EXHIBIT 99.10
EXECUTION COPY
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PLAN SETTLEMENT AND LOCK-UP AGREEMENT
This Plan Settlement and Lock-Up Agreement (the
"Agreement"), dated as of June 9, 2000, is by and among: (a)
each of the undersigned institutional holders (each a "Consenting
Holder" and collectively, the "Consenting Holders") of (i) 13-
1/4% Series A and B Senior Subordinated Notes Due 2003 (the "13-
1/4% Senior Subordinated Notes") issued by SFC New Holdings, Inc.
("SFC Holdings") pursuant to an Indenture, dated as of June 11,
1999, between SFC Holdings and U.S. Trust Company of Texas, N.A.,
as trustee (the "13-1/4% Senior Subordinated Indenture"),
(ii) 13% Series A and B Senior Secured Discount Debentures
Due 2009 (the "13% Senior Secured Discount Debentures") issued by
SFAC New Holdings, Inc. ("SFAC Holdings") pursuant to an
Indenture, dated as of June 11, 0000, xxxxxxx XXXX Xxxxxxxx xxx
Xxxxxx Xxxxxx Trust Company of New York, as trustee (the "13%
Senior Secured Discount Indenture") and (iii) 11% Senior
Subordinated Discount Debentures Due 2009 (the "11% Senior
Subordinated Discount Debentures") issued by SFC Sub, Inc. ("SFC
Sub") pursuant to an Indenture, dated as of June 11, 1999,
between SFC Sub and United States Trust Company of New York, as
trustee (the "11% Senior Subordinated Discount Indenture"); and
(b) SFC Holdings, SFAC Holdings, SFC Sub, Specialty Foods
Corporation ("SFC") and Specialty Foods Acquisition Corporation
("SFAC" and collectively with SFC, SFC Sub, SFAC Holdings and SFC
Holdings, the "Company" or the "Debtors").
RECITALS
A. An unofficial committee of the 13-1/4% Senior
Subordinated Notes, an unofficial committee of the 13% Senior
Secured Discount Debentures and an unofficial committee of the
11% Senior Subordinated Discount Debentures (such committees
being referred to collectively herein as the "Bondholders'
Committees"), the Consenting Holders and the Company have engaged
in good faith negotiations with the objective of reaching an
agreement regarding: (1) the allocation of the value of SFC
Holdings' assets, including (a) the cookie business, operated
principally through (i) Mother's Cake and Cookie Company,
(ii) Archway Cookies L.L.C. and (iii) their respective
subsidiaries (collectively, the "Cookie Business"); (b) the
specialty bread and cafe business operated principally through
Andre-Boudin Bakeries, Inc. and its subsidiaries (the "Specialty
Bread Business"); (c) cash and cash equivalents; (d) any amounts
returned to SFC Holdings or any of its affiliates on account of
escrow accounts established in connection with the sale or other
disposition of any of their operating assets (following the
satisfaction of any valid claims against such escrow accounts by
parties thereto), including the escrow established in connection
with the Company's sale of the Xxxx Baking Company to The
Earthgrains Company (the "Xxxx Escrow") and the escrow
established in connection with the Company's sale of the H&M Food
Systems Company, Inc. to IBP, Inc. (the "H&M Escrow"); (e) any
amounts returned to SFC Holdings or any of its affiliates on
account of payments that have been made in connection with that
certain settlement agreement by and among SFC Holdings, Saputo
Group and C. Xxxx Xxxxxxxxxxx reached with respect to the
litigation pending in the Los Angeles Superior Court, captioned
as Cacique v. Stella Foods, Inc., the related litigation and
potential insurance proceeds related thereto; and (f) any other
assets of the Company (collectively, the "Operating Assets"); and
(2) the distribution of proceeds from any sale, transfer or other
disposition of any of the Operating Assets.
B. The Bondholders' Committees, the Consenting
Holders and the Company now desire to implement a settlement
agreement regarding the allocation of the value of SFC Holdings'
assets and the distribution of proceeds from any sale, transfer
or other disposition of any of the Operating Assets, the terms of
which are set forth in detail below (the "Settlement").
C. To implement the Settlement, it is anticipated
that the Debtors will file voluntary petitions for relief under
chapter 11 of the Bankruptcy Code, 11 U.S.C. 101-1330 (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). In such event,
the Debtors would prepare a disclosure statement (a "Disclosure
Statement") and a plan of reorganization (a "Plan"), pursuant to
the applicable provisions of the Bankruptcy Code, that
incorporate and implement fully the terms and conditions of the
Settlement. It is anticipated that the Plan would provide for
the disposition of the Cookie Business pursuant to a reverse
merger of a subsidiary of the purchaser of the Cookie Business
with and into SFC, with SFC to be the surviving, reorganized
entity.
D. Each of the Consenting Holders has accepted the
Settlement and will commit on the terms and subject to the
conditions of this Agreement to vote to accept any Plan that
incorporates fully the terms and conditions of the Settlement,
pursuant to section 1126 of the Bankruptcy Code.
E. This Agreement is not intended to be, and each
party hereto acknowledges that it is not, a solicitation of the
acceptance or rejection of any Plan for any of the Debtors,
pursuant to section 1125 of the Bankruptcy Code. Each party
hereto further acknowledges that no acceptance or rejection of
any Plan shall be solicited unless and until the Debtors have
received (1) any required bankruptcy court approval or (2) if the
Plan is commenced as a prepackaged plan (a "Prepackaged Plan"),
any required approval of the Securities and Exchange Commission,
if any, as contemplated by section 1126(b) of the Bankruptcy
Code. Each party hereto further acknowledges and agrees that the
Debtors have not decided to, or agreed to, (1) sell the Cookie
Business or any other assets or (2) commence chapter 11 cases.
This Agreement shall not be deemed to be a determination or an
admission that the Company is insolvent or an agreement that any
one or more of the Debtors need to seek relief under the
Bankruptcy Code.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each of the undersigned parties
hereby agrees as follows.
Terms of the Settlement
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1. Defined Terms. In addition to terms defined
elsewhere in this Agreement, the following terms have the
indicated meanings for purposes of this Agreement:
a. 11% Senior Subordinated Discount Debentures
Minimum Recovery: the value of the "Minimum Recovery for
11% Senior Subordinated Discount Debentures" set forth in
Section 6 below.
b. 13-1/4% Senior Subordinated Claims: the
aggregate amount of all claims, other than Interest Claims
(as defined below), held by the holders of the
13-1/4% Senior Subordinated Notes under the 13-1/4% Senior
Subordinated Indenture, including: (i) the outstanding
principal of the 13-1/4% Senior Subordinated Notes; and
(ii) any and all fees, costs and other expenses relating to
and provided for in the 13-1/4% Senior Subordinated
Indenture incurred by the holders of the 13-1/4% Senior
Subordinated Notes.
c. 13-1/4% Senior Subordinated Minimum Recovery:
85% of the 13-1/4% Senior Subordinated Claims.
d. Average General Unsecured Recovery: the
amount (expressed in terms of a percentage) of each of the
General Unsecured Creditors' (as defined below) pro rata
share of (i) the Net Cash Proceeds, plus (ii) the Specialty
Bread Business Proceeds (as defined below), plus (iii) the
11% Senior Subordinated Discount Debentures Minimum
Recovery, based on the amount of their allowed claims
against SFC Holdings, pursuant to section 502 of the
Bankruptcy Code (the "Allowed Claims"), and without giving
regard or effect to any subordination rights of any of the
General Unsecured Creditors. For purposes of the definition
of "Average General Unsecured Recovery," the value of the
Specialty Bread Business Proceeds and the 11% Senior
Subordinated Discount Debentures Minimum Recovery shall be
determined in a manner to satisfy section 1129(a)(7) of the
Bankruptcy Code, pursuant to Section 8 below.
e. Convenience Class Recovery: the amount of
the Allowed Claim of any General Unsecured Creditor that
elects to have such claim treated under any class of claims
established for administrative convenience (a "Convenience
Class") under a Plan, pursuant to section 1122(b) of the
Bankruptcy Code; provided, that the claims subject to any
Convenience Class shall not exceed (i) $50,000.00 on an
individual basis and (ii) $250,000.00 in the aggregate.
f. General Unsecured Creditors: (i) holders of
the 12-1/8% Series A and B Senior Notes Due 2002 (the
"12-1/8% Senior Notes") issued by SFC Holdings pursuant to
an Indenture, dated as of June 11, 0000, xxxxxxx XXX
Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York, as
trustee; (ii) holders of the 11-1/4% Series A and B Senior
Notes Due 2001 (the "11-1/4% Senior Notes") issued by SFC
Holdings pursuant to an Indenture, dated as of June 11,
0000, xxxxxxx XXX Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company
of New York, as trustee; (iii) holders of the 13-1/4% Senior
Subordinated Notes; and (iv) any other entities holding
nonpriority, general unsecured claims that are allowed
against SFC Holdings, pursuant to section 502 of the
Bankruptcy Code.
g. Interest Claims: all accrued interest on the
13-1/4% Senior Subordinated Notes, together with all
interest that would have accrued thereon but for the
commencement of any bankruptcy case by SFC Holdings and
section 502(b) of the Bankruptcy Code, including PIK
interest.
h. Net Cash Proceeds: (i) all cash on the
Company's balance sheet as of the date immediately preceding
the effective date of the Plan confirmed by the Bankruptcy
Court (the "Plan Effective Date"), less (I) $500,000.00 if
the Plan Effective Date occurs on or before November 30,
2000 or (II) $250,000.00 if the Plan Effective Date occurs
on or after December 1, 2000, provided, that such amounts
shall be excluded from Net Cash Proceeds only (I) if the
Specialty Bread Business is not sold, transferred or
otherwise disposed of prior to the Plan Effective Date and
(II) to the extent necessary to cover the future operating
expenses, if any, of the Specialty Bread Business; plus
(ii) the cash proceeds arising from or generated by any
sale, transfer or other disposition (whether by merger or
otherwise) of any or all of the Total Assets (as defined
below); less (iii) the Total Senior Liabilities (as defined
below); less (iv) the 11% Senior Subordinated Discount
Debentures Minimum Recovery.
i. Senior Subordinated Sharing Percentages:
(i) 47.5% to the 13-1/4% Senior Subordinated Claims and (ii)
52.5% to the 13% Senior Secured Discount Debentures.
j. SFC Bondholders: the holders of the
following untendered notes: (i) SFC's 10-1/4% Senior Notes
Due 2001, (ii) SFC's 11-1/8% Senior Notes Due 2002 and
(iii) SFC's 11-1/4% Senior Subordinated Notes Due 2003.
k. Specialty Bread Business Proceeds: (i) the
proceeds arising from or generated by any sale, transfer or
other disposition (whether by merger or otherwise) of the
Specialty Bread Business, net of any expenses related to the
disposition of the Specialty Bread Business; or (ii) the
value of the Specialty Bread Business.
l. Total Assets: The Operating Assets,
excluding the Specialty Bread Business.
m. Total Senior Liabilities: (i)(I) all
liabilities of SFC Holdings under or with respect to tax
liabilities, fees and expenses, salaries and bonuses,
management incentive fees, severance payments, escrow
accounts or any other liabilities that are entitled to
priority under sections 503 and 507 of the Bankruptcy Code
or otherwise are senior to the claims of the General
Unsecured Creditors and the 13% Senior Secured Discount
Debentures under the applicable provisions of the Bankruptcy
Code or other applicable law and (II) all liabilities of the
Debtors that arise after the commencement of any chapter 11
cases by the Debtors and that are entitled to priority under
sections 503 and 507 of the Bankruptcy Code; and
(ii) expenses related to the disposition and administration
of all assets and proceeds, and the winding-up of the
businesses, of the Cookie Business contemplated under this
Agreement or in any chapter 11 cases filed by the Debtors,
to the extent that such expenses are entitled to priority
under sections 503 and 507 of the Bankruptcy Code.
2. Distribution of Net Cash Proceeds. The Net Cash
Proceeds shall be distributed as follows (the "Distribution
Scheme"):
a. First Distribution: 100% of the Net Cash
Proceeds distributed shall be paid first to the General
Unsecured Creditors, other than the holders of the 13-1/4%
Senior Subordinated Notes, and applied to the payment of
their respective Allowed Claims, up to the Average General
Unsecured Recovery or the Convenience Class Recovery, as
applicable.
b. Second Distribution: After claims subject to
the First Distribution are paid the Average General
Unsecured Recovery or the Convenience Class Recovery, as
applicable, the remaining Net Cash Proceeds distributed
shall be paid to the holders of the 12-1/8% Senior Notes and
the holders of the 11-1/4% Senior Notes and applied to the
payment of their respective Allowed Claims, until such
Allowed Claims are paid in full.
c. Third Distribution: After claims subject to
the Second Distribution are paid in full, the remaining Net
Cash Proceeds distributed shall be paid to the holders of
the 13-1/4% Senior Subordinated Claims and applied to the
payment of the Interest Claims, until such Interest Claims
are paid in full.
d. Fourth Distribution: After claims subject to
the Third Distribution are paid in full, the remaining Net
Cash Proceeds distributed shall be paid to the holders of
the 13-1/4% Senior Subordinated Claims and applied to the
payment of the 13-1/4% Senior Subordinated Minimum Recovery,
up to the 13-1/4% Senior Subordinated Minimum Recovery.
e. Fifth Distribution: After claims subject to
the Fourth Distribution are paid the 13-1/4% Senior
Subordinated Minimum Recovery, all remaining Net Cash
Proceeds distributed shall be shared pro rata among the
holders of the 13-1/4% Senior Subordinated Claims and the
holders of the 13% Senior Secured Discount Debentures in
accordance with the Senior Subordinated Sharing Percentages,
until the 13-1/4% Senior Subordinated Claims are paid in
full.
f. Sixth Distribution: After the 13-1/4% Senior
Subordinated Claims subject to the Fifth Distribution are
paid in full, all remaining Net Cash Proceeds distributed
shall be shared pro rata among the holders of the 13% Senior
Secured Discount Debentures, until the claims of the 13%
Senior Secured Discount Debentures are paid in full at the
optional redemption price in effect at the time of
distribution under the 13% Senior Secured Discount
Indenture.
g. Seventh Distribution: After the claims of
the 13% Senior Secured Discount Debentures subject to the
Sixth Distribution are paid in full at the optional
redemption price in effect at the time of distribution under
the 13% Senior Secured Discount Indenture, all remaining Net
Cash Proceeds distributed shall be shared pro rata among the
holders of the 11% Senior Subordinated Discount Debentures,
until the Allowed Claims of the 11% Senior Subordinated
Discount Debentures are paid in full.
h. Eighth Distribution: After the Allowed
Claims of the 11% Senior Subordinated Discount Debentures
subject to the Seventh Distribution are paid in full, all
remaining Net Cash Proceeds distributed shall be shared
pro rata among the SFC Bondholders as provided for in the
indentures governing their respective notes, until such
claims are paid in full.
i. Ninth Distribution: After claims subject to
the Eighth Distribution are paid in full, all remaining Net
Cash Proceeds shall be shared pro rata among the holders of
the equity of SFAC.
3. Timing of Distributions Under the Distribution
Scheme. The distributions contemplated by the Distribution
Scheme shall be made pursuant to a Plan confirmed by the
Bankruptcy Court as soon as practicable after the Plan Effective
Date; provided, that if any Net Cash Proceeds are received by the
Debtors or a liquidating trustee or other appropriate entity
appointed under the Plan subsequent to the Plan Effective Date,
then such funds shall be distributed in accordance with the
Distribution Scheme and the Plan as soon as practicable after the
date that the particular funds are received.
4. Continued Accrual of Interest on 13-1/4% Senior
Subordinated Claims. To the extent that any distribution of the
Net Cash Proceeds is not sufficient to satisfy in full the 13-
1/4% Senior Subordinated Claims, the 13-1/4% Senior Subordinated
Claims shall continue to accrue interest under the terms of the
13-1/4% Senior Subordinated Indenture (as if SFC Holdings had not
commenced a bankruptcy case and section 502(b) was inapplicable)
and the holders of the 13-1/4% Senior Subordinated Claims shall
receive subsequent distributions of the Net Cash Proceeds on
account of such Interest Claims pursuant to the Distribution
Scheme.
5. Minimum Recovery for 13% Senior Secured Discount
Debentures. Provided that the conditions set forth in Section 7
below are satisfied, if the Specialty Bread Business or its
assets are sold, transferred or otherwise disposed of (whether by
merger or otherwise), the holders of the 13% Senior Secured
Discount Debentures shall receive a distribution from the net
cash sale proceeds of such disposition equal to the value of the
Specialty Bread Business Proceeds; provided, however, that if
neither the Specialty Bread Business nor its assets are sold,
transferred or otherwise disposed of, 100% of the outstanding
capital stock of the Specialty Bread Business shall be
distributed (directly or indirectly) to the holders of the
13% Senior Secured Discount Debentures.
6. Minimum Recovery for 11% Senior Subordinated
Discount Debentures. Provided that the conditions set forth in
Section 7 below are satisfied, the holders of the 11% Senior
Subordinated Discount Debentures shall receive the following
distributions: (a)(i) 5% of any amounts returned to the Company
from the Xxxx Escrow plus (ii) if the gross total enterprise
value of the Cookie Business is at or above $400,000,000.00, an
additional 5% of any amounts returned to the Company from the
Xxxx Escrow; provided, that any distributions under this
Subsection 6(a) shall not be made until the funds are actually
returned to the Company from the Xxxx Escrow; and (b)(i) 1.5% of
the incremental gross total enterprise value of the Cookie
Business above $350,000,000.00, but less than $400,000,000.00,
plus (ii) 5% of the incremental gross total enterprise value of
the Cookie Business at or above $400,000,000.00. For purposes of
this Section, the term "total enterprise value" means the
aggregate cash consideration paid, plus any non-working capital
liabilities assumed, by the purchaser of the relevant assets.
7. Condition Precedent to the Agreement. The terms
of the Settlement and this Agreement are expressly conditioned on
the Cookie Business and its operating assets being sold.
8. Valuation of Certain Assets. If at the time that
the Debtors seek confirmation of a Plan (a) the Specialty Bread
Business or its assets have not been sold, transferred or
otherwise disposed of or (b) the amount of the funds to be
distributed to the holders of the 11% Senior Subordinated
Discount Debentures on account of the 11% Senior Subordinated
Discount Debentures Minimum Recovery is unknown, the parties to
this Agreement agree that the value of the Specialty Bread
Business Proceeds or the 11% Senior Subordinated Discount
Debentures Minimum Recovery, as applicable, shall be determined
by (a) the Bankruptcy Court; or (b) the Company's investment
banking firm.
9. Liquidation and Resolution of Claims. The Company
shall, in the ordinary course of business, use its best efforts
to: (a) liquidate or resolve any unliquidated or disputed claims
asserted against the Company or the Debtors' bankruptcy estates
(collectively, the "Disputed Claims"); and (b) pursue, liquidate
or resolve any claims or potential claims held by the Company or
the Debtors' bankruptcy estates, including any claims against the
Xxxx Escrow, the H&M Escrow or other escrow accounts
(collectively, the "Estate Claims").
a. Prebankruptcy Liquidation and Resolution of
Claims: The Company shall implement the claims resolution
procedures set forth below (the "Prebankruptcy Claims
Resolution Procedures"), whereby the Company shall use its
best efforts to resolve any Disputed Claims and any Estate
Claims existing prior to the sale of any or all of the
Operating Assets and the commencement of any chapter 11
cases by the Debtors (collectively, the "Prebankruptcy
Claims"). The Prebankruptcy Claims Resolution Procedures
shall be implemented as of the date of this Agreement. The
Prebankruptcy Claims Resolution Procedures shall include:
i. the formation of a claims resolution
committee to monitor the settlement of Prebankruptcy
Claims and consisting of the following four members:
(I) a representative of Morgens, Waterfall, Vintiadis &
Co., Inc. or its successor appointed by the Consenting
Holders holding the 13-1/4% Senior Subordinated Notes;
(II) a representative of Jefferies & Co., Inc. or its
successor appointed by the Consenting Holders holding
the 13% Senior Secured Discount Debentures; (III) a
representative of Acadia Partners, L.P. or its
successor appointed by the Consenting Holders holding
the 11% Senior Subordinated Discount Debentures; and
(IV) Xxxxxxxx X. Xxxxxxxx or one other representative
of the Company (the "Prebankruptcy Claims Resolution
Committee");
ii. the requirement that the Company shall
settle or otherwise resolve Prebankruptcy Claims
resulting in settled, resolved or liquidated claims
against or in favor of the Company (I) at or above
$5,000,000.00 on an individual basis or (II) at or
above $10,000,000.00 in the aggregate only if such
settlement or resolution is first approved by a
majority vote of the members of the Prebankruptcy
Claims Resolution Committee; provided, that (I) each
member of the Prebankruptcy Claims Resolution Committee
shall be entitled to one vote and (II) a majority shall
be determined based on the total number of members
serving on the Prebankruptcy Claims Resolution
Committee at the time of the vote;
iii. the requirement that the Company shall
provide each member of the Prebankruptcy Claims
Resolution Committee with written notice of the terms
of any settlement or other resolution of Prebankruptcy
Claims resulting in settled, resolved or liquidated
claims against or in favor of the Company at or above
$100,000.00, but less than $5,000,000.00, on an
individual basis so that such notice is received by the
members of the Prebankruptcy Claims Resolution
Committee no later than two business days' after the
Company agrees to the settlement or resolution of the
subject Prebankruptcy Claim; and
iv. other appropriate procedures instituted
by the Company (with the advice and input of the
Prebankruptcy Claims Resolution Committee) to
facilitate the timely and reasonable resolution of
Prebankruptcy Claims.
b. Postbankruptcy Liquidation and Resolution of
Claims: The Company further shall implement the claims
resolution procedures set forth below (the "Postbankruptcy
Claims Resolution Procedures"), whereby the Company or the
Debtors' bankruptcy estates shall continue to use their best
efforts to resolve any Disputed Claims and any Estate Claims
existing as of or arising after the commencement of any
chapter 11 cases by the Debtors (collectively, the
"Postbankruptcy Claims"). The Postbankruptcy Claims
Resolution Procedures shall be implemented immediately upon
the commencement of the Debtors' chapter 11 cases and shall
be incorporated into any Plan and Disclosure Statement filed
by the Debtors. The Postbankruptcy Claims Resolution
Procedures shall include:
i. the formation of a claims resolution
committee to monitor the resolution of Postbankruptcy
Claims and consisting of the following two members:
(I) a representative of Morgens, Waterfall, Vintiadis &
Co., Inc. or its successor appointed by the Consenting
Holders holding the 13-1/4% Senior Subordinated Notes;
and (II) a representative of Jefferies & Co., Inc. or
its successor appointed by the Consenting Holders
holding the 13% Senior Secured Discount Debentures (the
"Postbankruptcy Claims Resolution Committee");
provided, that a representative of the 13-1/4% Senior
Subordinated Notes or the 13% Senior Secured Discount
Debentures, as applicable, shall not be placed on or
shall excuse itself from the Postbankruptcy Claims
Resolution Committee after the Consenting Holders
holding the 13-1/4% Senior Subordinated Notes or the
13% Senior Secured Discount Debentures, as applicable,
receive all distributions to which they are entitled
under the Distribution Scheme and the other terms of
this Agreement;
ii. the Debtors' retention of one employee
or representative who has the requisite knowledge and
experience to assist the Company or the Debtors'
bankruptcy estates in the resolution of Postbankruptcy
Claims until all such claims are resolved;
iii. the requirement that the Company or the
Debtors' bankruptcy estates shall settle or otherwise
resolve Postbankruptcy Claims resulting in settled,
resolved or liquidated claims against or in favor of
the Company or the Debtors' bankruptcy estates (I) at
or above $500,000.00 on an individual basis or
(II) with respect to Disputed Claims, at or above
$2,500,000.00 in the aggregate only if (I) the proposed
settlement or resolution is first approved by each
member of the Postbankruptcy Claims Resolution
Committee or (II) to the extent that one of the members
of the Postbankruptcy Claims Resolution Committee
objects to the proposed settlement or resolution, such
settlement or resolution is approved by the Bankruptcy
Court after appropriate notice and a hearing;
iv. the requirement that the Company or the
Debtors' bankruptcy estates shall provide each member
of the Postbankruptcy Claims Resolution Committee with
written notice of the terms of any proposed settlement
or other resolution of Postbankruptcy Claims resulting
in settled, resolved or liquidated claims against or in
favor of the Company or the Debtors' bankruptcy estates
at or above $100,000.00, but less than $500,000.00, on
an individual basis so that such notice is received by
the members of the Postbankruptcy Claims Resolution
Committee no later than two business days' after the
Company or the Debtors' bankruptcy estates agree to the
proposed settlement or resolution of the subject
Postbankruptcy Claim; and
v. other appropriate procedures instituted
by the Company or the Debtors' bankruptcy estates (with
the advice and input of the Postbankruptcy Claims
Resolution Committee) to facilitate the timely and
reasonable resolution of Postbankruptcy Claims.
Acceptance of the Settlement
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10. Authority to Accept the Settlement. Each of the
Consenting Holders represents that, as of the date of this
Agreement, it is the beneficial owner of, or the investment
adviser or manager for the beneficial owners of, the principal
amount or accreted value (as of June 1, 2000) of notes or
debentures, as applicable, identified on its signature page (for
each such Consenting Holder, the "Relevant Claims"), with the
power and authority to vote and dispose of the Relevant Claims.
11. Acceptance of the Settlement. Each of the
undersigned parties hereby accepts the terms and conditions of
the Settlement and this Agreement.
Voting on Plan
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12. Acceptance of Plan. Each of the Consenting
Holders hereby agrees that, so long as no Terminating Event (as
defined below) has occurred, it shall vote to accept any Plan for
the Debtors that incorporates fully the terms and conditions of
the Settlement.
Transfer and Acquisition of Claims
----------------------------------
13. Transfer of Claims. Each of the Consenting
Holders hereby agrees that, so long as no Terminating Event (as
defined below) has occurred, it shall not sell, transfer or
assign any of the Relevant Claims or any option thereon or any
right or interest (voting or otherwise) therein, unless: (a) the
Consenting Holder provides written notice of the sale, transfer
or assignment of the Relevant Claims to (i) Xxxxxxx X. Xxxxx of
Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxx, Xxxx 00000 (facsimile: 216/579-0212), (ii) Xxx X.
Xxxxxxx of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile: 917-777-2120) and
(iii) Xxxxxxx X. Xxxxxxx of Xxxxx, Xxxxx & Xxxxx, 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (facsimile: 212/262-1910) and such
notice (i) identifies the transferee, (ii) identifies the portion
of the Relevant Claims that is subject to the sale, transfer or
assignment and (iii) confirms that the transferee has agreed to
be bound by all of the terms and conditions of the Settlement and
this Agreement; (b) the transferee agrees in writing to be bound
by all of the terms and conditions of the Settlement and this
Agreement by executing a counterpart signature page of this
Agreement; and (c) the Consenting Holder provides a copy of such
executed signature page to the other Consenting Holders and the
Debtors.
14. Additional Acquired Claims. Nothing in this
Agreement shall affect the ability of Consenting Holders to
acquire additional claims against the Debtors, provided, that any
such additional claims shall automatically be deemed to be
Relevant Claims and subject to the terms and conditions of this
Agreement.
15. Determination of Claims. Each Consenting Holder
acknowledges and agrees that the amount of the Allowed Claim of
the indenture trustee under the 13-1/4% Senior Subordinated
Indenture, the 13% Senior Secured Discount Indenture or the 11%
Senior Subordinated Discount Indenture, as applicable, shall be:
(a) the amount set forth on Schedule A attached hereto and
incorporated herein by reference; plus (b) any interest that
accrues and remains unpaid from and after June 1, 2000 through
the date that the Debtors commence their chapter 11 cases; plus
(c) any fees, costs and other expenses relating to and provided
for in the applicable indenture that accrue and remain unpaid as
of the date that the Debtors commence their chapter 11 cases, as
determined pursuant to this Agreement and the Bankruptcy Code.
Each Consenting Holder further acknowledges and agrees that the
amount of its Allowed Claim against the Debtors is its pro rata
share of the applicable indenture trustee's Allowed Claim (as set
forth in the preceding sentence). Nothing in this Section shall
affect or impair any subordination rights of any of the General
Unsecured Creditors.
Termination of the Agreement
----------------------------
16. Terminating Event. This Agreement shall terminate
upon the occurrence of any Terminating Event, as defined in
Section 17 below.
17. A "Terminating Event" shall mean the giving of
written notice to all parties hereto and the Debtors by (i)
Consenting Holders representing 51% of the Relevant Claims
related to the 13-1/4% Senior Subordinated Notes and
(ii) Consenting Holders representing 51% of the Relevant Claims
related to the 13% Senior Secured Discount Debentures as the
result of any of the following events:
a. The Debtors fail, within 60 days after the
date of this Agreement, to prepare and deliver to the
Consenting Holders a Plan that incorporates fully the terms
and conditions of the Settlement and an accompanying
Disclosure Statement that contains information regarding the
Debtors' businesses and operations materially consistent
with the information provided to the Bondholders' Committees
and the Consenting Holders or their respective
representatives prior to the date hereof.
b. The Debtors fail, within 120 days after the
date of this Agreement: (i) to commence the solicitation of
acceptances of a Prepackaged Plan; or (ii) if the Debtors
are not pursuing a Prepackaged Plan, to file voluntary
petitions for relief under chapter 11 of the Bankruptcy
Code.
c. The Debtors fail, within 155 days after the
date of this Agreement: (i) to file voluntary petitions for
relief under chapter 11 of the Bankruptcy Code, together
with a Disclosure Statement and a Prepackaged Plan, pursuant
to section 1121(a) of the Bankruptcy Code; or (ii) if the
Debtors are not pursuing a Prepackaged Plan, to file a
Disclosure Statement and a Plan and commence the
solicitation of acceptances of the Plan, pursuant to
section 1125 of the Bankruptcy Code.
d. The Plan proposed by the Debtors contains
terms that are materially inconsistent with the terms and
conditions of the Settlement or is amended, modified or
supplemented in any way that makes the Plan materially
inconsistent with the terms and conditions of the
Settlement.
e. The Plan is not confirmed by the Bankruptcy
Court and consummated within 215 days after the date of this
Agreement.
f. The failure of any condition to, or breach
of, the Settlement or this Agreement.
18. If the Debtors fail to satisfy any of the
conditions set forth in subparagraphs (a)-(f) of Section 17 above
and the Debtors cure such failure or otherwise satisfy such
condition before the required percentage of the Consenting
Holders take the action necessary to cause a Terminating Event (a
"Cured Event"), the Consenting Holders may not cause a
Terminating Event based on the Cured Event.
19. Change or Withdrawal of Vote. If any Terminating
Event occurs at a time when Bankruptcy Court approval is required
for a Consenting Holder to change or withdraw (or cause to be
changed or withdrawn) its vote to accept or reject a Plan, then
the other parties hereto shall not oppose any attempt by such
Consenting Holder to change or withdraw (or cause to be changed
or withdrawn) such vote at such time.
Documentation of the Settlement
-------------------------------
20. Good Faith Negotiation of Restructuring Documents.
Each of the undersigned parties hereby further covenants and
agrees to negotiate the definitive documents relating to the
Settlement and this Agreement, including the Plan and the
Disclosure Statement, in good faith.
Representations and Warranties
------------------------------
21. Corporate Power and Authority. Each of the
undersigned parties hereby represents and warrants to each other
that it has all requisite corporate power and authority to enter
into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under,
this Agreement.
22. Authorization. Each of the undersigned parties
hereby represents and warrants to each other that the execution
and delivery of this Agreement and the performance of its
obligations hereunder have been duly authorized by all necessary
corporate action on its part.
23. No Conflict. Each of the undersigned parties
hereby represents and warrants to each other that the execution,
delivery and performance by it of this Agreement do not and shall
not (a) violate any provision of law, rule of regulation
applicable to it or any of its affiliates or its certificate of
incorporation or bylaws or those of any of its affiliates or
(b) conflict with, result in the breach of or constitute (with
due notice or lapse of time or both) a default under any material
contractual obligation to which it or any of its affiliates is a
party or under its certificate of incorporation or bylaws.
24. Governmental Consents. Each of the undersigned
parties hereby represents and warrants to each other that the
execution, delivery and performance by it of this Agreement do
not and shall not require any registration or filing with, the
consent or approval of, notice to, or any other action with
respect to, any Federal, state or other governmental authority or
regulatory body, except such filings as may be necessary or
required for disclosure by the Securities and Exchange
Commission.
25. Binding Obligation. Each of the undersigned
parties hereby represents and warrants to each other that this
Agreement is the legally valid and binding obligation of it,
enforceable against it in accordance with the Agreement's terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
Miscellaneous Provisions
------------------------
26. Effective Date. This Agreement shall be effective
as of the date first written above.
27. Amendments and Modifications. This Agreement
shall not be amended, modified or supplemented, except in writing
signed by each of the parties hereto.
28. Disclosure of Relevant Claims. Unless required by
applicable law or regulation, no party hereto shall disclose any
Consenting Holder's holdings of Relevant Claims, without the
prior written consent of such Consenting Holder; provided, that
the Company may, as required, disclose the Relevant Claims set
forth on each Consenting Holder's signature page to potential
purchasers of the Operating Assets who have executed
confidentiality agreements with the Company that cover this
Agreement. If disclosure is required by law or regulation, the
disclosing party shall afford the applicable Consenting Holder a
reasonable opportunity to review and comment on the disclosure
prior to making such disclosure. Nothing in this Section shall
prohibit any Consenting Holder or the Debtors from disclosing:
(a) the approximate aggregate holdings of Relevant Claims by the
Consenting Holders as a group; or (b) any Consenting Holder's
holdings of Relevant Claims solely for purposes of, and only to
the extent necessary to, enforce the terms of this Agreement.
29. Impact of Appointment to Creditors' Committee.
Notwithstanding anything herein to the contrary, if any
Consenting Holder is appointed to and serves on an official
committee of creditors in any of the Debtors' chapter 11 cases (a
"Creditors' Committee"), the terms of this Agreement shall not be
construed to limit such Consenting Holder's exercise of its
fiduciary duties to any person arising from its service on a
Creditors' Committee, and any exercise of such fiduciary duties
shall not be deemed to constitute a breach of the terms of this
Agreement. A Consenting Holder's service on a Creditors'
Committee, however, will not affect the continuing validity and
enforceability of this Agreement. So long as no Terminating
Event has occurred, a Consenting Holder's service on a Creditors'
Committee shall not modify or limit the Consenting Holders'
obligations under this Agreement, including their obligation not
to vote to accept a Plan that does not incorporate fully the
terms and conditions of the Settlement.
30. Non-Binding Effect on Debtors. Nothing in this
Agreement is intended, or shall be construed, to obligate the
Debtors to sell any or all of the Operating Assets or to file a
petition for relief under chapter 11 of the Bankruptcy Code; the
parties hereto specifically acknowledge that the Debtors have
made no decisions with respect to such matters.
31. Governing Law. This Agreement shall be governed
by the laws of the State of Delaware, without regard to any
conflicts of law provision that would require the application of
the law of any other jurisdiction.
32. Jurisdiction. By its execution and delivery of
this Agreement, each of the parties hereto irrevocably and
unconditionally agrees that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or
in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or
proceeding, shall be brought (a) in the Bankruptcy Court if the
Debtors have commenced chapter 11 cases or (b) in a court of
competent jurisdiction in the State of New York if the Debtors
have not commenced chapter 11 cases. By its execution and
delivery of this Agreement, each party hereto irrevocably accepts
and submits itself to the jurisdiction of the Bankruptcy Court or
a court of competent jurisdiction in the State of New York, as
applicable under the preceding sentence, with respect to any such
action, suit or proceeding.
33. Specific Performance. It is understood and agreed
by each of the parties hereto that money damages would not be a
sufficient remedy for any breach of this Agreement by any party
and each non-breaching party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy
of any such breach.
34. Survival. Notwithstanding the sale of the
Relevant Claims in accordance with Section 13 of this Agreement
or the occurrence of a Terminating Event, the obligations and
agreements set forth in Section 28 of this Agreement shall
survive such termination and shall continue in full force and
effect for the benefit of the Consenting Holder in accordance
with the terms hereof.
35. Headings. The headings of the sections,
paragraphs and subsections of this Agreement are inserted for
convenience only and shall not affect the interpretation hereof.
36. Successors and Assigns. This Agreement is
intended to bind and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs, executors,
administrators and representatives. The agreements,
representatives and obligations of the undersigned parties under
this Agreements are, in all respects, several and not joint.
37. Prior Agreements. This Agreement supersedes all
prior negotiations and agreements with respect to the matters set
forth herein.
38. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same
agreement.
39. No Third-Party Beneficiaries. Unless expressly
stated herein, this Agreement shall be solely for the benefit of
the parties hereto and no other person or entity shall be a third-
party beneficiary hereof.
40. Consideration. Except as otherwise provided
herein, it is hereby acknowledged by the parties hereto that no
other consideration shall be due or payable to the Consenting
Holders for their agreement to vote to accept a Plan that
incorporates fully the terms and conditions of the Settlement
under the terms and subject to the conditions of this Agreement.
SCHEDULE A
Schedule of Allowed Claims of Indenture Trustees Against Debtors
Pursuant to Section 15 of
Plan Settlement and Lock-Up Agreement
Amount of Allowed Claim
Indenture as of June 1, 2000
------------------------------------ ---------------------------
13-1/4% Senior Subordinated Indenture $201,509,000.00 (Principal)
7,935,816.25 (Interest)
---------------
$209,444,816.25 (Total)
13% Senior Secured Discount Indenture $352,955,795.48 (Total Accreted
Value)
11% Senior Subordinated Discount Indenture $187,834,918.18 (Total)
