-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CziiWzwZ/jiZr6bX3TcGRMo1IA7Eq8sHmVhyC5yghDNNCdfPZ141OoyfhokUhKIx YL0VzphvS+X/5pGGIJOs5A== 0000950131-96-002522.txt : 19960531 0000950131-96-002522.hdr.sgml : 19960531 ACCESSION NUMBER: 0000950131-96-002522 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960513 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960529 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEVEN UP RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA INC CENTRAL INDEX KEY: 0000887353 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 954284699 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-47718 FILM NUMBER: 96574029 BUSINESS ADDRESS: STREET 1: 3220 E 26TH ST CITY: VERNON STATE: CA ZIP: 90023 BUSINESS PHONE: 2132687779 MAIL ADDRESS: STREET 1: 3220 EAST 26TH ST CITY: VERNON STATE: CA ZIP: 90023 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): May 13, 1996 SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 33-47718 95-4284699 - ---------------- -------------------------- --------------------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 3220 East 26th Street, Vernon, California 90023 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (213) 268-7779 -------------- Item 5. Other Events. - ------ ------------ Seven-Up/RC Bottling Company of Southern California, Inc. (the "Company") announced on May 13, 1996 that it had entered into a $54 million Debtor-in-Possession Credit Agreement (the "DIP Facility") with General Electric Capital Corporation ("GECC"). A copy of the DIP Facility is filed as exhibit 4.1 hereto. The Company also entered into a Security Agreement in favor of GECC, and Beverage Group Acquisition Corporation, the Company's parent, entered into a Continuing Guaranty in favor of GECC, copies of which are filed as exhibits 4.2 and 4.3, respectively, to this report. On May 20, 1996, the Company filed its proposed Plan of Reorganization and accompanying Disclosure Statement with the U.S. Bankrupty Court for the District of Delaware. Copies of the proposed Plan of Reorganization and Disclosure Statement are filed as exhibits 10.1 and 10.2, respectively, to this report. Item 7. Financial Statements and Exhibits. - ------ --------------------------------- (a) Not applicable. (b) Not applicable. (c) Exhibits 4.1 Debtor-in-Possession Credit Agreement dated as of May 13, 1996 between the Company, as borrower, the lenders party thereto and General Electric Capital Corporation, as agent. 4.2 Security Agreement dated as of May 13, 1996 by the Company, as debtor and debtor in possession, in favor of General Electric Capital Corporation, as agent. 4.3 Continuing Guaranty and Security Agreement dated as of May 13, 1996 by Beverage Group Acquisition Corporation, as debtor and debtor in possession, in favor of General Electric Capital Corporation, as agent and as a lender. 10.1 Proposed Debtors' Joint Plan of Reorganization dated May 17, 1996. 10.2 Proposed Disclosure Statement with Respect to Debtors' Joint Plan of Reorganization dated May 17, 1996. SIGNATURE 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. SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. Dated: May 28, 1996 By: /s/ David I. Brown --------------------------- David I. Brown Principal Accounting Officer and Treasurer EX-4.1 2 DEBTOR IN POSSESSION CREDIT AGREEMENT =========================================================================== DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 between SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., as Debtor and Debtor in Possession, as Borrower, THE LENDERS PARTY HERETO and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent ========================================================================== TABLE OF CONTENTS SECTION PAGE - ------- ---- 1. AMOUNT AND TERMS OF CREDIT....................................... 2 1.1 Revolving Credit Advances.................................. 2 1.2 [INTENTIONALLY OMITTED].................................... 4 1.3 Repayment; Termination of Commitment....................... 4 1.4 Use of Proceeds............................................ 5 1.5 Letters of Credit.......................................... 5 1.6 Interest................................................... 5 1.7 Eligible Accounts and Inventory............................ 7 1.8 Fees....................................................... 7 1.9 Cash Management System..................................... 7 1.10 Receipt of Payments........................................ 7 1.11 Pro Rata Treatment......................................... 8 1.12 Application and Allocation of Payments..................... 8 1.13 Non-Receipt of Funds by Agent.............................. 9 1.14 Sharing of Payments, Etc................................... 10 1.15 Settlement Procedures...................................... 11 1.16 Accounting................................................. 12 1.17 Indemnity.................................................. 13 1.18 Access..................................................... 14 1.19 Taxes...................................................... 15 1.20 Capital Adequacy........................................... 16 1.21 Priority of Obligations and Agent's Liens.................. 17 2. CONDITIONS PRECEDENT............................................. 18 2.1 Conditions to the Initial Revolving Credit Advance or Letter of Credit Obligation..................... 18 2.2 Further Conditions to Each Revolving Credit Advance and Each Letter of Credit Obligation............... 20 3. REPRESENTATIONS AND WARRANTIES................................... 21 3.1 Corporate Existence; Compliance with Law................... 21 3.2 Executive Offices; Collateral Locations; Corporate or Other Names................................... 21 3.3 Corporate Power; Authorization; Enforceable Obligations................................................ 21 3.4 Financial Statements and Projections....................... 22 3.5 Material Adverse Change.................................... 22 3.6 Ownership of Property; Liens............................... 22 3.7 Restrictions; No Default; Material Contracts............... 23 3.8 Labor Matters.............................................. 24 3.9 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness......................... 24 3.10 Government Regulation...................................... 24 3.11 Margin Regulations......................................... 25 3.12 Taxes...................................................... 25 3.13 ERISA...................................................... 26 3.14 No Litigation.............................................. 27 3.15 Brokers.................................................... 28 3.16 Patents, Trademarks, Copyrights and Licenses............... 28 i TABLE OF CONTENTS cont'd SECTION PAGE - ------- ---- 3.17 Full Disclosure............................................ 28 3.18 Hazardous Materials........................................ 29 3.19 Insurance Policies......................................... 29 3.20 Deposit and Disbursement Accounts.......................... 29 3.21 Prepetition Credit Agreement Obligations................... 29 4. FINANCIAL STATEMENTS AND INFORMATION............................. 30 4.1 Reports and Notices........................................ 30 4.2 Communication with Accountants............................. 30 5. AFFIRMATIVE COVENANTS............................................ 31 5.1 Maintenance of Existence and Conduct of Business................................................... 31 5.2 Payment of Charges and Claims.............................. 31 5.3 Books and Records.......................................... 32 5.4 Litigation................................................. 32 5.5 Insurance.................................................. 32 5.6 Compliance with Laws....................................... 33 5.7 Agreements................................................. 33 5.8 Supplemental Disclosure.................................... 34 5.9 Environmental Matters...................................... 35 5.10 Landlord's Agreements...................................... 35 5.11 Certain Obligations Respecting Subsidiaries................ 35 5.12 Application of Proceeds.................................... 35 5.13 Fiscal Year................................................ 36 5.14 Casualty and Condemnation.................................. 36 5.15 Payment of Prepetition Credit Agreement Obligations................................................ 37 6. NEGATIVE COVENANTS............................................... 37 6.1 Mergers, Subsidiaries, Etc................................. 37 6.2 Investments................................................ 37 6.3 Indebtedness............................................... 38 6.4 Affiliate and Employee Loans and Transactions; Employment Agreements...................................... 38 6.5 Capital Structure and Business............................. 39 6.6 Guaranteed Indebtedness.................................... 39 6.7 Liens...................................................... 39 6.8 Sale of Assets............................................. 40 6.9 ERISA...................................................... 41 6.10 Financial Covenants........................................ 41 6.11 Hazardous Materials........................................ 41 6.12 Sale-Leasebacks............................................ 41 6.13 Cancellation of Indebtedness............................... 41 6.14 Restricted Payments........................................ 42 6.15 Real Property Leases....................................... 42 6.16 Bank Accounts.............................................. 42 6.17 No Speculative Transactions................................ 42 6.18 Margin Regulations......................................... 42 6.19 Limitation on Negative Pledge Clauses...................... 42 ii TABLE OF CONTENTS cont'd SECTION PAGE - ------- ---- 6.20 Accounting Changes........................................ 42 6.21 Prepetition Indebtedness.................................. 43 6.22 Reclamation Claims........................................ 43 6.23 Application to the Court.................................. 43 7. TERM............................................................. 43 7.1 Duration.................................................. 43 7.2 Survival of Obligations................................... 44 8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES........................... 44 8.1 Events of Default......................................... 44 8.2 Remedies.................................................. 47 8.3 Waivers by Borrower....................................... 47 9. AGENT............................................................ 48 9.1 Appointment, Powers and Immunities........................ 48 9.2 Reliance by Agent......................................... 48 9.3 Defaults.................................................. 49 9.4 Rights as a Lender........................................ 49 9.5 Indemnification........................................... 49 9.6 Non-Reliance on Agent and Other Lenders................... 50 9.7 Failure to Act............................................ 50 9.8 Resignation of Agent...................................... 51 9.9 Consents under Loan Documents............................. 51 9.10 Collateral Matters........................................ 51 10. SUCCESSORS AND ASSIGNS........................................... 52 10.1 Successors and Assigns.................................... 52 10.2 Assignments and Participations............................ 52 11. MISCELLANEOUS.................................................... 54 11.1 Complete Agreement; Modification of Agreement............. 54 11.2 Fees and Expenses......................................... 55 11.3 No Waiver................................................. 56 11.4 Remedies.................................................. 57 11.5 Severability.............................................. 57 11.6 Conflict of Terms......................................... 57 11.7 Right of Set-off.......................................... 57 11.8 Authorized Signature...................................... 57 11.9 Notices................................................... 58 11.10 Parties Including Trustees; Bankruptcy Court Proceedings............................................... 59 11.11 Section Titles............................................ 60 11.12 Counterparts.............................................. 60 11.13 Time of the Essence....................................... 60 11.14 Publicity................................................. 60 11.15 GOVERNING LAW............................................. 60 11.16 WAIVER OF JURY TRIAL...................................... 60 iii INDEX OF ANNEXES, SCHEDULES AND EXHIBITS Annex A - Definitions; Rules of Construction Annex B - Cash Management System Annex C - Schedule of Documents Annex D - Schedule of Certain Fees Annex E - Financials, Projections and Notices Annex F - Insurance Requirements Annex G - Letters of Credit Annex H - Financial Covenants Schedule 3.2 - Executive Offices; Trade Names Schedule 3.4 - Financials and Projections Schedule 3.5 - Dividends; Material Changes Schedule 3.6 - Real Estate and Leases Schedule 3.7 - Material Contracts Schedule 3.8 - Labor Matters Schedule 3.9 - Ventures, Subsidiaries and Affiliates; Outstanding Stock Schedule 3.12 - Tax Matters Schedule 3.13 - ERISA Plans Schedule 3.14 - Litigation Schedule 3.16 - Patents, Trademarks, Copyrights and Licenses Schedule 3.18 - Hazardous Materials Schedule 3.19 - Insurance Policies Schedule 3.20 - Disbursement and Deposit Accounts Schedule 6.2 - Investments Schedule 6.3 - Indebtedness Schedule 6.4 - Loans to and Transactions with Employees Schedule 6.6 - Guaranteed Indebtedness Schedule 6.7 - Liens Schedule 11.8 - Authorized Signatures Exhibit A - Form of Notice of Revolving Credit Advance Exhibit B - Form of Borrowing Base Certificate Exhibit C - Form of Revolving Credit Note Exhibit D - Form of Emergency Order Exhibit E - Form of Interim Order Exhibit F - Form of Security Agreement iv DEBTOR IN POSSESSION CREDIT AGREEMENT ------------------------------------- THIS DEBTOR IN POSSESSION CREDIT AGREEMENT ("Agreement") is entered into as of May 13, 1996, by and between SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., a Delaware corporation, as Debtor and Debtor in Possession, ("Borrower"), each of the lenders listed on the signature pages hereof or which pursuant to Section 10.2 becomes a "Lender" hereunder (each individually a "Lender" and collectively "Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), a corporation organized under the banking laws of the State of New York, as agent hereunder for Lenders (in such capacity, together with its successors in such capacity, "Agent"), with reference to the following facts: RECITALS -------- A. Seven-Up/RC Bottling Company of Southern California, Inc. ("Seven- Up/RC") and GE Capital (as the "Agent" and sole "Lender" thereunder) are parties to that certain Credit Agreement dated as of February 1, 1994 (as amended, modified or supplemented prior to the Petition Date (as defined below), the "Prepetition Credit Agreement"), and certain other documents, instruments and agreements executed in connection therewith (the "Prepetition Loan Documents"), pursuant to which GE Capital agreed to provide certain financial accommodations to or for the benefit of Seven-Up/RC. B. On May 13, 1996 (the "Petition Date"), Borrower commenced Chapter 11 Case No. 96-738(HSB) (the "Chapter 11 Case") by filing a voluntary petition for reorganization under Title 11 of the United States Code, 11 U.S.C. (S)(S) 101 et seq. (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Borrower continues to operate its business and manage its properties as a debtor and debtor in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. C. Borrower has requested that Lenders provide a senior secured superpriority revolving credit facility of up to $54,000,000. Borrower intends to utilize such facility to fund its working capital requirements and to guarantee its letter of credit obligations during the pendency of the Chapter 11 Case. D. Lenders are willing to extend such postpetition credit facility to Borrower in accordance with and on the terms and conditions set forth in this Agreement. E. Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. Unless otherwise indicated, all references in this 1 Agreement or in the Annexes to this Agreement to sections, subsections, schedules, exhibits, annexes, and attachments shall refer to the corresponding sections, subsections, schedules, exhibits, annexes and attachments of or to this Agreement. All schedules, exhibits, annexes and attachments hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together, shall constitute but a single agreement. Unless otherwise expressly set forth herein, or in a written amendment referring to such schedules and annexes, all schedules and annexes referred to herein shall mean the schedules and annexes as in effect as of the Closing Date. These Recitals shall be construed as part of this Agreement. AGREEMENT --------- NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows: 1. AMOUNT AND TERMS OF CREDIT 1.1 Revolving Credit Advances. (a) Upon and subject to the terms and conditions hereof, each Lender severally agrees to make available, from time to time from the Closing Date until the Commitment Termination Date, for Borrower's use and upon the request of Borrower therefor to Agent, advances (each, a "Revolving Credit Advance") in an aggregate principal amount at any time outstanding up to but not exceeding the Revolving Credit Commitment of such Lender, provided that in no event shall the aggregate principal amount of the Revolving Credit Loan and outstanding Letter of Credit Obligations at any time exceed the Borrowing Availability. Borrower may from time to time borrow, repay and reborrow Revolving Credit Advances under this Section 1.1. (b) Borrower shall give Agent (which shall promptly notify Lenders) notice of each borrowing hereunder as provided in Section 1.1(c) and, subject to Section 1.15, on the date specified for such borrowing each Lender shall make available the amount of the Revolving Credit Advance or Revolving Credit Advances to be made by it on such date to Agent to such account of Agent as Agent may designate, in immediately available funds, for the account of Borrower. (c) Each notice of a borrowing of a Revolving Credit Advance shall be given in writing (by telecopy, hand delivery, or U.S. mail) by Borrower to Agent at its address at 350 South Beverly Drive, Suite 200, Beverly Hills, California 90212, to the attention of Mr. Mark E. Gudis, or such other Person as may be designated in writing by Agent, Telephone No. (310) 203-0335, Telecopy No. (310) 785-0644, given no later than 11:00 a.m. (Los Angeles time) on the Business Day of the proposed Revolving Credit Advance. Each such notice of borrowing (a "Notice of 2 Revolving Credit Advance") shall be substantially in the form of Exhibit A, specifying therein the requested date, the amount of such Revolving Credit Advance, the Disbursement Account into which such Revolving Credit Advance shall be made, and such other information as may be required by Agent. Agent and Lenders shall be entitled to rely upon and shall be fully protected under this Agreement in relying upon any Notice of Revolving Credit Advance believed by Agent to be genuine and to assume that the persons executing and delivering the same were duly authorized unless the responsible individual acting thereon for Agent shall have actual knowledge to the contrary. (d) The Revolving Credit Advances made by each Lender shall be evidenced by a single promissory note of Borrower for each Lender substantially in the form of Exhibit C hereto, dated the date hereof, payable to such Lender in a principal amount equal to the amount of its Revolving Credit Commitment as originally in effect and otherwise duly completed. The date and amount of each Revolving Credit Advance made by each Lender and each payment of principal with respect thereto shall be recorded on the books and records of such Lender, which books and records shall constitute prima facie evidence of the accuracy of the information therein recorded. The entire unpaid balance of the Revolving Credit Loan and all other Obligations shall be immediately due and payable on the Commitment Termination Date. (e) Borrower shall furnish to Agent and each Lender a Borrowing Base Certificate substantially in the form of Exhibit B, completed and signed by Borrower's Chief Executive Officer, Chief Financial Officer, Director of Banking and Investor Relations or Director of Accounting Services which sets forth a calculation of the Borrowing Base at the times and for the periods set forth in Annex E. Borrower agrees that in making any Revolving Credit Advance hereunder Agent and each Lender shall be entitled to rely upon the most recent Borrowing Base Certificate delivered to Agent and Lenders by Borrower. Borrower further agrees that if Borrower shall have failed to deliver a Borrowing Base Certificate to Agent and Lenders within the specified period Lenders shall be under no obligation to make any further Revolving Credit Advances (or incur any additional Letter of Credit Obligations) until such time as such Borrowing Base Certificate is delivered to Agent and Lenders. (f) The failure of any Lender (such Lender, a "Non-Funding Lender") to make any Revolving Credit Advance to be made by it on the date specified therefor shall not relieve any other Lender (each such other Lender, an "Other Lender") of its obligation to make its Revolving Credit Advance on such date, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make a Revolving Credit Advance to be made by such Non-Funding Lender, and no Non-Funding Lender shall have any obligation to Agent or any Other Lender for the failure by such Non-Funding Lender. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not 3 have any voting or consent rights under or with respect to any Loan Document or constitute a "Lender" (or be included in the calculation of "Required Lenders" hereunder) for any voting or consent rights under or with respect to any Loan Document. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement, the Revolving Credit Notes or the other Loan Documents (including exercising any rights of offset) without first obtaining the prior written consent of Agent and Required Lenders, it being the agreement of Lenders that any such action to protect or enforce rights under this Agreement, the Revolving Credit Notes or the other Loan Documents shall be taken in concert and at the direction or with the consent of Agent and Required Lenders and not individually by a single Lender. 1.2 [INTENTIONALLY OMITTED] 1.3 Repayment; Termination of Commitment. (a) Borrower hereby promises to pay to Agent, for the account of each Lender, the entire outstanding principal amount of the Revolving Credit Loan and the Revolving Credit Loan shall mature on the Commitment Termination Date. (b) If on any day the outstanding balance of the Revolving Credit Loan, when added to the then outstanding Letter of Credit Obligations, shall at any time exceed the Borrowing Availability, Borrower shall repay the Revolving Credit Loan in the amount of such excess on such day (or if such day is not a Business Day, on the next succeeding Business Day). (c) Borrower shall have the right at any time, upon at least ten (10) days prior written notice to Agent, to voluntarily terminate the Revolving Credit Commitments (in whole but not in part) without premium or penalty other than payment of the Termination Fee, if any. Upon such termination, Borrower's right to receive Revolving Credit Advances and the benefit of Letter of Credit Obligations shall simultaneously terminate and Borrower's obligation to pay the Non-Use Fee and any Collateral Management Fee or Collateral Examination Charge arising after such termination shall terminate, and notwithstanding anything to the contrary contained herein or in any Revolving Credit Note, the entire outstanding balance of the Revolving Credit Loan shall be immediately due and payable. On the date of such termination, Borrower shall pay to Agent in immediately available funds all of the Obligations, including the Termination Fee, if any, and any accrued and unpaid interest, and make arrangements, in accordance with the terms and conditions of Annex G, for satisfaction with respect to any outstanding Letter of Credit Obligations. (d) If the unpaid principal balance of the Revolving Credit Loan, when added to the then outstanding Letter of Credit Obligations, should at any time exceed the Borrowing 4 Availability, the excess balance shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all of the benefits thereof and of the Loan Documents and shall be evidenced by the Revolving Credit Notes. (e) All Obligations, including the Revolving Credit Loan and the Letter of Credit Obligations, shall be immediately due and payable, without notice, upon the termination of the financing transactions contemplated under the Caribbean Loan Documents, which termination shall not occur as a result of the filing of the Chapter 11 Case. 1.4 Use of Proceeds. Borrower shall use the proceeds of the Revolving Credit Loan for the payment of costs and expenses of the financing transactions contemplated by this Agreement that are payable by Borrower and for other corporate purposes permitted by the terms of this Agreement, the other Loan Documents, the Bankruptcy Code and the Bankruptcy Court; provided, that no portion of the Revolving Credit Loan or the Prepetition Advances shall be used, directly or indirectly: (a) to finance or make any Restricted Payment, (b) to pay any fees or similar amounts payable to any Person who has proposed or may propose to purchase interests in Borrower or Seven-Up/RC of PR or otherwise has proposed or may propose to invest in Borrower or Seven-Up/RC of PR (including so-called "topping fees," "exit fees" and similar amounts) in excess of $750,000 in the aggregate, (c) to fund, facilitate or pay for any investigation, research, consideration, commencement, maintenance or prosecution of any claims, rights, defenses or actions against Agent, any Lender or any of their respective Affiliates, including any claims, rights, defenses or actions arising from the prepetition acts involving Agent, any Lender or any of their respective Affiliates, or (d) to make any distribution under Borrower's plan of reorganization in the Chapter 11 Case. 1.5 Letters of Credit. Subject to the terms and conditions of this Agreement, Borrower shall have the right to request, and Lenders agree to incur, the Letter of Credit Obligations in accordance with the terms and conditions set forth in Annex G. 1.6 Interest. (a) Borrower shall pay interest on the Revolving Credit Loan to Agent for the account of each Lender: (i) in arrears for the preceding calendar month, on the first day of each calendar month, commencing on June 1, 1996; (ii) on the Commitment Termination Date; and (iii) if any interest accrues or remains payable after the Commitment Termination Date, upon demand. If any interest or other payment under this Agreement becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. 5 (b) Borrower shall be obligated to pay interest to Agent for the account of each Lender on the outstanding balance of the Revolving Credit Loan from the date any Revolving Credit Advance is made until it is paid in full at a floating rate equal to the CP Rate (as in effect from time to time) plus three and one-half percent (3.5%) per annum (the "Stated Rate"). All computations of interest shall be made by Agent and on the basis of a three hundred and sixty (360) day year, in each case for the actual number of days occurring in the period for which such interest is payable. Each determination by Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error or bad faith. (c) Upon the occurrence and during the continuance of any Event of Default, the interest rate applicable to all of the Obligations, including the Revolving Credit Loan, may in the sole discretion of Required Lenders be increased, effective as of the date of the Default giving rise to such Event of Default, to the Default Rate. (d) Notwithstanding anything to the contrary set forth in this Section 1.6, if, at any time until payment in full of all of the Obligations, the rate of interest payable hereunder exceeds the highest rate of interest permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by each Lender from the making of Revolving Credit Advances hereunder is equal to the total interest which such Lender would have received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. Thereafter, the interest rate payable hereunder shall be the rate of interest provided in Sections 1.6 (a) through (c), unless and until the rate of interest again exceeds the Maximum Lawful Rate, in which event this Section 1.6(d) shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount which such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. In the event the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 1.6(d), shall make a final determination that a Lender has received interest hereunder or under any of the Loan Documents in excess of the Maximum Lawful Rate, such Lender 6 shall, to the extent permitted by applicable law, promptly apply such excess in the manner set forth in Section 1.12, and thereafter shall refund any excess to Borrower or as a court of competent jurisdiction may otherwise order. 1.7 Eligible Accounts and Inventory. (a) Based on the most recent Borrowing Base Certificate delivered by Borrower to Agent and on other information available to Agent, Agent shall determine in accordance with the terms and provisions of this Agreement which Accounts shall be deemed to be "Eligible Accounts" for purposes of determining the amounts, if any, to be advanced to Borrower under the Revolving Credit Loan. (b) Based on the most recent Borrowing Base Certificate delivered by Borrower to Agent and on other information available to Agent, Agent shall determine in accordance with the terms and provisions of this Agreement which Inventory shall be deemed to be "Eligible Inventory" for purposes of determining the amounts, if any, to be advanced to Borrower under the Revolving Credit Loan. 1.8 Fees. As compensation for Agent's and Lender's costs, skills, services and efforts incurred and expended in making the Revolving Credit Loan and the Letters of Credit available to Borrower, Borrower agrees to pay to Agent for its own account or the account of Lenders, as the case may be, the fees set forth in Annex D in accordance with the terms set forth therein. All of the Fees described in Annex D shall be non-refundable and shall be fully-earned as and when such Fees become due and payable. 1.9 Cash Management System. On or prior to the Closing Date, Borrower will establish and maintain until the Termination Date, the cash management system described in Annex B. 1.10 Receipt of Payments. Borrower shall make each payment under this Agreement not later than 12:00 noon (Los Angeles time) on the day when due in Dollars in immediately available funds to the Collection Account. For purposes of computing interest and Fees and determining the Borrowing Availability: (a) all payments (including cash sweeps) consisting of cash, wire, or electronic transfers in immediately available funds shall be deemed received by Agent upon deposit in the Collection Account and notice to Agent of such deposit; and (b) all payments consisting of checks, drafts, or similar non-cash items shall be deemed received upon receipt of good funds following deposit in the Collection Account (together with notice to Agent of such deposit). Subject to Section 1.15, each payment received by Agent under this Agreement or any Revolving Credit Note for the account of any Lender shall be paid by Agent promptly to such Lender, in the same funds received, for application to the Revolving Credit Loan or other obligation in respect of which such payment is made. 7 1.11 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each Revolving Credit Advance (including any Revolving Credit Advance pursuant to Section 1.15(b)) shall be incurred and made by the relevant Lenders, and each payment of Non-Use Fee and the Termination Fee shall be made for the account of the relevant Lenders, pro rata according to the amounts of their respective Revolving Credit Commitments; (b) each payment or prepayment of principal of the Revolving Credit Loan by Borrower shall be made for the account of the relevant Lenders pro rata in accordance with the respective unpaid principal amounts of the Revolving Credit Loan held by Lenders; and (c) each payment of interest on the Revolving Credit Loan by Borrower shall be made for the account of the relevant Lenders pro rata in accordance with the amounts of interest on the Revolving Credit Loan then due and payable to the respective Lenders. 1.12 Application and Allocation of Payments. Borrower irrevocably waives the right to direct the application of any and all payments at any time or times hereafter received from or on behalf of Borrower, and Borrower irrevocably agrees that Agent and Lenders shall have the continuing exclusive right to apply any and all such payments against the then due and payable Prepetition Credit Agreement Obligations of Seven-Up/RC and the Obligations of Borrower and in repayment of the Revolving Credit Loan and the Letter of Credit Obligations as Lenders may deem advisable; provided, that the prepayments required under Section 1.3(b) shall be applied in the manner described in such Section. In the absence of a specific determination by Agent with respect thereto, the same shall be applied in the following order: (a) to the Prepetition Credit Agreement Obligations in accordance with Section 1.12 of the Prepetition Credit Agreement (provided that such payments will be applied to any due and owing scheduled principal payments on the Prepetition Term Loan prior to outstanding Prepetition Advances); (b) then due and payable Fees, expenses and other Obligations (including Revolving Credit Advances made by Agent in its capacity as Agent) owing to Agent; (c) then due and payable Fees and expenses of Lenders; (d) then due and payable interest payments; (e) then due and payable Obligations to Lenders other than Fees, expenses and interest and principal payments; (f) then due and payable principal payments on the Revolving Credit Loan. Agent, on behalf of Lenders, is authorized to, and at its option may, make or cause to be made Revolving Credit Advances by Lenders on behalf of Borrower for payment of all Fees, expenses, charges, costs, principal, interest, or other Obligations then due and payable by Borrower under this Agreement or any of the Loan Documents, even if the making of such Revolving Credit Advance causes the outstanding balance of the Revolving Credit Loan, when added to the then outstanding Letter of Credit Obligations, to exceed the Borrowing Availability, in which case the terms of Section 1.3(d) shall apply. 8 1.13 Non-Receipt of Funds by Agent. Unless Agent shall have been notified by a Lender or Borrower (in either case, "Payor") prior to the date on which such Payor is to make payment to Agent of (in the case of a Lender) the proceeds of a Revolving Credit Advance to be made by such Lender hereunder or (in the case of Borrower) a payment to Agent for account of one or more of Lenders hereunder (such payment being herein called the "Required Payment"), which notice shall be effective upon receipt by Agent, that such Payor does not intend to make the Required Payment to Agent, 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(s) on such date; and, if such Payor has not in fact made the Required Payment to Agent, the recipient(s) of such payment shall, on demand, repay to Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date (the "Advance Date") such amount was so made available by Agent until the date Agent recovers such amount, at a rate per annum equal to the CP Rate for such day and, if such recipient(s) shall fail promptly to make such payment, Agent shall be entitled to recover such amount, on demand, from such Payor, together with interest as aforesaid; provided, that if neither the recipient(s) nor such Payor shall return the Required Payment to Agent within three (3) Business Days of the Advance Date, then, retroactively to the Advance Date, such Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment as follows: (a) if the Required Payment shall represent a payment to be made by Borrower to Lenders, Borrower and the recipient(s) shall (without duplication) each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Default Rate (and, in case the recipient(s) shall return the Required Payment to Agent, without limiting the obligation of Borrower hereunder to pay interest to such recipient(s) at the Default Rate in respect of the Required Payment); and (b) if the Required Payment shall represent proceeds of a Revolving Credit Advance to be made by Lenders to Borrower, such Payor and Borrower shall (without duplication) each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the rate of interest provided for such Required Payment pursuant hereto (and, in case Borrower shall return the Required Payment to Agent, without limiting any claim Borrower may have against Payor in respect of the Required Payment). Nothing in this Section 1.13 or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Revolving Credit Commitment hereunder or to prejudice any rights that Borrower may have 9 against any Lender as a result of any default by such Lender hereunder. 1.14 Sharing of Payments, Etc. (a) 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 (but subject, as between Lenders, to the provisions of the last sentence of Section 1.1(f)), to offset balances held by it for the account of Borrower at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender's pro rata portion of the Revolving Credit Loan (including any Revolving Credit Advances deemed made by such Lender under Section 1.15(b)) or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to Borrower), in which case it shall promptly notify Borrower and Agent thereof; provided, that such Lender's failure to give such notice shall not affect the validity thereof. (b) If any Lender shall obtain from Borrower payment of any principal of or interest on the Revolving Credit Loan owing to it or payment of any other amount under this Agreement or any Revolving Credit Note held by it, or any other Loan Document through the exercise of any right of setoff, banker's lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received a greater percentage of the principal of or interest on the Revolving Credit Loan or such other amounts then due hereunder or thereunder by Borrower to such Lender than the percentage received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a participation in (or, if and to the extent specified by such Lender, direct interests in) the Revolving Credit Loan or such other amounts, respectively, owing to such other Lenders (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal of and/or interest on the Revolving Credit Loan or such other amounts, respectively, owing to each of Lenders. Amounts received by Agent under this Section 1.14(b) shall be treated as a payment by Borrower under Section 1.12. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of any participation sold or otherwise) if such payment is rescinded or must otherwise be restored. (c) Borrower agrees that any Lender so purchasing such a participation (or direct interest) may exercise, in a manner consistent with Section 1.14(a), all rights of set-off, banker's 10 lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of the Revolving Credit Loan or other amounts (as the case may be) owing to such Lender in the amount of such participation. (d) Nothing contained herein shall require any Lender to exercise any right as against Borrower as described in this Section 1.14 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 or obligation of Borrower. 1.15 Settlement Procedures. (a) The Revolving Credit Loan balance may fluctuate from day to day from Agent's disbursement of funds to, and receipt of funds from, Borrower. In order to minimize the frequency of transfers of funds between Agent and Lenders, Revolving Credit Advances may be made by Agent and payments in respect thereof will be settled according to the procedures set forth in this Section 1.15. Notwithstanding these procedures, each Lender's obligation to fund its portion of any Revolving Credit Advance made to Borrower will commence on the date such Revolving Credit Advances are made. Such payments will be made by each Lender without setoff, counterclaim or reduction of any kind. (b) Notwithstanding anything to the contrary contained in this Agreement, Agent may elect, at its sole option, to fund the entire amount of any Revolving Credit Advance requested by Borrower. In the event Agent makes such election, such Revolving Credit Advance made by Agent shall be deemed, and shall constitute, as of the date of making thereof, a Revolving Credit Advance made by each of Lenders in an amount equal to such Lender's pro rata share thereof, and each Lender shall be obligated to deliver to Agent such share of such Revolving Credit Advance on the Weekly Settlement Date in accordance with the procedure for weekly settlement set forth in Section 1.15(c) or as otherwise provided in Section 1.15(d). Notwithstanding anything to the contrary contained in this Agreement, for purposes of calculating interest payable to any Lender (a) Agent shall be deemed a "Lender" with respect to any outstanding Revolving Credit Advances funded by Agent, and (b) the amount of Revolving Credit Advances of any Lender that are outstanding on any day shall be equal to the amount of such Lender's Revolving Credit Advances outstanding on such day (A) excluding any Revolving Credit Advances that have been funded entirely by Agent with respect to which such Lender has not funded its pro rata share and (B) including Revolving Credit Advances of such Lender which have been repaid by Borrower to Agent but not yet received by such Lender from Agent. (c) Each Lender shall settle with Agent, upon Agent's request, on the third Business Day of each week (or on such other day of the week as may be designated from time to time by Agent) 11 in each successive week (the "Weekly Settlement Date"), on the net Revolving Credit Advances and payments since the date of the last settlement. On each Weekly Settlement Date, prior to 9:00 a.m. (Los Angeles time), Agent shall notify each Lender by telephone or by telex, telecopy or other form of teletransmission, of such Lender's pro rata share of the outstanding Revolving Credit Advances and the amount of the payment necessary to adjust such Lender's outstanding Revolving Credit Advances to such Lender's pro rata share of such Revolving Credit Advances as of such Weekly Settlement Date (on a net basis taking into account any funds in the Collection Account which Agent determines are available). Any such payment shall be made by the party from which such payment is due to the other party, in same day funds, not later than 11:00 a.m. (Los Angeles time) on such Weekly Settlement Date. If any Lender shall, for any reason, not settle with Agent within one Business Day after the Weekly Settlement Date, such Lender agrees to pay and Borrower agrees to repay, severally, to Agent forthwith on demand the amount due Agent on such Weekly Settlement Date together with interest thereon for each day from such Weekly Settlement Date until the day such amount is paid to Agent, at (i) in the case of such Lender, the CP Rate for the first three (3) days for which such amount remains unpaid and thereafter at the Stated Rate, and (ii) in the case of Borrower, the Stated Rate. If such Lender shall pay to Agent such corresponding amount, such amount so paid shall constitute such Lender's Revolving Credit Advance and, if both such Lender and Borrower shall have paid and repaid, respectively, such corresponding amount, Agent shall promptly pay over to Borrower such corresponding amount in same day funds, but Borrower shall remain obligated for all interest thereon. (d) As an alternative to the weekly settlement provided for in Section 1.15(c) , Agent may elect at its sole option, to use the following same day settlement procedure for borrowings of Revolving Credit Advances. Prior to 9:00 a.m. (Los Angeles time) on any date specified for a borrowing of a Revolving Credit Advance in a Notice of Revolving Credit Advance, Agent may notify each Lender by telephone or by telex, telecopy or other form of teletransmission, of the requested Revolving Credit Advance. Not later than 11:00 a.m. (Los Angeles time) on the date of such proposed Revolving Credit Advance, each Lender shall make available to Agent, in same day funds, to such account of Agent as Agent may designate, such Lender's pro rata share of such Revolving Credit Advance. Notwithstanding the foregoing, to the extent that there are available funds in the Collection Account, Agent may, at Agent's discretion, notify each Lender that such Lender's obligation to make available to Agent same day funds as provided in the preceding sentence shall be satisfied to the extent of its pro rata share out of such funds in the Collection Account, or such portion of such funds as Agent shall indicate are to be applied to fund such Revolving Credit Advance. 1.16 Accounting. Agent will provide a monthly accounting of transactions under the Revolving Credit Loan to Borrower. Each 12 and every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon Borrower in all respects as to all matters reflected therein, unless Borrower, within thirty (30) days after the date any such accounting is delivered by Agent to Borrower, shall notify Agent in writing of any objection which Borrower may have to any such accounting, describing the basis for such objection with specificity. In that event, only those items (the "disputed items") expressly objected to in such notice shall be deemed to be disputed by Borrower. Agent's determination, based upon the facts available, of any disputed item shall (absent manifest error) be final, binding and conclusive on Borrower. 1.17 Indemnity. (a) Borrower shall indemnify and hold Agent, each Lender and their respective Affiliates, officers, directors, employees, attorneys and agents (each, an "Indemnified Person"), harmless from and against any and all suits, actions, costs, fines, deficiencies, penalties, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys' fees and disbursements and other costs of investigations or defense, including those incurred upon any appeal) (each, a "Claim") which may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended under this Agreement or any other Loan Document or otherwise arising in connection with the transactions contemplated hereunder and thereunder, including any and all Environmental Liabilities and Costs and any infringement Claim relating to any intellectual property rights of any Person, and regardless of whether the Indemnified Person is a party to such Claim; provided, that Borrower shall not be liable for any indemnification to such Indemnified Person to the extent that such Claim results solely from such Indemnified Person's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. NEITHER AGENT NOR ANY LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY. In any suit, proceeding or action brought by Agent or Lenders relating to any Account, Chattel Paper, Contract, General Intangible, Instrument, Equipment or Document for any sum owing thereunder, or to enforce any provision of any Account, Chattel Paper, Contract, General Intangible, Instrument or Document, Borrower shall save, indemnify and keep Agent and Lenders harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligor thereunder 13 arising out of a breach by Borrower of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from Borrower, and all such obligations of Borrower shall be and remain enforceable against, and only against, Borrower and shall not be enforceable against Agent or Lenders. (b) Borrower hereby acknowledges and agrees that neither Agent nor any Lender (as of the date hereof) (i) is now or has ever been in control of any of the Subject Property or the affairs of any Loan Party, or (ii) has the capacity through the provisions of the Loan Documents to influence the conduct of any Loan Party with respect to the ownership, operation or management of any of the Subject Property. 1.18 Access. Borrower shall (and shall cause each of its Subsidiaries to): (a) provide access during normal business hours to Agent and each Lender and any of their respective officers, employees and agents, as frequently as Agent or any Lender determines to be appropriate, upon reasonable advance notice (unless a Default shall have occurred and be continuing, in which event no notice shall be required and Agent and each Lender shall have access at any and all times), to the properties and facilities of Borrower or any of its Subsidiaries; (b) permit Agent, and each Lender and any of their officers, employees and agents to inspect, audit and make extracts from all of Borrower's records, files and books of account at the times and pursuant to the procedures set forth in clause (a) above; and (c) permit Agent on behalf of Lenders, to conduct audits to inspect, review and evaluate the Collateral, and Borrower agrees to render to Agent and each Lender at Borrower's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto at the times and pursuant to the procedures set forth in clause (a) above. Borrower shall, and shall cause each of its Subsidiaries to, make available to Agent and each Lender and their respective counsel, as quickly as practicable under the circumstances, originals or copies of all books, records, board minutes, contracts, insurance policies, environmental audits, business plans, files, financial statements (actual and pro forma), filings with Federal, state and local regulatory agencies, and other instruments and documents which Agent or any Lender may reasonably request. Borrower shall deliver any document or instrument reasonably necessary for Agent or any Lender, as it may from time to time request, to obtain records from any service bureau or other Person which maintains records for Borrower, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by Borrower. Borrower shall instruct its independent certified public accountants and its banking and other financial institutions to make available to Agent and each Lender such information and records as Agent and each Lender may reasonably request. 14 1.19 Taxes. (a) Any and all payments by or on behalf of Borrower hereunder or under any Revolving Credit Note or any other Loan Document, shall be made, in accordance with this Section 1.19, free and clear of and without deduction for any and all present or future Taxes. If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Revolving Credit Note or any other Loan Document to Agent or any Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 1.19) Agent or such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. (b) In addition, Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as "Other Taxes"). (c) Borrower shall indemnify and pay, within ten (10) Business Days of written demand therefor, Agent and each Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 1.19) paid by Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Any Lender who receives an indemnification payment pursuant to this Section 1.19(c) shall, at Borrower's sole cost and expense, provide all reasonable assistance to Borrower in obtaining a refund if such Tax or Other Taxes were incorrectly or illegally asserted. (d) Within thirty (30) days after the date of any such payment of Taxes or Other Taxes, Borrower shall furnish to Agent or such Lender, at its address referred to in Section 11.9, the original or a certified copy of a receipt evidencing payment thereof. (e) If any Lender subsequently receives from a taxing authority a refund of any Tax or Other Tax previously paid by Borrower and for which Borrower has indemnified Lender pursuant to this Section 1.19, such Lender shall within thirty (30) days after receipt of such refund, and to the extent permitted by applicable law, pay to Borrower the net amount of any such refund after deducting taxes and expenses attributable thereto. 15 (f) Each Lender that is organized under the laws of any jurisdiction other than the United States of America or any State thereof (including the District of Columbia) agrees to furnish to Borrower and Agent, prior to the first interest payment date after which it becomes a Lender hereunder, two (2) copies of either U.S. Internal Revenue Service Form 1001 or Form 4224 (wherein such Lender claims entitlement to complete exemption from or reduced rate of United States Federal withholding tax on interest paid by Borrower hereunder) and to provide to Borrower and Agent new Forms 4224 or 1001, as applicable, or any successor forms thereto upon the expiration or obsolescence of any previously delivered form; provided, that no Lender shall be required to deliver a Form 4224 or 1001 under this Section 1.19(f) to the extent that the delivery of such form is not authorized by law. (g) In the event Borrower becomes obligated to pay any additional material amounts to any Lender pursuant to this Section 1.19 (which amounts are not due or payable to all Lenders generally) as a result of any event or condition described in this Section 1.19, then, unless such Lender has theretofore taken steps to remove or cure, and has removed or cured, the conditions creating the cause of such obligation to pay such additional amounts, Borrower may, subject to Agent's consent, designate a substitute lender (such substitute lender herein called a "Replacement Lender") to purchase and assume such Lender's rights and obligations (including obligations with respect to Letters of Credit) with respect to its entire pro rata share hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amounts payable to such Lender with respect to its pro rata share hereunder, plus any accrued and unpaid interest and accrued and unpaid Fees in respect of such Lender's pro rata share and on other terms satisfactory to Agent. Upon such purchase by the Replacement Lender and payment of all other amounts owing to the Lender being replaced hereunder, such Lender shall no longer be a party hereto or have any rights or obligations hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender with respect to its pro rata share hereunder; provided, that the rights of such Lender pursuant to this Section 1.19(g) shall survive any substitution described in this Section 1.19(g). 1.20 Capital Adequacy. (a) Borrower shall pay directly to each Lender from time to time on written request such amounts as such Lender may reasonably determine to be necessary to compensate such Lender for any increased costs to such Lender that it reasonably determines are attributable to any law or regulation, or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) of any court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing after 16 the date hereof any risk-based capital guideline or other capital requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) heretofore or hereafter issued by any Governmental Authority in respect of such Lender's Revolving Credit Commitment, Revolving Credit Loan, or incurrence of Letter of Credit Obligations hereunder (such compensation to include an amount equal to any reduction of the rate of return on assets or equity of such Lender to a level below that which such Lender could have achieved but for such law, regulation, interpretation, directive or request). (b) Each Lender will furnish to Borrower a certificate setting forth the basis and amount of each request by such Lender for compensation under this Section 1.20. Determinations and allocations by any Lender for purposes of this Section 1.20 of the effect of any Regulatory Change pursuant to or of capital maintained pursuant to this Section 1.20, on its costs or rate of return of maintaining Revolving Credit Advances, Letter of Credit Obligations, and its Revolving Credit Commitment, and of the amounts required to compensate such Lender under this Section 1.20, shall be conclusive absent manifest error. 1.21 Priority of Obligations and Agent's Liens. (a) Agent's Liens on the Collateral for the benefit of Agent and Lenders: (i) are subordinate in rank and priority only to (A) valid, perfected and enforceable Liens as of the Petition Date that are non-avoidable under the Bankruptcy Code or applicable non-bankruptcy law, (B) Agent's Liens securing the Prepetition Credit Agreement Obligations, and (C) the Carve-Out (as defined below); and (ii) are senior in rank and priority to the Caribbean Lenders' Liens on the Collateral. The Liens granted to Agent for the benefit of Lenders under the Loan Documents shall at all times be senior to the rights of Borrower and any successor trustee or estate representative in the Chapter 11 Case or any subsequent case or proceedings under the Bankruptcy Code. Further, any Lien on the Collateral which is avoided or otherwise preserved for the benefit of Borrower's estate under Section 551 of the Bankruptcy Code shall be subordinate to Agent's Liens on the Collateral for the benefit of Lenders. (b) The Obligations shall have administrative priority equivalent to a claim under Section 364(c)(1) of the Bankruptcy Code. Subject to the Carve-Out, such administrative claim shall have priority over all other costs and expenses of the kind specified in, or ordered pursuant to, Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b), 726 or any other provision of the Bankruptcy Code and shall at all times be senior to the rights of the Borrower, Borrower's estate, and any successor trustee or estate representative in the Chapter 11 Case or any subsequent proceedings or case under the Bankruptcy Code. 17 (c) Agent's Liens on the Collateral for the benefit of Lenders and the administrative claim under Section 364(c)(1) of the Bankruptcy Code afforded the Obligations shall, following the occurrence and during the continuation of a Default or an Event of Default, be subject to (i) the unpaid professional fees and expenses allowed pursuant to Section 330 of the Bankruptcy Code in an aggregate amount (determined without regard to fees and expenses awarded or otherwise paid on an interim basis) not to exceed $750,000 (except that in calculating the amount of such fees and expenses there shall be excluded any amounts of professional fees and expenses incurred prior to the date of such calculation that were allowed by the Bankruptcy Court under Section 330 or 331 of the Bankruptcy Code and previously paid by Borrower), and (ii) fees payable to the United States Trustee pursuant to 28 U.S.C. (S) 1930(a)(6) (such payments collectively being the "Carve-Out"); provided, that (1) the foregoing shall only be applicable in the event, and to the extent, that there are no free and clear assets of Borrower's estate in the Chapter 11 Case which may be used to satisfy such fees and disbursements and that recourse for payment of any such fees and disbursements shall be made first to any such unencumbered assets, (2) such fees and disbursements shall not be paid from amounts on deposit in the LC Cash Collateral Account, and (3) so long as no Default or an Event of Default has occurred, Borrower may pay compensation and reimbursement payable under Sections 330 and 331 of the Bankruptcy Code in amounts authorized or allowed by the Bankruptcy Court from the proceeds of the Revolving Credit Loan. 2. CONDITIONS PRECEDENT 2.1 Conditions to the Initial Revolving Credit Advance or Letter of Credit Obligation. Notwithstanding any other provision of this Agreement and without affecting in any manner the rights of Agent or any Lender hereunder, Borrower shall have no rights under this Agreement (but shall have all applicable obligations hereunder), and Agent and Lenders shall not be obligated to make the initial Revolving Credit Advance or to incur the initial Letter of Credit Obligation or to take, fulfill, or perform any other action hereunder, until the following conditions have been fulfilled to the satisfaction of or waived in writing by Agent (and to the extent specified below, of Lenders): (a) This Agreement or counterparts thereof shall have been duly executed by, and delivered to, Borrower, Agent and each Lender. (b) Agent and Lenders shall have received such documents, instruments, certificates, opinions and agreements as Agent shall request in connection with the transactions contemplated by this Agreement, including all documents, instruments, agreements and other materials listed in the Schedule of Documents each in form and substance satisfactory to Agent and Required Lenders. 18 (c) [INTENTIONALLY OMITTED] (d) Evidence satisfactory to Agent that Borrower has obtained consents and acknowledgments of all Persons whose consents and acknowledgments may be required, including all requisite Governmental Authorities, to the terms and to the execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby. (e) Evidence satisfactory to Agent that the insurance policies provided for in Section 3.19 and Annex F are in full force and effect, together with appropriate evidence showing a loss payable and/or additional insured clauses or endorsements, as appropriate, in favor of Agent and Lenders and in form and substance satisfactory to Agent. (f) Payment by Borrower to Agent for its account and the account of Lenders, as the case may be, of all Fees, costs, and expenses of closing (including fees and expenses of consultants and counsel to Agent presented as of the Closing Date). (g) Other than the commencement of the Chapter 11 Case and the actions, proceedings, investigations and other matters related thereto, no action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body (i) which, if successful, would have a Material Adverse Effect, or (ii) to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of, this Agreement or any of the other Loan Documents or the consummation of the transactions contemplated hereby and thereby and which, in Agent's sole judgment, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents. (h) Agent, in its sole judgment, shall not have determined that: (i) Borrower shall have made any Restricted Payment since December 31, 1995 except as permitted under the Prepetition Credit Agreement; (ii) any material increase in liabilities, liquidated or contingent, of Borrower, or any material decrease in the assets of Borrower, shall have occurred since December 31, 1995, except as shown in Borrower's unaudited March 31, 1996 financial statements; or (iii) any Material Adverse Effect shall have occurred since December 31, 1995, except as shown in Borrower's unaudited March 31, 1996 financial statements. (i) Agent shall be satisfied, in its sole judgment, with the corporate, capital, tax, legal and management structure of each Loan Party, and shall be satisfied, in its sole judgment exercised reasonably, with the nature and status of all contractual obligations, securities, labor, tax, ERISA, employee 19 benefit, environmental, health and safety matters, in each case, involving or affecting any Loan Party. 2.2 Further Conditions to Each Revolving Credit Advance and Each Letter of Credit Obligation. It shall be a further condition to the funding of the initial and each subsequent Revolving Credit Advance and the incurrence of the initial and each subsequent Letter of Credit Obligation, if any, that the following statements shall be true on the date of each such funding, advance or incurrence, as the case may be: (a) Borrower's representations and warranties contained herein or in any of the Loan Documents shall be true and correct in all material respects on and as of the Closing Date and the date on which each such Revolving Credit Advance is made or any Letter of Credit Obligation, if any, is incurred, as though made on or incurred on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date and except for changes therein permitted or contemplated by this Agreement. (b) No event shall have occurred and be continuing, or would result from the making of any Revolving Credit Advance or the incurrence of any Letter of Credit Obligation, as the case may be, which constitutes or, after such funding, would constitute a Default or an Event of Default. (c) After giving effect to such Revolving Credit Advance or the incurrence of such Letter of Credit Obligation, as the case may be, the aggregate principal amount of the Revolving Credit Loan and outstanding Letter of Credit Obligations shall not exceed (i) the amount then authorized by the Interim Order or the Final Order, as the case may be, or (ii) the Borrowing Availability. (d) (i) The Bankruptcy Court shall have entered the Interim Order prior to the expiration of the notice period required under Bankruptcy Rule 4001; (ii) the Bankruptcy Court shall have entered the Final Order upon the later of (A) the expiration of the notice period required under Bankruptcy Rule 4001 and (ii) the expiration of the Interim Order; and (iii) neither the Interim Order nor the Final Order, as the case may be, shall have been vacated or reversed, or modified or amended without Agent's consent, and no appeal of such order shall have been timely filed or, if such an appeal has been taken, no stay of such order pending appeal shall be presently effective. (e) Each of the conditions set forth in Section 2.1(b), Section 2.1(d) and Section 2.1(e) shall continue to be satisfied by Borrower as of such date. (f) No Material Adverse Effect shall have occurred. 20 The request and acceptance by Borrower of the proceeds of any Revolving Credit Advance, and the request by Borrower for the incurrence by Lenders of Letter of Credit Obligations, as the case may be, shall be deemed to constitute, as of the date of such request or acceptance, (i) a representation and warranty by Borrower that the conditions in this Section 2.2 have been satisfied and (ii) a confirmation by Borrower of the granting and continuance of Agent's and Lenders' Liens pursuant to the Collateral Documents. 3. REPRESENTATIONS AND WARRANTIES To induce Agent and Lenders to enter into this Agreement, Borrower represents and warrants to Agent and Lenders that: 3.1 Corporate Existence; Compliance with Law. Borrower: (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is duly qualified to do business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be in good standing in such other jurisdictions would not result in a Material Adverse Effect; (b) subject to compliance with any applicable provisions of the Bankruptcy Code, has the requisite corporate power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its business as now and proposed to be conducted; (c) has all licenses, permits, consents or approvals from or by, and has made all filings with, and has given all notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct, except where any such noncompliance would not result in a Material Adverse Effect; (d) is in compliance with its certificate of incorporation and by-laws; and (e) is in compliance in all material respects with all applicable provisions of law. 3.2 Executive Offices; Collateral Locations; Corporate or Other Names. The current locations of Borrower's executive office, principal place of business, corporate offices, all warehouses and premises within which any Collateral is stored or located, and the locations of all of Borrower's records concerning the Collateral are set forth in Schedule 3.2 and, except as set forth in Schedule 3.2, such locations have not changed during the preceding 12 months. During the prior five (5) years, except as set forth in Schedule 3.2, Borrower has not been known as or used any corporate, fictitious or trade name. 3.3 Corporate Power; Authorization; Enforceable Obligations. The execution, delivery and performance by Borrower of the Loan Documents and all other instruments and documents to be delivered by Borrower hereunder and thereunder and the 21 creation of all Liens provided for herein and therein: (a) are within Borrower's corporate power; (b) have been duly authorized by all necessary corporate and shareholder action; (c) have been, or by the Closing Date will be, duly authorized by the Bankruptcy Court; (d) are not in contravention of any provision of Borrower's certificate of incorporation or by-laws or other organizational documents; (e) subject to approval by the Bankruptcy Court will not violate any law or regulation, or any order or decree of any court or governmental instrumentality; (f) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower is a party or by which Borrower or any of its property is bound; (g) will not result in the creation or imposition of any Lien upon any of the property of Borrower other than those in favor of Agent or Lenders, all pursuant to the Loan Documents; and (h) do not require the consent or approval of any Governmental Authority or any other Person, except for the Bankruptcy Court and those referred to in Section 2.1(d), all of which will have been duly obtained, made or complied with prior to the Closing Date and which are in full force and effect. At or prior to the Closing Date, each of the Loan Documents shall have been duly executed and delivered for the benefit of or on behalf of Borrower and, subject to the entry of the Interim Order or the Final Order, as the case may be, each shall then constitute a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms. 3.4 Financial Statements and Projections. Borrower has delivered the Financials and Projections identified in Schedule 3.4, and each of such Financials and Projection complies in all material respects with the description thereof contained in Schedule 3.4. 3.5 Material Adverse Change. As of the date hereof, Borrower has no material obligations, contingent liabilities, or liabilities for Charges, long- term leases or unusual forward or long-term commitments which are not reflected in the audited December 31, 1995 consolidated balance sheet of Borrower and the March 31, 1996 unaudited financial statements of Borrower. As of the date hereof, there has been no material deviation from the Projections provided to Lenders. Except as otherwise permitted hereunder or as set forth in Schedule 3.5, no Restricted Payment has been made since December 31, 1995, and no shares of Stock of Borrower have been, or are now required to be, redeemed, retired, purchased or otherwise acquired for value by Borrower. Except as set forth in Schedule 3.5, since December 31, 1995, no event has occurred which would result in a Material Adverse Effect. 3.6 Ownership of Property; Liens. Except as described in Schedule 3.6, the real estate listed in Schedule 3.6 constitutes all of the real property owned, leased, or used in its business by Borrower. Borrower holds (a) good and marketable fee simple 22 title to all of its real estate described as owned in Schedule 3.6, (b) valid and marketable leasehold interests in all of Borrower's Leases (both as lessor and lessee, sublessee or assignee) described as leased in Schedule 3.6, and (c) good and marketable title to, or valid leasehold interests in, all of its other properties and assets. None of the properties and assets of Borrower are subject to any Liens, except (x) Permitted Encumbrances and Liens set forth in Schedule 6.7 and (y) from and after the Closing Date, the Lien in favor of Agent and Lenders pursuant to the Collateral Documents. Borrower has received all deeds, assignments, waivers, consents, non-disturbance and recognition or similar agreements, bills of sale and other documents, and duly effected all recordings, filings and other actions necessary to establish, protect and perfect Borrower's right, title and interest in and to all such real estate and other assets or property. Except as described in Schedule 3.6: (a) neither Borrower, nor, to Borrower's knowledge, any other party to any such Lease described in Schedule 3.6 is in default of its obligations thereunder or has delivered or received any notice of default under any such Lease, and no event has occurred which, with the giving of notice, the passage of time, or both, would constitute a default under any such Lease; (b) Borrower does not own or hold, and is not obligated under or a party to, any option, right of first refusal or any other contractual right to purchase, acquire, sell, assign or dispose of any real property owned or leased by it; and (c) no portion of any real property owned or leased by Borrower has suffered any material damage by fire or other casualty loss which has not heretofore been, as of the Closing Date, completely repaired and restored, or, at all times thereafter, repaired and restored (or is in the process of being repaired and restored), to a position reasonably comparable to its original condition. All material permits required to have been issued or appropriate to enable the real property owned or leased by Borrower to be lawfully occupied and used for all of the purposes for which they are currently occupied and used, have been lawfully issued and are, as of the date hereof, in full force and effect. 3.7 Restrictions; No Default; Material Contracts. No contract, lease, agreement or other instrument to which Borrower is a party or by which it or any of its properties or assets is bound or affected and no provision of any charter, corporate restriction, applicable law or governmental regulation binding upon or applicable to Borrower has resulted in or will result in a Material Adverse Effect. Except for defaults occasioned by the Chapter 11 Case or permitted under the Bankruptcy Code, Borrower is not in default and, to Borrower's knowledge, no third party is in default, under or with respect to any Material Contract to which Borrower is a party. No Default has occurred and is continuing. Schedule 3.7, as supplemented from time to time by written disclosures to the Agent, sets forth a complete and accurate list of all Material Contracts of Borrower and each of its Subsidiaries. 23 3.8 Labor Matters. Except as set forth in Schedule 3.8, there are no strikes or other labor disputes against Borrower that are pending or, to Borrower's knowledge, threatened. Hours worked by and payment made to employees of Borrower have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters, which violation in either case would have a Material Adverse Effect. All material payments due from Borrower on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Borrower. Except as set forth in Schedule 3.8, Borrower does not have any obligation under any collective bargaining agreement, management agreement, or any employment agreement, and a correct and complete copy of each agreement listed in Schedule 3.8 has been made available to Agent. There is no organizing activity involving Borrower pending or, to Borrower's knowledge, threatened by any labor union or group of employees. Except as set forth in Schedule 3.14, there are no representation proceedings pending or, to Borrower's knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of Borrower has made a pending demand for recognition, and, there are no complaints or charges against Borrower pending or, to Borrower's knowledge, threatened to be filed with any Federal, state, local or foreign court, governmental agency or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by Borrower of any individual. 3.9 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Except as set forth in Schedule 3.9, Borrower has no Subsidiaries, is not engaged in any joint venture or partnership with any other Person, and is not an Affiliate of any other Person. The Stock of Borrower owned by each of the stockholders thereof named in Schedule 3.9 constitutes all of the issued and outstanding Stock of Borrower. Except as set forth in Schedule 3.9, there are no outstanding rights to purchase options, warrants or similar rights or agreements pursuant to which Borrower may be required to issue, sell or purchase any Stock or other equity security. Schedule 3.9 lists all outstanding Stock of Borrower as of the Closing Date. Schedule 6.3 lists all Indebtedness in excess of $100,000 of Borrower as of the Closing Date. 3.10 Government Regulation. Borrower: (a) is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940 as amended; and (b) is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or any other Federal or state statute that restricts or limits Borrower's ability to incur Indebtedness, pledge its assets, or to perform its obligations hereunder, or under any other Loan Document, and the making of the Revolving Credit Advances and the incurrence of the Letter of Credit Obligations, in each case by Lenders, the application of 24 the proceeds and repayment thereof by Borrower, and the consummation of the transactions contemplated by this Agreement and the other Loan Documents, will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission. 3.11 Margin Regulations. Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of the any Revolving Credit Advance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Borrower will not take or permit to be taken any action which might cause any Loan Document or any document or instrument delivered pursuant hereto or thereto to violate any regulation of the Board of Governors of the Federal Reserve Board. 3.12 Taxes. All Federal, state, local and foreign tax returns, reports and statements, including information returns required to be filed by Borrower, have been filed with the appropriate Governmental Authority and all Charges and other impositions shown thereon to be due and payable have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid. Borrower has paid when due and payable all material Charges required to be paid by it. Proper and accurate amounts have been withheld by Borrower from its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable Federal, state, local and foreign law and such withholdings have been timely paid to the respective Governmental Authorities. Schedule 3.12 sets forth those taxable years for which any of the tax returns of Borrower are currently being audited by the IRS or any other applicable Governmental Authority; and any assessments or threatened assessments in connection with such audit or otherwise currently outstanding. Except as described in Schedule 3.12, Borrower has not executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. None of the property owned by Borrower is property which is required to treat as being owned by any other Person pursuant to the provisions of IRC Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of IRC Section 168(h). Borrower has not agreed or been requested to make any adjustment under IRC Section 481(a) or IRC Section 482 by reason of a change in accounting method or otherwise. Borrower has no obligation under any written tax sharing agreement except as described in Schedule 3.12. 25 3.13 ERISA. (a) Schedule 3.13 lists all Title IV Plans, Multiemployer Plans and Retiree Welfare Plans maintained or contributed to by Borrower or by any ERISA Affiliate of Borrower, and separately identifies such plans as either Title IV Plans, Multiemployer Plans, multiple employer plans subject to Section 4064 of ERISA or Retiree Welfare Plans. To the knowledge of Borrower: (i) all Qualified Plans of Borrower or any ERISA Affiliate of Borrower are the subject of current favorable determination letters received from the IRS under Section 401(a) of the IRC considering the effects on such Qualified Plans of the Tax Reform Act of 1986 and all later tax enactments through the Omnibus Reconciliation Act of 1993 ("OBRA 93")(except that compliance with the Unemployment Compensation Amendments of 1992 or/and OBRA 93 may be demonstrated alternatively by the timely verbatim adoption of appropriate IRS model amendments), or the appropriate Person has timely filed (or, in the case of any Qualified Plan with a plan year ending October 31, November 30 or December 31, the appropriate Person either has timely filed or will timely file such application) an application with the IRS for such a letter, all such Qualified Plans have been or shall be amended, including retroactive amendments, as required during such determination letter process to maintain the qualified status of such Plans, and, to the best of Borrower's knowledge, all such Qualified Plans have been operated in all material respects in compliance with their written terms and the provisions of applicable law; and (ii) the trusts created under each Qualified Plan are exempt from tax under the provisions of IRC Section 501(a) and nothing has occurred which would cause the loss of qualification of any Qualified Plan or tax-exempt status of any such trust. To the knowledge of Borrower, each Plan is in compliance in all material respects with the applicable provisions of ERISA and the IRC, including the filing of all reports required under the IRC or ERISA which are true and correct as of the date filed, and all required contributions and benefits have been paid in accordance with the provisions of each such Plan. Neither Borrower nor any ERISA Affiliate of Borrower has failed to make any contribution or pay any amount required by IRC Section 412 or Section 302 of ERISA. The present value of the liabilities under all unfunded Pension Plans of Borrower and its ERISA Affiliates does not exceed the aggregate amount of $500,000. Neither Borrower nor any ERISA Affiliate has engaged in a prohibited transaction, as defined in IRC Section 4975 or Section 406 of ERISA, in connection with any Plan which would subject Borrower or any ERISA Affiliate to a material tax on prohibited transactions imposed by IRC Section 4975 or any other material liability. (b) Except as set forth in Schedule 3.13: (i) no Title IV Plan has any material Unfunded Pension Liability; (ii) neither Borrower nor any ERISA Affiliate of Borrower nor Borrower and its ERISA Affiliates in the aggregate, have, or upon the occurrence of any reasonably possible events, would have any 26 material liability to any Multiemployer Plan or Retiree Welfare Plan which is not otherwise fully disclosed as or in a line item in the audited financial statements of Borrower or any ERISA Affiliate; (iii) no ERISA Event or event described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably expected to occur which has or can be expected to result in any material liability to Borrower; (iv) there are no pending, or to the knowledge of Borrower, threatened claims, actions or lawsuits (other than claims for benefits in the normal course), asserted or instituted against (x) any Plan or its assets, (y) any fiduciary (within the meaning of Section 3(21)(A) of ERISA) with respect to any Plan or (z) Borrower or any ERISA Affiliate with respect to any Plan; (v) neither Borrower nor any ERISA Affiliate of Borrower has incurred or reasonably expects to incur any Withdrawal Liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan; (vi) within the last five (5) years neither Borrower nor any ERISA Affiliate of Borrower has engaged in a transaction which resulted in a Title IV Plan with Unfunded Pension Liabilities being transferred outside of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any such entity; (vii) no Plan which is a Retiree Welfare Plan provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment (except as may be required by IRC Section 4980B and at the sole expense of the participant or the beneficiary of the participant); (viii) Borrower and each ERISA Affiliate of Borrower have complied in all material respects with the notice and continuation coverage requirements of IRC Section 4980B and the proposed or final regulations thereunder; and (ix) the aggregate benefit liabilities under all Plans of Borrower and its ERISA Affiliates that has been funded or satisfied with insurance contracts rated below AAA by Standard & Poor's Corporation, or below the equivalent rating by any other nationally recognized rating agency, does not exceed $500,000. 3.14 No Litigation. Except as set forth in Schedule 3.14, no action, claim or proceeding is now pending or, to the knowledge of Borrower, threatened against Borrower, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any Federal, state, or local government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators (a) which challenges any such Person's right, power, or competence to enter into or perform any of its obligations under the Loan Documents, or the validity or enforceability of any Loan Document or any action taken thereunder, or (b) which could reasonably be expected to result in a Material Adverse Effect. To the knowledge of Borrower, there does not exist a state of facts which is reasonably likely to give rise to such proceedings. Except as set forth in Schedule 3.14, Borrower is not a party to any consent decree. 27 3.15 Brokers. No broker or finder acting on behalf of Borrower brought about the obtaining, making or closing of the credit extended pursuant to this Agreement or the transactions contemplated by the Loan Documents and Borrower does not have any obligation to any Person in respect of any finder's or brokerage fees in connection therewith. 3.16 Patents, Trademarks, Copyrights and Licenses. Except as otherwise set forth in Schedule 3.16, Borrower owns all licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications and trade names which are necessary to continue to conduct its business as heretofore conducted by it, now conducted by it and proposed to be conducted by it, each of which is listed (with respect to copyrights, those that are registered only), together with United States Patent and Trademark Office application or registration numbers, where applicable, in Schedule 3.16. Schedule 3.16 lists each Material Franchise Agreement of Borrower as of the Closing Date and will be updated by Borrower to reflect promptly any change therein. Borrower conducts business without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others, except where such infringement or claim of infringement would not have or result in a Material Adverse Effect. Except as set forth in Schedule 3.16, to Borrower's knowledge, there is no infringement or claim of infringement by others of any material license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of Borrower. 3.17 Full Disclosure. No information contained in this Agreement, the other Loan Documents, the Financials or any written statement furnished by or on behalf of Borrower or any Affiliate thereof pursuant to the terms of this Agreement or any other Loan Document, which has previously been delivered to Agent or any Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. With respect to all business plans and other forecasts and projections (including the Projections) furnished by or on behalf of Borrower and made available to Agent or any Lender relating to the financial condition, operations, business, properties or prospects of Borrower or any Subsidiary thereof (a) all facts stated as such therein are true and complete in all material respects, (b) all facts upon which the forecasts or projections therein contained are based are true and complete in all material respects and no material fact was omitted therefrom, (c) all assumptions made on that basis are reasonable under the circumstances and are disclosed therein, and (d) the forecasts or projections are reasonably based on those facts and assumptions. With respect to any such forecasts or projections made available to Agent or any Lender after the Closing Date, the foregoing clauses (a) through 28 (d) shall be true and correct in all respects as of the date of such projections or forecasts. 3.18 Hazardous Materials. Except (a) as set forth in Schedule 3.18, (b) in connection with routine operations in the ordinary course of business in compliance with Environmental Laws or with applicable permits issued by a Governmental Authority, or (c) where the presence of any Hazardous Material could not reasonably be expected to result in a Material Adverse Effect, the Subject Property is free of any Hazardous Material. In addition, Schedule 3.18 discloses any and all existing or potential Environmental Liabilities and Costs of Borrower of which Borrower, after due inquiry, has knowledge, which could reasonably be expected to constitute or result in a Material Adverse Effect. Except as set forth in Schedule 3.18, Borrower has not caused or suffered to occur any Release at, under, above or within any Subject Property, which Release could reasonably be expected to constitute or result in a Material Adverse Effect. Neither Borrower nor its Affiliates is involved in operations which could reasonably be expected to lead to the imposition of any liability or Lien on it or any of the Subject Property under any Environmental Laws, which liability or Lien could reasonably be expected to constitute or result in a Material Adverse Effect, and Borrower has not permitted any tenant or occupant of such premises to engage in any such activity. 3.19 Insurance Policies. Schedule 3.19 lists all insurance of any nature maintained for current occurrences by Borrower, as well as a summary of the terms of such insurance. Such insurance complies with and shall at all times comply with the standards set forth in Annex F. 3.20 Deposit and Disbursement Accounts. Schedule 3.20 lists all banks and other financial institutions at which Borrower maintains deposits and/or other accounts and/or post office lock boxes, including the Disbursement Accounts, the Concentration Account and the Lock Box Accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number. 3.21 Prepetition Credit Agreement Obligations. (a) As of the Petition Date, (i) the outstanding principal amount of the Prepetition Advances was $22,833,083, (ii) the outstanding amount of Prepetition LC Obligations was $1,582,082, and (iii) the outstanding principal amount of the Prepetition Term Loan was $3,392,861. Borrower's obligation to pay such amounts (and all other Prepetition Credit Agreement Obligations) are valid and enforceable and are payable pursuant to this Agreement and the Prepetition Credit Agreement without offset, withholding, counterclaim, deduction or other defenses of any kind. 29 (b) All Liens granted to Agent or any Lender under and as defined in the Prepetition Credit Agreement are valid and fully perfected and remain in full force and effect. (c) The value of the Collateral is sufficient to permit the accrual and current payment of all amounts payable in respect of the Prepetition Credit Agreement Obligations pursuant to Section 5.15. (d) The Loan Documents, the Interim Order, if any, and the Final Order are without prejudice to the rights and remedies provided to Agent and Lenders under and as defined in the Prepetition Credit Agreement and the other Prepetition Loan Documents. 4. FINANCIAL STATEMENTS AND INFORMATION 4.1 Reports and Notices. Borrower covenants and agrees that from and after the Closing Date and until the Termination Date, it shall deliver to Agent and each Lender the Financial Statements, Projections and notices at the times and in the manner set forth in Annex E. 4.2 Communication with Accountants. Borrower (for itself and each Subsidiary thereof) authorizes Agent and each Lender to communicate directly with its and its Subsidiaries' independent certified public accountants and tax advisors and authorizes those accountants to disclose to Agent and each Lender any and all financial statements and other supporting financial documents and schedules, including copies of any management letter with respect to the business, financial condition and other affairs of Borrower and each Subsidiary thereof. At or before the Closing Date, Borrower shall deliver a letter (the "Accountant's Letter") addressed to and acknowledged by such accountants and tax advisors instructing them to make available to Agent and Lenders such information and records as Agent and Lenders may reasonably request and to otherwise comply with the provisions of this Section 4 and authorizing Agent and Lenders to rely on the certified Financials prepared by such accountants. After the Closing Date, (a) upon Agent's or any Lender's request, Borrower shall deliver a letter addressed to, and acknowledged by, such accountants and tax advisors instructing them to make available to Agent and Lenders such information and records as Agent or Lenders may reasonably request and to otherwise comply with the provisions of this Section 4, and (b) if Borrower engages the services of accountants or tax advisers other than Arthur Andersen & Co., it shall deliver a letter addressed to, and acknowledged by, such accounts or tax advisers containing the same terms and provisions as the Accountant's Letter. 30 5. AFFIRMATIVE COVENANTS Borrower covenants and agrees (for itself and its Subsidiaries) that, unless Required Lenders shall otherwise consent in writing, from and after the date hereof and until the Termination Date: 5.1 Maintenance of Existence and Conduct of Business. Borrower shall (and shall cause each of its Subsidiaries to): (a) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises, where the failure to do so would have a Material Adverse Effect; (b) continue to conduct its business substantially as now conducted or as otherwise permitted hereunder, except where the failure to do so results solely from the filing of the Chapter 11 Case; (c) at all times maintain, preserve and protect all of its Intellectual Property, and preserve all the remainder of its property, in use or useful in the conduct of its business and keep the same in good repair, working order and condition (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with Borrower's past practices, so that the business carried on in connection therewith may be properly and advantageously conducted at all times; (d) keep and maintain its Equipment and Fixtures in good operating condition sufficient for the continuation of such Person's business conducted on a basis consistent with past practices and shall provide or arrange for all maintenance and service and all repairs necessary for such purpose; and (e) transact business only under the names set forth in Schedule 3.2 unless Agent has given its prior written consent. 5.2 Payment of Charges and Claims. Except as non-payment is permitted or payment is prohibited by the Bankruptcy Code or the Bankruptcy Court, Borrower shall pay and discharge, or cause to be paid and discharged in accordance with the terms thereof, (A) all Charges imposed upon it or any Subsidiary of Borrower or its or their income and profits, or any of its property (real, personal or mixed), and (B) all lawful claims for labor, materials, supplies and services or otherwise, which if unpaid might by law become a Lien on its property; provided, that Borrower or any such Subsidiary shall not be required to pay any such Charge or claim which is being contested in good faith by proper legal actions or proceedings, so long as at the time of commencement of any such action or proceeding and during the pendency thereof: (i) no Default shall have occurred and be continuing; (ii) adequate reserves with respect thereto are established and are maintained in accordance with GAAP; (iii) such contest operates to suspend collection of the contested Charges or claims and is maintained and prosecuted continuously with diligence; (iv) none of the Collateral would be subject to forfeiture or loss or any Lien by reason of the institution or prosecution of such contest; (v) no Lien other 31 than a Permitted Encumbrance shall exist, be imposed or be attempted to be imposed for such Charges or claims during such action or proceeding; and (vi) Borrower shall promptly pay or discharge such contested Charges and all additional charges, interest penalties and expenses, if any, and shall deliver to Agent evidence acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to Borrower. 5.3 Books and Records. Borrower shall (and shall cause each Subsidiary to) keep adequate records and books of account with respect to its business activities, in which proper entries, reflecting all of its consolidated and consolidating financial transactions, are made in accordance with GAAP and on a basis consistent with the Financials. 5.4 Litigation. Borrower shall notify Agent and each Lender in writing, promptly upon learning thereof, of any litigation, Claim or other action commenced or threatened against Borrower or any Subsidiary of Borrower, and of the institution against any such Person of any suit or administrative proceeding which (a) may involve an amount in excess of $500,000 individually or in a series of related matters or (b) could have or result in a Material Adverse Effect if adversely determined. 5.5 Insurance. (a) Borrower shall, at its (or its Subsidiary's) sole cost and expense maintain or cause to be maintained, the policies of insurance in such amounts and as otherwise described in Annex F. Borrower shall notify Agent promptly of any occurrence causing a material loss or decline in value of any real or personal property and the estimated (or actual, if available) amount of such loss or decline, except as specified otherwise in Annex F. Borrower hereby directs all present and future insurers under its "All Risk" policies of insurance to pay all proceeds payable thereunder directly to Agent on behalf of Lenders. Borrower shall have the right (and obligation) to make, settle and adjust all claims under its insurance policies; provided, that (i) in the event Agent, in its sole discretion, determines that Borrower has not been diligent in such efforts, upon ten (10) Business Days prior notice (unless Agent determines, in its sole discretion, that a shorter notice period is required in order for its rights with respect to such claims not to be prejudiced), or (ii) upon the occurrence of an Event of Default, Agent shall have the right (but not the obligation) to make, settle and adjust on behalf of Borrower. Subject to the immediately preceding sentence, Borrower irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated by Agent) as Borrower's true and lawful agent and attorney in-fact for the purpose of making, settling and adjusting claims under the "All Risk" policies of insurance, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such "All Risk" 32 policies of insurance, and for making all determinations and decisions with respect to such "All Risk" policies of insurance. In the event Borrower at any time or times hereafter shall fail to obtain or maintain (or fail to cause to be obtained or maintained) any of the policies of insurance required above or to pay any premium in whole or in part relating thereto, Agent or Lenders, without waiving or releasing any Obligations or Default or Event of Default hereunder, may at any time or times thereafter (but shall not be obligated to) obtain and maintain such policies of insurance and pay such premium and take any other action with respect thereto which Agent or Lenders deem advisable. All sums so disbursed, including attorneys' fees, court costs and other charges related thereto, shall be payable, on demand, by Borrower to Agent on behalf of Lenders and shall be additional Obligations hereunder secured by the Collateral, provided, that if and to the extent Borrower fails to promptly pay any of such sums upon Agent's demand therefor, Agent is authorized to, and at its option may, make or cause to be made Revolving Credit Advances on behalf of Borrower for payment thereof. (b) Agent and Required Lenders reserve the right at any time, upon review of Borrower's risk profile, to require additional forms and limits of insurance to, in Agent's or Required Lenders' sole opinion, adequately protect the interests of Agent and Lenders. Agent and each Lender acknowledge that, based upon the evidence of insurance coverage presented to Agent and upon Borrower's existing business, locations and operations as of the Closing Date, Borrower's insurance coverage in effect on the Closing Date is satisfactory in accordance with this Section. Borrower shall, if so requested by Agent, deliver to Agent, at such time as Agent may reasonably request, a report of a reputable insurance broker satisfactory to Agent with respect to its insurance policies. (c) Borrower shall deliver to Agent endorsements to all of its and its Subsidiaries' (i) "All Risk" and business interruption insurance naming Agent on behalf of Lenders as loss payee, and (ii) general liability and other liability policies naming Agent and each Lender as additional insureds. 5.6 Compliance with Laws. Except as non-compliance is permitted or compliance is prohibited by the Bankruptcy Code, Borrower shall (and shall cause each of its Subsidiaries to) comply in all material respects with all Federal, state and local laws, permits and regulations applicable to it, including those relating to licensing, ERISA and labor matters. 5.7 Agreements. Except as non-performance is permitted or performance is prohibited by the Bankruptcy Code or the Bankruptcy Court, Borrower shall (and shall cause each of its Subsidiaries to) perform, within all required time periods (after giving effect to any applicable grace periods), all of its 33 obligations and enforce all of its rights under each agreement, contract, instrument or other document to which it is a party, including each Material Franchise Agreement, any leases and customer contracts to which it is a party, where the failure to so perform and enforce could have or result in a Material Adverse Effect. Borrower shall not (and shall not permit any of its Subsidiaries to) terminate or modify any provision of any agreement, contract, instrument or other document (including each Material Franchise Agreement) to which it is a party which termination or modification could have or result in a Material Adverse Effect. Borrower shall (and shall cause each of its Subsidiaries to) perform and comply with all obligations in respect of Accounts, Chattel Paper, Contracts, Licenses, Instruments, Documents and all other agreements constituting or giving rise to Collateral. Except as provided below, Borrower shall not, without Agent's prior written consent, with respect to any of the Accounts, Chattel Paper, Instruments or amounts due under any Contract: (a) grant any extension of the time of payment of any thereof; (b) compromise or settle the same for less than the full amount thereof; (c) release, in whole or in part, any Person liable for the payment thereof; or (d) allow any credit or discount whatsoever thereon other than trade discounts granted in the ordinary course of business of Borrower; provided, that Borrower may take any of the actions set forth in clauses (a) through (d) above to the extent that the amount affected by any one such action does not exceed $100,000. 5.8 Supplemental Disclosure. From time to time as may be necessary, Borrower may, or at the request of Agent or any Lender, Borrower shall supplement (or cause to be supplemented) each Schedule hereto, or representation herein or in any other Loan Document with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Schedule or as an exception to such representation or which is necessary to correct any information in such Schedule or representation which has been rendered inaccurate thereby; provided, that such supplement to such Schedule or representation shall not be deemed an amendment thereof unless expressly consented to in writing by Agent, or (a) with respect to amendments to Schedule 3.2, Borrower has provided Agent with not less than thirty (30) days prior written notice and Borrower has executed and delivered to Agent all documents requested by Agent to maintain the perfection and priority of Agent's Liens on the Collateral, and (b) with respect to amendments to Schedule 3.19 or Schedule 3.20, Borrower has provided Agent with not less than thirty (30) days prior written notice, and no such amendments, except as the same may be consented to in a writing which expressly includes a waiver, shall be or be deemed a waiver by Lenders of any Default disclosed therein. Borrower shall, if so requested by Agent or Required Lenders, furnish to Agent and Lenders as often as they reasonably request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Agent or Required Lenders may 34 reasonably request, all in reasonable detail, and, Borrower shall advise Agent and Lenders promptly, in reasonable detail, of any of the following of which Borrower becomes aware: (a) any Lien, other than as permitted pursuant to Section 6.7, attaching to or asserted against any of the Collateral; (b) any material deterioration in the Collateral; (c) any cancellation, termination, non-renewal, default or other material occurrence with respect to a Material Franchise Agreement; (d) any change in the list of Material Franchise Agreements; and (e) the occurrence of any other event which would have a Material Adverse Effect upon the Collateral and/or Agent's Lien thereon. 5.9 Environmental Matters. Borrower shall (a) comply with the Environmental Laws and permits applicable to it, except where such noncompliance could not have a Material Adverse Effect, (b) notify Agent and each Lender promptly after Borrower becomes aware of any Release upon any Subject Property that results in a reporting obligation to any Governmental Authority, and (c) promptly advise Agent of any material oral communication received by any Loan Party in connection with, and forward to Agent and each Lender a copy of any written order, notice, permit, application, or other material communication or report received by any Loan Party in connection with, any such Release or any other material matter relating to any Environmental Laws that may affect any Subject Property or any Loan Party. The provisions of this Section 5.9 shall apply whether or not the Environmental Protection Agency, any other Federal agency or any state or local environmental agency has taken or threatened any action in connection with any Release or the presence of any Hazardous Materials. 5.10 Landlord's Agreements. Except as otherwise provided in the Interim Order and the Final Order, Borrower shall use reasonable efforts, consistent with sound business judgment, to obtain a landlord's agreement in form and substance acceptable to Agent from the lessor of any present or future leased premises of Borrower. 5.11 Certain Obligations Respecting Subsidiaries. Borrower will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that each of its Subsidiaries is a wholly owned Subsidiary. Borrower will not permit any of its Subsidiaries to enter into, after the date of this Agreement, any indenture, agreement, instrument or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends or other Restricted Payments, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of any property or assets. 5.12 Application of Proceeds. Borrower shall use the proceeds of Revolving Credit Advances as provided in Section 1.4. 35 5.13 Fiscal Year. Borrower shall, and shall cause each Subsidiary to, maintain as its Fiscal Year the twelve month period ending on December 31 of each year. 5.14 Casualty and Condemnation. (a) Borrower shall promptly notify Agent of any loss, damage, or destruction to any Collateral or any real property owned by Borrower whether or not constituting Collateral (collectively, "Property") or arising from its use, whether or not covered by insurance. Subject to the provisions of Section 5.5, Agent on behalf of Lenders is hereby authorized to adjust losses and collect all insurance proceeds directly. If, notwithstanding the provisions hereof which require that Agent be the sole loss payee, a check or other instrument from an insurer is made payable to Borrower or Borrower and Agent jointly, Agent may endorse Borrower's name thereon and take such other action as Agent may elect to obtain the proceeds thereof. After deducting from such proceeds the expenses, if any, incurred by Agent in the collection or handling thereof, if such net proceeds do not arise from a loss, damage or destruction to any Collateral, and involve less than $1,000,000, Borrower may use such net proceeds to repair or replace such property. In all other cases, Agent may apply such proceeds to the reduction of the Obligations in the manner set forth in Section 1.12 or, at Agent's option in its sole discretion, exercised in good faith, may permit or require Borrower to use such proceeds, or any part thereof, to replace, repair or restore such Property as provided in paragraph (d) below. (b) Borrower shall promptly upon learning of the institution of any proceeding for the condemnation or other taking of any of its Property, notify Agent of the pendency of such proceeding, and agrees that Agent may participate in any such proceeding and Borrower from time to time will deliver to Agent all instruments reasonably requested by Agent to permit such participation. Agent shall (and is hereby authorized to) collect any and all awards, payments or other proceeds of any such condemnation or taking and apply such proceeds to the reduction of the Obligations in the manner set forth in Section 1.12 or, at Agent's option in its sole discretion, may permit or require Borrower to use such proceeds, or any part thereof, to replace, repair or restore such Property as provided in paragraph (d) below. (c) Subject to the terms and conditions hereof (including Section 2.2), after any application of the proceeds of any loss or taking of Borrower's Property to the reduction of the Obligations pursuant to paragraphs (a) and (b) above, Borrower may borrow Revolving Credit Advances for the purpose of replacing, repairing or restoring any Property subject to such loss or taking in accordance with paragraph (d) below. 36 (d) Any Property which is to be replaced, repaired or restored pursuant to paragraph (a), (b) or (c) above shall be replaced, repaired or restored with materials and workmanship of substantially as good a quality as existed before such loss or taking, and Borrower shall commence such replacement, repair or restoration as soon as practicable and proceed diligently with it until completion to Agent's reasonable satisfaction. Borrower shall provide to Agent written progress reports, other information and evidence of its compliance with the foregoing. 5.15 Payment of Prepetition Credit Agreement Obligations. Borrower shall pay to Agent for the benefit of the Lenders (under and as defined in the Prepetition Credit Agreement) when such amounts would otherwise be due thereunder (but for the acceleration of such obligations resulting from the filing of the Chapter 11 Case) all interest on the Prepetition Advances (at the default rate set forth in Section 1.6(c) thereof; provided, that so long as no Event of Default has occurred and is continuing under this Agreement, such rate shall be at the non-default rate specified in such section), and all other fees and expenses owing thereunder. 6. NEGATIVE COVENANTS Borrower covenants and agrees (for itself and each Subsidiary) that, without Required Lenders' prior written consent, from and after the date hereof and until the Termination Date: 6.1 Mergers, Subsidiaries, Etc. Borrower shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with, any Person or form or acquire any Subsidiary. Prior to forming any Subsidiary, Borrower shall (a) provide not less than thirty (30) days prior written notice to Agent and each Lender, (b) take all actions requested by Agent to protect and preserve the Collateral, and (c) receive the prior written consent of Required Lenders. Borrower shall not permit any of its Subsidiaries (other than Seven-Up/RC of PR) to engage in any business operations or acquire any assets or property. 6.2 Investments. Borrower shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, make or maintain any Investment except, so long as Borrower complies with Section 345 of the Bankruptcy Code: (a) as otherwise permitted by Section 6.3 or 6.4; (b) Investments outstanding on the date hereof and listed in Schedule 6.2; (c) Borrower's ownership of the Stock of Seven-Up/RC of PR; (d) Investments in Dollars and Cash Equivalents to the extent needed to finance local operations (provided such Investments are in deposits in one or more of the Disbursement Accounts and such deposits do not exceed $500,000 in 37 the aggregate for all such accounts); (e) Investments by Borrower and Seven- Up/RC of PR in trade and franchise receivables owing to them in the ordinary course of their respective businesses; (f) Investments received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (g) Negotiable instruments endorsed for collection in the ordinary course of business; and (h) Investments received by Borrower upon the sale or disposition of assets otherwise permitted pursuant to Section 6.8. 6.3 Indebtedness. Borrower shall not (and shall not permit any of its Subsidiaries to) create, incur, assume or permit to exist any Indebtedness, except, to the extent not prohibited by the Bankruptcy Code: (a) the Obligations; (b) Deferred Taxes; (c) the Senior Secured Notes; (d) Capital Lease Obligations permitted under clause (d) of Section 6.7; (e) Indebtedness secured by purchase money Liens permitted under clause (d) of Section 6.7 in a maximum aggregate amount outstanding at any time not to exceed $5,000,000; (f) the Caribbean Intercompany Notes; (g) other Intercompany Indebtedness incurred by Seven-Up/RC of PR in favor of Borrower in the ordinary course of business (provided that such Intercompany Indebtedness is evidenced by Intercompany Notes which are pledged to Agent pursuant to the Collateral Documents); (h) other Indebtedness of all Loan Parties in the aggregate amount outstanding not to exceed $2,000,000 at any time; and (i) other Indebtedness set forth in Schedule 6.3. 6.4 Affiliate and Employee Loans and Transactions; Employment Agreements. Except with respect to the Caribbean Notes, Intercompany Indebtedness permitted by Section 6.3, or as otherwise expressly permitted hereunder, Borrower shall not (and shall not permit any of its Subsidiaries to) enter into any lending, borrowing or other commercial transaction with any of its Subsidiaries, Affiliates, officers, directors or employees, including payment of any management, consulting, advisory or similar fee other than on terms and conditions as favorable to such Person as would be obtainable by such Person at the time in a comparable arm's-length transaction with a Person other than an Affiliate or a Subsidiary; provided, that the foregoing shall not prohibit any of the following, to the extent not prohibited by the Bankruptcy Code: (a) loans by Borrower to its officers, directors and employees in a maximum aggregate principal amount outstanding at any time for all officers, directors and employees of $50,000; (b) performance by Borrower of the terms of its obligations under the Management Agreement, the Tax Sharing Agreement and the Intercorporate Services Agreement; (c) payment by Borrower and its Subsidiaries of reasonable compensation to their respective management employees as approved by their respective boards of directors; (d) purchases by Borrower and its Subsidiaries from their respective Subsidiaries and Affiliates of raw materials to be used in their respective businesses, so long as such purchases are on terms and conditions as favorable to the 38 purchaser as would be obtained by such Person in a comparable arm's length transaction with a Person other than an Affiliate or Subsidiary; and (e) reimbursement by Borrower of WB and BGAC for corporate administrative expenses actually incurred by WB and BGAC and payable to third parties who are not Affiliates provided that such expenses are actually paid upon WB or BGAC's receipt of such payment. Set forth in Schedule 6.4 is a list of all such lending, borrowing or other commercial transactions existing or outstanding as of the Closing Date. 6.5 Capital Structure and Business. Except as permitted under Section 5.1, Borrower shall not (and shall not permit any of its Subsidiaries to): (a) make any changes in its business objectives, purposes, or operations which could in any way adversely affect the repayment of the Obligations or have or result in a Material Adverse Effect; (b) make any change in its capital structure as described in Schedule 3.9 and Schedule 6.3 (including the issuance or recapitalization of any shares of Stock or other securities convertible into Stock or any revision of the terms of its outstanding Stock); (c) amend its certificate of incorporation, charter, by-laws or other organizational documents; or (d) substantially alter the scope or character of their business; provided, that Borrower or its Subsidiaries may enter into a business substantially similar to the business currently engaged in by such Person. 6.6 Guaranteed Indebtedness. Borrower shall not (and shall not permit any of its Subsidiaries to) incur any Guaranteed Indebtedness except: (a) by endorsement of instruments or items of payment for deposit to the general account of such Person; (b) for Guaranteed Indebtedness incurred for the benefit of Borrower if the primary obligation is permitted by this Agreement for Borrower to incur (and such Guaranteed Indebtedness shall be treated as a primary obligation for all purposes hereof); (c) for performance bonds or indemnities entered into in the ordinary course of business consistent with past practices; (d) Guaranteed Indebtedness identified in Schedule 6.6 attached hereto, and extension and renewals thereof which do not increase the principal amount thereof; (e) other Guaranteed Indebtedness in a maximum aggregate amount not exceeding $250,000 at any time; and (f) Guaranteed Indebtedness arising under any Guaranty or Borrower's guaranty of the obligations of Seven-Up/RC of PR under the Caribbean Loan Documents. 6.7 Liens. Borrower shall not (and shall not permit any of its Subsidiaries to) create or permit to exist any Lien on any of its properties or assets except for: (a) presently existing or hereafter created Liens in favor of Agent or Lenders to secure the Obligations or the obligations of any Guarantor under any Guaranty; (b) Liens set forth in Schedule 6.7 existing on the Closing Date; (c) Permitted Encumbrances; (d) purchase money liens or purchase money security interests upon or in Equipment acquired by Borrower or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such Equipment 39 or to secure Indebtedness or Capital Lease Obligations permitted under Section 6.3 incurred solely for the purpose of financing the acquisition of such Equipment, so long as such Equipment is not a component, part or accessory installed on, or an accession, addition or attachment to, any other Equipment or other property of Borrower or any Subsidiary thereof (except other Equipment on which a security interest exists under this clause); (e) Liens in favor of the lenders under the Caribbean Loan Documents securing the respective obligations of Borrower and Seven-Up/RC of PR thereunder; (f) Liens currently existing on the Stock of Borrower and the Stock of Seven-Up/RC of PR pursuant to the Indenture; (g) Liens securing Indebtedness not exceeding $100,000 in the aggregate at any time; (h) Liens against Equipment arising from the filing of UCC financing statements with respect to lease transactions permitted by the terms of this Agreement; and (i) extensions, renewals and replacements of Liens referred to in clauses (b), (d), (f) and (g) above, provided that any such extension, renewal or replacement Lien is limited to the property or assets covered by the Lien extended, renewed or replaced and does not secure Indebtedness in an amount greater than the amount of the outstanding Indebtedness secured thereby immediately prior to such extension, renewal or replacement. Notwithstanding the generality of the foregoing, in no event shall any Lien on Collateral be permitted other than Liens in favor of Agent or Lenders, the lenders under the Caribbean Loan Documents, and other Permitted Encumbrances. 6.8 Sale of Assets. Borrower shall not (and shall not permit any of its Subsidiaries to) sell, transfer, convey, assign or otherwise dispose of any of its assets or properties, including any Collateral; provided, that the foregoing shall not prohibit any of the following, to the extent not prohibited by the Bankruptcy Code: (a) the sale of Inventory in the ordinary course of business; (b) the exchange of property or assets other than Collateral for new assets so long as the incremental cost (if any) of such new property or assets in excess of the fair market value of the assets so exchanged is a Capital Expenditure permitted pursuant to Annex H; (c) the licensing or sublicensing by Borrower or its Subsidiaries of Intellectual Property in the ordinary course of business; (d) the sale or disposition by Borrower of Collateral consisting of Equipment or Fixtures provided that (i) the amount of gross consideration (prior to the deduction of any items taken into account in determining the Net Proceeds of such sale or disposition) received in cash is equal to at least one hundred percent (100%) of the fair market value of such property or assets; (e) the disposition of (i) damaged Collateral to the extent required by insurance or (ii) other damaged property or assets giving rise to an insurance claim pursuant to reasonable prudent business practices; and (f) other sales or dispositions of property not constituting Collateral and having an aggregate fair market value not exceeding $750,000 for all such sales or dispositions in any Fiscal Year. 40 6.9 ERISA Neither Borrower nor any ERISA Affiliate shall acquire any new ERISA Affiliate that maintains or has an obligation to contribute to a Pension Plan that has either an "accumulated funding deficiency," as defined in Section 302 of ERISA, or any "unfunded vested benefits," as defined in Section 4006(a)(3)(E)(iii) of ERISA. Additionally, neither Borrower nor any ERISA Affiliate shall: (a) establish any new Plan, or undertake any new obligation to contribute to any Plan if such establishment or undertaking could reasonably be expected to result in the creation of a material liability to Borrower or ERISA Affiliate of Borrower, or to Borrower and its ERISA Affiliates in the aggregate; (b) permit or suffer any condition set forth in Section 3.13 to cease to be met and satisfied at any time which condition could result in a material liability to Borrower or any ERISA Affiliate of Borrower; (c) terminate any Pension Plan where such termination could reasonably be anticipated to result in a material liability to Borrower; (d) permit any accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA, to be incurred with respect to any Plan; fail to make any contributions or fail to pay any amounts due and owing as required by the terms of any Plan before such contributions or amounts become delinquent; (e) make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan which withdrawal could result in a material liability to Borrower or any ERISA Affiliate of Borrower; (f) at any time fail to provide Agent or any Lender within twenty-one (21) days with copies of any Plan documents or governmental reports or filings, if reasonably requested by Agent or any Lender. 6.10 Financial Covenants. Borrower shall not breach or fail to comply with any of the financial covenants set forth in Annex H. 6.11 Hazardous Materials. Except as set forth in Schedule 3.18, Borrower shall not and shall not permit any of its Subsidiaries or any other Person within the control of Borrower, to cause or permit a Release of Hazardous Material on, under, in or about any Subject Property if such Release either violates or gives rise to liability pursuant to any Environmental Laws, which violation or liability could in a reasonable worse case scenario constitute or result in a Material Adverse Effect. 6.12 Sale-Leasebacks. Borrower shall not (and shall not permit any of its Subsidiaries to) engage in any sale-leaseback or similar transaction involving any of its property or assets. 6.13 Cancellation of Indebtedness. Except as permitted by Section 5.7, Borrower shall not (and shall not permit any of its Subsidiaries to) cancel any claim or Indebtedness owing to it, except for reasonable consideration and in the ordinary course of its business, or voluntarily prepay any Indebtedness (other than the Obligations or the obligations of Seven-Up/RC of PR under the Caribbean Loan Documents). 41 6.14 Restricted Payments. Borrower shall not make any Restricted Payment to any Person and Borrower shall not permit any Subsidiary to make any Restricted Payment other than to Borrower. 6.15 Real Property Leases. Borrower shall not (and shall not permit any of its Subsidiaries to) enter into or renew (by amendment, modification or otherwise) any Lease, except, with respect to Seven-Up/RC of PR, as provided in the Caribbean Loan Documents or to the extent the aggregate annual base rent of all of Borrower's Leases does not, in any Fiscal Year, increase by more than $300,000 plus the aggregate rent increase under all such Leases based upon any index-rate or rent escalation clauses set forth therein. 6.16 Bank Accounts. Borrower shall not (and shall not permit any of its Subsidiaries to) maintain any deposit, operating or other bank accounts except for those accounts identified in Schedule 3.20. 6.17 No Speculative Transactions. Borrower shall not (and shall not permit any of its Subsidiaries to) engage in any speculative transaction or any transaction involving commodity options or futures contracts (other than in the ordinary course of business consistent with past practice and interest rate swap, cap or collar agreements relating to the Revolving Credit Advances). 6.18 Margin Regulations. Borrower shall not use the proceeds of any Revolving Credit Advance to purchase or carry any Margin Stock or any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934. 6.19 Limitation on Negative Pledge Clauses. Borrower shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, enter into any agreement with any Person, other than the agreements with Agent or Lenders pursuant to a Loan Document or the Caribbean Loan Documents, and other than the Indenture, which prohibits or limits the ability of Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired; provided, that any Loan Party may agree to prohibitions against other Liens on specific property encumbered to secure payment of particular Indebtedness of such Person (which Indebtedness relates solely to such specific property). 6.20 Accounting Changes. Borrower shall not (and shall not permit any of its Subsidiaries to) make, any significant change in accounting treatment and reporting practices except for changes concurred in by Borrower's independent public accountants. 42 6.21 Prepetition Indebtedness. Borrower will not consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, (a) the Interim Order, if any, or the Final Order, or (b) the Prepetition Indebtedness. Except for (a) employee claims for unpaid wages, bonuses, accrued vacation and sick leave time, business expenses and contributions to employee benefit plans for the period immediately preceding the Petition Date and permitted to be paid by order of the Bankruptcy Court, (b) cure payments made to Borrower's franchisors, or to GE Capital or McDonnell Douglas with respect to prepetition capital lease obligations, each in accordance with Section 365(b)(1)(A) of the Bankruptcy Code, (c) utility deposits made by Borrower in accordance with Section 366 of the Bankruptcy Code, (d) payments in respect of sales incentive programs, including coupon redemptions, retail promotion funds, full service vending machines, refrigerated cabinets and rebates for the period immediately preceding the Petition Date and authorized to be paid by the Bankruptcy Court in an order or orders in form and substance satisfactory to Agent; and (e) Trade Payables authorized to be paid by the Bankruptcy Court in an order or orders in form and substance satisfactory to Agent, Borrower will not make any payment in respect of, or repurchase, redeem, retire or defease any, Prepetition Indebtedness. Nothing in this Section 6.21 shall prohibit Borrower from granting administrative claim status to a seller of goods in accordance with Section 546(c)(2)(A) of the Bankruptcy Code. 6.22 Reclamation Claims. Borrower shall not enter into any agreement to return any inventory to any of its creditors for application against any Prepetition Indebtedness under Section 546(g) of the Bankruptcy Code (as added by the 1994 amendments thereto) or allow any creditor to take any setoff against any of its Prepetition Indebtedness based upon any such return pursuant to Section 553(b)(1) of the Bankruptcy Code or otherwise. 6.23 Application to the Court. The Borrower shall not apply to the Bankruptcy Court for authority to take any action that is prohibited by the terms of this Agreement and the other Loan Documents or refrain from taking any action that is required to be taken by the terms of this Agreement and the other Loan Documents. 7. TERM 7.1 Duration. The financing arrangement contemplated hereby shall be in effect until the Commitment Termination Date. On the Commitment Termination Date, the Revolving Credit Commitments shall terminate and the Revolving Credit Loan and all other then due and payable Obligations shall immediately become due and payable in full, in cash. 43 7.2 Survival of Obligations. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the Obligations, duties, indemnities, and liabilities of any Loan Party, or the rights of Agent or any Lender relating to any Obligations, due or not due, liquidated, contingent or unliquidated or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is not required until after the Commitment Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon any Loan Party, and all rights of Agent and each Lender, all as contained in the Loan Documents shall not terminate or expire, but rather shall survive such termination or cancellation and shall continue in full force and effect until such time as all of the Obligations have been indefeasibly paid in full in accordance with the terms of the agreements creating such Obligations. 8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 8.1 Events of Default. Notwithstanding the provisions of Section 362 of the Bankruptcy Code and without application or motion to the Bankruptcy Court, the occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "Event of Default" hereunder and shall permit Agent, by written notice to Borrower, (a) to declare the principal of, and accrued interest on, the Prepetition Credit Agreement Obligations, the Revolving Credit Loan and all other Obligations to be immediately due and payable in full, whereupon the same shall immediately become due and payable in full without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower, and (b) to terminate the commitment of each Lender to make any further Revolving Credit Advances or to incur any additional Letter of Credit Obligations: (a) Borrower shall fail to make any payment in respect of any Obligations hereunder or under any of the other Loan Documents when due and payable or declared due and payable, including any payment of principal of, or interest on, the Revolving Credit Loan and, in the case of any interest payment, such failure is not cured within two (2) Business Days after the due date thereof. (b) Borrower shall fail or neglect to perform, keep or observe any of the provisions of Section 1.9, Section 4.1, or Section 6, including any of the provisions set forth in Annex B, Annex E, or Annex H. (c) Borrower shall fail or neglect to perform, keep or observe any term or provision of this Agreement (other than any such term or provision referred to in paragraph (a) or (b) above) 44 or of any of the other Loan Documents, and the same shall remain unremedied for a period ending on the first to occur of ten (10) Business Days after Borrower shall receive written notice of any such failure from Agent or any Lender or thirty (30) days after Borrower shall become aware thereof. (d) Except for defaults occasioned by the filing of the Chapter 11 Case or arising out of the non-payment of the Senior Secured Notes, a default shall occur under any other agreement, document or instrument to which Borrower is a party or by which it or its property is bound, and such default (i) involves the failure to make any payment (whether of principal, interest or otherwise) due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of Borrower in an aggregate amount exceeding $500,000 or (ii) causes (or permits any holder of such Indebtedness or a trustee to cause) such Indebtedness, or a portion thereof in an aggregate amount exceeding $250,000, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment (other than Indebtedness on account of the rejection of executory contracts entered into prior to the Petition Date). (e) Any representation or warranty herein or in any Loan Document or in any written statement pursuant thereto or hereto, any report, financial statement or certificate made or delivered to Agent or any Lender by Borrower shall be untrue or incorrect in any material respect as of the date when made or deemed made (including those made or deemed made pursuant to Section 2.2). (f) The bringing of a motion by Borrower in the Chapter 11 Case: (i) to obtain financing from any Person other than GE Capital under Section 364(d) of the Bankruptcy Code; or (ii) to grant any Lien other than Permitted Encumbrances upon or affecting any Collateral; or (iii) to use Cash Collateral of Agent or any Lender under Section 363(c) of the Bankruptcy Code without Required Lender's written consent; or (iv) to recover from any portions of the Collateral any costs or expenses of preserving or disposing of such Collateral under Section 506(c) of the Bankruptcy Code; or any other action or actions adverse to Agent or any Lender or their rights and remedies hereunder or their interest in the Collateral that would, individually or in the aggregate, have a Material Adverse Effect. (g) The allowance of any claim or claims under Section 506(c) of the Bankruptcy Code against or with respect to any Collateral in excess of $50,000 in the aggregate. (h) The occurrence of any postpetition judgments, liabilities or events that would, individually or in the aggregate, have a Material Adverse Effect. 45 (i) The entry by the Bankruptcy Court of an order authorizing the appointment of an interim or permanent trustee in the Chapter 11 Case or the appointment of an examiner in the Chapter 11 Case with expanded powers to operate or manage the financial affairs, the business, or reorganization of Borrower. (j) The dismissal of the Chapter 11 Case, or the conversion of the Chapter 11 Case from one under Chapter 11 to one under Chapter 7 of the Bankruptcy Code. (k) The entry of an order by the Bankruptcy Court granting relief from or modifying the automatic stay of Section 362 of the Bankruptcy Code (i) to allow any creditor (other than Agent) to execute upon or enforce a Lien on any Collateral, or (ii) with respect to any Lien of or the granting of any Lien on any Collateral to any state or local environmental or regulatory agency or authority, which in either case would have a Material Adverse Effect. (l) The modification of the Interim Order or the Final Order without Lenders' written consent. (m) The commencement of a suit or action against Agent or any Lender by or on behalf of (i) Borrower, (ii) the Environmental Protection Agency, (iii) any state environmental protection or health and safety agency, or (iv) any official committee in the Chapter 11 Case, which asserts a claim or seeks a legal or equitable remedy that would have the effect of subordinating the claim or Lien of Agent or any Lender and, if such suit or action is commenced by any Person other than any Loan Party or any Subsidiary, officer or employee of any Loan Party, it shall not have been dismissed within thirty (30) days after service thereof on Agent. (n) Any provision of any Loan Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms or any Loan Party or other party thereto shall so state in writing; or any Lien created under any Collateral Document shall cease to be a valid and perfected Lien having the first priority, subject only to Permitted Encumbrances in any of the Collateral purported to be covered thereby. (o) There shall occur a Change of Control. (p) Any Material Franchise Agreement shall be either canceled, terminated or not renewed, rejected or deemed rejected in the Chapter 11 Case, or modified in any way which would have a Material Adverse Effect, or any Loan Party shall for any reason lose the benefit of any exclusivity provision under any Material Franchise Agreement. (q) An event or condition specified in Section 6.9 hereof shall occur or exist and, as a result of such event or condition, Borrower or any ERISA Affiliate or Borrower or/and any 46 ERISA Affiliates in the aggregate shall incur or in the opinion of Required Lenders shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) in excess of $500,000 in the aggregate. (r) A default shall occur under the Caribbean Letter Agreement. 8.2 Remedies. Upon the occurrence of an Event of Default and for so long as such Event of Default continues without cure, following written notice to Borrower, the automatic stay under Bankruptcy Code Section 362 shall be vacated, without application or motion to, or order from, the Bankruptcy Court, in order to permit Agent and Lenders: (a) to terminate this facility with respect to further Revolving Credit Advances and Letter of Credit Obligations, whereupon Lenders shall have no further duty to make Revolving Credit Advances or incur Letter of Credit Obligations under this Agreement and the Revolving Credit Commitments shall be terminated; (b) to declare all principal of, and accrued interest on, the Revolving Credit Loan and all other Obligations to be immediately due and payable; (c) to revoke Borrower's rights to use Cash Collateral in which Agent or any Lender has an interest; and (d) five (5) Business Days after receipt of written notice by Borrower from Lenders, to exercise any and all other rights and remedies allowed by applicable laws of the United States and of any state thereof (including the UCC), including the right to sell or otherwise dispose of any Collateral in a commercially reasonable manner (including Inventory subject to trademarks or tradenames; provided, that upon timely written notice to Agent and Borrower by a franchisor, licensor, distributor or other similar owner of any such trademark or tradename (the "Requesting Licensor"), Agent and Lender may only sell or otherwise dispose of Collateral subject to the Requesting Licensor's trademark or tradename in a manner that Borrower would be permitted to sell or otherwise dispose of such Collateral under its franchise agreement, licensing agreement, distribution agreement or other similar agreement with the Requesting Licensor, as if such agreement was in full force and effect). 8.3 Waivers by Borrower. Except as otherwise provided for in this Agreement and applicable law, to the full extent permitted by applicable law, Borrower waives (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all Loan Documents, notes, commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any Lender on which Borrower may in any way be liable, and Borrower hereby ratifies and confirms whatever Agent or any Lender may do in this regard, (b) all rights to notice and a hearing prior to Agent's or Lenders' taking possession or control of, or to Agent's or 47 Lenders' replevy, attachment or levy upon, the Collateral or any bond or security which might be required by any court prior to allowing Agent or Lenders to exercise any of their remedies, and (c) the benefit of any right of redemption and all valuation, appraisal and exemption laws. Borrower acknowledges that it has been advised by counsel of its choice with respect to this Agreement, the other Loan Documents and the transactions contemplated by this Agreement and the other Loan Documents. 9. AGENT 9.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably appoints and authorizes GE Capital to act as its agent hereunder and under the other Loan Documents with such powers as are specifically delegated to Agent by the terms of this Agreement and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Agent (which term as used in this sentence and in Section 9.5 and the first sentence of Section 9.6 hereof shall include reference to its affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Loan Documents, and shall not by reason of this Agreement or any other Loan Document be a trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders for any recitals, statements, representations or warranties contained in this Agreement or in any other Loan Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Loan Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or any other document referred to or provided for herein or therein or for any failure by any Loan Party or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Loan Document; (d) shall not be responsible to Lenders for any action taken or omitted to be taken by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. Agent may deem and treat the payee of any Revolving Credit Note as the holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed with Agent. 9.2 Reliance by Agent. Agent shall be entitled to rely upon any certification, notice or other communication (including 48 any thereof by telephone, telecopy, telex, telegram or cable) 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 Agent. As to any matters not expressly provided for by this Agreement or any other Loan Document, Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by Required Lenders or all of Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant thereto shall be binding on all Lenders. 9.3 Defaults. Agent shall not be deemed to have knowledge or notice of the occurrence of a Default (other than the non-payment of principal of or interest on the Revolving Credit Loan or of Fees) unless Agent has received notice from a Lender or Borrower specifying such Default and stating that such notice is a "Notice of Default". In the event that Agent receives such a notice of the occurrence of a Default, Agent shall give prompt notice thereof to Lenders (and shall give each Lender prompt notice of each such non-payment). Agent shall (subject to Section 9.7) take such action with respect to such Default as shall be directed by Required Lenders; provided, that unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of Lenders except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of Required Lenders or all of Lenders as is required in such circumstance. 9.4 Rights as a Lender. In the event that GE Capital (or any successor acting as Agent) shall become a Lender hereunder, with respect any Revolving Credit Commitment or Revolving Credit Advance, it shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include Agent in its individual capacity. GE Capital (and any successor acting as Agent) and its affiliates may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of business with the Loan Parties (and any of their Subsidiaries or Affiliates) as if it were not acting as Agent, and GE Capital and its affiliates may accept fees and other consideration from the Loan Parties for services in connection with this Agreement or otherwise without having to account for the same to Lenders. 9.5 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by Borrower hereunder and without limiting the obligations of Borrower hereunder) ratably in accordance with the aggregate principal amount of the Revolving 49 Credit Advances held, by Lenders (or, if no Revolving Credit Advances are at the time outstanding, ratably in accordance with their respective Revolving Credit Commitments), for any and all Claims of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Loan Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Borrower is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents; provided, that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified as determined by a final judgment of a court of competent jurisdiction. 9.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrower and its Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon 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 of the other Loan Documents. Agent shall not be required to keep itself informed as to the performance or observance by any Loan Party of this Agreement or any of the other Loan Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of Borrower or any of its Subsidiaries. Agent will use reasonable efforts to provide Lenders with any information received by Agent from Borrower which is required to be provided to Lenders hereunder, with any notice of a Default received by Agent from Borrower and with any notice of a Default delivered by Agent to Borrower; provided, that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the affairs, financial condition or business of Borrower or any of its Subsidiaries (or any of their affiliates) that may come into the possession of Agent or any of its affiliates nor to update or correct any information previously given which becomes incorrect or which Agent learns is incorrect. 9.7 Failure to Act. Except for action expressly required of Agent hereunder and under the other Loan Documents, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their 50 indemnification obligations under Section 9.5 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. 9.8 Resignation of Agent. Subject to the appointment and acceptance of a successor Agent as provided below, Agent may resign at any time by giving notice thereof to Lenders and Borrower. Upon any such resignation Required Lenders shall have the right to appoint a successor Agent with Borrower's prior written consent, which consent shall not be unreasonably withheld. If no successor Agent shall have been so appointed by Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of Lenders, appoint a successor Agent, that shall be a financial institution with a combined capital and surplus or net worth of at least $200,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 9 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 Agent. 9.9 Consents under Loan Documents. Except as otherwise provided in Section 11.1 with respect to this Agreement, Agent may, with the prior consent of Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Loan Documents; provided, that without the prior consent of each Lender, Agent shall not (except as provided herein or in the Collateral Documents) release any material portion of the Collateral or otherwise terminate any Lien under any Collateral Document with respect to any material portion of the Collateral, or agree to additional obligations being secured by such Collateral, except that no such consent shall be required, and Agent is hereby authorized and instructed, to release any Lien covering Collateral (a) which is the subject of a disposition permitted hereunder, (b) which secures Indebtedness to the extent permitted under Section 6.3, or (c) the value of which does not exceed $5,000,000 in any Fiscal Year. 9.10 Collateral Matters. (a) Except as otherwise expressly provided for in this Agreement, Agent shall have no obligation whatsoever to any Lender or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Loan Party or is cared for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Borrowing Base, or whether any particular reserves are appropriate, or that the Liens granted to Agent herein or pursuant hereto have been properly or 51 sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Loan Documents, it being understood and agreed that (i) in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent's own interest in the Collateral as a Lender and (ii) that Agent shall have no duty or liability whatsoever to any other Lender, other than liability for its own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (b) Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Lenders' security interest in assets which, in accordance with Article 9 of the Code, can be perfected only by possession. Should any Lender (other than Agent) obtain possession of any such Collateral, such Lender shall notify Agent thereof and, promptly upon Agent's request therefor, shall deliver such Collateral to Agent or in accordance with Agent's instructions. 10. SUCCESSORS AND ASSIGNS 10.1 Successors and Assigns. This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of Borrower, Agent, Lenders, and their respective successors and assigns, except as otherwise provided herein or therein. Borrower may not assign, delegate, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the Loan Documents without the prior express written consent of Agent and all Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by Borrower without such prior express written consent shall be void. The terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining the relative rights and obligations of Borrower, Agent and Lenders with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Loan Documents. 10.2 Assignments and Participations. Each Lender may resell (through syndication, assignment or a participation) all or a portion of its rights and obligations under this Agreement (including all or a part of its Revolving Credit Advances, Revolving Credit Commitment and Revolving Credit Note), in minimum increments of $5,000,000, to any other Person. In the case of an assignment by any Lender under this Section 10.2, the purchaser shall have, to the extent of such assignment, the same rights, benefits and obligations as it would 52 if it were a Lender hereunder; provided, that each such assignment shall be of a constant, and not a varying, percentage of the selling Lender's rights and obligations under this Agreement. Upon execution by the assignor and the assignee of an instrument pursuant to which the assignee assumes such rights and obligations, payment by such assignee to such assignor of an amount equal to the purchase price agreed between such assignor and assignee and delivery to Agent and Borrower of an executed copy of such instrument together with payment to Agent of a processing fee of $2,500, such assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights and benefits as it would have if it were a Lender hereunder and the assignor shall be, to the extent of such assignment (unless otherwise provided therein) released from its obligations under this Agreement. Borrower hereby acknowledges and agrees that any assignment will give rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered to be a "Lender" hereunder and under the other Loan Documents. In all instances, each Lender's liability to make Revolving Credit Advances shall be several and not joint and shall be limited to such Lender's pro rata share thereof. Upon any such assignment, Borrower, at its own expense, shall execute and deliver to Agent in exchange for the surrendered Revolving Credit Note of the assignor Lender a new Revolving Credit Note to the order of the assignor Lender in an amount equal to the Revolving Credit Commitment assumed by such assignee Lender, and if the assignor Lender has retained a Revolving Credit Commitment hereunder a new Revolving Credit Note to the order of the assignor Lender in an amount equal to such retained Revolving Credit Commitment. Such new Revolving Credit Notes shall be dated the Closing Date and shall otherwise be in the form of the Revolving Credit Note replaced thereby. The Revolving Credit Notes surrendered to Agent shall be returned by Agent to Borrower marked "canceled". Each Lender may sell participations in all or any part of its Revolving Credit Advances and its Revolving Credit Commitment, to any other Person; provided, that (a) all amounts payable by Borrower hereunder shall be determined as if that Lender had not sold such participation and the participating Lender shall remain a "Lender" for all purposes under this Agreement, (b) any such grant of a participation will be made in compliance with all applicable state or Federal laws, rules, and regulations, (c) any such participation shall be divided pro rata among the participating Lender's share of the Revolving Credit Loan, and (d) such Lender shall not grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or the Loan Documents, except to the extent such amendment or waiver would (i) extend the final maturity date for payment of the Revolving Credit Loan in which such participant is participating; (ii) reduce the interest rate or the amount of principal or Fees applicable to the Revolving Credit Loan in which such participant is participating; or (iii) release all or substantially all of the Collateral, except 53 as expressly provided herein. In those cases in which a Lender grants rights to its participants to approve any amendment to or waiver of this Agreement or the other Loan Documents respecting the matters described in the foregoing clauses (i) through (iii), the relevant participation agreements shall provide for a voting mechanism whereby a majority of the amount of the participating Lender's portion of the Revolving Credit Loan, as the case may be (irrespective of whether held by such Lender or participated), shall control the vote for all of such Lender's portion of the Revolving Credit Loan. In the case of any participation, the participant shall not have any rights under this Agreement or any of the other Loan Documents entered into in connection herewith (the participant's right against such Lender in respect of such participation to be those set forth in the participation or other agreement executed by such Lender and the participant relating thereto) and all amounts payable to any Lender hereunder shall be determined as if such Lender had not sold such participation. Except as otherwise provided in this Section 10.2 no Lender shall, as between Borrower and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Revolving Credit Loan or other Obligations owed to such Lender. Any Lender permitted to sell assignments and participations under this Section 10.2 may furnish any information concerning Borrower and its Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants). Borrower shall assist any Lender permitted to sell assignments or participations under this Section 10.2 in whatever manner reasonably necessary in order to enable or effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be reasonably requested and the preparation and delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings with, potential assignees or participants. Borrower shall certify the correctness, completeness and accuracy of all descriptions of Borrower and its affairs contained in any selling materials and all information provided by it and included in such materials. No information shall be provided to any potential assignee or participant unless such potential assignee and participant has signed a confidentiality agreement substantially in the form of Exhibit G. 11. MISCELLANEOUS 11.1 Complete Agreement; Modification of Agreement. This Agreement and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, 54 commitments, understandings or inducements (oral or written, expressed or implied), including the commitment letter dated August 30, 1995, as amended, between Seven-Up/RC and GE Capital. Neither this Agreement nor any other Loan Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by Required Lenders; provided, that no such change, waiver, discharge or termination shall, without the consent of each affected Lender and Agent, (a) extend the scheduled final maturity of the Revolving Credit Loan, or any portion thereof, or reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-Default increase in interest rates) thereon or Fees, or reduce the principal amount thereof, or increase the Revolving Credit Commitment of such Lender over the amount thereof then in effect (it being understood that a waiver of any Default shall not constitute a change in the terms of any Revolving Credit Commitment of any Lender), (b) release more than $5,000,000 in value of the Collateral (except as expressly permitted by the Loan Documents), (c) amend, modify or waive any provision of this Section, or Section 1.9, 9.5, 11.2 or 11.7, (d) reduce any percentage specified in, or otherwise modify, the definition of Required Lenders, or (e) consent to the assignment or transfer by Borrower of any of its rights and obligations under this Agreement. No provision of Section 9 may be amended without the prior written consent of Agent. 11.2 Fees and Expenses. (a) Borrower shall pay not later than five (5) days after receipt of an invoice therefor, all costs and expenses (including reasonable fees of counsel) of Agent in connection with the preparation, negotiation, approval, execution, delivery, administration, modification, amendment, waiver and enforcement (whether through negotiations, legal proceedings or otherwise) of the Loan Documents, and commitments relating thereto, and the other documents to be delivered hereunder or thereunder and the transactions contemplated hereby and thereby and the fulfillment or attempted fulfillment of conditions precedent hereunder, including: (i) wire transfer fees and other costs of forwarding to Borrower or any other Person on behalf of Borrower by Agent and each Lender of the proceeds of the Revolving Credit Advances; (ii) any amendment, modification or waiver of, or consent with respect to, any of the Loan Documents or advice in connection with the administration of the advances made pursuant hereto or its rights hereunder or thereunder; (iii) the review of pleadings and documents related to the Chapter 11 Case, attendance at meetings related to the Chapter 11 Case, and general monitoring of the Chapter 11 Case; (iv) any litigation, claim, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, Borrower or any other Person) in any way relating to the Collateral, any of the Loan Documents or any other agreements to be executed or delivered in connection therewith or herewith, whether as party, witness, or otherwise, including any 55 litigation, claim, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against Borrower or any other Person that may be obligated to Agent and Lenders by virtue of the Loan Documents, including any litigation, contest, dispute, suit, case, proceeding or action (and any appeal or review) in connection with the Chapter 11 Case; (v) any attempt to enforce any rights of Agent or Lenders against Borrower or any other Person that may be obligated to Agent or Lenders by virtue of any of the Loan Documents; (vi) any effort to (A) monitor the Revolving Credit Loan and the Loan Documents, (B) evaluate, observe, assess Borrower or its affairs, or (C) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the Collateral. (b) Borrower shall pay on demand all costs and expenses (including reasonable fees of counsel) of Agent and each Lender in connection with any Default and any enforcement or collection proceedings resulting therefrom or any amendment, modification or waiver of, or consent with respect to, any of the Loan Documents in connection with any Default. (c) Without limiting the generality of clauses (a) and (b) above, Borrower's obligation to reimburse Agent and/or any Lender for costs and expenses shall include the reasonable fees and expenses of counsel (and local, foreign or special counsel, advisors, consultants and auditors retained by such counsel), as well as the fees and expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram charges; secretarial overtime charges; expenses for travel, lodging and food; and all other out-of-pocket costs and expenses of every type and nature paid or incurred in connection with the performance of such legal or other advisory services. 11.3 No Waiver. No failure on the part of Agent or Lenders, at any time or times, to require strict performance by any Loan Party, of any provision of this Agreement and any of the other Loan Documents shall waive, affect or diminish any right of Agent or Lenders thereafter to demand strict compliance and performance therewith. Any suspension or waiver of a Default shall not suspend, waive or affect any other Default whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of any Loan Party contained in this Agreement or any of the other Loan Documents and no Default by any Loan Party shall be deemed to have been suspended or waived by Lenders, unless such waiver or suspension is by an instrument in writing signed by an officer of or other authorized employee of Agent and Required Lenders or all of 56 Lenders if required hereunder and directed to Borrower specifying such suspension or waiver. 11.4 Remedies. The rights and remedies of Agent and Lenders under this Agreement shall be cumulative and nonexclusive of any other rights and remedies which Agent or any Lender may have under any other agreement, including the Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required. 11.5 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 11.6 Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provisions contained in this Agreement shall govern and control. 11.7 Right of Set-off. Subject to Section 1.1(f) and 1.14, upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of Borrower against any and all of the Obligations now or hereafter existing irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be unmatured. Each Lender agrees promptly to notify Agent and Borrower after any such setoff and application made by such Lender; provided, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to the other rights and remedies (including other rights of setoff) which such Lender may have. 11.8 Authorized Signature. Until Agent shall be notified by Borrower to the contrary, the signature upon any document or instrument delivered pursuant hereto and believed by Agent or any of Agent's officers, agents, or employees to be that of an officer or duly authorized representative of Borrower listed in Schedule 11.8 shall bind Borrower and be deemed to be the act of Borrower affixed pursuant to and in accordance with resolutions duly adopted by Borrower's Board of Directors, and Agent and each Lender shall be entitled to assume the authority of each 57 signature and authority of the Person whose signature it is or appears to be unless the Person acting in reliance on such signature shall have actual knowledge of the fact that such signature is false or the Person whose signature or purported signature is presented is without authority. 11.9 Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon either of the parties by the other party, or whenever either of the parties desires to give or serve upon the other party any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered: (a) upon the earlier of actual receipt and three (3) days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by telecopy answerback and by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 11.9); (c) one Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person (other than Borrower, Agent or any Lender) designated below to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. (a) If to Agent, as a Lender or as Agent, at: General Electric Capital Corporation 350 South Beverly Drive, Suite 200 Beverly Hills, California 90212 Attention: Mr. Mark Elliot Gudis Senior Vice President (Commercial Finance) Facsimile: (310) 785-0644 With copies to: General Electric Capital Corporation 3379 Peachtree Road Northeast, Suite 600 Atlanta, Georgia 30326 Attention: Mr. Timothy C. Huban Vice President Commercial Finance Facsimile: (404) 262-9032 58 and General Electric Capital Corporation 201 High Ridge Road Stanford, Connecticut 06927 Attention: Legal Counsel Facsimile: (203) 316-7889 and Murphy, Weir & Butler 101 California Street 39th Floor San Francisco, California 94111 Attention: Dick M. Okada, Esq. Facsimile: (415) 421-7879 (b) If to Borrower, at: Seven-Up/RC Bottling Company of Southern California, Inc. 3220 East 26th Street Vernon, California 90023 Attention: Mr. Dave Brown Facsimile: (213) 262-9566 and Kirkland & Ellis 153 East 53rd Street New York, New York 10002 Attention: Theodore L. Freedman, Esq. Facsimile: (212) 446-4900 11.10 Parties Including Trustees; Bankruptcy Court Proceedings. This Agreement, the other Loan Documents, and all security interests or Liens created hereby or pursuant to the Security Agreement or any other Loan Document shall be binding upon Borrower, the estate of Borrower, and any trustee or successor in interest of Borrower in the Chapter 11 Case or any subsequent case commenced under Chapter 7 of the Bankruptcy Code, and shall not be subject to Section 365 of the Bankruptcy Code. This Agreement and the other Loan Documents shall be binding upon, and inure to the benefit of, the successors of Agent and each Lender, and the assigns, transferees and endorsees of Agent and each Lender. The security interests and Liens created in this Agreement, the Security Agreement and the other Loan Documents shall be and remain valid and perfected in the event of the substantive consolidation or conversion of the Chapter 11 Case or any other bankruptcy case of Borrower to a case under Chapter 7 of the Bankruptcy Code or in the event of dismissal of the Chapter 11 Case or the release of any Collateral from the property of Borrower or jurisdiction of the Bankruptcy Court for any reason, without the necessity that Agent file financing 59 statements or otherwise perfect its security interests or Liens for the benefit of Lenders under applicable law. 11.11 Section Titles. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement. 11.12 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. 11.13 Time of the Essence. Time is of the essence of this Agreement and each of the other Loan Documents. 11.14 Publicity. Borrower consents to Agent or any Lender publishing a tombstone or similar advertising material relating to the financing transaction contemplated by this Agreement. 11.15 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS SET FORTH HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE, IN THE BANKRUPTCY COURT, DISTRICT OF DELAWARE. SERVICE OF PROCESS ON BORROWER, AGENT OR ANY LENDER IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 11.9. NOTHING HEREIN SHALL PRECLUDE AGENT, ANY LENDER OR ANY BORROWER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. 11.16 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE, 60 ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 61 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above. "Borrower" -------- SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., as Debtor and Debtor in Possession By: /s/ David I. Brown ---------------------------- Name: David I. Brown -------------------------- Title: Treasurer ------------------------- "Agent" ----- GENERAL ELECTRIC CAPITAL CORPORATION, as Agent By: /s/ Elaine L. Moore ---------------------------- Elaine L. Moore Duly Authorized Signatory "Lenders" ------- Revolving Credit Commitment GENERAL ELECTRIC CAPITAL - --------------------------- CORPORATION $54,000,000 By: /s/ Elaine L. Moore ---------------------------- Elaine L. Moore Duly Authorized Signatory 62 ANNEXES, SCHEDULES AND EXHIBITS TO DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 between SEVEN-UP BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., as Debtor and Debtor in Possession, as Borrower, THE LENDERS PARTY THERETO and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent INDEX OF ANNEXES, SCHEDULES AND EXHIBITS ---------------------------------------- Annex A - Definitions; Rules of Construction Annex B - Cash Management System Annex C - Schedule of Documents Annex D - Schedule of Certain Fees Annex E - Financials, Projections and Notices Annex F - Insurance Requirements Annex G - Letters of Credit Annex H - Financial Covenants Schedule 3.2 - Executive Offices; Trade Names Schedule 3.4 - Financial Statements and Projections Schedule 3.5 - Dividends; Material Changes Schedule 3.6 - Real Estate and Leases Schedule 3.7 - Material Contracts Schedule 3.8 - Labor Matters Schedule 3.9 - Ventures, Subsidiaries and Affiliates; Outstanding Stock Schedule 3.12 - Tax Matters Schedule 3.13 - ERISA Plans Schedule 3.14 - Litigation Schedule 3.16 - Patents, Trademarks, Copyrights and Licenses Schedule 3.18 - Hazardous Materials Schedule 3.19 - Insurance Policies Schedule 3.20 - Disbursement and Deposit Accounts Schedule 6.2 - Investments Schedule 6.3 - Indebtedness Schedule 6.4 - Loans to and Transactions with Employees Schedule 6.6 - Guaranteed Indebtedness Schedule 6.7 - Liens Schedule 11.8 - Authorized Signatures Exhibit A - Form of Notice of Revolving Credit Advance Exhibit B - Form of Borrowing Base Certificate Exhibit C - Form of Revolving Credit Note Exhibit D - Form of Emergency Order Exhibit E - Form of Interim Order Exhibit F - Form of Security Agreement i ANNEX A to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 DEFINITIONS; RULES OF CONSTRUCTION ---------------------------------- 1. Definitions. In addition to the defined terms appearing in the Agreement and other Loan Documents, capitalized terms used in the Agreement and the other Loan Documents shall have (unless otherwise provided elsewhere in the Agreement and the other Loan Documents) the following respective meanings: "Account Debtor" shall mean any Person who may become obligated to Borrower under, with respect to, or on account of, any Account, Chattel Paper or General Intangible. "Accountant's Letter" shall have the meaning assigned to it in Section 4.2. "Accounts" shall mean all "accounts," as such term is defined in the Code, now owned or hereafter acquired by Borrower and, in any event, including: (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or acquired by or belonging or owing to Borrower, whether arising out of goods sold or services rendered by it or from any other transaction (including any such obligations which may be characterized as an account or contract right under the Code); (b) all of Borrower's rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services; (c) all of Borrower's rights to any goods represented by any of the foregoing (including unpaid sellers' rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods); (d) all monies due or to become due to Borrower under all purchase orders and contracts for the sale or lease of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower) now or hereafter in existence, including, without limitation, the right to receive the proceeds of said purchase orders and contracts; and (e) all collateral security and guarantees of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing. "Advance Date" shall have the meaning assigned to it in Section 1.13. "Affiliate" shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person, or (c) each of such Person's officers, directors, joint ventures and partners. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. "Agent" shall have the meaning assigned to it in the first paragraph of the Agreement. "Agreement" shall mean the Debtor in Possession Credit Agreement to which this Annex A is attached and of which it forms a part, including all Annexes, Schedules, and Exhibits attached or otherwise identified thereto, all restatements, modifications and supplements thereof or thereto, and any appendices, attachments, exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "Bankruptcy Code" shall mean the provisions of Title 11 of the United States Code, 11 U.S.C. (S)(S) 101 et seq., as the same may be amended from time to time. "Bankruptcy Court" shall have the meaning assigned to it in Recital B. "Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy Procedure, as the same may from time to time be in effect and applicable to the Chapter 11 Case. "BGAC" shall mean Beverage Group Acquisition Corporation, a Delaware corporation, as debtor and debtor in possession in chapter 11 case no. 96- 739(HSB) in the Bankruptcy Court. "BGAC Guaranty" shall mean the Continuing Guaranty and Security Agreement of BGAC dated as of the Closing Date, as from time to time amended, supplemented or modified. "Blocked Account Agreement" shall have the meaning assigned to it in Annex B. "Borrower" shall mean Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation, as Debtor and Debtor in Possession in the Chapter 11 Case. "Borrowing Availability" shall mean, at any time, the lesser at such time of: (a) an amount equal to the sum of (i) the Maximum Revolving Credit Commitment minus (ii) all outstanding Prepetition Credit Agreement Obligations minus (iii) the Postpetition Overadvance Reduction Amount; and (b) an amount equal to the sum of (i) the Borrowing Base plus (ii) the Postpetition Overadvance minus (iii) all outstanding Prepetition Credit Agreement Obligations minus (iv) the Postpetition Overadvance Reduction Amount. "Borrowing Base" shall mean, at any time, an amount determined by Agent in its sole discretion, exercised in good faith, to be equal to the sum at such time of: (a) up to eighty-five percent (85%) of Eligible Accounts; plus (b) up to fifty percent (50%) of raw material Eligible Inventory consisting of beverage concentrate valued on a first-in, first-out basis (at the lower of cost or market); plus (c) the lesser of (i) up to fifty percent (50%) of raw material Eligible Inventory consisting of beverage ingredients (other than concentrate), bottles and cans valued on a first-in, first-out basis (at the lower of cost or market), and (ii) $500,000; plus (d) up to sixty-five percent (65%) of finished goods Eligible Inventory valued on a first-in, first-out basis (at the lower of cost or market); minus (f) the amount of any reserves as Agent may deem necessary or appropriate from time to time in its sole discretion, exercised in good faith. "Borrowing Base Certificate" shall mean a certificate in the form attached hereto as Exhibit B. "Business Day" shall mean any day that is not (a) a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of California or New York, or (ii) a day on which Lender is not open for business. "Capital Expenditures" shall mean, as of any date, any expenditure charged to Borrower's gross buildings and equipment account which is not financed. "Capital Lease" shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, either would be required to be classified and accounted for as a capital lease on a balance sheet of such Person or otherwise be disclosed as such in a note to such balance sheet, other than, in the case of Borrower, any such lease under which Borrower is the lessor. "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such balance sheet. "Caribbean Lenders" shall mean the "Lenders" as defined in the Caribbean Loan Documents. "Caribbean Letter Agreement" shall mean that certain letter agreement dated as of August 22, 1995 among Seven-Up/RC of PR, Caribbean Lenders, Seven-Up/RC, GE Capital and GE Capital Puerto Rico with respect to the Intercompany Notes. "Caribbean Loan Documents" shall mean that certain Credit Agreement dated February 1, 1994 executed by Seven-Up/RC of PR, GE Capital Puerto Rico and the Lenders named therein, and all other agreements, documents and instruments executed and delivered in connection therewith, as the same may be modified, amended or supplemented from time to time. "Carve-Out" shall have the meaning assigned to it in Section 1.21(c). "Cash Collateral" shall mean "cash collateral" as that phrase is defined in Section 363(a) of the Bankruptcy Code. "Cash Collateral Account" shall have the meaning assigned to it in Annex G. "Cash Equivalents" shall mean: (a) securities with maturities of one year or less from the date of acquisition, issued or fully guaranteed or insured by the government of the United States of America or any agency thereof and backed by the full faith and credit of the United States of America; (b) certificates of deposit, Eurodollar time deposits, overnight bank deposits and bankers' acceptances of any domestic commercial bank having capital and surplus in excess of $500,000,000, having maturities of one year or less from the date of acquisition; and (c) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corp. or at least P-1 by Moody's Investors Services, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments, in each case with maturities of not less than sixty (60) days from the date acquired. "Change of Control" shall mean: (a) with respect to Seven-Up/RC of PR, if Borrower ceases to own one hundred percent (100%) of Seven-Up/RC of PR; (b) with respect to Borrower, if BGAC ceases to own one hundred percent (100%) of the Stock of Borrower; (c) with respect to BGAC, if WB ceases to own one hundred percent (100%) of the Stock of BGAC; and (d) with respect to WB, if Citicorp Venture Capital, Ltd., together with its Affiliates, ceases to hold a plurality of the issued and outstanding voting Stock of WB. "Chapter 11 Case" shall have the meaning assigned to it in Recital B. "Charges" shall mean all Federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to PBGC at the time due and payable), levies, assessments, charges or Liens upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of Borrower, (d) the ownership or use by Borrower of any of its assets, or (v) any other aspect of Borrower's business. "Chattel Paper" shall mean all "chattel paper," as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located. "Claim" shall have the meaning assigned to it in Section 1.17. "Closing Date" shall mean the Business Day on which the conditions precedent set forth in Section 2 have been satisfied, in Agent's sole discretion, or waived in writing by Agent, and the initial Revolving Credit Advance has been made or the initial Letter of Credit Obligation has been incurred. "Code" shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, that in the event that by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or the remedies with respect to, Agent's security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "Code" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. "Collateral" shall mean all personal property of Borrower, tangible or intangible, now existing or hereafter acquired, including accessions, substitutions and proceeds (including insurance proceeds), that may at any time be or become subject to a Lien in favor of Agent or Lenders to secure the Obligations or the obligations under the BGAC Guaranty pursuant to the Collateral Documents, the Interim Order, the Final Order, or otherwise. "Collateral Documents" shall mean the Security Agreement, the BGAC Guaranty and all other instruments and agreements now or hereafter securing the whole or any part of the Obligations. "Collateral Examination Charge" shall have the meaning assigned to it in Annex D. "Collateral Management Fee" shall have the meaning assigned to it in Annex D. "Collection Account" shall mean that certain account of Agent, account number 502-328-54 in the name of GECC/CAF Depository at Bankers Trust Company, 1 Bankers Trust Plaza, New York, New York 10006, ABA number 021-001-033, or such other account as may be designated by Agent. "Commitment Termination Date" shall mean the earliest of (a) May 13, 1998, (b) the date of termination of the Revolving Credit Commitments pursuant to Section 8.2, (c) the date of termination of the Revolving Credit Commitments in accordance with the provisions of Section 1.3(c), (d) the date that is five (5) days after the Petition Date if by 11:59 P.M. (New York time) on such date the Interim Order has not been entered by the Bankruptcy Court, (e) the date that is twenty-five (25) days after the Petition Date if by 11:59 P.M. (New York time) on such date either (i) the Final Order has not been entered by the Bankruptcy Court or (ii) the Interim Order, pursuant to paragraph 27 thereof, has not become the Final Order, and (f) the date a plan of reorganization in the Chapter 11 Case becomes effective. "Concentration Account" shall have the meaning assigned to it in Annex B. "Contracts" shall mean all the contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which Borrower may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account. "Copyrights" shall mean any United States copyright to which Borrower now or hereafter has title, as well as any application for a United States of America copyright hereafter made by Borrower. "CP Rate" shall mean, for any day, the latest published rate for thirty (30) day commercial paper placed directly by GE Capital, which rate normally appears in the "Money Rates" column of The Wall Street Journal or, in the event such report shall not so appear, in such other nationally recognized publication as Agent may, from time to time, specify to Borrower; provided, that in the event such rate is not specified in a nationally recognized publication or GE Capital ceases to directly place such commercial paper, the CP Rate shall mean the latest published rate for 30-day dealer commercial paper (high grade unsecured notes sold through dealers by major corporations), which normally appears in the "Money Rates" column of The Wall Street Journal or, in the event such report shall not so appear, in such other nationally recognized publication as Agent may, from time to time, specify to Borrower. The CP Rate will be determined on a monthly basis as of the last Business Day of each month, and the CP Rate so determined will be utilized for the next succeeding month. "Default" shall mean any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default. "Default Rate" shall mean a rate per annum equal to two percent (2%) plus the Stated Rate as in effect from time to time. "Deferred Taxes" shall mean, with respect to any Person at any date, the amount of deferred taxes of such Person as shown on the balance sheet of such Person as of such date. "Disbursement Accounts" shall have the meaning assigned to it in Annex B. "Documents" shall mean all "documents," as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located, and in any event any bills of lading, dock warrants, dock receipts, warehouse receipts, or other documents of title. "Dollars" and "$" shall mean lawful money of the United States of America. "DOL" shall mean the United States Department of Labor or any successor thereto. "EBITDA" shall mean, for any Fiscal Period, (a) the total amount of Borrower's income before Interest Expense and taxes, plus (b) to the extent deducted in determining such income, depreciation, amortization, and other similar non-cash charges, fees and expenses of the transactions contemplated by the Loan Documents and extraordinary items, minus (c) to the extent recognized in determining such income, extraordinary gains, in each case for Borrower for such Fiscal Period, minus (d) to the extent recognized in determining such income, intercorporate charges allocated and paid by Seven-Up/RC of PR pursuant to the Intercorporate Services Agreement. "Eligible Accounts" shall have the meaning assigned to it in Section 1.7(a). Unless otherwise agreed to in writing by Agent, in determining whether an Account constitutes an Eligible Account, Agent shall not include any Account: (a) that does not arise from the sale of goods by Borrower in the ordinary course of Borrower's business; (b) upon which (i) Borrower's right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatever, or (ii) Borrower is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process; (c) (i) against which, or against any contract or agreement pursuant to which such Account arises, is asserted any defense, counterclaim or set-off, or (ii) which is a "contra" Account, whether well-founded or otherwise, in each case to the extent of such defense, counterclaim, set-off or "contra" amount; (d) that is not a true and correct statement of a bona fide indebtedness incurred in the amount of the Account for merchandise sold and accepted by or services rendered to the Account Debtor obligated upon such Account; (e) with respect to which an invoice, acceptable to Agent in form and substance to ensure compliance with the terms of the Loan Documents (it being agreed that the form of Borrower's invoice delivered to Agent as Item 1.30 to the Schedule of Documents attached to the Prepetition Credit Agreement) is, based upon current laws, regulations and other conditions, acceptable on the Closing Date for purposes of this clause (e)), has not been sent to Account Debtor; (f) that is not owned by Borrower or is subject to any right, claim, or interest of another other than the Lien in favor of Agent and Lenders or Caribbean Lenders; (g) that arises from a sale to or performance of services for an employee, Affiliate, parent or Subsidiary of Borrower, or an entity which has common officers or directors with Borrower; (h) that is the obligation of an Account Debtor that is the Federal government or a political subdivision thereof, unless Borrower has complied with the Federal Assignment of Claims Acts of 1940, and any amendments thereto, with respect to such obligation; (i) that is evidenced by chattel paper, a promissory note, negotiable instruments or any other instrument of any kind; (j) that is the obligation of an Account Debtor located in a foreign country, unless the sale of goods giving rise to the Account is on a letter of credit or other credit support basis satisfactory to Agent and Agent's security interest in or assignment of such Account and letter of credit or other credit support is duly and properly created and/or perfected to Agent's satisfaction; or the sale represented by such Account is denominated in other than Dollars or is payable outside the continental United States of America; (k) that is the obligation of an Account Debtor to the extent Borrower is liable or otherwise indebted to such Account Debtor for goods sold or services rendered by such Account Debtor to Borrower; (l) that arises with respect to goods which are delivered on a cash-on- delivery basis or placed on consignment, guaranteed sale or other terms by reason of which the payment by the Account Debtor may be conditional; (m) that is an obligation for which the total unpaid Accounts of the Account Debtor exceed fifteen percent (15%) of the net amount of all Accounts, to the extent of such excess; (n) that is in default; provided, that an Account shall be deemed in default upon the occurrence of any of the following: (i) the Account is not paid within the ninety (90) days from its invoice date; (ii) the sale represented by such Account is subject to any material claim or dispute made in writing or otherwise known to Borrower by the Person to whom or to which it was made; (iii) if any Account Debtor obligated upon such Account suspends business, becomes insolvent, makes a general assignment for the benefit of creditors, or fails to pay its debts generally as they come due; or (iv) if any petition is filed by or against any Account Debtor obligated upon such Account under any bankruptcy law or any other national, state or provincial receivership, insolvency relief or other law or laws for the relief of debtors; (o) that is the obligation of an Account Debtor as to which fifty percent (50%) or more of the Dollar value of the Accounts of such Account Debtor have become, or have been determined by Agent in its sole discretion, exercised in good faith, to be, ineligible; (p) the sale represented by such Account is on terms longer than Borrower's standard terms requiring payment on the tenth (10th) day of the month immediately following such sale; (q) that arises from any bill-and-hold or other sale of goods which remain in Borrower's possession or under Borrower's control; (r) as to which the interest of Agent and Lenders therein in not a first priority perfected security interest; (s) to the extent such Account exceeds any credit limit established by Agent based upon the creditworthiness of the Account Debtor; (t) that fails to meet or violates any of Borrower's representations, warranties or covenants contained in the Agreement or any other Loan Document; (u) with respect to which the Account Debtor is located in Indiana, New Jersey or Minnesota, unless Borrower has qualified to do business in such state or filed and maintained effective a Notice of Business Activities Report (or similar report) with the appropriate office or agency in such state for the then current year; (v) that is not otherwise acceptable in the sole discretion of Agent, exercised in good faith. "Eligible Inventory" shall have the meaning assigned to it in Section 1.7(b). Unless otherwise agreed to in writing by Agent, in determining whether Inventory constitutes Eligible Inventory, Agent shall not include any Inventory that: (a) is not owned by Borrower free and clear of all Liens and rights of others, except first priority Liens in favor of Agent or Liens in favor of Caribbean Lenders; (b) is not located on premises owned or operated by Borrower and referenced in Schedule 3.6; (c) is Inventory in transit or Inventory held on or at any leased premises where the landlord thereof has not executed a consent and waiver in form and substance satisfactory to Agent or Agent is otherwise satisfied with its ability to take possession and dispose of the Inventory at such premises; (d) is in the possession or control of a bailee, warehouseman, processor, converter or other Person other than Borrower, unless Agent is in possession of such agreements, instruments and documents as Agent may reasonably require (each in form and content acceptable to Agent and duly executed, as appropriate by the bailee, warehouseman, processor, converter or other Person in possession or control of such Inventory, as applicable) including warehouse receipts in Agent's name covering such Inventory; (e) is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory has been delivered to Agent; (f) in Agent's judgment, is obsolete, unsalable, shopworn, damaged, unfit for further processing, or is of substandard quality; (g) consists of display items, packaging and shipping materials or goods which have been returned by the buyer; (h) consists of (i) discontinued items or (ii) slow-moving items held in inventory for more than 365 days following purchase or completion of manufacture; (i) does not meet all standards imposed by any Governmental Authority; (j) is placed by Borrower on consignment or held by Borrower on consignment from another Person; (k) is raw material Inventory or finished goods Inventory with respect to which Agent has determined in its sole discretion, exercised in good faith, that it may not have the ability pursuant to the terms of the Interim Order or the Final Order, to sell or dispose of such type of Inventory; (l) is finished goods Inventory, the manufacture of which has not been completed prior to the termination of the franchise or other agreement under which Borrower holds a license to produce such Inventory; (m) is Inventory produced in violation of the Fair Labor Standards Act and subject to the "hot goods" provisions contained in Title 29 U.S.C. (S) 215 or any successor statute or section; (n) is Inventory which in any way fails to meet or violates any warranty, representation or covenant contained in the Agreement or any other Loan Document; or (o) is not otherwise acceptable in the sole discretion of Agent, exercised in good faith. "Emergency Order" shall mean the order of the Bankruptcy Court entered in the Chapter 11 Case after an emergency hearing (assuming satisfaction of the standards prescribed in Bankruptcy Rule 4001 and other applicable law), together with all extensions, modifications and amendments thereto, satisfactory in form and substance to Agent, authorizing, on an emergency interim basis, Borrower to execute and perform under the terms of the Agreement and the other Loan Documents, and substantially in the form attached as Exhibit D. "Environmental Laws" shall mean all Federal, state and local laws, statutes, ordinances, orders and regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any applicable judicial or administrative interpretation thereof relating to the regulation and protection of human health and safety (from environmental matters), the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. (S)(S) 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. (S)(S) 136 et seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)(S) 6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. (S)(S) 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. (S)(S) 740 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. (S)(S) 1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. (S)(S) 651 et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. (S)(S) 300(f) et seq.), and any and all regulations promulgated thereunder, and all analogous state and local counterparts or equivalents and any transfer of ownership notification or approval statutes in connection therewith. "Environmental Liabilities and Costs" shall mean all liabilities, obligations, responsibilities, remedial actions, removal costs, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim, suit, action or demand by any person or entity, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (including any thereof arising under any Environmental Law) and which relate to any health or safety condition regulated under any Environmental Law or in connection with any other environmental matter or Release, threatened Release, or the presence of a Hazardous Material. "Equipment" shall mean all "equipment" as such term is defined in the Code, and, in any event, shall include all machinery, equipment, furnishings, fixtures and vehicles and any and all additions, accessions, substitutions and replacements of any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto. "ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time, and any regulations promulgated thereunder. "ERISA Affiliate" shall mean, with respect to Borrower, any trade or business (whether or not incorporated) under common control with Borrower and which, together with Borrower, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the IRC. "ERISA Event" shall mean, with respect to Borrower, any Subsidiary thereof or any ERISA Affiliate, (a) a Reportable Event with respect to a Title IV Plan or a Multiemployer Plan; (b) the withdrawal of Borrower, any Subsidiary thereof or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of Borrower, any Subsidiary thereof or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceeding to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make required contributions to a Qualified Plan; or (f) any other event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA. "Event of Default" shall have the meaning assigned to it in Section 8.1. "Excess Borrowing Availability" shall mean at any time of measurement, the amount by which Borrowing Availability exceeds the aggregate principal amount of the Revolving Credit Loan and outstanding Letter of Credit Obligations. "Fees" shall mean the fees due to Agent and Lenders as set forth in Section 1.8, and any other fees due to Agent or Lenders pursuant to the Loan Documents. "Final Order" shall mean the order of the Bankruptcy Court entered in the Chapter 11 Case after a final hearing under Bankruptcy Rule 4001, or without a final hearing pursuant to paragraph 27 of the Interim Order, satisfactory in form and substance to Agent, and from which no appeal has been timely filed, or if timely filed, no stay pending appeal shall have been granted, together with all extensions, modifications and amendments thereto, authorizing Borrower to obtain credit, incur indebtedness, and grant liens under the Agreement and the other Loan Documents and providing for the superpriority of Agent's claims, all as set forth in such order. "Financials" shall mean the financial statements referred to in paragraph 1 of Schedule 3.4. "Fiscal Month" shall mean each of the monthly accounting periods of Borrower. "Fiscal Quarter" shall mean each of the three-month periods ending on March 31, June 30, September 30 or December 31. "Fiscal Year" shall mean the 12-month period of Borrower and its Subsidiaries ending on December 31 of each year. Subsequent changes of the fiscal year of Borrower and its Subsidiaries shall not change the term "Fiscal Year," unless Agent and Required Lenders shall consent in writing to such change. "Fixed Charge Coverage Ratio" shall mean, as of any date with respect to Borrower, the ratio of (a) EBITDA for the Rolling Period immediately preceding such date, minus Capital Expenditures paid during such period, to (b) the sum of (i) cash interest paid in respect of Funded Debt (excluding interest expense related to Capital Lease Obligations) during such period, plus (ii) regularly scheduled payments of principal which, despite any implication, does not include any mandatory or voluntary prepayment pursuant to Section 1.3, paid on Funded Debt during such period, plus (iii) cash Taxes paid during such period, plus (iv) cash dividend payments paid during such period. "Fixtures" shall mean all "fixtures," as such term is defined in the Code, now or hereafter owned or acquired by Borrower, wherever located, and, in any event, including all of the fixtures, systems, machinery, apparatus, equipment and fittings of every kind and nature whatsoever and all appurtenances and additions thereto and substitutions therefor or replacements thereof, now or hereafter attached or affixed to or constituting a part of, or located in or upon, real property wherever located (including all heating, electrical, mechanical, lighting, lifting, plumbing, ventilating, air- conditioning and air cooling, refrigerating, incinerating and power, loading and unloading, signs, escalators, elevators, boilers, communication, switchboards, sprinkler and other fire prevention and extinguishing fixtures, systems, machinery, apparatus and equipment, and all engines, motors, dynamos, machinery, pipes, pumps, tanks, conduits and ducts constituting a part of any of the foregoing, together with all extensions, improvements, betterments, renewals, substitutes, and replacements of, and all additions and appurtenances to any of the foregoing property). "Funded Debt" shall mean all of Borrower's Indebtedness which by the terms of the agreement governing or instrument evidencing such Indebtedness matures more than one year from, or is directly or indirectly renewable or extendible at the option of Borrower under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from, the date of creation thereof, including current maturities of long-term debt, revolving credit, and short-term debt extendible beyond one year at the option of Borrower, and shall also include the Obligations and any subordinated debt of Borrower and any Subsidiary of Borrower, but shall not include any Intercompany Indebtedness. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time; provided, that for purposes of calculating any financial covenant set forth in Annex H or any definition or component to be used in the calculation of any financial covenant set forth in Annex H, "GAAP" shall mean generally accepted accounting principles in the United States of America as applied by Borrower as of December 31, 1995. "GE Capital" shall mean General Electric Capital Corporation, a corporation organized under the banking laws of the State of New York. "General Intangibles" shall mean all "general intangibles," as such term is defined in the Code, now owned or hereafter acquired by Borrower and, in any event, including all right, title and interest which Borrower may now or hereafter have in or under any Contract, all customer lists, interests in partnerships, joint ventures and other business associations, permits, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill, all rights and claims in or under insurance policies, (including insurance for fire, damage, loss, and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man, and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, and bank accounts (including the Lock Box Accounts, the Concentration Account and the Disbursement Accounts), rights to receive tax refunds and other payments and rights of indemnification. "Goods" shall mean all "goods" as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located, including movables, Fixtures, Equipment, Inventory, or other tangible personal property. "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other monetary obligation ("primary obligations") of any other Person (the "primary obligor") in any manner including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof. "Hazardous Material" shall mean any substance, material or waste, the generation, handling, storage, treatment or disposal of which is regulated by any Governmental Authority pursuant to, or which forms the basis of liability under, any Environmental Law, including any material or substance which is (i) defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste" or "restricted hazardous waste" or other similar term of phrase under any Environmental Laws, or (ii) petroleum or any fraction thereof, asbestos, polychlorinated biphenyls, or radioactive substances. "Indebtedness" of any Person shall mean (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (d) all Capital Lease Obligations, (e) all Guaranteed Indebtedness, (f) all Indebtedness referred to in clause (a), (b), (c), (d) or (e) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (f) the Obligations, and (g) all liabilities under Title IV of ERISA. "Indemnified Person" shall have the meaning assigned to it in Section 1.17. "Indenture" shall mean that certain Indenture dated as of August 1, 1992 among Borrower, BGAC, and The Bank of New York as in effect on the Petition Date. "Instruments" shall mean all "instruments," as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located and in any event all certificated securities, certificates of deposit and all notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. "Intellectual Property" shall mean, collectively, all Trademarks, all Patents, all Copyrights and all Licenses now held or hereafter acquired by Borrower, together with all franchises, tax refund claims, rights of indemnification, payments under insurance, indemnities, warranties and guarantees payable with respect to the foregoing. "Intercompany Indebtedness" shall mean any Indebtedness of Borrower or any Subsidiary which is owing to or from Borrower or any Subsidiary. "Intercompany Notes" shall mean promissory notes evidencing Intercompany Indebtedness which Intercompany Notes, (a) if owed to or held by Borrower or Seven-Up/RC of PR, shall be payable upon demand and bear interest at current market rates and shall not be subordinated to any other Indebtedness of the debtor (except that any Intercompany Notes from Seven-Up/RC of PR to Borrower ("Caribbean Intercompany Notes") may be subordinated to Seven-Up/RC of PR's obligations under the Caribbean Loan Documents). "Intercorporate Services Agreement" shall mean the Intercorporate Services Agreement between Borrower and Seven-Up/RC of PR dated as of September 11, 1990, as the same may be amended or modified with the consent of Agent. "Interest Expense" shall mean the interest expense of Borrower in respect of Indebtedness, including amortization of original issue discount on any Indebtedness and of all fees payable in connection with the incurrence of such Indebtedness (to the extent included in interest expense), the interest portion of any deferred payment obligation and the interest component of any Capital Lease Obligation. "Interim Order" shall mean the order of the Bankruptcy Court entered in the Chapter 11 Case after an interim hearing (assuming satisfaction of the standards prescribed in Bankruptcy Rule 4001 and other applicable law), together with all extensions, modifications and amendments thereto, satisfactory in form and substance to agent, authorizing, on an interim basis, Borrower to execute and perform under the terms of the Agreement and the other Loan Documents, substantially in the form attached as Exhibit E; provided, that in the event the Emergency Order is entered in the Chapter 11 Case, the term "Interim Order" shall be deemed to include the Emergency Order until such time as the Emergency Order is superseded by the Interim Order or the Final Order, as the case may be. "Inventory" shall mean all "inventory," as such term is defined in the Code, now or hereafter owned or acquired by, Borrower, wherever located, and, in any event, including inventory, merchandise, goods and other personal property which are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower's business or in the processing, production, packaging, promotion, delivery or shipping of the same, including other supplies, and all accessions and additions thereto and all documents of title covering any of the foregoing. "IRC" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto. "IRS" shall mean the Internal Revenue Service, or any successor thereto. "Investment" shall mean, for any Person (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition; (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person); and (c) the entering into of any Guaranteed Indebtedness of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. "Leases" shall mean all of those leasehold estates in real property now owned or hereafter acquired by Borrower. "Lender" and "Lenders" shall have the meanings provided in the first paragraph of the Agreement. "Letter of Credit Fee" shall have the meaning assigned to it in Annex D. "Letter of Credit Obligations" shall mean all outstanding obligations incurred by Agent or any Lender at the request of Borrower, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance or guaranty, by Agent, any Lender or another Person, of Letters of Credit. The amount of such Letter of Credit Obligations at any time shall equal the maximum amount which may be payable by Agent or Lenders thereupon or pursuant thereto at such time. "Letters of Credit" shall mean commercial or standby letters of credit issued at the request and for the account of Borrower for which Agent or any Lender has incurred Letter of Credit Obligations. "License" shall mean any Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by Borrower. "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction). "Loan Documents" shall mean the Agreement, the Revolving Credit Notes, the Collateral Documents, the Interim Order and the Final Order, and all agreements, instruments, documents and certificates in favor of Agent or Lenders that are identified in the Schedule of Documents, including all other pledges, powers of attorney, consents, assignments, contracts, notices, and other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party and delivered to Agent or Lenders in connection with the Agreement or the financing transactions contemplated hereby. "Loan Party" means each of Borrower and each Subsidiary of Borrower. "Lock Box Account Agreements" shall have the meaning assigned to it in Annex B. "Lock Box Accounts" shall have the meaning assigned to it in Annex B. "Management Agreement" shall mean that certain Management Agreement among WB, Borrower and Bart S. Brodkin dated as of September 11, 1990, as the same may be renewed in accordance with its terms or amended or modified with the consent of Borrower's Board of Directors. "Margin Stock" shall have the meaning specified in Regulation G, T, U or X of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Material Adverse Effect" shall mean: (a) a material adverse effect on (i) the business, assets, operations, prospects, or financial condition of any Loan Party, (ii) Borrower's ability to pay or perform the Obligations in accordance with the terms thereof, (iii) the Collateral or Agent's or Lenders' Liens on the Collateral or the priority of any such Liens, or (iv) the rights and remedies of Agent and Lenders under the Agreement and the other Loan Documents; or (b) except in connection with the filing of any proof or proofs of claim in the Chapter 11 Case, the incurrence by any Loan Party of any liability, contingent or liquidated, that has an actual or contingent incurrence of liability, or dollar exposure or loss, greater than $500,000 (net of any tax effect) to such Loan Party, which loss or liability would not be reflected on such Person's income statement. "Material Contracts" shall mean each contract to which Borrower or any of its Subsidiaries is now or hereafter a party involving aggregate consideration payable to or by Borrower or any of its Subsidiaries, contingent or otherwise, in excess of $1,000,000, except contracts as to which the remaining consideration payable to or by Borrower or any of its Subsidiaries is less than $1,000,000, and in any event shall include all Material Franchise Agreements. "Material Franchise Agreement" shall mean, at any time, each franchise agreement of each Loan Party relating to: (a) Royal Crown Cola Co.; (b) The Seven-Up Company; and (c) any franchise that represents five percent (5%) or more of Borrower's consolidated net revenues for the immediately preceding 12- month period. "Maximum Lawful Rate" shall have the meaning assigned to it in Section 1.6(d). "Maximum Revolving Credit Commitment" shall mean, at any particular time, an amount equal to $54,000,000. "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 4001(a) (3) of ERISA, and to which Borrower or any ERISA Affiliate is making, is obligated to make, has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them. "Net Proceeds" shall mean the net cash amount realized from any asset sale after deducting all reasonable costs and expenses payable in connection therewith, including reasonable attorneys fees and taxes with respect to such sale and repayment of any Indebtedness secured by such assets. "Non-Funding Lender" shall have the meaning assigned to it in Section 1.1(f). "Non-Use Fee" shall have the meaning assigned to it in Annex D. "Notice of Interest Period" shall have the meaning assigned to it in Section 1.6(d). "Notice of Revolving Credit Advance" shall have the meaning assigned to it in Section 1.1(c). "Obligations" shall mean all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by Borrower to Agent or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under any of the Loan Documents. This term includes all Fees, Charges, expenses, attorneys' fees and any other sum chargeable to Borrower under any of the Loan Documents. "Operating Lease" shall mean any lease of real or personal property, or mixed property, that is not a Capital Lease. "Other Lender" shall have the meaning assigned to it in Section 1.1(f). "Other Taxes" shall have the meaning assigned to it in Section 1.19(b). "Patent License" shall mean, with respect to Borrower or any Subsidiary of Borrower, rights under any written agreement now owned or hereafter acquired by such Person granting any right with respect to any invention on which a Patent is in existence. "Patents" shall mean all of the following in which Borrower now holds or hereafter acquires any interest: (a) all letters patent of the United States of America or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States of America or any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State or Territory thereof, or any other country, and (b) all reissues, divisions, continuations, continuations-in-part or extensions thereof. "Payor" shall have the meaning assigned to it in Section 1.13. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor thereto. "Pension Plan" shall mean an employee pension benefit plan, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an individual account plan, as defined in Section 3(34) of ERISA, and which Borrower or, if a Title IV Plan, any Subsidiary of Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. "Permitted Encumbrances" shall mean the following encumbrances: (a) Liens for taxes or assessments or other governmental Charges or levies, either not yet due and payable or to the extent that nonpayment thereof is permitted by the terms of Section 5.2 of the Agreement or by the Bankruptcy Code or the Bankruptcy Court; (b) pledges or deposits securing obligations under workmen's compensation, unemployment insurance, social security or public liability laws or similar legislation; (c) pledges or deposits securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which Borrower is a party as lessee made in the ordinary course of business; (d) deposits securing public or statutory obligations of Borrower; (e) inchoate and unperfected workers', mechanics', suppliers' or similar liens arising in the ordinary course of business; (f) carriers', warehousemen's or other similar possessory liens arising in the ordinary course of business and securing indebtedness not yet due and payable in an outstanding aggregate amount not in excess of $250,000 at any time; (g) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which Borrower is a party; (h) any attachment or judgment lien, unless the judgment it secures shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 30 days after the expiration of any such stay; (i) zoning restrictions, easements, licenses, or other restrictions on the use of real property or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such real property, leases or leasehold estates; and (j) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other Liens imposed as a matter of law incurred in the ordinary course of business for sums not yet delivered or being contested in good faith so long as reserves and any other provisions required by GAAP shall have been made. "Person" shall mean any individual, sole proprietor ship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof). "Petition Date" shall have the meaning assigned to it in Recital B. "Plan" shall mean, with respect to Borrower or any ERISA Affiliate, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. "Postpetition Overadvance" shall mean, at any time, an amount equal to $4,000,000. "Postpetition Overadvance Reduction Amount" shall mean, at any time, the aggregate amount of (a) principal payments of the Prepetition Term Loan scheduled to occur after the Petition Date under the secured promissory note evidencing the Prepetition Term Loan as and to the extent actually paid pursuant to Section 1.12, and (b) the amount of any Net Proceeds from any sale or disposition of any Collateral permitted under Section 6.8(d), which proceeds are not used by Borrower within sixty (60) days to acquire property or assets in a line of business related to Borrower's business as it is then conducted. "Prepetition Advances" shall mean the "Revolving Credit Advances" as defined in Annex A to the Prepetition Credit Agreement. "Prepetition Credit Agreement" shall have the meaning assigned to it in Recital A. "Prepetition Credit Agreement Obligations" shall mean the "Obligations" as defined in Annex A to the Prepetition Credit Agreement, including any amounts returned or restored to Borrower. "Prepetition Indebtedness" shall mean all Indebtedness of Borrower incurred or assumed prior to the Petition Date other than the Prepetition Credit Agreement Obligations. "Prepetition LC Cash Collateral Account" shall mean the "LC Cash Collateral Account" as defined in Annex A to the Prepetition Credit Agreement. "Prepetition LC Obligations" shall mean the "Letter of Credit Obligations" as defined in Annex A to the Prepetition Credit Agreement. "Prepetition Loan Documents" shall mean the "Loan Documents" as defined in Annex A to the Prepetition Credit Agreement, as amended, modified or supplemented prior to the Petition Date. "Prepetition Term Loan" shall mean the "Term Loan" as defined in Annex A to the Prepetition Credit Agreement. "Proceeds" shall mean all "proceeds," as such term is defined in the Code and, in any event, shall include, with respect to any Person: (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to such Person from time to time with respect to any of its property or assets; (b) any and all payments (in any form whatsoever) made or due and payable to such Person from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of such Person's property or assets by any governmental body, authority, bureau or agency (or any person acting under color of governmental authority), (c) any claim of such Person against third parties (i) for past, present or future infringement of any Patent or Patent License or (ii) for past, present or future infringement or dilution of any Trademark or Trademark License or for injury to the goodwill associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License; (d) any recoveries by such Person against third parties with respect to any litigation or dispute concerning any of such Person's property or assets; and (e) any and all other amounts from time to time paid or payable under or in connection with any of such Person's property or assets, upon disposition or otherwise. "Projections" shall mean the projections referred to in paragraph 2 of Schedule 3.4 and any other projections required to be delivered by Borrower to Lender under the Agreement. "Property" shall have the meaning assigned to it in Section 5.14. "Qualified Plan" shall mean an employee pension benefit plan, as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under IRC Section 401(a), and which Borrower, any Subsidiary of Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. "Regulatory Change" shall mean, with respect to any Lender, any change after the date of the Agreement in Federal, state or foreign law or regulations (including Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of lenders including such Lender of or under any Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Release" shall mean, as to any Person, any release or any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration of a Hazardous Material into the indoor or outdoor environment by such Person (or by a person under such Person's direction or control), including the movement of a Hazardous Material through or in the air, soil, surface water, ground water or property; but shall exclude any release, discharge, emission or disposal in material compliance with a then effective permit or order of a Governmental Authority. "Replacement Lender" shall have the meaning assigned to it in Section 1.19(g). "Reportable Event" shall mean any of the events described in Section 4043(b) (1), (3), (5) or (6) of ERISA. "Requesting Licensor" shall have the meaning assigned to it in Section 8.2. "Required Lenders" shall mean, at any time, Lenders holding more than fifty percent (50%) of the aggregate of the Revolving Credit Commitments of all Lenders at such time. "Required Payment" shall have the meaning assigned to it in Section 1.13. "Restricted Payment" shall mean, with respect to any Person: (a) the declaration or payment of any dividend or the occurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of such Person's Stock; (b) any payment on account of the purchase, redemption, defeasance or other retirement of such Person's Stock or any other payment or distribution made in respect thereof, either directly or indirectly; or (c) any payment, loan, contribution, or other transfer of funds or other property to any Stockholder of such Person. "Retiree Welfare Plan" shall refer to any Welfare Plan providing for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant's termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant. "Revolving Credit Advance" shall have the meaning assigned to it in Section 1.1(a). "Revolving Credit Commitment" shall mean, as to each Lender, the commitment of such Lender to make Revolving Credit Advances to Borrower pursuant to Section 1.1 in the aggregate principal amount outstanding not to exceed the amount set forth opposite such Lender's name on the signature page of the Agreement, as such amount may be reduced or modified pursuant to the Agreement. "Revolving Credit Loan" shall mean the aggregate amount of Revolving Credit Advances of all Lenders outstanding at any time. "Revolving Credit Notes" shall mean the promissory notes provided for by Section 1.1(d) and all promissory notes delivered in substitution or exchange therefor, in each case as the same may be modified and supplemented and in effect from time to time. "Rolling Period" shall mean, as of the end of any period, the immediately preceding 12 Fiscal Months, including the Fiscal Month then ending; provided, that as of the end of any period prior to May 1, 1997, "Rolling Period" shall mean the period from May 1, 1996 through the end of such period. "Schedule of Documents" shall mean the schedule attached hereto as Annex C, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with the Loan Documents and the transactions contemplated thereunder. "Security Agreement" shall mean the Security Agreement, substantially in the form of Exhibit F attached hereto, between Agent, for the ratable benefit of Lenders, and Borrower, including all amendments, modifications and supplements thereto, and shall refer to the Security Agreement as the same may be in effect at the time such reference becomes operative. "Senior Secured Notes" shall mean Borrower's 11 1/2 Senior Secured Notes Due 1999, issued pursuant to the Indenture. "Seven-Up/RC" shall have the meaning assigned to it in Recital A. "Seven-Up/RC of PR" shall mean Seven-Up/RC Bottling Company of Puerto Rico, Inc., a Puerto Rico corporation, a wholly-owned Subsidiary of Borrower. "Stated Rate" shall have the meaning assigned to it in Section 1.6(b). "Stock" shall mean all shares, options, warrants, general or limited partnership interests, participation or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). "Stockholder" shall mean each holder of Stock of Borrower. "Subject Property" shall mean all real property owned, leased or operated by any Loan Party or any Affiliate of Borrower. "Subsidiary" shall mean, with respect to any Person: (a) any corporation of which an aggregate of 50% or more of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irres pective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by proxy, agreement, operation of law or otherwise; and (b) any partnership in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of 50% or more or of which any such Person is a general partner or may exercise the powers of a general partner. "Superpriority Claims" shall mean allowed administrative expense claims against Borrower in the Chapter 11 Case with priority under Section 364(c)(1) of the Bankruptcy Code over any and all other administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code. "Tangible Net Worth" shall mean, with respect to Borrower, as of any date, (a) the total amount of its assets (less depreciation, depletion and other properly deductible valuation reserves), minus (b) the amount of its intangible assets, minus (c) its total liabilities. "Tax Sharing Agreement" shall mean that certain Tax Sharing Agreement dated as of September 11, 1990 between Borrower and WB, as the same may be amended or modified with the consent of Agent, which consent shall not be unreasonably withheld. "Taxes" shall mean taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of any Lender by the United States of America, the jurisdiction under the laws of which such Lender is organized or the jurisdiction in which such Lender's applicable lending office is located or, in each case, any political subdivision thereof. "Termination Date" shall mean the date on which (a) the Revolving Credit Commitments have been terminated in full, and Lenders shall have no further obligation to make any credit extensions or financial accommodations hereunder, and (b) all Obligations then due and payable have been indefeasibly paid in full, and Borrower shall have funded the amounts required, if any, under the Loan Documents into the Cash Collateral Account in respect of Letter of Credit Obligations, if any, then outstanding. "Termination Fee" shall have the meaning assigned to it in Annex D. "Title IV Plan" shall mean a Pension Plan, other than a Multiemployer Plan, which is covered by Title IV of ERISA. "Trade Payables" shall mean, as of any date of determination thereof, the accounts payable of Borrower determined in accordance of GAAP in favor or trade vendors; provided, that the trade terms of such vendors shall be substantially similar to those in effect on March 31, 1996. "Trademark License" shall mean, with respect to Borrower or any Subsidiary of Borrower, rights under any written agreement now owned or hereafter acquired by such Person granting any right to use any Trademark or Trademark registration. "Trademarks" shall mean all of the following in which Borrower now holds or hereafter acquires any interest: (a) all common law and statutory trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State or Territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all licenses thereunder and together with the goodwill associated with and symbolized by such trademark. "Unfunded Pension Liability" shall mean, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions in effect under such Title IV Plan, and (b) for a period of five (5) years following a transaction reasonably likely to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by Borrower or any ERISA Affiliate as a result of such transaction. "WB" means WB Bottling Corporation. "Weekly Settlement Date" shall have the meaning assigned to it in Section 1.15(c). "Welfare Plans" shall mean any welfare plan, as defined in Section 3(1) of ERISA, which is maintained or contributed to by Borrower or any ERISA Affiliate. "Withdrawal Liability" shall mean, at any time, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in contributions pursuant to Section 4243 of ERISA with respect to all Multiemployer Plans. 2. Certain Matters of Construction. Any accounting term used in the Agreement or the other Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed, unless otherwise specifically provided therein, in accordance with GAAP consistently applied. That certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. All other undefined terms contained in the Agreement or the other Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code as in effect in the State of California to the extent the same are used or defined therein. The words "herein," "hereof" and "hereunder" or other words of similar import refer to the Agreement as a whole, including the exhibits and schedules thereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement. For purposes of the Agreement and the other Loan Documents, the following additional rules of construction shall apply: (a) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter; (b) the term "including" shall not be limiting or exclusive, unless specifically indicated to the contrary; (c) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations; and (d) all references to any instruments or agreements, including references to any of the Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. ANNEX B to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 CASH MANAGEMENT SYSTEM ---------------------- Borrower agrees to establish, and to maintain, until the Termination Date, the cash management system described below: 1. Borrower shall not (and shall not permit any of its Subsidiaries to) maintain any deposit, checking, operating or other bank account except for those accounts identified in Schedule 3.20. So long as any Revolving Credit Advance is outstanding, no more than $500,000 in the aggregate may, for any two (2) consecutive Business Days, be maintained in the accounts of Borrower identified in Schedule 3.20. 2. Commencing on the Closing Date and for so long as any Obligations are outstanding, Borrower shall deposit or, if directed by Agent, cause to be deposited directly, in either case on the date of receipt thereof, all cash, checks, notes, drafts or other similar items of payment relating to or constituting payments made in respect of any and all Collateral, or otherwise payable to Borrower, into lock boxes or lock box accounts in Borrower's or Agent's name (collectively, the "Lock Box Accounts") at the banks set forth in Attachment I hereto. On or before the Closing Date, Borrower shall have established a concentration account in Borrower's name (the "Concentration Account") at the bank set forth in Attachment I hereto. 3. On or before the Closing Date, the banks at which the Lock Box Accounts are held shall have entered into tri-party lock box agreements with Agent and Borrower, in form and substance acceptable to Agent (the "Lock Box Account Agreements"). Each such Lock Box Account Agreement shall provide, among other things, that (a) such bank executing such agreement has no rights of setoff or recoupment or any other claim against such Lock Box Account, other than for payment of its service fees and other charges directly related to the administration of such account, and (b) such bank agrees to sweep on a daily basis all amounts in the Lock Box Account to the Concentration Account. 4. On or before the Closing Date, the bank at which the Concentration Account is held shall have entered into a tri-party blocked account agreement with Agent and Borrower, in form and substance acceptable to Agent (the "Blocked Account Agreement"). Such Blocked Account Agreement shall provide, among B-1 other things, that (a) such bank executing such agreement has no rights of setoff or recoupment or any other claim against such Concentration Account, other than for payment of its service fees and other charges directly related to the administration of such account, and (b) such bank agrees to sweep on a daily basis all amounts received in the Concentration Account to the Collection Account. 5. Commencing on the Closing Date, (a) the blocked account arrangements shall immediately become operative at the banks at which the Lock Box Accounts and the Concentration Account are maintained, and (b) amounts outstanding under the Revolving Credit Loan shall be reduced through daily sweeps, by wire transfer, of the Lock Box Accounts into the Concentration Account, and of the Concentration Account into the Collection Account, as provided in this Annex B. Borrower acknowledges that it shall have no right to gain access to any of the moneys in the Lock Box Accounts or the Concentration Account until the Termination Date. 6. Borrower may maintain, in its name, accounts (the "Disbursement Accounts") at a bank or banks acceptable to Lender into which Agent shall, from time to time, deposit proceeds of Revolving Credit Advances made pursuant to Section 1.1 for use solely in accordance with the provisions of Section 1.4. All of the Disbursement Accounts as of the Closing Date are listed in Attachment I hereto. On or before the Closing Date, the banks set forth in paragraph 3 of Attachment I hereto shall have entered into Pledged Account Agreements in form and substance acceptable to Agent. 7. So long as no Default or Event of Default has occurred, Borrower may amend Attachment I hereto to add or replace a Lock Box Account, Concentration Account, or Disbursement Account; provided, that (a) Agent shall have consented to the opening of such account with the relevant bank, and (b) with respect to any Lock Box Account or the Concentration Account, at the time of the opening of such account, Borrower and such bank shall have executed and delivered to Agent a Blocked Account Agreement, in form and substance satisfactory to Agent, and with respect to any Disbursement Account, at the time of the opening of such account, Borrower and such bank shall have executed and delivered to Agent a Pledged Account Agreement in form and substance acceptable to Agent. Borrower shall close any of its accounts (and establish replacement accounts in accordance with the foregoing sentence) within 30 days of notice from Agent that the creditworthiness of the bank holding such accounts is no longer acceptable in Agent's sole judgment. The Lock Box Accounts, the Disbursement Accounts and the Concentration Account shall be cash collateral accounts with all cash, checks and other similar items of payment in such accounts securing payment of the Obligations, and in which Borrower shall have granted a first B-2 priority perfected Lien to Agent for the benefit of Lenders pursuant to the Security Agreement. 8. All amounts deposited in the Collection Account shall be deemed received by Lender in accordance with the terms of Section 1.10 and shall be applied (and allocated) by Lender in accordance with the terms of Section 1.12. In no event shall any amount be so applied unless and until such amount shall have been credited in immediately available funds to the Collection Account. 9. Borrower hereby constitutes and irrevocably appoints Agent its true and lawful attorney, with full power of substitution, to demand, collect, receive and sue for all amounts which may become due or payable under the Lock Box Accounts and the Concentration Account, and to execute all withdrawal receipts or other orders for Borrower, in its own name or in Borrower's name or otherwise, which Agent deems necessary or appropriate to protect and preserve its right, title and interest in such accounts. 10. Upon request of Agent, Borrower shall forward to Agent, on a weekly basis, evidence of the deposit of all items of payment received by Borrower into the Lock Box Accounts and copies of all such checks and other items, together with a statement showing the application of those items relating to payments on Accounts to outstanding Accounts and a collection report with regard thereto in form and substance reasonably satisfactory to Agent. B-3 ATTACHMENT I TO ANNEX B ----------------------- LIST OF LOCK BOX ACCOUNTS, CONCENTRATION ACCOUNT AND DISBURSEMENT ACCOUNTS 1. Lock Box Accounts. ----------------- Bank of America Los Angeles, CA......... A/C #53166 Bank of America Orange, CA.............. A/C #53524 Bank of America Fresno, CA.............. A/C #53752 Bank of America Sylmar, CA.............. A/C #53583 Bank of America Los Angeles, CA......... A/C #53509 Bank of America San Bernardino, CA...... A/C #53185 Bank of America La Jolla, CA............ A/C #53510 Bank of America Los Angeles, CA......... A/C #53827 Bank of America Los Angeles, CA......... A/C #54256 2. Concentration Accounts. ---------------------- Bank of America Los Angeles, CA......... A/C #1461-7-01215 First Interstate Bank of Las Vegas, NV.. A/C #0380182410 Norwest Bank of New Mexico, NM.......... A/C #106017007 3. Disbursement Accounts. --------------------- Banker's Trust Operating................ 50208715 Banker's Trust.......................... 00516816 Bank of America Payroll................. 1461-7-50102 Bank of America Operating Account....... 1461-0-50047 Bank of America Payroll Taxes........... 1461-8-50098 Bank of America Electric Transfer....... 1461-5-50099 B-i ANNEX D to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 SCHEDULE OF CERTAIN FEES ------------------------ 1. Closing Fee. On the Closing Date, Borrower shall pay to Agent, for the account of Lenders, a closing fee of $540,000 (the "Closing Fee"), against which shall be credited the $50,000 underwriting deposit paid by Borrower to Agent upon execution of the letter of interest by Seven-Up/RC on August 17, 1995 (net of costs and expenses incurred as of the Closing Date by Agent and its Affiliates in connection with this transaction), and the $270,000 commitment letter delivery fee paid by Seven-Up/RC to GE Capital upon execution of the commitment letter on August 30, 1995. 2. Non-Use Fee. Borrower shall pay to Agent, for the account of Lenders, an unused facility fee (the "Non-Use Fee"), equal to three-eights of one percent (0.375%) per annum on the average unused daily balance of Lenders' Revolving Credit Commitments less any outstanding Prepetition Advances, payable in arrears (i) for the preceding calendar month, on the first Business Day of each calendar month commencing June 1, 1996, and (ii) on the Commitment Termination Date; provided, that for purposes of computing the Non-Use Fee such Revolving Credit Commitments shall be reduced by Postpetition Overadvance Reduction Amount, if any. All computations of the foregoing fees shall be made by Agent on the basis of a three hundred sixty (360) day year, and for the actual number of days occurring in the period for which such fee is payable. 3. Letter of Credit Fee. Borrower shall pay to Agent, for the account of Lenders, a letter of credit fee (the "Letter of Credit Fee") of two percent (2.0%) per annum (calculated on the basis of a 360 day year and actual days elapsed), on the face amount of all outstanding Letter of Credit Obligations, payable in arrears (i) for the preceding calendar month, on the first Business Day of the succeeding month, and (ii) on the Commitment Termination Date. Upon the occurrence and during the continuance of an Event of Default, the Letter of Credit Fee may in the sole discretion of Required Lenders be increased, effective as of the date of the Default giving rise to such Event of Default, to a per annum rate which is two percent (2.0%) per annum in excess of the rate that would otherwise be applicable, and shall be payable upon demand by Agent. D-1 4. Collateral Management Fee. For each yearly period commencing on the Closing Date or any anniversary of the Closing Date, or any portion thereof, Borrower shall pay to Agent, for Agent's own account, an annual collateral management fee in the amount of $50,000, payable in advance on the Closing Date and on each anniversary thereof (each such payment being a "Collateral Management Fee"). 5. Termination Fee. Borrower shall pay to GE Capital a prepayment fee equal to $100,000 (the "Termination Fee") in the event that prior to the first anniversary of the Closing Date Borrower terminates the Revolving Credit Commitments and repays the Obligations in full (except in connection with the working capital financing of a plan of reorganization in the Chapter 11 Case by GE Capital). 6. Collateral Examination Charge. Borrower shall pay to Agent, for Agent's own account, a collateral examination charge of $500 per day per individual in connection with any field examination conducted by Agent (the "Collateral Examination Charge"). D-2 ANNEX E to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 FINANCIAL STATEMENTS, PROJECTIONS AND NOTICES --------------------------------------------- 1. By no later than the second Business Day of each week: (a) a Borrowing Base Certificate as of the last day of the preceding week; (b) a collateral report setting forth the net amount of Borrower's Accounts by location; and (c) a summary of Borrower's finished goods and raw materials Inventory by location. 2. By no later than the twentieth day of each Fiscal Month: (a) a monthly aged Accounts trial balance by Account Debtor and a schedule detailing ineligible Accounts for adjustments to the Borrowing Base, and a summary aged Accounts trial balance to Borrower's general ledger for the previous Fiscal Month and monthly financial statement, in each case accompanied by such supporting detail and documentation as Agent may reasonably request; (b) a monthly Inventory aging and a schedule detailing ineligible Inventory for adjustments to the Borrowing Base, and a reconciliation of such Inventory aging to Borrower's general ledger for the previous Fiscal Month and monthly financial statement, in each case accompanied by such supporting detail and documentation as Agent may request; (c) a detailed listing of all Assumed Expenses paid to or on behalf of WB in the previous Fiscal Month; and (d) a detailed listing of the cash interest paid with respect to Capital Lease Obligations in the previous Fiscal Month. 3. By no later than the twentieth day of each Fiscal Month: (a) an internally prepared income statement and statement of cash flows for such Fiscal Month and that portion of the current Fiscal Year ending as of the close of such Fiscal E-1 Month, and balance sheet as at the end of such Fiscal Month, in each case for Borrower on a consolidated and consolidating basis, which financial and other information shall provide comparisons to the prior year's equivalent period, both on a monthly and year-to-date basis, and to budget; (b) a report of the Chief Executive Officer or Chief Financial Officer of Borrower setting forth management's discussion and analysis of all current income statement, balance sheet and cash flow financial trends; and (c) a certificate of the Chief Executive Officer or Chief Financial Officer of Borrower that all such financial statements are complete and correct and present fairly in accordance with GAAP (subject to normal year-end adjustments) the consolidated financial position, the consolidated results of operations and the consolidated statements of cash flow of Borrower as at the end of such Fiscal Month and for the period then ended, and that to his or her knowledge there was no Default or Event of Default in existence as of such time or specifying those Defaults or Events of Default of which he or she was aware. 4. Within ninety (90) days after the close of each Fiscal Year (which with respect to the items set forth in paragraphs (a) and (b) below may be satisfied by the delivery of Borrower's Annual Report on Form 10-K, to the extent applicable): (a) copies of the annual audited financial statements of Borrower determined on a consolidated basis, together with an auditor's compilation of the consolidating financial statements, for Borrower and each of its Subsidiaries, each consisting of a balance sheet and statement of operations, retained earnings and cash flow, setting forth in comparative form the figures for the previous Fiscal Year, which financial statements shall be prepared in accordance with GAAP, certified without qualification by Arthur Andersen & Co. or another firm of independent certified public accountants of recognized national standing selected by Borrower and acceptable to Agent, and accompanied by (i) a statement in reasonable detail showing the calculations used in determining Borrower's compliance with the financial covenants set forth in Annex H, and (ii) a report from such accountants to the effect that in connection with their audit examination, they did not become aware of any Default, or Event of Default, or specifying those Defaults or Events of Default, of which they became aware; (b) a report of the Chief Executive Officer or the Chief Financial Officer of Borrower setting forth management's discussion and analysis of all current income statement, balance sheet and cash flow financial trends; E-2 (c) the annual letter from Borrower's Chief Executive Officer or Chief Financial Officer to such accountants in connection with their audit examination detailing Borrower's contingent liabilities and material litigation, ERISA, labor and environmental matters (d) a certification of the Chief Executive Officer or Chief Financial Officer of Borrower that all such financial statements are complete and correct and present fairly in accordance with GAAP the financial position, the results of operations and the changes in financial position of Borrower as at the end of such Fiscal Year and for the period then ended, and that there was no Default or Event of Default in existence as of such time or specifying those Defaults or Events of Default of which he or she was aware; and (e) an Accountant's Letter (as defined in Section 4.2) with respect to the certified Financials for such Fiscal Year. 5. Not later than thirty (30) days before the end of each Fiscal Year, a final operating plan which shall include a monthly budget (including a Capital Expenditures budget) for Borrower reasonably acceptable to Agent for the following Fiscal Year (similar in form and content to the Projections and integrating plans for personnel, capital expenditures, corporate overhead expenses and facilities) approved by Borrower's board of directors and, in each case, which includes the following: (a) projected balance sheets of Borrower for such Fiscal Year, on a monthly basis: (b) projected cash flow statements and forecasted Excess Borrowing Availability, including summary details of cash disbursements (including Capital Expenditures) for such Fiscal Year, on a monthly basis; (c) projected income statements of operations of Borrower for such Fiscal Year, on a monthly basis; and (d) projected annual balance sheet, cash flow statements, and income statements of operations of Borrower on a consolidated and consolidating basis for such Fiscal Year; together with a reasonable description of major assumptions used in generating such balance sheets, cash flows and income statements, and operating plan, and other appropriate supporting details as requested by Agent. 6. As soon as practicable, but in any event within five (5) Business Days after Borrower becomes aware of the existence of any Default or Event of Default, or any development or other information that would have a Material Adverse Effect, telephonic E-3 or telegraphic notice specifying the nature of such Default or Event of Default or development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within five (5) Business Days. 7. Upon Agent's request, copies of all federal, state, local and foreign tax returns, information returns and reports in respect of income, franchise or other taxes on or measured by income (excluding sales, use or like taxes) filed by Borrower or any Subsidiary thereof. 8. Promptly upon their becoming available, copies of any final registration statements and the regular, periodic and special reports, if any, which Borrower or any Subsidiary thereof shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange. 9. Promptly upon the mailing thereof to the shareholders of Borrower generally, copies of all financial statements, reports and proxy statements so mailed. 10. As soon as possible, and in any event within 10 days after Borrower knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by the chief financial officer of Borrower setting forth details respecting such event or condition and the action, if any, that Borrower, any Subsidiary thereof or any 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 Borrower, any Subsidiary thereof or any ERISA Affiliate with respect to such event or condition): (a) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, 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 IRC or Section 302 of ERISA shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the IRC); (b) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (c) 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, or the receipt by Borrower, any Subsidiary thereof or any ERISA Affiliate of a notice from a E-4 Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (d) the complete or partial withdrawal by Borrower, any Subsidiary thereof or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by Borrower, any Subsidiary thereof 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; and (e) the institution of a proceeding by a fiduciary of any Multiemployer Plan against Borrower, any Subsidiary thereof or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days. 11. Promptly after the same is available, copies of all pleadings, motions, applications, judicial information, financial information and other documents filed by or on behalf of Borrower with the Bankruptcy Court or the U.S. Trustee in the Chapter 11 Case, or distributed by or on behalf of Borrower to any official committee appointed in the Chapter 11 Case. 12. Such other reports and information respecting Borrower's business, financial condition or prospects as Agent may, from time to time, reasonably request. E-5 ANNEX F to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 INSURANCE REQUIREMENTS ---------------------- 1. Coverage Requirements. The insurance policies maintained by Borrower provide for, without limitation, the following insurance coverage: (a) "All Risk" physical damage insurance on all of Borrower's tangible real and personal property and assets, wherever located, including Inventory located at premises not owned or leased by Borrower and covers, without limitation, fire and extended coverage, boiler and machinery coverage, flood, earthquake, environmental, liquids, theft, burglary, explosion, collapse, and all other hazards and risks ordinarily insured against by owners or users of such properties in similar businesses. All policies of insurance on such real and personal property contain an endorsement, in form and substance acceptable to Agent, showing loss payable to Agent (Form 438 BFU or its equivalent) and extra expense and business interruption endorsements. Such endorsement, or an independent instrument furnished to Agent, provides that the insurance companies will give Agent at least thirty (30) days prior written notice before any such policy or policies of insurance shall be altered or canceled and that no act or default of Borrower or any other Person shall affect the right of Agent to recover under such policy or policies of insurance in case of loss or damage; (b) Comprehensive general liability insurance on an "occurrence basis" against claims for personal injury, bodily injury and property damage with a minimum limit of $1,000,000 per occurrence and $5,000,000 in the aggregate. Such coverage includes, without limitation, premises/operations, broad form contractual liability, underground, explosion and collapse hazard, independent contractors, broad form property coverage, products and completed operations liability; (c) Statutory limits of, worker's compensation insurance (which may be provided on a self-insured basis), including employee's occupational disease and employer's liability in the amount of $300,000 for each accident or occurrence; (d) Automobile liability insurance for all owned, non-owned or hired automobiles against claims for personal F-1 injury, bodily injury and property damage with a minimum combined single limit of $1,000,000 per occurrence; (e) Umbrella insurance of $100,000,000 per occurrence and $100,000,000 in the aggregate; (f) Crime insurance with respect to employee dishonesty in an amount not less than $2,500,000; and (g) Fiduciary liability insurance with respect to defined benefit and group welfare plans in an amount not less than $5,000,000. All of such policies (i) shall have deductibles acceptable to Agent; (ii) shall provide that Agent will be notified by written notice at least thirty (30) days prior to such policy's cancellation or modification; (iii) are in full force and effect; (iv) are in form and with insurers recognized as adequate by Agent (insurers with an A.M. Best rating lower than "A" will not be considered adequate); and (v) provide coverage of such risks and for such amounts as is customarily maintained for businesses of the scope and size of Borrower's and as otherwise acceptable to Agent. Each insurance policy contains a clause which provides that Agent's interest under such policy shall not be invalidated by any act or omission to act of, or any breach of warranty by, the insured, or by any change in the title, ownership or possession of the insured property, or by the use of the property for purposes more hazardous than is permitted in such policy. Borrower has delivered to Agent a certificate of insurance that evidences the existence of each policy of insurance, payment of all premiums therefor and compliance with all provisions of this Agreement. F-2 ANNEX G to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 LETTERS OF CREDIT ----------------- 1. Lenders agree, subject to the terms and conditions hereinafter set forth, to incur Letter of Credit Obligations in respect of the issuance of Letters of Credit issued on terms acceptable to Agent and supporting obligations of Borrower incurred in the ordinary course of Borrower's business to support the payment of Borrower's inventory purchase obligations, insurance premiums, and utility and other operating expenses and obligations, as Borrower shall request by written notice to Agent that is received by Agent not less than three (3) Business Days prior to the requested date of issuance of any such Letter of Credit; provided, that the aggregate amount of all Prepetition LC Obligations and Letter of Credit Obligations at any one time outstanding (whether or not then due and payable) shall not exceed the lesser of (a) $5,000,000 and (b) when added to the Revolving Credit Loan, the Borrowing Availability; and further provided, that (i) no such Letter of Credit shall have an expiry date which is later than three hundred sixty-five (365) days following the date of issuance thereof, and (ii) Lenders shall be under no obligation to incur Letter of Credit Obligations in respect of any Letter of Credit having an expiry date that is later than May 13, 1998. The bank or other legally authorized Person (including any Lender) that issues or accepts, as the case may be, any Letter of Credit shall be determined by Lender in its sole discretion. 2. In the event that Lenders shall make any payment on or pursuant to any Letter of Credit Obligation, such payment shall then be deemed to constitute a Revolving Credit Advance. For purposes of computing interest under Section 1.6, a Revolving Credit Advance made in satisfaction of a Letter of Credit Obligation shall be deemed to have been made as of the date on which the issuer or endorser makes the related payment under the underlying Letter of Credit. 3. In the event that any Letter of Credit Obligation, whether or not then due or payable, shall for any reason be outstanding on the Commitment Termination Date, Borrower will either (a) cause the underlying Letter of Credit to be returned and canceled and Lenders' corresponding Letter of Credit Obligation to be terminated, or (b) pay to Agent, for the ratable benefit of Lenders cash or Cash Equivalents acceptable to Agent in an amount equal to 105% of the maximum amount then available G-1 to be drawn under the Letter of Credit. Such cash or Cash Equivalents shall be held by Agent in a cash collateral account (the "Cash Collateral Account") which shall be in the name, sole dominion and control of Agent (as a cash collateral account) for the ratable benefit of Lenders and subject to the terms of this Annex G. Borrower agrees to execute and deliver to Agent such documentation with respect to the Cash Collateral Account as Agent may request, and Borrower hereby pledges and grants to Agent a security interest in all such cash or Cash Equivalents held in the Cash Collateral Account from time to time and all interest thereon and the proceeds thereof, as additional security for the payment of all amounts due in respect of the Letter of Credit Obligations, whether or not then due. 4. From time to time after cash or Cash Equivalents are deposited in the Cash Collateral Account, Agent may apply such cash or Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, in such order as Agent may elect, as shall be or shall become due and payable by Borrower to Lenders with respect to such Letter of Credit Obligations and, once all Letter of Credit Obligations have been satisfied, to any other Obligations then outstanding as and when due and payable. 5. Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any right to withdraw any of the cash or Cash Equivalents held in the Cash Collateral Account, except that upon the termination of any Letter of Credit Obligation in accordance with its terms and the payment of all amounts payable by Borrower to Agent or Lenders in respect thereof, any funds remaining in the Cash Collateral Account in excess of the then remaining Letter of Credit Obligations and any other outstanding Obligations to Agent or Lender shall be returned to Borrower. 6. Neither Agent nor Lenders shall have any obligation to invest any cash deposited in the Cash Collateral Account or to deposit any such cash in an interest-bearing account, and interest and earnings thereon, if any, shall be the property of Agent, for the ratable benefit of Lenders. Interest and earnings on the Cash Equivalents in the Cash Collateral Account shall be the property of Borrower. 7. In the event that Lenders shall incur any Letter of Credit Obligations, Borrower agrees to pay the Letter of Credit Fee to Agent, for the ratable benefit of Lenders, as compensation to Lenders for incurring such Letter of Credit Obligations. In addition, Borrower shall reimburse Agent and Lenders for all fees and charges paid by Agent or Lenders on account of such Letter of Credit Obligations to the issuer or like party. G-2 ANNEX H to DEBTOR IN POSSESSION CREDIT AGREEMENT Dated as of May 13, 1996 FINANCIAL COVENANTS ------------------- 1. Borrower shall maintain, as of the end of each Fiscal Month set forth below, on a Rolling Period basis, EBITDA of not less than the following amounts corresponding thereto: May 1996 $ 0 June 1996 $ 1,000 000 July 1996 $ 1,700,000 August 1996 $ 2,800,000 September 1996 $ 3,700,000 October 1996 $ 4,700,000 November 1996 $ 5,400,000 December 1996 $ 6,800,000 January 1997 $ 6,400,000 February 1997 $ 6,600,000 March 1997 $ 8,000,000 April 1997 $ 8,300,000 May 1997 $ 8,800,000 June 1997 $ 9,400 000 July 1997 $ 9,700,000 August 1997 $10,000,000 September 1997 $10,100,000 October 1997 $10,300,000 November 1997 $10,500,000 December 1997 $10,800,000 January 1998 $10,800,000 February 1998 $10,800,000 March 1998 $10,900,000 April 1998 $10,900,000 May 1998 $11,000,000 2. Borrower shall not make aggregate Capital Expenditures in excess of the amounts set forth below for the Fiscal Month corresponding thereto, to be tested on a Rolling Period basis: May 1996 $ 400,000 June 1996 $1,100,000 July 1996 $1,600,000 August 1996 $2,100,000 September 1996 $2,700,000 October 1996 $2,900,000 November 1996 $3,100,000 December 1996 $4,300,000 January 1997 $4,800,000 February 1997 $5,300,000 March 1997 $5,800,000 April 1997 $6,300,000 May 1997 $6,400,000 June 1997 $6,200,000 July 1997 $6,200,000 August 1997 $6,200,000 September 1997 $6,100,000 October 1997 $6,400,000 November 1997 $6,700,000 December 1997 $6,000,000 January 1998 $6,000,000 February 1998 $6,000,000 March 1998 $6,000,000 April 1998 $6,000,000 May 1998 $6,000,000 Borrower may make Capital Expenditures using (a) the trade-in value of assets exchanged in accordance with Section 6.8(b), and (b) insurance proceeds from the disposition of damaged property or assets in accordance with Section 6.8(e). 3. Borrower shall maintain, as of the end of each Fiscal Month beginning October 1996, on a Rolling Period basis, a Fixed Charge Coverage Ratio of not less than 0.6 to 1. H-2 EX-4.2 3 SECURITY AGREEMENT Exhibit 4.2 SECURITY AGREEMENT ------------------ THIS SECURITY AGREEMENT ("Security Agreement"), dated as of May 13, 1996, is made by SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., a Delaware corporation, as Debtor and Debtor in Possession ("Borrower"), having its chief executive office and principal place of business at 3220 East 26th Street, Vernon, California 90023, in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized under the banking laws of the State of New York and having an office at 350 South Beverly Drive, Beverly Hills, California 90212, as agent (in such capacity, "Agent") for the lenders ("Lenders," and together with Agent, "Secured Creditors") from time to time party to the Debtor in Possession Credit Agreement referenced below. RECITALS -------- A. Pursuant to that certain Debtor in Possession Credit Agreement of even date herewith by and among Borrower, Lenders and Agent, together with all schedules, exhibits and appendices thereto (as the same from time to time may be amended, restated, supplemented or otherwise modified, the "Credit Agreement"), Lenders have agreed, among other things, to make the Revolving Credit Loan and to incur the Letter of Credit Obligations (each as defined in the Credit Agreement) to and for the benefit of Borrower. B. Lenders are willing to extend the financial accommodations in favor of Borrower as and to the extent provided for in the Credit Agreement, but only upon the condition, among others, that Borrower shall have executed and delivered this Security Agreement in favor of Agent for the benefit of Secured Creditors. AGREEMENT --------- NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINED TERMS. Unless otherwise defined herein (a) terms or matters of construction defined or established in Annex A to the Credit Agreement are used herein as therein defined or established, and (b) the following terms shall have the following meanings: "Avoidance Actions" means any and all rights of Borrower or a subsequent chapter 11 or chapter 7 trustee to recover property and to avoid liens or other property interests under the Bankruptcy Code and all property interests recovered or obtained thereby under Sections 544 through 550, inclusive, of the Bankruptcy Code. "Collateral" shall have the meaning assigned to such term in Section 2 of this Security Agreement. "hereby," "herein," "hereof," and "hereunder" and words of similar import refer to this Security Agreement as a whole (including any amendments, attachments, and schedules hereto) and not merely to the specific section, paragraph or clause in which the respective word appears. "Secured Obligations" means (a) all Obligations of Borrower to Secured Creditors under the Credit Agreement, including the unpaid principal of, and accrued interest on, the Revolving Credit Note, the Letter of Credit Obligations, and all prepayment, and other fees and charges owing by Borrower to Secured Creditors under the Credit Agreement, (b) all Prepetition Credit Agreement Obligations, and (c) all other respective Indebtedness, liabilities and Obligations and Prepetition Credit Agreement Obligations of Borrower to Secured Creditors, whether now existing or hereafter arising, and whether created under, arising out of or in connection with the Credit Agreement, the Prepetition Credit Agreement, this Security Agreement or any of the other Loan Documents or Prepetition Loan Documents. 2. GRANT OF SECURITY INTEREST (a) To secure the prompt and complete payment, performance and observance of all Secured Obligations, and to induce Secured Creditors to enter into the Credit Agreement, make the Revolving Credit Loan and incur Letter of Credit Obligations, all as provided for and in accordance with the terms of the Credit Agreement, Borrower hereby grants to Agent, for the benefit of Secured Creditors, in accordance with Sections 364(c) and 364(d) of the Bankruptcy Code, a security interest in and Lien upon all of Borrower's right, title and interest in, to and under the following prepetition and postpetition assets of Borrower and Borrower's estate, whether now owned by or owing to, or hereafter acquired by or arising in favor of Borrower (including under any trade names, styles or divisions of Borrower), whether owned or consigned by or to or leased by or to Borrower, and regardless of where located (all of which being hereinafter collectively referred to as the "Collateral"): (i) all Accounts; (ii) all Inventory; 2 (iii) all Instruments evidencing Intercompany Indebtedness, including those set forth in Schedule I hereto; (iv) all Equipment and Fixtures set forth in Schedule II hereto; (v) all General Intangibles, Chattel Paper, Contracts, and Documents related to any of the foregoing; (vi) all money, cash or Cash Equivalents related to any of the foregoing, including the Lock Box Accounts, the Concentration Accounts, the Disbursement Accounts, and all other lockbox, deposit and other bank accounts of Borrower and all deposits therein and investments made with the funds therein; (vii) all Proceeds of all Avoidance Actions, except for the Proceeds of any Avoidance Actions against any Secured Creditor; (viii) all books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records) pertaining to any of the foregoing; and (ix) to the extent not otherwise included, all Proceeds of any of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing; provided, that notwithstanding any provision to the contrary contained in this Security Agreement, Borrower does not grant, and Agent has not taken, a security interest in any Hazardous Materials of Borrower, the capital stock of Seven- Up/RC of PR, any Equipment or Fixtures not described above, or any Intellectual Property of Borrower. (b) In addition, to secure the prompt and complete payment when due of the Secured Obligations and in order to induce Lenders as aforesaid, Borrower hereby grants to Agent, for the benefit of Secured Creditors, in accordance with Sections 364(c) and 364(d) of the Bankruptcy Code, a security interest in and Lien upon all property of Borrower held by any Secured Creditor, including all property of every description now or hereafter in the possession or custody of, or in transit to, any Secured Creditor for any purpose, including safekeeping, collection or pledge, for the account of Borrower, or as to which Borrower may have any right or power. 3 (c) Agent's Liens on the Collateral for the benefit of Secured Creditors: (i) are subordinate in rank and priority only to (A) valid, perfected and enforceable Liens as of the Petition Date that are non-avoidable under the Bankruptcy Code or applicable non-bankruptcy law and are senior in rank and priority to Agent's Liens securing the Prepetition Credit Agreement Obligations, (B) Agent's Liens securing the Prepetition Credit Agreement Obligations, and (C) the Carve-Out; and (ii) are senior in rank and priority to the Caribbean Lenders' Liens on the Collateral. The Liens on the Collateral granted to Agent for the benefit of Secured Creditors under the Loan Documents shall at all times be senior to the rights of Borrower and any successor trustee or estate representative in the Chapter 11 Case or any subsequent case or proceedings under the Bankruptcy Code. Further, any Lien on the Collateral which is avoided or otherwise preserved for the benefit of Borrower's estate under Section 551 of the Bankruptcy Code shall be subordinate to Agent's Liens on the Collateral for the benefit of Secured Creditors. (d) The Liens and security interests granted hereunder or pursuant to any other Loan Document shall be automatically perfected upon entry of the Interim Order or Final Order without the requirement of any further filings, notices, recordings or actions of any kind by Agent, any Lender, Borrower or any other Person. 3. RIGHTS OF SECURED CREDITORS; LIMITATIONS ON OBLIGATIONS OF SECURED CREDITORS (a) It is expressly agreed by Borrower that, notwithstanding anything herein to the contrary, and except as permitted by the Bankruptcy Code, Borrower shall remain liable under each Contract and License to observe and perform all the conditions and obligations to be observed and performed by it thereunder, and no Secured Creditor shall have any obligation or liability under any Contract or License by reason of or arising out of this Security Agreement or the granting herein of a security interest therein and Lien thereon or the receipt by any Secured Creditor of any payment relating to any Contract or License pursuant hereto, nor shall any Secured Creditor be required or obligated in any manner to perform or fulfill any of the obligations of Borrower under or pursuant to any Contract or License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract or License, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) Agent may at any time after the occurrence and during the continuation of a Default or an Event of Default, and without prior notice to Borrower or notice or approval of the 4 Bankruptcy Court, notify Account Debtors, parties to Contracts, and obligors in respect of Instruments and Chattel Paper that the Accounts and the right, title and interest of Borrower in and under such Contracts, Instruments and Chattel Paper have been assigned to Agent, for the benefit of Secured Creditors, and that payments shall be made directly to Agent. Upon the request of Agent, Borrower shall so notify such Account Debtors, parties to Contracts, and obligors in respect of Instruments and Chattel Paper. (c) Upon reasonable prior notice to Borrower, without further notice to or approval of the Bankruptcy Court, unless a Default or an Event of Default has occurred and is continuing in which case no notice is necessary, Agent shall have the right from time to time to make test verifications of the Accounts and physical verifications and appraisals of the Inventory and other Collateral in any manner and through any medium that it considers advisable, and Borrower agrees to furnish all assistance and information as Agent may reasonably require in connection therewith. Agent may at any time in Agent's own name or in the name of Borrower communicate with Account Debtors, parties to Contracts, and obligors in respect of Instruments and Chattel Paper to verify with such Persons, to Agent's satisfaction, the existence, amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper. Upon the occurrence and continuation of a Default or an Event of Default, Borrower, at its own expense, shall cause the independent certified public accountants then engaged by Borrower to prepare and deliver to Agent at any time and from time to time, promptly upon Agent's request, the following reports: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) an aged receivable trial balance; and (iv) test verifications of such Accounts as Agent may request. Borrower, at its own expense, shall cause its independent certified public accountants to deliver to Agent the results of any physical verifications of all or any portion of the Inventory made or observed by such accountants when and if such verification is conducted. 4. REPRESENTATIONS AND WARRANTIES Borrower hereby represents and warrants that: (a) Except for the security interests and Liens granted to Agent for the benefit of Secured Creditors under this Security Agreement, the other Permitted Encumbrances, and the Liens set forth in SCHEDULE 6.7 to the Credit Agreement, Borrower is the sole owner of each item of Collateral in which it purports to grant a security interest hereunder, having good and marketable title thereto free and clear of any and all Liens. (b) No effective security agreement, financing statement, equivalent security or Lien instrument or continuation 5 statement covering all or any part of the Collateral is on file or of record in any public office, except (i) those set forth in SCHEDULE 6.7 to the Credit Agreement, (ii) those filed by Borrower in favor of Agent pursuant to this Security Agreement, or (iii) those relating to other Permitted Encumbrances. (c) The security interest in and Lien upon the Collateral hereby granted to Agent, for the benefit of Secured Creditors, is a duly perfected, non-voidable security interest, prior to all other Liens except those Permitted Encumbrances identified in SCHEDULE 6.7 to the Credit Agreement as prior to Agent's Liens, and except other Permitted Encumbrances that would be prior to Agent's Liens as a matter of law. (d) SCHEDULE I hereto lists all Instruments of Borrower. All action necessary or desirable to protect and perfect the Lien and security interest of Agent granted hereby in each item set forth in SCHEDULE I hereto, including the delivery of all originals thereof to Agent, has been duly taken, and all further actions from time to time deemed necessary by Agent to protect and perfect such security interest will be duly taken upon the request of Lender, without any requirement of notice to or approval by the Bankruptcy Court. The Lien and security interest of Agent in the Collateral listed in SCHEDULE I hereto is prior to all other Liens except Permitted Encumbrances that would be or are prior to Agent's Liens as a matter of law, and is enforceable as such against creditors of and (except as provided by the Code) purchasers from Borrower. (e) Borrower's chief executive office, principal place of business, corporate offices, all warehouses and premises within which any Collateral is stored or located, and the locations of all of its records concerning the Collateral are set forth in SCHEDULE 3.2 to the Credit Agreement. SCHEDULE 3.2 correctly identifies any of such facilities or locations that are not owned by Borrower and sets forth the names of the owners and lessors of, and the holders of any mortgages on, such facilities and locations. Borrower shall not change its chief executive office, principal place of business, any of its corporate offices, warehouses or other Collateral locations, or the location of its records concerning the Collateral, without giving thirty (30) days prior written notice thereof to Agent and taking all actions deemed necessary or appropriate by Agent to continuously protect and perfect Agent's security interest in, and Lien upon, the Collateral. (f) Unless otherwise disclosed in writing by Borrower to Agent, with respect to the Accounts: (i) each Account represents bona fide sales of Inventory to customers in the ordinary course of Borrower's business in accordance with the terms and provisions of the documents evidencing such Accounts, and are not (with respect to Eligible Accounts) evidenced by a 6 judgment, Document, Instrument or Chattel Paper; (ii) the amounts shown on any aged receivable trial balance delivered by Borrower to Agent pursuant to the terms of this Security Agreement or the Credit Agreement or on Borrower's books and records, and all invoices and statements that may be delivered to Agent or Lenders with respect thereto, are actually and absolutely owing to Borrower and are not in any way contingent; (iii) no payments have been or shall be made to Borrower with respect to the Accounts or other Collateral except payments immediately delivered to Agent pursuant to the terms of ANNEX B to the Credit Agreement; (iv) there are no setoffs, claims or disputes existing or asserted with respect to any Eligible Account, and Borrower has not made any agreement with any Account Debtor for any deduction therefrom, except in accordance with SECTION 5.7 of the Credit Agreement; (v) to the best of Borrower's knowledge, there are no facts, events or occurrences that in any way impair the validity or enforcement of any Eligible Account or tend to reduce the amount payable thereunder except as shown on the respective aged receivable trial balances, Borrower's books and records and all invoices and statements delivered to Agent with respect thereto; (vi) to the best of Borrower's knowledge, all Account Debtors have the capacity to contract; (vii) Borrower has received no notice of proceedings or actions that are threatened or pending against any Account Debtor that might result in any material adverse change in such Account Debtor's financial condition; and (viii) Borrower has no knowledge that any Account Debtor is unable generally to pay its debts as they become due. (g) With respect to the Inventory: (i) such Inventory is located at one of the locations set forth in SCHEDULE 3.2 to the Credit Agreement; (ii) Borrower has good, indefeasible and marketable title to such Inventory and such Inventory is not subject to any Lien or security interest whatsoever except for Permitted Encumbrances and the security interest granted to Agent, for the benefit of Secured Creditors, hereunder; (iii) all Eligible Inventory is of good and merchantable quality, free from any defects; (iv) except as a noted on SCHEDULE 3.16 to the Credit Agreement with respect to Borrower's franchise agreements, such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties; and (v) except as may be provided in one or more of Borrower's franchise agreements, the completion of manufacture, sale or other disposition of such Inventory by Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which Borrower is a party or to which such property is subject. (h) With respect to the Equipment and Fixtures: (i) the Equipment and Fixtures are located at one or more of the locations set forth in SCHEDULE 3.2 to the Credit Agreement; (ii) the Equipment and Fixtures are not subject to any Liens or 7 other interests in favor of any landlord or mortgagee of Borrower, except as disclosed in writing by Borrower to Agent; (iii) the Equipment and Fixtures are in good condition excepting only ordinary wear and tear; and (iv) the Equipment and Fixtures, and Borrower's use and operation thereof, do not breach, infringe upon or violate any license, patent or trademark belonging to or in favor of any third party. (i) No dispute, right of setoff, counterclaim or defense exists with respect to the Instruments set forth in SCHEDULE I. 5. COVENANTS Borrower covenants and agrees with Secured Creditors that from and after the date of this Security Agreement and until the Termination Date: (a) At any time and from time to time, upon the request of Agent and at the sole expense of Borrower, Borrower shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as any Secured Party may reasonably deem desirable to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including: (i) using its reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Agent, for the benefit of Secured Creditors, of any License or Contract held by Borrower or in which Borrower has any rights not heretofore assigned; (ii) filing any financing or continuation statements under the Code with respect to the Liens and security interests granted hereunder or under any other Loan Document; (iii) transferring Collateral to Agent's possession (if such Collateral consists of Documents, Instruments or Chattel Paper or if a security interest in such Collateral can be perfected only by possession, or if otherwise requested by Agent); and (iv) using its reasonable efforts, consistent with sound business practice, to obtain waivers, in form and substance satisfactory to Agent, of Liens from landlords and mortgagees (it being understood that Agent in its discretion may establish a reasonable reserve against the Borrowing Availability under the Credit Agreement until the same have been obtained). Borrower also hereby authorizes Agent to file any such financing or continuation statement without the signature of Borrower to the extent permitted by applicable law. If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, such Instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Agent immediately upon Borrower's receipt thereof and promptly delivered to Agent. 8 (b) Borrower shall keep and maintain, at its own cost and expense, satisfactory and complete records of the Collateral, including a record of any and all payments received and any and all credits granted with respect to the Collateral and all other dealings with the Collateral. Borrower shall mark its books and records pertaining to the Collateral to evidence this Security Agreement and the Liens and security interests granted hereby. All Chattel Paper shall be marked with the following legend: "This writing and the obligations evidenced or secured hereby are subject to the security interest of General Electric Capital Corporation as Agent for certain Secured Creditors." Upon the occurrence and during the continuation of any Event of Default, Borrower shall deliver and turn over all of Borrower's books and records pertaining to the Collateral to Agent or to Agent's representatives at any time on demand of Agent. Borrower shall permit any representative of Agent or such Lender to inspect such books and records and shall provide photocopies thereof to Agent or such Lender as set forth in SECTION 1.18 of the Credit Agreement. (c) Borrower shall not change its name, identity or corporate structure in any manner that might make any financing or continuation statement filed in connection herewith seriously misleading within the meaning of Section 9-402(7) of the Code or any other applicable provision of the Code unless Borrower shall have given Agent at least thirty (30) days prior written notice thereof and shall have taken all action (or made arrangements satisfactory to Agent to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by Agent to amend such financing statement or continuation statement so that it is not seriously misleading. (d) Borrower shall not re-date any invoice or sale or make sales on extended dating beyond that customary in Borrower's business or extend or modify any Account (other than corrections of errors in the ordinary course of business). If Borrower becomes aware of any matter materially affecting any Account, including information regarding the Account Debtor's creditworthiness, Borrower will promptly so advise Agent. (e) Except as set forth in SECTION 5.7 of the Credit Agreement, Borrower shall not release, in whole or in part, the obligations of any Person liable for payment in respect of any Account nor shall Borrower, without Agent's prior written consent, which consent shall not be unreasonably withheld or delayed, accept any note or other Instrument (except a check or other Instrument for the immediate payment of money) for an amount in excess of $100,000, individually or in the aggregate, with respect to any Accounts of a single Account Debtor. Any such Instrument shall be considered as evidence of the Account or Accounts and not payment thereof and Borrower will promptly 9 deliver such Instrument to Agent appropriately endorsed in a manner satisfactory to Agent. Regardless of the form of presentment, demand, notice of dishonor, protest, and notice of protest with respect thereto, the maker thereof will remain liable thereon until such Instrument is paid in full. (f) Except as set forth in SECTION 5.7 of the Credit Agreement, Borrower shall not grant any discount, credit or allowance to any Account Debtor, or compromise, settle or adjust any Account for less than the full amount thereof. (g) Borrower agrees that all Inventory manufactured or processed by Borrower will be manufactured and processed in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations, and orders thereunder. Borrower will not, without Agent's written consent, sell any Inventory on a guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis. (h) Borrower shall notify Agent immediately if it knows or has reason to know that any application or registration relating to any Trademark that is material to the conduct of Borrower's business may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court) regarding Borrower's ownership of any Trademark that is material to the conduct of Borrower's business, its right to register the same, or to keep and maintain the same. (i) In no event shall Borrower, either by itself or through any agent, employee, licensee or designee, file an application for the registration of any Trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof without giving Agent prior written notice thereof and, upon the request of Agent, Borrower shall execute and deliver any and all agreements, instruments, documents and papers as Agent may request to evidence Agent's security interest in such Trademark and the General Intangibles, including the goodwill, of Borrower relating thereto or represented thereby. (j) Borrower shall take all necessary actions to maintain and pursue each application, to obtain the relevant registration, and to maintain the registration of each of the owned Trademarks that is material to the conduct of Borrower's business, including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings. (k) In the event that any owned Trademark is infringed upon, or misappropriated or diluted by a third party, Borrower shall notify Agent promptly after Borrower learns thereof and 10 shall, unless Borrower shall reasonably determine that such owned Trademark is not material to the conduct of Borrower's business, promptly sue such party for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as Borrower shall reasonably deem appropriate under the circumstances to protect such owned Trademark. (l) Borrower agrees not to divest its rights under any owned Patent or Copyright, without the prior written approval of Agent, and will take all action necessary or advisable to maintain each such Patent or Copyright. (m) Borrower agrees, promptly upon learning of the same, to furnish Agent in writing with all pertinent information available to Borrower with respect to any infringement or other violation of Borrower's rights in any material owned Patent or Copyright, or with respect to any claim that practice of any material owned Patent or Copyright violates any property right of that party. Borrower further agrees, absent direction of Agent to the contrary, to prosecute any person infringing any significant owned Patent or Copyright. (n) Borrower represents and warrants to and agrees with Agent and Lenders that all of the Equipment and Fixtures are and will be used or held for use in Borrower's business. Borrower shall keep and maintain the Equipment and Fixtures in good operating condition and repair (ordinary wear and tear excepted) and shall make all necessary repairs thereto. Borrower shall promptly inform Agent of any material additions to or deletions from the Equipment of Fixtures. Borrower shall not permit any Equipment to become a fixture to real property or an accession to other personal property, unless Agent, for the benefit of Secured Creditors, has a valid, perfected, and first priority Lien upon such real or personal property. Borrower will not, without Agent's prior written consent, alter or remove any identifying symbol or number on the Equipment or Fixtures. Except as provided in SECTION 6.8 to the Credit Agreement, Borrower shall not, without the prior written consent of Agent, or without prior approval of the Bankruptcy Court as may be required under the circumstances, sell, lease as a lessor, or otherwise dispose of any of the Equipment or Fixtures. (o) Borrower will defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest thereon. (p) Borrower shall give Agent not less than thirty (30) days prior written notice before moving any Collateral to a location not set forth in SCHEDULE 3.2 to the Credit Agreement, and shall in no event move any Collateral outside the United States of America. 11 6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT (a) Borrower hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name, from time to time in Agent's discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement and, without limiting the generality of the foregoing, Borrower hereby grants to Agent the power and right, on behalf of Borrower, without notice to or assent by Borrower, at any time, to do the following: (i) in the name of Borrower, in its own name or otherwise, take possession of, endorse and receive payment of any checks, drafts, notes, acceptances, or other Instruments for the payment of monies due under any Collateral; (ii) continue any insurance existing pursuant to the terms of this Security Agreement, the Credit Agreement or any other Loan Document and pay all or any part of the premiums therefor and the costs thereof as a Revolving Credit Advance under the Credit Agreement; and (iii) receive payment of any and all monies, claims, and other amounts due or to become due at any time arising out of or in respect of any Collateral. (b) Borrower hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name, from time to time in Agent's discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement and, without limiting the generality of the foregoing, Borrower hereby grants to Agent the power and right, on behalf of Borrower, without notice to or assent by Borrower, and without notice to or approval of the Bankruptcy Court, upon the occurrence and during the continuation of a Default or an Event of Default, to do the following: (i) ask, demand, collect, receive and give acquittances and receipts for any and all money due or to become due under any Collateral; 12 (ii) pay or discharge any taxes, Liens, security interests, or other encumbrances levied or placed on or threatened against the Collateral; (iii) effect any repairs or obtain any insurance called for by the terms of the Credit Agreement and pay all or any part of the premiums therefor and costs thereof; (iv) direct any party liable for any payment under or in respect of any of the Collateral to make payment of any and all monies due or to become due thereunder, directly to Agent or as Agent shall direct; (v) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against Account Debtors, assignments, verifications, and notices in connection with accounts and other documents constituting or related to the Collateral; (vi) settle, compromise or adjust any suit, action, or proceeding described above and, in connection therewith, give such discharges or releases as Agent may deem appropriate; (vii) file any claim or take or commence any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of collecting any and all such monies due under any Collateral whenever payable; (viii) commence and prosecute any suits, actions or proceedings at law or in equity in any court to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (ix) defend any suit, action or proceeding brought against Borrower with respect to any Collateral if Borrower does not defend such suit, action or proceeding or if Agent believes that Borrower is not pursuing such defense in a manner that will maximize the recovery with respect to such Collateral; (x) license or, to the extent permitted by an applicable License, sublicense, whether general, specific or otherwise and whether on an exclusive or non-exclusive basis, any Patent or Trademark throughout the world on such terms and conditions and in such manner as Agent shall, in its sole discretion, determine; and (xi) sell, transfer, pledge, make any agreement with respect to, or otherwise deal with any of the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and to do, at Agent's option and Borrower's expense, at any time or from time to time, all acts and other things that Agent reasonably deems necessary to 13 perfect, preserve, or realize upon the Collateral and Agent's Liens therein in order to effect the intent of this Security Agreement, all as fully and effectively as Borrower might do. (c) Borrower hereby ratifies, to the extent permitted by law, all that said attorneys shall lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this Section 6 is a power coupled with an interest and shall be irrevocable until the Termination Date. (d) The powers conferred on Agent hereunder are solely to protect Agent's security interests in, and Lien upon, the Collateral and shall not impose any duty upon it to exercise any such powers. Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and none of its officers, directors, employees, agents or representatives shall be responsible to Borrower for any act or failure to act, except for their own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (e) Borrower also authorizes Agent, at any time and from time to time, (i) to communicate in its own name with any party to any Contract with regard to the assignment of the right, title and interest of Borrower in and under the Contracts and other matters relating thereto, and (ii) to execute, in connection with the sale provided for in Section 8 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. 7. PERFORMANCE BY AGENT OF BORROWER'S OBLIGATIONS If Borrower fails to perform or comply with any of its agreements contained herein or in any of the other Loan Documents and Agent, as provided for by the terms of this Security Agreement or any other Loan Documents, shall itself perform or comply, or otherwise cause performance of or compliance with such agreement, the reasonable expenses (including attorneys' fees) of Agent incurred in connection with such performance or compliance, together with interest thereon at the Default Rate shall be payable by Borrower to Agent on demand and shall constitute part of the Secured Obligations. 8. REMEDIES; RIGHTS UPON DEFAULT (a) Upon the occurrence of an Event of Default and for so long as such Event of Default continues without cure, and without application or motion to, or order from, the Bankruptcy Court, in addition to all other rights and remedies granted to Agent under this Security Agreement, the Credit Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to the Obligations, Agent may, upon five Business Days' prior notice to Borrower, exercise all 14 rights and remedies of a secured party under the Code or other applicable law, including the right to sell or otherwise dispose of any Collateral in a commercially reasonable manner (including Inventory subject to trademarks or tradenames; provided, that upon timely written notice to Agent and Borrower by a franchisor, licensor, distributor or other similar owner of any such trademark or tradename (the "Requesting Licensor"), Agent and Lenders may only sell or otherwise dispose of Collateral subject to the Requesting Licensor's trademark or tradename in a manner that Borrower would be permitted to sell or otherwise dispose of such Collateral under its franchise agreement, licensing agreement, distribution agreement or other similar agreement with the Requesting Licensor, as if such agreement was in full force and effect). Without limiting the generality of the foregoing, Borrower expressly agrees that in any such event Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Borrower or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code and other applicable law), may forthwith enter upon the premises of Borrower where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving Borrower notice and opportunity for a hearing on Agent's claim or action, and without paying rent to Borrower, and collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales or at any exchange, at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Agent and any Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for its benefit the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption Borrower hereby releases. Such sales may be adjourned or continued from time to time with or without notice. Agent shall have the right to conduct such sales on Borrower's premises or elsewhere and shall have the right to use Borrower's premises without charge for such sales for such time or times as Agent deems necessary or advisable. Borrower further agrees, at Agent's request, to assemble the Collateral and make it available to Agent at places which Agent shall reasonably select, whether at Borrower's premises or elsewhere. Until Agent is able to effect a sale, lease, or other disposition of the Collateral, Agent shall have the right to use or operate the Collateral on behalf of Borrower, or any part thereof, to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any 15 other purpose deemed appropriate by Agent. Agent shall have no obligation to Borrower to maintain or preserve the rights of Borrower as against third parties with respect to the Collateral while the Collateral is in the possession of Agent. Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of the Collateral and to enforce any of Agent's remedies with respect to such appointment without prior notice or hearing. Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, as provided in Section 8(d) hereof, Borrower remaining liable for any deficiency remaining unpaid after such application, and only after so paying over such net proceeds and after the payment by Agent of any other amount required by any provision of law, including Section 9-504(1)(c) of the Code (but only after Agent has received what Agent considers reasonable proof of a subordinate party's security interest), need Agent account for the surplus, if any, to Borrower. To the maximum extent permitted by applicable law, Borrower waives all claims, damages, and demands against Agent or any Secured Creditor arising out of the repossession, retention or sale of the Collateral except such as arise out of the gross negligence or willful misconduct of such party. Borrower agrees that five (5) Business Days' prior notice by Agent to Borrower of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Borrower shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which Secured Creditors are entitled, Borrower also being liable for any and all costs and expenses incurred by Agent, including reasonable attorneys' fees, to collect such deficiency. (b) Borrower agrees to pay any and all costs of Agent, including reasonable attorneys' fees incurred in connection with the enforcement of any of its or Lenders' rights and remedies hereunder. (c) Except as otherwise specifically provided herein, (to the maximum extent permitted by applicable law), Borrower hereby waives presentment, demand, protest or any notice of any kind in connection with this Security Agreement or any Collateral. (d) The Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be distributed by Agent upon receipt, in the following order of priorities: first, to Agent in an amount sufficient to pay in full the reasonable expenses of Agent in connection with such sale, disposition or other realization, including all expenses, liabilities and advances incurred or made by Agent in connection 16 therewith, including reasonable attorneys' fees and any other Obligations owed to Agent; second, to the Prepetition Credit Agreement Obligations in accordance with Section 1.12 of the Prepetition Credit Agreement; third, then due and payable Fees, expenses and other Obligations (including Revolving Credit Advances made by Agent in its capacity as Agent) owing to Agent; fourth, then due and payable Fees and expenses of Lenders; fifth, then due and payable interest payments; sixth, then due and payable Obligations to Lenders other than Fees, expenses and interest and principal payments; seventh, then due and payable principal payments on the Revolving Credit Loan; and finally, to Borrower, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds; (e) The obligations of Borrower to Agent for the benefit of Secured Creditors under this Security Agreement shall constitute administrative expenses of Borrower in the Chapter 11 Case with priority under Section 364(c)(1) of the Bankruptcy Code over any and all other administrative expenses of the kind specified or ordered pursuant to any provision of the Bankruptcy Code, including Sections 326, 328, 503, 507 and 726 of the Bankruptcy Code. 9. GRANT OF LICENSE TO INTELLECTUAL PROPERTY COLLATERAL Except to the extent prohibited by the terms of any License, for the purpose of enabling Agent to exercise rights and remedies under Section 8 hereof (including, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral) at such time as Agent shall be lawfully entitled to exercise such rights and remedies, Borrower hereby grants to Agent, for the benefit of Secured Creditors, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to Borrower) to use, transfer, license or sublicense any Patent, Trademark, Copyright or trade secret, now owned or hereafter acquired by Borrower, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer and automatic machinery software and programs used for the compilation or printout thereof. 17 10. LIMITATION ON AGENT'S DUTY IN RESPECT OF COLLATERAL Agent shall use reasonable care with respect to the Collateral in its possession or under its control. Agent shall not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Agent, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. Upon request of Borrower, Agent shall account for any monies received by Agent in respect of any foreclosure on or disposition of the Collateral. 11. REINSTATEMENT This Security Agreement shall remain in full force and effect and continue to be effective should the Chapter 11 Case be dismissed, converted to a case under chapter 7 under the Bankruptcy Code or substantively consolidated with any other bankruptcy cases, should any petition be filed by or against Borrower for liquidation or reorganization, should Borrower become insolvent or make an assignment for the benefit of creditors, or should a receiver or trustee be appointed for all or any significant part of Borrower's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, such obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 12. NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever either of the parties desires to give or serve upon any other party any communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and given in the manner provided for in SECTION 11.9 of the Credit Agreement. 13. SEVERABILITY Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or 18 unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Security Agreement is to be read, construed and applied together with the Credit Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of the Secured Creditors and Borrower with respect to the matters referred to herein and therein. 14. NO WAIVER; CUMULATIVE REMEDIES Agent shall not, by any act, delay, omission or otherwise, be deemed to have waived any of its or any Lenders' rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Agent or any Lender would otherwise have had on any future occasion. No failure to exercise, nor any delay in exercising on the part of Agent or any Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by a written instrument duly executed by Agent and Borrower and, to the extent required by the Credit Agreement, the Required Lenders or all Lenders. 15. LIMITATION BY LAW All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any order of the Bankruptcy Court or applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they do not render this Security Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered, or filed under the provisions of any applicable law. 16. TERMINATION OF THIS SECURITY AGREEMENT Subject to Section 11 hereof, this Security Agreement shall terminate upon the Termination Date. 19 17. SUCCESSORS AND ASSIGNS (a) This Security Agreement and all obligations of Borrower hereunder shall be binding upon the successors and assigns of Borrower and, together with the rights and remedies of Agent, hereunder, shall inure to the benefit of Agent, Secured Creditors, all future holders of any instrument evidencing any of the Obligations or Prepetition Credit Agreement Obligations and their respective successors and permitted assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or Prepetition Credit Agreement Obligations or any portion thereof or interest therein shall in any manner affect the security interest granted hereunder to Agent, for the benefit of Secured Creditors. Borrower may not assign, sell or otherwise transfer an interest in this Security Agreement. (b) Notwithstanding anything to the contrary contained herein, unless a Default or an Event of Default has occurred and is continuing, Agent shall from time to time execute and deliver, upon the written request of Borrower, any and all instruments, certificates or other documents, in the form so requested, necessary or appropriate in the judgment of Borrower to permit Borrower to continue to exploit, license, use, enjoy and protect the Patents, Copyrights and Trademarks. 18. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE, IN THE BANKRUPTCY COURT OF THE DISTRICT OF DELAWARE. NOTHING IN THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY SECURED CREDITOR FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. SERVICE OF PROCESS ON BORROWER, AGENT OR ANY LENDER IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 11.9 OF THE CREDIT AGREEMENT. 19. MUTUAL WAIVER OF JURY TRIAL 20 BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS SECURITY AGREEMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS HEREUNDER OR THEREUNDER. IN WITNESS WHEREOF, Borrower has caused this Security Agreement to be executed and delivered by its duly authorized officer on the date first set forth above. SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., Debtor and Debtor in Possession By: /s/ David I. Brown ------------------------------ Name: David I. Brown ---------------------------- Title: Treasurer --------------------------- ACCEPTED AS OF MAY 13, 1996: GENERAL ELECTRIC CAPITAL CORPORATION, as Agent By: /s/ Elaine L. Moore ------------------------------- Elaine L. Moore Duly Authorized Signatory 21 EX-4.3 4 CONTINUING GUARANTY AND SECURITY AGREEMENT Exhibit 4.3 CONTINUING GUARANTY AND SECURITY AGREEMENT ------------------------------------------ THIS CONTINUING GUARANTY AND SECURITY AGREEMENT ("Guaranty") dated as of May 13, 1996, made by BEVERAGE GROUP ACQUISITION CORPORATION, a Delaware corporation, as Debtor and Debtor in Possession ("Guarantor"), in favor of General Electric Capital Corporation, a corporation organized under the banking laws of the State of New York, as agent (in such capacity, "Agent") for itself as a "Lender" and for the benefit of the other "Lenders" as defined in the Debtor in Possession Credit Agreement referred to below (collectively, the "Lenders" and individually, a "Lender"), is based on the following facts: RECITALS -------- A. Guarantor owns 100% of the issued and outstanding common stock of Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation, as Debtor and Debtor in Possession ("Borrower"). B. Borrower, Agent, and Lenders are entering into a Debtor in Possession Credit Agreement of even date herewith (as subsequently supplemented, amended, modified or restated from time to time, the "Credit Agreement"). C. It is a condition to Lenders' obligations under the Credit Agreement that Guarantor execute and deliver this Guaranty. AGREEMENT --------- NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows: 1. DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION 1.1 Definitions. Unless otherwise defined herein, (a) capitalized terms used herein shall have the respective meanings ascribed to them in the Credit Agreement, and (b) the following terms shall have, unless otherwise provided elsewhere in this Guaranty, the meanings set forth below (such meanings being equally applicable to both the singular and plural forms of the terms defined): "Event of Default" shall have the meaning set forth in Section 10.1. "Guaranty" shall mean this Continuing Guaranty and Security Agreement, including any and all amendments, modifications and supplements hereof or hereto. "Guaranty Collateral" shall mean any property or property interest now or hereafter securing payment and performance of the Guaranty Liabilities pursuant to the terms of this Guaranty or otherwise. "Guaranty Liabilities" shall mean (a) the Obligations and (b) all indebtedness, liabilities, and obligations of Guarantor to Agent or Lenders whether now existing or hereafter arising under this Guaranty. "Obligations" shall mean all loans, advances, debts, liabilities, and obligations for the performance of covenants, tasks or duties or for the payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by Borrower to Agent or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under any of the Loan Documents. The term "Obligations" includes all principal, interest, Fees, Charges, expenses, attorneys' fees and any other sum chargeable to Borrower under any Loan Document. "Secured Creditors" shall mean Agent and Lenders. "Termination Date" shall mean the date on which Borrower shall have no further right to receive any financial accommodations under the Credit Agreement and the then due and payable Obligations and Guaranty Liabilities shall have been completely satisfied. 1.2 Certain Matters of Construction. Unless otherwise specifically provided, use of any term shall be equally applicable to any gender, "or" shall not be exclusive, "including" shall not be limiting or exclusive, and any reference to a "Section" shall refer to the relevant section of this Guaranty. 2. THE GUARANTY 2.1 Guaranty of the Obligations. Guarantor hereby unconditionally, irrevocably, and jointly and severally with Borrower guarantees to Agent, for the benefit of each Lender, and its successors, endorsees, transferees, and assigns, the prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of the Obligations; provided, that the maximum liability of Guarantor hereunder shall not exceed $10,000,000 plus any costs or expenses incurred by Agent or 2 Lenders in connection with the receipt or enforcement of this Guaranty. 2.2 Absolute Guaranty. The Guaranty Liabilities shall remain in full force and effect without regard to, and shall not be impaired or affected by, or be deemed to be satisfied by, nor shall Guarantor or any Guaranty Collateral be exonerated, discharged, or released by, any of the following events: (a) Agent's or any Lender's exercise or enforcement of, or failure or delay in exercising or enforcing, legal proceedings to collect the Obligations or any power, right, or remedy with respect to any of the Obligations, the Collateral, the Guaranty Liabilities, or the Guaranty Collateral, including: (i) any action or inaction of Agent or any Lender to perfect, protect, or enforce any security interest in any Collateral or Guaranty Collateral; (ii) any impairment or invalidity of the Collateral or the Guaranty Collateral or any suspension of Agent's or any Lender's right to enforce against Borrower or any other guarantor of the Obligations, any Obligations, any Guaranty Liabilities, any other obligations, or any security interest in or lien upon the Collateral or the Guaranty Collateral; or (iii) any change in the time, manner, or place of payment of, or in any other term of, any or all of the Obligations or the Guaranty Liabilities, or any other amendment to or waiver of the Credit Agreement, any other Loan Document, or any other agreement or instrument governing or evidencing any of the Obligations or the Guaranty Liabilities; (b) insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, appointment of a receiver or trustee for all or any part of Borrower's or Guarantor's assets or of the assets of any other guarantor of the Obligations, liquidation, winding-up, or dissolution of Borrower or Guarantor or any other guarantor of the Obligations; (c) any limitation, discharge, cessation, or partial satisfaction of the Obligations, of any Guaranty Liabilities, or of the obligations of any other guarantor of the Obligations, whether by operation of any statute, regulation, or rule of law, or otherwise, regardless of the intervention or omission of Agent or any Lender, or any invalidity, voidability, unenforceability, or irregularity, or future change to or amendment of, in whole or in part, the Credit Agreement, this Guaranty, any other Loan Document, or any other document evidencing any Obligations; (d) any merger, acquisition, consolidation or change in structure of Borrower or Guarantor or any other guarantor of the Obligations; or any sale, lease, transfer, or other disposition of any or all of the assets or shares of Borrower or Guarantor or any other guarantor of the Obligations; 3 (e) any assignment or other transfer, in whole or in part, of Agent's or any Lender's interest in or rights under the Credit Agreement or any other Loan Document, including this Guaranty, or of Agent's or any Lender's interest in the Obligations, the Guaranty Liabilities, the Collateral, or the Guaranty Collateral; (f) any claim, defense, counterclaim, or set-off, other than (i) any defense of prior performance or (ii) any defense based on any applicable provision of the Code requiring that the Collateral or the Guaranty Collateral be disposed of in a commercially reasonable manner, which Borrower, Guarantor, or any other guarantor of the Obligations may have or assert, including any defense of incapacity, disability, or lack of corporate or other authority to execute any documents relating to the Obligations, the Guaranty Liabilities, the Collateral, the Guaranty Collateral, or any other guaranty of the Obligations; (g) any cancellation, renunciation, or surrender of any pledge, guaranty, or any debt instrument evidencing the Obligations or the Guaranty Liabilities; (h) Agent's or any Lender's vote, claim, distribution, election, acceptance, action, or inaction in any bankruptcy or reorganization case related to the Collateral, the Guaranty Collateral, the Obligations, or the Guaranty Liabilities; (i) any other action or circumstances that might otherwise constitute a defense available to, or a legal or equitable discharge of, any surety, guarantor or pledgor; or (j) the fact that any of the Obligations or the Guaranty Liabilities may become due or payable in connection with or by reason of any agreement or transaction that may be illegal, invalid, or unenforceable in whole or in part; it being agreed by Guarantor that the Guaranty Liabilities shall not be discharged until the Termination Date. 2.3 Demand by Agent. In addition to the terms of the guaranty set forth in Sections 2.1 and 2.2, and in no manner imposing any limitation on such terms, it is expressly understood and agreed that, if the Obligations are declared to be or otherwise become immediately due and payable, then Guarantor shall, upon demand in writing therefor by Agent to Guarantor, immediately pay the Guaranty Liabilities to Agent for the account of Secured Creditors. Such payment shall be credited and applied upon the Obligations, in immediately available Federal funds to an account designated by Agent or at the address set forth herein for the giving of notice to Agent or at any other address that may be specified in writing from time to time by Agent. This section shall in no way affect Agent's and Lender's right to resort to the Guaranty Collateral without demand, as provided in 4 Section 10.2. Any payment received by Agent with respect to the Obligations shall reduce the Guaranty Liabilities by the amount of such payment. 2.4 Guarantor Waivers. In addition to any other waivers contained herein, Guarantor waives and agrees as follows: (a) The Guaranty Liabilities are the immediate, direct, primary, and absolute liabilities of Guarantor, and are independent of and not co-extensive with the Obligations or the obligations of any other guarantor thereof. Guarantor expressly waives any right it may now or in the future have to require Agent or any Lender to, and neither Agent nor any Lender shall have any liability to, first pursue or enforce against Borrower, any of Borrower's properties or assets, the Collateral, the Guaranty Collateral, or any other security, guaranty, or pledge that may now or hereafter be held by Agent for the benefit of Secured Creditors for the Obligations or for the Guaranty Liabilities, or to apply such security, guaranty, or pledge to the Obligations or to the Guaranty Liabilities, or to pursue any other remedy in Agent's or any Lender's power that Guarantor may or may not be able to pursue itself and that may lighten Guarantor's burden, before proceeding against the Guaranty Collateral. Guarantor agrees that any notice or directive given at any time to Agent that is inconsistent with the waiver in the immediately preceding sentence shall be null and void and may be ignored by Agent, and, in addition, may not be pleaded or introduced as evidence in any litigation or other dispute resolution procedure relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless Agent has specifically agreed otherwise in writing. Guarantor shall remain liable for the Guaranty Liabilities, notwithstanding any judgment Agent may obtain for the benefit of Agent or Lenders against Borrower, any other guarantor of the Obligations, or any other Person, or any modification, extension, or renewal with respect thereto. (b) Guarantor has entered into this Guaranty based solely upon its independent knowledge of Borrower's financial condition and Guarantor assumes full responsibility for obtaining any further information with respect to Borrower or the conduct of its business. Guarantor represents that it is now, and during the terms of this Guaranty will be, responsible for ascertaining the financial condition of Borrower. Guarantor hereby waives any duty on the part of Agent or any Lender to disclose to Guarantor, and agrees that it is not relying upon nor expecting Agent or any Lender to disclose to it, any fact known or hereafter known by Agent or any Lender relating to the operation or condition of Borrower or its business or relating to the existence, liability, or financial condition of any other guarantor of the Obligations. Guarantor knowingly accepts the full range of risk encompassed in a contract of continuing guaranty, which risk includes the 5 possibility that Borrower may incur Obligations after Borrower's financial condition or its ability to pay its debts as they mature has deteriorated. (c) Neither Agent nor any Lender shall be under any liability to marshal any assets in favor of Guarantor or in payment of any or all of the Obligations or Guaranty Liabilities. (d) Guarantor hereby waives: (i) presentment, demand, protest, notice of acceleration, dishonor, non-payment, protest, or any delay related thereto, with respect to any instruments or documents relating to the Obligations or the Guaranty Liabilities; (ii) notice of any extension, modification, renewal, or amendment of any of the terms of the Credit Agreement or any other Loan Document relating to the Obligations or the Guaranty Liabilities; (iii) notice of the occurrence of any Default or Event of Default with respect to the Obligations, the Guaranty Liabilities, the Collateral, or the Guaranty Collateral; and (iv) notice of any exercise or non-exercise by Agent or any Lender of any right, power, or remedy with respect to the Obligations, the Collateral, the Guaranty Collateral, or the Guaranty Liabilities. (e) Guarantor shall have no right of subrogation, reimbursement, indemnity, or contribution, and shall have no right of recourse with respect to the Collateral or any Lien held therefor, all of which Guarantor expressly waives. If Agent may, under applicable law, proceed to realize its benefits under any Loan Document giving Agent a Lien for the benefit of Secured Creditors upon any Collateral, whether owned by Borrower or by any other Person, either by judicial foreclosure or by nonjudicial sale or enforcement, Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Guaranty. If, in the exercise of any of its rights and remedies, Agent shall forfeit any of its rights or remedies under any Loan Document, including its right to obtain a deficiency judgment against Borrower or any other Person, whether because of any applicable laws pertaining to "election of remedies," anti-deficiency rules, or the like, then Guarantor hereby consents to such action by Agent and waives any claim based upon such action. Any election of remedies that results in the denial or impairment of the right of Agent to seek a deficiency judgment against Borrower shall not impair Guarantor's obligations under this Guaranty. In the event Agent shall bid at any foreclosure or trustee's sale or at any public or private sale permitted by law or the Loan Documents, Agent may bid all or less than the amount of the Obligations or the Guaranty Liabilities and the amount of such bid need not be paid by Agent but shall be credited and applied as set forth in Section 12. The amount of the successful bid at any such sale, whether Agent or any other party (including 6 Guarantor) is the successful bidder, shall be deemed to be prima facie evidence of the fair market value of the Collateral and the amount remaining after application of such bid amount in the manner set forth in Section 12 shall be deemed to be prima facie evidence of the amount of the Obligations guaranteed under this Guaranty, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Agent might otherwise be entitled but for such bidding at any such sale. (f) Guarantor agrees and represents that the Obligations are and shall be incurred by Borrower, and that the Guaranty Liabilities are and shall be incurred by Guarantor, for business and commercial purposes only. Guarantor agrees that any claim of Agent or any Lender against Guarantor arising out of this Guaranty arises out of the conduct by Guarantor of its trade, business, or profession. Guarantor undertakes all the risks encompassed in the Credit Agreement and the other Loan Documents as they may be now or are hereafter agreed upon by Agent, Lenders and Borrower. Prior to the Termination Date, Agent, in such manner and upon such terms and at such time as it deems best, and with or without notice to Guarantor, may release, add, subordinate or substitute security for the Obligations or the Guaranty Liabilities. (g) Guarantor waives and agrees that it shall not at any time insist upon, plead, or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent, or otherwise affect the performance by Guarantor of the Guaranty Liabilities or the enforcement by Agent of this Guaranty. (h) A separate action or actions may be brought and prosecuted by Agent against Guarantor whether or not an action is brought against Borrower, or whether Borrower is joined in any such action or actions. Without limiting the generality of the foregoing, Guarantor expressly waives the benefit of any statute of limitation affecting the Obligations and expressly agrees that the running of a period of limitation on, or Agent's delay or omission in, any action by Agent against Borrower or for the foreclosure of any lien or the enforcement of any security interest in the Collateral or the Guaranty Collateral shall not exonerate or affect Guarantor's liability to pay and perform the Guaranty Liabilities. 2.5 Waivers Under Statutes. Guarantor expressly acknowledges that: (a) If Borrower defaults in the payment or performance of the Obligations and Guarantor pays to Agent all or part of the Obligations, Guarantor would have a right to proceed against 7 Borrower to the extent of the Obligations so paid by Guarantor and to have the benefit of any security held by Agent, for the benefit of Secured Creditors, for the Obligations to the extent of the Obligations so paid by Guarantor. Such right is commonly known as the "right of subrogation." (b) If Borrower defaults in the payment or performance of the Obligations, Agent, among other things, may foreclose upon any real property security by means of judicial action or by non-judicial action commonly known as a "non-judicial foreclosure," "trustee's sale" or "power of sale foreclosure." (c) If Borrower so defaults and Agent sells any real property security by means of a non-judicial foreclosure, trustee's sale or power of sale foreclosure, Guarantor's right of subrogation to proceed against Borrower would be extinguished by the operation of California Code of Civil Procedure ("CCP") Section 580d or similar laws, and, in such case, Guarantor might have a defense against payment under this Guaranty. (d) If Borrower so defaults and Agent sells any real property security by means of judicial action, Guarantor's right to proceed against Borrower might be limited by the operation of CCP Section 580a or similar laws, in which case Guarantor might have a complete or partial defense against payment under this Guaranty. Nevertheless, Guarantor expressly, knowingly and intentionally waives and relinquishes any and all rights, defenses or benefits Guarantor might have under CCP Sections 580a or 580d or similar laws. In addition, Guarantor also expressly, knowingly and intentionally waives and relinquishes any and all rights, defenses or benefits Guarantor may have based upon an election of remedies by Agent which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor's subrogation rights and/or Guarantor's rights to proceed against Borrower and/or against any other Person or any security for the Guaranty Liabilities by way of subrogation, indemnity, contribution, reimbursement or otherwise. In particular, Guarantor agrees that this Guaranty will remain fully effective and Guarantor will be liable to Agent for any Guaranty Liabilities even if Agent sells real property security for the Obligations by non-judicial foreclosure, trustee's sale or power of sale foreclosure and the effect of such sale is to prevent Guarantor from taking any action against Borrower to recover any amounts paid by Guarantor to Agent under this Guaranty or otherwise limits or destroys Guarantor's right of subrogation. In addition, Guarantor waives all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed 8 Guarantor's rights of subrogation and reimbursement against the principal by the operation of CCP Section 580d or similar laws. 2.6 Waivers of Defenses. Guarantor waives any defense based upon or arising by reason of: (a) any disability or other defense of Borrower or any other Person; (b) the cessation of liability or limitation from any cause whatsoever of the Obligations or any portion thereof, other than payment in full; (c) any lack of authority of any agent or other person acting or purporting to act on behalf of Borrower, or any defect in the formation of Borrower; (d) the application by Borrower of the proceeds of the Obligations or any other obligation of Borrower to Agent or Lenders for purposes other than the purposes represented to, or intended or understood by, Agent, Lenders or Guarantor; (e) any act or omission by Agent or any Lender that directly or indirectly results in or aids the discharge of Borrower or any portion of the Obligations or any other obligation of Borrower to Agent or Lenders by operation of law or otherwise; or (f) any modification of the Obligations or any other obligation of Borrower to Agent or Lenders in any form whatsoever, including the renewal, extension, acceleration or other change in time for payment of the Obligations, or other change in the terms of the Obligations or any part thereof, including increase or decrease of the rate of interest thereon. Without limiting the generality of the foregoing, Guarantor waives any defenses or rights arising under California Civil Code sections 2795, 2808, 2809, 2810, 2815, 2819 through 2825 (inclusive), 2832, 2839, 2845 through 2850 (inclusive), and 2855 or any similar laws. 2.7 Benefits of Guaranty. The provisions of this Guaranty are for the benefit of Agent and Lenders and their respective successors, transferees, endorsees, and assigns, and nothing herein shall impair, as between Borrower, Agent, and Lenders, the Obligations. No such transfer, endorsement, or assignment shall increase or diminish any of the Guaranty Liabilities hereunder. This Guaranty binds Guarantor, and Guarantor may not assign, transfer, or endorse this Guaranty. In the event all or any part of the Obligations are transferred, endorsed, or assigned by Agent or any Lender to any Person, any reference to "Agent" or "Lender" herein shall be deemed to refer equally to such Person. 2.8 Continuing Guaranty. Guarantor agrees that (a) this is a continuing guaranty, (b) this Guaranty shall remain in full force and effect until the Termination Date, and (c) the Guaranty Liabilities hereunder shall extend to each and every extension or renewal, if any, of the Credit Agreement, regardless of whether the Obligations may, in successive transactions, be paid, repaid, advanced, or renewed from time to time. 9 2.9 Subordination. (a) Guarantor hereby agrees that all obligations and all indebtedness of Borrower to Guarantor, including any and all present and future indebtedness regardless of its nature or manner of origination now or hereafter to become due and owing by Borrower to Guarantor (collectively, the "Subordinated Indebtedness"), are hereby unconditionally and forever subordinated and postponed and shall be inferior, in all respects, to the Obligations. (b) In no circumstance shall any Subordinated Indebtedness be entitled to any collateral security; provided, that in the event any such collateral security exists, Guarantor hereby agrees that any now existing or hereafter arising lien upon or security interest in any of the assets of Borrower, or any of the assets of any other guarantor of the Obligations, in favor of Guarantor, whether created by contract, assignment, subrogation, reimbursement, indemnity, operation of law, principles of equity or otherwise, shall be junior and inferior to, and is hereby subordinated in priority to any now existing or hereafter arising Lien or security interest in favor of Agent, for the benefit of Lenders, or in and against the Collateral, regardless of the time, manner or order of creation, attachment or perfection of the respective liens or security interests. (c) Guarantor shall not assert, collect, accept payment on or enforce any of the Subordinated Indebtedness or take collateral or other security to secure payment of the Subordinated Indebtedness unless and until the Obligations are paid in full. Guarantor shall not demand payment of, accelerate the maturity of, or declare a default or event of default under the Subordinated Indebtedness unless and until the Obligations are paid in full. Guarantor shall not cause or permit Borrower to make or give, and Guarantor shall not receive or accept, payment in any form (direct or indirect, including by transfer to an affiliate or subsidiary of Borrower or Guarantor) on account of the Subordinated Indebtedness, make any transfers in respect of the Subordinated Indebtedness without the express prior written consent of Agent (which consent may be withheld for any reason in Agent's sole discretion), or give any collateral security for the Subordinated Indebtedness. Any payment, transfer, or collateral security so made or given by Borrower and received or accepted by Guarantor, without the express prior written consent of Agent, shall be held in trust by Guarantor for Agent, for the account of Secured Creditors, and Guarantor shall immediately turn over, in kind, any such payment to Agent for application in reduction of, or (in the case of property other than cash) as security for, the Guaranty Liabilities. 10 3. GRANT OF SECURITY INTEREST (a) To secure the prompt and complete payment, performance and observance of all of the Guaranty Liabilities (whether at stated maturity, by acceleration or otherwise) and to induce Lenders to extend the financial accommodations to Borrower in accordance with the terms of Credit Agreement, Guarantor hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to Agent, for the benefit of Secured Creditors, and hereby grants to Agent, for the benefit of Secured Creditors, a security interest in, all of Guarantor's right, title and interest in, to and under the following property, whether now owned or owing, or hereafter acquired or arising (including under any trade names, styles or divisions thereof), and whether owned or consigned by or to or leased by or to Guarantor, and regardless of where located (all of which being hereinafter collectively referred to as the "Guaranty Collateral"): (i) all rights to payment of any kind owing or made to Guarantor from Borrower, Seven-Up/RC of PR, or any other Subsidiary or Affiliate of Guarantor; (ii) all books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records) pertaining to any of the foregoing; and (iii) to the extent not otherwise included, all proceeds of the foregoing, as such term is defined in the Code, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing. (b) In addition, to secure the prompt and complete payment, performance and observance of the Guaranty Liabilities and in order to induce Lender as aforesaid, Guarantor hereby grants to Agent, for the benefit of Secured Creditors, a lien upon and security interest in all property of Guarantor held by Agent or any Lender, including all property of every description now or hereafter in the possession or custody of, or in transit to, Agent or any Lender, for any purpose, including for safekeeping, collection or pledge, for the account of Guarantor, or as to which Guarantor may have any right or power. (c) Agent's Liens on the Guaranty Collateral for the benefit of Secured Creditors are subordinate in rank and priority only to (A) valid, perfected and enforceable Liens as of the Petition Date that are non-avoidable under the Bankruptcy Code or applicable non-bankruptcy law and are senior in rank and priority 11 to Agent's Liens on the Guaranty Collateral securing the Prepetition Credit Agreement Obligations, (B) Agent's Liens securing the Prepetition Credit Agreement Obligations, and (C) the Carve-Out. The Liens granted to Agent for the benefit of Secured Creditors hereunder shall at all times be senior to the rights of Guarantor and any successor trustee or estate representative in Guarantor's chapter 11 case or any subsequent case or proceedings under the Bankruptcy Code. Further, any Lien on the Guaranty Collateral which is avoided or otherwise preserved for the benefit of Guarantor's estate under Section 551 of the Bankruptcy Code shall be subordinate to Agent's Liens on the Guaranty Collateral for the benefit of Secured Creditors. (d) The Liens and security interests granted hereunder shall be automatically perfected upon entry of the Interim Order or Final Order without the requirement of any further filings, notices, recordings or actions of any kind by Agent, any Lender, Guarantor or any other Person. 4. RIGHTS OF AGENT AND LENDERS; LIMITATIONS ON OBLIGATIONS OF AGENT AND LENDERS (a) It is expressly agreed by Guarantor that, notwithstanding anything herein to the contrary, and except as permitted by the Bankruptcy Code, Guarantor shall remain liable with respect to all Guaranty Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder, and neither Agent nor any Lender shall have any obligation or liability with respect to any Guaranty Collateral by reason of or arising out of this Guaranty or the granting herein of a security interest therein and Lien thereon or the receipt by Agent or any Lender of any payment relating to any Guaranty Collateral pursuant hereto, nor shall Agent or any Lender be required or obligated in any manner to perform or fulfill any of the obligations of Guarantor under or pursuant to any Guaranty Collateral, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Guaranty Collateral, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) Agent may at any time after the occurrence and during the continuation of an Event of Default and without prior notice to Guarantor or notice or approval of the Bankruptcy Court, notify any Person obligated to Guarantor with respect to any Guaranty Collateral that the Guaranty Collateral and the right, title and interest of Guarantor in and under such Guaranty Collateral have been assigned to Agent, for the benefit of Secured Creditors, and that payments shall be made directly to 12 Agent. Upon the request of Agent, Guarantor shall so notify such Persons. 5. REPRESENTATIONS AND WARRANTIES To induce Lenders to extend the financial accommodations to Borrower in accordance with the terms of the Credit Agreement, Guarantor makes the following representations and warranties, each and all of which shall survive the execution and delivery of this Guaranty: 5.1 Guarantor's Addresses. Guarantor's name and address are accurately set forth in Section 14.5. 5.2 No Violation or Default. The execution, delivery, and performance of this Guaranty and all other Loan Documents and all instruments and documents to be delivered by Guarantor hereunder and under the Credit Agreement will not violate any law or regulation, or any order or decree of any court or governmental instrumentality, will not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which Guarantor is a party or by which Guarantor or any of its property is bound, will not result in the creation or imposition of any Lien upon any of the property of Guarantor (except as granted hereunder to Agent for the benefit of Secured Creditors) and the same do not require the consent or approval of any governmental body, agency, authority, or any other Person except those already obtained (including the approval of the Bankruptcy Court). 5.3 Enforceable Liabilities. This Guaranty has been duly executed and delivered by Guarantor, and subject to the entry of the Interim Order or the Final Order, as the case may be, shall then constitute a legal, valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms. 5.4 No Offset, Defense, or Counterclaim. Guarantor represents, warrants, and agrees that, as of the date of this Guaranty, the Guaranty Liabilities are not subject to any offset or defense against Agent, any Lender, or Borrower of any kind, and Guarantor specifically waives its right to assert any such defense or right of offset. Guarantor further agrees that the Guaranty Liabilities shall not be subject to any counterclaims, offsets, or defenses against Agent, any Lender or Borrower that may arise in the future, except for (a) any defense of prior performance or payment, or (b) any defense based on any applicable provision of the Code requiring that the Collateral and the Guaranty Collateral be disposed of in a commercially reasonable manner, which Borrower, Guarantor, or any other guarantor of the Obligations may have or assert. 13 6. FURTHER ASSURANCES (a) At any time and from time to time, upon the request of Agent and at the sole expense of Guarantor, Guarantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Agent deems desirable to obtain the full benefits of this Guaranty and of the rights and powers herein granted, including: (i) using its reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Agent of any Guaranty Collateral or in which Guarantor has any rights not heretofore assigned; (ii) filing any financing or continuation statements under the Code with respect to the Liens and security interests granted hereunder or under any other Loan Document; and (iii) transferring Guaranty Collateral to Agent's possession (if such Guaranty Collateral consists of documents, instruments or chattel paper or if a security interest in such Guaranty Collateral can be perfected only by possession, or if otherwise requested by Agent). Guarantor also hereby authorizes Agent to file any such financing or continuation statement without the signature of Guarantor to the extent permitted by applicable law. If any amount payable under or in connection with any of the Guaranty Collateral is or shall become evidenced by any instrument, such instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Agent immediately upon Guarantor's receipt thereof and promptly delivered to Agent. (b) Guarantor shall not change its name, identity or corporate structure in any manner that might make any financing or continuation statement filed in connection herewith seriously misleading within the meaning of Section 9-402(7) of the Code or any other applicable provision of the Code unless Guarantor shall have given Agent at least thirty (30) days' prior written notice thereof and shall have taken all action (or made arrangements satisfactory to Agent to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by Agent to amend such financing statement or continuation statement so that it is not seriously misleading. (c) Guarantor shall give Agent and Lenders not less than thirty (30) days' prior written notice before moving any Guaranty Collateral to a location not set forth in Schedule 3.2 to the Credit Agreement, and shall in no event move any Guaranty Collateral outside the United States of America. 7. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT (a) Guarantor hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power 14 of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Guarantor and in the name of Guarantor or in its own name, from time to time in Agent's discretion, for the purpose of carrying out the terms of this Guaranty, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Guaranty and, without limiting the generality of the foregoing, Guarantor hereby grants to Agent the power and right, on behalf of Guarantor, without notice to or assent by Guarantor, and without notice to or approval of the Bankruptcy Court, upon the occurrence and during the continuation of a Default or an Event of Default, to do the following: (i) in the name of Guarantor, in its own name or otherwise, take possession of, endorse and receive payment of any checks, drafts, notes, acceptances, or other instruments for the payment of monies due under any Guaranty Collateral; (ii) ask, demand, collect, receive and give acquittances and receipts for any and all money due or to become due under any Guaranty Collateral; (iii) pay or discharge any taxes, Liens, security interests, or other encumbrances levied or placed on or threatened against the Guaranty Collateral; (iv) direct any party liable for any payment under or in respect of any of the Guaranty Collateral to make payment of any and all monies due or to become due thereunder, directly to Agent or as Agent shall direct; (v) file any claim or take or commence any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of collecting any and all such monies due under any Guaranty Collateral whenever payable; (vi) commence and prosecute any suits, actions or proceedings at law or in equity in any court to collect the Guaranty Collateral or any part thereof and to enforce any other right in respect of any Guaranty Collateral; (vii) defend any suit, action or proceeding brought against Guarantor with respect to any Guaranty Collateral if Guarantor does not defend such suit, action or proceeding or if Agent believes that Guarantor is not pursuing such defense in a manner that will maximize the recovery with respect to such Guaranty Collateral; and (viii) sell, transfer, pledge, make any agreement with respect to, or otherwise deal with any of the Guaranty 15 Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and to do, at Agent's option and Guarantor's expense, at any time or from time to time, all acts and other things that Agent reasonably deems necessary to perfect, preserve, or realize upon the Guaranty Collateral and Agent's Liens therein in order to effect the intent of this Guaranty, all as fully and effectively as Guarantor might do. (b) Guarantor hereby ratifies, to the extent permitted by law, all that said attorneys shall lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this Section 7 is a power coupled with an interest and shall be irrevocable until the Termination Date. (c) The powers conferred on Agent hereunder are solely to protect Agent's security interests in, and Lien upon, the Guaranty Collateral and shall not impose any duty upon Agent to exercise any such powers. Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and none of its officers, directors, employees, agents or representatives shall be responsible to Guarantor for any act or failure to act, except for their own gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (d) Guarantor also authorizes Agent at any time and from time to time, (i) to communicate in its own name with any party to any Guaranty Collateral with regard to the assignment of the right, title and interest of Guarantor in and under such Guaranty Collateral and other matters relating thereto, and (ii) to execute, in connection with the sale provided for in Section 10.2 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Guaranty Collateral. 8. PAYMENTS FREE AND CLEAR OF TAXES All payments required to be made by Guarantor hereunder shall be made to Agent free and clear of, and without deduction for, any and all present or future Taxes that would otherwise have been payable by Agent for the account of each Lender if Borrower had paid the Obligations under the Credit Agreement to Agent in accordance with the terms of the Loan Documents. Upon request by Agent, Guarantor shall furnish to Agent a receipt for any Taxes paid by Guarantor pursuant to this Section 8 or, if no Taxes are payable with respect to any payments required to be made by Guarantor hereunder, either a certificate from each appropriate taxing authority or an opinion of counsel acceptable to Agent, in either case stating that such payment is exempt from or not subject to Taxes. If Taxes are paid by Agent on behalf of any Lender, as a result of payments under this Guaranty, Guarantor will, upon demand of Agent, and whether or not such 16 Taxes shall be correctly or legally asserted, indemnify Agent and the Lenders for such payments, together with any interest, penalties, and expenses in connection therewith plus interest thereon at the rate specified in the Loan Documents that is then applicable to the Credit Agreement (calculated as if such payments constituted overdue amounts of principal as of the date of the making of such payments). Guarantor will assume all the rights and responsibilities of Borrower as set forth in Section 1.19 of the Credit Agreement, and Agent and Lenders will assume all of the rights and responsibilities of Agent and Lenders as set forth in Section 1.19 of the Credit Agreement. 9. REINSTATEMENT This Guaranty shall remain in full force and effect and continue to be effective should Guarantor's chapter 11 case be dismissed, converted to a case under chapter 7 of the Bankruptcy Code or substantively consolidated with any other bankruptcy cases, should any petition be filed by or against Guarantor for liquidation or reorganization, should Guarantor become insolvent or make an assignment for the benefit of creditors, or should a receiver or trustee be appointed for all or any significant part of Guarantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations or the Guaranty Liabilities, or any part thereof, is, pursuant to applicable law, avoided, rescinded or reduced in amount, or must otherwise be restored or returned by Agent or any Lender or any obligee of the Obligations or the Guaranty Liabilities, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is avoided, rescinded, reduced, restored, or returned, such obligations shall be reinstated and deemed reduced only by such amount paid and not so avoided, rescinded, reduced, restored, or returned. 10. DEFAULTS AND REMEDIES 10.1 Events of Default. It shall be an "Event of Default" hereunder upon the occurrence of any one or more of the following events (regardless of the reason therefor): (a) any Event of Default shall occur under the Credit Agreement; (b) Guarantor shall fail or neglect to perform, keep or observe any provision of this Guaranty or any other Loan Document, and the same remains unremedied for a period ending on the first to occur of ten (10) days after Guarantor shall receive written notice of any such failure from Agent or any Lender or thirty (30) days after Guarantor shall become aware thereof; 17 (c) any representation or warranty of Guarantor made under this Guaranty shall prove to be untrue or incorrect as of the date when made or deemed made; or (d) Guarantor shall renounce or revoke, or attempt to renounce or revoke, this Guaranty. 10.2 Remedies; Rights Upon Default. (a) Upon the occurrence of an Event of Default and for so long as such Event of Default continues without cure, and without application or motion to, or order from, the Bankruptcy Court, in addition to all other rights and remedies granted to Agent under this Guaranty and under any other instrument or agreement securing, evidencing or relating to the Guaranty Liabilities, including the making of a demand upon Guarantor for the payment of the Guaranty Liabilities, Agent may, upon three Business Days' prior notice to Guarantor, exercise all rights and remedies of a secured party under the Code or other applicable law, including the right to sell or otherwise dispose of any Guaranty Collateral in a commercially reasonable manner. (b) Without limiting the generality of the foregoing, Guarantor expressly agrees that in any such event Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Guarantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code and other applicable law), may immediately enter upon the premises of Guarantor where any Guaranty Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving Guarantor notice and opportunity for a hearing on Agent's claim or action, and without paying rent to Guarantor, and collect, receive, assemble, process, appropriate and realize upon the Guaranty Collateral, or any part thereof, and may immediately sell, lease, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Guaranty Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales or at any exchange, at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Agent and any Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for its benefit the whole or any part of said Guaranty Collateral so sold, free of any right or equity of redemption, which equity of redemption Guarantor hereby releases. Such sales may be adjourned or continued from time to time with or without notice. Agent shall have the right to conduct such sales on Guarantor's premises or elsewhere and shall have the right to use 18 Guarantor's premises without charge for such sales for such time or times as Agent deems necessary or advisable. Guarantor further agrees, at Agent's request, to assemble the Guaranty Collateral and make it available to Agent at places which Agent shall reasonably select, whether at Guarantor's premises or elsewhere. Until Agent is able to effect a sale, lease, or other disposition of the Guaranty Collateral, Agent shall have the right to use or operate the Guaranty Collateral on behalf of Guarantor, or any part thereof, to the extent that it deems appropriate for the purpose of preserving the Guaranty Collateral or its value or for any other purpose deemed appropriate by Agent. Agent shall have no obligation to Guarantor to maintain or preserve the rights of Guarantor as against third parties with respect to the Guaranty Collateral while the Guaranty Collateral is in the possession of Agent. Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of the Guaranty Collateral and to enforce any of Agent's remedies with respect to such appointment without prior notice or hearing. Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, as provided in Section 12, Guarantor remaining liable for any deficiency remaining unpaid after such application, and only after so paying over such net proceeds and after the payment by Agent of any other amount required by any provision of law, including Section 9-504(1)(c) of the Code (but only after Agent has received what Agent considers reasonable proof of a subordinate party's security interest), need Agent account for the surplus, if any, to Guarantor. To the maximum extent permitted by applicable law, Guarantor waives all claims, damages, and demands against Agent or any Secured Creditor arising out of the repossession, retention or sale of the Guaranty Collateral except such as arise out of the gross negligence or willful misconduct of such party. Guarantor agrees that five (5) Business Days' prior notice by Agent to Guarantor of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Guarantor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Guaranty Collateral are insufficient to pay all amounts to which Agent and Lenders are entitled, Guarantor also being liable for any and all costs and expenses incurred by Agent, including reasonable attorneys' fees, to collect such deficiency. (c) Guarantor agrees to pay any and all costs of Agent, including reasonable attorneys' fees incurred in connection with the enforcement of any of its or Lenders' rights and remedies hereunder. (d) Except as otherwise specifically provided herein, (to the maximum extent permitted by applicable law), Guarantor 19 hereby waives presentment, demand, protest or any notice of any kind in connection with this Guaranty or any Guaranty Collateral. (e) The proceeds of any sale, disposition or other realization upon all or any part of the Guaranty Collateral shall be distributed by Agent upon receipt, in the order of priorities set forth in Section 12 hereof. (f) The obligations of Guarantor to Agent for the benefit of Secured Creditors under this Guaranty shall constitute administrative expenses of Guarantor in its chapter 11 case with priority under Section 364(c)(1) of the Bankruptcy Code over any and all other administrative expenses of the kind specified or ordered pursuant to any provision of the Bankruptcy Code, including Sections 326, 328, 503, 507 and 726 of the Bankruptcy Code. 11. INDEMNIFICATION Guarantor agrees to indemnify and hold Agent and the Lenders harmless from and against any Taxes, liabilities, claims and damages, including reasonable costs, attorneys' fees, and disbursements, and other expenses incurred or arising by reason of the taking or the failure to take action by Agent, in good faith, in respect of any transaction effected under this Guaranty, including any action to enforce payment of the Guaranty Liabilities, or in connection with the Lien upon the Guaranty Collateral, including any taxes payable in connection with the delivery of any of the Guaranty Collateral as provided herein. The liabilities of Guarantor under this Section 11 shall survive the termination of this Guaranty. 12. APPLICATION OF PAYMENTS Any payment made by Guarantor under this Guaranty shall be applied by Agent first, to the satisfaction of the Guarantor's indemnification liabilities pursuant to Section 11, and then, in the order of priorities set forth in Section 1.12 of the Credit Agreement. 13. LIMITATION ON AGENT'S DUTY IN RESPECT OF GUARANTY COLLATERAL Agent shall use reasonable care with respect to the Guaranty Collateral in its possession or under its control. Agent shall not have any other duty as to any Guaranty Collateral in its possession or control or in the possession or control of any agent or nominee of Agent, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. Upon request of Guarantor, Agent shall account for any monies received by Agent in respect of any foreclosure on or disposition of the Guaranty Collateral. 20 14. MISCELLANEOUS 14.1 Entire Agreement; Amendments. This Guaranty, together with the other Loan Documents (a) constitutes the entire agreement between the parties with respect to the subject matter hereof, and (b) may not be amended or supplemented except by a writing signed by Guarantor and Agent. 14.2 Section Titles. The section titles contained in this Guaranty are and shall be without substantive meaning or context of any kind whatsoever and are not a part of the agreement between the parties hereto. 14.3 Severability. In the event that any one or more of the provisions contained in this Guaranty shall be determined to be invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of any such provision or provisions in every other respect, and the remaining provisions of this Guaranty, shall not be in any way impaired. 14.4 Conflict of Terms. The Loan Documents, other than this Guaranty, are incorporated in this Guaranty by this reference. Except as otherwise provided in this Guaranty and except as otherwise provided in the Loan Documents other than this Guaranty, by specific reference to the applicable provision of this Guaranty, if any provision contained in this Guaranty is in conflict with, or inconsistent with, any provision in the Loan Documents other than this Guaranty, provisions contained in the Credit Agreement shall govern and control. 14.5 Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any communication with respect to this Guaranty, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or by registered or certified mail, return receipt requested, postage prepaid, or telecopied and confirmed by telecopy answerback addressed as follows: If to Agent: General Electric Capital Corporation 350 South Beverly Drive, Suite 200 Los Angeles, California 90212 Attention: Mr. Mark Elliot Gudis Senior Vice President (Commercial Finance) Telecopy No.: (310) 284-8068 21 With copies to: General Electric Capital Corporation 3379 Peachtree Road Northeast, Suite 600 Atlanta, GA 30326 Attention: Mr. Timothy C. Huban Telecopy No.: (404) 262-9032 and General Electric Capital Corporation 201 High Ridge Road Stamford, Connecticut 06927 Attention: Legal Counsel Telecopy No.: (203) 316-7889 and Murphy, Weir & Butler 101 California Street, 39th Floor San Francisco, California 94111 Attention: Dick M. Okada, Esq. Telecopy No.: (415) 421-7879 If to Guarantor: Beverage Group Acquisition Corporation 3220 East 26th Street Vernon, California 90023 Attention: Mr. Dave Brown Telecopy No.: (213) 262-9560 With copies to: Kirkland & Ellis 153 East 53rd Street New York, New York 10022-4675 Attention: Luc A. Despins, Esq. Telecopy No.: (212) 446-4900 14.6 Non-Waiver. None of the liabilities of Guarantor, and no right or remedy of Agent under this Guaranty, shall be deemed to have been suspended or waived by Agent, nor shall Agent be estopped from asserting any such right or remedy, by Agent's conduct or oral statements, but any such suspension or waiver of any such right or remedy by Agent must be in writing and signed by Agent. Any suspension or waiver by Agent of any of its rights or remedies under this Guaranty shall not suspend or waive any prior or subsequent right or remedy, whether of the same or of a different type. 22 14.7 Termination Date. This Guaranty is a continuing Guaranty that shall remain in full force and effect until the Termination Date, at which time this Guaranty shall terminate and be of no further force and effect, subject to the reinstatement provisions of Section 9. 14.8 Limitation of Liability. None of Agent, any Lender, or any of their officers, directors, employees, agents, or counsel shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own respective gross negligence or willful misconduct. 14.9 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS GUARANTY OR IN ANY OF THE OTHER LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. GUARANTOR CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE, IN THE BANKRUPTCY COURT OF THE DISTRICT OF DELAWARE. NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY SECURED CREDITOR FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR GUARANTY COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR THE GUARANTY LIABILITIES, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. SERVICE OF PROCESS ON GUARANTOR, AGENT OR ANY LENDER IN ANY ACTION ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 14.5 OF THIS GUARANTY. 14.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS. 23 24 IN WITNESS WHEREOF, Guarantor has executed and delivered this Continuing Guaranty and Security Agreement as of the date first above written. "GUARANTOR" BEVERAGE GROUP ACQUISITION CORPORATION By: /s/ David I. Brown ------------------------------- Title: Treasurer ---------------------------- ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN "AGENT" GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Elaine L. Moore ----------------------------------- Elaine L. Moore Duly Authorized Signatory 25 EX-10.1 5 DEBTORS' JOINT PLAN OF REORGANIZATION Exhibit 10.1 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ----------------------------------X In re: : Chapter 11 SEVEN-UP/RC BOTTLING : Reorganization Cases COMPANY OF SOUTHERN Nos. 96-738 CALIFORNIA, INC. AND : and 96-739 (HSB) BEVERAGE GROUP ACQUISITION CORPORATION, : Jointly Administered Debtors. --------------------- : ----------------------------------X DEBTORS' JOINT PLAN OF REORGANIZATION KIRKLAND & ELLIS YOUNG, CONAWAY, STARGATT & TAYLOR Citicorp Center Rodney Square North, 11th Fl. 153 East 53rd Street P.O. Box 391 New York, New York 10022-4675 Wilmington, Delaware 19899 (212) 446-4800 (302) 571-6600 Attorneys for Seven-Up/RC Bottling Company of Southern California, Inc. and Beverage Group Acquisition Corporation Dated: New York, New York May 17, 1996 TABLE OF CONTENTS PAGE ----
INTRODUCTION.............................................................. 1 ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME........ 1 A. Scope Of Definitions............................................ 1 B. Definitions..................................................... 1 C. Rules Of Interpretation......................................... 10 D. Computation Of Time............................................. 11 ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS............................... 11 A. Introduction.................................................... 11 B. Unclassified Claims (not entitled to vote on the Plan).......... 11 1. DIP Facility Claims........................................ 11 2. Administrative Claims...................................... 11 3. Priority Tax Claims........................................ 12 C. Classes Of Claims That Are Not Impaired (not entitled to vote on the Plan).................................................... 12 1. Class 1: Other Priority Claims............................ 12 2. Class 2: Secured Claims................................... 12 3. Class 3: General Unsecured Claims......................... 12 D. Impaired Classes Of Claims (entitled to vote on the Plan)....... 12 1. Class 4: Noteholders Claims............................... 12 2. Class 5: GE Capital Term Loan Secured Claims.............. 13 E. Impaired Class of Interest (entitled to vote on the Plan, but deemed to have accepted pursuant to order of the Bankruptcy Court).......................................................... 13 1. Class 6: Old Common Stock Interest......................... 13 ARTICLE III TREATMENT OF CLAIMS AND INTEREST..................................... 13 A. Unclassified Claims............................................. 13 1. DIP Facility Claims........................................ 13 2. Administrative Claims...................................... 14 3. Priority Tax Claims........................................ 14
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B. Classes Of Claims That Are Not Impaired......................... 14 1. Class 1: Other Priority Claims............................ 14 2. Class 2: Secured Claims................................... 14 3. Class 3: General Unsecured Claims......................... 15 C. Impaired Classes Of Claims...................................... 16 1. Class 4: Noteholders Claims............................... 16 2. Class 5: GE Capital Term Loan Secured Claims.............. 16 D. Impaired Class of Interest...................................... 17 1. Class 6: Old Common Stock Interest......................... 17 ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN................................. 17 A. Substantive Consolidation and Continued Corporate Existence of Seven-Up/RC........................................ 17 B. Directors And Officers.......................................... 17 C. Operations of Debtors Between Confirmation and Consummation.................................................... 18 D. Exclusivity Period.............................................. 18 E. Term of Injunctions or Stays.................................... 18 F. Revesting Of Assets............................................. 18 G. Creditors' Committee............................................ 19 H. Effectuating Documents; Further Transactions.................... 19 I. Procedure for Making Distributions to Holders of Noteholders Claims.............................................. 19 J. Fractional Shares............................................... 20 K. Fractional Cents................................................ 20 L. De Minimis Distributions........................................ 20 M. Management Option............................................... 20 ARTICLE V ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY IMPAIRED CLASSES OF CLAIMS.................... 20 A. Classes Entitled To Vote........................................ 20 B. Class Acceptance Requirement.................................... 21 C. Cramdown........................................................ 21 ARTICLE VI PRESERVATION OF LITIGATION CLAIMS.................................... 21
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A. Retained Litigation Claims...................................... 21 B. Preservation of Insurance....................................... 21 ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS................................... 21 A. Date Of Distributions........................................... 21 B. Interest On Claims.............................................. 22 C. Disbursing Agent................................................ 22 D. Means Of Cash Payment........................................... 22 E. Delivery Of Distributions....................................... 22 F. Cancellation of Existing Securities and Agreements.............. 23 G. Resolution of Claims............................................ 24 H. Ordinary Course Liabilities..................................... 24 I. Record Date for Distributions to Holders of Senior Secured Notes................................................... 24 ARTICLE VIII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES................ 25 A. Rejected Executory Contracts And Unexpired Leases............... 25 B. Assumed If Not Rejected......................................... 25 C. Payments Related To Assumption Of Executory Contracts And Unexpired Leases.................................. 25 D. Bar Date For Rejection Damages.................................. 26 E. Compensation And Benefit Programs............................... 26 F. Assignment Of Executory Contracts And Unexpired Leases To Reorganized Seven-Up/RC............................... 26 ARTICLE IX CONDITIONS PRECEDENT................................................. 27 A. Conditions To Confirmation...................................... 27 B. Conditions To Consummation...................................... 27 C. Waiver Of Conditions To Confirmation And Consummation.................................................... 30
-iv- TABLE OF CONTENTS (continued) Page ---- ARTICLE X MODIFICATIONS AND AMENDMENTS................................ 30 A. Modification of the Plan................................. 30 ARTICLE XI RETENTION OF JURISDICTION................................... 30 A. Jurisdiction of Bankruptcy Court......................... 30 ARTICLE XII MISCELLANEOUS PROVISIONS......................................... 32 A. Setoff................................................... 32 B. Withholding And Reporting Requirements................... 32 C. Discharge Of Seven-Up/RC................................. 32 D. Releases................................................. 33 E. Injunction............................................... 34 F. Exculpation And Limitation Of Liability.................. 34 G. Binding Effect........................................... 35 H. Withdrawal Or Non-Consummation........................... 35 I. Modification of Treatment of Claims...................... 36 J. Continued Confidentiality Obligations.................... 36 K. Section 1145 Exemption................................... 36 L. Section 1146 Exemption................................... 36 M. Notices.................................................. 37 N. Governing Law............................................ 38 -v- EXHIBIT LIST Exhibit A: Certificate Of Incorporation And By-Laws of Seven-Up/RC Exhibit B: Schedule Of Rejected Executory Contracts And Unexpired Leases of Seven-Up/RC Exhibit C: Management Option Agreement Exhibit D: WB Warrant Agreement Exhibit E: Class 5 Note Exhibit F: Schedule of Directors of Seven-Up/RC after Consummation Exhibit G: Merger Agreement -vi- INTRODUCTION Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation, and Beverage Group Acquisition Corporation, a Delaware corporation, jointly propose the Plan of Reorganization (as may be amended, the "Plan") for the resolution of their outstanding creditor claims and equity interests. All holders of Claims are encouraged to read the Plan and the Disclosure Statement in their entirety before voting to accept or reject the Plan. Subject to the restrictions on modifications set forth in section 1127 of the Bankruptcy Code and those restrictions on modifications set forth in Article X of the Plan, the Debtors reserve their right to alter, amend, or modify the Plan one or more times before its substantial consummation. ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME A. SCOPE OF DEFINITIONS For purposes of this Plan, except as expressly provided or unless the context otherwise requires, all capitalized terms not otherwise defined shall have the meanings ascribed to them in Article I of the Plan. Any term used in the Plan that is not defined herein, but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that term in the Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such terms shall include the plural as well as the singular, the masculine gender shall include the feminine, and the feminine gender shall include the masculine. B. DEFINITIONS 1.1 "Administrative Claim" means a Claim for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and entitled to priority pursuant to section 507(a)(1) of the Bankruptcy Code, including, but not limited to, the actual, necessary costs and expenses incurred after the Petition Date of preserving the Estates and operating the business of Seven-Up/RC, including wages, salaries, or commissions for services rendered after the commencement of these Chapter 11 Cases, Professional Fees, and all fees and charges assessed against the Estates under chapter 123 of title 28 of the United States Code. 1.2 "Allowed Claim" means a Claim or any portion thereof (a) that has been allowed by a Final Order, (b) for which a proof of claim bar date has been established and a proof of claim has been timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, Bankruptcy Rules, or any Final Order of the Bankruptcy Court, and as to which either (i) no objection to its allowance has been filed within the periods of limitation fixed by the Bankruptcy Code, Bankruptcy Rules or by any Final Order of the Bankruptcy Court, or (ii) any objection to its allowance has been settled, withdrawn, or has been denied by a Final Order, or (c) that is expressly allowed in the Plan; provided, however, that all Claims for which no proof of claim bar date has been established shall be treated for all purposes as if the Chapter 11 Cases were not filed and, subject to the provisions of section VII.G. hereof, the determination of whether any such Claim shall be allowed and/or the amount thereof shall be determined, resolved or adjudicated, as the case may be, in the procedural manner in which such Claim would have been determined, resolved or adjudicated if the Chapter 11 Cases had not been commenced. 1.3 "Allowed Class . . . Claim" means an Allowed Claim in the particular Class described. 1.4 "Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C. (S)(S) 101-1330, as in effect on the date hereof. 1.5 "Bankruptcy Court" means the Bankruptcy Court of the United States District Court for the District of Delaware or such other court as may have jurisdiction over these Chapter 11 Cases. 1.6 "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal Rules of Civil Procedure, as amended, as applicable to these Chapter 11 Cases or proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable to these Chapter 11 Cases or proceedings therein, as the case may be. 1.7 "BGAC" means Beverage Group Acquisition Corporation, a Delaware corporation and a debtor and debtor-in-possession in Chapter 11 Case No. 96-739 (HSB). BGAC will be merged and substantively consolidated with and into Seven- Up/RC on -2- Consummation. BGAC also means Reorganized Seven-Up/RC on and after Consummation. 1.8 "BGAC Common Stock" means the common stock of BGAC with a par value of $0.01 per share, authorized and outstanding as of the Petition Date. 1.9 "Business Day" means any day, excluding Saturdays, Sundays, and legal holidays, on which commercial banks are open for business in New York, New York. 1.10 "Cash" means legal tender of the United States or its equivalent. 1.11 "Chapter 11 Cases" means the Chapter 11 cases of Seven-Up/RC and BGAC pending in the Bankruptcy Court and bearing case numbers 96-738 (HSB) and 96-739 (HSB) . 1.12 "Claim" means a claim against Seven-Up/RC or BGAC, whether or not asserted, as defined in section 101(5) of the Bankruptcy Code. 1.13 "Class" means a category of holders of Claims or Interests described in Article II hereof. 1.14 "Class 4 New Common Stock" means 98% of the New Common Stock. 1.15 "Class 4 Proceeds" means all proceeds realized by Seven-Up/RC from the Stock Purchase Agreement and the Consulting Agreement minus (i) federal, state and Puerto Rico gains, income, transfer, repatriation, or similar taxes, (ii) the commissions, legal fees, accounting fees, retention program payments to employees of Seven-Up/RC of PR and all other costs applicable to the sale transaction, (iii) outstanding principal, accrued but unpaid interest, and any other fees or costs associated with the payment of all amounts owed by Seven- Up/RC of PR to GE Capital of PR, and (iv) $10 million, which sum shall be applied to reduce the outstanding pre-petition and post-petition obligations owed by Seven-Up/RC to GE Capital in the manner provided, and pursuant to, the DIP Facility. 1.16 "Class 5 Note" means the note to be distributed to the holder of the Allowed Class 5 GE Capital Term Loan Secured Claim, a copy of which is attached as Exhibit "E" hereto. -3- 1.17 "Committee" means the creditors' committee appointed by the United States Trustee on May 24, 1996, to represent unsecured creditors of Seven-Up/RC, as such committee may be constituted from time to time. 1.18 "Confirmation" means confirmation of the Plan pursuant to section 1129 of the Bankruptcy Code. 1.19 "Confirmation Hearing" means the hearing on confirmation of the Plan under section 1128 of the Bankruptcy Code. 1.20 "Confirmation Order" means the order, entered by the Bankruptcy Court, confirming the Plan. 1.21 "Consulting Agreement" means the Non-Competition and Consulting Agreement, between Seven-Up Acquisition Corp. and Seven-Up/RC. 1.22 "Consummation" means the Business Day on which all conditions to the consummation of the Plan set forth in Section IX.B. hereof have been satisfied or waived as provided in Section IX.C. hereof. 1.23 "Cure" means the distribution of Cash, or such other property as may be agreed upon by the parties and ordered by the Bankruptcy Court, with respect to the assumption of an executory contract or unexpired lease, pursuant to section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary obligations, without interest, or such other amount as may be agreed upon by the parties, under such executory contract or unexpired lease, to the extent such obligations are enforceable under the Bankruptcy Code and applicable non- bankruptcy law. 1.24 "Debtors" means Seven-Up/RC and BGAC collectively, including Seven- Up/RC and BGAC in their capacity as debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 1.25 "DIP Facility" means the Debtor-in-Possession Credit Agreement, dated as of May 13, 1996, between Seven-Up/RC, as borrower, the lenders party thereto, and GE Capital, as agent, as approved by the Bankruptcy Court pursuant to the terms of the order with respect thereto, dated May 13, 1996, and as both may be amended from time to time. -4- 1.26 "DIP Facility Claim" means a claim pursuant to or arising under the DIP Facility. 1.27 "Disallowed Claim" means (a) a Claim, or any portion thereof, that has been disallowed by a Final Order or (b) a Claim as to which a proof of claim bar date has been established by the Bankruptcy Code, Bankruptcy Rules or Final Order of the Bankruptcy Court but no proof of claim has been filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court. 1.28 "Disbursing Agent" means the Indenture Trustee, who shall make distributions to holders of Allowed Class 4 Noteholders Claims. 1.29 "Disclosure Statement" means the written disclosure statement relating to the Plan and approved by the Bankruptcy Court, as such disclosure statement may be amended, modified, or supplemented from time to time. 1.30 "Disputed Claim" means a Claim, or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim; provided, however, that, for purposes of the Plan, any Claim for which no proof of claim bar date has been established shall not be treated as a Disputed Claim unless Seven-Up/RC disputes such claim in accordance with the provisions of section VII.G. hereof. 1.31 "Distribution Date" means the date, occurring as soon as practicable after Consummation but in no event more than 10 days after Consummation, upon which the first distributions are made to holders of Allowed Class 4 Noteholders Claims and to holders of Allowed Class 5 GE Capital Term Loan Secured Claims in accordance with Section III.C. hereof. 1.32 "Estates" means, collectively, the estates of Seven-Up/RC and BGAC in the Chapter 11 Cases, pursuant to section 541 of the Bankruptcy Code. 1.33 "Face Amount" means (a) when used in reference to a Disputed or Disallowed Claim, the full stated amount claimed by the holder of such Claim in any proof of Claim timely filed with the Bankruptcy Court or otherwise deemed timely filed by any Final Order of the Bankruptcy Court or other applicable bankruptcy law, and (b) when used in reference to an Allowed Claim, the allowed amount of such Claim. -5- 1.34 "Final Order" means an order or judgment, the operation or effect of which has not been stayed, reversed, or amended and as to which order or judgment (or any revision, modification, or amendment thereof) the time to appeal or to seek review or rehearing has expired and as to which no appeal or petition for review or rehearing was filed or, if filed, remains pending. 1.35 "GE Capital" means General Electric Capital Corporation, a corporation organized under the banking laws of the State of New York. 1.36 "GE Capital Commitment Letter" means the commitment letter, dated June __, 1996 issued by GE Capital, and attached to the Disclosure Statement as Exhibit "B", or a commitment by another financial institution on the same, or substantially similar, terms. 1.37 "GE Capital Credit Agreement" means the credit agreement, as amended, dated as of February 1, 1994, between Seven-Up/RC, as borrower, the lenders party thereto, and GE Capital, as agent. 1.38 "GE Capital Credit Agreement Collateral" means the property as described in the Collateral Documents (as defined in the GE Capital Credit Agreement), in which Seven-Up/RC granted GE Capital, as agent under the GE Capital Credit Agreement, a lien or security interest to secure its obligations under the GE Capital Credit Agreement to the extent that such property remains encumbered by a valid, enforceable and perfected lien or security interest of GE Capital, as agent under the GE Capital Credit Agreement, that has neither been avoided nor is the subject of an action pending on Consummation to avoid such lien or security interest under the Bankruptcy Code or applicable non-bankruptcy law. 1.39 "GE Capital of PR" means General Electric Capital Corporation of Puerto Rico, a Puerto Rico corporation. 1.40 "GE Capital of PR Collateral" means the property as described in the GE Capital of PR Guaranty, in which Seven-Up/RC granted GE Capital of PR a lien or security interest to secure its obligations under the GE Capital of PR Guaranty to the extent that such property remains encumbered by a valid, enforceable and perfected lien or security interest of GE Capital of PR that has neither been avoided nor is the subject of an action pending as -6- of Consummation to avoid such lien or security interest under the Bankruptcy Code or applicable non-bankruptcy law. 1.41 "GE Capital of PR Guaranty" means the Continuing Guaranty Agreement, dated as of February 1, 1994, between Seven-Up/RC and GE Capital of PR, pursuant to which Seven-Up/RC guaranteed the payment and performance of Seven-Up/RC of PR's obligations under the credit agreement, dated as of February 1, 1994, between GE Capital of PR, and the lender parties thereto, and Seven-Up/RC of PR. 1.42 "GE Capital Post-Consummation Facility" means the credit agreement and related documents to be entered into by Seven-Up/RC and the lender parties thereto, in accordance with the GE Capital Commitment Letter. 1.43 "GE Capital Term Loan" means the loan evidenced by the Promissory Note, dated April 3, 1995, by Seven-Up/RC, as maker, in favor of GE Capital, as payee, in the original principal amount of $693,166.18. 1.44 "GE Capital Term Loan Collateral" means the property as described in the Master Security Agreement, made as of March 31, 1995, by and between Seven- Up/RC, as debtor, and GE Capital, as secured party, the Collateral Schedule No. 1 and the Amendment No. 1 to Master Security Agreement, dated March 31, 1995, between Seven-Up/RC, as debtor, and GE Capital, as secured party, in which Seven Up/RC granted GE Capital a lien or security interest to secure its obligations under the GE Capital Term Loan to the extent that such property remains encumbered by a valid, enforceable and perfected lien or security interest of GE Capital that has neither been avoided nor is the subject of an action pending as of Consummation to avoid such lien or security interest under the Bankruptcy Code or applicable non-bankruptcy law. 1.45 "Indenture Trustee" means The Bank of New York, as indenture trustee under the Senior Secured Notes Indenture, or any successor or replacement trustee. 1.46 "Interest" means the rights of the holder and owner of issued and outstanding shares of Old Common Stock or BGAC Common Stock, as the case may be. -7- 1.47 "Management Option" means the option agreement between Seven-Up/RC and certain members of Seven-Up/RC management designated therein, pursuant to which such designated members of management will be granted the right to purchase 6% of the equity of Reorganized Seven-Up/RC, which form of option agreement is attached as Exhibit "C" hereto. 1.48 "Merger Agreement" means the merger agreement, dated July __, 1996, between Seven-Up/RC and BGAC, pursuant to which BGAC will merge into Seven-Up/RC immediately prior to Consummation of the Plan, a copy of which is attached as Exhibit "G" hereto. 1.49 "New Common Stock" means the shares of common stock of Reorganized Seven-Up/RC, par value $0.01 per share, to be authorized and issued by Reorganized Seven-Up/RC on Consummation pursuant to this Plan. The New Common Stock shall have such rights with respect to dividends, liquidation, voting, and other matters as set forth in Reorganized Seven-Up/RC's amended and restated certificate of incorporation, a copy of which is attached as Exhibit "A" hereto and as provided under applicable law. 1.50 "Noteholders" means those Persons holding the Senior Secured Notes. 1.51 "Old Common Stock" means the common stock of Seven-Up/RC with a par value of $0.01 per share, authorized and outstanding as of the Petition Date. 1.52 "Old Securities" means the Senior Secured Notes and the Old Common Stock. 1.53 "Other Priority Claim" means a Claim entitled to priority pursuant to section 507(a) of the Bankruptcy Code, other than a Priority Tax Claim, an Administrative Claim, or a DIP Facility Claim. 1.54 "Other Secured Claims" means a Secured Claim other than (i) a Secured Claim in subclasses 2.01 GE Capital Working Capital Secured Claims or 2.02 GE Capital of PR Secured Claims, (ii) a Class 4 Noteholders Claim, (iii) a Class 5 GE Capital Term Loan Secured Claim, and (iv) a DIP Facility Claim. -8- 1.55 "Person" means an individual, corporation, partnership, joint venture, association, joint stock company, trust, estate, unincorporated organization, or other entity. 1.56 "Petition Date" means May 13, 1996, the date on which Seven-Up/RC and BGAC filed their petitions for reorganization commencing these Chapter 11 Cases. 1.57 "Plan" has the meaning ascribed to that term in the Introduction to this Plan. 1.58 "Porta Pack" means Porta Pack Corporation, a Delaware corporation. 1.59 "Principal License Agreements" means those franchise and license agreements with Cadbury Schweppes Inc., Royal Crown Cola Co., and Great Brands of Europe, Inc. 1.60 "Priority Tax Claim" means a Claim entitled to priority pursuant to section 507(a)(8) of the Bankruptcy Code. 1.61 "Professional Fees" means a Claim of a professional, retained in these Chapter 11 Cases, or either Chapter 11 Case, pursuant to sections 327 and 1103 of the Bankruptcy Code or otherwise, for compensation or reimbursement of costs and expenses relating to services incurred prior to and including Confirmation, when and to the extent any Claim described above is approved by a Final Order entered pursuant to sections 330, 331, 503(b), or 1103 of the Bankruptcy Code. 1.62 "Pro Rata" means, at any time, the proportion that the Face Amount of a Claim in a particular Class bears to the aggregate Face Amount of all Claims (including Disputed Claims, but excluding Disallowed Claims) in such Class, unless the Plan provides otherwise. 1.63 "Record Date" means the record date for purposes of making distributions under the Plan on account of Allowed Claims, which date shall be the fifth (5th) Business Day following Confirmation. 1.64 "Registration Rights Agreement" means the registration rights agreement to be in a form acceptable to the Unofficial Noteholders Committee. -9- 1.65 "Reinstated" or "Reinstatement" means leaving unaltered the legal, equitable, and contractual rights to which a Claim entitles the holder of such Claim so as to leave such Claim unimpaired in accordance with section 1124 of the Bankruptcy Code, thereby entitling the holder of such Claim to, but not more than, (a) reinstatement of the original maturity of the obligations on which such Claim is based, and (b) payment, as provided herein, of an amount of Cash consisting solely of the sum of (i) matured but unpaid principal installments, without regard to any acceleration of maturity, accruing prior to Consummation, (ii) accrued but unpaid interest as of the Petition Date, and (iii) reasonable fees, expenses, and charges, to the extent such fees, expenses, and charges are allowed under the Bankruptcy Code and are provided for in the agreement or agreements on which such Claim is based; provided, however, that any contractual right that does not pertain to the payment when due of principal and interest on the obligation on which such Claim is based, including, but not limited to, financial covenant ratios, negative pledge covenants, covenants or restrictions on merger or consolidation, and affirmative covenants regarding corporate existence prohibiting certain transactions or actions contemplated by the Plan, or conditioning such transactions or actions on certain factors, shall not be reinstated in order to accomplish Reinstatement. 1.66 "Reorganized Seven-Up/RC" means Seven-Up/RC as reorganized on and after Consummation and after giving affect to the merger with, and substantive consolidation into, BGAC. 1.67 "Secured Claim" means a Claim, secured by a valid, binding and enforceable security interest in or lien upon property of the Estates to the extent of the value as is established by the Bankruptcy Court, of such interest or lien as determined by a Final Order of the Bankruptcy Court, after notice to the Committee, pursuant to section 506 of the Bankruptcy Code or as otherwise agreed upon in writing by Seven-Up/RC and the holder of such Claim after notice to the Committee and subject to the approval of the Bankruptcy Court. 1.68 "Senior Secured Notes" means the 11.5% Senior Secured Notes due 1999 of Seven-Up/RC, issued and outstanding under the Senior Secured Notes Indenture. 1.69 "Senior Secured Notes Collateral" means the Old Common Stock and 66.5% of the issued and outstanding capital stock of -10- Seven-Up/RC of PR in which BGAC and Seven-Up/RC granted the Noteholders liens and security interests to secure BGAC's obligations under its guarantee of the Senior Secured Notes and Seven-Up/RC's obligations under the Senior Secured Notes. 1.70 "Senior Secured Notes Indenture" means the indenture dated as of August 1, 1992, by and among Seven-Up/RC, BGAC and the Indenture Trustee, pursuant to which the Senior Secured Notes were issued, as such indenture may heretofore have been amended, modified, or supplemented. 1.71 "Seven-Up/RC" means Seven-Up/RC Bottling Company of Southern California, Inc., a Delaware corporation, a wholly-owned subsidiary of BGAC and a debtor and debtor-in-possession in Chapter 11 Case No. 96-738 (HSB). Seven- Up/RC also means Reorganized Seven-Up/RC on and after Consummation. 1.72 "Seven-Up/RC of PR" means Seven-Up/RC Bottling Company of Puerto Rico, Inc, the direct wholly-owned subsidiary of Seven-Up/RC. 1.73 "Stock Purchase Agreement" means the Stock Purchase and Sale Agreement, dated May 3, 1996, among Seven-Up Acquisition Corporation, Seven- Up/RC and Seven-Up/RC of PR, or such other agreement between Seven-Up/RC and the party offering a higher and better offer. 1.74 "Unofficial Noteholders Committee" means the ad hoc unofficial committee of holders of Senior Secured Notes, which was formed after the August 1, 1995 suspension of interest payments on the Senior Secured Notes. 1.75 "Unsecured Claim" means a Claim against Seven-Up/RC that is not a DIP Facility Claim, Administrative Claim, Priority Tax Claim, or Class 1 Other Priority Claim, Class 2 Secured Claim, Class 4 Noteholders Claim, or Class 5 GE Capital Term Loan Secured Claim. 1.76 "Westinghouse" means Westinghouse Electric Corporation and its affiliates. 1.77 "WB" means WB Bottling Corporation, a Delaware corporation and the holder of 100% of the BGAC Common Stock. -11- 1.78 "WB Warrants" means the warrants to be issued under the warrant agreement by and between Seven-Up/RC and WB, pursuant to which WB will be granted the right to purchase five (5%) percent of New Common Stock, which warrant agreement is attached as Exhibit "D" hereto. C. RULES OF INTERPRETATION For purposes of the Plan (a) any reference in the Plan to a contract, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions, (b) any reference in the Plan to an existing document or exhibit filed or to be filed means such document or exhibit as it may have been or may be amended, modified, or supplemented, (c) unless otherwise specified, all references in the Plan to Sections, Articles, Schedules, and Exhibits are references to Sections, Articles, Schedules, and Exhibits of or to the Plan, (d) the words "herein" and "hereto" refer to the Plan in its entirety rather than to a particular portion of the Plan, (e) any reference to the number or percentage of shares of New Common Stock, unless otherwise specified, reflects the actual distribution of such New Common Stock but does not reflect any dilution due to the exercise of the Management Option or the WB Warrants,(f) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan, and (g) the rules of construction set forth in section 102 of the Bankruptcy Code and in the Bankruptcy Rules shall apply. D. COMPUTATION OF TIME In computing any period of time prescribed or allowed by the Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply. -12- ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS A. INTRODUCTION All Claims and Interests, except DIP Facility Claims, Administrative Claims, and Priority Tax Claims, are placed in the Classes set forth below. In accordance with section 1123(a)(1) of the Bankruptcy Code, DIP Facility Claims, Administrative Claims, and Priority Tax Claims, as described below, have not been classified. A Claim or Interest is placed in a particular Class only to the extent that the Claim or Interest falls within the description of that Class, and is classified in other Classes to the extent that any portion of the Claim or Interest falls within the description of such other Classes. A Claim or Interest is also placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim in that Class and such Claim or Interest has not been paid, released, or otherwise settled prior to Consummation. B. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON THE PLAN) 1. DIP Facility Claims 2. Administrative Claims Against Seven-Up/RC 3. Priority Tax Claims Against Seven-Up/RC C. CLASSES OF CLAIMS THAT ARE NOT IMPAIRED (NOT ENTITLED TO VOTE ON THE PLAN) 1. Class 1: Other Priority Claims Class 1 consists of all Other Priority Claims against Seven-Up/RC. 2. Class 2: Secured Claims Class 2 consists of separate subclasses for each Secured Claim secured by a security interest in or lien upon -13- property in which Seven-Up/RC's Estate has an interest. Each subclass is deemed to be a separate class for all purposes under the Bankruptcy Code. Class 2.01: GE Capital Working Capital Secured Claims Class 2.01 consists of all Claims against Seven-Up/RC, secured by and to the extent of the value of the GE Capital Credit Agreement Collateral, directly or indirectly arising from or under, or relating in any way to the GE Capital Credit Agreement. Class 2.02: GE Capital of PR Secured Claims Class 2.02 consists of all Claims secured by and to the extent of the value of the GE Capital of PR Collateral, directly or indirectly arising from or under, or relating in any way to the GE Capital of PR Guaranty. Class 2.03: Other Secured Claims Class 2.03 consists of all Other Secured Claims against Seven-Up/RC. 3. Class 3: General Unsecured Claims Class 3 consists of all Unsecured Claims against Seven-Up/RC. D. IMPAIRED CLASSES OF CLAIMS (ENTITLED TO VOTE ON THE PLAN) 1. Class 4: Noteholders Claims Class 4 consists of all Claims directly or indirectly arising from or under, or relating in any way to, the Senior Secured Notes Indenture, the Senior Secured Notes or the Senior Secured Notes Collateral. 2. Class 5: GE Capital Term Loan Secured Claims Class 5 consists of all Claims directly or indirectly arising from or under, or relating in any way to, the GE Capital Term Loan or the GE Capital Term Loan Collateral. -14- E. IMPAIRED CLASS OF INTEREST (ENTITLED TO VOTE ON THE PLAN BUT DEEMED TO HAVE ACCEPTED PURSUANT TO ORDER OF BANKRUPTCY COURT) 1. Class 6: Old Common Stock Interest Class 6 consists of all Interest arising from or in any way associated with the Old Common Stock. ARTICLE III TREATMENT OF CLAIMS AND INTERESTS A. UNCLASSIFIED CLAIMS 1. DIP Facility Claims On the Distribution Date, the holder of all Claims pursuant to or arising under the DIP Facility shall receive, in full satisfaction, settlement, release and discharge of and in exchange for such Allowed DIP Facility Claim, (a) Cash equal to the amount of such Allowed Claim and all the rights, benefits, and protections provided it under the order or orders of the Bankruptcy Court approving the DIP Facility, or (b) such other treatment as to which Seven-Up/RC and such holder shall have agreed upon in writing as announced at or prior to the Confirmation Hearing. 2. Administrative Claims On the Distribution Date, a holder of an Allowed Administrative Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Administrative Claim (a) Cash equal to the unpaid portion of such Allowed Administrative Claim, or (b) such other treatment as to which Seven-Up/RC and such holder shall have agreed upon in writing; provided, however, that Allowed Administrative Claims with respect to liabilities incurred by Seven-Up/RC in the ordinary course of its business during these Chapter 11 Cases shall be paid in the ordinary course of business in accordance with the terms and conditions of any agreements relating thereto. -15- 3. Priority Tax Claims On the Distribution Date, a holder of an Allowed Priority Tax Claim shall be entitled to receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Tax Claim (a) deferred Cash payments in an aggregate principal amount equal to the amount of such Allowed Priority Tax Claim plus interest on the unpaid portion thereof at the rate of five (5) percent per annum from Consummation through the date of payment thereof or (b) such other treatment as to which Seven-Up/RC and such holder shall have agreed upon in writing, with the approval of the Bankruptcy Court, after notice to the Committee. If deferred Cash payments are made to a holder of an Allowed Priority Tax Claim, payments of principal shall be made in annual installments, each such installment amount being equal to ten (10) percent of such Allowed Priority Tax Claim plus accrued and unpaid interest, with the first payment to be due on the first anniversary of the Distribution Date, and subsequent payments to be due on each successive anniversary of the first payment date or as soon thereafter as is practicable; provided, however, that any installments remaining unpaid on the date that is six years after the date of assessment of the tax that is the basis of the Allowed Priority Tax Claim shall be paid on the first Business Day following such date, together with any accrued and unpaid interest to the date of payment; provided, further, that Seven-Up/RC reserves the right to pay any Allowed Priority Tax Claim, or any remaining balance of such Allowed Priority Tax Claim, in full at any time on or after Consummation without premium or penalty. B. CLASSES OF CLAIMS THAT ARE NOT IMPAIRED 1. Class 1: Other Priority Claims On the Distribution Date, a holder of an Allowed Class 1 Other Priority Claim shall receive, in the sole discretion of Seven-Up/RC, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 1 Other Priority Claim (a) Cash equal to the amount of such Allowed Class 1 Other Priority Claim, or (b) such other treatment as to which Seven-Up/RC and such holder shall have agreed upon in writing. -16- 2. Class 2: Secured Claims Each subclass of Class 2 Secured Claims shall be treated as a separate class for purposes of implementing and consummating the Plan and each holder of an Allowed Class 2 Secured Claim shall receive the treatment set forth below. To the extent, if any, that the value of the collateral securing a Class 2 Secured Claim is less than the amount of such Allowed Claim, the difference shall be treated as a Class 3 General Unsecured Claim. Class 2.01: GE Capital Working Capital Secured Claims On the Distribution Date, a holder of an Allowed Class 2.01 GE Capital Working Capital Secured Claim shall, in the sole discretion of Seven-Up/RC, and in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 2.01 GE Capital Working Capital Secured Claim, receive (a) Cash in an amount equal to such Allowed Class 2.01 GE Capital Working Capital Claim or (b) such other treatment as Seven-Up/RC and such holder shall have agreed in writing as announced at or prior to the Confirmation Hearing. Class 2.02: GE Capital of PR Secured Claims On the Distribution Date, a holder of an Allowed Class 2.02 GE Capital of PR Secured Claim shall, in the sole discretion of Seven-Up/RC, and in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 2.02 GE Capital of PR Secured Claim, receive (a) Cash in an amount equal to such Allowed Class 2.02 GE Capital of PR Secured Claim or (b) such other treatment as Seven-Up/RC and such holder shall have agreed in writing as announced at or prior to the Confirmation Hearing. Class 2.03: Other Secured Claims On the Distribution Date, a holder of an Allowed Class 2.03 Other Secured Claim shall, in the sole discretion of Seven-Up/RC, and in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 2.03 Other Secured Claim, (a) receive Cash in an amount equal to such Allowed Class 2.03 Other Secured Claim, (b) have its Allowed Class 2.03 Other Secured Claim Reinstated, (c) have the collateral, to the extent it secures the payment obligations of Seven-Up/RC or BGAC to such holder, returned to it or (d) receive such other treatment as -17- Seven-Up/RC and such holder shall have agreed in writing as announced at or prior to the Confirmation Hearing; provided, however, that notwithstanding any provision of this Plan to the contrary, nothing herein shall affect the right or ability of Seven-Up/RC to avoid any purported lien or security interest. 3. Class 3: General Unsecured Claims On the Distribution Date, a holder of an Allowed Class 3 General Unsecured Claim, shall be paid in full in the ordinary course of business. Such holder will not receive any distribution under the Plan, but such Allowed Class 3 General Unsecured Claim will become an obligation of Reorganized Seven-Up/RC, and, if applicable, be paid in accordance with the terms of any invoice or agreement relating to such Allowed Class 3 General Unsecured Claim. C. IMPAIRED CLASSES OF CLAIMS 1. Class 4: Noteholders Claims On the Distribution Date, a holder of an Allowed Class 4 Noteholders Claim, in full satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Class 4 Noteholders Claim, shall receive, its Pro Rata share of (x) Class 4 New Common Stock and (y) Class 4 Proceeds. For all purposes associated herewith, including voting and distributions, the Class 4 Noteholders Claims are hereby allowed in the aggregate principal amount of $140,000,000 plus accrued and unpaid interest through and including the Petition Date at the rate provided for in the Senior Secured Notes Indenture. Distributions to holders of Allowed Class 4 Noteholders Claims shall be deemed to be applied first to payment of the outstanding principal on the Senior Secured Notes and second to payment of accrued and unpaid interest under the Senior Secured Notes. On the Distribution Date, Seven-Up/RC shall pay the reasonable and actual costs and expenses of the Unofficial Noteholders Committee, including without limitation the fees of counsel for the Unofficial Noteholders Committee. Notwithstanding the foregoing or anything in the Plan to the contrary, in the event that Class 4 Proceeds are less than $55 million but more than $54 million, Seven-Up/RC shall make an additional distribution to the Disbursing Agent in an amount by which $55 million exceeds the Class 4 Proceeds. In the event -18- that Class 4 Proceeds are more than $55 million but less than $56 million, Class 4 Proceeds shall be deemed to be $55 million and the difference between the actual amount of Class 4 Proceeds and $55 million shall be retained by Seven- Up/RC to pay its indebtedness under the DIP Facility or the GE Post-Consummation Facility, as the case may be. 2. Class 5: GE Capital Term Loan Secured Claims On the Distribution Date, a holder of an Allowed Class 5 GE Capital Term Loan Secured Claim, in full satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Class 5 GE Capital Term Loan Secured Claims, shall receive either (i) Cash equal to 100% of the outstanding and unpaid principal amount of the Allowed Class 5 GE Capital Term Loan Secured Claims or (ii) the Class 5 Note. D. IMPAIRED CLASS OF INTEREST (ENTITLED TO VOTE ON THE PLAN BUT DEEMED TO HAVE ACCEPTED PURSUANT TO ORDER OF BANKRUPTCY COURT) 1. Class 6: Old Common Stock Interest WB, as holder on or after Consummation of the Allowed Class 6 Old Common Stock Interest, shall receive the WB Warrants and 2% of the New Common Stock on account of such Class 6 Old Common Stock Interest. ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN A. SUBSTANTIVE CONSOLIDATION AND CONTINUED CORPORATE EXISTENCE OF SEVEN- UP/RC On Consummation, BGAC will be substantively consolidated into, and merged (pursuant to the Merger Agreement) with, Seven-Up/RC, with Seven-Up/RC as the surviving corporation. For purposes of the Plan, all Claims against BGAC shall be deemed to be Claims against Seven-Up/RC and all property of BGAC shall be deemed to be property of Seven-Up/RC. Seven-Up/RC will continue to exist as a separate corporate entity in accordance with the laws of Delaware and pursuant to the certificate of incorporation -19- and by-laws in effect prior to Consummation, except to the extent such certificate of incorporation and by-laws are amended and restated as provided for by this Plan. Both the amended and restated certificate of incorporation and by-laws shall include, among other things, pursuant to section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance of nonvoting equity securities. The amended and restated certificate of incorporation of Reorganized Seven-Up/RC is attached as Exhibit "A" hereto. B. DIRECTORS AND OFFICERS The officers of Seven-Up/RC before Consummation shall serve as the officers of Reorganized Seven-Up/RC after Consummation. On Consummation, the current directors of Seven-Up/RC shall resign and be replaced by the directors whose names are listed on Exhibit "F" hereto, who shall serve as the initial board of directors of Reorganized Seven-Up/RC. Any right or obligation of Seven-Up/RC pursuant to its certificate of incorporation, by-laws, applicable state law or specific agreement to indemnify its shareholders or its officers, directors or employees who either (i) served Seven-Up/RC in one or more such capacities as of March 15, 1996 or (ii) have ceased to serve because of death or physical or mental disability, with respect to or arising out of events that occurred prior to the Petition Date, shall be an obligation of Reorganized Seven-Up/RC. C. OPERATIONS OF DEBTORS BETWEEN CONFIRMATION AND CONSUMMATION The Debtors shall continue to operate as debtors-in-possession, subject to the supervision of the Bankruptcy Court, pursuant to the Bankruptcy Code during the period from Confirmation through and until Consummation, and any obligation incurred by the Debtors during that period shall constitute an Administrative Claim; provided, however, that nothing herein shall preclude the Debtors from taking any step they deem necessary or desirable to prepare for and effect the Consummation of the Plan. D. EXCLUSIVITY PERIOD The Debtors shall retain the exclusive right to amend the Plan and solicit acceptances thereof until Consummation. -20- E. TERM OF INJUNCTIONS OR STAYS Unless otherwise provided herein or in the Confirmation Order, all injunctions or stays provided for in the Chapter 11 Cases under Section 105 or 362 of the Bankruptcy Code, or otherwise, and extant immediately prior to Confirmation shall remain in full force and effect until Consummation. F. REVESTING OF ASSETS Pursuant to section 1141(b) of the Bankruptcy Code, the property of the Estates shall revest in Seven-Up/RC on Consummation of the Plan. Thereafter, Reorganized Seven-Up/RC may operate its business and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. As of Consummation, all property of Seven-Up/RC and BGAC shall be free and clear of all Claims and Interests, including liens and security interests, except as specifically provided in the Plan or in the Confirmation Order. Without limiting the foregoing, Seven-Up/RC may, without application to or approval by the Bankruptcy Court, pay professional fees and expenses that it may incur after Confirmation. G. CREDITORS' COMMITTEE The Committee shall cease to exist after Consummation. H. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS The Chairman of the Board of Directors, the President, the Chief Operating Officer, the Chief Financial Officer, or any other appropriate officer of the Debtors, shall be, and hereby are, authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, certificates, and other agreements or documents, and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Secretary or Assistant Secretary of the Debtors shall be authorized to certify or attest to any of the foregoing actions, if necessary. -21- I. PROCEDURE FOR MAKING DISTRIBUTIONS TO HOLDERS OF NOTEHOLDERS CLAIMS Each holder of an Allowed Class 4 Noteholders Claim shall tender its Senior Secured Notes to the Indenture Trustee in accordance with written instructions to be provided to such holders by the Indenture Trustee as promptly as possible following Consummation. Such instructions shall specify that delivery of such Senior Secured Notes will be effected, and the risk of loss and title thereto will pass, only upon the proper delivery of such Senior Secured Notes with a letter of transmittal in accordance with such instructions. All surrendered Senior Secured Notes shall be marked as canceled and delivered by the Indenture Trustee to Reorganized Seven-Up/RC. All distributions of Class 4 New Common Stock or Class 4 Proceeds on account of Allowed Class 4 Noteholders Claims shall be made by the Indenture Trustee, who shall have sole responsibility for distributing shares or Cash to holders of Allowed Class 4 Noteholders Claims and for calculating the amount of shares or Cash to be distributed to such holders out of the shares and Cash distributed to the Indenture Trustee. It shall be a condition to the making of any distribution of shares and Cash to any holder of an Allowed Class 4 Noteholders Claim that such holder shall have tendered to the Indenture Trustee such holder's Senior Secured Notes or, in the event that any such Senior Secured Notes are lost, stolen, mutilated or destroyed, evidence satisfactory to the Indenture Trustee of the loss, mutilation or destruction of such Senior Secured Notes or, at the Indenture Trustee's option, an affidavit of such holder in accordance with Article 8 of the Uniform Commercial Code. Distributions under this Plan to any Person in respect of Senior Secured Notes shall not be made if such Person has not complied with the provisions of the foregoing sentence within two (2) years following Consummation, and any such Person shall be deemed to have no further Claim and shall not participate in any distribution under this Plan. J. FRACTIONAL SHARES Notwithstanding any other provision of the Plan to the contrary, no fractional shares shall be issued pursuant to the Plan. Whenever any payment of a fraction of a share under the Plan would otherwise be required, the actual distribution made shall reflect a rounding of such fraction to the nearest whole share (up or down), with half shares or less being rounded down and fractions in excess of half a share being rounded up. -22- K. FRACTIONAL CENTS Notwithstanding any other provision of the Plan to the contrary, no payment of fractional cents shall be made pursuant to the Plan. Whenever any payment of a fraction of a cent under the Plan would otherwise be required, the actual distribution made shall reflect a rounding of such fraction to the nearest whole penny (up or down), with half pennies or less being rounded down and fractions in excess of half a penny being rounded up. L. DE MINIMIS DISTRIBUTIONS No Cash distribution of less than twenty-five dollars ($25.00) shall be made by the Indenture Trustee or Seven-Up/RC in respect of any Allowed Claim unless a request therefor is made in writing to the Indenture Trustee. M. MANAGEMENT OPTION Upon Consummation of the Plan, certain members of management of Seven- Up/RC shall be granted the right, subject to the conditions contained in the Management Option, to purchase up to 6% of New Common Stock at a purchase price per share equal to the Exercise Price (as defined in the Management Option). ARTICLE V ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY IMPAIRED CLASSES OF CLAIMS A. CLASSES ENTITLED TO VOTE Each impaired Class that will receive or retain property or any interest in property under the Plan shall be entitled to vote to accept or reject the Plan. Any Class of Claims that is not impaired shall be deemed to have accepted the Plan and shall not be entitled to vote to accept or reject the Plan. B. CLASS ACCEPTANCE REQUIREMENT Under section 1126(c) of the Bankruptcy Code, an impaired Class of Claims has accepted the Plan if the holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the Allowed Claims of such Class who have voted on the Plan, have voted to accept the Plan. -23- C. CRAMDOWN The Debtors reserve their right to request Confirmation of the Plan, as it may be modified from time to time, under section 1129(b) of the Bankruptcy Code. ARTICLE VI PRESERVATION OF LITIGATION CLAIMS A. RETAINED LITIGATION CLAIMS In accordance with section 1123(b)(3) of the Bankruptcy Code, and except as otherwise provided herein or in the Confirmation Order, Reorganized Seven-Up shall retain and may expressly, in its sole discretion, enforce, sue on, settle, or compromise (or decline to do any of the foregoing) all claims, rights of action, suits, and proceedings, whether in law or in equity, whether known or unknown, that Seven-Up/RC, BGAC, or their Estates may hold against any Person. Reorganized Seven-Up/RC or any of its successors may pursue such retained litigation claims in accordance with the best interests of Reorganized Seven-Up/RC or its successors who hold such rights of action. B. PRESERVATION OF INSURANCE The Debtors' discharge and release from all Claims as provided herein, except as necessary to be consistent with the Plan, shall not diminish or impair the enforceability of any insurance policy that may cover Claims against Seven- Up/RC, BGAC or any other Person. ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS A. DATE OF DISTRIBUTIONS Distributions under the Plan shall be made on the Distribution Date, except as otherwise provided for herein or ordered by the Bankruptcy Court. -24- B. INTEREST ON CLAIMS Except (i) as specifically provided for in the Plan or the Confirmation Order or (ii) with respect to an Allowed DIP Facility Claim, an Allowed Class 2.01 GE Capital Working Capital Secured Claim, an Allowed Class 2.02 GE Capital of PR Secured Claim, or an Allowed Class 5 GE Capital Term Loan Claim, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if and after such Disputed Claim becomes an Allowed Claim; provided, however, that, if Seven-Up/RC objects to the allowance of a Claim after the Distribution Date and such Claim becomes an Allowed Claim, Seven-Up/RC shall pay interest on such Allowed Claim from the date of the objection through the date of the initial distribution on such Allowed Claim at a rate of 6% per annum. C. DISBURSING AGENT As to all distributions to holders of Allowed Claims in classes other than Class 4 Noteholders Claims, Seven-Up/RC shall make all distributions required under this Plan. The Indenture Trustee shall make all distributions to holders of Allowed Class 4 Noteholders Claims. Distributions to holders of Allowed Class 4 Noteholders Claims shall be deemed delivered and accepted when Class 4 Proceeds and Class 4 New Common Stock are delivered to the Indenture Trustee. D. MEANS OF CASH PAYMENT Cash payments made pursuant to this Plan shall be in U.S. funds, by the means agreed to by the payor and the payee, including by check or wire transfer, or, in the absence of an agreement, such commercially reasonable manner as the payor shall determine in its sole discretion. E. DELIVERY OF DISTRIBUTIONS Distributions to holders of Allowed Claims shall be made by the Indenture Trustee or Seven-Up/RC, as the case may be, (a) at the addresses set forth on the list of record holders of the Senior Secured Notes as of the Record Date or (b) at the addresses reflected in Seven-Up/RC's books and records. -25- If any holder's distribution is returned to the Indenture Trustee, Seven- Up/RC, or such other agent as Seven-Up/RC may designate, as the case may be, no further distributions to such holder shall be made unless and until the Indenture Trustee, Seven-Up/RC, or such other agent as Seven-Up/RC may designate, as the case may be, is notified of such holder's then current address, at which time all missed distributions shall be made to such holder without interest; provided, however, that to the extent Seven-Up/RC or the Indenture Trustee earns interest on the Class 4 Proceeds, such interest less any applicable bank charges shall be distributed Pro Rata to the holders of Allowed Class 4 Noteholders Claims. Amounts in respect of undeliverable distributions made through the Indenture Trustee, Seven-Up/RC, or such other agent as Seven- Up/RC may designate, as the case may be, shall be returned to Reorganized Seven- Up/RC until such distributions are claimed. All claims for undeliverable distributions shall be made on or before the fifth (5th) anniversary of Consummation. After such date, all unclaimed property shall revert to Reorganized Seven-Up/RC and the claim of any holder or successor to such holder with respect to such property shall be discharged and forever barred. F. CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS Upon Consummation, except as otherwise provided for herein and except with respect to the obligations, if any, arising under the DIP Facility that survive Consummation of the Plan, (i) the Old Securities and any other note, bond, indenture, or other instrument or document evidencing or creating any indebtedness, equity interest or obligation of Seven-Up/RC, except such notes or other instruments evidencing indebtedness or obligations of Seven-Up/RC that are Reinstated under the Plan, shall be canceled, and (ii) the obligations of Seven- Up/RC under any agreements, indentures, or certificates of designations governing the Old Securities and any other note, bond, indenture, or other instrument or document evidencing or creating any indebtedness, equity interest or obligation of Seven-Up/RC, except such notes or other instruments evidencing indebtedness or obligations of Seven-Up/RC that are Reinstated under the Plan, as the case may be, shall be discharged; provided, however, that each indenture or other agreement that governs the rights of the holder of a Claim and that is administered by the Indenture Trustee shall continue in effect solely for the purposes of (i) allowing the Indenture Trustee to make the distributions to be made on account of such Claims under the Plan as provided in Article VII hereof -26- and (ii) governing the agency relationship between the Indenture Trustee and the Noteholders, which provisions shall remain in effect according to the terms of the Senior Secured Notes Indenture; provided, further, that the provisions of this paragraph shall not affect the discharge of the Debtors' liabilities under the Bankruptcy Code and the Confirmation Order or result in any expense or liability to Reorganized Seven-Up/RC. Reorganized Seven-Up/RC shall not have any obligations to the Indenture Trustee for any fees, costs, or expenses, except as expressly provided in this Section VII.F.; provided, further, that Reorganized Seven-Up/RC shall be liable for the payment of the reasonable fees and expenses of the Indenture Trustee under the Senior Secured Notes, including attorneys fees outstanding on the Petition Date and amounts incurred in connection with this Plan and in making the distributions to holders of Allowed Class 4 Noteholders Claims in accordance with the provisions hereof, in an aggregate amount not to exceed $75,000. G. RESOLUTION OF CLAIMS Any Claim, other than a Claim for Professional Fees, that is not an Allowed Claim shall be determined, resolved, or adjudicated in the manner in which such Claim would have been determined, resolved or adjudicated if this Chapter 11 case had not been commenced, unless, at Seven-Up/RC's election, the amount of such Claim is determined, resolved, or adjudicated by the Bankruptcy Court. Seven-Up/RC may file an objection with the Bankruptcy Court to the allowance of any Claim (whether or not a proof of claim has been filed) at any time on or before November 1, 1996, unless such time period is extended by order of the Bankruptcy Court. H. ORDINARY COURSE LIABILITIES Subject to the terms hereof, holders of Claims against Seven-Up/RC based on liabilities incurred before or after the Petition Date in the ordinary course of Seven-Up/RC's business shall not be required to file any request for payment of such Claims. Such Claims shall be assumed and paid by Seven-Up/RC in accordance with the terms of this Plan, without any further action by the holders of such Claims. -27- I. RECORD DATE FOR DISTRIBUTIONS TO HOLDERS OF SENIOR SECURED NOTES At the close of business on the Record Date, the transfer ledgers of the Indenture Trustee shall be closed, and there shall be no further changes in the record holders of the Senior Secured Notes. Reorganized Seven-Up/RC and the Indenture Trustee shall have no obligation to recognize any transfer of such Senior Secured Notes occurring after the Record Date. Reorganized Seven-Up/RC and the Indenture Trustee shall be entitled instead to recognize and deal for all purposes hereunder with only those record holders stated on the transfer ledgers as of the close of business on the Record Date. ARTICLE VIII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES A. REJECTED EXECUTORY CONTRACTS AND UNEXPIRED LEASES All executory contracts and unexpired leases of Seven-Up/RC specifically listed on Exhibit "B" hereto shall be deemed automatically rejected upon Confirmation. The Confirmation Order shall constitute an order of the Bankruptcy Court approving such rejections, pursuant to section 365(a) of the Bankruptcy Code. B. ASSUMED IF NOT REJECTED All executory contracts and unexpired leases of Seven-Up/RC, including any and all franchise, distribution, licensing, or cooperative association agreements, not specifically listed on the schedule of rejected executory contracts and unexpired leases annexed as Exhibit "B" hereto shall be deemed to be automatically assumed as of Confirmation. The Confirmation Order shall constitute an order of the Bankruptcy Court approving such assumptions, pursuant to section 365(a) of the Bankruptcy Code, as of Confirmation. Each assumed executory contract and unexpired lease of Seven-Up/RC that relates to the use or occupancy of real property shall include (a) all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, and (b) all -28- executory contracts or unexpired leases appurtenant to the premises, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, powers, uses, usufructs, reciprocal easement agreements, vaults, tunnel or bridge agreements, or franchises, and any other interests in real estate or rights in rem related to such premises, unless any of the foregoing agreements has been rejected pursuant to a Final Order of the Bankruptcy Court or is listed on the schedule of rejected contracts and leases annexed as Exhibit "B" hereto. All executory contracts and unexpired leases of BGAC, if any, shall be deemed automatically rejected as of Confirmation. C. PAYMENTS RELATED TO ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES Any monetary amounts by which each executory contract and unexpired lease to be assumed under the Plan may be in default shall be satisfied by Cure, under section 365(b)(1) of the Bankruptcy Code, at the option of Seven-Up/RC or the assignee of Seven-Up/RC assuming such contract or lease. In the event of a dispute regarding (i) the nature or the amount of any Cure, (ii) the ability of Reorganized Seven-Up/RC or any assignee to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (iii) any other matter pertaining to assumption, Cure shall occur following the entry of a Final Order resolving the dispute and approving the assumption and, as the case may be, assignment. D. BAR DATE FOR REJECTION DAMAGES If the rejection by Seven-Up/RC or BGAC, pursuant to the Plan, of an executory contract or unexpired lease results in a Claim, then such Claim shall be barred forever and shall not be enforceable against Seven-Up/RC or Reorganized Seven-Up/RC, or its property unless a proof of claim is filed with the clerk of the Bankruptcy Court and served upon counsel to Seven-Up/RC and counsel to the Committee within thirty (30) days after service of a notice that the executory contract or unexpired lease has been rejected. -29- E. COMPENSATION AND BENEFIT PROGRAMS All employment and severance agreements, and all employee compensation and benefit programs of Seven-Up/RC, including agreements and programs subject to sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into before or after the Petition Date and not since terminated, shall be deemed to be, and shall be treated as though they are, executory contracts that are assumed under this Plan, but only to the extent that rights under such agreements and programs are held by Seven-Up/RC or Persons who are Seven-Up/RC employees as of Confirmation, and Seven-Up/RC's obligations under such agreements and programs to persons who are employees of Seven-Up/RC on Confirmation shall survive Confirmation of this Plan, except for (i) such executory contracts or plans specifically rejected pursuant to the Plan (to the extent such rejection does not violate sections 1114 and 1129(a)(13) of the Bankruptcy Code) and (ii) such executory contracts or plans as have previously been rejected, pursuant to a Final Order, or specifically waived by the beneficiaries of such plans or contracts or programs. F. ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES TO REORGANIZED SEVEN-UP/RC On Consummation, each of the executory contracts and unexpired leases that is being, or previously has been, assumed shall be assigned to Reorganized Seven-Up/RC. The Confirmation Order shall approve such assignments pursuant to section 365 of the Bankruptcy Code. ARTICLE IX CONDITIONS PRECEDENT A. CONDITIONS TO CONFIRMATION The following are conditions precedent to Confirmation of the Plan that must be satisfied unless waived in accordance with Section IX.C. of the Plan: 1. The Confirmation Order shall be in form and substance reasonably acceptable to Seven-Up/RC, the Committee, and GE Capital. -30- 2. The GE Capital Commitment Letter shall be in effect and shall not have been terminated. 3. The Bankruptcy Court shall have entered an order approving the Stock Purchase Agreement, which agreement shall have been executed and delivered, shall be in effect and shall not have been terminated. B. CONDITIONS TO CONSUMMATION The following are conditions precedent to the occurrence of Consummation, each of which must be satisfied unless waived in accordance with Section IX.C. of the Plan: 1. Confirmation Order shall have been entered. 2. The Confirmation Order shall have become a Final Order and provide, among other things, that: a. The provisions of the Confirmation Order are nonseverable and mutually dependent. b. All executory contracts or unexpired leases assumed by Seven- Up/RC during these Chapter 11 Cases or under the Plan shall be assigned and transferred to, and remain in full force and effect for the benefit of, Reorganized Seven-Up/RC notwithstanding any provision in such contract or lease (including those described in sections 365(b)(2) and (f) of the Bankruptcy Code) that prohibits such assignment or transfer or that enables or requires termination of such contract or lease. c. The transfers of property by Seven-Up/RC and, to the extent applicable, BGAC (a) to Reorganized Seven-Up/RC (i) are or shall be legal, valid, and effective transfers of property, (ii) vest or shall vest Reorganized Seven-Up/RC with good title to such property free and clear of all liens, charges, Claims, encumbrances, or interests, except as expressly provided in the Plan or Confirmation Order, (iii) do not and shall not constitute avoidable transfers under the Bankruptcy Code or under applicable bankruptcy or -31- non-bankruptcy law, and (iv) do not and shall not subject Reorganized Seven-Up/RC to any liability by reason of such transfer under the Bankruptcy Code or under applicable non- bankruptcy law, including, without limitation, any laws affecting successor or transferee liability, and (b) to holders of Claims under the Plan are for good consideration and value and are in the ordinary course of Seven-Up/RC's business. d. Except as expressly provided in the Plan, Seven-Up/RC and BGAC are discharged effective upon Confirmation from any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code), and the Debtors' liability in respect thereof is extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, or known or unknown, or that arose from any agreement of Seven- Up/RC or BGAC that has either been assumed or rejected in these Chapter 11 Cases or pursuant to the Plan, or obligation of Seven-Up/RC or BGAC incurred before Confirmation, or from any conduct of Seven-Up/RC or BGAC prior to Confirmation, or that otherwise arose before Confirmation, including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the Petition Date. e. The Plan does not provide for the liquidation of all or substantially all of the property of Seven-Up/RC or BGAC and its Confirmation is not likely to be followed by the liquidation of Reorganized Seven-Up/RC or the need for further financial reorganization. f. Any objection, not previously withdrawn or settled, to the adequacy of the information contained in the Disclosure Statement is overruled, and the information contained in the Disclosure Statement was adequate for the purpose -32- of soliciting ballots for Confirmation of the Plan. g. The substantive consolidation of BGAC with and into Seven- Up/RC is approved and authorized, and such substantive consolidation is in the best interests of the Estates. 3. The Bankruptcy Court shall have entered one or more orders (which may be the Confirmation Order), which have become Final Orders authorizing the assumption and assignment of all unexpired leases and executory contracts, including the Principal Licensing Agreements, to Reorganized Seven-Up/RC. 4. No request for revocation of the Confirmation Order under section 1144 of the Bankruptcy Code shall have been made, or, if made, shall remain pending. 5. The sale of the stock of Seven-Up/RC of PR, pursuant to the Stock Purchase Agreement or substantially similar agreement, shall have closed. 6. The documents implementing the GE Capital Post-Consummation Facility shall have been executed and delivered to Seven-Up/RC and the conditions to funding thereunder, except for those conditions relating to Consummation of the Plan and payments to be made in the Chapter 11 Cases, shall have been satisfied or waived. 7. Seven-Up/RC's amended and restated certificate of incorporation shall have been filed with the secretary of state of Delaware and shall be in effect. 8. Seven-Up/RC shall have adopted its amended and restated by-laws and such by-laws shall be in effect. 9. Seven-Up/RC shall have reserved (a) the Class 4 Proceeds for payment to holders of Allowed Class 4 Noteholders Claims and (b) the funds (if any) that must be distributed to the Disbursing Agent pursuant to the second paragraph of Section III.C.1. hereof. -33- 10. The Merger Agreement shall have been executed, delivered and filed with the secretary of state of Delaware. 11. The Registration Rights Agreement shall have been executed and delivered. C. WAIVER OF CONDITIONS TO CONFIRMATION AND CONSUMMATION The conditions set forth in Sections IX.A. and IX.B.2. through B.4. of the Plan may be waived by Seven-Up/RC without notice or a hearing; provided, however, that Seven-Up/RC shall provide the Committee and GE Capital with notice of any waiver under this Section IX.C. The conditions set forth in Sections IX.B.1. and IX.B.5. through B.11. may not be waived by Seven-Up/RC and BGAC. ARTICLE X MODIFICATIONS AND AMENDMENTS A. MODIFICATION OF THE PLAN The Debtors may alter, amend, or modify the Plan or any Exhibits thereto under section 1127(a) of the Bankruptcy Code at any time prior to Confirmation. The Debtors shall provide parties-in-interest with notice of such amendments or modifications as may be required by the Bankruptcy Rules or order of the Bankruptcy Court and shall, in any event, provide such notice to counsel for the Committee and GE Capital. After Confirmation and prior to substantial consummation of the Plan as defined in section 1101(2) of the Bankruptcy Code, Seven-Up/RC may, under section 1127(b) of the Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy any defect or omission or to reconcile any inconsistencies in the Plan, the disclosure statement approved with respect to the Plan, or the Confirmation Order, and such matters as may be necessary to carry out the purpose and effect of the Plan so long as such proceedings do not adversely affect the treatment of holders of Claims or holders of Interests under the Plan; provided, however, that prior notice of such proceedings shall be served in accordance with the Bankruptcy Rules or order of the Bankruptcy Court. -34- ARTICLE XI RETENTION OF JURISDICTION A. JURISDICTION OF BANKRUPTCY COURT The Bankruptcy Court shall have exclusive jurisdiction, under sections 105(a) and 1142 of the Bankruptcy Code, of all matters arising out of, and related to, these Chapter 11 Cases and the Plan including, among other things, the following matters: 1. To hear and determine any and all pending or future objections to the allowance of Claims relating to events or transactions occurring on or prior to Consummation; 2. To consider and rule on the compromise and settlement of any Claim against or cause of action on behalf of Seven-Up/RC or its Estate; 3. To hear and determine all pending or future controversies, suits, and disputes that may arise in connection with the interpretation of the Plan or any documents intended to implement the provisions of the Plan; 4. To hear and determine any and all applications for the allowance of Professional Fees; 5. To hear and determine, if necessary, or to estimate or liquidate any and all claims arising from the rejection of executory contracts or unexpired leases pursuant to the Plan or otherwise; 6. To consider any modifications of the Plan permitted by the Bankruptcy Code; 7. To correct any defect, cure any omission or reconcile any inconsistency in the Plan, including any exhibit thereto, or in any order of the Bankruptcy Court, including the Confirmation Order, as may be necessary to carry out the purposes and intent of the Plan and to implement and effectuate the Plan; -35- 8. To determine such other matters as may be provided for in the Confirmation order or other orders of the Bankruptcy Court as may be authorized under the provisions of the Bankruptcy Code or any other applicable law; 9. To enforce all orders, judgments, injunctions, and rulings entered in the Chapter 11 Cases; 10. To issue such orders as may be necessary or appropriate in aid of Confirmation and to facilitate Consummation of the Plan; 11. To enter an order closing these Chapter 11 Cases; 12. To recover all assets of Seven-Up/RC, or property of its Estate, wherever located; and 13. To hear and determine (a) all motions, applications, adversary proceedings, and contested and litigated matters pending on Consummation, and (b) all claims by or against Seven-Up/RC arising under the Bankruptcy Code or non-bankruptcy law, if made applicable by the Bankruptcy Code, including claims to avoid fraudulent transfers under section 548 of the Bankruptcy Code, whether such claims are commenced before or after Consummation. ARTICLE XII MISCELLANEOUS PROVISIONS A. SETOFF Seven-Up/RC may, but shall not be required to, set off against any Claim and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that Seven-Up/RC may have against the holder of such Claim; however, neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by Seven- Up/RC of any such claim that Seven-Up/RC may have against such holder. -36- B. WITHHOLDING AND REPORTING REQUIREMENTS In connection with the Plan and all instruments issued in connection therewith and distributions thereon, Seven-Up/RC shall comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. C. DISCHARGE OF DEBTORS All property distributed under the Plan shall be in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims of any nature whatsoever against the Debtors or any of their respective assets or properties, and, except as otherwise provided herein or in the Confirmation Order, upon Confirmation, Seven-Up/RC and BGAC shall each be deemed discharged and released under section 1141(d)(1)(A) of the Bankruptcy Code from any and all debts. The Confirmation Order shall be a judicial determination of discharge of all liabilities of Seven-Up/RC and BGAC, subject to the occurrence of Consummation. D. RELEASES Except as otherwise specifically provided for by this Plan, any Person accepting any distribution pursuant to this Plan shall be presumed conclusively to have released the (i) Debtors, (ii) Reorganized Seven-Up/RC, (iii) successors and assigns of the Debtors, (iv) Affiliates of the Debtors and such Persons, successors and assigns of such Affiliates, (v) present and former stockholders of the Debtors or an Affiliate of the Debtors and such stockholder's Affiliates, and (vi) directors, officers, agents, attorneys, accountants, advisors, financial advisors of the foregoing (collectively, the "Released Parties"), and the employees of any Released Party, and any Person claimed to be liable derivatively through any of the foregoing, from any cause of action based on, arising from, or in any way connected with the same subject matter as the Claim or Interest on which the distribution is received. The release described in the preceding sentence shall be enforceable as a matter of contract law against any Person that accepts any distribution pursuant to this Plan. Upon Consummation, the Debtors will conclusively be deemed to release (i) the following parties and their members and -37- representatives, including but not limited to all professionals (such as accountants, financial advisors and attorneys) retained by such parties: (a) Seven-Up/RC and BGAC; (b) GE Capital; (c) the Committee; (d) the Unofficial Noteholders Committee; (e) the Indenture Trustee; (f) the lenders under the DIP Facility; (g) all stockholders and their Affiliates of the Debtors or of an Affiliate of the Debtors; and (h) all directors and officers of the Debtors and their Affiliates holding such offices at any time during the period from and including March 15, 1996 through and including Confirmation from any and all liability based upon any act or omission related to past service with, for, or on behalf of the Debtors, including but not limited to the prosecution of this Chapter 11 Case, except for: 1. any indebtedness of any such person to the Debtors for money borrowed by such person; 2. any setoff or counterclaim the Debtors may have or assert against any such person, provided that the aggregate amount thereof shall not exceed the aggregate amount of any Claims held or asserted by such person against the Debtors; 3. the uncollected amount of any claim made by the Debtors (whether in a filed pleading, by letter or otherwise asserted in writing) prior to the Consummation against such person which claim has not been adjudicated to Final Order, settled, or compromised; or -38- 4. claims arising from the fraud, willful misconduct, or gross negligence of such persons. Notwithstanding the foregoing or anything in the Plan to the contrary, nothing herein shall be deemed to release Westinghouse from any claim (as defined in section 101(5) of the Bankruptcy Code) of Seven-Up/RC, BGAC, WB, or Seven-UP/RC of PR against Westinghouse arising under that certain Asset and Stock Purchase Agreement dated as of March 30, 1990. The releases embodied in this Plan are in addition to, and not in lieu of, any other release separately given, conditionally or unconditionally. E. INJUNCTION The satisfaction, release, and discharge pursuant to Section XII.C. hereof shall also act as an injunction against any Person commencing or continuing any action, employment of process, or act to collect, offset, or recover any Claim or cause of action satisfied, released, or discharged under this Plan to the fullest extent authorized or provided by the Bankruptcy Court, including, without limitation, to the extent provided for or authorized by sections 524 and 1141 thereof. F. EXCULPATION AND LIMITATION OF LIABILITY Neither Seven-Up/RC, Reorganized Seven-Up/RC, the Committee, the Unofficial Noteholders Committee, GE Capital nor any of their respective present or former members, officers, directors, employees, advisors, attorneys, or agents, shall have or incur any liability to any holder of a Claim or an Interest, or any other party in interest, or any of their respective agents, employees, representatives, financial advisors, attorneys, or affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, these Chapter 11 Cases, the pursuit of Confirmation of the Plan, the Consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct, and in all respects shall be entitled to rely reasonably upon the advice of counsel with respect to their duties and responsibilities under the Plan. Notwithstanding any other provision of this Plan, any holder of a Claim or an Interest, any other party in interest, and any -39- of their respective agents, employees, representatives, financial advisors, attorneys, or affiliates, and any successors or assigns of the foregoing, shall have no right of action against Seven-Up/RC, Reorganized Seven-Up/RC, the Committee, the Unofficial Noteholders Committee, GE Capital or any of their respective present or former members, officers, directors, employees, advisors, attorneys, or agents, for any act or omission in connection with, relating to, or arising out of, these Chapter 11 Cases, the pursuit of Confirmation of the Plan, the Consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct. G. BINDING EFFECT The Plan shall be binding upon and inure to the benefit of Seven-Up/RC, Reorganized Seven-Up/RC, the holders of Claims, the holders of Interests, and their respective successors and assigns. H. WITHDRAWAL OR NON-CONSUMMATION If the Debtors withdraw the Plan prior to Confirmation, or if Confirmation or Consummation does not occur, then the Plan, any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Class of Claims), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void. In such event, nothing contained herein, and no acts taken in preparation for Consummation of the Plan, shall be deemed to constitute a waiver or release of any Claims by or against Seven- Up/RC, BGAC or any other Person, to prejudice in any manner the rights of Seven- Up/RC, BGAC or any Person in any further proceedings involving Seven-Up/RC or BGAC, or to constitute an admission of any sort by Seven-Up/RC, BGAC or any other Person. I. MODIFICATION OF TREATMENT OF CLAIMS. The Debtors reserve the right to modify the treatment of any Allowed Claim in any manner adverse only to the holder of such Claim at any time after Consummation upon the consent of the creditor whose Allowed Claim is being adversely affected. -40- J. CONTINUED CONFIDENTIALITY OBLIGATIONS. Pursuant to the terms thereof, members of and advisors to any Committee, any other holder of a Claim or Interest and their respective predecessors and successors shall continue to be obligated and bound by the terms of any confidentiality agreement executed by them in connection with these Chapter 11 Cases or the Debtors, to the extent that such agreement, by its terms, may continue in effect after Confirmation. K. SECTION 1145 EXEMPTION. Pursuant to, in accordance with, and solely to the extent provided under, section 1145 of the Bankruptcy Code, the issuance of the New Common Stock under this Plan is exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, and any state or local law requiring registration or licensing of an issuer, underwriter, broker, or dealer in such New Common Stock and is deemed to be a public offering of the New Common Stock. L. SECTION 1146 EXEMPTION. To the extent permitted by section 1146(c) of the Bankruptcy Code, the issuance, transfer, or exchange of any security under the Plan, or the execution, delivery, or recording of an instrument of transfer pursuant to, in implementation of, or as contemplated by the Plan, or the revesting, transfer, or sale of any property of the Debtors, including but not limited to the stock of Seven-Up of PR and Porta Pack held by Seven-Up/RC and sold under the Stock Purchase Agreement, pursuant to, in implementation of, or as contemplated by the Plan shall not be taxed under any state or local law imposing a stamp tax, transfer tax, or similar tax or fee. Consistent with the foregoing, each recorder of deeds or similar official for any county, city, or governmental unit in which any instrument hereunder or of the type referred to above is to be recorded shall, pursuant to the Confirmation Order, be ordered and directed to accept such instrument, without requiring the payment of any documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax, or similar tax. -41- M. NOTICES. Any notice required or permitted to be provided to Seven-Up/RC and the Committee under the Plan shall be in writing and served by (a) certified mail, return receipt requested, (b) hand delivery, or (c) overnight delivery service, to be addressed as follows: KIRKLAND & ELLIS Attorneys for Seven-Up/RC Bottling Company of Southern California, Inc. and Beverage Group Acquisition Corporation Citicorp Center 153 East 53rd Street New York, New York 10022-4675 Attn: Luc A. Despins and -------------------------- Attorneys for the Committee [ADDRESS] Attn: --------------------- -42- N. GOVERNING LAW. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan. The laws of the State of Delaware shall govern corporate governance matters. Dated: New York, New York May 17, 1996 SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., BEVERAGE GROUP ACQUISITION CORPORATION Debtors-in-Possession By: /s/ Barton S. Brodkin ____________________________ Barton S. Brodkin Chief Executive Officer and President -43- EXHIBIT A TO DEBTORS' JOINT PLAN OF REORGANIZATION CERTIFICATE OF INCORPORATION AND BY-LAWS OF SEVEN-UP/RC (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT B TO DEBTORS' JOINT PLAN OF REORGANIZATION SCHEDULE OF REJECTED EXECUTORY CONTRACTS AND UNEXPIRED LEASES OF SEVEN-UP/RC (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT C TO DEBTORS' JOINT PLAN OF REORGANIZATION MANAGEMENT OPTION AGREEMENT (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT D TO DEBTORS' JOINT PLAN OF REORGANIZATION WB WARRANT AGREEMENT (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT E TO DEBTORS' JOINT PLAN OF REORGANIZATION CLASS 5 NOTE (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT F TO DEBTORS' JOINT PLAN OF REORGANIZATION SCHEDULE OF DIRECTORS OF SEVEN-UP/RC AFTER CONSUMMATION (Will be filed with the Bankruptcy Court on or before June 19, 1996) EX-10.2 6 DISCLOSURE STATEMENT Exhibit 10.2 THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT AND NO ONE MAY SOLICIT ACCEPTANCES OR REJECTIONS OF THE PLAN OF REORGANIZATION UNTIL THE DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION. IN ADDITION, THIS DISCLOSURE STATEMENT WILL BE REVISED TO REFLECT EVENTS THAT OCCUR SUBSEQUENT TO THE DATE HEREOF, BUT PRIOR TO THE BANKRUPTCY COURT'S APPROVAL OF THE DISCLOSURE STATEMENT ================================================================================ UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE - ------------------------- X : In re: : SEVEN-UP/RC BOTTLING : Chapter 11 COMPANY OF SOUTHERN : Reorganization Cases CALIFORNIA, INC. AND : Nos. 96-738 BEVERAGE GROUP : and 96-739 (HSB) ACQUISITION CORPORATION, : : Jointly Administered Debtors. : --------------------- : - ------------------------- X - --------------------------------------------------- DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION KIRKLAND & ELLIS YOUNG, CONAWAY, STARGATT & TAYLOR Citicorp Center Rodney Square North, 11th Fl. 153 East 53rd Street P.O. Box 391 New York, New York 10022-4675 Wilmington, Delaware 19899 (212) 446-4800 (302) 571-6600 Attorneys for Seven-Up/RC Bottling Company of Southern California, Inc. and Beverage Group Acquisition Corporation Dated: New York, New York May 17, 1996 EXECUTIVE SUMMARY Seven-Up/RC Bottling Company of Southern California ("Seven-Up/RC") and its parent Beverage Group Acquisition Corporation ("BGAC") filed petitions for relief under Chapter 11 of the United States Bankruptcy Code on May 13, 1996. Seven-Up/RC and BGAC filed their joint plan of reorganization (the "Plan") with the Bankruptcy Court, which sets forth how Claims against and Interests in Seven-Up/RC and BGAC will be treated following BGAC's merger and substantive consolidation with and into Seven-Up/RC and Seven-Up/RC's emergence from Chapter 11. This Disclosure Statement describes certain aspects of the Plan, Seven-UP/RC's business operations, significant events occurring in the Chapter 11 Cases and related matters. This Executive Summary is intended solely as a summary of the distribution provisions of the Plan and certain matters related to Seven-Up/RC's business. FOR A COMPLETE UNDERSTANDING OF THE PLAN, YOU SHOULD READ THE DISCLOSURE STATEMENT, THE PLAN, AND THE EXHIBITS AND SCHEDULES THERETO IN THEIR ENTIRETY. Capitalized terms used in this Executive Summary and not otherwise defined herein have the meanings ascribed to them in the Disclosure Statement and the Plan. A. SUMMARY OF THE PLAN The principal purpose of the Plan is to effectuate a deleveraging of the indebtedness of Seven-Up/RC whereby approximately $140 million owed by Seven-Up/RC to the holders of the Senior Secured Notes will be converted to equity. Specifically, in exchange for a discharge of Seven-Up/RC's debt obligations under the Senior Secured Notes, Seven-Up/RC will distribute to the holders of the Senior Secured Notes (i) the net cash proceeds received by Seven- Up/RC from the sale of its wholly-owned subsidiary, Seven-Up/RC Bottling Company of Puerto Rico, Inc. ("Seven-Up/RC of PR") and (ii) 98% of the stock of Reorganized Seven-Up/RC (subject to dilution if and when certain options or warrants granted under the Plan are exercised). The Plan is the product of months of negotiations with the unofficial committee of holders of the Senior Secured Notes (the "Noteholders Committee") and has the support of holders of Senior Secured Notes believed to represent more than two-thirds in principal amount of outstanding Senior Secured Notes. It is contemplated that, except for Class 5 GE Capital Term Loan Secured Claims, and the Claims of present and former holders of the Senior Secured Notes, no creditors of Seven-Up/RC will be affected or impaired by these Chapter 11 Cases. WB Bottling Corporation ("WB"), as the holder of the Class 6 Old Common Stock i Interest, will be impaired as it will receive only 2% of the New Common Stock and the WB Warrants. Under the Plan, Claims against and Interests in Seven-Up/RC and BGAC are divided into Classes. Certain unclassified Claims, including Administrative Claims and Priority Tax Claims, will receive payment in Cash either upon Consummation, as such Claims are liquidated, or in installments over time, as permitted by the Bankruptcy Code, or as agreed with the holders of such Claims. Debtor-in-possession financing will be repaid in full upon Consummation in accordance with the terms of the relevant financing documents and orders of the Bankruptcy Court relating thereto, unless otherwise expressly agreed by GE Capital. The lenders providing the debtor-in-possession financing are not required to extend such financing beyond Consummation. See Section VI.D. of the Disclosure Statement entitled "The Chapter 11 Cases -- Debtor-in-Possession Financing and Use of Cash Collateral" and Section II.D. "Components of Plan -- GE Capital Post-Consummation Facility." All other Claims and all Interests are classified into 6 classes and will receive the distributions and recoveries (if any) described in the table below. The table summarizes the classification and treatment of the principal pre-petition Claims and Interests under the Plan. The classification and treatment for all Classes are described in more detail in Section VII.B. "Summary of the Plan -- Certain Matters Regarding Classification and Treatment of Claims and Interests." Estimated Claim amounts in Classes 1 through 5 are based upon Seven-Up/RC's books and records. There can be no assurance that the estimated amounts below are correct, and actual Claim amounts may be significantly different from the estimates. This summary is qualified in its entirety by reference to the provisions of the Plan, a copy of which is attached as Exhibit "A" hereto. CLASS DESCRIPTION TREATMENT UNDER THE PLAN - ----------------- ------------------------ Class 1 - Other Priority Claims (if . NOT IMPAIRED any) ii Estimated Allowed Amount: $0 . A holder of an Allowed Class 1 Other Priority Claim will receive (i) cash equal to the amount of such Allowed Class 1 Other Priority Claim or (ii) such other treatment as to which Seven-Up/RC and such holder will have agreed upon in writing. . Estimated Recovery: 100%. iii Class 2 - Secured Claims . NOT IMPAIRED Estimated Allowed Amount: . A holder of an Allowed Class 2 $28 million as of Petition Date Secured Claim will be entitled to (a) receive the allowed amount of such Claim in full, and in cash, on the Distribution Date, (b) have its Allowed Class 2 Secured Claim Reinstated, (c) have its collateral, to the extent it secures the payment obligations of Seven-Up/RC or BGAC to such holder, returned to it or (d) receive such other treatment as Seven-Up/RC and such holder will have agreed in writing as announced at or prior to the Confirmation Hearing. Please refer to the particular subclass for specific treatment options. . Estimated Recovery: 100%. - ------------------------------------------------------------------------------ Class 3 - General Unsecured Claims . NOT IMPAIRED (which includes claims of trade creditors). - ------------------------------------------------------------------------------ Estimated Allowed Amount: . A holder of an Allowed General $22.1 million as of Petition Date Unsecured Claim will be paid in full in the ordinary course of Seven-Up/RC's business and, accordingly, will not be entitled to receive any distribution under the Plan. Such Claims will become obligations of Reorganized Seven- Up/RC, and be paid pursuant to the terms of applicable invoice or agreement (if any) relating to such Claims. In addition, pursuant to an order of the Bankruptcy Court, dated May 13, 1996, to the extent of post- petition shipments made to Seven- Up/RC on customary trade terms, such trade creditors may credit post-petition payments against their pre-petition claims before Confirmation of the Plan. . Estimated Recovery: 100%. iv Class 4 - Noteholders Claims . IMPAIRED Estimated Allowed Amount: . A holder of an Allowed Class 4 $140 million in principal plus Noteholders Claims will receive accrued and unpaid interest as of the its Pro Rata share of (i) Class 4 Petition Date. New Common Stock, and (ii) Class 4 Proceeds. . Estimated Recovery: 60%. Class 5 - GE Capital Term Loan . IMPAIRED Secured Claims . A holder of an Allowed Class 5 GE Estimated Allowed Amount: $594,000 as Capital Term Loan Secured Claim of the Petition Date will receive either Cash equal to the outstanding and unpaid principal amount of the GE Capital Term Loan or the Class 5 Note. . Estimated Recovery: 100% Class 6 - Old Common Stock Interest . IMPAIRED . WB Bottling Corporation, as the sole holder of the Allowed Class 6 Old Common Stock Interest, will receive 2% of the New Common Stock and the WB Warrants on account of such Class 6 Old Common Stock Interest. . Estimated Recovery: Undetermined. Seven-Up/RC will use the net proceeds from the Subsidiary Sale (as hereinafter defined) to fund the cash payments required to be made under the Plan to holders of Allowed Class 4 Noteholders Claims. After careful review of Seven-Up/RC's current business operations, estimated recoveries in a liquidation scenario, and prospects as an ongoing business, Seven-Up/RC has concluded that the recovery to creditors will be maximized by Seven-Up/RC's, continued operation as a going concern. Seven-Up/RC believes that its business and assets have significant value that would not be realized by liquidating Seven-Up/RC either in whole or in substantial part. v B. SUMMARY OF POST-CONFIRMATION OPERATIONS As a result of Confirmation and Consummation of the Plan, Seven-Up/RC will continue to operate as an independent business. Seven-Up/RC of PR, which historically has operated independently of its corporate parent Seven-Up/RC, will have been sold to a third-party pursuant to the Stock Purchase Agreement. Seven-Up/RC will retain no ownership interest in Seven-Up/RC of PR. In addition, prior to Consummation, BGAC will be substantively consolidated into, and merged (pursuant to the Merger Agreement, a copy of which is attached as Exhibit "G" to the Plan) with, Seven-Up/RC, with Seven-Up/RC as the surviving corporation. Attached hereto as Exhibit "C" is projected financial information which forecasts the financial performance of Reorganized Seven-Up/RC through December 31, 2000. These projections are based on the current business plan for Reorganized Seven-Up/RC. The ongoing post-Consummation operations of Reorganized Seven-Up/RC will be financed through a revolving line of credit with GE Capital. See Section II.D. "Components of the Plan -- GE Capital Post- Consummation Facility." DISCLAIMER ALL CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT, INCLUDING THE PRECEDING EXECUTIVE SUMMARY, ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN, OTHER EXHIBITS ANNEXED TO THE PLAN, AND THIS DISCLOSURE STATEMENT AS A WHOLE. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND RULE 3016(c) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS. THIS DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN, OR OTHERWISE PURCHASING, SELLING, OR TRANSFERRING SECURITIES OF SEVEN-UP/RC SHOULD NOT RELY UPON THIS DISCLOSURE STATEMENT FOR SUCH PURPOSES vi AND SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE NOR BE CONSTRUED AS AN ADMISSION OF ANY FACT NOR LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. THE DESCRIPTIONS SET FORTH HEREIN OF THE ACTIONS, CONCLUSIONS, OR RECOMMENDATIONS OF SEVEN-UP/RC AND BGAC OR ANY OTHER PARTY IN INTEREST HAVE BEEN SUBMITTED TO OR APPROVED BY SUCH PARTY, BUT NO SUCH PARTY MAKES ANY REPRESENTATION REGARDING SUCH DESCRIPTIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NONBANKRUPTCY PROCEEDING INVOLVING SEVEN-UP/RC, BGAC OR ANY OTHER PARTY, NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF CLAIMS AGAINST, OR INTERESTS IN, SEVEN- UP/RC OR BGAC. vii TABLE OF CONTENTS
I. INTRODUCTION............................................................. 1 A. Definitions......................................................... 2 B. Notice To Holders Of Claims And Interests........................... 2 C. Solicitation Package................................................ 3 D. Voting Procedures, Ballots, and Voting Deadline (For Holders Of Impaired Claims)......................................... 4 E. Confirmation Hearing and Deadline for Objections to Confirmation........................................................ 5 II. COMPONENTS OF THE PLAN.................................................. 6 A. Cash and Stock Distribution......................................... 6 B. Subsidiary Sale..................................................... 7 C. Management Option................................................... 8 D. GE Capital Post-Consummation Facility............................... 8 III. SUMMARY EXPLANATION OF THE PLAN........................................ 8 A. Consequences of the Plan on Holders of Senior Secured Notes............................................................... 8 B. Consequences of the Plan on Holders of Trade Claims.............................................................. 9 C. Consequences of the Plan on Holders of Old Common Stock........................................................ 9 IV. CERTAIN EVENTS LEADING TO AND SUBSEQUENT TO THE COMMENCEMENT OF THE CHAPTER 11 CASES; OPERATIONS OF SEVEN-UP/RC; BUSINESS AND OPERATIONS OF REORGANIZED SEVEN-UP/RC; OPERATIONS DURING THE CHAPTER 11 CASES......... 9 A. Certain Events Leading To The Commencement Of The Chapter 11 Cases.................................................... 9 B. Certain Events Subsequent To The Commencement Of The Chapter 11 Cases.................................................... 13 C. Operations of Seven-Up/RC........................................... 14 D. Business Strategy................................................... 15 E. Territories and Products............................................ 15 F. Bottling Rights; Franchise Agreements............................... 16 G. Manufacturing....................................................... 18 H. Pre-Petition Settlements With Lessors and Other Parties....................................................... 19 I. Direct Material Costs............................................... 20 J. Sales and Distribution.............................................. 21 K. Marketing........................................................... 22 L. Competition and Markets............................................. 22
i M. Government Regulation......................................... 23 N. Employees..................................................... 24 O. Properties.................................................... 24 P. Legal Proceedings............................................. 25 Q. Business and Operations of Reorganized Seven-Up/RC............ 25 V. OFFICERS AND DIRECTORS OF SEVEN-UP/RC.............................. 25 A. Post-Restructuring Executive Officers......................... 25 B. Current Directors and Executive Officers...................... 27 C. Officers and Directors of Reorganized Seven-Up/RC............. 27 D. Certain Relationships and Related Transactions with Officers and Directors........................................ 28 VI. THE CHAPTER 11 CASES.............................................. 28 A. Parties In Interest........................................... 28 1. Advisors To Seven-Up/RC................................... 28 2. The Unofficial Committee of Unsecured Creditors and Its Advisors.......................................... 29 B. Disposition Of Executory Contracts............................ 30 C. Significant Court Orders...................................... 30 D. Debtor-In-Possession Financing And Use Of Cash Collateral.................................................... 31 VII. SUMMARY OF THE PLAN.............................................. 33 A. Overall Structure Of The Plan................................. 33 B. Certain Matters Regarding Classification And Treatment of Claims and Interests....................................... 34 1. Unclassified Claims....................................... 34 2. Classes of Claims That Are Not Impaired................... 36 3. Impaired Classes of Claims (Entitled to Vote on the Plan)................................................. 38 4. Impaired Class of Interest (Entitled to Vote on the Plan, but Deemed to have Accepted Pursuant to Order of Bankruptcy Court)................................ 39 C. Treatment of Trade Creditors and Employees under the Plan.......................................................... 39 1. Provisions for Trade Creditors............................ 39 2. Provisions for Employees.................................. 39 D. Means for Execution of the Plan............................... 40 1. Cancellation of Senior Secured Notes...................... 40 2. Surrender of Senior Secured Notes......................... 41 3. Distribution of Cash...................................... 41 4. Transfer Ledgers.......................................... 42 5. Modification of Treatment of Claims....................... 42 6. Setoffs................................................... 42
ii 7. Unclaimed Distributions............................................ 42 8. No Interest........................................................ 43 E. Conditions to Confirmation and Consummation............................ 44 1. Conditions to Confirmation......................................... 44 2. Conditions to Consummation......................................... 44 3. Waiver of Conditions to Confirmation and Consummation.............. 47 F. Effects of Plan Confirmation........................................... 47 1. Discharge.......................................................... 47 2. Revesting.......................................................... 48 3. Retention of Jurisdiction.......................................... 48 4. Failure of Court to Exercise Jurisdiction.......................... 49 5. Post-Consummation Effect of Evidences of Claims or Interests....... 49 6. Term of Injunctions or Stays....................................... 49 7. Releases........................................................... 49 8. Injunction......................................................... 51 9. Exculpation and Limitation of Liability............................ 51 G. Miscellaneous Provisions............................................... 52 1. Executory Contracts and Unexpired Leases........................... 52 2. Indemnification Obligations........................................ 54 3. Subsidiary of Seven-Up/RC.......................................... 54 4. Proofs of Claim Not Mandatory...................................... 54 5. Modification of the Plan........................................... 55 6. Substantive Consolidation and Continued Corporate Existence of Seven-Up/RC................................. 55 7. Operations of Debtors Between Confirmation and Consummation........ 56 8. Exclusivity Period................................................. 56 9. Creditors' Committee............................................... 56 10. Effectuating Documents; Further Transactions....................... 56 11. Procedure for Making Distributions to Holders of Noteholders Claims................................................. 57 12. Fractional Shares.................................................. 57 13. Fractional Cents................................................... 57 14. De Minimis Distributions........................................... 58 15. Retained Litigation Claims......................................... 58 16. Preservation of Insurance.......................................... 58 17. Section 1146 Exemption............................................. 58 18. Binding Effect..................................................... 59 19. Withdrawal or Non-Consummation..................................... 59 VIII. CERTAIN FACTORS TO BE CONSIDERED..................................... 59 A. General Considerations............................................. 59 B. Certain Bankruptcy Considerations.................................. 59 C. Inherent Uncertainty of Financial Projections...................... 60 iii
D. Competition...................................................... 61 E. Relationship with Franchisors.................................... 61 F. Local Economies.................................................. 62 G. Government Regulation............................................ 62 H. Disruption of Operations......................................... 63 I. Considerations Relating to Acceptance of the Plan................ 63 1. Risk of Non-Confirmation of the Plan......................... 63 2. Risk that the Plan will not be Consummated................... 63 IX. RESALE OF SECURITIES RECEIVED UNDER PLAN............................. 64 X. VOTING REQUIREMENTS................................................... 66 A. Voting on the Plan................................................ 67 B. Surrender of Senior Secured Notes................................. 70 XI. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS............................. 71 A. Federal Income Tax Consequences to Seven-Up/RC.................... 71 1. Subsidiary Sale............................................... 71 2. Discharge of Indebtedness..................................... 72 3. Use of Tax Attributes......................................... 72 B. Federal Income Tax Consequences to Holders of Claims.............. 74 1. Holders of Unimpaired Claims.................................. 74 2. Holders of Senior Secured Notes............................... 74 XII.CONCLUSION............................................................ 77 A. HEARING ON AND OBJECTIONS TO CONFIRMATION......................... 77 1. Confirmation Hearing.......................................... 77 2. Date Set For Filing Objections to Confirmation................ 77 B. Recommendation.................................................... 77 EXHIBITS EXHIBIT A: DEBTORS' JOINT PLAN OF REORGANIZATION EXHIBIT B: GE CAPITAL COMMITMENT LETTER EXHIBIT C: PROJECTED FINANCIAL DATA EXHIBIT D: FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 EXHIBIT E: FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1995 EXHIBIT F: LIQUIDATION ANALYSIS
iv DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION I. INTRODUCTION Seven-Up/RC Bottling Company of Southern California ("Seven-Up/RC") and its parent Beverage Group Acquisition Corporation ("BGAC") hereby transmit this disclosure statement (the "Disclosure Statement") pursuant to section 1125 of the United States Bankruptcy Code (the "Bankruptcy Code"), for use in the solicitation of votes on their joint reorganization plan, dated May 17, 1996 (the "Plan"). A copy of the Plan is attached to this Disclosure Statement as Exhibit "A" hereto. This Disclosure Statement sets forth certain information regarding Seven-Up/RC's and BGAC's pre-petition history, significant events that have occurred during Seven-Up/RC's and BGAC's Chapter 11 Cases, and the anticipated organization and operations of Seven-Up/RC after Consummation of the Plan and Seven-Up/RC's emergence from Chapter 11. This Disclosure Statement also describes the Plan, alternatives to the Plan, effects of Confirmation of the Plan, certain risk factors associated with the equity securities to be issued to certain of Seven-Up/RC's creditors under the Plan, and the manner in which distributions will be made under the Plan. In addition, this Disclosure Statement discusses the confirmation process and the voting procedures that holders of Claims in impaired Classes must follow for their votes to be counted. FOR A DESCRIPTION OF THE PLAN AND VARIOUS RISK AND OTHER FACTORS PERTAINING TO THE PLAN AS IT RELATES TO HOLDERS OF CLAIMS AGAINST SEVEN-UP/RC AND BGAC, PLEASE SEE SECTION VII "SUMMARY OF THE PLAN" AND SECTION VIII "CERTAIN FACTORS TO BE CONSIDERED." THIS DISCLOSURE STATEMENT SUMMARIZES CERTAIN PROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN SEVEN-UP/RC'S AND BGAC'S CHAPTER 11 CASES, AND FINANCIAL INFORMATION. ALTHOUGH SEVEN-UP/RC AND BGAC BELIEVE THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY SEVEN-UP/RC'S MANAGEMENT, EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED. SEVEN-UP/RC IS UNABLE TO WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT ANY INACCURACY OR OMISSION. NOTHING CONTAINED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, BE ADMISSIBLE IN ANY NONBANKRUPTCY PROCEEDING INVOLVING SEVEN-UP/RC AND BGAC OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF CLAIMS OR INTERESTS. YOU SHOULD CONSULT YOUR PERSONAL COUNSEL OR TAX ADVISOR ON ANY QUESTIONS OR CONCERNS RESPECTING TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF CLAIMS OR INTERESTS. A. DEFINITIONS Except as otherwise provided herein, capitalized terms not otherwise defined in this Disclosure Statement have the meanings ascribed to them in the Plan. B. NOTICE TO HOLDERS OF CLAIMS AND INTERESTS This Disclosure Statement is being transmitted to (a) holders of Impaired Claims against and Interests in Seven-Up/RC who will receive distributions of property under the Plan and thus are entitled to vote to accept or reject the Plan, and (b) holders of Claims against Seven-Up/RC that are not Impaired, who are conclusively presumed to have accepted the Plan and hence are not entitled to vote thereon. The primary purpose of this Disclosure Statement is to provide the holders of the Senior Secured Notes and the GE Capital Term Loan Secured Claims with adequate information so that they can make a reasonably informed decision with respect to the Plan prior to exercising their right to vote to accept or to reject the Plan. Because the boards of directors of BGAC, Seven-Up/RC and WB Bottling Corporation ("WB") are identical and BGAC and Seven- Up/RC are joint proponents of the Plan, the Debtors are requesting that the Bankruptcy Court deem that WB has voted its Class 6 Old Common Stock Interest to accept the Plan. On June __, 1996, the Bankruptcy Court approved this Disclosure Statement as containing information of a kind and in sufficient detail adequate to enable the holders of Claims against Seven-Up/RC to make an informed judgment about the Plan. THE BANKRUPTCY COURT'S APPROVAL OF THIS DISCLOSURE STATEMENT CONSTITUTES NEITHER A GUARANTY OF THE ACCURACY OR COMPLETENESS OF 2 THE INFORMATION CONTAINED HEREIN NOR AN ENDORSEMENT OF THE PLAN BY THE BANKRUPTCY COURT. WHEN CONFIRMED BY THE BANKRUPTCY COURT, THE PLAN WILL BIND ALL HOLDERS OF CLAIMS AGAINST AND INTERESTS IN SEVEN-UP/RC AND BGAC, WHETHER OR NOT THEY ARE ENTITLED TO VOTE OR DID VOTE ON THE PLAN AND WHETHER OR NOT THEY RECEIVE OR RETAIN ANY DISTRIBUTIONS OR PROPERTY UNDER THE PLAN. THUS, YOU ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT CAREFULLY. IN PARTICULAR, ALL HOLDERS OF IMPAIRED CLAIMS AGAINST SEVEN-UP/RC AND BGAC ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND ITS EXHIBITS CAREFULLY AND IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. This Disclosure Statement contains important information about the Plan, Seven-Up/RC's businesses and operations, considerations pertinent to acceptance or rejection of the Plan, and developments concerning the Chapter 11 Cases. THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES ON THE PLAN. No solicitation of votes may be made until distribution of this Disclosure Statement, and no person has been authorized to distribute any information concerning Seven-Up/RC and BGAC other than the information contained herein. CERTAIN OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS BY ITS NATURE FORWARD-LOOKING AND CONTAINS ESTIMATES, ASSUMPTIONS, AND PROJECTIONS THAT MAY BE MATERIALLY DIFFERENT FROM ACTUAL FUTURE RESULTS. Except with respect to the projected financial information set forth in Exhibit "C" hereto (the "Projections") and except as otherwise specifically and expressly stated herein, this Disclosure Statement does not reflect any events that may occur subsequent to the date hereof. Such events may have a material impact on the information contained in this Disclosure Statement. Seven-Up/RC and Reorganized Seven-Up/RC do not intend to update the Projections. Thus, the Projections will not reflect the impact of any subsequent events not already accounted for in the assumptions underlying the Projections. Further, Seven-Up/RC does not anticipate that any amendments or supplements to this Disclosure Statement will be distributed to reflect such occurrences. Accordingly, the delivery of this Disclosure Statement shall not under any circumstance imply that the information herein is correct or complete as of any time subsequent to the date hereof. 3 EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED BY A CERTIFIED PUBLIC ACCOUNTANT AND HAS NOT BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. C. SOLICITATION PACKAGE Accompanying this Disclosure Statement are copies of, among other things (i) the Plan (Exhibit "A" hereto); (ii) the notice of, among other things, the time for submitting Ballots to accept or reject the Plan, the date, time and place of the Confirmation Hearing, and the time for filing objections to the Confirmation of the Plan (the "Confirmation Hearing Notice"); and (iii) for the holders of the Senior Secured Notes and the GE Capital Term Loan, who comprise the only Classes that are impaired and entitled to receive a distribution under the Plan, and thus are the only creditors permitted to vote on the Plan, one or more Ballots (and return envelopes) to be used in voting to accept or to reject the Plan. If you did not receive a Ballot in your package and believe that you should have or wish to receive additional copies of this Disclosure Statement at your own expense, please contact the Voting Agent at: Hill and Knowlton, Inc. 466 Lexington Avenue New York, New York 10017 (212) 885-0555 D. VOTING PROCEDURES, BALLOTS, AND VOTING DEADLINE (FOR HOLDERS OF IMPAIRED CLAIMS) After carefully reviewing the Plan, this Disclosure Statement, and the detailed instructions accompanying your Ballot, please indicate your acceptance or rejection of the Plan by checking the appropriate box on the enclosed Ballot. Please complete and sign your original Ballot (copies will not be accepted) and return it in the envelope provided so that it is RECEIVED by the Voting Deadline (as defined below). Please note that if you hold the debt securities evidencing your Claim through a broker or other financial intermediary, you may have to return your ballot to such broker or financial intermediary sufficiently in advance of the Voting Deadline so as to permit such broker or financial intermediary to fill out and return a master ballot by the Voting Deadline. HOLDERS OF SECURITIES SHOULD REFER TO "SPECIAL NOTE FOR 4 HOLDERS OF SECURITIES" IN SECTION X "VOTING REQUIREMENTS" FOR FURTHER INFORMATION REGARDING VOTING PROCEDURES. IN ORDER FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE PROPERLY COMPLETED AS SET FORTH ABOVE AND IN ACCORDANCE WITH THE VOTING INSTRUCTIONS ON THE BALLOT AND RECEIVED NO LATER THAN JULY __, 1996 AT 4:30 P.M. EASTERN DAYLIGHT TIME (THE "VOTING DEADLINE") BY HILL AND KNOWLTON, INC. (THE "VOTING AGENT"). DO NOT RETURN DEBT INSTRUMENTS WITH YOUR BALLOT. If you have any questions about the procedure for voting your Claim or with respect to the packet of materials that you have received, please contact the Voting Agent at the following address and phone number. Hill and Knowlton, Inc. 466 Lexington Avenue New York, New York 10017 (212) 885-0555 If you wish to obtain, at your own expense, unless otherwise specifically required by Federal Rule of Bankruptcy Procedure 3017(d), an additional copy of the Plan, this Disclosure Statement, or any exhibits to such documents, please contact the Voting Agent. E. CONFIRMATION HEARING AND DEADLINE FOR OBJECTIONS TO CONFIRMATION Pursuant to section 1128 of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 3017(c), the Bankruptcy Court has scheduled a hearing on Confirmation of the Plan (the "Confirmation Hearing") to commence on July ___, 1996 at [____] a.m. Eastern Daylight Time, or as soon thereafter as counsel may be heard, before the Honorable Helen S. Balick, United States Bankruptcy Judge, at Marine Midland Plaza, 824 Market Street, 6th Floor, Wilmington, Delaware 19801. The Bankruptcy Court has directed that objections, if any, to Confirmation of the Plan must be filed with the clerk of the Bankruptcy Court and served so that they are RECEIVED on or before July ___, 1996, at 4:30 p.m. Eastern Daylight Time, by: Counsel for Seven-Up/RC Kirkland & Ellis 5 Citicorp Center 153 East 53rd Street New York, New York 10022-4675 Attn: Luc A. Despins - and - Young, Conaway, Stargatt & Taylor Rodney Square North, 11th Floor P.O. Box 391 Wilmington, Delaware 19899 Attn: Laura Davis Jones United States Trustee The Office of the United States Trustee 601 Walnut Street Curtis Center, Suite 950-W Philadelphia, Pennsylvania 19106 Attn: John D. McLaughlin, Jr. Co-Counsel for the Creditors' Committee [INSERT WHEN KNOWN] - and - [INSERT NAME OF DELAWARE LOCAL COUNSEL] Counsel for GE Capital Murphy, Weir & Butler 2049 Century Park East, 21st Floor Los Angeles, California 90067 Attn: Gregory A. Bray The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the adjournment date made at the Confirmation Hearing or at any subsequent adjourned Confirmation Hearing. 6 THE PLAN HAS THE SUPPORT OF (i) [THE CREDITORS' COMMITTEE], (ii) GE CAPITAL, (iii) THE NOTEHOLDERS COMMITTEE, (iv) SEVEN-UP/RC, AND (v) BGAC. IN THE VIEW OF SEVEN-UP/RC AND BGAC, THE TREATMENT OF HOLDERS OF CLAIMS UNDER THE PLAN CONTEMPLATES GREATER RECOVERY FOR SUCH HOLDERS THAN WOULD BE AVAILABLE IN LIQUIDATION. ACCORDINGLY, SEVEN-UP/RC AND BGAC BELIEVE THAT THE PLAN IS IN THE BEST INTERESTS OF HOLDERS OF CLAIMS AND, THUS, RECOMMENDS THAT ALL HOLDERS OF CLAIMS IN IMPAIRED CLASSES VOTE TO ACCEPT THE PLAN. II. COMPONENTS OF THE PLAN The principal purpose of the Plan is to effectuate a substantial deleveraging of the indebtedness of Seven-Up/RC. In particular, approximately $140 million owed by Seven-Up/RC to the holders of the Senior Secured Notes will be exchanged for (i) the net cash proceeds received by Seven-Up/RC from the sale of its wholly-owned subsidiary, Seven-Up/RC Bottling Company of Puerto Rico, Inc. ("Seven-Up/RC of PR") and (ii) 98% of the stock of Reorganized Seven-Up/RC (subject to dilution if and when the Management Option or WB Warrants are exercised). It is contemplated that, except for (i) Class 4 Noteholders Claims, and (ii) Class 5 GE Capital Term Loan Secured Claims, no creditors of Seven- Up/RC will be affected or impaired by these Chapter 11 Cases. A. CASH AND STOCK DISTRIBUTION On the Distribution Date, the holders of 11.5% Senior Secured Notes due 1999 of Seven-Up/RC ($140 million aggregate principal amount outstanding as of the date hereof), secured by 66.5% of the issued and outstanding capital stock of Seven-Up/RC of PR and guaranteed by BGAC (the "Senior Secured Notes") will receive their Pro Rata share of the Class 4 Proceeds available to Seven- Up/RC as a result of the Stock Purchase Agreement and the Consulting Agreement and 98% of the New Common Stock of Reorganized Seven-Up/RC (subject to dilution if and when the Management Option and WB Warrants are exercised). On the Distribution Date, Seven-Up/RC will pay the reasonable and actual costs and expenses of the ad hoc unofficial committee of holders of the Senior Secured Notes (the "Noteholders Committee"), including without limitation the fees of counsel for the Noteholders Committee. For purposes of the Plan, Class 4 Proceeds means all proceeds realized by Seven-Up/RC from the Stock Purchase Agreement and the Consulting Agreement minus 7 (a) federal, state and Puerto Rico gains, income, transfer, repatriation, or similar taxes (estimated to be approximately $116,000), (b) the commissions, legal fees, accounting fees, retention program payments to employees of Seven-Up/RC of PR and all other costs applicable to the sale transaction (estimated to be approximately $1.923 million), (c) outstanding principal, accrued but unpaid interest, and any other fees or costs associated with the payment of all amounts owed by Seven-Up/RC of PR to GE Capital of PR (estimated to be approximately $7.0 million), and (d) $10 million, which sum shall be applied to reduce the outstanding pre-petition and post-petition obligations owed by Seven-Up/RC to GE Capital in the manner provided, and pursuant to, the DIP Facility. Based on the Stock Purchase Agreement with Center Street, the gross proceeds from the sale of the stock of Seven-Up/RC of PR are estimated to be approximately $74 million. Class 4 Proceeds are thus estimated to be approximately $55 million. B. SUBSIDIARY SALE To provide the cash to fund the distributions to holders of Senior Secured Notes under the Plan, Seven-Up/RC will sell the capital stock of Seven- Up/RC of PR, together with certain other assets and consideration, including a consulting and non-competition agreement, as provided for in the Stock Purchase Agreement, using a competitive bidding procedure (the "Definitions Subsidiary Sale"). Seven-Up/RC has entered into the Stock Purchase Agreement with Seven- Up Acquisition Corporation, an affiliate of Center Street Capital Partners, L.P. ("Center Street"). Certain members of Seven-Up/RC of PR's management are investors with Center Street with respect to the Subsidiary Sale. The sale of the stock of Seven-Up/RC of PR is expressly subject to higher and better offers and approval by the Bankruptcy Court. 8 C. MANAGEMENT OPTION Upon Consummation of the Plan, certain members of management of Seven- Up/RC will be granted the right, subject to the conditions contained in the option agreement (the "Management Option"), to purchase up to 6% of New Common Stock at a purchase price per share equal to the Exercise Price (as defined in the Management Option). D. GE CAPITAL POST-CONSUMMATION FACILITY Upon Consummation of the Plan, Reorganized Seven-Up/RC will enter into a credit facility with GE Capital to provide post-consummation working capital (the "Definitions GE Capital Post-Consummation Facility"). The GE Capital Post- Consummation Facility will provide Seven-Up/RC with $35 million in a revolving financing facility for its general corporate purposes, including working capital and capital expenditures. Borrowings under the GE Capital Post-Consummation Facility will, as they are under the current working capital facility, be secured by substantially all of Seven-Up/RC's assets. Seven-Up/RC has received a commitment letter, dated June __, 1996 (the "GE Definitions Capital Commitment Letter") from General Electric Capital Corporation ("Definitions GE Capital"), pursuant to which GE Capital has agreed, subject to the fulfillment of certain conditions, to enter into the GE Capital Post-Consummation Facility. The GE Capital Commitment Letter is attached as Exhibit "B" hereto. III. SUMMARY EXPLANATION OF THE PLAN A. CONSEQUENCES OF THE PLAN ON HOLDERS OF SENIOR SECURED NOTES A holder of Senior Secured Notes will receive its Pro Rata share of Class 4 Proceeds (estimated to be approximately $55 million if the contemplated Subsidiary Sale is consummated) and Class 4 New Common Stock (the book value of which is estimated to be approximately $29.4 million, as of Consummation). See Section VII.B.3. "Summary of Plan -- Certain Matters Regarding Classification and Treatment of Claims and Interests -- Impaired Classes of Claims (Entitled to Vote on the Plan)." Cash distributions to holders of Senior Secured Notes will be made upon or as soon as practical after Consummation but in no event later than 10 days after Consummation, as provided in the Plan. 9 B. CONSEQUENCES OF THE PLAN ON HOLDERS OF TRADE CLAIMS Holders of trade claims will retain all legal, equitable, and contractual rights. Trade creditors will not be required to file proofs of claim or, absent further order of the court, take other action in the bankruptcy cases. On May 13, 1996, the Bankruptcy Court entered an order governing the satisfaction of pre-petition trade claims prior to confirmation of a plan of reorganization (the "Trade Claim Order"). The Trade Claim Order allows trade creditors who receive post-petition payment on account of post-petition shipments or post-petition services rendered to Seven-Up/RC to credit such payment against their pre-petition claims, provided such creditors continue to provide Seven-Up/RC with customary trade terms and do not seek to reclaim their goods. Pursuant to the Plan, Seven-Up/RC's trade creditors will be paid in full in the ordinary course of Seven-Up/RC's business. Seven-Up/RC of PR will not file a bankruptcy petition and the trade creditors of Seven-Up/RC of PR will not be affected by Seven-Up/RC's Chapter 11 case. C. CONSEQUENCES OF THE PLAN ON HOLDERS OF OLD COMMON STOCK Upon Consummation, WB, as the holder of the Class 6 Old Common Stock Interest will receive 2% of the New Common Stock and the WB Warrants representing the right to acquire up to 5% of the New Common Stock, on account of such Old Common Stock Interest. IV. CERTAIN EVENTS LEADING TO AND SUBSEQUENT TO THE COMMENCEMENT OF THE CHAPTER 11 CASES; OPERATIONS OF SEVEN-UP/RC; BUSINESS AND OPERATIONS OF REORGANIZED SEVEN-UP/RC; OPERATIONS DURING THE CHAPTER 11 CASES A. CERTAIN EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES Liquidity Problems. Seven-Up/RC experienced severe liquidity problems in 1995, due primarily to a recessionary Southern California economy, reduced consumption of carbonated soft drinks, increased raw material costs, increased promotional activity by Seven-Up/RC's competitors, and reduced sales of hot-fill beverage products. As a result, Seven-Up/RC has been unable to meet its obligations to the holders of the Senior Secured Notes. On August 1, 1995, Seven-Up/RC suspended making semi-annual interest payments on its $140,000,000 aggregate principal amount of Senior Secured 10 Notes. During the second quarter of 1995, Seven-Up/RC was in default of certain financial covenants under its revolving credit facility with GE Capital. GE Capital subsequently waived its right to exercise certain remedies as a result of such defaults. In August 1995, Seven-Up/RC retained Whitman Heffernan Rhein & Co., Inc. ("Whitman Heffernan"), as financial advisor, and Kirkland & Ellis, as restructuring counsel, to advise it with respect to restructuring matters. Formation of Noteholders Committee. After the August 1, 1995 suspension of interest payments under the Senior Secured Notes, the Noteholders Committee was formed to negotiate the terms and conditions of a restructuring of Seven-Up/RC that would primarily affect the Senior Secured Notes. The Noteholders Committee represented holders of in excess of two-thirds of the principal amount of Senior Secured Notes. The Noteholders Committee retained the law firm of Wachtell, Lipton, Rosen & Katz ("Definitions Wachtell, Lipton") as legal advisors and Houlihan Lokey Howard & Zukin ("Houlihan Lokey") as financial advisors. Seven-Up/RC agreed to pay at the request of the Noteholders Committee, and has in fact paid to date, the reasonable fees and expenses of such firms incurred in connection with the representation of the Noteholders Committee. Involuntary Chapter 11 Petition. On September 14, 1995, four individuals who held in aggregate less than 2% of the outstanding principal amount of the Senior Secured Notes filed an involuntary Chapter 11 petition (the "Involuntary Petition") against Seven-Up/RC in the Bankruptcy Court for the District of Delaware. This involuntary petition was dismissed on October 2, 1995, with the consent of the petitioning creditors, pursuant to a settlement agreement dated September 22, 1995. Pursuant to the terms of the settlement, the petitioning creditors agreed not to file a bankruptcy petition for a period of sixty days after executing the settlement agreement in return for Seven-Up/RC agreeing, among other things, to request that two of the petitioners be added to the Noteholders Committee, with one acting solely in an ex officio capacity. None of the petitioning creditors has been added to the Noteholders Committee. Negotiations with Noteholders Committee. Subsequent to the dismissal of the Involuntary Petition and during the fall of 1995, Seven-Up/RC and its legal and financial advisors met with the legal and financial advisors to the Noteholders Committee to discuss Seven-Up/RC's restructuring. Among other things, Seven-Up/RC 11 representatives presented a business plan to Houlihan Lokey and Wachtell, Lipton. Restructuring Proposal. On November 9, 1995, Seven-Up/RC announced that it and the Noteholders Committee had reached agreement on the general terms of a restructuring of the Senior Secured Notes. The terms of the restructuring proposal -- which are reflected in the Plan -- provide that the stock of Seven-Up/RC of PR, among other things, would be sold and that the holders of Senior Secured Notes would receive certain cash proceeds obtained from the sale of the stock of Seven-Up/RC of PR and Porta Pack (the "Subsidiary Sale") and 98% of Reorganized Seven-Up/RC's equity (subject to dilution if and when the Management Option and WB Warrants are exercised) in exchange for their notes. Certain members of Seven-Up/RC's management would receive an option to purchase 6.0% of the equity of Reorganized Seven-Up/RC at the Initial Option Price. In addition, WB would receive (i) 2% of the equity of Reorganized Seven-Up/RC and (ii) warrants to purchase 5% of the equity of Reorganized Seven-Up/RC at the Exercise Price. The holders of the Senior Secured Notes will receive the net proceeds from the sale of Seven-Up/RC of PR stock after payment of the following items from the gross sales price: (a) federal, state and Puerto Rico gains, income, transfer, repatriation, or similar taxes (estimated to be approximately $116,000), (b) the commissions, legal fees, accounting fees, retention program payments to employees of Seven-Up/RC of PR and all other costs applicable to the sale transaction (estimated to be approximately $1.923 million), (c) outstanding principal, accrued but unpaid interest, and any other fees or costs associated with the payment of all amounts owed by Seven-Up/RC of PR to GE Capital of PR (estimated to be approximately $7.0 million), and (d) $10 million, which sum shall be applied to reduce the outstanding pre-petition and post-petition 12 obligations owed by Seven-Up/RC to GE Capital in the manner provided, and pursuant to, the DIP Facility. Accordingly, if the current transaction with Center Street is consummated, the estimated Class 4 Proceeds would be approximately $55 million. Pursuant to the restructuring proposal, Seven-Up/RC's trade suppliers would be paid in full in the ordinary course of Seven-Up/RC's business. In addition, effective as of Consummation, Reorganized Seven-Up/RC would enter into a $35 million credit facility with GE Capital, or another appropriate and qualified lender, the proceeds of which will be used for general corporate purposes, including working capital and capital expenditures. Seven- Up/RC estimates initial borrowings to be approximately $24.4 million, based on the Projections. The restructuring proposal contemplated that apart from this credit facility, certain capitalized leases and a term loan from GE Capital (in addition to the $35 million revolving exit facility described above) of approximately $5.7 million, Seven-Up/RC would have no debt outstanding after the restructuring was completed. Finally, the restructuring proposal provided that broad releases would be granted to Seven-Up/RC, its affiliates, directors, and officers, among others. See Section VII.F.7. "Summary of the Plan -- Effects of Plan Confirmation -- Releases." Sale of the Stock of Seven-Up/RC of PR. Following the agreement-in- principle on the terms of a restructuring of the Senior Secured Notes, Seven- Up/RC retained Whitman Heffernan and Houlihan, Lokey (together with Whitman Heffernan, the "Brokers") to handle the sale of Seven-Up/RC of PR (the "Subsidiary Sale"). Before the Brokers began contacting parties with respect to the Subsidiary Sale, Seven-Up/RC received an unsolicited offer from Center Street Capital Partners, L.P. in December of 1995. Thereafter, Center Street submitted an amended offer on January 5, 1996 for $75 million, which included a $10 million cash payment in exchange for Seven-Up/RC's entering into a non- competition and consulting agreement with Center Street and providing management and operations consulting services to Center Street for a period of five years from closing (the "Consulting Fee"). On January 17, 1996, Seven-Up/RC and Center Street signed a letter of intent, pursuant to which the Subsidiary Sale would be consummated for $74.2 million, including the Consulting Fee and the assumption of certain liabilities of Seven-Up/RC of PR (the "Letter of Intent"). 13 Certain members of management of Seven-Up/RC of PR are investors with Center Street with respect to the Subsidiary Sale. Following the execution of the Letter of Intent, pursuant to their retention, the Brokers contacted approximately seventy-eight strategic or financial parties concerning the Subsidiary Sale. The contacted parties included beverage bottlers in addition to financial buyers with an interest in the bottling industry. In addition, at the time that the restructuring proposal was accepted, Seven-Up/RC had issued a press release in which it announced that Seven-Up/RC and the Noteholders Committee had reached agreement on the principal economic terms of the restructuring and that one of the key components of the restructuring proposal was the Subsidiary Sale. Seven-Up/RC, with the assistance of the Brokers, prepared a package of confidential information (the "Confidential Memorandum") in January 1996 which was distributed by the Brokers to approximately thirty-five interested parties that had executed and returned confidentiality agreements. Each of the parties that received the Confidential Memorandum was asked to submit an indication of interest (with an approximate purchase price) for the Subsidiary Sale. Seven- Up/RC received eight indications of interest in mid-February that were sufficiently significant as to justify further discussions. After receiving the indications of interest, the Center Street proposal reflected in the Letter of Intent remained, in the opinion of Seven- Up/RC and the Brokers, the most attractive proposal and the most likely proposal to proceed to a closing. Therefore, while Center Street conducted its due diligence investigation, Seven-Up/RC and Center Street negotiated, over a fifteen-week period, the terms of the Stock Purchase Agreement. During the course of the negotiations, Seven-Up/RC and Center Street agreed to decrease Center Street's purchase price to approximately $74 million. On May 3, 1996, Seven-Up/RC and Center Street executed the Stock Purchase Agreement. On May 6, 1996, Seven-Up/RC issued a press release announcing that it had entered into the Stock Purchase Agreement with Center Street and stated expressly that the offer contained therein was subject to approval by the Bankruptcy Court and higher and better offers. In addition to Center Street, Seven-Up/RC and the Brokers permitted two additional parties to conduct due diligence. All parties that submitted an indication of interest have been given notice of the proposed 14 Subsidiary Sale and of the hearing scheduled by the Bankruptcy Court for June 19, 1996, to approve such sale to Center Street, and will have an opportunity to submit higher and better offers. Any increase in the consideration received by Seven-Up/RC as a result of this competitive bidding process will inure to the benefit of the holders of the Senior Secured Notes because it will increase the amount of Class 4 Proceeds. On May 13, 1996, the Bankruptcy Court entered an order approving, among other things, certain provisions of the Stock Purchase Agreement, including a topping fee of $1,750,000, and a minimum overbid requirement of $2 million. On May 14, 1996, Center Street deposited the sum of $2 million with an escrow agent, in accordance with the terms of the Stock Purchase Agreement. B. CERTAIN EVENTS SUBSEQUENT TO THE COMMENCEMENT OF THE CHAPTER 11 CASES [TO BE FINALIZED ON OR BEFORE JUNE 19, 1996] C. OPERATIONS OF SEVEN-UP/RC The following description of Seven-Up/RC excludes the business, operations or financial results of Seven-Up/RC of PR, Seven-Up/RC's wholly-owned subsidiary. As a result of the Subsidiary Sale, Reorganized Seven-Up/RC will not own Seven-Up/RC of PR. Accordingly, the business, operations, financial results and future prospects of Seven-Up/RC of PR are not material to the holders of the Senior Secured Notes who will receive Cash and New Common Stock under the Plan. Seven-Up/RC is among the largest beverage distributors in the United States, selling over 1 1/2 billion eight-ounce servings in fiscal year 1995, and is one of the largest bottlers of Seven-Up in the United States. Seven-Up/RC manufactures and distributes a broad variety of beverage products in Southern California, Central California, and portions of Nevada and New Mexico. Within its territories, Seven-Up/RC has the exclusive right to manufacture, distribute, or both, the following franchised trademark brands: Seven-Up (lemon-lime soda), Royal Crown (cola), A&W (root beer and cream soda), Sunkist (orange and citrus soda), Hawaiian Punch (tropical punch), Schweppes (tonics and mixers), Evian (imported still water), Perrier (imported mineral water), Welch's (grape, strawberry, and pineapple beverages), Mystic (New Age), and Yoo-Hoo 15 (chocolate drink), among others. Seven-Up/RC's net sales in fiscal year 1995 were $314,469,000. Seven-Up/RC distributes its beverage products to its customers via a network of distribution facilities located within major population areas. Seven-Up/RC distributes over 95% of its products directly to retail outlets through its direct-store-door ("Definitions DSD") distribution system, whereby Seven-Up/RC delivers finished beverage product directly to its customers by truck. For the remaining 5%, customers pick up beverage products directly from Seven-Up/RC's distribution warehouses. With its DSD distribution system and its network of distribution warehouses, Seven-Up/RC provides efficient, high-quality service to more than 35,000 retail outlets in the United States. These retail outlets serve over 30 million consumers and include supermarkets, warehouse clubs, convenience stores, and other retail establishments. Seven-Up/RC is a wholly-owned subsidiary of BGAC, a Delaware corporation. BGAC has no independent operations and is itself a wholly-owned subsidiary of WB, a privately-held Delaware corporation. The stockholders of WB are: (i) Westinghouse; (ii) Citicorp Venture Capital, Ltd.; (iii) Commonwealth Investors, L.P.; (iv) the Equitable Life Assurance Society of the United States; and (v) certain directors of WB, BGAC and Seven-Up/RC. WB acquired the Beverage Group of Westinghouse in September 1990 for an aggregate consideration of approximately $224,000,000 (the "Definitions Acquisition"). In August 1992, Seven-Up/RC and WB completed a series of transactions whereby Seven-Up/RC issued the Senior Secured Notes, with interest thereon payable semi-annually. The Senior Secured Notes are unconditionally guaranteed by BGAC and are secured by a lien on, and security interest in, all of Seven- Up/RC's issued and outstanding capital stock and 66.5% of the issued and outstanding capital stock of Seven-Up/RC of PR. The net proceeds of the Senior Secured Notes were used to retire indebtedness incurred as a result of the Acquisition. In connection with these transactions, certain equity holders converted their indebtedness against Seven-Up/RC into an equity interest of WB. The Senior Secured Notes were underwritten by Citicorp Securities Markets, Inc., among others. 16 D. BUSINESS STRATEGY Seven-Up/RC's business strategy is to (i) manufacture and distribute the leading franchised and trademarked beverage brands in its beverage flavor categories and (ii) emphasize the profitability of its core business rather than expand into untested markets. Seven-Up/RC will remain highly focused on its core DSD business. At the same time, certain of its non-core businesses, including Seven-Up/RC's Avalon Food and Beverage division ("Avalon"), which focuses primarily on warehouse distribution to large retail grocers who further distribute the products through their internal distribution systems, and substantially all of its hot-fill contracting business, will be either totally discontinued or greatly downsized. E. TERRITORIES AND PRODUCTS Territories. Based on the three most significant factors that contribute to revenue growth in the beverage industry -- per-capita beverage consumption, climate, and population growth -- Seven-Up/RC operates in some of the most attractive geographic territories for beverage sales. In addition, the population growth rates of California, Nevada, and New Mexico are higher than average, which directly translates to higher beverage consumption in those states, relative to other geographic territories. Beverage Franchises. Seven-Up/RC is able to attract franchises because, unlike its principal competitors, Seven-Up/RC can devote significant attention to each brand and can provide each franchisor with the marketing and merchandising benefits of a larger bottler. Franchised Brands. Seven-Up/RC's franchised brand portfolio is composed of beverage brands which generally lead their respective beverage flavor categories. Because of the breadth and strength of Seven-Up/RC's franchised brand portfolio, retail outlets provide Seven-Up/RC's brands with amounts of shelf space and promotional displays that are on par with that of Seven-Up/RC's competitors. For information regarding Seven-Up/RC's sales by franchise, see Seven-Up/RC's Form 10-K attached as Exhibit "E" hereto. The market shares of Seven-Up/RC's franchised brands are among the highest in Seven-Up/RC's territories. Although Pepsi-Cola and 17 Coca-Cola collectively account for over 60% of the soft drinks sold in Seven- Up/RC's territories, Seven-Up/RC remains competitive because the combined market share of its franchised brands give it marketing and merchandising advantages that it would otherwise lack with a smaller or less diversified brand portfolio. The combined market share of Seven-Up/RC's franchised brands also enables Seven- Up/RC to realize purchasing, manufacturing, marketing, and delivery efficiencies, all of which contribute to Seven-Up/RC's ability to market and price its beverage products competitively. Not only does Seven-Up/RC's franchised brands have high local market shares, but a majority of Seven-Up/RC's franchised brands have local market shares that are higher than their respective national market shares. F. BOTTLING RIGHTS; FRANCHISE AGREEMENTS Seven-Up/RC has entered into agreements with beverage franchisors pursuant to which Seven-Up/RC owns the exclusive right to manufacture, distribute, or both, certain beverage products in specified territories. Under these exclusive franchise agreements, Seven-Up/RC gains the right to use each franchisor's trade name and trademark, as well as any associated patents, copyrights, designs, and labels. Pursuant to these agreements, Seven-Up/RC also owns non-exclusive rights to produce, distribute, and market certain soft drink syrups in premix (ready-to-use) and postmix (concentrated) form for fountain sales. Seven-Up/RC considers its franchise agreements with Cadbury Schweppes Inc. ("Seven-Up," "A&W," "Welch's" and "Sunkist"), Great Brands of Europe, Inc. ("Evian") and Royal Crown Cola Co. to be material to its operations. These agreements and Seven-Up/RC's other franchise contracts obligate Seven-Up/RC to (a) maintain production and distribution facilities that are financially sound and that can satisfy the demand for the franchisor's beverage products, as well as meet franchisor-prescribed quality control standards, (b) use its best efforts to promote sales of the franchisor's beverages, (c) submit annual marketing, management, and advertising plans for franchisor approval (which approval may not be unreasonably withheld), and (d) submit reports summarizing the implementation of these plans. The franchise agreements generally prohibit Seven-Up/RC from engaging in specific activities including, but not limited to, 18 distributing or selling the franchised beverage product outside the specified geographic territory, and producing or handling competing products or other products that would imitate, infringe upon, or cause confusion with the trade dress, containers, or trademarks of the franchised beverage product. The franchisor also generally reserves the right to approve any transfer of the license. In addition, the licenses usually do not allow assignments for consideration. Seven-Up/RC's franchise agreements are either for an indefinite term or for several years with automatic renewals. Seven-Up/RC may terminate a franchise agreement at any time, without cause, by giving proper notice to the franchisor. A franchisor may terminate Seven-Up/RC's rights to produce, market, and distribute its products upon an event of default (as defined in the franchise agreement) and in certain other limited circumstances. Events of default include, but are not limited to, engaging in prohibited activities and failing to fulfill Seven-Up/RC's affirmative obligations under the franchise agreements. No franchisor has ever terminated any of Seven-Up/RC's franchise agreements as a result of a breach of the agreements' provisions. Seven-Up/RC considers its relationship with each of its franchisors to be satisfactory. Discontinuation of Snapple. On July 20, 1995, Seven-Up/RC received notice that its rights to distribute Snapple products in Southern California -- which were not subject to a franchise agreement -- would be terminated as of November 10, 1995. On January 26, 1996, Seven-Up/RC and Quaker Oats, Inc., owner of Snapple Beverage Corporation ("Snapple"), reached an agreement pursuant to which Seven-Up/RC ceased all production of hot-fill products for Snapple and terminated a "take-or-pay" contract for a consideration to Seven-Up/RC of $1.2 million and terminated, as of December 31, 1995, an Equipment Lease Agreement under which Seven-Up/RC leased hot-fill production equipment from Quaker Oats. Settlement with Evian. On July 28, 1995, Seven-Up/RC received a notice of termination of the distribution agreement dated September 12, 1990 (the "Distribution Agreement") with Evian. The Distribution Agreement grants Seven-Up/RC the exclusive right to distribute Evian Water in Southern California. In its notice of termination, Evian stated its belief that termination was justified based on Seven-Up/RC's decision to suspend interest payments on the Senior Secured Notes. Additionally, the termination notice stated 19 that Seven-Up/RC would be allowed to distribute Evian Water on an at will basis. Evian's notice of termination was not effective until the expiration of the contractually specified cure period. Before the cure period as extended expired, Seven-Up/RC and Evian reached a settlement pursuant to which the termination notice was withdrawn and the Distribution Agreement was amended. The Distribution Agreement, as amended on January 12, 1996, grants certain termination rights to Evian in the event that certain standards, primarily related to the performance of distribution services rather than sales volume, are not met. Seven-Up/RC believes it will be able to comply with these standards. Assumption of Franchise Agreements. The Plan provides that all of Seven-Up/RC's franchise agreements will be assumed by Reorganized Seven-Up/RC. See Section VII.G.1. "Summary of the Plan -- Miscellaneous Provisions -- Executory Contracts and Unexpired Leases." G. MANUFACTURING Equipment Upgrades. In 1995, Seven-Up/RC manufactured more than 50 million cases of beverage products in its Vernon and Buena Park, California and Albuquerque, New Mexico manufacturing plants. Since 1990, Seven-Up/RC has invested approximately $11,600,000 to upgrade production equipment. These improvements have substantially increased the speed, efficiency, and flexibility of Seven-Up/RC's bottling and canning lines and have substantially reduced Seven-Up/RC's direct labor and plant costs. These improvements have enabled Seven-Up/RC to position itself as a technological leader in the soft drink industry. To this end, Seven-Up/RC currently has a broader range of manufacturing capabilities than most other bottlers. For example, Seven-Up/RC can filter beverages using special methods, and preserve beverage products using heat pasteurization rather than additives. In addition, Seven-Up/RC can produce teas and juice-filled products using its "hot-fill" production equipment. Manufacturing Capacity. Seven-Up/RC's largest manufacturing plant is located in Vernon, California. Built in 1977, the Vernon plant is a combination manufacturing and distribution facility that can produce 42 million cases annually from two bottle lines and two can lines. The Buena Park, California plant is a diversified facility capable of making 27 million cases annually from three 20 separate lines that produce canned, bottled, and fountain products, as well as hot-fill and pasteurized products. The Albuquerque, New Mexico plant is a combined manufacturing and distribution facility capable of producing 3 million cases annually from one can and one bottle line. Given the manufacturing capacity of these three plants, Seven-Up/RC believes it can adequately meet its existing and future production requirements. H. PRE-PETITION SETTLEMENTS WITH LESSORS AND OTHER PARTIES San Bernardino, CA Facility. During January 1996, Seven-Up/RC, as part of its consolidation program to reduce operating costs, notified the Cott Corporation ("Cott"), the owner of the plant, that it would discontinue its agreement to manage the manufacturing and production conducted at Cott's San Bernardino Facility as of March 29, 1996. In accordance with the Worker Adjustment and Retraining Notification Act (29 U.S.C. (S)(S) 2101 et seq., the "Warn Act"), employees of this facility were given 60 days' notice that Seven- Up/RC would be closing its operations at this facility. Negotiations with respect to a potential settlement of the mutual claims of Cott and Seven-Up/RC under Cott's agreement with Seven-Up/RC are ongoing. Carson, CA Facility (Metropolitan Los Angeles). On April 3, 1996, Seven-Up/RC reached an agreement with the lessor of its Carson distribution facility regarding the termination of the applicable lease agreement on or before June 30, 1996. The lease at the Carson facility expires on April 21, 1998. As part of the settlement, the landlord waived any claims it may have had against Seven-Up/RC under the lease and Seven-Up/RC paid the landlord $227,703 and, in addition, allowed the landlord to retain its security deposit of $72,297 for a total consideration of $300,000 (out of an approximate aggregate uncapped claim for rent reserved under the lease of $1,591,000). In addition, Seven- Up/RC relinquished any rights it may have had to the leasehold improvements at the facility. Distribution from this facility has been consolidated into Seven- Up/RC's main facility in Vernon, California. Anaheim, CA Facility. On November 29, 1995, Seven-Up/RC reached an agreement with the lessor of its Anaheim distribution facility regarding the termination of the applicable lease agreement. As a result of Seven-Up/RC's decision to discontinue its Avalon distribution system, Seven-Up/RC vacated the Anaheim 21 facility, which was a distribution facility for Avalon, in November 1995. The lease of the facility expires on September 30, 1997. As part of the settlement, the landlord waived any claims it may have had against Seven-Up/RC under the lease and Seven-Up/RC paid the landlord $104,000 and, in addition, allowed the landlord to retain its security deposit of $56,000 for a total consideration of $160,000. In addition, Seven-Up/RC relinquished any rights it may have to the leasehold improvements at the facility. McDonnell Douglas Equipment Lease. On May 7, 1996, Seven-Up/RC reached an agreement with MDFC Equipment Leasing Corporation ("MDFC"), the equipment lessor of two hot-fill bottling lines located at Seven-Up/RC's Vernon, California facility. As a result of its decision to significantly downsize contract packing, Seven-Up/RC no longer needs the equipment. The lease of the equipment expires on January 25, 2001. As part of the settlement, MDFC waived, with certain exceptions, any claims it may have had against Seven-Up/RC under the lease and Seven-Up/RC surrendered the equipment to MDFC and paid MDFC $1,000,000.00 plus past due unpaid monthly rental payments through March 1996. Seven-Up/RC believes these pre-petition settlements are in the best interest of its creditors and estate because they resulted in cash payments that are estimated to be approximately $4 million less than the potential claims of the parties to these settlements. I. DIRECT MATERIAL COSTS The most significant costs of manufacturing beverage products are those associated with the products' direct materials. Direct material costs vary among beverage brands because each beverage has unique flavor extract and sweetener blends which cause production costs to differ. Direct material costs also vary among beverage brands because of how the beverage is packaged. Each beverage package has an associated standard cost, with glass containers having the highest package cost per case. As such, Seven-Up/RC's per-case blended direct materials cost varies with changes in the amount of glass containers or cans produced in any given year. Seven-Up/RC is also a member of a purchasing cooperative association, which is comprised of the largest independent bottlers in the United States. Through its membership in the cooperative, Seven-Up/RC receives the benefit of greater purchasing power and lower raw material costs. 22 In 1995, key raw and direct materials and their approximate percentage of material costs included concentrate (22.4%), aluminum cans (21.3%), finished products (including Evian, Snapple, Perrier, and Yoo-Hoo) (25%), plastic bottles (9.8%), liquid corn sugar (9.9%), glass bottles (3.7%), packaging (1.7%), and other materials (including bottle closures and additives) (6.2%). With the exception of concentrate, which is purchased directly from the franchisor, Seven-Up/RC is not dependent on any individual supplier for any of its raw materials. J. SALES AND DISTRIBUTION Seven-Up/RC's principal distribution method is its DSD system. Pursuant to the DSD system, Seven-Up/RC delivers finished beverage product by truck directly to its customers and in 1995 the DSD system accounted for over 85% of Seven-Up/RC's case sales. This delivery system is Seven-Up/RC's preferred distribution method. It provides Seven-Up/RC with greater control over sales, marketing and merchandising of its products. The balance of case sales in 1995 were distributed through delivery to customer warehouses, primarily through Seven-Up/RC's Avalon division, which will be eliminated during 1996. After the elimination of the Avalon distribution division, Seven-Up/RC's DSD system will represent over 95% of Seven-Up/RC's case sales. Seven-Up/RC uses vending machines, fountain equipment, and visi- coolers (bottler-identified refrigerated cabinets) to display and sell its cold drink products. Vending machines are either Seven-Up/RC-owned or are sold, leased, or loaned to retail outlets or distributors who are responsible for maintaining and restocking the machines. Seven-Up/RC generally loans visi- coolers to large retail outlets and convenience stores. Seven-Up/RC is not dependent on any single customer. During 1995, no single customer accounted for 10% or more of Seven-Up/RC's sales. A significant portion of Seven-Up/RC's sales are made to large retail chains. Seven-Up/RC does not anticipate losing any significant number of these customers because consumer demand for Seven-Up/RC's beverage brands is strong and because Seven- Up/RC is the exclusive distributor of its products within its territories. Therefore, retail chains will likely continue purchasing Seven-Up/RC's products in order to satisfy retail consumer demand. 23 K. MARKETING Marketing is the primary basis for competition among soft drink bottlers. Successful bottlers must price their products competitively, advertise creatively in their geographic territories, and execute their promotional programs effectively. Seven-Up/RC's marketing efforts are directed towards managing brands and key accounts, promotional activities, and merchandising activities. Seven-Up/RC believes that its marketing program allows it to compete effectively within its geographic territories. Retail promotional programs are Seven-Up/RC's most significant marketing expense. These programs are financed either by Seven-Up/RC alone or in conjunction with Seven-Up/RC's franchisors. Generally, Seven-Up/RC's franchisors underwrite national advertising campaigns and Seven-Up/RC pays for local advertising campaigns. Seven-Up/RC's brand management group coordinates the local marketing program for each of its franchised soft drink brands with the corresponding national advertising campaign of Seven-Up/RC's franchisors. To this end, Seven- Up/RC's brand managers develop local advertising campaigns, implement strategies to develop local brand recognition, direct promotional activities on a Seven- Up/RC-wide basis, and monitor marketing support received from franchisors pursuant to annual marketing agreements entered into with Seven-Up/RC's franchisors. Seven-Up/RC's financial success, and the financial success of any bottler, is closely tied to its on-going relationships with its key accounts. These relationships are fostered by Seven-Up/RC's key account managers who service Seven-Up/RC's forty-five largest customers. These customers represent 61% of Seven-Up/RC's DSD case sales. To foster these relationships, Seven- Up/RC's key account managers coordinate Seven-Up/RC's promotional activities with those of the franchisor, design promotional programs to meet specific customer needs, and obtain authorization from Seven-Up/RC's customers for new product and package distribution. Seven-Up/RC focuses a significant portion of its promotional efforts on acquiring premium shelf space and end-aisle displays for Seven-Up/RC's brands in high-volume retail outlets. End-aisle displays are especially effective for selling Seven-Up/RC's beverage products because they are linked to special promotions and 24 advertising campaigns that stimulate sales. In addition, Seven-Up/RC advertises heavily in newspapers and runs rebate and coupon programs for retail consumers. The goal of Seven-Up/RC's merchandising activities is to make its products highly visible and available to retail consumers shopping in large grocery chains. Retail merchandisers are responsible for building promotional displays and for restocking products in grocery store beverage aisles. To assist its customers with these tasks and to enhance its relationships with its key accounts, Seven-Up/RC will help its customers determine the most efficient use of shelf space based on consumer preferences for products and packaging and beverage product sales volume. L. COMPETITION AND MARKETS The soft drink industry is a highly competitive industry that is horizontally and vertically consolidated. The industry's key competitive factors are price, advertising, sales volume, promotional incentives, and franchisor subsidies. Seven-Up/RC's principal competitors are Coca-Cola Enterprises, Inc. ("Definitions CCE") and the Pepsi-Cola Company ("Definitions PCC"), both of which are affiliated with their respective syrup companies. Beginning in 1991, CCE and PCC engaged in price wars in the Southern California market in an effort to increase their respective market shares. As a result, the earnings of soft-drink bottlers, including the earnings of Seven-Up/RC, eroded market-wide as bottlers cut their per-case prices in an effort to remain competitive with CCE and PCC. For a detailed discussion of Seven-Up/RC's financial results, see Form 10-K for Fiscal Year Ended December 31, 1995, dated March 29, 1996./1/ - ------------- /1/ A copy of the 10-K is attached as Exhibit "E" hereto. The 10-K is prepared on a consolidated basis and includes the operations of Seven-Up/RC of PR. It does not reflect the financial position of Seven-Up/RC on a stand-alone basis. Seven-Up/RC competes effectively in its markets by skillfully balancing the factors that affect Seven-Up/RC's market share and profitability. To maintain market share and profitability, Seven-Up/RC must execute its marketing programs efficiently and must 25 invest in manufacturing and distribution technology in order to ensure itself low overhead. M. GOVERNMENT REGULATION The production, distribution, and sale of many of Seven-Up/RC's products are subject to the Federal Food, Drug and Cosmetic Act, the Occupational Safety and Health Act, various federal environmental statutes, and various other federal, state, and local statutes that regulate the production, sale, safety, advertising, labeling, and franchising of beverages. Recycling. Seven-Up/RC is subject to laws governing recycling. The state of California imposes a recycling fee on soft drink bottlers for carbonated beverage containers and requires that all carbonated beverage containers clearly display information apprising retail consumers that the fee will be used exclusively to promote recycling. The recycling fee is $0.025 per container holding twenty-four ounces or less and $0.05 per container holding twenty-five ounces or more. Although Seven-Up/RC is required pursuant to California law to pay the recycling fee, Seven-Up/RC recoups the cost by including the fee on its sales invoices. California may automatically increase its recycling fee if targeted statewide recycling rates are not reached; however, Seven-Up/RC believes that future fee increases, if any, will be minimal because of the success of California's recycling program. Environmental. Substantially all of Seven-Up/RC's facilities are subject to federal, state, and local laws that regulate the environment. Complying with these environmental laws has not materially affected Seven- Up/RC's capital expenditures, net income, or competitive position. However, the costs of complying with existing and future environmental laws can not be predicted with any degree of certainty and may significantly affect Seven- Up/RC's future operations. Container Deposits. Currently, Seven-Up/RC does not sell products in any state that requires deposits on bottles or cans. However, if a national container deposit law were to be implemented, Seven-Up/RC's operating costs could be significantly affected. 26 N. EMPLOYEES On September 11, 1995, as part of its restructuring effort, Seven- Up/RC permanently reduced its work force by 205 people, or by more than 15%. The reductions were concentrated in administrative and other areas, but excluded the core service and marketing divisions of the company. The reductions are an essential element in Seven-Up/RC's restructuring plan. As of December 31, 1995, Seven-Up/RC employed 1,352 employees. A majority of these employees (59%) are hourly workers covered by collective bargaining agreements. The United Industrial Workers ("Definitions UIW") union covers most Los Angeles employees under contracts that expire in 1997. Various local chapters of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America represent employees at Las Vegas, San Diego and Santa Maria under contracts expiring in 1997, 1995, and 1996, respectively. Negotiations regarding the San Diego agreement, which expired during 1995, have been initiated and negotiations regarding the Santa Maria contract are expected to commence in or about June, 1996. Seven-Up/RC has not had any strikes or work stoppages in the past twenty years and considers its relationship with its employees to be satisfactory. O. PROPERTIES Seven-Up/RC's headquarters are located in Vernon, California. Seven- Up/RC owns two combination manufacturing and distribution facilities (Vernon, California and Albuquerque, New Mexico) and owns one manufacturing facility in Buena Park, California. Seven-Up/RC also owns six distribution facilities (Bakersfield, Orange, San Diego, San Fernando, Santa Maria, and Las Vegas) and leases six (Carson, Fresno, El Centro, Oxnard, Redlands, and Vernon). The leased facilities are subject to customary commercial leases with terms expiring between 1996 and 1999. As part of its restructuring effort and in conjunction with Seven- Up/RC's decision to downsize its hot-fill production, it was determined that DSD operations conducted at the leased facility in Carson, California would cease during the second quarter of 1996. See Section IV.G. "Certain Events Leading to and Subsequent to the Commencement of the Chapter 11 Cases; Operations of Seven- UP/RC; Business and Operations of Reorganized Seven-Up/RC; Operations During the Chapter 11 Cases -- Manufacturing." Seven-Up/RC 27 believes, after consolidation of the Carson facility, that its owned and leased facilities will be sufficient to satisfy its operating requirements for the foreseeable future. P. LEGAL PROCEEDINGS Seven-Up/RC is involved from time to time in routine litigation that is incidental to its business. Seven-Up/RC does not believe that the outcome of any such litigation will have a material adverse effect upon Seven-Up/RC. Q. BUSINESS AND OPERATIONS OF REORGANIZED SEVEN-UP/RC There can be no assurance that the business and operations of Reorganized Seven-Up/RC following the Consummation of the Plan will not change in a material way as compared with the business and operations of Seven-Up/RC as conducted on the date of this Disclosure Statement. V. OFFICERS AND DIRECTORS OF SEVEN-UP/RC A. POST-RESTRUCTURING EXECUTIVE OFFICERS Seven-Up/RC currently contemplates that the existing officers of Seven-Up/RC are expected to serve at the request of the Board of Directors of Reorganized Seven-Up/RC in their current capacities after Consummation of the Plan. The following table sets forth certain information with respect to these officers:
AGE AS OF DECEMBER 31, NAME POSITION(S) 1995 - ---- ----------- ------------ Barton S. Brodkin Chief Executive Officer and 54 President since October 1990 Roy S. Breneman Chief Sales and Marketing 54 Officer and Executive Vice President Louis Janicich Senior Vice President of 58 Human Resources and Secretary
28
AGE AS OF DECEMBER 31, NAME POSITION(S) 1995 - ---- ----------- ------------ Donald G. Coppersmith/2/ Senior Vice President of 63 Operations
BARTON S. BRODKIN (Chief Executive Officer and President). Mr. Brodkin began his career in the soft drink industry in 1967 with the Pepsi-Cola Bottling Company, where he held various sales and marketing positions, ultimately becoming Group Marketing Manager. He joined Westinghouse's Beverage Group in 1973 as Vice President of the Western Division and in 1980 was promoted to Business Unit President and General Manager. He is a director of, and has served as President of, the Seven-Up Bottlers Association. Currently, Mr. Brodkin is Treasurer of the National Soft Drink Association and a director of the RC Bottlers Association. ROY S. BRENEMAN (Chief Sales and Marketing Officer and Executive Vice President). Mr. Breneman began his career in the soft drink industry in 1968 as a merchandising manager for the Pepsi-Cola Company. He served as Vice President, General Manager for the Dr. Pepper bottler in Dallas and was National Sales Manager for the Country Time ready-to-drink division of General Foods Corporation. He joined Westinghouse's Beverage Group as Vice President of Marketing Services and became the Senior Vice President of Sales and Marketing in 1986. Currently, Mr. Breneman is on a leave of absence recuperating from an illness. LOUIS JANICICH (Senior Vice President of Human Resources and Secretary). Mr. Janicich has been involved in human resources within the soft drink industry since 1967 when he was Director of Industrial Relations with the Pepsi-Cola Bottling Company of Los Angeles. He joined Westinghouse's Beverage Group as Director of - --------------- /2/ As of June 28, 1996, F.L. Joseph Chalmers will replace Mr. Coppersmith as Senior Vice President of Operations. Mr. Chalmers began his career with Westinghouse in 1969 serving in various positions in purchasing, contract administration and materials management. He transferred to Westinghouse's beverage group in 1976. He served as director of food service, vice- president of sales, and vice-president of logistics. 29 Industrial Relations in 1970 and in 1987 assumed his current position of Senior Vice President of Human Resources. DONALD G. COPPERSMITH (Senior Vice President of Operations). Mr. Coppersmith, who will retire as of June 28, 1996, joined Westinghouse in 1962 as a Senior Quality Engineer and subsequently held various positions of increasing importance in quality control and manufacturing. He transferred in 1976 to Westinghouse's Beverage Group as Senior Vice President of Operations. B. CURRENT DIRECTORS AND EXECUTIVE OFFICERS For a list of the current directors and executive officers of Seven- Up/RC, please refer to pages 26-28 of the attached Form 10-K. C. OFFICERS AND DIRECTORS OF REORGANIZED SEVEN-UP/RC It is currently contemplated that the existing senior officers of Seven-Up/RC are expected to serve, at the request of the Board of Directors of Reorganized Seven-Up/RC, in their current capacities after Consummation of the Plan. On March 20, 1996, Seven-Up/RC and its affiliates entered into a termination agreement (the "Termination Agreement") with Alfred A. Favero, who until that time had served as Chief Financial Officer of Seven-Up/RC. Pursuant to the Termination Agreement, Seven-Up/RC agreed to pay Mr. Favero his base salary and other regular benefits until January 31, 1996, and to continue in effect the indemnification and insurance coverage rights of Mr. Favero after such date. Mr. Favero terminated his employment with Seven-Up/RC for personal reasons. Prior to the Petition Date, Seven-Up/RC executed an Amended and Restated Management Agreement with Barton S. Brodkin, chief executive officer of Seven-Up/RC (the "Amended Management Agreement"). Under the Amended Management Agreement, which expires on September 25, 1998 (subject to renewal at Seven- Up/RC's option), Brodkin is to receive an annual base salary as follows: $300,000 until September 24, 1996, $325,000 from September 25, 1996 until September 24, 1997 and $350,000 from September 25, 1997 until termination of the Amended Management Agreement. In addition, Brodkin is eligible for a consensual reorganization bonus of $100,000 if a consensual reorganization is 30 consummated. For purposes of the Amended Management Agreement, "consensual reorganization" means (i) an out-of-court restructuring through an exchange offer or other mechanism, (ii) a tender offer for the Senior Secured Notes or (iii) confirmation of a Chapter 11 plan of reorganization approved by the requisite holders of the Senior Secured Notes and Seven-Up/RC. Under the Amended Management Agreement, Brodkin will also be eligible for a $150,000 bonus in the event the Subsidiary Sale is consummated for aggregate gross consideration in excess of $70 million. Lastly, in the event Brodkin's employment is terminated without cause, he will be eligible to receive a severance payment in the amount of the applicable annual base salary at the time of such termination. It is also currently contemplated that all of Seven-Up/RC's existing directors will resign immediately prior to Consummation. The names of the members of the Board of Directors of Reorganized Seven-Up/RC are listed on Exhibit "F" to the Plan "Schedule of Directors of Seven-Up/RC after Consummation." D. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH OFFICERS AND DIRECTORS Certain officers and directors are involved in other transactions with Seven-Up/RC. See "Certain Relationships and Related Transactions" on page 32 of the 1995 Form 10-K, attached as Exhibit "E" hereto. VI. THE CHAPTER 11 CASES Seven-Up/RC and BGAC filed their petitions for reorganization relief under Chapter 11 of the Bankruptcy Code on May 13, 1996. Following commencement of the Chapter 11 Cases, all actions and proceedings against Seven-Up/RC and BGAC and all acts to obtain any property of the Estate were automatically stayed under section 362 of the Bankruptcy Code. As more fully discussed below, Seven- Up/RC retained certain advisors to assist in the Chapter 11 Cases, and the United States Trustee appointed an official committee of unsecured creditors of Seven-Up/RC which also has retained advisors to facilitate such committee's participation in the Chapter 11 Cases. Also described below are some of the important events that have occurred to date during the Chapter 11 Cases. 31 A. PARTIES IN INTEREST The parties described below have been major parties in interest in the Chapter 11 Cases to date. 1. Advisors To Seven-Up/RC By order of the Bankruptcy Court, dated May 13, 1996, Seven-Up/RC retained Kirkland & Ellis to act as general counsel in the Chapter 11 Cases and Young, Conaway, Stargatt & Taylor as its Delaware counsel. Seven-Up/RC and BGAC also have retained Arthur Andersen as their accountants. Seven-Up/RC and BGAC have consulted with these advisors on all aspects of its business, financial restructuring, and operations as a debtor-in-possession in the Chapter 11 Cases. Seven-Up/RC has retained Whitman Heffernan as its financial advisor. On May 13, 1996, the Bankruptcy Court issued an order authorizing Whitman Heffernan's employment and retention as financial advisor on the terms and conditions set forth in the application for such employment and retention. Such terms and conditions include compensation in the amount of $75,000 per month, plus reasonable out-of-pocket expenses. In the event that Consummation occurs, the application contemplates additional fees for Whitman Heffernan. Payment of all fees other than the monthly fees described above requires further order of the Bankruptcy Court. Whitman Heffernan assisted management in preparing the business plan and the Projections. In conducting these tasks (i) Whitman Heffernan relied upon and assumed the accuracy and completeness of the financial and other information that was available from public sources, that was provided to Whitman Heffernan by Seven-Up/RC or its representatives, or that was otherwise reviewed by Whitman Heffernan and(ii) Whitman Heffernan did not assume any responsibility for making any independent evaluation of Seven-UP/RC's assets or liabilities or for making any independent verification of any of the information that Whitman Heffernan reviewed. The business plan and the Projections were necessarily based on the economic, market and other conditions as they existed at the time the business plan and the Projections were prepared. Subsequent developments may affect the business plan and the Projections. Whitman Heffernan has not updated or revised 32 either the business plan or the Projections and, at this time, it is not expected that it will do so. 2. The Official Committee of Unsecured Creditors And Its Advisors The official committee of unsecured creditors (the "Creditors Committee") appointed by the United States Trustee on May 24, 1996, is currently comprised of [LIST MEMBERS]. [______] serves as chair of the Creditors Committee. The Creditors Committee has, with the approval of the Bankruptcy Court, employed and retained the law firm of __________. B. DISPOSITION OF EXECUTORY CONTRACTS Under the Bankruptcy Code, Seven-Up/RC has the ability to reject executory contracts, including unexpired leases. Parties affected by these rejections may file claims with the Bankruptcy Court in accordance with the Bankruptcy Code. Allowed claims arising from rejection of such executory contracts or unexpired leases will be paid in full in accordance with the terms of the Plan and the provisions of the Bankruptcy Code, which limit the amount of rejection claims under certain circumstances. C. SIGNIFICANT COURT ORDERS Although Seven-Up/RC is authorized to operate its business as a debtor-in-possession, it may not engage in transactions outside the ordinary course of its business without permission of the Bankruptcy Court, following notice and opportunity for a hearing as provided for in the Bankruptcy Code and Bankruptcy Rules. Since the Petition Date, Seven-Up/RC has sought and obtained certain orders from the Bankruptcy Court that are of particular importance in the operation of Seven-Up/RC's business during the pendency of the Chapter 11 Cases. Included among such orders are those authorizing: -- maintenance of Seven-Up/RC's existing bank accounts, continued use of existing business forms, continued use of existing cash management system and transfer of funds to non-debtor subsidiaries and affiliates, without interruption and in the usual and ordinary course; 33 -- payment to employees of accrued pre-petition wages, bonuses, and commissions on their regularly scheduled post-petition payment dates, permission for employees to use pre-petition vacation time, payment of employees' pre-petition reimbursable employee business expenses, payment of employees' accrued pre-petition employer- contributions to employee benefit plans, and the continuation of employee benefit plans post-petition; -- banks to honor pre-petition checks for payment of pre-petition employee claims; -- payment of up to $22.1 million in pre-petition claims of trade creditors, pursuant to the Trade Claims Order, if and to the extent such trade creditors continue to ship goods to Seven-Up/RC or render services to Seven-Up/RC after the Petition Date on customary trade terms, see Section III.B. "Summary Explanation of the Plan --Consequences of the Plan on Holders of Trade Claims;" -- incurrence of post-petition secured debt pursuant to the DIP Facilities and consensual use of cash collateral, see Section VI.D. "The Chapter 11 Cases -- Debtor-in-Possession Financing and Use of Cash Collateral;" -- retention of legal counsel, accountants, and consultants to perform certain services on Seven-Up/RC's behalf; and -- the continued use, in accordance with customary trade and Seven- Up/RC's prior practice, of (i) coupon redemption, (ii) retail promotional funds, (iii) full service vending machines, (iv) "visi-coolers", and (v) rebates, among other things, whether or not such claims arose pre- or post-petition. D. DEBTOR-IN-POSSESSION FINANCING AND USE OF CASH COLLATERAL On the Petition Date, Seven-Up/RC requested that the Bankruptcy Court immediately enter an emergency order and moved for the entry of interim and final orders approving the consensual use of cash collateral and the post- petition extension of credit pursuant to that certain Debtor In Possession Credit Agreement, dated as of May 13, 1996 (the "DIP Loan Agreement") with GE Capital. 34 Pursuant to the DIP Loan Agreement, GE Capital agreed to make revolving credit advances and guarantee letter of credit obligations in the aggregate amount up to $54,000,000 (the "DIP Facility"), which amount includes all outstanding amounts with respect to the GE Capital Credit Agreement, on the terms and subject to the conditions contained therein, including, among other things, the following: . Term: All obligations under the DIP Loan Agreement will be due and payable on the earliest to occur of, among other things, twenty-four months from the closing date of the DIP Facility, the date of termination of the revolving credit commitments by Seven-Up/RC pursuant to Section 1.3(c) of the DIP Loan Agreement, the effective date of a plan of reorganization, or the termination of Seven-Up/RC's right to borrow upon the occurrence and continuance of an event of default thereof, in accordance with Section 8.2 of the DIP Loan Agreement. . Interest: Interest on the unpaid principal amount of the DIP Facility will accrue at a per annum rate equal to the index rate (which is defined as the published rate for thirty day commercial paper placed directly by GE Capital) plus 3.50% (with a per annum default rate equal to the index rate plus 5.50%), payable monthly in arrears. . Application of Proceeds: Proceeds or payments received by GE Capital under the applicable pre-petition loan agreements and the DIP Loan Agreement will be applied first to the pre-petition indebtedness of GE Capital until paid in full and thereafter to pay the indebtedness under the DIP Facility. . Collateral Security and Priority: Subject to a carve-out for certain administrative fees and expenses of the estate, the DIP Facility is secured by first-priority liens on and security interests in certain of the Seven-Up/RC's assets, subject in rank and priority to any valid, non-avoidable, perfected and enforceable liens which existed on the Petition Date, except for the liens of certain 35 lenders who have consented to the subordination of their liens to the liens securing the DIP Facility. . Administrative Superpriority: Subject to a carve-out for certain administrative fees and expenses of the estate, the post-petition indebtedness will have first administrative priority equivalent to a claim under Section 364(c)(1) of the Bankruptcy Code. . BGAC Guaranty: The full and complete performance of the obligations of Seven-Up/RC under the DIP Facility has been guaranteed by BGAC, which guaranty is secured by (a) all rights to payment of any kind owing or made to BGAC by Seven-Up/RC or Seven-Up/RC of PR, (b) all books and records relating to the foregoing, and (c) all proceeds thereof. On May 13, 1996, the Bankruptcy Court authorized Seven-Up/RC to use cash collateral and to borrow up to $4.1 million under the DIP Loan Agreement on an emergency basis. Subsequently, on May __, 1996, the Bankruptcy Court authorized Seven-Up/RC to use cash collateral and to borrow up to $9.1 million on an interim basis, pending final approval of the DIP Loan Agreement. On May __, 1996, the Bankruptcy Court entered a final order authorizing Seven-Up/RC to use cash collateral and obtain credit under the DIP Loan Agreement on a final basis. In connection with the foregoing, the Bankruptcy Court also, among other things (i) authorized Seven-Up/RC to grant post-petition liens on and security interests in the property of the estate to secure payment of the borrowings and other financial accommodations to be made pursuant to the DIP Loan Agreement, (ii) authorized Seven-Up/RC to grant replacement liens and certain other protection to GE Capital on account of the pre-petition indebtedness and the guaranteed indebtedness of GE Capital, (iii) granted superpriority claim status pursuant to section 364(c) of the Bankruptcy Code on account of all post-petition financing, and (iv) modified the automatic stay in certain respects. 36 VII. SUMMARY OF THE PLAN THIS SECTION PROVIDES A SUMMARY OF THE STRUCTURE AND MEANS FOR IMPLEMENTATION OF THE PLAN, AND OF THE CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH ACCOMPANIES THIS DISCLOSURE STATEMENT, AND TO THE EXHIBITS ATTACHED THERETO. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE PROVISIONS CONTAINED IN THE PLAN AND IN DOCUMENTS REFERRED TO THEREIN. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH DOCUMENTS FOR THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS. THE PLAN ITSELF AND THE DOCUMENTS REFERRED TO THEREIN CONTROL THE ACTUAL TREATMENT OF CLAIMS AGAINST AND INTERESTS IN SEVEN-UP/RC UNDER THE PLAN AND WILL, UPON THE CONSUMMATION DATE, BE BINDING UPON HOLDERS OF CLAIMS AGAINST AND INTERESTS IN SEVEN-UP/RC, REORGANIZED SEVEN-UP/RC, AND OTHER PARTIES IN INTEREST. A. OVERALL STRUCTURE OF THE PLAN Soon after filing its Chapter 11 petition, Seven-Up/RC focused on quickly obtaining Confirmation of the Plan to allow it to emerge promptly from Chapter 11, thereby preserving Seven-Up/RC's going concern value. Seven-Up/RC recognized that in the competitive industry in which it operates, a lengthy Chapter 11 case could impair Seven-Up/RC's financial condition and value and dim the prospects for a successful reorganization. Seven-Up/RC believes that the Plan, as described below, provides the best possible recovery to Seven-Up/RC's Claim holders consistent with the establishment of a viable financial basis for Seven-Up/RC's future operations. The Plan and the application of proceeds from the Subsidiary Sale will remove over $150 million in secured and unsecured indebtedness from Seven-Up/RC's balance sheet. This deleveraging of the company is the keystone of the Plan and will provide Seven-Up/RC with the financial flexibility necessary to compete in the highly competitive beverage industry. Under the Plan, Claims against and Interests in Seven-Up/RC are divided into different Classes. If the Plan is confirmed by the Bankruptcy Court and consummated, on the Distribution Date, and 37 at certain times thereafter as Claims are resolved, liquidated or otherwise allowed, Seven-Up/RC will distribute Cash, securities, and other property in respect of certain Classes of Claims as provided in the Plan. The Classes of Claims against and Interests in Seven-Up/RC created under the Plan, the treatment of those Classes under the Plan, and the securities and other property to be distributed under the Plan (if any) are described below. The terms of the Plan are based upon, among other things, Seven- Up/RC's assessment of its ability to achieve the goals of its current business plan, make the distributions under the Plan, and repay its continuing obligations in a manner consistent with the working capital requirements of Reorganized Seven-Up/RC's business. In conjunction with the Plan, Seven-Up/RC has provided financial projections of earnings and cash flows for each of the four and one-half fiscal year periods from June 30, 1996 through December 31, 2000, based on its current business plan. (See Projections annexed as Exhibit "C" hereto.) B. CERTAIN MATTERS REGARDING CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS The following describes the Plan's classification of those Claims against and Interests in Seven-Up/RC or BGAC that are required to be classified under the Bankruptcy Code, and the treatment that the holders of such Allowed Claims or Allowed Interests (each as defined in the Plan) will receive under the Plan. 1. Unclassified Claims The Bankruptcy Code does not require classification of certain priority claims against a debtor. In this case, these unclassified claims include DIP Facility Claims, Administrative Claims and Priority Tax Claims. (a) DIP Facility Claims. A "Definitions DIP Facility Claim" is a Claim made pursuant to, or arising under, the DIP Facility. The Plan provides that on the Distribution Date, each holder of a DIP Facility Claim will receive (a) Cash equal to the amount of such Allowed Claim and all the rights, benefits, and protections provided it under the order or orders of the Bankruptcy Court approving the DIP Facility, or (b) such other 38 treatment as to which Seven-Up/RC and such holder have agreed upon in writing. (b) Administrative Claims. An "Definitions Administrative Claim" is a Claim for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and entitled to priority pursuant to section 507(a)(1) of the Bankruptcy Code, including, but not limited to, the actual, necessary costs and expenses incurred after the Petition Date, of preserving the Estates and operating the business of Seven-Up/RC, including wages, salaries, or commissions for services rendered after the commencement of the Chapter 11 Cases, Professional Fees, and all fees and charges assessed against the Estates under chapter 123 of title 28 of the United States Code. Under the Plan, each holder of an Allowed Administrative Claim will receive on the Distribution Date (a) Cash equal to the unpaid portion of such Allowed Administrative Claim, or (b) such other treatment as to which Seven-Up/RC and the holder of such Allowed Administrative Claim will have agreed upon in writing; provided, however, that Allowed Administrative Claims with respect to liabilities incurred by Seven-Up/RC in the ordinary course of its business during the Chapter 11 Cases will be paid in the ordinary course of business in accordance with the terms and conditions of any agreements relating thereto. (c) Priority Tax Claims. A "Definitions Priority Tax Claim" is a Claim entitled to priority pursuant to section 507(a)(8) of the Bankruptcy Code. On the Distribution Date, a holder of an Allowed Priority Tax Claim will receive (a) deferred Cash payments in an aggregate principal amount equal to the amount of such Allowed Priority Tax Claim plus interest on the unpaid portion thereof at the rate of five percent per annum from the Distribution Date through the date of payment thereof or (b) such other treatment as to which Seven-Up/RC and such holder will have agreed upon in writing, with the approval of the Bankruptcy Court, after notice to the Creditors Committee. If deferred Cash payments are made to a holder of an Allowed Priority Tax Claim, payments of principal will be made in annual installments, each such installment amount being equal to ten percent of such Allowed Priority Tax Claim plus accrued and unpaid interest, with the first payment to be due on the first anniversary of the Distribution Date, and subsequent payments to be due on each 39 successive anniversary of the first payment date or as soon thereafter as is practicable; provided, however, that any installments remaining unpaid on the date that is six years after the date of assessment of the tax that is the basis of the Allowed Priority Tax Claim will be paid on the first Business Day following such date, together with any accrued and unpaid interest to the date of payment; provided, further, that Seven-Up/RC reserves the right to pay any Allowed Priority Tax Claim, or any remaining balance of such Allowed Priority Tax Claim, in full at any time on or after Consummation without premium or penalty. 2. Classes of Claims That Are Not Impaired (a) Class 1: Other Priority Claims Class 1 consists of all Other Priority Claims. An Other Priority Claim is a Claim entitled to priority pursuant to section 507(a) of the Bankruptcy Code, other than a Priority Tax Claim, an Administrative Claim, or a DIP Facility Claim. The Plan provides that each holder of an Allowed Claim in Class 1 will be entitled to receive the allowed amount of such Claim in full, and in cash, on the Distribution Date or such other treatment as such holder and Seven-Up/RC have agreed upon in writing. Allowed Claims in Class 1 are not impaired under the Plan and, therefore, holders of Claims in Class 1 will be deemed to have accepted the Plan. (b) Class 2: Secured Claims Class 2 consists of Secured Claims. Each subclass of Class 2 Secured Claims will be treated as a separate class for purposes of implementing and consummating the Plan and each holder of an Allowed Class 2 Secured Claim will receive the treatment set forth in the Plan. To the extent, if any, that the value of the collateral securing a Class 2 Secured Claim is less than the amount of such Allowed Claim, the difference will be treated as a Class 3 General Unsecured Claim. Class 2.01 consists of all Claims against Seven-Up/RC, secured by and to the extent of the value as of the Petition Date of the GE Capital Credit Agreement Collateral, directly or indirectly arising from or under, or relating in any way to the GE Capital Credit Agreement. On the Distribution Date, a holder of an Allowed 40 Class 2.01 GE Capital Working Capital Secured Claim will receive (a) Cash in an amount equal to such Allowed Class 2.01 GE Capital Working Capital Secured Claim or (b) such other treatment as Seven-Up/RC and such holder will have agreed in writing as announced at or prior to the Confirmation Hearing. Class 2.02 consists of all Claims secured by and to the extent of the value of the Petition Date of the GE Capital of PR Collateral, directly or indirectly arising from or under, or relating in any way to the GE Capital of PR Guaranty. On the Distribution Date, a holder of an Allowed Class 2.02 GE Capital of PR Secured Claim will, in the sole discretion of Seven-Up/RC, and in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Class 2.02 GE Capital of PR Secured Claim, receive (a) Cash in an amount equal to such Allowed Class 2.02 GE Capital of PR Secured Claim or (b) such other treatment as Seven-Up/RC and such holder shall have agreed in writing as announced at or prior to the Confirmation Hearing. Class 2.03 consists of Other Secured Claims. An Other Secured Claim is a Secured Claim other than (i) a Secured Claim in subclasses 2.01 GE Capital Working Capital Secured Claims and 2.02 GE Capital of PR Secured Claims (ii) a Class 4 Noteholders Claim, (iii) a Class 5 GE Capital Term Loan Secured Claim, and (iv) a DIP Facility Claim. On the Distribution Date, a holder of an Allowed Class 2.03 Other Secured Claim will (a) receive Cash in an amount equal to such Allowed Class 2.03 Other Secured Claim, (b) have its Allowed Class 2.03 Other Secured Claim Reinstated, (c) have the collateral, which secures the payment obligations of Seven-Up/RC or BGAC to such holder, returned to it or (d) receive such other treatment as Seven-Up/RC and such holder have agreed in writing as announced at or prior to the Confirmation Hearing; provided, however, that notwithstanding any provision of the Plan to the contrary, nothing will affect the right or ability of Seven-Up/RC to avoid any purported lien or security interest. (c) Class 3: General Unsecured Claims Class 3 consists of all Unsecured Claims. An Unsecured Claim is any claim that is not a DIP Facility Claim, Administrative Claim, Priority Tax Claim, Class 1 Other Priority Claim, Class 2 Secured Claim, Class 4 Noteholders Claim or Class 5 GE Capital Term Loan Secured Claim. 41 The Plan provides that each holder of an Allowed Claim in Class 3 will be paid in full in the ordinary course of Seven-Up/RC's business and, accordingly, will not be entitled to receive any distribution under the Plan. Instead, the Plan provides that such Claims will become obligations of Reorganized Seven-Up/RC, and be paid pursuant to the terms of any applicable invoice or agreement relating to such Claims. Allowed Claims in Class 3 are not impaired under the Plan and, therefore, holders of Claims in Class 3 will be deemed to have accepted the Plan. 3. Impaired Classes of Claims (Entitled to Vote on the Plan) (a) Class 4: Noteholders Claims Class 4 consists of all Claims against Seven-Up/RC directly or indirectly arising from or under, or relating in any way to, the Senior Secured Notes Indenture, the Senior Secured Notes or the Senior Secured Notes Collateral. The Plan provides that on the Distribution Date, each holder of an Allowed Claim in Class 4 will be entitled to receive its Pro Rata share of (a) Class 4 New Common Stock and (b) Class 4 Proceeds. Notwithstanding any provision of the Plan to the contrary, for all purposes associated therewith, including voting and distributions, the Class 4 Noteholders Claims are allowed in the aggregate principal amount of approximately $140 million plus accrued and unpaid interest through the Petition Date at the rate provided for in the Senior Secured Notes Indenture. Allowed Claims in Class 4 are impaired under the Plan and therefore, holders of Claims in Class 4 are entitled to vote on the Plan. On the Distribution Date, Seven-Up/RC will pay the reasonable and actual costs and expenses of the Noteholders Committee, including without limitation the fees of counsel for the Unofficial Noteholders Committee. Notwithstanding the foregoing or anything herein to the contrary, in the event that Class 4 Proceeds are less than $55 million but more than $54 million, Seven-Up/RC will make an additional distribution to the Disbursing Agent in an amount by which $55 million exceeds the Class 4 Proceeds. In the event that Class 4 Proceeds are more than $55 million but less than $56 million, Class 4 Proceeds will be deemed to be $55 million and the difference between the actual amount of Class 4 Proceeds and $55 million will be retained by Seven- Up/RC to pay its indebtedness under the DIP Facility or the GE Post-Consummation Facility, as the case may be. 42 (b) Class 5: GE Capital Term Loan Secured Claims Class 5 consists of all Claims directly or indirectly arising from or under, or relating in any way to, the GE Capital Term Loan or the GE Capital Term Loan Collateral. On the Distribution Date, a holder of an Allowed Class 5 GE Capital Term Loan Secured Claims, in full satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Class 5 GE Capital Term Loan Secured Claims, will receive either (i) Cash equal to 100% of the outstanding and unpaid principal amount of the Allowed Class 5 GE Capital Term Loan Secured Claims or (ii) the Class 5 Note. 4. Impaired Class of Interest (Entitled to Vote on The Plan but Deemed To Have Accepted Pursuant to Order of Bankruptcy Court) (a) Class 6: Old Common Stock Interest Class 6 consists of the Interest arising from or in any way associated with the Old Common Stock. The Plan provides that WB, as the holder of the Allowed Class 6 Old Common Stock Interest, will receive (i) 2% of the New Common Stock and (ii) the WB Warrants. C. TREATMENT OF TRADE CREDITORS AND EMPLOYEES UNDER THE PLAN 1. Provisions for Trade Creditors Seven-Up/RC proposes that all Claims of its trade creditors will not be impaired and will be paid in full. If the Plan is confirmed, holders of trade Claims will not be required to file proofs of claim with the Bankruptcy Court and no bar date will be enforced as to such trade Claims. Upon and after Consummation (and, subject to Bankruptcy Court approval, prior to Consummation), all trade Claims not already paid will be paid in full or in the ordinary course of business of Seven-Up/RC. If Seven-Up/RC disputes any trade Claim, such dispute will be determined, resolved, or adjudicated, as the case may be, in the manner in which such dispute would have been determined, resolved or adjudicated if the Chapter 11 Cases had not been commenced, and will survive Consummation and the Consummation of the applicable Plan as if the Chapter 11 Cases had not been commenced. At Seven-Up/RC's option, such dispute may be brought before, and resolved 43 by, the Bankruptcy Court. If Seven-Up/RC wishes to file an objection with the Bankruptcy Court to the allowance of any Claim, including trade Claims, whether or not a proof of claim has been filed, it must file such objection with the Bankruptcy Court on or before November 1, 1996. Any claim arising from the rejection of an executory contract or unexpired lease under the Plan will be paid when such claim is allowed by the Bankruptcy Court. 2. Provisions for Employees To ensure the continuity of Seven-Up/RC's work force and to further accommodate the unimpaired treatment of employee benefits, Seven-Up/RC sought and obtained an order from the Bankruptcy Court authorizing Seven-Up/RC's banks to honor payroll checks outstanding as of the Petition Date (or to issue replacement checks), to permit employees to utilize paid vacation time accrued prior to the Petition Date (so long as they remain employees of Seven-Up/RC) and to continue paying medical and other benefits under all applicable insurance plans. Employee Claims and benefits not paid or honored prior to Consummation of the Plan will be paid or honored upon Consummation of the Plan or as soon thereafter as such payment or other obligation becomes due or performable. Employees will not be required to file proofs of claim on account of employee Claims. Under the Plan, salaries or wages, as the case may be, accrued paid vacation, health related benefits, severance benefits, field management and executive/administrative management incentive plans and similar employee benefits with respect to Seven-Up/RC employees will be unaffected. D. MEANS FOR EXECUTION OF THE PLAN 1. Cancellation of Senior Secured Notes Upon Consummation and subject to the distributions of Class 4 Proceeds and New Common Stock being made as required under the Plan, except as otherwise provided for in the Plan and except with respect to the obligations, if any, arising under the DIP Facility that survive Consummation of the Plan, (i) the Old Securities and any other note, bond, indenture, or other instrument or document evidencing or creating any indebtedness, equity interest, or obligation of Seven-Up/RC or BGAC, except such notes or other instruments evidencing indebtedness or obligations of Seven-Up/RC 44 that are Reinstated under the Plan, will be canceled and (ii) the obligations of Seven-Up/RC or BGAC under any agreements, indentures, or certificates of designations governing the Old Securities and any other note, bond, indenture, or other instrument or document evidencing or creating any indebtedness, equity interest or obligation of Seven-Up/RC, except such notes or other instruments evidencing indebtedness or obligations of Seven-Up/RC that are Reinstated under the Plan, as the case may be, will be discharged; provided, however, that each indenture or other agreement that governs the rights of the holder of a Claim and that is administered by the Indenture Trustee will continue in effect solely for the purposes of (i) allowing the Indenture Trustee to make the distributions to be made on account of such Claims under the Plan as provided in Article VII of the Plan and (ii) governing the agency relationship between the Indenture Trustee and Noteholders under the Senior Secured Notes Indenture, which provisions will remain in effect according to the terms of the Senior Secured Notes Indenture; provided, further, that nothing therein will affect the discharge of Seven-Up/RC and BGAC liabilities under the Bankruptcy Code and the Confirmation Order or result in any expense or liability to Reorganized Seven- Up/RC. Reorganized Seven-Up/RC will not have any obligations to the Indenture Trustee for any fees, costs, or expenses, except as expressly provided in the Plan; provided, further, that Reorganized Seven-Up/RC will be liable for the payment of the reasonable fees and expenses of the Indenture Trustee under the Senior Secured Notes Indenture, including attorneys fees outstanding on the Petition Date and amounts incurred in connection with this Plan and in making the distributions to holders of Allowed Class 4 Noteholders Claims in accordance with the provisions of the Plan, in an aggregate amount not to exceed $75,000 2. Surrender of Senior Secured Notes As a condition to receiving any distribution pursuant to the Plan, each holder of Senior Secured Notes must (i) surrender such Senior Secured Notes to the Disbursing Agent, or (ii) provide an affidavit of loss with regard to such Senior Secured Notes which is in form and substance satisfactory to the Disbursing Agent. If no surrender of such Senior Secured Notes occurs and such holder does not provide an affidavit acceptable to the Disbursing Agent, then no distribution may be made to any holder whose Claim or Interest is based on such Senior Secured Notes. 45 3. Distribution of Cash The Disbursing Agent (or such other entity or entities as Seven-Up/RC designates to distribute cash pursuant to the Plan) will distribute all cash to be distributed under the Plan. The Disbursing Agent may employ or contract with other entities to assist in or perform the distribution of such cash. The Disbursing Agent will only distribute cash to holders of Claims (or their assignees) who surrender their Senior Secured Notes in accordance with the provisions set forth in Section VII.D.2. "Summary of the Plan -- Means for Execution of the Plan -- Surrender of Senior Secured Notes." Only holders of Senior Secured Notes registered on the books of Seven-Up/RC and BGAC or any other person who has obtained a properly completed bond power from the registered holder of Senior Secured Notes will be eligible to receive cash, as provided for under the Plan. Payments of cash required to be made pursuant to the Plan will be made, at the election of Seven-Up/RC, by check drawn on a domestic bank or by wire transfer from a domestic bank. Checks issued by Seven- Up/RC pursuant to the Plan in respect of Allowed Claims will be null and void if not cashed within ninety days of the date of the issuance thereof. Requests for reissuance of any check must be made directly to the Disbursing Agent. 4. Transfer Ledgers By the close of business on the first Business Day after the Confirmation Date, the Indenture Trustee will close the transfer ledgers for the holders of the Senior Secured Notes and will be entitled to rely solely upon the names and addresses of such holders as set forth on the transfer ledgers in making distributions on account of the Senior Secured Notes. To the extent that the persons identified on such transfer ledgers are not the beneficial holders of the Senior Secured Notes, such persons will be obligated to distribute cash to the beneficial holders on account of the Senior Secured Notes in accordance with the Plan. Seven-Up/RC will reimburse such persons for actual out-of-pocket costs of making such distributions. 46 5. Modification of Treatment of Claims Seven-Up/RC reserves the right to modify the treatment of any Allowed Claim in any manner adverse only to the holder of such Claim at any time after Consummation upon the consent of the creditor whose Allowed Claim is being adversely affected. 6. Setoffs Seven-Up/RC may, but will not be required to, set off against any Claim and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that Seven-Up/RC may have against the holder of such Claim; however, neither the failure to do so nor the allowance of any Claim hereunder will constitute a waiver or release by Seven- Up/RC of any such claim that Seven-Up/RC may have against such holder. 7. Unclaimed Distributions Any person that is entitled to receive a cash distribution under the Plan but fails to cash a check within 90 days of its issuance will be entitled to receive a reissued check from Seven-Up/RC for the amount of the original check, without any interest, if such person requests the Disbursing Agent to reissue such check and provides the Disbursing Agent with such documentation as the Disbursing Agent would request to verify that such person is entitled to such check, prior to the second anniversary of Consummation. If a person fails to cash a check within 90 days of its issuance and fails to request reissuance of such check prior to the second anniversary of Consummation, any cash that such person was entitled to receive pursuant to such check will become the property of, and will be released to, Seven-Up/RC. If any person entitled to receive cash cannot be located upon Consummation, such cash will not be distributed by Seven-Up/RC. If such person is located within two years of Consummation, the cash will be distributed to such person. If any person entitled to receive a distribution of cash under the Plan cannot be located within two years of Consummation, such person will not be entitled to receive any distribution under the Plan. Nothing contained in the Plan will require Seven-Up/RC to attempt to locate any person entitled to any distribution under the Plan by any means other than mailing such distribution to the last known address of such person as set forth in the Schedules (as defined in the Plan), or set forth in a 47 proof of claim or interest filed by such person and served upon Seven-Up/RC or otherwise provided to the Disbursing Agent by the Indenture Trustee. If any holder's distribution is returned to the Indenture Trustee, Seven-Up/RC, or such other agent as Seven-Up/RC may designate, as the case may be, no further distributions to such holder will be made unless and until the Indenture Trustee, Seven-Up/RC, or such other agent as Seven-Up/RC may designate, as the case may be, is notified of such holder's then current address, at which time all missed distributions will be made to such holder without interest; provided, however, that to the extent Seven-Up/RC or the Indenture Trustee earns interest in fact on the Class 4 Proceeds, such interest less any applicable bank charges will be distributed to the holders of Allowed Class 4 Claims on a Pro Rata basis. Amounts in respect of undeliverable distributions made through the Indenture Trustee, Seven-Up/RC, or such other agent as Seven-Up/RC may designate, as the case may be, will be returned to Reorganized Seven-Up/RC until such distributions are claimed. All claims for undeliverable distributions will be made on or before the fifth (5th) anniversary of Consummation. After such date, all unclaimed property will revert to Reorganized Seven-Up/RC and the claim of any holder or successor to such holder with respect to such property will be discharged and forever barred. 8. No Interest Except (i) as specifically provided for in the Plan or the Confirmation Order, (ii) with respect to Allowed Class 2.01 GE Capital Working Capital Secured Claims or Allowed Class 2.02 GE Capital of PR Secured Claims or (iii) with respect to an Allowed DIP Facility Claim, interest will not accrue on Claims, and no holder of a Claim will be entitled to interest accruing on or after the Petition Date on any Claim. Interest will not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if and after such Disputed Claim becomes an Allowed Claim; provided, however, that, if Seven-Up/RC objects to the allowance of a Claim after the Distribution Date and such Claim becomes an Allowed Claim, Seven-Up/RC will pay interest on such Allowed Claim from the date of the objection through the date of the initial distribution on such Allowed Claim at a rate of 6% per annum. 48 E. CONDITIONS TO CONFIRMATION AND CONSUMMATION 1. Conditions to Confirmation The following are conditions precedent to Confirmation of the Plan that must be satisfied unless waived in accordance with Section IX.C. of the Plan: (a) The Confirmation Order will be in form and substance reasonably acceptable to Seven-Up/RC, counsel to the Creditors Committee, and counsel to GE Capital. (b) The GE Capital Commitment Letter will be in effect and not have been terminated. (c) The Bankruptcy Court will have entered an order approving the Stock Purchase Agreement, which agreement will have been executed and delivered, will be in effect and will not have been terminated. 2. Conditions to Consummation The following are conditions precedent to the occurrence of Consummation, each of which must be satisfied unless waived in accordance with Section IX.C. of the Plan: (i) Confirmation will have occurred (ii) The Confirmation Order will have become a Final Order and provide, among other things, that: (1) The provisions of the Confirmation Order are nonseverable and mutually dependent. (2) All executory contracts or unexpired leases assumed by Seven-Up/RC during these Chapter 11 Cases or under the Plan will be assigned and transferred to, and remain in full force and effect for the benefit of, Reorganized Seven-Up/RC notwithstanding any provision in such contract or lease (including those described in sections 365(b)(2) and (f) of the Bankruptcy Code) that prohibits such assignment 49 or transfer or that enables or requires termination of such contract or lease. (3) The transfers of property by Seven-Up/RC and, to the extent applicable, BGAC (a) to Reorganized Seven-Up/RC (i) are or will be legal, valid, and effective transfers of property, (ii) vest or will vest Reorganized Seven-Up/RC with good title to such property free and clear of all liens, charges, Claims, encumbrances, or interests, except as expressly provided in the Plan or Confirmation Order, (iii) do not and will not constitute avoidable transfers under the Bankruptcy Code or under applicable bankruptcy or nonbankruptcy law, and (iv) do not and will not subject Reorganized Seven-Up/RC to any liability by reason of such transfer under the Bankruptcy Code or under applicable nonbankruptcy law, including, without limitation, any laws affecting successor or transferee liability, and (b) to holders of Claims under the Plan are for good consideration and value and are in the ordinary course of Seven-Up/RC's business. (4) Except as expressly provided in the Plan, Seven-Up/RC and BGAC are discharged effective upon Confirmation from any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code), and the Debtors' liability in respect thereof is extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, or known or unknown, or that arose from any agreement of Seven-Up/RC or BGAC that has either been assumed or rejected in these Chapter 11 Cases or pursuant to the Plan, or obligation of Seven-Up/RC or BGAC incurred before Confirmation, or from any conduct of Seven-Up/RC or BGAC prior to Confirmation, or that otherwise arose before Confirmation, including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the Petition Date. 50 (5) The Plan does not provide for the liquidation of all or substantially all of the property of Seven-Up/RC or BGAC and its Confirmation is not likely to be followed by the liquidation of Reorganized Seven-Up/RC or the need for further financial reorganization. (6) Any objection, not previously withdrawn or settled, to the adequacy of the information contained in the Disclosure Statement is overruled, and the information contained in the Disclosure Statement is adequate for the purpose of soliciting ballots for Confirmation of the Plan. (7) The substantive consolidation of BGAC with and into Seven- Up/RC is approved and authorized, and such substantive consolidation is in the best interests of the Estates. (iii) The Bankruptcy Court will have entered one or more orders (which may be the Confirmation Order), which have become Final Orders authorizing the assumption and assignment of all unexpired leases and executory contracts, including the Principal Licensing Agreements, to Reorganized Seven-Up/RC. (iv) No request for revocation of the Confirmation Order under section 1144 of the Bankruptcy Code will have been made, or, if made, will remain pending. (v) The sale of the stock of Seven-Up/RC of PR, pursuant to the Stock Purchase Agreement or substantially similar agreement, will have closed. (vi) The documents implementing the GE Capital Post-Consummation Facility will have been executed and delivered to Seven- Up/RC and the conditions to funding thereunder, except for those conditions relating to Consummation of the Plan and payments to be made in the Chapter 11 Cases, will have been satisfied or waived. 51 (vii) Seven-Up/RC's amended and restated certificate of incorporation will have been filed with the secretary of state of Delaware and will be in effect. (viii) Seven-Up/RC will have adopted its amended and restated by- laws and such by-laws will be in effect. (ix) Seven-Up/RC will have reserved (a) the Class 4 Proceeds for payment to holders of Allowed Class 4 Noteholders Claims and (b) the funds (if any) that must be distributed to the Disbursing Agent pursuant to the second paragraph of Section III.C.1. of the Plan. (x) The Merger Agreement will have been executed, delivered and filed with the secretary of state of Delaware. (xi) The Registration Rights Agreement will have been executed and delivered. 3. Waiver of Conditions to Confirmation and Consummation The conditions set forth in Sections IX.A. and IX.B.2. through B.4. of the Plan may be waived by Seven-Up/RC and BGAC without notice or a hearing; provided, however, that Seven-Up/RC or BGAC shall provide the Committee and GE Capital with notice of any waiver under this Section IX.C. The conditions set forth in Sections IX.B.1. and IX.B.5. through B.11. of the Plan may not be waived by Seven-Up/RC. F. EFFECTS OF PLAN CONFIRMATION 1. Discharge Except as otherwise provided in the Plan or in the Confirmation Order, upon Consummation all property distributed under the Plan will be in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims of any nature whatsoever against Seven-Up/RC and BGAC or any of its assets or properties, and, except as otherwise provided in the Plan or in the Confirmation Order, upon Confirmation, Seven-Up/RC and 52 BGAC will be deemed discharged and released under section 1141(d)(1)(A) of the Bankruptcy Code from any and all debts. The Confirmation Order will be a judicial determination of discharge of all liabilities of Seven-Up/RC and BGAC, subject to the occurrence of Consummation. The Confirmation Order will be a judicial determination of discharge and termination of all liabilities of and all Claims as of Consummation against Seven-Up/RC and BGAC, and all Interests in Seven-Up/RC and BGAC, except as otherwise specifically provided in the Plan. Upon Consummation, as to every discharged Claim and Interest, the creditor or equity holder that held such Claim or Interest as of Consummation will be permanently enjoined and precluded from asserting against Seven-Up/RC and BGAC, or against their assets or properties or any transferee thereof, any other or further Claim or Interest based upon any document, instrument or act, omission, transaction or other activity of any kind or nature that occurred prior to Consummation, except as expressly set forth in the Plan or in the Confirmation Order. 2. Revesting of Assets Pursuant to section 1141(b) of the Bankruptcy Code, the property of the Estates will revest in Seven-Up/RC upon Consummation of the Plan. Thereafter, Reorganized Seven-Up/RC may operate its business and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. Upon Consummation, all property of Seven-Up/RC will be free and clear of all Claims and Interests, including liens and security interests, except as specifically provided in the Plan or in the Confirmation Order. Without limiting the foregoing, Seven-Up/RC may, without application to or approval by the Bankruptcy Court, pay professional fees and expenses that it incurs after Confirmation. 3. Retention of Jurisdiction The Bankruptcy Court will have exclusive jurisdiction, under sections 105(a) and 1142 of the Bankruptcy Code, of all matters arising out of, and related to, these Chapter 11 Cases and the Plan including, among other things, the following matters: (1) to hear and determine any and all pending or future objections to the allowance of Claims relating to events or transactions occurring on or prior to Consummation; (2) to consider and rule on the compromise and settlement of any Claim against or cause of action on behalf of the Estates; (3) to hear and determine all pending or 53 future controversies, suits, and disputes that may arise in connection with the interpretation of the Plan or any documents intended to implement the provisions of the Plan; (4) to hear and determine any and all applications for the allowance of Professional Fees; (5) to hear and determine, if necessary, or to estimate or liquidate any and all claims arising from the rejection of executory contracts or unexpired leases pursuant to the Plan or otherwise; (6) to consider any modifications of the Plan permitted by the Bankruptcy Code; (7) to correct any defect, cure any omission, or reconcile any inconsistency in the Plan, including any exhibit thereto, or in any order of the Bankruptcy Court, including the Confirmation Order, as may be necessary to carry out the purposes and intent of the Plan and to implement and effectuate the Plan; (8) to determine such other matters as may be provided for in the Confirmation Order or other orders of the Bankruptcy Court as may be authorized under the provisions of the Bankruptcy Code or any other applicable law; (9) to enforce all orders, judgments, injunctions, and rulings entered in the Chapter 11 Cases; (10) to issue such orders as may be necessary or appropriate in aid of Confirmation and to facilitate Consummation of the Plan; (11) to enter an order closing the Chapter 11 Cases; (12) to recover all assets of Seven-Up/RC and property of the Estates, wherever located; and (13) to hear and determine (a) all motions, applications, adversary proceedings, and contested and litigated matters pending on Consummation, and (b) all claims by or against Seven-Up/RC arising under the Bankruptcy Code or nonbankruptcy law, if made applicable by the Bankruptcy Code, including claims to avoid fraudulent transfers under section 548 of the Bankruptcy Code, whether such claims are commenced before or after Consummation. 4. Failure of Court to Exercise Jurisdiction If the Court abstains from exercising or declines to exercise jurisdiction, or is otherwise without jurisdiction over any matter arising out of the Chapter 11 Case of Seven-Up/RC, the Plan will not prohibit or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter. 5. Post-Consummation Effect of Evidences of Claims or Interests Senior Secured Notes and other evidences of Claims against or Interests in Seven-Up/RC and BGAC will, effective upon 54 Consummation, represent only the right to participate in the distributions contemplated by the Plan. 6. Term of Injunctions or Stays Unless otherwise provided, all injunctions or stays imposed in the Chapter 11 Cases of Seven-Up/RC and BGAC pursuant to sections 105 or 362 of the Bankruptcy Code or otherwise and in effect on the Confirmation Date will remain in full force and effect until Consummation. 7. Releases As described above, see Section II "Components of the Plan," the granting of releases to certain parties-in-interest constituted an important element of the restructuring agreement negotiated in November, 1995 between Seven-Up/RC and the Noteholders Committee. The Plan incorporates and implements this aspect of the restructuring Agreement. Except as otherwise specifically provided by the Plan, any Person accepting any distribution pursuant to the Plan will be presumed conclusively to have released the Debtors, Reorganized Seven-Up/RC, and any other Person accepting any distribution pursuant to the Plan, successors and assigns of the Debtors, and such Persons, affiliates of the Debtors and such Persons, successors and assigns of such affiliates, present and former stockholders, directors, officers, agents, attorneys, advisors, financial advisors, investment bankers, and employees of the Debtors, such affiliates and such Persons, and any Person claimed to be liable derivatively through any of the foregoing, from any cause of action based on the same subject matter as the Claim or Interest on which the distribution is received. The release described in the preceding sentence will be enforceable as a matter of contract law against any Person that accepts any distribution pursuant to the Plan. Upon Consummation, the Debtors will conclusively be deemed to release (i) the following parties and their members and representatives, including but not limited to all professionals (such as accountants, financial advisors and attorneys) retained by such parties: (a) Seven-Up/RC and BGAC; 55 (b) the Committee; (c) the Noteholders Committee; (d) the Indenture Trustee; (e) the lenders under the DIP Facility; (f) all stockholders and their Affiliates of the Debtors or of an Affiliate of the Debtors; and (g) all directors and officers of the Debtors and their Affiliates holding such offices at any time during the period from and including March 15, 1996 through and including Confirmation from any and all liability based upon any act or omission related to past service with, for, or on behalf of the Debtors except for: 1. any indebtedness of any such person to the Debtors for money borrowed by such person; 2. any setoff or counterclaim the Debtors may have or assert against any such person, provided that the aggregate amount thereof will not exceed the aggregate amount of any Claims held or asserted by such person against the Debtors; 3. the uncollected amount of any claim made by the Debtors (whether in a filed pleading, by letter or otherwise asserted in writing) prior to the Consummation against such person which claim has not been adjudicated to Final Order, settled, or compromised; or 4. claims arising from the fraud, willful misconduct, or gross negligence of such persons. Notwithstanding the foregoing or anything in the Plan to the contrary, nothing herein will be deemed to release Westinghouse from any claim (as defined in section 101(5) of the Bankruptcy Code) of Seven-Up/RC, BGAC, WB, or Seven-UP/RC of PR against Westinghouse arising under that certain Asset and Stock Purchase Agreement dated as of March 30, 1990. 56 The Debtors are aware of no material released claim and of no claim asserted or threatened against any party being released. Under these circumstances, and in light of the benefit to Seven-Up/RC, the Debtors believe that the releases will help insure the success of the restructuring and are appropriate and valid under the Bankruptcy Code. Seven-Up/RC of PR is not providing a release of any claim it may hold against any party, and as expressly provided for in the Stock Purchase Agreement. 8. Injunction The satisfaction, release, and discharge pursuant to the Plan will also act as an injunction against any Person commencing or continuing any action, employment of process, or act to collect, offset, or recover any Claim or cause of action satisfied, released, or discharged under the Plan to the fullest extent authorized or provided by the Bankruptcy Court, including, without limitation, to the extent provided for or authorized by sections 524 and 1141 thereof. 9. Exculpation and Limitation of Liability Neither Seven-Up/RC, Reorganized Seven-Up/RC, the Committee, the Noteholders Committee, GE Capital nor any of their respective present or former members, officers, directors, employees, advisors, attorneys, or agents, will have or incur any liability to any holder of a Claim or an Interest, or any other party in interest, or any of their respective agents, employees, representatives, financial advisors, attorneys, or affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, these Chapter 11 Cases, the pursuit of Confirmation of the Plan, the Consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct, and in all respects will be entitled to rely reasonably upon the advice of counsel with respect to their duties and responsibilities under the Plan. Notwithstanding any other provision of the Plan, any holder of a Claim or an Interest, any other party in interest, and any of their respective agents, employees, representatives, financial advisors, attorneys, or affiliates, and any successors or assigns of the foregoing, will have no right of action against Seven-Up/RC, BGAC, Reorganized Seven-Up/RC, the Committee, the Noteholders 57 Committee, GE Capital or any of their respective present or former members, officers, directors, employees, advisors, attorneys, or agents, for any act or omission in connection with, relating to, or arising out of, these Chapter 11 Cases, the pursuit of Confirmation of the Plan, the Consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct. G. MISCELLANEOUS PROVISIONS 1. Executory Contracts and Unexpired Leases The term "Definitions executory contract" is not defined in the Bankruptcy Code. Generally, an "executory contract" is a contract for which substantial performance remains due from both parties; one commonly used definition is that an executory contract is one where the obligations of each party are so far unperformed that the failure of either party to complete performance would constitute a material breach excusing the performance of the other party. Upon Confirmation, all executory contracts and unexpired leases of Seven-Up/RC that are not specifically listed on Exhibit "B" to the Plan will be deemed automatically assumed and all executory contracts and unexpired leases of Seven- Up/RC, including any and all franchise, distribution, licensing, or cooperative association agreements, that are specifically listed on Exhibit "B" to the Plan, will be deemed automatically rejected as of Confirmation. Pursuant to section 365(a) of the Bankruptcy Code, the Confirmation Order will constitute an order of the Bankruptcy Court approving such rejections and assumptions. All executory contracts and unexpired leases of BGAC, if any, will be deemed automatically rejected as of Confirmation. Each assumed executory contract and unexpired lease of Seven-Up/RC that relates to the use or occupancy of real property will include (a) all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, and (b) all executory contracts or unexpired leases appurtenant to the premises, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, powers, uses, usufructs, reciprocal easement agreements, vaults, tunnel or bridge agreements, or franchises, and any other interests in real 58 estate or rights in rem related to such premises, unless any of the foregoing agreements has been rejected pursuant to a Final Order of the Bankruptcy Court or is listed on the schedule of rejected contracts and leases annexed as Exhibit "B" to the Plan. Any monetary amounts by which each executory contract and unexpired lease to be assumed under the Plan may be in default will be satisfied by Cure, under section 365(b)(1) of the Bankruptcy Code, at the option of Seven-Up/RC or its assignee assuming such contract or lease. In the event of a dispute regarding (i) the nature or the amount of any Cure, (ii) the ability of Reorganized Seven- Up/RC or any assignee to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (iii) any other matter pertaining to assumption, Cure will occur following the entry of a Final Order resolving the dispute and approving the assumption and, as the case may be, assignment; provided, however, that with respect to a dispute concerning Seven-Up/RC's proposed assumption of a Principal License Agreement, the entry of an order resolving such dispute will have become a Final Order on or before Consummation. If the rejection by Seven-Up/RC, pursuant to the Plan or the Confirmation Order, of an executory contract or unexpired lease results in a Claim, then such Claim will be barred forever and will not be enforceable against Seven-Up/RC, Reorganized Seven-Up/RC, or the properties of either of them unless a proof of claim is filed with the clerk of the Bankruptcy Court and served upon counsel to Seven-Up/RC and the Committee within thirty (30) days after service of a notice that the executory contract or unexpired lease has been rejected. All employment and severance agreements, and all employee compensation and benefit programs of Seven-Up/RC, including agreements and programs subject to sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into before or after the Petition Date and not since terminated, will be deemed to be, and will be treated as though they are, executory contracts that are assumed under the Plan, but only to the extent that rights under such agreements and programs are held by Seven-Up/RC or Persons who are Seven-Up/RC employees as of Confirmation, and Seven-Up/RC's obligations under such agreements and programs to persons who are employees of Seven-Up/RC upon Confirmation will survive Confirmation of the Plan, except for (i) such executory contracts or plans specifically 59 rejected pursuant to the Plan (to the extent such rejection does not violate sections 1114 and 1129(a)(13) of the Bankruptcy Code) and (ii) such executory contracts or plans as have previously been rejected, pursuant to a Final Order, or specifically waived by the beneficiaries of such plans or contracts or programs. Upon Consummation, each of the executory contracts and unexpired leases that is being, or previously has been, assumed will be assigned to Reorganized Seven- Up/RC. The Confirmation Order will approve such assignments pursuant to section 365 of the Bankruptcy Code. 2. Indemnification Obligations For purposes of the Plan, any right or obligation of Seven-Up/RC pursuant to its certificate of incorporation, by-laws, applicable state law or specific agreement to indemnify its shareholders or its officers, directors or employees who either (i) continue to serve Seven-Up/RC in one or more such capacities as of March 15, 1996 or (ii) have ceased to serve because of death or physical or mental disability, with respect to or arising out of events that occurred prior to the Petition Date, will be an obligation of Reorganized Seven-Up/RC. 3. Subsidiary of Seven-Up/RC Prior to consummation of the Subsidiary Sale, Seven-Up/RC of PR will remain a wholly-owned subsidiary of Seven-Up/RC. The Plan and the restructuring do not affect the rights of creditors of Seven-Up/RC of PR. Moreover, because of the Subsidiary Sale, after Consummation, Seven-Up/RC of PR will no longer be a subsidiary or affiliate of Seven-Up/RC. 4. Proofs of Claim Not Mandatory By order dated May 13, 1996, the Bankruptcy Court extended the time for Seven- Up/RC to file the schedules and statement of financial affairs until July 17, 1996, and deemed the requirement to file such schedules and statements permanently waived upon Confirmation of the Plan. If the Plan is not confirmed on or before July 17, 1996, Seven-Up/RC will seek an additional extension of the time to file such schedules and statements. The allowance or disallowance of each claim will be adjudicated as if no Chapter 60 11 Cases had occurred; provided, however, that Seven-Up/RC and BGAC may adjudicate any disputed claim in the Bankruptcy Court. 5. Modification of the Plan Seven-Up/RC and BGAC reserve the right to amend or modify the terms of the Plan in accordance with the provisions of section 1127 of the Bankruptcy Code. Under the Bankruptcy Code, such amendments or modifications may be approved by the Bankruptcy Court at Confirmation without resolicitation of votes if the Bankruptcy Court determines that, after notice as required by the Bankruptcy Code and the Bankruptcy Rules, that the proposed modification does not adversely change the treatment of any Claim or Interest of a Holder who has not accepted the modification in writing. Seven-Up/RC and BGAC will give Holders of Claims and Interests notice of such amendments and modifications as may be required by applicable law and will, in any event, provide notice of such amendments or modifications to counsel to the Committee and GE Capital. Seven-Up/RC and BGAC reserve the right to use acceptances of the Plan to confirm any amendment of the Plan to the extent permitted by law. After Confirmation, Seven-Up/RC may ask the Bankruptcy Court to remedy any defects or omissions or reconcile any inconsistencies in the Plan or the Confirmation Order as may be necessary to carry out the purposes and intent of the Plan, so long as the holders of Claims and Interests are not adversely affected and prior notice is served in accordance with the Bankruptcy Code and Bankruptcy Rules. 6. Substantive Consolidation and Continued Corporate Existence of Seven- Up/RC Prior to Consummation, BGAC will be substantively consolidated with and into Seven-Up/RC, and for purposes of the Plan, all Claims against BGAC shall be deemed Claims against Seven-Up/RC, and the property of BGAC shall be deemed to be property of Seven-Up/RC. Seven-Up/RC will continue to exist as a separate corporate entity in accordance with the laws of Delaware and pursuant to the certificate of incorporation and by-laws in effect prior to Consummation, except to the extent such certificate of incorporation and by-laws are amended and restated as provided for by the Plan. The substantive consolidation proposed under the Plan is appropriate in light of, among other factors, the fact that BGAC 61 has only two creditors, GE Capital and the Noteholders (the "BGAC Creditors"), and that BGAC is only secondarily liable to the BGAC Creditors for debts of Seven-Up/RC. GE Capital supports the Plan and it is believed that the Noteholders will also vote to accept the Plan. In light of this, there is no reason why BGAC should not be consolidated with and into Seven-Up/RC. In addition, it is unclear whether the BGAC Creditors relied upon the creditworthiness of BGAC. The substantive consolidation proposed under the Plan is in the best interests of the Debtors' creditors, as it will allow the proposal and consummation of a single plan with the least delay and administrative cost. Both the amended and restated certificate of incorporation and by-laws will include, among other things, pursuant to section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance of nonvoting equity securities. The amended certificate of incorporation of Reorganized Seven-Up/RC is attached as Exhibit "A" to the Plan. 7. Operations of Debtors Between Confirmation and Consummation Seven-Up/RC and BGAC will continue to operate as debtors-in-possession, subject to the supervision of the Bankruptcy Court, pursuant to the Bankruptcy Code during the period from Confirmation through and until Consummation, and any obligation incurred by the Debtors during that period will constitute an Administrative Claim; provided, however, that nothing herein will preclude either Seven-Up/RC or BGAC from taking any step they deem necessary or desirable to prepare for and effect the Consummation of the Plan. 8. Exclusivity Period Seven-Up/RC and BGAC will retain the exclusive right to amend the Plan and solicit acceptances thereof until Consummation. 9. Creditors' Committee The Committee will cease to exist after Consummation. 62 10. Effectuating Documents; Further Transactions The Chairman of the Board of Directors, the President, the Chief Operating Officer, the Chief Financial Officer, or any other appropriate officer of either Seven-Up/RC or BGAC will be authorized under the Plan to execute, deliver, file, or record such contracts, instruments, releases, indentures, certificates, and other agreements or documents, and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Secretary or Assistant Secretary of Seven-Up/RC and BGAC will be authorized to certify or attest to any of the foregoing actions, if necessary. 11. Procedure for Making Distributions to Holders of Noteholders Claims Each holder of an Allowed Class 4 Noteholders Claim will tender its Senior Secured Notes to the Indenture Trustee in accordance with written instructions to be provided to such holders by the Indenture Trustee as promptly as possible following Consummation. Such instructions will specify that delivery of such Senior Secured Notes will be effected, and the risk of loss and title thereto will pass, only upon the proper delivery of such Senior Secured Notes with a letter of transmittal in accordance with such instructions. All surrendered Senior Secured Notes will be marked as canceled and delivered. All distributions of Class 4 New Common Stock or Class 4 Proceeds on account of Allowed Class 4 Noteholders Claims will be made by the Indenture Trustee. It will be a condition to the making of any distribution of shares and Cash to any holder of an Allowed Class 4 Noteholders Claim that such holder will have tendered to the Indenture Trustee such holder's Senior Secured Notes or, in the event that any such Senior Secured Notes are lost, stolen, mutilated or destroyed, evidence satisfactory to the Indenture Trustee of the loss, mutilation or destruction of such Senior Secured Notes or, at the Indenture Trustee's option, an affidavit of such holder in accordance with Article 8 of the Uniform Commercial Code. Distributions under the Plan to any Person in respect of Senior Secured Notes will not be made if such Person has not complied with the provisions of the foregoing sentence within two (2) years following Consummation, and any such Person will be deemed to have no further Claim and will not participate in any distribution under the Plan. 63 12. Fractional Shares Notwithstanding any other provision of the Plan to the contrary, no fractional shares will be issued pursuant to the Plan. Whenever any payment of a fraction of a share under the Plan would otherwise be required, the actual distribution made will reflect a rounding of such fraction to the nearest whole share (up or down), with half shares or less being rounded down and fractions in excess of half a share being rounded up. 13. Fractional Cents Notwithstanding any other provision of the Plan to the contrary, no payment of fractional cents will be made pursuant to the Plan. Whenever any payment of a fraction of a cent under the Plan would otherwise be required, the actual distribution made will reflect a rounding of such fraction to the nearest whole penny (up or down), with half pennies or less being rounded down and fractions in excess of half a penny being rounded up. 14. De Minimis Distributions No Cash distribution of less than twenty-five dollars ($25.00) will be made by the Indenture Trustee or Seven-Up/RC in respect of any Allowed Claim unless a request therefor is made in writing to the Indenture Trustee. 15. Retained Litigation Claims In accordance with section 1123(b)(3) of the Bankruptcy Code, and except as otherwise provided in the Plan or in the Confirmation Order, Reorganized Seven- Up will retain and may expressly, in its sole discretion, enforce, sue on, settle, or compromise (or decline to do any of the foregoing) all claims, rights of action, suits, and proceedings, whether in law or in equity, whether known or unknown, that Seven-Up/RC, BGAC, or their estates may hold against any Person. Reorganized Seven-Up/RC or any of its successors may pursue such retained litigation claims in accordance with the best interests of Reorganized Seven- Up/RC or its successors who hold such rights of action. 64 16. Preservation of Insurance The discharge and release of Seven-Up/RC and BGAC from all Claims as provided in the Plan, except as necessary to be consistent with the Plan, will not diminish or impair the enforceability of any insurance policy that may cover Claims against Seven-Up/RC, BGAC or any other Person. 17. Section 1146 Exemption To the extent permitted by section 1146(c) of the Bankruptcy Code, the issuance, transfer, or exchange of any security under the Plan, or the execution, delivery, or recording of an instrument of transfer pursuant to, in implementation of, or as contemplated by the Plan, or the revesting, transfer, or sale of any property of the Debtors, including but not limited to the stock of Seven-Up of PR and Porta Pack Corporation held by Seven-Up/RC and sold under the Stock Purchase Agreement, pursuant to, in implementation of, or as contemplated by the Plan will not be taxed under any state or local law imposing a stamp tax, transfer tax, or similar tax or fee. Consistent with the foregoing, each recorder of deeds or similar official for any county, city, or governmental unit in which any instrument under the Plan or of the type referred to above is to be recorded will, pursuant to the Confirmation Order, be ordered and directed to accept such instrument, without requiring the payment of any documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax, or similar tax. 18. Binding Effect The Plan will be binding upon and inure to the benefit of Seven-Up/RC, Reorganized Seven-Up/RC, the holders of Claims, the holders of Interests, and their respective successors and assigns. 19. Withdrawal or Non-Consummation If Seven-Up/RC and BGAC withdraw the Plan prior to Confirmation, or if Confirmation or Consummation does not occur, then the Plan, any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Class of Claims), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant to the Plan, will be deemed null and void. In such event, nothing contained herein, and no acts taken in preparation for 65 Consummation of the Plan, will be deemed to constitute a waiver or release of any Claims by or against Seven-Up/RC, BGAC or any other Person, to prejudice in any manner the rights of Seven-Up/RC, BGAC or any Person in any further proceedings involving Seven-Up/RC or BGAC, or to constitute an admission of any sort by Seven-Up/RC, BGAC or any other Person. VIII. CERTAIN FACTORS TO BE CONSIDERED Prior to deciding whether to vote to accept or reject the Plan, each holder of Senior Secured Notes should carefully consider all of the information contained in this Disclosure Statement, especially the factors described or cross- referenced in the following paragraphs. A. GENERAL CONSIDERATIONS The formulation of a reorganization plan is the principal purpose of a Chapter 11 case. The Plan sets forth the means for satisfying the holders of Claims against Seven-Up/RC. Reorganization of Seven-Up/RC under the proposed Plan also avoids the potentially adverse impact of a liquidation on Seven-Up/RC employees, and many of its customers, suppliers and trade vendors. B. CERTAIN BANKRUPTCY CONSIDERATIONS If the Plan is not confirmed and consummated, there can be no assurance that the Chapter 11 Cases will continue rather than be converted to a liquidation, or that any alternative plan of reorganization would be on terms as favorable to holders of Claims as the terms of the Plan. If a liquidation or protracted reorganization were to occur, the distributions to creditors under the Plan would be drastically reduced. Seven-Up/RC believes that in a liquidation under Chapter 7, before creditors received any distributions, additional administrative expenses of a trustee and such trustee's attorneys, accountants and other professionals would cause a substantial diminution in the value of the estate. In addition, certain Claims would arise by reason of the liquidation and from the rejection of unexpired leases and other executory contracts in connection with the cessation of Seven-Up/RC's operations. Moreover, the creditors would receive substantially less because of the inability in a liquidation to realize the greater going concern value of Seven-Up/RC's assets. 66 Seven-Up/RC's liquidation analysis, prepared with Whitman Heffernan's assistance, is premised on a liquidation in a Chapter 7 case and is attached as Exhibit "F" hereto. In the analysis, Seven-Up/RC has taken into account the nature, status and underlying value of its assets, the ultimate realizable value of its assets, and the extent to which such assets are subject to liens and security interests. Based on this analysis, and as indicated on the recovery summary included as part of Exhibit "F" to this Disclosure Statement, it is likely that a liquidation of Seven-Up/RC's operations would produce less value for distribution to creditors than that recoverable in each instance under the Plan. In the opinion of Seven-Up/RC, the recoveries projected to be available in liquidation are not likely to afford holders of Claims as great a realization potential as does the Plan. C. INHERENT UNCERTAINTY OF FINANCIAL PROJECTIONS The Projections forecast Seven-Up/RC's operations through the period ending December 31, 2000. The Projections are based on numerous assumptions that are an integral part of the Projections, including Confirmation and Consummation of the Plan in accordance with its terms, the anticipated future performance of Reorganized Seven-Up/RC, industry performance, general business and economic conditions, competition, adequate financing, continued supply of raw materials at assumed prices, and other matters, many of which are beyond the control of Reorganized Seven-Up/RC and some or all of which may not materialize. In addition, unanticipated events and circumstances occurring subsequent to the date that this Disclosure Statement was approved by the Bankruptcy Court may affect the actual financial results of Reorganized Seven-Up/RC's operations. These variations may be material and may adversely affect the ability of Reorganized Seven-Up/RC to pay the obligations owing to certain holders of Claims entitled to distributions under the Plan. Because the actual results achieved throughout the periods covered by the Projections may vary from the projected results, the Projections should not be relied upon as a guaranty, representation, or other assurance of the actual results that will occur. D. COMPETITION The soft drink bottling business is highly competitive and is affected by changes in population growth rates, the climate, and the beverage consumption preferences of the general public. Key 67 competitive factors of the soft drink bottling industry are price, advertising, sales volume, promotional incentives, and franchisor subsidies. Over the past several years, market conditions have limited Seven-Up/RC's ability to increase many of its products' prices. Seven-Up/RC, as well as other bottlers, have been forced to cut prices in response to intense price competition between Coca-Cola Enterprises Inc. and company-owned bottling operations of the Pepsi-Cola Company. This price competition has eroded per case margins market-wide and may continue to the extent that both competitors are directed by their respective syrup franchisors to reduce prices further in order to increase soft drink syrup sales. Seven-Up/RC may not have adequate financial resources to meet future competitive challenges. For example, Seven-Up/RC relies to a substantial degree upon advertising and promotional funds provided by its franchisors. These support funds are negotiated on an annual basis and may be reduced or terminated. In the event that Seven-Up/RC's franchisors reduce or terminate these funds, Seven-Up/RC may be unable to maintain the same degree of advertising and promotional activity and as a result, consumer demand for its beverage products may slip. E. RELATIONSHIP WITH FRANCHISORS Seven-Up/RC's agreements with its beverage brand franchisors cover all of Seven-Up/RC's present bottling territories and most of its beverage products. Pursuant to these agreements, prices for beverage concentrate are fixed and non- negotiable and Seven-Up/RC covenants not to transfer control of its bottling rights without franchisor consent. In addition, a franchisor may terminate Seven-Up/RC's bottling rights with respect to that franchisor's products upon the occurrence of an event of default under any of Seven-Up/RC's franchise agreements and in certain other limited circumstances. Termination of Seven- Up/RC's bottling rights by the franchisors of its principal products would constitute a default under its revolving credit facility and could have a material adverse effect on Seven-Up/RC's financial position. 68 F. LOCAL ECONOMIES Seven-Up/RC's sales are dependent on the condition of the local economies in its territories, which, with respect to export sales, includes currency fluctuations. The recent recessions in Seven-Up/RC's territories adversely impacted Seven-Up/RC's sales volume. There is no assurance that the economies in these territories will improve or that such recessions will not occur again in the near future. G. GOVERNMENT REGULATION The production, distribution, and sale of many of Seven-Up/RC's products are subject to federal, state, and local statutes governing, health, sanitation, environmental matters, safety, and the sale of alcoholic beverages. Seven-Up/RC believes that it has all licenses and approvals that are material to the operation of its business. Seven-Up/RC also believes that its operations are in material compliance with applicable laws and regulations. Seven-Up/RC is subject to laws governing recycling. The state of California imposes a recycling fee for carbonated beverage containers on soft drink bottlers and requires that all carbonated beverage containers clearly state that the fee will be used exclusively to promote recycling. The recycling fee is $0.025 per container holding twenty-four ounces or less and $0.05 per container holding twenty-five ounces or more. Although Seven-Up/RC is required under California law to pay the recycling fee, Seven-Up/RC recoups its cost by including the fee on its sales invoices. California may automatically increase its recycling fee if targeted statewide recycling rates are not reached; however, Seven-Up/RC believes that future fee increases, if any, will be minimal because of the success of California's recycling program. Substantially all of Seven-Up/RC's facilities are subject to federal, state, and local laws that regulate the environment. Complying with these environmental laws has not materially affected Seven-Up/RC's capital expenditures, net income, or competitive position. However, the costs of complying with existing and future environmental laws can not be predicted with any degree of certainty and may significantly affect Seven-Up/RC's future operations. 69 Seven-Up/RC does not currently sell products in any state that requires deposits on bottles or cans. However, if a national container deposit law were implemented, Seven-Up/RC's operating costs could be significantly affected. H. DISRUPTION OF OPERATIONS The Chapter 11 Cases, even in connection with a consensual Plan, could adversely affect Seven-Up/RC's relationships with its trade creditors, franchisors, employees, and customers. If such relationships are adversely affected, Seven-Up/RC's operations could be materially affected. I. CONSIDERATIONS RELATING TO ACCEPTANCE OF THE PLAN 1. Risk of Non-Confirmation of the Plan Even if all impaired classes of Claims accept or are deemed to have accepted the Plan, or, with respect to a class that rejects the Plan, the requirements for cramdown are met, the Bankruptcy Court, which may exercise substantial discretion, may choose not to confirm the Plan. Section 1129 of the Bankruptcy Code requires, among other things, a demonstration that the Confirmation of the Plan will not be followed by liquidation or need for further financial reorganization of Seven-Up/RC (the "Definitions Feasibility Test"), and that the value of distributions to creditors who do not accept the Plan may not be less than the value of distributions such creditors would receive if Seven-Up/RC was liquidated under Chapter 7 of the Bankruptcy Code (the "Definitions Best Interests Test"). Although Seven-Up/RC believes that the Plan will meet such tests, there can be no assurance that the Bankruptcy Court will reach the same conclusion. Seven-Up/RC reserves the right to seek Confirmation of the Plan from the Bankruptcy Court by employing the "cramdown" procedures set forth in section 1129(b) of the Bankruptcy Code if a class of Claims votes to reject the Plan. In order to confirm the Plan under section 1129(b), the Bankruptcy Court must determine that, in addition to satisfying all other requirements for Confirmation, the Plan "does not discriminate unfairly" and is "fair and equitable" with respect to each impaired class that has not accepted the Plan. 70 2. Risk that the Plan will Not be Consummated Consummation of the Plan is conditioned upon, among other things, completion of the Subsidiary Sale and Reorganized Seven-Up/RC entering into the GE Capital Post-Consummation Facility. See Section VII.D. "Summary of the Plan --- Means for Execution of the Plan." There can be no assurance, however, that the Subsidiary Sale will not be delayed or challenged or that the GE Capital Post- Consummation Facility will be executed. Accordingly, even if the Plan is confirmed by the Bankruptcy Court, there can be no assurance that the Plan or the restructuring will be consummated. IX. RESALE OF SECURITIES RECEIVED UNDER PLAN Pursuant to the Plan, holders of the Senior Secured Notes will receive a Pro Rata share of the Class 4 New Common Stock. Under section 1145(a) of the Bankruptcy Code, the issuance of securities to be distributed under the Plan and the subsequent resale of such securities by entities which are not "underwriters" (as defined in section 1145(b) of the Bankruptcy Code) are not subject to the registration requirements of section 5 of the Securities Act of 1933. BECAUSE OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR HOLDER MAY BE AN UNDERWRITER, SEVEN-UP/RC MAKES NO REPRESENTATION CONCERNING THE ABILITY OF ANY PERSON TO DISPOSE OF THE SECURITIES TO BE DISTRIBUTED UNDER THE PLAN. Section 1145(b)(1) of the Bankruptcy Code provides: (b)(1) Except as provided in paragraph (2) of this subsection and except with respect to ordinary trading transactions of an entity that is not an issuer, an entity is an underwriter under section 2(11) of the Securities Act of 1933, if such entity -- (A) purchases a claim against, interest in, or claim for an administrative expense in the concerning, the debtor, if such purchase is with a view to distribution of any security received or to be received in exchange for such a claim or interest; (B) offers to sell securities offered or sold under the plan for the holders of such securities; 71 (C) offers to buy securities offered or sold under the plan from the holders of such securities, if such offer to buy is-- (i) with a view to distribution of such securities; and (ii) under an agreement made in connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan; or (D) is an issuer, as used in such section 2(11), with respect to such securities. (2) An entity is not an underwriter under section 2(11) of the Securities Act of 1933 or under paragraph (1) of this subsection with respect to an agreement that provides only for-- (A) (i) the matching or combining of fractional interests in securities offered or sold under the plan into whole interests, or (ii) the purchase or sale of such fractional interests from or to entities receiving such fractional interests under the plan; or (B) the purchase or sale for such entities of such fractional or whole interests as are necessary to adjust for any remaining fractional interests after such matching. (3) An entity other than an entity of the kind specified in paragraph (1) of this subsection is not an underwriter under section 2(11) of the Securities Act of 1933 with respect to any securities offered or sold to such entity in the manner specified in subsection (a)(1) of this section. (c) An offer or sale of securities of the kind and in the manner specified under subsection (a)(1) of this section is deemed to be a public offering. 72 (d) The Trust Indenture Act of 1939 does not apply to a note issued under the plan that matures not later than one year after effective date of the plan. SEVEN-UP/RC RECOMMENDS THAT RECIPIENTS OF SECURITIES UNDER THE PLAN CONSULT WITH LEGAL COUNSEL CONCERNING THE LIMITATIONS ON THEIR ABILITY TO DISPOSE OF SUCH SECURITIES. There can be no assurance that an active market for any of the securities to be distributed under the Plan will develop and no assurance can be given as to the prices at which they might be traded. X. VOTING REQUIREMENTS On June__, 1996, the Bankruptcy Court entered the order, among other things, approving this Disclosure Statement, setting voting procedures, and scheduling the hearing on Confirmation of the Plan. A copy of the Confirmation Hearing Notice is enclosed with this Disclosure Statement. It sets forth in detail, among other things, procedures governing voting deadlines and objection deadlines. The Confirmation Hearing Notice and the instructions attached to the Ballot should be read in connection with this section of this Disclosure Statement. If you have any questions about the procedure for voting your Claim or the packet of materials you received, please contact the Voting Agent: Hill and Knowlton, Inc. 466 Lexington Avenue New York, New York 10017 (212) 885-0555 If you wish to obtain an additional copy of the Plan, this Disclosure Statement, or any exhibits to such documents, at your own expense, unless otherwise specifically required by Bankruptcy Rule 3017(d), please contact the Voting Agent. The Bankruptcy Court may confirm the Plan only if it determines that the Plan complies with the technical requirements of Chapter 11 of the Bankruptcy Code and that the disclosures of Seven-Up/RC concerning the Plan have been adequate and have 73 included information concerning all payments made or promised by Seven-Up/RC in connection with the Plan and the Chapter 11 Case. In addition, the Bankruptcy Court must determine that the Plan has been proposed in good faith and not by any means forbidden by law. In particular, the Bankruptcy Code requires the Bankruptcy Court to find, among other things, the (i) the Plan has been accepted by the requisite votes of all Classes of Impaired Claims and Interests unless approval will be sought under section 1129(b) of the Bankruptcy Code in spite of the dissent of one or more such Classes, which will be the case under the Plan, (ii) the Plan is "feasible," which means that there is a reasonable probability that Confirmation of the Plan will not be followed by liquidation or the need for further financial reorganization, and (iii) the Plan is in the "best interests" of all holders of Claims or Interests, which means that such holders will receive at least as much under the Plan as they would receive in a liquidation under Chapter 7 of the Bankruptcy Code. The Bankruptcy Court must find that all conditions mentioned above are met before it can confirm the Plan. Seven-Up/RC believes that the Plan satisfies all these conditions. A. VOTING ON THE PLAN This Disclosure Statement and the appropriate Ballot are being distributed to all holders of Claims who are entitled to vote on the Plan. There is a separate Ballot designated for each impaired voting class in order to facilitate vote tabulation; however, all Ballots are substantially similar in form and substance and the term "Definitions Ballot" is used without intended reference to the Ballot of any specific class of Claims. Who May Vote Holders of Claims in the following classes are receiving or retaining property under the Plan, are impaired by the Plan, and are therefore entitled to vote on the Plan: Class 4: Claims of Holders of Senior Secured Notes; and Class 5: Claims of Holder of GE Capital Term Loan Only holders of Senior Secured Notes on the Record Date and the GE Capital Term Loan are eligible to vote on the Plan. See "Beneficial Owners of Old Securities" below. As fixed by the Bankruptcy Court, the Record Date is June 19, 1996. 74 In addition, WB, the only holder of the Class 6 Old Common Stock Interests, is entitled to vote, but is deemed to have accepted the Plan, pursuant to order of the Bankruptcy Court dated June __, 1996. Voting Procedures for Holders of Impaired Claims on the Record Date If you are a registered holder of Senior Secured Notes on the Record Date, you will receive the Ballot relating to the Senior Secured Notes that you hold of record. Registered holders may include brokerage firms, commercial banks, trust companies, or other Nominees. If such Nominees hold Senior Secured Notes, but do not hold Senior Secured Notes for their own account, they should immediately provide copies of this Disclosure Statement and the appropriate Ballot to their customers and to beneficial owners. For further instructions, see "Beneficial Owners of Senior Secured Notes" below. Any beneficial owner who has not received a Disclosure Statement or Ballot should contact its brokerage firm or nominee, or the Voting Agent. All votes to accept or reject the Plan with respect to any class of Claims must be cast by using the form of Ballot designated for such class. Ballots must be received by the Voting Agent no later than 4:30 p.m., Eastern Daylight Time, on July ___, 1996, the Voting Deadline. Seven-Up/RC will notify the Voting Agent of any extension by oral or written notice and will make a public announcement thereof, each prior to 9:00 a.m., Eastern Daylight Time, on the next business day after the previously scheduled Voting Deadline. Holders of impaired Claims on the Record Date who vote on the Plan should complete and sign the Ballot in accordance with the instructions thereon, being sure to check the appropriate box entitled "Accept the Plan" or "Reject the Plan." Each holder must vote all Senior Secured Notes beneficially owned in a particular class in the same way (i.e., all "accept" or all "reject") even if such Senior Secured Notes are owned through more than one broker or bank. Ballots must be delivered to the Voting Agent, at its address set forth on the back cover of this Disclosure Statement. The method of such delivery is at the election and risk of the holder. If such delivery is by mail, it is recommended that holders use an 75 air courier with a guaranteed next day delivery or registered mail, properly insured, with return receipt requested. In all cases, sufficient time should be allowed to assure timely delivery. You may receive multiple copies of this Disclosure Statement, especially if you own Senior Secured Notes through more than one broker or bank. If you submit more than one Ballot for a class or issue of Senior Secured Notes because you beneficially own such Senior Secured Notes through more than one broker or bank, be sure to indicate in Item 3 of the Ballot(s) the names of ALL broker- dealers or other intermediaries who hold Senior Secured Notes for you. Beneficial Owners of Senior Secured Notes Any holder holding Senior Secured Notes on the Record Date in its own name can vote by completing and signing the enclosed Ballot and returning it directly to the Voting Agent on or before the Voting Deadline using the enclosed pre- addressed stamped envelope. Any holder holding Senior Secured Notes on the Record Date through a Nominee can vote by either (i) completing the beneficial owner Ballot and returning it to such Nominee early enough to permit such registered holder to transcribe the information from the beneficial owner Ballot onto a Master Ballot and return the Master Ballot to the Voting Agent before the Voting Deadline, or (ii) if the Ballot has been executed by the Nominee, by completing the Ballot and returning it directly to the Voting Agent by the Voting Deadline. By submitting a vote for or against the Plan, you are certifying that you are the Holder of the Senior Secured Notes being voted or an authorized signatory for such a Holder. Your submission of a Ballot will also constitute a request that you (or in the case of an authorized signatory, the beneficial owner) be treated as the beneficial holder of such securities for purposes of voting on the Plan. Brokerage Firms, Banks, and Other Nominees A Nominee which is the registered holder of a Senior Secured Note for a beneficial owner, or is a participant in a securities clearing agency and is authorized to vote in the name of such securities clearing agency pursuant to an omnibus proxy (as 76 described below) and is acting for a beneficial owner, can vote on behalf of such beneficial owner by (i) distributing a copy of this Disclosure Statement and all appropriate Ballots to such beneficial owner, (ii) collecting all such Ballots, (iii) completing a Master Ballot compiling the votes and other information from the Ballots collected, and (iv) transmitting such completed Master Ballot to the Voting Agent by the Voting Deadline. A proxy intermediary acting on behalf of a brokerage firm or bank may follow the procedures outlined in the preceding sentence to vote on behalf of such beneficial owner. A Nominee which is the registered holder of a Senior Secured Note for one or more beneficial owners also may arrange for such beneficial owners to vote by executing the appropriate Ballot and by distributing a copy of the Disclosure Statement and such executed Ballot to such beneficial owners, who will then vote and return such Ballot to the Voting Agent. Voting Deadline and Extensions In order to be counted for purposes of voting on the Plan, all of the information requested on the applicable Ballot must be provided. Ballots must be received by the Voting Agent at its address set forth on the back cover of this Disclosure Statement no later than 4:30 p.m., Eastern Daylight Time, on July___, 1996, the Voting Deadline. Withdrawal or Change of Votes on the Plan A Ballot may be withdrawn by delivering a written transmission notice of withdrawal to the Voting Agent (or, if the Senior Secured Notes are held by a Nominee, to the Nominee so that the Nominee may deliver such notice of revocation to the Voting Agent), in each case so that the Voting Agent receives such notice prior to the Voting Deadline Thereafter, withdrawal may be effected only with the approval of the Bankruptcy Court. In order to be valid, a notice of withdrawal must (i) specify the name of the holder who submitted the votes on the Plan to be withdrawn; (ii) contain the description of the Senior Secured Notes to which it relates and the aggregate principal amount or number of notes represented by such Senior Secured Notes; and (iii) be signed by the holder in the same manner as on the Ballot. Seven- Up/RC and BGAC expressly reserve the absolute right to contest the validity of any such withdrawals of votes on the Plan. 77 Any holder who has previously submitted to the Voting Agent (or if the Senior Secured Notes are held by a Nominee so that the Nominee may deliver such subsequent Ballot to the Voting Agent) prior to the Voting Deadline a properly completed Ballot may change such vote by submitting to the Voting Agent prior to the Voting Deadline a subsequent properly completed Ballot for acceptance or rejection of the Plan. In the case where more than one timely, properly completed Ballot is received, only the one that bears the latest date will be counted for purposes of determining whether sufficient acceptances required to seek Confirmation of the Plan have been received. If more than one Master Ballot is submitted and the later dated Master Ballot(s) supplement rather than supersede the earlier Master Ballot(s), please mark the subsequent Master Ballot(s) with the words "Additional Votes" or such other language as is customarily used to indicate additional votes that are not meant to revoke earlier votes. B. SURRENDER OF SENIOR SECURED NOTES As a condition to receiving any distribution pursuant to the Plan, each holder of Senior Secured Notes must (i) surrender such Senior Secured Notes to the Disbursing Agent, or (ii) provide an affidavit of loss with regard to such Senior Secured Notes which is in form and substance satisfactory to the Disbursing Agent. If no surrender of such Senior Secured Notes occurs and such holder does not provide an affidavit acceptable to the Disbursing Agent, then no distribution may be made to any holder whose Claim is based on such Senior Secured Note. XI. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following is a general summary of certain material federal income tax consequences of the Plan for Seven-Up/RC, its creditors and its shareholders. This summary does not discuss all aspects of federal income taxation that may be relevant to Seven-Up/RC, to a particular creditor or to a particular shareholder in light of its investment circumstances or to creditors or shareholders subject to special treatment under the federal income tax laws, such as tax-exempt entities, foreign corporations or individuals who are not citizens or residents of the United States. It also does not discuss any aspects of state, local or foreign taxation. This summary is based on the Internal Revenue Code of 1986, as amended (the "Tax Code"), Treasury regulations promulgated thereunder, rulings and judicial decisions, all of which are subject to change, 78 possibly with retroactive effect. Moreover, the tax consequences of certain aspects of the Plan are uncertain because of the lack of applicable legal precedent. Consequently, each creditor and shareholder is urged to consult with his own tax advisor as to the specific tax consequences to him of the Plan. A. FEDERAL INCOME TAX CONSEQUENCES TO SEVEN-UP/RC 1. Subsidiary Sale As a result of the Subsidiary Sale, Seven-Up/RC will recognize (i) ordinary income equal to the amount of consideration received under the Consulting Agreement and (ii) gain (most of which will be capital gain, but some of which will be ordinary income) equal to the excess of the amount of consideration received under the Stock Purchase Agreement over Seven-Up/RC's adjusted tax basis in the stock of Seven-Up/RC of PR and Porta Pack. If the Subsidiary Sale occurs on or before the Consummation Date, Seven-Up/RC will be permitted to offset this ordinary income and capital gain with existing net operating loss carryforwards. In that case, the Subsidiary Sale should not generate any regular federal income tax liability for Seven-Up/RC. However, the ordinary income and capital gain will be subject to an alternative minimum tax ("AMT") at an effective rate of approximately 2% of applicable alternative minimum taxable income. If the Subsidiary Sale were not to occur on or prior to the Consummation Date, Seven-Up/RC likely would be unable to offset much of the gain on the Subsidiary Sale with net operating losses because Seven-Up/RC's existing net operating losses will be substantially reduced as a result of the reorganization (see Discharge of Indebtedness below). In that case, Seven-Up/RC would be subject to regular income tax on the Subsidiary Sale. 2. Discharge Of Indebtedness Seven-Up/RC will realize discharge of indebtedness income if a Claim is not paid in full or if a Claim is Reinstated or modified, provided that such Reinstatement or modification constitutes a "significant modification" that is a realization event for tax purposes and the creditor is not paid in full (i.e., does not receive Cash and/or property with a fair market value equal to the full amount of the Claim). In accord with this rule, 79 Seven-Up/RC will realize discharge of indebtedness income upon the exchange of the Senior Secured Notes for Class 4 Proceeds and Class 4 New Common Stock, except and only to the extent that payment of the indebtedness would have resulted in a deduction. Such discharge of indebtedness income will equal the excess of the amount owed by Seven-Up/RC with respect to such Senior Secured Notes over the sum of the amount of money, and the fair market value of the New Common Stock transferred to the holders of such Senior Secured Notes. For purposes of the Projections set forth in Exhibit "C" hereto, the computation of the discharge of indebtedness income assumes that the fair market value of New Common Stock transferred to Noteholders equals approximately $29,400,000. Such discharge of indebtedness income will not be included in Seven-Up/RC's gross income, but in general will be applied first to reduce Seven-Up/RC's end- of-the-year tax attributes (e.g., net operating and capital loss carryovers) and then, to the extent the amount of such discharge of indebtedness income exceeds Seven-Up/RC's tax attributes, to reduce Seven-Up/RC's adjusted tax basis in its assets. It is anticipated that the discharge of indebtedness income realized from the exchange of the Senior Secured Notes for Class 4 Proceeds and Class 4 New Common Stock will result in the substantial reduction of some of Seven- Up/RC's tax attributes, including Seven-Up/RC's net operating losses remaining after the Subsidiary Sale. 3. Use Of Tax Attributes Pursuant to the Plan, the Class 4 New Common Stock will be issued to the Noteholders, subject to dilution upon the exercise of the Management Option and the WB Warrant. The Old Common Stock of Seven-Up/RC thereafter will be canceled and WB will cease to have a majority equity interest in Reorganized Seven-Up/RC. As a result, Seven-Up/RC will undergo an "ownership change" within the meaning of the Tax Code as of the Distribution Date. Accordingly, Seven-Up/RC's ability to use certain tax attributes (including any net operating losses, remaining net operating loss carryovers or net unrealized built-in losses) that arose prior to the ownership change to offset its taxable income, if any, generated in taxable periods after the ownership change will be subject to an annual limitation (the "Annual Limitation"). The Annual Limitation generally will equal (i) the value of Seven-Up/RC immediately after the ownership change multiplied by (ii) the long-term tax-exempt 80 rate, as announced each month by the Treasury Department, on the date of the ownership change. However, the Annual Limitation will equal zero if Reorganized Seven-Up/RC does not continue the "business enterprise" of Seven-Up/RC, as that term is defined for tax purposes, for at least two years from the Distribution Date. Based upon an assumed equity value for Reorganized Seven-Up/RC of $30.0 million and a current rate of 5.68% for ownership changes that occur in May, 1996, the Projections assume that the Annual Limitation will be approximately $1.7 million. It is anticipated that Seven-Up/RC's net operating loss carryovers will be substantially reduced as a result of Seven-Up/RC's realization of discharge of indebtedness income. In addition, Reorganized Seven-Up/RC is expected to have net unrealized built-in losses in its assets (i.e., adjusted tax basis in excess of fair market value at the time of the consummation of the Plan) equal to approximately $32.7 million, which will be subject to the Annual Limitation if such losses are recognized within five years from the consummation of the Plan (the "recognition period"). Built-in losses inherent in a particular asset will be treated as recognized either when the asset is sold or when the asset generates depreciation or amortization deductions. In the latter case, only the depreciation or amortization attributable to the built-in loss amount (the "Limited Depreciation") will be subject to the Annual Limitation. The Projections assume that Seven-Up/RC will generate Limited Depreciation during the recognition period in excess of the assumed $1.7 million Annual Limitation on the deductibility of such losses. Seven-Up/RC's Limited Depreciation in excess of the Annual Limitation will be treated similar to a net operating or net capital loss carryforward, as the case may be, for federal income tax purposes. Such loss carryforward will be subject to the Annual Limitation until such deduction is utilized or expires generally. The recognition of net unrealized built-in losses (including by depreciation or amortization) could affect Seven-Up/RC's liability for AMT since, for purposes of computing the base subject to the AMT, the basis of Seven-Up/RC's assets will be their fair market value immediately before the ownership change, and not the higher adjusted tax basis. Due to the uncertainty with regard to the disposition of assets with such net unrealized built-in losses, Seven-Up/RC cannot predict the precise impact of such limitations on the ultimate deductibility of all such losses or the possible exposure to AMT caused by such disposition. 81 B. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS 1. Holders Of Unimpaired Claims A holder whose Claim is paid in full on the Consummation Date will recognize gain or loss for federal income tax purposes equal to the difference between such payment and his adjusted tax basis in the Claim. A holder whose Claim is Reinstated, provided that such Reinstatement does not result in a "significant modification" of the Claim for tax purposes, will not realize gain or loss as a result of the Plan. However, a holder whose Claim is Reinstated or modified in a way that is considered a "significant modification" of the Claim for tax purposes, or who is treated as having received interest, damages, or other income in connection with a Reinstatement or modification, will realize gain or loss for federal income tax purposes. Such gain or loss will be recognized unless such Reinstatement or modification constitutes a tax-free recapitalization, which is unlikely. 2. Holders Of Senior Secured Notes (a) General In general, Noteholders will realize gain or loss on the exchange of an Allowed Class 4 Noteholders Claim for Class 4 Proceeds and Class 4 New Common Stock in an amount equal to the difference between (i) the sum of (x) the amount of money and (y) the fair market value of the Class 4 New Common Stock received and (ii) the adjusted tax basis of the holder in the Senior Secured Notes surrendered in exchange therefor. In accordance with the Plan, distributions to holders of Allowed Class 4 Noteholders Claims will be deemed to be applied first to payment of the outstanding principal on the Senior Secured Notes and second to payment of accrued and unpaid interest under the Senior Secured Notes. Whether or not a Noteholder will be required or allowed to recognize the gain or loss realized on the exchange of a Senior Secured Note for Class 4 Proceeds and Class 4 New Common Stock depends on whether such exchange constitutes a recapitalization. This, in turn, depends upon whether the Senior Secured Notes constitute "securities" for federal income tax purposes. Whether an instrument constitutes a "security" for federal income tax purposes is determined based on all the facts and circumstances. 82 Certain authorities have held that the length of the term of a debt instrument is a factor in determining whether such instrument is a security for federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are numerous other factors that could be taken into account in determining whether a debt instrument is a security, including among others, the security for payment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote or otherwise participate in the management of the obligor, convertibility of the instrument into an equity interest of the obligor, whether payments of interest are fixed, variable or contingent and whether such payments are made on a current basis or are accrued. Thus, in general, if the Senior Secured Notes constitute securities, the exchange of a Senior Secured Note for Class 4 Proceeds and Class 4 New Common Stock will constitute a recapitalization. In such a case, a Noteholder that receives Cash in the exchange will not recognize any loss, but will recognize any gain realized in such exchange to the extent of the lesser of (i) the amount of gain realized or (ii) the amount of money received (reduced by the amount of such money that is allocated to accrued but unpaid interest, as discussed below). The tax basis of a holder of Class 4 New Common Stock received in the exchange generally will be equal to the adjusted tax basis of such holder in the Senior Secured Notes surrendered in exchange therefor increased by the gain, if any, recognized and reduced by the amount of money received. The holding period of a holder of the Class 4 New Common Stock received in the exchange generally will include the holding period of such holder in the Senior Secured Notes surrendered in exchange therefor (provided such Senior Secured Notes were held as a capital asset at the time of the exchange). If the Senior Secured Notes do not constitute securities, the entire amount of gain or loss realized by a Noteholder will be recognized for federal income tax purposes. The tax basis of a Noteholder in the Class 4 New Common Stock will be equal to the fair market value of the New Common Stock at the time of the exchange. In that event, the holding period of a holder of the New Common Stock will begin on the day following the day of the exchange. 83 Except for the amount of gain attributable to accrued market discount on Senior Secured Notes that were purchased with market discount (which market discount is subject to the rules described below), any gain or loss recognized on the exchange will be capital gain or loss if the Senior Secured Notes are capital assets in the hands of the Noteholder. Such gain or loss will be long- term capital gain or loss if the Noteholder's holding period with respect to the Senior Secured Notes surrendered exceeds one year at the time of the exchange. Notwithstanding this general rule, if any amount of the consideration received by a Noteholder in exchange for Senior Secured Notes were deemed to be allocable to accrued but unpaid interest, a Noteholder who has not taken such accrued but unpaid interest into income would have ordinary income in that amount (as described below). (b) Market Discount A debt instrument (such as a Senior Secured Note) has "market discount" if its stated redemption price at maturity exceeds its tax basis in the hands of the holder immediately after its acquisition, unless a statutorily-defined de minimis exception applies. If the exchange of a Senior Secured Note with market discount for Class 4 Proceeds and Class 4 New Common Stock pursuant to the Plan does not qualify as a recapitalization, a Noteholder generally will be treated as recognizing ordinary income on the exchange equal to the amount of market discount that accrued during the Noteholder's period of ownership. This rule will not apply to a Noteholder who had previously elected to include market discount in income as it accrued for federal income tax purposes. (c) Accrued Interest If any amount of the consideration received by a Noteholder in exchange for Senior Secured Notes were deemed for tax purposes to be allocable to accrued but unpaid interest, the Noteholder would have ordinary income in that amount unless the Noteholder had previously included such interest in income. On the other hand, a Noteholder who had previously included such interest in income should recognize a loss to the extent the prior inclusion exceeds the amount of such consideration allocable to accrued but unpaid interest. It is unclear whether such a loss is capital or ordinary. 84 The law is also somewhat uncertain regarding the proper allocation of Cash received by Noteholders between principal and interest. Although recently finalized Treasury Department regulations generally require each payment under a loan to be treated first as a payment of accrued and unpaid interest, these regulations do not specify whether such an approach applies in the context of loan termination payments made by a creditor pursuant to a Chapter 11 plan of reorganization. Moreover, the regulations do not specify how the consideration received in a recapitalization should be allocated. As a result, no assurance can be given that the Service will not attempt to allocate some portion of the Class 4 Proceeds and Class 4 New Common Stock received under the Plan to some or all of the accrued but unpaid interest on the Senior Secured Notes, which would require Noteholders to include such amount in ordinary income as described in the paragraph above. Allocation of consideration between principal and interest in this circumstance could result in the recognition of ordinary income and capital loss. Capital losses generally are not fully deductible against ordinary income. Notwithstanding the general discussion above, the tax basis of a Noteholder in Class 4 New Common Stock treated as received in satisfaction of accrued interest on the Senior Secured Notes, if any, should be equal to the amount of interest income treated as satisfied by the receipt of such stock. Additionally, a Noteholder's holding period in such stock should begin on the day following the date on which such stock is distributed. XII. CONCLUSION This Disclosure Statement was approved by the Bankruptcy Court after notice and a hearing. The Bankruptcy Court has determined that this Disclosure Statement contains information adequate to permit holders of Claims to make an informed judgment about the Plan. Such approval, however, does not mean that the Bankruptcy Court recommends either acceptance or rejection of the Plan. A. HEARING ON AND OBJECTIONS TO CONFIRMATION 1. Confirmation Hearing The hearing on Confirmation of the Plan has been scheduled to commence on July ___, 1996, at [ :__ a].m., Eastern Daylight Time, or as soon thereafter as counsel may be heard, before the Honorable 85 Helen S. Balick, 6th Floor, United States Bankruptcy Court, Marine Midland Plaza, 824 Market Street, Wilmington, Delaware 19801. Such hearing may be adjourned from time to time by announcing such adjournment in open court or otherwise, all without further notice to parties in interest, and the Plan may be modified by Seven-Up/RC pursuant to section 1127 of the Bankruptcy Code prior to, during, or as a result of that hearing, without further notice to parties in interest. 2. Date Set For Filing Objections to Confirmation The time by which all objections to Confirmation of the Plan must be filed with the Bankruptcy Court and received by the parties listed on the Confirmation Hearing Notice has been set for [ :__] p.m., Eastern Daylight Time, on July ___, 1996. A copy of that notice is being transmitted with this Disclosure Statement. B. RECOMMENDATION SEVEN-UP/RC, [THE COMMITTEE] AND THE NOTEHOLDERS COMMITTEE BELIEVE THAT THE CONFIRMATION OF THE PLAN IS IN THE BEST INTERESTS OF SEVEN-UP/RC, ITS CREDITORS AND ITS ESTATE. The Plan provides for an equitable and early distribution to holders of the Senior Secured Notes and the GE Capital Term Loan and preserves the going concern value of Seven-Up/RC. Seven-Up/RC believes that any alternative to Confirmation of the Plan, such as liquidation or attempts by another party in interest to file a plan, could result in significant delays, litigation, and costs, as well as a reduction in the going concern value of Seven-Up/RC and a loss of jobs by many Seven-Up/RC employees. [INTENTIONALLY LEFT BLANK] 86 Moreover, Seven-Up/RC believes that Seven-Up/RC's creditors will receive a greater and earlier recovery under the Plan than those that would be achieved in a liquidation. FOR THESE REASONS, SEVEN-UP/RC URGES YOU TO RETURN YOUR BALLOT AND VOTE TO ACCEPT THE PLAN. Dated: New York, New York May 17, 1996 SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC., BEVERAGE GROUP ACQUISITION CORPORATION Debtors-in-Possession By: /s/ Barton S. Brodkin -------------------------------------- Barton S. Brodkin Chief Executive Officer and President 87 EXHIBIT A TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION Debtors' Joint Plan of Reorganization (Filed as Exhibit 10.1) EXHIBIT B TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION GE CAPITAL COMMITMENT LETTER (Will be filed with the Bankruptcy Court on or before June 19, 1996) EXHIBIT C TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION PROJECTED FINANCIAL DATA SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. PROJECTED FINANCIAL DATA A. Introduction These projected financial statements (the "Projections") were prepared in order to show the projected results of Seven-Up/RC's operations following consummation of the Plan. The Projections are based on the assumptions discussed below. The Projections should be read in conjunction with the Disclosure Statement, including "Section X ---CERTAIN RISK FACTORS." All capitalized terms not defined in this exhibit have the same meanings ascribed to them in the Disclosure Statement to which this exhibit is attached. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, THE FINANCIAL ACCOUNTING STANDARDS BOARD, OR THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION REGARDING PROJECTIONS. FURTHERMORE, THE PROJECTIONS HAVE NOT BEEN AUDITED OR REVIEWED BY SEVEN-UP/RC'S INDEPENDENT CERTIFIED ACCOUNTANTS. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS, WHICH MAY NOT BE REALIZED, AND ARE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF SEVEN- UP/RC. CONSEQUENTLY, THE PROJECTIONS SHOULD NOT BE REGARDED AS A REPRESENTATION OR WARRANTY OF SEVEN-UP/RC, OR ANY OTHER PERSON, THAT THE PROJECTIONS WILL BE REALIZED. ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE PRESENTED IN THE PROJECTIONS. The Projections included herein are: 1. Pro Forma Consolidated Balance Sheet of Reorganized Seven-Up/RC as of June 30, 1996 based on the historical balance sheet updated to reflect the effect of projected activity up to the Consummation Date (assumed to be June 30, 1996), and reflecting the projected accounting effects of the Plan's consummation and of "fresh 1 start" accounting as promulgated by the AICPA Statement of Position 90-7 entitled "Financial Reporting By Entities in Reorganization Under the Bankruptcy Code." 2. Projected Consolidated Income Statements of Reorganized Seven-Up/RC for each of the five fiscal years in the period ending December 31, 2000. 3. Projected Consolidated Balance Sheets of Reorganized Seven-Up/RC as of the years ending in December 1996, 1997, 1998, 1999, and 2000. 4. Projected Consolidated Cash Flow Statements of Reorganized Seven-Up/RC for each of the five fiscal years in the period ending December 31, 2000. The Projections have been prepared on the basis of generally accepted accounting principles consistent with those currently adopted by Seven-Up/RC in the preparation of its historical financial statements except as noted in the accompanying assumptions. The Projections should be read in conjunction with the significant assumptions set forth below, and with Seven-Up/RC's audited consolidated financial statements for the year ended December 31, 1995 included in the Annual Report on Form 10-K. The Projections present, to the best of management's knowledge and belief, the expected financial position, results of operations and cash flows of Reorganized Seven-Up/RC for the periods shown. Accordingly, the Projections reflect management's judgment, as of the date of this Disclosure Statement, of expected future operating conditions. All estimates and assumptions shown within the Projections were developed by management and in certain instances reflect the anticipated operating results of marketing strategies that have been subjected to very limited testing at the time of preparation of the Projections. The assumptions disclosed here are those that management believes are significant to the Projections. There will normally be differences between projected and actual results because events and circumstances frequently do not occur as expected. The Projections reflect the effect of consummation of the Plan and adjustments of "fresh start" accounting. The Projections are based on a number of estimates and assumptions that, although developed and considered reasonable by management, are inherently subject to significant economic and competitive uncertainties and contingencies, some of which are beyond the control of Reorganized Seven-Up/RC and its management. The Projections are based upon assumptions of future business decisions which are subject to change. Accordingly, there can be no assurance that the projected results will be realized, and actual results may vary materially from those projected. If actual results are lower than those shown or if the assumptions used in formulating the Projections are not realized, Reorganized Seven-Up/RC's operating results and cash flows, and hence its ability to perform under the Plan, may be materially 2 adversely affected. Management does not intend to revise the Projections solely to reflect circumstances existing after the date of this Disclosure Statement or to reflect the occurrence of unanticipated events. Management assumes no responsibility to advise users of the Projections about any subsequent changes. WHILE MANAGEMENT BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE PROJECTED FINANCIAL STATEMENTS FOR THE PROJECTION PERIOD, WHEN CONSIDERED ON AN OVERALL BASIS, ARE REASONABLE IN LIGHT OF CURRENT CIRCUMSTANCES AND EXPECTATIONS, NO ASSURANCE CAN BE GIVEN THAT THE PROJECTIONS WILL BE REALIZED. SEVEN-UP/RC URGES THAT THE UNDERLYING ASSUMPTIONS BE CONSIDERED CAREFULLY BY HOLDERS OF CLAIMS IN REACHING THEIR DETERMINATION OF WHETHER TO ACCEPT OR REJECT THE PLAN. B. Reorganized Seven-Up/RC's Business Reorganized Seven-Up/RC will continue the business of Seven-Up/RC in Southern California, Nevada and New Mexico. As of June 30, 1996, it is anticipated that Reorganized Seven-Up/RC will continue to operate its manufacturing/distribution facility in Vernon, California, its manufacturing facility in Buena Park, California and its manufacturing/distribution plant in Albuquerque, New Mexico. As part of the operational restructuring, it is expected that the Anaheim and Carson distribution facilities will be closed, resulting in 11 distribution warehouses. Reorganized Seven-Up/RC is expected to employ approximately 1,300 employees as of June 30, 1996. As part of its strategic operating plan, Reorganized Seven-Up/RC will continue the implementation of certain initiatives undertaken by Seven-Up/RC in the latter half of 1995 and the first half of 1996. Reorganized Seven-Up/RC will be highly focused on its core direct-store-door business. Certain non-core businesses, including the hot-fill contracting business and the Avalon business, will be either totally discontinued or greatly downsized. The management of Reorganized Seven-Up/RC will be committed to the profitability of its core business, and will not seek to gain market share at the expense of profitability. It is anticipated that targeted levels of profitability will be achieved through the maintenance of minimum price points for its products and through vigorous cost reduction measures. As part of its cost reduction program begun in October 1995, Seven-Up/RC reduced its work force by 205 employees. The cost reduction plan is expected to result in annual savings of $10.6 million. Reorganized Seven-Up/RC expects 3 to closely analyze its manufacturing, warehousing and distribution, and management information systems functions to determine what additional savings can be realized. C. Significant Assumptions to the Projected Consolidated Opening Balance Sheet of Reorganized Seven-Up/RC as of June 30, 1996 1. The restructuring program expenses are expected to be accrued prior to the Consummation Date of the Plan. 2. The sale of Seven-Up/RC of Puerto Rico will have been completed prior to consummation on substantially the terms set forth in the Acquisition Agreement. 3. The confirmation and consummation will be accomplished according to the terms of the Plan as described in the Disclosure Statement to which this exhibit is attached. 4. Seven-Up/RC will obtain a working capital facility in the aggregate amount of $35 million at a floating interest rate to fund, among other things, post-consummation operations. 5. "Fresh start" accounting adjustments have been made to reflect the estimated adjustments necessary to adopt fresh start reporting in accordance with Statement of Position 90-7 issued by the American Institute of Certified Public Accountants in November 1990, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Fresh start reporting requires that the reorganization value of Seven-Up/RC be allocated to Seven-Up/RC's assets in conformity with APB Opinion 16, "Business Combinations," for transactions reported on the basis of the purchase method. The reorganization value (the total value of Reorganized Seven-Up/RC's assets) used in preparing the Projected Consolidated Opening Balance Sheet of Reorganized Seven-Up/RC is $96.3 million. This reorganization value was determined as the sum of (a) the enterprise value of Reorganized Seven-Up/RC (the value of the equity and interest-bearing debt) of approximately $60.0 million and (b) other non-interest bearing operating liabilities of approximately $36.3 million. The projected value of Reorganized Seven-Up/RC's stockholders' equity as of June 30, 1996 is $30.0 million, representing the excess of the enterprise value of the firm over its interest- bearing debt. The reorganization value of Reorganized Seven-Up/RC is subject to adjustment to reflect any fluctuation in the financial projections on which the valuation is based. The allocation of reorganization value to individual assets and liabilities is subject to change after the Consummation Date and could result in material differences to the allocated values estimated in the Projections. 4 6. The significant "fresh start" accounting adjustments are summarized as follows: (a) Current assets and current liabilities have been stated at their historical carrying values. (b) The net carrying value of fixed assets has been reduced by approximately $28.9 million to reflect management's estimate of the going concern value of these assets. (c) The net carrying value of "Intangibles and Goodwill" has been reduced by approximately $5.3 million to reflect management's estimate of the going concern value of these assets. (d) The net carrying value of "Debt Issuance Costs" of approximately $3.1 million has been eliminated to reflect the cancellation of the Senior Secured Notes. D. Assumptions for Projections for the Five Fiscal Years in the Period Ending December 31, 2000. 1. Sales Growth Net sales for the calendar year 1996 are expected to decline 20.4% from 1995, reflecting the restructuring efforts implemented by Seven-Up/RC, including the elimination of the Avalon business and the substantial reduction in the Company's Liquitrend hot-fill business. In 1997, the Company projects that net sales will grow 5.5% over 1996 net sales. Thereafter, net sales is anticipated to grow at a rate of 4.1% from 1998 through 2000. 2. Cost of Goods Sold Cost of goods sold as a percentage of net sales is expected to decline from 85.5% in 1995 to 79.3% for 1996, reflecting in large measure anticipated decreases in the cost of certain raw materials. For the balance of the projection period, cost of goods sold are projected to be approximately 79.5% of net sales. 3. Administrative, Marketing and General Expenses Administrative, marketing and general expenses are expected to 5 increase at annual rates of 2.3%, 1.9%, 3.1%, 1.8% and 2.5% for the years 1996, 1997, 1998, 1999 and 2000, respectively. These increases are less than the anticipated general rate of inflation and reflect management's implementation of certain overhead cost savings measures. 4. Depreciation and Amortization The Company expects to implement fresh start accounting as of the Consummation Date. This will cause the Company's assets to be restated at their fair market values, and the resulting depreciation and amortization charges are expected to be significantly lower than historical charges. Over the projection period, depreciation and amortization charges are expected to grow from $4.2 million in 1997 to $7.9 million in 2000. These increases are attributable to the anticipated capital expenditures over the projection period (see the following footnote). 6 5. Capital Expenditures. Capital expenditures are projected to be $6.0 million, $6.0 million, $6.0 million, $7.0 million and $7.0 million in fiscal years 1996, 1997, 1998, 1999 and 2000. These capital expenditures represent maintenance levels of replacement capital relating primarily to the distribution fleet, warehouse equipment and production and manufacturing equipment. 6. Interest Expense - Revolving Line of Credit Interest expense on the revolving line of credit is assumed to be 9.0% throughout the projection period. 7. Provision for Taxes The provision for taxes has been calculated by applying the expected statutory Federal and state corporate tax rates against the anticipated taxable income for each of the years. 7 SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC. FIVE-YEAR PLAN BALANCE SHEET ($ 000'S)
Pre-Consummation Post-Consummation -------------------- -------------------------------------------------------- Projected Projected as of as of 06/30/96 06/30/96 Actual Pre-Fresh Fresh Year Ended December 31, 1995 Start Start 1996 1997 1998 1999 2000 ------- --------- ---------- -------- ------- ------- ------- ------- Current assets: Cash 2,545 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Accounts receivable 34,883 35,254 35,254 32,533 34,326 35,742 37,206 38,744 Inventories 18,461 18,981 18,981 17,518 18,483 19,246 20,034 20,862 Prepaid expenses 2,044 1,014 1,014 2,170 2,290 2,385 2,483 2,586 ------- --------- ---------- -------- ------- ------- ------- ------- Total current assets 57,933 57,749 57,749 54,721 57,599 59,873 62,223 64,692 Investment in joint venture 23,331 23,330 0 0 0 0 0 0 Property, plant and equipment, net 62,145 60,437 31,517 33,742 37,098 38,814 40,544 41,217 Other assets: Intangibles and goodwill 10,974 10,565 5,283 5,019 4,491 3,963 3,435 2,907 Debt issuance costs 3,703 3,137 0 0 0 0 0 0 Note receivable-Puerto Rico 16,000 16,000 0 0 0 0 0 0 Other assets 4,754 3,209 1,778 1,244 875 643 528 529 ------- --------- ---------- -------- ------- ------- ------- ------- Total assets 178,840 174,427 96,327 94,726 100,063 103,293 106,730 109,345 ======= ========= ========== =======- ======= ======= ======= ======= Current liabilities: Accounts payable 19,586 22,767 22,767 21,022 22,180 23,095 24,041 25,034 Accrued expenses 33,278 33,686 13,560 14,584 15,388 16,023 16,679 17,368 Current portion of long-term debt and lease obligations 2,312 2,342 1,273 1,300 2,964 707 776 752 Intercompany (1,630) (3,150) 0 0 0 0 0 0 ------- --------- ---------- -------- ------- ------- ------- ------- Total current liabilities 53,546 55,645 37,600 36,906 40,532 39,825 41,496 43,154 Long-term debt Senior secured notes 140,000 140,000 0 0 0 0 0 0 Term loan 3,386 2,977 2,977 2,565 304 174 32 0 Revolving credit facility 29,284 33,050 23,050 20,144 19,731 21,214 20,643 19,485 Capital lease obligations 5,562 5,051 2,700 2,455 1,930 1,352 719 0 ------- --------- ---------- -------- ------- ------- ------- ------- Total long-term debt 178,232 181,078 28,727 25,164 21,965 22,740 21,394 19,485 Capital contribution 4,023 4,023 0 0 0 0 0 0 Common stock 1 1 50 50 50 50 50 50 Additional paid-in capital 49,999 49,999 29,950 29,950 29,950 29,950 29,950 29,950 Predecessor cost adjustment (11,466) (11,466) 0 0 0 0 0 0 Retained earnings (deficit) (95,495) (104,853) 0 2,656 7,566 10,728 13,840 16,706 ------- --------- ---------- -------- ------- ------- ------- ------- Total stockholder's equity (deficit) (52,938) (62,296) 30,000 32,656 37,566 40,728 43,840 46,706 Total liabilities and stockholder's equity 178,840 174,427 96,327 94,726 100,063 103,293 106,730 109,345 ======= ========= ========== ======== ======= ======= ======= =======
-8- SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC. FIVE-YEAR PLAN INCOME STATEMENT ($ 000's)
------------------------------------------------------------------------- PRE-CONSUMMATION POST CONSUMMATION ------------------- --------------------------------------------------- PROJECTED PROJECTED SIX SIX MONTHS MONTHS PROJECTED YEAR ENDED DECEMBER 31, ACTUAL ENDED ENDED ------------------------------------ 1995 06/30/96 12/31/96 1997 1998 1999 2000 ------- --------- --------- ------------------------------------ Net sales 314,469 121,144 129,106 264,043 274,941 286,202 298,030 Cost of goods sold 269,017 96,860 101,465 209,641 218,266 227,310 237,133 ------- ------- ------- ------- ------- ------- ------- Gross profit 45,452 24,284 27,641 54,402 56,675 58,892 60,897 Administrative, marketing and general 40,719 20,561 21,064 42,436 43,473 44,528 45,620 Depreciation and amortization 13,224 5,879 1,178 4,207 5,812 6,798 7,855 Restructure charges 5,848 3,260 765 0 0 0 0 ------- ------- ------- ------- ------- ------- ------- Operating income (loss) (14,339) (5,416) 4,634 7,759 7,390 7,566 7,422 Interest expense (21,777) (7,518) (1,324) (2,657) (2,408) (2,394) (2,269) Other income, net 3,550 3,576 0 1,000 0 0 0 ------- ------- ------- ------- ------- ------- ------- Earnings before taxes (before restructuring items) (32,566) (9,358) 3,310 6,102 4,982 5,172 5,153 Restructuring gain (loss) -- see note below 0 93,788 0 0 0 0 0 ------- ------- ------- ------- ------- ------- ------- Earnings before taxes (32,566) 84,430 3,310 6,102 4,982 5,172 5,153 Provision for income taxes 0 0 654 1,192 1,820 2,059 2,288 ------- ------- ------- ------- ------- ------- ------- Net income (loss) (32,566) 84,430 2,656 4,910 3,162 3,113 2,865 ======= ======= ======= ======= ====== ======= =======
Note: restructuring gain (loss) includes $22,520 gain on the sale of Puerto Rico; $72,589 for the recognition of income relating to the cancellation of the Senior Secured Notes; and $1,321 loss for the write-off of capital leases. -9- SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC. FIVE-YEAR PLAN CASH FLOW STATEMENT ($ 000'S)
Pre-Consummation Post-Consummation --------------------------------------------------------------------- Projected Projected Six Six Months Months Actual Ended Ended Projected Year Ended December 31, CASH FLOWS FROM OPERATING 1995 06/30/96 12/31/96 1997 1998 1999 2000 ACTIVITIES ------- -------- -------- ------ ------ ------ ------- Net Income (before restructuring gain/loss) (32,566) (9,358) 2,656 4,910 3,162 3,113 2,865 Depreciation and amortization 15,137 6,797 1,345 4,541 6,194 7,063 8,004 Equity in earnings of joint venture (103) (5) 0 0 0 0 0 (Gain) loss on sale of fixed assets (30) (16) 0 0 0 0 0 Changes in assets and liabilities: Accounts receivable, net 21,592 (371) 2,721 (1,793) (1,416) (1,464) (1,538) Inventories 20,290 (520) 1,463 (965) (763) (788) (828) Prepaid expenses (318) 1,030 (1,156) (120) (95) (98) (103) Accounts payable (32,986) 3,181 (1,745) 1,158 915 946 993 Accrued expenses 12,637 408 1,024 804 635 656 689 Other non-current assets (980) 1,212 485 0 0 0 0 Intercompany 508 (1,520) 0 0 0 0 0 ------- -------- -------- ------ ------ ------ ------- Net cash provided by (used in) operating 3,181 838 6,793 8,535 8,632 9,428 10,082 activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of fixed assets 140 16 0 0 0 0 0 Purchases of fixed assets (2,549) (3,045) (2,955) (6,000) (6,000) (7,000) (7,000) Purchases of pallets and shells (1,170) (798) (302) (1,000) (1,150) (1,150) (1,150) ------- -------- -------- ------ ------ ------ ------- Net cash provided by (used in) operating (3,579) (3,827) (3,257) (7,000) (7,150) (8,150) (8,150) activities CASH FLOWS FROM FINANCING ACTIVITIES (Repayments of) proceeds from revolving (299) 3,766 (2,906) (413) 1,483 (572) (1,157) credit facility Repayment of debt issuance costs (2) 68 0 0 0 0 0 (Repayments of) proceeds from capital leases (820) (486) (223) (479) (526) (577) (633) (Repayments of) proceeds from term loan (88) (404) (407) (643) (2,439) (129) (142) ------- -------- -------- ------ ------ ------ ------- Net cash provided by (used in) financing (1,209) 2,944 (3,536) (1,535) (1,482) (1,278) (1,932) activities NET INCREASE (DECREASE) IN CASH (1,607) (45) 0 0 0 0 0 ======= ======== ======== ====== ====== ====== ======= CASH, Beginning of period 4,152 2,545 2,500 2,500 2,500 2,500 2,500 CASH, End of period 2,545 2,500 2,500 2,500 2,500 2,500 2,500 ------- -------- -------- ------ ------ ------ -------
-10- EXHIBIT D TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 (Will be contained as an exhibit to the Disclosure Statement after approval by the Bankruptcy Court) EXHIBIT E TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 (Will be contained as an exhibit to the Disclosure Statement after approval by the Bankruptcy Court) EXHIBIT F TO DISCLOSURE STATEMENT WITH RESPECT TO DEBTORS' JOINT PLAN OF REORGANIZATION LIQUIDATION ANALYSIS BGAC SEVEN-UP/RC BOTTLING COMPANY OF SOUTHERN CALIFORNIA, INC. LIQUIDATION ANALYSIS Seven-Up/RC's management has prepared this liquidation analysis (the "Liquidation Analysis") to help holders of Claims decide whether to accept or reject the Plan. The Liquidation Analysis indicates the values which may be obtained by Classes of Claims if assets of BGAC and Seven-Up/RC are sold, pursuant to a Chapter 7 liquidation, as an alternative to continued operations of the business and payments under a plan of reorganization. The Liquidation Analysis is based on the assumptions discussed below. All capitalized terms not defined in this exhibit have the same meanings ascribed to them in the Disclosure Statement to which this exhibit is attached. Alternatively, a Chapter 7 trustee could decide to sell the operations of Seven-Up/RC as a whole. The fees payable to the Chapter 7 trustee under sections 326 and 330 of the Bankruptcy Code (i.e., as much as 3% of the assets liquidated to the extent such assets exceed $1 million in value), the disruption to business operations resulting from the Chapter 7 liquidation, and the liquidation discounts that will be applied to valuation models all result in a lower recovery to the holders of the Senior Secured Notes, who under the Plan will receive 98% of the New Common Stock (subject to dilution under certain scenarios). Because these holders will become the new equity owners of Reorganized Seven-Up/RC, they could accomplish this same result, if they so choose, without the attendant costs and disruptions associated with a Chapter 7 liquidation. 1. STATEMENT OF ASSETS ($000's)
Projected Estimated Book Value As of Liquidation Note June 30, 1996 % Value References (Unaudited) Recovery (Unaudited) ---------- ---------------- -------- ----------- Cash 1 2,500 100% 2,500 Marketable Securities 64 95% 61 Accounts Receivable: 2 Trade--major chain accounts 14,627 70% 10,239 Trade--independent accounts 14,627 35% 5,119 Franchisors 6,000 60% 3,600 Inventory: 3 Raw materials 2,500 80% 2,000 Finished goods 16,481 80% 13,185 Prepaid Expenses 4 Insurance, taxes, DMV registration 950 0% 0 Investment in Puerto Rico 5 42,480 153% 65,000 Property, Plant, Equipment and Leasehold Improvements, net 6 58,415 47% 27,465 Capital Leases 7 2,022 47% 950 Intangible Assets 8 13,702 0% 0 Other Assets 9 Pallets/CO2 tanks 1,059 25% 265 Shells 1,622 10% 162 Restructure retainers 528 100% 528 ------- ------- Total Assets 177,577 74% 131,074 Costs Associated with Liquidation 10 Payroll Costs Associated with Termination of Employees 5,200 Payroll Costs during Liquidation 2,000 Chapter 7 Professional Fees 1,800 Trustee Fee 1,907 ------- Net Estimated Liquidation Proceeds Available for Allocation 120,167
BGAC SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC. NOTES TO LIQUIDATION ANALYSIS The Liquidation Analysis reflects BGAC and Seven-Up/RC's estimates of the proceeds that would be realized if BGAC and Seven-Up/RC were to be liquidated in accordance with Chapter 7 of the Bankruptcy Code. The Liquidation Analysis is based on the projected assets of BGAC and Seven-Up/RC as of June 30, 1996. Underlying the Liquidation Analysis are a number of estimates and assumptions that, although developed and considered reasonable by management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of BGAC and Seven-Up/RC and management, and upon the assumptions with respect to liquidation decisions which could be subject to change. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE REALIZED IF BGAC AND SEVEN- UP/RC WERE, IN FACT, TO UNDERGO SUCH A LIQUIDATION, AND ACTUAL RESULTS COULD VARY MATERIALLY FROM THOSE SHOWN HERE. The issues of potential recoveries from avoidance actions and final bankruptcy claims reconciliation have not been addressed in the Liquidation Analysis. The Liquidation Analysis assumes a 12-month period for the completion of the liquidation. During that period, Seven-Up/RC would collect accounts receivable as they are paid in the ordinary course of business and take collection actions with respect to those accounts receivable that are not paid according to invoice terms. Seven-Up/RC would also convert its inventories to cash. The Liquidation Analysis assumes that operations are continued for approximately a one-month period to enable the raw material inventories to be converted to final product and sold. Estimates of the fair realizable value of Seven-Up/RC's fixed assets, including land, property and equipment, have been obtained from real estate and equipment appraisers and/or vendors. With respect to intangible assets, no liquidation value has been assigned to Seven- Up/RC's brand franchises because management believes that legal restrictions and franchisor restrictions on transferability of these assets would render them valueless in a liquidation context. The asset values have been stated net of the projected direct third-party costs (sales commissions, transportation costs, etc.) incurred upon disposition. Also, such values have been discounted at a rate of 10% to reflect their net present value as of Consummation. The cost of the Chapter 7 trustee and the legal and other professional fees incurred during the pendency of the Chapter 7 liquidation have been separately stated, and therefore are not reflected in the values of the assets themselves. Likewise, certain other costs, including the payroll cost associated with the continuation of 3 operations for the one-month period and payroll termination costs, have been separately stated. The following notes describe the significant assumptions that are reflected in the Liquidation Analysis. Note 1 - Cash The Liquidation Analysis assumes that operations during the liquidation period would not generate additional cash available for distribution except for net proceeds generated by liquidating non-cash assets, including the disposition of the Puerto Rico subsidiary. Seven-Up/RC's cash receipts and disbursements are cleared through its revolving credit facility. The cash shown on the balance sheet as of June 30, 1996 represents the projected balance of uncleared checks on that date. Note 2 - Accounts Receivable Accounts receivable consist primarily of sales on account to Seven- Up/RC's major chain and independent customers and of promotional support funds owed by the various syrup franchisor companies to Seven-Up/RC. The recovery of receivables is based on management's estimate of collections, taking into account such factors as the aging of receivables, the existence of potential disputes relating to such receivables, and the costs of third party collection agents. Management believes that the collection of the independent accounts receivable will be considerable more difficult than the collection of the major chain account receivables and the franchisor receivables, and therefore a lower collection rate for these receivables has been assumed. Note 3 - Inventory The Liquidation Analysis assumes that Seven-Up/RC's finished goods inventory of its core products could be sold quickly for cash by implementing aggressive promotional programs. The finished goods inventory of non-core products represents four to six months worth of inventory and would be more difficult to liquidate. Overall, an 80% recovery of book value with respect to all finished goods inventories was assumed. With respect to Seven-Up/RC's inventory of raw materials, a distinction was once again made between raw materials used in the production of core products and those utilized in the production of non-core products. For core product raw materials, the assumption has been made that such materials would be converted to finished product and disposed of in the same manner as outlined in the preceding paragraph. The 4 proceeds therefore reflect the value added by the production cycle, reduced by the costs of direct labor and factory overhead incurred in the production process. Non-core product materials, on the other hand, are assumed to be liquidated without being converted into finished goods. Overall, management anticipates that the net realizable proceeds of the raw materials inventories would be 80% of the book carrying value of such inventories. . Note 4 - Prepaid Expenses No liquidation value has been assigned to those prepaid expenses that consist of prepaid insurance, property taxes and vehicle registration, all of which are deemed uncollectible. Note 5 - Investment in Puerto Rico The book carrying value of the investment in Puerto Rico includes Seven- Up/RC's investment in its Puerto Rico subsidiary, its investment in the Porta Pack joint venture, the note receivable from the Puerto Rico subsidiary in the amount of $16 million, and an intercompany note receivable. The recovery amount represents the net proceeds from the disposition of the Puerto Rico subsidiary pursuant to the terms of the Stock Purchase Agreement, net of transaction costs and taxes. Note 6 - Property, Plant and Equipment and Leasehold Improvements, net Property, plant and equipment include owned land, warehouse and manufacturing facilities, and specialized equipment for manufacturing, distribution and warehouse functions. Values for these elements are based on Seven-Up/RC management reviews of appraisals and valuations by real estate consultants, equipment suppliers and industry analysts. Liquidation proceeds are net of selling costs, dismantling expenses and relocation expenses. No liquidation value has been assigned to the leasehold improvements, reflecting management's belief that the proceeds of disposition would be offset by disposition expenses. Note 7 - Capital Leases Capital leases consist primarily of specific manufacturing equipment acquired during 1994 and 1995. Values for these leases are based on Seven- Up/RC's management reviews of appraisals by equipment suppliers and industry consultants. Note 8 - Intangibles 5 Intangibles include brand franchises, goodwill and debt issuance costs. The Liquidation Analysis assigns no value to these intangibles. As stated in the introduction to this Liquidation Analysis, management believes that franchisor and legal restrictions on the transferability of the brand franchises render these intangibles valueless in the liquidation context. Note 9 - Other Assets Other Assets primarily include Seven-Up/RC identified pallets, stainless steel tanks for fountain dispensers and plastic shells for 2-liter and 20- ounce bottle packages. Seven-Up/RC management has valued these assets based on scrap value due to the inherent difficulty of disposing of bottler identified assets. The restructuring retainers represent prepaid fees for legal and consulting services and are assumed to be fully recoverable in a liquidation. Note 10 - Costs Associated with Liquidation The costs associated with liquidation represent costs that have not otherwise been taken into account in determining the net proceeds from the disposition of assets. The costs incurred as a result of the termination of employees has been estimated at $4,000 per employee for a projected workforce of 1,300. During the Chapter 7 liquidation period, the trustee would need the assistance of a skeleton workforce to safeguard the assets of the estate. The trustee would also need to retain certain members of management to assist in the orderly liquidation of assets. Management estimates that the cost of personnel over the projected 12-month liquidation period would be $2.0 million. The trustee would also require the services of professionals, primarily attorneys, during the liquidation period. Management estimates that the cost of professionals, including professionals representing the creditors committee, would be approximately $150,000 per month, or $1.8 million over the projected 12-month liquidation period. The Chapter 7 trustee's fees have been estimated at 3% of the cash proceeds from the estate, excluding the net proceeds from the disposition of the Puerto Rico subsidiary. The Puerto Rico disposition proceeds have been excluded because it is anticipated that the sale will have been fully arranged prior to the involvement of the Chapter 7 trustee. The 3% commission represents the maximum amount allowable under section 326 of the Bankruptcy Code. 6 II. ALLOCATION OF NET ESTIMATED LIQUIDATION PROCEEDS TO SECURED, ADMINISTRATIVE AND PRIORITY CLAIMANTS (000's)
Estimated Estimated Liquidation Allowable Value Claims (Unaudited) ------ ----------- Net Estimated Liquidation Proceeds Available For Allocation 120,167 Class 2- Secured Claims 5,675 Class 4- Noteholders Claims (secured portion) 43,225 Class 5- GE Capital Term Loan Secured Claims 594 Total Secured Claims 49,494 ----------- Net Estimated Liquidation Proceeds After Secured Claims 70,673 Less Chapter 11 Administrative Claims Entitled to Superpriority DIP Facility Claims 34,531 34,531 ----------- Net Estimated Liquidation Proceeds After Secured Claims and Chapter 11 Administrative Claims Entitled to Superpriority 36,142 Less Other Chapter 11 Administrative Claims: Trade Payables- Postpetition 18,214 Professional Fees 1,000 Total Other Chapter 11 Administrative Claims 19,214 ----------- Net Estimated Liquidation Proceeds After Secured and Chapter 11 Administrative Claims 16,928 Less Priority Claims: Priority Employee Claims 1,800 Reclamation Claims 983 Total Priority Claims ------ 2,783 ----------- Net Estimated Liquidation Proceeds After Secured Administrative and Priority Claims 14,145
III. ALLOCATION OF NET ESTIMATED LIQUIDATION PROCEEDS TO UNSECURED CLAIMANTS ($000's)
Shortfall Allocation Estimated Based on Estimated for Allowed Liquidation Plan Plan Liquidation Allowed Claims Recovery Recovery Recovery Distribution Claims (If applicable) % % --------- ------------ --------- --------------- ----------- -------- Class 3-General Unsecured Claims 17,454 1,837 17,454 (15,616) 10.5% 100.0% Unsecured Portion of Noteholders Claims 41,175 12,307 116,901 (104,594) 10.5% 35.2% Class 6 Old Common Stock Interest 600(1) 0 NA(2) NA(2) NA(2) NA(2)
(1) The recovery represents the estimated fair market value of the 2% of the New Common Stock that will be distributed to WB Bottling Corporation as holder of the Class 6 Old Common Stock Interest. In addition to this amount, Class 6 will also receive the WB Warrants. (2) Not applicable. IV. BONDHOLDER TOTAL RECOVERY ANALYSIS ($ 000's)
Secured Unsecured Total Recovery Claim Claim Claim as % of Recovery Recovery Recovery Original Par -------- --------- -------- ------------ Plan (1) 43,225 41,175 84,400 60.3% Chapter 7 Liquidation 43,225 12,307 55,532 39.7%
(1) The total claim recovery of $84,400 under the Plan is comprised of cash in the amount of $55,000 and 98% of the New Common Stock with an estimated fair market value of $29,400. -----END PRIVACY-ENHANCED MESSAGE-----