<PAGE>
EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------x
In re : Chapter 11
:
ContiFinancial Corporation, et al., : Case No. 00 B 12184 (AJG)
:
Debtors. : (Jointly Administered)
--------------------------------------------------x
THIRD AMENDED JOINT PLAN OF REORGANIZATION OF
CONTIFINANCIAL CORPORATION AND AFFILIATES UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
AS MODIFIED ON THE RECORD OF THE CONFIRMATION HEARING
AND APPROVED BY THE CONFIRMATION ORDER
Dated: New York, New York
December 18, 2000
DEWEY BALLANTINE LLP TOGUT, SEGAL & SEGAL LLP
COUNSEL FOR CONTIFINANCIAL COUNSEL FOR CONTIMORTGAGE
CORPORATION, ET AL. CORPORATION, ET AL.
DEBTORS IN POSSESSION DEBTORS IN POSSESSION
ATTN: RICHARD S. MILLER, ESQ. ATTN: ALBERT TOGUT, ESQ.
1301 AVENUE OF THE AMERICAS ONE PENN PLAZA
NEW YORK, NY 10019-6092 NEW YORK, NY 10119
(212) 259-8000 (212) 594-5000
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION................................................................ 1
ARTICLE I. DEFINITIONS, RULES OF INTERPRETATION, AND
CONSTRUCTION................................................... 2
A. Defined Terms........................................................... 2
B. Definitions............................................................. 2
Section 1.01 Additional Quarterly Distributions...................... 2
Section 1.02 Administrative Claim.................................... 2
Section 1.03 Allowed................................................. 2
Section 1.04 Allowed Administrative Claim............................ 2
Section 1.05 Allowed Claim........................................... 2
Section 1.06 Allowed Priority Claim.................................. 3
Section 1.07 Annual Distribution Date................................ 3
Section 1.08 Assets.................................................. 3
Section 1.09 Available Cash.......................................... 3
Section 1.10 Available Unclaimed Property............................ 3
Section 1.11 Ballot.................................................. 3
Section 1.12 Bank Agent.............................................. 3
Section 1.13 Bank Group.............................................. 3
Section 1.14 Bank Group Claim........................................ 3
Section 1.15 Bank Group Committee.................................... 3
Section 1.16 Bank Group Committee Fees............................... 3
Section 1.17 Bankruptcy Code......................................... 4
Section 1.18 Bankruptcy Court........................................ 4
Section 1.19 Bankruptcy Rules........................................ 4
Section 1.20 Bar Date................................................ 4
Section 1.21 Business Day............................................ 4
Section 1.22 Cash.................................................... 4
Section 1.23 Causes of Action........................................ 4
Section 1.24 CFN..................................................... 4
Section 1.25 Chapter 11 Cases........................................ 4
Section 1.26 Claim................................................... 4
Section 1.27 Claims Agent............................................ 4
Section 1.28 Class................................................... 5
Section 1.29 Class 5................................................. 5
Section 1.30 Class 5 Cash............................................ 5
Section 1.31 Class [___] Claim....................................... 5
Section 1.32 CMC..................................................... 5
Section 1.33 Collateral.............................................. 5
Section 1.34 Compromise and Settlement............................... 5
i
<PAGE>
Section 1.35 Confirmation Date....................................... 5
Section 1.36 Confirmation Hearing.................................... 5
Section 1.37 Confirmation Order...................................... 5
Section 1.38 Convenience Claim....................................... 5
Section 1.39 Court................................................... 5
Section 1.40 Credit Agreement........................................ 5
Section 1.41 D&O Insurance........................................... 6
Section 1.42 Debtors................................................. 6
Section 1.43 Defendant............................................... 6
Section 1.44 Disallowed.............................................. 6
Section 1.45 Disclosure Statement.................................... 6
Section 1.46 Disclosure Statement Order.............................. 6
Section 1.47 Disputed Claim.......................................... 6
Section 1.48 Disputed Claims Reserve Trust........................... 6
Section 1.49 Distributed ESRs........................................ 7
Section 1.50 Distribution............................................ 7
Section 1.51 Distribution Address.................................... 7
Section 1.52 Distribution Date....................................... 7
Section 1.53 Effective Date.......................................... 7
Section 1.54 Equity Interest......................................... 7
Section 1.55 ESR..................................................... 7
Section 1.56 Estates................................................. 7
Section 1.57 Exhibit................................................. 7
Section 1.58 Exhibit Filing Date..................................... 7
Section 1.59 Face Amount............................................. 8
Section 1.60 FGIC.................................................... 8
Section 1.61 FGIC Agreement.......................................... 8
Section 1.62 FGIC Claims............................................. 8
Section 1.63 FGIC Pooling and Servicing Agreements................... 8
Section 1.64 FGIC Reserve Account.................................... 8
Section 1.65 Fidelity................................................ 8
Section 1.66 File or Filed........................................... 8
Section 1.67 Final Claims Resolution Date............................ 8
Section 1.68 Final Order............................................. 8
Section 1.69 Fractional Liquidating Trust Unit....................... 9
Section 1.70 General Unsecured Claim................................. 9
Section 1.71 Greenwich............................................... 9
Section 1.72 Greenwich Collateral.................................... 9
Section 1.73 Greenwich Security Agreement............................ 9
Section 1.74 Greenwich Repurchase Facility........................... 9
Section 1.75 Greenwich Repurchase Facility Secured Claims............ 9
Section 1.76 Greenwich Whole Loan Purchase Facility.................. 9
Section 1.77 Greenwich Whole Loan Purchase Facility Secured Claims... 9
Section 1.78 Indentures.............................................. 9
Section 1.79 Indenture Trustee....................................... 9
Section 1.80 Initial Distribution.................................... 9
ii
<PAGE>
Section 1.81 Initial Distribution Date............................... 9
Section 1.82 Intercompany Claim..................................... 10
Section 1.83 Interest............................................... 10
Section 1.84 IRS.................................................... 10
Section 1.85 Judgment Amount........................................ 10
Section 1.86 Letter of Credit Agreement............................. 10
Section 1.87 Lien................................................... 10
Section 1.88 Liquidating Trust...................................... 10
Section 1.89 Liquidating Trust Agreement............................ 10
Section 1.90 Liquidating Trust Committee............................ 10
Section 1.91 Liquidating Trust Unit................................. 10
Section 1.92 Liquidating Trustee.................................... 10
Section 1.93 MBIA................................................... 11
Section 1.94 MBIA Agreement......................................... 11
Section 1.95 MBIA Claims............................................ 11
Section 1.96 MBIA Pooling and Servicing Agreements.................. 11
Section 1.97 MBIA Reserve Account.................................. 11
Section 1.98 Offset Amount.......................................... 11
Section 1.99 Old Common Stock....................................... 11
Section 1.100 Ordinary Course Professionals Orders................... 11
Section 1.101 Other Secured Claims................................... 11
Section 1.102 Paying Agent........................................... 11
Section 1.103 Person................................................. 11
Section 1.104 Petition Date.......................................... 12
Section 1.105 Plan................................................... 12
Section 1.106 Plan Administration Agreement.......................... 12
Section 1.107 Plan Administration Committee.......................... 12
Section 1.108 Plan Administrator..................................... 12
Section 1.109 Preference Stipulation................................. 12
Section 1.110 Prepetition Claim...................................... 12
Section 1.111 Priority Claim......................................... 12
Section 1.112 Priority Tax Claim..................................... 12
Section 1.113 Professionals.......................................... 13
Section 1.114 Quarterly Distribution Date............................ 13
Section 1.115 Ratable or Ratable Share............................... 13
Section 1.116 Reinstated............................................. 13
Section 1.117 Resource One Debtors................................... 13
Section 1.118 Royal.................................................. 13
Section 1.119 Schedules.............................................. 13
Section 1.120 Secured Claim.......................................... 13
Section 1.121 Security............................................... 13
Section 1.122 Senior Notes........................................... 13
Section 1.123 Senior Notes Claim..................................... 14
Section 1.124 Settlement Debtors..................................... 14
Section 1.125 Settlement Debtors Premium............................. 14
Section 1.126 Settlement Debtors Premium Adjustment.................. 14
iii
<PAGE>
Section 1.127 Settlement Debtors Premium Initial Distribution........ 14
Section 1.128 Special Notice List.................................... 14
Section 1.129 Subordinated Claim..................................... 14
Section 1.130 Surviving Special Purpose Entities..................... 15
Section 1.131 Transition Period...................................... 15
Section 1.132 Transition Team........................................ 15
Section 1.133 Treasury Regulation.................................... 15
Section 1.134 Trust Assets........................................... 15
Section 1.135 Unclaimed Property..................................... 15
Section 1.136 Unofficial Committees.................................. 15
Section 1.137 Unofficial Noteholders' Committee...................... 15
Section 1.138 Unofficial Noteholders' Committee Fees................. 15
Section 1.139 U.S. Trustee Fees...................................... 16
C. Rules of Construction.................................................. 16
Section 1.140 Generally.............................................. 16
Section 1.141 Exhibits............................................... 16
Section 1.142 Time Periods........................................... 16
Section 1.143 Miscellaneous Rules.................................... 16
ARTICLE II. COMPROMISE AND SETTLEMENT; GENERAL RULES
REGARDING CLASSIFICATION OF CLAIMS AND
INTERESTS.................................................... 16
Section 2.01 Compromise and Settlement.............................. 16
Section 2.02 General Rules of Classification Under the Bankruptcy
Code................................................... 17
Section 2.03 Undersecured Claims.................................... 17
ARTICLE III. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS................. 17
Section 3.01 Summary................................................ 17
ARTICLE IV. TREATMENT OF UNCLASSIFIED CLAIMS............................... 18
Section 4.01 Administrative Claims.................................. 18
Section 4.02 Priority Tax Claims.................................... 18
Section 4.03 U.S. Trustee Fees...................................... 19
ARTICLE V. TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS.................... 19
Section 5.01 Class 1a: Greenwich Repurchase Facility Secured
Claims....................................... 19
Section 5.02 Class 1b: Greenwich Whole Loan Purchase Facility
Secured Claims............................... 19
Section 5.03 Class 2a: MBIA Claims.................................. 20
Section 5.04 Class 2b: FGIC Claims.................................. 20
Section 5.05 Class 3: Other Secured Claims......................... 20
Section 5.06 Class 4: Priority Claims.............................. 21
Section 5.07 Class 5a: Bank Group Claims, Senior Notes Claims, and
General Unsecured Claims against Debtors
other than the Settlement Debtors............ 21
iv
<PAGE>
Section 5.08 Class 5b: General Unsecured Claims against the
Settlement Debtors..................................... 21
Section 5.09 Class 5: Miscellaneous Distribution Provisions........ 22
Section 5.10 Class 6: Convenience Claims........................... 23
Section 5.11 Class 7: Subordinated Claims.......................... 23
Section 5.12 Class 8: Equity Interests............................. 23
ARTICLE VI. ESTABLISHMENT OF TRUSTS; IMPLEMENTATION OF PLAN................ 23
Section 6.01 The Liquidating Trust.................................. 23
Section 6.02 Appointment of Liquidating Trustee and Liquidating
Trust Committee........................................ 25
Section 6.03 Liquidating Trust Units, Applicability of Securities
Laws and Reporting Requirements........................ 25
Section 6.04 Disputed Claims Reserve Trust.......................... 26
Section 6.05 Distributions To Holders Of Claims And Interests....... 28
Section 6.06 Miscellaneous Distribution Provisions.................. 30
Section 6.07 De Minimis Distributions............................... 31
Section 6.08 Setoffs................................................ 31
Section 6.09 Intercompany Claims.................................... 32
Section 6.10 Unclaimed Property..................................... 32
Section 6.11 Exemption from Transfer Taxes.......................... 32
Section 6.12 Cancellation of Capital Stock.......................... 33
Section 6.13 Cancellation of Senior Notes and Agreements............ 33
Section 6.14 Disputed Payments...................................... 34
Section 6.15 Withholding Taxes...................................... 34
Section 6.16 Obligations Incurred After the Confirmation Date....... 34
Section 6.17 Instructions to Liquidating Trustee or Plan
Administrator.......................................... 34
Section 6.18 Record Date for Distributions to Holders of Senior
Notes.................................................. 35
Section 6.19 Dissolution............................................ 35
ARTICLE VII. EFFECT OF THE PLAN ON CLAIMS AND INTERESTS.................... 35
Section 7.01 Jurisdiction of Court.................................. 35
Section 7.02 Binding Effect......................................... 35
Section 7.03 Term of Injunctions or Stays........................... 35
Section 7.04 Rights of Action....................................... 35
Section 7.05 Discharge.............................................. 36
Section 7.06 Preservation of Insurance.............................. 37
ARTICLE VIII. EXECUTORY CONTRACTS.......................................... 37
Section 8.01 Executory Contracts and Unexpired Leases............... 37
Section 8.02 Cure................................................... 38
Section 8.03 Rejection Damages Bar Date............................. 38
Section 8.04 Executory Contracts and Unexpired Leases Entered
Into and Other Obligations Incurred After the
Petition Date.......................................... 38
v
<PAGE>
ARTICLE IX. CONDITIONS TO CONFIRMATION AND OCCURRENCE OF EFFECTIVE DATE.... 39
Section 9.01 Conditions to Confirmation............................. 39
Section 9.02 Conditions to Occurrence of Effective Date............. 39
Section 9.03 Waiver of Conditions to Confirmation and Occurrence
of Effective Date...................................... 39
Section 9.04 Effect of Nonoccurrence of the Conditions to
Occurrence of Effective Date........................... 39
ARTICLE X. CONFIRMABILITY AND SEVERABILITY OF A PLAN AND CRAMDOWN.......... 40
Section 10.01 Confirmability and Severability of a Plan.............. 40
Section 10.02 Cramdown............................................... 40
ARTICLE XI. ADMINISTRATIVE PROVISIONS...................................... 41
Section 11.01 Retention of Jurisdiction.............................. 41
Section 11.02 Governing Law.......................................... 42
Section 11.03 Administrative Bar Date................................ 42
Section 11.04 Payment of Statutory Fees.............................. 43
Section 11.05 Payment of Transition Team Fees and Expenses........... 43
Section 11.06 Effectuating Documents and Further Transactions........ 43
Section 11.07 Limitation of Liability................................ 43
Section 11.08 Amendments............................................. 44
Section 11.09 Debtors' Retirement Plans.............................. 44
Section 11.10 Successors and Assigns................................. 44
Section 11.11 Confirmation Order and Plan Control.................... 45
Section 11.12 Headings............................................... 45
Section 11.13 Relationship of Liquidating Trust Agreement and Plan
Administration Agreement to the Plan................... 45
Section 11.14 Notices................................................ 45
EXHIBITS
A Liquidating Trust Agreement
B Plan Administration Agreement
C Distributed ESRs
D Surviving Non-Debtor Affiliates
E Schedule of Assumed and Assumed and Assigned
Executory Contracts and Unexpired Leases
F Disputed Claims
vi
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------x
In re : Chapter 11
:
ContiFinancial Corporation, et al., : Case No. 00 B 12184 (AJG)
:
Debtors. : (Jointly Administered)
------------------------------------------x
THIRD AMENDED JOINT PLAN OF REORGANIZATION OF
CONTIFINANCIAL CORPORATION AND AFFILIATESm:
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
--------------------------------------------------
INTRODUCTION
ContiFinancial Corporation, ContiMortgage Corporation,
ContiTrade Services LLC, ContiWest Corporation, ContiFinancial Services
Corporation, Resource One Consumer Discount Company, Inc., Warminster National
Abstract, Inc., Keystone Capital Group, Inc., Keystone Mortgage Investments,
Inc., ZTS Corporation, Resource One Mortgage of Oxford Valley, Inc., Resource
One Consumer Discount Co. of Minnesota, Inc., Resource One Mortgage of Delaware
Valley, Inc., ResourceCorp Financial, Inc., ContiInsurance Agency, Inc., Crystal
Mortgage Company, Inc., Lenders M.D., Inc., California Lending Group, Inc.,
ContiAsset Receivables Management L.L.C., Royal Mortgage Partners, L.P. and
Fidelity Mortgage Decisions Corporation (collectively, the "Debtors") as debtors
and debtors-in-possession in the above-captioned chapter 11 cases, hereby
propose the following third amended joint plan of reorganization pursuant to
section 1121(a) of title 11 of the United States Code. Reference is made to the
Disclosure Statement for a discussion of the Debtors' history, businesses,
properties, results of operations, projections for future recoveries, a summary
and analysis of the Plan and other related matters. The Debtors are the
proponents of the Plan within the meaning of section 1129 of the Bankruptcy
Code.
These reorganization cases have been consolidated for
procedural purposes and are being jointly administered pursuant to an order of
the United States Bankruptcy Court for the Southern District of New York. This
Plan contemplates the substantive consolidation of the Debtors for purposes of
distribution and voting.
Under section 1125(b) of the Bankruptcy Code, a vote to accept
or reject the Plan cannot be solicited from a holder of a claim or interest
until such time as the Disclosure Statement has been approved by the Bankruptcy
Court and distributed to holders of claims and interests. ALL HOLDERS OF CLAIMS
AGAINST THE DEBTORS ARE ENCOURAGED TO READ THE PLAN AND THE RELATED DISCLOSURE
STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT
<PAGE>
OR TO REJECT THE PLAN. SUBJECT TO CERTAIN RESTRICTIONS AND REQUIREMENTS SET
FORTH IN THE PLAN, THE DEBTORS RESERVE THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE
OR WITHDRAW THE PLAN PRIOR TO ITS SUBSTANTIAL CONSUMMATION.
ARTICLE I.
DEFINITIONS, RULES OF INTERPRETATION, AND CONSTRUCTION
A. Defined Terms. As used herein, the following terms have the
respective meanings specified below, unless the context otherwise requires (such
meanings to be equally applicable to both the singular and plural, and masculine
and feminine forms of the terms defined). Any term used in the Plan but not
defined herein that is used in the Bankruptcy Code or Bankruptcy Rules shall
have the meaning assigned to that term in the Bankruptcy Code or Bankruptcy
Rules.
B. Definitions.
Section 1.01 Additional Quarterly Distributions means a
Distribution, if practicable, on a Quarterly Distribution Date to each holder of
Liquidating Trust Units from the Liquidating Trust as set forth in this Plan.
Section 1.02 Administrative Claim means any Claim under
sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation: (a) the actual, necessary costs and expenses incurred by the Debtors
after the Petition Date, and (b) compensation for legal and other services and
reimbursement of expenses awarded pursuant to sections 330(a), 331 or 1103 of
the Bankruptcy Code.
Section 1.03 Allowed means, with respect to a Claim or
Interest, the extent to which a Claim or Interest is not objected to within the
period fixed by the Bankruptcy Code, the Bankruptcy Rules or orders of the
Court, or otherwise allowed by a Final Order, including, without limitation, the
Confirmation Order and (a) scheduled by the Debtors pursuant to the Bankruptcy
Code and the Bankruptcy Rules in a liquidated amount and not listed as
contingent, unliquidated or disputed, (b) timely Filed under applicable law with
the Court pursuant to the Bankruptcy Code, the Bankruptcy Rules or any
applicable orders of the Court, or (c) late-Filed and allowed by Court Order
after notice and a hearing. Unless otherwise specified herein, in section 506(b)
of the Bankruptcy Code or by order of the Bankruptcy Court, "Allowed Claim,"
shall not, for the purposes of distributions under the Plan, include (x) for
Prepetition Claims, interest on such Claim or Claims accruing from or after the
Petition Date, (y) punitive or exemplary damages, or (z) any fine, penalty or
forfeiture.
Section 1.04 Allowed Administrative Claim means an
Administrative Claim to the extent it is Allowed.
Section 1.05 Allowed Claim means a Claim to the extent that
such Claim is Allowed.
2
<PAGE>
Section 1.06 Allowed Priority Claim means a Priority Claim to
the extent it is Allowed.
Section 1.07 Annual Distribution Date means every fourth
Quarterly Distribution Date.
Section 1.08 Assets means all assets of the Debtors of any
nature whatsoever, including, without limitation, all property of the Estates
pursuant to Section 541 of the Bankruptcy Code, Cash, Causes of Action, tax
refunds, claims of right, interests and property, real and personal, tangible
and intangible.
Section 1.09 Available Cash means all Cash of the Liquidating
Trust, less Cash or reserves necessary for the administration of the Liquidating
Trust and the Disputed Claims Reserve Trust, as determined in the reasonable
discretion of the Liquidating Trustee for litigation costs, anticipated costs
and operating expenses.
Section 1.10 Available Unclaimed Property means Unclaimed
Property that is unclaimed on the first anniversary of the date of Distribution
of such property (together with any interest thereon and proceeds thereof).
Section 1.11 Ballot means the ballot distributed to a holder
of a Claim on which ballot such holder of a Claim may, inter alia, vote for or
against the Plan.
Section 1.12 Bank Agent means Credit Suisse First Boston, New
York Branch, as Administrative Agent, to the Credit Agreement or any successor
thereto.
Section 1.13 Bank Group means Credit Suisse First Boston, New
York Branch, as Administrative Agent, and Credit Suisse First Boston, New York
Branch, and Dresdner Bank AG, New York and Grand Cayman Branches, as
Co-Arrangers, and those other financial institutions that are parties to the
Credit Agreement and the Letter of Credit Agreement and their successors and
assigns.
Section 1.14 Bank Group Claim means any Claim of the Bank
Group arising under the Credit Agreement and the Letter of Credit Agreement.
Section 1.15 Bank Group Committee means those members of the
Bank Group acting as an unofficial creditors' committee in the Chapter 11 Cases,
which committee may be reconstituted from time to time, including Credit Suisse
First Boston, Credit Lyonnais, The Bank of New York, and The Bank of Nova
Scotia.
Section 1.16 Bank Group Committee Fees means those fees and
expenses actually incurred or to be paid, if any, by the Debtors to Weil,
Gotshal & Manges LLP, as counsel to the Bank Group Committee, and
PriceWaterhouseCoopers LLP, as financial advisors to the Bank Group Committee,
pursuant to the Plan or Confirmation Order for payment of such fees and expenses
for work performed from the Petition Date through the Effective Date.
3
<PAGE>
Section 1.17 Bankruptcy Code means the Bankruptcy Reform Act
of 1978, as amended and codified at title 11 of the United States Code, 11
U.S.C.ss.ss.101 et seq.
Section 1.18 Bankruptcy Court means the United States
Bankruptcy Court for the Southern District of New York which has jurisdiction
over the Chapter 11 Cases.
Section 1.19 Bankruptcy Rules means the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal
Rules of Civil Procedure, as amended, made applicable through the Federal Rules
of Bankruptcy Procedure, and the Local Rules of the Bankruptcy Court.
Section 1.20 Bar Date means such date(s) fixed by Order(s) of
the Bankruptcy Court by which Proofs of Claim, Proofs of Interest, or requests
for allowance of Administrative Claims must be Filed.
Section 1.21 Business Day means any day except a Saturday,
Sunday, or "legal holiday" as such term is defined in Bankruptcy Rule 9006(a).
Section 1.22 Cash means cash and cash equivalents in U.S.
dollars.
Section 1.23 Causes of Action means any and all claims, rights
and causes of action that could have been brought by or on behalf of the Debtors
arising before, on or after the Petition Date, known or unknown, suspected or
unsuspected, in contract or in tort, at law or in equity or under any theory of
law, including, but not limited to (i) those referred to in the Disclosure
Statement, (ii) any and all claims, rights and causes of action the Debtors or
the Estates may have against any Person arising under chapter 5 of the
Bankruptcy Code, or any similar provision of state law or any other law, rule,
regulation, decree, order, statute or otherwise, (iii) derivative claims and
(iv) right of setoff or recoupment, and claims on contracts or breaches of duty
imposed by law.
Section 1.24 CFN means ContiFinancial Corporation, a Delaware
corporation.
Section 1.25 Chapter 11 Cases means case numbers 00-12184
(AJG) through 00-12187 (AJG), 00-12189 (AJG) through 00-12203 (AJG) inclusive,
00-13732 (AJG) and 00-13733 (AJG), commenced by the Debtors under chapter 11 of
the Bankruptcy Code on the Petition Date in the Bankruptcy Court, and styled
ContiFinancial Corporation, et al., Debtors.
Section 1.26 Claim means a claim, as such term is defined in
section 101(5) of the Bankruptcy Code, against the Debtors.
Section 1.27 Claims Agent means Donlin, Recano & Co. or such
successor as the Debtors or the Plan Administrator may designate.
4
<PAGE>
Section 1.28 Class means a group of Claims or the Equity
Interests as classified in Article III under the Plan.
Section 1.29 Class 5 means both Class 5a and Class 5b.
Section 1.30 Class 5 Cash means Cash, which shall be
distributed on the Initial Distribution Date to holders of Class 5 Claims as
provided in Article V of the Plan, estimated in the Disclosure Statement as
reflected in the Pro Forma Balance Sheet, Section X-D.
Section 1.31 Class [___] Claim means a Claim in the particular
Class of Claims identified and described in Article III of the Plan.
Section 1.32 CMC means ContiMortgage Corporation, a Delaware
corporation.
Section 1.33 Collateral means any property or interest in
property of the estates of the Debtors that is subject to an unavoidable Lien to
secure the payment or performance of a Claim.
Section 1.34 Compromise and Settlement means the settlement
which is part of, incorporated in the Plan, and a condition precedent to the
Effective Date, resolving issues among each of the Debtors, the Unofficial
Noteholders' Committee and the Unofficial Bank Group Committee concerning (a)
substantive consolidation; (b) treatment of intercompany loans and claims; and
(c) the Settlement Debtors Premium.
Section 1.35 Confirmation Date means the date on which the
Clerk of the Bankruptcy Court enters the Confirmation Order.
Section 1.36 Confirmation Hearing means the hearing conducted
by the Bankruptcy Court to consider confirmation of the Plan.
Section 1.37 Confirmation Order means the order, entered by
the Clerk of the Bankruptcy Court, confirming the Plan in accordance with the
provisions of the Bankruptcy Code.
Section 1.38 Convenience Claim means any General Unsecured
Claim, in an amount equal to or less than $1,000, or voluntarily reduced by the
holder of the General Unsecured Claim to $1,000 (the "Threshold Amount");
provided, however, that such Threshold Amount may be increased in the reasonable
business judgment of the Debtors, subject to the consent of each of the
Unofficial Committees at or before the Initial Distribution Date for the purpose
of administrative convenience or to reduce the expenses of administration of the
Liquidating Trust.
Section 1.39 Court shall have the same meaning as Bankruptcy
Court.
Section 1.40 Credit Agreement means that certain Credit
Agreement, dated as of January 7, 1997, as amended, among CFN, The Lenders Party
Thereto, and
5
<PAGE>
Credit Suisse First Boston, New York Branch, as Administrative Agent, and Credit
Suisse First Boston, New York Branch, and Dresdner Bank AG, New York and Grand
Cayman Branches, as Co-Arrangers, and any of the documents or instruments
related thereto.
Section 1.41 D&O Insurance means the officers and directors
insurance maintained by the Debtors which covers the Debtors' present and former
officers and directors.
Section 1.42 Debtors shall have the meaning ascribed in the
Introduction herein.
Section 1.43 Defendant shall have the meaning given such term
in Section 6.04(e) hereof.
Section 1.44 Disallowed means the extent to which a Disputed
Claim is not Allowed whether by Final Order of the Court, by agreement of the
parties or otherwise.
Section 1.45 Disclosure Statement means the written disclosure
statement, that relates to the Plan, as amended, supplemented or modified from
time to time, and as approved by the Bankruptcy Court under section 1125 of the
Bankruptcy Code.
Section 1.46 Disclosure Statement Order means the order of the
Court approving the Disclosure Statement as containing adequate information
pursuant to section 1125 of the Bankruptcy Code.
Section 1.47 Disputed Claim means (a) if no proof of Claim has
been timely Filed or deemed timely Filed under applicable law or order of the
Court, a Claim that has been listed on a Debtor's Schedules as disputed,
contingent or unliquidated; or (b) if a proof of Claim has been Filed or deemed
timely Filed under applicable law or order of the Court, a proof of Claim as to
which an objection or request for estimation has been timely Filed and has not
been (i) withdrawn, (ii) overruled or denied by a Final Order or (iii) granted
in whole by a Final Order. For the purposes of the Plan, a Claim shall be
considered a Disputed Claim, unless otherwise ordered by the Bankruptcy Court,
if (x) an objection has been Filed with respect to such Claim prior to the
Effective Date or, if a Claim is permitted to be Filed after the Effective Date,
no later than thirty days after such Claim has been Filed or (y) such claim is
listed on Exhibit F titled "Disputed Claims" attached to this Plan to be Filed
by the Debtors on or before the Exhibit Filing Date.
Section 1.48 Disputed Claims Reserve Trust means a trust
established by the Debtors for the payment of Disputed Claims that become
Allowed Claims after the Effective Date, and which shall hold Cash and
Liquidating Trust Units in trust for the benefit of the holders of Disputed
Claims that become Allowed Claims, and shall not, constitute property of the
Debtors' Estates or the Liquidating Trust.
6
<PAGE>
Section 1.49 Distributed ESRs means those ESRs, listed on
Exhibit C hereto, that will be contributed by the Debtors to the Liquidating
Trust for the benefit of holders of Allowed Class 5 Claims, in accordance with
the provisions of this Plan.
Section 1.50 Distribution means the distribution in accordance
with this Plan of any property or Assets distributed under Articles IV or V
herein, including, without limitation, (a) Cash, (b) Liquidating Trust Units, or
(c) any combination thereof.
Section 1.51 Distribution Address means the address set forth
in the relevant proof of claim, as such address may have been updated pursuant
to Bankruptcy Rule 2002(g). If no proof of claim is Filed in respect of a
particular Claim, such defined term means the address set forth in the relevant
Debtor's Schedules, as such address may have been updated pursuant to Bankruptcy
Rule 2002(g).
Section 1.52 Distribution Date means any date on which a
Distribution is made, including, without limitation, the Initial Distribution
Date or a Quarterly Distribution Date.
Section 1.53 Effective Date means a Business Day selected by
the Debtors which is eleven (11) days after the Confirmation Order is entered by
the Bankruptcy Court, or as soon thereafter as practicable; provided, however,
that Effective Date shall not occur sooner than January 2, 2001.
Section 1.54 Equity Interest means the interest held by any
Person in the equity of the Debtors, including, without limitation, any "equity
security" in the Debtors as defined by section 101(16) of the Bankruptcy Code.
Section 1.55 ESR means any certificated or non-certificated
interest retained by a Debtor or an affiliate of the Debtors that entitles the
holders of such interest to receive some or all of the excess cash flows
generated by a pool of securitized loans generally calculated as (a) the monthly
interest payments from the loans, less (b) the sum of (i) pass-through interest
paid to third-party investors, (ii) trustees fees, (iii) third-party credit
enhancement fees, and (iv) servicing fees.
Section 1.56 Estates means, as to each Debtor, the estate of
such Debtor in its Chapter 11 Case created by section 541 of the Bankruptcy Code
upon the commencement of such Chapter 11 Case.
Section 1.57 Exhibit means an exhibit to either this Plan or
the Disclosure Statement.
Section 1.58 Exhibit Filing Date means the last date by which
forms of the Exhibits to the Plan shall be Filed with the Bankruptcy Court,
which date (a) with respect to the Liquidating Trust Agreement and the Plan
Administration Agreement, shall be not later than one day prior to the date on
which the Confirmation Hearing will be held, or such later date as may be fixed
by the Bankruptcy Court and (b) with respect to the lists of (i) Distributed
ESRs, (ii) Surviving Special Purpose Entities, (iii) Assumed
7
<PAGE>
Executory Contracts and Unexpired Leases, and (iv) Disputed Claims, shall be not
later than the Effective Date or such later date as may be fixed by the
Bankruptcy Court.
Section 1.59 Face Amount means (a) with respect to any Claim
for which a proof of claim is Filed, an amount equal to: (i) the liquidated
amount, if any, set forth therein; and/or (ii) any other amount estimated by the
Court in accordance with section 502(c) of the Bankruptcy Code and the relevant
provisions of this Plan; or (b) if no proof of claim is Filed and such Claim is
scheduled in the relevant Debtor's Schedules, the amount of the Claim scheduled
as undisputed, fixed and liquidated.
Section 1.60 FGIC means Financial Guaranty Insurance Company.
Section 1.61 FGIC Agreement means that certain settlement
agreement dated as of July 13, 2000 among CMC, on behalf of itself and the other
Debtors and FGIC.
Section 1.62 FGIC Claims means any and all Claims of FGIC
against the Debtors. The FGIC Claims shall be Allowed Secured Claims in
accordance with the FGIC Agreement.
Section 1.63 FGIC Pooling and Servicing Agreements means those
agreements listed on Exhibit "A" to the FGIC Agreement.
Section 1.64 FGIC Reserve Account means that certain reserve
account established for the benefit of FGIC pursuant to the FGIC Agreement.
Section 1.65 Fidelity means Fidelity Mortgage Decisions
Corporation, an Illinois corporation.
Section 1.66 File or Filed means filed with the Bankruptcy
Court in the Chapter 11 Cases.
Section 1.67 Final Claims Resolution Date means the date on
which the last Disputed Claim has been resolved, either by consent, order of the
Bankruptcy Court or otherwise.
Section 1.68 Final Order means an order as to which the time
to appeal, petition for certiorari, or move for reargument or rehearing has
expired and as to which no appeal, petition for certiorari, or other proceedings
for reargument or rehearing shall then be pending or as to which any right to
appeal, petition for certiorari, move for reargument, or rehearing shall have
been waived in writing or, in the event that an appeal, writ of certiorari, or
reargument or rehearing thereof has been sought, such order shall have been
affirmed by the highest court to which such order was appealed, or certiorari
has been denied, or from which reargument or rehearing was sought, and the time
to take any further appeal, petition for certiorari or motion for reargument or
rehearing shall have expired.
8
<PAGE>
Section 1.69 Fractional Liquidating Trust Unit means the
fractions of Liquidating Trust Units not issued pursuant to Section 6.06 hereof.
Section 1.70 General Unsecured Claim means an unsecured Claim
that is not an Administrative Claim, a Priority Tax Claim, a Secured Claim, a
Priority Claim, a Bank Group Claim, a Senior Notes Claim, or a Subordinated
Claim.
Section 1.71 Greenwich means, collectively, Greenwich Capital
Financial Products, Inc. and its affiliates.
Section 1.72 Greenwich Collateral means certain assets of CFN
upon which Greenwich maintains Liens as provided in the Greenwich Security
Agreement.
Section 1.73 Greenwich Security Agreement means that certain
Amended and Restated Pledge Agreement dated August 31, 1999, made by CFN as
grantor in favor of Greenwich.
Section 1.74 Greenwich Repurchase Facility means that certain
Master Repurchase Agreement Governing Purchases and Sales of Assets, dated as of
August 9, 1999, as amended, by and among CFN, CMC and Greenwich, and any of the
documents or instruments related thereto.
Section 1.75 Greenwich Repurchase Facility Secured Claims
means any Secured Claims of Greenwich arising out of the Greenwich Repurchase
Facility and the Greenwich Security Agreement.
Section 1.76 Greenwich Whole Loan Purchase Facility means that
certain Master Mortgage Loan Purchase Facility, dated as of August 9, 1999, as
amended, by and among CFN, CMC and Greenwich, and any of the documents or
instruments related thereto.
Section 1.77 Greenwich Whole Loan Purchase Facility Secured
Claims means any Secured Claims arising out of the Greenwich Whole Loan Purchase
Facility and the Greenwich Security Agreement.
Section 1.78 Indentures means the agreements to which CFN is a
party and under which the Senior Notes were issued.
Section 1.79 Indenture Trustee means Wells Fargo Bank,
National Association, formerly known as Norwest Bank Minnesota, National
Association, which serves as successor indenture trustee under each of the
Indentures.
Section 1.80 Initial Distribution means that distribution to
holders of Allowed Claims made on or as soon as practicable as determined by
Liquidating Trustee after the Effective Date as provided for in Section 6.05 of
the Plan.
Section 1.81 Initial Distribution Date means the date on which
Initial Distributions, if any, are made under the Plan.
9
<PAGE>
Section 1.82 Intercompany Claim means any Claims between and
among the Debtors or any non-debtor affiliate.
Section 1.83 Interest means (a) share in a corporation,
whether or not transferable or denominated "stock," or similar security; (b)
membership interest in a limited liability company; (c) interest of a limited
partner in a limited partnership; (d) warrant or right, other than a right to
convert, to purchase, sell or subscribe to a share, security or interest of a
kind specified in subparagraphs (a), (b) and (c) of this paragraph; or (e)
interest of a general partner in a limited or general partnership.
Section 1.84 IRS means the Internal Revenue Service.
Section 1.85 Judgment Amount shall have the meaning given such
term in Section 6.04(e) hereof.
Section 1.86 Letter of Credit Agreement means that certain
Amended and Restated Letter of Credit and Reimbursement Agreement, dated as of
September 9, 1997, as amended and restated August 21, 1998, among CFN, the
Participating Banks Party Thereto, Credit Suisse First Boston, New York Branch,
as Agent, Dresdner Bank AG, New York Branch, as Issuing Bank, and Credit Suisse
First Boston, New York Branch, and Dresdner Bank AG, New York and Grand Cayman
Branches, as Arrangers, as amended.
Section 1.87 Lien means any charge against or interest in
property to secure payment of a debt or performance of an obligation.
Section 1.88 Liquidating Trust means the liquidating trust to
be created on the Effective Date, in accordance with Article VI of the Plan and
governed by this Plan and the Liquidating Trust Agreement, which liquidating
trust shall issue 1,000,000,000 Liquidating Trust Units on the Effective Date of
the Plan, which shall be comprised of 986,000,000 issued on a Ratable basis to
holders of Class 5 Claims and 14,000,000 issued on a Ratable basis to holders
only of Class 5b Claims, as set forth in Article V of the Plan.
Section 1.89 Liquidating Trust Agreement means the agreement
to be dated as of the Effective Date establishing and delineating the terms and
conditions of the Liquidating Trust, substantially in the form annexed hereto as
Exhibit A, which is incorporated in full into and is a part of this Plan as if
set forth herein.
Section 1.90 Liquidating Trust Committee means those
individuals appointed in accordance with Liquidating Trust Agreement with the
powers and responsibilities set forth in the Liquidating Trust Agreement.
Section 1.91 Liquidating Trust Unit means an undivided
beneficial interest in the Liquidating Trust represented by a certificate.
Section 1.92 Liquidating Trustee means the Person appointed in
accordance with the Liquidating Trust Agreement to administer the Liquidating
Trust.
10
<PAGE>
As part of its duties, powers and responsibilities set forth herein and in the
Liquidating Trust Agreement, the Liquidating Trustee, consistent with the
purposes of the Liquidating Trust and subject only to the limitations of the
Liquidating Trust Agreement, shall be deemed to be and shall have all the
duties, powers, and rights of a trustee under Sections 704 and 1106 of the
Bankruptcy Code, including, without limitation, commencing, prosecuting or
settling Causes of Action, enforcing contracts, and asserting claims, defenses,
offsets and privileges.
Section 1.93 MBIA means MBIA Insurance Corporation.
Section 1.94 MBIA Agreement means that certain side servicing
agreement dated as of May 17, 2000, as amended, to the MBIA Pooling and
Servicing Agreements among CMC, as servicer, CFN and MBIA as certificate
insurer.
Section 1.95 MBIA Claims means any and all Claims of MBIA
against the Debtors. The MBIA Claims shall be Allowed Secured Claims in
accordance with the MBIA Agreement.
Section 1.96 MBIA Pooling and Servicing Agreements means those
agreements listed on Schedule I to the MBIA Agreement.
Section 1.97 MBIA Reserve Account means that certain reserve
account established for the benefit of MBIA pursuant to the MBIA Agreement.
Section 1.98 Offset Amount shall have the meaning given such
term in Section 6.04(e) hereof.
Section 1.99 Old Common Stock means the common stock or
Interests issued by any of the Debtors and outstanding immediately prior to the
Effective Date or held in treasury.
Section 1.100 Ordinary Course Professionals Orders means those
Orders, dated May 18, 2000 and June 14, 2000, and any subsequent notices filed
pursuant to the Ordinary Course Professionals Orders, authorizing the Debtors to
retain, employ and compensate certain professionals in the ordinary course of
the Debtors' businesses.
Section 1.101 Other Secured Claims means any Secured Claim
other than the Greenwich Repurchase Facility Secured Claims, the Greenwich Whole
Loan Purchase Facility Secured Claims, the MBIA Claims or the FGIC Claims.
Section 1.102 Paying Agent means the Indenture Trustee, Bank
Agent, stock transfer agents, agents contractually authorized and/or obligated
to make Distributions to certain claimants and similar intermediaries and agents
participating in making or conveying Distributions as required by the Plan which
shall not be the Liquidating Trustee.
Section 1.103 Person means an individual, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership,
11
<PAGE>
association, joint venture, trust, estate, unincorporated organization, or a
government or any agency or political subdivision thereof.
Section 1.104 Petition Date means May 17, 2000, the date upon
which the chapter 11 petitions of each of the Debtors were filed, with the
exception of Royal and Fidelity, for which Petition Date means August 14, 2000.
Section 1.105 Plan means this joint chapter 11 plan of
reorganization, including, without limitation, the exhibits and schedules
hereto, as such may be altered, amended, or otherwise modified from time to
time.
Section 1.106 Plan Administration Agreement means the
agreement to be dated as of the Effective Date (i) establishing and delineating
the terms and conditions of the Disputed Claims Reserve Trust; (ii) appointing
the Plan Administrator and the Plan Administration Committee; and (iii) setting
forth the responsibilities and powers of the Plan Administrator and the Plan
Administration Committee, substantially in the form annexed hereto as Exhibit B,
which is incorporated in full into and is a part of the Plan as set forth
herein.
Section 1.107 Plan Administration Committee means those
individuals appointed in accordance with the Plan Administration Agreement with
the powers and responsibilities set forth in the Plan Administration Agreement.
Section 1.108 Plan Administrator means the person appointed in
accordance with the Plan Administration Agreement to supervise operation of the
Disputed Claims Reserve Trust and perform such other duties as provided in the
Plan Administration Agreement.
Section 1.109 Preference Stipulation means that certain
stipulation among the Unofficial Noteholders' Committee, the Bank Group and the
Debtors "So Ordered" by the Court on July 6, 2000, relating to the settlement
and compromise of claims regarding certain interest payments made by CFN prior
to the Petition Date.
Section 1.110 Prepetition Claim means any Claim arising on or
prior to the Petition Date.
Section 1.111 Priority Claim means any Claim entitled to
priority pursuant to section 507(a) of the Bankruptcy Code, other than (a) an
Administrative Claim, or (b) a Priority Tax Claim.
Section 1.112 Priority Tax Claim means any Claim entitled to
priority pursuant to section 507(a)(8) of the Bankruptcy Code.
12
<PAGE>
Section 1.113 Professionals means the attorneys, accountants
and other professionals whose retention has been approved by the Court in these
Chapter 11 Cases.
Section 1.114 Quarterly Distribution Date means the first
Business Day after the end of each calendar quarter (i.e., March 31, June 30,
September 30 and December 31 for each calendar year) from and after the
Effective Date.
Section 1.115 Ratable or Ratable Share means a number
(expressed as a percentage) equal to the proportion that an Allowed Claim bears
to the aggregate amount or number of Allowed Claims plus Disputed Claims (in
their aggregate Face Amount) in such Class as of the date of determination. For
purposes of calculating Distributions to holders of Class 5 Claims the
denominator of such proportion shall be the aggregate amount or number of
Allowed Claims plus Disputed Claims (in their aggregate Face Amount) in both
Class 5a and Class 5b, unless specifically noted otherwise.
Section 1.116 Reinstated means leaving unaltered the legal,
equitable and contractual rights to which a Claim entitles the holder of such
Claim, in accordance with section 1124 of the Bankruptcy Code.
Section 1.117 Resource One Debtors means Resource One Consumer
Discount Company, Inc., a Pennsylvania corporation, Resource One Mortgage of
Oxford Valley, Inc., a Pennsylvania corporation, Resource One Consumer Discount
Co. of Minnesota, Inc., a Pennsylvania corporation, Resource One Mortgage of
Delaware Valley, Inc., a Pennsylvania corporation, and ResourceCorp Financial,
Inc., a Pennsylvania corporation.
Section 1.118 Royal means Royal Mortgage Partners, L.P., a
California limited partnership.
Section 1.119 Schedules means the schedules of assets and
liabilities and the statement of financial affairs, as each may be amended from
time to time, Filed by the Debtors as required by section 521 of the Bankruptcy
Code and the Bankruptcy Rules.
Section 1.120 Secured Claim means a Claim secured by a Lien on
any Asset of the Debtors, or right of setoff, which Lien or right of setoff, as
the case may be, is valid, perfected and enforceable under applicable law and is
not subject to avoidance under the Bankruptcy Code or applicable nonbankruptcy
law, but only to the extent of the value, pursuant to section 506(a) of the
Bankruptcy Code, of any interest of the holder of the Claim in property of the
Estate(s) securing such Claim.
Section 1.121 Security means security as defined in Section
101 of the Bankruptcy Code.
Section 1.122 Senior Notes means collectively, the (i) 7 1/2%
Senior Notes Due 2002, issued by CFN on March 1, 1997, (ii) 8 3/8% Senior Notes
Due 2003, issued by CFN on August 15, 1996, and (iii) 8 1/8% Senior Notes Due
2008, issued by CFN on March 4, 1998.
13
<PAGE>
Section 1.123 Senior Notes Claim means any Claim arising under
the Senior Notes; but not a cause of action for damages arising from purchase or
sale of such Senior Note.
Section 1.124 Settlement Debtors means CMC and the Resource
One Debtors.
Section 1.125 Settlement Debtors Premium means, subject to the
Settlement Debtors Premium Adjustment, 14,000,000 Liquidating Trust Units, which
amount of such Liquidating Trust Units may not be modified without the consent
of each of the Unofficial Committees, to be distributed to holders of Allowed
Class 5b Claims in accordance with Section 5.08(c) of the Plan; provided,
however, that, notwithstanding the Settlement Debtors Premium Adjustment, in no
event will less than 7,500,000 Liquidating Trust Units be distributed to holders
of Allowed Class 5b Claims in accordance with Section 5.08(c) of the Plan. All
Liquidating Trust Units not distributable as of the Final Claims Resolution Date
in accordance with the Settlement Debtors Premium Adjustments shall be cancelled
and the proceeds realized in respect thereof shall be distributed to the holders
of Liquidating Trust Units.
Section 1.126 Settlement Debtors Premium Adjustment means, in
the event the aggregate amount of Allowed Class 5b Claims exceeds $20,000,000,
the 14,000,000 Liquidating Trust Units otherwise distributable to holders of
Allowed Class 5b Claims in accordance with Section 5.08(c) of the Plan shall be
reduced by .325 Units for each dollar that the aggregate amount of Allowed Class
5b Claims exceeds $20,000,000, as determined by the following formula (which
formula may not be modified without the consent of each of the Unofficial
Committees):
(Aggregate Amount of
Settlement Debtors = 14,000,000 - (.325) X Allowed Class 5b - 20,000,000)
Premium Adjustment Claims
Notwithstanding the above formula, the Settlement Debtors Premium Initial
Distribution shall be distributed in accordance with Section 5.08(c) of the
Plan.
Section 1.127 Settlement Debtors Premium Initial Distribution
means 7,500,000 Liquidating Trust Units to be distributed in accordance with
Section 5.08(c) of the Plan.
Section 1.128 Special Notice List means the list maintained by
the Liquidating Trustee of any Person who provides written notification to the
Liquidating Trustee of their request to receive notice of Liquidating Trust
activities, as provided in Section 6.03(c) of the Plan.
Section 1.129 Subordinated Claim means any Claim that is
subject to subordination under Section 510 of the Bankruptcy Code, including,
without limitation,
14
<PAGE>
any claim arising from the rescission of a purchase or sale of a Security of the
Debtors or affiliates of the Debtors, for damages from the purchase or sale of a
Security of the Debtors or affiliates of the Debtors, or for reimbursement or
contribution allowed under section 502 of the Bankruptcy Code on account of such
a claim.
Section 1.130 Surviving Special Purpose Entities means those
certain non-debtor affiliates of the Debtors listed on Exhibit D hereto whose
stock will be transferred to and become assets of the Liquidating Trust.
Section 1.131 Transition Period means November 1, 2000 through
the Effective Date.
Section 1.132 Transition Team means the individuals comprising
a transition management team led by Jeffrey H. Beck, the proposed Liquidating
Trustee, as appointed pursuant to the Court's Order dated November 8, 2000 and
any professionals retained by the Transition Team.
Section 1.133 Treasury Regulation means those regulations
promulgated pursuant to the Internal Revenue Code of 1986, as amended.
Section 1.134 Trust Assets means any and all of the Debtors'
right, title and interest in all property and Assets of the Debtors transferred
on the Effective Date to the Liquidating Trust or the Disputed Claims Reserve
Trust, as the case may be, including, without limitation, any Causes of Action
the Debtors or their Estates may hold against any Person.
Section 1.135 Unclaimed Property means any Distributions other
than payments to holders of Senior Notes Claims and Bank Group Claims unclaimed
on or after the applicable Initial Distribution Date or the date on which an
Additional Quarterly Distribution would have been made in respect of the
relevant Allowed Claim. Unclaimed Property shall include: (a) checks (and the
funds represented thereby) and Liquidating Trust Units (i) mailed to a
Distribution Address and returned as undeliverable without a proper forwarding
address or (ii) not mailed or delivered because no Distribution Address to mail
or deliver such property was available, and (b) funds for checks delivered but
uncashed within one year of the Effective Date.
Section 1.136 Unofficial Committees means each of the Bank
Group Committee and Unofficial Noteholders' Committee.
Section 1.137 Unofficial Noteholders' Committee means the
committee of holders of Senior Notes formed prior to and after the Petition Date
to negotiate on behalf of such holders the restructuring of the Debtors'
financial affairs which may be reconstituted from time to time, including
American Express Financial Advisors, Putnam Investment Management and other
funds, Salomon Brothers Asset Management, Inc., Wells Fargo Bank Minnesota,
National Association, and Bennet Management, Inc.
Section 1.138 Unofficial Noteholders' Committee Fees means
those fees and expenses actually incurred and to be paid, if any, by the Debtors
to Akin, Gump,
15
<PAGE>
Strauss, Hauer & Feld LLP, as counsel to the Unofficial Noteholders' Committee,
and Houlihan, Lokey, Howard & Zukin, as financial advisors to the Unofficial
Noteholders' Committee, pursuant to Section 5.07(c) of the Plan or the
Confirmation Order for payment of such fees and expenses for work performed from
the Petition Date through the Effective Date.
Section 1.139 U.S. Trustee Fees means all fees and charges
assessed against the Estates by the United States Trustee and due pursuant to
section 1930 of title 28 of the United States Code.
C. Rules of Construction.
Section 1.140 Generally. For purposes of the Plan, (a) 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; (b) unless otherwise specified, all references in the Plan to
Sections, Articles and Exhibits are references to Sections, Articles and
Exhibits of or to the Plan; and (c) the rules of construction set forth in
section 102 of the Bankruptcy Code and the Bankruptcy Rules shall apply unless
superseded herein or in the Confirmation Order.
Section 1.141 Exhibits. All Exhibits are incorporated into and
are a part of the Plan as if set forth in full herein. Copies of Exhibits, after
being Filed, can be obtained upon written request to Dewey Ballantine LLP, 1301
Avenue of the Americas, New York, New York 10019 (Attn: Richard S. Miller,
Esq.), counsel to the Debtors.
Section 1.142 Time Periods. In computing any period of time
prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a)
shall apply.
Section 1.143 Miscellaneous Rules. (i) The words "herein,"
"hereof," "hereunder," and other words of similar import refer to this Plan as a
whole, not to any particular Section, subsection, or clause, unless the context
requires otherwise; (ii) whenever it appears appropriate from the context, each
term stated in the singular or the plural includes the singular and the plural,
and each pronoun stated in the masculine, feminine or neuter includes the
masculine, feminine and the neuter; and (iii) captions and headings to Articles
and Sections of the Plan are inserted for convenience or reference only and are
not intended to be a part or to affect the interpretation of the Plan.
ARTICLE II.
COMPROMISE AND SETTLEMENT; GENERAL RULES
REGARDING CLASSIFICATION
OF CLAIMS AND INTERESTS
Section 2.01 Compromise and Settlement. The Plan incorporates
a proposed Compromise and Settlement of certain issues related primarily to
whether the Estates of each of the Debtors should be consolidated for purposes
of aggregating Assets and making payments to Creditors, whether and to what
extent proceeds from the sale of
16
<PAGE>
certain Assets should be allocated among the Debtors based upon their respective
claims of ownership to certain Assets sold thereunder, and the amount and
priority of certain Intercompany Claims. The provisions of the Plan relating to
substantive consolidation of the Debtors, the cancellation of Intercompany
Claims, and the treatment of each class of Claims under the Plan reflect this
Compromise and Settlement, which, upon the Effective Date, shall be binding upon
the Debtors, all Creditors, and all Persons whether or not such Persons have
voted to accept or reject this Plan.
Section 2.02 General Rules of Classification Under the
Bankruptcy Code. In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Priority Tax Claims have not been classified and thus
are excluded from the Classes as set forth below. All other Claims and Interests
have been classified as set forth below.
A Claim or Interest is classified 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 Class(es) to the extent that any remainder of
the Claim or Interest falls within the description of such other Class(es).
A Claim is also placed in a particular Class for the purpose
of receiving Distributions pursuant to the Plan only to the extent that such
Claim is an Allowed Claim in that Class and such Claim has not been paid,
released, or otherwise settled prior to the Effective Date.
Section 2.03 Undersecured Claims. To the extent that the
amount of an Allowed Claim is greater than the value of the Collateral securing
such Claim as of the applicable valuation date (assuming the value of such
Collateral is greater than $0), subject to section 1111(b) of the Bankruptcy
Code, such Claim is classified in both Classes of Other Secured Claims for the
secured portion of such Claim and the class of General Unsecured Claims for the
excess of such Claim over the value of the Collateral. Notwithstanding anything
to the contrary herein, absent an order of the Bankruptcy Court or agreement
fixing the allowed amount of a Secured Claim or the scheduling of such Claim as
liquidated, nondisputed and noncontingent on the relevant Debtor's Schedules,
the relevant Debtor is not bound by a classification made or implied herein with
respect to any particular Claim.
ARTICLE III.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Section 3.01 Summary. Claims, other than Administrative Claims
and Priority Tax Claims, are classified for all purposes, including voting,
confirmation, and distribution, as follows:
<TABLE>
<CAPTION>
<S> <C>
Class 1a: Greenwich Repurchase Class 1a consists of the Greenwich
Facility Secured Claims Repurchase Facility Secured Claims.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Class 1b: Greenwich Whole Loan Class 1b consists of the Greenwich Whole
Facility Secured Claims Loan Facility Secured Claims.
Class 2a: MBIA Claims Class 2a consists of the MBIA Claims
Class 2b: FGIC Claims Class 2b consists of the FGIC Claims
Class 3: Other Secured Claims Class 3 consists of Other Secured Claims
Class 4: Priority Claims Class 4 consists of all non-tax Priority Claims
Class 5a: Bank Group Claims, Class 5a consists of all Bank Group Claims,
Senior Notes Claims, and Senior Notes Claims, and General
General Unsecured Claims Unsecured Claims against Debtors other
against Debtors other than the Settlement Debtors
than the Settlement Debtors
Class 5b: General Unsecured Claims Class 5b consists of all General Unsecured
against the Settlement Debtors Claims against the Settlement Debtors
Class 6: Convenience Claims Class 6 consists of all Convenience Claims
Class 7: Subordinated Claims Class 7 consists of all Subordinated Claims
Class 8: Equity Interests Class 8 consists of all Equity Interests in the
Debtors
</TABLE>
ARTICLE IV.
TREATMENT OF UNCLASSIFIED CLAIMS
Section 4.01 Administrative Claims. Subject to the Bar Date
provisions herein and except to the extent the Debtors and the holder of an
Allowed Administrative Claim agree to a different treatment, the Liquidating
Trustee shall pay to each holder of an Allowed Administrative Claim, Cash, in an
amount equal to such Allowed Administrative Claim, on the later of (i) the
Effective Date and (ii) thirty days after the date on which such Administrative
Claim becomes an Allowed Administrative Claim, or as soon thereafter as is
practicable; provided, however, that Allowed Administrative Claims representing
obligations incurred in the ordinary course of business of the Debtors shall be
paid by the Debtors or the Liquidating Trustee, as the case may be, in
accordance with the terms and conditions of the particular agreements from which
such Allowed Administrative Claims arise.
Section 4.02 Priority Tax Claims. Except to the extent the
Debtors and the holder of an Allowed Priority Tax Claim agree to a different
treatment, the
18
<PAGE>
Liquidating Trustee shall make deferred Cash payments over a period not
exceeding six years from the date of assessment of such tax. Payments shall be
made in equal quarterly installments of principal, plus simple interest accruing
from the Effective Date at a rate equal to nine percent (9%) per annum on the
unpaid portion of each Priority Tax Claim; provided, however, that the
Liquidating Trust shall have the right to pay any Priority Tax Claim, or any
remaining balance of such Claim, in full, at any time on or after the Effective
Date, without premium or penalty. The first payment shall be due on the latest
of (i) ninety days after the Effective Date, (ii) ninety days after the date on
which an order allowing any such Claim becomes a Final Order, and (iii) such
other date that is agreed on by the holder of an Allowed Priority Tax Claim and
the Debtors or the Liquidating Trust, as the case may be, or as soon thereafter
as is practicable.
Section 4.03 U.S. Trustee Fees. The Debtors or the Liquidating
Trust, as the case may be, shall pay all U.S. Trustee Fees until such time as
the Court enters a final decree closing each of the Debtors' cases.
ARTICLE V.
TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
The holders of Allowed Claims in each Class shall receive the
following distributions where applicable, on or after the Initial Distribution
Date, unless another date is otherwise provided for herein or elsewhere under
the Plan.
Section 5.01 Class 1a: Greenwich Repurchase Facility Secured
Claims.
(a) Impairment. Holders of Allowed Claims in Class 1a are not
impaired. Each holder of an Allowed Secured Claim in Class 1a is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. On the Effective Date, or a later date pursuant
to an agreement between CFN and Greenwich, all Greenwich Repurchase Facility
Secured Claims, if any, shall, at the Debtors' sole option, be (i) paid in full
in Cash, (ii) Reinstated with Greenwich retaining its Liens upon the Greenwich
Collateral in accordance with the Greenwich Security Agreement, or (iii)
satisfied by returning to Greenwich the Greenwich Collateral securing such
Greenwich Repurchase Facility Secured Claims.
Section 5.02 Class 1b: Greenwich Whole Loan Purchase Facility
Secured Claims.
(a) Impairment. Holders of Allowed Claims in Class 1b are not
impaired. Each holder of an Allowed Secured Claim in Class 1b is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. On the Effective Date, or a later date pursuant
to agreement between CFN and Greenwich, all Greenwich Whole Loan Purchase
Facility Secured Claims, if any, shall, at the Debtors' sole option, be (i) paid
in full in Cash, (ii)
19
<PAGE>
Reinstated with Greenwich retaining its Liens upon the Greenwich Collateral in
accordance with the Greenwich Security Agreement, or (iii) satisfied by
returning to Greenwich the Greenwich Collateral securing such Greenwich Whole
Loan Purchase Facility Secured Claims.
Section 5.03 Class 2a: MBIA Claims.
(a) Impairment. Holders of Allowed Claims in Class 2a are not
impaired. Each holder of an Allowed Secured Claim in Class 2a is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. On the Effective Date, the MBIA Claims, if any,
shall receive the treatment for those claims and shall receive Liens on the MBIA
Reserve Account all as described in and provided by the MBIA Agreement.
Section 5.04 Class 2b: FGIC Claims.
(a) Impairment. Holders of Allowed Claims in Class 2b are not
impaired. Each holder of an Allowed Secured Claim in Class 2b is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. On the Effective Date, the FGIC Claims, if any,
shall receive the treatment for those claims and shall receive Liens on the FGIC
Reserve Account all as described in and provided by the FGIC Agreement.
Section 5.05 Class 3: Other Secured Claims.
(a) Impairment. Holders of Allowed Claims in Class 3 are not
impaired. Each holder of an Allowed Secured Claim in Class 3 is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. At the sole option of the Debtors, the
Liquidating Trustee or the Plan Administrator, as the case may be, on the later
of (x) the Effective Date, or (y) for Claims in Class 3 that were Disputed
Claims and have become Allowed Secured Claims, the Quarterly Distribution Date,
or as soon thereafter as is practicable, such Allowed Secured Claim shall: (i)
be Reinstated; or (ii) receive the Collateral securing such Allowed Secured
Claim; or (iii) receive Cash in an amount, not to exceed the Allowed amount of
such Claim, equal to the proceeds actually realized from the sale of any
Collateral securing such Claim, less the actual costs and expenses of disposing
of such Collateral; or (iv) receive such other treatment as may be agreed upon
by the Debtors, the Liquidating Trustee, or the Plan Administrator, as the case
may be, and the holder of an Allowed Secured Claim. In the event that the
Debtors, the Liquidating Trustee or the Plan Administrator, elect, pursuant to
option (ii) above, to distribute to the holder of an Allowed Secured Claim, the
Collateral securing such Allowed Secured Claim, the holder of such Allowed
Secured Claim may request that the Liquidating Trustee or the Plan Administrator
(a) attempt to sell the Collateral securing the Allowed Secured Claim, or (b)
abandon such Collateral. In the event that the Liquidating Trustee or the Plan
Administrator honors such a request and attempts to sell such Collateral
20
<PAGE>
securing such Allowed Secured Claim or abandon such Collateral, all expenses
relating thereto, including, but not limited to, storage expenses, shall be
borne by the holder of the Allowed Secured Claim. Notwithstanding the foregoing,
the Liquidating Trustee or the Plan Administrator retains the right to decline
to honor a request by the holder of an Allowed Secured Claim to attempt to sell
such Collateral.
Section 5.06 Class 4: Priority Claims.
(a) Impairment. Holders of Allowed Claims in Class 4 are not
impaired. Each holder of an Allowed Priority Claim in Class 4 is not entitled to
vote to accept or reject the Plan in its capacity as a holder of such Claim.
(b) Treatment. Each holder of an Allowed Claim in Class 4
shall receive Cash in an amount equal to the amount of such Allowed Claim on the
later of (i) the Effective Date, or (ii) for Claims in Class 4 that were
Disputed Claims and have become Allowed Claims, the Quarterly Distribution Date,
or as soon thereafter as is practicable.
Section 5.07 Class 5a: Bank Group Claims, Senior Notes Claims,
and General Unsecured Claims against Debtors other than the Settlement Debtors.
(a) Impairment. Holders of Allowed Claims in Class 5a are
impaired and are entitled to vote to accept or reject the Plan.
(b) Treatment. Subject to this Section 5.07 and Section 5.09,
on either (i) the Effective Date or as soon thereafter as practicable, or (ii)
the Quarterly Distribution Date for Claims in Class 5a that were Disputed Claims
and have become Allowed Class 5a Claims, or as soon thereafter as is
practicable, each holder of an Allowed Claim in Class 5a shall receive a Ratable
Share of (a) Class 5 Cash, and (b) 986,000,000 Liquidating Trust Units
representing an undivided interest in the Trust Assets transferred to the
Liquidating Trust by the Debtors pursuant to the Plan and the Liquidating Trust
Agreement.
(c) Unofficial Committees Fees. Upon the Effective Date, the
Unofficial Noteholders' Committee Fees and the Bank Group Committees Fees shall
be paid by the Debtors to the extent such fees have not been paid by the
respective members of such committees. The aggregate amount of Class 5 Cash
otherwise distributable to the holders of Allowed Senior Notes Claims and
Allowed Bank Group Claims in accordance with Section 5.07(b) hereof shall be
reduced, in an amount equal to the Unofficial Noteholders' Committee Fees and
Bank Group Committee Fees, respectively. After the Effective Date, the fees and
expenses of the Unofficial Committees in furtherance of implementation or
effectuation of the Plan shall be paid by Liquidating Trust.
Section 5.08 Class 5b: General Unsecured Claims against the
Settlement Debtors
(a) Impairment. Holders of Allowed Claims in Class 5b are
impaired and are entitled to vote to accept or reject the Plan.
21
<PAGE>
(b) Treatment. Subject to this Section 5.08 and Section 5.09,
on either (i) the Effective Date or as soon thereafter as practicable, or (ii)
the Quarterly Distribution Date for Claims in Class 5b that were Disputed Claims
and have become Allowed Class 5b Claims, or as soon thereafter as is
practicable, each holder of an Allowed Claim in Class 5b shall receive a Ratable
Share of (a) Class 5 Cash and (b) 986,000,000 Liquidating Trust Units
representing an undivided interest in the Trust Assets transferred to the
Liquidating Trust by the Debtors pursuant to the Plan and the Liquidating Trust
Agreement.
(c) Settlement Debtors Premium. In addition to the
Distribution provided for in Section 5.08(b) and Section 5.09(a), on the Initial
Distribution Date, a Ratable Share of the Settlement Debtors Premium Initial
Distribution shall be distributed to holders of Allowed Class 5b Claims and the
Disputed Claims Reserve Trust on account of Disputed Class 5b Claims.
Thereafter, the remaining Settlement Debtors Premium (i.e., the Settlement
Debtors Premium minus the Settlement Debtors Premium Initial Distribution) shall
be distributed, when practicable, on Quarterly Distribution Dates, in accordance
with the Settlement Debtors Premium Adjustment. For the purpose of calculating
such Ratable Share, only the aggregate Face Amount of Allowed Class 5b Claims
and Disputed Class 5b Claims shall be included in the denominator of the
equation.
Section 5.09 Class 5: Miscellaneous Distribution Provisions
(a) Preference Stipulation. In addition to the Distribution
provided for in Section 5.07(b) and Section 5.08(b) hereof, each holder of an
Allowed General Unsecured Claim shall receive a Ratable Share of the funds to be
distributed to such holders pursuant to the Preference Stipulation. For the
purpose of calculating such Ratable Share, only the aggregate Face Amount of
Allowed General Unsecured Claims and Disputed General Unsecured Claims shall be
included in the denominator of the equation.
(b) Creditors Electing Convenience Class Treatment. Each
holder of an Allowed General Unsecured Claim may elect on its Ballot,
contemporaneously with such holder's vote to accept or reject the Plan, to be
included in Class 6 rather than Class 5 and receive the Distributions provided
for in Section 5.10 hereof. In addition, within sixty (60) days after the
Effective Date, the Liquidating Trustee may inquire of holders of General
Unsecured Claims who did not make the Convenience Class election on their Ballot
as to whether such holders desire to receive Convenience Class treatment for
their Allowed General Unsecured Claims. Holders of Disputed Class 5 Claims that
become Allowed Class 5 Claims after the Confirmation Date may request to have
such Allowed Claims receive Convenience Class treatment under the Plan. The Plan
Administrator shall have discretion as to whether to honor such request.
22
<PAGE>
Section 5.10 Class 6: Convenience Claims.
(a) Impairment. Holders of Allowed Claims in Class 6 are not
impaired. Each holder of an Allowed Class 6 Claim is not entitled to vote to
accept or reject this Plan.
(b) Treatment. Each holder of an Allowed Convenience Claim in
Class 6 shall receive Cash in an amount equal to the lesser of (a) one-hundred
percent (100%) of such Allowed Convenience Claim or (b) $1,000 on the later of
(i) the Effective Date or as soon thereafter as practicable, or (ii) for Claims
in Class 6 that were Disputed Claims and have become Allowed Claims, the
Quarterly Distribution Date, or as soon thereafter as is practicable.
Section 5.11 Class 7: Subordinated Claims.
(a) Impairment. Holders of the Subordinated Claims in Class 7
are impaired. For purposes of the Plan, each holder of a Subordinated Claim in
Class 7 is conclusively presumed to have rejected this Plan and is not entitled
to vote to accept or reject this Plan.
(b) Treatment. Holders of Subordinated Claims shall receive no
Distribution under the Plan.
Section 5.12 Class 8: Equity Interests.
(a) Impairment. The holders of the Equity Interests in Class 8
are impaired. For purposes of the Plan, each holder of an Equity Interest in
Class 8 is conclusively presumed to have rejected this Plan and is not entitled
to vote to accept or reject this Plan.
(b) Treatment. Holders of Equity Interests in Class 8 shall
receive no Distribution under the Plan and the Old Common Stock shall be
cancelled.
ARTICLE VI.
ESTABLISHMENT OF TRUSTS; IMPLEMENTATION OF PLAN
Section 6.01 The Liquidating Trust.
(a) Establishment of the Trust. On the Effective Date, the
Debtors, on their own behalf and on behalf of holders of Allowed Class 5 Claims,
shall execute the Liquidating Trust Agreement and shall take all other steps
necessary to establish the Liquidating Trust. The Liquidating Trust Agreement
shall contain provisions customary to trust agreements utilized in comparable
circumstances, including, but not limited to, any and all provisions necessary
to govern the rights, powers, obligations and appointment and removal of the
Liquidating Trustee and to ensure the treatment of the Liquidating Trust as a
liquidating trust for federal income tax purposes. On the Effective Date, the
Debtors shall transfer (as described in Section 6.01(c) hereunder) to the
23
<PAGE>
Liquidating Trust all of their right, title, and interest in all of the Trust
Assets, including, among others, Cash (less any Cash transferred to the Disputed
Claims Reserve Trust as required by Section 6.04 hereof), Distributed ESRs,
Causes of Action and the stock of the Surviving Special Purpose Entities, free
and clear of any Lien, Claim or Interest in such property of any other Person or
entity except as provided in this Plan. Title to all Trust Assets shall vest in
the Liquidating Trust on the Effective Date. The Debtors or such other Persons
that may have possession or control of such Trust Assets shall transfer
possession or control of such Trust Assets to the Liquidating Trustee and shall
execute documents or instruments necessary to effectuate such transfers. For tax
reporting purposes, the Liquidating Trust shall report on a December 31 fiscal
year.
(b) Purpose of the Liquidating Trust. The Liquidating Trust
shall be established for the sole purpose of liquidating the Trust Assets, in
accordance with Treasury Regulation Section 301.7701-4(d), with no objective to
continue or engage in the conduct of a trade or business. Subject to definitive
guidance from the IRS, all parties shall treat the Liquidating Trust as a
liquidating trust for all federal income tax purposes.
(c) Transfer of Assets.
(i) The transfer of the Trust Assets to the Liquidating Trust
shall be made, as provided herein, for the benefit of the holders of Allowed
Class 5 Claims, whether allowed on or after the Effective Date. In this regard,
the Trust Assets will be transferred to such holders of Allowed Class 5 Claims
and, in respect of any Disputed Claims to the Disputed Claims Reserve Trust, to
be held, in each case, by the Debtors on their behalf. Immediately thereafter,
on behalf of holders of Allowed Class 5 Claims, the Debtors shall transfer such
Trust Assets to the Liquidating Trust in exchange for Liquidating Trust Units
for the benefit of holders of the Allowed Class 5 Claims in accordance with the
Plan. The Liquidating Trustee shall then distribute the Liquidating Trust Units
to the holders of the Allowed Class 5 Claims in exchange for their claims and to
the Plan Administrator (to be held in the Disputed Claims Reserve Trust for the
benefit of holders of Disputed Claims), subject to the conditions set forth in
the Liquidating Trust Agreement. Upon the transfer of the Trust Assets, the
Debtors shall have no further interest in or with respect to the Trust Assets or
the Liquidating Trust.
(ii) For all federal income tax purposes, all parties
(including, without limitation, the Debtors, the Liquidating Trustee, the
holders of Allowed Class 5 Claims, and the Plan Administrator) shall treat the
transfer of Trust Assets to the Liquidating Trust, in accordance with the terms
of the Plan, as a transfer to the holders of Allowed Class 5 Claims (and in
respect of any Disputed Claims, to the Plan Administrator) followed by a
transfer by such holders to the Liquidating Trust, and the beneficiaries of the
Liquidating Trust (or Disputed Claims Reserve Trust) shall be treated as the
grantors and owners thereof.
(d) Valuation of Assets. As soon as possible after the
Effective Date, but in no event later than sixty (60) days thereafter, (i) the
Liquidating Trust Committee shall inform, in writing, the Liquidating Trustee of
the fair market value of the Trust Assets transferred to the Liquidating Trust,
based on the good faith determination of the
24
<PAGE>
Liquidating Trust Committee, and (ii) the Liquidating Trustee shall apprise the
record holders of the Liquidating Trust Units in writing solely of such
valuation. The valuation shall be used consistently by all parties (including,
without limitation, the Debtors, the Liquidating Trustee, the holders of Allowed
Class 5 Claims and the Plan Administrator) for all federal income tax purposes.
(e) Termination. The Liquidating Trust shall terminate no
later than the fifth (5th) anniversary of the Effective Date; provided, however,
that, on or prior to the date six (6) months prior to such termination, the
Bankruptcy Court, upon motion by a party in interest, may extend the term of the
Liquidating Trust if it is necessary to the liquidation of the Trust Assets.
Notwithstanding the foregoing, multiple extensions can be obtained so long as
Bankruptcy Court approval is obtained at least six (6) months prior to the
expiration of each extended term; provided, however, that the aggregate of all
such extensions shall not exceed three (3) years, unless the Liquidating Trustee
receives a favorable ruling from the IRS that any further extension would not
adversely affect the status of the trust as a liquidating trust within the
meaning of Treas. Reg. ss.301.7701-4(d) for federal income tax purposes.
Section 6.02 Appointment of Liquidating Trustee and
Liquidating Trust Committee. On or prior to the Confirmation Date, the Bank
Group Committee and the Unofficial Noteholders' Committee shall appoint a
Liquidating Trustee and Liquidating Trust Committee in accordance with the
provisions set forth in the Liquidating Trust Agreement. Subject to Section 1.7
of the Liquidating Trust Agreement, the Liquidating Trustee or any individual
appointed to the Liquidating Trust Committee may serve on any of the boards of
directors of the Surviving Special Purpose Entities. The individuals who serve
on the Liquidating Trust Committee may also serve on the Plan Administration
Committee. The same person who serves as Liquidating Trustee may also serve in a
separate capacity as the Plan Administrator. The compensation for each member of
the Liquidating Trust Committee shall be as set forth in the Liquidating Trust
Agreement. The Liquidating Trustee shall be deemed the Estates' representative
in accordance with Section 1123 of the Bankruptcy Code and shall have all
powers, authority and responsibilities specified in the Liquidating Trust
Agreement incorporated herein, including, without limitation, the powers of a
trustee under Sections 704 and 1106.
Section 6.03 Liquidating Trust Units, Applicability of
Securities Laws and Reporting Requirements.
(a) Securities Laws. Under section 1145 of the Bankruptcy
Code, the issuance of Liquidating Trust Units under the Plan shall be exempt
from registration under the Securities Act of 1933 and applicable state and
local laws requiring registration of securities. If the Liquidating Trustee
determines, with the advice of counsel, that the Liquidating Trust is required
to comply with the registration and reporting requirements of the Securities and
Exchange Act of 1934, as amended, or the Investment Company Act of 1940, as
amended, then the Liquidating Trustee shall take any and all actions to comply
with such reporting requirements and file necessary periodic reports with the
Securities and Exchange Commission.
25
<PAGE>
(b) Transferability. Upon issuance thereof, the beneficial
interests represented by the Liquidating Trust Units shall be transferable. The
Liquidating Trustee, with the advice and consent of the Liquidating Trust
Committee, shall establish procedures to govern the registration and transfer of
Liquidating Trust Units and shall notify all record holders and the Persons on
the Special Notice List once such procedures have been established. The
Liquidating Trustee shall not seek to have the Liquidating Trust Units listed on
a nationally recognized stock exchange after the Effective Date.
(c) Special Notice List. Any interested Person who provides
the Liquidating Trustee with written notice of their request to receive notice
of Liquidating Trust activities shall be included on the Special Notice List
maintained by the Liquidating Trustee for such purposes.
(d) Notice on Web Site. In addition to the requirements of
6.03(c) above, the Liquidating Trustee shall establish, as soon as reasonably
practicable, and maintain a web site for the purpose of providing notice of
Liquidating Trust activities. Subject to providing notice to the Special Notice
List, the posting of such activities on the web site shall be in lieu of
providing actual notice to holders of Liquidating Trust Units.
Section 6.04 Disputed Claims Reserve Trust.
(a) Establishment of Disputed Claims Reserve Trust. On the
Effective Date, and after making all Distributions required to be made on the
Effective Date, the Debtors shall execute the Plan Administration Agreement and
establish the Disputed Claims Reserve Trust which shall be administered by the
Plan Administrator. For tax reporting purposes the Disputed Claims Reserve Trust
shall report on a December 31 Fiscal Year.
(b) [Intentionally Omitted]
(c) Appointment of Plan Administrator and Plan Administration
Committee. On or prior to the Confirmation Date, the Bank Group Committee and
the Unofficial Noteholders' Committee shall appoint the Plan Administrator and
Plan Administration Committee as provided in the Plan Administration Agreement.
The Plan Administrator and the Plan Administration Committee shall have the
powers, authority and responsibilities as set forth in the Plan Administration
Agreement which is incorporated as if fully set forth herein. The person who
serves as the Liquidating Trustee may also serve in a separate capacity as the
Plan Administrator. The individuals who serve on the Liquidating Trust Committee
may also serve on the Plan Administration Committee. The Plan Administrator, any
individual appointed to the Plan Administration Committee, or any agent or
employee of such persons, may serve on the boards of directors of the surviving
Special Purpose Entities. Compensation for each member of the Plan
Administration Committee shall be as set forth in the Plan Administration
Agreement. The Plan Administrator, under the direction of the Plan
Administration Committee, shall (i) hold and administer the Disputed Claims
Reserve Trust, (ii) object to, settle or otherwise resolve Disputed Claims,
(iii) make Distributions to holders of Disputed Claims that subsequently become
Allowed Claims in accordance
26
<PAGE>
with the Plan, (iv) make Distributions of the Settlement Debtors Premium (less
the Settlement Debtors Premium Initial Distribution) to holders of General
Unsecured Claims against the Settlement Debtors in accordance with the Plan, (v)
distribute any remaining assets of the Disputed Claims Reserve Trust, after
resolving all Disputed Claims, to holders of Liquidating Trust Units for Ratable
distribution and (vi) wind up the remaining affairs of and dissolve the Debtors.
(d) Transfer of Assets. On the Effective Date, the Debtors
shall fund the Disputed Claims Reserve Trust with Liquidating Trust Units and
Cash in an amount to be determined by the Liquidating Trustee, Plan
Administrator and, the Unofficial Committees' financial advisors, with the
advice of the Debtors for (a) the costs and expenses projected to be incurred in
connection with the resolution of Disputed Claims and the Distribution of the
proceeds thereof, in accordance with the Plan, (b) costs and expenses projected
to be incurred in connection with the winding up of the affairs of the Debtors
and their dissolution and (c) the reasonable compensation of the Plan
Administrator and the Plan Administration Committee. Cash and other property
shall be placed into the Disputed Claims Reserve Trust and the Cash shall be
held in separate interest bearing accounts in trust by class for the benefit of
the holders of Allowed Claims entitled thereto under the terms of the Plan. Any
payment made to the holder of an Allowed Claim which was previously a Disputed
Claim from the Disputed Claims Reserve Trust, shall include any accrued interest
thereon, at the rate earned in such interest bearing account less any expenses,
including, without limitation, applicable taxes. The Disputed Claims Reserve
Trust shall be terminated by the Plan Administrator, upon the filing with the
Bankruptcy Court of a written certification of the Plan Administrator that all
Distributions and other dispositions of all Cash and/or Liquidating Trust Units
required herein to be made have been made in accordance with the terms of this
Plan. Such written certification shall be sent by the Plan Administrator to the
Liquidating Trustee within 15 days of the satisfaction of the condition set
forth in the immediately preceding sentence. With respect to the Liquidating
Trust Units held in the Disputed Claims Reserve Trust, neither the Plan
Administrator, nor any other party, shall be entitled to vote any of the
Liquidating Trust Units held in the Disputed Claims Reserve Trust. In the event
that any matter requires the approval of the holders of Liquidating Trust Units
prior to the Distribution of the Liquidating Trust Units held in the Disputed
Claims Reserve Trust, solely with respect to such vote, the Liquidating Trust
Units held by the Plan Administrator shall be deemed not to have been issued.
The Plan Administrator shall hold in reserve the Settlement Debtors Premium
(less the Settlement Debtors Premium Initial Distribution which had previously
been distributed in accordance with Section 5.08(c) of the Plan) and any
proceeds or Distributions thereof, which proceeds shall be held in the Disputed
Claims Reserve Trust pending Distribution in accordance with Section 5.08(c) of
the Plan.
(e) Net Liquidating Trust Recovery/Affirmative Obligations:
(i) Net Judgment. Notwithstanding anything contained herein to
the contrary, in the event that any creditor or a defendant in a litigation
brought by the Liquidating Trustee for and on behalf of the Liquidating Trust (a
"Defendant") (1) is required by a Final Order to make payment to the Liquidating
Trust (the "Judgment
27
<PAGE>
Amount"), and (2) has a right of setoff under section 553 of the Bankruptcy Code
or applicable non-bankruptcy law, has a claim for contribution or reimbursement
or has incurred costs and expenses which would give rise to an enforceable claim
against the Debtors or the Liquidating Trust (other than Subordinated Claims),
each as determined by a Final Order (the aggregate amount of all such rights,
claims, costs and expenses being referred to herein as the "Offset Amount"),
such Defendant shall be obligated to pay only the excess, if any, of the amount
of the Judgment Amount over the Offset Amount.
(ii) Affirmative Obligations. Notwithstanding anything
contained herein to the contrary, in the event that a Defendant (1) has an
Offset Amount and (2) the Offset Amount is in excess of the Judgment Amount, if
any, (i) the Judgment Amount shall be setoff against the Offset Amount and shall
not be paid to the Liquidating Trust by such Defendant and (ii) the Defendant
shall be deemed to have a Disputed Claim that has become an Allowed Claim (in
the amount of the excess of the Offset Amount over the Judgment Amount) and
shall be entitled to receive the appropriate distribution from the Disputed
Claims Reserve Trust and subsequent Distributions from the Liquidating Trust in
accordance with the class of Claim as provided for under this Plan, and (iii)
the Liquidating Trust shall have no liability with respect to such Offset
Amount. In the event that the Disputed Claims Reserve Trust contains
insufficient Cash and/or Liquidating Trust Units on account of Offset Amounts,
then the Liquidating Trust may transfer Cash and/or Liquidating Trust Units to
the Disputed Claims Reserve Trust for the benefit of any Defendant as if the
Offset Amount was a Disputed Claim. Any Defendant having an a Disputed Claim
which has become Allowed under this Section shall not be permitted to recover
thereon by execution, levy or similar procedures in respect to any judgment
allowing such Claim but shall receive a Distribution on account of such claim in
accordance with the terms of this Plan on the Quarterly Distribution Date
immediately after such judgment becomes final.
Section 6.05 Distributions To Holders Of Claims And Interests.
(a) Initial Distributions. On the Initial Distribution Date,
the Liquidating Trustee shall make a Distribution to: (i) each holder of an
Allowed Claim in an amount equal to its Ratable Share (calculated as of the
applicable Initial Distribution Date) of Cash and/or Liquidating Trust Units in
accordance with the terms of the Plan; (ii) each Paying Agent in an amount equal
to the aggregate Ratable Share (calculated as of the Initial Distribution Date)
of Cash or Liquidating Trust Units in accordance with the terms of the Plan,
that such Paying Agent shall distribute to holders of Allowed Claims in the
relevant Class; and (iii) if applicable, the Disputed Claims Reserve Trust in an
amount equal to the remaining Cash and Liquidating Trust Units allocated in
accordance with the terms of this Plan. Subject to Section 6.05(b) below, the
amount of Cash to be paid on the Initial Distribution Date to holders of Allowed
Claims will be calculated as if each Disputed Claim were an Allowed Claim in its
Face Amount.
(b) Estimation of Claims. The Plan Administrator may, at any
time, request that the Bankruptcy Court estimate any Claim subject to estimation
under section 502(c) of the Bankruptcy Code and for which the Debtors may be
liable under this Plan,
28
<PAGE>
including any Claim for taxes, to the extent permitted by section 502(c) of the
Bankruptcy Code, regardless of whether any party in interest previously objected
to such Claim; and the Bankruptcy Court will retain jurisdiction to estimate any
Claim pursuant to section 502(c) of the Bankruptcy Code at any time during
litigation concerning any objection to any Claim. In the event that the
Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated
amount will constitute either the Allowed amount of such Claim or a maximum
limitation on such Claim, as determined by the Bankruptcy Court. If the
estimated amount constitutes a maximum limitation on such Claim, the Plan
Administrator may elect to pursue any supplemental proceedings to object to any
ultimate allowance on such Claim. All of the aforementioned Claims objection,
estimation and resolution procedures are cumulative and not necessarily
exclusive of one another. Claims may be estimated and subsequently compromised,
settled, withdrawn or resolved by any mechanism approved by the Bankruptcy
Court.
(c) Resolution of Disputed Claims. No Distribution or payment
shall be made on account of a Disputed Claim until such Disputed Claim becomes
an Allowed Claim. No Distribution or payment shall be made to any holder of an
Allowed General Unsecured Claim who is also a potential defendant in an
avoidance action under chapter 5 of the Bankruptcy Code. For purposes of the
Plan, such Distribution or payment on account of such Allowed General Unsecured
Claim shall be held in the Disputed Claims Reserve Trust as if it were a
Disputed Claim. Unless otherwise ordered by the Bankruptcy Court, after the
Effective Date, the Plan Administrator, under the direction of the Plan
Administration Committee, shall have the exclusive right to make and file
objections to and settle, compromise or otherwise resolve Disputed Claims,
except that as to applications for allowances of compensation and reimbursement
of expenses under sections 330 and 503 of the Bankruptcy Code, objections may be
made in accordance with the applicable Bankruptcy Rules by parties-in-interest.
The Plan Administrator shall file and serve a copy of each objection upon the
holder of the Claim to which an objection is made and the Liquidating Trustee,
as soon as practicable, but in no event later than (i) one hundred-twenty days
after the Effective Date, or (ii) such other time as may be fixed or extended by
the order of the Bankruptcy Court. After the Effective Date, the Plan
Administrator may settle or compromise any Disputed Claim without approval of
the Bankruptcy Court. The Liquidating Trustee shall have standing and be
entitled to contest the settlement, compromise or resolution of any Disputed
Claim.
(d) Distributions when a Disputed Claim Becomes an Allowed
Claim; or when a Disputed Claim is Subsequently Disallowed. On the first
Quarterly Distribution Date from and after the Initial Distribution Date, or as
soon thereafter as practicable, the Plan Administrator shall make Ratable
Distributions, in accordance with the provisions of this Plan (calculated as of
such Quarterly Distribution Date), of Cash and/or Liquidating Trust Units
reserved for any Disputed Claim that has become an Allowed Claim during the
preceding calendar quarter, to the holder of such Allowed Claim or the relevant
Paying Agent, as the case may be. Holders of Disputed Claims that are ultimately
Allowed will also be entitled to receive any Distributions received on and after
the Effective Date on account of the Liquidating Trust Units distributed to such
holder on account of its Allowed Claim. Any Distributions held in the Disputed
Claims Reserve Trust for the benefit of a holder of a Disputed Claim, which is
subsequently
29
<PAGE>
Disallowed, in whole or part, shall be distributed, on an Annual Distribution
Date, on a Ratable basis to holders of Liquidating Trust Units and to the
Disputed Claims Reserve Trust on account of Disputed Claims as if such amounts
had been distributed on the Effective Date. The Liquidating Trustee shall assist
the Plan Administrator in making the Distributions required under the preceding
sentence to such holders of Liquidating Trust Units.
(e) Additional Quarterly Distributions on Account of
Liquidating Trust Units. On each Quarterly Distribution Date, the Liquidating
Trustee shall distribute from the Liquidating Trust to each holder of a
Liquidating Trust Unit, or to the relevant Paying Agent, as the case may be, on
account of such Liquidating Trust Unit a Ratable Share of Available Cash.
Notwithstanding anything to the contrary in the Plan or the Liquidating Trust
Agreement, no Distribution shall be made on any Quarterly Distribution Date,
unless the aggregate Distribution on such Quarterly Distribution Date would be
in excess of $5,000,000 in value; provided, however, that the Liquidating
Trustee will be obligated to distribute all Available Cash on each Annual
Distribution Date if the aggregate Distribution on such date would be in excess
of $10,000 in value.
(f) Late Claims. Except as otherwise expressly provided in
this Plan, any Claim not deemed filed pursuant to section 1111(a) of the
Bankruptcy Code or timely filed pursuant to the Bankruptcy Code, Bankruptcy
Rules or any applicable order of the Court, shall (a) not be treated as an
Allowed Claim; and (b) be expunged from the Claims register in the Chapter 11
Cases without need for any further notice, motion, objection or order.
Section 6.06 Miscellaneous Distribution Provisions.
(a) Method of Cash Distributions. Cash payments made pursuant
to the Plan shall be in United States dollars by checks drawn on a domestic bank
selected by the Liquidating Trustee or Plan Administrator, as the case may be,
or by wire transfer from a domestic bank, at the option of the Liquidating
Trustee or Plan Administrator, as the case may be; provided, however, that cash
payments made to foreign creditors, if any, holding Allowed Claims may be paid,
at the option of the Liquidating Trustee or Plan Administrator, as the case may
be, in such funds and by such means as are necessary or customary in a
particular foreign jurisdiction.
(b) Distributions on Non-Business Days. Any payment or
Distribution due on a day other than a Business Day shall be made, without
interest, on the next Business Day.
(c) Accrual of Postpetition Interest. Unless otherwise
provided for in the Plan, no holder of a pre-petition Allowed Claim shall be
entitled to the accrual of interest on account of such Claim.
(d) No Distribution Pending Allowance. Notwithstanding any
other provision of this Plan, no Cash or other property shall be distributed
under this Plan on account of any Disputed Claim, unless and until such Claim
becomes an Allowed Claim.
30
<PAGE>
No Distribution or payment shall be made to any holder of an Allowed General
Unsecured Claim who is also a potential defendant in an avoidance action under
chapter 5 of the Bankruptcy Code. Notwithstanding this section, a Distribution
to such potential defendant shall not constitute a waiver of any rights of the
Debtors or the Liquidating Trustee, as the case may be. For purposes of the
Plan, such Distribution or payment on account of such Allowed General Unsecured
Claim shall be held in the Disputed Claims Reserve Trust as if it were a
Disputed Claim.
(e) No Distribution of Fractional Liquidating Trust Units.
Notwithstanding any other provisions of the Plan, only whole numbers of
Liquidating Trust Units shall be issued. When any Distribution on account of an
Allowed Claim would otherwise result in the issuance of a number of Liquidating
Trust Units that is not a whole number, any Fractional Liquidating Trust Units
that otherwise would have been distributed shall be rounded up or down, as
applicable. Notwithstanding the foregoing, if a Person holds more than one
Claim, the Fractional Liquidating Trust Units that such Person otherwise would
be entitled to on account of each such Claim held by such Person shall be
aggregated and, after taking into account such aggregation, such Person shall
receive on account thereof (in addition to any whole number of Liquidating Trust
Units or other Distribution such Person is entitled to under this Plan prior to
such aggregation) any resulting whole number of shares of Liquidating Trust
Units with any remaining Fractional Liquidating Trust Units subject to rounding
up or down, as applicable.
(f) No Distribution in Excess of Allowed Amount of Claim.
Notwithstanding anything to the contrary herein, no holder of an Allowed Claim
shall receive in respect of such Claim any Distribution (of a value set forth
herein or in the Disclosure Statement) in excess of the Allowed amount of such
Claim, except that the foregoing shall not limit holders of Disputed Claims from
receiving accrued interest as provided in this Plan, if such holders Disputed
Claims become Allowed.
Section 6.07 De Minimis Distributions. Notwithstanding Section
6.05(e) of the Plan, if the amount of Cash to be distributed to the holder of an
Allowed Claim or a Liquidating Trust Unit, as the case may be, is less than $25,
the Liquidating Trustee or the Plan Administrator, as the case may be, may hold
the Cash Distributions to be made to such holder until the aggregate amount of
Cash to be distributed to such holder is in an amount equal to or greater than
$25 if the Liquidating Trustee or the Plan Administrator, as the case may be,
determines that the cost to distribute such Cash is unreasonable in light of the
amount of Cash to be distributed. Notwithstanding the preceding sentence, if the
amount of Cash Distribution to such holder never aggregates to more than $25,
then on the final Distribution Date, the Liquidating Trustee or the Plan
Administrator, as the case may be, may distribute such Cash to the holder
entitled thereto.
Section 6.08 Setoffs. The Debtors, the Liquidating Trustee or
the Plan Administrator, as the case may be, are authorized, pursuant to section
553 of the Bankruptcy Code, to set off against any Allowed Claim and the
Distributions to be made on account of such Allowed Claim, the claims, rights
and Causes of Action of any nature that the Debtors may hold against the holder
of such Allowed Claim; provided, however, that neither the failure to effect
such a setoff nor the allowance of any Claim hereunder
31
<PAGE>
shall constitute a waiver or release by the Debtors of any such claims, rights
and Causes of Action that the Debtors may possess against such holder.
Section 6.09 Intercompany Claims. In accordance with the
Compromise and Settlement provided for herein, the Intercompany Claims shall be
deemed released, waived and discharged as of the Effective Date.
Section 6.10 Unclaimed Property.
(a) Escrow of Unclaimed Property. Unclaimed Property (and all
interest, dividends, and other Distributions thereon) shall be delivered
promptly to the Liquidating Trustee or Plan Administrator, as the case may be,
by each Paying Agent. The Liquidating Trustee or Plan Administrator, as the case
may be, shall deposit such Unclaimed Property in trust (for the benefit of the
holders of Allowed Claims entitled thereto under the terms of this Plan) in a
subaccount of the Liquidating Trust or the Disputed Claims Reserve Trust, as the
case may be. For a period of one year following the Effective Date, Unclaimed
Property, including any interest, dividends, and other Distributions thereon
shall be: (i) held in such subaccount solely for the benefit of the holders of
Allowed Claims that have failed to claim such property; and (ii) released from
such subaccount and delivered to the holder of an Allowed Claim upon
presentation of proper proof by such holder of its entitlement thereto. The
Liquidating Trustee or Plan Administrator, as the case may be, shall pay, or
cause to be paid, out of the funds held in the Liquidating Trust or the Disputed
Claims Reserve Trust, as the case may be, including, without limitation, the
subaccount, any tax imposed by any federal, state or local taxing authority on
the income generated by the funds held in such subaccount. The Liquidating
Trustee or the Plan Administrator, as the case may be, shall also file, or cause
to be filed any tax or information return related to such accounts. All Cash
held in each such subaccount shall be invested in accordance with section 345 of
the Bankruptcy Code, as modified by the relevant Orders of the Court for
investments made by the Debtors during the Chapter 11 Cases. The earnings on
such investments shall be held in trust as an addition to the balance of the
subaccount for the benefit of the holders of Allowed Claims entitled to such
Unclaimed Property, and shall not constitute property of the Liquidating Trust.
(b) Distribution of Unclaimed Property. At the end of one year
following the relevant Distribution Date of Cash and/or Liquidating Trust Units,
the holders of Allowed Claims theretofore entitled to Unclaimed Property shall
cease to be entitled thereto (such holders, the "Unclaimed Holders"), and the
Unclaimed Property for each Unclaimed Holder shall then be distributed on a
Ratable basis to the holders of Liquidating Trust Units in accordance with this
Plan.
Section 6.11 Exemption from Transfer Taxes. Pursuant to
section 1146(c) of the Bankruptcy Code, the assignment or surrender of any lease
or sublease, or the delivery, making, filing, or recording of any deed or other
instrument of transfer, or the issuance, transfer, or exchange of any security,
including, without limitation, the Liquidating Trust Units, under, in
furtherance of, or in connection with this Plan, whether arising prior or
subsequent to the Confirmation Date, including any deeds, bills of sale or
32
<PAGE>
assignments executed in connection with any disposition of assets contemplated
by this Plan shall not be subject to any stamp, real estate transfer, mortgage,
recording or other similar tax, including, but not limited to, any transfers of
assets to the Liquidating Trust or Disputed Claims Reserve Trust on or shortly
after the Effective Date by the Debtors, holders of Allowed Claims or the Plan
Administrator.
Section 6.12 Cancellation of Capital Stock. As of the
Effective Date, by virtue of the Plan and in all events without any action on
the part of the holders thereof, each share of Old Common Stock issued and
outstanding or held in treasury, shall be cancelled and retired and no
consideration will be paid or delivered with respect thereto. Notwithstanding
anything herein to the contrary, holders of Old Common Stock shall not be
required to surrender such stock to the Debtors.
Section 6.13 Cancellation of Senior Notes and Agreements. On
the Effective Date, except as otherwise provided for in the Plan, the Senior
Notes and any other note, bond, indenture or other instrument or document
evidencing or creating any indebtedness or obligation of the Debtors (the
"Instruments") will be deemed cancelled and of no further force or effect
without any further action on the part of the Bankruptcy Court, or any Person
including, but not limited to, governmental agencies. The holders of such
cancelled Senior Notes and Instruments will have no claims against the Debtors
for payment of such Senior Notes or Instruments, except for the rights provided
pursuant to the Plan, including, without limitation, the rights provided for
pursuant to Section 5.07(b).
Following the Effective Date, holders of Senior Notes will
receive from the respective indenture trustee, agent, servicer or the
Liquidating Trustee, specific instructions regarding the time and manner in
which the Senior Notes are to be surrendered, if requested by the Liquidating
Trustee. The Initial Distribution under this Plan in respect of Allowed Senior
Notes Claims (after giving effect to Section 5.07(c) of the Plan) shall be made
to the Indenture Trustee for the benefit of such holders, and shall be subject
to any rights or liens that the Indenture Trustee may have for fees, costs,
expenses and indemnification under the respective Indentures or other agreement.
All Distributions subsequent to the Initial Distribution shall be made pursuant
to the Liquidating Trust Agreement or the Plan Administration Agreement, as the
case may be.
Any Senior Note which is lost, stolen, mutilated or destroyed,
shall be deemed surrendered when the holder of a Claim based thereon delivers to
the applicable indenture trustee, agent, servicer or the Liquidating Trustee (a)
evidence satisfactory to the indenture trustee, agent, servicer or the
Liquidating Trustee of the loss, theft, mutilation or destruction of such
instrument or certificate, and (b) such security or indemnity as may be required
by the indenture trustee, agent, servicer or the Liquidating Trustee to hold
each of them harmless with respect thereto.
Each indenture or other agreement that governs the rights of
the holder of a Claim and that is administered by an indenture trustee, an agent
or a servicer, shall continue in effect solely for the purposes of (a) allowing
such indenture trustee, agent or servicer to make the Distributions to be made
on account of such Claims under this Plan,
33
<PAGE>
(b) permitting such indenture trustee, agent or servicer to maintain any rights
or liens it may have for fees, costs, expenses and indemnification under such
indenture or other agreement and to be paid or reimbursed for such prepetition
and postpetition fees, costs, expenses and indemnification only from the
Distributions (until payment in full of such fees, costs, expenses or
indemnification) that are governed by the respective indenture or other
agreement in accordance with the provisions set forth therein; provided,
however, that the foregoing shall not affect the discharge of Debtors'
liabilities under the Bankruptcy Code and the Confirmation Order or result in
any expense or liability to the Debtors or the Liquidating Trust.
Nothing herein shall constitute a waiver or affect the ability
of holders of Senior Notes or Instruments to assert claims on account of the
Senior Notes or Instruments against third parties.
Section 6.14 Disputed Payments. If any dispute arises as to
the identity of a holder of an Allowed Claim who is to receive any Distribution,
the Liquidating Trustee or Plan Administrator, as the case may be, or relevant
Paying Agent may, in lieu of making such Distribution to such Person, make such
Distribution into an escrow account to be held in trust for the benefit of such
holder and shall not constitute property of the Debtors, their Estates or the
Liquidating Trust. Such Distribution shall be held in escrow until the
disposition thereof shall be determined by order of the Bankruptcy Court or
other court of competent jurisdiction or by written agreement among the
interested parties to such dispute.
Section 6.15 Withholding Taxes. In connection with the Plan,
to the extent applicable, the Liquidating Trustee and Plan Administrator shall
comply with all withholding and reporting requirements imposed on it by federal,
state and local taxing authorities, and all Distributions shall be subject to
such withholding and reporting requirements.
Section 6.16 Obligations Incurred After the Confirmation Date.
Payment obligations incurred after the date and time of entry of the
Confirmation Order, including, without limitation, the fees and expenses of
Professionals, shall not be subject to application or proof of claim and may be
paid by the Debtors or the Liquidating Trustee, as the case may be, in the
ordinary course of business and without further Bankruptcy Court approval.
Section 6.17 Instructions to Liquidating Trustee or Plan
Administrator. Prior to any Distribution on account of any Senior Notes, the
indenture trustee, agent or servicer of the Senior Notes shall (a) inform the
Liquidating Trustee or Plan Administrator, as the case may be, as to the amount
of properly surrendered Senior Notes and (b) instruct the Liquidating Trustee or
Plan Administrator, as the case may be, in a form and manner that the
Liquidating Trustee or Plan Administrator, as the case may be, reasonably
determines to be acceptable, of the names of the holders of Senior Notes with
Allowed Class 5 Claims who are to receive Distributions in respect of such
Allowed Class 5 Claims in exchange for properly surrendered Senior Notes.
34
<PAGE>
Section 6.18 Record Date for Distributions to Holders of
Senior Notes. At the close of business on the Confirmation Date, the transfer
ledgers of the indenture trustees, agent and servicers of the Senior Notes shall
be closed, and there shall be no further changes in the record holders of the
Senior Notes. The Debtors, the Liquidating Trust, the Liquidating Trustee, and
the indenture trustees, agents and servicers for such Senior Notes shall have no
obligation to recognize any transfer of such Senior Notes occurring after the
Confirmation Date. The Debtors, the Liquidating Trust, the Liquidating Trustee,
and the indenture trustees, agents and servicers for such Senior Notes 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 Confirmation Date.
Section 6.19 Dissolution. From and after the Effective Date,
the Plan Administrator shall use its reasonable best efforts to dissolve the
Debtors and any affiliates of the Debtors that are not surviving Special Purpose
Entities as quickly as is reasonably practical. In that connection, the Plan
Administrator shall prepare and file all corporate resolutions, statements,
notices, tax returns and other documents necessary to accomplish their
dissolution, and the Confirmation Order shall provide for the appointment of the
Plan Administrator as the authorized signatory to execute on behalf of each
Debtor or any Affiliate any and all documents necessary to accomplish such
dissolution.
ARTICLE VII.
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
Section 7.01 Jurisdiction of Court. Until the Effective Date,
the Court shall retain jurisdiction over the Debtors and their Estates.
Thereafter, jurisdiction of the Court shall be limited to the subject matters
set forth in Article XI of this Plan.
Section 7.02 Binding Effect. Except as otherwise provided in
section 1141(d) of the Bankruptcy Code, on and after the Confirmation Date, the
provisions of this Plan shall bind any holder of a Claim against, or Equity
Interest in, the Debtors and their respective successors and assigns, whether or
not the Claim or Equity Interest of such holder is impaired under this Plan and
whether or not such holder has accepted this Plan.
Section 7.03 Term of Injunctions or Stays. Unless otherwise
provided herein, all injunctions or stays provided for in the Chapter 11 Cases
pursuant to sections 105 or 362 of the Bankruptcy Code, or otherwise, and in
existence on the Confirmation Date, shall remain in full force and effect until
the later of: (1) Final Claims Resolution Date or (2) the Effective Date.
Section 7.04 Rights of Action. On the Effective Date, pursuant
to Section 1123(b)(3) of the Bankruptcy Code, the Liquidating Trustee shall have
possession and control of the Trust Assets, and shall, pursuant to the
Liquidating Trust Agreement, retain and have the right to enforce any and all
present or future rights,
35
<PAGE>
claims or Causes of Action, against any Person and with respect to any rights of
the Debtors that arose before or after the Petition Date, including, but not
limited to, rights, claims and Causes of Action. All present or future rights,
claims or Causes of Action against any Person that existed prior to the
Effective Date are preserved and are transferred to the Liquidating Trust,
including, without limitation, such claims, rights or Causes of Action
identified in the Disclosure Statement. Subject to the requirements of the
Liquidating Trust Agreement, the Liquidating Trustee may pursue, abandon, settle
or release any or all such claims, rights or Causes of Action, as it deems
appropriate. In pursuing any claim, right or Cause of Action, the Liquidating
Trustee, as the representative of the Estates, shall be entitled to the
extensions provided under section 108 of the Bankruptcy Code.
Section 7.05 Discharge.
(a) Scope. Except as otherwise provided in the Plan or
Confirmation Order, and subject to section 1141(d)(1) of the Bankruptcy Code,
when the Confirmation Order becomes a Final Order, the Plan and the Confirmation
Order shall discharge, effective as of the Effective Date, all debts of, Claims
against, Liens on, and Interests in each of the Debtors, their assets, or
properties, which debts, Claims, Liens, and Interests arose at any time before
the entry of the Confirmation Order. The discharge of the Debtors shall be
effective as to each Claim or Interest, regardless of whether a proof of Claim
or Interest therefor was filed, whether the Claim is an Allowed Claim, or
whether the holder thereof votes to accept the Plan. On the Effective Date, as
to every discharged Claim and Interest, any holder of such Claim or Interest
shall be precluded from asserting against any Debtor formerly obligated with
respect to such Claim or Interest, or against such Debtor's assets or
properties, any other or further Claim or Interest based upon any document,
instrument, act, omission, transaction, or other activity of any kind or nature
that occurred before the Confirmation Date.
(b) Injunction. Except as otherwise provided in the Plan or
Confirmation Order, as of the Effective Date, all entities that hold a Claim
that is discharged pursuant to Section 7.05(a) or an Interest or other right of
an equity security holder that is terminated pursuant to the terms of the Plan,
are permanently enjoined from taking any of the following actions on account of
any such discharged Claims or terminated Interests or rights: (1) commencing or
continuing in any manner any action or other proceeding against the Debtors, the
Liquidating Trust or the Disputed Claims Reserve Trust or their respective Trust
Assets or other property; (2) enforcing, attaching, collecting or recovering in
any manner any judgment, award, decree or order against the Debtors, the
Liquidating Trust or the Disputed Claims Reserve Trust or their respective Trust
Assets or other property; (3) creating, perfecting or enforcing any Lien or
encumbrance against the Debtors, the Liquidating Trust or the Disputed Claims
Reserve Trust or their respective Trust Assets or other property; (4) asserting
a setoff, right of subrogation or recoupment of any kind against any obligation
due to the Debtors, the Liquidating Trust, or the Disputed Claims Reserve Trust
or their respective Trust Assets or other property; and (5) commencing or
continuing any action that does not comply with or is inconsistent with the
Plan.
36
<PAGE>
(c) Release of Collateral. Unless a particular Secured Claim
is Reinstated or the holder thereof receives a return of its Collateral in
respect of such Claim under this Plan: (i) each holder of: (A) a Secured Claim;
and/or (B) a Claim that is purportedly secured, shall on or immediately before
the Effective Date: (x) turn over and release to the Liquidating Trust any and
all property that secures or purportedly secures such Claim; and (y) execute
such documents and instruments as the Debtors or the Liquidating Trust requires
to evidence such claimant's release of such property; and (ii) on the Effective
Date, all claims, right, title and interest in such property shall revert to the
Liquidating Trust, free and clear of all Claims and Interests, including
(without limitation) Liens, charges, pledges, encumbrances and/or security
interests of any kind. No Distribution hereunder shall be made to or on behalf
of any holder of such Claim unless and until such holder executes and delivers
to the Debtors or the Liquidating Trust such release of Liens. Any such holder
that fails to execute and deliver such release of Liens within 180 days of the
Effective Date shall be deemed to have no further Claim and shall not
participate in any Distribution hereunder. Notwithstanding the immediately
preceding sentence, any holder of a Disputed Claim shall not be required to
execute and deliver such release of Liens until the time such Claim is Allowed
or Disallowed.
(d) Cause of Action Injunction. On and after the Effective
Date, for cause shown, (a) all Persons other than the Liquidating Trustee will
be permanently enjoined from commencing or continuing in any manner any action
or proceeding (whether directly, indirectly, derivatively or otherwise) on
account of, or respecting any, Claim, debt, right or Cause of Action that the
Liquidating Trust retains sole and exclusive authority to pursue, in accordance
with the Liquidating Trust Agreement, and (b) all Persons other than the
Liquidating Trustee will be permanently enjoined from commencing or continuing
in any manner any action or proceeding (whether directly, indirectly,
derivatively or otherwise) on account of or respecting any Causes of Action.
Section 7.06 Preservation of Insurance. The provisions of this
Plan shall not diminish or impair in any manner the enforceability and coverage
of any insurance policies that may cover Claims against the Debtors or any other
Person including, without limitation, the D&O Insurance.
ARTICLE VIII.
EXECUTORY CONTRACTS
Section 8.01 Executory Contracts and Unexpired Leases. As of
the Effective Date, subject to Section 7.06 of the Plan, all executory contracts
and unexpired leases of each Debtor shall be deemed rejected by such Debtor
pursuant to the provisions of section 365 of the Bankruptcy Code, except: (a)
any executory contract or unexpired lease that has been or is the subject of a
motion to assume or assume and assign filed pursuant to section 365 of the
Bankruptcy Code by any of the Debtors before the Effective Date; (b) any
executory contract or unexpired lease listed in the "Schedule of Assumed and
Assumed and Assigned Executory Contracts and Unexpired Leases" to be Filed by
the Debtors as Exhibit E to the Plan on or before the Exhibit Filing Date; (c)
any executory contract or unexpired lease assumed or assumed and assigned
pursuant to the
37
<PAGE>
provisions of this Plan; (d) any agreement, obligation, security interest,
transaction or similar undertaking that the relevant Debtor believes is not
executory or is not a lease, and which is later determined by the Court to be an
executory contract or unexpired lease that is subject to assumption or rejection
under section 365 of the Bankruptcy Code. Notwithstanding the preceding
sentence, upon agreement of the Debtors, American General Finance, Inc. ("AGFI")
and American General Finance Corporation ("AGFC," and together with AGFI, "Am
Gen"), the rejection of each of (i) the Loan Participation and Servicing
Agreement among CFN, CMC and AGFC, dated as of September 26, 1996, (ii) the
Mortgage Loan Purchase Agreement among CFN, CMC, AGFI, dated as of January 21,
1999, and (iii) the Commitment Agreement among CFN, CMC and AGFI, dated as of
January 29, 1999, shall occur no earlier than 30 days from the date of the entry
of the Confirmation Order, unless extended by Court Order; provided, however,
that the Debtors or the Liquidating Trustee, as the case may be, shall have the
discretion to reject the Am Gen Agreements prior to the expiration of such 30
days upon written notification to Am Gen with rejection effective upon mailing
of such notification.
Section 8.02 Cure. At the election of the relevant Debtor, any
monetary defaults under each executory contract and unexpired lease to be
assumed under this Plan shall be satisfied pursuant to section 365(b)(1) of the
Bankruptcy Code, in one of the following ways: (a) by payment of the default
amount in Cash on the Effective Date; or (b) on such other terms as agreed to by
the parties to such executory contract or unexpired lease. In the event of a
dispute regarding: (i) the amount of any cure payments; (ii) the ability of the
Debtor that is a party thereto to provide adequate assurance of future
performance under the contract or lease to be assumed; or (iii) any other matter
pertaining to assumption, then the cure payments required by section 365(b)(1)
of the Bankruptcy Code shall be made following the entry of a Final Order
resolving the dispute and approving assumption.
Section 8.03 Rejection Damages Bar Date. If the rejection by
any Debtor, pursuant to the Plan or otherwise, of an executory contract or
unexpired lease, results in a Claim, then such Claim shall be forever barred and
shall not be enforceable against such Debtor or the Liquidating Trust 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 the Debtors, Liquidating Trustee
and the Plan Administrator on or before the earlier of (i) the later of the
applicable Bar Date or within thirty (30) days after the date of service of
notice of entry of an order of the Court authorizing such rejection, including
this Confirmation Order, (ii) thirty (30) days after such rejection becomes
effective if such rejection occurred by reason of expiration of a time period
fixed by the Court, or (iii) such other period set by the Court.
Section 8.04 Executory Contracts and Unexpired Leases Entered
Into and Other Obligations Incurred After the Petition Date. Executory contracts
and unexpired leases entered into and other obligations incurred after the
Petition Date by any Debtor shall be performed by the Liquidating Trust.
Accordingly, such executory contracts, unexpired leases and other obligations
shall survive and remain unaffected by entry of the Confirmation Order.
38
<PAGE>
ARTICLE IX.
CONDITIONS TO CONFIRMATION
AND OCCURRENCE OF EFFECTIVE DATE
Section 9.01 Conditions to Confirmation. This Plan may not be
confirmed unless each of the conditions set forth below is satisfied. Except as
provided in Section 9.03 below, any one or more of the following conditions may
be waived at any time by the Debtors with the consent of each of the Unofficial
Committees.
(a) The Disclosure Statement Order shall have been entered and
be a Final Order.
(b) The Confirmation Order shall be in a form reasonably
acceptable to the Debtors and each of the Unofficial Committees.
(c) the Compromise and Settlement and all other provisions
embodied in this Plan shall not have been modified.
Section 9.02 Conditions to Occurrence of Effective Date. The
Effective Date for this Plan may not occur unless each of the conditions set
forth below is satisfied. Except as provided in Section 9.03 below, any one or
more of the following conditions may be waived at any time by the Debtors with
the consent of each of the Unofficial Committees.
(a) The Confirmation Order which, inter alia, approves the
Compromise and Settlement shall have been entered and be a Final Order.
(b) The Liquidating Trustee, the Liquidating Trust Committee,
the Plan Administrator and the Plan Administration Committee each shall have
been properly nominated and appointed and each shall have accepted to act in
such capacity.
(c) The Liquidation Trust Agreement and the Plan
Administration Agreement shall be in a form acceptable to each of the Unofficial
Committees.
Section 9.03 Waiver of Conditions to Confirmation and
Occurrence of Effective Date. Each of the conditions to confirmation of this
Plan or to the occurrence of the Effective Date is for the benefit of the
Debtors. Other than the requirement that the Disclosure Statement Order and the
Confirmation Order must be entered, the requirement that a particular condition
be satisfied may be waived in whole or part, as set forth in this Plan.
Section 9.04 Effect of Nonoccurrence of the Conditions to
Occurrence of Effective Date. If each of the conditions to the occurrence of the
Effective Date have not been satisfied or duly waived on or before the date
which is no later than the first Business Day after sixty (60) days after the
Confirmation Order is entered, or by such later date as is approved, after
notice and a hearing, by the Court, then upon motion by any party in interest
made before the time that each of the conditions has been satisfied or
39
<PAGE>
duly waived, the Confirmation Order may be vacated by the Court; provided,
however, that, notwithstanding the filing of such a motion, the Confirmation
Order shall not be vacated if each of the conditions to occurrence of the
Effective Date is either satisfied or duly waived before the Court enters an
order granting the relief requested in such motion. If the Confirmation Order is
vacated pursuant to this Section, the Plan shall be null and void in all
respects, and nothing contained in the Plan shall: (a) constitute a waiver or
release of any Claims by or against, or Interests in, the Debtors; or (b)
prejudice in any manner the rights of any of the Debtors or of any other party
in interest, including, without limitation, the right to seek a further
extension of the exclusivity periods under section 1121(d) of the Bankruptcy
Code.
ARTICLE X.
CONFIRMABILITY AND SEVERABILITY
OF A PLAN AND CRAMDOWN
Section 10.01 Confirmability and Severability of a Plan. The
Debtors, with the consent of each of the Unofficial Committees, reserve the
right to alter, amend, modify, revoke or withdraw the Plan as it applies to any
particular Debtor. The Debtors, with the consent of each of the Unofficial
Committees, reserves the right to make non-substantive changes in the Plan,
which changes may be necessary to facilitate the withdrawal of another Debtor
from the Plan. Any such revocation or withdrawal by a Debtor (only with the
consent of each of the Unofficial Committees) shall not affect this Plan as the
plan of reorganization of the other Debtors. If a Debtor revokes or withdraws
from this Plan (only with the consent of each of the Unofficial Committees): (a)
nothing contained herein shall be deemed to constitute a waiver or release of
any Claims by or against such Debtor, or to prejudice in any manner the rights
of such Debtor or any persons in any further proceedings involving such Debtor;
and (b) any provisions of any Confirmation Order with respect to such Debtor
shall be null and void (and such Debtor shall not be benefited by the
Confirmation Order) and all such rights of or against such Debtor shall exist as
though this Plan had not been filed and no actions taken to effectuate it. A
determination by the Bankruptcy Court that the Plan, as it applies to any
particular Debtor, is not confirmable pursuant to section 1129 of the Bankruptcy
Code shall not limit or affect: (1) the confirmability of the Plan (only with
the consent of each of the Unofficial Committees) as it applies to any other
Debtor; or (2) the Debtors' ability to modify the Plan (only with the consent of
each of the Unofficial Committees), as it applies to any particular Debtor, to
satisfy the confirmation requirements of section 1129 of the Bankruptcy Code.
Each provision of this Plan shall be considered separable and, if for any reason
any provision or provisions herein are determined to be invalid and contrary to
any existing or future law, the balance of this Plan shall be given effect
without relation to the invalid provision.
Section 10.02 Cramdown. The Debtors shall request the
Bankruptcy Court to confirm in accordance with section 1129(b) of the Bankruptcy
Code only as to Classes 7 and 8.
40
<PAGE>
ARTICLE XI.
ADMINISTRATIVE PROVISIONS
Section 11.01 Retention of Jurisdiction. Notwithstanding
confirmation of this Plan or occurrence of the Effective Date, the Court shall
retain jurisdiction for all purposes permitted under applicable law, including,
without limitation, the following purposes:
(a) Determination of the allowability of Claims upon objection
to such Claims by Debtors or the Plan Administrator, as the case may be, and the
validity, extent, priority and nonavoidability of consensual and nonconsensual
Liens and other encumbrances;
(b) Determination of tax liability pursuant to section 505 of
the Bankruptcy Code;
(c) Approval, pursuant to section 365 of the Bankruptcy Code,
of all matters related to the assumption, assumption and assignment, or
rejection of any executory contract or unexpired lease of any of the Debtors;
(d) Determination of requests for payment of administrative
expenses entitled to priority under section 507(a)(1) of the Bankruptcy Code,
including compensation of parties entitled thereto under section 330 of the
Bankruptcy Code;
(e) Resolution of controversies and disputes regarding the
interpretation of this Plan;
(f) Implementation of the provisions of this Plan and entry of
Orders in aid of confirmation and consummation of this Plan, including, without
limitation, appropriate Orders protecting the Debtors, their successors and
Estates from actions by creditors and/or Interest holders of the Debtors or any
of them, ensuring Distributions to holders of Allowed Claims and resolving
disputes and controversies regarding property of the Estates, the Liquidating
Trust, the Disputed Claims Reserve Trust or powers of the Liquidating Trustee
and the Plan Administrator;
(g) Modification of (i) the Plan pursuant to section 1127 of
the Bankruptcy Code and (ii) the Liquidating Trust Agreement and Plan
Administration Agreement;
(h) Issue orders, if appropriate, as requested by the
Liquidating Trustee and the Plan Administrator under, and subject to, the
provisions of Bankruptcy Rule 2004;
(i) Adjudication of any Causes of Action;
(j) Entry of a Final Order closing the Chapter 11 Cases.
41
<PAGE>
Section 11.02 Governing Law. Except to the extent the
Bankruptcy Code, Bankruptcy Rules, or other federal laws apply and except for
Reinstated Secured Claims governed by another jurisdiction's law, the rights and
obligations arising under this Plan shall be governed by the laws of the State
of New York, without giving effect to principles of conflicts of law.
Section 11.03 Administrative Bar Date.
(a) General Provisions. Except as provided below in Section
11.03(b) for Administrative Claims of Professionals requesting compensation or
reimbursement of expenses and in Section 11.03(c) for liabilities incurred by a
Debtor in the ordinary course of its business, requests for payment of
Administrative Claims must be Filed no later than 30 days after notice of entry
of the Confirmation Order. Holders of Administrative Claims who are required to
File a request for payment of such Claims and who do not File such requests by
the applicable Bar Date, shall be forever barred from asserting such Claims
against the Debtors, the Liquidating Trust or their respective property.
(b) Professionals. All Professionals or other entities
requesting compensation or reimbursement of expenses pursuant to sections 327,
328, 330, 331, 503(b) and 1103 of the Bankruptcy Code for services rendered
before the Confirmation Date (including compensation requested by any
Professional or other entity for making a substantial contribution in the
Chapter 11 Cases but excluding professionals retained pursuant to the Ordinary
Course Professionals Orders) shall File an application for final allowance of
compensation and reimbursement of expenses no later than 45 days after the
Confirmation Date. Objections to applications of Professionals or other entities
for compensation or reimbursement of expenses must be Filed no later than 75
days after the Confirmation Date. All compensation and reimbursement of expenses
allowed by the Bankruptcy Court shall be paid to the applicable Professional
immediately thereafter. Each Professional that intends to seek payment for
compensation or reimbursement of expenses from the Debtors (including
compensation requested by any Professional or other entity for making a
substantial contribution in the Chapter 11 Cases) shall provide the Debtors with
a statement, by no later than the Confirmation Date, of the amount of estimated
unpaid fees and expenses that each such Professional has incurred or expects to
incur through the Confirmation Date. The Debtors or the Liquidating Trustee, as
the case may be, shall establish a reserve in an appropriate amount for the
payment of any such unpaid fees and expenses of such Professionals.
(c) Ordinary Course Liabilities. Holders of Administrative
Claims based on liabilities incurred by a Debtor in the ordinary course of
business, including, without limitation, professionals retained pursuant to the
Ordinary Course Professionals Orders, shall not be required to File any request
for payment of such Claims. Such Administrative Claims shall be assumed and paid
by the Liquidating Trust pursuant to the terms and conditions of the particular
transaction giving rise to such Administrative Claim, without any further action
by the holders of such Claims or the Court. For purposes of this Section,
ordinary course liabilities shall not include any claims or
42
<PAGE>
obligations arising out of or relating to the purchase or sale of loans or
related contracts after the Petition Date.
Section 11.04 Payment of Statutory Fees. All fees payable
pursuant to section 1930 of title 28 of the United States Code, as determined by
the Court on the Confirmation Date, shall be paid on the Effective Date. Any
statutory fees accruing after the Confirmation Date shall be paid in accordance
with Article IV of this Plan.
Section 11.05 Payment of Transition Team Fees and Expenses.
The Liquidating Trustee shall pay from Available Cash, all fees and expenses of
the Transition Team during the Transition Period without Court Order.
Section 11.06 Effectuating Documents and Further Transactions.
Each Debtor shall be authorized to execute, deliver, file, or record such
documents, contracts, instruments, releases, and other agreements and take such
other action as may be necessary to effectuate and further evidence the terms
and conditions of the Plan.
Section 11.07 Limitation of Liability. None of the Debtors,
the Bank Group Committee, the Indenture Trustee, the Unofficial Noteholders'
Committee (including the present and former members), their respective officers
and directors, employees, agents (acting in such capacity), representatives nor
any professional employed by any of them (collectively, the "Affected Parties")
shall have or incur any liability to any Person or entity for any action taken
or omitted to be taken in connection with or related to (i) the formulation,
preparation, dissemination, implementation, confirmation, or consummation of the
Plan, the Disclosure Statement, or any contract, release, or other agreement or
document created or entered into, or any other action taken or omitted to be
taken in connection with the Plan, and (ii) actions taken or omitted to be taken
in connection with the Chapter 11 Cases or the operations or administration of
the Debtors during the Chapter 11 Cases that arose out of or relate to the
period from the Petition Date through the Effective Date. Notwithstanding
anything in this Section 11.07 to the contrary, the provisions of this Section
11.07 shall (i) not limit in any way whatsoever the liability of any Person or
entity that would otherwise result from any action or omission to the extent
that such action or omission is determined in a Final Order to have constituted
gross negligence, willful misconduct, or breach of fiduciary duty; (ii) be of no
force or effect as to the Liquidating Trustee, including, without limitation,
his power and authority to investigate, commence and prosecute Causes of Action,
if any, against any of the Affected Parties and no Affected Party shall be
entitled to rely upon or assert this Section 11.07 as a defense to any such
Causes of Action brought by the Liquidating Trustee; and (iii) not affect the
rights of any party-in-interest pursuant to Section 11.03(b) of this Plan. If
this Section 11.07 is deemed in any way to limit, impair, or constitute a
defense to any such Causes of Action brought by the Liquidating Trustee, such
portion or all of this Section 11.07 shall be deemed null and void and of no
force and effect.
43
<PAGE>
Section 11.08 Amendments.
(a) Preconfirmation Amendment. The Debtors, with the consent
of each of the Unofficial Committees, may modify the Plan at any time prior to
the entry of the Confirmation Order provided that the Plan, as modified, and the
Disclosure Statement pertaining thereto meet applicable Bankruptcy Code
requirements of Section 1125, among others.
(b) Post-confirmation Amendment Not Requiring Resolicitation.
After the entry of the Confirmation Order, the Debtors may modify the Plan, with
the consent of each of the Unofficial Committees, to remedy any defect or
omission or to reconcile any inconsistencies in the Plan or in the Confirmation
Order, as may be necessary to carry out the purposes and effects of the Plan,
provided that: (i) the Debtors obtain approval of the Bankruptcy Court for such
modification, after notice and a hearing; and (ii) such modification shall not
materially and adversely affect the interests, rights, treatment, or
Distributions of any Class under the Plan. As this Plan provides for Substantive
Consolidation, after the entry of the Confirmation Order, appropriate
modifications may be executed by any appropriate officer of the Debtors and need
not be executed by an appropriate signatory for each of the Debtors.
(c) Post-confirmation Amendment Requiring Resolicitation.
After the Confirmation Date and before the Effective Date of the Plan, the
Debtors may modify the Plan, with the consent of each of the Unofficial
Committees, in a way that materially or adversely affects the interests, rights,
treatment, or Distributions of a class of Claims or Interests provided that: (i)
the Plan, as modified, meets applicable Bankruptcy Code requirements; (ii) the
Debtors obtain Bankruptcy Court approval for such modification, after notice and
a hearing; (iii) such modification is accepted by at least two-thirds in amount,
and more than one-half in number, of Allowed Claims voting in each class
affected by such modification; and (iv) the Debtors comply with section 1125 of
the Bankruptcy Code with respect to the Plan as modified.
Section 11.09 Debtors' Retirement Plans. The Liquidating
Trustee shall assume all duties of the Debtors to maintain and administer with
respect to the ContiFinancial Retirement Annuity Plan and the ContiFinancial
Employee Savings Plan (the "Employee Plans"). The Liquidating Trustee shall
agree and acknowledge that it is the successor plan sponsor of the Employee
Plans, and that it will take any and all actions it deems necessary and
advisable to administer the Employee Plans and effectuate the termination of the
Employee Plans in accordance with the requirements of the Employee Retirement
Income Security Act of 1974, as amended and the Internal Revenue Code of 1986,
as amended.
Section 11.10 Successors and Assigns. The rights, benefits,
and obligations of any Person named or referred to in the Plan shall be binding
upon, and shall inure to the benefit of, the heir, executor, administrator,
successor or assign of such Person.
44
<PAGE>
Section 11.11 Confirmation Order and Plan Control. To the
extent the Confirmation Order and/or this Plan is inconsistent with the
Disclosure Statement, any other agreement entered into between or among any
Debtor(s), or any of them and any third party (but excluding the Liquidating
Trust Agreement or the Plan Administration Agreement), this Plan controls the
Disclosure Statement and any such agreements and the Confirmation Order (and any
other orders of the Court) controls this Plan.
Section 11.12 Headings. Headings are used in this Plan for
convenience and reference only, and shall not constitute a part of this Plan for
any other purpose.
Section 11.13 Relationship of Liquidating Trust Agreement and
Plan Administration Agreement to the Plan. The principal purpose of the
Liquidating Trust Agreement and the Plan Administration Agreement is to aid in
the implementation of the Plan and therefore the Plan incorporates the
provisions of the Liquidating Trust Agreement and the Plan Administration
Agreement. To that end, the Liquidating Trustee and the Plan Administrator, as
the case may be, shall have the full power and authority to take any action
consistent with the purpose and provisions of the Plan, and to seek any Orders
from the Bankruptcy Court in furtherance of the implementation of the Plan, the
Liquidating Trust Agreement and the Plan Administration Agreement, as the case
may be. If any provision of the Liquidating Trust Agreement or the Plan
Administration Agreement are found to be inconsistent with the provisions of the
Plan, the provisions of the Liquidating Trust Agreement or the Plan
Administration Agreement, as the case may be, shall control.
Section 11.14 Notices. Any notice required or permitted to be
provided under the Plan shall be in writing and served by either (a) certified
mail, return receipt requested, postage prepaid, (b) hand delivery or (c)
overnight delivery service, freight prepaid, and addressed as follows:
For the Debtors
ContiFinancial Corporation
277 Park Avenue
New York, New York 10172
(212) 208-2800
Attn: Alan H. Fishman
45
<PAGE>
with copies to:
Dewey Ballantine LLP
Attorneys for the Debtors
1301 Avenue of the Americas
New York, New York 10019-6092
(212) 259-8000
Attn: Richard S. Miller, Esq.
Togut, Segal & Segal LLP
Attorneys for the Debtors
One Penn Plaza
New York, New York 10119
(212) 594-5000
Attn: Albert Togut, Esq.
For the Bank Group Committee
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attn: Marvin E. Jacob, Esq.
Judy G. Z. Liu, Esq.
For the Unofficial Noteholders' Committee
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
Attn: Daniel H. Golden, Esq.
Ira S. Dizengoff, Esq.
46
<PAGE>
For the Liquidating Trustee and Plan Administrator
Jeffrey H. Beck, Esq.
6555 N. Powerline Road
Suite 408
Fort Lauderdale, Florida 33309
(954) 958-8070
with copies to:
Bilzin Sumberg Dunn Baena Price & Axelrod LLP
2500 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2336
Attn: Scott L. Baena, Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
47
<PAGE>
Dated: New York, New York
December 18, 2000
Respectfully Submitted,
CONTIFINANCIAL CORPORATION, ET AL.
Debtors and Debtors-in-Possession
By: /s/ Alan H. Fishman
-------------------------------------
Alan H. Fishman
Authorized Signatory
By: /s/ Robert D. Davis
-------------------------------------
Robert D. Davis
Authorized Signatory
By: /s/ Michael T. Conrad
-------------------------------------
Michael T. Conrad
Authorized Signatory
By: /s/ Hal Willard
-------------------------------------
Hal Willard
Authorized Signatory
48
<PAGE>
EXHIBIT A
LIQUIDATING TRUST AGREEMENT
<PAGE>
LIQUIDATING TRUST AGREEMENT
This Liquidating Trust Agreement (the "Trust Agreement"),
dated as of December [ ], 2000, by and between ContiFinancial Corporation,
ContiTrade Services LLC, ContiMortgage Corporation, ContiWest Corporation,
ContiFinancial Services Corporation, Resource One Consumer Discount Company,
Inc., Warminster National Abstract, Inc., Keystone Capital Group, Inc., Keystone
Mortgage Investments, Inc., ZTS Corp., Resource One Mortgage of Oxford Valley,
Inc., Resource One Consumer Discount Company of Minnesota, Inc., Resource One
Mortgage of Delaware Valley, Inc., ResourceCorp. Financial, Inc., ContiInsurance
Agency, Inc., Crystal Mortgage Company, Inc., Lenders M.D., Inc., California
Lending Group, Inc. d/b/a United Lending Group, ContiAsset Receivables
Management L.L.C., Royal Mortgage Partners, L.P. a/k/a Royal Mortgagebanc and
Fidelity Mortgage Decisions Corporation (collectively, the "Debtors") and
Jeffrey H. Beck as Liquidating Trustee, executed in connection with the Third
Amended Joint Plan of Reorganization of ContiFinancial Corporation and
Affiliates Under Chapter 11 of the Bankruptcy Code (the "Plan"), filed on
December 18, 2000, as may be amended, by the Debtors in the United States
Bankruptcy Court for the Southern District of New York (the "Court"), provides
for the establishment of a liquidating trust evidenced hereby (the "Liquidating
Trust") to resolve, liquidate and realize upon the Trust Assets, Causes of
Action and such other claims and property, as successor to and representative of
the Estates of the Debtors. Except with respect to the terms defined herein, all
capitalized terms contained herein shall have the meanings ascribed to them in
the Plan.
W I T N E S S E T H
WHEREAS, the Plan provides for, among other things, the
distribution to the holders of Claims evidenced by (i) Bank Group Claims, (ii)
Senior Note Claims, and (iii) General Unsecured Claims (holders of such Bank
Group Claims, Senior Note Claims, and General Unsecured Claims referred to
collectively as the "Allowed Class 5 Claims"), consisting of one hundred percent
(100%) of the beneficial interests of the trust created hereby;
WHEREAS, the Liquidating Trust is created pursuant to, and to
effectuate, the Plan;
WHEREAS, the Liquidating Trust is created on behalf of, and
for the sole benefit of, the holders of Allowed Class 5 Claims (including those
Disputed Class 5 Claims that become Allowed Class 5 Claims);
WHEREAS, the Liquidating Trust is established for the sole
purpose of liquidating its assets for the benefit of the holders of the Allowed
Class 5 Claims, in accordance with Treasury Regulation Section 301.7701-4(d),
with no objective or authority to continue or engage in the conduct of a trade
or business;
WHEREAS, the Liquidating Trust is intended to qualify as a
fixed investment trust within the meaning of Treasury Regulation Section
301.7701-4(c);
WHEREAS, the Liquidating Trust is intended to qualify as a
liquidating trust for federal income tax purposes; and
<PAGE>
WHEREAS, any reference herein to a holder of Liquidating Trust
Units means a holder recorded on the official registry maintained by the
Liquidating Trustee and shall not mean any beneficial owner not recorded on such
official registry.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the Plan, the Debtors
and the Liquidating Trustee agree as follows:
ARTICLE I
ESTABLISHMENT OF THE LIQUIDATING TRUST
1.1 Transfer of Property to Liquidating Trustee. Pursuant to
the Plan, the Debtors and the Liquidating Trustee hereby establish on behalf of
the Allowed Class 5 Claims, whether such claims are allowed on or after the
Effective Date of the Plan, the Liquidating Trust and the Debtors hereby
transfer, assign, and deliver to the Liquidating Trustee all of their right,
title, and interest in the Trust Assets free and clear of any Lien, Claim or
Interest in such Property of any other Person or entity except as provided in
the Plan. The Liquidating Trustee agrees to accept and hold the Trust Assets in
trust for the Allowed Class 5 Claims, subject to the terms of this Trust
Agreement.
1.2 Title to Trust Assets.
(a) The transfer of the Trust Assets to the
Liquidating Trust shall be made for the benefit of the holders
of Allowed Class 5 Claims, whether allowed on or after the
Effective Date. In this regard, the Trust Assets will be
transferred (subject to the liabilities indicated herein) to
such holders of Allowed Class 5 Claims and, in respect of any
Disputed Class 5 Claims to the Plan Administrator to be held
in the Disputed Claims Reserve Trust, to be held, in each
case, by the Debtors on their behalf. Immediately thereafter,
on behalf of such holders, the Debtors shall transfer such
Trust Assets to the Liquidating Trust in exchange for units
(the "Liquidating Trust Units") for the benefit of such
holders in accordance with the Plan. The Debtors or
Liquidating Trustee, as the case may be, will then distribute
the Liquidating Trust Units to the record holders of Allowed
Class 5 Claims in exchange for their Allowed Claims and to the
Plan Administrator to be held in the Disputed Claims Reserve
Trust for the benefit of holders of Disputed Claims in
exchange for their Claims. Upon the transfer of the Trust
Assets, the Liquidating Trustee shall succeed to all of the
Debtors' right, title and interest in the Trust Assets and the
Debtors will have no further interest in or with respect to
the Trust Assets or this Liquidating Trust.
(b) For all federal income tax purposes, all parties
(including, without limitation, the Debtors, the Liquidating
Trustee, the holders of Allowed Class 5 Claims and the Plan
Administrator) shall treat the transfer of Trust Assets to the
Liquidating Trust, as set forth in this Section 1.2 and in
accordance with the Plan, as a transfer to the holders of
Allowed Class 5 Claims (and, as provided in the Plan, in
respect of any Disputed Claims, to the Plan Administrator to
be held in the Disputed
2
<PAGE>
Claims Reserve Trust), followed by a transfer by such holders
to the Liquidating Trust, and the beneficiaries of this
Liquidating Trust shall be treated as the grantors and owners
hereof.
1.3 Assignment and Assumption of Claims. In accordance with
Section 1.2 hereof, the Debtors hereby transfer and assign the Trust Assets to
the Liquidating Trust, and the Liquidating Trustee on behalf of the Liquidating
Trust hereby assumes and agrees that all such Trust Assets will be transferred
to the Liquidating Trust subject to the following liabilities, if any, which
arise out of or relate to any known or unknown claim (as such term is defined in
Section 101(5) of the Bankruptcy Code) or causes of action against the Debtors
or their respective Estates: (a) Administrative Claims, Priority Tax Claims and
Priority Claims that have not been Allowed as of the Effective Date but which
are subsequently Allowed; (b) any costs and expenses incurred by the Transition
Team during the Transition Period; (c) All U.S. Trustee Fees until such time as
the Court enters a final decree closing each Debtor's Chapter 11 Case; (d) any
expenses incurred and unpaid, or to be incurred, by the Liquidating Trustee and
Plan Administrator in the performance of its administrative duties in respect of
the winding up of the Debtors' Estates (including, the filing of final tax
returns and the payment of any taxes shown thereon, and any tax liability
determined to be due and owing pursuant to the requests for expedited
determinations under Section 505 of the Bankruptcy Code; and (e) any obligations
owing pursuant to the Plan and unpaid (including, without limitation,
obligations incurred after the Confirmation Date and the fees and expenses of
Professionals under Section 11.03(b) of the Plan); but specifically excluding
any (i) claims which have been barred or discharged pursuant to the Plan and
(ii) claims against the Surviving Special Purpose Entities.
1.4 Valuation of Trust Assets. As soon as possible after the
Effective Date, but in no event later than sixty (60) days thereafter, (i) the
Liquidating Trust Committee (as defined in Section 1.6, below) shall inform the
Liquidating Trustee in writing of the fair market value of the Trust Assets
transferred to the Liquidating Trust, based on the good faith determination of
the Liquidating Trust Committee, and (ii) the Liquidating Trustee shall apprise
the record holders of the Liquidating Trust Units in writing solely of such
valuation. The valuation shall be used consistently by all parties (including,
without limitation, the Debtors, the Liquidating Trustee, the holders of Allowed
Class 5 Claims and the Plan Administrator) for all purposes including federal
income tax purposes.
1.5 Appointment of the Liquidating Trustee. The Liquidating
Trustee shall be Jeffrey H. Beck. The Liquidating Trustee may serve in a
separate capacity as the Plan Administrator.
1.6 Liquidating Trust Committee. Raymond Wechsler, Phil
Vincent and Gene Dais shall be nominated and appointed as the individuals who
shall serve as members of the Liquidating Trust Committee that will advise the
Liquidating Trustee and make certain determinations regarding the liquidation of
the Trust Assets (provided that such determinations otherwise could have been
made by the Liquidating Trustee in accordance with the provisions of this Trust
Agreement and the Plan). The Liquidating Trust Committee initially shall consist
of the 3 members identified, who each shall serve for an initial term of two
years. Thereafter, members of a subsequent Liquidating Trust Committee shall be
nominated to serve by the previous Liquidating Trust Committee and shall qualify
to serve upon a vote of at least fifty-one percent (51%) of the
3
<PAGE>
Liquidating Trust Units (the "Majority Holders") actually voting for such
purpose. Unless otherwise specified herein, approval of a majority of the
members of such Liquidating Trust Committee shall be required for the
Liquidating Trust Committee to act, provided that the Liquidating Trust
Committee may delegate responsibility for discrete issues or decisions to one or
more of its members. The Liquidating Trustee shall notify the holders of the
Liquidating Trust Units of the establishment of a Liquidating Trust Committee
pursuant to this Section 1.6 and the identities of its members promptly
following such Liquidating Trust Committee's formation. In the event that a
member of the Liquidating Trust Committee resigns prior to the expiration of his
term or is otherwise unable to serve out his term, the remaining members of the
Liquidating Trust Committee shall select the successor to serve the remainder of
such term. The Liquidating Trust Committee shall have the rights and powers set
forth herein. The Liquidating Trust Committee shall be authorized to adopt
by-laws to govern its activities. The Liquidating Trustee and his professionals
may assist the Liquidating Trust Committee in establishing and adopting such
by-laws. In the event that a Liquidating Trust Committee shall not be formed and
continuing to exist under this Trust Agreement, all references herein to
required approval or other action of such Liquidating Trust Committee shall be
of no force or effect. In performance of their duties hereunder, members of the
Liquidating Trust Committee shall be entitled to receive (i) reimbursement of
reasonable expenses, (ii) indemnification as set forth in Section 4.7 hereof,
and (iii) compensation as provided for in Section 4.7 hereof. The members of the
Liquidating Trust Committee may serve in a separate capacity as members of the
Plan Administration Committee.
1.7 Surviving Special Purpose Entities; Other Entities.
(a) The Liquidating Trustee and Liquidating Trust Committee
shall act with respect to each Surviving Special Purpose Entity (whether in
connection with the Liquidating Trust's position as equity owner, or as a
selected director of such entity), and shall cause each such entity to act,
consistent with the purposes and provisions of the Liquidating Trust and this
Trust Agreement (including, without limitation, including as part of the
Available Cash of the Liquidating Trust, all similarly available cash of the
respective entity, as provided in Section 1.7(c) below, and otherwise treating
the Surviving Special Purpose Entities as if they were simply divisions of the
Liquidating Trust, rather than separate entities).
(b) The Liquidating Trustee and the Liquidating Trust
Committee shall use their best efforts, to the extent not achieved on or prior
to the Effective Date, (i) to amend, or cause to be amended, the charters and
governing documents of each Surviving Special Purpose Entity to provide that (A)
the overriding purpose of such entity is the same as that set forth in Section
3.1 hereof, including no objective to continue or engage in the conduct of a
trade or business (other than as necessary to preserve the value of its assets)
and the expeditious but orderly disposition of its assets, and (B) the entity
shall, to the extent permitted under applicable law, act consistent with the
purposes and provisions of this Trust Agreement., and (ii) to cause each
Surviving Special Purpose Entity to contractually agree (A) to the provisions of
this Article 1.7 and (B) whether or not its charter or governing documents
ultimately are amended, to act consistent with the purposes and provisions of
this Trust Agreement.
(c) The Liquidating Trustee shall cause each Surviving Special
Purpose Entity to distribute to the Liquidating Trust on or before each Annual
Distribution Date (or such earlier time
4
<PAGE>
as required to be included in the Distribution by the Liquidating Trust on the
Annual Distribution Date) all of its Cash (less any amounts required for payment
of taxes and any other expenses as needed or as may be needed by each Surviving
Special Purpose Entity which are not required to be paid to the Liquidating
Trust).
(d) Subject to the provisions of this Section 1.7, the
Liquidating Trustee and the members of the Liquidating Trust Committee,
including their respective employees, may serve as a member of the board of
directors of each Surviving Special Purpose Entity.
(e) Other than each of the Surviving Special Purpose Entities,
the Liquidating Trust shall not hold 50% or more of the stock (in either vote or
value) of any entity that is treated as a corporation for federal income tax
purposes, nor have any interest in an entity that is treated as a partnership
for federal income tax purposes, unless such stock or partnership interest was
obtained involuntarily or as a matter of practical economic necessity in order
to preserve the value of the Trust Assets. In the latter event, the Liquidating
Trustee shall apply the provisions of this Section 1.7 to such entity (and any
direct and indirect subsidiaries of such entity) as if such entity (and
subsidiaries) were a Surviving Special Purpose Entity, and such entities shall
thereafter be treated as Surviving Special Purpose Entities for purposes of this
Trust Agreement.
ARTICLE II
LIQUIDATING TRUST Units
2.1 Identification of Holders of Liquidating Trust Units. The
record holders of Liquidating Trust Units shall be recorded and set forth in a
register maintained by the Liquidating Trustee expressly for such purpose. All
references in this Trust Agreement to holders shall be read to mean holders of
record as set forth in the register maintained by the Liquidating Trustee.
Unless expressly provided herein, the Liquidating Trustee may establish a record
date which it deems practicable for determining the holders for a particular
purpose. The distribution of Liquidating Trust Units to either a holder of an
Allowed Class 5 Claim or to the Disputed Claims Reserve Trust shall be
accomplished as set forth in the Plan.
2.2 Control by Holders. The holders of at least seventy-five
percent (75%) of the Liquidating Trust Units among holders of Allowed Class 5
Claims may direct the Liquidating Trustee to enter into or not to take any
action with respect to a Trust Asset; provided, however, that (i) the
Liquidating Trustee, upon advice of counsel, may refuse to follow any direction
that conflicts with law or this Trust Agreement and (ii) the holders of
Liquidating Trust Units providing such direction shall provide indemnification
to the Liquidating Trustee, satisfactory to it, against losses or expenses
caused by the taking or not taking of any such action. In the event that the
Liquidating Trustee receives such direction, and the requirements of subsection
(i) are satisfied, the direction of holders shall supercede any conflicting
direction of the Liquidating Trust Committee.
2.3 Transferability of Liquidating Trust Units. Upon issuance,
the Liquidating Trust Units shall be transferable. The Liquidating Trustee, with
the advice and consent of the Liquidating Trust Committee, shall establish
procedures to govern the registration and transfer of Liquidating Trust Units.
Once such procedures have been established, the Liquidating Trustee shall notify
all record holders and the Special Notice List of such procedures. The
Liquidating Trustee shall not
5
<PAGE>
seek to have the Liquidating Trust Units listed on a nationally recognized stock
exchange after the Effective Date.
ARTICLE III
PURPOSE, AUTHORITY, LIMITATIONS, AnD DISTRIBUTIONS
3.1 Purpose of the Liquidating Trust. The Liquidating Trust
shall be established for the sole purpose of liquidating the Trust Assets, in
accordance with Treasury Regulation Section 301.7701-4(d), with no objective to
continue or engage in the conduct of a trade or business. Accordingly, the
Liquidating Trustee shall, in an expeditious but orderly manner, liquidate and
convert to Cash the Trust Assets of the Liquidating Trust, make timely
distributions and not unduly prolong the duration of the Liquidating Trust. The
liquidation of the Trust Assets may be accomplished either through the sale of
Trust Assets (in whole or in combination), including the sale of any claims,
rights or Causes of Action or through the prosecution or settlement of any
claims, rights or Causes of Action, or otherwise.
3.2 Authority of Liquidating Trustee. In connection with the
administration of the Liquidating Trust, except as set forth in this Trust
Agreement, the Liquidating Trustee is authorized to perform any and all acts
necessary or desirable to accomplish the purposes of the Liquidating Trust.
Without limiting, but subject to, the foregoing and to Section 3.4, the
Liquidating Trustee shall be expressly authorized, but shall not be required,
to:
(a) hold legal title to any and all rights of the
holders of the Liquidating Trust Units in or arising from the
Trust Assets, including but not limited to, collecting,
receiving any and all money and other property belonging to
the Liquidating Trust and the right to vote any claim or
interest in a case under the Bankruptcy Code and receive any
distribution therein;
(b) perform the duties, exercise the powers, and
assert the rights of a trustee under Sections 704 and 1106 of
the Bankruptcy Code, including, without limitation,
commencing, prosecuting or settling Causes of Action,
enforcing contracts, and asserting claims, defenses, offsets
and privileges.
(c) protect and enforce the rights to the Trust
Assets by any method deemed appropriate including, without
limitation, by judicial proceedings or pursuant to any
applicable bankruptcy, insolvency, moratorium or similar law
and general principles of equity;
(d) compromise, adjust, arbitrate, sue on or defend,
pursue, prosecute abandon, or otherwise deal with and settle,
in accordance with the terms set forth in Section 3.3 hereof,
claims and Causes of Action in favor of or against the
Liquidating Trust as the Liquidating Trustee shall deem
advisable;
(e) avoid and recover transfers of the Debtors'
property as may be permitted by the Bankruptcy Code or
applicable state law, including, without limitation, those
identified in the Disclosure Statement;
6
<PAGE>
(f) determine and satisfy any and all liabilities
created, incurred or assumed by the Liquidating Trust;
(g) file, on behalf of the Debtors' affiliated tax
group, any and all tax returns;
(h) file, if necessary, any and all tax and
information returns with respect to the Liquidating Trust and
pay taxes properly payable by the Liquidating Trust, if any;
(i) exercise any and all rights afforded a debtor
under Section 505 of the Bankruptcy Code to request a prompt
determination of the state and federal tax liabilities of the
Debtors, whether such liabilities were incurred prior to the
Petition Date or during the pendency of the Chapter 11 Cases;
(j) execute offsets against Claims as provided for in
the Plan;
(k) assert or waive any privilege or defense on
behalf of the Liquidating Trust or the Debtors;
(l) pay all expenses and make all other payments
relating to the Trust Assets;
(m) pay all U.S. Trustee Fees until such time as the
Court enters a final decree closing each Debtors' Chapter 11
Case;
(n) obtain insurance coverage with respect to the
liabilities and obligations of the Liquidating Trustee and the
members of the Liquidating Trust Committee under this Trust
Agreement (in the form of an errors and omissions policy or
otherwise);
(o) obtain insurance coverage with respect to real
and personal property which may become Trust Assets, if any;
(p) retain and pay such independent law firms as
counsel to the Liquidating Trust as the Liquidating Trustee in
its sole discretion may select to aid in the prosecution of
any claims that constitute the Trust Assets, and to perform
such other functions as may be appropriate in the Liquidating
Trustee's sole discretion. The Liquidating Trustee may commit
the Liquidating Trust to and shall pay such independent law
firms reasonable compensation for services rendered and
expenses incurred. A law firm shall not be disqualified from
serving as independent counsel to the Liquidating Trust solely
because of its retention as counsel to the Disputed Claims
Reserve Trust or its prior retention by the Debtors;
(q) retain and pay an independent public accounting
firm to perform such reviews and/or audits of the financial
books and records of the Liquidating Trust as may be
appropriate in the Liquidating Trustee's sole discretion and
to prepare and file any tax returns or informational returns
for the Liquidating Trust as may be required. The Liquidating
Trustee may commit the Liquidating Trust to and shall
7
<PAGE>
pay such independent public accounting firm reasonable
compensation for services rendered and expenses incurred;
(r) retain and pay such third parties as the
Liquidating Trustee, in its sole discretion, may deem
necessary or appropriate to assist the Liquidating Trustee in
carrying out its powers and duties under this Trust Agreement.
The Liquidating Trustee may commit the Liquidating Trust to
and shall pay all such persons or entities reasonable
compensation for services rendered and expenses incurred, as
well as commit the Liquidating Trust to indemnify any such
parties in connection with the performance of services;
(s) employ such employees as the Liquidating Trustee,
in its sole discretion and as consistent with the purposes of
the Liquidating Trust, may deem necessary or appropriate to
assist the Liquidating Trustee in carrying out its powers and
duties under this Trust Agreement. The Liquidating Trustee may
commit the Liquidating Trust to and shall pay all such
employees reasonable salary in the amounts it shall determine
to be appropriate and any employee benefits it may establish
pursuant to Section 3.2(t) below. If the Liquidating Trustee
shall employ employees pursuant to this Section 3.2(s), the
Liquidating Trustee shall establish payroll procedures and pay
any and all federal, state or local tax withholding required
under applicable law with respect to any such employees, and
it will take all other actions it deems necessary to
effectuate the provisions of this Section 3.2(s).
(t) establish and adopt or cease to provide such
employee benefits for the benefit of any employees described
in Section 3.2(s) above as the Liquidating Trustee, in its
sole discretion and as consistent with the purposes of the
Liquidating Trust, may deem necessary or appropriate,
including the adoption of any group health plan.
(u) take any action deemed appropriate, under
applicable state law or the Plan, as holder of the common
stock of the Surviving Special Purpose Entities, consistent
with the Liquidating Trust Agreement;
(v) invest any moneys held as part of the Liquidating
Trust in accordance with the terms of Section 4.5 hereof,
limited, however, to such investments that are consistent with
the Liquidating Trust's status as a liquidating trust and a
fixed investment trust within the meaning of Treasury
Regulation Sections 301.7701-4(d) and (c) respectively;
(w) request any appropriate tax determination,
including, without limitation, a determination pursuant to
Section 505 of the Bankruptcy Code;
(x) establish and maintain a web site for the purpose
of providing notice of Liquidating Trust activities in lieu of
providing actual notice to holders of Liquidating Trust Units,
subject to providing notice to the Special Notice List;
(y) seek the examination of any entity under, and
subject to, the provisions of Bankruptcy Rule 2004; and
8
<PAGE>
(z) take or refrain from taking any and all actions
the Liquidating Trustee reasonably deems necessary for the
continuation, protection and maximization of the Trust Assets
or to carry out the purposes hereof.
3.3 Certain Actions by the Liquidating Trustee.
(a) The Liquidating Trustee shall be empowered to
and, in its sole discretion (subject to Section 2.2 and this
Section 3.3 hereof) may, take all appropriate action with
respect to the Trust Assets consistent with the purpose of the
Liquidating Trust, including, without limitation, the filing,
prosecution, settlement or other resolution of claims and
Causes of Action, including, without limitation, those based
upon Sections 544, 547, 548, 549, 550 or 553(b) of the
Bankruptcy Code. Notwithstanding the foregoing, the
Liquidating Trustee shall follow the procedures set forth in
this Section 3.3 prior to entering into any proposed action or
series of related actions regarding the Trust Assets.
(b) The Liquidating Trustee shall, prior to (i)
taking any such action with respect to a Trust Asset having a
value (as determined by the Liquidating Trustee upon the
advice of the Liquidating Trustee's professionals) in excess
of $300,000 but not greater than $1,000,000, or (ii) settling
any litigation, provide notice to the Liquidating Trust
Committee. The Liquidating Trustee shall be authorized to take
such action unless the Liquidating Trust Committee timely
notifies the Liquidating Trustee of the Committee's objection
to such action. In the event of such objection, the
Liquidating Trustee shall not be authorized to take such
action unless Bankruptcy Court approval is received
(c) The Liquidating Trustee shall, prior to taking
any action with respect to a Trust Asset having a value (as
determined by the Liquidating Trustee upon the advice of the
Liquidating Trustee's professionals) in excess of one million
dollars ($1,000,000), procure the approval of the Liquidating
Trust Committee. In addition, the Liquidating Trustee shall
provide the Persons on the Special Notice List (but not
including those who may be the subject of the proposed
action), with prior written notice describing in reasonable
detail the action proposed to be taken and the reasons why the
Liquidating Trustee believes such action to be in the best
interest of the Liquidating Trust and advising such Persons
that the Liquidating Trustee will take such action unless a
party in interest timely files, and serves on the Liquidating
Trustee and his counsel, an objection to such action with the
Bankruptcy Court. If the Liquidating Trustee receives such
timely written objection, then the Liquidating Trustee shall
not be authorized to take such action unless Bankruptcy Court
approval is received.
(d) In all other events, unless otherwise set forth
herein, the Liquidating Trustee is authorized to consummate an
action without any notice or consent and shall be held
harmless in taking such action, provided that the Liquidating
Trustee shall not settle any claim or Cause of Action unless a
release in favor of the Liquidating Trust satisfactory in form
and substance to the Liquidating Trustee is granted.
9
<PAGE>
(e) Anything contained in this Trust Agreement to the
contrary notwithstanding, the Liquidating Trustee may, but is
not required to, submit a proposed action to a court of
competent jurisdiction, including the Bankruptcy Court, for
its approval, on notice to the Liquidating Trust Committee and
Persons on the Special Notice List, and may comply with any
action approved by such court, and shall have no obligation to
submit any such action to the procedures set forth in this
Section 3.3 hereof.
(f) Notwithstanding anything herein to the contrary,
the Liquidating Trustee shall be authorized to pay the fees
and expenses incurred by Professionals after the Confirmation
Date without providing notice to or obtaining the approval of
any party.
3.4 Limitation of Liquidating Trustee's Authority.
Notwithstanding anything herein to the contrary, the Liquidating Trustee shall
not and shall not be authorized to engage in any trade or business, or vary any
investment with respect to the Trust Assets or any proceeds therefrom (other
than as provided in Section 4.5, below), and shall take such actions consistent
with the orderly liquidation of the Trust Assets as are required by applicable
law, and such actions permitted under Sections 3.2, 3.3, 3.6, 3.7 and 4.5
hereof. Notwithstanding any other authority granted by Section 3.2, the
Liquidating Trustee is not authorized to engage in any investments or activities
inconsistent with the treatment of the Liquidating Trust as a liquidating trust
and a fixed investment trust within the meaning of Treasury Regulation Sections
301.7701-4(d) and (c) respectively.
3.5 Books and Records. The Liquidating Trustee shall maintain
in respect of the Liquidating Trust and the holders of Liquidating Trust Units
books and records relating to the Trust Assets and income of the Liquidating
Trust and the payment of expenses of, and liabilities of claims against or
assumed by, the Liquidating Trust in such detail and for such period of time as
may be necessary to enable it to make full and proper accounting in respect
thereof in accordance with Article VI hereof and to comply with applicable
provisions of law. Such books and records shall be maintained on a modified cash
or other comprehensive basis of accounting necessary to facilitate compliance
with the tax reporting requirements of the Liquidating Trust. Except as provided
in Section 8.1, nothing in this Trust Agreement requires the Liquidating Trustee
to file any accounting or seek approval of any court with respect to the
administration of the Liquidating Trust, or as a condition for managing any
payment or distribution out of the Trust Assets. Holders of the Liquidating
Trust Units shall have the right upon thirty (30) days' prior written notice
delivered to the Liquidating Trustee to inspect such books and records
(including financial statements), provided that, if so requested, such holder
shall have entered into a confidentiality agreement satisfactory in form and
substance to the Liquidating Trustee.
10
<PAGE>
3.6 Additional Powers. Except as otherwise set forth in this
Trust Agreement or in the Plan, and subject to the Treasury Regulations
governing liquidating trust and fixed investment trusts and the retained
jurisdiction of the Court as provided for in the Plan, but without prior or
further authorization, the Liquidating Trustee may control and exercise
authority over the Trust Assets and over the protection, conservation and
disposition thereof. No person dealing with the Liquidating Trust shall be
obligated to inquire into the authority of the Liquidating Trustee in connection
with the protection, conservation or disposition of the Trust Assets.
3.7 Application of Trust Assets and Other Property. The
Liquidating Trustee shall apply all Trust Assets and any proceeds therefrom, as
follows:
(a) The Liquidating Trustee shall apply all Cash
constituting
Trust Assets and any proceeds therefrom in the order and
reflecting the priorities set forth below:
FIRST, to pay all the costs and expenses of the
Liquidating Trust including, without limitation, the annual
compensation (but not any additional compensation) to the
Liquidating Trustee and to the members of the Liquidating
Trust Committee as specified in Section 4.7(a) hereof and the
reimbursement for any and all costs, expenses and liabilities
incurred by them in connection with the performance of their
duties under this Trust Agreement.
SECOND, to pay all costs and expenses of the
Transition Team incurred during the Transition Period.
THIRD, to pay any obligations owing pursuant to the
Plan that are unpaid including, without limitation,
obligations incurred after the Confirmation Date.
FOURTH, to pay all Allowed Claims in accordance with
the terms, provision and priorities set forth in the Plan.
Notwithstanding anything to the contrary in this Section
3.7(a) or in Section 3.7(b) below, prior to making any distribution to holders
of Liquidating Trust Units, the Liquidating Trustee may retain such amounts (i)
as are reasonably necessary to meet contingent liabilities and to maintain the
value of the Trust Assets of the Liquidating Trust during liquidation, (ii) to
pay reasonable estimated administrative expenses (including any taxes imposed on
the Liquidating Trust or in respect of the Trust Assets of the Liquidating
Trust), (iii) as the Liquidating Trustee may deem necessary to provide further
funding to the Plan Administrator, and (iv) to satisfy other liabilities
incurred or assumed by the Liquidating Trust (or to which the Trust Assets are
otherwise subject), all for the term of the Liquidating Trust and in accordance
with this Trust Agreement or the Plan.
(b) Quarterly Distribution; Withholding. Subject to
the Plan, on each Quarterly Distribution Date, the Liquidating
Trust shall distribute from the Liquidating Trust to each
holder of a Liquidating Trust Unit or the relevant Paying
Agent, as the case may be, a Ratable Share of Available Cash
on hand (including all net Cash income plus all net Cash
proceeds from the liquidation of Trust Assets, including as
Cash for this purpose, all permissible investments described
in Section 4.5, below). Notwithstanding anything to the
contrary herein or in the Plan, no
11
<PAGE>
Distribution shall be made on any Quarterly Distribution Date,
unless the aggregate Distribution on such Quarterly
Distribution Date would be in excess of $5,000,000 in value;
provided, however, that the Liquidating Trustee will be
obligated to distribute all Available Cash on each Annual
Distribution Date if the aggregate Distribution on such date
would be in excess of $10,000 in value. The Liquidating
Trustee may withhold from amounts distributable to any Person
any and all amounts, determined in the Liquidating Trustee's
reasonable sole discretion, required by any law, regulation,
rule, ruling, directive or other governmental requirement.
(c) Manner of Payment or Distribution. All
Distributions made by the Liquidating Trustee to holders of
Liquidating Trust Units shall be payable to the holders of
Liquidating Trust Units of record as of the 15th day prior to
the date scheduled for the distribution, unless such day is
not a Business Day, then such day shall be the following
Business Day (the "Record Date"). If the Distribution shall be
in Cash, the Liquidating Trustee shall distribute such Cash by
wire, check, or such other method as the Liquidating Trustee
deems appropriate under the circumstances.
3.8 Reporting Duties.
(a) Federal Income Tax. The Liquidating Trustee shall
file returns for the Liquidating Trust as a grantor trust
pursuant to Treasury Regulation Section 1.671-4(a).
(b) Other. The Liquidating Trustee shall also file
(or cause to be filed) any other statements, returns or
disclosures relating to the Liquidating Trust that are
required by any governmental authority.
3.9 Compliance with Laws. Any and all distributions of Trust
Assets and proceeds of borrowings, if any, shall be in compliance with
applicable laws, including, but not limited to, applicable federal and state
securities laws.
3.10 Debtors' Retirement Plans. The Liquidating Trustee hereby
agrees to assume all duties of the Debtors to maintain and administer with
respect to the ContiFinancial Retirement Annuity Plan and the ContiFinancial
Employee Savings Plan (the "Plans"). The Liquidating Trustee hereby agrees and
acknowledges that it is the successor plan sponsor of the Plans, and that it
will take any and all actions it deems necessary and advisable, and as
consistent with the purposes of the Liquidating Trust, to administer the Plans
and effectuate the termination of the Plans in accordance with the requirements
of the Employee Retirement Income Security Act of 1974, as amended and the
Internal Revenue Code of 1986, as amended.
ARTICLE IV
THE LIQUIDATING TRUSTEE
4.1 Generally. The Liquidating Trustee's powers are
exercisable solely in a fiduciary capacity consistent with, and in furtherance
of, the purposes of this Liquidating Trust and
12
<PAGE>
not otherwise, except that the Liquidating Trustee may deal with the Trust
Assets for its own account as permitted by Section 4.7.
4.2 Responsibilities of Liquidating Trustee. The Liquidating
Trustee shall, in an expeditious but orderly manner, liquidate and convert to
Cash the Trust Assets, make timely Distributions and not unduly prolong the
duration of the Liquidating Trust. In so doing, the Liquidating Trustee will
exercise its reasonable business judgment in liquidating the Trust Assets. The
liquidation of the Trust Assets may be accomplished through the sale of Trust
Assets (in whole or in combination), including the sale of any claims, rights or
Causes of Action or through the prosecution or settlement of any or all claims,
rights or Causes of Action, or otherwise. In connection therewith, and subject
to the limitations of Section 3.3, the Liquidating Trustee will have the power
to prosecute for the benefit of the Liquidating Trust all claims, rights and
Causes of Action transferred to the Liquidating Trust, whether such suits are
brought in the name of the Liquidating Trust, the Debtors or otherwise for the
benefit of the holders of Liquidating Trust Units. Any and all proceeds
generated from such Trust Assets shall be held by the Liquidating Trust. Except
as expressly set forth herein, the Liquidating Trustee shall have absolute
discretion to pursue or not to pursue any and all claims, rights or causes of
action, as it determines are in the best interests of the holders of the
Liquidating Trust Units and consistent with the purposes of the Liquidating
Trust, and shall have no liability for the outcome of its decision. The
Liquidating Trustee may incur any reasonable and necessary expenses in
liquidating the Trust Assets.
4.3 Liability of Liquidating Trustee. In no event shall the
Liquidating Trustee be personally liable for any claim asserted against the
Liquidating Trust. Notwithstanding anything to the contrary set forth herein, no
provision of this Trust Agreement shall be construed to relieve the Liquidating
Trustee from liability for its own grossly negligent actions, its own grossly
negligent failure to act, or its own fraud or willful misconduct, except that:
(a) the Liquidating Trustee shall be liable only for
the performance of such duties and obligations as are
specifically set forth in this Trust Agreement; and
(b) the Liquidating Trustee shall not be liable for
any error of judgment made in good faith, or with respect to
any action taken or omitted to be taken in good faith, unless
the Liquidating Trustee was reckless and grossly negligent.
4.4 Reliance by Liquidating Trustee. Except as otherwise
provided in Section 4.3:
(a) the Liquidating Trustee may rely, and shall be
protected in acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, or other paper or document believed by him to
be genuine and to have been signed or presented by the proper
party or parties;
(b) the Liquidating Trustee may consult with any and
all professionals to be selected by him, and the Liquidating
Trustee shall not be liable for any action taken or omitted to
be taken by him in accordance with the advice of such
professionals; and
(c) persons dealing with the Liquidating Trustee
shall look only to the Trust Assets to satisfy any liability
incurred by the Liquidating Trustee to such person in
13
<PAGE>
carrying out the terms of this Trust Agreement, and the
Liquidating Trustee shall have no personal obligation to
satisfy any such liability.
4.5 Investment and Safekeeping of Trust Assets. All moneys and
other property received by the Liquidating Trustee shall, until distributed or
paid over as herein provided, be held in trust for the benefit of the holders of
the Liquidating Trust Units, but need not be segregated from other Trust Assets,
unless and to the extent required by law. The Liquidating Trustee shall be under
no liability for interest or producing income on any moneys received by him
hereunder and held for distribution or payment to the holders of Liquidating
Trust Units, except as such interest shall actually be received by the
Liquidating Trustee. Investments of any moneys held by the Liquidating Trustee
shall be administered in view of the manner in which individuals of ordinary
prudence, discretion and judgment would act in the management of their own
affairs; provided, however, that the right and power of the Liquidating Trustee
to invest the Trust Assets, the proceeds thereof, or any income earned by the
Liquidating Trust, shall be limited to the right and power to invest such Trust
Assets (pending periodic distributions in accordance with Section 3.7 hereof) in
demand and time deposits, such as short-term certificates of deposit, in banks
or other savings institutions, or other temporary liquid investments, such as
Treasury bills; and provided further, that the scope of any such permissible
investments shall be limited to include only those investments, or shall be
expanded to include any additional investments, as the case may be, that a
liquidating trust and a fixed investment trust, within the meaning of Treasury
Regulation Section 301.7701-4, may be permitted to invest in, pursuant to the
Treasury Regulations, or any modification in the IRS guidelines, whether set
forth in IRS rulings, other IRS pronouncements or otherwise. The Liquidating
Trustee shall not "vary the investment" within the meaning of Treasury
Regulation Section 301.7701-4(c). Any investment made as provided for herein
must mature prior to the date of the next scheduled distribution, but in no
event shall such investment have a maturity date in excess of twelve (12) months
from the date of the acquisition of such investment.
4.6 Authorization to Expend Trust Assets. The Liquidating
Trustee may expend the Trust Assets (i) as reasonably necessary to meet
contingent liabilities and to maintain the value of the Trust Assets during
liquidation, (ii) to pay all administrative expenses of the Liquidating Trust
(including, but not limited to, any taxes imposed on the Liquidating Trust),
(iii) to fund the costs and expenses of the Plan Administrator, and (iv) to
satisfy all other liabilities incurred or assumed by the Liquidating Trust (or
to which the Trust Assets are otherwise subject) in accordance with the Trust
Agreement or the Plan, including, without limitation, those liabilities set
forth in Section 1.3 hereof.
4.7 Expense Reimbursement and Compensation.
(a) The Trust Assets shall be subject to the claims
of the Liquidating Trustee and the members of the Liquidating
Trust Committee, and the Liquidating Trustee shall be entitled
to reimburse itself and the members of the Liquidating Trust
Committee out of any available Cash in the Liquidating Trust,
for its actual out-of-pocket expenses and against and from any
and all loss, liability, expense, or damage which the
Liquidating Trustee or any such member may sustain in good
faith and without willful misconduct, gross negligence, or
fraud in the exercise and performance of any of the powers and
duties of the Liquidating Trustee or the Liquidating Trust
Committee under this Trust Agreement, provided that the
14
<PAGE>
provisions set forth in Section 4.3 hereof as applied to the
Liquidating Trustee shall be deemed to apply to the members of
the Liquidating Trust Committee as if the Liquidating Trust
Committee was the subject of such Section 4.3. As compensation
for the performance of its duties, the Liquidating Trustee
will be entitled to bill hourly for the services (and at the
specific rate) of the individuals listed on Exhibit A attached
hereto, and such additional compensation that may be agreed
upon by the Liquidating Trustee and the Unofficial Committees.
Each member of the Liquidating Trust Committee shall be paid
$40,000 per annum for a required six (6) meeting, and such
other amounts as negotiated by the Liquidating Trustee and
each member of the Liquidating Trust Committee for any
additional meetings. In the event that a member of the
Liquidating Trust Committee also serves on the Plan
Administration Committee, such member shall only be entitled
to receive $40,000 in the aggregate as base compensation for
six (6) meetings.
(b) If the Cash in the Liquidating Trust shall be
insufficient to compensate and reimburse the Liquidating
Trustee, including any professionals retained by the
Liquidating Trustee, or the members of the Liquidating Trust
Committee, as the case may be, for any amounts to which they
are entitled hereunder and if the Liquidating Trustee shall be
unable to borrow funds sufficient for such compensation and
reimbursement in accordance with the terms of this Trust
Agreement, then the Liquidating Trustee is hereby authorized,
subject to Sections 3.3(b) and 3.3(c) hereof, to reduce to
Cash that portion of the Trust Assets necessary so as to
effect such compensation and reimbursement.
4.8 No Bond. The Liquidating Trustee shall serve without bond.
4.9 Confidentiality. The Liquidating Trustee shall, during the
period that it serves as Liquidating Trustee under this Trust Agreement and for
a period of twelve (12) months following the termination of this Trust Agreement
or following its removal or resignation hereunder, hold strictly confidential
and not use for personal gain any material, non-public information of or
pertaining to any entity to which any of the Trust Assets relates or of which it
has become aware in its capacity as Liquidating Trustee.
15
<PAGE>
ARTICLE V
SUCCESSOR LIQUIDATING TRUSTEE
5.1 Removal. The Liquidating Trustee may be removed with or
without cause by (i) unanimous vote of the Liquidating Trust Committee, or (ii)
the affirmative vote of more than seventy-five percent (75%) of all Liquidating
Trust Units by written consent or at a meeting of holders of Liquidating Trust
Units called for the purpose of removing the Liquidating Trustee. Such removal
shall become effective on the later to occur of: (i) the date action is taken by
the holders of Liquidating Trust Units or the Liquidating Trust Committee, as
the case may be pursuant to this Section 5.1; or (ii) the appointment of a
successor by the Liquidating Trust Committee or the Majority Holders and the
acceptance by such successor of such appointment.
5.2 Resignation. The Liquidating Trustee may resign by giving
not less than ninety (90) days' prior written notice thereof to the holders of
Liquidating Trust Units. Such resignation shall become effective on the later to
occur of: (i) the day specified in such notice; and (ii) the appointment of a
successor by the Liquidating Trust Committee or the Majority Holders and the
acceptance by such successor of such appointment. If a successor Liquidating
Trustee is not appointed or does not accept its appointment within ninety (90)
days following delivery of notice of resignation, the Liquidating Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Liquidating Trustee.
5.3 Appointment of Successor upon Removal, Resignation, or
Death. If the Liquidating Trustee is removed pursuant to Section 5.1, resigns
pursuant to Section 5.2 or dies, the Liquidating Trust Committee may appoint a
successor Liquidating Trustee. If a successor Liquidating Trustee is not
appointed or does not accept its appointment within forty-five (45) days
following such action for removal, delivery of notice of resignation or death of
the predecessor Liquidating Trustee, as the case may be, the Majority Holders
may appoint a successor Liquidating Trustee. If a successor Liquidating Trustee
is not appointed or does not accept its appointment pursuant to the preceding
sentence of this Section 5.3 within seventy-five (75) days following such action
for removal, delivery of notice of resignation or death of the predecessor
Liquidating Trustee, as the case may be, any holder of Liquidating Trust Units
may petition any court of competent jurisdiction for the appointment of a
successor Liquidating Trustee.
5.4 Acceptance of Appointment by Successor Liquidating
Trustee. Any successor Liquidating Trustee appointed hereunder shall execute an
instrument accepting such appointment hereunder and shall file such acceptance
with the Liquidating Trust records. Thereupon, such successor Liquidating
Trustee shall, without any further act, become vested with all the estates,
properties, rights, powers, trusts and duties of its predecessor in the
Liquidating Trust with like effect as if originally named herein; provided,
however, that a removed or resigning Liquidating Trustee shall, nevertheless,
when requested in writing by the successor Liquidating Trustee, execute and
deliver an instrument or instruments conveying and transferring to such
successor Liquidating Trustee under the Liquidating Trust all the estates,
properties, rights, powers, and trusts of such predecessor Liquidating Trustee.
16
<PAGE>
ARTICLE VI
REPORTS TO HOLDERS OF UNITS OF BENEFICIAL INTERESTS
6.1 Securities Laws, Tax and Other Reports to Holders of Liquidating Trust
Units.
(a) Securities Laws. Under section 1145 of the
Bankruptcy Code, the issuance of Liquidating Trust Units under
the Plan shall be exempt from registration under the
Securities Act of 1933 and applicable state and local laws
requiring registration of securities. If the Liquidating
Trustee determines, with the advice of counsel, that the
Liquidating Trust is required to comply with the registration
and reporting requirements of the Securities and Exchange Act
of 1934, as amended, or the Investment Company Act of 1940, as
amended, then the Liquidating Trustee shall take any and all
actions to comply with such reporting requirements and file
periodic reports with the Securities and Exchange Commission.
(b) Other Reporting. If the Liquidating Trustee is
not required to file the periodic reports referred to in
Section 6.1(a) above, as soon as practicable after the end of
each calendar year and six (6) months thereafter, and as soon
as practicable upon termination of the Liquidating Trust, the
Liquidating Trustee shall submit to each holder of Liquidating
Trust Units appearing on its records as of the end of such
period or such date of termination a written report including:
(i) financial statements of the Liquidating Trust for such
period prepared on a modified cash basis or other
comprehensive basis of accounting, and, if the end of a
calendar year, a report of an independent certified public
accountant employed by the Liquidating Trustee, which report
shall reflect the result of such agreed upon procedures
relating to the financial accounting administration of the
Liquidating Trust as proposed by the Liquidating Trustee and
approved by the Liquidating Trust Committee; (ii) a
description of any action taken by the Liquidating Trustee in
the performance of its duties which materially affects the
Liquidating Trust and of which notice has not previously been
given to the holders of Liquidating Trust Units; (iii) a
summary, or actual report if deemed appropriate by the
Liquidating Trustee, of any reports provided to the Debtors or
Liquidating Trust, as the case may be, by the servicers of
loans in which the Debtors' interest is a Trust Asset; and
(iv) if at the end of a calendar year, a separate statement
for each holder of Liquidating Trust Units setting forth the
holder's share of items of income, gain, loss, deduction or
credit and will instruct all such holders to report such items
on their federal income tax returns. The Liquidating Trust's
taxable income will be allocated pro rata to the holders of
the Liquidating Trust Units based on the number of such
Liquidating Trust Units held by a holder compared with the
aggregate number of such Liquidating Trust Units outstanding.
The Liquidating Trustee shall promptly submit additional
reports to the holders of Liquidating Trust Units whenever a
material event or change occurs which effects either the
Liquidating Trust or the rights of the holder of Liquidating
Trust Units hereunder. The Liquidating Trustee shall prepare,
and distribute to holders of Liquidating Trust Units, a report
describing the progress of converting Trust Assets to Cash and
making distributions to holders of Liquidating Trust Units and
any other material information relating to the Trust Assets
and the
17
<PAGE>
administration of the Liquidating Trust. If the Liquidating
Trustee is required to file the periodic reports described in
Section 6.1(a), then the Liquidating Trustee's obligations
under this Section 6.1(b) shall be limited to reporting each
Liquidating Trust Unit holder's share of income, gain, loss,
credit or deduction for federal income tax purposes.
(c) Any report required to be distributed by the
Trustee under Section 6.1(b) shall also be distributed to the
Liquidating Trust Committee and the Persons on the Special
Notice List within ten Business Days of its distribution to
holders of Liquidating Trust Units under Section 6.1(b). The
Liquidating Trustee may post any report required to be
provided under this Section 6.1 on the web site maintained by
the Liquidating Trustee in lieu of actual notice to holders of
Liquidating Trust Units subject to providing notice to the
Special Notice List.
ARTICLE VII
TERMINATION OF LIQUIDATING TRUST
7.1 Termination of Liquidating Trust. The Liquidating Trust
will terminate on the earlier of: (a) thirty (30) days after the distribution of
the Trust Assets in accordance with the terms of this Trust Agreement and the
Plan; and (b) the fifth (5th) anniversary of the Effective Date; provided,
however, that, on or prior to the date six (6) months prior to such termination,
the Court, upon motion by a party in interest, may extend the term of the
Liquidating Trust if it is necessary to the liquidation of the Trust Assets.
Notwithstanding the foregoing, multiple extensions can be obtained so long as
Court approval is obtained at least six (6) months prior to the expiration of
each extended term. The aggregate of all such extensions shall not exceed three
(3) years, unless the Liquidating Trustee receives a favorable ruling from the
IRS that any further extension would not adversely affect the status of the
Liquidating Trust as a liquidating trust within the meaning of Treas. Reg. ss.
301.7701-4(d) for federal income tax purposes. The Liquidating Trustee shall not
unduly prolong the duration of the Liquidating Trust and shall at all times
endeavor to resolve, settle or otherwise dispose of all claims that constitute
Trust Assets and to effect the distribution of the Trust Assets to the holders
of the Liquidating Trust Units in accordance with the terms hereof and terminate
the Liquidating Trust as soon as practicable. Prior to and upon termination of
the Liquidating Trust, the Trust Assets will be distributed to the holders of
Liquidating Trust Units, pursuant to the provisions set forth in Section 3.7
hereof. If any Trust Assets are not duly claimed, such Trust Assets will be
distributed, pro rata, to all holders of Liquidating Trust Units receiving Trust
Assets pursuant to this Section 7.1. Thereafter, if there are still any Trust
Assets not duly claimed, such Trust Assets will be disposed of in accordance
with applicable law.
ARTICLE VIII
AMENDMENT AND WAIVER
8.1 Any substantive provision of this Trust Agreement may be amended or waived
by the Liquidating Trustee, upon notice to the Liquidating Trust Committee and
Persons on the Special Notice List, with the approval of the Bankruptcy Court.
Technical amendments to this Trust Agreement may be made, as necessary to
clarify this Trust Agreement or enable the
18
<PAGE>
Liquidating Trustee to effectuate the terms of this Trust Agreement, by the
Liquidating Trustee and with the consent of the Liquidating Trust Committee.
Notwithstanding this Section 8.1, any amendments to this Trust Agreement shall
not be inconsistent with the purpose and intention of the Liquidating Trust to
liquidate in an expeditious but orderly manner the Trust Assets in accordance
with Treasury Regulation 301.7701-4(d) and Section 3.1 hereof.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Intention of Parties to Establish Liquidating Trust. This
Trust Agreement is intended to create a liquidating trust for federal income tax
purposes and, to the extent provided by law, shall be governed and construed in
all respects as such a trust and any ambiguity herein shall be construed
consistent herewith and, if necessary, this Trust Agreement may be amended to
comply with such federal income tax laws, which amendments may apply
retroactively.
9.2 Preservation of Privilege and Defenses. In connection with
the rights, claims, and Causes of Action that constitute the Trust Assets, any
attorney-client privilege, work-product privilege, or other privilege or
immunity attaching to any documents or communications (whether written or oral)
transferred to the Liquidating Trust shall vest in the Liquidating Trustee and
its representatives, and the Debtors, and the Liquidating Trustee are authorized
to take all necessary actions to effectuate the transfer of such privileges and
available defenses.
9.3 Cooperation. The Debtors shall provide, and the Debtors
shall cause the Surviving Special Purpose Entities to provide, the Liquidating
Trustee with copies of such of their books and records as the Liquidating
Trustee shall reasonably require for the purpose of performing its duties and
exercising its powers hereunder. The officers and directors of the Surviving
Special Purpose Entities shall cooperate with the Liquidating Trustee and shall
provide information reasonably requested by the Liquidating Trustee.
9.4 Laws as to Construction. This Trust Agreement shall be
governed and construed in accordance with the laws of the State of New York,
without giving effect to rules governing the conflict of law.
9.5 Severability. If any provision of this Trust Agreement or
the application thereof to any person or circumstance shall be finally
determined by a court of competent jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Trust Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and such provision of
this Trust Agreement shall be valid and enforced to the fullest extent permitted
by law.
9.6 Notices. Any notice or other communication hereunder shall
be in writing and shall be deemed to have been sufficiently given, for all
purposes, if deposited, postage prepaid, in a post office or letter box
addressed to the person for whom such notice is intended:
If to the Debtors:
ContiFinancial Corporation
19
<PAGE>
277 Park Avenue
New York, New York 10172
(212) 208-2800
Attn: Alan H. Fishman
with copies to:
Dewey Ballantine LLP
Attorneys for the Debtors
1301 Avenue of the Americas
New York, New York 10019-6092
(212) 259-8000
Attn: Richard S. Miller, Esq.
Togut, Segal & Segal LLP
Attorneys for the Debtors
One Penn Plaza
New York, New York 10119
(212) 594-5000
Attn: Albert Togut, Esq.
If to the Liquidating Trustee:
Jeffrey H. Beck
6555 N. Powerline Road
Suite 408
Fort Lauderdale, Florida 33309
(954) 958-8070
with a copy to:
Bilzin Sumberg Dunn Baena Price
& Axelrod LLP
2500 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2336
Attn: Scott L. Baena, Esq.
If to a holder of a Liquidating Trust Unit:
To the name and address set forth on the registry maintained
by the Liquidating Trustee.
9.7 Headings. The section headings contained in this Trust
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Trust Agreement or of any term or provision
hereof.
20
<PAGE>
9.8 Relationship to the Plan. The principal purpose of this
Trust Agreement is to aid in the implementation of the Plan and therefore this
Trust Agreement incorporates the provisions of the Plan. To that end, the
Liquidating Trustee shall have full power and authority to take any action
consistent with the purpose and provisions of the Plan, and to seek any orders
from the Bankruptcy Court in furtherance of implementation of the Plan and this
Trust Agreement. If any provisions of this Trust Agreement are found to be
inconsistent with the provisions of the Plan, the provisions of this Trust
Agreement shall control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have either executed
and acknowledged this Trust Agreement, or caused it to be executed and
acknowledged on their behalf by their duly authorized officers all as of the
date first above written.
ContiFinancial Corporation, et al.
Debtors and Debtors in Possession
By:
-------------------------------------------
Name: Alan H. Fishman
Title: President & Chief Executive Officer
-------------------------------------------
Jeffrey H. Beck, as Liquidating Trustee
22
<PAGE>
EXHIBIT B
PLAN ADMINISTRATION AGREEMENT
<PAGE>
FORM
PLAN ADMINISTRATION AGREEMENT
This Plan Administration Agreement (the "Administration
Agreement"), dated as of December __, 2000, by and between ContiFinancial
Corporation, ContiTrade Services LLC, ContiMortgage Corporation, ContiWest
Corporation, ContiFinancial Services Corporation, Resource One Consumer Discount
Company, Inc., Warminster National Abstract, Inc., Keystone Capital Group, Inc.,
Keystone Mortgage Investments, Inc., ZTS Corp., Resource One Mortgage of Oxford
Valley, Inc., Resource One Consumer Discount Company of Minnesota, Inc.,
Resource One Mortgage of Delaware Valley, Inc., ResourceCorp Financial, Inc.,
ContiInsurance Agency, Inc., Crystal Mortgage Company, Inc., Lenders M.D., Inc.,
California Lending Group, Inc. d/b/a United Lending Group, ContiAsset
Receivables Management L.L.C., Royal Mortgage Partners, L.P. a/k/a Royal
Mortgagebanc and Fidelity Mortgage Decisions Corporation (collectively, the
"Debtors") and Jeffrey H. Beck as Plan Administrator, executed in connection
with the Third Amended Joint Plan of Reorganization of ContiFinancial
Corporation and Affiliates Under Chapter 11 of the Bankruptcy Code (the "Plan"),
filed on December 18, 2000, as may be amended, by the Debtors in the United
States Bankruptcy Court for the Southern District of New York (the "Court")
including any subsequent amendments filed by the Debtors, which Plan provides
for the establishment of a disputed claims reserve trust evidenced hereby (the
"Disputed Claims Reserve Trust") to resolve all disputed claims and reserve
distributions for the benefit of holders of Disputed Claims that subsequently
become Allowed and holders of General Unsecured Claims against the Settlement
Debtors with respect to the Settlement Debtors Premium, whether such claims are
Allowed on or after the Effective Date of the Plan. Except with respect to the
terms defined herein, all capitalized terms contained herein shall have the
meanings ascribed to them in the Plan and the Liquidating Trust Agreement
executed on even date herewith.
W I T N E S S E T H
WHEREAS, the Plan provides for, among other things, the
Distribution to the Disputed Claims Reserve Trust for the benefit of holders of
Disputed Claims which become Allowed Claims and holders of General Unsecured
Claims against the Settlement Debtors with respect to the Settlement Debtors
Premium, whether such claims are Allowed on or after the Effective Date;
WHEREAS, the Disputed Claims Reserve Trust is created pursuant
to, and to effectuate, the Plan;
WHEREAS, the Disputed Claims Reserve Trust is established for
the sole purpose of resolving claims and holding, receiving and disbursing
Distributions for the benefit of the holders of Disputed Claims that become
Allowed and the holders of General Unsecured Claims against the Settlement
Debtors with respect to the Settlement Debtors Premium, whether such claims are
Allowed on or after the Effective date, with no objective or authority to
continue or engage in the conduct of a trade or business;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the Plan, the Debtors
and the Plan Administrator agree as follows:
ARTICLE I
ESTABLISHMENT OF THE DISPUTED CLAIMS RESERVE TRUST
1.1 Transfer of Property to Plan Administrator
(a) Pursuant to the Plan, the Debtors and the Plan
Administrator hereby establish the Disputed Claims Reserve Trust on behalf of
holders of Disputed Claims that become Allowed and holders of General Unsecured
Claims against the Settlement Debtors with respect to the Settlement Debtors
Premium, whether such claims are Allowed on or after the Effective Date of the
Plan, and the Debtors hereby transfer, assign, and deliver to the Plan
Administrator all of their right, title, and interest in the Liquidating Trust
Units and Cash in the amount to be determined as provided under the Plan free
and clear of any Lien, Claim or Interest in such property of any other Person or
entity except as provided in the Plan. The Plan Administrator agrees to accept
and hold the Cash and Liquidating Trust Units as provided under the Plan in
trust for holders of Disputed Claims that become Allowed and holders of General
Unsecured Claims against the Settlement Debtors with respect to the Settlement
Debtors Premium, whether such claims are Allowed on or after the Effective Date
of the Plan, subject to the terms of this Administration Agreement.
(b) Pursuant to the Plan, the Debtors shall transfer the
Settlement Debtors Premium (minus the Settlement Debtors Premium Initial
Distribution) to the Plan Administrator to be held for the benefit of holders of
General Unsecured Claims against the Settlement Debtors in the Disputed Claims
Reserve Trust for Distribution, in accordance with Section 5.07(d) of the Plan.
1.2 Title to Transferred Assets
(a) The transfer of the Cash and Liquidating Trust Units to
the Disputed Claims Reserve Trust shall be made for the benefit of the holders
of Disputed Claims that become Allowed and the holders of General Unsecured
Claims against the Settlement Debtors with respect to the Settlement Debtors
Premium, whether such claims are Allowed on or after the Effective Date of the
Plan. In this regard, the Cash and Liquidating Trust Units will be transferred
(subject to the liabilities indicated herein) to the Disputed Claims Reserve
Trust, to be held by the Plan Administrator on behalf of holders of Disputed
Claims that become Allowed and holders of General Unsecured Claims against the
Settlement Debtors with respect to the Settlement Debtors Premium, whether such
claims are Allowed on or after the Effective Date of the Plan. Upon the transfer
of the Cash and Liquidating Trust Units to the Disputed Claims Reserve Trust,
the Debtors will have no further interest in or with respect to such property or
this Disputed Claims Reserve Trust.
2
<PAGE>
(b) For all federal income tax purposes, all parties
(including, without limitation, the Debtors, the Plan Administrator, the
Liquidating Trustee, the holders of Disputed Claims and the holders of
Liquidating Trust Units) shall treat the transfer of Cash and Liquidating Trust
Units to the Disputed Claims Reserve Trust, as set forth in this Section 1.2 and
in accordance with the Plan.
1.3 Assignment and Assumption of Claims. In accordance with
Section 1.2 hereof and as provided for under the Plan, the Debtors hereby
transfer the Cash and Liquidating Trust Units to the Disputed Claims Reserve
Trust, and the Plan Administrator on behalf of the Disputed Claims Reserve Trust
hereby assumes and agrees that all such Cash and Liquidating Trust Units will be
transferred to the Disputed Claims Reserve Trust subject to the following
liabilities, if any: Disputed Claims that become Allowed on or after the
Effective Date; but specifically excluding any (i) Claims which have been
barred, discharged or released pursuant to the Plan, the Confirmation Order or
any other Order of the Bankruptcy Court and (ii) claims against the Surviving
Special Purpose Entities.
1.4 Intentionally Omitted.
1.5 Appointment of the Plan Administrator. The Plan
Administrator shall be Jeffrey H. Beck. The Plan Administrator may serve on the
boards of directors of the Surviving Special Purpose Entities. The Plan
Administrator may serve in a separate capacity as the Liquidating Trustee.
1.6 Plan Administration Committee. Raymond Wechsler, Phil
Vincent and Gene Davis shall be nominated and appointed as individuals who shall
serve as members of the Plan Administration Committee that will advise the Plan
Administrator and make certain determinations regarding the resolution of
Disputed Claims (provided that such determinations otherwise could have been
made by the Plan Administrator in accordance with the provisions of this
Administration Agreement and the Plan). The Plan Administration Committee
initially shall consist of the 3 members identified, who each shall serve for an
initial term of two years. Thereafter, members of a subsequent Plan
Administration Committee shall be appointed by the previous Plan Administration
Committee. Unless otherwise specified herein, approval of a majority of the
members of such Plan Administration Committee shall be required for the Plan
Administration Committee to act, provided that the Plan Administration Committee
may delegate responsibility for discrete issues or decisions to one or more of
its members. The Plan Administrator shall notify the holders of Disputed Claims
and holders of Allowed Class 5 Claims of the establishment of a Plan
Administration Committee pursuant to this Section 1.6 and the identities of its
members promptly following such Plan Administration Committee's formation. In
the event that a member of the Plan Administration Committee resigns prior to
the expiration of his term or is otherwise unable to serve out his term, the
remaining members of the Plan Administration Committee shall select the
successor to serve the remainder of such term. The Plan Administration Committee
shall have the rights and powers set forth herein. In the event that a Plan
Administration Committee shall not be formed and continuing to exist under this
Administration Agreement, all references herein to required approval or other
action of such Plan
3
<PAGE>
Administration Committee shall be of no force or effect. In performance of their
duties hereunder, members of the Plan Administration Committee shall be entitled
to receive (i) reimbursement of reasonable expenses, (ii) indemnification as set
forth in Section 4.7 hereof, and (iii) compensation as provided for in Section
4.7 hereof. The members of the Plan Administration Committee may serve on the
boards of directors of the Surviving Special Purpose Entities.
ARTICLE II
Units of beneficial interests
2.1 Identification of Holders of Liquidating Trust Units. The
Plan Administrator shall notify the Liquidating Trustee, in writing, of any
Person or entity receiving a Liquidating Trust Unit on account of such Person's
or entity's Disputed Claim having become Allowed. Thereafter, the holders of
Disputed Claims that become Allowed and, as a result, receive Liquidating Trust
Units shall be recorded and set forth in a register maintained by the
Liquidating Trustee expressly for such purpose. The distribution of Liquidating
Trust Units to either a holder of an Allowed Class 5 Claim or holder of a
Disputed Claim that becomes an Allowed Class 5 Claim shall be accomplished as
set forth in the Plan.
ARTICLE III
PURPOSE, AUTHORITY, LIMITATIONS, AnD DISTRIBUTIONS
3.1 Purpose of the Disputed Claims Reserve Trust. The Disputed
Claims Reserve Trust shall be established for resolving Disputed Claims and for
winding up the affairs and dissolving the Debtors with no objective to continue
or engage in the conduct of a trade or business. Accordingly, the Plan
Administrator shall, in an expeditious but orderly manner, resolve Disputed
Claims, make timely Distributions and not unduly prolong the duration of the
Disputed Claims Reserve Trust. Subject to Section 3.3 hereof, the resolution of
Disputed Claims may be accomplished through the objection to or settlement of
such Claims.
3.2 Authority of Plan Administrator. In connection with the
administration of the Disputed Claims Reserve Trust, except as set forth in this
Administration Agreement, the Plan Administrator is authorized to perform any
and all acts necessary and desirable to accomplish the purposes of the Disputed
Claims Reserve Trust. Without limiting, but subject to, the foregoing, the Plan
Administrator shall be expressly authorized, but shall not be required, to:
(a) hold legal title to any property transferred to the
Disputed Claims Reserve Trust and assert all rights of the holders of
Liquidating Trust Units, including but not limited to, collecting, receiving any
and all money and other property belonging to the Disputed Claims Reserve Trust
and the right to vote any claim or interest in a case under the Bankruptcy Code
and receive any distribution therein; provided, however, that with respect to
the Liquidating Trust Units held in the Disputed Claims Reserve Trust,
4
<PAGE>
neither the Plan Administrator, nor any other party, shall be entitled to vote
any such Liquidating Trust Units in any matter that requires the approval of the
holders of all outstanding Liquidating Trust Units;
(b) perform the duties, exercise the powers and assert the
rights of a trustee under Sections 704 and 1106 of the Bankruptcy Code,
including without limitation, the prosecution of objections to Disputed Claims;
(c) protect and enforce the rights to the property transferred
to the Disputed Claims Reserve Trust by any method deemed appropriate including,
without limitation, by judicial proceedings or pursuant to any applicable
bankruptcy, insolvency, moratorium or similar law and general principles of
equity;
(d) compromise, adjust, arbitrate, sue on or defend, pursue,
prosecute, abandon, or otherwise deal with and settle, in accordance with the
terms set forth in Section 3.3 hereof, claims and Causes of Action in favor of
or against the Debtors or the Disputed Claims Reserve Trust as the Plan
Administrator shall deem advisable subject to the authority of Liquidating
Trustee;
(e) determine and satisfy any and all liabilities created,
incurred or assumed by the Disputed Claims Reserve Trust;
(f) file, if necessary, any and all tax and information
returns with respect to the Disputed Claims Reserve Trust and pay taxes properly
payable by the Disputed Claims Reserve Trust, if any;
(g) obtain insurance coverage with respect to the liabilities
and obligations of the Plan Administrator and the members of the Plan
Administration Committee under this Administration Agreement (in the form of an
errors and omissions policy or otherwise);
(h) retain and pay such independent law firms as counsel to
the Disputed Claims Reserve Trust as the Plan Administrator in its sole
discretion may select to aid in the resolution of any Disputed Claim or related
claims, and to perform such other functions as may be appropriate in the Plan
Administrator's sole discretion. The Plan Administrator may commit the Disputed
Claims Reserve Trust to and shall pay such independent law firms reasonable
compensation for services rendered and expenses incurred. A law firm shall not
be disqualified from serving as independent counsel to the Disputed Claim
Reserve Trust solely because of its retention as counsel to the Liquidating
Trust or its prior retention as counsel to the Debtors;
(i) retain and pay an independent public accounting firm to
perform such reviews and/or audits of the financial books and records of the
Disputed Claims Reserve Trust as may be appropriate in the Plan Administrator's
sole discretion and to prepare and file any tax returns or informational returns
for the Disputed Claims Reserve Trust as may be required. The Plan Administrator
may commit the Disputed Claims Reserve Trust to and shall pay such independent
public accounting firm reasonable compensation for services rendered and
expenses incurred;
5
<PAGE>
(j) execute offsets against Claims as provided for in the
Plan;
(k) assert or waive any privilege or defense on behalf of the
Disputed Claims Reserve Trust or the Debtors;
(l) retain and pay such third parties as the Plan
Administrator, in its sole discretion, may deem necessary or appropriate to
assist the Plan Administrator in carrying out its powers and duties under this
Administration Agreement. The Plan Administrator may commit the Disputed Claims
Reserve Trust to and shall pay all such persons or entities reasonable
compensation for services rendered and expenses incurred, as well as commit the
Disputed Claims Reserve Trust to indemnify any such parties in connection with
the performance of services;
(m) employ such employees as the Plan Administrator, in its
sole discretion and as consistent with the purposes of the Liquidating Trust,
may deem necessary or appropriate to assist the Plan Administrator in carrying
out its powers and duties under this Administration Agreement. The Plan
Administrator may commit the Disputed Claims Reserve Trust to and shall pay all
such employees reasonable salary in the amounts it shall determine to be
appropriate and any employee benefits it may establish pursuant to Section
3.2(o) below. If the Plan Administrator shall employ employees pursuant to this
Section 3.2(n), the Plan Administrator shall establish payroll procedures and
pay any and all federal, state or local tax withholding required under
applicable law with respect to any such employees, and it will take all other
actions it deems necessary to effectuate the provisions of this Section 3.2(n).
(n) establish and adopt or cease to provide employee benefits
for the benefit of any employees described in Section 3.2(n) above as the Plan
Administrator, in its sole discretion and as consistent with the purposes of the
Liquidating Trust, may deem necessary or appropriate, including the adoption of
any group health plan.
(o) invest any moneys held as part of the Disputed Claims
Reserve Trust in accordance with the terms of Section 4.5 hereof;
(p) request any appropriate tax determination, including,
without limitation, a determination pursuant to Section 505 of the Bankruptcy
Code;
(q) seek the examination of any entity under, and subject to,
the provisions of Bankruptcy Rule 2004;
(r) wind up the affairs and dissolve the Debtors and any
affiliates of the Debtors that are not Surviving Special Purpose Entities as
quickly as reasonably practical. The Plan Administrator shall act as the
authorized signatory to execute on behalf of each Debtor and any Affiliate any
and all documents necessary to accomplish such dissolution; and
(s) take or refrain from taking any and all actions the Plan
Administrator reasonably deems necessary for the continuation, protection and
6
<PAGE>
maximization of the assets of the Disputed Claims Reserve Trust or to carry out
the purposes hereof.
3.3 Certain Actions by the Plan Administrator.
(a) The Plan Administrator shall be empowered to and, in its
sole discretion (subject to this Section 3.3 hereof) may, take all appropriate
action with respect to resolution of the Disputed Claims consistent with the
purpose of the Disputed Claims Reserve Trust, including, without limitation, the
prosecution, settlement or other resolution of claims and Causes of Action.
Notwithstanding the foregoing, the Plan Administrator shall prior to entering
into any proposed settlement of a Disputed Claim for an amount in excess of
$500,000, procure the approval of the Plan Administration Committee.
(b) Notwithstanding anything contained in this Administration
Agreement to the contrary, the Plan Administrator may, but is not required to,
submit a proposed action to a court of competent jurisdiction, including the
Bankruptcy Court, for its approval, on notice to the Plan Administration
Committee and any party affected by the proposed action, and may comply with any
action approved by such court, and shall have no obligation to submit any such
action to the procedures set forth in this Section 3.3.
3.4 Limitation of Plan Administrator's Authority.
Notwithstanding anything herein to the contrary, the Plan Administrator shall
not and shall not be authorized to engage in any trade or business and shall
take such actions consistent with the resolution of Disputed Claims as are
required by applicable law, and such actions permitted under Sections 3.2, 3.3,
3.6, 3.7 and 4.5 hereof.
3.5 Books and Records. The Plan Administrator shall maintain
in respect of the Disputed Claims Reserve Trust books and records relating to
the property and income of the Disputed Claims Reserve Trust and the payment of
expenses of, and liabilities of claims against or assumed by, the Disputed
Claims Reserve Trust in such detail and for such period of time as may be
necessary to enable it to make full and proper accounting in respect thereof to
the Liquidating Trustee and to comply with applicable provisions of law. Such
books and records shall be maintained on a modified cash or other comprehensive
basis of accounting necessary to facilitate compliance with the tax reporting
requirements of the Disputed Claims Reserve Trust. Except as otherwise may be
provided herein, nothing in this Administration Agreement requires the Plan
Administrator to file any accounting or seek approval of any court with respect
to the administration of the Disputed Claims Reserve Trust, or as a condition
for managing any payment or distribution out of the Disputed Claims Reserve
Trust. The Liquidating Trustee, holders of Disputed Claims and holders of
Allowed Class 5 Claims shall have the right upon thirty (30) days' prior written
notice delivered to the Plan Administrator to inspect such books and records,
provided that, if so requested, such holders shall have entered into a
confidentiality agreement satisfactory in form and substance to the Plan
Administrator.
7
<PAGE>
3.6 Additional Powers. Except as otherwise set forth in this
Administration Agreement or in the Plan, and subject to the Treasury Regulations
governing fixed investment trusts and the retained jurisdiction of the Court as
provided for in the Plan, but without prior or further authorization, the Plan
Administrator may control and exercise authority over the property of the
Disputed Claims Reserve Trust and over the protection, conservation and
disposition thereof. No person dealing with the Disputed Claims Reserve Trust
shall be obligated to inquire into the authority of the Plan Administrator in
connection with the protection, conservation or disposition of such property.
3.7 Distribution of Assets in the Disputed Claims Reserve
Trust.
(a) Subject to the Plan and Section 4.5 hereof, on the first
Quarterly Distribution Date from and after the Initial Distribution Date, or as
soon thereafter as practicable, the Plan Administrator shall make Ratable
Distributions, in accordance with the provisions of the Plan (calculated as of
such Quarterly Distribution Date), of Cash and/or Liquidating Trust Units
reserved for any Disputed Claim that has become an Allowed Claim during the
preceding calendar quarter and any Allowed General Unsecured Claim against the
Settlement Debtors, to the holder of such Allowed Claims or the relevant Paying
Agent, as the case may be. Holders of such Claims will also be entitled to
receive any Distributions received on and after the Effective Date on account of
the Liquidating Trust Units distributed to such holder on account of its Allowed
Claim from the Liquidating Trust. Any Distributions held in the Disputed Claims
Reserve Trust for the benefit of a holder of a Disputed Claim, which is
subsequently Disallowed, in whole or part, shall be distributed on the Annual
Distribution Date on a Ratable basis to holders of Liquidating Trust Units.
Notwithstanding anything to the contrary in this Section
3.7(a) or in Section 3.7(b) below, prior to making any Distribution to the
holders of Disputed Claims that have become Allowed and the holders of General
Unsecured Claims against the Settlement Debtors with respect to the Settlement
Debtors Premium, whether such claims are Allowed on or after the Effective Date
of the Plan,, the Plan Administrator may retain such amounts (i) as are
reasonably necessary to meet contingent liabilities and to maintain the value of
the property of the Disputed Claims Reserve Trust during liquidation, (ii) to
pay reasonable estimated administrative expenses (including any taxes imposed on
the Disputed Claims Reserve Trust or in respect of the Cash and/or Liquidating
Trust Units of the Disputed Claims Reserve Trust), (iii) as the Plan
Administrator may deem necessary to provide further funding to the Disputed
Claims Reserve Trust, and (iv) to satisfy other liabilities incurred or assumed
by the Disputed Claims Reserve Trust (or to which such property is otherwise
subject), all for the term of the Disputed Claims Reserve Trust and in
accordance with this Administration Agreement or the Plan.
(b) Quarterly Distribution; Withholding. On each Quarterly
Distribution Date, the Plan Administrator shall distribute from the Disputed
Claims Reserve Trust (i) to the holders of Disputed Claims that have become
Allowed Claims during the preceding calendar quarter, Cash and Liquidating Trust
Units as provided for
8
<PAGE>
in accordance with the Plan and (ii) to the holders of Allowed General Unsecured
Claims against the Settlement Debtors, the Settlement Debtors Premium, as
provided for in the Plan. Notwithstanding anything to the contrary herein or in
the Plan, no Distribution shall be made on any Quarterly Distribution Date,
unless the aggregate Distribution on such Quarterly Distribution Date would be
in excess of $10,000 in value. The Plan Administrator may withhold from amounts
distributable to any Person any and all amounts, determined in the Plan
Administrator's reasonable sole discretion, required by any law, regulation,
rule, ruling, directive or other governmental requirement.
(c) Manner of Payment or Distribution. All Distributions made
by the Plan Administrator to holders of Disputed Claims that have become Allowed
Claims and to holders of Allowed General Unsecured Claims against the Settlement
Debtors with respect to the Settlement Debtors Premium, whether such claims are
Allowed on or after the Effective Date of the Plan, shall be payable to the
holders of such Allowed Claims of record as of the 15th day prior to the date
scheduled for the distribution, unless such day is not a Business Day, then such
day shall be the following Business Day (the "Record Date"). If the Distribution
shall be in Cash, the Plan Administrator shall distribute such Cash by wire,
check, or such other method as the Plan Administrator deems appropriate under
the circumstances.
3.8 Reporting Duties.
(a) Federal Income Tax. The Plan Administrator shall file
returns for the Disputed Claims Reserve Trust as a trust.
(b) Other. The Plan Administrator shall also file (or cause to
be filed) any other statements, returns or disclosures relating to the Disputed
Claims Reserve Trust that are required by any governmental authority.
3.9 Compliance with Laws. Any and all distributions of Cash
and/or Liquidating Trust Units and proceeds of borrowings, if any, shall be in
compliance with applicable laws, including, but not limited to, applicable
federal and state securities laws.
ARTICLE IV
THE PLAN ADMINISTRATOR
4.1 Generally. The Plan Administrator's powers are exercisable
solely in a fiduciary capacity consistent with, and in furtherance of, the
purposes of this Disputed Claims Reserve Trust and Sections 3.3 and 3.4 hereof
and not otherwise, except that the Plan Administrator may deal with the property
of the Disputed Claims Reserve Trust for its own account as permitted by Section
4.7 hereof.
4.2 Responsibilities of Plan Administrator. The Plan
Administrator, under the direction of the Plan Administration Committee, shall,
in an expeditious but orderly manner, make and file objections to and settle,
compromise or otherwise resolve Disputed Claims in accordance with the Plan, the
Bankruptcy Code and Bankruptcy Rules. The Plan Administrator shall file and
serve a copy of each objection upon the
9
<PAGE>
holder of the Disputed Claim to which an objection is made and upon the
Liquidating Trustee, as soon as practicable, but in no event later than (i) one
hundred-twenty days after the Effective Date, or (ii) such other time as may be
fixed or extended by the order of the Bankruptcy Court. Subject to the Plan and
this Administration Agreement, after the Effective Date, the Plan Administrator
may settle or compromise any Disputed Claim without approval of the Bankruptcy
Court. The Liquidating Trustee or the Liquidating Trust Committee shall have
standing and be entitled to contest the settlement, compromise or resolution of
any Disputed Claim.
4.3 Liability of Plan Administrator. In no event shall the
Plan Administrator be personally liable for any claim asserted against the
Disputed Claims Reserve Trust. Notwithstanding anything to the contrary set
forth herein, no provision of this Administration Agreement shall be construed
to relieve the Plan Administrator from liability for its own grossly negligent
actions, its own grossly negligent failure to act, or its own fraud or willful
misconduct, except that:
(a) the Plan Administrator shall be liable only for the
performance of such duties and obligations as are specifically set forth in this
Administration Agreement; and
(b) the Plan Administrator shall not be liable for any error
of judgment made in good faith, or with respect to any action taken or omitted
to be taken in good faith, unless the Plan Administrator was reckless and
grossly negligent.
4.4 Reliance by Plan Administrator. Except as otherwise
provided in Section 4.3 hereof:
(a) the Plan Administrator may rely, and shall be protected in
acting upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, or other paper or document believed by
him to be genuine and to have been signed or presented by the proper party or
parties;
(b) the Plan Administrator may consult with any and all
professionals to be selected by him, and the Plan Administrator shall not be
liable for any action taken or omitted to be taken by him in accordance with the
advice of such professionals; and
(c) persons dealing with the Plan Administrator shall look
only to the Cash in the Disputed Claims Reserve Trust to satisfy any liability
incurred by the Plan Administrator to such person in carrying out the terms of
this Administration Agreement, and the Plan Administrator shall have no personal
obligation to satisfy any such liability.
4.5 Investment and Safekeeping of Assets. All moneys and other
property received by the Plan Administrator shall, until distributed or paid
over as herein provided, be held in trust for the benefit of the holders of
Disputed Claims that become Allowed and holders of Allowed General Unsecured
Claims against the Settlement Debtors, and need not be segregated unless and to
the extent required by law or the Plan. The Plan Administrator shall be under no
liability or obligation for interest or producing income on any moneys received
by him hereunder and held for distribution or payment to
10
<PAGE>
the holders of Disputed Claims that become Allowed and to the holders of Allowed
General Unsecured Claims against the Settlement Debtors, except as such interest
shall actually be received by the Plan Administrator. Investments of any moneys
held by the Plan Administrator shall be administered in view of the manner in
which individuals of ordinary prudence, discretion and judgment would act in the
management of their own affairs; provided, however, that the right and power of
the Plan Administrator to invest the Cash, the proceeds thereof, or any income
earned by the Disputed Claims Reserve Trust, shall be limited to the right and
power to invest such Cash (pending periodic distributions in accordance with
Section 3.7 hereof) in demand and time deposits, such as short-term certificates
of deposit, in banks or other savings institutions, or other temporary liquid
investments, such as Treasury bills, consistent with the purposes of the
Liquidating Trust.
4.6 Authorization to Expend Cash. The Plan Administrator may
expend Cash (i) as reasonably necessary to meet contingent liabilities and to
maintain the value of the property in the Disputed Claims Reserve Trust during
liquidation, (ii) to pay all administrative expenses of the Disputed Claims
Reserve Trust (including, but not limited to, any taxes imposed on the Disputed
Claims Reserve Trust), (iii) to fund the costs and expenses of the Plan
Administrator, and (iv) to satisfy all other liabilities incurred or assumed by
the Disputed Claims Reserve Trust (or to which such property is otherwise
subject) in accordance with the Administration Agreement or the Plan, including,
without limitation, those liabilities set forth in Section 1.3 hereof.
4.7 Expense Reimbursement and Compensation.
(a) The Cash in the Disputed Claims Reserve Trust shall be
subject to the claims of the Plan Administrator and the members of the Plan
Administration Committee, and the Plan Administrator shall be entitled to
reimburse itself and the members of the Plan Administration Committee out of any
available Cash in the Disputed Claims Reserve Trust, for its actual
out-of-pocket expenses and against and from any and all loss, liability,
expense, or damage which the Plan Administrator or any such member may sustain
in good faith and without willful misconduct, gross negligence, or fraud in the
exercise and performance of any of the powers and duties of the Plan
Administrator or the Plan Administration Committee under this Administration
Agreement, provided that the provisions set forth in Section 4.3 hereof as
applied to the Plan Administrator shall be deemed to apply to the members of the
Plan Administration Committee as if the Plan Administration Committee was the
subject of such Section 4.3. As compensation for the performance of its duties,
the Plan Administrator will be entitled to bill hourly for the services (and at
the specific rate) of the individuals listed on Exhibit A attached hereto, and
such additional compensation that may be agreed upon by the Plan Administrator
and the Unofficial Committees. Each member of the Plan Administration Committee
shall be paid $40,000 per annum for a required six (6) meeting and such other
amounts as negotiated by the Plan Administrator and each member of the Plan
Administration Committee for any additional meetings. In the event that a member
of the Plan Administration Committee also serves on the Liquidating Trust
Committee, such member shall only be entitled to receive $40,000 in the
aggregate as base compensation for six (6) meetings.
11
<PAGE>
(b) If the Cash in the Disputed Claims Reserve Trust shall be
insufficient to compensate and reimburse the Plan Administrator or the members
of the Plan Administration Committee, as the case may be, for any amounts to
which they are entitled hereunder and if the Plan Administrator shall be unable
to obtain funds from the Liquidating Trust or borrow funds sufficient for such
compensation and reimbursement in accordance with the terms of this
Administration Agreement, then the Plan Administrator is hereby authorized,
subject to Section 3.3 hereof, to reduce to Cash that portion of the property of
the Disputed Claims Reserve Trust necessary so as to effect such compensation
and reimbursement.
4.8 No Bond. The Plan Administrator shall serve without bond.
4.9 Confidentiality. The Plan Administrator shall, during the
period that it serves as Plan Administrator under this Administration Agreement
and for a period of twelve (12) months following the termination of this
Administration Agreement or following its removal or resignation hereunder, hold
strictly confidential and not use for personal gain any material, non-public
information of or pertaining to any entity to which any of the assets of
Disputed Claims Reserve Trust relates or of which it has become aware in its
capacity as Plan Administrator.
ARTICLE V
SUCCESSOR PLAN ADMINISTRATOR
5.1 Removal. The Plan Administrator may be removed with or
without cause by unanimous vote of the Plan Administration Committee. Such
removal shall become effective on the appointment of a successor by the Plan
Administration Committee and the acceptance by such successor of such
appointment.
5.2 Resignation. The Plan Administrator may resign by giving
not less than ninety (90) days' prior written notice thereof to the Plan
Administration Committee. Such resignation shall become effective on the later
to occur of: (i) the day specified in such notice; and (ii) the appointment of a
successor by the Plan Administration Committee and the acceptance by such
successor of such appointment. If a successor Plan Administrator is not
appointed or does not accept its appointment within ninety (90) days following
delivery of notice of resignation, the Plan Administrator may petition any court
of competent jurisdiction for the appointment of a successor Plan Administrator.
5.3 Appointment of Successor upon Removal, Resignation or
Death. If the Plan Administrator is removed pursuant to Section 5.1 or resigns
pursuant to Section 5.2 or dies, the Plan Administration Committee may appoint a
successor Plan Administrator. If a successor Plan Administrator is not appointed
or does not accept its appointment pursuant to the preceding sentence of this
Section 5.3 within seventy-five (75) days following such action for removal,
delivery of notice of resignation or the death of the predecessor Plan
Administrator, as the case may be, any member of the Plan Administration
Committee may petition any court of competent jurisdiction for the appointment
of a successor Plan Administrator.
12
<PAGE>
5.4 Acceptance of Appointment by Successor Plan Administrator.
Any successor Plan Administrator appointed hereunder shall execute an instrument
accepting such appointment hereunder and shall file such acceptance with the
Disputed Claims Reserve Trust and the Liquidating Trust records. Thereupon, such
successor Plan Administrator shall, without any further act, become vested with
all the estates, properties, rights, powers, trusts and duties of its
predecessor in the Disputed Claims Reserve Trust with like effect as if
originally named herein; provided, however, that a removed or resigning Plan
Administrator shall, nevertheless, when requested in writing by the successor
Plan Administrator, execute and deliver an instrument or instruments conveying
and transferring to such successor Plan Administrator under the Disputed Claims
Reserve Trust all the estates, properties, rights, powers, and trusts of such
predecessor Plan Administrator.
ARTICLE VI
TERMINATION OF DISPUTED CLAIMS RESERVE TRUST
6.1 Termination of Disputed Claims Reserve Trust. The Disputed
Claims Reserve Trust will terminate upon the filing with Bankruptcy Court of a
written certification by the Plan Administrator that (i) the Plan Administrator
has dissolved the Debtors or disposed of all of the Debtors common stock and
(ii) all Disputed Claims have been resolved and that all Distributions and other
dispositions of all Cash and/or Liquidating Trust Units required under the Plan
to be made from the Disputed Claims Reserve Trust have been made. Such written
certification shall be sent by the Plan Administrator to the Liquidating Trustee
within 15 days of the satisfaction of the conditions set forth in the
immediately preceding sentence. Upon termination, all Cash and other assets then
remaining in the Disputed Claims Reserve Trust which is de minimus in nature and
for which distribution to holders of Liquidating Trust Units is unduly
burdensome shall be paid to the Liquidating Trust.
ARTICLE VII
AMENDMENT AND WAIVER
7.1 Any substantive provision of this Administration Agreement
may be amended or waived with the approval of the Plan Administration Committee.
Upon notice to the holders of Disputed Claims and Allowed Class 5 Claims,
technical amendments to this Administration Agreement may be made, as necessary
to clarify this Administration Agreement or enable the Plan Administrator to
effectuate the terms of this Administration Agreement, with the consent of the
Plan Administrator and the Plan Administration Committee. In addition,
notwithstanding any provision set forth herein to the contrary, the Plan
Administrator may enter into and effect any settlement or other resolution of
any Disputed Claim without the consent of the Plan Administration Committee;
provided, however, that such settlement or resolution shall have been approved
by the Court.
13
<PAGE>
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Intentionally Omitted.
8.2 Preservation of Privilege and Defenses. In connection with
the rights, claims, and Causes of Action that constitute the property of the
Disputed Claims Reserve Trust, any attorney-client privilege, work-product
privilege, or other privilege or immunity attaching to any documents or
communications (whether written or oral) transferred to the Disputed Claims
Reserve Trust shall vest in the Plan Administrator and its representatives, and
the Debtors and the Plan Administrator are authorized to take all necessary
actions to effectuate the transfer of such privileges and available defenses.
8.3 Cooperation. The Debtors shall provide, and the Debtors
shall cause the Surviving Special Purpose Entities to provide, the Plan
Administrator with copies of such of their books and records as the Plan
Administrator shall reasonably require for the purpose of performing its duties
and exercising its powers hereunder. The officers and directors of the Surviving
Special Purpose Entities shall cooperate with the Plan Administrator and shall
provide information reasonably requested by the Plan Administrator.
8.4 Laws as to Construction. This Administration Agreement
shall be governed and construed in accordance with the laws of the State of New
York, without giving effect to rules governing the conflict of law.
8.5 Severability. If any provision of this Administration
Agreement or the application thereof to any person or circumstance shall be
finally determined by a court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Administration Agreement, or
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, shall not be affected thereby,
and such provision of this Administration Agreement shall be valid and enforced
to the fullest extent permitted by law.
8.6 Notices. Any notice or other communication hereunder shall
be in writing and shall be deemed to have been sufficiently given, for all
purposes, if deposited, postage prepaid, in a post office or letter box
addressed to the person for whom such notice is intended:
If to the Debtors:
ContiFinancial Corporation
277 Park Avenue
New York, New York 10172
(212) 208-2800
Attn: Alan H. Fishman
14
<PAGE>
with copies to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attn: Richard S. Miller, Esq.
Togut, Segal & Segal
One Penn Plaza - Suite 3335
New York, New York 10119
Attn: Albert Togut, Esq.
If to the Plan Administrator:
Jeffrey H. Beck
655 N. Powerline Road
Suite 408
Fort Lauderdale, Florida 33309
(954) 958-8070
with a copy to:
Bilzin Sumberg Dunn Baena Price
& Axelrod LLP
2500 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2336
Attn: Scott L. Baena, Esq.
8.7 Headings. The section headings contained in this
Administration Agreement are solely for convenience of reference and shall not
affect the meaning or interpretation of this Administration Agreement or of any
term or provision hereof.
8.8 Relationship to the Plan. The principal purpose of this
Administration Agreement is to aid in the implementation of the Plan and
therefore this Administration Agreement incorporates the provisions of the Plan.
To that end, the Plan Administrator shall have full power and authority to take
any action consistent with the purpose and provisions of the Plan, and to seek
any orders from the Bankruptcy Court in furtherance of implementation of the
Plan and this Administration Agreement. If any provisions of this Administration
Agreement are found to be inconsistent with (a) the provisions of the Plan, the
provisions of this Administration Agreement shall control or (b) the provisions
of the Liquidating Trust Agreement, the provisions of the Liquidating Trust
Agreement shall control.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have either executed
and acknowledged this Administration Agreement, or caused it to be executed and
acknowledged on their behalf by their duly authorized officers all as of the
date first above written.
ContiFinancial Corporation, et al.
Debtors and Debtors in Possession
By:
-----------------------------------------
Name: Alan H. Fishman
Title: President & Chief Executive
Officer
-----------------------------------------
Jeffrey H. Beck, as Plan Administrator
<PAGE>
EXHIBIT C
DISTRIBUTED ESRS
TO BE FILED ON OR BEFORE THE
EXHIBIT FILING DATE.
<PAGE>
EXHIBIT D
SURVIVING NON-DEBTOR AFFILIATES
TO BE FILED ON OR BEFORE THE
EXHIBIT FILING DATE.
<PAGE>
EXHIBIT E
ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
TO BE FILED ON OR BEFORE THE
EXHIBIT FILING DATE.
<PAGE>
EXHIBIT F
SCHEDULE OF DISPUTED CLAIMS
TO BE FILED ON OR BEFORE THE
EXHIBIT FILING DATE.
