AGREEMENT CONCERNING VOTING
This Agreement Concerning Voting (as the same may be amended, modified
or supplemented from time to time in accordance with the terms hereof, this
"Agreement") is entered into by (i) Flagstar Corporation (the "Company"), (ii)
Flagstar Companies, Inc. ("FCI"; the Company and FCI are together referred to as
"Flagstar"), and (iii) the undersigned holders (in its or their capacity as an
individual holder, the "Consenting Debentureholder") of, as the case may be,
those certain 11 1/4% Senior Subordinated Debentures due November 1, 2004 (the
"11 1/4% Debentures") and/or those certain 113/8% Senior Subordinated Debentures
due September 15, 2003 (the "113/8% Debentures") issued by the Company
(collectively, the "Debentures") in connection with a proposed financial
restructuring of Flagstar (the "Financial Restructuring") which is proposed to
be accomplished by means of a prepackaged or pre-arranged Chapter 11 Plan of
Reorganization of Flagstar (the "Prepackaged Plan") pursuant to Chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code").
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, Flagstar and each
Consenting Debentureholder (collectively, the "Parties"), intending to be
legally bound, agree as follows:
1. CONSENTING DEBENTUREHOLDER AGREEMENTS. The Consenting
Debentureholders represent that they are (i) the beneficial owners of no less
than 45% of the Debentures as of the date hereof (the "Relevant Debentures")
and/or the investment advisers or managers for the beneficial owners of Relevant
Debentures having the power to vote and dispose of Relevant Debentures on behalf
of such beneficial owners, and (ii) entitled (for their own account or for the
account of other persons claiming through them) to all of the rights and
economic benefits of the Relevant Debentures. The Consenting Debentureholders
agree and represent that, subject to Section 2 and Section 6 hereof and subject
to their receipt of solicitation materials in respect of the Prepackaged Plan
that are consistent with the terms of this Agreement:
(a) in connection with Flagstar's solicitation of ballots with
respect to the Prepackaged Plan, they will, as promptly as practicable,
vote (or, with respect to managed accounts, use their reasonable best
efforts to cause to be voted) the claims (the "Claims") in respect of
the Relevant Debentures in favor of the Prepackaged Plan, provided that
the terms of the Prepackaged Plan are consistent with the material
terms of the Prepackaged Plan described on Xxxxxxxx 0 xxxxxxxx xxxxxx
("Xxxxxxxx 0"), unless revised terms have been previously agreed to in
writing by the Consenting Debentureholder, it being recognized and
agreed by the Parties that Appendix 1 does not purport to include all
of the material terms with respect to the Prepackaged Plan;
(b) so long as they are the beneficial owners of, and/or
investment advisers or managers with respect to, the Relevant
Debentures, they will not at any time prior to the termination of this
Agreement vote (or cause to be voted) in favor of, or otherwise support
or encourage, directly or indirectly, any plan of reorganization
concerning Flagstar other than the Prepackaged Plan; and
(c) they will not sell, transfer or assign any of the Relevant
Debentures or any voting interest therein during the term of this
Agreement except to a purchaser who agrees prior to such acquisition to
be bound by all the terms of this Agreement with respect to the
Relevant Debentures being acquired by such purchaser, which agreement
shall subsequently be confirmed in writing (which writing may include a
trade confirmation issued by a broker or dealer, acting as principal or
as agent for the purchaser, stating that such agreement is a term of
such transfer), in which event the Company and FCI shall be deemed to
have acknowledged that each of their respective obligations to the
Consenting Debentureholders hereunder shall be deemed to constitute
obligations in favor of such purchaser, and each of the Company and FCI
shall confirm that acknowledgement in writing.
2. TERMINATION OF AGREEMENT. A Consenting Debentureholder's obligations
hereunder shall terminate upon the occurrence of any Agreement Termination
Event, unless the occurrence of such Agreement Termination Event is waived in
writing by such Consenting Debentureholder. If any Agreement Termination Event
occurs (and has not been waived) at a time when court permission shall be
required for a Consenting Debentureholder to change or withdraw (or cause to be
changed or withdrawn) its votes in favor of the Prepackaged Plan, the Company
and FCI shall not, subject to their fiduciary duties as debtors in possession,
oppose any attempt by such Consenting Debentureholder to change or withdraw (or
cause to be changed or withdrawn) such votes at such time.
For the purposes hereof an "Agreement Termination Event" shall mean any
of the following:
(a) the filing of petitions under the Bankruptcy Code in
respect of the Company and FCI and the filing of the Prepackaged Plan
in connection with such petitions shall not have occurred on or before
July 31, 1997;
(b) the effective date of the Prepackage Plan shall not have
occurred on or before October 15, 1997;
(c) either the Company or FCI terminates the solicitation in
respect of the Prepackaged Plan or withdraws the Prepackaged Plan;
(d) there occurs any material change in the terms of the
Prepackaged Plan materially affecting Debentureholders as a class not
previously consented to by the Consenting Debentureholders;
(e) to the extent the right of the Consenting Debentureholder
to vote or direct the disposition of the Relevant Debentures results
from an arrangement in existence on the date hereof under which such
Consenting Debentureholder has been engaged to perform investment
management services on behalf of a beneficial owner of the Relevant
Debentures, (i) such engagement shall be terminated by such beneficial
owner or as the result of any statutory, regulatory or BONA FIDE
business requirement or condition not related to the subject matter of
this Agreement, or (ii) such beneficial holder on its own (without any
direct of indirect influence from the Consenting Debentureholder)
directs the Consenting Debentureholder to dispose of some or all of the
Relevant Debentures
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beneficially owned by such beneficial owner; PROVIDED that, in any
case, the Agreement Termination Event shall only apply to Debentures
held by the beneficial owner as to which the engagement has been
terminated or as to which such disposal direction has been issued.
The Consenting Debentureholders shall have no liability to the
Company, FCI or each other in respect of any termination of this
Agreement in accordance with the terms hereof.
3. FURTHER ACQUISITION OF SECURITIES. This Agreement shall in no way be
construed to preclude the Consenting Debentureholders from acquiring additional
Debentures of the Company. However, any such additional Debentures so acquired
shall automatically be deemed to be Relevant Debentures and to be subject to all
of the terms of this Agreement OTHER THAN Section 1(c) hereof. This Agreement
shall in no way be construed to preclude the Consenting Debentureholders from
acquiring any other securities of the Company or FCI. However, the Consenting
Debentureholders agree that they will vote (or cause to be voted) any such
additional securities in favor of the Prepackaged Plan for so long as this
Agreement remains in effect.
4. AMENDMENTS. This Agreement may not be modified, amended or
supplemented except in writing signed by each of the Parties.
5. DISCLOSURE OF INDIVIDUAL HOLDINGS. Unless required by applicable law
or regulation (including, without limitation, the Bankruptcy Code and the U.S.
securities laws and any rules or regulations of the Securities and Exchange
Commission), which may require disclosure of the following, Flagstar may not
disclose the Consenting Debentureholders' individual holdings of Relevant
Debentures without the prior written consent of the Consenting Debentureholders;
and if such announcement or disclosure is so required by law or regulation,
Flagstar shall afford the Consenting Debentureholders the reasonable opportunity
under all the circumstances to conduct a reasonable review of, and comment upon,
such announcement or disclosure prior to making such announcement or disclosure.
The foregoing shall not prohibit the Company or FCI from disclosing the
approximate aggregate holdings of Debentures by the Consenting Debentureholders.
6. IMPACT OF APPOINTMENT TO CREDITORS COMMITTEE. Notwithstanding
anything herein to the contrary, in the event that any Consenting
Debentureholder is appointed to and serves on a committee of creditors in the
Company's Chapter 11 case, the terms of this Agreement shall not be construed so
as to limit such Consenting Debentureholder's exercise in its sole discretion of
its fiduciary duties to any person arising from its serving on that committee of
creditors, and any such exercise in the sole discretion of such Consenting
Debentureholder of such fiduciary duties arising from its serving on that
committee of creditors shall not be deemed to constitute a breach of the terms
of this Agreement (but the fact of such service on such committee shall not
otherwise affect the continuing validity or enforceability of this Agreement).
The foregoing shall not modify or limit the obligations of Consenting
Debentureholders to vote their individual holdings of Debentures and take the
other actions, as set forth in Section 1 hereof.
7. INDEMNIFICATION OBLIGATIONS. Each of the Company and FCI agrees, on
a joint and several basis, that it shall fully indemnify (i) each Consenting
Debentureholder and (ii) each and every other person by reason of the fact that
such person is or was a director, officer,
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employee, agent, shareholder, professional (including, without limitation, Xxxx
& Xxxxxx, Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, and Xxxxxxxx, Xxxxxx & Finger) or other
authorized representative of the Consenting Debentureholder (all the foregoing
persons, together with the Consenting Debentureholders, the "Indemnitees")
against any claims, liabilities, actions, suits, damages, fines, judgments or
expenses (including reasonable attorney's fees), brought or asserted by anyone
(other than the Company or FCI or any successor with respect to asserted
violations of this Agreement) arising during the course of, or otherwise in
connection with or in any way related to, the negotiation, preparation,
formulation, solicitation, dissemination, implementation, confirmation and
consummation of the Financial Restructuring, including the Prepackaged Plan and
the transactions contemplated thereby; PROVIDED, HOWEVER, that this indemnity
shall not extend to any claims asserted by the Consenting Debentureholder
against any other Indemnitee, and PROVIDED, FURTHER, that the foregoing
indemnification shall not apply to any liabilities arising from the gross
negligence or wilful misconduct of any Indemnitee. If any claim, action or
proceeding is brought or asserted against an Indemnitee in respect of which
indemnity may be sought from the Company or FCI, the Indemnitee shall promptly
notify the Company or FCI in writing, and the Company or FCI shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnitee, and the payment of all expenses. The Indemnitee shall have the
right to employ separate counsel in any such claim, action or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnitee unless (a) the Company or FCI has
agreed to pay the fees and expenses of such counsel, or (b) the Company or FCI
shall have failed promptly to assume the defense of such claim, action or
proceeding and employ counsel reasonably satisfactory to the Indemnitee in any
such claim, action or proceeding, or (c) the named parties to any such claim,
action or proceeding (including any impleaded parties) include both the
Indemnitee and the Company or FCI, and the Indemnitee believes, in the exercise
of its business judgment and in the opinion of its legal counsel, reasonably
satisfactory to the Company or FCI, that the joint representation of the Company
or FCI and the Indemnitee will likely result in a conflict of interest (in which
case, if the Indemnitee notifies the Company or FCI in writing that it elects to
employ separate counsel at the expense of the Company or FCI, the Company or FCI
shall not have the right to assume the defense of such action or proceeding on
behalf of the Indemnitee). In addition, the Company or FCI shall not effect any
settlement or release from liability in connection with any matter for which the
Indemnitee would have the right to indemnification from the Company or FCI,
unless such settlement contains a full and unconditional release of the
Indemnitee, or a release of the Indemnitee reasonably satisfactory in form and
substance to the Indemnitee.
8. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the Parties hereby irrevocably and unconditionally agrees for
itself 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, may be brought in any Federal or State court in the Borough of
Manhattan, the City of New York, but for that purpose only, and, by execution
and delivery of this Agreement, each of the Parties hereby irrevocably accepts
and submits itself to the nonexclusive jurisdiction of each such court,
generally and unconditionally, with respect to any such action, suit or
proceeding. Notwithstanding the foregoing consent to New York jurisdiction, upon
the commencement of the
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Company's Chapter 11 case, the Parties agree that the bankruptcy court hearing
such case shall have exclusive jurisdiction of all matters arising out of or in
connection with the Consenting Debentureholders' agreements pursuant to Section
1 hereof and that they shall not seek to enforce any such agreements in any
other court.
9. SPECIFIC PERFORMANCE. It is understood and agreed by the Parties
that money damages would not be a sufficient remedy for any breach of this
Agreement by any Party (other than a breach by the Company or FCI of Section 10
hereof) and each non-breaching Party shall be entitled to specific performance
and injunctive or other equitable relief as a remedy of any such breach.
10. FEES AND EXPENSES. If any Party brings an action against any other
Party based upon a breach by the other Party of its obligations under this
letter, the prevailing Party shall be entitled to all reasonable expenses
incurred, including reasonable attorneys' and financial advisers' fees.
11. SURVIVAL. Notwithstanding the sale of the Relevant Debentures in
accordance with Section 1(c) hereof or the termination of the Consenting
Debentureholders' obligations hereunder in accordance with Section 2 hereof, the
agreements and obligations of the Company and FCI in Section 5 and Sections 7-11
hereof shall survive such termination and shall continue in full force and
effect for the benefit of the Consenting Debentureholders in accordance with the
terms hereof.
12. HEADINGS. The headings of the Sections, paragraphs and subsections
of this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
13. SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL OBLIGATIONS. This
Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators and
representatives. The agreements and obligations of the Company and FCI under
this Agreement are joint and several in all respects, and the invalidity or
unenforceability at any time of any provision hereof against either of them
shall not affect or diminish in any way the continuing validity and
enforceability of such agreements and obligations against the other of them. The
agreements, representations and obligations of the Consenting Debentureholders
under this Agreement are several and not joint in all respects.
14. PRIOR NEGOTIATIONS. This Agreement and Appendix 1 supersede all
prior negotiations with respect to the subject matter hereof.
15. 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.
[Remainder of page is blank; next page is signature page]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date set forth below.
Dated: March 21, 1997
FLAGSTAR CORPORATION
By: /s/ XXXXX X. XXXXXXX
___________________________________________
FLAGSTAR COMPANIES, INC.
By: /s/ XXXXX X. XXXXXXX
___________________________________________
MAGTEN ASSET MANAGEMENT CORPORATION
By: /s/ XXXXXX XXXXX
___________________________________________
XXXXXX XXXXXX & COMPANY
By: /s/ XXXXXXXXX X. XXX
___________________________________________
XXXXX CAPITAL MANAGEMENT, INC.
By: /s/ XXXXXX X. XXXXXXX
___________________________________________
[SIGNATURE PAGE TO AGREEMENT CONCERNING VOTING]
