby amended in its entirety to provide as follows: "Each Lender shall to the extent of the percentage amount equal to the product of such Lender's Commitment Percentage times the aggregate amount of all unreimbursed reimbursement obligations made with respect to the Letters of Credit be deemed to have irrevocably purchased an undivided participation in each unreimbursed reimbursement obligation. In the event that at the time a disbursement is made the unpaid balance of Revolving Advances exceeds or would exceed, with the making of such disbursement, the lesser of (x) the Maximum Revolving Advance Amount minus the aggregate amount of outstanding Letters of Credit or (y) the Formula Amount minus the amount set forth in Section 2.1(a)(iv), or the Advances outstanding to Graniteville or Patrick would exceed the lesser of (i) the Graniteville Sublimit or the Patrick Sublimit, as the case may be, or (ii) the Graniteville Formula Amount minus the aggregate amount of outstanding Letters of Credit issued on behalf of Graniteville or the Patrick Formula Amount minus the aggregate amount of outstanding letters of Credit issued on behalf of Patrick, as the case may be,, and such disbursement is not reimbursed by Borrower within two (2) Business Days, Agent shall promptly notify each Lender and upon Agent's demand each Lender shall pay to Agent such Lender's proportionate share of such unreimbursed disbursement together with such Lender's proportionate share of Agent's unreimbursed costs and expenses relating to such unreimbursed disbursement. Upon receipt by Agent of a repayment from Borrower of any amount disbursed by Agent for which Agent had already been reimbursed by the Lenders, Agent shall deliver to each of the Lenders that Lender's pro rata share of such repayment. Each Lender's participation commitment shall continue until the last to occur of any of the following events: (A) Agent ceases to be obligated to issue Letters of Credit hereunder, (B) no Letter of Credit issued hereunder remains outstanding and uncancelled, or (C) all Persons (other than Borrower) have been fully reimbursed for all payments made under or relating to Letters of Credit." (l) Section 2.9 of the Loan Agreement is hereby amended by deleting "$7,500,000" and inserting "$5,000,000" in its place and stead. (m) The following subsections are hereby added to Section 3.3 of the Loan Agreement following Section 3.3(c) which provide as follows: "(d) Commitment Fee. Upon the execution of Amendment No. 6, Borrowers shall pay to each Lender a commitment fee equal to the product of (i) .70% times (ii) any increase in each Lender's Commitment Amount pursuant to Amendment No. 6. (e) Amendment Fee. Upon the execution of this Amendment No. 6, Borrowers shall pay to each Lender an amendment fee equal to the product of (i) one quarter of one percent (.25%) times (ii) each Lender's Commitment Amount prior to giving effect to Amendment No. 6. (f) Fee Letter. Upon the execution of Amendment No. 6, Borrowers shall pay to Agent for its own account the fees set forth in the Fee Letter." (n) Section 3.4 of the Loan Agreement is hereby amended by deleting "$500" and inserting "$750" in its place and stead. (o) Section 4.5 of the Loan Agreement is hereby amended by adding "as amended as of the Amendment No. 6 Effective Date" after each reference to "Schedule 4.5". (p) The second to last sentence of Section 5.4 of the Loan Agreement is hereby amended in its entirety to provide as follows: "Federal, state and local income tax returns of Graniteville and of Patrick have been examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ended March 3, 1985, except for returns filed with the State of California where returns have been examined and reported upon or closed by statute for all years prior to and including the fiscal year ended February 26, 1984. (q) Section 5.5(a) of the Loan Agreement is hereby amended by deleting "March 1, 1992" in the second line thereof and inserting "January 1, 1995" in its place and stead. (r) Section 5.5(b) of the Loan Agreement is hereby amended by deleting "as of the Closing Date" in the second line thereof and inserting "as of the Amendment No. 6 Effective Date". (s) Section 6.5 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.5 Net Worth. Cause to be maintained as of the end of each fiscal quarter a Net Worth of not less than the amount set forth below opposite such fiscal quarter end: Fiscal Quarter End Minimum Net Worth July 2, 1995 $165,000,000 October 1, 1995 165,000,000 December 31, 1995 170,000,000 March 31, 1996 175,000,000 June 30, 1996 180,000,000 September 29, 1996 185,000,000 December 29, 1996 190,000,000 March 30, 1997 195,000,000 June 29, 1997 200,000,000 September 28, 1997 205,000,000 December 28, 1997 210,000,000 For each fiscal quarter end thereafter, the Minimum Net Worth shall be increased by an amount equal to $5,000,000 for such fiscal quarter end. (t) Section 6.6 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.6 Current Ratio. Cause to be maintained as of the end of each fiscal quarter a ratio of Current Assets to Current Liabilities not less than the amount set forth below opposite such fiscal quarter end: Fiscal Quarter End Current Ratio July 2, 1995 2.6 to 1.0 October 1, 1995 2.5 to 1.0 December 31, 1995 2.4 to 1.0 and each fiscal quarter end thereafter (u) Section 6.7 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.7 Indebtedness to Net Worth Ratio. Cause to be maintained as of the end of each fiscal quarter a ratio of Indebtedness of Borrowers on a Consolidated Basis to Net Worth no greater than the ratio set forth below opposite such fiscal quarter end: Indebtedness to Fiscal Quarter End Net Worth Ratio July 2, 1995 1.67 to 1.00 October 1, 1995 1.64 to 1.00 December 31, 1995 1.87 to 1.00 March 31, 1996 1.80 to 1.00 June 30, 1996 1.70 to 1.00 September 29, 1996 1.63 to 1.00 December 29, 1996 1.55 to 1.00 March 30, 1997 1.48 to 1.00 June 29, 1997 1.39 to 1.00 September 28, 1997 1.33 to 1.00 December 28, 1997 1.26 to 1.00 and each fiscal quarter 1.25 to 1.00" end thereafter (v) Section 6.8 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.8 Working Capital. Cause to be maintained as of the end of each fiscal quarter, Working Capital in an amount not less than the amount set forth below opposite such fiscal quarter end: Fiscal Quarter End Minimum Working Capital July 2, 1995 $109,300,000 October 1, 1995 110,300,000 December 31, 1995 112,100,000 March 31, 1996 116,700,000 June 30, 1996 117,000,000 September 29, 1996 117,100,000 December 29, 1996 117,400,000 March 30, 1997 117,400,000 June 29, 1997 117,700,000 September 28, 1997 117,700,000 December 28, 1997 117,900,000 and each fiscal quarter 120,000,000" end thereafter (w) Section 6.9 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.9. Interest Coverage. Cause for each four quarter period ending at the fiscal quarter ends set forth below the ratio of (i) Earnings Before Interest and Income Taxes plus depreciation and amortization to (ii) aggregate interest expense of Borrowers on a Consolidated Basis to be greater than the ratio set forth opposite such fiscal quarter end: Fiscal Quarter End Interest Coverage Ratio July 2, 1995 2.60 to 1.0 October 1, 1995 2.40 to 1.0 December 31, 1995 2.40 to 1.0 March 31, 1996 2.50 to 1.0 June 30, 1996 2.50 to 1.0 September 29, 1996 2.50 to 1.0 December 29, 1996 2.75 to 1.0 March 30, 1997 2.75 to 1.0 June 29, 1997 2.75 to 1.0 September 28, 1997 2.75 to 1.0 December 28, 1997 3.00 to 1.0 and each four 3.00 to 1.0 (4) quarter period ending thereafter In the event that the Mistic Acquisition is not consummated on or before August 31, 1995 and a prepayment is made pursuant to Section 2.4(b)(ii) hereof, then Borrowers and Lenders shall, in good faith, negotiate any adjustments required to the Financial Covenants as a result of such prepayment and in the event Borrowers and Required Lenders cannot agree on such adjustments by September 30, 1995, Agent shall in the exercise of its reasonable business judgment determine the necessary adjustments and reset the Financial Covenants in which event the consent of Lenders or Borrowers shall not be required." (x) Section 6.13 of the Loan Agreement is hereby amended in its entirety to provide as follows: "6.13 Interest Rate Protection. No later than sixty (60) days from the Amendment No. 6 Effective Date, deliver to Agent evidence reasonably satisfactory to Agent that Borrowers have purchased interest rate protection for at least $108,000,000 of the Advances covering a period of twenty four (24) months from the date of purchase and providing for a Eurodollar Rate cap of 9% per annum in the event that (a) the 90 day Eurodollar Rate exceeds 9% or (b) the Chemical Rate exceeds 12%." (y) Section 7.5 of the Loan Agreement is hereby amended in its entirety to provide as follows: "7.5 Loans. Make advances, loans or extensions of credit to any Person, including without limitation, any Parent, Subsidiary or Affiliate except (a) the extension of commercial trade credit in connection with the sale of Inventory in the ordinary course of its business; (b) loans to Triarc on the Closing Date not to exceed $66,600,000 in the aggregate ("Original Triarc Loan"); (c) accrued but unpaid interest on the Original Triarc Loan evidenced by a note; (d) loans to Triarc on the Amendment No. 6 Effective Date not to exceed $36,000,000 in the aggregate evidenced by a note charging interest at a rate per annum equal to nine and one-half percent (9.50%) payable on a semi- annual basis as follows: not less than forty percent (40%) to be in cash and not more than sixty percent (60%) to be in the form of additional promissory notes ("Additional Triarc Loan"); provided, however, to the extent that Triarc does not make scheduled interest payments on the Additional Triarc Loan in cash or property (additional promissory notes do not constitute payment in cash or property) intercompany interest between Graniteville and Triarc shall not be reflected for purposes of the Tax Sharing Agreement; (e) loans and advances to employees for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount not to exceed $200,000 at any time outstanding; (f) loans and advances by Graniteville to Patrick and loans and advances by Patrick to Graniteville; and (g) loans and advances by Graniteville to Affiliates which together with dividends paid by Graniteville to Affiliates in accordance with Section 7.7(a) of this Agreement do not exceed an aggregate amount equal to fifty percent (50%) of the net income after taxes of Borrowers on a Consolidated Basis cumulated from the beginning of the first fiscal year commencing on or after December 20, 1994, provided, that (i) the outstanding principal balance of the Term Loan is equal to or less than $50,000,000 at the time of such loan or advance; (ii) no Event of Default or Default exists or would exist after giving effect to such loan or advance and payments made in accordance with Section 7.7(a); (iii) such loans or advances and payments made pursuant to Section 7.7(a) are made no more than once per fiscal year but not earlier than thirty (30) days after delivery to Agent of the Audited Annual Financial Statements delivered pursuant to Section 9.7 hereof, nor later than one hundred and eighty (180) days after the end of the applicable fiscal year; and (iv) Agent has received a certificate of the Chief Financial Officer of Graniteville stating that after giving effect to such loans or advances and payments made pursuant to Section 7.7(a), Borrowers will each have sufficient Undrawn Availability to meet each of their respective obligations in the ordinary course of business for the ninety (90) days following the date of such loans or advances and payments made pursuant to Section 7.7(a); provided, that with respect to loans and advances permitted by subsections (b), (c), (d), (f) and (g) such loans and advances are evidenced by promissory notes which notes have been assigned to Agent for the benefit of Lenders including, without limitation, the notes representing interest pursuant to (d) hereof." (z) Section 7.6 of the Loan Agreement is hereby amended in its entirety to provide as follows: "7.6 Capital Expenditures. Contract for, purchase or make any expenditure or commitments for fixed or capital assets (including capitalized leases and Operating Lease Obligations but excluding any proceeds of insurance received by Borrowers used to replace or repair fixed assets) in any fiscal year set forth below in an amount in excess of the amount set forth opposite such fiscal year end: Fiscal Year End Capital Expenditures December 31, 1995 14,000,000 December 29, 1996 15,000,000 December 28, 1997 15,000,000 January 3, 1999 15,000,000 and each fiscal year end thereafter Notwithstanding the foregoing, unutilized capital expenditures for any one fiscal year may be utilized in the immediately following fiscal year after full utilization of the above amounts of permitted capital expenditures in such immediately following fiscal year (i.e., the amounts set forth above without the addition of the carryover amount); provided, however, in no event shall capital expenditures exceed $20,000,000 in any one fiscal year or $30,000,000 in the aggregate in any two consecutive fiscal years." (aa) Section 7.10(e) of the Loan Agreement is hereby amended in its entirety to provide as follows: "(e) Management Fees paid by Borrowers to Triarc not to exceed $7,500,000 in the aggregate during any fiscal year of Borrowers to be paid in equal quarterly installments; provided, however, in the event that (i) the outstanding principal amount of the Term Loan plus the Maximum Revolving Advance Amount is greater than $180,000,000 and an Event of Default has occurred and is continuing, then no payments shall be made with respect to the Management Fees." (ab) Section 7.13 the Loan Agreement is hereby amended in its entirety to provide as follows: "7.13 Fiscal Year and Accounting Changes. (a) Change its fiscal year from a year ending on the Sunday nearest the last day of December or (b) make any significant change (i) in accounting treatment and reporting practices except as required by GAAP, provided if Graniteville must change its accounting treatment of the notes representing the Original Triarc Loan and the Additional Triarc Loan, then so long as there is no cash flow impact from the change in treatment of such notes Borrowers and Lenders shall, in good faith, negotiate any adjustments required to the Financial Covenants as a result of such change and in the event Borrowers and Required Lenders cannot agree on such adjustments within fifteen (15) Business Days of Borrowers' notice to Agent of such proposed change, Agent shall in the exercise of its reasonable business judgment determine the necessary adjustments and reset the Financial Covenants in which event the consent of Lenders or Borrowers shall not be required, or (ii) in tax reporting treatment except as required by law, applicable regulations or rulings." (ac) The proviso in Section 13.1 of the Loan Agreement is hereby amended in its entirety to provide as follows: "provided, however, that Borrowers pay an early termination fee in an amount equal to (x) 2% of the amount of principal prepaid under the Term Loan if the Termination Date occurs from the Amendment No. 6 Effective Date to and including the date immediately preceding the first anniversary of the Amendment No. 6 Effective Date, (y) 1% of the amount of principal prepaid under the Term Loan if the Termination Date occurs from the first anniversary of the Amendment No. 6 Effective Date to and including the date immediately preceding the second anniversary of the Amendment No. Effective 6 Date, and (z) 1/2% of the amount of principal prepaid under the Term Loan if the Termination Date occurs from the second anniversary of the Amendment No. 6 Effective Date to and including the date immediately preceding the third anniversary of the Amendment No. 6 Effective Date." (ad) Exhibits 2.1(a), 2.4 and 5.5(b) are amended in their entirety by Exhibits 1, 2 and 3 to Amendment No. 6. 3. Consent. The Lenders hereby consent to the application of the net proceeds from the sale of the Unimproved Land to outstanding Revolving Advances notwithstanding the provisions of Section 2.4(b)(i) of the Loan Agreement. 4. Lender Acknowledgement. By its execution below, each Lender hereby acknowledges (x) its Commitment Percentage and Commitment Amount as set forth on Schedule A attached hereto and (y) that in connection with the making of the Additional Term Loan, the proceeds from the sale of approximately 10,500 acres of Unimproved Land have been applied to reduce the outstanding amount of Revolving Advances for purposes of determining availability (such proceeds having previously been applied for purposes of calculating interest on Revolving Advances). 5. Conditions of Effectiveness. The agreement of Lenders to make the Advances requested to be made on the Amendment No. 6 Effective Date is subject to the satisfaction, or waiver by Agent (and with respect to the condition set forth in (k) below, the waiver by all Lenders), immediately prior to or concurrently with the making of such Advances, of the following conditions precedent: (a) Amended and Restated Revolving Credit Note. Agent shall have received the Amended and Restated Revolving Credit Note duly executed and delivered by an authorized officer of each Borrower; (b) Amended and Restated Term Note. Agent shall have received the Amended and Restated Term Note duly executed and delivered by an authorized officer of each Borrower; (c) Corporate Proceedings of Borrowers. Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of each Borrower authorizing (i) the execution, delivery and performance of this Amendment No. 6, the Amended and Restated Notes, the Amended and Restated Mortgages, and any Other Documents; (d) Collateral Examination. Agent shall have, at Borrowers' expense, completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Agent, of the Real Property and Equipment of each Borrower; (e) Fees and Fee Letter. Agent shall have received a duly executed Fee Letter and all fees payable to Agent and Lenders; (f) Insurance. Agent shall be reasonably satisfied with respect to the adequacy of Borrowers' insurance coverages; (g) Amendment to Mortgages. Agent shall have received in form and substance reasonably satisfactory to Lenders the Amendment to Mortgages duly executed by all parties thereto; (h) Title Insurance. Agent shall have received fully paid endorsements to the existing title insurance policies advancing the effective date (or binding commitments to issue such endorsements, marked to Agent's reasonable satisfaction to evidence the form of such endorsements to be delivered with respect to the Amendment to Mortgages), in standard ALTA form with respect to Real Property located in the United States and issued by a title insurance company satisfactory to Agent, each, together with the title insurance policies, in an amount equal to not less than the fair market value of the Real Property subject to the Amendment to Mortgages, insuring such Amendment to Mortgages to create a valid Lien on the Real Property with no exceptions which Agent shall not have approved in writing and no survey exceptions; (i) Environmental Reports. Agent shall have received all environmental studies and reports (including Phase I Environmental Reports) prepared by independent environmental engineering firms satisfactory to Agent (for purposes hereof, Clayton Environmental shall be satisfactory) of all Real Property and all other real property owned by Borrowers all of which shall be satisfactory to Agent and all assets of each Borrower shall be in compliance in all material respects with all federal, state and local regulations to the satisfaction of Agent; (j) No Adverse Material Change. Since May 28, 1995, there shall not have occurred (i) any material adverse change in: the business, financial condition, prospects or results of operations of Borrowers taken as a whole or the existence or value of any Collateral; or (ii) any event, condition or state of facts which could reasonably be expected materially and adversely to affect the business, financial condition or results of operations of Borrowers taken as a whole; (k) Undrawn Availability. After giving effect to the $36,000,000 loan to Triarc, Borrowers shall have aggregate Undrawn Availability of at least $10,000,000; (l) Amendment(s) to Factoring Agreement(s). Agent shall have received a copy of the Amendment(s) to the Factoring Agreement(s) executed by each Borrower, in form and substance reasonably satisfactory to Agent; (m) INTENTIONALLY OMITTED; (n) Assignment of Notes. Agent shall have received, for the ratable benefit of Lenders, an assignment of the promissory notes representing each of the Original Triarc Loan and the Additional Triarc Loan; (o) Reaffirmations. Agent shall have received reaffirmations from each Guarantor and pledgor of each Guaranty and Stock Pledge Agreement, respectively, in form and substance satisfactory to Agent; (p) Searches. Agent shall have received updated UCC, judgment and tax lien searches in form and substance satisfactory to Agent; (q) Legal Opinions. Agent shall have received the executed legal opinion of Borrowers' or Guarantors' counsel with respect to Borrowers and Guarantors in form and substance satisfactory to Lenders which shall cover such matters incident to the transactions contemplated by Amendment No. 6, the Amended and Restated Notes, the Amended and Restated Mortgages, the Reaffirmations of Guarantees, the Reaffirmations to Stock Pledge Agreements and related agreements as Agent may reasonably require and each Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders; (r) Financial Condition Certificates. Agent shall have received executed Officers Certificates satisfactory in form and substance to Lenders, certifying the solvency of Borrowers on a Consolidated Basis after giving effect to the transactions contemplated by Amendment No. 6 and as to each Borrower's financial resources and its ability to meet its respective obligations and liabilities as they become due; to the effect that as of the Amendment No. 6 Effective Date and after giving effect to the transactions contemplated by Amendment No. 6: a. the assets of Borrowers on a Consolidated Basis, at a fair valuation, exceed the total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of Borrowers; b. current projections which are based on underlying assumptions which provide a reasonable basis for the projections and which reflect each Borrower's judgment based on present circumstances, the most likely set of conditions and each Borrower's most likely course of action for the period projected, demonstrate that each Borrower will have sufficient cash flow to enable it to pay its debts as they mature; and c. neither Borrower has an unreasonably small capital base with which to engage in its anticipated business. For purposes of this subsection (i), the "fair valuation" of the assets of each Borrower shall be determined on the basis of the amount which may be realized within a reasonable time, either through collection or sale of such assets at market value, conceiving the latter as the amount which could be obtained for the property in question within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions; and (s) Other. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated herein shall be satisfactory in form and substance to Agent, Lenders and their counsel. 6. Representations and Warranties. Borrowers hereby represent and warrant as follows: (a) This Amendment No. 6 and the Loan Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrowers and are enforceable against Borrowers in accordance with their respective terms. (b) No Event of Default or Default has occurred and is continuing or would exist after giving effect to this Amendment No. 6. (c) Borrowers have no defense, counterclaim or offset with respect to the Obligations. 7. Effect on the Loan Agreement. (a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby. (b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment No. 6 shall not operate as a waiver of any right, power or remedy of Lender, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. 8. Governing Law. This Amendment No. 6 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York. 9. Headings. Section headings in this Amendment No. 6 are included herein for convenience of reference only and shall not constitute a part of this Amendment No. 6 for any other purpose. 10. Counterparts. This Amendment No. 6 may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original but all of which taken together shall be deemed to constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. IN WITNESS WHEREOF, this Amendment No. 6 has been duly executed as of the day and year first written above. GRANITEVILLE COMPANY By: JOHN L. BARNES ------------------------ John L. Barnes Its: Executive Vice President C.H. PATRICK & CO., INC. By: JOHN L. BARNES ------------------------ John L. Barnes Its: Vice President THE CIT GROUP/COMMERCIAL SERVICES, INC., as Lender and as Agent By: GORDON JONES ------------------------ Gordon Jones Its: Vice President BOT FINANCIAL CORP. By: WILLIAM YORK, JR. ------------------------ William York, Jr. Its: Senior Vice President THE BANK OF NEW YORK COMMERCIAL CORPORATION By: DANIEL MURRAY ------------------------ Daniel Murray Its: Vice President FIRST UNION NATIONAL BANK OF GEORGIA By: WINSTON WILKINSON ------------------------ Winston Wilkinson Its: Vice President NATIONAL CANADA FINANCE CORP. By: CHARLIE COLLIE ------------------------ Charlie Collie Its: Vice President & Office Manager By: DANIEL SHAW ------------------------ Daniel Shaw Its: Assistant Vice President NATWEST BANK, N.A. By: DAVID MARIONE ------------------------ David Marione Its: Vice President SANWA BUSINESS CREDIT CORP. By: PETER SKAVLA ------------------------ Peter Skavla Its: Vice President EX-99.1 15 PRESS RELEASE 8/9/95 EXHIBIT 99.1 CONTACT: John L. Cohlan Edward Falk Triarc Companies, Inc. Joseph Victori Wines, Inc. (212) 230-3095 (914) 637-0400 FOR IMMEDIATE RELEASE TRIARC COMPLETES ACQUISITION OF MISTIC BEVERAGES NEW YORK, NEW YORK -- August 9, 1995 -- Triarc Companies, Inc. (NYSE:TRY) announced today that it has completed the acquisition of Mistic Beverages for an aggregate purchase price of approximately $95 million. Mistic, a leader in the growing New Age beverage segment, markets fruit drinks, ready-to-drink brewed iced teas and naturally flavored sparkling waters under the Mistic and Royal Mistic trademarks. Mistic had 1994 net sales of approximately $130 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $16 million. Triarc expects the acquisition to enhance its earnings per share for fiscal 1995. As previously announced, Michael F. Weinstein, former President and Chief Operating Officer of A&W Brands, Inc., will serve as Chief Executive Officer of Mistic, and Ernest Cavallo, the current Chief Financial Officer of Mistic and former Executive Vice President and Chief Financial Officer of A&W, will serve as President and Chief Financial Officer of Mistic. Mr. Weinstein has over 20 years experience in senior management positions in the beverage industry, and Mr. Cavallo has over 30 years of experience in senior financial management positions, including 10 years at A&W. Joe Umbach, Mistic's founder and former Chairman and Chief Executive Officer, will continue to provide consulting services to Mistic in the area of new product development. Mistic will be part of Triarc's Beverage Group, which is chaired by John C. Carson, President and Chief Executive Officer of Triarc's Royal Crown Company, Inc. subsidiary. Financing for the Mistic acquisition was provided by The Chase Manhattan Bank and CIT. The CIT financing was pursuant to the credit facility provided to Graniteville Company and C.H. Patrick & Co. Inc., which was increased by approximately $41 million. Proceeds from the refinancing are being used to finance the Mistic acquisition and for general corporate purposes. As previously announced, Triarc continues to pursue strategic alternatives to maximize the value of its textile and specialty chemical and liquefied petroleum gas subsidiaries. Through its four core businesses, restaurants (Arby's, Inc.), beverages (Royal Crown Company, Inc. and Mistic), textiles (Graniteville Company) and liquefied petroleum gas (National Propane Corporation), Triarc Companies, Inc., currently has annual revenues of more than $1 billion. # # # EX-2.1 16 ASSET PURCH AGMT Exhibit 2.1 ASSET PURCHASE AGREEMENT by and among MISTIC BRANDS, INC. and JOSEPH VICTORI WINES, INC. BEST FLAVORS, INC. NATURE'S OWN BEVERAGE COMPANY and JOSEPH UMBACH _________________________ As of August 9, 1995 _________________________ TABLE OF CONTENTS Page 1. Purchase and Sale of Acquired Assets.. . . . . . . . 1.1 Purchase and Sale of Acquired Assets. . . . . 1.2 Excluded Assets . . . . . . . . . . . . . . . 2. Assumption of Liabilities. . . . . . . . . . . . . . 2.1 Assumption of Liabilities by the Buyer. . . . 2.2 Excluded Liabilities. . . . . . . . . . . . . 3. Consideration for the Purchase of the Assets . . . . 3.1 Purchase Price. . . . . . . . . . . . . . . . 3.2 Post-Closing Adjustment . . . . . . . . . . . 3.3 Delivery of the Note. . . . . . . . . . . . . 4. Closing. . . . . . . . . . . . . . . . . . . . . . . 5. Representations and Warranties of the Sellers. . . . 5.1 Due Incorporation and Authority . . . . . . . 5.2 Authority to Execute and Perform this Agreement, the Consulting Agreement and the Product and Royalty Agreement . . . . . . . . 5.3 Subsidiaries and Other Affiliates; Ownership. . 5.4 Qualification . . . . . . . . . . . . . . . . . 5.5 Charter Documents and Corporate Records . . . 5.6 Financial Statements. . . . . . . . . . . . . 5.7 No Material Adverse Change. . . . . . . . . . 5.8 Tax Matters . . . . . . . . . . . . . . . . . . 5.9 Compliance with Laws. . . . . . . . . . . . . . 5.10 No Breach. . . . . . . . . . . . . . . . . . . 5.11 Claims and Proceedings . . . . . . . . . . . . 5.12 Contracts. . . . . . . . . . . . . . . . . . . 5.13 Real Estate . . . . . . . . . . . . . . . . 5.14 Inventory and Supplies . . . . . . . . . . . . 5.15 Receivables. . . . . . . . . . . . . . . . . . 5.16 Tangible Property. . . . . . . . . . . . . . . 5.17 Intangible Property. . . . . . . . . . . . . . 5.18 Title to Properties. . . . . . . . . . . . . . 5.19 Accounts Payable . . . . . . . . . . . . . . . 5.20 No Undisclosed Non-alcoholic Beverage Non- ordinary Course Business Liabilities. . . . . 5.21 Suppliers, Customers, Distributors and Co-Packers. . . . . . . . . . . . . . . . . . 5.22 Employee Benefit Plans . . . . . . . . . . . . 5.23 Employee Relations . . . . . . . . . . . . . . 5.24 Environmental Liabilities. . . . . . . . . . . 5.25 Insurance. . . . . . . . . . . . . . . . . . . 5.26 Products. . . . . . . . . . . . . . . . . . . 5.27 Officers, Directors and Key Employees. . . . . 5.28 Operations of the Companies. . . . . . . . . . 5.29 Related Party Transactions . . . . . . . . . . 5.30 Banks, Brokers and Proxies . . . . . . . . . . 5.31 Premerger Notification . . . . . . . . . . . . 5.32 Full Disclosure. . . . . . . . . . . . . . . . 5.33 Entire Business. . . . . . . . . . . . . . . . 5.34 No Projection Representation . . . . . . . . . 6. Representations and Warranties of Mistic . . . . . . 6.1 Due Incorporation and Authority of Mistic . . . 6.2 Authority to Execute and Perform this Agree- ment, the Consulting Agreement and the Product and Royalty Agreement . . . . . . . . 6.3 Premerger Notification. . . . . . . . . . . . . 7. Covenants and Agreements . . . . . . . . . . . . . . 7.1 Conduct of Business . . . . . . . . . . . . . . 7.2 Corporate Examinations and Investigations . . . 7.3 Publicity . . . . . . . . . . . . . . . . . . . 7.4 Expenses. . . . . . . . . . . . . . . . . . . . 7.5 Indemnification of Brokerage. . . . . . . . . . 7.6 Related Parties . . . . . . . . . . . . . . . . 7.7 Employee Matters. . . . . . . . . . . . . . . 7.8 Trademarks, Service Marks, Corporate Names and Trade Names . . . . . . . . . . . . . . . 7.9 Letters of Credit . . . . . . . . . . . . . . 7.10 Arkansas Litigation Cost . . . . . . . . . . . 7.11 Taxes. . . . . . . . . . . . . . . . . . . . . 7.12 Claims; Qualification. . . . . . . . . . . . . 7.13 Bulk Sales Law . . . . . . . . . . . . . . . . 7.15 Further Assurances . . . . . . . . . . . . . . 8. Conditions Precedent to the Obligation of the Buyer to Close . . . . . . . . . . . . . . . . . . . 8.1 Representations and Covenants . . . . . . . . . 8.2 Necessary Consents. . . . . . . . . . . . . . . 8.3 Opinions of Counsel to the Sellers. . . . . . . 8.4 No Claims . . . . . . . . . . . . . . . . . . . 8.5 HSR Act Filing. . . . . . . . . . . . . . . . . 8.6 Consulting Agreement. . . . . . . . . . . . . . 8.7 Product and Royalty Agreement . . . . . . . . . 8.8 Financing . . . . . . . . . . . . . . . . . . 8.9 Employees. . . . . . . . . . . . . . . . . . 8.10 Bill of Sale . . . . . . . . . . . . . . . . . 8.11 Assignment of Intellectual Property. . . . . . 8.12 Assignment of Contracts. . . . . . . . . . . . 8.13 Lease Amendment. . . . . . . . . . . . . . . . 8.14 Release of Liens . . . . . . . . . . . . . . . 8.15 Release of Claims by Affiliates. . . . . . . . 8.16 Secretary Certificate. . . . . . . . . . . . . 8.17 Certified Charter Documents. . . . . . . . . . 9. Conditions Precedent to the Obligation of the Sellers to Close . . . . . . . . . . . . . . . . . . 9.1 Representations and Covenants . . . . . . . . . 9.2 Opinion of Counsel to the Buyer . . . . . . . . 9.3 No Claims . . . . . . . . . . . . . . . . . . . 9.4 HSR Act Filing. . . . . . . . . . . . . . . . . 9.5 Product and Royalty Agreement . . . . . . . . 9.6 Instrument of Assumption. . . . . . . . . . . 9.7 Payment of Purchase Price . . . . . . . . . . . 10. Non-Competition by the Sellers . . . . . . . . . . . 10.1 Covenants Against Competition . . . . . 10.1.1 Non-Compete . . . . . . . . . . . . . 10.1.2 Confidential Information; Personal Relationships. . . . . . . . . . . . . . . 10.1.3 Property of the Business. . . . . . . 10.1.4 Employees of the Business . . . . . . 10.2 Rights and Remedies Upon Breach. . . . . . . . 10.2.1 Specific Performance. . . . . . . . . 10.2.2 Accounting. . . . . . . . . . . . . . 10.2.3 Indemnification . . . . . . . . . . . 10.3 Severability of Covenants. . . . . . . . . . . 10.4 Blue-Pencilling. . . . . . . . . . . . . . . . 10.5 Enforceability in Jurisdictions. . . . . . . . 10.6 Non-Compete Payments . . . . . . . . . . . . 11. Survival . . . . . . . . . . . . . . . . . . . . . . 11.1 Survival of Representations and Warranties of the Sellers After Closing . . . . . . . . . . . . 11.2 Survival of Representations and Warranties of Mistic After Closing. . . . . . 12. General Indemnification. . . . . . . . . . . . . . . 12.1 Obligation of the Sellers to Indemnify . . . . . . . . . . . . . . . . . . 12.2 Obligation of the Buyer to Indemnify.. . . . . 12.3 Notice and Opportunity to Defend . . . . . . . 12.3.1 Notice of Asserted Liability. . . . . 12.3.2 Opportunity to Defend . . . . . . . . 12.3.3 Disputes with Customers, Distri- butors, Co-packers, Sales Agents or Suppliers. . . . . . . . . . . . . . . . . 12.4 Limitations on Indemnification . . . . . . . . 12.5 Set-off Rights . . . . . . . . . . . . . . . . 13. [Intentionally Omitted.] . . . . . . . . . . . . . . 14. Miscellaneous. . . . . . . . . . . . . . . . . . . . 14.1 Certain Definitions . . . . . . . . . . . . . . . . 14.2 Consent to Jurisdiction; Service of Process. . 14.3 Notices. . . . . . . . . . . . . . . . . . . . 14.4 Entire Agreement . . . . . . . . . . . . . . . 14.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies. . . . . . 14.6 Governing Law. . . . . . . . . . . . . . . . . 14.7 Binding Effect; Assignment . . . . . . . . . . 14.8 Variations in Pronouns . . . . . . . . . . . . 14.9 Counterparts . . . . . . . . . . . . . . . . . 14.10 Exhibits and Schedules. . . . . . . . . . . . 14.11 Headings. . . . . . . . . . . . . . . . . . . 14.12 Severability of Provisions. . . . . . . . . . 14.13 Cooperation . . . . . . . . . . . . . . . . . 14.14 No Third Party Beneficiaries. . . . . . . . . Exhibits A: Form of Note B: Severance Policy C: Opinions of Counsel to the Sellers D: Form of Consulting Agreement E: Form of Product and Royalty Agreement F: Opinion of Counsel to the Buyer SCHEDULES 1.1 Tangible Property 5.4 Qualification 5.6 Financial Statements 5.8 Tax Matters 5.9 Permits 5.10 Required Consents 5.11 Claims and Proceedings 5.12 Contracts 5.13 Real Estate 5.14 Inventory and Supplies 5.15 Receivables 5.17 Intangible Property 5.18 Liens 5.19 Accounts Payable 5.21 Suppliers, Customers, Distributors and Co-Packers 5.22 Employee Benefit Plans 5.25 Insurance 5.26 Products 5.27 Officers, Directors and Key Employees 5.28 Operations of the Companies 5.29 Related Party Transactions 5.30 Bank Accounts 7.7 Transferred Employees 7.11 Method of Allocating Expenses 8.2 Necessary Consents 8.14 Release of Liens 14.13 Records ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT made as of August 9, 1995, by and among MISTIC BRANDS, INC., a Delaware corporation ("Mistic"), on the one hand, and JOSEPH VICTORI WINES, INC., a New York corporation ("JVWNY"), BEST FLAVORS, INC., a Nevada corporation ("Best Flavors"), NATURE'S OWN BEVERAGE COMPANY, a Delaware corporation ("Nature's Own") (JVWNY, Best Flavors and Nature's Own are referred to collectively as the "Companies") and Joseph Umbach ("Umbach" and, together with the Companies, collectively, the "Sellers"), on the other hand. The Sellers are engaged, among other things, in the research, development, formulation, production, marketing and sale of a wide variety of non-alcoholic beverages (the "Business"). The term "Business" shall not include the Sellers' alcoholic beverage business. Upon the terms and conditions set forth herein, the Sellers desire to sell and Mistic, or at Mistic's option, one or more Affiliates (as defined in Section 14.1) or designees of Mistic (Mistic or such Affiliates or designees, the "Buyer"), desire to purchase all of the tangible and intangible assets and operations of the Business, as the same shall exist at the Closing (as defined in Section 1.1). In consideration of the mutual promises, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Purchase and Sale of Acquired Assets. 1.1 Purchase and Sale of Acquired Assets. Upon the terms and subject to the conditions set forth in this Agreement, at the closing (the "Closing") of the trans- actions contemplated hereby (the "Contemplated Trans- actions"), the Sellers shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase and acquire from the Sellers, free and clear of any and all Liens (as defined in Section 14.1), all of the assets and operations of the Sellers, of every type and description, real and personal, tangible and intangible, known and unknown, wherever located and whether or not reflected on the books and records of the Sellers, as the same shall exist on the date of the Closing (the "Closing Date"), other than the Excluded Assets as set forth in Section 1.2 (col- lectively, the "Acquired Assets"). Without limiting the generality of the foregoing, the Acquired Assets shall include, but shall not be limited to, all of the Sellers' right, title and interest in and to the following items: (a) Cash and Cash Equivalents and Bank Accounts. All cash and cash equivalents, on hand, in the Sellers' accounts or in transit relating to the Business, as well as the bank accounts and other depositary accounts relating to the Business; (b) Accounts Receivable. All accounts and notes receivable of the Sellers relating to the Busi- ness, other than the accounts receivable from Nubian Shine, Inc. ("Nubian") in the amount of $89,027.00 and S&D Distributing ("S&D") in the amount of approximately $18,000; (c) Inventory and Supplies. All (i) inventory of finished goods, raw materials, work in process, packaging items, promotional materials and similar items, wherever located, (ii) stock in trade, merchandise, goods, supplies and other products, (iii) office supplies and similar materials, and (iv) all samples of the Sellers, in each case relating to the Business; (d) Tangible Property. All facilities, machinery, accessories, computers and peripherals devices, equipment, plant, furniture, furnishings, leasehold improve- ments, fixtures, fixed assets, appliances, automobiles, airplanes, boats and all other vehicles, structures, any related capitalized items and other tangible property of the Sellers, in each case relating to the Business and set forth on Schedule 1.1 hereto (collectively, the "Tangible Prop- erty"); (e) Leases and Permits. The Leases (as defined in Section 5.13) and all other leasehold interests and Permits (as defined in Section 5.9) relating to the Business; (f) Contracts and Agreements, etc. All Contracts (as defined in Section 5.10) relating to the Business, including, without limitation, the Contracts listed on Schedule 5.12 hereof; (g) Security Deposits, Bonds and Claims Against Third Parties. All of the Sellers' security deposits with third parties and all security bonds and all claims against third parties, in each case relating to the Business, including, without limitation, rights under any manufacturer's or vendor's warranties and insurance claims and proceeds; (h) Prepaid Expenses, etc. All of the Sellers' prepaid expenses and rentals relating to the Busi- ness; (i) Intellectual Property. All patents, trademarks, copyrights, service marks, trade names, trade secrets, know-how, processes, formulae, recipes, ideas, technical production requirements, technologies, blueprints, designs, and proprietary information utilized in or incident to the Business, all applications for or registrations of any of the foregoing, and all permits, grants, and licenses or other rights running to or from the Sellers relating to any of the foregoing (collectively, the "Intellectual Property"); (j) Goodwill. All of the Sellers' goodwill and going concern value relating to the Business and all of the Acquired Assets; and (k) Other Assets. All of the Sellers' other intangible and tangible assets relating to the Busi- ness, including, without limitation: all computer software and electronic data, all supplier information, all customer lists and customer correspondence, all sales records, all research, statistical, production, marketing and promotional materials, records, files, reports and other documents and data, all distribution records, all business post office boxes and business telephone listings, all research results and other know-how, and all other materials, records, files and data, in whatever form contained. 1.2 Excluded Assets. Notwithstanding any other provision of this Agreement, the Sellers shall not sell, assign or transfer to the Buyer, and the Buyer shall not purchase from the Sellers, any of the following assets (collectively, the "Excluded Assets"): (a) This Agreement. All of the rights of the Sellers under this Agreement and any documents delivered or received in connection herewith; (b) Corporate Records. (i) All corpo- rate minute books, stock ledgers and other corporate books and records of the Sellers relating solely to corporate level activities and (ii) all books and records of the Sellers not relating to the Business, the Acquired Assets or the Assumed Liabilities; and (c) Other Excluded Assets. All of the rights and assets of the Sellers relating solely to the alcoholic beverage business of the Sellers. 2. Assumption of Liabilities. 2.1 Assumption of Liabilities by the Buyer. At the Closing, the Buyer shall assume and thereafter pay, perform, satisfy and discharge the following obligations and liabilities of the Companies existing at the Closing and relating to the Business, other than Excluded Liabilities as set forth in Section 2.2 (collectively, the "Assumed Liabilities"): (a) Liabilities Relating to the Busi- ness. All of the liabilities and obligations of the Com- panies relating to the Business existing at the Closing as a result of the conduct of the Business prior thereto; (b) Credit Agreement. All liabilities and obligations of the Companies up to a maximum amount of $7,000,000 for outstanding borrowings (the "Bank Debt") under the Companies' General Loan and Security Agreement, dated as of May 18, 1994, as amended by a letter agreement dated April 28, 1995 (the "Credit Agreement") with The Bank of New York (the "Bank"), exclusive of the Arkansas Litigation Letter of Credit (as defined in Section 7.9); (c) Arkansas Litigation Costs. 50% of all liabilities and obligations (up to a maximum amount of $2,250,000) (the "Buyer Arkansas Payment") relating to any judgment or settlement amount, legal expenses and the cost of the Arkansas Litigation Letter of Credit, including, without limitation, renewal fees and/or the cost of obtaining a new letter of credit to replace the Arkansas Litigation Letter of Credit (collectively, the "Arkansas Litigation Cost"), of the litigation entitled Raleigh Spring Water d/b/a Clear Mountain Spring Water v. Joseph Victori Wines, Inc. (the "Arkansas Litigation"); (d) Tax Liabilities. 50% of all liabilities and obligations relating to (i) the Transaction Sales Taxes (as defined in Section 14.1) up to a maximum amount of $50,000 (the "Buyer Transaction Sales Tax Payment") and (ii) any sales Taxes payable in connection with the New York sales Tax audit set forth on Schedule 5.8 up to a maximum amount of $50,000 (the "Buyer Sales Tax Audit Payment"); and (e) Distributor and Co-packer Expenses. Any and all liabilities or obligations for Losses (as defined in Section 12.1) based upon, arising out of or otherwise in respect of the Buyer's acts or omissions or representations with respect to any distributor or co-packer whose agreement is terminated or not renewed (unless the Buyer has offered to renew the existing agreement on at least as favorable economic terms as those in effect immediately prior to expiration) after the Closing, including, without limitation, any claim by a distributor or co-packer terminated by the Buyer or not renewed (unless the Buyer has offered to renew the existing agreement on at least as favorable economic terms as those in effect immediately prior to expiration) after the Closing that alleges a violation of law or other liability from an act or omission of the Companies with respect to the Business that occurred prior to the Closing. 2.2 Excluded Liabilities. Anything in this Agreement to the contrary notwithstanding, the Buyer shall not, and shall not be deemed to, assume, perform, satisfy or discharge, or otherwise be responsible for, and the Sellers shall pay, perform, assume and discharge or otherwise be responsible for, any and all of the following liabilities or obligations relating to the Business (collectively, the "Excluded Liabilities"): (a) Costs. Any and all liabilities and obligations in respect of costs or expenses incurred by any of the Companies in connection with the Contemplated Transactions; (b) Affiliate Liabilities. Any and all liabilities and obligations of any of the Companies to any other Company, Umbach or any Affiliate of the Sellers ("Affiliate Liabilities"); (c) Tax Liabilities. Any and all liabilities and obligations of the Sellers (including as transferee or successor, by contract or otherwise) for any Taxes, whether accrued before or after the Closing, including, without limitation, (i) the Transaction Sales Taxes (other than the Buyer Transaction Sales Tax Payment), (ii) any Taxes payable in connection with any Tax audits (other than the Buyer Sales Tax Audit Payment) and (iii) Taxes imposed with respect to the Business or the Acquired Assets for all taxable periods (or portions thereof) ending on or prior to the Closing; (d) Distributor, Co-packer and Sales Brokers Expenses. Any and all liabilities or obligations (including, without limitation, the Arkansas Litigation Costs, other than the Buyer Arkansas Payment) for Losses based upon, arising out of or otherwise in respect of the Companies' acts or omissions or representations with respect to any of the Companies' current or former distributors, co- packers or sales brokers, including, without limitation, distributors, co-packers or sales brokers of the Companies whose agreements were terminated, not renewed or to whose transfer the Companies objected or otherwise prohibited or interfered with, in each case prior to the Closing, including, without limitation, Nubian and S&D; (e) Liability Relating to Non- compliance with Laws. Any and all liabilities or obligations for Losses based upon, arising out of or otherwise in respect of the Sellers' acts or omissions or representations with respect to any distributors or co- packers, including, without limitation, any claim by a distributor or co-packer alleging a violation of law, including, without limitation, any claim that alleges a failure of the Sellers to comply with franchise relationship, registration and disclosure, business opportunity laws and special industry statutes other than if such Losses are based upon, arise out of or otherwise are in respect of the Buyer's acts or omissions or representations with respect to any distributors or co-packers whose agreements are terminated or not renewed (unless the Buyer has offered to renew the existing agreement on at least as favorable economic terms as those in effect immediately prior to expiration) after the Closing. (f) Fees and Expenses. Any and all liabilities or obligations of the Companies for fees and expenses of lawyers, accountants, brokers and investment bankers retained by the Sellers and any other costs or expenses incurred by the Companies in connection with any previously proposed Business Combinations (as defined in Section 14.1) or public offerings involving the Companies or any of their predecessors or Affiliates; (g) Employee Obligations. Any and all liabilities and obligations to or in respect of current or former employees of the Companies, other than (i) the liabilities and obligations which are assumed by the Buyer pursuant to Section 7.7 with respect to Transferred Employees (as defined in Section 7.7) and (ii) obligations for severance up to a maximum amount of $8,250 per month through June 30, 1996 payable to Michael Robbins, the Companies' former Western division sales manager; (h) Credit Agreement. Any and all liabilities and obligations of the Companies in respect of the Bank Debt in excess $7,000,000, excluding the Arkansas Litigation Letter of Credit; and (i) Other Excluded Liabilities. Any and all liabilities and obligations that are related to the Seller's alcoholic beverage business. 3. Consideration for the Purchase of the Assets. 3.1 Purchase Price. The purchase price for the Acquired Assets shall consist of (i) $93,000,000, payable at the Closing by wire transfer of immediately available funds to an account or accounts specified in writing by the Sellers two business days prior to the Closing Date (subject to a post-closing adjustment as set forth in Section 3.2 hereof), (ii) the Note (as defined in Section 3.4) and (iii) the assumption by the Buyer of the Assumed Liabilities (collectively, the "Purchase Price," and as adjusted pursuant to Section 3.2, the "Adjusted Purchase Price"). 3.2 Post-Closing Adjustment. (a) Within twenty (20) days after the Closing Date, the Buyer shall prepare and deliver to the Sellers a combined balance sheet (the "Wine Division Balance Sheet") of the Companies relating to the Companies' alcoholic beverage business as of July 31, 1995, a combined income statement (the "Wine Division Income Statement") of the Companies relating to the Companies' alcoholic beverage business for the period from June 1, 1995 through July 31, 1995 and a statement (the "Adjustment Statement") setting forth the Wine Division Net Equity (as defined in Section 14.1) and Wine Division Net Profit or Loss (as defined in Section 14.1), together with an Officer's Certificate stating that the preparation of the Adjustment Statement has been made in accordance with generally accepted accounting principles. (b) Within thirty (30) days after the Sellers receive the Adjustment Statement, the Sellers shall notify the Buyer in writing of any proposed modifications the Sellers believe are required in order for the Adjustment Statement fairly to reflect the Wine Division Net Equity and the Wine Division Net Profit or Net Loss. If an agreement cannot be reached as to any of such proposed modifications within thirty (30) days after the Buyer receives written notice of such proposed modifications, any party may notify the other that such party requires that the item or items being disputed be determined in accordance with the terms of this Agreement by a nationally recognized firm of independent public accountants mutually agreed upon by the Buyer and the Sellers as promptly as practical. Upon delivery to the Buyer and the Sellers of a statement in writing setting forth the conclusions of the accounting firm's opinion of the disputed item or items and the effect of such conclusions on the Wine Division Net Equity and the Wine Division Net Profit or Net Loss, such determinations shall be final and binding upon the Buyer and the Sellers with no further right of appeal. One-half of the fees of such firm of accountants for making such determinations shall be paid by each of the Buyer, on the one hand, and the Sellers, on the other hand. (c) In the absence of any notice of proposed modifications from the Sellers within thirty (30) days of the Sellers' receipt of the Adjustment Statement, the Adjustment Statement shall be deemed accepted by the Sellers and shall be considered final. Proposed modifications shall be deemed accepted by the Buyer to the extent that the Buyer does not notify the Sellers of a disagreement within thirty (30) days after its receipt of any notice of proposed modifications from the Sellers to the Adjustment Statement. (d) If and to the extent that the Wine Division Net Equity is less than $1,408,000 plus the Wine Division Net Profit, if any, and minus the Wine Division Net Loss, if any, the Purchase Price shall be increased by such amount and the Buyer shall pay in the aggregate to the Sellers such amount within five (5) business days after the Adjustment Amount is finally determined pursuant to this Section 3.2 in cash by wire transfer of immediately available funds. If and to the extent that the Wine Division Net Equity is greater than $1,408,000 plus the Wine Division Net Profit, if any, and minus the Wine Division Net Loss, if any, the Purchase Price shall be reduced by such amount and the Sellers shall jointly and severally pay to the Buyer such amount within five (5) business days after the Adjustment Amount is finally determined pursuant to this Section 3.2 in cash by wire transfer of immediately available funds. 3.3 Delivery of the Note. At the Closing, the Buyer shall deliver to Umbach, on behalf of the Sellers, a promissory note (the "Note"), dated the Closing Date, in the form of Exhibit A, which Note shall provide for the payment by the Buyer to Umbach, on behalf of the Sellers, of eight quarterly installments of $125,000, payable beginning three months after the Closing Date and every three months thereafter until the eight installments have been paid and which Note shall bear no interest. 4. Closing. The Closing shall take place at the offices of LeBoeuf, Lamb, Greene & MacRae, 125 West 55th Street, New York, New York 10022 on the date hereof. 5. Representations and Warranties of the Sellers. The Sellers, jointly and severally, represent and warrant to Mistic and the Buyer as follows: 5.1 Due Incorporation and Authority. Each of the Companies is a corporation duly organized, validly existing and in good standing under the laws of its juris- diction of organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being and heretofore conducted. 5.2 Authority to Execute and Perform this Agreement, the Consulting Agreement and the Product and Royalty Agreement. (a) Each of the Sellers has the full legal right and power and all authority and approvals required to execute and deliver this Agreement and to perform fully such Seller's obligations hereunder, including, without limitation, the power and authority to convey the Acquired Assets, free and clear of any Liens (other than Liens relating to the Bank Debt, which Liens shall be released at the Closing concurrently with the repayment of the Bank Debt). This Agreement has been duly executed and delivered by each of the Sellers and (assuming the due authorization, execution and delivery hereof by Mistic) is a valid and binding obligation of each Seller enforceable against such Seller in accordance with its terms. The execution and delivery by each of the Sellers of this Agreement, the consummation of the Contemplated Transactions and the performance by each of the Sellers of this Agreement in accordance with its terms will not (i) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both constitute) a default under the Articles of Incorporation or By-Laws (or similar organizational documents) of any of the Companies or any Laws or Orders (as each term is defined in Section 5.9) of any Governmental Body (as defined in Section 5.9) applicable to any of the Sellers, the Business or the Acquired Assets; or (ii) result in the creation of any Lien on the Business or any of the Acquired Assets. (b) Umbach has the full legal right and power and all authority and approvals required to execute and deliver the Consulting Agreement (as defined in Section 8.6) and the Product and Royalty Agreement (as defined in Section 8.7) and to perform fully his obligations thereunder. Each of the Consulting Agreement and the Product and Royalty Agreement when executed and delivered by Umbach at the Closing (and assuming the due authorization, execution and delivery thereof by the Buyer) will be a valid and binding obligation of Umbach enforceable against Umbach in accordance with their respective terms. The execution and delivery by Umbach of the Consulting Agreement and the Product and Royalty Agreement and the performance by Umbach of the Consulting Agreement and the Product and Royalty Agreement in accordance with their respective terms will not (i) conflict with or the result in any breach or violation of any of the terms or conditions of, or constitute (or with notice or lapse of time or both constitute) a default under any Laws or Orders of any Governmental Body applicable to any of the Sellers, the Business or the Acquired Assets; or (ii) result in the creation of any Lien on the Business or any of the Acquired Assets. 5.3 Subsidiaries and Other Affiliates; Ownership. The Companies do not directly or indirectly own any interest in any Person and Umbach does not directly or indirectly own or have the power to vote shares of any capital stock (other than the capital stock of the Companies) or other ownership interests having ordinary voting power to elect a majority of the directors of such corporation or other Persons performing similar functions for such entity, as the case may be. Mistic Beverage, Inc., a Delaware corporation (a former subsidiary of Umbach) was merged into JVWNY on April 28, 1995; Best Flavors purchased substantially all of the assets of Joseph Victori Wines, Inc., a California corporation, on October 29, 1994; and LVJ Sales Company, a Connecticut general partnership, ceased operations in 1993 and its assets were distributed to its partners. All of the business and operations of the Busi- ness is now conducted solely by the Companies. All of the issued and outstanding shares of common stock of the Companies are owned by Umbach. Besides such common stock, no other class of capital stock or other ownership interests of any of the Companies is authorized or outstanding. 5.4 Qualification. Except as set forth on Schedule 5.4, each of the Companies is duly qualified or otherwise authorized as a foreign corporation to transact business and is in good standing in each jurisdiction set forth on Schedule 5.4, which are the only jurisdictions in which such qualification or authorization is required by law and in which the failure so to qualify or be authorized could have a material adverse effect on the business, condition (financial or otherwise), results of operations, assets, liabilities or properties of the Business, taken as a whole (collectively, the "Condition of the Business"). No other jurisdiction has claimed, in writing or otherwise, that any of the Companies are required to qualify or otherwise be authorized as a foreign corporation therein and, except as set forth on Schedule 5.4, none of the Companies files franchise, income or other tax returns in any other jurisdiction based upon the ownership or use of property therein or the derivation of income therefrom. None of the Companies owns or leases property in any jurisdiction other than its respective jurisdiction of organization and the jurisdictions set forth on Sched- ule 5.4. 5.5 Charter Documents and Corporate Records. The Sellers have heretofore delivered to the Buyer true and complete copies of the Articles of Incorporation and By- laws, or comparable instruments, of each of the Companies as in effect on the date hereof. The minute books of each of the Companies have been made available to the Buyer for its inspection and they do not contain any material omissions or misstatements. The stock books of each of the Companies have been made available to the Buyer for its inspection and they are true and complete. 5.6 Financial Statements. The combined balance sheets of the Companies relating to the Business as of December 31, 1993 and 1994 and the related combined statements of income, stockholders' equity and partners' capital, and cash flows for the years then ended, including the footnotes thereto, certified by Grant Thorton LLP, the Companies' independent certified public accountants ("GT"), which are attached hereto on Schedule 5.6, fairly present the combined financial position of the Companies relating to the Business as at such dates and the combined results of operations and combined cash flows of the Companies relating to the Business for such respective periods, in each case in accordance with generally accepted accounting principles consistently applied ("GAAP") for the periods covered thereby. (The foregoing combined financial statements of the Companies relating to the Business as of December 31, 1994 and for the year then ended are sometimes herein called the "Audited Financials.") The unaudited combined balance sheets of the Companies relating to the Business, as of June 30, 1995, and the related combined statements of income, stockholders' equity and partners' capital, and cash flows for the period then ended, which are attached hereto on Schedule 5.6, fairly present the combined financial position of the Companies relating to the Business as at June 30, 1995 and for the six months then ended, in each case in accordance with GAAP applied on a basis consistent with that of the Audited Financials (subject to there being no requirement of footnotes and to the normal year-end adjustments described in Schedule 5.6) and with all interim financial statements of the Companies heretofore delivered to the Buyer on behalf of the Sellers. (The foregoing unaudited combined financial statements of the Companies relating to the Business, as of June 30, 1995 and for the six months then ended are sometimes herein called the "Interim Financials," the combined balance sheet included in the Audited Financials is sometimes herein called the "Balance Sheet," the combined balance sheet included in the Interim Financials is sometimes herein called the "Interim Balance Sheet" and December 31, 1994 is herein called the "Balance Sheet Date.") 5.7 No Material Adverse Change. Since the Balance Sheet Date, there has been no material adverse change in the Condition of the Business, and none of the Sellers Knows of any such change which is threatened, nor has there been any damage, destruction, loss or other occurrence which could have or has had a material adverse effect on Condition of the Business, whether or not covered by insurance. 5.8 Tax Matters. The Sellers have paid all Taxes due and payable prior to the Closing and filed all returns and reports required to be filed prior to the Closing with respect to the Sellers (including any predecessor entities) and the Business for which the Buyer could be held liable or a claim made against the Acquired Assets. Except as set forth on Schedule 5.8, there are no audits or other proceedings by any Governmental Body pending or, to the Knowledge of the Sellers, threatened, with respect to Taxes of the Sellers (including any predecessor entities) or the Business for which the Buyer could be held liable or a claim made against the Acquired Assets. No assessment of Taxes is proposed against the Sellers (including any predecessor entities), the Business or the Acquired Assets. Except as provided on Schedule 5.8, since the Balance Sheet Date, the Sellers have not pledged, transferred, or otherwise disposed of any Acquired Assets or any assets that would otherwise constitute Acquired Assets nor have they assumed any Assumed Liabilities or Liabilities (as defined in Section 5.20) that would otherwise constitute Assumed Liabilities to pay any Taxes. The Sellers are not party to, and have no liability under (including liability with respect to a predecessor entity), any indemnification, allocation or sharing agreement with respect to Taxes. 5.9 Compliance with Laws. (a) None of the Sellers is in violation of any applicable order, judgment, injunction, award, decree or writ (collectively, "Orders"), or any applicable law, statute, code, ordinance, regulation or other requirement, including, without limitation, any franchise, relationship, registration and disclosure, and business opportunity laws and special industry statutes, but excluding bulk sales laws (collectively, "Laws"), of any government or political sub- division thereof, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any court or arbitrator (each, a "Governmental Body") which violation could have a material adverse effect on the Condition of the Business, and none of the Sellers has received notice that any such violation is being or may be alleged. None of the Sellers has made any illegal payment to officers or employees of any Governmental Body, or made any illegal payment to customers, suppliers, distributors or co-packers for the sharing of fees or rebating of charges, or engaged in any other illegal reciprocal practice, or made any illegal payment or given any other illegal consideration to purchasing agents or other representatives of customers in respect of sales made or to be made by the Sellers. (b) Except as set forth on Schedule 5.9, each of the Companies has all licenses, permits, orders or approvals of, and have made all registrations with, all Governmental Bodies that are required for the conduct of the Business (collectively, "Permits"), except for those Permits the failure of which to obtain would not have a material adverse effect on the Condition of the Business. All Permits are listed on Schedule 5.9 and are in full force and effect; no violations are or have been recorded in respect of any Permit; and no proceeding is pending or, to the Knowledge of the Sellers threatened, to revoke or limit any Permit. (c) Each of the Sellers and its Affili- ates is, with respect to every product relating to the Business manufactured, produced, sold, marketed, distributed or under development at any time by or on behalf of any of the Sellers and its Affiliates (each a "Product" and col- lectively the "Products"), in compliance ("Product Compli- ance") with the applicable provisions of the Federal Food, Drug and Cosmetics Act, as amended, the applicable regula- tions and requirements adopted by the FDA (as defined in Section 14.1) pursuant to that Act, the applicable regula- tions and requirements adopted by the USDA (as defined in Section 14.1) and any applicable requirements established by state and local authorities responsible for regulating food products and establishments (collectively, "State Food Authorities"), as well as with all terms and conditions imposed in any Permits granted to the Sellers or their Affiliates by the FDA, USDA or State Food Authorities, including any applicable Good Manufacturing Practices, requirements for use of food or color additives, labeling requirements, testing requirements and protocols, shipping requirements, record keeping and reporting requirements, monitoring requirements, packaging or repackaging require- ments, laboratory controls, storage and warehousing proced- ures and shipping requirements, except where the failure to be in Product Compliance would not have a material adverse effect on the Condition of the Business. Except as set forth on Schedule 5.9, none of the Sellers or their Affiliates have received written notice of any failure to be in Product Compliance or that the FDA, USDA or any State Food Authority is alleging any failure to be in Product Compliance. (d) Except as set forth on Schedule 5.9, none of the Sellers, their Affiliates, the Products, or, to the Actual Knowledge (as defined in Section 14.1) of the Sellers, the co-packers manufacturing the Products or the co-packers' facilities, is now subject (and none has been subject during the previous four years) to any adverse inspection, finding, recall, investigation, penalty assessment, audit or other compliance or enforcement action by the FDA, USDA, any State Food Authority or any other authority having responsibility for the regulation of food or beverage products. (e) The Sellers and their Affiliates have obtained all required approvals and authorizations from, and have made all required applications and other submissions to, the FDA, USDA, State Food Authorities and any other authority having responsibility for the regulation of food or beverage products, for their current and past business activities relating to the Products, including any approvals required for the marketing and sale of those Products, the manufacture and distribution of the Products, the food and color additives appearing in or otherwise used in manufacturing the Products, the labeling of the Products and the claims made regarding the content, benefits or quality of the Products, except for those approvals, authorizations, applications and other submissions of which the failure to obtain would not have a material adverse effect on the Condition of the Business. None of the Sellers or their Affiliates have received any written notice that any approvals, authorizations, applications or other submissions have not been obtained or have been revoked or that there is any challenge to any such approvals, authorizations, applications or other submissions. (f) None of the Sellers, their Affili- ates or, to the Actual Knowledge of the Sellers, any third party retained by the Sellers or their Affiliates has made on behalf of the Sellers or their Affiliates any false statements or material omissions in applications or other submissions to the FDA, USDA, State Food Authorities or any other authority having responsibility for the regulation of food or beverage products, and none of the Sellers, their Affiliates or, to the Actual Knowledge of the Sellers, third parties retained by the Sellers or their Affiliates has made or offered on behalf of the Sellers or their Affiliates any payments, gratuities or other things of value that are prohibited by any law or regulation to personnel of the FDA, USDA, State Food Authority or other authority having responsibility for the regulation of food or beverage prod- ucts. (g) The Sellers and their Affiliates have not received any information or report from the FDA, FDA personnel or other authority indicating that any of the Products are unsafe for their intended use, and the Sellers and their Affiliates are not aware of any facts that would indicate that the FDA, USDA or any State Food Authority has or will prohibit or materially restrict the manufacturing, marketing, sale, license, or use in the United States of any Product currently produced, marketed or under development by the Sellers or their Affiliates, or the operation or use of any facility currently used by the Sellers, their Affiliates or, to the Actual Knowledge of the Sellers, their co-packers to make or distribute any Product. 5.10 No Breach. The execution, delivery and performance of this Agreement by the Sellers and the Consulting Agreement and the Product and Royalty Agreement by Umbach in accordance with their respective terms, and the consummation of the Contemplated Transactions will not (i) require the Sellers to obtain any consent, approval or action of, or make any filing with or give any notice to, any Person, except as set forth on Schedule 5.10 (the "Required Consents"); (ii) if the Required Consents are obtained, violate, conflict with or result in the breach of any of the terms of, result in a modification of the effect of, otherwise cause the termination of or give any other contracting party the right to terminate, or any other right or constitute (or with notice or lapse of time or both constitute) a default (by way of substitution, novation or otherwise) under, any written or oral contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale contract, mortgage, license, franchise, commitment or other binding arrangement (collectively, the "Contracts") to which any of the Sellers are a party or by or to which any of them or any of their properties may be bound or subject, which violation, conflict, breach, modification, termina- tion, termination right or other right, or default could have a material adverse effect on the Condition of the Business, or result in the creation of any Lien upon the properties of the Companies pursuant to the terms of any such Contract; (iii) if the Required Consents are obtained, violate any Order of any Governmental Body against, or binding upon, the Companies or upon their respective securities, properties or business; (iv) if the Required Consents are obtained, violate any Laws of any Governmental Body, which violation could have a material adverse effect on the Condition of the Business; and (v) if the Required Consents are obtained, violate or result in the revocation or suspension of any Permit, which violation, revocation or suspension could have a material adverse effect on the Condition of the Business. Except as set forth on Schedule 5.10, none of the rights of the Companies under any of the Contracts listed or described on Schedule 5.12 will be subject to termination or modification as a result of the Contemplated Transactions. 5.11 Claims and Proceedings. There are no outstanding Orders of any Governmental Body against or involving any of the Companies. Except as set forth on Schedule 5.11 and Schedule 5.17(b), there are no actions, suits, claims, or legal, administrative or arbitral proceedings or investigations (collectively, "Claims") (whether or not the defense thereof or liabilities in respect thereof are covered by insurance) pending, or to the Knowledge of any Seller, threatened, against or involving any of the Sellers, the Business or any of the Acquired Assets which, individually or in the aggregate, could, if determined adversely, have a material adverse effect upon the Contemplated Transactions or upon the Condition of the Business. Except as set forth on Schedule 5.11 and Schedule 5.17(b), to the Actual Knowledge of any Seller, there is no fact, event or circumstance that could reasonably be expected to give rise to any Claim that would be required to be set forth on Schedule 5.11 and Schedule 5.17(b) if it were currently pending or threatened. All notices required to have been given to any insurance company listed as insuring against any Claim set forth on Schedule 5.11 have been timely and duly given and no insurance company has asserted, orally or in writing, that such Claim is not covered by the applicable policy relating to such Claim. Except as set forth on Schedule 5.11, there are no product liability Claims against or involving any of the Companies or any Product and no such Claims have been settled, adjudicated or otherwise disposed of since July 1, 1992. There are no Claims pending or, to the Knowledge of any Seller, threatened that would give rise to any right of indemnification on the part of any director or officer of any of the Companies or the heirs, executors or administrators of such director or officer, against the Buyer, as successor to the Business. 5.12 Contracts. (a) Except for Contracts otherwise set forth on Schedule 5.13, Schedule 5.19 or Schedule 5.21, Schedule 5.12 sets forth all of the following Contracts which relate to the Business to which any of the Companies are a party or by or to which any of them or any of their properties may be bound or subject: (i) Contracts with any current or former officer, director, shareholder, employee, consultant, agent or other representative or with an entity in which any of the foregoing has an interest; (ii) Contracts with any labor union or association representing any employee; (iii) Contracts with any Person to sell, manufacture, distribute, bottle, blend, process, pack, load or otherwise market any of the Products; (iv) Contracts with any Person licensing or otherwise granting any other rights to or otherwise in respect of any of the Intellectual Property; (v) Contracts for the sale of any properties other than in the ordinary course of business or for the grant to any Person of any option or preferential rights to purchase any properties; (vi) partnership or joint venture agreements; (vii) Contracts under which any of the Companies agree to indemnify any party; (viii) Contracts which cannot be canceled without liability, premium or penalty on less than 90 days' notice; (ix) Contracts with customers, distributors, co-packers or suppliers for the sharing of fees, the rebating of charges or other similar arrangements; (x) Contracts containing covenants of any of the Sellers not to compete in any line of business or with any Person in any geographical area or covenants of any other Person not to compete with any of the Companies in any line of business or in any geographical area; (xi) Contracts relating to the acquisition by any of the Companies of any operating business or the capital stock of any other Person; (xii) Contracts requiring the payment to any Person of an override or similar commission or fee; (xiii) Contracts relating to the borrowing of money; (xiv) options for the purchase of any property for an aggregate purchase price in excess of $50,000; (xv) Contracts pursuant to which any of the Companies may hold or use any interest owned or claimed by any of the Companies in or to any material property; (xvi) management Contracts and other similar agreements with any Person; and (xix) any other Contracts pursuant to the terms of which there is either a current or future obliga- tion or right of the Companies to make payments in excess of $50,000 or receive payments in excess of $50,000. Schedule 5.12 also lists all Contracts currently in negotiation by the Companies of a type which if entered into by the Companies would be required to be listed on Schedule 5.12 or on any other Schedule ("Proposed Contracts"). (b) There have been delivered to the Buyer true and complete copies of (i) all of the Contracts set forth on Schedule 5.12 or on any other Schedule, together with all amendments, modifications, supplements or side letters affecting the obligations of any party there- under or, with respect to Contracts which are not in writ- ing, Schedule 5.12 contains a description of the material terms thereof (including, without limitation, the parties thereto, the amount of consideration thereunder, any change of control provisions and any termination provisions con- tained therein or pertaining thereto) and (ii) the most recent draft, letter of intent or term sheet (or if none exist, a reasonably detailed written summary) embodying the terms of all of the Proposed Contracts set forth on Sched- ule 5.12. All of the Contracts referred to in the preceding clause (i) are valid and binding upon the Companies in accordance with their terms other than Contracts with respect to which the non-validity of which would not have a material adverse effect on the Condition of the Business. None of the Companies is in default in any material respect under any of such Contracts referred to in clause (i) above, nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder. Except as set forth on Schedule 5.12, to the Actual Knowledge of the Sellers, none of the Companies' co- packers or any of the Companies' 50 largest distributors is in default under any such Contract referred to in clause (i) above in any material respect nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder. 5.13 Real Estate. (a) None of the Companies own any real property. Schedule 5.13 contains a true, correct and complete schedule of all leases (the "Leases") under which the Companies use or occupy or have the right to use or occupy, now or in the future, real property, and the Companies are not a party to any lease, sublease, license or other agreement for the use or occupancy of any real property other than the Leases. There exists no reciprocal easement or operating agreements relating to the Leases between the Companies and any third party and, to the Knowledge of the Sellers, between the lessor thereunder and any third party. The Companies are the sole lessees under the Leases, and have not assigned, sublet, mortgaged or otherwise encumbered in any respect whatsoever their leasehold estate under the Leases except as expressly set forth on Schedule 5.13. (b) Each Lease is a valid and binding obligation enforceable against the lessor thereunder in accordance with its terms, and there is no default under any Lease by any of the Companies or, to the Knowledge of the Sellers, by any other party thereto, and, to the Knowledge of the Sellers, no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder. No previous or current party to any Lease has given written notice of or made a Claim against any of the Companies with respect to any breach or default thereunder which remains uncured or otherwise in existence as of the date hereof. All rent and other sums and charges payable by the Companies under or in respect of the Leases are current. Upon the consummation of the Contemplated Transactions, the Leases will continue to entitle the Companies (as and to the extent therein provided) to the use, occupancy and possession of the real property specified in the Leases and for the purposes such property is now being or is contemplated to be used by the Companies. The Sellers have delivered to the Buyer true, correct and complete copies of the Leases, together with all amendments, modifications, supplements or side letters affecting the obligations of any party thereunder. (c) None of the rights of the Companies under the Leases are subject to termination or modification as a result of the consummation of the Contemplated Trans- actions. 5.14 Inventory and Supplies. The inventory of each of the Companies (including that reflected on the Balance Sheet) is or was, prior to the sale thereof, in good and merchantable condition, and suitable and usable or salable in the ordinary course of business for the purposes for which it is intended and none of such inventory is obsolete, damaged, or defective, except as set forth on Item (A) of Schedule 5.14 and subject to the reserve for inventory write down set forth on the Balance Sheet or as a result of the operation of the Business from the Balance Sheet Date in the ordinary course of business in accordance with past custom and practice of the Sellers. Except as set forth on Schedule 5.14, all of the Companies' inventory is held at the Companies' facilities. None of the Sellers knows of any adverse condition affecting the supply of materials available to the Companies. 5.15 Receivables. All accounts and notes receivable reflected on the Balance Sheet, and all accounts and notes receivable arising subsequent to the Balance Sheet Date (i) have arisen in the ordinary course of business of the Companies and (ii) subject only to a reserve for bad debts computed in a manner consistent with past practice and reasonably estimated to reflect the probable results of collection, have been collected or are collectible in the ordinary course of business of the Companies in the aggregate recorded amounts thereof in accordance with their terms. Schedule 5.15 lists any obligor which together with all of its Affiliates owed accounts and notes receivable at June 30, 1995 in an aggregate amount of $40,000 or more. 5.16 Tangible Property. The Tangible Prop- erty is in good operating condition and repair, ordinary wear and tear excepted, subject to continued repair and replacement in accordance with past practice, and are suit- able for their intended use. During the past three years, there has not been any significant interruption of the operations of the Companies due to inadequate maintenance of the Tangible Property. 5.17 Intangible Property. Schedule 5.17 sets forth all the Intellectual Property utilized in or incident to the Business that are material to the Business as presently conducted or as being developed. Except as set forth on Schedules 5.11 and 5.17, none of the Companies has any notice of any adversely held patent, invention, trademark, copyright, service mark or trade name of any other Person or notice of any claim of any other Person relating to any of the Intellectual Property, and none of the Sellers Knows of any basis for any such charge or claim. All Intellectual Property is protected against the use of such Intellectual Property by other Persons, except where the failure to protect would not have a material adverse effect on the Condition of the Business. There is no present or, to the Knowledge of the Sellers, threatened use or encroachment of any Intellectual Property which could have a material adverse effect on the Condition of the Business. 5.18 Title to Properties. Each of the Companies is the owner of all the right, title and interest in and has good and marketable title to all of the Intellectual Property. Each of the Companies has good and marketable title to all of the other Acquired Assets. Except for (i) Liens specifically described in the notes to the Audited or Interim Financials, (ii) properties disposed of, or subject to purchase or sales orders, in the ordinary course of business since the Balance Sheet Date, (iii) Liens securing taxes, assessments, governmental charges or levies, or the claims of materialmen, carriers, landlords and like Persons, each of which is not yet due and payable or is being contested in good faith, so long as such contest does not involve any substantial danger of the sale, forfeiture or loss of any assets material to the Condition of the Business or (iv) Liens disclosed on Schedule 5.18, the Companies own the Acquired Assets free and clear of any Lien. 5.19 Accounts Payable. Schedule 5.19 sets forth a true and correct aged list of all accounts payable of the Companies relating to the Business as of June 30, 1995 in excess of $40,000 to any one payee. All accounts payable have arisen in the ordinary course of business of the Companies. The Companies have, or are capable of obtaining through existing borrowing channels, adequate funds to pay all accounts payable that come due prior to the Closing Date. 5.20 No Undisclosed Non-alcoholic Beverage Non-ordinary Course Business Liabilities. Except as otherwise fully and adequately reflected on the Balance Sheet or Interim Balance Sheet, none of the Companies has, except in the ordinary course of the Business, incurred any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise, whether or not of a kind required by GAAP to be set forth on a financial statement or in the notes thereto, including, without limitation, indebtedness for borrowed money, other than the working capital line pursuant to the Credit Agreement (collectively, "Liabilities"). 5.21 Suppliers, Customers, Distributors and Co-Packers. Schedule 5.21 lists, by dollar volume paid for the ten largest suppliers, the ten largest customers, the 50 largest distributors and all co-packers of the Companies relating to the Business. The relationships of the Companies with such suppliers, customers, distributors and co-packers are good commercial working relationships and, except as set forth on Schedule 5.21, (i) no Person listed on Schedule 5.21 within the last twelve months has threatened in writing to cancel or otherwise terminate the relationship of such Person with any of the Companies or renegotiate any material term of its agreements with any of the Companies or alleged in writing a material breach by any of the Companies, or to the Actual Knowledge of the Sellers, intends to cancel or otherwise terminate the relationship of such Person with any of the Companies or renegotiate any material term of its agreements with any of the Companies or allege in writing a material breach by any of the Companies, and (ii) no such Person has during the last twelve months decreased materially or threatened in writing to decrease or limit materially, or to the Actual Knowledge of the Sellers, intends to modify materially its relationship with any of the Companies or intends to decrease or limit materially, its services or supplies to any of the Companies or its usage or purchase of any of the Products. 5.22 Employee Benefit Plans. (a) Schedule 5.22 identifies each Employee Plan (as defined in Section 14.1). The Sellers have furnished to the Buyer copies of the Employee Plans (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof together with the most recent annual reports (Form 5500 including, if applicable, Schedule B thereto) and the most recent actuarial valuation report prepared in connection with any Employee Plan. No Employee Plan is a Multiemployer Plan (as defined in Section 14.1) or is otherwise subject to Title IV of ERISA or Section 412 of the Code. The Sellers have provided the Buyer with a complete list, as of the most recent practicable date, of all current employees of the Business along with their base salary. (b) Neither the Sellers, nor any of their ERISA Affiliates (as defined in Section 14.1) (i) is a party to any collective bargaining agreement relating to any current or former employees of the Business, (ii) has main- tained, administered or contributed to any employee benefit plan subject to Title IV of ERISA or Section 412 of the Code within the immediately preceding five years, (iii) has engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Section 4069 or 4212(c) of ERISA or (iv) has incurred, or reasonably expects to incur prior to the Closing Date, (A) any liability under Title IV of ERISA arising in connec- tion with the termination of, or a complete or partial withdrawal from, any plan covered or previously covered by Title IV of ERISA or (B) any liability under Section 4971, 4975 or 5000(a) of the Code that in either case could become a liability of the Companies or the Buyer or any of its ERISA Affiliates, and the assets of the Companies are not now, nor will they after the passage of time be, subject to any Lien imposed under Code Section 412(m) by reason of a failure of any of the Sellers or their Affiliates to make timely installments or other payments required under Code Section 412. (c) Each Employee Plan has been main- tained in substantial compliance with its terms and with the requirements prescribed by any and all applicable Laws and Orders, including but not limited to ERISA and the Code. (d) None of the Sellers has any current or projected liability in respect of post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees of the Business, except as required to avoid excise tax under Section 4980B of the Code. (e) There is no contract, plan or arrangement (written or otherwise) covering any current or former employee of the Business that, individually or col- lectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code, and no current or former employee of the Business will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the Contemplated Trans- actions. 5.23 Employee Relations. The Companies have approximately 151 employees in the aggregate. No union organizing efforts have been conducted within the last five years or, to the Knowledge of the Sellers, are now being conducted. None of the Companies has at any time during the last five years had, nor, to the Knowledge of the Sellers, are there now threatened, a strike, picket, work stoppage, work slowdown or other labor trouble. Since July 1, 1995, to the Knowledge of the Sellers, the Companies do not have any liability for employee medical expenses in excess of an amount equal to $25,000 per month. 5.24 Environmental Liabilities. Each of the Companies (i) is and has been in compliance with all applicable Environmental Laws (as defined in Section 14.1); (ii) there is no civil, criminal or administrative judgment, action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or, to the Sellers' Knowledge, threatened against such Company pursuant to Environmental Laws or principles of common law relating to pollution, protection of the environ- ment or health and safety which would reasonably be expected to result in a fine, penalty or other obligation, cost or expense; and (iii) there are no past or present events, conditions, circumstances, activities, practices, incidents, agreements, actions or plans which may prevent compliance with Environmental Laws, or which have given rise to or may give rise to liability under Environmental Laws or principles of common law relating to pollution, protection of the environment or health and safety. 5.25 Insurance. Schedule 5.25 sets forth a list (specifying the insurer, describing each pending claim thereunder of more than $25,000 and setting forth the aggregate limit, if any, of the insurer's liability there- under) of all policies or binders of fire, liability, prod- uct liability, workmen's compensation, vehicular and other insurance held by or on behalf of the Companies relating to the Business. Such policies and binders are valid and binding in accordance with their terms and are in full force and effect. None of the Companies is in default with respect to any material provision contained in any such policy or binder or has failed to give any notice or present any claim under any such policy or binder in due and timely fashion. Except for claims set forth on Schedule 5.25, there are no outstanding unpaid Claims under any such policy or binder, and none of the Companies has received any notice of cancellation or non-renewal of any such policy or binder. There is no inaccuracy in any application for such policies or binders, any failure to pay premiums when due or any similar state of facts that might form the basis for termination of any such insurance. Except as set forth on Schedule 5.25, none of the Companies has received any writ- ten notice from any of its insurance carriers that any insurance premiums will be materially increased in the future or that any insurance coverage listed on Schedule 5.25 will not be available in the future on substantially the same terms as now in effect. 5.26 Products. Except as set forth on Schedule 5.26, there are no statements, citations or deci- sions by any Governmental Body specifically stating that any Product is defective or unsafe or fails to meet any standards promulgated by any such Governmental Body. Except as set forth on Schedule 5.26, there have been no recalls ordered by any such Governmental Body with respect to any Product. Except as set forth on Schedule 5.26, to the Knowledge of the Sellers, there is no (i) fact relating to any Product that may impose upon the Companies a duty to recall any Product or a duty to warn customers of a defect in any Product, (ii) latent or overt design, manufacturing or other defect in any Product or (iii) material liability for warranty claims or returns with respect to any Product not fully reflected on the Audited Financials or Interim Financials. 5.27 Officers, Directors and Key Employees. Schedule 5.27 sets forth (i) the name and total compensation of each officer and director of each of the Companies, (ii) the name and total compensation of each other employee, consultant, agent or other representative of each of the Companies whose current or committed annual rate of compensation (including bonuses and commissions) exceeds $50,000, (iii) all wage and salary increases, bonuses and increases in any other direct or indirect compensation received by such Persons since August 1, 1994 that were in excess of the greater of 10% of such person's salary or $15,000, (iv) any accrual for, or any commitment or agreement by the Companies to pay, such increases, bonuses or pay and (v) any payments or commitments to pay any severance or termination pay to any such Persons. 5.28 Operations of the Companies. (a) Except as set forth on Schedule 5.28, since the Balance Sheet Date, the Companies have not: (i) declared or paid any dividends or declared or made any other distributions of any kind to their shareholders, other than combined cash distributions to their shareholders from January 1, 1995 through July 31, 1995 in an amount not to exceed $4,750,000, in the aggre- gate, and from August 1 through the Closing Date in an amount not to exceed $280,000, in the aggregate, or made any direct or indirect redemption, retirement, purchase or other acquisition of any shares of its capital stock; (ii) except for up to a maximum of $7,000,000 of borrowings under the Credit Agreement, incurred any indebtedness for borrowed money, exclusive of the Arkansas Litigation Letter of Credit; (iii) reduced their cash or short- term investments or their equivalent, other than to meet cash needs arising in the ordinary course of business, consistent with past practices; (iv) waived any material right under any Contract or other agreement of the type required to be set forth on any Schedule; (v) made any change in their accounting methods or practices or made any change in depreciation or amortization policies or rates adopted by them; (vi) materially changed any of their business policies, including, without limitation, advertising, investment, manufacturing, marketing, distribu- tion, pricing, purchasing, production, personnel, sales, returns, budget or product acquisition policies; (vii) made any loan or advance to any of its shareholders, officers, directors, employees, consultants, agents or other representatives (other than travel advances made in the ordinary course of business), or made any other loan or advance otherwise than in the ordinary course of business; (viii) hired any new employees with a total annual compensation in excess of $60,000; (ix) except for inventory or equipment in the ordinary course of business, sold, abandoned or made any other disposition of any of their properties or made any acquisition of all or any part of the properties, capital stock or Business of any other Person; (x) paid, directly or indirectly, any of its material Liabilities before the same became due in accordance with its terms or otherwise than in the ordinary course of business; (xi) acquired any assets not used solely in connection with the Business; (xii) entered into any transactions with Umbach or any of Umbach's Affiliates; (xiii) terminated or failed to renew, or received any written threat (that was not subsequently withdrawn) to terminate or fail to renew, any Contract or other agreement that is or was material to the Condition of the Business; (xiv) amended their Articles of Incorporation or By-laws (or comparable instruments) or merged with or into or consolidated with any other Person, subdivided or in any way reclassified any shares of its capital stock or changed or agreed to change in any manner the rights of their outstanding capital stock or the charac- ter of their business; or (xv) engaged in any other material transaction other than in the ordinary course of business. (b) Since June 27, 1995, the Companies have not: (i) without the prior written consent of Mistic pledged, transferred, or otherwise disposed of any Acquired Assets or any assets that would constitute Acquired Assets nor have they assumed any Assumed Liabilities or Liabilities that would constitute Assumed Liabilities to (x) pay any Liabilities other than Assumed Liabilities or (y) purchase any assets other than Acquired Assets; (ii) incurred or committed to incur any sales, marketing or promotional allowances outside of the ordinary course of business to distributors or co-packers; (iii) entered into any agreements or changed or waived the terms of any existing agreements with distributors or co-packers without giving advance notice to Mistic except as set forth on Schedule 5.28; (iv) managed their operations outside the ordinary course of business without the prior written consent of Mistic; (v) entered into any agreements requiring any payment to be made or incurred as a result of any change of control; (vi) incurred advertising and promotional expenses or other financial commitments in excess of historical, ordinary or current plan levels; and (vii) increased the compensation of any employee or consultant, other than annual raises consistent with historical practice. In addition, since June 27, 1995, the Sellers have consulted with Mistic and its Affiliates with respect to all critical and/or significant commitments. 5.29 Related Party Transactions. Except as set forth on Schedule 5.29, none of the officers, directors or Affiliates of the Companies, nor Umbach or his Affili- ates: (i) owns, directly or indirectly, any interest in (excepting less than 1% stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in busi- ness as, a competitor, lessor, lessee, supplier, distrib- utor, co-packer, sales agent or customer of any of the Companies; (ii) owns, directly or indirectly, in whole or in part, any property that any of the Companies use in the conduct of the Business; (iii) is a party to any Contract with any of the Companies; or (iv) has any cause of action or other Claim whatsoever against, or owes any amount to, any of the Companies. 5.30 Banks, Brokers and Proxies. Sched- ule 5.30 sets forth (i) the name of each bank, trust com- panies, securities or other broker or other financial institution with which the Companies have an account, credit line or safe deposit box or vault, or otherwise maintain relations; (ii) the name of each Person authorized by the Companies to draw thereon or to have access to any safe deposit box or vault; (iii) the purpose of each such account, safe deposit box or vault; and (iv) the names of all Persons authorized by proxies, powers of attorney or other instruments to act on behalf of any of the Companies in matters concerning its Business or affairs. 5.31 Premerger Notification. The Sellers have filed notification and report forms with respect to the Contemplated Transactions in compliance with the Hart-Scott- Rodino Antitrust Improvements Act of 1976, and the rules and regulations promulgated thereunder (the "HSR Act"). 5.32 Full Disclosure. There is no fact or facts Actually Known to any of the Sellers that the Sellers have not disclosed to the Buyer in writing that materially adversely affects or, so far as any of the Sellers can now reasonably foresee, will materially adversely affect, the Condition of the Business or the ability of the Sellers to perform this Agreement or of Umbach to perform the Consulting Agreement and the Product and Royalty Agreement other than general industry trends and conditions. 5.33 Entire Business. Except for the Excluded Assets, the consummation of the Contemplated Trans- actions will convey to the Buyer all of the Sellers' right, title and interest in and to all of their rights, assets and properties used in the Business. 5.34 No Projection Representation. The Buyer acknowledges that the Sellers are not making any representation or warranty regarding the accuracy, cor- rectness or completeness of any projected financial informa- tion, data, forecasts or commentary regarding the Companies and/or the Business which have been provided to the Buyer by the Sellers in connection with the Contemplated Transactions and that the Sellers shall not have any liability whatsoever with respect to such projected financial information, data, forecasts or commentary. 6. Representations and Warranties of Mistic. Mistic represents and warrants to the Sellers as follows: 6.1 Due Incorporation and Authority of Mistic. Mistic is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being and as heretofore conducted. 6.2 Authority to Execute and Perform this Agreement, the Consulting Agreement and the Product and Royalty Agreement. Mistic has the full legal right and power and all authority and approvals required to execute and deliver this Agreement, the Consulting Agreement and the Product and Royalty Agreement and to perform fully its obligations hereunder and thereunder. This Agreement has been duly executed and delivered by Mistic and (assuming the due authorization, execution and delivery hereof by the Sellers) is a valid and binding obligation of Mistic enforceable against Mistic in accordance with its terms. Each of the Consulting Agreement and the Product and Royalty Agreement when executed and delivered by Mistic at the Closing (and assuming the due authorization, execution and delivery thereof by Umbach) will be a valid and binding obligation of Mistic enforceable against Mistic in accord- ance with its terms. The execution and delivery by Mistic of this Agreement, the Consulting Agreement and the Product and Royalty Agreement, the consummation of the Contemplated Transactions and the performance by Mistic of this Agreement, the Consulting Agreement and the Product and Royalty Agreement in accordance with their respective terms will not (i) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both constitute) a default under, the Certificate of Incorporation or By-laws of Mistic, any Law or Order of any Governmental Body applicable to Mistic, or any Contract to which Mistic is a party or by or to which Mistic or any of its properties is bound or subject; or (ii) result in the creation of any Lien on any of the properties of Mistic. 6.3 Premerger Notification. Mistic and its Affiliates have filed notification and report forms with respect to the Contemplated Transactions in compliance with the HSR Act. 7. Covenants and Agreements. 7.1 Conduct of Business. From the date hereof through the Closing Date, each of the Sellers agrees that it (i) shall cause each of the Companies to conduct the Business in the ordinary course and, without the prior written consent of the Buyer, not to undertake any of the actions specified in Section 5.28; and (ii) shall conduct the Business in such a manner so that the representations and warranties contained in Article 5 shall continue to be true and correct on and as of the Closing Date as if made on and as of the Closing Date. The Sellers shall give the Buyer prompt notice of any event, condition or circumstance occurring from the date hereof through the Closing Date that would constitute a violation or breach of any representation or warranty, whether made as of the date hereof or as of the Closing Date, or that would constitute a violation or breach of any covenant of any Seller contained in this Agreement. The Sellers agree that none of the Sellers will, nor will any of the Sellers permit any of their Affiliates (or authorize or permit any of their respective representatives) to, take directly or indirectly any action to initiate, assist, solicit, negotiate, encourage or accept any offer or inquiry from any Person (a) to engage in any Business Combination (as defined in Section 14.1), (b) to reach any agreement or understanding (whether or not such agreement or understanding is absolute, revokable, contingent or condi- tional) for, or otherwise attempt to consummate, any Busi- ness Combination or (c) to furnish or cause to be furnished any information with respect to the Companies to any Person (other than as contemplated hereby) who the Sellers or any Affiliate or representative Knows or has reason to believe is in the process of considering any Business Combination. If any Seller or any such Affiliate or representative receives from any Person any offer, inquiry or informational request referred to above, such Seller will promptly advise such Person, by written notice of the terms of this section and will promptly, orally and in writing, advise the Buyer of such offer, inquiry or request and deliver a copy of the foregoing notice to the Buyer. 7.2 Corporate Examinations and Investiga- tions. Prior to the Closing Date, the Sellers agree that Mistic and its Affiliates and any Person who is considering providing financing in connection with the Contemplated Transactions shall be entitled, through their respective officers, directors, employees, agents, counsel, accountants, financial advisors, consultants and other representatives, including, without limitation, Paul, Weiss, Rifkind, Wharton & Garrison, Fish & Neave and Deloitte & Touche LLP, the Buyer's independent certified public accountants ("D&T") (collectively the "Representatives"), to make such investigation of the properties, businesses and operations of the Companies, and such examination of the Acquired Assets, properties, contracts, books, records, customers, suppliers and all such other information and data concerning the Business, as they reasonably may request in connection with such investigation. Any such investigation and examination shall be conducted at reasonable times upon prior notice and under reasonable circumstances, and the Sellers shall cooperate fully therein. No investigation by the Buyer or the Representatives shall diminish, obviate or otherwise affect any of the representations, warranties, covenants or agreements of the Sellers contained in this Agreement. In order that the Buyer may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may wish of the affairs of the Companies, the Sellers shall make avail- able and shall cause the Companies to make available to the Representatives during such period all such information and copies of such Documents concerning the affairs of the Companies as such Representatives may reasonably request, shall permit the Representatives access to the properties of the Companies and all parts thereof and shall cause their officers, employees, consultants, agents, accountants and attorneys to cooperate fully with such Representatives in connection with such review and examination. 7.3 Publicity. The parties agree that no publicity release or announcement concerning this Agreement or the Contemplated Transactions shall be made without advance approval thereof by the Sellers and the Buyer, unless required by applicable law or the rules and regula- tions of any applicable stock exchange. 7.4 Expenses. The Buyer shall bear its own expenses and Umbach shall bear the Sellers' expenses incurred in connection with the preparation, execution and performance of this Agreement and the Contemplated Trans- actions, including, without limitation, all fees and expenses of agents, representatives, counsel and accountants, except as otherwise specifically provided herein. Umbach shall timely pay any and all Transaction Sales Taxes and shall timely file all returns and reports thereto. Upon the payment by Umbach of the Transaction Sales Taxes and receipt by the Buyer of evidence satisfactory to the Buyer of such payment, the Buyer shall promptly pay the Sellers the Buyer Transaction Sales Tax Payment. 7.5 Indemnification of Brokerage. The Sellers represent and warrant to the Buyer that, no broker, finder, agent or similar intermediary (a "Broker") has acted on behalf of any of the Sellers in connection with this Agreement or the Contemplated Transactions, and that there are no brokerage commissions, finder's fees or similar fees or commissions payable in connection therewith based on any agreement, arrangement or understanding with the Sellers, or any action taken by the Sellers. Each of the Sellers agrees, jointly and severally, to indemnify and save the Buyer harmless from any Claim or demand for commission or other compensation by any Broker claiming to have been employed by or on behalf of the Sellers and to bear the cost of legal expenses incurred in defending against any such Claim. Mistic represents and warrants to the Sellers that no Broker has acted on behalf of Mistic in connection with this Agreement or the Contemplated Transactions, and that there are no brokerage commissions, finders' fees or similar fees or commissions payable in connection therewith based on any agreement, arrangement or understanding with Mistic, or any action taken by Mistic. Mistic agrees to indemnify and save the Sellers harmless from any Claim or demand for commission or other compensation by any Broker claiming to have been employed by or on behalf of Mistic or the Buyer, and to bear the cost of legal expenses incurred in defending against any such Claim. 7.6 Related Parties. Umbach shall, prior to the Closing, (a) pay or cause to be paid to the Companies, all amounts owed to the Companies and reflected on the Balance Sheet or borrowed from or owed to the Companies since the Balance Sheet Date by Umbach or any Affiliate of Umbach other than the Companies and other than up to a maximum amount of $109,812.97, owed by Arthur Greenwald to the Companies (the "Greenwald Debt"), which Greenwald Debt shall be forgiven by the Sellers immediately prior to the Closing, and (b) return or cause any Affiliate to return any Acquired Assets in the possession of Umbach or any Affiliate or, with Mistic's written consent, purchase such Acquired Assets from the Companies at fair market value. Prior to the Closing, any and all Affiliate Liabilities shall be canceled. The Seller shall be permitted to pay Mr. Greenwald immediately prior to the Closing an amount equal to the income Tax obligations of Mr. Greenwald up to a maximum amount of $40,187.03 with respect to the forgiveness of the Greenwald Debt. 7.7 Employee Matters. (a) Severance Policy. The Buyer agrees to adopt a severance policy for the benefit of the employees of the Companies who accept and commence employment with the Buyer and its Affiliates (the "Transferred Employees") and who are terminated by the Buyer without cause during the twelve month period from the Closing Date (and in the case of the eight Transferred Employees set forth on Schedule 7.7 (the "Key Employees"), who are terminated by the Buyer without cause at any time) with terms substantially consistent with those set forth on Exhibit B hereto. Nothing herein shall prohibit the Buyer from terminating the employment of any employee at any time. Except as required by law and except for the Buyer's obligations with respect to the severance policy described above, nothing contained herein shall obligate the Buyer to adopt or continue any employee benefit plan or arrangement after the Closing Date. (b) The Sellers' Employee Benefit Plans. (i) Except as otherwise provided in this Section 7.7, the Sellers shall retain all obliga- tions and liabilities in respect of each employee or former employee, including any beneficiary or dependent thereof, who is not a Transferred Employee. (ii) With respect to each Trans- ferred Employee (including any beneficiary or dependent thereof), the Sellers shall retain all liabilities and obligations arising outside the ordinary course of business. (c) WARN. The Sellers shall be jointly and severally responsible for all obligations and liabil- ities under the Workers Adjustment and Retraining Notifica- tion Act of 1988, as amended, and each similar state law ("WARN"), with respect to employees of the Business by reason of their severance or other termination of employment on or prior to the Closing Date. The Buyer agrees that it will not terminate any Transferred Employees on the Closing Date but shall not be restricted from doing so after the Closing Date. (d) Third Party Beneficiaries. No provision of this Section 7.7 shall create any third party beneficiary rights in any current or former employee of any of the Companies (including any beneficiary or dependent thereof) in respect of continued employment or resumed employment, and no provision of this Section 7.7 shall create any rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any employee benefit plan or arrangement. 7.8 Trademarks, Service Marks, Corporate Names and Trade Names. From and after the Closing, the Sellers and their Affiliates agree not to use any trade- marks, service marks, corporate names, trade names or otherwise any references to "Mistic," "Sunesta," or any of the Companies' other trademarks, service marks, corporate names and trade names included among the Acquired Assets and any derivations thereof. 7.9 Letters of Credit. The Buyer agrees, at its option, to keep outstanding the standby letter of credit in the amount of $3,054,000 issued by the Bank pursuant to the Credit Agreement in connection with the Arkansas Litiga- tion (the "Arkansas Litigation Letter of Credit"), or obtain a new letter of credit in the same face amount to replace the Arkansas Litigation Letter of Credit, until the Arkansas Litigation has been settled or a judgment has become final and is not subject to further appeal. 7.10 Arkansas Litigation Cost. The Sellers and Buyer agree that any and all amounts paid by the Buyer for the Arkansas Litigation Cost in excess of the Buyer Arkansas Payment and not immediately repaid by the Sellers will bear interest at a rate of 9% per annum from the first day following the date on which such repayment is due until such repayment is received in full by the Buyer in immedi- ately available funds, subject to Section 12.5. 7.11 Taxes. (a) The Sellers will pay all Taxes due and payable on or after the Closing and will file all returns and reports required to be filed on or after the Closing with respect to the Sellers (including any predecessor entities) including, without limitation, Taxes imposed with respect to the Business or the Acquired Assets for all taxable periods (or portions thereof) ending on or prior to the Closing, for which the Buyer could be held liable or a claim made against the Acquired Assets. (b) For purposes of this Agreement, the net income of the Business for the period from August 1 through the Closing (the "Stub Tax Period") will be based on (i) the dollar amount of the sales of the Business for the Stub Tax Period multiplied by (ii) a margin that allocates the expenses for the month of August to the Stub Tax Period based on the procedures set forth on Schedule 7.11 and the Sellers shall be liable for all Taxes imposed with respect to the income of the Business for the Stub Period. The Buyer shall deliver to the Sellers by September 30, 1995 a statement setting forth the dollar amount of such sales and such margin which statement shall be prepared by the President of the Buyer in consultation with the Sellers' tax advisers and such statement, after good faith consultation and reasonable consideration of the Sellers' comments, shall be final and binding upon the Buyer and the Sellers with no further right of appeal. Both sides expect the President of the Buyer to exercise his independent judgment. (c) The Sellers shall pay any and all Taxes with respect to the Sellers (including any predecessor entities) including, without limitation, Taxes imposed with respect to the Business or the Acquired Assets for all taxable periods (or portion thereof) ending on or prior to the Closing, imposed upon the Buyer based, in whole or in part, upon the failure to comply with the bulk sales laws. 7.12 Claims; Qualification. Upon the request in writing by the Buyer, the Sellers agree to assist the Buyer in connection with any Claim that the Buyer desires to bring against a third party, including, without limitation, agreeing to become a party to such action, to the extent it is required or desirable in connection with the Claim. Upon the request in writing of the Buyer, the Sellers agree to take all actions necessary to qualify the Companies in any jurisdiction in connection with any Claim that the Buyer wishes to bring in which any of the Companies is to be a named party. 7.13 Bulk Sales Law. The Contemplated Transactions shall be consummated without compliance with bulk sales Laws. If by reason of any applicable bulk sales Law, any Claims are asserted by creditors of the Sellers relating to the Excluded Liabilities, such Claims shall be the responsibility of the Sellers, and the Sellers shall jointly and severally indemnify, defend and hold harmless Mistic and the Buyer (and their respective directors, officers, employees, Affiliates, successors and assigns) from and against all Losses based upon, arising out of or otherwise in respect of the failure to comply with such bulk sales Laws. 7.14 Litigation Cooperation. The Sellers agree that they will cooperate with the Buyer in connection with any claims brought by distributors or co-packers of the Company, including without limitation, being available to take depositions and to be witness at trial, help in preparation of any legal documentation and providing any advice or support that the Buyer may request of the Sellers in connection with such claims. 7.15 Further Assurances. Each of the parties shall execute such Documents and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the Contemplated Transactions, including, without limitation filing all UCC-3 termination statements and all documents with the U.S. Patent and Trademark Office necessary to release any Liens on the Intellectual Property. Each such party shall use com- mercially reasonable efforts to fulfill or obtain the fulfillment of the conditions to the Closing set forth in Articles 8 and 9. Conditions Precedent to the Obligation of the Buyer to Close. The obligation of the Buyer to enter into and complete the Closing is subject, at the option of the Buyer acting in accordance with the provisions of Article 13 with respect to termination of this Agreement, to the ful- fillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by it: 8.1 Representations and Covenants. The representations and warranties of the Sellers contained in this Agreement shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. Each of the Sellers shall have performed and complied with all covenants and agree- ments required by this Agreement to be performed or complied with by the Sellers on or prior to the Closing Date. Each Seller shall have delivered to the Buyer a certificate, dated the date of the Closing and signed by the Sellers, to the foregoing effect. 8.2 Necessary Consents All consents listed on Schedule 8.2 (the "Necessary Consents") shall have been obtained and be in full force and effect, and the Buyer shall have been furnished with evidence reasonably satis- factory to it of the granting of the Necessary Consents. 8.3 Opinions of Counsel to the Sellers. The Buyer shall have received the opinions of (i) Pryor, Cashman, Sherman & Flynn, (ii) Lionel Sawyer & Collins, and (iii) Cowan, Liebowitz, and Lotman, P.C., counsel to the Sellers, dated the date of the Closing, addressed to the Buyer, in the form of Exhibit C. 8.4 No Claims. No Claims shall be pending or, to the knowledge of the Buyer or Knowledge of the Sellers, threatened, before any Governmental Body to restrain or prohibit, or to obtain damages or a discovery order in respect of, this Agreement or the consummation of the Contemplated Transactions or which has had or may have, in the reasonable judgment of the Buyer, a materially adverse effect on the Condition of the Business. 8.5 HSR Act Filing. Any Person required in connection with the Contemplated Transactions to file a notification and report form in compliance with the HSR Act shall have filed such form and the applicable waiting period with respect to each such form (including any extension thereof by reason of a request for additional information) shall have expired or been terminated. 8.6 Consulting Agreement. The consulting agreement in the form of Exhibit D (the "Consulting Agreement") shall have been executed and delivered by Umbach. 8.7 Product and Royalty Agreement. The product and royalty agreement in the form of Exhibit E (the "Product and Royalty Agreement") shall have been executed and delivered by Umbach. 8.8 Financing. The Buyer shall have obtained financing necessary to pay the Purchase Price, repay or refinance the Bank Debt and replace the Arkansas Litigation Letter of Credit on terms and conditions that are satisfactory to the Buyer in its sole discretion. 8.9 Employees. At the Closing, the Buyer shall enter into satisfactory arrangements with substantially all of the employees of the Business, other than those employees agreed to by the Buyer, pursuant to which such employees shall become employees of the Buyer and shall cease to be employees of the Companies. 8.10 Bill of Sale. Each of the Sellers shall have executed and delivered to the Buyer a Bill of Sale in form and substance reasonably satisfactory to the Buyer. 8.11 Assignment of Intellectual Property. Each of the Sellers shall have executed and delivered to the Buyer an Assignment of Intellectual Property in form and substance reasonably satisfactory to the Buyer. 8.12 Assignment of Contracts. Each of the Sellers shall have executed and delivered to the Buyer an Assignment of Contracts substantially in form and substance reasonably satisfactory of the Buyer. 8.13 Lease Amendment. JVWNY shall have delivered to the Buyer the First Amendment of Lease executed by Philip DeRaffele et al. d/b/a 2525 Palmer Associates and JVWNY. 8.14 Release of Liens. Each of the Sellers shall deliver to the Buyer evidence satisfactory to the Buyer to cancel, terminate and extinguish all Liens on the Assets set forth on Schedule 8.14. 8.15 Release of Claims by Affiliates. Each of the shareholders, directors and Affiliates of the Com- panies and Umbach and his Affiliates shall have executed releases in form and substance reasonably satisfactory to the Buyer releasing the Buyer from any and all causes of actions or other claims whatsoever against the Buyer or the Acquired Assets. 8.16 Secretary Certificate. Each of the Companies shall have executed and delivered to Buyer a certificate of its Secretary or Assistant Secretary, dated the Closing Date, certifying (i) that the resolutions adopted by the Board of Directors and Shareholders of the Companies authorizing the execution, delivery and per- formance of this Agreement by such Companies and the consummation of the Contemplated Transactions, a copy of which shall be attached to the certificate, were duly adopted and are in full force and effect, (ii) the incumbency of each person executing this Agreement or any other document delivered pursuant to this Agreement on behalf of the Sellers, and (iii) that the by-laws of the Companies, a copy of which shall be attached to the certificate, were duly adopted and are in full force and effect. 8.17 Certified Charter Documents. Each of the Companies shall have delivered to the Buyer true and complete copies of the Articles of Incorporation of such Company, certified by the Secretary of State or other appropriate officials of its jurisdiction of organization. 9. Conditions Precedent to the Obligation of the Sellers to Close. The obligation of the Sellers to enter into and complete the Closing is subject, at the option of the Sellers acting in accordance with the provisions of Article 13 with respect to termination of this Agreement, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Sellers: 9.1 Representations and Covenants. The representations and warranties of Mistic contained in this Agreement shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. Mistic shall have performed and complied with all covenants and agreements required by this Agreement to be performed or complied with by them on or prior to the Closing Date. Mistic shall have delivered to the Sellers a certificate, dated the date of the Closing and signed by an officer of Mistic and the Buyer, to the fore- going effect. 9.2 Opinion of Counsel to the Buyer. The Sellers shall have received the opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the Buyer, dated the date of the Closing, addressed to the Sellers, in the form of Exhibit F. 9.3 No Claims. No Claims shall be pending or, to the knowledge of the Buyer or the Knowledge of the Sellers, threatened, before any Governmental Body to restrain or prohibit, or to obtain damages or a discovery order in respect of, this Agreement or the consummation of the Contemplated Transactions. 9.4 HSR Act Filing. Any Person required in connection with the Contemplated Transactions to file a notification and report form in compliance with the HSR Act shall have filed such form and the applicable waiting period with respect to each such form (including any extension thereof by reason of a request for additional information) shall have expired or been terminated. 9.5 Product and Royalty Agreement. The Product and Royalty Agreement shall have been executed and delivered by the Buyer. 9.6 Instrument of Assumption. The Buyer shall have executed and delivered to the Sellers an instru- ment of assumption with respect to the Assumed Liabilities in form and substance reasonably satisfactory to the Sellers. 9.7 Payment of Purchase Price. The Buyer shall have paid the Purchase Price to the Sellers at the Closing in accordance with Section 3.1 hereof. 10. Non-Competition by the Sellers. 10.1 Covenants Against Competition. Each of the Sellers acknowledges that (i) the Buyer would not pur- chase the Business but for the agreements and covenants contained in this Article 10; (ii) Umbach is one of the limited number of Persons who developed the Business; (iii) the Business is conducted throughout the United States and certain foreign jurisdictions; (iv) Umbach's work for the Companies has given him and will continue to give him trade secrets of and confidential information concerning the Companies; (v) the agreements and covenants contained in this Article 10 are essential to protect the business and goodwill of the Business, which is being purchased by the Buyer; and (vi) Umbach has means to support himself and his dependents other than by engaging in the Business and the provisions of this Article 10 will not impair such ability. Accordingly, the Sellers covenant and agree as follows: 10.1.1 Non-Compete. For a period of three years following the Closing (the "Restricted Period"), the Sellers and their Affiliates shall not in the United States or in any country where the Products are sold, directly or indirectly, (i) engage in the Business or in the development or sale of non-alcoholic beverage products, ideas, formulations or recipes, other than pursuant to the Consulting Agreement and the Product and Royalty Agreement; (ii) enter the employ of, or render any services to, any Person engaged in any non-alcoholic beverage business; or (iii) become interested in any such Person in any capacity, including, without limitation, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; provided, however, the Sellers and their Affiliates, may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if none or the Sellers or their Affiliates, is a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 1% or more of any class of securities of such Person. 10.1.2 Confidential Information; Per- sonal Relationships. The Sellers promise and agree that, the Sellers and their Affiliates will not disclose to any Person not employed by the Buyer or not engaged to render services to the Buyer, and that the Sellers and their Affiliates will not use for their benefit or for the benefit of others, any confidential information of the Business (the "Confidential Information"), including, without limitation, "know-how," trade secrets, ideas, formulae, operational methods, recipes, methods of manufacture, customer lists, details of client or consultant contracts, product development techniques or plans, technical production requirements and other technical processes, designs and design projects, inventions and research projects (collectively, the "Special Information"), and pricing policies, financial data, marketing and sales information, marketing plans or strategies, business acquisition plans, new personnel acquisition plans and other personnel data, - and other proprietary information of the Business during the Restricted Period and with respect to the Special Information during the Restricted Period or any time there- after; provided, however, that this provision shall not preclude the Sellers and their Affiliates and Umbach's family members from use or disclosure of information known generally to the public (other than information known gen- erally to the public as a result of a violation of this Section 10.1.2 by the Sellers or the Affiliates or Umbach's family members) any disclosure required by law or court order. The Sellers shall have the express right to continue to conduct the alcoholic beverage business of the Sellers which may include the sale of fruit flavored alcoholic beverages which may utilize "basic" or "component" flavors used by the Companies prior to the Closing; provided, however, no such activities shall utilize any Confidential Information and to the extent that the "basic" or "component" flavors utilize the Confidential Information, the Sellers may not utilize them. 10.1.3 Property of the Business. All memoranda, notes, lists, records and other Documents (and all copies thereof), including such items stored in computer memories, on microfiche or by any other means, made or compiled by or on behalf of the Sellers, or made available to the Sellers relating to the Business, are and shall be the Property of the Buyer as of the Closing Date and shall be delivered to the Buyer promptly after the Closing or at any other time on request. 10.1.4 Employees of the Business. Except as agreed to in writing by the Buyer, until the third anniversary of the Closing Date, the Sellers shall not, directly or indirectly, hire or solicit any employee of the Business or encourage any such employee to leave such employment. 10.2 Rights and Remedies Upon Breach. If any of the Sellers breaches, or threatens to commit a breach of, any of the provisions of Section 10.1 (the "Restrictive Covenants"), the Buyer shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the Buyer under law or in equity: 10.2.1 Specific Performance. The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restric- tive Covenants would cause irreparable injury to the Buyer, and that money damages would not provide an adequate remedy to the Buyer. 10.2.2 Accounting. The right and remedy to require the Sellers to account for and pay over to the Buyer all compensation, profits, monies, accruals, increments and other benefits derived or received by the Sellers as the result of any transactions constituting a breach of the Restrictive Covenants. 10.2.3 Indemnification. The rights and remedies set forth in Article 12. 10.3 Severability of Covenants. Each of the Sellers acknowledges and agrees that the Restrictive Covenants are reasonable and valid in geographical and temporal scope and in all other respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 10.4 Blue-Pencilling. If any court deter- mines that any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geo- graphic scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable. 10.5 Enforceability in Jurisdictions. The Buyer and the Sellers intend to and hereby confer juris- diction to enforce the Restrictive Covenants upon the courts of any jurisdiction within the geographical scope of the Restrictive Covenants. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants unenforce- able by reason of the breadth of such scope or otherwise, it is the intention of the Buyer and the Sellers that such determination not bar or in any way affect the Buyer's right to the relief provided above in the courts of any other jurisdiction within the geographical scope of the Restric- tive Covenants, as to breaches of the Restrictive Covenants in such other respective jurisdictions, the Restrictive Covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants. 10.6 Non-Compete Payments. Subject to Section 12.5 hereof, in consideration for the Restrictive Covenants, the Buyer shall pay the Sellers, by wire transfer to an account or accounts designated in writing by the Sellers, in the aggregate $3,000,000 in deferred payments (the "Non-Compete Payments"), payable in the amount of $900,000 in cash on each of the first through third anniversary, and $300,000 in cash four months after the third anniversary, of the Closing; provided, however, that the Buyer may defer commencement of payment of the Non- Compete Payments until the date in which the settlement or judgment in the Arkansas Litigation becomes final and is not subject to further appeal. 11. Survival. 11.1 Survival of Representations and War- ranties of the Sellers After Closing. Notwithstanding any right of Mistic and its Affiliates fully to investigate the affairs of the Companies and notwithstanding any knowledge of facts determined or determinable by Mistic and its Affil- iates pursuant to such investigation or right of investiga- tion, Mistic and its Affiliates have the right to rely fully upon the representations, warranties, covenants and agree- ments of the Sellers contained in this Agreement or in any Documents delivered pursuant to this Agreement. All such representations and warranties shall survive the execution and delivery of this Agreement and the Closing hereunder and shall continue in full force and effect for a period of two years after the Closing Date; provided, however, that (i) the representations and warranties of the Sellers contained in Sections 5.1, 5.2, the first sentence of 5.18, 5.28(a)(i), 5.28(b)(i) and 5.29 shall continue in full force and effect indefinitely, (ii) the representations and warranties of the Sellers contained in Sections 5.3, 5.4, 5.24 and 5.33 shall continue in full force and effect for three (3) years, (iii) the representations and warranties of the Sellers contained in Section 5.20 shall continue in full force and effect for a period of five years after the Clos- ing Date, (iv) the representations and warranties of the Sellers contained in Section 5.8 shall continue in full force and effect for six months after any applicable statute of limitations (taking into account any waiver or tolling thereof) with respect to Claims which may arise thereunder or relate thereto shall have run (the representations and warranties referred to in clauses (i), (iii) and (iv) are referred to collectively as the "Basket Exclusions" and the representations and warranties referred to in clause (ii) (other than the representations and warranties referred to in Section 5.24) are referred to collectively as the "Partial Basket Exclusions"), and (v) any covenants or agreements contained herein or made pursuant hereto by the Sellers shall survive until fully discharged. To the extent any survival period specified herein exceeds an applicable statute of limitation, the provisions of this Section 11.1 shall constitute a waiver by the Sellers of such statute of limitation. 11.2 Survival of Representations and War- ranties of Mistic After Closing. The Sellers have the right to rely fully upon the representations, warranties, covenants and agreements of Mistic contained in this Agree- ment or in any Document delivered pursuant to this Agree- ment. All such representations and warranties shall survive the execution and delivery of this Agreement and the Closing hereunder and shall continue in full force and effect for a period of two years after the Closing Date; provided, however, that (i) the representations and warranties of Mistic contained in Sections 6.1 and 6.2 shall continue in full force and effect indefinitely, and (ii) any covenants or agreements contained herein or made pursuant hereto by Mistic shall survive until fully discharged. To the extent any survival period specified herein exceeds an applicable statute of limitation, the provisions of this Section 11.2 shall constitute a waiver by Mistic of such statute of limitation. 12. General Indemnification. 12.1 Obligation of the Sellers to Indemnify. Subject to the limitations contained in Article 11, the Sellers jointly and severally agree to indemnify, defend and hold harmless Mistic and the Buyer (and their respective directors, officers, employees, Affiliates, successors and assigns) from and against all losses, liabilities, damages, fines, deficiencies, demands, claims, actions, judgments or causes of action, assessments, costs or expenses (including, without limitation, interest, penalties and reasonable attorneys' fees and disbursements, including, without limitation, reasonable attorneys' fees and disbursements incurred by the Indemnitee (as defined in Section 12.3.1) in any action or proceeding between the Indemnitee and the Indemnifying Party (as defined in Section 12.3.1) or between the Indemnitee and any third party or otherwise) ("Losses") based upon, arising out of or otherwise in respect of (a) any inaccuracy in or any breach of any representation, warranty, covenant or agreement of the Sellers contained in this Agreement or in any Documents delivered pursuant to this Agreement and (b) the Excluded Liabilities. Any indemnification payments made pursuant to this Section 12.1 shall be deemed an adjustment to the Purchase Price and the Adjusted Purchase Price, thereby reducing such Purchase Price and Adjusted Purchase Price by the amount of such indemnification payments. The Buyer acknowledges that it will not be entitled to indemnification for liabilities based upon, arising out of or otherwise in respect of any breach of the representation of the Sellers contained in Section 5.9 that none of the Sellers is in violation of franchise relationship, registration and disclosure, and business opportunity laws and special industry statutes, to the extent that the Buyer is assuming such liabilities pursuant to Section 2.1(e). 12.2 Obligation of the Buyer to Indemnify. Subject to the limitations contained in Article 11, Mistic and the Buyer agree to indemnify, defend and hold harmless the Sellers (and the Companies' respective directors, officers, employees, Affiliates, successors and assigns) from and against all Losses based upon, arising out of or otherwise in respect of (a) any inaccuracy in or any breach of any representation, warranty, covenant or agreement of Mistic and the Buyer contained in this Agreement or in any Documents delivered pursuant to this Agreement, (b) the Assumed Liabilities and (c) any liability relating to the Business or the Acquired Assets that is incurred or accrues after the Closing Date, other than as a result of (i) actions taken by the Sellers or their Affiliates after the Closing Date and (ii) any inaccuracy in or any breach of any representation, warranty, covenant or agreement of the Sellers contained in this Agreement or in any Documents delivered pursuant to this Agreement. 12.3 Notice and Opportunity to Defend. 12.3.1 Notice of Asserted Liability. Promptly after receipt by any party hereto (the "Indem- nitee") of notice of any demand, claim or circumstances which, with the lapse of time, would or might give rise to a claim or the commencement (or threatened commencement) of any action, proceeding or investigation (an "Asserted Liability") that may result in a Loss, the Indemnitee shall give written notice thereof (the "Claims Notice") to any other party or parties obligated to provide indemnification pursuant to Section 12.1 or 12.2 (the "Indemnifying Party"). The Claims Notice shall describe the Asserted Liability in reasonable detail, and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnitee. 12.3.2 Opportunity to Defend. Subject to the limitations set forth in this Section 12.3, the Indemnifying Party may elect to compromise or defend, at its own expense and by its own counsel, any Asserted Liability. If the Indemnifying Party elects to compromise or defend such Asserted Liability, it shall within 30 days (or sooner, if the nature of the Asserted Liability so requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the compromise of, or defense against, such Asserted Liability. If the Indemnifying Party elects not to compro- mise or defend the Asserted Liability, fails to notify the Indemnitee of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indem- nitee may pay, compromise or defend such Asserted Liability. Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee may settle or compromise any claim over the objection of the other; provided, however, that consent to settlement or compromise shall not be unreason- ably withheld or delayed. In any event, the Indemnitee and the Indemnifying Party may participate, at their own expense, in the defense of such Asserted Liability. If the Indemnifying Party chooses to defend any claim, the Indem- nitee shall make available to the Indemnifying Party any books, records or other Documents within its control that are necessary or appropriate for such defense. 12.3.3 Disputes with Customers, Distri- butors, Co-packers, Sales Agents or Suppliers. Anything in Section 12.3.2 to the contrary notwithstanding, in the case of any Asserted Liability by any customers, distributors, co-packers, sales agents or suppliers of any of the Com- panies with respect to the Business in connection with which Mistic or the Buyer may make a claim against the Sellers for indemnification pursuant to Section 12.1, Mistic or the Buyer shall give a Claims Notice with respect thereto but, unless Mistic or the Buyer and the Indemnifying Party other- wise agree, Mistic or the Buyer shall have the exclusive right at its option to defend, at its own expense, any such matter, subject to the duty of Mistic and the Buyer to consult with the Indemnifying Party and its attorneys in connection with such defense and provided that no such matter shall be compromised or settled by the Buyer without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party shall have the right to recommend in good faith to the Buyer proposals to compromise or settle claims brought by a customer, distributor, co-packer, sales agent or supplier, and Mistic and the Buyer agree to present such proposed compromises or settlements to such customer, distributor, co-packer, sales agent or supplier. All amounts required to be paid in connection with any such Asserted Liability pursuant to the determination of any Governmental Body, and all amounts required to be paid in connection with any such compromise or settlement consented to by the Indemnifying Party, shall be borne and paid by the Indemnifying Party. The parties agree to cooperate fully with one another in the defense, compromise or settlement of any such Asserted Liability. 12.4 Limitations on Indemnification. The indemnification provided for in Sections 12.1(a) and 12.2(a) shall be subject to the following limitations: (a) The Sellers shall not be obligated to pay any amounts for indemnification under Section 12.1(a) for Losses based upon, arising out of or otherwise in respect of any inaccuracy in or any breach of any represen- tation or warranty contained in Article 5 (other than as provided in clauses (b), (c), (d) and (e) of this Section 12.4) until the aggregate amounts for indemnification of such Losses plus any Losses under the Basket Exclusions, the Partial Basket Exclusions, Section 5.24 plus amounts, if any, applied pursuant to Section 12.4(b)(ii) equal $750,000 (the "Basket Amount"), whereupon the Sellers shall be obligated to pay all such amounts for indemnification in excess of the Basket Amount and any such indemnification payment with respect thereto shall be limited to $15,000,000 (the "Cap"). (b) The Sellers shall not be obligated to pay any amounts for indemnification under Section 12.1(a) for Losses based upon, arising out of or otherwise in respect of any inaccuracy in or any breach of any representation or warranty contained in Sections 5.14, 5.15 and 5.19 until the aggregate amounts for indemnification of such Losses equal $200,000, whereupon the Sellers shall apply all such amounts for indemnification (excluding the first $200,000) against the Basket Amount set forth in Section 12.4(a). Any such indemnification payment with respect thereto shall be limited to the Cap set forth in Section 12.4(a). (c) The Sellers shall not be obligated to pay any amounts for indemnification under Section 12.1(a) for Losses based upon, arising out of or otherwise in respect of any inaccuracy in or any breach of any represen- tation or warranty contained in Section 5.24 until the amount for indemnification for any Loss individually equals $50,000 or the amounts for indemnification for all such Losses in the aggregate equals $250,000, whereupon the Sellers shall be obligated to pay all such amounts in excess of the $50,000 and $250,000. Any such indemnification payment with respect thereto shall be limited to the Intermediate Cap set forth in Section 12.4(d). (d) The Sellers shall not be obligated to pay any amounts for indemnification under Section 12.1(a) for Losses based upon, arising out of or otherwise in respect of any inaccuracy in or any breach of any of the Partial Basket Exclusions until the aggregate amounts for indemnification of such Losses equal $200,000 (the "Partial Basket Exclusion Amount"), whereupon the Sellers shall be obligated to pay all such amounts for indemnification in excess of the Partial Basket Exclusion Amount and any such indemnification payment with respect thereto shall be limited to $40,000,000 ("Intermediate Cap"). (e) The Buyer shall be entitled to receive the full amount for indemnification under Section 12.1(a) for Losses based upon, arising out of or otherwise in respect of any inaccuracy in or any breach of any of the Basket Exclusions; provided, however, in no event shall the Sellers have any liability for indemnification under this Agreement in an aggregate amount in excess of the Adjusted Purchase Price. (f) The Sellers shall be entitled to received the full amount for indemnification under Sec- tion 12.2(a) for Losses based upon, arising of or otherwise in respect of any inaccuracy in or breach of any represen- tation or warranty contained in Article 6; provided, however, in no event shall Mistic or the Buyer have any liability for indemnification under this Agreement in an aggregate amount in excess of the Adjusted Purchase Price. 12.5 Set-off Rights. The Sellers agree that the Buyer shall have the right, but not the obligation, to set-off against its payment obligations for the Non-Compete Payments, payments under the Consulting Agreement and the Product and Royalty Agreement (the "Royalty Payments"), payments under the Note (the "Note Payments") and any of its payment obligations after the Closing in connection with the adjustment to the Purchase Price pursuant to Section 3.2 (together with the Non-Compete Payments, the Royalty Payments and the Note Payments, the "Set-off Payments") (i) the full amount of any Losses required to be paid by the Sellers pursuant to Section 12.1 if such Losses are not otherwise paid within 30 days after the Buyer has requested payment and (ii) any of the Sellers' payment obligations after the Closing in connection with the adjustment to the Purchase Price pursuant to Section 3.2; provided, however, that the Buyer shall be obligated to set-off, prior to seeking any payment directly from the Sellers, against the Set-Off Payments, any and all claims the Buyer may have against the Sellers relating to the Arkansas Litigation Costs, other than the Buyer Arkansas Payment. If the Buyer elects to exercise its set-off rights hereunder, it will give to the Sellers written notice of such election which includes the amount to be set-off, and upon giving of such notice the amount of obligations for the Non-Compete Payments, the Royalty Payments and the Note Payments shall automatically be reduced by the amount set forth in such notice. In the event there is a final determination by a court of competent jurisdiction that the Buyer was not entitled to indemnification under this Article 12 with respect to the set-off amount, the Buyer shall promptly thereafter repay to the Sellers all such amounts which are so determined to have been incorrectly set-off plus interest at a rate of 9% per annum. For purposes of this Section 12.5, a determination shall be final if any and all appeals therefrom shall have been resolved or if 30 days shall have passed from the rendering of such determination (or of any determination on appeal therefrom) and no party shall have commenced any such appeal therefrom. 13. [Intentionally Omitted.] 14. Miscellaneous. 14.1 Certain Definitions. (a) As used in this Agreement, the following terms have the following meanings: (i) "Actual Knowledge" with respect to the Sellers, means the knowledge of Umbach and any of the other officers, directors or shareholders of the Companies, after consultation with the Key Employees, but without any other independent investigation; and "Actually Known" has a correlative meaning. (ii) "Affiliate" means, with respect to any Person, any other Person controlling, controlled by or under common control with, such Person or the parents, spouse, siblings, siblings of spouse, children, or beneficiaries of, such Person. (iii) "Business Combination" means any merger, consolidation or combination to which any of the Sellers is a party, any sale, dividend, split, recapitalization or other disposition of capital stock or other equity interest of any of the Companies or any sale, dividend or other disposition of all or substantially all of the assets and properties of any of the Companies or any significant financing or refinancing by any of the Com- panies. (iv) "Documents" means all documents, Contracts, instruments, certificates, notices, consents, affidavits, letters, telegrams, telexes, statements, sched- ules (including Schedules to this Agreement), exhibits (including Exhibits to this Agreement) and any other papers whatsoever. (v) "Employee Plan" means any employ- ment, severance or similar contract or arrangement (whether or not written) or any plan, policy, fund, program or con- tract or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option, or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (includ- ing any self-insured arrangements) health or medical benefits, disability benefits, worker's compensation, sup- plemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensa- tion, pension, health, medical or life insurance or other benefits), including, without limitation, each "employee benefit plan" within the meaning of Section 3(3) of ERISA that (1) is entered into, maintained, administered or contributed to, as the case may be, by any of the Sellers or their respective Affiliates and (2) covers any current or former employee of the Business. (vi) "Environmental Laws" means all federal, state, local and foreign laws, regulations and codes, as well as orders, decrees, judgments or injunctions issued, promulgated, approved or entered thereunder relating to pollution, protection of the environment or health and safety. (vii) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder. (viii) "ERISA Affiliate" with respect to any entity, means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. (ix) "FDA" means the U.S. Food & Drug Administration. (x) "Knowledge" with respect to the Sellers, means the knowledge of Umbach and any of the other officers, directors or shareholders of the Companies, after reasonable investigation; and "Knows" has a correlative meaning. (xi) "Lien" means any lien, pledge, mortgage, security interest, claim, lease, charge, option, right of first refusal, easement, servitude, transfer restriction under any shareholder or similar agreement, encumbrance or any other restriction or limitation what- soever. (xii) "Multiemployer Plan" means each Employee Plan that is a multiemployer plan, as defined in Section 3(37) of ERISA. (xiii) "Person" means any individual, corporation, partnership, firm, joint venture, association, joint-stock companies, trust, unincorporated organization, Governmental Body or other entity. (xiv) "Taxes" mean all federal, state, county, local, foreign and other taxes of any kind whatsoever (including, without limitation, income, profits, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, license, stamp, environmental, with- holding, employment, unemployment compensation, payroll related and property taxes, import duties and other govern- mental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustment related to any of the foregoing. (xv) "Transaction Sales Taxes" means any transfer, sales or use Taxes payable in connection with the sale and purchase of the Acquired Assets and/or the consummation of the Contemplated Transactions. (xvi) "USDA" means the U.S. Department of Agriculture. (xvii) "Wine Division Net Equity" means (A) the sum of cash, accounts receivable, inventory and fixed assets less (B) the sum of accounts payable and accrued liabilities, in each case of the Companies relating to the Companies' alcoholic beverage business as of the July 31, 1995, as reflected on the Wine Division Balance Sheet. (xviii) "Wine Division Net Profit or Net Loss" means the net profit or net loss of the Companies relating to the Companies' alcoholic beverage business for the period from June 1, 1995 through July 31, 1995, as reflected on the Wine Division Income Statement. (b) The following capitalized terms are defined in the following Sections of this Agreement: Term Section Acquired Assets 1.1 Actual Knowledge 14.1(a) Adjusted Purchase Price 3.1 Adjustment Statement 3.2(a) Affiliate 14.1(a) Affiliate Liabilities 2.2(b) Agent 14.2(b) Arkansas Litigation 2.1(c) Arkansas Litigation Cost 2.1(c) Arkansas Litigation Letter of Credit 7.9 Asserted Liability 12.3.1 Assumed Liabilities 2.1 Audited Financials 5.6 Balance Sheet 5.6 Balance Sheet Date 5.6 Bank 2.1(b) Bank Debt 2.1(b) Basket Amount 12.4(a) Basket Exclusions 11.1 Best Flavors Preamble Broker 7.5 Business Preamble Business Combination 14.1(a) Buyer Preamble Buyer Arkansas Payment 2.1(c) Buyer Sales Tax Audit Payment 2.1(d) Buyer Transaction Sales Tax Payment 2.1(d) Cap 12.4(a) Claims 5.11 Claims Notice 12.3.1 Closing 1.1 Closing Date 1.1 Companies Preamble Condition of the Business 5.4 Consulting Agreement 8.6 Confidential Information 10.1.2 Contemplated Transactions 1.1 Contracts 5.10 Credit Agreement 2.1(b) D&T 7.2 Documents 14.1(a) Employee Plan 14.1(a) ERISA 14.1(a) ERISA Affiliate 14.1(a) Excess Amount 3.2(a) Excluded Assets 1.2 Excluded Liabilities 2.2 Environmental Laws 14.1(a) FDA 14.1(a) Final Date 13.1(i) GAAP 5.6 GT 5.6 Governmental Body 5.9(a) Greenwald Debt 7.6 HSR Act 5.31 Indemnifying Party 12.3.1 Indemnitee 12.3.1 Intellectual Property 1.1(i) Interim Balance Sheet 5.6 Interim Financials 5.6 Intermediate Cap 12.4(d) JVWNY Preamble Key Employees 7.7(a) Knowledge 14.1(a) Laws 5.9(a) Leases 5.13(a) Liabilities 5.20 Lien 14.1(a) Losses 12.1 Mistic Preamble Multiemployer Plan 14.1(a) Nature's Own Preamble Necessary Consents 8.2 Non-Compete Payments 10.6 Note 3.3 Note Payments 12.5 Nubian 1.1(b) Orders 5.9(a) Partial Basket Exclusion Amount 12.4(d) Partial Basket Exclusions 11.1 Permits 5.9(b) Person 14.1(a) Product and Royalty Agreement 8.7 Product Compliance 5.9(c) Products 5.9(c) Proposed Contracts 5.12(a) Purchase Price 3.1 Representatives 7.2 Required Consents 5.10 Restricted Period 10.1.1 Restrictive Covenants 10.2 Royalty Payments 12.5 S&D 1.1(b) Sellers Preamble Set-off Payments 12.5 Special Information 10.1.2 State Food Authorities 5.9 Stub Tax Period 7.11(b) Tangible Property 1.1(d) Taxes 14.1(a) Transaction Sales Taxes 14.1(a) Transferred Employees 7.7(a) Umbach Preamble USDA 14.1(a) WARN 7.7(c) Wine Division Balance Sheet 3.2(a) Wine Division Income Statement 3.2(a) Wine Division Net Equity 14.1(a) Wine Division Net Profit or Net Loss 14.1(a) 14.2 Consent to Jurisdiction; Service of Process. (a) Any legal action, suit or proceeding arising out of or relating to this Agreement or the Contemplated Transactions may be instituted in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceed- ing, any claim that it is not subject personally to the jurisdiction of such court, that the action, suit or pro- ceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement, the Consulting Agreement, the Product and Royalty Agreement or the subject matter hereof may not be enforced in or by such court on jurisdictional grounds. (b) Each Seller hereby appoints John P. Napoli (the "Agent"), at the Agent's offices of Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York 10022, or his office at such other address in New York, New York, as he hereafter furnishes to the other parties, as such party's authorized agent to accept and acknowledge on such party's behalf service of any and all process that may be served in any such action, suit or proceeding. Any and all service of process in any such action, suit or proceeding shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided, or by personal service on the Agent with a copy of such process mailed to such party by first class mail or registered or certified mail, return receipt requested, postage prepaid. The service of process shall be deemed complete when mailed by registered or certified mail or by any other means of mail that requires a signed receipt, or if given by personal service when the party or the Agent is personally served. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction. 14.3 Notices. Any notice or other communi- cation required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, regis- tered or overnight express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, or if telegraphed, telexed or sent by facsimile transmission on the date the receipt of the transmission is confirmed or, if mailed by overnight mail, the business day after the date of deposit with a reputable overnight courier service, or if mailed by non-overnight certified or registered mail, five days after the date of deposit in the United States mails, as follows: (i) if to Mistic or the Buyer to: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, New York 10801 Attention: Ernest J. Cavallo Facsimile: (914) 637-0020 with a copy to: Triarc Companies, Inc. 900 Third Avenue New York, NY 10022 Attention: Executive Vice President and General Counsel Facsimile: (212) 230-3216 and to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Neale M. Albert, Esq. Facsimile: (212) 757-3990 (ii) if to the Sellers to: 102 Overlook Drive Greenwich, CT 06830 Attention: Joseph Umbach Facsimile: (203) 869-2797 with a copy to: Pryor, Cashman, Sherman & Flynn 410 Park Avenue New York, New York 10022 Attention: John P. Napoli, Esq. Facsimile: (212) 326-0806 Any party may by notice given in accordance with this Sec- tion to the other parties designate another address or Person for receipt of notices hereunder. 14.4 Entire Agreement. This Agreement (including the Exhibits and Schedules) and any collateral agreements executed in connection with the consummation of the Contemplated Transactions contain the entire agreement among the parties with respect to the purchase of the Acquired Assets and supersede all prior agreements, written or oral, with respect thereto. 14.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by Mistic or the Buyer and the Sellers or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement or any Documents delivered pursuant to this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement or any Documents delivered pursuant to this Agreement (or in any other agreement between the parties) as to which there is no inaccuracy or breach. 14.6 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State. 14.7 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal repre- sentatives. This Agreement may not be assigned by the Sellers. This Agreement may be assigned by Mistic in whole or in part to one or more of its Affiliates or designees and to any sources providing Mistic and/or the Buyer with the financing to consummate the Contemplated Transactions. 14.8 Variations in Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. 14.9 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together consti- tute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 14.10 Exhibits and Schedules. The Exhibits and Schedules are a part of this Agreement as if fully set forth herein. All references herein to Sections, Exhibits and Schedules shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. 14.11 Headings. The headings in this Agree- ment are for reference only, and shall not affect the inter- pretation of this Agreement. 14.12 Severability of Provisions. If any provision or any portion of any provision of this Agreement, or the application of any such provision or any portion thereof to any Person or circumstance, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, and the application of such provision or portion of such provision as is held invalid or unenforceable to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. 14.13 Cooperation. The Buyer and the Sellers shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as a part of their respective obligations under this Agreement including but not limited to the obtaining of all Necessary Consents. Each of the Sellers and the Buyer shall take such actions, and shall execute and deliver to the other party such further documents as such party shall reasonably request to ensure, complete and evidence the full and effective transfer of the Acquired Assets to the Buyer or to otherwise consummate the Contemplated Transactions, including all documents necessary or desirable to record the transfer of the Intellectual Property. In addition, the Buyer shall afford the Sellers or their representatives, upon prior written notice, at reasonable times, full access to all the books and records of the Business relating to all periods prior to the Closing Date in the possession of the Buyer that are necessary in order to enable the Sellers to prepare their tax returns for periods ending prior to the Closing Date or to respond to a tax audit relating to a period ending on or prior to the Closing Date or for any other legitimate business purpose relating to such period. The Buyer shall cause their employees to cooperate and assist the Sellers or their representatives in locating information and responding to any information requests issued by any Governmental Body. The Buyer shall permit the Sellers or their representatives to copy the records set forth on Schedule 14.13 relating to periods ending on or prior to the Closing Date, at the Sellers' expense and shall cause their employees to cooperate and assist Sellers or their representatives in locating information for copying. The Buyer agrees to retain such records consistent with the past practice of the Business for a five (5) year period after the Closing Date. 14.14 No Third Party Beneficiaries. This Agreement shall not, and shall not be deemed to, confer any rights or remedies upon any Person other than the Sellers, Mistic and the Buyer and their respective successors and permitted assigns. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. MISTIC BRANDS, INC. By:ERNEST J. CAVALLO ---------------------------- Name: Ernest J. Cavallo Title: President and CFO JOSEPH UMBACH ------------------------------- JOSEPH UMBACH JOSEPH VICTORI WINES, INC. By:JOSEPH UMBACH ---------------------------- Name: Joseph Umbach Title: President and CFO BEST FLAVORS, INC. By:JOSEPH UMBACH ---------------------------- Name: Joseph Umbach Title: President and CFO NATURE'S OWN BEVERAGE COMPANY By:JOSEPH UMBACH ---------------------------- Name: Joseph Umbach Title: President and CFO Exhibit A PROMISSORY NOTE $1,000,000.00 August 9, 1995 FOR VALUE RECEIVED, the undersigned, MISTIC BRANDS, INC., a Delaware corporation ("Mistic"), hereby promises to pay to the order of JOSEPH UMBACH, an individual ("Umbach"), the sum of One Million Dollars ($1,000,000.00) payable in eight quarterly installments of $125,000.00 each, beginning three months after the date hereof and continuing every three months thereafter until the eight installments have been paid. No interest shall accrue under this Note. All amounts payable hereunder shall be payable in lawful money of the United States of America by delivery of a check to Umbach at 102 Overlook Drive, Greenwich, CT 06830 or at such other place as Umbach shall designate in writing. Any payments due to Umbach hereunder shall be subject to a right (but not an obligation) of set-off by Mistic pursuant to Section 12.5 of the Asset Purchase Agreement ("Asset Purchase Agreement") made as of August 9, 1995, by and among Mistic, on the one hand, and Umbach, Joseph Victori Wines, Inc., a New York corporation, Best Flavors, Inc., a Nevada corporation, and Nature's Own Beverage Company, a Delaware corporation, on the other hand. If Mistic fails to pay any installment under this Note when due and payable, such unpaid sum shall thereafter bear interest at a rate equal to 9% per annum until such amount has been paid in full. If Mistic fails to pay any installment within thirty days after it is due, Umbach may declare all unpaid installments due and payable, except that Umbach shall not be entitled to declare such installments due and payable if Mistic has elected to pursue its right of set-off pursuant to Section 12.5 of the Asset Purchase Agreement. In the event of a final determination by a court of competent jurisdiction that Mistic was not entitled to set-off such amounts, Mistic shall have thirty days to repay the Sellers all unpaid installments which are so determined to have been incorrectly set-off plus the 9% interest referred to above. If Mistic fails to pay such amounts within such thirty days, Umbach shall be entitled to declare all unpaid installments due and payable. If Mistic voluntarily files for bankruptcy or is involuntarily placed into bankruptcy by a creditor of Mistic, all unpaid installments shall be immediately due and payable. This Note may only be amended or supplemented at any time by the mutual written consent of Mistic and Umbach. This Note shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. IN WITNESS WHEREOF, this Note is executed as of the date set forth above. MISTIC BRANDS, INC. By: _________________________ Name: Title: Exhibit B SEVERANCE PAYMENT SCHEDULE FOR EMPLOYEES TERMINATED BY BUYER WITHOUT CAUSE WITHIN 12 MONTHS FROM CLOSING Group I Vice Presidents, Directors and Sales and Brand Managers reporting directly to the President (10 people) : Less than one (1) year of service (2 people): - four (4) weeks severance pay Over one (1) year of service (8 people): - eight (8) weeks severance pay plus - two (2) weeks severance pay for each year of service* and, - if after twelve (12) weeks employee does not have employment, severance pay will continue until employment is found up to a maximum of an additional twelve (12) weeks provided employee has displayed a good faith effort to seek employment. Group II All other employees (138 people): Less than one (1) year of service: - two (2) weeks severance pay Over one (1) year of service: - two (2) weeks severance pay plus - two (2) weeks severance pay for each year of service*. _____ *1 week for each completed 6 months of service. Exhibit C [LETTERHEAD OF PRYOR, CASHMAN, SHERMAN & FLYNN] August 9, 1995 Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, NY 10801 Re: Joseph Victori Wines, Inc., Best Flavors, Inc., Natures's Own Beverage Company and Joseph Umbach Ladies and Gentlemen: We have acted as counsel to Joseph Victori Wines, Inc., a New York corporation ("JVWNY"), Bet Flavors, Inc., a Nevada corporation ("Best Flavors"), Nature's Own Beverage Company, a Delaware corporation ("Nature's Own") (JVWNY, Best Flavors and Nature's Own are collectively referred to as the "Companies") and Joseph Umbach ("Umbach" and collectively with the Companies, the "Sellers"), in connection with the transactions contemplated by that certain Asset Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), between the Sellers and Mistic Brands, Inc., a Delaware corporation ("Mistic"). This opinion is being delivered to you pursuant to Section 8.3 of the Purchase Agreement. Capitalized terms not otherwise defined herein shall have the respective meaning set forth in the Purchase Agreement. In connection with this opinion, we have examined originals or copies certified or otherwise reproduced to our satisfaction, of such records, documents or other instruments as in our judgment are necessary or appropriate to enable us to render the opinions hereinafter expressed, including, without limitation, the following, each of which are dated as of the date hereof (collectively, the "Documents"); (i) The Purchase Agreement; (ii) The Consulting Agreement; (iii) The Product and Royalty Agreement; (iv) The Bill of Sale, Assignment and Transfer from the Sellers to Mistic; (v) The Assignment of Contracts between Mistic and the Sellers; (vi) The Assignments of Intellectual Property from the Sellers to Mistic; (vii) The Assignment of Leases from the Sellers to Mistic; and (viii) The Assumption Agreement between the Sellers and Mistic. In addition, we have examined such documents, corporate records and other instruments as we have deemed necessary for the purpose of rendering this opinion, including, without limitation, the certificate of incorporation and the by-laws of each of the Companies. In such examination, we have assumed the genuineness of all signatures, the legal competence of the signers, the authenticity of all documents submitted to us as originals and the conformity with originals of all documents submitted to us a certified, photostatic, reproduced or conformed copies. As to any facts material to this opinion, we have, to the extent that such facts were not independently established, relied upon certificates of public officials and statements and certificates of officers of the Companies and Umbach and upon the factual matters contained in the representations and warranties of the Sellers made in or pursuant to the Documents. Based upon the foregoing, and subject to the assumptions, exceptions and qualifications set forth herein, we are of the opinion that: 1. Each of the Companies (i) is a corporation validly organized and existing in good standing under the laws of the state of its incorporation and (ii) has the requisite corporate power and authority to carry on the Business as it is now being conducted and to own the properties used in the conduct of the Business. 2. Each of the Companies is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction set forth on Exhibit A. 3. Each of the Companies has the requisite corporate power and authority to execute and deliver each of the Documents to which it is a party and perform fully its obligations under such Documents; Umbach has the requisite power and authority to execute and deliver each of the Documents to which he is a party and to perform fully his obligations under such Documents. 4. The execution, delivery and performance by each of the Companies of each of the documents to which each Company is a party have been duly authorized by all necessary corporate action. 5. Each of the Documents to which each of the Sellers is a party (assuming the valid authorization, execution and delivery of each of the Documents by Mistic) is the valid and binding obligation of each of the Sellers, enforceable against them in accordance with the terms of the Documents. 6. the execution and delivery by each of the sellers of the Purchase Agreement, the consummation of the Contemplated Transactions and the performance by each of the Sellers of the Purchase Agreement will not conflict with or result in any breach or violation of any of the terms and conditions of, or default under, the Articles of Incorporation or By-laws of any of the Companies. 7. The execution, delivery and performance of the Documents, and the consummation of the Contemplated Transactions will not (i) require the Sellers to obtain any consent, approval or action of, or make any filing with, or give any notice to, any person, except the Required Consents set forth on Schedule 5.10; (ii) if the Required consents are obtained, violate, conflict with or result in the breach of any of the terms of, result in a modification of the effect of, otherwise cause the termination of or give any other contracting party the right to terminate or any other right, or constitute (or with notice or lapse of time or both constitute) a default (by way of substitution, novation or otherwise) under any of the Contracts listed on Schedules 5.12 or 5.13 of the Purchase Agreement, which violation, conflict, breach, modification, termination, termination right or other right, or default could have a material adverse effect on the Condition of the Business, or result in the creation of any Lien upon the properties of the Companies pursuant to the terms of any such Contract; (iii) if the Required consents are obtained, to our knowledge, violate any Order of any Governmental Body against, or binding upon, the Companies or upon their respective securities, properties or business; (iv) if the Required Consents are obtained, violate any laws of the States of New York, Delaware and Nevada or of the federal laws of the Untied States or any Governmental Body, which violation could have a material adverse effect on the Condition of the Business; or (v) if the Required Consents are obtained, violate or result in the revocation or suspension of any Permit, which violation, revocation or suspension could have a material adverse effect on the Condition of the Business. 8. The instruments of conveyance and transfer of the Acquired Assets delivered to Mistic at the Closing are in proper form under New York, Nevada and Delaware law to fully convey the interests purported to be conveyed thereunder. 9. To our knowledge, except as set forth on Schedules 5.11 and 5.17 of the Purchase Agreement, there are no Claims pending or threatened by or against the Sellers that would materially and adversely affect the consummation of the Contemplated Transactions. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: (a) The enforceability of the documents may be: (i) subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws now or hereafter in effect relating to or affecting creditors' rights or remedies generally; and (ii) subject to general principles of equity, including without limitation, the availability of specific performance, regardless of whether considered in a proceeding in equity or at law; (b) We express no opinion with respect to: (i) the enforceability of forum selection clauses in the federal courts and (ii) the enforceability of clauses selecting forums outside of the State of New York; (iii) the discretion of the court before which any proceeding may be brought; (iv) the enforceability of any choice of law provision and (v) rights to indemnification and contribution which may be limited by applicable law or equitable principles. (c) We express no opinion with respect to the ownership of the Trademarks and conveyance of good title to the Trademarks or as to any pending or threatened Claims against that Sellers which have or would have a material adverse effect on the conveyance of the Trademarks. We advise you that we are members only of the Bar of the State of New York and the opinions expressed herein are limited to the laws of the State of New York, the corporate laws of the State of Delaware with respect to which laws we are generally familiar, and the federal laws of the United States. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders thereunder, which are currently in effect. As members of the Bar of the State of New York, we do not purport to be experts on the laws of any other state. We have relied exclusively upon the legal opinion of Lionel, Sawyer & Collins attached hereto as Exhibit B, with respect to all opinions expressed herein with respect to the laws of the State of Nevada. The opinion of Lionel, Sawyer & Collins is in form and substance satisfactory to us and, in our opinion, you are, and we are, justified in relying thereon. This letter speaks only as of its date and applies only to the matters specifically covered by this letter. We expressly disclaim any obligation to supplement this opinion if any applicable laws change after the date of this opinion, or if we become aware of any facts that might change the opinions expressed above after the date of this opinion. This opinion letter is solely for your benefit in connection with the consummation of the Contemplated Transactions and may not be relied upon, quoted, used, circulated or referred to, nor copies hereof delivered to, any other person, except for any financial institutions which is providing financing to Mistic or its Affiliates in connection with the consummation of the Contemplated Transactions. Very truly yours, Exhibit A Foreign Qualifications Joseph Victori Wines, Inc. (a New York corporation): Alabama California Connecticut Florida New Jersey Pennsylvania Nature's Own Beverage Company (a Delaware corporation): New York Best Flavors, Inc. (a Nevada corporation): None Exhibit B [LETTERHEAD OF LIONEL SAWYER & COLLINS] August 9, 1995 Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, New York 10801 Pryor, Cashman, Sherman & Flynn 410 Park Avenue New York, New York 10022-4441 Ladies and Gentlemen: We have acted as special counsel in the State of Nevada to Best Flavors, Inc., a Nevada corporation ("Best Flavors") in connection with that Asset Purchase Agreement (the "Purchase Agreement"), dated as of august 9, 1995, among Mistic Beverage, Inc., a Delaware corporation ("Mistic"), and Joseph Victori Wines, Inc., a New York corporation, Best Flavors, Nature's Own Beverage Company, a Delaware corporation, and Joseph Umbach (collectively, the "Sellers"). This opinion is being furnished to you at the request of Best Flavors in connection with Section 8.3 of the Purchase Agreement. Capitalized terms used herein and not defined shall have the meanings given them in the Purchase Agreement. In rendering this opinion, we have reviewed copies of the following documents (collectively, the "Documents"): 10. the Purchase Agreement; 11. the Bill of Sale, dated as of August 9, 1995, by the Sellers in favor of Mistic; 12. that Assumption Agreement, dated as of August 9, 1995, among the Sellers and Mistic; 13. that Assignment and Assumption of Contracts, dated as of August 9, 1995, among the Sellers and Mistic; 14. that U.S. Trademark Assignment, dated August 9, 1995, by Best Flavors in favor or Mistic; and 15. that Worldwide Trademark Assignment, dated August 9, 1995, by Best Flavors in favor of Mistic. We have also examined originals or copies of such corporate records and certificates of public officials as we have deemed necessary or advisable for purposes of this opinion. We have not reviewed, and express no opinion as to, any instrument or agreement referred to or incorporated by reference in the Documents. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to originals of all copies of all documents submitted to us. We have relied upon the certificates of all public officials and corporate officers with respect to the accuracy of all matters contained therein. Based on the foregoing, and subject to the qualifications and assumptions set forth herein, we are of the opinion that: 1. Best Flavors is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite corporate power and authority to execute and deliver the Documents and to perform fully its obligations under the Documents. 2. The execution, delivery and performance by Best Flavors of the Documents have been duly authorized by al necessary corporate action. 3. A court of the State of Nevada will give effect to the provisions of the Purchase Agreement and the Bill of Sale providing that such documents will be governed by the laws of the State of New York. The opinion expressed in this paragraph is based on information you have supplied as to certain contacts between the Sate of New York and the Contemplated Transactions, including the following: (a) substantial negotiations relating to such transactions have taken place in the State of New York, (b) Best Flavors is executing and delivering the Purchase Agreement and the Bill of Sale in the State of New York as part of the Closing, (c) outside counsel representing many of the parties to the Purchase Agreement and the Bill of Sale in connection with the Contemplated Transactions have their offices in the State of New York and negotiations in connection with such transactions have taken place in certain of their offices, and (d) many of the parties to the Purchase Agreement and the and the Bill of Sale are located in the State of New York. 4. The execution, delivery and performance of the Documents, and the consummation of the Contemplated Transactions, will not (i) require Best Flavors to obtain any consent, approval or action of, or make any filing with or give any notice to, any Nevada Governmental Body, (ii) violate any law of the State of Nevada, or (iii) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both constitute a default under, the Articles of Incorporation or By-Laws of Best flavors. Nothing herein shall be deemed an opinion as to the laws of any jurisdiction other than the State of Nevada. We express no opinion as to whether or not Best flavors has all necessary permits and approvals to conduct its business. This opinion is intended solely for the use of the persons to whom they are addressed in connection with the Contemplated Transactions and, any financial institution which is providing financing to Mistic or its Affiliates in connection with the consummation of the Contemplated Transactions and, any financial institution which is providing financing to Mistic or its Affiliates in connection with the consummation of the Contemplated Transactions in connection with the provision of such financing. It may not be relied upon by any other person or for any other purpose, or reproduced or filed publicly by any person, without the written consent of this firm. Sincerely, LIONEL SAWYER & COLLINS Exhibit D CONSULTING AGREEMENT CONSULTING AGREEMENT made as of August __, 1995, by and between MISTIC BRANDS, INC., a Delaware corporation ("Mistic"), and JOSEPH UMBACH, an individual residing at 102 Overlook Drive, Greenwich, CT 06830 (the "Consultant"). Mistic is engaged in the research, development, formulation, production, marketing and sale of a wide variety of non-alcoholic beverages (the "Business"). Mistic desires to engage the Consultant to provide, and the Consultant desires to provide, the consulting services described herein (the "Consulting Services") with respect to the Business. In consideration of the mutual promises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Engagement of the Consultant. Mistic hereby engages the Consultant to provide the Consulting Services provided for in this Agreement during the Term (as defined in Section 2), and the Consultant hereby accepts such engagement. 2. Term of the Consulting Services. The term (the "Term") of this Agreement shall commence on the date hereof and shall continue for a period of six months. 3. The Consultant's Responsibilities. (a) The Consultant shall provide to Mistic during the Term such Consulting Services with respect to the Business, in the greater New York metropolitan area, as is now being conducted or during the Term may be conducted, as shall be reasonably requested by Mistic, including, without limitation: (i) advice and consultation in the development of new products, product lines, product flavor extensions and product enhancements; (ii) advice as to sources of raw materials and supplies; (iii) advice with respect to trade and other advertising and marketing; (iv) advice and consultation concerning the recruitment of prospective employees and the retention of current employees; (v) advice and consultation regarding reducing operating expenses; and (vi) advice and consultation in dealing with distributors, co-packers, customers and suppliers. (b) The Consultant shall be available to provide the Consulting Services to Mistic during normal business hours during the Term, as reasonably requested by Mistic. Mistic acknowledges that the arrangement between Mistic and the Consultant is a consulting arrangement, not an employment arrangement, and that the Consultant will not be providing the Consulting Services on a full-time basis. (c) The Consultant acknowledges and agrees that all control and authority with respect to all matters relating to the Business shall remain with Mistic and that all decisions with respect thereto shall be made by Mistic. The Consultant shall not have access to Mistic's laboratory without the prior consent of Mistic's Chief Executive Officer or President, which consent may be withheld at their sole discretion and which consent may be revoked at any time. The Consultant shall have no authority to incur any costs or expenses or to make any decisions regarding expenditures of funds on behalf of Mistic or in any way to bind Mistic to any obligation whatsoever without the prior written consent of Mistic in accordance with Section 4(b). The Consultant acknowledges and agrees that any representation by the Consultant to any party to the contrary shall be deemed to be a breach of this Agreement. 4. Consulting Fees and Reimbursements. (a) The Consultant has agreed to provide the Consulting Services provided for herein in order to induce Mistic to (i) purchase the Business pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement"), dated as of August __, 1995, by and among Mistic, on the one hand, and Joseph Victori Wines, Inc., a New York corporation ("JVWNY"), Best Flavors, Inc., a Nevada corporation ("Best Flavors"), Nature's Own Beverage Company, a Delaware corporation ("Nature's Own") (JVWNY, Best Flavors and Nature's Own are referred to collectively as the "Companies") and the Consultant, on the other hand, and (ii) enter in the Product and Royalty Agreement, dated the date hereof, by and between Mistic and the Consultant. The Consultant agrees that he shall not be entitled to receive any additional consulting fees or compensation for the Consulting Services. (b) Mistic shall pay or reimburse the Consultant for all out of pocket expenses reasonably incurred by the Consultant in performance of the Consulting Services; provided that the incurrence of any expense individually, or together with related expenses, that exceeds $1,000 has been consented to by Mistic in writing in advance. Such payment or reimbursement shall be made upon presentation of customary and accurate documentation of such expenses. 5. Restrictions on Other Employment. (a) During the Term, the Consultant shall not accept or render any full-time employment, except that that Consultant may continue his employment with the Companies. (b) The Consultant acknowledges that: (i) Mistic would not have purchased the Business pursuant to the Asset Purchase Agreement but for the agreements and covenants contained in this Agreement and in the Asset Purchase Agreement (including without limitation, the non- compete provisions contained therein); (ii) the Consultant is one of a limited number of persons who developed the Business prior to the closing contemplated by the Asset Purchase Agreement; (iii) the agreements and covenants contained in this Agreement and in the Asset Purchase Agreement (including without limitation, the non-compete provisions contained therein) are essential for an orderly transition of the Business to Mistic; (iv) the Consultant has the means and ability to support himself and his dependents during the Term without needing to accept any full time employment; and (v) the provisions of this Agreement will not impair such ability. 6. Rights and Remedies upon Breach. If the Consultant breaches, or threatens to commit a breach of, any of the provisions of this Agreement, Mistic shall have the following rights and remedies, each of which shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Mistic under the Asset Purchase Agreement and under law or in equity: (a) Specific Performance. The right and remedy to have the provisions of this Agreement specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of such provisions would cause irreparable injury to Mistic, and that money damages would not provide an adequate remedy to Mistic. (b) Accounting. The right and remedy to require the Consultant to account for and pay over to Mistic all compensation, profits, moneys, accruals, increments and other benefits derived or received by the Consultant as a result of any transactions constituting a breach of this Agreement. 7. Nature of Relationship. The Consultant agrees that: (i) he is an independent contractor; (ii) he shall provide the Consulting Services in accordance with such status; and (iii) he shall not hold himself out as an employee, agent or representative of Mistic or any of its affiliates, and shall have no authority to bind Mistic in any respect. 8. Miscellaneous 8.1 Consent to Jurisdiction; Service of Process. (a) Any legal action, suit or proceeding arising out of or relating to this Agreement may be instituted in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court on jurisdictional grounds. (b) Each party further irrevocably submits to the jurisdiction of such court in any such action, suit or proceeding. The Consultant hereby appoints John P. Napoli (the "Agent"), at the Agent's offices of Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York 10022, or his office at such other address in New York, New York, as he hereafter furnishes to the other parties, as such party's authorized agent to accept and acknowledge on such party's behalf service of any and all process that may be served in any such action, suit or proceeding. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided, or by personal service on the Agent with a copy of such process mailed to such party by first class mail or registered or certified mail, return receipt requested, postage prepaid. The service of process shall be deemed complete when mailed if by registered or certified mail or by any other means of mail that requires a signed receipt, or if given by personal service when the party or the Agent is personally served. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction. 8.2 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or overnight express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, or if telegraphed, telexed or sent by facsimile transmission on the date the receipt of the transmission is confirmed or, if mailed by overnight mail, the business day after the date of deposit with a reputable overnight courier service, or if mailed by non-overnight certified or registered mail, five days after the date of deposit in the United States mails, as follows: (A) if to Mistic to: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, New York 10801 Attention: Ernest J. Cavallo Facsimile: (914) 637-0020 with a copy to: Triarc Companies, Inc. 900 Third Avenue New York, NY 10022 Attention: Executive Vice President and General Counsel Facsimile: (212) 230-3216 (B) if to the Consultant to: Joseph Umbach 102 Overlook Drive Greenwich, CT 06830 Facsimile: (203) 869-2797 with a copy to: Pryor, Cashman, Sherman & Flynn 410 Park Avenue New York, New York 10022 Attention: John P. Napoli Facsimile: (212) 326-0806 Any party may by notice given in accordance with this Sec- tion to the other parties designate another address or Person for receipt of notices hereunder. 8.3 Entire Agreement. This Agreement, the Asset Purchase Agreement and the Product and Royalty Agreement made as of the date hereof, between Mistic and the Consultant contain the entire agreement among the parties with respect to the Consulting Services to be rendered to Mistic and supersede all prior agreements, written or oral, with respect thereto. 8.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by Mistic and the Consultant or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement as to which there is no inaccuracy or breach. 8.5 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State. 8.6 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal repre- sentatives. This Agreement may not be assigned by the Consultant. This Agreement may be assigned by Mistic in whole or in part (i) to Mistic's direct parent, (ii) to Royal Crown Company, Inc., a Delaware corporation, (iii) to any sources providing Mistic with the financing to consummate the Contemplated Transactions (as defined in the Asset Purchase Agreement) or (iv) in connection with a transfer of all or substantially all of the Business, to one or more of Mistic's affiliates or designees. 8.7 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 8.8 Sections. All references herein to Sections shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. 8.9 Headings. The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement. 8.10 Severability of Provisions. If any provision or any portion of any provision of this Agreement, or the application of any such provision or any portion thereof to any person or circumstance, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, and the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. 8.11 No Third Party Beneficiaries. This Agreement shall not, and shall not be deemed to, confer any rights or remedies upon any person other than Mistic and the Consultant and their respective successors and permitted assigns. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. MISTIC BRANDS, INC. By:___________________________ Name: Title: ___________________________ Joseph Umbach Exhibit E PRODUCT AND ROYALTY AGREEMENT PRODUCT AND ROYALTY AGREEMENT made as of August 9, 1995 by and between MISTIC BRANDS, INC., a Delaware corporation ("Mistic") and JOSEPH UMBACH, an individual residing at 102 Overlook Drive, Greenwich, CT 06830 ("Umbach"). Mistic is engaged in the research, development, formulation, production, marketing and sale of a wide variety of non-alcoholic beverages (the "Business"). Mistic desires to engage Umbach to develop, and Umbach desires to accept the engagement to develop, products, product lines, product flavor extensions and product enhancements for the Business, as is now being conducted or in the future may be conducted (collectively, the "Products"). In consideration of the mutual promises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Engagement of Umbach. Mistic hereby engages Umbach to develop Products for Mistic during the Term (as defined in Section 2) and Umbach hereby accept such engagement. Mistic acknowledges that Umbach has no obligation to develop any Products during the Term. 2. Term. The term (the "Term") of this Agreement shall commence on the date hereof and shall continue until the third anniversary of the date hereof. Each three-month and twelve-month period commencing on the date hereof during the Term shall constitute and hereafter be referred to as a "Quarter" and an "Annual Period," respectively. 3. Qualified Products. Umbach shall be entitled to receive Royalty Payments (as defined in Section 6) in accordance with the terms of Section 6 with respect to the Products set forth on Schedule A annexed hereto (the "Schedule A Products") and any other Products (the "New Products") for which Umbach has submitted a proposal (the "Proposal") to Mistic and the Proposal has been approved by Mistic in writing, in its sole discretion. The Schedule A Products and the New Products are collectively referred to herein as the "Qualified Products." Any product flavor extensions under current Royal Mistic product lines shall not be deemed to be a Qualified Product. 4. Proposals. Umbach may submit Proposals for New Products to Mistic in writing. Each Proposal shall set forth the specific details for the New Product, including, without limitation, the (i) formulation, (ii) packaging, (iii) labeling, (iv) trademarks, (v) positioning of the proposed New Product and (vi) business rationale. Upon Mistic's receipt of a Proposal, Mistic may request that Umbach provide additional information concerning such Proposal. Within 30 days after Mistic has received the Proposal, or if Mistic has requested additional information, within 30 days after Mistic has been furnished with the requested information, Mistic will inform Umbach in writing whether Mistic has approved such Product for distribution, which approval may be withheld by Mistic in its sole discretion. Mistic retains the right to refuse to distribute any Products developed, discovered or conceived by Umbach during the Term. 5. Mistic and RC Products. Umbach acknowledges and agrees that Mistic, Royal Crown Company, Inc., a Delaware corporation ("RC"), and their affiliates may now or in the future be working on ideas which are the same as or similar to a proposed New Product conceived by Umbach hereunder and that the submission by Umbach of a Proposal will not obligate Mistic to pay Royalty Payments on the proposed New Product if the idea for such proposed New Product was developed, discovered or conceived by Mistic, RC or any of their affiliates prior to Mistic's receipt of the Proposal for the proposed New Product. 6. Royalty Payments. During the Term, Mistic shall pay to Umbach royalty payments of $.25 (the "Royalty Payments") for each case of a Qualified Product sold and shipped during the Term (less the number of such cases returned to Mistic); provided that Umbach shall not be entitled to receive any Royalty Payments with respect to any Schedule A Product for any Annual Period if the threshold (the "Threshold") for such Schedule A Product as set forth on Schedule A attached hereto has not been met for such Annual Period. In the case of any New Product, Mistic and Umbach shall negotiate in good faith promptly after such New Product has been approved by Mistic to decide the Threshold which must be sold and shipped within each Annual Period of the Term for Royalty Payments to become due on such New Product. If Mistic and Umbach cannot agree upon the Threshold for a New Product within 60 days after Mistic has approved the New Product, then the Threshold for each twelve month period thereafter shall be 250,000 cases and for any shorter period shall be 250,000 cases multiplied by a fraction, the numerator of which is the number of days in such period and the denominator of which is 365. 7. Payment of Royalty Payments. Mistic shall, within 60 days after the expiration of each Quarter (the "Applicable Quarter") during the Term, provide Umbach with a written statement (the "Statement") setting forth the number of cases of each Qualified Product sold and shipped in the Applicable Quarter (less the number of cases returned during the Applicable Quarter). Unless Umbach objects in writing to the Statement within 30 days after receipt thereof, the Statement shall be deemed final and binding upon Umbach. If Umbach objects to the Statement, Mistic and Umbach shall negotiate in good faith to resolve the dispute. In the event that they cannot resolve the dispute, the Statement shall be reviewed by Mistic's independent certified public accountants. Such accounting firm shall deliver to Mistic and Umbach a statement in writing setting forth its determination as to the number of cases of each Qualified Product sold and shipped in the Applicable Quarter (less the number of cases returned during the Applicable Quarter), which determination shall be final and binding upon Mistic and Umbach, unless objected to by Umbach within 15 days. If such determination is objected to by Umbach, then the Statement shall be reviewed by an independent certified public accountanting firm jointly selected by Mistic and Umbach. Such accounting firm shall deliver to Mistic and Umbach a statement in writing setting forth its determination as to the number of cases of each Qualified Product sold and shipped in the Applicable Quarter (less the number of cases returned during the Applicable Quarter). Such determination shall be final and binding upon Mistic and Umbach with no further right of appeal, absent demonstrable error. One half of the fees of such firm of accountants for making such determination shall be paid by each of Mistic and Umbach. Mistic shall, within 10 days after the expiration of the 30-day period or 10 days after the dispute has been resolved by the parties or by the accounting firm, pay to Umbach by check, the Royalty Payments, if any, earned during such Applicable Quarter. Royalty Payments, with respect to each Qualified Product, shall be based on the amount of cases of such Qualified Product that Mistic sold and shipped during the Applicable Quarter (less the number of cases returned during the Applicable Quarter); provided that in the first Quarter in which the Threshold has been met for such Qualified Product, Royalty Payments shall be made for all cases sold and shipped during the Applicable Quarter and all previous Quarters of that Annual Period (less the number of cases returned during such period). 8. Non-competition. Umbach acknowledges that (i) he is subject to an agreement not to compete with Mistic, an agreement not to disclose confidential information of the Business and certain other restrictive covenants set forth in Article 10 of the Asset Purchase Agreement (the "Asset Purchase Agreement"), dated as of August 9, 1995, by and among Mistic, on the one hand, and Umbach, Joseph Victori Wines, Inc., a New York corporation, Best Flavors, Inc., a Nevada corporation, and Nature's Own Beverage Company, a Delaware corporation (collectively, the Sellers), on the other hand; (ii) any refusal by Mistic to distribute any Product developed, discovered or conceived by Umbach or any failure by Mistic and Umbach to agree upon a Threshold for a New Product shall not relieve Umbach of his obligations under the provisions of Article 10 of the Asset Purchase Agreement or under the terms of this Agreement; and (iii) subject to Section 12 below, all Products developed, discovered or conceived during the Term by Umbach shall be the property of Mistic and Umbach may not sell to any person any rights to any of the Products either during the Term or thereafter. 9. Umbach's Use of Mistic's Resources. Beginning on the date hereof, Mistic shall provide Umbach with office space (the "Office Space") at its New Rochelle office. Umbach shall reimburse Mistic in advance for Mistic's actual cost for the Office Space including utilities and other miscellaneous expenses in an amount equal to $1,500 per month on the first of every month. Mistic may terminate any such rental arrangement with Umbach for the Office Space for any reason or no reason at all upon 60 days prior written notice to Umbach. Upon the prior written consent of Mistic, which Mistic may grant or deny in whole or part in its sole discretion, Umbach may use Mistic's staff, facilities and other research and development resources in connection with the development of new Products. Also, upon the prior written consent of Mistic, which Mistic may grant or deny in whole or in part in its sole discretion, Umbach may use Mistic's facilities in connection with the development of new products in connection with Umbach's alcoholic beverage business ("R&D Resources") other than Mistic's secretarial services, word processing equipment, phones, fax and other support services (the "Support Services"), subject to Mistic's control thereof and the non-interference by Umbach with the Business as conducted by Mistic. Mistic may revoke Umbach's rights to use the R&D Resources, in whole or in part, at any time and in its sole discretion. Umbach acknowledges that he shall at his sole expense pay for all Support Services and that Mistic shall not be responsible for providing Umbach with any Support Services. 10. Transitional Accounting Services. Mistic shall provide Umbach with transitional accounting services in order to separate out the financial records of the Business from the financial records of the Sellers' alcoholic beverage business. Mistic shall provide such services until December 31, 1995, at a rate of $300 per month. Umbach acknowledges that such transitional accounting services will not require a significant amount of time of any of Mistic's employees. 11. Reimbursement of Certain Expenses. Mistic shall reimburse Umbach's cost of raw material as well as development costs of packaging material, designs and concepts (bottles, labels, caps, etc.) in connection with Umbach's development of New Products; provided that Mistic shall have approved all such costs in advance. Mistic acknowledges that Umbach shall have no obligation to incur any such expenses. 12. Ownership of Products. All Products developed, discovered or conceived during the Term by Umbach, whether or not (i) the Products are or become Qualified Products, (ii) Umbach has submitted a Proposal to Mistic for the Products and (iii) the Products are sold or shipped during the Term, shall be Mistic's property; provided, however, that (i) if Umbach conceives of an idea for a Product which he has not presented to Mistic during the Term and which he has not developed or begun to develop in facilities owned by Mistic, then Umbach shall own the rights to such Product, (ii) if Umbach presents a Proposal to Mistic and Mistic rejects such Proposal, then Umbach shall own the rights to such Product and (iii) if Umbach presents a Proposal (a) before the first two years of the Term, then if Mistic does not develop or begin to develop such Product within the Term, Umbach shall own the rights to such Product and (b) after the first two years of the Term, then if Mistic does not develop or begin to develop such Product within one year after Umbach has presented the Proposal to Mistic, Umbach shall own the rights to such Product; provided, further, that clauses (i), (ii) and (iii) are subject to Section 8 hereof. Umbach shall execute all appropriate documentation requested by Mistic to evidence Mistic's ownership of the Products. 13. Right of Set-Off. Any Royalty Payments or other amounts (including reimbursement of expenses) due Umbach hereunder shall be subject to a right (but not an obligation) of set-off by Mistic pursuant to Section 12.5 of the Asset Purchase Agreement; provided, however, that Mistic shall be obligated to set-off, prior to seeking any payment directly from the Sellers, against the Set-Off Payments any and all claims Mistic may have against the Sellers relating to the Arkansas Litigation Costs, other than the Buyer Arkansas Payment (as each such terms is defined in the Asset Purchase Agreement). 14. Nature of Relationship. Umbach agrees that: (i) he is an independent contractor; (ii) he shall develop Products for Mistic in accordance with such status; and (iii) he shall not hold himself out as an employee, agent or representative of Mistic or any of its affiliates and shall have no authority to bind Mistic in any respect. 15. Withholding. All compensation of Umbach by Mistic provided for in this Agreement shall be subject to deductions or amounts to be withheld as required by any applicable laws and regulations. 16. Miscellaneous 16.1 Consent to Jurisdiction; Service of Process. (a) Any legal action, suit or proceeding arising out of or relating to this Agreement may be instituted in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. (b) Umbach hereby appoints John P. Napoli Agent (the "Agent"), at the Agent's offices of Pryor, Cashman, Sherman & Flynn, 410 Park Avenue, New York, New York 10022, or his office at such other address in New York, New York, as he hereafter furnishes to the other parties, as such party's authorized agent to accept and acknowledge on such party's behalf service of any and all process that may be served in any such action, suit or proceeding. Any and all service of process in any such action, suit or proceeding shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided, or by personal service on the Agent with a copy of such process mailed to such party by first class mail or registered or certified mail, return receipt requested, postage prepaid. The service of process shall be deemed complete when mailed if by registered or certified mail or by any other means of mail that requires a signed receipt, or, if given by personal service when the party or the Agent is personally served. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction. 16.2 Notices. Any notice or other communi- cation required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, regis- tered or overnight express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, of if telegraphed, telexed or sent by facsimile transmission, on the date the receipt of the transmission is confirmed or, if mailed by overnight mail, the business day after the date of deposit with a reputable overnight courier service, or if mailed by non-overnight certified or registered mail, five days after the date of deposit in the United States mails, as follows: (A) if to Mistic to: Mistic Brands, Inc. 2525 Palmer Avenue New Rochelle, NY 10801 Attention: Ernest J. Cavallo Facsimile: (914) 637-0420 with a copy to: Triarc Companies, Inc. 900 Third Avenue New York, NY 10022 Attention: Executive Vice President and General Counsel Facsimile: (212) 230-3216 (B) if to Umbach to: Joseph Umbach 102 Overlook Drive Greenwich, CT 06830 Facsimile: (203) 869-2797 with a copy to: Pryor, Cashman, Sherman & Flynn 410 Park Avenue New York, New York 10022 Attention: John P. Napoli Facsimile: (212) 326-0806 Any party may by notice given in accordance with this Sec- tion to the other parties designate another address or Person for receipt of notices hereunder. 16.3 Entire Agreement. This Agreement (including Schedule A hereto) and the Asset Purchase Agreement contain the entire agreement among the parties with respect to the matters referenced herein and supersedes all prior agreements, written or oral, with respect thereto. 16.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by Mistic and Umbach or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement as to which there is no inaccuracy or breach. 16.5 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State. 16.6 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal repre- sentatives. This Agreement may not be assigned by Umbach. This Agreement may be assigned by Mistic in whole or in part (i) to Mistic's direct parent, (ii) to RC, (iii) to any sources providing Mistic with the financing to consummate the Contemplated Transactions (as defined in the Asset Purchase Agreement) or (iv) in connection with a transfer of all or substantially all of the Business, to one or more of Mistic's affiliates or designees. 16.7 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together consti- tute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 16.8 Schedule and Sections. Schedule A is a part of this Agreement as if fully set forth herein. All references herein to Sections and Schedule A shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. 16.9 Headings. The headings in this Agree- ment are for reference only, and shall not affect the inter- pretation of this Agreement. 16.10 Severability of Provisions. If any provision or any portion of any provision of this Agreement, or the application of any such provision or any portion thereof to any person or circumstance, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, and the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. 16.11 No Third Party Beneficiaries. This Agreement shall not, and shall not be deemed to, confer any rights or remedies upon any person other than Umbach, Mistic and their respective successors and permitted assigns. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. MISTIC BRANDS, INC. By:__________________________ Name: Title: ___________________________ Joseph Umbach SCHEDULE A PRODUCT THRESHOLD (MINIMUM # OF CASES PER YEAR) ANNUAL PERIOD Sports Cap(1) 300,000 1, 2 and 3 Sunesta 750,000 1 1,000,000 2 and 3 Sun Valley Squeeze 250,000 1, 2 and 3 _______ (1) These products are (1) Clear (labelled "Mistic Sport Refresher") flavors - Lemonade-Lime, Orange Mango, Fruit Punch and Raspberry- Strawberry; and (2) Color (i.e.) Mistic Standard Flavors with Sports Cap) - Lemon Tea, Fruit Punch, Kiwi Strawberry, Grape Strawberry and Orange Banana (plus in each case, line (i.e., flavor) extensions but excluding any new groups of products with a Sports Cap). Exhibit F [LETTERHEAD OF PWRW&G] (212) 373-3000 August __, 1995 Joseph Victori Wines, Inc., Best Flavors, Inc., Nature's Own Beverage Company, and Joseph Umbach 2525 Palmer Avenue New Rochelle, NY 10801 Ladies and Gentlemen: We have acted as special counsel to Mistic Brands, Inc., a Delaware corporation ("Mistic"), in connection with the Asset Purchase Agreement made as of August __, 1995 (the "Purchase Agreement), by and among Mistic, on the one hand, and Joseph Victori Wines, Inc., a New York Corporation ("JVWNY"), Best Flavors, Inc., a Nevada corporation ("Best Flavors"), Nature's Own Beverage Company, a Delaware corporation ("Nature's Own") (JVWNY, Best Flavors and Nature's Own are referred to collectively as the "Companies") and Joseph Umbach ("Umbach," and together with the Companies, collectively, the "Sellers"), on the other hand. Capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Purchase Agreement. This opinion is being furnished to you at the request of Mistic pursuant to Section 9.2 of the Purchase Agreement. In connection with this opinion, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents, each dated as of the date hereof, unless otherwise specified (collectively, the "Documents"): 1. The Purchase Agreement; 2. The Consulting Agreement; 3. The Product and Royalty Agreement; and 4. The Assumption Agreement between the Sellers and Mistic. In addition, we have examined: (i) such corporate records of Mistic as we have considered appropriate, including copies of the certificate of incorporation, and bylaws of Mistic, certified as in effect on the date hereof (collectively, the "Charter Documents"), and certified copies of resolutions of the board of directors of Mistic and (ii) such other certificates, agreements and documents as we deemed relevant and necessary as a basis for the opinions hereinafter expressed. In our examination of the aforesaid documents, we have assumed, without independent investigation, the genuineness of all signatures, the enforceability against each of the Sellers of the Documents to which each is a party, the legal capacity of all natural persons who have executed any of the Documents, the authenticity of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of valid existing agreements or other documents and the authenticity of all such latter documents. In expressing the opinions set forth herein, we have relied upon the factual matters contained in the representations and warranties of Mistic made in the Documents and upon certificates of public officials and officers of Mistic. Based on the foregoing, and subject to the assumptions, exceptions and qualifications set forth herein, we are of the opinion that: 1. Mistic is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to execute and deliver the Documents and to perform fully its obligations under the Documents. 2. The execution, delivery and performance by Mistic of the Documents have been duly authorized by all necessary corporate action. 3. Each of the Documents constitutes the legal, valid and binding obligation of Mistic, enforceable against Mistic in accordance with its terms. 4. The execution, delivery and performance of the Documents by Mistic and the consummation of the Contemplated Transactions will not (i) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with notice or lapse of time or both constitute) a default under the Charter Documents, any Law of the State of New York or the General Corporation Laws of the State of Delaware or Order of any Governmental Body to which we have knowledge applicable to Mistic; or (ii) result in the creation of any Lien on any of the properties of Mistic. 5. To our knowledge, there are no Claims pending or threatened by or against Mistic which have or would have a material adverse effect on the Contemplated Transactions at law or in equity before any Governmental Body. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: (a) The enforceability of the Documents may be: (i) subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors rights generally; and (ii) subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). (b) We express no opinion with respect to: (i) the enforceability of forum selection clauses in the federal courts and (ii) the enforceability of clauses selecting forums outside of the state of New York. [(c) Do we need to carve out the noncompetition sections of the Documents?] Our opinions expressed above are limited to the laws of the State of New York and the General Corporation Law of the State of Delaware. Our opinions are rendered only with respect to the laws, and the rules, regulations and orders thereunder, which are currently in effect. This letter is furnished by us solely for your benefit in connection with the transactions referred to in the Agreement and may not be circulated to, or relied upon by, any other Person. Very truly yours, PAUL, WEISS, RIFKIND, WHARTON & GARRISON Pursuant to Item 601 of Regulation S-K, the schedules to the Asset Purchase Agreement are not being filed herewith since such schedules do not contain information which is material to an investment decision. The omitted schedules consist of the following: 5.3 Outstanding Capital Stock of the Companies, indicating Joseph Umbach's ownership thereof 5.4 A listing of the Companies' Qualifications to do Business 5.6 Certain Year-End Adjustments 5.8 Tax Matters 5.9 A listing of the Companies' Permits 5.10 A listing of Consents Required to Consummate the Acquisition 5.11 A listing of certain Claims and Proceedings related to the Companies 5.12 A listing of certain material Contracts of the Companies 5.13 Real Estate Matters 5.14 Inventory and Supplies Matters 5.15 A listing of certain Accounts Receivables of the Companies 5.17 A listing of the Intangible Property of the Companies 5.18 A listing of certain Liens affecting the assets of the Companies 5.19 A listing of certain Accounts Payable of the Companies 5.21 A listing of certain Suppliers, Vendors and Co-Packers of the Companies 5.22 Employee Benefit Matters 5.25 Insurance Matters 5.26 Product Matters 5.27 A listing of the Companies' Directors, Officers and Key Employees 5.28 Certain Matters Relating to the Operations of the Companies 5.30 A Listing of bank accounts of the Companies 7.7 Transferred Employee Matters 8.2 A listing of Consents necessary to consummate the Acquisition The Registrant will furnish supplementally a copy of any omitted schedule to the Commission upon request.