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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.
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(Exact name of registrant as specified in its charter)
Delaware 33-47718 95-4284699
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
3220 East 26th Street, Vernon, California 90023
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 268-7779
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Item 5. Other Events.
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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.
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(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.
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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
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David I. Brown
Principal Accounting Officer
and Treasurer
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===========================================================================
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
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TABLE OF CONTENTS
SECTION PAGE
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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
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TABLE OF CONTENTS cont'd
SECTION PAGE
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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
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TABLE OF CONTENTS cont'd
SECTION PAGE
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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
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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
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DEBTOR IN POSSESSION CREDIT AGREEMENT
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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
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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
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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
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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
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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.
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(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
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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.
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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.
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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
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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
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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)
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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
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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
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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.
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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.
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(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
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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.
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(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.
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(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
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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.
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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
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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
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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.
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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
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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.
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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
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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.
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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
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(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.
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(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.
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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
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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"
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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
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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
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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.
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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.
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(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
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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
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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
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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.
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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).
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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.
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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.
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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)
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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.
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(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
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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
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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
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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
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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
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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
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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
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<PAGE>
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
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<PAGE>
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,
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<PAGE>
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
<PAGE>
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
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<PAGE>
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
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<PAGE>
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
<PAGE>
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
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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,
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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.
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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
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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
<PAGE>
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
<PAGE>
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.
<PAGE>
"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.
<PAGE>
"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.
<PAGE>
"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
<PAGE>
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.
<PAGE>
"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
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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;
<PAGE>
(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;
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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).
<PAGE>
"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
<PAGE>
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.
<PAGE>
"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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
"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.
<PAGE>
"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
<PAGE>
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.
<PAGE>
"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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
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<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
"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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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;
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(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
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<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
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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
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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.
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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
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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
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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.
<PAGE>
"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
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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;
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(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
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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
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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
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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
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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
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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.
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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.
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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
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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
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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.
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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
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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
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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
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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
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(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
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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
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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.
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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
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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
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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
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24
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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
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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
<PAGE>
TABLE OF CONTENTS
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<S> <C> <C>
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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(continued)
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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
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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
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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
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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
<PAGE>
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
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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
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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.
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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.
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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
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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.
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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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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
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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.
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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.
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<PAGE>
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;
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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-
<PAGE>
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-
<PAGE>
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.
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<PAGE>
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:
---------------------
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<PAGE>
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
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<PAGE>
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)
<PAGE>
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)
<PAGE>
EXHIBIT C
TO
DEBTORS' JOINT PLAN OF REORGANIZATION
MANAGEMENT OPTION AGREEMENT
(Will be filed with the Bankruptcy Court
on or before June 19, 1996)
<PAGE>
EXHIBIT D
TO
DEBTORS' JOINT PLAN OF REORGANIZATION
WB WARRANT AGREEMENT
(Will be filed with the Bankruptcy Court
on or before June 19, 1996)
<PAGE>
EXHIBIT E
TO
DEBTORS' JOINT PLAN OF REORGANIZATION
CLASS 5 NOTE
(Will be filed with the Bankruptcy Court
on or before June 19, 1996)
<PAGE>
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)
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
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TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
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
</TABLE>
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<S> <C> <C>
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
</TABLE>
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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
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<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
<PAGE>
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
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(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
<PAGE>
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
<PAGE>
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
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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
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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
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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").
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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
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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
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(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.
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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
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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,
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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
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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
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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
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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.
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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.
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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
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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
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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.
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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
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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:
<TABLE>
<CAPTION>
AGE AS OF
DECEMBER 31,
NAME POSITION(S) 1995
- ---- ----------- ------------
<S> <C> <C>
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
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
AGE AS OF
DECEMBER 31,
NAME POSITION(S) 1995
- ---- ----------- ------------
<S> <C> <C>
Donald G. Coppersmith/2/ Senior Vice President of 63
Operations
</TABLE>
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.
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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
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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.
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<PAGE>
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
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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;
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-- 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
<PAGE>
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
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<PAGE>
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.
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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
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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
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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
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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
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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.
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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.
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(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
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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
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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.
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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.
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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
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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.
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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
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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.
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(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.
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(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
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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
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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
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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;
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(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.
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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.
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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;
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(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.
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(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
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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.
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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
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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
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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.
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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,
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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,
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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
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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.
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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.
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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.
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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.
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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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT A
TO
DISCLOSURE STATEMENT WITH RESPECT TO
DEBTORS' JOINT PLAN OF REORGANIZATION
Debtors' Joint Plan
of Reorganization
(Filed as Exhibit 10.1)
<PAGE>
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)
<PAGE>
EXHIBIT C
TO
DISCLOSURE STATEMENT WITH RESPECT TO
DEBTORS' JOINT PLAN OF REORGANIZATION
PROJECTED FINANCIAL DATA
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
5. Capital Expenditures.
Capital expenditures are projected to be $6.0 million, $6.0
million, $6.0 million, $7.0 million and $7.0 million in fiscal years 1996,
1997, 1998, 1999 and 2000. These capital expenditures represent
maintenance levels of replacement capital relating primarily to the
distribution fleet, warehouse equipment and production and manufacturing
equipment.
6. Interest Expense - Revolving Line of Credit
Interest expense on the revolving line of credit is assumed to be
9.0% throughout the projection period.
7. Provision for Taxes
The provision for taxes has been calculated by applying the
expected statutory Federal and state corporate tax rates against the
anticipated taxable income for each of the years.
7
<PAGE>
SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC.
FIVE-YEAR PLAN
BALANCE SHEET
($ 000'S)
<TABLE>
<CAPTION>
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
------- --------- ---------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
======= ========= ========== ======== ======= ======= ======= =======
</TABLE>
-8-
<PAGE>
SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC.
FIVE-YEAR PLAN
INCOME STATEMENT
($ 000's)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
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
------- --------- --------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
======= ======= ======= ======= ====== ======= =======
</TABLE>
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 $1,321 loss for the write-off of capital
leases.
-9-
<PAGE>
SEVEN-UP/RC BOTTLING OF SOUTHERN CALIFORNIA, INC.
FIVE-YEAR PLAN
CASH FLOW STATEMENT
($ 000'S)
<TABLE>
<CAPTION>
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 ------- -------- -------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
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
------- -------- -------- ------ ------ ------ -------
</TABLE>
-10-
<PAGE>
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)
<PAGE>
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)
<PAGE>
EXHIBIT F
TO
DISCLOSURE STATEMENT WITH RESPECT TO
DEBTORS' JOINT PLAN OF REORGANIZATION
LIQUIDATION ANALYSIS
<PAGE>
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.
<PAGE>
1. STATEMENT OF ASSETS
($000's)
<TABLE>
<CAPTION>
Projected Estimated
Book Value As of Liquidation
Note June 30, 1996 % Value
References (Unaudited) Recovery (Unaudited)
---------- ---------------- -------- -----------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
II. ALLOCATION OF NET ESTIMATED LIQUIDATION PROCEEDS TO
SECURED, ADMINISTRATIVE AND PRIORITY CLAIMANTS
(000's)
<TABLE>
<CAPTION>
Estimated
Estimated Liquidation
Allowable Value
Claims (Unaudited)
------ -----------
<S> <C> <C>
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
</TABLE>
<PAGE>
III. ALLOCATION OF NET ESTIMATED LIQUIDATION PROCEEDS TO UNSECURED CLAIMANTS
($000's)
<TABLE>
<CAPTION>
Shortfall
Allocation Estimated
Based on Estimated for Allowed Liquidation Plan
Plan Liquidation Allowed Claims Recovery Recovery
Recovery Distribution Claims (If applicable) % %
--------- ------------ --------- --------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Class 3-General
Unsecured Claims 17,454 1,837 17,454 (15,616) 10.5% 100.0%
Unsecured Portion of
Noteholders Claims 41,175 12,307 116,901 (104,594) 10.5% 35.2%
Class 6 Old Common
Stock Interest 600(1) 0 NA(2) NA(2) NA(2) NA(2)
</TABLE>
(1) The recovery represents the estimated fair market value of the 2% of the New
Common Stock that will be distributed to WB Bottling Corporation as holder
of the Class 6 Old Common Stock Interest. In addition to this amount, Class
6 will also receive the WB Warrants.
(2) Not applicable.
IV. BONDHOLDER TOTAL RECOVERY ANALYSIS
($ 000's)
<TABLE>
<CAPTION>
Secured Unsecured Total Recovery
Claim Claim Claim as % of
Recovery Recovery Recovery Original Par
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
Plan (1) 43,225 41,175 84,400 60.3%
Chapter 7 Liquidation 43,225 12,307 55,532 39.7%
</TABLE>
(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.
