SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 4, 1997
Sassco Fashions, Ltd.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
022-22269 223497645
Commission File Number (IRS Employer Identification No.)
77 Metro Way, Secaucus, New Jersey 07094
(Address of principal executive offices) (Zip Code)
(201) 864-0328
Registrant's Telephone Number
Page 1 of 3<PAGE>
Item 5. Other Events.
Capitalized terms not otherwise defined in this
Form 8-K have the respective meanings assigned to them in the
Fourth Amended and Restated Joint Plan of Reorganization for
Debtors Pursuant to Chapter 11 of the United States Bank-
ruptcy Code Proposed by Debtors and Creditors' Committee,
dated April 18, 1997 (the "Plan") a copy of which is attached
as Exhibit 4 hereto.
Pursuant to the Plan, and by order of the Bank-
ruptcy Court, dated April 21, 1997, confirming such Plan. On
June 4, 1997, The Leslie Fay Companies, Inc., a Delaware
corporation ("Leslie Fay") was restructured and Sassco
Fashions, Ltd., a Delaware corporation ("Sassco"), and a
division of Leslie Fay, was transferred to Leslie Fay's
creditors as a new entity. In connection therewith, Sassco
issued $110,000,000 in aggregate principal amount of 12.75%
Senior Notes Due 2004 (the "Notes") to John J. Caliolo, solely
in his capacity as Disbursing Agent, pursuant to an indenture
dated as of June 4, 1997 by and between Sassco and IBJ Schroder
Bank and Trust Company, as Trustee (the "Trustee"). In
addition, Sassco and the Trustee executed a Supplemental
Indenture, dated as of June 30, 1997 with respect to the Notes.
Item 6. Exhibits.
1. Indenture, dated as of June 4, 1997 by and
between Sassco Fashions, Ltd. and IBJ Schroder
Bank & Trust Company, as trustee (filed herewith).
2. Form of Note (attached as Exhibit A to Exhibit 1,
filed herewith).
3. Supplemental Indenture, dated as of June 30,
1997 by and between Sassco Fashions, Ltd. and
IBJ Schroder Bank and Trust Company, as
trustee (filed herewith).
4. Fourth Amended and Restated Joint Plan of
Reorganization for Debtors Pursuant to Chapter
11 of the United States Bankruptcy Code Pro-
posed by Debtors and Creditors' Committee,
dated April 18, 1997 (filed herewith).
Page 2 of 3<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
Dated: July 14, 1997
SASSCO FASHIONS, LTD.
By: /s/ Dennis P. Kelley
Name: Dennis P. Kelley
Title: Chief Financial Officer
Page 3 of 3<PAGE>
EXHIBIT LIST
Page No.
1. Indenture, dated as of June 4, 1997 by and
between Sassco Fashions, Ltd. and IBJ Schroder
Bank & Trust Company, as trustee (filed herewith).
2. Form of Note (attached as Exhibit A to Exhibit 1, filed
herewith).
3. Supplemental Indenture, dated as of June 30,
1997 by and between Sassco Fashions, Ltd. and
IBJ Schroder Bank and Trust Company, as
trustee (filed herewith).
4. Fourth Amended and Restated Joint Plan of
Reorganization for Debtors Pursuant to Chapter
11 of the United States Bankruptcy Code
Proposed by Debtors and Creditors' Committee,
dated April 18, 1997 (filed herewith).
Execution Copy
SASSCO FASHIONS, LTD.
$110,000,000
12.75% SENIOR NOTES, DUE 2004
INDENTURE
DATED AS OF JUNE 4, 1997
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.............................. 1
Section 1.2. Terms Defined in TIA..................... 16
Section 1.3. Rules of Construction.................... 16
ARTICLE 2
THE SECURITIES
Section 2.1. Form and Dating.......................... 16
Section 2.2. Execution and Authentication............. 16
Section 2.3. Terms.................................... 17
Section 2.4. Registrar and Paying Agent............... 18
Section 2.5. Paying Agent to Hold Money in Trust...... 18
Section 2.6. Securityholder Lists..................... 19
Section 2.7. Transfer and Exchange.................... 19
Section 2.8. Replacement Securities................... 20
Section 2.9. Outstanding Securities................... 20
Section 2.10. Treasury Securities...................... 20
Section 2.11. Temporary Securities..................... 21
Section 2.12. Cancellation............................. 21
Section 2.13. Defaulted Interest....................... 21
Section 2.14. Home Office Payment Agreements........... 22
Section 2.15. Deposit of Moneys........................ 22
Section 2.16. CUSIP Number and Private
Placement Number......................... 23
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ARTICLE 3
REDEMPTION
Section 3.1. Certain Notices to Trustee............... 23
Section 3.2. Selection of Securities to Be Redeemed... 23
Section 3.3. Notice of Redemption..................... 24
Section 3.4. Effect of Notice of Redemption........... 25
Section 3.5. Deposit of Redemption Price.............. 25
Section 3.6. Securities Redeemed in Part.............. 26
Section 3.7. Optional Redemption...................... 26
ARTICLE 4
COVENANTS
Section 4.1. Payment of Securities.................... 26
Section 4.2. Maintenance of Office or Agency.......... 27
Section 4.3. Corporate Existence...................... 27
Section 4.4. Payment of Taxes and Other Claims........ 28
Section 4.5. Maintenance of Properties; Insurance;
Books and Records; Compliance with Law... 28
Section 4.6. Compliance Certificates.................. 29
Section 4.7. Reports.................................. 30
Section 4.8. Limitation on Additional Indebtedness.... 32
Section 4.9. Limitation on Investments................ 33
Section 4.10. Limitation on Liens...................... 33
Section 4.11. Limitation on Restricted Payments........ 35
Section 4.12. Change of Control........................ 36
Section 4.13. Limitations on Transactions with
Affiliates............................... 39
Section 4.14. Compliance with ERISA.................... 39
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Section 4.15. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries...... 40
Section 4.16. Conflicting Agreements................... 40
Section 4.17. Liquidation.............................. 41
Section 4.18. Stay, Extension and Usury Laws........... 41
Section 4.19. Fiscal Year.............................. 42
Section 4.20. Limitations on Consolidations,
Mergers and Certain Asset Sales.......... 42
Section 4.21. Limitations on Sale of Assets............ 42
Section 4.22. Change in Business....................... 43
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1. Events of Default........................ 43
Section 5.2. Acceleration............................. 46
Section 5.3. Other Remedies........................... 46
Section 5.4. Waiver of Past Defaults.................. 47
Section 5.5. Control by Majority...................... 47
Section 5.6. Limitation on Suits...................... 47
Section 5.7. Rights of Holders to Receive Payment..... 48
Section 5.8. Collection Suit by Trustee............... 48
Section 5.9. Trustee May File Proofs of Claim......... 49
Section 5.10. Priorities............................... 49
Section 5.11. Undertaking for Costs.................... 50
ARTICLE 6
TRUSTEE
Section 6.1. Duties of Trustee........................ 50
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Section 6.2. Rights of Trustee........................ 52
Section 6.3. Trustee's Disclaimer..................... 52
Section 6.4. Notice of Defaults....................... 53
Section 6.5. Compensation and Indemnity............... 53
Section 6.6. Trustee Not Responsible for Recitals,
Disposition of Securities or Applica-
tion of Proceeds Thereof................. 54
Section 6.7. Trustee and Agents May Hold Securities;
Collections, etc......................... 54
Section 6.8. Replacement of Trustee................... 54
Section 6.9. Successor Trustee by Merger, etc......... 55
Section 6.10. Eligibility.............................. 56
Section 6.11. Appointment of Co-Trustee................ 56
Section 6.12. Reports by Trustee to Holders............ 56
Section 6.13. Preferential Collection of Claims
Against Company.......................... 56
Section 6.14. Communication by Holders with Other
Holders.................................. 57
ARTICLE 7
AMENDMENTS
Section 7.1. Without Consent of Holders............... 57
Section 7.2. With Consent of Holders.................. 58
Section 7.3. Revocation and Effect of Consents........ 59
Section 7.4. Notation on or Exchange of Securities.... 59
Section 7.5. Trustee to Sign Amendments, etc.......... 60
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations..... 60
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Section 8.2. Application of Trust Money............... 62
Section 8.3. Repayment to the Company................. 62
Section 8.3. Reinstatement............................ 63
ARTICLE 9
MEETINGS OF HOLDERS OF SECURITIES
Section 9.1. Purposes of Meetings..................... 63
Section 9.2. Call of Meetings by Trustee.............. 64
Section 9.3. Call of Meetings by Company or
Security Holders......................... 64
Section 9.4. Persons Entitled to Vote at Meeting...... 64
Section 9.5. Regulations for Meeting.................. 65
Section 9.6. Proof of Execution of Instruments
and of Holding Securities................ 65
ARTICLE 10
MISCELLANEOUS
Section 10.1. Conflict with Trust Indenture Act........ 66
Section 10.2. Notices.................................. 66
Section 10.3. Table of Contents, Headings, etc......... 68
Section 10.4. Certificate and Opinion as to Conditions
Precedent................................ 68
Section 10.5. Statements Required in Certificate....... 68
Section 10.6. Rules by Trustee and Agents.............. 68
Section 10.7. Legal Holidays........................... 69
Section 10.8. No Recourse Against Others............... 69
Section 10.9. Governing Law; Submission
to Jurisdiction.......................... 69
Section 10.10. No Adverse Integration of Other
Agreements............................... 70
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Section 10.11. Successors............................... 70
Section 10.12. Severability............................. 70
Section 10.13. Counterpart Originals.................... 70
Section 10.14. Accounting Terms......................... 70
Section 10.15. Transfers of Securities.................. 71
Exhibits:
Exhibit A Form of Securities
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INDENTURE dated as of June 4, 1997 between Sassco
Fashions, Ltd., a Delaware corporation ("Company"), and IBJ
Schroder Bank and Trust Company, as trustee ("Trustee").
The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of
12.75% Senior Notes, Due 2004.
All things necessary have been done to make the Se-
curities, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid
obligations of the Company and to make this Indenture a valid
agreement of the Company.
Each party hereto agrees as follows for the benefit
of the other party and for the equal and ratable benefit of
the Holders of the Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Accounts" shall mean, with respect to any Person,
any "account" (as such term is defined in Section 9-106 of
the UCC) now owned or hereafter acquired by such Person and,
in any event, includes, without limitation, (i) all accounts
receivable, book debts and other forms of obligations now
owned or hereafter received or acquired by or belonging or
owing to such Person (including, without limitation, under
any trade name, style or division thereof) arising out of
goods leased or sold or services rendered by such Person (in-
cluding, without limitation, any such obligation which might
be characterized as an account or contract right under the
UCC), (ii) all of such Person's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired
by it for goods or services and all of such Person's rights
to any goods represented by any of the foregoing (including,
without limitation, unpaid seller's rights of rescission, re-
plevin, reclamation and stoppage in transit and rights to re-
turned, reclaimed or repossessed goods), (iii) all moneys due
or to become due to such Person under all contracts for the
sale or lease of goods or the performance of services or any
such activities by such Person (whether or not yet earned by
performance on the part of such Person or in connection with
any other transaction), now in existence or hereafter occur-
ring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and (iv) all<PAGE>
collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Accumulated Funding Deficiency" has the meaning
set forth in Section 302 of ERISA.
"Affiliate" means (i) any Person directly or indi-
rectly controlling or controlled by or under direct or indi-
rect common control with the Company or any other obligor
upon the Securities, (ii) any spouse, immediate family member
or other relative who has the same principal residence of any
Person described in (i) above, (iii) any trust in which any
such Persons described in clause (i) or (ii) above has a ben-
eficial interest and (iv) any corporation or other organi-
zation of which any such Persons described in clause (i),
(ii) or (iii) above collectively own more than 50% of the eq-
uity of such entity. For purposes of this definition, "con-
trol" when used with respect to any Person means the power to
direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting secu-
rities, by contract or otherwise. The terms "controlled" and
"controlling" have meanings correlative to the foregoing.
"Affiliate Transaction" has the meaning set forth
in Section 4.13.
"Agent" means any Registrar, Paying Agent or co-
registrar.
"Appraiser" means a Person who in the course of its
business appraises property and, where Real Property is in-
volved, who is a member in good standing of the American In-
stitute of Real Estate Appraisers, recognized and licensed to
do business in the jurisdiction where the applicable Real
Property is situated, reasonably acceptable to the Trustee.
"Asset Sale" means any direct or indirect sale,
conveyance, exchange, transfer, lease or other disposition to
any Person, in one transaction or a series of related trans-
actions, of (i) any Capital Stock of any Subsidiary of the
Company or (ii) any other property or asset of the Company or
any Subsidiary of the Company.
"Bankruptcy Law" means Title 11 of the U.S. Code or
any similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors
of the Company or any authorized committee of such Board of
Directors.
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"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certi-
fication, and delivered to the Trustee.
"Book Value" means, with respect to any property or
asset of the Company, the value ascribed to such property or
asset on the Company's books of record and account in the
manner required by GAAP.
"Business Day" means any day other than a Saturday,
a Sunday or a Legal Holiday.
"Capital Lease" means, at the time any determina-
tion thereof is to be made, any lease of any property, real
or personal, in respect of which the present value of the
minimum rental commitment must be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the lia-
bility in respect of a Capital Lease which would at such time
be so required to be capitalized on such balance sheet in ac-
cordance with GAAP.
"Capital Stock" means, with respect to any Person,
any and all shares, interests, participations, rights in or
other equivalents (however designated and whether voting or
non-voting) of such Person's capital stock and any and all
rights, warrants or options exchangeable for or convertible
into such capital stock.
"Cash Equivalents" means, at any time (i) any evi-
dence of Indebtedness with a maturity of 180 days or less is-
sued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality
thereof (provided, however, that the full faith and credit of
the United States of America is pledged in support thereof);
(ii) certificates of deposits or acceptances with a maturity
of 180 days or less of any financial institution that is a
member of the Federal Reserve System having combined capital
and surplus and undivided profits of not less than
$500,000,000 and a minimum rating from Moody's Investors Ser-
vice, Inc. of at least single A; (iii) commercial paper with
a maturity of 180 days or less issued by a corporation (ex-
cept an Affiliate) organized under the laws of any state of
the United States of America or the District of Columbia and
rated at least A-1 by Standard & Poor's Corporation or at
-3-<PAGE>
least P-1 by Moody's Investors Service, Inc.; and (iv) repur-
chase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one
year from the date of acquisition; provided, however, that
the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depositary In-
stitutions with Securities and Others, as adopted by the Com-
ptroller of the Currency.
"Change of Control" means the occurrence of any
Person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) acquiring "beneficial ownership" (as de-
fined in Rule 13d-3 under the Exchange Act), directly or in-
directly, of 50 percent or more of the aggregate voting power
of the Capital Stock of the Company, other than a group con-
trolled by Arthur S. Levine.
"Change of Control Offer" has the meaning set forth
in Section 4.12(a).
"Change of Control Payment Date" has the meaning
set forth in Section 4.12(a).
"Change of Control Price" has the meaning set forth
in Section 4.12(a).
"Commonly Controlled Entity" means an entity,
whether or not incorporated, which is under common control
with the Company within the meaning of Section 4001 of ERISA.
"Company" means Sassco Fashions, Ltd., a Delaware
corporation.
"Competitor" means (i) any Person which is engaged
in the business of manufacturing, distributing or selling
women's apparel or (ii) any "Affiliate" as such term is de-
fined in Rule 405 promulgated pursuant to the Securities Act
of 1933.
"Consolidated Cash Flow" means, with respect to any
Person for any period, the Consolidated Net Income of such
Person for such period plus (i) an amount equal to any ordi-
nary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in com-
puting such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Sub-
sidiaries for such period, to the extent that such provision
-4-<PAGE>
for taxes was deducted in computing such Consolidated Net
Income, plus (iii) consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without
limitation, amortization of original issue discount, non-cash
interest payments, the interest component of any deferred
payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash charges (excluding
any such non-cash charge to the extent that it represents an
accrual of or reserve for cash charges in any future period
or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amorti-
zation and other non-cash charges were deducted in computing
such Consolidated Net Income.
"Consolidated EBIT" means, with respect to any Per-
son for any period, the Consolidated Net Income of such Per-
son for such period increased (to the extent deducted in de-
termining Consolidated Net Income) by the sum of: (i) all
income taxes of such Person and its Subsidiaries provided in
accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or nonrecurring gains
or losses and other than deferred taxes); (ii) all interest
expense of such Person and its Subsidiaries paid, accrued or
capitalized in accordance with GAAP (net of any interest in-
come of such Person and its Subsidiaries) for such period and
(iii) all foreign currency losses less foreign currency gains
of such Person and its Subsidiaries for such period.
"Consolidated EBITDA" means, with respect to any
Person for any period, the Consolidated EBIT of such Person
for such period plus depreciation and amortization and any
other non-cash charges for such period to the extent deducted
in determining the Consolidated EBIT of such Person and its
Subsidiaries for such period.
"Consolidated Interest Coverage Ratio" means, with
respect to any Person, the ratio of (i) Consolidated EBITDA
of such Person for the four full fiscal quarters that immedi-
ately precede the date of the transaction or other circum-
stance giving rise to the need to calculate the Consolidated
-5-<PAGE>
Interest Coverage Ratio (the "Transaction Date") to (ii) all
cash and non-cash interest expense of such Person and its
Subsidiaries determined in accordance with GAAP (net of any
interest income of such Person and its Subsidiaries and ex-
clusive of amortization of deferred financing fees of such
Person and its Subsidiaries) and the aggregate amount of cash
dividends or other distributions declared or paid on Capital
Stock (other than common stock) of such Person and its Sub-
sidiaries, in each case for such four full fiscal quarter pe-
riod. In addition to and without limitation of the forego-
ing, for purposes of this definition, "Consolidated EBITDA"
and the items referred to in the preceding clause (ii) shall
be calculated after giving effect on a pro forma basis for
the period of such calculation to the incurrence of any In-
debtedness of such Person or any of its Subsidiaries at any
time during the period (the "Reference Period") (A) commenc-
ing on the first day of the four full fiscal quarter period
that precedes the Transaction Date and (B) ending on and in-
cluding the Transaction Date, including, without limitation,
the incurrence of the Indebtedness giving rise to the need to
make such calculation, as if such incurrence occurred on the
first day of the Reference Period; provided, however, that if
such Person or any of its Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the above clause
shall give effect to the incurrence of such guaranteed In-
debtedness as if such Person or Subsidiary had directly in-
curred such guaranteed Indebtedness.
"Consolidated Net Income" means, with respect to
any Person for any period, the net income of such Person and
its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided, however, that
(i) the net income of any Person other than a Subsidiary of
such Person (the "Other Person") shall be included to the ex-
tent of the amount of cash dividends or distributions paid by
the Other Person to such Person or a Subsidiary of such Per-
son, (ii) the net income of any Person acquired in a pooling
of interests transaction for any period prior to the date of
the acquisition of such Person shall be excluded, (iii) ex-
traordinary gains and losses shall be excluded, (iv) any non-
cash charges resulting from the application of, and compli-
ance with, Statement of Financial Accounting Standards No.
106 or any similar accounting standard adopted by the Company
shall be excluded, and (v) gains (net of related income
taxes) realized from Asset Sales shall be excluded.
"Consolidated Total Assets" means, with respect to
any Person, the total consolidated assets of such Person as
shown on the most recent balance sheet of such Person.
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"Corporate Trust Office of the Trustee" shall be at
the address of the Trustee specified in Section 9.3 or such
other address as the Trustee may give notice of to the Com-
pany.
"Co-Trustee" means any Person appointed by the
Trustee pursuant to Section 6.11.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official charged with
maintaining possession or control over property for one or
more creditors.
"Default" means any event which is, or after notice
or passage of time or both would be, an Event of Default.
"Default Interest" has the meaning set forth in
Section 4.1.
"Default Rate" has the meaning set forth in Section
4.1.
"Disqualified Stock" means, with respect to any
Person, any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the
option of the holder thereof, in whole or in part on, or pri-
or to, the Maturity Date of the Securities.
"Effective Date" means the date of this Indenture.
"Equity Offering" means an underwritten public of-
fering of Capital Stock of the Company.
"ERISA" means the Employee Retirement Income Secu-
rity Act of 1974 and the rules and regulations issued there-
under, as amended from time to time.
"ERISA Affiliate" means, in relation to any Person,
any trade or business (whether or not incorporated) which is
a member of a group of which that Person is a member and
which is under common control within the meaning of the regu-
lations promulgated under Section 414 of the Internal Revenue
Code.
"ERISA Termination Event" means (i) a Reportable
Event, or (ii) the withdrawal of the Company or any of its
respective ERISA Affiliates from a Plan during a plan year
-7-<PAGE>
including Plans in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, or (iii) the filing
of a notice of intent to terminate a Plan or the treatment of
a Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a
Plan by the PBGC, or (v) any other event or condition which
would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to adminis-
ter, any Plan.
"Event of Default" has the meaning set forth in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value" or "fair value" means, with re-
spect to any asset or property, the price which could be ne-
gotiated in an arm's-length free market transaction, for
cash, between an informed and willing seller and an informed
and willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair
Market Value shall be determined by the Board of Directors
acting in good faith and shall be evidenced by a Board Reso-
lution delivered to the Trustee except (i) any determination
of Fair Market Value made with respect to any Real Property
shall be made by an Appraiser and (ii) as otherwise indicated
in this Indenture.
"Fiscal Year" means the fiscal year of the Company
and its Subsidiaries which ends on December 31.
"GAAP" means generally accepted accounting princi-
ples set forth in the opinions and pronouncements of the Ac-
counting Principles Board of the American Institute of Cer-
tified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a sig-
nificant segment of the accounting profession of the United
States, which are applicable as of the date of determination.
"Governmental Authority" means any nation or gov-
ernment, any state or political subdivision thereof and any
entity exercising elective, legislative, judicial, regulatory
or administrative functions of or pertaining to any govern-
ment.
"Guaranty" or "guaranty" means, as applied to any
obligation, (a) a guaranty (other than (i) by endorsement of
negotiable instruments for collection in the ordinary course
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of business, and (ii) a Performance Guaranty), direct or in-
direct, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof),
of any part or all of such obligation, and (b) an agreement,
direct or indirect, contingent or otherwise, the practical
effect of which is to assure in any way the payment or per-
formance (or payment of damages in the event of nonperfor-
mance) of any part or all of such obligation, including,
without limiting the foregoing, the payment of amounts drawn
down by letters of credit, but excluding any Performance
Guaranty. The amount of a guaranty shall be deemed to be the
maximum amount of the obligation guarantied for which the
guarantor could be held liable under such guaranty.
"Hedging Obligations" means, with respect to any
Person, the obligations of such Person under (i) currency ex-
change or interest rate swap agreements, currency exchange or
interest rate cap agreements and currency exchange or inter-
est rate collar agreements and (ii) other agreements or ar-
rangements designed to protect such Person against fluctua-
tions in currency exchange or interest rates.
"Holder" means a Person in whose name a Security is
registered.
"Incur" or "incur" has the meaning set forth in
Section 4.8.
"Indebtedness" means, with respect to any Person,
without duplication, (i) all obligations for borrowed money,
(ii) all obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) all Capital Lease Obliga-
tions, (iv) all obligations issued or assumed as the deferred
purchase price of property, all conditional sale obligations
and all obligations under any title retention agreement (but
excluding trade accounts payable or accrued expenses arising
in the ordinary course of business), (v) all obligations is-
sued or contracted for as payment in consideration of the
purchase by such Person of the stock or substantially all the
assets or a merger or consolidation, (vi) all obligations for
the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (but ex-
cluding trade letters of credit issued in support of trade
account payables arising in the ordinary course of business
and performance letters of credit), (vii) all obligations of
the type referred to in clauses (i) through (vi) of other
Persons and all dividends of other Persons for the payment of
which, in either case, such Person is directly or indirectly
responsible or liable as obligor, guarantor or otherwise, and
(viii) all obligations of the type referred to in clauses (i)
-9-<PAGE>
through (vii) of other Persons which are secured by any Lien
on any property or asset of such Person, the amount of such
obligation being deemed to be the lesser of the value of such
property or asset or the amount of the obligation so secured.
"Indenture" means this Indenture as supplemented,
amended or otherwise modified from time to time.
"Independent" when used with respect to any speci-
fied Person means such a Person who (a) is in fact indepen-
dent, (b) does not have any direct financial interest or any
material indirect financial interest in the Company or in any
Affiliate of the Company and (c) is not an officer, employee,
promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the
Company. Whenever it is provided in this Indenture that any
Independent Person's opinion or certificate shall be fur-
nished to the Trustee, such Person shall be appointed by the
Company and approved by the Trustee in the exercise of rea-
sonable care, and such opinion or certificate shall state
that the signer has read this definition and that the signer
is Independent within the meaning thereof.
"Institutional Holder" means any bank, trust com-
pany, insurance company, pension fund, investment company or
other financial institution, including, without limitation,
any "qualified institutional buyer" within the meaning of
Rule 144A promulgated under the Securities Act, which is or
becomes a Holder.
"interest," when used with respect to any Security,
means the amount of all interest accruing on such Security at
the stated interest rate and all interest accruing on such
Security at the Default Rate in accordance with Section 4.1.
"Interest Payment Date," when used with respect to
any Security, means the stated maturity of an installment of
interest specified in such Security.
"Inventory" shall mean, with respect to any Person,
any "inventory" (as such term is defined in Section 9-109(4)
of the UCC) now owned or hereafter acquired by such Person,
and wherever located, and, in any event, includes, without
limitation, all inventory, merchandise, goods and other per-
sonal property now owned or hereafter acquired by such Person
which are held for sale or lease or are furnished or are to
be furnished under a contract of service or which constitute
raw materials, work in process or materials used or consumed
or to be used or consumed in such Person's business, or the
-10-<PAGE>
processing, packaging, delivery or shipping of the same, and
all finished goods.
"Issue Date" means the date on which the Securities
are issued.
"Legal Holiday" means any day on which banking in-
stitutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Lien" means, with respect to any asset or prop-
erty, any mortgage, lien, pledge, charge, security interest
or other encumbrance of any kind or nature whatsoever in re-
spect of such asset or property, whether or not filed, re-
corded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell and any filing of or agreement to give any financing
statement under the UCC (or equivalent statutes) of any ju-
risdiction).
"Maturity Date" means, when used with respect to
any Security, the date specified in such Security as the
fixed date on which the principal of such Security is due and
payable (in the absence of any acceleration thereof pursuant
to Section 5.2).
"Multiemployer Plan" means a Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any As-
set Sale or Equity Offering, the aggregate amount of (i) cash
received by the Company or such Subsidiary, as the case may
be, from such Asset Sale or Equity Offering, after (a) provi-
sion for all income or other taxes payable as a result of
such Asset Sale or Equity Offering, and (b) payment of all
brokerage commissions and other reasonable fees and expenses
related to such Asset Sale or Equity Offering and (ii) Cash
Equivalents, promissory notes or readily marketable debt or
equity securities received by the Company or such Subsidiary,
as the case may be, from such Asset Sale or Equity Offering,
but only in amounts equal to cash received on account of the
liquidation or payment of such notes or securities when and
as received.
"Obligations" means, collectively, all of the In-
debtedness, obligations and liabilities whether direct or in-
direct, joint or several, actual, absolute or contingent, ma-
tured or unmatured, liquidated or unliquidated, secured or
-11-<PAGE>
unsecured, arising by contract, operation of law or other-
wise, including any principal, interest (including post-peti-
tion interest), premiums, penalties and fees, of the Company
or any Subsidiary thereof payable under the documentation
governing any such Indebtedness.
"Officers" means the President, the Treasurer, any
Assistant Treasurer, Controller, Secretary or any Vice-Pres-
ident of the Company.
"Officers' Certificate" means a certificate signed
by two Officers.
"Opinion of Counsel" means a written opinion from
legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Company or any other
obligor upon the Securities or to the Trustee.
"Paying Agent" has the meaning set forth in Section
2.4.
"Payment Default" has the meaning set forth in Sec-
tion 5.1(7).
"PBGC" means the Pension Benefit Guaranty Corpora-
tion, or any successor thereto.
"Performance Guaranty" means, in respect of the
Company or any of its Subsidiaries, contingent obligations
arising from the issuance of performance guaranties, assur-
ances, indemnities, bonds, letters of credit or similar
agreements in the ordinary course of business in respect of
the contracts (other than for borrowed money) of the Company
or any of the Subsidiaries of the Company for the benefit of
surety companies or for the benefit of others to induce such
others to forgo the issuance of a surety bond in their favor.
"Permitted Investments" means (i) Restricted In-
vestments in existence as of the date hereof, (ii) certifi-
cates of deposit with final maturities of one year or less
issued by commercial banks chartered in the United States of
America (a "Commercial Bank") with capital and surplus in ex-
cess of $100,000,000, (iii) commercial paper rated at least
P-1 by Moody's Investors Service, Inc. or at least A-1 by
Standard & Poor's Corporation, (iv) direct obligations issued
by the United States of America or any agency thereof with a
maturity not more than one year from the date of acquisition,
(v) money market preferred stock rated A or above, (vi) tax-
exempt floating rate option tender bonds, backed by a letter
of credit issued by a Commercial Bank rated AA by Standard &
-12-<PAGE>
Poor's Corporation or Aa by Moody's Investors Service, Inc.
and (vii) equity or debt investments in wholly-owned Subsid-
iaries with lines of business similar to that of the Company
or any of its Subsidiaries' existing lines of business.
"Person" means any individual, corporation, part-
nership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plan" means, at any particular time any employee
benefit plan, as defined in Section 3(3) of ERISA, in respect
of which the Company or any of its ERISA Affiliates or a Com-
monly Controlled Entity is (or, if such plan were terminated
at which time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"principal" of a debt security means the principal
of the security.
"Prohibited Transaction" has the meaning set forth
in Section 406 of ERISA.
"Real Property" means any interest in any real pro-
perty or any portion thereof whether owned in fee or leased
or otherwise owned.
"Redemption Price" means, with respect to any Secu-
rity to be redeemed, the principal and premium, if any, plus
accrued interest on such Security as of the date fixed for
such redemption by or pursuant to this Indenture.
"Registrar" has the meaning set forth in Section
2.4.
"Reorganization Plan" means the Fourth Amended and
Restated Joint Plan of Reorganization for Debtors Pursuant to
Chapter 11 of the United States Bankruptcy Code Proposed by
Debtors and Creditors' Committee, in the jointly administered
chapter 11 reorganization cases commenced by The Leslie Fay
Companies, Inc. and its Subsidiaries, Chapter 11 Case No. 93B
41724 (TLB), confirmed by order of the United States Bank-
ruptcy Court for the Southern District of New York entered on
April 21, 1997, either in its form on the Effective Date or
as it may subsequently be supplemented, amended or otherwise
modified from time to time in accordance with the Bankruptcy
Law, the Federal Rules of Bankruptcy Procedure and the
Reorganization Plan, including all appendices, exhibits and
schedules thereto.
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"Reportable Event" means any of the events set
forth in Section 4043(b) of ERISA and the regulations there-
under, other than those events as to which the thirty (30)
day notice period is waived under subsection .13, .14, .16,
.18, .19 or .20 of Section 2615 of the regulations of the PBGC.
"Requesting Holder" means any Holder who delivers a
written notice to the Company requesting that the Company de-
liver directly to such Holder all certificates, notices and
reports required to be delivered to the Trustee under the
terms of this Indenture.
"Restricted Investment" means any capital contribu-
tion to, or other debt or equity investment in, any Person
(other than Permitted Investments).
"Restricted Payment" with respect to any Person
means (i) the payment or declaration of any distribution on
account of any class of such Person's Capital Stock; (ii) re-
demptions, purchases or other acquisitions (direct or indi-
rect) of such Person's Capital Stock; (iii) optional prepay-
ment of any subordinated Indebtedness of such Person; and
(iv) any Restricted Investment.
"Restricted Securities" means Securities which were
acquired by the Holder thereof other than pursuant to an ef-
fective registration statement under the Securities Act or
Rule 144 (or any successor rule) thereunder.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 12.75% Senior Notes due
March 31, 2004 referred to in the preamble to this Indenture
and issued pursuant hereto.
"Securities Act" means the Securities Act of 1933,
as amended.
"Securityholder" means a Holder of one or more Se-
curities.
"Significant Subsidiary" means any Subsidiary of
the Company which would be a "significant subsidiary" as de-
fined in Rule 1-O2 of Regulation S-X under the Securities Act
and the Exchange Act.
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"Single Employer Plan" shall have the meaning set
forth in Section 4001(a)(15) of ERISA.
"Subsidiary" means, with respect to any Person, (i)
any corporation of which at least a majority of the outstand-
ing Capital Stock or other equity interests having ordinary
voting power for the election of directors or other governing
body of such corporation is owned directly or indirectly by
such Person or (ii) any other Person of which at least a ma-
jority of voting interest is at the time, directly or indi-
rectly, owned by such Person. Unless otherwise specified,
any reference to a Subsidiary is deemed to be a reference to
a Subsidiary of the Company.
"Supplemental Indenture" means any supplemental in-
denture to this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb), as amended.
"Trust Officer" means any officer in the Corporate
Trust Division of the Trustee, or any other officer or assis-
tant officer of the Trustee assigned by the Trustee to admin-
ister its corporate trust matters.
"Trustee" means the party named as such above until
a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the succes-
sor serving hereunder.
"UCC" means the Uniform Commercial Code as in ef-
fect in the State of New York.
"U.S. Government Obligations" means direct obliga-
tions of the United States of America for the payment of
which the full faith and credit of the United States of
America is pledged.
"Working Capital Facility" means that certain Re-
volving Credit Agreement made as of June 4, 1997 by and among
the Company, the lender parties thereto, Bank Boston, N.A.,
as administrative and collateral agent, BancBoston Securities
Corp. as syndication agent and Heller Financial, Inc. as Co-
Agent, and all agreements, instruments and documents entered
into in connection therewith, as any of the same may be
supplemented, amended or otherwise modified from time to
time.
-15-<PAGE>
Section 1.2. Terms Defined in TIA.
All terms used in this Indenture and not defined
herein that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP in
the United States;
(3) "or" is not exclusive;
(4) "including" means including, but not limited
to;
(5) words in the singular include the plural, and
in the plural include the singular;
(6) provisions apply to successive events and
transactions; and
(7) all references to sections and subsections are
references to sections and subsections of this Inden-
ture, except as expressly provided otherwise.
ARTICLE 2
THE SECURITIES
Section 2.1. Form and Dating.
The Securities and the Trustee's certificate of au-
thentication shall be substantially in the form of Exhibit A,
which is attached and made part of this Indenture. The Secu-
rities may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Security shall be
dated the date of its authentication. The Securities shall
be in denominations of $1,000 and integral multiples thereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Securities for the Com-
pany by manual or facsimile signature. The Company's seal
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shall be impressed, affixed, imprinted or reproduced on the
Securities.
If an Officer whose signature is on a Security no
longer holds that office at the time the Security is authen-
ticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated
by the manual signature of an authorized signatory of the
Trustee. Such signature shall be conclusive evidence that
the Security has been authenticated under this Indenture.
The form of Trustee's certificate of authentication to be
borne by the Securities shall be substantially as set forth
in the form of Securities attached hereto.
The Trustee shall authenticate the Securities for
original issue in an aggregate principal amount of
$110,000,000. The aggregate principal amount of Securities
outstanding at any time may not exceed the amount set forth
herein except as provided in Section 2.3.
The Trustee may appoint an authenticating agent ac-
ceptable to the Company to authenticate securities. An au-
thenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to au-
thentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate.
Section 2.3. Terms.
(a) The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture
is limited to $110,000,000, except for Securities authenti-
cated and delivered upon registration of the transfer of, in
exchange for, or in replacement of, other Securities pursuant
to Sections 2.7 and 2.8 hereof.
(b) The Securities shall have a Maturity Date of
March 31, 2004 and shall bear interest at the rate of 12.75%
per annum. Interest shall be (i) computed on the basis of a
360-day year of twelve 30-day months and (ii) payable in ar-
rears on September 30, 1997 and semiannually on each March 31
and September 30 thereafter.
(c) The Securities shall be redeemable as provided
in Article 3.
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Section 2.4. Registrar and Paying Agent.
The Company shall maintain an office or agency
where Securities may be presented for registration of trans-
fer or for exchange ("Registrar"), an office or agency where
Securities may be presented for payment ("Paying Agent") and
an office or agency where notices and demands to or upon the
Company in respect of the Securities and this Indenture may
be served. The Registrar shall keep a register of the Secu-
rities and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any addi-
tional paying agent. The Company shall notify the Trustee of
the name and address of any Agent not a party to this Inden-
ture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Sec-
tion 6.5. The Company or any of its Subsidiaries may act as
Registrar or co-registrar. Neither the Company nor any of
its Affiliates may act as Paying Agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, in
form and substance reasonably satisfactory to the Trustee,
which shall incorporate the provisions of the TIA. The
agreement shall implement the provisions of this Indenture
that relate to such Agent.
The Company initially appoints the Trustee as Reg-
istrar, Paying Agent and agent for service of notices and de-
mands in connection with the Securities.
Section 2.5. Paying Agent to Hold Money in Trust.
The Company (or any other obligor upon the Securi-
ties) shall require each Paying Agent other than the Trustee
to agree in writing (and in form and substance reasonably
satisfactory to the Trustee) that the Paying Agent will hold
in trust for the benefit of the Securityholders or the
Trustee all money held by the Paying Agent for the payment of
principal of, interest on or other amounts including premi-
ums, if any, in respect of the Securities, and will promptly
notify the Trustee of any default by the Company (or any
other obligor upon the Securities) in making any such pay-
ment. While any such default continues, the Trustee may re-
quire a Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. The Company
(or any other obligor upon the Securities) at any time may
require a Paying Agent to pay all money held by it to the
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Trustee. Upon payment over to the Trustee, the Paying Agent
shall have no further liability for the money delivered to
the Trustee.
Section 2.6. Securityholder Lists.
The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to
it of the names and addresses of Securityholders. If the
Trustee is not the Registrar, the Company (and/or any other
obligor upon the Securities) shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date
(and in all events at intervals of not more than six months)
and at such other times as the Trustee may request in writ-
ing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Securi-
tyholders.
Section 2.7. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-registrar with a request from the Holder of such Securi-
ties to register the transfer of or to exchange them for an
equal principal amount of Securities of other authorized de-
nominations, the Registrar shall register the transfer or
make the exchange as requested if its requirements for such
transactions are met; provided, however, that (a) any Secu-
rity presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar
and the Trustee duly executed by the Holder thereof or his
attorney duly authorized in writing and (b) Section 9.16, if
applicable, has been complied with. To permit registrations
of transfers and exchanges, the Company shall issue and exe-
cute and the Trustee shall authenticate new Securities evi-
dencing such transfer or exchange at the Registrar's request.
Neither the Registrar nor any co-registrar shall be required
to exchange or register the transfer of any Security selected
for redemption, except the unredeemed portion of any Security
being redeemed in part. Neither the Company nor the Regis-
trar or any co-registrar shall be required to issue, ex-
change, or register the transfer of any Security during the
period commencing 15 days before the day of selection of Se-
curities for redemption and ending at the close of business
on the day of selection.
No service charge shall be made to the Security-
holder for any registration of transfer or exchange (except
as otherwise expressly permitted herein), but the Company may
require payment of a sum sufficient to cover any transfer tax
-19-<PAGE>
or similar governmental charge that may be imposed in rela-
tion to a transfer or exchange (other than such transfer tax
or similar governmental charge payable upon exchanges pursu-
ant to Sections 2.11 or 7.4 hereof).
Section 2.8. Replacement Securities.
If any mutilated Security is surrendered to the
Registrar or the Trustee, or the Company and the Trustee re-
ceive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and execute
and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If the Trustee or the
Company so requires, the Holder must supply an indemnity bond
that is sufficient in the reasonable judgment of the Trustee
and the Company to protect the Company, the Trustee, any
Agent or any authenticating agent from any loss which any of
them may suffer if a Security is replaced. Every replacement
Security shall constitute an additional Obligation of the
Company. The Company and the Trustee may charge the Holder
for their actual out of pocket expenses in replacing a Secu-
rity.
Section 2.9. Outstanding Securities.
The Securities outstanding at any time are all the
Securities authenticated by the Trustee except for those can-
celed by it, those delivered to it for cancellation and those
described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8,
it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a
bona fide purchaser in whose hands such security is a legal,
valid and binding Obligation of the Company.
If the principal amount of any Security is consid-
ered paid under Section 4.1, it ceases to be outstanding and
interest on it ceases to accrue.
A Security does not cease to be outstanding because
the Company or an Affiliate holds the Security.
Section 2.10. Treasury Securities.
In determining whether the Holders of the required
principal amount of Securities have concurred in any declara-
tion of acceleration or notice of default or direction,
waiver or consent or any amendment, Securities owned by the
-20-<PAGE>
Company, any other obligor upon the Securities or an Affili-
ate shall be disregarded as though not outstanding, except
that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver
or consent to any amendment, modification or other change to
this Indenture, only Securities which the Trustee actually
knows are so owned shall be so disregarded.
Section 2.11. Temporary Securities.
Until definitive Securities are ready for delivery,
the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substan-
tially in the form of definitive Securities but may have var-
iations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Securi-
ties in exchange for temporary Securities. Until such ex-
change, temporary Securities shall be entitled to the same
rights, benefits and privileges as the definitive Securities.
Section 2.12. Cancellation.
The Company at any time may deliver Securities to
the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Securities surrendered to
them for registration of transfer, exchange or payment. The
Trustee shall cancel all Securities surrendered for registra-
tion of transfer, exchange, payment, replacement or cancella-
tion and shall destroy canceled Securities unless, by a writ-
ten order, signed by two Officers, the Company directs them
to be returned to it. The Company may not reissue or resell,
or issue new Securities to replace, Securities that it has
redeemed or paid or that have been delivered to the Trustee
for cancellation.
Section 2.13. Defaulted Interest.
If the Company defaults in a payment of interest on
the Securities, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, any interest pay-
able on the defaulted interest, to the Persons who are Secu-
rityholders on a subsequent special record date, which date
shall be at least five Business Days prior to the payment
date, in each case at the rate provided therefor in the Secu-
rities and in Section 4.1 hereof. The Company shall, with
the consent of the Trustee, fix each such special record date
and payment date. At least 15 days before such special
record date, the Company (or the Trustee, in the name of and
-21-<PAGE>
at the expense of the Company) shall mail to each Security-
holder a notice that states the special record date, the re-
lated payment date and the amount of defaulted interest, and
interest payable on such defaulted interest to be paid. At
the Company's request, the Trustee shall give such notice of
redemption in the Company's name and at the Company's ex-
pense; provided, however, that the Company shall deliver to
the Trustee, at least 15 days prior to the date that notice
must be given to the Securityholders, an Officers' Certifi-
cate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided
in this Section 2.13.
Section 2.14. Home Office Payment Agreements.
Notwithstanding any provisions of this Indenture or
of the Securities to the contrary, payments of interest on,
premiums, if any, and all or any portion of the principal of,
any Security, other than the final payment of principal on a
Security, shall be made by the Paying Agent directly to any
Holder of principal amount of $1,000,000 or more of such Se-
curity (by federal funds transfer) without surrender or pre-
sentation thereof to the Paying Agent if such Holder (a) pro-
vides the Company and the Trustee with an undertaking that
such Holder (or the Person for whom such Holder is a nominee)
will, before selling, transferring or otherwise disposing of
any such Security, make a notation thereon, or submit the
same to the Trustee for notation thereon, of the date to
which interest has been paid thereon and the amount of all
redemptions previously made thereon, or surrender the same to
the Trustee in exchange for a Security or Securities aggre-
gating the same principal amount as the unredeemed principal
amount of the Securities surrendered and (b) provides the
Trustee with wire transfer or other payment instructions rea-
sonably satisfactory to the Trustee on or before the record
date for such payment to be made to such Holder. The Company
will indemnify and hold the Trustee and the Paying Agent
harmless against any liability resulting from any act or
omission to act on the part of the Company or any such Holder
in connection with any such agreement or which the Paying
Agent may incur as a result of making any payment in accor-
dance with any such agreement.
Section 2.15. Deposit of Moneys.
On each Interest Payment Date and the Maturity
Date, the Company shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or the
Maturity Date, as the case may be, in a timely manner which
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permits the Trustee to remit payment to the Holders on such
Interest Payment Date or the Maturity Date, as the case may
be.
Section 2.16. CUSIP Number and Private
Placement Number.
The Company in issuing the Securities may use a
"CUSIP" number, and if so, such CUSIP number shall be in-
cluded in notices of redemption or exchange as a convenience
to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness or ac-
curacy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other
identification numbers printed on the Securities. The Com-
pany will promptly notify the Trustee of any change in the
CUSIP number. In addition, the Company shall, if applicable,
at the Company's expense, procure a "Private Placement" num-
ber for the Securities issued pursuant to this Indenture.
ARTICLE 3
REDEMPTION
Section 3.1. Certain Notices to Trustee.
If the Company intends to redeem Securities pursu-
ant to the provisions of Section 3.7 hereof, it shall notify
the Trustee in writing, at least 45 days before a redemption
date (and at least two Business Days before a notice of
redemption is sent to the Holders), of the redemption date,
the principal amount of Securities to be redeemed and the
Redemption Price and shall furnish to the Trustee an
Officers' Certificate stating that such redemption will
comply with the conditions contained herein and in the
Securities.
Section 3.2. Selection of Securities to Be
Redeemed.
If less than all of the Securities are to be re-
deemed, the Trustee shall select the Securities to be re-
deemed on a pro rata basis or by lottery in multiples of
$1,000 among the outstanding Securities.
The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the
case of Securities selected for partial redemption, the prin-
cipal amount to be redeemed. Securities and portions of them
selected shall be in amounts of $1,000 or whole multiples of
-23-<PAGE>
$1,000; except that if all of the Securities of a Holder are
to be redeemed, the entire outstanding amount of Securities
held by such Holder, even if not a multiple of $1,000, shall
be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called
for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a
redemption date the Company shall mail a notice of redemption
by first class mail to each Holder whose Securities are to be
redeemed and the Trustee and the Paying Agent.
The notice shall identify the Securities to be re-
deemed and shall state:
(1) the redemption date;
(2) the Redemption Price;
(3) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be
redeemed and that, after the redemption date, upon sur-
render of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed por-
tion thereof will be issued without charge to the Secu-
rityholder;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemp-
tion Price, except as provided in Section 2.14 hereof;
(6) that, unless the Company defaults in making
the redemption payment, interest on Securities called
for redemption ceases to accrue on and after the redemp-
tion date;
(7) the paragraph of the Securities and the sec-
tion of the Indenture pursuant to which the Securities
called for redemption are being redeemed;
(8) if less than all of the Securities are to be
redeemed, the identification of the particular Securi-
ties (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Securities to be redeemed
-24-<PAGE>
and the aggregate principal amount of Securities esti-
mated to be outstanding after such partial redemption;
and
(9) the CUSIP number or Private Placement number,
if any, pursuant to Section 2.16 hereof.
At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at the
Company's expense; provided, however, that the Company shall
deliver to the Trustee, at least 15 days prior to the date
that notice must be given to the Securityholders, an Offic-
ers' Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in such notice
as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities
called for redemption become due and payable on the redemp-
tion date at the Redemption Price.
Section 3.5. Deposit of Redemption Price.
At least one Business Day prior to the redemption
date, the Company shall deposit with the Trustee or with the
Paying Agent in immediately available funds money sufficient
to pay the Redemption Price of all Securities or portions
thereof to be redeemed on that date. The Trustee or the Pay-
ing Agent shall return to the Company any excess money not
required for such redemption.
If the Company complies with the preceding para-
graph, interest on the Securities to be redeemed shall cease
to accrue on the applicable redemption date, whether or not
such Securities are presented for payment. If any Security
called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall continue to ac-
crue on the unpaid principal, from the redemption date until
such principal is paid, and on any interest not paid on such
unpaid principal, in each case at the Default Rate provided
in the Securities and in Section 4.1 hereof.
-25-<PAGE>
Section 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in
part, the Company shall issue and the Trustee shall authenti-
cate for the Holder at the expense of the Company a new Secu-
rity equal in principal amount to the unredeemed portion of
the Security surrendered.
Section 3.7. Optional Redemption.
(a) Subject to Section 4.12, and except as set
forth in subsection (b) of this Section 3.7, the Securities
may not be redeemed in whole or in part prior to January 1,
2000. On or after that date, the Company may redeem the Se-
curities in whole or in part at any time at the following Re-
demption Prices (expressed in percentages of principal
amount), plus accrued interest to the redemption date:
Period Redeemed Percentage
--------------- ----------
January 1, 2000 through December 31, 2000 106.375%
January 1, 2001 through December 31, 2001 104.250%
January 1, 2002 through December 31, 2002 102.125%
January 1, 2003 through the Maturity Date 100.000%
(b) Notwithstanding the provisions of subsection
(a) of this Section 3.7, at any time prior to January 1,
2000, the Company may redeem in part and from time to time
with the net proceeds of one or more public equity offerings,
up to 35% of the original aggregate principal amount of the
Securities at a Redemption Price of 110% of the principal
amount of the Securities to be redeemed plus accrued interest
to the redemption date.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Securities.
The Company shall pay the principal of, premium (if
any), and interest on the Securities on the dates and in the
manner provided in the Securities and this Indenture. Prin-
cipal, premium (if any) and interest shall be considered paid
on the date due if the Paying Agent holds on such date (or
the immediately preceding Business Day if Section 3.5 is ap-
plicable) money deposited by the Company in immediately
available funds designated for and sufficient to pay all
principal, premium (if any) and interest then due.
-26-<PAGE>
The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any ("Default Interest")
at the rate equal to 14.75% per annum (the "Default Rate");
it shall pay Default Interest (including post-petition inter-
est in any proceeding under any Bankruptcy Law) on overdue
installments of interest (upon the expiration of any appli-
cable grace period) at the same rate to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in New York, New York an
office or agency (which may be an office of the Trustee, Reg-
istrar or co-registrar) where Securities may be surrendered
for registration of transfer or exchange or for presentation
for payment and where notices and demands to or upon the Com-
pany in respect of the Securities and this Indenture may be
served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presen-
tations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate
one or more other offices or agencies where the Securities
may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; pro-
vided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to main-
tain an office or agency in New York, New York for such pur-
poses. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the
Company in accordance with Section 2.4.
Section 4.3. Corporate Existence.
Subject to Section 4.20 hereof, the Company shall
do or cause to be done, at its own cost and expense, all
things necessary to, and will cause each of its Subsidiaries
to, preserve and keep in full force and effect its respective
corporate, partnership or other existence in accordance with
its respective organizational documents and the rights (char-
ter and statutory), licenses and franchises of the Company
and each of its Subsidiaries; provided, however that, subject
-27-<PAGE>
to the terms hereof, the Company shall not be required to
preserve any such right, license or franchise, or the corpo-
rate, partnership or other existence of any Subsidiary, if
the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not adverse in
any material respect to the Holders.
Section 4.4. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent,
(a) all taxes, assessments and governmental charges levied or
imposed upon its or its Subsidiaries' income, profits or
property and (b) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon
its or its Subsidiaries' assets or property; provided, how-
ever, that the Company shall not be required to pay or dis-
charge or cause to be paid or discharged any such tax, as-
sessment, charge or claim whose amount, applicability or va-
lidity is being contested in good faith by appropriate nego-
tiations or proceedings and for which disputed amounts ad-
equate reserves (in the good faith judgment of the Board of
Directors of the Company) have been made.
Section 4.5. Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
(a) The Company shall and shall cause each of its
Subsidiaries to, at all times cause all properties used or
useful in the conduct of its business to be maintained and
kept in good condition, repair and working order (reasonable
wear and tear excepted) and supplied with all necessary
equipment, and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereto.
(b) The Company and each of its Subsidiaries shall
maintain insurance with insurance companies or associations
with a rating of "A-XIV" or better, as established by Best's
Rating Guide (or an equivalent rating with such other publi-
cation of a similar nature as shall be in current use) in at
least such amounts and covering at least such risks as are
usually and customarily insured against in the same general
area by companies engaged in the same or similar business,
and furnish to the Trustee and each Requesting Holder, upon
written request, full information as to the insurance car-
ried.
(c) The Company shall and shall cause each of its
Subsidiaries to keep proper books of record and account, in
-28-<PAGE>
which full and correct entries shall be made of all financial
transactions and the assets and business of the Company and
each Subsidiary of the Company, in accordance with GAAP con-
sistently applied to the Company and its Subsidiaries taken
as a whole.
(d) The Company shall and shall cause each of its
Subsidiaries to comply with all statutes, laws, ordinances,
or government rules and regulations to which it is subject,
non-compliance with which would materially adversely affect
the business, prospects, earnings, properties, assets or con-
dition (financial or otherwise) of the Company and its Sub-
sidiaries taken as a whole.
Section 4.6. Compliance Certificates.
(a) The Company shall deliver to the Trustee and
each Requesting Holder, within 45 days after the end of each
of the respective first three quarters of each Fiscal Year,
and within 90 days after the end of each Fiscal Year, Offic-
ers' Certificates of the Company stating (i) that a review of
the activities of the Company during the preceding fiscal
quarter or Fiscal Year, as the case may be, has been made un-
der the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed
and fulfilled its obligations under this Indenture, (ii)
that, to the best knowledge of such Officers, the Company has
kept, observed, performed and fulfilled each and every cov-
enant contained in this Indenture and is not in default in
the performance or observance of any of the terms, provisions
and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events
of Default of which such Officers have knowledge, their sta-
tus and what action the Company is taking or proposes to take
with respect thereto) and (iii) that to the best of such Of-
ficers' knowledge no event has occurred and remains in exist-
ence by reason of which payments on account of the principal
of, premium, if any, or interest, if any, on the Securities
are prohibited (or, if such event has occurred, describing
the event and what action the Company is taking or proposes
to take with respect thereto).
(b) So long as (and to the extent) not contrary to
the then current recommendations of the American Institute of
Certified Public Accountants, the annual financial statements
delivered pursuant to Section 4.7 hereof shall be accompanied
by a written statement of the Company's Independent public
accountants, which shall be a nationally recognized firm,
that in making the examination necessary for certification of
such annual financial statements nothing has come to their
-29-<PAGE>
attention that would lead them to believe that the Company
has violated any provisions of this Indenture or, if any such
violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Secu-
rities are outstanding, deliver to the Trustee and any Re-
questing Holder, forthwith upon any Officer becoming aware of
any Default or Event of Default an Officers' Certificate
specifying such Default or Event of Default and what action
the Company is taking or proposes to take with respect there-
to.
Section 4.7. Reports.
(a) In accordance with the provisions of TIA Section
314(a), at any time that the Company has a class of securi-
ties registered under the Exchange Act or is otherwise re-
quired to file reports with the SEC pursuant to Section 15(d)
of the Exchange Act, the Company shall file with the Trustee,
each Institutional Holder and any Requesting Holder, within
15 days after it files them with the SEC, copies of the an-
nual reports and of the information, documents and other re-
ports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. The Company also shall com-
ply with the other provisions of TIA Section 314(a). In addition,
the Company shall cause its annual report to stockholders and
any quarterly or other financial reports generally furnished
by it to stockholders to be filed with the Trustee and
mailed, no later than the date such materials are mailed or
made available to the Company's stockholders, to the Holders
at their addresses as set forth in the register of the Secu-
rities maintained by the Registrar.
(b) At any time that the Company does not have a
class of securities registered under the Exchange Act or is
not required to file reports with the SEC pursuant to Section
15(d) of the Exchange Act, the Company shall furnish to the
Trustee and shall mail (or cause to be mailed by the Trustee
at the Company's expense) to each Institutional Holder and
each of the Requesting Holders at their addresses as set
forth in the register of the Securities within 60 days after
the close of each quarter of the Company's Fiscal Year and
within 90 days after the close of each Fiscal Year consoli-
dated balance sheets of the Company as of the end of each
such quarter or Fiscal Year, as the case may be, consolidated
-30-<PAGE>
statements of income, cash flow and changes in net worth of
the Company for such quarter and for the period commencing at
the end of the Company's previous Fiscal Year and ending with
the end of such quarter or Fiscal Year, as the case may be,
all such financial statements setting forth in comparative
form the corresponding figures for the corresponding period
of the preceding Fiscal Year, all in reasonable detail and
duly certified (subject to year-end adjustments) by an Of-
ficer of the Company as having been prepared in accordance
with GAAP consistently applied, and, in the case of annual
consolidated financial statements, certified by Independent
public accountants of recognized standing and accompanied by
such certifying public accountants' management letter and a
"Management's Discussion and Analysis of the Results of Op-
erations and Financial Condition of the Company and its Sub-
sidiaries" for the periods presented, which discussion and
analysis shall be prepared by the management of the Company
in a manner responsive to the requirements of Item 303 (or
any successor item or section) of Regulation S-K under the
Exchange Act. All financial statements will be prepared in
accordance with GAAP consistently applied, except for changes
with which the Company's Independent public accountants con-
cur and except that quarterly statements may be subject to
year-end adjustments and may be prepared in accordance with
Rule 10-01 of Regulation S-X under the Exchange Act.
(c) Promptly upon its receipt thereof, the Company
shall furnish to the Trustee and shall mail (or cause to be
mailed by the Trustee at the Company's expense) to each of
the Holders at their addresses as set forth in the register
of the Securities copies of all financial reports (including,
without limitation, management letters), if any, submitted to
the Company or any of its Subsidiaries by its auditors, in
connection with each annual, interim or special audit of
their respective books by such auditors.
(d) The Company shall provide, at the request of
any Institutional Holder, such financial and other informa-
tion as any such Holder or any potential transferee that is
not a Competitor and is a "qualified institutional buyer" (as
defined in Rule 144A promulgated under the Securities Act)
may reasonably determine is required to permit compliance
with the requirements of Rule 144A in connection with the re-
sale by a Holder of any Securities, except at such times as
the Company is a reporting company under Section 13 or 15(d)
of the Exchange Act or has complied with the requirements for
the exemption from registration under the Exchange Act set
forth in Rule 12g3-2(b) under such Act.
-31-<PAGE>
(e) The Company shall provide, with reasonable
promptness, such other data and information as any Institu-
tional Holder may reasonably request.
The Trustee and each Securityholder is hereby authorized to
deliver a copy of any financial statement or any other infor-
mation relating to the business, operations or financial con-
dition of the Company or any of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any regulatory
body or agency, including without limitation, the National
Association of Insurance Commissioners, having jurisdiction
over the Trustee or such Securityholder or to any Person
which shall, or shall have any right or obligation to, suc-
ceed to all or any part of the interest of such Security-
holder in the Securities and this Indenture.
Section 4.8. Limitation on Additional
Indebtedness.
Neither the Company nor any of its Subsidiaries
shall contract, create, incur, assume, guaranty, suffer to
exist nor otherwise become liable with respect to (collec-
tively, "incur") any Indebtedness except for the following
(each of which shall be given independent effect):
(1) Indebtedness incurred pursuant to this Inden-
ture and the Securities;
(2) Indebtedness under the Working Capital Facil-
ity in an aggregate outstanding principal amount not to
exceed $115,000,000 at any one time;
(3) Indebtedness of the Company and any of its
Subsidiaries outstanding on the Effective Date;
(4) Indebtedness consisting of Capital Lease Obli-
gations so long as the aggregate annual rental obliga-
tions in respect thereof do not exceed $500,000 at any
one time;
(5) Indebtedness to refinance its Indebtedness (or
Indebtedness of a Subsidiary, in the case of the Com-
pany), provided that any such Indebtedness shall not (i)
have a final maturity or mandatory redemption payments
prior to the earlier of the final maturity of the In-
debtedness being so refinanced and the Maturity Date, or
(ii) have a principal amount in excess of the principal
amount and accrued interest of the Indebtedness being so
refinanced (unless such Indebtedness is issued at a dis-
count in which case the issuance price of such discount
-32-<PAGE>
Indebtedness shall not exceed the principal amount of
the Indebtedness being so refinanced (it being under-
stood that, with respect to any Indebtedness issued at a
discount in compliance with this covenant, the accrual
of amortization of the original issue discount on such
Indebtedness after the date of issuance thereof shall
not be deemed to be incurrence of additional Indebted-
ness for the purpose of this covenant)) plus all fees
and expenses related to the negotiation, consummation or
execution of such Indebtedness; and
(6) additional Indebtedness of the Company (but
not any Subsidiary), so long as, after giving effect to
the incurrence of such Indebtedness and the application
of the net proceeds thereof as if such Indebtedness was
incurred and the proceeds thereof so applied at the
beginning of the relevant period, the Consolidated
Interest Coverage Ratio for the most recent four quarter
period in respect of which financial statements are
available is not less than 1.75 to 1.
Section 4.9. Limitation on Investments.
Neither the Company nor any of its Subsidiaries
shall make any acquisitions of, investments in, or loans, ad-
vances or extensions of credit to any Person, except Permit-
ted Investments.
Section 4.10. Limitation on Liens.
Neither the Company nor any of its Subsidiaries
shall incur any Lien in respect of any property now owned or
hereafter acquired by it, except for the following:
(1) Liens for taxes or assessments or other
governmental charges or levies not yet due or pay-
able to the extent that non-payment thereof is per-
mitted by Section 4.4 hereof;
(2) Liens created by or resulting from any
litigation or legal proceeding which is currently
being contested in good faith by appropriate pro-
ceedings; and Liens in favor of the Trustee to the
extent permitted by Sections 5.9 and 6.5 hereof;
(3) Liens on property of the Company or any
of its Subsidiaries in existence on the Effective
Date;
(4) intercompany Liens;
-33-<PAGE>
(5) the extension, renewal or replacement of
any Lien permitted by the foregoing paragraph (3)
in respect of the same property subject thereto or
the extension, renewal or replacement (without in-
crease of principal amount of the Indebtedness se-
cured or extension to any other property);
(6) (i) any Lien on property or in rights re-
lating thereto created in connection with the pro-
vision of all or a part of the purchase price or
cost of construction of such property created con-
temporaneously with, or within 120 days after, such
acquisition or the completion of such construction,
or (ii) any Lien on property (or in rights relating
thereto) existing at the time of acquisition there-
of, whether or not the Indebtedness secured thereby
is assumed by the Company or such Subsidiary; or
(iii) any Lien existing on the property of a corpo-
ration (or in rights relating thereto) at the time
such corporation is merged into or consolidated
with the Company or a Subsidiary or at the time of
a sale, lease or other disposition of the proper-
ties of a corporation or firm as an entirety or
substantially as an entirety to the Company or a
Subsidiary, in the case of (ii) and (iii) as long
as not incurred in contemplation of such transac-
tion; provided, however, that (i) aggregate amount
of Indebtedness secured by all such Liens shall
not, at the date of incurrence of such Lien and af-
ter giving effect thereto, exceed (together with
all other outstanding Indebtedness of the Company
and its Subsidiaries) the amount permitted under
Section 4.8(6) hereof and (ii) all of such Liens
shall secure Indebtedness that does not exceed 100%
of the Fair Market Value of the related property;
(7) Liens on property of the Company relating
to Indebtedness incurred in respect of the Working
Capital Facility to the extent permitted by Section
4.8(2) hereof, provided, however, that the aggre-
gate principal amount of the Indebtedness secured
by such Liens shall not exceed $115,000,000 at any
one time;
(8) Liens incurred for pledges and deposits
in connection with workers' compensation, unemploy-
ment insurance and other social security benefits,
or securing the performance bids, tenders, leases,
contracts (other than for the repayment of borrowed
money), statutory obligations, progress payments,
-34-<PAGE>
surety, appeal and performance bonds and other ob-
ligations of like nature, in each case incurred in
the ordinary course of business;
(9) Liens imposed by law, such as landlords',
mechanics', carriers', warehousemen's, material-
men's and vendors' Liens, in each case incurred in
good faith in the ordinary course of business;
(10) Zoning restrictions, easements, rights
of way, licenses, covenants, reservations, restric-
tions on the use of Real Property or minor irregu-
larities of title incident thereto which do not in
the aggregate materially detract from the value of
the property or assets of the Company or any of its
Subsidiaries, as the case may be, or materially im-
pair the use of such property in the operation of
the Company's or any of its Subsidiaries' business;
and
(11) Liens on property of the Company or any
of its Subsidiaries subject to, and securing only,
Capital Lease Obligations to the extent such Capi-
tal Lease Obligations are permitted by Sections
4.8(4) or 4.8(6); provided, however, that such
Liens only serve to secure the payment of
Indebtedness arising under such Capital Lease
Obligations and the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation
does not encumber any other asset of the Company.
Section 4.11. Limitation on Restricted Payments.
(a) The Company shall not, and will not permit any
of its Subsidiaries to, directly or indirectly, make any Re-
stricted Payment unless at the time of such Restricted Pay-
ment:
(i) the amount of such Restricted Payment,
when added to the aggregate amount of all Restrict-
ed Payments made since the Effective Date does not
exceed the sum of: (1) $5,000,000, plus (2) 50% of
the Company's Consolidated Net Income accrued dur-
ing each fiscal quarter since the Effective Date
(or, if such Consolidated Net Income is a deficit,
minus 100 percent of such deficit), plus (3) the
proceeds derived by the Company from the sale
(through an Equity Offering or otherwise) of Capi-
tal Stock of the Company since the Effective Date;
-35-<PAGE>
(ii) the Company would, at the time of such
Restricted Payment and after giving pro forma ef-
fect thereto, as if such Restricted Payment had
been made at the beginning of the applicable four-
quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to
Section 4.8(6) hereof; and
(iii) no Default or Event of Default shall have
occurred and be continuing or would occur as a con-
sequence thereof.
(b) Notwithstanding the foregoing provisions of
subsection (a), the provisions of this Section 4.11 shall not
prohibit (i) the retirement of any shares of the Company's
Capital Stock in exchange for other shares of the Company's
Capital Stock or (ii) the payment by or on behalf of the Com-
pany of Indebtedness of the Company under the Working Capital
Facility.
Section 4.12. Change of Control.
(a) Promptly following the occurrence of any
Change of Control, the Company shall so notify the Trustee by
delivery of an Officers' Certificate and shall offer to
purchase (a "Change of Control Offer") from all Holders, and
shall purchase from all Holders accepting such Change of
Control Offer on the date fixed for the closing of such
Change of Control Offer (the "Change of Control Payment
Date"), all outstanding Securities tendered in response to
such Change of Control Offer at an offer price (the "Change
of Control Price") in cash equal to 101 percent of the ag-
gregate principal amount thereof plus accrued and unpaid in-
terest, if any, to the Change of Control Payment Date in ac-
cordance with the procedures set forth in this Section 4.12.
(b) Within 30 days after the date of any Change of
Control, the Company (with notice to the Trustee), shall mail
or cause to be mailed to all Holders on the date of the
Change of Control, at their last registered address, a notice
of the occurrence of such Change of Control and of the Hold-
ers' rights arising as a result thereof. At the Company's
request, the Trustee shall mail or cause to be mailed such
notice in the Company's name and at the Company's request;
provided, however, that the Company shall deliver to the
Trustee at least 15 days prior to the date that notice must
be given to the Securityholders, an Officers' Certificate
requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided
in this Section 4.12. The Change of Control Offer shall
-36-<PAGE>
remain open from the time of mailing for at least 20 Business
Days. The notice, which shall govern the terms of the Change
of Control Offer, shall include such disclosures as are
required by law and shall state:
(1) that the Change of Control Offer is being
made pursuant to this Section 4.12;
(2) that the Holder has the right to require
the Company to repurchase such Holder's Securities at the
Change of Control Price;
(3) that any Security not tendered shall con-
tinue to accrue interest in accordance with the terms there-
of;
(4) that any Security accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest on the Change of Control Payment Date;
(5) the Change of Control Payment Date which
shall be no earlier than 45 days nor later than 60 days from
the date such notice is mailed;
(6) that Holders electing to have Securities
purchased pursuant to a Change of Control Offer will be re-
quired to surrender the Securities to the Company or the Pay-
ing Agent at the address specified in the notice prior to
5:00 p.m., New York City time, on the Change of Control Pay-
ment Date and must complete any form letter of transmittal
proposed by the Company and acceptable to the Trustee and
Paying Agent;
(7) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than
5:00 p.m., New York City time, on the Business Day that is
two Business Days immediately preceding the Change of Control
Payment Date, a tested telex, facsimile transmission or let-
ter setting forth the name of the Holder, the principal
amount of Securities the Holder delivered for purchase, the
Security certificate number (if any) and a statement that
such Holder is withdrawing its election to have such Securi-
ties purchased;
(8) that Holders which elect to have their
Securities purchased only in part will be issued new Securi-
ties equal in principal amount to the unpurchased portion of
the Securities surrendered;
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(9) information concerning the business of
the Company which the Company in good faith believes will en-
able such Holders to make an informed decision (which at a
minimum will include (A) information comparable to that con-
tained in the reports required pursuant to Section 4.7 here-
of, (B) a description of material developments in the Com-
pany's business subsequent to the date of the latest of such
reports, and (C) if material, appropriate pro forma financial
information); and
(10) the instructions that Holders must fol-
low in order to tender their Securities.
(c) The Company shall not, and shall not permit
any Subsidiary to, create or permit to exist or become effec-
tive any restriction that would materially impair the ability
of the Company to make a Change of Control Offer or, if such
Change of Control Offer is made, to pay for Securities ten-
dered for purchase.
(d) On or before the Change of Control Payment
Date in connection with which the Change of Control Offer is
being made, the Company shall (i) accept for payment Securi-
ties or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money suf-
ficient, in immediately available funds, to pay the Purchase
Price of all Securities or portions thereof so tendered and
accepted and (iii) deliver to the Paying Agent the Securities
so accepted together with an Officers' Certificate setting
forth the Securities or portions thereof tendered to the Com-
pany or the Paying Agent and accepted for payment by the Com-
pany. The Paying Agent shall promptly mail, deliver or
transfer by federal funds to Holders of Securities so ac-
cepted payment in an amount equal to the Change of Control
Price of the Securities purchased from each such Holder, and
the Trustee shall promptly authenticate and mail or deliver
to such Holder a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. The
Company will publicly announce the results of the Change of
Control Offer on the first Business Day following the Change
of Control Payment Date.
The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act
and any other securities laws or regulations in connection
with the repurchase of Securities pursuant to the Change of
Control Offer. To the extent that the provisions of any se-
curities laws or regulations conflict with provisions of this
Section 4.12 the Company shall comply with the applicable se-
curities laws and regulations and shall not be deemed to have
-38-<PAGE>
breached its obligations under this Section 4.12 by virtue
hereof.
Section 4.13. Limitations on Transactions with
Affiliates.
Neither the Company nor any of its Subsidiaries
shall make any loan, advance, guaranty or capital contribu-
tion to, or for the benefit of, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or
for the benefit of, or purchase or lease any property or as-
sets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, an Affiliate (each
an "Affiliate Transaction") unless such Affiliate Transac-
tions are (i) entered into in good faith and on terms that
are no less favorable to the Company or the relevant Subsid-
iary than those that could have been obtained in a comparable
transaction by the Company or such Subsidiary on an arm's
length basis from an unrelated Person, and (ii) evidenced by
an agreement approved by the Board of Directors.
Section 4.14. Compliance with ERISA.
The Company shall not terminate, or permit or suf-
fer any of its ERISA Affiliates to terminate (other than a
standard termination, as defined in Section 4041(b) of ERISA,
of a Single Employer Plan), any Plans maintained by any of
the Company or any of its Subsidiaries or any of their ERISA
Affiliates so as to incur any liability to the PBGC; com-
pletely or partially withdraw, or permit or suffer any of
their ERISA Affiliates to withdraw completely or partially,
from any Multiemployer Plan so as to incur any liability to
such plan on account of such withdrawal; permit or suffer to
exist any Prohibited Transaction involving any such Plans or
any trust created thereunder which would subject any of the
Company or any of its Subsidiaries or any of their ERISA Af-
filiates to a tax or penalty on Prohibited Transactions im-
posed under Internal Revenue Code Section 4975 or under
ERISA; fail to pay, or permit or suffer any of their ERISA
Affiliates to fail to pay, to any such Plan any contribution
which they or their ERISA Affiliates are obligated to pay un-
der the terms of such Plan; permit any Accumulated Funding
Deficiency, whether or not waived, to occur with respect to
any Plan; or permit or suffer to exist any occurrence of a
Reportable Event, or any other event or condition, which pre-
sents a material risk of termination by the PBGC of any such
Plan. The Company shall deliver to the Trustee (by means of
an Officers' Certificate) and any Requesting Holder, promptly
after (i) the occurrence thereof, notice that an ERISA Termi-
nation Event or a Prohibited Transaction with respect to any
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Plan has occurred, which such notice shall specify the nature
thereof and the Company's proposed response thereto, and (ii)
actual knowledge thereof, copies of any notice of the PBGC's
intention to terminate or to have a trustee appointed to ad-
minister any Plan.
Section 4.15. Limitation on Dividend and Other
Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create or other-
wise cause or suffer to exist or become effective any encum-
brance or restriction on the ability of any Subsidiary to (a)
pay dividends or make any other distributions on its Capital
Stock or any other interest or participation in, or measured
by, its profits, owned by the Company or any Subsidiary of
the Company, or pay any Indebtedness owed to, the Company or
a Subsidiary, (b) make loans or advances to the Company or
any Subsidiary or (c) transfer any of its properties or as-
sets to the Company, except for such encumbrances or restric-
tions existing under or by reason of (i) applicable law, (ii)
this Indenture, (iii) customary provisions restricting sub-
letting or assignment of any lease governing a leasehold in-
terest of the Company or any Subsidiary, (iv) any instrument
governing Indebtedness of a Person acquired by the Company or
any Subsidiary at the time of such acquisition, which encum-
brance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired, (v) In-
debtedness existing on the date hereof (and, with respect to
the Working Capital Facility, any refinancings thereof
permitted under Section 4.8) or (vi) any guaranty of any of
the foregoing.
Section 4.16. Conflicting Agreements.
The Company shall not, and shall not permit any of
its Subsidiaries to, enter into any agreement or instrument
that by its terms expressly prohibits the Company from op-
tionally redeeming (except for restrictions on optional
redemptions of the Securities set forth in the Working
Capital Facility and any refinancings thereof permitted under
Section 4.8) or otherwise making any payments on or in
respect of the Securities in accordance with the terms there-
of and of this Indenture, as in effect from time to time.
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Section 4.17. Liquidation.
The Board of Directors or the stockholders of the
Company may not adopt a plan of liquidation which provides
for, contemplates or the effectuation of which is preceded by
(a) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its
Subsidiaries otherwise than substantially as an entirety and
(b) the distribution of all or substantially all of the pro-
ceeds of such sale, lease, conveyance or other disposition
and of the remaining assets of the Company to the holders of
Capital Stock of the Company, unless the Company, prior to
making any liquidating distribution pursuant to such plan,
makes provision for the satisfaction of the Company's Obliga-
tions hereunder and under the Securities as to the payment of
principal, premium, if any, interest and all other amounts
required hereunder. The Company shall be deemed to make pro-
vision for such payments only if the Company delivers in
trust to the Trustee or Paying Agent money or U.S. Government
Obligations maturing as to principal and interest in such
amounts and at such times as are sufficient without consider-
ation of any reinvestment of such interest to pay, when due,
the principal of, premium, if any, and interest on the Secu-
rities and also delivers to the Trustee an Opinion of Counsel
or a ruling received from the Internal Revenue Service to the
effect that Holders of the Securities will not recognize in-
come, gain or loss for Federal income tax purposes as a re-
sult of such action and will be subject to Federal income tax
on the same amount and in the same manner and at the same
times as would have been the case if such action had not been
taken, provided, however, that the Company shall not make any
liquidating distribution until the Trustee shall have re-
ceived an Officers' Certificate and an Opinion of Counsel as
to the Company's compliance with the provisions of this Sec-
tion 4.17 and that no Default or Event of Default then exists
or would occur as a result of any such liquidating distribu-
tion.
Section 4.18. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may af-
fect the covenants or the performance of this Indenture or
the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advan-
tage of any such law, and covenants that it will not, by re-
sort to any such law, hinder, delay or impede the execution
-41-<PAGE>
of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no
such law has been enacted.
Section 4.19. Fiscal Year.
Neither the Company nor any of its Subsidiaries
shall change their respective Fiscal Years until all Obliga-
tions under the Securities and the Indenture have been repaid
in full and discharged.
Section 4.20. Limitations on Consolidations,
Mergers and Certain Asset Sales.
Neither the Company nor any of its Subsidiaries
shall consolidate or merge with, or into, or sell all or
substantially all of its assets as an entirety to, any Person
unless (i) if the Company is a party to such consolidation,
merger or sale and is not the surviving Person, the surviving
Person expressly assumes all the obligations of the Company
under the Securities and this Indenture pursuant to a
Supplemental Indenture in a form reasonably satisfactory to
the Trustee; (ii) immediately after such consolidation,
merger or sale no Default or Event of Default exists; (iii)
the surviving Person shall be organized and doing business
under the laws of the United States of America or any state
thereof, (iv) at the time of such consolidation, merger or
sale and after giving pro forma effect thereto, as if such
consolidation, merger or sale had occurred at the beginning
of the applicable four-quarter period, the Company would have
been permitted to incur at least $1.00 of additional Indebt-
edness pursuant to Section 4.8(6) hereof and (v) the Company
has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation,
merger or sale complies with this Section 4.20 ,that, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with this
Section 4.20, and that all conditions precedent herein
provided for relating to such transaction have been complied
with; provided, however, that any Subsidiary may be merged or
consolidated with, or into, the Company (provided that the
Company shall be the surviving corporation and no Default or
Event of Default shall occur as a result of such merger or
consolidation) or with any one or more other Subsidiaries.
Section 4.21. Limitations on Sale of Assets.
Other than in the ordinary course of business, the
Company shall not, and shall not permit any of its Subsidiar-
ies to, make any Asset Sale unless (i) the Book Value of the
-42-<PAGE>
asset or assets to be sold in such Asset Sale, when combined
with the aggregate Book Value of the assets sold in all other
Asset Sales made (a) during the same Fiscal Year as the pro-
posed Asset Sale, does not exceed 10% of the Consolidated To-
tal Assets of the Company as of the date of such proposed As-
set Sale, and (b) since the Effective Date, on a cumulative
basis, does not exceed 25% of the Consolidated Total Assets
of the Company as of the date of such proposed Asset Sale;
and (ii) the asset or assets to be sold in such Asset Sale
when combined with the assets sold in all other Asset Sales
made (a) during the same Fiscal Year as the proposed Asset
Sale, do not contribute in excess of 10% of the Company's
Consolidated Cash Flow; and (b) since the Effective Date, on
a cumulative basis, do not contribute in excess of 25% of the
Company's Consolidated Cash Flow, provided, however, that (i)
any wholly-owned Subsidiary may make an Asset Sale to the
Company or any other wholly-owned Subsidiary, (ii) the Com-
pany may make an Asset Sale in excess of the limitations set
forth above if (a) the Net Cash Proceeds of such Asset Sale
are used to purchase other property of a similar nature and
of at least equivalent Book Value within nine months of such
Asset Sale, (b) such Asset Sale is made pursuant to a plan of
liquidation effected in accordance with Section 4.17 or (c)
such Asset Sale is a sale of all or substantially all of the
assets of the Company or such Subsidiary and is effected in
accordance with Section 4.20, and (iii) the Company and any
of its Subsidiaries may make an Asset Sale if the Net Cash
Proceeds thereof are applied the outstanding principal amount
of the Indebtedness under the Working Capital Facility, in
permanent reduction thereof.
Section 4.22. Change in Business.
The Company shall not materially change or alter,
or permit or suffer any of its Subsidiaries to materially
change or alter, the nature of its businesses as conducted or
as proposed to be conducted as of the Effective Date.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of the
premium, if any, or interest on any Security or any
other amount required to be paid hereunder (other than
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principal) when the same becomes due and payable and the
Default continues for a period of five Business Days;
(2) the Company defaults in the payment of the
principal of any Security when the same becomes due and
payable at maturity, upon any redemption or otherwise;
(3) the Company fails to comply with Sections 4.20
and 4.21 hereof;
(4) the Company fails to observe or perform any
covenant, condition or agreement on the part of the Com-
pany to be observed or performed pursuant to Sections
4.8 through 4.13, inclusive, and the Default continues
for the period and after the notice specified below;
(5) the Company fails to comply with any of its
other covenants or perform any other material obliga-
tions in the Securities or this Indenture and the De-
fault continues for the period and after the notice
specified below;
(6) any representation or warranty made in this
Indenture or in any certificate furnished in connection
therewith is proven to be false or incorrect in any ma-
terial respect as of the date made;
(7) a default occurs under any mortgage, indenture
or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness
of the Company or any of its Subsidiaries, whether such
Indebtedness now exists or shall be created hereafter,
(a) if such default constitutes a nonpayment of princi-
pal, interest or penalty on such Indebtedness (after the
expiration of any applicable grace period (a "Payment
Default")) and (b) if the principal amount of such In-
debtedness, together with the principal amount of any
other Indebtedness of the Company with regard to which
there then exists a Payment Default, exceeds $500,000;
(8) a final judgment or final judgments for the
payment of money are entered by a court or courts of
competent jurisdiction against the Company or any of its
Subsidiaries and such judgment or judgments remain un-
discharged for a period (during which execution shall
not be effectively stayed) of 90 days, provided that the
aggregate of all such judgments exceeds $500,000 (net of
insurance proceeds);
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(9) any holder of a Lien shall lawfully take pos-
session of all or substantially all of the properties,
assets or revenues of the Company for a period of at
least 30 days;
(10) the Company or any of its Significant Subsid-
iaries pursuant to or within the meaning of any Bank-
ruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for re-
lief against it in an involuntary case,
(c) consents to the appointment of a Custo-
dian of it or for all or substantially all of its
property, or
(d) makes a general assignment for the ben-
efit of its creditors;
(11) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(a) is for relief against the Company or any
Significant Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or
any Significant Subsidiary or for all or substan-
tially all of the property of the Company or any
Significant Subsidiary, or
(c) orders the liquidation of the Company or
any Significant Subsidiary; or
(12) Pursuant to or within the meaning of any
Bankruptcy Law, an involuntary petition is filed against
the Company or any Significant Subsidiary seeking the
commencement of a case, and such petition remains undis-
missed for a period of 30 days.
A Default under clause (4) or (5), respectively, is
not an Event of Default until the Trustee notifies the Com-
pany, or the Holders of at least 25% in principal amount of
the then outstanding Securities notify the Company and the
Trustee, of the Default and the Company does not cure the De-
fault within (i) in the event of a Default under clause (4)
within 10 days after receipt of the notice and (ii) in the
event of a Default under clause (5) within 30 days after re-
ceipt of the notice. The notice must specify the Default,
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demand that it be remedied and state that the notice is a
"Notice of Default."
In the case of any Event of Default occurring by
reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of
avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Se-
curities pursuant to Section 3.7 hereof, an equivalent pre-
mium shall also become and be immediately due and payable to
the extent permitted by law upon the acceleration of the Se-
curities.
Section 5.2. Acceleration.
If an Event of Default (other than an Event of De-
fault specified in clauses (10) through (12), inclusive, of
Section 5.1 hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in
principal amount of the then outstanding Securities by notice
to the Company and the Trustee, may, and the Trustee upon the
request of the Holders of at least 25% in principal amount of
the then outstanding Securities shall, declare the unpaid
principal of and premium, if any, and any accrued interest on
all the Securities to be due and payable. Upon such declara-
tion the principal, interest and premium, if any, shall be
due and payable immediately without presentment, demand, pro-
test or notice of any kind, all of which are hereby expressly
waived. If an Event of Default specified in clause (10),
(11) or (12) of Section 5.1 hereof occurs, such principal,
premium, if any, and interest shall ipso facto become and be
immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of
a majority in principal amount of the then outstanding Secu-
rities by written notice to the Trustee may rescind an accel-
eration and its consequences if the rescission would not con-
flict with any order, judgment or decree and if all existing
Events of Default (except nonpayment of principal, premium,
if any, or interest that has become due solely because of the
acceleration) have been cured or waived. No such rescission
shall affect any subsequent default or impair any right con-
sequent thereto.
Section 5.3. Other Remedies.
If an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect the
payment of principal or interest or premium, if any, on the
Securities or to enforce the performance of any provision of
the Securities or this Indenture.
-46-<PAGE>
The Trustee may maintain a proceeding even if it
does not possess any of the Securities or does not produce
any of them in the proceeding. A delay or omission by the
Trustee or any Securityholder in exercising any right or rem-
edy accruing upon an Event of Default shall not impair the
right or remedy or constitute a waiver of or acquiescence in
the Event of Default. No remedy is exclusive of any other
remedy. All remedies are cumulative to the extent permitted
by law.
Section 5.4. Waiver of Past Defaults.
Subject to Sections 5.7 and 7.2, the Holders of at
least a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing De-
fault or Event of Default and its consequences except a De-
fault specified in Section 5.1(1) or (2) or in respect of any
provision hereof which cannot be modified or amended without
the consent of the Holder so affected pursuant to Section
7.2. Upon any such waiver, such Default shall cease to ex-
ist, and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose of this Inden-
ture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 5.5. Control by Majority.
The Holders of a majority in principal amount of
the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy avail-
able to the Trustee or exercising any trust or power con-
ferred on it; provided, however, the Trustee may refuse to
follow any direction that conflicts with law or this Inden-
ture, that the Trustee determines may be unduly prejudicial
to the rights of other Securityholders, or that may involve
the Trustee in personal liability unless the Trustee has in-
demnification satisfactory to it in its sole discretion
against any loss, liability or expense caused or incurred by
its following such direction; and provided, further, that the
Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
Section 5.6. Limitation on Suits.
Except as provided in Section 5.7, a Securityholder
may pursue a remedy with respect to this Indenture or the Se-
curities only if:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
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(2) the Holders of at least 25% in principal
amount of the then outstanding Securities make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request
within 15 days after receipt of the request and the of-
fer of indemnity; and
(5) during such 15-day period the Holders of a ma-
jority in principal amount of the then outstanding Secu-
rities do not give the Trustee a direction inconsistent
with the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or
priority over another Securityholder.
Section 5.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Inden-
ture, the right of any Holder of a Security to receive pay-
ment of principal, premium, if any, and interest on the Secu-
rity, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be im-
paired or affected without the consent of the Holder.
Section 5.8. Collection Suit by Trustee.
If an Event of Default specified in Section 5.1(1)
or (2) occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal,
premium, if any, and accrued interest remaining unpaid on the
Securities, together with interest overdue on principal, pre-
mium, if any, and, to the extent that payment of such inter-
est is lawful, interest on overdue installments of interest,
in each case at 14.75% per annum as set forth in Section 4.1
and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
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Section 5.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of
claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (includ-
ing any claim for the reasonable compensation, expenses, dis-
bursements, advances and indemnification (pursuant to Section
6.5) of the Trustee, its agents and counsel) and the Securi-
tyholders allowed in any judicial proceedings relative to the
Company and any of its Subsidiaries, its creditors or its
property and shall be entitled and empowered to collect, re-
ceive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Security-
holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements, advances and indemnification of the Trustee,
its agents and counsel, and any other amounts due the Trustee
under Section 6.5 hereof. To the extent that the payment of
any such compensation, expenses, disbursements, advances and
indemnification of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 6.5 hereof
out of the estate in any such proceeding, shall be denied for
any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the
Holders of the Securities may be entitled to receive in such
proceeding whether in liquidation or under any plan of reor-
ganization or arrangement or otherwise. Nothing herein con-
tained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Security-
holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such pro-
ceeding.
Section 5.10. Priorities.
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Sec-
tion 6.5;
Second: to Securityholders for amounts outstanding
in respect of the Securities for principal, premium, if any,
and accrued interest, ratably, without preference or priority
-49-<PAGE>
of any kind, according to the amounts due and payable on the
Securities for principal, premium, if any, and accrued inter-
est, respectively;
Third: to Securityholders for all other amounts
outstanding in respect of the Securities; and
Fourth: to the Company.
The Trustee may fix a record date and payment date
for any payment to Securityholders.
Section 5.11. Undertaking for Costs.
In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as a Trustee, a
court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reason-
able costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trus-
tee, a suit by a Holder pursuant to Section 5.7, or a suit by
Holders of more than 25% in principal amount of the then out-
standing Securities.
ARTICLE 6
TRUSTEE
Section 6.1. Duties of Trustee.
(1) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same de-
gree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct
of his own affairs.
(2) Except during the continuance of an Event of
Default:
(a) The Trustee need perform only those du-
ties that are specifically required to be performed
in this Indenture and no others, and no implied
covenants or obligations shall be read into this
Indenture against the Trustee.
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(b) In the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opin-
ions expressed therein, upon certificates or opin-
ions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions
to determine whether or not they conform to the re-
quirements of this Indenture.
(3) The Trustee may not be relieved from liabili-
ties for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(a) This paragraph does not limit the effect
of paragraph (2) of this Section.
(b) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Of-
ficer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with re-
spect to any action it takes or omits to take in
good faith in accordance with a direction received
by it pursuant to Section 5.5.
(4) Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (1), (2) and (3) of this
Section.
(5) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or incur any li-
ability. The Trustee may refuse to perform any duty or exer-
cise any right or power unless it receives indemnity satis-
factory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest
on any money received by it except as the Trustee may agree
in writing with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the
extent required by law.
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Section 6.2. Rights of Trustee.
(1) The Trustee may rely on and shall be protected
in acting or refraining from acting upon any document be-
lieved by it to be genuine and to have been signed or pre-
sented by the proper Person. The Trustee need not investi-
gate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from act-
ing, it may require an Officers' Certificate or an Opinion of
Counsel or both. The Trustee shall not be liable for any ac-
tion it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and com-
plete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in reliance thereon.
(3) The Trustee may act through agents in the per-
formance of its duties hereunder and shall not be responsible
for the misconduct or negligence of any agent appointed with
due care.
(4) The Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to
be authorized or within its rights or powers conferred upon
it by this Indenture.
(5) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the
Company.
Section 6.3. Trustee's Disclaimer.
The Trustee makes no representation as to the va-
lidity or adequacy of this Indenture or the Securities, it
shall not be accountable for the Company's use of the pro-
ceeds from the Securities or any money paid to the Company or
upon the Company's direction under any provision hereof, it
shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee and
it shall not be responsible for any statement or recital
herein or any statement in the Securities other than its cer-
tificate of authentication.
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Section 6.4. Notice of Defaults.
If a Default occurs and is continuing, the Trustee
shall promptly mail to Securityholders, at the expense of the
Company, a notice of the Default promptly after the Trustee
receives the Officers' Certificate with respect to such De-
fault provided in Section 4.6(c) or otherwise has actual
knowledge thereof.
Section 6.5. Compensation and Indemnity.
The Company shall pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation
for its acceptance of this Indenture and services hereunder
as may be agreed upon in writing by the Company and the
Trustee from time to time. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, advances and ex-
penses incurred by it or made on behalf of it. Such expenses
shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee, and each
predecessor Trustee, and hold it harmless against any loss,
liability or expense incurred by it arising out of or in con-
nection with the acceptance or administration of its duties
under this Indenture or the trusts hereunder, including the
costs and expenses of defending itself against or investigat-
ing any claim of liability, except as set forth in the next
paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity, but failure to so
notify shall not affect the Trustee's right to indemnity
hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. If there arises a
conflict of interest, the Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unrea-
sonably withheld.
The Company need not reimburse any expense or in-
demnify against any loss or liability incurred by the Trustee
through gross negligence or bad faith.
To secure the Company's payment obligations in this
Section, the Trustee shall have a Lien prior to the Securi-
ties on all money or property held or collected by the
Trustee, except that held in trust to pay principal, premium,
if any, and interest on particular Securities. Such Lien
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shall survive the satisfaction and discharge of this Inden-
ture.
When the Trustee incurs expenses or renders ser-
vices after an Event of Default specified in Section 5.1(10),
(11) or (12) occurs, the expenses and the compensation for
the services are intended to constitute expenses of adminis-
tration under any Bankruptcy Law.
Section 6.6. Trustee Not Responsible for
Recitals, Disposition of
Securities or Application of
Proceeds Thereof.
The recitals contained herein and in the Securi-
ties, except the Trustee's certificates of authentication,
shall be taken as the statements of the Company and the
Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representation as to the validity
or sufficiency of this Indenture or of the Securities. The
Trustee shall not be accountable for the use or application
by the Company of any of the Securities or of the proceeds
thereof.
Section 6.7. Trustee and Agents May Hold
Securities; Collections, etc.
The Trustee or any agent of the Company or the
Trustee, in its individual or any other capacity, may become
the owner or pledgee of Securities with the same rights it
would have if it were not the Trustee or such agent and, sub-
ject to the provisions of this Indenture, if operative, may
otherwise deal with the Company and receive, collect, hold
and retain collections from the Company with the same rights
it would have if it were not the Trustee or such agent.
Section 6.8. Replacement of Trustee.
A resignation or removal of the Trustee and ap-
pointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as
provided in this Section.
The Trustee may resign and be discharged from the
trust hereby created by so notifying the Company. The Hold-
ers of a majority in principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee
and the Company in writing. The Company may remove the
Trustee if:
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(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged a bankrupt or an in-
solvent or an order for relief is entered with respect
to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a va-
cancy exists in the office of Trustee for any reason, the
Company and any other obligor upon the Securities shall
promptly appoint a successor Trustee.
If a successor Trustee does not take office within
60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10%
in principal amount of the then outstanding Securities may
petition any court of competent jurisdiction for the appoint-
ment of a successor Trustee.
If the Trustee after written request by any Securi-
tyholder who has been a Securityholder for at least six
months fails to comply with Section 6.10, such Securityholder
may petition any court of competent jurisdiction for the re-
moval of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written accep-
tance of its appointment to the retiring Trustee and to the
Company. Thereupon the resignation or removal of the retir-
ing Trustee shall become effective, and the successor Trustee
shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a no-
tice of its succession to Securityholders. The retiring
Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the Lien pro-
vided for in Section 6.5. Notwithstanding replacement of the
Trustee pursuant to this Section 6.8, the Company's obliga-
tions under Section 6.5 hereof shall continue for the benefit
of the retiring Trustee.
Section 6.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts
into, or transfers all or substantially all of its corporate
trust business to another corporation, the successor corpora-
tion without any further act shall be the successor Trustee;
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provided, however, such successor Trustee must satisfy the
requirements of Section 6.10.
Section 6.10. Eligibility.
There shall at all times be a Trustee (or successor
Trustee) hereunder which shall be a corporation organized and
doing business under the laws of the United States of America
or of any state thereof authorized under such laws to exer-
cise corporate trust powers, shall be subject to supervision
or examination by Federal or state authority and shall have a
combined capital and surplus of at least $100,000,000 as set
forth in its most recent published annual report of condi-
tion.
Section 6.11. Appointment of Co-Trustee.
If the Trustee deems it necessary or desirable in
connection with its interest in the Collateral and the en-
forcement of the Security Documents, the Trustee may appoint
a Co-Trustee with such powers of the Trustee as may be desig-
nated by the Trustee at the time of such appointment.
Section 6.12. Reports by Trustee to Holders.
(a) Within 60 days after each May 15, beginning
with the May 15 following the date of this Indenture, the
Trustee shall mail to the Holders, in the manner and to the
extent required by TIA Section 313(c), a brief report dated as of
such reporting date that complies with TIA Section 313(a). The
Trustee shall also comply with TIA Section 313(b). The Trustee
shall also transmit by mail all reports as required by TIA
Section 313(c).
(b) Commencing at the time this Indenture is
qualified under the TIA, a copy of each report at the time of
its mailing to Holders shall be filed with the SEC and each
stock exchange on which the Securities are listed. The Com-
pany shall promptly notify the Trustee when the Securities
are listed on any stock exchange.
Section 6.13. Preferential Collection of Claims
Against Company.
The Trustee is subject to TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee
who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
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Section 6.14. Communication by Holders with Other
Holders.
Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA
Section 312(c).
ARTICLE 7
AMENDMENTS
Section 7.1. Without Consent of Holders.
The Company and the Trustee may amend this Inden-
ture or the Securities without the consent of any Security-
holder:
(1) to cure any ambiguity, defect or inconsis-
tency;
(2) to comply with any requirements of the SEC in
connection with the qualification of this Indenture un-
der the TIA as then in effect;
(3) to evidence and provide for the acceptance of
appointment hereunder by a separate or successor Trustee
with respect to the Securities and to add to or change
any of the provisions of this Indenture as shall be nec-
essary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, pursu-
ant to the requirements of Section 6.11;
(4) to provide for uncertificated Securities in
addition to certificated Securities; or
(5) to make any change that does not adversely af-
fect the legal rights of any Securityholder hereunder.
Upon the request of the Company, accompanied by a
Board Resolution authorizing the execution of any such Sup-
plemental Indenture, and upon receipt by the Trustee of the
documents described in Section 7.5 hereof, the Trustee shall
join with the Company in the execution of any Supplemental
Indenture authorized or permitted by the terms of this Inden-
ture and to make any further appropriate agreements and stip-
ulations which may be therein contained, but the Trustee
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shall not be obligated to enter into such Supplemental Inden-
ture which affects its own rights, duties or immunities under
this Indenture or otherwise.
Section 7.2. With Consent of Holders.
Subject to the provisions of Section 5.7 and this
Section 7.2, the Company and the Trustee may amend or supple-
ment this Indenture or the Securities with the written con-
sent of the Holders of at least a majority in principal
amount of the then outstanding Securities. Subject to Sec-
tion 5.7 and the provisions of this Section 7.2, the Holders
of a majority in principal amount of the Securities then out-
standing may, or the Trustee with the written consent of the
Holders of at least a majority in principal amount of the
then outstanding Securities may, waive compliance in a par-
ticular instance by the Company with any provision of this
Indenture or the Securities, except those provisions affect-
ing the Trustee's own rights, duties and immunities, unless
the Trustee expressly consents, in its sole discretion, in
writing.
Notwithstanding the first paragraph of this Section
7.2, without the consent of each Securityholder affected, an
amendment or waiver under this Section may not:
(1) reduce the rate of or change the time of or
payment of interest, including default interest, on any
Security;
(2) reduce the principal of or redemption premium
applicable to, or change the fixed maturity of any Secu-
rity or alter the redemption provisions with respect
thereto;
(3) make any Security payable in money other than
that stated in the Security;
(4) make any change in Section 4.12, 5.2, 5.4,
5.5, 5.6, 5.7 or 7.2 hereof; or
(5) waive a Default in the payment of principal
of, premium, if any, or interest on, or redemption pay-
ment with respect to, any Security.
Upon the request of the Company, accompanied by a
Board Resolution authorizing the execution of any such Sup-
plemental Indenture, and upon the filing with the Trustee of
evidence of the consent of the Securityholders as aforesaid,
and upon receipt by the Trustee of the documents described in
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Section 7.5 hereof, the Trustee shall join with the Company
in the execution of such Supplemental Indenture unless such
Supplemental Indenture affects the Trustee's own rights, du-
ties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not
be obligated to, enter into such Supplemental Indenture.
It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of
any proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the
Holders of each Security affected thereby a notice briefly
describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity
of any such Supplemental Indenture. If requested by any
Holder the Trustee will mail a copy of any Supplemental In-
denture to such Holder.
Section 7.3. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if nota-
tion of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security if the Trustee
receives written notice of revocation before the date the
amendment, supplement or waiver becomes effective. If an
amendment or waiver becomes effective, it thereafter binds
every Securityholder in accordance with its terms.
Section 7.4. Notation on or Exchange of Securi-
ties.
If an amendment, supplement or waiver changes the
terms of a Security, the Trustee shall (in accordance with
the specific direction of the Company) request the Holder of
the Security to deliver it to the Trustee. The Trustee shall
(in accordance with the specific direction of the Company)
place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in ex-
change for the Security shall issue and the Trustee shall au-
thenticate a new Security that reflects the changed terms.
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Failure to make the appropriate notation or issue a new Secu-
rity shall not affect the validity and effect of such amend-
ment, supplement or waiver.
Section 7.5. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, waiver or
Supplemental Indenture authorized pursuant to this Article 7
if the amendment does not adversely affect the rights, du-
ties, liabilities or immunities of the Trustee. If it does
the Trustee may, but need not, sign it. In signing or refus-
ing to sign such amendment, waiver or Supplemental Indenture,
the Trustee shall be entitled to receive and, subject to Sec-
tion 7.1, shall be fully protected in relying upon, an Offic-
ers' Certificate and an Opinion of Counsel as conclusive evi-
dence that such amendment, waiver or Supplemental Indenture
is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding
upon the Company in accordance with its terms. The Company
may not sign an amendment, waiver or Supplemental Indenture
until the Board Of Directors approves it.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
(a) This Indenture shall cease to be of further
effect (except that the Company's obligations under Section
6.5 and the Company's, the Trustee's and the Paying Agent's
obligations under Section 8.3 hereof shall survive) when all
outstanding Securities theretofore authenticated and issued
have been delivered (other than destroyed, lost or stolen Se-
curities that have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable here-
under.
(b) In addition, the Company may terminate its ob-
ligations under the Securities and this Indenture if:
(i) the Company has irrevocably deposited in
trust for the benefit of the Holders with the Trustee or
(at the option of the Trustee) with a trustee reasonably
satisfactory to the Trustee and the Company, under the
terms of an irrevocable trust agreement in form and sub-
stance satisfactory to the Trustee at any time prior to
the stated maturity of the Securities or the date of re-
demption of all of the Outstanding Securities, money or
U.S. Government Obligations maturing as to principal and
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interest in such amounts and at such times as are suffi-
cient (in the reasonable opinion of a nationally recog-
nized firm of independent accountants expressed in a writ-
ten certificate thereof delivered to the Trustee, without
consideration of the reinvestment of such interest) to pay
principal of and interest on the Outstanding Securities
(other than Securities replaced pursuant to Section 2.8)
to maturity or redemption, as the case may be, and to pay
all other sums payable by it hereunder; provided, however,
that (i) the trustee of the irrevocable trust shall have
been irrevocably instructed to pay such money or the pro-
ceeds of such U.S. Government Obligations to the Trustee
and (ii) the Trustee shall have been irrevocably in-
structed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal
and interest with respect to the Securities;
(ii) the Company delivers to the Trustee an Of-
ficers' Certificate stating that all conditions precedent
provided for herein relating to the satisfaction and dis-
charge of this Indenture have been complied with, and an
Opinion of Counsel to the same effect;
(iii) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or
as a result thereof;
(iv) the Company shall have delivered to the
Trustee (A) either (1) a ruling directed to the Trustee
received from the Internal Revenue Service to the effect
that the Holders of the Securities will not recognize in-
come, gain or loss for federal income tax purposes as a
result of the Company's exercise of its option under this
clause (b) and will be subject to federal income tax on
the same amount and in the same manner and at the same
time as would have been the case if such option had not
been exercised or (2) an Opinion of Counsel to the same
effect as the ruling described in clause (1), accompanied
by a ruling to that effect published by the Internal Rev-
enue Service, and (B) an Opinion of Counsel to the effect
that (1) after the passage of 90 days following the de-
posit, the trust funds will not be subject to the prefer-
ence provisions of Section 547 of Title 11 of the United
States Code (except that no opinion need be given with re-
spect to the application of subsection (b)(4)(b) thereof),
or (2) (x) the Trustee will hold, for the benefit of the
Holders of Securities, a valid and perfected security in-
terest in such trust funds, and (y) the Holders of Securi-
ties will be entitled to receive adequate protection of
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their interests in such trust funds if such trust funds
are used; and
(v) the exercise by the Company of its option
under this clause (b) shall not cause the Trustee to have
a conflicting interest as defined in Section 6.10 or for
purposes of the TIA with respect to any securities of the
Company.
(c) Notwithstanding the foregoing paragraph (b),
prior to the end of the 90-day period following the deposit re-
ferred to above, none of the Company's obligations under this
Indenture shall be discharged and, subsequent to the end of
such 90-day period the Company's respective obligations under
Sections 2.2, 2.4, 2.5, 2.8, 2.11, 4.1, 4.2, 4.12, 4.18, 6.5,
6.8, 8.3 and 8.4 shall survive until the Securities are no
longer outstanding. Thereafter, only the Company's and the
Trustee's obligations in Sections 6.5, 8.3 and 8.4 shall sur-
vive.
(d) After such irrevocable deposit made pursuant to
Section 8.1(b) and satisfaction of the other conditions set
forth herein, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under this
Indenture except for those surviving obligations specified
above.
(e) In order to have money available on a payment
date to pay principal of or interest on the Securities, the
U.S. Government Obligations shall be payable as to principal or
interest at least one Business Day before such payment date in
such amounts as will provide the necessary money.
Section 8.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee
and the Company shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.1(b) here-
of. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accor-
dance with this Indenture to the payment of principal of and
interest on the Securities.
Section 8.3. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly
pay to the Company upon written request any excess money or se-
curities held by them at any time after the termination of the
Company's obligations in accordance with Section 8.1.
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(b) The Trustee and the Paying Agent shall pay to
the Company, upon written request, any money held by them for
the payment of principal or interest that remains unclaimed for
two years and six months after the date upon which such payment
shall have become due; provided, however, that the Company
shall have caused notice of such payment to be mailed to each
Holder entitled thereto not less than 30 days prior to such re-
payment. After payment to the Company, the Holders entitled to
the money must look to the Company for payment as general
creditors unless an applicable abandoned property law desig-
nates another person, and all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
8.2 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Com-
pany's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had oc-
curred pursuant to Section 8.1(b) until such time as the
Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2;
provided, however, that if the Company has made any payment of
interest on or principal of any Securities because of the rein-
statement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE 9
MEETINGS OF HOLDERS OF SECURITIES
Section 9.1. Purposes of Meetings.
A meeting of Holders of Securities may be called at
any time and from time to time pursuant to the provisions of
this Article 9 for any of the following purposes:
(a) to give any notice to the Company or to the
Trustee, or to give any direction to the Trustee, or to waive
any non-performance hereunder, and its consequences, or to take
any other action authorized to be taken by Holders of Securi-
ties pursuant to any of the provisions of this Indenture;
(b) to remove the Trustee pursuant to the provisions
of Section 6.8;
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(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of
Article 7.
(d) to take any other action authorized to be taken
by or on behalf of the Holders of any specified aggregate prin-
cipal amount of the Securities under any other provision of
this Indenture or under applicable law.
Section 9.2. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Holders
of Securities to take any action specified in Section 9.1, to
be held at such time and at such place in the State of New
York, as the Trustee shall determine. Notice of each meeting
of the Holders of Securities, setting forth the time and the
place of such meeting and, in general terms, the action pro-
posed to be taken at such meeting, shall be mailed by the
Trustee to the Holders of the Securities, not less than 20 nor
more than 60 days prior to the date fixed for the meeting, at
their last addresses as they shall appear on the register of
the Securities.
Section 9.3. Call of Meetings by Company or Security
Holders.
If any at time the Company, pursuant to a resolution
of its Board of Directors, or the holders of at least twenty-
five percent in aggregate principal amount of the Securities
them outstanding, shall have requested the Trustee to call a
meeting of Holders of Securities to take any action authorized
in Section 9.1, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed notice of such meeting within
twenty days after receipt of such request, then the Company or
the Holders of Securities in the amount above specified, as the
case may be, may determine the time and the place in the State
of New York for such meeting, and may call such meeting by
mailing notice thereof as provided in Section 9.2.
Section 9.4. Persons Entitled to Vote at Meeting.
To be entitled to vote at any meeting of Holders of
Securities, a person shall (a) be a Holder of Securities or (b)
be a person appointed by an instrument in writing as proxy by a
Holder of Securities. The only persons who shall be entitled
to be present or speak at any meeting of the Holders of the
Securities shall be the persons entitled to vote at such meet-
ing and their counsel and any representatives of the Company
and its counsel.
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Section 9.5. Regulations for Meeting.
Notwithstanding any other provisions of this Inden-
ture, the Trustee may make such reasonable regulations as it
may deem advisable for any meeting of Holders of the Securities
in regard to the appointment of proxies, the proof of the
holding of Securities, the appointment and duties of inspectors
of votes, the submission and examination of proxies and other
evidence of the right to vote, and such other matters concern-
ing the conduct of the meeting as it shall think fit. Except
as otherwise permitted or required by any such regulations, the
holding of Securities shall be proved in the manner specified
in Section 9.6 and the appointment of any proxy shall be proved
in the manner specified in such Section 9.6 or by having the
signature of the person executing the proxy witnessed or guar-
anteed by any bank, banker, trust company or New York Stock
Exchange, Inc. member firm satisfactory to the Trustee.
The Trustee shall, by an instrument in writing, ap-
point a temporary chairman of the meeting, unless the meeting
shall have been called by the Company or by Holders of the Se-
curities as provided in Section 9.3, in which case the Company
or the Holders of the Securities calling the meeting, as the
case may be, shall in like manner appoint a temporary chairman,
and a permanent chairman and a permanent secretary of the meet-
ing shall be elected by vote of the Holders of a majority in
principal amount of the Securities represented at the meeting
and entitled to vote.
At any meeting of Holders of Securities, the presence
of persons holding or representing Securities in an aggregate
principal amount sufficient to take action upon the business
for the transaction of which such meeting was called shall be
necessary to constitute a quorum; but, if less than a quorum be
present, the persons holding or representing a majority in ag-
gregate principal amount of the Securities represented at the
meeting may adjourn such meeting with the same effect, for all
intents and purposes, as though a quorum had been present.
Section 9.6. Proof of Execution of Instruments and
of Holding of Securities.
Proof of the execution of any instrument by a Holder
of Securities or his or her agent or proxy and proof of the
holding by any Person of any of the Securities shall be suf-
ficient if made in the following manner;
(1) The fact and date of the execution by any such
Person of any instrument may be proved by the certificate
of any notary public or other officer of any jurisdiction
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authorized to take acknowledgements of deeds to be re-
corded in such jurisdiction that the Person executing such
instrument acknowledged to him or her the execution
thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer.
Such certificate or affidavit shall constitute sufficient
proof of the authority of the Person executing any instru-
ment in cases where Securities are not held by Persons in
their individual capacities.
(2) The fact and date of execution of any such in-
strument may also be proved in any other manner which the
Trustee deems sufficient.
(3) The ownership of Securities shall be proved by
the register of the Securities or by a certificate of the
Registrar.
(4) The Trustee shall not be bound to recognize any
Person as a Securityholder unless his or her title to any
Security is proved in the manner provided in this Section
9.6.
The Trustee may require such additional proof of any
matter referred to in this Section 9.06 as it shall deem nec-
essary.
ARTICLE 10
MISCELLANEOUS
Section 10.1. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or con-
flicts with any provision of the TIA or another provision which
is required or deemed to be included in this Indenture by any
of the provisions of the TIA, the provision of the TIA shall
control.
Section 10.2. Notices.
Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered
in person or mailed by first-class mail (registered or certi-
fied, return receipt requested), telex, telecopier or overnight
air courier guaranteeing next day delivery, to the other's ad-
dress:
-66-<PAGE>
If to the Company:
Sassco Fashions, Ltd.
77 Metro Way
Secaucus, New Jersey 07094
Attention: President
Telecopier No.: (201) 583-8860
If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Re: Sassco Fashions, Ltd.
Telecopier No.: (212) 858-2952
The Company or the Trustee, by notice to the other,
may designate additional or different addresses for subse-
quent notices or communications.
All notices and communications (other than those
sent to Securityholders) shall be deemed to have been duly
given: at the time delivered by hand, if personally deliv-
ered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed;
when receipt acknowledged, if telecopied; and the next Busi-
ness Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Securityholder
shall be mailed by first-class mail certified or registered,
return receipt requested, to his address shown on the regis-
ter kept by the Registrar or telecopied to his number, if
any, shown on the register kept by the Registrar for that
purpose. Failure to mail a notice or communication to a Se-
curityholder or any defect in it shall not affect its suf-
ficiency with respect to other Securityholders.
If a notice or communication is mailed to a Securi-
tyholder in the manner provided above within the time pre-
scribed, it is duly given, whether or not the addressee re-
ceives it.
If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each
Agent at the same time.
-67-<PAGE>
Section 10.3. Table of Contents, Headings, etc.
The Table of Contents and Headings of the Articles
and Sections of this Indenture have been inserted for conve-
nience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 10.4. Certificate and Opinion as to
Conditions Precedent.
Upon any request or application by the Company to
the Trustee to take any action under this Indenture, the Com-
pany shall furnish to the Trustee an Officers' Certificate
(which shall include the statements set forth in Section 9.6)
stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Inden-
ture relating to the proposed action have been complied with.
Section 10.5. Statements Required in Certificate.
Each certificate with respect to compliance with a
condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such cer-
tificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(3) a statement that, in the opinion of such Per-
son, he has made such examination or investigation as is
necessary to entitle him to express an informed opinion
as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opin-
ion of such Person, such condition or covenant has been
complied with.
Section 10.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by
or at a meeting of Securityholders. The Registrar or Paying
Agent may make reasonable rules and set reasonable require-
ments for its functions.
-68-<PAGE>
Section 10.7. Legal Holidays.
If a payment date is a Legal Holiday, payment may
be made on the next succeeding day that is not a Legal Holi-
day, and interest shall accrue for the intervening period.
Section 10.8. No Recourse Against Others.
A director, officer, employee or stockholder of the
Company, as such, shall not have any liability for any Obli-
gations of the Company under the Securities or this Indenture
or for any claim based on, in respect of or by reason of such
Obligations or their creation. Each Securityholder by ac-
cepting a Security waives and releases all such liability.
Section 10.9. Governing Law; Submission to
Jurisdiction.
(1) The laws of the State of New York shall govern
and be used to construe this Indenture and the Securities.
(2) The Company hereby expressly and irrevocably
agrees and consents that any suit, action or proceeding aris-
ing out of or relating to this Indenture, the Securities and
the transactions contemplated herein may be instituted by the
Trustee or any Holder in any State or Federal court sitting
in the County of New York, State of New York, United States
of America and, by the execution and delivery of this Inden-
ture, the Securities, the Company expressly waives any objec-
tion that it may have now or hereafter to the laying of the
venue or to the jurisdiction of any such suit, action or pro-
ceeding, and irrevocably submits generally and uncondition-
ally to the jurisdiction of any such court in any such suit,
action or proceeding.
(3) The Company agrees that service of process may
be made on the Company by personal service of a copy of the
summons and complaint or other legal process in any such
suit, action or proceeding, or by registered or certified
mail (postage prepaid) to the address of the Company speci-
fied in or pursuant to Section 9.3, or by any other method of
service provided for under the applicable laws in effect in
the State of New York.
(4) Nothing contained in subsection (2) or (3)
hereof shall preclude the Trustee or any Holder from bringing
any suit, action or proceeding arising out of or relating to
this Indenture, the Securities or the transactions contem-
plated herein in the courts of any place where the Company or
-69-<PAGE>
any of the Company's property or assets may be found or lo-
cated or any other place where jurisdiction may otherwise be
obtained.
Section 10.10. No Adverse Integration of Other
Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsid-
iary. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
Section 10.11. Successors.
All agreements of the Trustee in this Indenture
shall bind its successor. All rights of the Securityholders
granted hereunder shall inure to the benefit of their succes-
sors.
Section 10.12. Severability.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provi-
sions shall not in any way be affected or impaired thereby.
Section 10.13. Counterpart Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy
is enough to prove this Indenture.
Section 10.14. Accounting Terms.
All accounting terms not specifically defined here-
in shall be construed in accordance with GAAP, consistently
applied. Where any accounting determination or calculation
is required to be made under this Agreement, such determina-
tion or calculation (unless otherwise provided) will be made
in accordance with GAAP, consistently applied, except that if
because of a change in GAAP, the Company would have to alter
a previously utilized accounting method or policy in order to
remain in compliance with GAAP, such determination or calcu-
lation will continue to be made in accordance with the Com-
pany's previous accounting methods or policy. Unless other-
wise specified herein, all financial statements required to
be delivered hereunder shall be prepared and all financial
records shall be maintained in accordance with GAAP.
-70-<PAGE>
Section 10.15. Transfers of Securities.
Except as otherwise permitted under Bankruptcy Law,
until such time as Securities shall be registered pursuant to
a registration statement filed under the Securities Act and
said Securities shall be transferred pursuant to the terms of
an effective registration statement, such Securities shall
bear a legend to that effect, and transfer of such legended
Securities shall be subject to the Company and the Trustee
receiving a representation from the prospective purchaser,
reasonably satisfactory in form and substance to the Company
and to the Trustee, that such prospective purchaser is ac-
quiring the Securities for its own account and not with a
view to, or for resale in connection with, the distribution
or other disposition thereof or with any present intention of
distributing or reselling such Securities.
SASSCO FASHIONS, LTD.
By: /s/ Arthur S. Levine
Title: Chief Executive Officer
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ Barbara McCluskey
Title: Vice President
-71-<PAGE>
EXHIBIT A
(Face of Securities)
SASSCO FASHIONS, LTD.
12.75% Senior Notes, Due 2004
SASSCO FASHIONS, LTD., a corporation organized and
existing under the laws of the State of Delaware, prom-
ises to pay to or registered assigns the
principal sum of Dollars on March 31, 2004 as
set forth herein.
Interest Payment Dates: September 30, 1997 and each
March 31 and September 30 thereafter.
Record Dates: September 1, 1997, and each September 1
and March 1 thereafter.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
SASSCO FASHIONS, LTD.
By:
Title:
Attest:
[SEAL]
By:
Title:<PAGE>
Dated:
Certificate of Authentication:
This is one of the Securities
referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
Authorized Officer<PAGE>
(Back of Securities)
SASSCO FASHIONS, LTD.
12.75% Senior Notes, Due 2004
1. Interest. Sassco Fashions, Ltd., a Delaware
corporation (the "Company"), promises to pay interest on the
principal amount of this Security from June 4, 1997 (the
"Issue Date") until maturity at the interest rate of 12.75%
per annum, payable as set forth in paragraph 2.
The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law,
as defined in the Indenture) on overdue principal at the rate
equal to 14.75% per annum; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy
Law) on overdue installments of interest (without regard to
any applicable grace period) at the same rate to the extent
lawful. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company shall pay in-
terest (i) in arrears on September 30, 1997 to the holders of
record of this Security ("Holders") at the close of business
on September 1, 1997, and (ii) semiannually in arrears on
each March 31 and September 30, to the Holders at the close
of business on the March 1 and September 1 next preceding the
interest payment date, commencing March 31, 1998. Interest
shall initially accrue from the date of issuance of this Se-
curity, and the first interest payment date will be September
30, 1997. The Company shall pay interest on the Securities
(except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the record
date for the next interest payment date even though Securi-
ties are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to
a Paying Agent to collect principal payments. The Company
shall pay principal, premium and interest in money of the
United States of America that at the time of payment is legal
tender for payment of public and private debts. The Company
may, however, pay principal and, except as set forth below,
interest by check payable in such money.
3. Paying Agent and Registrar. IBJ Schroder Bank
& Trust Company, as Trustee (the "Trustee"), shall act as
Paying Agent and Registrar. The Company may change any Pay-
ing Agent, Co-Paying Agent, Registrar or Co-Registrar without<PAGE>
prior notice. The Company or any of its subsidiaries may act
in any such capacity.
4. Indenture. The Company issued the Securities
under an Indenture dated as of June 4, 1997 (the "Indenture")
among the Company and the Trustee. The terms of the Securi-
ties include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture. The Securities are subject to, and quali-
fied by, all such terms, certain of which are summarized
herein, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Securities are gen-
eral obligations of the Company limited to $110,000,000 in
original aggregate principal amount.
5. Optional Redemption. Commencing on January 1,
2000, the Company may redeem all or any portion of the Secu-
rities, at the redemption prices set forth in the Indenture,
together with accrued interest to the date of such redemption
on the principal amount of Securities redeemed. In addition,
prior to January 1, 2000, the Company may redeem up to a
specified percentage of the Securities at a specified redemp-
tion price, from the net proceeds of one or more public eq-
uity offerings, as set forth in the Indenture.
6. Repurchase Upon Change of Control. If at any
time a Change of Control occurs, the Company shall be re-
quired to offer to repurchase all outstanding Securities at a
price equal to 101% of the outstanding principal amount
thereof plus accrued interest thereon to the date of repur-
chase of such Securities. Holders of Securities which are
the subject of such an offer to repurchase shall receive an
offer to repurchase from the Company prior to any related re-
purchase date, and may elect to have such Securities repur-
chased by complying with the instructions issued by the Com-
pany in respect of such repurchase pursuant to Section 4.12
of the Indenture.
7. Notice of Redemption. Notice of redemption
pursuant to paragraph 5 of this Security shall be mailed at
least 30 days but no more than 60 days before the redemption
date to each Holder to be redeemed at his registered address.
Securities in denominations larger than $1,000 may be re-
deemed in part but only in whole multiples of $1,000. In the
event of a redemption of less than all of the Securities, the
Securities shall be chosen for redemption by the Trustee,
generally pro rata, by lot or other method authorized in the
Indenture. On and after the redemption date interest ceases<PAGE>
to accrue on Securities or portions of them called for re-
demption.
If this Security is redeemed subsequent to a record
date with respect to any interest payment date specified
above and on or prior to such interest payment date, then any
accrued interest shall be paid to the person in whose name
this Security is registered at the close of business on such
record date.
8. Denominations, Transfer, Exchange. Subject to
certain exceptions set forth in the Indenture, the Securities
are in registered form without coupons in denominations of
$100 and integral multiples thereof. The transfer of Securi-
ties may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Hold-
er, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required
by law or permitted by the Indenture. The Registrar need not
exchange or register the transfer of any Security or portion
of a Security selected for redemption. Also, it need not ex-
change or register the transfer of any Securities for a pe-
riod of 15 days before a selection of Securities to be re-
deemed.
9. Persons Deemed Owners. The registered Holder
of a Security shall be treated as its owner for all purposes.
10. Amendments and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in
principal amount of the then outstanding Securities, and any
existing Default may be waived with the consent of the Hold-
ers of at least a majority in principal amount of the then
outstanding Securities. Without the consent of any Holder,
the Indenture or the Securities may be amended to cure any
ambiguity, defect or inconsistency or to make any change that
does not adversely affect the rights of any Holder.
11. Defaults and Remedies. An Event of Default
is: default for Five Business Days in payment of interest on
the Securities; default in payment of principal on the Secu-
rities; failure by the Company to comply with certain of its
agreements in the Indenture or the Securities; failure by the
Company for a specified number of days after notice to it to
comply with any of its other agreements in the Indenture or
the Securities; certain breaches of representations and war-
ranties; certain defaults in payment of other indebtedness of
the Company and certain of its Subsidiaries; certain final<PAGE>
judgments which remain undischarged; certain events of bank-
ruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Securities may de-
clare the principal amount of the Securities to be due and
payable immediately. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately
without further action or notice. Holders may not enforce
the Indenture or the Securities except as provided in the In-
denture. The Trustee may require indemnity satisfactory to
it before it enforces the Indenture or Securities. Subject
to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the
Trustee in its exercise of any trust or power.
12. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years and six
months, the Trustee and the Paying Agent will pay the money
back to the Company at its request. After that, Security
holders entitled to the money must look to the Company for
payment unless an abandoned property law designates another
person and all liability of the Trustee and such Paying Agent
with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If
the Company deposits with the Trustee money or U.S. Govern-
ment Obligations sufficient to pay principal of, premium, if
any, and accrued interest on the Notes to redemption or matu-
rity, the Company will be discharged from the Indenture and
the Securities, except for certain sections thereof.
14. Trustee Dealings with Company. The Trustee,
in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for any obligor on
the Securities or its Affiliates, and may otherwise deal with
each such obligor or its Affiliates, as if it were not
Trustee.
15. No Recourse Against Others. A director, of-
ficer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company un-
der the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations. Each
Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consider-
ation for the issue of the Securities.<PAGE>
16. Authentication. This Security shall not be
valid until authenticated by the manual signature of the
Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entire-
ties), JT TEN (= joint tenants with right of survivor-ship
and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act.) Terms defined in
the Indenture and not otherwise defined in this Security have
the meanings set forth in the Indenture.
18. Indenture. Each Holder, by accepting a Secu-
rity, agrees to be bound by all of the terms and provisions
of the Indenture, as the same may be amended from time to
time.
19. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identifica-
tion Procedures, the Company may cause CUSIP numbers to be
printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as con-
tained in any notice of redemption and reliance may be placed
only on the other identification numbers placed hereon.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request
may be made to: Sassco Fashions, Ltd., 77 Metro Way, Secau-
cus, New Jersey 07094, Attention: President.<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
(insert assignee's social security or tax I.D. no.)
(Print or type assignee's name, address and zip
code) and irrevocably appoint
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Date: Your signature:
(Sign exactly as your name appears on the other side
of this Security)
Signature Guaranty:
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE, dated as of June 30, 1997
(the "Supplemental Indenture") to the Indenture between Sassco
Fashions, Ltd., a Delaware corporation (the "Company"), and IBJ
Schroder Bank & Trust Company, as trustee (the "Trustee"),
dated as of June 4, 1997 (the "Indenture").
WHEREAS, the Company and the Trustee have heretofore
executed and entered into the Indenture;
WHEREAS, pursuant to Section 7.1(5) of the Indenture,
the Company has determined that an amendment to the Indenture
by Supplemental Indenture as set forth herein, is appropriate
and will not adversely affect the legal rights of any
Securityholder thereunder and the Company and the Trustee
desire to evidence such amendment in writing; and
WHEREAS, all acts and things necessary to make this
Supplemental Indenture a valid agreement, enforceable according
to its terms have been done and performed, and the execution
and delivery of this Supplemental Indenture by the Company and
the Trustee have been in all respects duly authorized by the
Company and the Trustee.
ACCORDINGLY, in consideration of the foregoing and
the mutual agreements set forth herein, the parties hereto
agree as follows:
1. Section 2.1 of the Indenture is hereby modified
and amended to change the reference to "$1,000" to "$1".
2. Section 3.2 of the Indenture is hereby modified
and amended to change each of the references to"$1,000" to
"$1".
3. Exhibit A of the Indenture is hereby modified
and amended to change the reference to "$100" to "$1".
4. This Supplemental Indenture shall be governed by
and construed in accordance with the laws of the State of New
York and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
5. This Supplemental Indenture may be executed in
one or more counterparts, each of which shall be an original,
but such counterparts shall together constitute one and the
same instrument. Terms not defined herein shall, unless the
context otherwise requires, have the meanings assigned to such
terms in the Indenture.
6. In all respects not inconsistent with the terms
and provisions of this Supplemental Indenture, the Indenture is
hereby ratified, adopted, approved and confirmed.
7. If any term, provision, covenant or restriction
of this Supplemental Indenture is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, cov-
enants and restrictions of this Supplemental Indenture and of
the Indenture shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.<PAGE>
8. The provisions of this Supplemental Indenture
will take effect immediately upon its execution and delivery to
the Trustee.
IN WITNESS WHEREOF, the parties hereto have caused
this Supplemental Indenture to be duly executed, all as of the
date and year first above written.
SASSCO FASHIONS, LTD.
By: /s/ Dennis P. Kelley
Name: Dennis P. Kelley
Title: Chief Financial Officer
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By: /s/ Barbara McCluskey
Name: Barbara McCluskey
Title: Vice President
2
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------x
In re :
Chapter 11 Case No.
THE LESLIE FAY COMPANIES, INC., : 93 B 41724 et seq. (TLB)
et al., (Jointly Administered)
:
Debtors.
----------------------------------x
FOURTH AMENDED AND RESTATED JOINT PLAN
OF REORGANIZATION FOR DEBTORS PURSUANT
TO CHAPTER 11 OF THE UNITED STATES
BANKRUPTCY CODE PROPOSED BY DEBTORS AND CREDITORS' COMMITTEE
WEIL, GOTSHAL & MANGES LLP WACHTELL, LIPTON, ROSEN & KATZ
Attorneys for Debtors Attorneys for the Official
in Possession Committee of Unsecured Creditors
767 Fifth Avenue of The Leslie Fay Companies, Inc.
New York, New York 10153 51 West 52nd Street
(212) 310-8000 New York, New York 10019
(212) 403-1000<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS............................................... 1
1.1 Administrative Expense Claim.................. 1
1.2 Affiliate..................................... 1
1.3 Allowed Administrative Expense Claim.......... 1
1.4 Allowed Bank Claim............................ 1
1.5 Allowed Claim................................. 1
1.6 Allowed General Unsecured Claim............... 1
1.7 Allowed Priority Non-Tax Claim................ 2
1.8 Allowed Priority Tax Claim.................... 2
1.9 Allowed Secured Claim......................... 2
1.10 Allowed Senior Note Claim..................... 2
1.11 Allowed Senior Subordinated Note Claim........ 2
1.12 Allowed Unsecured Claim....................... 2
1.13 Amended Bylaws of Reorganized Leslie Fay...... 2
1.14 Amended Certificate of Incorporation of
Reorganized Leslie Fay...................... 2
1.15 Ballot........................................ 2
1.16 Ballot Date................................... 2
1.17 Bank Cash Amount.............................. 2
1.18 Bank Claim.................................... 2
1.19 Bank Leslie Fay Stock Amount.................. 3
1.20 Bank LFC Fraction............................. 3
1.21 Bank Sassco Note Amount....................... 3
1.22 Bank Sassco Stock Amount...................... 3
1.23 Bankruptcy Code............................... 3
1.24 Bankruptcy Court.............................. 3
1.25 Bankruptcy Rules.............................. 3
1.26 Business Day.................................. 4
1.27 Cash.......................................... 4
1.28 Cash Available for Distribution............... 4
1.29 Cash Equivalents.............................. 4
1.30 Castleberry Assets............................ 4
1.31 Castleberry Division.......................... 4
1.32 Castleberry Liabilities....................... 4
1.33 Chapter 11 Cases.............................. 4
1.34 Claim......................................... 4
1.35 Class......................................... 4
1.36 Class Action.................................. 4
1.37 Collateral.................................... 4
1.38 Confirmation Date............................. 4
1.39 Confirmation Order............................ 5
1.40 Consummation Cash Shortfall Amount............ 5
1.41 Convenience Claims............................ 5
1.42 Creditor...................................... 5
1.43 Creditor Representative....................... 5
-i-<PAGE>
Page
1.44 Creditors' Committee.......................... 5
1.45 Debtor........................................ 5
1.46 Debtor in Possession.......................... 5
1.47 Deferred Professionals........................ 5
1.48 Derivative Action............................. 5
1.49 Derivative Action Board....................... 5
1.50 Disbursement Account(s)....................... 5
1.51 Disbursing Agent.............................. 6
1.52 Disclosure Statement.......................... 6
1.53 Disputed Claim................................ 6
1.54 Dress and Sportswear Assets................... 6
1.55 Effective Date................................ 6
1.56 Effective Date Anniversary.................... 6
1.57 Entity........................................ 6
1.58 Equity Committee.............................. 6
1.59 Equity Interest............................... 6
1.60 Final Distribution Date....................... 6
1.61 Final Order................................... 6
1.62 General Unsecured Cash Amount................. 7
1.63 General Unsecured Claim....................... 7
1.64 General Unsecured Leslie Fay Stock Amount..... 7
1.65 General Unsecured LFC Fraction................ 7
1.66 General Unsecured Sassco Note Amount.......... 7
1.67 General Unsecured Sassco Stock Amount......... 7
1.68 Guarantee..................................... 7
1.69 Hue........................................... 7
1.70 Hue Equity Interest........................... 7
1.71 Intercompany Affiliate........................ 7
1.72 Intercompany Affiliate Claim.................. 7
1.73 Leslie Fay.................................... 7
1.74 Leslie Fay Assets............................. 7
1.75 Leslie Fay Dress Division..................... 7
1.76 Leslie Fay Equity Interest.................... 8
1.77 Leslie Fay Intellectual Property.............. 8
1.78 Leslie Fay Liabilities........................ 8
1.79 Leslie Fay Sportswear Division................ 8
1.80 Levine........................................ 8
1.81 Levine Employment Agreement................... 8
1.82 Licensing..................................... 8
1.83 Licensing Equity Interest..................... 8
1.84 Lien.......................................... 8
1.85 New Castleberry............................... 8
1.86 New Castleberry Bylaws........................ 8
1.87 New Castleberry Certificate of Incorporation.. 8
1.88 New Castleberry Common Stock.................. 8
1.89 New Sassco.................................... 8
1.90 New Sassco Bylaws............................. 8
1.91 New Sassco Certificate of Incorporation....... 8
1.92 New Sassco Common Stock....................... 9
1.93 New Sassco Credit Agreement................... 9
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1.94 New Sassco EBIT............................... 9
1.95 New Sassco Indenture.......................... 9
1.96 New Sassco Indenture Trustee.................. 9
1.97 New Sassco Intercompany Note.................. 9
1.98 New Sassco Lender............................. 9
1.99 New Sassco Management Options................. 9
1.100 New Sassco Management Recipients.............. 9
1.101 New Sassco Notes.............................. 9
1.102 New Sassco Registration Rights Agreement...... 9
1.103 New Securities................................ 9
1.104 New Securities Available for Distribution..... 9
1.105 1986 Stock Option Plan........................ 10
1.106 Nipon Agreement............................... 10
1.107 Nipon Trademarks.............................. 10
1.108 Outlander..................................... 10
1.109 Person........................................ 10
1.110 Petition Date................................. 10
1.111 Plan.......................................... 10
1.112 Plan Administration Agreement................. 10
1.113 Plan Administrator............................ 10
1.114 Plan Assets................................... 10
1.115 Plan Supplement............................... 10
1.116 Pomerantz..................................... 11
1.117 Priority Non-Tax Claim........................ 11
1.118 Priority Tax Claim............................ 11
1.119 Proponents.................................... 11
1.120 Pro Rata Bank Fraction........................ 11
1.121 Pro Rata General Unsecured Fraction........... 11
1.122 Pro Rata Senior Note Fraction................. 11
1.123 Pro Rata Senior Subordinated Fraction......... 11
1.124 Pro Rata Share................................ 11
1.125 Reorganized Leslie Fay........................ 11
1.126 Reorganized Leslie Fay Common Stock........... 11
1.127 Reorganized Leslie Fay Credit Agreement....... 11
1.128 Reorganized Leslie Fay Earnings Adjustment.... 11
1.129 Reorganized Leslie Fay EBITDA................. 12
1.130 Reorganized Leslie Fay Lender................. 12
1.131 Reorganized Leslie Fay Licensing Agreement.... 12
1.132 Reorganized Leslie Fay Licensing Company...... 12
1.133 Reorganized Leslie Fay Licensing Company
By-Laws..................................... 12
1.134 Reorganized Leslie Fay licensing Company
Certificate of Incorporation................ 12
1.135 Reorganized Leslie Fay Licensing Company
Common Stock................................ 12
1.136 Reorganized Leslie Fay Net Asset Amount....... 12
1.137 Reorganized Leslie Fay Operating Company...... 12
1.138 Reorganized Leslie Fay Operating Company
Bylaws...................................... 12
1.139 Reorganized Leslie Fay Operating Company
Certificate of Incorporation................ 12
1.140 Reorganized Leslie Fay Operating Company
Common Stock................................ 12
1.141 Reorganized Leslie Fay Operating Company
Liabilities................................. 12
1.142 Reorganized Leslie Fay Registration Rights
Agreement................................... 12
1.143 Reorganized Leslie Fay Senior Managers........ 13
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1.144 Reorganized Leslie Fay Stock Options.......... 13
1.145 Reorganized Leslie Fay Target EBITDA.......... 13
1.146 Retail (Alabama).............................. 13
1.147 Retail (Alabama) Equity Interest.............. 13
1.148 Retail (California)........................... 13
1.149 Retail (California) Equity Interest........... 13
1.150 Retail Debtor................................. 13
1.151 Retail (Iowa)................................. 13
1.152 Retail (Iowa) Equity Interest................. 13
1.153 Retail Outlets................................ 13
1.154 Retail Outlets Equity Interest................ 13
1.155 Retail (Tennessee)............................ 13
1.156 Retail (Tennessee) Equity Interest............ 13
1.157 Retiree....................................... 13
1.158 Retiree Administrative Claim.................. 13
1.159 Retiree Benefit Plans......................... 13
1.160 Revolving Credit Notes........................ 13
1.161 Rights........................................ 13
1.162 Rights Agreement.............................. 13
1.163 Sassco........................................ 14
1.164 Sassco Assets................................. 14
1.165 Sassco Labilities............................. 14
1.166 Schedule of Leslie Fay and Castleberry
Assets and Liabilities...................... 14
1.167 Schedule of Sassco Assets and Liabilities..... 14
1.168 Schedules..................................... 14
1.169 Secured Claim................................. 14
1.170 Securities Act................................ 14
1.171 Senior Bank Fraction.......................... 14
1.172 Senior Note Cash Amount....................... 14
1.173 Senior Note Claim............................. 15
1.174 Senior Note Documents......................... 15
1.175 Senior Note Fraction.......................... 15
1.176 Senior Note Leslie Fay Stock Amount........... 15
1.177 Senior Note LFC Fraction...................... 15
1.178 Senior Note Sassco Note Amount................ 15
1.179 Senior Note Sassco Stock Amount............... 15
1.180 Senior Notes.................................. 16
1.181 Senior Subordinated LFC Fraction.............. 16
1.182 Senior Subordinated Note Claim................ 16
1.183 Senior Subordinated Notes..................... 16
1.184 Special Sassco Assets......................... 16
1.185 Spitalnick.................................... 16
1.186 Spitalnick Equity Interest.................... 16
1.187 Statutorily Subordinated Claims............... 16
1.188 Statutory Lien Claim.......................... 16
1.189 Stock Option.................................. 16
1.190 Subsidiary.................................... 16
1.191 Subsidiary Guaranty Claims.................... 16
1.192 Taxes......................................... 16
1.193 Unsecured Claim............................... 16
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1.194 Working Capital Adjustment.................... 17
1.195 Other Definitions............................. 17
ARTICLE II
COMPROMISE AND SETTLEMENT OF DISPUTES;
SUBSTANTIVE CONSOLIDATION OF DEBTORS;
ASSUMPTION OF OBLIGATION UNDER THE PLAN................... 17
2.1 Compromise and Settlement..................... 17
2.2 Substantive Consolidation..................... 17
2.3 Cancellation of Intercompany Claims........... 17
ARTICLE III
SEPARATION OF SASSCO AND LESLIE FAY....................... 17
3.1 Merger and Consolidation...................... 17
3.2 Effective Date Transactions................... 17
3.3 Post-Effective Date Adjustment................ 19
ARTICLE IV
NEW SASSCO MATTERS........................................ 19
4.1 New Sassco Management Options................. 19
4.2 Levine Employment............................. 19
4.3 New Sassco Credit Agreement................... 19
4.4 New Sassco Registration Rights Agreement...... 19
4.5 Certain Corporate Governance Matters.......... 19
(a) Organization............................. 19
(b) Board of Directors....................... 19
(c) Certain Transactions..................... 20
4.6 Miscellaneous................................. 20
4.7 Additional Stock Options...................... 20
ARTICLE V
REORGANIZED LESLIE FAY MATTERS............................ 20
5.1 Employment Contracts.......................... 20
5.2 Reorganized Leslie Fay Stock Options.......... 21
5.3 Additional Pomerantz Arrangements............. 21
5.4 Board of Directors............................ 21
5.5 Reorganized Leslie Fay Credit Agreement....... 21
5.6 Reorganized Leslie Fay Registration Rights
Agreement................................ 21
ARTICLE VI
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS.................... 21
6.1 Administrative Expense Claims................. 21
6.2 Compensation and Reimbursement Claims......... 22
6.3 Payment of Priority Tax Claims................ 22
ARTICLE VII
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS............. 22
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ARTICLE VIII
PROVISIONS FOR TREATMENT OF
PRIORITY NON-TAX CLAIMS (CLASS 1)......................... 23
8.1 Payment of Allowed Priority Non-Tax Claims.... 23
ARTICLE IX
PROVISIONS FOR TREATMENT OF
SECURED CLAIMS (CLASS 2).................................. 23
9.1 Payment of Secured Claims..................... 23
ARTICLE X
PROVISIONS FOR ALLOWANCE AND
TREATMENT OF BANK CLAIMS (CLASS 3)........................ 23
10.1 Allowance of Bank Claims...................... 23
10.2 Payment of Allowed Bank Claims................ 24
ARTICLE XI
PROVISIONS FOR ALLOWANCE AND
TREATMENT OF SENIOR NOTE CLAIMS (CLASS 4)................. 24
11.1 Allowance of Senior Note Claims............... 24
11.2 Payment of Allowed Senior Note Claims......... 24
ARTICLE XII
PROVISIONS FOR ALLOWANCE AND TREATMENT OF
SENIOR SUBORDINATED NOTE CLAIMS (CLASS 5)................. 24
12.1 Allowance of Senior Subordinated Note Claims.. 24
12.2 Payment of Senior Subordinated Note Claims.... 24
ARTICLE XIII
[Intentionally Omitted.]............................. 25
ARTICLE XIV
PROVISION FOR TREATMENT OF GENERAL
UNSECURED CLAIMS (CLASS 6)................................ 25
14.1 Payment of Allowed General Unsecured Claims... 25
14.2 Allowed Claims of Two Hundred Fifty Dollars
or More..................................... 25
ARTICLE XV
PROVISIONS FOR TREATMENT
OF CONVENIENCE CLAIMS (CLASS 7)........................... 25
ARTICLE XVI
PROVISIONS FOR TREATMENT OF
STATUTORILY SUBORDINATED CLAIMS (CLASS 8)................. 26
ARTICLE XVII
PROVISIONS FOR TREATMENT OF
LESLIE FAY EQUITY INTERESTS (CLASS 9)..................... 26
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ARTICLE XVIII
PROVISIONS FOR TREATMENT OF
HUE EQUITY INTERESTS (CLASS 10)........................... 26
ARTICLE XIX
PROVISIONS FOR TREATMENT OF
SPITALNICK EQUITY INTERESTS (CLASS 11).................... 26
ARTICLE XX
PROVISIONS FOR TREATMENT OF
LICENSING EQUITY INTERESTS (CLASS 12)..................... 26
ARTICLE XXI
PROVISIONS FOR TREATMENT OF
RETAIL OUTLETS EQUITY INTERESTS (CLASS 13)................ 27
ARTICLE XXII
PROVISIONS FOR TREATMENT OF
RETAIL (ALABAMA) EQUITY INTERESTS (CLASS 14).............. 27
ARTICLE XXIII
PROVISIONS FOR TREATMENT OF
RETAIL (CALIFORNIA) EQUITY INTERESTS (CLASS 15)........... 27
ARTICLE XXIV
PROVISIONS FOR TREATMENT OF
RETAIL (IOWA) EQUITY INTERESTS (CLASS 16)................. 27
ARTICLE XXV
PROVISIONS FOR TREATMENT OF
RETAIL (TENNESSEE) EQUITY INTERESTS (CLASS 17)............ 27
ARTICLE XXVI
PROVISIONS FOR TREATMENT OF
DISPUTED CLAIMS UNDER THE PLAN............................ 28
26.1 Objections to Claims; Prosecution of
Disputed Claims............................. 28
26.2 Estimation of Claims.......................... 28
26.3 Payments and Distributions on Disputed
Claims...................................... 28
ARTICLE XXVII
PROSECUTION OF CLAIMS HELD BY THE DEBTORS................. 29
27.1 Prosecution of Claims......................... 29
27.2 Net Payment by Defendants..................... 29
ARTICLE XXVIII
ACCEPTANCE OR REJECTION OF PLAN;
EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS...... 29
28.1 Impaired Classes to Vote...................... 29
28.2 Acceptance by Class of Creditors.............. 30
28.3 Cramdown...................................... 30
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ARTICLE XXIX
IDENTIFICATION OF CLAIMS AND
EQUITY INTERESTS NOT IMPAIRED BY THE PLAN................. 30
29.1 Unimpaired Classes............................ 30
29.2 Impaired Classes to Vote on Plan.............. 30
29.3 Controversy Concerning Impairment............. 30
ARTICLE XXX
PROVISIONS FOR TIMING OF DISTRIBUTIONS.................... 30
30.1 Time and Manner of Payments................... 30
(a) Initial Payments......................... 30
(b) Quarterly Payments....................... 30
30.2 Timeliness of Payments........................ 31
30.3 Distributions by Disbursing Agent............. 31
30.4 Calculation of Distribution Amounts of
Securities.................................. 31
30.5 Delivery of Distributions..................... 31
30.6 Undeliverable Distributions................... 31
(a) Holding of Undeliverable Distributions... 31
(b) Failure to Claim Undeliverable
Distributions.......................... 31
30.7 Compliance with Tax Requirements.............. 32
30.8 Time Bar to Cash Payments..................... 32
30.9 Distributions After Effective Date............ 32
30.10 Set-Offs...................................... 32
30.11 Surrender and Cancellation of Instruments..... 32
30.12 De Minimis Distributions...................... 32
30.13 HSR Compliance................................ 32
30.14 Termination of Subordination Rights and
Settlement of Related Claims and
Controversies............................... 33
ARTICLE XXXI
RIGHTS AND POWERS OF DISBURSING AGENT..................... 33
31.1 Exculpation................................... 33
31.2 Powers of the Disbursing Agent................ 33
31.3 Expenses Incurred From and After the
Effective Date.............................. 33
31.4 Method of Payment............................. 33
ARTICLE XXXII
THE PLAN ADMINISTRATOR.................................... 34
32.1 Appointment of Plan Administrator............. 34
32.2 Responsibilities of Plan Administrator........ 34
32.3 Powers of Plan Administrator.................. 34
32.4 Compensation of Plan Administrator............ 34
32.5 Termination of Plan Administrator............. 34
ARTICLE XXXIII
COMMITTEES................................................ 34
33.1 Creditors' Committee Composition and Term..... 34
33.2 Duties and Powers of the Creditors'
Committee................................... 35
33.3 Equity Committee.............................. 35
33.4 Dissolution of Derivative Action Board........ 35
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ARTICLE XXXIV
EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................. 35
34.1 Assumption of Executory Contracts and
Unexpired Leases............................ 35
34.2 Cure of Defaults for Assumed Executory
Contracts and Unexpired Leases.............. 35
34.3 Rejection Damage Claims....................... 35
ARTICLE XXXV
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN......... 36
35.1 Conditions Precedent to Effective Date of
the Plan.................................... 36
(a) Entry of the Confirmation Order.......... 36
(b) Post-Consummation New Sassco Financing... 36
(c) Post-Consummation Reorganized Leslie
Fay Financing.......................... 36
(d) Execution of Documents; Other Actions.... 36
(e) Appointment of Plan Administrator........ 36
(f) Amendment to Reorganized Leslie Fay
Certificate of Incorporation;
Incorporation of Reorganized Leslie
Fay Operating Company, Reorganized
Leslie Fay Licensing Company and
New Castleberry........................ 36
(g) Incorporation of New Sassco.............. 36
(h) Allowed Amount of Claims................. 36
(i) Satisfaction of Debtor in Possession
Financing.............................. 37
35.2 Waiver of Conditions Precedent................ 37
ARTICLE XXXVI
PROVISIONS FOR THE ESTABLISHMENT
AND MAINTENANCE OF DISBURSEMENT ACCOUNTS.................. 37
36.1 Establishment of Disbursement Account......... 37
36.2 Maintenance of Disbursement Account(s)........ 37
ARTICLE XXXVII
EFFECT OF CONFIRMATION.................................... 37
37.1 Reorganized Leslie Fay Authority.............. 37
(a) General Authority........................ 37
(b) Compromise and Settlement of Certain
Class of Controversies................. 37
37.2 Title to Assets; Discharge of Liabilities..... 38
37.3 Discharge of Debtors.......................... 38
37.4 Injunction.................................... 38
37.5 Term of Existing Injunctions or Stays......... 38
37.6 Limited Release of Directors, Officers and
Employees................................... 38
37.7 Exculpation................................... 38
37.8 Preservation of Rights of Action.............. 39
37.9 Injunction.................................... 39
ARTICLE XXXVIII
RETENTION OF JURISDICTION................................. 39
38.1 Retention of Jurisdiction..................... 39
38.2 Modification of Plan.......................... 40
ARTICLE XXXIX
PROVISIONS FOR MANAGEMENT................................. 40
39.1 Directors..................................... 40
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39.2 Officers...................................... 41
39.3 Employment Contracts.......................... 41
ARTICLE XL
ARTICLES OF INCORPORATION AND BY-LAWS OF THE DEBTORS...... 41
40.1 Amendment of Articles of Incorporation and
By-Laws..................................... 41
ARTICLE XLI
MISCELLANEOUS PROVISIONS.................................. 41
41.1 Payment of Statutory Fees..................... 41
41.2 Retiree Benefits.............................. 41
41.3 Post-Effective Date Fees and Expenses......... 41
41.4 Severability.................................. 41
41.5 Governing Law................................. 42
41.6 Notices....................................... 42
41.7 Closing of Cases.............................. 42
41.8 Section Headings.............................. 43
Exhibit A Certain Terms of, and Restrictions on, New Sassco
Management Options
Exhibit B Principal Terms of Levine Employment Agreement
Exhibit C Reorganized Leslie Fay Employment Arrangements
Exhibit D Reorganized Leslie Fay Stock Options
-x-<PAGE>
The Leslie Fay Companies, Inc., Hue, Inc., Spitalnick
Corp., Leslie Fay Licensing Corp., Leslie Fay Retail Outlets,
Inc., Leslie Fay Factory Outlet (Alabama), Inc., Leslie Fay
Factory Outlet (California), Inc., Leslie Fay Factory Outlet
(Iowa), Inc., Leslie Fay Factory Outlet (Tennessee), Inc. and
The Official Committee of Unsecured Creditors of The Leslie Fay
Companies, Inc. hereby propose the following plan of
reorganization pursuant to sections 1121(a) and (c) and 1123 of
the Bankruptcy Code.
ARTICLE I
DEFINITIONS
As used in the Plan, the following terms shall have
the respective meanings specified below and be equally
applicable to the singular and plural of terms defined:
1.1 Administrative Expense Claim. Any Claim
constituting a cost or expense of administration of the Chapter
11 Cases asserted under section 503(b) of the Bankruptcy Code,
including, without limitation, any actual and necessary costs
and expenses of preserving the estates of the Debtors, any
actual and necessary costs and expenses of operating the
businesses of the Debtors in Possession, any indebtedness or
obligations incurred or assumed by the Debtors in Possession in
connection with the conduct of their businesses or for the
acquisition or lease of property or the procurement or
rendition of services, any costs and expenses of the Debtors in
Possession for the management, maintenance, preservation, sale
or other disposition of any assets, the administration and
implementation of the Plan, the administration, prosecution or
defense of Claims by or against the Debtors and for
distributions under the Plan, any Claims for compensation and
reimbursement of expenses arising during the period from and
after the Petition Date and prior to the Effective Date or
otherwise in accordance with the provisions of the Plan, and
any fees or charges assessed against the Debtors' estates under
section 1930, chapter 123, Title 28, United States Code.
1.2 Affiliate. Any Entity that is an "affiliate" of
a Debtor within the meaning of section 101(2) of the Bankruptcy
Code.
1.3 Allowed Administrative Expense Claim. An
Administrative Expense Claim, to the extent it is or has become
an Allowed Claim.
1.4 Allowed Bank Claim. A Bank Claim, to the extent
it is or has become an Allowed Claim.
1.5 Allowed Claim. Any Claim against a Debtor, (a)
(i) proof of which was filed (x) in the case of the Retail
Debtors, on or before December 12, 1995, the date designated by
the Bankruptcy Court as the last date for filing proofs of
claim against the Retail Debtors, (y) in the case of the other
Debtors, on or before December 10, 1993, the date designated by
the Bankruptcy Court as the last date for filing proofs of
claim against such other Debtors or (z) in either case, such
other date as has been authorized by an order of the Bankruptcy
Court, or (ii) if no proof of Claim has been timely filed,
which has been or hereafter is listed by a Debtor in its
Schedules as liquidated in amount and not disputed or
contingent and (iii) whether or not a proof of claim has been
filed, a Claim as to which no objection to the allowance
thereof has been interposed within the applicable period of
limitation fixed by the Plan, the Bankruptcy Code, the
Bankruptcy Rules or a Final Order, or as to which an objection
has been interposed and such Claim has been allowed in whole or
in part by a Final Order or (b) in the case of Bank Claims,
Senior Note Claims and Senior Subordinated Note Claims, allowed
pursuant to Sections 10.1, 11.1, and 12.1 hereof, respectively.
For purposes of determining the amount of an "Allowed Claim",
there shall be deducted therefrom an amount equal to the amount
of any claim which a Debtor may hold against the holder
thereof, to the extent such claim may be set off pursuant to
section 553 of the Bankruptcy Code.
1.6 Allowed General Unsecured Claim. A General
Unsecured Claim, to the extent it is or has become an Allowed
Claim.
1<PAGE>
1.7 Allowed Priority Non-Tax Claim. A Priority Non-
Tax Claim, to the extent it is or has become an Allowed Claim.
1.8 Allowed Priority Tax Claim. A Priority Tax
Claim, to the extent it is or has become an Allowed Claim.
1.9 Allowed Secured Claim. A Secured Claim, to the
extent it is or has become an Allowed Claim.
1.10 Allowed Senior Note Claim. A Senior Note
Claim, to the extent it is or has become an Allowed Claim.
1.11 Allowed Senior Subordinated Note Claim. A
Senior Subordinated Note Claim, to the extent it is or has
become an Allowed Claim.
1.12 Allowed Unsecured Claim. An Unsecured Claim,
to the extent it is or has become an Allowed Claim.
1.13 Amended Bylaws of Reorganized Leslie Fay. The
amended bylaws of Reorganized Leslie Fay, which amended bylaws
shall be in substantially the form included in the Plan
Supplement.
1.14 Amended Certificate of Incorporation of
Reorganized Leslie Fay. The Certificate of Incorporation of
Reorganized Leslie Fay, as amended, which certificate of
incorporation shall be in substantially the form included in
the Plan Supplement.
1.15 Ballot. The form distributed to holders of
impaired Claims on which such holders indicate acceptance or
rejection of the Plan and any election for treatment of such
impaired Claim provided under the Plan.
1.16 Ballot Date. The date set by the Bankruptcy
Court by which all Ballots for acceptance or rejection of the
Plan or elections for alternative treatment under the Plan must
be received.
1.17 Bank Cash Amount. The sum of:
(a) The product of:
(i) the Cash Available for Distribution times
(ii) the Pro Rata Bank Fraction, plus
(b) The product of:
a. the Cash Available for Distribution times
the Pro Rata Senior Subordinated Fraction,
times
b. the Senior Bank Fraction.
1.18 Bank Claim. Any Claim against any Debtor
arising under or governed by that certain Financing Agreement,
dated as of January 15, 1992, by and among Leslie Fay, Chemical
Bank, Manufacturers Hanover Trust Company, Marine Midland Bank,
National Westminster Bank USA, The Bank of New York and
Chemical Bank, as Agent, as amended, supplemented or otherwise
modified, including, without limitation, any Claim arising from
or related to the Revolving Credit Notes.
2<PAGE>
1.19 Bank Leslie Fay Stock Amount. The number of
shares of Reorganized Leslie Fay Common Stock equal to the sum
of:
(a) The product of Three Million Four Hundred
Thousand (3,400,000) times the Bank LFC
Fraction, plus
(b) The product of:
(i) the excess, if any, of (x) Three Million
Four Hundred Thousand (3,400,000) times
the Senior Subordinated LFC Fraction over
(y) Two Hundred Four Thousand (204,000),
times
(ii) the Senior Bank Fraction.
1.20 Bank LFC Fraction. The Fraction (a) the
numerator of which shall be the aggregate amount of Allowed
Bank Claims and (b) the denominator of which shall be the sum
of the aggregate amount of Allowed Bank Claims, Allowed Senior
Note Claims, Allowed Senior Subordinated Note Claims and
Allowed General Unsecured Claims.
1.21 Bank Sassco Note Amount. The aggregate
principal amount of New Sassco Notes equal to the sum of:
(a) The product of One Hundred Ten Million Dollars
($110,000,000) times the Pro Rata Bank
Fraction, plus
(b) The product of:
a. the product of One Hundred Ten Million
Dollars ($110,000,000) times the Pro Rata
Senior Subordinated Fraction, times
b. the Senior Bank Fraction.
1.22 Bank Sassco Stock Amount. The number of shares of
New Sassco Common Stock equal to the sum of:
(a) The product of Six Million Eight Hundred
Thousand (6,800,000) times the Pro Rata Bank
Fraction, plus
(b) The product of:
a. the excess, if any, of (x) Six Million
Eight Hundred Thousand (6,800,000) times
the Pro Rata Senior Subordinated Fraction
over (y) Four Hundred Eight Thousand
(408,000), times
b. the Senior Bank Fraction.
1.23 Bankruptcy Code. The Bankruptcy Reform Act of
1978, codified at Title 11 of the United States Code, as
amended, as applicable to the Chapter 11 Cases.
1.24 Bankruptcy Court. The United States Bankruptcy
Court for the Southern District of New York or such other court
having jurisdiction over the Chapter 11 Cases.
1.25 Bankruptcy Rules. The Federal Rules of
Bankruptcy Procedure, as promulgated by the United States
Supreme Court under section 2075 of Title 28 of the United
States Code, and any Local Rules of the Bankruptcy Court, as
amended.
3<PAGE>
1.26 Business Day. A day other than a Saturday, a
Sunday or any other day on which commercial banks in New York,
New York are required or authorized to close.
1.27 Cash. Lawful currency of the United States of
America.
1.28 Cash Available for Distribution. At any time
of determination thereof, the excess, if any, of (a) all Cash
and Cash Equivalents in the Disbursement Account(s) over (b)
such amounts of Cash (i) reasonably determined by the
Disbursing Agent, and consented to by the Creditors' Committee,
as necessary to satisfy, in accordance with the terms and
conditions of the Plan, Administrative Expense Claims, Priority
Non-Tax Claims, Priority Tax Claims, Convenience Claims,
Special Unsecured Claims and Secured Claims and (ii) necessary
to make Pro Rata distributions to holders of Disputed Claims as
if such Disputed Claims were, at such time, Allowed Claims.
1.29 Cash Equivalents. Equivalents of Cash in the
form of readily marketable securities or instruments issued by
a person other than the Debtors or an Affiliate, including,
without limitation, readily marketable direct obligations of,
or obligations guaranteed by, the United States of America,
commercial paper of domestic corporations carrying a Moody's
Rating of "A" or better, or equivalent rating of any other
nationally recognized rating service, or interest-bearing
certificates of deposit or other similar obligations of
domestic banks or other financial institutions having a
shareholders' equity or equivalent capital of not less than One
Hundred Million Dollars ($100,000,000), having maturities of
not more than one (1) year, at the then best generally
available rates of interest for like amounts and like periods.
1.30 Castleberry Assets. Substantially all of the
assets of the Castleberry Division as of the Effective Date,
all as identified in the Schedule of Leslie Fay and Castleberry
Assets and Liabilities included in the Plan Supplement.
1.31 Castleberry Division. The division of Leslie
Fay engaged in the design and manufacture and sale of women's
knitwear apparel and blouses marketed under "CASTLEBERRY" and
related labels.
1.32 Castleberry Liabilities. The current
obligations and liabilities of the Debtors incurred from and
after the Petition Date in the ordinary course of business of
the Castleberry Division, all as identified in the Schedule of
Leslie Fay and Castleberry Assets and Liabilities.
1.33 Chapter 11 Cases. The cases commenced under
chapter 11 of the Bankruptcy Code by the Debtors on
their respective Petition Dates.
1.34 Claim. Any right to payment from any of the
Debtors, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured, known or unknown; or any right to an equitable
remedy for breach of performance if such breach gives rise to a
right of payment from any of the Debtors, whether or not such
right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured.
1.35 Class. A category of holders of Claims or
Equity Interests as set forth in Article VII of the Plan.
1.36 Class Action. The litigation, styled In re:
The Leslie Fay Companies, Inc. Securities Litigation, pending
before the United States District Court for the Southern
District of New York, Civil Action No. 92-CIV-8036 (WCC).
1.37 Collateral. Any property or interest in
property of the estate of any Debtor that is subject to an
unavoidable Lien to secure the payment or performance of a
Claim.
1.38 Confirmation Date. The date upon which the
Clerk of the Bankruptcy Court enters the Confirmation Order.
4<PAGE>
1.39 Confirmation Order. The order of the
Bankruptcy Court confirming the Plan in accordance with the
provisions of chapter 11 of the Bankruptcy Code.
1.40 Consummation Cash Shortfall Amount. An amount
of Cash, estimated to be Six Million Four Hundred Forty-Five
Thousand Dollars ($6,445,000), equal to the excess of (A) the
sum of (i) the amount of Cash, if any, to be transferred by the
Debtors or Reorganized Leslie Fay to New Sassco and its
Subsidiaries on the Effective Date (including any Cash held on
the Effective Date by any Subsidiary of Reorganized Leslie Fay
the stock of which is transferred to New Sassco), (ii) the
amount of Cash required by the Plan to be paid by the Debtors
on or about the Effective Date to holders of Allowed Priority
Claims, (iii) the amount of Cash required to pay Allowed
Administrative Expense Claims that will become due and payable
on or within 90 days after the Effective Date (subject to the
second proviso in Section 6.1 hereof) and (iv) the amount of
Cash required to pay certain other costs and expenses
(including taxes) of the Debtors arising from the
implementation of the Plan, as determined by the Debtors and
the Creditors' Committee on or prior to the Effective Date,
over (B) the amount of Cash remaining with the Debtors, net of
outstanding checks, as of the Effective Date.
1.41 Convenience Claims. Any General Unsecured
Claim against any Debtor in an amount of Two Hundred Fifty
Dollars ($250.00) or less; provided, however, that if the
holder of a General Unsecured Claim shall make an election to
reduce such Claim to Two Hundred Fifty Dollars ($250.00) in
accordance with Section 14.2 hereof, such Claim shall be
treated as a Convenience Claim for all purposes.
1.42 Creditor. Any person that has a Claim against
any of the Debtors that arose or is deemed to have arisen on or
before the Petition Date, including, without limitation, a
Claim against the Debtors' estates of a kind specified in
sections 502(g), 502(h) or 502(i) of the Bankruptcy Code.
1.43 Creditor Representative. The Person designated
by the Creditors' Committee to effectuate the transactions
described in Section 3.2 hereof on behalf of the Creditors in
Classes 3, 4, 5, 6 and 7.
1.44 Creditors' Committee. The Official Committee
of Unsecured Creditors appointed by the Bankruptcy Court and
the United States Trustee in the Chapter 11 Cases pursuant to
section 1102 of the Bankruptcy Code, as reconstituted from time
to time.
1.45 Debtor. Each of Leslie Fay, Hue, Spitalnick
and Licensing, the debtors in Chapter 11 Cases Nos. 93 B 41724
(TLB) through 93 B 41727 (TLB), and each Retail Debtor.
1.46 Debtor in Possession. Each Debtor as a debtor
in possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code.
1.47 Deferred Professionals. As defined in Section
6.1 hereof.
1.48 Derivative Action. The litigation, styled
Isadore Langer, derivatively on behalf of The Leslie Fay
Companies, Inc. v. John J. Pomerantz, et al., pending before
the Supreme Court of the State of New York, County of New York,
Case No. 104544193.
1.49 Derivative Action Board. The three Persons or
Entities appointed prior to the Effective Date by the
Bankruptcy Court upon nomination by the Creditors' Committee
(or any replacements thereafter selected by such Persons or
Entities), who shall determine by a majority vote whether to
prosecute, compromise and settle or discontinue the Derivative
Action.
1.50 Disbursement Account(s). The account(s) to be
established by the Debtors on the Effective Date in accordance
with Section 36.1 of the Plan, together with any interest
earned thereon.
5<PAGE>
1.51 Disbursing Agent. Reorganized Leslie Fay, the
Plan Administrator or such other Entity as may be designated by
the Debtors and the Creditors' Committee, solely in its
capacity as agent of the Debtors to effectuate the
distributions contemplated under this Plan.
1.52 Disclosure Statement. The disclosure statement
related to the Plan and approved by the Bankruptcy Court in
accordance with section 1125 of the Bankruptcy Code.
1.53 Disputed Claim. A Claim against any of the
Debtors, to the extent the allowance of which is the subject of
a timely objection or request for estimation in accordance with
the Plan, the Bankruptcy Code, the Bankruptcy Rules or a Final
Order, or is otherwise disputed by a Debtor in accordance with
applicable law, which objection, request for estimation or
dispute has not been withdrawn or determined by a Final Order;
provided, however, that for purposes of determining the
aggregate amount of Disputed Claims against the Debtors'
chapter 11 estates and the deduction for disputed claims in
determining Cash Available for Distribution and New Securities
Available for Distribution, "Disputed Claims" shall mean the
lesser of (a) Disputed Claims as filed with, or allowed by, the
Bankruptcy Court and (b) Disputed Claims as estimated by the
Bankruptcy Court pursuant to section 502(c) of the Bankruptcy
Code; and provided, further, that, in the event the Bankruptcy
Court shall estimate a Disputed Claim for purposes of
allowance, such estimation shall constitute and represent the
maximum amount in which such Claim may ultimately become an
Allowed Claim.
1.54 Dress and Sportswear Assets. Substantially all
of the assets of the Leslie Fay Dress Division and the Leslie
Fay Sportswear Division as of the Effective Date, and
substantially all of the assets of Leslie Fay in the design,
production and sale of its Outlander line of products as of the
Effective Date, all as identified in the Schedule of Leslie Fay
and Castleberry Assets and Liabilities included in the Plan
Supplement, but in any event excluding the Leslie Fay
Intellectual Property.
1.55 Effective Date. The first (1st) Business Day
following the satisfaction of the conditions precedent
specified in Section 35.1 of the Plan, unless otherwise waived
as provided in Section 35.2 of the Plan.
1.56 Effective Date Anniversary. An anniversary of
the Effective Date.
1.57 Entity. An individual, a corporation, a
general partnership, a limited partnership, a limited liability
company, a limited liability partnership, an association, a
joint stock company, a joint venture, an estate, a trust, an
unincorporated organization, a government or any subdivision
thereof or any other entity.
1.58 Equity Committee. The Official Committee of
Equity Interest holders appointed by the Bankruptcy Court and
the United States Trustee in the Chapter 11 Case of Leslie Fay
pursuant to section 1102 of the Bankruptcy Code, as
reconstituted from time to time.
1.59 Equity Interest. Any equity interest in any of
the Debtors represented by duly authorized, validly issued and
outstanding shares of stock or any interest or right to convert
into an interest or acquire any equity interest which was in
existence immediately prior to the Petition Date, including,
without limitation, any Leslie Fay Equity Interest.
1.60 Final Distribution Date. The date on which a
final distribution is made to holders of Allowed Claims
pursuant to the Plan, which date shall occur after all Disputed
Claims have been resolved by Final Order and all Plan Assets
have been converted to Cash or abandoned, as the case may be,
pursuant to a Final Order.
1.61 Final Order. An order of the Bankruptcy Court
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 rear-
gument or rehearing shall then be pending; and if an appeal,
writ of certiorari, re-argument or rehearing thereof has been
sought, such order shall have been affirmed by the highest
court to which such order was appealed, or certiorari shall
have been denied or reargument or rehearing shall have been
denied or resulted in no modification of such order, and the
time to take any
6<PAGE>
further appeal, petition for certiorari or move for reargument
or rehearing shall have expired; provided, however, that the
possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure or any analogous rule under
the Bankruptcy Rules, may be but has not then been filed with
respect to such order, shall not cause such order not to be a
Final Order.
1.62 General Unsecured Cash Amount. The product of
(a) Cash Available for Distribution times (b) the Pro Rata
General Unsecured Fraction.
1.63 General Unsecured Claim. An Unsecured Claim,
other than an Intercompany Affiliate Claim, a Bank Claim, a
Senior Note Claim, a Senior Subordinated Note Claim, a
Statutorily Subordinated Claim or a Convenience Claim.
1.64 General Unsecured Leslie Fay Stock Amount. The
number of shares of Reorganized Leslie Fay Common Stock equal
to the product of (a) Three Million Four Hundred Thousand
(3,400,000) times the General Unsecured LFC Fraction.
1.65 General Unsecured LFC Fraction. The fraction
(a) the numerator of which shall be the aggregate amount of
Allowed General Unsecured Claims and (b) the denominator of
which shall be the sum of the aggregate amount of Allowed Bank
Claims, Allowed Senior Note Claims, Allowed Senior Subordinated
Note Claims and Allowed General Unsecured Claims.
1.66 General Unsecured Sassco Note Amount. The
aggregate principal amount of New Sassco Notes equal to the
product of (a) One Hundred Ten Million Dollars ($110,000,000)
times (b) the Pro Rata General Unsecured Fraction.
1.67 General Unsecured Sassco Stock Amount. The
number of shares of New Sassco Common Stock equal to the
product of (a) Six Million Eight Hundred Thousand (6,800,000)
times (b) the Pro Rata General Unsecured Fraction.
1.68 Guarantee. The Guarantees, each dated as of
January 15, 1992, executed by Spitalnick and Licensing in favor
of Manufacturers Hanover Trust Company, as agent, Manufacturers
Hanover Trust Company, Chemical Bank, Bankers Trust Company and
Marine Midland Bank, N.A., as amended.
1.69 Hue. Hue, Inc., a New York corporation.
1.70 Hue Equity Interest. A common Equity Interest
in Hue.
1.71 Intercompany Affiliate. Any of the Debtors and
any other direct or indirect Subsidiary of Leslie Fay.
1.72 Intercompany Affiliate Claim. Any Unsecured
Claim held by any Intercompany Affiliate against any Debtor.
1.73 Leslie Fay. The Leslie Fay Companies, Inc., a
Delaware corporation.
1.74 Leslie Fay Assets. Substantially all of the
assets of the Leslie Fay Dress Division, the Leslie Fay Sportswear
Division and Hue as of the Effective Date, including, without
limitation, the intellectual property associated therewith, and
substantially all of the assets of Leslie Fay in the design,
production and sale of its Outlander line of products as of the
Effective Date, including, without limitation, the intellectual
property associated therewith, all as identified in the
Schedule of Leslie Fay and Castleberry Assets and Liabilities
included in the Plan Supplement.
1.75 Leslie Fay Dress Division. The Dress Division
of Leslie Fay.
7<PAGE>
1.76 Leslie Fay Equity Interest. A common Equity
Interest in Leslie Fay represented by (i) one of the 18,771,836
issued and outstanding shares of common stock of Leslie Fay,
(ii) any Stock Option or other right arising from or related to
the 1986 Stock Option Plan and (iii) any Rights arising from or
related to the Rights Agreement.
1.77 Leslie Fay Intellectual Property. All trade-
marks, trade names and other intellectual property associated
with Hue, the Leslie Fay Dress Division, the Leslie Fay
Sportswear Division and Outlander as of the Effective Date, all
as identified in the Schedule of Leslie Fay and Castleberry
Assets and Liabilities included in the Plan Supplement, which
intellectual property shall be subject to the Reorganized
Leslie Fay Licensing Agreement.
1.78 Leslie Fay Liabilities. The current
obligations of the Debtors incurred from and after the Petition
Date in the ordinary course of business of the Leslie Fay Dress
Division, the Leslie Fay Sportswear Division and Hue, and not
in connection with Sassco's business operations, the Sassco
Assets, Castleberry's business operations or the Castleberry
Assets, all as identified in the Schedule of Leslie Fay and
Castleberry Assets and Liabilities included in the Plan
Supplement.
1.79 Leslie Fay Sportswear Division. The Sportswear
Division of Leslie Fay.
1.80 Levine. Arthur S. Levine, an individual.
1.81 Levine Employment Agreement. As defined in
Section 4.3 hereof.
1.82 Licensing. Leslie Fay Licensing Corp., a
Delaware corporation.
1.83 Licensing Equity Interest. A common Equity
Interest in Licensing.
1.84 Lien. Any charge against or interest in
property to secure payment of a debt or performance of an
obligation.
1.85 New Castleberry. A corporation to be organized
pursuant to the laws of the State of Delaware as a wholly-owned
Subsidiary of Reorganized Leslie Fay on or before the Effective
Date, unless otherwise sold beforehand.
1.86 New Castleberry Bylaws. The bylaws of New
Castleberry, which bylaws shall be in substantially the form
included in the Plan Supplement.
1.87 New Castleberry Certificate of Incorporation.
The certificate of incorporation of New Castleberry, which
certificate of incorporation shall be in substantially the
form set forth in the Plan Supplement.
1.88 New Castleberry Common Stock. The shares of
common stock of New Castleberry to be issued on the Effective
Date, having a par value of $0.01 per share.
1.89 New Sassco. A corporation to be organized by
the Creditor Representative on or before the Effective Date
pursuant to Section 4.5(a) hereof.
1.90 New Sassco Bylaws. The bylaws of New Sassco,
which bylaws shall be in substantially the form included in the
Plan Supplement.
1.91 New Sassco Certificate of Incorporation. The
Certificate of Incorporation of New Sassco, which Certificate
of Incorporation shall be in substantially the form included in
the Plan Supplement.
8<PAGE>
1.92 New Sassco Common Stock. The shares of common
stock of New Sassco, having a par value of $.01 per share, of
which Six Million Eight Hundred Thousand (6,800,000) shares
shall be issued on and as of the Effective Date pursuant to the
terms of the Plan.
1.93 New Sassco Credit Agreement. The Credit
Agreement between New Sassco and the New Sassco Lender, which
Credit Agreement shall (a) be in substantially the form
included in the Plan Supplement and (b) contain a working
capital facility in the amount of One Hundred Million Dollars
($100,000,000) (or such higher amount as may be agreed by
Levine and the Creditors' Committee).
1.94 New Sassco EBIT. The earnings before interest
and taxes of New Sassco as determined in accordance with
generally accepted accounting principles in the United States
of America in effect from time to time.
1.95 New Sassco Indenture. An indenture executed by
New Sassco and the New Sassco Indenture Trustee, which
indenture shall be in substantially the form included in the
Plan Supplement.
1.96 New Sassco Indenture Trustee. A financial
institution reasonably acceptable to the Creditors' Committee
and Levine.
1.97 New Sassco Intercompany Note. Collectively,
the unsecured promissory note issued by New Sassco on the
Effective Date in favor of the Plan Administrator (solely as
agent for the Deferred Professionals), and the unsecured
promissory note issued by New Sassco on the Effective Date in
favor of Reorganized Leslie Fay, each in the original principal
amount of Four Million Dollars ($4,000,000), bearing interest
at the prevailing market rate, which interest and principal
amounts shall be due and payable on April 30, 1997. The New
Sassco Intercompany Note shall be substantially in the form set
forth in the Plan Supplement.
1.98 New Sassco Lender. The First National Bank of
Boston and/or such other financial institution(s) as may be
reasonably acceptable to Levine and the Creditors' Committee.
1.99 New Sassco Management Options. As defined in
Section 4.1 hereof.
1.100 New Sassco Management Recipients. As defined
in Section 4.1 hereof.
1.101 New Sassco Notes. The 12.75% Senior Notes of
New Sassco in the original principal amount of One Hundred Ten
Million Dollars ($110,000,000), maturing on or about the
seventh anniversary of Effective Date, which Notes shall be in
substantially the form included in the Plan Supplement.
Interest shall be payable on such Notes semiannually in arrears
in Cash; provided, however, that the first such interest
payment shall be due and payable on September 30, 1997.
1.102 New Sassco Registration Rights Agreement. A
registration rights agreement governing the resale of New
Sassco Common Stock by Creditors who may be "affiliates" of New
Sassco, which registration rights agreement shall be in
substantially the form included in the Plan Supplement.
1.103 New Securities. Reorganized Leslie Fay Common
Stock, New Sassco Notes and New Sassco Common Stock.
1.104 New Securities Available for Distribution. At
the time of determination thereof, all Reorganized Leslie Fay
Common Stock, New Sassco Notes and New Sassco Common Stock,
less such amounts of Reorganized Leslie Fay Common Stock, New
Sassco Notes and New Sassco Common Stock necessary to make
distributions to holders of Disputed Claims as if such Disputed
Claims were, at such time, Allowed Claims.
9<PAGE>
1.105 1986 Stock Option Plan. The 1986 Stock Option
Plan, dated as of June 27, 1986, established by Leslie Fay for
the benefit of key senior management employees.
1.106 Nipon Agreement. The Agreement, dated January
6, 1988, between Leslie Fay and Albert Nipon, Inc.
1.107 Nipon Trademarks. All of the Debtors' rights
and interests in and to the trademarks, tradenames and other
intellectual property acquired pursuant to the Nipon Agreement.
1.108 Outlander. The Outlander label, trademarks and
tradenames utilized by Leslie Fay in connection with the
distribution and sale of certain product lines.
1.109 Person. An individual or Entity.
1.110 Petition Date. April 5, 1993, the date on
which Leslie Fay, Hue, Spitalnick and Licensing, and November
15, 1995, the date on which the Retail Debtors, respectively,
filed their respective voluntary petitions for relief
commencing their Chapter 11 Cases.
1.111 Plan. This Fourth Amended and Restated Joint
Plan of Reorganization for Debtors Pursuant to Chapter 11 of
the United States Bankruptcy Code Proposed by Debtors and
Creditors' Committee, including, without limitation, the
exhibits and schedules hereto and the Plan Supplement, either
in its present form or as the same may be amended, modified or
supplemented from time to time in accordance with the terms and
provisions hereof.
1.112 Plan Administration Agreement. The agreement
prescribing the powers, duties and rights of the Plan
Administrator in administering the Plan, which agreement shall
be in substantially the form included in the Plan Supplement.
1.113 Plan Administrator. The Person to be
designated by the Debtors and the Creditors' Committee and
retained, as of the Effective Date, by Reorganized Leslie Fay,
with the approval of the Bankruptcy Court, as the employee or
fiduciary responsible for, among other things, the matters
described in Section 32.2 hereof.
1.114 Plan Assets. All Cash, Cash Equivalents and
other tangible and intangible assets and properties of the
Debtors in existence immediately prior to the Effective Date,
including, without limitation all causes of action of the
Debtors against third parties, whether or not subject to
pending litigation, and all proceeds thereof, but excluding the
Sassco Assets, Castleberry Assets and Leslie Fay Assets.
1.115 Plan Supplement. A separate volume, to be
filed with the Clerk of the Bankruptcy Court, containing, among
other things, forms of the Amended Bylaws of Reorganized Leslie
Fay, Amended Certificate of Incorporation of Reorganized Leslie
Fay, Reorganized Leslie Fay Credit Agreement, Reorganized
Leslie Fay Operating Company Certificate of Incorporation,
Reorganized Leslie Fay Operating Company Bylaws, Reorganized
Leslie Fay Licensing Company Certificate of Incorporation,
Reorganized Leslie Fay Licensing Company Bylaws, New
Castleberry Certificate of Incorporation, New Castleberry
Bylaws, New Sassco Certificate of Incorporation, New Sassco
Bylaws, New Sassco Credit Agreement, New Sassco Notes, New
Sassco Indenture, New Sassco Intercompany Note, Schedule of
Leslie Fay and Castleberry Assets and Liabilities, Schedule of
Sassco Assets and liabilities, Plan Administration Agreement,
Reorganized Leslie Fay licensing Agreement, New Sassco
Registration Rights Agreement, Reorganized Leslie Fay
Registration Rights Agreement, the Levine Registration Rights
Agreement and the definitive documentation for the New Sassco
Management Options and Reorganized Leslie Fay Management
Options, all in form and substance satisfactory to the Debtors
and the Creditors' Committee. The Plan Supplement (containing
drafts or final versions of the foregoing documents) shall be
filed with the clerk of the Bankruptcy Court as early as
practicable (but in no event later than one (1) Business Day)
prior to the commencement of the hearing to consider
confirmation of the Plan, or on such other date as the
Bankruptcy Court may establish.
10<PAGE>
1.116 Pomerantz. John J. Pomerantz, an individual.
1.117 Priority Non-Tax Claim. Any Claim against any
of the Debtors, other than an Administrative Expense Claim or a
Priority Tax Claim, entitled to priority in payment under
section 507(a) of the Bankruptcy Code, but only to the extent
entitled to such priority.
1.118 Priority Tax Claim. Any Claim against any of
the Debtors entitled to priority in payment under section
507(a)(8) of the Bankruptcy Code.
1.119 Proponents. Collectively, Leslie Fay, Hue,
Spitalnick, Licensing, the Retail Debtors and the Creditors'
Committee.
1.120 Pro Rata Bank Fraction. The fraction (a) the
numerator of which shall be the aggregate amount of Allowed
Bank Claims and (b) the denominator of which shall be the sum
of the aggregate amount of Allowed Bank Claims, Allowed Senior
Note Claims, Allowed Senior Subordinated Note Claims and
Allowed General Unsecured Claims.
1.121 Pro Rata General Unsecured Fraction. The
fraction (a) the numerator of which shall be the aggregate
amount of Allowed General Unsecured Claims and (b) the
denominator of which shall be the sum of the aggregate amount
of Allowed Bank Claims, Allowed Senior Note Claims, Allowed
Senior Subordinated Note Claims and Allowed General Unsecured
Claims.
1.122 Pro Rata Senior Note Fraction. The fraction
(a) the numerator of which shall be the aggregate amount of
Allowed Senior Note Claims and (b) the denominator of which
shall be the sum of the aggregate amount of Allowed Bank
Claims, Allowed Senior Note Claims, Allowed Senior Subordinated
Note Claims and Allowed General Unsecured Claims.
1.123 Pro Rata Senior Subordinated Fraction. The
fraction (a) the numerator of which shall be the aggregate
amount of Allowed Senior Subordinated Note Claims and (b) the
denominator of which shall be the sum of the aggregate amount
of Allowed Bank Claims, Allowed Senior Note Claims, Allowed
Senior Subordinated Note Claims and Allowed General Unsecured
Claims.
1.124 Pro Rata Share. With respect to Allowed Claims
and Allowed Equity Interests within the same class, the
proportion that an Allowed Claim or Allowed Equity Interest bears
to all Allowed Claims or Equity Interests, as the case may be,
within such class.
1.125 Reorganized Leslie Fay. The surviving
corporation of the merger described in Section 3.1 hereof.
1.126 Reorganized Leslie Fay Common Stock. The
common stock of Reorganized Leslie Fay, having a par value of
$.01 per share, of which Three Million Four Hundred Thousand
(3,400,000) shares shall be issued on and as of the Effective
Date pursuant to the terms of the Plan.
1.127 Reorganized Leslie Fay Credit Agreement. The
Credit Agreement between Reorganized Leslie Fay Operating
Company and the Reorganized Leslie Fay Lender, substantially in
the form included in the Plan Supplement, pursuant to which the
Reorganized Leslie Fay Lender shall have agreed to provide
working capital financing to Reorganized Leslie Fay Operating
Company on terms and conditions satisfactory to the Debtors and
the Creditors' Committee.
1.128 Reorganized Leslie Fay Earnings Adjustment. An
amount which may be positive or negative equal to (i) the 1997 net
operating profit or net operating loss of the Leslie Fay Dress
Division, the Leslie Fay Sportswear Division and Licensing
through the Effective Date minus (ii) One Million Seven Hundred
Thousand Dollars ($1,700,000).
11<PAGE>
1.129 Reorganized Leslie Fay EBITDA. The earnings
before interest, taxes, depreciation and amortization of
Reorganized Leslie Fay determined in accordance with generally
accepted accounting principles in the United States of America
in effect from time to time.
1.130 Reorganized Leslie Fay Lender. One or more
financial institutions acceptable to the Debtors and the
Creditors' Committee.
1.131 Reorganized Leslie Fay Licensing Agreement. An
agreement between Reorganized Leslie Fay and Reorganized Leslie
Fay Operating Company substantially in the form to be included
in the Plan Supplement, pursuant to which, and on the terms and
subject to the conditions set forth therein, Reorganized Leslie
Fay shall grant to Reorganized Leslie Fay Operating Company a
perpetual royalty-free license to the Leslie Fay Intellectual
Property.
1.132 Reorganized Leslie Fay Licensing Company. A
corporation to be organized pursuant to the laws of the State
of Delaware as a wholly-owned Subsidiary of Reorganized Leslie
Fay on or prior to the Effective Date.
1.133 Reorganized Leslie Fay Licensing Company By-
Laws. The bylaws of Reorganized Leslie Fay Licensing Company,
which bylaws shall be in substantially the form included in the
Plan Supplement.
1.134 Reorganized Leslie Fay Licensing Company
Certificate of Incorporation. The certificate of incorporation
of Reorganized Leslie Fay Licensing Company, which certificate
of incorporation shall be in substantially the form included in
the Plan Supplement.
1.135 Reorganized Leslie Fay Licensing Company Common
Stock. The shares of common stock of reorganized Leslie Fay
Licensing Company to be issued on the Effective Date, having a
par value of $0.01 per share.
1.136 Reorganized Leslie Fay Net Asset Amount. An
amount equal to the excess of total assets (including, without
limitation, the outstanding principal amounts of the New Sassco
Intercompany Note payable to Reorganized Leslie Fay) over total
liabilities of Reorganized Leslie Fay as recorded on
Reorganized Leslie Fay's books as of the Effective Date, before
any application of "fresh start" or "purchase accounting"
adjustments.
1.137 Reorganized Leslie Fay Operating Company. A
corporation to be organized pursuant to the laws of the State
of Delaware as a wholly-owned Subsidiary of Reorganized Leslie
Fay on or prior to the Effective Date.
1.138 Reorganized Leslie Fay Operating Company
Bylaws. The bylaws of Reorganized Leslie Fay Operating
Company, which bylaws shall be in substantially the form
included in the Plan Supplement.
1.139 Reorganized Leslie Fay Operating Company
Certificate of Incorporation. The certificate of incorporation
of Reorganized Leslie Fay Operating Company, which certificate
of incorporation shall be in substantially the form included in
the Plan Supplement.
1.140 Reorganized Leslie Fay Operating Company Common
Stock. The shares of common stock of Reorganized Leslie Fay
Operating Company to be issued on the Effective Date, having a
par value of $0.01 per share.
1.141 Reorganized Leslie Fay Operating Company
Liabilities. All Leslie Fay liabilities consisting of obliga-
tions incurred in the ordinary course of business of the Leslie
Fay Dresswear Division and the Leslie Fay Sportswear Division,
as set forth in the Schedule of Leslie Fay and Castleberry
Assets and Liabilities.
1.142 Reorganized Leslie Fay Registration Rights
Agreement. A registration rights agreement governing the
resale of Reorganized Leslie Fay Common Stock by Creditors who
may be "affiliates" of Reorganized Leslie Fay, which
registration rights agreement shall be in substantially the
form included in the Plan Supplement.
12<PAGE>
1.143 Reorganized Leslie Fay Senior Managers. As
defined in Section 5.1 hereof.
1.144 Reorganized Leslie Fay Stock Options. As
defined in Section 5.2 hereof.
1.145 Reorganized Leslie Fay Target EBITDA. As
defined in Exhibit F hereof.
1.146 Retail (Alabama). Leslie Fay Factory Outlet
(Alabama), Inc., an Alabama corporation.
1.147 Retail (Alabama) Equity Interest. A common
Equity Interest in Retail (Alabama).
1.148 Retail (California). Leslie Fay Factory Outlet
(California), Inc., a California corporation.
1.149 Retail (California) Equity Interest. A common
Equity Interest in Retail (California).
1.150 Retail Debtor. Each of Retail Outlets, Retail
(Alabama), Retail (California), Retail (Iowa) and Retail
(Tennessee), the debtors in Chapter 11 Cases Nos. 95 B 45357
(TLB) through 95 B 45361 (TLB).
1.151 Retail (Iowa). Leslie Fay Factory Outlet
(Iowa), an Iowa corporation.
1.152 Retail (Iowa) Equity Interest. A common Equity
Interest in Retail (Iowa).
1.153 Retail Outlets. Leslie Fay Retail Outlets,
Inc., a Delaware corporation.
1.154 Retail Outlets Equity Interest. A common
Equity Interest in Retail Outlets.
1.155 Retail (Tennessee). Leslie Fay Factory Outlet
(Tennessee), Inc., a Tennessee corporation.
1.156 Retail (Tennessee) Equity Interest. A common
Equity Interest in Retail (Tennessee).
1.157 Retiree. Any person who retired from
employment with the Debtors prior to the Petition Date and was
and continues to be eligible for medical, death or insurance
benefits provided in the Retiree Benefit Plans as required by
section 1114 of the Bankruptcy Code.
1.158 Retiree Administrative Claim. The Claim of a
Retiree under the Retiree Benefit Plans, to the extent such
Claim is entitled to treatment as an Administrative Expense
Claim.
1.159 Retiree Benefit Plans. Any plan or policy of
the Debtors in full force and effect as of the Petition Date
under which medical, death or insurance benefits are provided
to Retirees, as any such plan or policy may have been modified
during the pendency of the Chapter 11 Cases.
1.160 Revolving Credit Notes. The Revolving Credit
Notes issued by Leslie Fay pursuant to that certain Financing
Agreement, dated as of January 15, 1992, by and among Leslie
Fay, Chemical Bank, Manufacturers Hanover Trust Company, Marine
Midland Bank, N.A., National Westminster Bank USA, The Bank of
New York and Chemical Bank, as Agent, as amended.
1.161 Rights. The rights to purchase Leslie Fay
Equity Interests granted pursuant to the Rights Agreement.
1.162 Rights Agreement. The Rights Agreement, dated
as of April 5, 1993, between Leslie Fay, as issuer, and
Chemical Bank, as rights agent, pursuant to which Rights to
purchase one share of Leslie Fay common stock for each out-
standing share of Leslie Fay common stock, subject to
adjustment, were issued.
13<PAGE>
1.163 Sassco. The Sassco Fashions, Ltd. Division of
Leslie Fay.
1.164 Sassco Assets. The assets of the Debtors used
or owned in connection with the Sassco business and the Nipon
Trademarks, as identified in the Schedule of Sassco Assets and
Liabilities, including the Working Capital Adjustment Amount.
1.165 Sassco Liabilities. The current obligations
and liabilities of the Debtors incurred after the Petition Date
in connection with the Sassco business and the Nipon
Trademarks, all as identified in the Schedule of Sassco Assets
and Liabilities, including without limitation the following:
(i) "accounts payable", "accrued expenses" and "other
liabilities" as reflected on Sassco's divisional balance sheet as
of the Effective Date and (ii) outstanding pro-rated
liabilities attributable to Sassco as of the Effective Date,
including without limitation payroll, health insurance
payments, workers' compensation payments, 401(k) contributions,
audit fees, vacation pay and certain state taxes.
1.166 Schedule of Leslie Fay and Castleberry Assets
and Liabilities. The schedule included in the Plan Supplement
identifying, to the reasonable satisfaction of the Debtors and
the Creditors' Committee, the Leslie Fay Assets, Leslie Fay
Liabilities, Castleberry Assets and Castleberry Liabilities,
which schedule shall be updated as of the Effective Date to the
reasonable satisfaction of the Debtors and the Creditors'
Committee.
1.167 Schedule of Sassco Assets and Liabilities. The
schedule included in the Plan Supplement identifying, to the
reasonable satisfaction of the Debtors and the Creditors'
Committee, the Sassco Assets and Sassco Liabilities, which
schedule shall be updated as of the Effective Date to the
reasonable satisfaction of the Debtors and the Creditors'
Committee.
1.168 Schedules. The respective schedules of assets
and liabilities and the statements official affairs filed by
the Debtors under section 521 of the Bankruptcy Code and the
Official Bankruptcy Forms of the Bankruptcy Rules as such
schedules and statements have been or may be supplemented or
amended.
1.169 Secured Claim. A Claim against a Debtor that
is secured by a Lien on Collateral or that is subject to setoff
under section 553 of the Bankruptcy Code, to the extent of the
value of the Collateral or to the extent of the amount subject
to setoff, as applicable, as determined in accordance with
section 506(a) of the Bankruptcy Code.
1.170 Securities Act. The Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1.171 Senior Bank Fraction. The fraction (a) the
numerator of which shall be the aggregate amount of Allowed Bank
Claims and (b) the denominator of which shall be the sum of the
aggregate amount of Allowed Bank Claims and Allowed Senior
Note Claims.
1.172 Senior Note Cash Amount. The sum of:
(a) The product of:
(i) the Cash Available for Distribution times
(ii) the Pro Rata Senior Note Fraction, plus
(b) The product of:
(i) the Cash Available for Distribution times
the Pro Rata Senior Subordinated Fraction,
times
(ii) the Senior Note Fraction.
14<PAGE>
1.173 Senior Note Claim. Any Claim based upon or
evidenced by a Senior Note.
1.174 Senior Note Documents. Those certain Note
Agreements, each dated January 4, 1990, between Leslie
Fay and The Prudential Insurance Company of America and Leslie
Fay and The Northwestern Mutual life Insurance Company pursuant
to which the Senior Notes and the Senior Subordinated Notes
were issued.
1.175 Senior Note Fraction. The fraction (a) the
numerator of which shall be the aggregate amount of Allowed
Senior Note Claims and (b) the denominator of which shall be
the sum of the aggregate amount of Allowed Bank Claims and
Allowed Senior Note Claims.
1.176 Senior Note Leslie Fay Stock Amount. The number
of shares of Reorganized Leslie Fay Common Stock equal to the
sum of:
(a) The product of Three Million Four Hundred
Thousand (3,400,000) times the Senior Note LFC
Fraction, plus
(b) The product of:
a. the excess, if any, of (x) Three Million Four
Hundred Thousand (3,400,000) times the Senior
Subordinated LFC Fraction over (y) Two
Hundred Four Thousand (204,000), times
b. The Senior Note Fraction.
1.177 Senior Note LFC Fraction. The fraction (a) the
numerator of which shall be the aggregate amount of Allowed
Senior Note Claims and (b) the denominator of which shall be
the sum of the aggregate amount of Allowed Bank Claims, Allowed
Senior Note Claims, Allowed Senior Subordinated Note Claims and
Allowed General Unsecured Claims.
1.178 Senior Note Sassco Note Amount. The aggregate
principal amount of New Sassco Notes equal to the sum of:
(a) The product of One Hundred Ten Million Dollars
($110,000,000) times the Pro Rata Senior Note
Fraction, plus
(b) The product of:
a. the product of One Hundred Ten Million
Dollars ($110,000,000) times the Pro Rata
Senior Subordinated Fraction, times
b. the Senior Note Fraction.
1.179 Senior Note Sassco Stock Amount. The number of
shares of New Sassco Common Stock equal to the sum of:
(a) The product of Six Million Eight Hundred
Thousand (6,800,000) times the Pro Rata Senior
Note Fraction, plus
(b) The product of:
a. the excess, if any, of (x) Six Million Eight
Hundred Thousand (6,800,000) times the Pro
Rata Senior Subordinated Fraction over (y)
Four Hundred Eight Thousand (408,000), times
15<PAGE>
b. the Senior Note Fraction.
1.180 Senior Notes. The 9.53% promissory notes
executed and delivered by Leslie Fay pursuant to the Senior
Note Documents in the aggregate original principal amount of
Fifty Million Dollars ($50,000,000.00).
1.181 Senior Subordinated LFC Fraction. The fraction
(a) the numerator of which shall be the aggregate amount of
Allowed Senior Subordinated Note Claims and (b) the denominator
of which shall be the sum of the aggregate amount of Allowed
Bank Claims, Allowed Senior Note Claims, Allowed Senior
Subordinated Note Claims and Allowed General Unsecured Claims.
1.182 Senior Subordinated Note Claim. Any Claim based
upon or evidenced by a Senior Subordinated Note.
1.183 Senior Subordinated Notes. The 10.54% Senior
Subordinated Notes executed and delivered by Leslie Fay
pursuant to the Senior Note Documents in the aggregate original
principal amount of Twenty-Five Million Dollars
($25,000,000.00).
1.184 Special Sassco Assets. Sassco Assets identified
by the Debtors and the Creditors' Committee on or prior to the
Effective Date having a fair market value on the Effective Date
equal to the sum of the Consummation Cash Shortfall Amount plus
Eight Million Dollars ($8,000,000).
1.185 Spitalnick. Spitalnick Corp., a New York
corporation.
1.186 Spitalnick Equity Interest. A common Equity
Interest in Spitalnick.
1.187 Statutorily Subordinated Claims. Any Claim that
is subject to subordination under section 510(b) of the
Bankruptcy Code, including, without limitation, the Claims, if
any, of present and former officers and directors of the Debt-
ors for reimbursement, indemnity or contribution in connection
with the Class Action and the Derivative Action.
1.188 Statutory Lien Claim. Any Secured Claim secured
by a Lien attaching by operation of law in favor of a seller,
artisan, materialman, mechanic, warehouseman, carrier or other
similar Person.
1.189 Stock Option. An option to purchase Leslie Fay
Equity Interests and stock appreciation rights granted pursuant
to the 1986 Stock Option Plan.
1.190 Subsidiary. With reference to any Entity, any
corporation, partnership or other business entity of which more
than fifty percent (50%) of the issued and outstanding capital
stock having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such
corporation has or might have voting power upon the occurrence
of any contingency) or, as to any partnership or other legal
entity, ordinary equity capital interests, is at the applicable
date directly or indirectly owned or controlled by such Entity,
by such Entity and one or more of its other Subsidiaries, or by
one or more other Subsidiaries of such Entity.
1.191 Subsidiary Guaranty Claims. Any Claim against
any Debtor arising under or governed by a Guarantee.
1.192 Taxes. As defined in Section 4.1 hereof.
1.193 Unsecured Claim. Any Claim against a Debtor,
other than an Administrative Expense Claim, a Retiree
Administrative Claim, a Priority Non-Tax Claim, a Priority Tax
Claim or a Secured Claim.
16<PAGE>
1.194 Working Capital Adjustment Amount. An amount,
which may be positive or negative, equal to (a) the Reorganized
Leslie Fay Net Asset Amount minus (b) the sum of (i) Forty Nine
Million Three Hundred Thousand Dollars ($49,300,000) and (ii)
the Reorganized Leslie Fay Earnings Adjustment.
1.195 Other Definitions. Unless the context otherwise
requires, any capitalized term used and not defined herein or
elsewhere in the Plan but that is defined in the Bankruptcy
Code shall have the meaning assigned to that term in the
Bankruptcy Code. Unless otherwise specified, all section,
schedule or exhibit references in the Plan are to the
respective section in, article of, or schedule or exhibit to,
the Plan, as the same may be amended, waived, or modified from
time to time. The words "herein," "hereof," "hereto,"
"hereunder," and other words of similar import refer to the
Plan as a whole and not to any particular section, subsection,
or clause contained in the Plan.
ARTICLE II
COMPROMISE AND SETTLEMENT OF DISPUTES;
SUBSTANTIVE CONSOLIDATION OF DEBTORS;
ASSUMPTION OF OBLIGATION UNDER THE PLAN
2.1 Compromise and Settlement. The Plan
incorporates the compromise and settlement of certain issues
which were disputed by the Proponents and which were resolved
in the negotiations of the provisions of the Plan. These
issues related primarily to whether the estates of each of the
Debtors should be treated separately for purposes of making
distributions to Creditors and whether all of the Debtors'
assets should be sold or otherwise disposed of pursuant to the
Plan. The provisions of the Plan relating to substantive
consolidation of the Debtors, the cancellation of Intercompany
Affiliate Claims, the treatment of each Class of Claims under
the Plan, the satisfaction and cancellation of contractual
subordination rights in favor of certain Creditors and the
election of alternative treatment under the Plan reflect this
compromise and settlement, which, upon the Effective Date,
shall be binding upon the Debtors, all Creditors and all
Persons receiving any payments or other distributions under the
Plan.
2.2 Substantive Consolidation. On the Effective
Date, the Chapter 11 Cases shall be substantively consolidated
pursuant to order of the Bankruptcy Court entered after notice
and a hearing. For purposes of the Plan, the assets and
liabilities of the Debtors shall be pooled and all Claims shall
be satisfied from the assets of the single consolidated estate.
Any Claims against one or more of the Debtors based upon a
guaranty, indemnity, co-signature, surety or otherwise, of
Claims against another Debtor, including, without limitation,
the Subsidiary Guaranty Claims and the Guarantees related
thereto, shall be treated as a single Claim against the
consolidated estate of all of the Debtors and shall be entitled
to distribution under the Plan only with respect to such single
Claims.
2.3 Cancellation of Intercompany Claims. On the
Effective Date, all Intercompany Affiliate Claims shall be
extinguished, except to the extent that an Intercompany
Affiliate Claim held by Leslie Fay against an Affiliate exceeds
the amount, if any, of an Intercompany Affiliate Claim held by
such Affiliate against Leslie Fay.
ARTICLE III
SEPARATION OF SASSCO AND LESLIE FAY
3.1 Merger and Consolidation. On the Effective
Date, the estates of Hue, Spitalnick, Licensing, Retail
Outlets, Retail (Alabama), Retail (California), Retail (Iowa)
and Retail (Tennessee) shall be merged with and into Leslie
Fay.
3.2 Effective Date Transactions. On the Effective Date
the following transactions shall be consummated pursuant to
documentation in form and substance satisfactory to the Debtors
and the Creditors' Committee:
17<PAGE>
(a) Reorganized Leslie Fay will sell, without
recourse, the Special Sassco Assets to New Sassco (or a
Subsidiary thereof) for (i) an amount of Cash equal to the
sum of the Consummation Cash Shortfall Amount plus Four
Million Dollars ($4,000,000) and (ii) the issuance by New
Sassco to the Plan Administrator (solely as agent for the
Deferred Professionals) and Reorganized Leslie Fay of the
two New Sassco Intercompany Notes, each in the principal
amount of Four Million Dollars ($4,000,000);
(b) Reorganized Leslie Fay shall sell and transfer,
without recourse, to the Creditor Representative on behalf
of the Creditors holding Claims in Classes 3, 4, 5 and 6,
an undivided eighty percent (80%) interest in the Sassco
Assets other than the Special Sassco Assets (subject to
80% of the outstanding Sassco Liabilities), in exchange
for the cancellation of Claims in such Classes in an
amount equal to the fair market value of such Sassco
Assets (subject to such Sassco liabilities);
(c) Reorganized Leslie Fay shall sell and transfer,
without recourse, to New Sassco, an undivided twenty
percent (20%) interest in the Sassco Assets other than the
Special Sassco Assets (subject to 20% of the outstanding
Sassco Liabilities);
(d) the Creditor Representative, on behalf of the
Creditors holding Claims in Classes 3, 4, 5 and 6, shall
contribute, without recourse, to New Sassco the undivided
eighty percent (80%) interest in the Sassco Assets
received by the Creditor Representative pursuant to
Section 3.2(b) hereof (subject to 80% of the outstanding
Sassco Liabilities);
(e) New Sassco shall (i) assume all of the Sassco
Liabilities and (ii) issue to the Creditor Representative
(x) on behalf of the Creditors holding Claims in Classes
3, 4, 5 and 6, (aa) Five Million Four Hundred Forty
Thousand (5,440,000) shares of New Sassco Common Stock and
(bb) Eighty-Eight Million Dollars ($88,000,000) in
aggregate principal amount of New Sassco Notes and (y) on
behalf of the Creditors holding Claims in Classes 3, 4, 5
and 6 at the direction of Reorganized Leslie Fay (aa) One
Million Three Hundred Sixty Thousand (1,360,000) shares of
New Sassco Common Stock and (bb) Twenty-Two Million Dol-
lars ($22,000,000) in aggregate principal amount of New
Sassco Notes;
(f) the Creditor Representative shall remit, without
recourse, to the Disbursing Agent, all of the New Sassco
Notes and shares of the New Sassco Common Stock received
pursuant to Section 3.2(e) hereof, for distribution to the
Creditors holding Claims in Classes 3, 4, 5 and 6 pursuant
to Article XXX hereof;
(g) Reorganized Leslie Fay shall (i) issue to the
Disbursing Agent Three Million Four Hundred Thousand
(3,400,000) shares of Reorganized Leslie Fay Common Stock,
for distribution to Creditors holding Claims in Classes 3,
4, 5 and 6 pursuant to Article XXX hereof, (ii) execute
and deliver the Reorganized Leslie Fay Licensing Agreement
and (iii) transfer to (x) Reorganized Leslie Fay Operating
Company Four Million Dollars ($4,000,000) in Cash, all of
its right, title and interest in and to the New Sassco
Intercompany Note issued to it and all of the Dress and
Sportswear Assets, (y) Reorganized Leslie Fay Licensing
Company all of the Leslie Fay Intellectual Property
(subject to the rights of Reorganized Leslie Fay Operating
Company pursuant to the Reorganized Leslie Fay Licensing
Agreement) and (z) New Castleberry all of the Castleberry
Assets (subject to the Castleberry Liabilities);
(h) New Castleberry shall (i) issue to Reorganized
Leslie Fay all of the New Castleberry Common Stock and
(ii) assume all of the Castleberry Liabilities;
(i) Reorganized Leslie Fay Operating Company shall
(i) assume all of the Reorganized Leslie Fay Operating
Company Liabilities, (ii) issue to Reorganized Leslie Fay
all of the issued and outstanding shares of Reorganized
Leslie Fay Operating Company Common Stock and (iii)
execute and deliver the Reorganized Leslie Fay licensing
Agreement; and
18<PAGE>
(j) Reorganized Leslie Fay Licensing Company shall
issue to Reorganized Leslie Fay all of the issued and
outstanding shares of Reorganized Leslie Fay licensing
Company Common Stock.
3.3 Post-Effective Date Adjustment. Within forty-
five (45) days after the Effective Date, Reorganized Leslie Fay
and New Sassco shall determine the Working Capital Adjustment
Amount, which amount shall be paid, within three (3) Business
Days after such determination, by (i) Reorganized Leslie Fay to
New Sassco, if the Working Capital Adjustment Amount is
positive or (ii) New Sassco to Reorganized Leslie Fay if the
Working Capital Adjustment Amount is negative. In the event
Reorganized Leslie Fay and New Sassco are unable to agree upon
the Working Capital Adjustment Amount, CIBC Wood Gundy (or such
other mutually agreeable disinterested third party) shall
resolve the dispute, and such decision shall be final and
binding on both parties.
ARTICLE IV
NEW SASSCO MATTERS
4.1 New Sassco Management Options. New Sassco will
issue to Levine and the other members of New Sassco's senior
management ("New Sassco Management Recipients") nonqualified
options (the "New Sassco Management Options") to purchase up to
22.5% of the New Sassco Common Stock on a fully diluted basis.
The New Sassco Management Options will have the terms and
restrictions set forth on Exhibit A hereto, and such other terms
and restrictions as may be mutually satisfactory to the
Creditors' Committee (or, after the Effective Date, the New
Sassco Board of Directors) and Levine. The definitive
documentation for the New Sassco Management Options will be in
substantially the form set forth in the Plan Supplement, with
such modifications, if any, as to which the Creditors'
Committee (or, after the Effective Date, the New Sassco Board
of Directors) and Levine may agree.
4.2 Levine Employment. On or prior to the Effective
Date, Levine will enter into an employment agreement with New
Sassco having the principal terms described in Exhibit B
hereto, and otherwise being in form and substance reasonably
satisfactory to Levine and the Creditors' Committee (the
"Levine Employment Agreement"), with such modifications, if
any, as to which Levine and the Creditors' Committee (or, after
the Effective Date, the New Sassco Board of Directors) may
agree.
4.3 New Sassco Credit Agreement. On the Effective
Date, New Sassco shall execute and deliver the New Sassco
Credit Agreement.
4.4 New Sassco Registration Rights Agreement. On
the Effective Date, New Sassco shall execute and deliver the
New Sassco Registration Rights Agreement.
4.5 Certain Corporate Governance Matters. As of the
Effective Date:
(a) Organization. New Sassco will be organized in a
jurisdiction within the United States mutually acceptable to
the Creditors' Committee and Levine (or, if the same is
acceptable to the Creditors' Committee, in a jurisdiction
outside of the United States).
(b) Board of Directors. The board of directors of
New Sassco will initially have seven members, five of whom will
be designees of the Creditors' Committee (in the case of the
initial members of the board of directors) or holders of New
Sassco Common Stock (in the case of subsequent members) and two
of whom, during Levine's term of employment, will be Levine and
a designee of Levine. During Levine's term of employment, (i)
Levine will have the right to designate one observer to the
board of directors and (ii) if the size of the board of
directors is increased after the Effective Date, Levine will be
entitled to designate at least 28% of the members of the board
of directors. During the term of his employment, Levine will
be Chairman and Chief Executive Officer of New Sassco.
19<PAGE>
(c) Certain Transactions. The New Sassco
Certificate of Incorporation, New Sassco Bylaws and/or Levine
Employment Agreement will specify extraordinary transactions as
to which (unless otherwise agreed by New Sassco and Levine)
Levine's approval will be required, so long as he is employed
by New Sassco, including without limitation a sale or merger of
New Sassco, or a material amendment to the New Sassco
Certificate of Incorporation or New Sassco Bylaws.
4.6 Miscellaneous. On the Effective Date:
(a) Levine's affiliate's Claims will be allowed by
an order of the Bankruptcy Court (which may be the Confir-
mation Order) in full in the aggregate amount of One
Million Four Hundred Fifty Thousand Dollars ($1,450,000)
as General Unsecured Claims;
(b) the Debtors' claims against Levine arising prior
to the Effective Date will be released in full.
(c) Levine and his Affiliates will be reimbursed in
the aggregate amount of Two Hundred Thousand Dollars
($200,000) for their out-of-pocket expenses in connection
with the transactions contemplated herein and their prior
efforts to purchase Sassco.
(d) New Sassco will enter into a customary
registration rights agreement (the "New Sassco Management
Registration Rights Agreement") with Levine and other New
Sassco Management Recipients in form and substance satis-
factory to the Creditors' Committee, pursuant to which the
New Sassco Management Recipients will be granted "piggy-
back" registration rights with respect to New Sassco
Common Stock issuable upon exercise of New Sassco
Management Options. Such registration rights agreement
will contain customary language to the effect that if the
managing underwriter in an offering initiated by New
Sassco or a Person holding "demand" registration rights,
and with respect to which Levine exercises such
"piggyback" rights, believes that the amount of securities
to be included in the offering exceeds the amount which
can be sold within an acceptable price range, then the
offering will include that amount of securities which may
be sold within such range, in the following priority:
first, all securities proposed to be sold by New Sassco
for its own account, or by the Person exercising "demand"
rights; and second, securities covered by Levine's
"piggyback" rights (pro rata with securities to be sold by
other holders, if any, of "piggyback" rights).
(e) New Sassco will enter into customary employment
contracts with other key New Sassco managers, at
compensation levels commensurate with the compensation
presently paid to such personnel, and with such other
provisions to be satisfactory to Levine and the Creditors'
Committee.
(f) All claims against Leonard Feinberg relating to
his previous employment with the Debtors will be released.
4.7 Additional Stock Options. After the Effective
Date, the New Sassco board of directors will have the authority
to establish a program pursuant to which New Sassco will grant
one or more members of management of New Sassco, options to
purchase 2% of the New Sassco Common Stock, all on terms and
conditions established by the New Sassco board of directors in
its discretion.
ARTICLE V
REORGANIZED LESLIE FAY MATTERS
5.1 Employment Contracts. On or before the
Effective Date, Reorganized Leslie Fay will enter into
employment contracts with certain senior managers (the
"Reorganized Leslie Fay Senior Managers") having the principal
terms set forth in Exhibit C hereto, and such other terms as to
which the Debtors and the Creditors' Committee (or, after the
Effective Date, the Reorganized Leslie Fay board of directors)
may agree.
20<PAGE>
5.2 Reorganized Leslie Fay Stock Options. On the
Effective Date, Reorganized Leslie Fay Senior Managers will
receive options to purchase Reorganized Leslie Fay Common Stock
("Reorganized Leslie Fay Stock Options") having the principal
terms set forth in Exhibit D hereto, and such other terms as to
which the Debtors and the Creditors' Committee (or, after the
Effective Date, the Reorganized Leslie Fay board of directors)
may agree, such Reorganized Leslie Fay Stock Options to be
shared among the Reorganized Leslie Fay Senior Managers as they
may agree. The definitive documentation for the Reorganized
Leslie Fay Stock Options will be set forth in the Plan
Supplement, with such modifications, if any, as to which the
Creditors' Committee (or, after the Effective Date, the
Reorganized Leslie Ray Board of Directors) and the Reorganized
Leslie Fay Senior Managers may agree.
5.3 Additional Pomerantz Arrangements.
(a) Pomerantz will be the Chairman and Chief
Executive Officer of Reorganized Leslie Fay.
(b) Reorganized Leslie Fay will continue Pomerantz's
existing health insurance coverage for life, so long as the
annual cost thereof to Reorganized Leslie Fay is less than or
equal to $20,000.
(c) Pomerantz will release his Claims, if any, for
unpaid amounts under his current contract.
5.4 Board of Directors. The initial board of
directors will have seven members, five of whom will be
designees of the Creditors' Committee and two of whom will be
Pomerantz and a designee of Pomerantz.
5.5 Reorganized Leslie Fay Credit Agreement. On the
Effective Date, Reorganized Leslie Fay Operating Company shall
execute and deliver the Reorganized Leslie Fay Credit
Agreement.
5.6 Reorganized Leslie Fay Registration Rights
Agreement. On the Effective Date, Reorganized Leslie Fay shall
execute and deliver the Reorganized Leslie Fay Registration
Rights Agreement.
ARTICLE VI
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
6.1 Administrative Expense Claims. On the later to
occur of (a) the Effective Date and (b) the date on which such
a Claim shall become an Allowed Claim, the Debtors shall (i)
pay to each holder of an Allowed Administrative Expense Claim,
in Cash, the full amount of such Allowed Administrative Expense
Claim, or (ii) satisfy and discharge such Claim in accordance
with such other terms as may be agreed upon by and between the
holder thereof and the Debtors; provided, however, that Allowed
Administrative Expense Claims representing liabilities or
obligations incurred or assumed by the Debtors in Possession in
the ordinary course of business or liabilities arising under
loans made or advances extended to the Debtors in Possession,
whether or not incurred in the ordinary course of business,
shall be assumed and paid by New Sassco, Reorganized Leslie
Fay, Reorganized Leslie Fay Operating Company or New
Castleberry, as applicable, in accordance with the terms and
conditions of the particular transaction and any agreements
relating thereto; provided, further, that with respect to
Administrative Expense Claims (collectively, "Professional
Claims") held by professionals (the "Deferred Professionals")
retained by the Debtors, the Creditors' Committee and the
Equity Committee, (i) the Debtors shall pay in Cash to the
Deferred Professionals (pro rata based upon the respective
Allowed Professional Claims held by them) only the aggregate
amount of (a) unpaid Allowed Professional Claims as of the
later of the Effective Date or the date upon which such
Professional Claims become Allowed Administrative Expense Claim
minus (b) Four Million Dollars ($4,000,000), (ii) the unpaid
balance (the "Unpaid Balance") of the Professional Claims shall
be deferred by the Deferred Professionals and payable (pro rata
based upon the respective Allowed Professional Claims held by
them) by the Plan Administrator from proceeds received on or in
respect of the New Sassco Intercompany Note issued to it and
(iii) none of the Debtors, Reorganized Leslie Fay, Reorganized
Leslie Fay
21<PAGE>
Operating Company, Reorganized Leslie Fay Licensing Company
or New Castleberry shall have any liability whatsoever
on account of the Unpaid Balance, including without limitation
any liability based upon the failure by New Sassco to make
payment in full in respect of the New Sassco Intercompany Note
issued to the Plan Administrator.
6.2 Compensation and Reimbursement Claims. All
Persons or Entities that are awarded compensation or
reimbursement of expenses by the Bankruptcy Court in accordance
with section 330 or 331 of the Bankruptcy Code or entitled to
the priorities established pursuant to section 503(b)(2),
503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code, shall
be paid in full, in Cash, the amounts allowed by the Bankruptcy
Court (a) on or as soon as reasonably practicable following the
later to occur of (i) the Effective Date and (ii) the date upon
which the Bankruptcy Court order allowing such Claim becomes a
Final Order or (b) upon such other terms as may be mutually
agreed upon between such holder of an Allowed Administrative
Expense Claim and the Debtors.
6.3 Payment of Priority Tax Claims. Each holder of an
Allowed Priority Tax Claim shall be paid the full amount of
such Allowed Priority Tax Claim. At the sole option and
discretion of Reorganized Leslie Fay, which option shall be
exercised on or prior to the Effective Date, such payment shall
be made (a) in full, in Cash, on the Effective Date, (b) in ac-
cordance with section 1129(a)(9)(c) of the Bankruptcy Code, in
full, in Cash, in up to twenty-four (24) equal quarterly in-
stallments, commencing on the first (1st) Business Day
following the date of assessment of such Allowed Priority Tax
Claim, together with interest accrued thereon at a rate to be
determined by the Bankruptcy Court, or (c) by mutual agreement
of the holder of such Allowed Priority Tax Claim and
Reorganized Leslie Fay.
ARTICLE VII
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims and Equity Interests are classified as
follows:
7.1 Class 1 - Priority Non-Tax Claims
7.2 Class 2 - Secured Claims
7.3 Class 3 - Bank Claims
7.4 Class 4 - Senior Note Claims
7.5 Class 5 - Senior Subordinated Note Claims
7.6 Class 6 - General Unsecured Claims
7.7 Class 7 - Convenience Claims
7.8 Class 8 - Statutorily Subordinated Claims
7.9 Class 9 - Leslie Fay Equity Interests
7.10 Class 10 - Hue Equity Interests
7.11 Class II - Spitalnick Equity Interests
7.12 Class 12 - Licensing Equity Interests
22<PAGE>
7.13 Class 13 - Retail Outlets Equity Interests
7.14 Class 14 - Retail (Alabama) Equity Interests
7.15 Class 15 - Retail (California) Equity Interests
7.16 Class 16 - Retail (Iowa) Equity Interests
7.17 Class 17 - Retail (Tennessee) Equity Interests
ARTICLE VIII
PROVISIONS FOR TREATMENT OF
PRIORITY NON-TAX CLAIMS (CLASS 1)
8.1 Payment of Allowed Priority Non-Tax Claims. On
the Effective Date, Reorganized Leslie Fay shall pay to each
holder of an Allowed Priority Non-Tax Claim, in Cash, the full
amount of such Allowed Priority Non-Tax Claim, unless the
holder of such Allowed Priority Non-Tax Claim and Reorganized
Leslie Fay agree to a different treatment thereof. Any
Priority Non-Tax Claim not Allowed as of the Effective Date
shall be paid in full, in Cash, as soon as practicable after
the date upon which the Bankruptcy Court order allowing such
Claim becomes a Final Order.
ARTICLE IX
PROVISIONS FOR TREATMENT OF
SECURED CLAIMS (CLASS 2)
9.1 Payment of Secured Claims. On the Effective
Date, each holder of an Allowed Secured Claim shall receive one
of the following distributions: (a) the payment of such
holder's Allowed Secured Claim in full, in Cash; (b) the sale
or disposition proceeds of the property securing any Allowed
Secured Claim to the extent of the value of their respective
interests in such property; (c) the surrender to the holder or
holders of any Allowed Secured Claim of the property securing
such Claim; or (d) such other distributions as shall be
necessary to satisfy the requirements of chapter 11 of the
Bankruptcy Code. The manner and treatment of each Allowed
Secured Claim shall be determined by the Debtors, in their
discretion, on or before the Confirmation Date, and upon notice
to each Secured Creditor.
ARTICLE X
PROVISIONS FOR ALLOWANCE AND
TREATMENT OF BANK CLAIMS (CLASS 3)
10.1 Allowance of Bank Claims. As of the Effective
Date, the Bank Claims are hereby allowed in the aggregate
amount of One Hundred Seventy-Eight Million Three Thousand
Eight Hundred Fifty Dollars ($178,003,850).
23<PAGE>
10.2 Payment of Allowed Bank Claims. Commencing on
the Effective Date, each holder of an Allowed Bank Claim shall
be entitled to receive distributions as follows:
(a) The aggregate principal amount of New Sassco
Notes equal to such holder's Pro Rata Share of
the Bank Sassco Note Amount.
(b) The aggregate number of shares of New Sassco
Common Stock equal to such holder's Pro Rata
Share of the Bank Sassco Stock Amount.
(c) The aggregate number of shares of Reorganized
Leslie Fay Common Stock equal to such holder's
Pro Rata Share of the Bank Leslie Fay Stock
Amount.
(d) Such holder's Pro Rata Share of the Bank Cash
Amount.
ARTICLE XI
PROVISIONS FOR ALLOWANCE AND
TREATMENT OF SENIOR NOTE CLAIMS (CLASS 4)
11.1 Allowance of Senior Note Claims. As of the
Effective Date, the Senior Note Claims are hereby allowed in
the aggregate amount of Fifty Million Fifty Two Thousand Nine
Hundred Forty Three Dollars ($50,052,943).
11.2 Payment of Allowed Senior Note Claims.
Commencing on the Effective Date, each holder of an Allowed
Senior Note Claim shall be entitled to receive:
(a) The aggregate principal amount of New Sassco
Notes equal to such holder's Pro Rata Share of
the Senior Note Sassco Note Amount.
(b) The aggregate number of shares of New Sassco
Common Stock equal to such holder's Pro Rata
Share of the Senior Note Sassco Stock Amount.
(c) The aggregate number of shares of Reorganized
Leslie Fay Common Stock equal to such holder's
Pro Rata Share of the Senior Note Leslie Fay
Stock Amount.
(d) Such holder's Pro Rata Share of the Senior Note
Cash Amount.
ARTICLE XII
PROVISIONS FOR ALLOWANCE AND TREATMENT OF
SENIOR SUBORDINATED NOTE CLAIMS (CLASS 5)
12.1 Allowance of Senior Subordinated Note Claims.
As of the Effective Date, the Senior Subordinated Note Claims
are hereby allowed in the aggregate amount of Twenty-Five
Million Twenty Nine Thousand Two Hundred Seventy Eight Dollars
($25,029,278).
12.2 Payment of Senior Subordinated Note Claims.
Commencing on the Effective Date, each holder of an Allowed
Senior Subordinated Note Claim shall be entitled to receive
such holder's Pro Rata Share of:
24<PAGE>
(a) Four Hundred Eight Thousand (408,000) shares of
New Sassco Common Stock and
(b) Two Hundred Four Thousand (204,000) shares of
Reorganized Leslie Fay Common Stock.
ARTICLE XIII
[Intentionally Omitted.]
ARTICLE XIV
PROVISION FOR TREATMENT OF GENERAL
UNSECURED CLAIMS (CLASS 6)
Each holder of an Allowed General Unsecured Claim
shall be entitled to receive distributions in accordance with
Section 14.1 or 14.2 hereof.
14.1 Payment of Allowed General Unsecured Claims.
Commencing on the Effective Date, each holder of an Allowed
General Unsecured Claim shall be entitled to receive:
(a) The aggregate principal amount of New Sassco
Notes equal to such holder's Pro Rata Share of
the General Unsecured Sassco Note Amount.
(b) The aggregate number of shares of New Sassco
Common Stock equal to such holder's Pro Rata
Share of the General Unsecured Sassco Stock
Amount.
(c) The aggregate number of shares of Reorganized
Leslie Fay Common Stock equal to such holder's
Pro Rata Share of the General Unsecured Leslie
Fay Stock Amount.
(d) Such holder's Pro Rata Shares of the General
Unsecured Cash Amount.
14.2 Allowed Claims of Two Hundred Fifty Dollars or
More. Notwithstanding the provisions of Section 14.1 of the
Plan, any holder of an Allowed General Unsecured Claim whose
Allowed General Unsecured Claim is more than Two Hundred Fifty
Dollars ($250.00), and who elects to reduce the amount of such
Allowed Claim to Two Hundred Fifty Dollars ($250.00), shall, at
such holder's option, be entitled to receive, based on such
Allowed Claim as so reduced, distributions pursuant to Article
XV hereof, in full settlement, satisfaction, release and
discharge of such Allowed Claim. Such election must be made on
the Ballot and be received by the Debtors on or prior to the
Ballot Date. Any election made after the Ballot Date shall not
be binding upon the Debtors unless the Ballot Date is expressly
waived, in writing, by the Debtors.
ARTICLE XV
PROVISIONS FOR TREATMENT
OF CONVENIENCE CLAIMS (CLASS 7)
15.1 On the Effective Date, each holder of an Allowed
Convenience Claim shall be entitled to receive Cash equal to
the amount of such Allowed Convenience Claim.
25<PAGE>
ARTICLE XVI
PROVISIONS FOR TREATMENT OF
STATUTORILY SUBORDINATED CLAIMS (CLASS 8)
16.1 On the Effective Date, all Statutorily
Subordinated Claims will be deemed expunged and extinguished.
ARTICLE XVII
PROVISIONS FOR TREATMENT OF
LESLIE FAY EQUITY INTERESTS (CLASS 9)
17.1 On the Effective Date, all Allowed Leslie Fay
Equity Interests shall be deemed extinguished and the
certificates representing such Equity Interests, including,
without limitation, Stock Options and Rights, shall be
cancelled and of no force and effect.
ARTICLE XVIII
PROVISIONS FOR TREATMENT OF
HUE EQUITY INTERESTS (CLASS 10)
18.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Hue Equity Interests shall be deemed
extinguished, and the certificates representing such Equity
Interests shall be cancelled and of no force and effect.
ARTICLE XIX
PROVISIONS FOR TREATMENT OF
SPITALNICK EQUITY INTERESTS (CLASS 11)
19.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Spitalnick Equity Interests shall be
deemed extinguished, and the certificates representing such
Equity Interests shall be cancelled and of no force and effect.
ARTICLE XX
PROVISIONS FOR TREATMENT OF
LICENSING EQUITY INTERESTS (CLASS 12)
20.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Licensing Equity Interests shall be
deemed extinguished, and the certificates representing such
Equity Interests shall be cancelled and of no force and effect.
26<PAGE>
ARTICLE XXI
PROVISIONS FOR TREATMENT OF
RETAIL OUTLETS EQUITY INTERESTS (CLASS 13)
21.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Retail Outlets Equity Interests shall
be deemed extinguished, and the certificates representing such
Equity Interests shall be cancelled and of no force and effect.
ARTICLE XXII
PROVISIONS FOR TREATMENT OF
RETAIL (ALABAMA) EQUITY INTERESTS (CLASS 14)
22.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Retail (Alabama) Equity Interests
shall be deemed extinguished, and the certificates representing
such Equity Interests shall be cancelled and of no force and
effect.
ARTICLE XXIII
PROVISIONS FOR TREATMENT OF
RETAIL (CALIFORNIA) EQUITY INTERESTS (CLASS 15)
23.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Retail (California) Equity Interests
shall be deemed extinguished, and the certificates representing
such Equity Interests shall be cancelled and of no force and
effect.
ARTICLE XXIV
PROVISIONS FOR TREATMENT OF
RETAIL (IOWA) EQUITY INTERESTS (CLASS 16)
24.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Retail (Iowa) Equity Interests shall
be deemed extinguished, and the certificates representing such
Equity Interests shall be cancelled and of no force and effect.
ARTICLE XXV
PROVISIONS FOR TREATMENT OF
RETAIL (TENNESSEE) EQUITY INTERESTS (CLASS 17)
25.1 On the Effective Date, in accordance with
Section 2.2 of the Plan, Retail (Tennessee) Equity Interests
shall be deemed extinguished, and the certificates representing
such Equity Interests shall be cancelled and of no force and
effect.
27<PAGE>
ARTICLE XXVI
PROVISIONS FOR TREATMENT OF
DISPUTED CLAIMS UNDER THE PLAN
26.1 Objections to Claims; Prosecution of Disputed
Claims. The Debtors or Reorganized Leslie Fay shall object to
the allowance of Claims filed with the Bankruptcy Court with
respect to which it disputes liability in whole or in part.
All objections shall be litigated to Final Order; provided,
however, that Reorganized Leslie Fay (within such parameters as
may be established by the Board of Directors of Reorganized
Leslie Fay) shall have the authority to file, settle,
compromise or withdraw any objections to Claims, without
approval of the Bankruptcy Court. Unless otherwise ordered by
the Bankruptcy Court, the Debtors or Reorganized Leslie Fay
shall file and serve all objections to Claims as soon as
practicable, but in no event later than the Effective Date or
such later date as may be approved by the Bankruptcy Court.
26.2 Estimation of Claims. The Debtors or
Reorganized Leslie Fay may at any time request that the
Bankruptcy Court estimate any contingent or Disputed Claim
pursuant to section 502(c) of the Bankruptcy Code regardless of
whether the Debtors or Reorganized Leslie Fay previously have
objected to such Claim or whether the Bankruptcy Court has
ruled on any such objection, and the Bankruptcy Court will
retain jurisdiction to estimate any Claim at any time during
litigation concerning any objection to any Claim, including,
without limitation, during the pendency of any appeal relating
to any such objection. In the event that the Bankruptcy Court
estimates any contingent or Disputed Claim, the amount so
estimated shall 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 the amount of such Claim, the Debtors or
Reorganization Leslie Fay may pursue supplementary proceedings
to object to the allowance of such Claim. All of the
aforementioned objection, estimation and resolution procedures
are intended to be 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.
26.3 Payments and Distributions on Disputed Claims.
(a) From and after the Effective Date, the Disbursing Agent
shall remit to the Plan Administrator, and the Plan
Administrator shall reserve and hold in trust for the benefit
of each holder of a Disputed Claim, Cash, and New Securities in
an amount equal to the Pro Rata distributions which the holder
of such Disputed Claim would have received if it were an
Allowed Claim based upon the lesser of the amount (i) of the
Disputed Claim and (ii) estimated by the Bankruptcy Court
pursuant to section 502 of the Bankruptcy Code for purposes of
allowance, which amount shall constitute and represent the
maximum amount of such Claim if it ultimately becomes an
Allowed Claim. Any Cash or New Securities reserved and held
for the benefit of a holder of a Disputed Claim shall be
treated as a payment and reduction on account of such Disputed
Claim for purposes of computing (a) any additional amounts to
be paid in Cash or distributed in New Securities in the event
the Disputed Claim ultimately becomes an Allowed Claim, or (b)
any interest payable in accordance with the Plan with respect
to such Disputed Claim at the time or times such Cash or
interests are reserved. Cash reserved for the benefit of
holders of Disputed Claims shall be either (x) held by the Plan
Administrator in trust for the benefit of such holders in an
interest-bearing account or (y) invested in interest-bearing
obligations issued by the United States Government, or by an
agency of the United States Government and guaranteed by the
United States Government, and having (in either case) a
maturity of not more than thirty (30) days, pending
determination of their entitlement thereto under the terms of
the Plan.
(b) At such time as a Disputed Claim becomes, in
whole or in part, an Allowed Claim, the Plan Administrator
shall remit to the Disbursing Agent for distribution to such
holder the payments and distributions to which such holder is
then entitled under the Plan, together with any interest which
has accrued on the amount of Cash so reserved, but only to the
extent that such interest is attributable to the amount of the
Allowed Claim. Such payments shall be made as soon as
practicable after the date that the order or judgment of the
Bankruptcy Court allowing such Claim becomes a Final Order but
in no event more than thirty (30) days thereafter. To the
extent that a Disputed Claim ultimately becomes an Allowed
Claim in an amount less than the Disputed Claim, the Plan
Administrator shall remit to the Disbursing Agent the balance
of any Cash and New Securities
28<PAGE>
previously reserved for and on account of a Disputed Claim, for
inclusion in Cash Available for Distribution and New Securities
Available for Distribution, respectively.
(c) For purposes of determining the accrual of
interest or rights in respect of any other payment from and
after the Effective Date, the New Securities to be issued shall
be deemed issued as of the Effective Date regardless of the
date on which they are actually dated, authenticated or
received by the holders of Allowed Claims; provided, however,
that the Plan Administrator shall withhold any payment until
such distribution actually is made.
ARTICLE XXVII
PROSECUTION OF CLAIMS HELD BY THE DEBTORS
27.1 Prosecution of Claims. From and after the
Confirmation Date, Reorganized Leslie Fay shall, as a
representative of the estates of the Debtors, litigate any
avoidance or recovery actions under sections 544, 545, 547,
548, 549, 550, 551 and 553 of the Bankruptcy Code and any other
causes of action, rights to payments of claims that belong to
the Debtors or Debtors in Possession, that may be pending on
the Confirmation Date or instituted by Debtors thereafter, to a
Final Order, and Reorganized Leslie Fay may compromise and
settle such claims, without approval of the Bankruptcy Court
(but with approval of, or within parameters established by, the
Board of Directors of Reorganized Leslie Fay); provided,
however, that, notwithstanding the foregoing, the Plan
Administrator, as representative of all holders of Allowed
Claims in Classes 3 through 6 (inclusive), shall, if directed
by the Derivative Action Board, prosecute the Derivative
Action, and the Plan Administrator may discontinue or
compromise and settle the Derivative Action, with any necessary
approval of the court in which such action is pending, and with
approval of, or within parameters established by, the
Derivative Action Board. The net proceeds of any such
litigation or settlement (after satisfaction of all costs and
expenses incurred in connection therewith) shall be remitted to
the Disbursing Agent for inclusion in Cash Available for
Distribution.
27.2 Net Payment by Defendants. Notwithstanding
anything to the contrary herein, in the event that a defendant
in a litigation of the kind described in Section 27.1 hereof is
required by a Final Order to make payment (a "Disgorgement
Payment") to Reorganized Leslie Fay, and such Disgorgement
Payment (if so made) would give rise to a Claim, (a) such
defendant will be required to pay (a "Net Payment") in Cash
(and will have no Claim in respect thereof) only the excess, if
any, of (i) the amount of such Disgorgement Payment over (ii)
the fair market value of the distributions ("Initial
Distributions") on such Claim pursuant to this Plan that would
have been received by such defendant if such defendant had made
such Disgorgement Payment (which fair market value shall be
determined as of the date of such Net Payment by agreement between
Reorganized Leslie Fay and such defendant, or by Final Order)
and (b) if any distributions ("Subsequent Distributions") are made
hereunder after such defendant makes such Net Payment, such
defendant shall receive such defendant's Pro Rata Share of such
Subsequent Distributions (or, at Reorganized Leslie Fay's
election, the fair market value thereof determined as of the
date of such Subsequent Distributions by agreement between
Reorganized Leslie Fay and such defendant, or by Final Order),
which Pro Rata Share shall be calculated as if such defendant
had made such Disgorgement Payment and received Initial
Distributions in respect thereof.
ARTICLE XXVIII
ACCEPTANCE OR REJECTION OF PLAN;
EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS
28.1 Impaired Classes to Vote. Each impaired Class
of Creditors with Claims against the Debtors' estates shall be
entitled to vote separately to accept or reject the Plan.
29<PAGE>
28.2 Acceptance by Class of Creditors. A Class of
Creditors shall have accepted the Plan if the Plan is accepted
by at least two-thirds (2/3) in amount and more than one-half
(1/2) in number of the Allowed Claims of such Class that have
accepted or rejected the Plan.
28.3 Cramdown. In the event that any impaired Class
of Claims against the Debtors' chapter 11 estates shall fail to
accept the Plan in accordance with section 1129(a) of the
Bankruptcy Code, the Proponents reserve the right to request
that the Bankruptcy Court confirm the Plan in accordance with
section 1129(b) of the Bankruptcy Code or amend the Plan.
ARTICLE XXIX
IDENTIFICATION OF CLAIMS AND
EQUITY INTERESTS NOT IMPAIRED BY THE PLAN
29.1 Unimpaired Classes. All Claims and Equity
Interests other than Claims and Equity Interests in Classes 1,
2 and 7 of the Plan, are impaired under the Plan.
29.2 Impaired Classes to Vote on Plan. The Claims
and Equity Interests included in Classes 3, 4, 5 and 6 of the
Plan are impaired and are therefore entitled to vote to accept
or reject the Plan. In accordance with section 1126(g) of the
Bankruptcy Code, Classes 8, 9, 10, 11, 12, 13, 14, 15, 16 and
17 are deemed to have rejected the Plan.
29.3 Controversy Concerning Impairment. In the
event of a controversy as to whether any Class of Claims
or Equity Interests is impaired under the Plan, the Bankruptcy
Court shall, after notice and a hearing, determine such
controversy.
ARTICLE XXX
PROVISIONS FOR TIMING OF DISTRIBUTIONS
30.1 Time and Manner of Payments. Payments under
the Plan shall be made to each holder of an Allowed Unsecured
Claim as follows:
(a) Initial Payments. On or as soon as practicable
after the Effective Date, the Disbursing Agent shall
distribute, or cause to be distributed, to the Plan
Administrator on behalf of holders of Disputed Claims, and to
each holder of (i) an Allowed Bank Claim, (ii) an Allowed
Senior Note Claim, (iii) an Allowed Senior Subordinated Note
Claim and (iv) an Allowed General Unsecured Claim, such
Creditor's share, if any, of Cash Available for Distribution
and New Securities Available for Distribution as determined
pursuant to Articles X, XI, XII and XIV hereof, respectively.
(b) Quarterly Payments. On the first (1st) Business
Day that is after the close of one full calendar quarter
following the date of the initial Effective Date distributions,
and, thereafter, on each first (1st) Business Day following the
close of calendar quarters, the Disbursing Agent shall
distribute, or cause to be distributed, to the Plan
Administrator on behalf of holders of Disputed Claims, and to
each holder of (i) an Allowed Bank Claim, (ii) an Allowed
Senior Note Claim, (iii) an Allowed Senior Subordinated Note
Claim and (iv) an Allowed General Unsecured Claim, an amount
equal to such Creditor's share, if any, of Cash Available for
Distribution and New Securities Available for Distribution as
determined pursuant to Articles X, XI, XII, XIII and XIV
hereof, until such time as there are no longer any potential
Cash or Interests Available for Distribution. Notwithstanding
the foregoing, at the direction of the Plan Administrator, the
Disbursing Agent shall retain each distribution to a Creditor
under this Section 30.1(b) consisting of Fifty Dollars ($50) or
less in aggregate principal amount of New Sassco Notes or Five
(5) shares or less of New Sassco Common Stock or Reorganized
Leslie Fay Common Stock; provided, however, that on the Final
Distribution Date, the Disbursing Agent shall distribute, or
cause to be distributed, to such
30<PAGE>
Creditor, (i) the New Sassco Notes, if any, so retained, plus
interest received thereon, if the aggregate principal amount
thereof is greater than Fifty Dollars ($50), (ii) Cash in an
amount equal to the aggregate principal amount of all New
Sassco Notes so retained, plus interest received thereon, if
such aggregate principal amount is Fifty Dollars ($50) or less,
(iii) the New Sassco Common Stock or Reorganized Leslie Fay
Common Stock, if any, so retained, if the number of shares of
New Sassco Common Stock or Reorganized Leslie Fay Common Stock,
as applicable, is greater than Five (5) and (iv) Cash in
aggregate amount equal to the fair market value of the New
Sassco Common Stock or Reorganized Leslie Fay Common Stock, if
any so retained, if the number of shares of New Sassco Common
Stock or Reorganized Leslie Fay Common Stock, as applicable, so
retained is Five (5) or less.
30.2 Timeliness of Payments. Any payments or
distributions to be made by the Debtors pursuant to the Plan
shall be deemed to be timely made if made within twenty (20)
days after the dates specified in the Plan.
30.3 Distributions by Disbursing Agent. All
distributions under the Plan shall be made by the Disbursing
Agent at the direction of the Plan Administrator. The
Disbursing Agent shall not be required to post any bond or
surety or other security for the performance of its duties.
The Disbursing Agent shall be deemed to hold all property to be
distributed hereunder, in trust for the benefit of the Persons
entitled to receive the same. The Disbursing Agent shall not
hold an economic or beneficial interest in such property.
30.4 Calculation of Distribution Amounts of
Securities. No fractional shares of Reorganized Leslie Fay
Common Stock, or New Sassco Common Stock shall be issued.
Fractional shares of Reorganized Leslie Fay Common Stock and
New Sassco Common Stock shall be rounded to the next greater or
next lower number of shares in accordance with the following
method: (a) fractions of one-half (1/2) or greater shall be
rounded to the next higher whole number, and (b) fractions of
less than one-half (1/2) shall be rounded to the next lower
whole number. For purposes of this Section 30.4, all
references to holders of Allowed Claims herein shall refer to
the beneficial owners of such Allowed Claims, and all
calculations relating to the rounding provisions of this
Section 30.4 shall be made based upon such beneficial
ownership. The total number of shares or interests of
Reorganized Leslie Fay Common Stock and New Sassco Common Stock
to be distributed to a Class of Claims shall be adjusted as
necessary to account for the rounding provided for in this
Section 30.4.
30.5 Delivery of Distributions. Subject to the
provisions of Rule 9010 of the Bankruptcy Rules, distributions
and deliveries to holders of Allowed Claims shall be made at
the address of each such holder as set forth on the Schedules
filed with the Bankruptcy Court unless superseded by the
address set forth on proofs of claim filed by such holders, or
at the last known address of such a holder if no proof of claim
is filed or if the Debtors have been notified in writing of a
change of address.
30.6 Undeliverable Distributions.
(a) Holding of Undeliverable Distributions. If any
distribution to any holder is returned to the Disbursing Agent
as undeliverable, no further distributions shall be made to
such holder unless and until the Disbursing Agent is notified,
in writing, of such holder's then-current address.
Undeliverable distributions shall remain in the possession of
the Disbursing Agent until such time as a distribution becomes
deliverable. All Persons ultimately receiving undeliverable
Cash, including, without limitation, any interest earned
thereon or dividends distributed with respect to Reorganized
Leslie Fay Common Stock and New Sassco Common Stock shall not
be entitled to any other interest or other accruals of any
kind. Nothing contained in the Plan shall require the
Disbursing Agent to attempt to locate any holder of an Allowed
Claim.
(b) Failure to Claim Undeliverable Distributions.
Any holder of an Allowed Claim that does not assert its rights
pursuant to the Plan to receive a distribution within two (2)
years from and after the Effective Date shall have its Claim
for such undeliverable distribution discharged and shall be
forever barred from asserting any such Claim against
Reorganized Leslie Fay, Reorganized Leslie Fay Licensing
Company, Reorganized Leslie Fay Operating Company, New
Castleberry and New Sassco, or their respective property. In
such cases, (x) the Disbursing Agent shall distribute unclaimed
Cash and New Sassco Common Stock to holders of Allowed Claims
in Classes 3, 4, 5, 6 and 7 on the Final Distribution Date with
such
31<PAGE>
holders to receive their respective Pro Rata distributions of
such unclaimed Cash and New Sassco Common Stock in the manner
provided for in Articles X, XI, XII, XIII and XIV of the Plan;
and (y) any Reorganized Leslie Fay Common Stock held for dis-
tribution on account of such Claims shall be cancelled and
discharged as if it had never been issued in the first place.
30.7 Compliance with Tax Requirements. To the
extent applicable, the Disbursing Agent, Reorganized Leslie Fay
and New Sassco shall comply with all tax withholding and
reporting requirements imposed on them by any governmental
unit, and all distributions pursuant to the Plan shall be
subject to such withholding and reporting requirements.
30.8 Time Bar to Cash Payments. Checks issued by
the Disbursing Agent on account of Allowed Claims shall be null
and void if not negotiated within ninety (90) days from and
after the date of issuance thereof. Any amounts paid to the
Disbursing Agent in respect of such a check shall be promptly
returned to Reorganized Leslie Fay by the Disbursing Agent.
Requests for reissuance of any check shall be made directly to
the Disbursing Agent by the holder of the Allowed Claim with
respect to which such check originally was issued. Any claim
in respect of such a voided check shall be made on or before
the later of (a) the second (2nd) anniversary of the Effective
Date or (b) ninety (90) days after the date of issuance of such
check, if such check represents a final distribution hereunder
on account of such Claim. After such date, all Claims in
respect of voided checks shall be discharged and forever
barred.
30.9 Distributions After Effective Date.
Distributions made after the Effective Date to holders of
Claims that are not Allowed Claims as of the Effective Date but
which later become Allowed Claims shall be deemed to have been
made on the Effective Date.
30.10 Set-Offs. Reorganized Leslie Fay may,
pursuant to section 553 of the Bankruptcy Code or applicable
nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of
such Claim (before any distribution is made on account of such
Claim), the claims, rights and causes of action of any nature
that the Debtors or Reorganized Leslie Fay may hold against the
holder of such Allowed Claim; provided, however, that neither
the failure to effect such a set-off nor the allowance of any
Claim hereunder shall constitute a waiver or release by the
Debtors or Reorganized Leslie Fay of any such claims, rights
and causes of action that the Debtors or Reorganized Leslie Fay
may possess against such holder.
30.11 Surrender and Cancellation of Instruments.
Except as Reorganized Leslie Fay otherwise may agree, (a) each
holder of a promissory note or other instrument evidencing a
Claim shall surrender such promissory note or instrument to the
Disbursing Agent, and the Disbursing Agent shall distribute or
shall cause to be distributed to the holder thereof the
appropriate distributions hereunder, (b) no distribution
hereunder shall be made to or on behalf of any holder of such a
Claim unless and until such promissory note or instrument is
received or the unavailability of such note or instrument is
reasonably established to the satisfaction of the Disbursing
Agent and (c) in accordance with section 1143 of the Bankruptcy
Code, any such holder of such a Claim that fails to (i)
surrender or cause to be surrendered such promissory note or
instrument or to execute and deliver an affidavit of loss and
indemnity reasonably satisfactory to the Disbursing Agent and
(ii) in the event that the Disbursing Agent requests, furnish a
bond in form and substance (including amount) reasonably
satisfactory to the Disbursing Agent, within two (2) years from
and after the Effective Date shall be deemed to have forfeited
all rights, claims and interests and shall not participate in
any distribution hereunder.
30.12 De Minimis Distributions. No Cash payment of
less than Ten Dollars ($10.00) shall be made by the Disbursing
Agent to any holder of an Allowed Claim unless a request
therefor is made in writing to the Disbursing Agent.
30.13 HSR Compliance. Any shares of Reorganized
Leslie Fay Common Stock or New Sassco Common Stock to be
distributed hereunder to any Entity required to file a Premerger
Notification and Report Form under Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended, shall not be distributed
until the notification and waiting periods applicable under
such act to such Entity shall have expired or been terminated.
32<PAGE>
30.14 Termination of Subordination Rights and
Settlement of Related Claims and Controversies. The
classification and manner of satisfying all Claims under the
Plan take into consideration all contractual, legal and
equitable subordination rights, whether arising under general
principles of equitable subordination, section 510(c) of the
Bankruptcy Code or otherwise, that a holder of a Claim may have
against other Claim Holders with respect to any distribution
made pursuant to the Plan. On the Effective Date, all
contractual, legal or equitable subordination rights that a
holder of a Claim may have with respect to any distribution to
be made pursuant to the Plan shall be discharged and
terminated, and all actions related to the enforcement of such
subordination rights shall be permanently enjoined.
Accordingly, distributions pursuant to the Plan to holders of
Allowed Claims shall not be subject to payment to a beneficiary
of such terminated subordination rights, or to levy,
garnishment, attachment or other legal process by any
beneficiary of such terminated subordination rights. Pursuant
to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the
provisions of this Section 29.14 shall constitute a good faith
compromise and settlement of all claims or controversies
relating to the termination of all contractual, legal and
equitable subordination rights that a holder of a Claim may
have with respect to any Allowed Claim, or any distribution to
be made on account of an Allowed Claim. The entry of the
Confirmation Order shall constitute the Bankruptcy Court's
approval of the compromise or settlement of all such claims or
controversies and the Bankruptcy Court's finding that such
compromise or settlement is in the best interests of the
Debtors, Reorganized Leslie Fay, New Sassco and their
respective property and holders of Claims and is fair,
equitable and reasonable.
ARTICLE XXXI
RIGHTS AND POWERS OF DISBURSING AGENT
31.1 Exculpation. From and after the Effective
Date, the Disbursing Agent shall be exculpated by all Persons
and Entities, including, without limitation, holders of Claims
and Equity Interests and other parties in interest, from any
and all claims, causes of action and other assertions of
liability arising out of the discharge of the powers and duties
conferred upon such Disbursing Agent by the Plan or any order
of the Bankruptcy Court entered pursuant to or in furtherance
of the Plan, or applicable law, except for actions or omissions
to act arising out of the gross negligence, willful misconduct
or breach of fiduciary duty of such Disbursing Agent. No
holder of a Claim or an Equity Interest or other party in
interest shall have or pursue any claim or cause of action
against the Disbursing Agent for making payments in accordance
with the Plan or for implementing the provisions of the Plan.
31.2 Powers of the Disbursing Agent. Except to the
extent that the responsibility for the same is vested in the
Plan Administrator pursuant to the Plan Administration
Agreement, the Disbursing Agent shall be empowered to (a) take
all steps and execute all instruments and documents necessary
to effectuate the Plan, (b) make distributions contemplated by
the Plan, (c) comply with the Plan and the obligations
thereunder, (d) employ professionals to represent it with
respect to its responsibilities, and (e) exercise such other
powers as may be vested in the Disbursing Agent pursuant to
order of the Bankruptcy Court, pursuant to the Plan, or as
deemed by the Disbursing Agent to be necessary and proper to
implement the provisions of the Plan. The Disbursing Agent
shall be bonded pursuant to arrangements with a bonding company
in form and substance reasonably satisfactory to the Debtors
and the Creditors' Committee.
31.3 Expenses Incurred From and After the Effective
Date. Except as otherwise ordered by the Bankruptcy Court, the
amount of any fees and expenses incurred by the Disbursing
Agent from and after the Effective Date (including taxes) and
any compensation and expense reimbursement claims, including,
without limitation, reasonable fees and expenses of counsel,
made by the Disbursing Agent, shall be paid in Cash by
Reorganized Leslie Fay.
31.4 Method of Payment. Payments of Cash to be made
by the Debtors pursuant to the Plan shall be made, at the
election of the Debtors, by check drawn on a domestic bank or
by wire transfer of immediately available funds.
33<PAGE>
ARTICLE XXXII
THE PLAN ADMINISTRATOR
32.1 Appointment of Plan Administrator. On the
Effective Date, compliance with the provisions of the Plan
shall become the general responsibility of the Plan
Administrator (subject to the supervision of the Board of
Directors of Reorganized Leslie Fay) pursuant to and in
accordance with the provisions of the Plan and the Plan
Administration Agreement.
32.2 Responsibilities of Plan Administrator. The
responsibilities of the Plan Administrator shall include (a)
liquidating Plan Assets, (b) facilitating Reorganized Leslie
Fay's prosecution or settlement of objections to and
estimations of Claims, (c) facilitating Leslie Fay's
prosecution and/or settlement of claims and causes of action,
(d) calculating and assisting the Disbursing Agent in
implementing all distributions in accordance with the Plan, (e)
filing all required tax returns and paying taxes and all other
obligations on behalf of Reorganized Leslie Fay from funds held
by Reorganized Leslie Fay, (f) periodic reporting to the
Bankruptcy Court, of the status of the Claims resolution
process, distributions on Allowed Claims and prosecution of
causes of action, and (g) such other responsibilities as may be
vested in the Plan Administrator pursuant to the Plan, the Plan
Administration Agreement or Bankruptcy Court order or as may be
necessary and proper to carry out the provisions of the Plan.
32.3 Powers of Plan Administrator. The powers of
the Plan Administrator shall, without any further Bankruptcy
Court approval in each of the following cases, include (a) the
power to invest funds in, and withdraw, make distributions and
pay taxes and other obligations owed by Reorganized Leslie Fay
from funds held by the Plan Administrator and/or Reorganized
Leslie Fay in accordance with the Plan, (b) the power to engage
employees and professional persons to assist the Plan
Administrator with respect to its responsibilities, (c) the
power to dispose of, and deliver title to others of, Plan
Assets on behalf of Reorganized Leslie Fay, (d) the power to
compromise and settle claims and causes of action on behalf of
or against Reorganized Leslie Fay, and (e) such other powers as
may be vested in or assumed by the Plan Administrator pursuant
to the Plan, the Plan Administration Agreement or as may be
necessary and proper to carry out the provisions of the Plan.
32.4 Compensation of Plan Administrator. In
addition to reimbursement for actual out-of-pocket expenses
incurred by the Plan Administrator, the Plan Administrator
shall be entitled to receive reasonable compensation for
services rendered on behalf of Reorganized Leslie Fay in an
amount and on such terms as may be agreed to by the Debtors or
Reorganized Leslie Fay and the Creditors' Committee as
reflected in the Plan Administration Agreement. Any dispute
with respect to such compensation shall be resolved by
agreement among the parties or, if the parties are unable to
agree, determined by the Bankruptcy Court.
32.5 Termination of Plan Administrator. The duties,
responsibilities and powers of the Plan Administrator shall
terminate on the date set forth in the Plan Administration
Agreement.
ARTICLE XXXIII
COMMITTEES
33.1 Creditors' Committee Composition and Term.
From the Confirmation Date up to and including the Effective
Date, the members of the Creditors' Committee appointed
pursuant to section 1102 of the Bankruptcy Code, and their duly
appointed successors, shall continue to serve. Upon the
disallowance by Final Order of the Claim held by a Creditor
that is a member of the Creditors' Committee, such membership
shall terminate and no replacement shall be appointed. Upon
the resignation, death or disability of a member of the
Creditors' Committee, the Creditor having appointed such member
shall have the right to designate a replacement. In the event
such Creditor shall fail to designate a replacement, no other
replacement may be appointed to the Creditors' Committee.
Members of the Creditors' Committee shall serve without
compensation but shall be
34<PAGE>
entitled to reimbursement of their resonable out-of-pocket
expenses which are attributable to their attendance at Creditor's
Committee meetings. The Creditor' Committee shall be entitled
to retain legal counsel and such other professionals as may
be authorized by the Bankruptcy Court, the fees and expenses of
which shall be entitled to payment as Administrative Expense Claims.
On the Effective Date, the Creditors' Committee shall be dissolved
and the members thereof and the professionals retained by the
Creditors' Committee in accordance with section 1103 of the
Bankruptcy Code shall be released and discharged from their
respective fiduciary obligations.
33.2 Duties and Powers of the Creditors' Committee.
Until the Effective Date, the duties and powers of the
Creditors' Committee shall consist of the monitoring of
litigation and settlements concerning Disputed Claims and
claims of the Debtors in connection with the Seidman
Litigation, and the consummation of the transactions
contemplated by the Plan.
33.3 Equity Committee. On the Confirmation Date,
the Equity Committee shall be dissolved and the members thereof
and the professionals retained by the Equity Committee in
accordance with section 327 of the Bankruptcy Code shall be
released and discharged from their respective fiduciary
obligations, if the same has not occurred prior to the
Confirmation Date.
33.4 Dissolution of Derivative Action Board. Upon
termination of the Derivative Action by judgment, settlement or
otherwise, the Derivative Action Board shall be dissolved and
the members thereof shall be released and discharged from their
respective fiduciary obligations.
ARTICLE XXXIV
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
34.1 Assumption of Executory Contracts and Unexpired
Leases. Any executory contracts or unexpired leases which have
not expired by their own terms on or prior to the Effective
Date, which have not been rejected with the approval of the
Bankruptcy Court, or which are not the subject of a motion to
reject the same pending as of the Effective Date shall be
deemed assumed by the Debtors in Possession on the Effective
Date and assigned to New Sassco or Reorganized Leslie Fay, as
applicable, and the entry of the Confirmation Order by the
Bankruptcy Court shall constitute approval of such rejections
and assumptions pursuant to sections 365(a) and 1123 of the
Bankruptcy Code. The Debtors' collective bargaining agreement
effective June 1, 1994 through May 31, 1997, with the Union of
Needletrades, Industrial and Textile Employees ("UNITE"), the
successor to the International Ladies' Garment Workers' Union
("ILGWU"), is binding on its successors, including successors
due to a plan of reorganization. New Sassco and Reorganized
Leslie Fay are bound by the terms and conditions of the extant
collective bargaining agreement between the Debtors and UNITE.
34.2 Cure of Defaults for Assumed Executory
Contracts and Unexpired Leases. Any monetary amounts required
as cure payments on each executory contract and unexpired lease
to be assumed pursuant to the Plan shall be satisfied, pursuant
to section 365(b)(1) of the Bankruptcy Code, by payment of the
cure amount in Cash on the Effective Date or upon such other
terms and dates as the parties to such executory contracts or
unexpired leases otherwise may agree. In the event of a
dispute regarding (a) the amount of any cure payment, (b) the
ability of the Debtors or any assignee to provide "adequate
assurance of future performance" (within the meaning of section
365 of the Bankruptcy Code) under the contract or lease to be
assumed or (c) any other matter pertaining to assumption, the
cure payments required by section 365(b)(1) of the Bankruptcy
Code shall be made following the entry of a Final Order
resolving such dispute.
34.3 Rejection Damage Claims. Not later than ten
(10) days prior to the Confirmation Date, the Debtors shall
file with the Bankruptcy Court a list of executory contracts
and unexpired leases to be rejected by the Debtors as of the
Effective Date. If the rejection of an executory contract or
unexpired lease by any of the Debtors results in damages to the
other party or parties to such contract or lease, any claim for
such damages, if not heretofore evidenced by a filed proof of
claim, shall be forever barred and shall not be enforceable
against the Debtors, or their respective properties or agents,
35<PAGE>
successors, or assigns, unless a proof of claim is filed with
the Bankruptcy Court and served upon counsel for the Debtors on
or before fifteen (15) days after the later of (a) the
Confirmation Date and (b) the date of entry of an order by the
Bankruptcy Court authorizing rejection of a particular
executory contract or lease. Unless otherwise ordered by the
Bankruptcy Court or provided in the Plan, all such Claims for
which proofs of claim are timely filed will be treated as
General Unsecured Claims subject to the provisions of Section
13.1 of the Plan.
ARTICLE XXXV
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN
35.1 Conditions Precedent to Effective Date of the
Plan. The occurrence of the Effective Date and the substantial
consummation of the Plan are subject to satisfaction of the
following conditions precedent:
(a) Entry of the Confirmation Order. The Clerk of
the Bankruptcy Court shall have entered the Confirmation Order,
in form and substance satisfactory to the Debtors and the
Creditors' Committee, and the Confirmation Order shall have
become a Final Order or such Confirmation Order shall not have
been stayed, enjoined or restrained.
(b) Post-Consummation New Sassco Financing. The
closing under each of the New Sassco Credit Agreement and the
New Sassco Indenture shall have occurred or shall be ready to
occur subject only to the occurrence of the Effective Date.
(c) Post-Consummation Reorganized Leslie Fay
Financing. The closing under the Reorganized Leslie Fay Credit
Agreement shall have occurred or shall be ready to occur
subject only to the occurrence of the Effective Date.
(d) Execution of Documents; Other Actions. All other
actions and documents necessary to implement the Plan shall
have been effected or executed. Without limiting the
generality of the foregoing, the Disbursement Account(s) shall
have sufficient Cash in order that Cash payments may be made on
or about the Effective Date as, and to the extent, contemplated
herein.
(e) Appointment of Plan Administrator. The Plan
Administrator shall have been appointed in accordance with
Article XXXII of the Plan and the Plan Administrator shall have
executed the Plan Administration Agreement evidencing the Plan
Administrator's agreement to serve in such capacity.
(f) Amendment to Reorganized Leslie Fay Certificate
of Incorporation; Incorporation of Reorganized Leslie Fay
Operating Company, Reorganized Leslie Fay Licensing Company and
New Castleberry. The Amended Certificate of Incorporation of
Reorganized Leslie Fay shall have become effective, and
Reorganized Leslie Fay Operating Company, Reorganized Leslie
Fay Licensing Company and New Castleberry shall have been
incorporated pursuant to the Reorganized Leslie Fay Operating
Company Certificate of Incorporation, the Reorganized Leslie
Fay Licensing Company Certificate of Incorporation and the New
Castleberry Certificate of Incorporation, respectively, and
shall be authorized to conduct business.
(g) Incorporation of New Sassco. New Sassco shall
have been incorporated pursuant to the New Sassco Certificate
of Incorporation and shall be authorized to conduct business.
(h) Allowed Amount of Claims. The Debtors shall
have filed with the Bankruptcy Court a statement that the
Debtors believe, after conducting an analysis of the Claims in
Class 6, that the Allowed Claims in such Class, together with
the Allowed Claims in Classes 3, 4, 5 and 7, will not exceed
Three Hundred Forty Million Dollars ($340,000,000.00) in aggre-
gate amount.
36<PAGE>
(i) Satisfaction of Debtor in Possession Financing.
All financing provided to the Debtors pursuant to section 364
of the Bankruptcy Code shall have been repaid or replaced, or
other arrangements satisfactory to the lenders providing such
financing, the Debtors and the Creditors' Committee, regarding
the termination of such financing shall have been made.
35.2 Waiver of Conditions Precedent. Each of the
conditions precedent in Section 35.1, other than those set
forth in subsections (a) and (i) thereof, may be waived, in
whole or in part, by the Proponents, in their respective
discretion. Any such waiver of a condition precedent in
Section 34.1 hereof may be effected at any time, without notice
or leave or order of the Bankruptcy Court and without any
formal action other than a writing.
ARTICLE XXXVI
PROVISIONS FOR THE ESTABLISHMENT
AND MAINTENANCE OF DISBURSEMENT ACCOUNTS
36.1 Establishment of Disbursement Account. On or
before the Effective Date, the Debtors shall establish one or
more segregated bank accounts in the name of Reorganized Leslie
Fay as Disbursing Agent under the Plan, which accounts shall be
trust accounts for the benefit of Creditors pursuant to the
Plan and utilized solely for the investment and distribution of
Cash consistent with the terms and conditions of the Plan. On
or before the Effective Date, the Debtors shall deposit into
such Disbursement Account(s) all Cash and Cash Equivalents of
the Debtors, less the sum of Four Million Dollars
($4,000,000.00) to satisfy the working capital needs of
Reorganized Leslie Fay Operating Company as described in
Section 3.2(g) hereof. From and after the Effective Date, the
Plan Administrator shall deposit into the Disbursement Account(s)
all Cash proceeds of Plan Assets less amounts, if any,
necessary to supplement the amounts referred to in this Section
36.1 of the Plan.
36.2 Maintenance of Disbursement Account(s).
Disbursement Account(s) shall be maintained at one or more
domestic banks or financial institutions of Reorganized Leslie
Fay's choice having a shareholder's equity or equivalent
capital of not less than One Hundred Million Dollars
($100,000,000.00). Reorganized Leslie Fay shall invest Cash in
Disbursement Account(s) in Cash Equivalents; provided, however,
that sufficient liquidity shall be maintained in such account
or accounts to (a) make promptly when due all payments upon
Disputed Claims if, as and when they become Allowed Claims, and
(b) make promptly when due the other payments provided for in
the Plan.
ARTICLE XXXVII
EFFECT OF CONFIRMATION
37.1 Reorganized Leslie Fay Authority.
(a) General Authority. During the period from the
Confirmation Date up to but not including the Effective Date,
the Bankruptcy Court shall retain custody and jurisdiction of
the Debtors, their property and their operations. On the
Effective Date, Reorganized Leslie Fay, its property and its
operations shall be released from the custody and jurisdiction
of the Bankruptcy Court, except as provided in Section 38.1
hereof.
(b) Compromise and Settlement of Certain Class of
Controversies. From and after the Confirmation Date, all
controversies pending before any court other than the
Bankruptcy Court shall constitute a class of controversies
under Rule 9019(b) of the Bankruptcy Rules and Reorganized
Leslie Fay may compromise or settle any controversy in such
class without further approval by the Bankruptcy Court.
37<PAGE>
37.2 Title to Assets; Discharge of Liabilities.
Except as otherwise provided by the Plan, on the Effective
Date, title to all assets and properties encompassed by the
Plan shall vest in Reorganized Leslie Fay, New Sassco,
Reorganized Leslie Fay Operating Company, Reorganized Leslie
Fay Licensing Company or New Castleberry, as the case may be,
in accordance with section 1141 of the Bankruptcy Code, and
the Confirmation Order shall be a judicial determination of
discharge of the Debtors' liabilities except as provided in the
Plan.
37.3 Discharge of Debtors. The rights afforded in
the Plan and the treatment of all holders of Claims or Equity
Interests herein shall be in exchange for and in complete
satisfaction, discharge and release of all Claims or Equity
Interests of any nature whatsoever, known or unknown, including
any interest accrued or expenses incurred thereon from and
after the Petition Date against any of the Debtors or any of
their respective estates or properties or interests in
property. Except as otherwise provided herein, upon the
Effective Date, all Claims and equity Interests in the Debtors
will be satisfied, discharged and released in full exchange for
the consideration provided for hereunder. All Persons and
Entities shall be precluded from asserting against any Debtor,
their successors, including, without limitation, Reorganized
Leslie Fay, Reorganized Leslie Fay Operating Company, New
Castleberry and New Sassco, their agents and employees, or
their respective assets or properties, any other or further
Claims based upon any act or omission, transaction or other
activity of any kind or nature arising from or related to the
Debtors or the Chapter 11 Cases that occurred prior to the
Effective Date.
37.4 Injunction. Except as otherwise expressly
provided in the Plan, the Confirmation Order will provide,
among other things, that all Persons or Entities who have held,
hold or may hold Claims or Equity Interests are permanently
enjoined, from and after the Effective Date, from (a)
commencing or continuing in any manner any action or other
proceeding of any kind on any such Claim or Equity Interest
against a Debtor, Reorganized Leslie Fay, Reorganized Leslie
Fay Operating Company, Reorganized Leslie Fay Licensing
Company, New Castleberry or New Sassco, (b) the enforcement,
attachment, collection or recovery by any manner or means of
any judgment, award, decree or order against the Debtors, (c)
creating, perfecting, or enforcing any encumbrance of any kind
against the Debtors or against the property or interests in
property of the Debtors, and (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation
due from the Debtors or against the property or interests in
property of the Debtors, with respect to any such Claim.
37.5 Term of Existing Injunctions or Stays. Unless
otherwise provided, 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 Effective Date.
37.6 Limited Release of Directors, Officers and
Employees. As of the Effective Date, the Debtors shall be
deemed to have waived and released their present and former
directors, officers and employees who were directors, officers
and employees, respectively, during the Chapter 11 Cases and on
or before April 5, 1993, from any and all claims of the
Debtors, including, without limitation, claims which the
Debtors or Debtors in Possession otherwise have legal power to
assert, compromise or settle in connection with the Chapter 11
Cases, arising on or prior to the Effective Date; provided,
however, that this provision shall not operate as a waiver or
release of any claim (i) in respect to any loan, advance or
similar payment by any Debtor to any such person, (ii) in
respect of any contractual obligation owed by such person to
any Debtor, (iii) relating to such person's fraud or gross
negligence, (iv) to the extent based upon or attributable to
such person gaining in fact a personal profit to which such
person was not legally entitled, including, without limitation,
profits made from the purchase or sale of equity securities of
the Debtors which are recoverable by the Debtors pursuant to
section 16(b) of the Securities Exchange Act of 1934, as
amended, or (v) relating to such person's breach of fiduciary
duty, other than those claims against which such directors,
officers and employees were protected by the provisions of (a)
Article VII of the Restated By-Laws of The Leslie Fay
Companies, Inc., adopted as of August 1, 1986 and amended as of
December 17, 1986 and March 6, 1990, (b) Article Eighth of the
Restated Certificate of Incorporation of The Leslie Fay
Companies, Inc., filed August 1, 1986 and (c) applicable law.
37.7 Exculpation. None of the Debtors, Reorganized
Leslie Fay, the Plan Administrator, the Creditor Representative
or any of their respective directors, officers, employees,
advisors and agents (acting in such capacity), nor the
Creditors' Committee, the Derivative Action Board and the
Equity Committee and their respective members and professionals
(acting in such capacity), shall have or incur any liability to
any entity for any act taken or omitted to be taken in
connection
38<PAGE>
with or related to the formulation, preparation, dissemination,
implementation, confirmation or consummation of the Plan, the
disclosure statement related thereto or any contract,
instrument, release or other agreement or document created or
entered into, or any other act taken or omitted to be taken in
connection with the Plan or, in the case of the Derivative
Action Board, in connection with the prosecution, compromise
and settlement or discontinuance of the Derivative Action;
provided, however, that the foregoing provisions of this
Section 37.7 shall not affect the liability of any entity that
otherwise would result from any such act or omission to the
extent that such act or omission is determined in a Final Order
to have constituted gross negligence, willful misconduct or
breach of fiduciary duty. The Debtors, the Creditors'
Committee and their respective advisors, attorneys and agents
shall have no liability under the Plan to any Creditor or
holder of an Equity Interest by virtue of being a proponent of
the Plan, or, in the case of the Derivative Action Board, in
connection with the prosecution, compromise and settlement or
discontinuance of the Derivative Action.
37.8 Preservation of Rights of Action. Except as
otherwise provided in the Plan or in any contract, instrument,
release, or other agreement entered into in connection with the
Plan, in accordance with section 1123(b) of the Bankruptcy
Code, Reorganized Leslie Fay shall retain the sole and
exclusive authority to enforce any claims, rights and causes of
action that the Debtors or their chapter 11 estates may hold
against any entity, including any claims, rights or causes of
action arising under sections 544, 547, 548, 549 and 550 of the
Bankruptcy Code. Reorganized Leslie Fay may pursue such
retained claims, rights or causes of action, as appropriate, in
accordance with the best interests of Reorganized Leslie Fay.
37.9 Injunction. Except as provided herein, as of
the Effective Date, all non-Debtor entities are permanently
enjoined from commencing or continuing in any manner, any
action or proceeding, whether directly, derivatively, on
account of or respecting any claim, debt, right or cause of
action of the Debtors or Reorganized Leslie Fay which the
Debtors or Reorganized Leslie Fay, as the case may be, retain
sole and exclusive authority to pursue in accordance with
Section 27.1 of the Plan or which has been released by the
Debtors or Reorganized Leslie Fay in accordance with Section
37.6 of the Plan.
ARTICLE XXXVIII
RETENTION OF JURISDICTION
38.1 Retention of Jurisdiction. The Bankruptcy
Court shall retain and have exclusive jurisdiction over the
Chapter 11 Cases for the following purposes:
(a) to resolve any matters related to the
assumption, assumption and assignment or rejection of any
executory contract or unexpired lease to which the Debtors are
a party or with respect to which the Debtors may be liable and
to hear, determine and, if necessary, liquidate, any Claims
arising therefrom, including those matters related to the
amendment after the Effective Date (pursuant to Section 34.3 of
the Plan), to add any executory contracts or unexpired leases
to the list of executory contracts and unexpired leases to be
rejected;
(b) to enter such orders as may be necessary or
appropriate to implement or consummate the provisions of the
Plan and all contracts, instruments, releases, indentures and
other agreements or documents created in connection with the
Plan;
(c) to determine any and all adversary proceedings,
applications and contested matters other than any controversy
in the class of controversies fixed in Section 28.3 hereof;
(d) to ensure that distributions to holders of
Allowed Claims are accomplished as provided herein;
(e) to hear and determine any timely objections to
Administrative Expense Claims or to proofs of claim and
equity interests filed, both before and after the Confirmation
Date, including any objections to the classification of any
Claim or
39<PAGE>
Equity Interest, and to allow, disallow, determine, liquidate,
classify, estimate or establish the priority of secured or
unsecured status or any Claim, in whole or in part;
(f) to enter and implement such orders as may be
appropriate in the event the Confirmation Order is for any
reason stayed, revoked, modified, reversed or vacated;
(g) to issue such orders in aide of execution of the
Plan, to the extent authorized by section 1142 of the Bank-
ruptcy Code;
(h) to consider any modifications of the Plan, to
cure any defect or omission, or reconcile any inconsistency in
any order of the Bankruptcy Court, including the Confirmation
Order;
(i) to hear and determine all applications for
awards of compensation for services rendered and reimbursement
of expenses incurred prior to the Effective Date;
(j) to hear and determine disputes arising in
connection with the interpretation, implementation, or
enforcement of the Plan or the extent of any entity's
obligations incurred in connection with or released under the
Plan;
(k) to issue injunctions, enter and implement other
orders or take such other actions as may be necessary or
appropriate to restrain interference by any entity with
consummation or enforcement of the Plan, except as otherwise
provided herein;
(l) to determine any other matters that may arise in
connection with or relate to the Plan, the Disclosure State-
ment, the Confirmation Order or any contract, instrument,
release, indenture or other agreement or document created in
connection with the Plan or the Disclosure Statement;
(m) to hear and determine matters concerning state,
local and federal taxes in accordance with sections 346, 505,
and 1146 of the Bankruptcy Code;
(n) to hear any other matter or for any purpose
specified in the Confirmation Order that is not inconsistent
with the Bankruptcy Code; and
(o) to enter a final decree closing the Chapter 11
Cases.
38.2 Modification of Plan. The Proponents reserve
the right, in accordance with the Bankruptcy Code and the
Bankruptcy Rules, to amend or modify the Plan at any time prior
to the entry of the Confirmation Order. After the entry of the
Confirmation Order, the Proponents may, upon order of the
Bankruptcy Court, amend or modify the Plan, in accordance with
section 1127(b) of the Bankruptcy Code, or remedy any defect or
omission or reconcile any inconsistency in the Plan in such
manner as may be necessary to carry out the purpose and intent
of the Plan. A holder of a Claim that has accepted the Plan
shall be deemed to have accepted the Plan as modified if the
proposed modification does not materially and adversely change
the treatment of the Claim of such holder.
ARTICLE XXXIX
PROVISIONS FOR MANAGEMENT
39.1 Directors. As of the Effective Date, the
directors of Reorganized Leslie Fay shall be such Persons as
the Creditors' Committee and Pomerantz shall designate, in
accordance with Section 5.4 hereof, subject to the approval of
the Bankruptcy Court, on or prior to the Confirmation Date. As
of the Effective Date, the directors of New Sassco shall be
such
40<PAGE>
Persons as the Creditors' Committee and Levine shall designate,
in accordance with Section 4.5 hereof, subject to the approval
of the Bankruptcy Court, on or prior to the Confirmation Date.
Thereafter, the terms and manner of selection of the directors
of Reorganized Leslie Fay and New Sassco shall be as provided
in the Amended Bylaws of Reorganized Leslie Fay and New Sassco
Bylaws (and, in the case of New Sassco, the Levine Employment
Agreement), as applicable, as the same may be amended.
39.2 Officers. The officer(s) of the Debtors and
Sassco on the Effective Date shall continue to serve as
officer(s) of Reorganized Leslie Fay or New Sassco, as the case
may be, after the Effective Date and until such time as they
may resign, be removed or be replaced or their employment
contracts, if any, may expire.
39.3 Employment Contracts. After the Effective
Date, New Sassco and Reorganized Leslie Fay may enter into such
employment contracts with its officers, agents or employees as
the Board of Directors of New Sassco or the Board of Directors
of Reorganized Leslie Fay, respectively, may approve.
ARTICLE XL
ARTICLES OF INCORPORATION AND BY-LAWS OF THE DEBTORS
40.1 Amendment of Articles of Incorporation and By-
Laws. The articles of incorporation and by-laws of the Debtors
shall be amended on the Effective Date to read substantially as
set forth in the Amended Certificate of Incorporation of
Reorganized Leslie Fay and Amended Bylaws of Reorganized Leslie
Fay.
ARTICLE XLI
MISCELLANEOUS PROVISIONS
41.1 Payment of Statutory Fees. All fees payable
pursuant to section 1930 of title 28 of the United States Code,
as determined by the Bankruptcy Court at the Confirmation
Hearing, shall be paid on the Consummation Date.
41.2 Retiree Benefits. From and after the Effective
Date, pursuant to section 1129(a)(13) of the Bankruptcy Code,
Reorganized Leslie Fay shall continue to pay all retiree
benefits (within the meaning of section 1114 of the Bankruptcy
Code), at the level established in accordance with subsection
(e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, at any
time prior to the Confirmation Date, at the level and for the
duration of the period during which each Debtor has obligated
itself to provide such benefits.
41.3 Post-Effective Date Fees and Expenses. From
and after the Effective Date, Reorganized Leslie Fay shall, in
the ordinary course of business and without the necessity for
any approval by the Bankruptcy Court, pay the reasonable fees
and expenses of the professional persons thereafter incurred by
Reorganized Leslie Fay or the Plan Administrator related to
implementation and consummation of the Plan.
41.4 Severability. If, prior to the Confirmation
Date, any term or provision of the Plan is held by the
Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court shall, with the consent of the Debtors, have
the power to alter and interpret such term or provision to make
it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision
held to be invalid, void or unenforceable, and such term or
provision shall then be applicable as altered or interpreted.
Notwithstanding any such holding, alteration or interpretation,
the remainder of the terms and provisions of the Plan shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated by such holding, alteration
or interpretation. The Confirmation Order shall constitute a
judicial determination and shall provide that
41<PAGE>
each term and provision of the Plan, as it may have been
altered or interpreted in accordance with the foregoing, is
valid and enforceable pursuant to its terms.
41.5 Governing Law. Except to the extent that the
Bankruptcy Code or other federal law is applicable, or to the
extent that an Exhibit hereto or document contained in the Plan
Supplement provides otherwise, the rights, duties and
obligations arising under this Plan shall be governed by, and
construed and enforced in accordance with, the Bankruptcy Code
and, to the extent not inconsistent therewith, the laws of the
State of New York, without giving effect to principles of
conflicts of laws.
41.6 Notices. All notices, requests, and demands to
or upon the Debtors or Reorganized Leslie Fay to be effective
shall be in writing, including by facsimile transmission, and,
unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when actually delivered or, in the
case of notice by facsimile transmission, when received and
telephonically confirmed, addressed as follows:
The Leslie Fay Companies, Inc.
1412 Broadway
New York, New York 10018
Attention: General Counsel
Telecopier: (212) 221-4285
Telephonic Confirmation: (212) 221-4160
With a copy to:
(1) Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Alan B. Miller, Esq.
Telecopier: (212) 735-4965
Telephonic Confirmation: (212) 310-8272
- and -
(2) The Official Committee of Unsecured
Creditors of The Leslie Fay Companies, Inc.
c/o Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Chaim J. Fortgang, Esq.
Telecopier: (212) 403-2000
Telephonic Confirmation: (212) 403-1000
41.7 Closing of Cases. Reorganized Leslie Fay
shall, promptly upon the full administration of the Chapter 11
cases, file with the Bankruptcy Court all documents required by
Bankruptcy Rule 3022 and any applicable order of the Bankruptcy
Court.
42<PAGE>
41.8 Section Headings. The section headings
contained in this Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of
the Plan.
Dated: New York, New York
April 18, 1997
Respectfully submitted,
THE LESLIE FAY COMPANIES, INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
LESLIE FAY LICENSING CORP.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
HUE, INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
SPITALNICK CORP.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
LESLIE FAY RETAIL OUTLETS, INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
43<PAGE>
LESLIE FAY FACTORY OUTLET
(ALABAMA), INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
LESLIE FAY FACTORY OUTLET
(CALIFORNIA), INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
LESLIE FAY FACTORY OUTLET
(IOWA), INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
LESLIE FAY FACTORY OUTLET
(TENNESSEE), INC.
By: /s/ John J. Pomerantz
Name: John J. Pomerantz
Title: Chairman
44<PAGE>
/s/ Alan B. Miller /s/ Richard G. Mason
ALAN B. MILLER (AM 2817) Richard G. Mason (RM 0698)
A Member of the Firm A Member of the Firm
WEIL, GOTSHAL & MANGES LLP WACHTELL, LIPTON, ROSEN & KATZ
Attorneys for Debtors and Attorneys for the Official
Debtors in Possession Committee of Unsecured Creditors
767 Fifth Avenue of The Leslie Fay Companies, Inc.
New York, New York 10153 51 West 52nd Street
(212) 310-8000 New York, New York 10019
(212) 403-1000
45<PAGE>
Exhibit A to Plan
Certain Terms of, and Restrictions
on, New Sassco Management Options
A. Grant of Senior Management Options. New Sassco Management
Recipients will receive New Sassco Management Options to
purchase New Sassco Stock on a fully-diluted basis, as
follows.
i. Effective Date. On the Effective Date, New
Sassco Management Options (the "Initial
Options") will be granted for 10% of the New
Sassco Stock.
ii. 1997 Fiscal Year. If New Sassco achieves an
EBITDA of at least $29,000,000 in the 1997
fiscal year, New Sassco Management Options (the
"1997 Options") will be granted for an
additional 5% of the New Sassco Stock.
iii. 1998 Fiscal Year. If New Sassco achieves an
EBITDA of $33,000,000 for the 1998 fiscal year,
New Sassco Management Options (the "1998
Options") will be granted for an additional 5%
of the New Sassco Stock.
iv. Home Run. If New Sassco achieves an EBITDA of
$44,000,000 in or before the 2001 fiscal year,
New Sassco Management Options (the "Home Run
Options") will be granted for an additional 2.5%
of the New Sassco Stock.
v. Alternative Grant. If the 1997 Options and/or
1998 Options are not granted pursuant to clauses
(a)(ii) and (a)(iii) above, New Sassco
Management Options will be granted in equivalent
amounts if, in the 1999 fiscal year, New Sassco
achieves an EBITDA equal to the lesser of (x)
$37,500,000 and (y) the Budgeted EBITDA (as
defined in Exhibit B) for the 1999 fiscal year.
B. Additional Terms of New Sassco Management Options.
i. Vesting of Initial Options. 25% of the Initial
Options will vest on the Effective Date. 15% of
the Initial Options will vest on each of the
first five Anniversaries. Notwithstanding the
foregoing, vesting will occur automatically upon
the death, permanent disability, termination
without cause or resignation for good reason of
the Management Recipient.
ii. Transferability of Initial Options. Vested
Initial Options held by a New Sassco Management
Recipient will become transferable during the
periods set forth in column 1 below in an amount
equal to such Management Recipient's ratable
share of the percentage of aggregate vested and
non-vested Initial Options set forth in column 2
below:
1 2
Prior to the first Anniversary 0%
On and after the first Anniversary 10%
On and after the second Anniversary 10%
On and after the third Anniversary 10%
On and after the fourth Anniversary 25%
On and after the fifth Anniversary 45%
A-1<PAGE>
Notwithstanding the above, Levine will have the right
to sell up to $1 million per year (based upon actual
gross sales price) on a cumulative basis (i.e., up to
$1 million on and after the first Anniversary, up to
$2 million (less prior sales) on and after the second
Anniversary, etc.) of his vested New Sassco
Management Options and/or stock acquired upon
exercise of New Sassco Management Options, subject to
applicable law.
iii. Vesting of Other Senior Management Options. 1997
Options and 1998 Options, if granted, will vest in
accordance with the schedule set forth above for
Initial Options (as if they had been granted on the
Effective Date). Home Runs Options, if granted, will
vest immediately upon the date of grant.
iv. Transferability of Other Senior Management Options.
1997 Options and 1998 Options, if granted, will be
transferable in accordance with the schedule set
forth above for Initial Options (as if they had been
granted on the Effective Date). Home Runs Options,
if granted, will be transferable immediately upon the
date of grant.
v. Exercise Price. The exercise price of New Sassco
Management Options will be the average market price
of New Sassco Stock during the (i) ten days before
the thirtieth day after the Effective Date and
(ii) ten days after such thirtieth day.
vi. Cashless Exercise. New Sassco Management Recipients
will be allowed to exercise New Sassco Management
Options on a cashless basis. The value of the block
of New Sassco Stock to be used as "currency" in the
exercise will be the average market price over the
fifteen-day trading period immediately prior to the
date of exercise, less (in the case of New Sassco
Management Options exercised on or before the end of
the thirtieth month immediately following the
Effective Date) the discount, if any, that an
independent broker retained by New Sassco determines
to be appropriate in order to reflect "thinness" of
trading volume over such period when compared to the
amount of "currency" stock.
vii. Exercise Period. New Sassco Management Options will
be exercisable from the date of vesting thereof until
(i) the ninetieth day following the date of the New
Sassco Management Recipient's retirement, resignation
(other than for good reason) or termination for
cause, if the same occurs prior to the fifth
Anniversary, (ii) the later of (x) the end of the
sixth calendar month following the sixth Anniversary
and (y) eighteen months following the date of
termination of employment, if the New Sassco
Management Recipient remains employed by New Sassco
through, or is terminated without cause or resigns
for good reason prior to, the fifth Anniversary or
(iii) in the event of the death or permanent
disability of a New Sassco Management Recipient, the
earlier of (x) the end of the second calendar year
after the date of such death or permanent disability
and (y) the end of the sixth calendar month following
the sixth Anniversary. All New Sassco Management
Options not exercised by such date will expire
automatically.
viii. Forfeiture. In the event that a New Sassco
Management Recipient is terminated for cause or
voluntarily retires or resigns other than for good
reason, all non-vested New Sassco Management Options
received by such New Sassco Management Recipient will
be automatically forfeited to, and cancelled by, New
Sassco.
A-2<PAGE>
Exhibit B to Plan
Principal Terms of Levine Employment Agreement
On the Effective Date, Levine and Now Sassco will
enter into a five-year employment contract. In addition to the
compensation terms set forth below, such contract will contain
customary terms and provisions, including a non-competition
agreement by Levine expiring on the fifth Anniversary.
A. Base Salary. Levine's base salary will be $2 million per
annum.
B. Bonus. Commencing with the 1998 fiscal year, Levine will
be entitled to annual bonuses based upon New Sassco's
achievement of EBITDA targets as set forth below, so long
as he remains employed by New Sassco:
i. 1998 fiscal year. If New Sassco's EBITDA for
the 1998 fiscal year (the "1998 EBITDA") is at
least $34 million, Levine will earn a cash bonus
(the "1998 Bonus") equal to the sum of (x)
$500,000 plus (y) 50% of 1998 EBITDA in excess
of $34 million; provided, however, that (aa) in
no event shall the 1998 Bonus exceed $1.5
million and (bb) in the event that New Sassco's
1998 EBITDA is less than $36.5 million, New
Sassco shall defer payment of $500,000 of the
1998 Bonus and pay the same to Levine promptly
after the first fiscal year following the 1998
fiscal year in which New Sassco's EBITDA is at
least $36.5 million.
ii. 1999 fiscal year and thereafter. For each
fiscal year following the 1998 fiscal year, if
New Sassco's EBITDA is (a) less than or equal to
85% of the Budgeted EBITDA (as hereinafter
defined) for such year (the "Minimum
Percentage"), Levine will receive no bonus or
(b) greater than the Minimum Percentage, Levine
will receive a cash bonus of $100,000 or portion
thereof for each percentage point or portion
thereof of such Budgeted EBITDA by which such
EBITDA exceeds the Minimum Percentage; provided,
however, that Levine shall not be entitled to a
bonus in excess of $1.5 million for any fiscal
year. "Budgeted EBITDA" for any fiscal year
shall be the single EBITDA target for such
fiscal year contained in the operating budget
established by the New Sassco board of directors
(the "New Sassco Board") in good faith for New
Sassco as a whole.
C. Termination.
i. Termination for Cause. If Levine is terminated
for "cause", Levine will receive the following,
prorated through the date of termination: (i) his
base salary plus (ii) if Levine is terminated
pursuant to paragraph (c)(iii)(c) below, his
bonus, if any, for the fiscal year of such
termination.
ii. Termination Without Cause, or Resignation for
Good Reason. If Levine is terminated without
"cause" or resigns for "good reason", Levine
will receive the present value of his base
salary for the remainder of his contract term
(using a 10% discount factor) (the "Termination
Amount"); provided, however, that if the sole
basis for Levine's resignation for "good reason"
is a "change in control" of New Sassco, Levine
will receive only 57% of the Termination Amount.
iii. Definition of "Cause". "Cause" will be defined
as (a) conviction of Levine for a felony; (b)
perpetration by Levine of (x) an illegal act
which causes significant economic injury to New
Sassco or (y) a common law fraud against New
Sassco; or (c) willful violation by Levine
(following a warning in writing with respect
thereto from the New Sassco Board) of a specific
written direction from the New Sassco Board
concerning one or more matters material to New
Sassco's business and not within the purview of
Levine as Chief Executive Officer as described in
the next succeeding sentence ("Material
Insubordination"). It is understood that the
day-to-day operations of New Sassco shall be within
the purview of Levine as Chief Executive Officer to
the maximum extent consistent with the standards in
New Sassco's industry for comparable public
companies. In the event of a dispute by the
B-1<PAGE>
parties, the issue of whether Levine has
committed Material Insubordination will be
submitted to arbitration.
iv. "Good reason" will be defined as the
continuation of any of the following events for
more than ten (10) days after New Sassco's
receipt from Levine of written notice thereof.
(a) Levine shall fail to be re-elected as a
Director of New Sassco and as chairman of the
New Sassco Board of Directors or shall be
removed from such position or the position
of Chief Executive Officer of New Sassco at
any time during the term of his employment
(other than for "cause"), or Levine's
designee(s) or observer shall fail to be
re-elected or shall be removed as a
Director or observer during such term, or
the size of the New Sassco Board of
Directors shall be expanded and Levine
shall not be given reasonable opportunity
to designate one or more additional
Directors such that Levine and all
Directors designated by Levine shall
comprise at least 28% of the membership of
the New Sassco Board of Directors;
(b) Levine shall fail to be vested with the
powers and authority of Chief Executive
Officer of New Sassco as described above,
or the powers and authority of such
position or his authority and
responsibilities with respect thereto shall
be diminished in any material respect;
(c) Levine shall have assigned to him without
his express written consent any duties,
functions, authority or responsibilities
that are materially inconsistent with
Levine's positions described above;
(d) Levine's principal place of employment is
changed to a location more than twenty-five
miles from the prior location without
Levine's prior written consent;
(e) any material failure by New Sassco to
comply with any of the provisions of
Levine's employment agreement including,
without limitation, failure to make any
material payment required to be made by New
Sassco within five (5) business days after
the date such payment is required to be
made;
(f) any purported termination by New Sassco of
Levine's employment otherwise than as
expressly permitted by, and in compliance
with all conditions and procedures of,
Levine's employment agreement;
(g) New Sassco shall fail to comply with the
provisions of Levine's employment agreement
concerning (i) maintenance of directors and
officers liability insurance and (ii)
assumption of New Sassco's obligations
under Levine's employment agreement by
successors to New Sassco, or
(h) a "change in control" shall have occurred
with respect to New Sassco.
D. Miscellaneous.
i. Levine's affiliate's claims of $1,450,000
against Leslie Fay will be allowed in full as
pre-petition, unsecured claims and will receive
their ratable share of distributions to the
Creditors. Leslie Fay's claims against Levine
will be released in full.
ii. Levine and his affiliates will be reimbursed in
the aggregate amount of $200,000 for their out-
of-pocket expenses in connection with this
transaction and their prior efforts to purchase
Sassco.
B-2<PAGE>
Exhibit C to Plan
Reorganized Leslie Fay Employment Arrangements
A. Salary. The following Reorganized Leslie Fay Senior
Managers will have employment contracts with Reorganized
Leslie Fay that will expire on the first anniversary of
the Effective Date, at the corresponding per annum
salaries and allowances (collectively with the bonuses
described in paragraph 3 below, "Compensation"):
Base Salary Auto Allowance Clothing Allowance
=========== ============== ==================
J. Pomerantz $ 430,000 Company car $ 0
J. Ward 400,000 $1140/month 0
C. Bandel 250,000 900/month 200/month
D. Fellicetti 325,000 900/month 0
W. Wishart 200,000 900/month 0
$1,605,000
B. Termination Pay. If a Reorganized Leslie Fay Senior
Manager is terminated without cause (including Reorganized
Leslie Fay determination (other than for cause) not to
renew the Reorganized Leslie Fay Senior Manager's contract
at the end of its term), the Reorganized Leslie Fay Senior
Manager will receive severance equal to: (a) if the
termination occurs in conjunction with a change of
control, the remaining Compensation under the Reorganized
Leslie Fay Manager's contract plus the greater of (i) one
year's Compensation minus profits, if any, realized on
options, or option stock, in connection with the change of
control and (ii) six months' Compensation and (b) if the
termination does not occur in conjunction with a change of
control, the greater of (i) six months' Compensation and
(ii) the remaining Compensation due under the Reorganized
Leslie Fay Senior Manager's contract.
C. Cash Bonuses.
i. Amount. If Reorganized Leslie Fay EBITDA (before
profit sharing, excluding Castleberry and "Transco"
allocation (as defined in the financial reporting
package periodically presented to the Creditors'
Committee) and including Hue licensing revenue) is
greater than or equal to 85% ("Minimum Percentage")
of Target EBITDA (as defined in Exhibit D),
Reorganized Leslie Fay Senior Managers (including J.
Pomerantz) will earn aggregate annual cash bonuses
("Cash Bonus Pool") equal to the sum of (a) 9.6% of
Reorganized Leslie Fay EBITDA plus (b) 0.2% of
Reorganized Leslie Fay EBITDA for each percentage
point, if any, of Target EBITDA by which Reorganized
Leslie Fay EBITDA exceeds the Minimum Percentage;
provided, however, that the Cash Bonus Pool shall not
exceed 12.5% of Reorganized Leslie Fay EBITDA.
C-1<PAGE>
Exhibit D to Plan
Reorganized Leslie Fay Stock Options
Reorganized Leslie Fay Senior Managers will receive
nontransferable Reorganized Leslie Fay Stock Options as follows
(to be shared among members of senior management as they
agree):
A. Options for 5% of Reorganized Leslie Fay common stock upon
the Effective Date. One third of such options will vest
on each of first three anniversaries of Effective Date;
provided, however, that all options will vest immediately
upon a change of control. Strike price will equal a
$21,000,000 Reorganized Leslie Fay valuation (or $6.18 per
share based on 3,400,000 shares).
B. Options for another 5% of Reorganized Leslie Fay common
stock (at same strike price) if Reorganized Leslie Fay's
1996 Target EBITDA is achieved. One third of such options
will vest on each of first three anniversaries of grant;
provided, however, that all options will vest immediately
upon a change of control.
C. Options for another 7.5% of Reorganized Leslie Fay common
stock (at same strike price) if a "Home Run" is achieved.
All such options vest upon occurrence of "Home Run." "Home
Run" will be defined as a business combination,
underwritten equity offering or other similar corporate
transaction pursuant to which the enterprise value imputed
to Reorganized Leslie Fay is at least:
i. $40 million if the transaction occurs on or
before the first anniversary of the Effective
Date; provided, however, that if the enterprise
value is $37.5 million, "Home Run" options will
be granted for 2.5% of Reorganized Leslie Fay
common stock, with another 0.1% granted for each
additional $50,000 in enterprise value up to $40
million.
ii. $60 million if the transaction occurs on or
before the second anniversary of the Effective
Date; provided, however, that if the enterprise
value is $45 million, "Home Run" options will be
granted for 2.5% of Reorganized Leslie Fay
common stock, with another 0.1% granted for each
additional $300,000 in enterprise value up to
$60 million.
iii. $80 million if the transaction occurs on or
before the third anniversary of the Effective
Date; provided, however, that if the enterprise
value is $60 million, "Home Run" options will be
granted for 2.5% of Reorganized Leslie Fay
common stock, with another 0.1% granted for each
additional $400,000 in enterprise value up to
$80 million, or
iv. $100 million if the transaction occurs after the
third anniversary of the Effective Date;
provided, however, that if the enterprise value
is $75 million, "Home Run" options will be
granted for 2.5% of Reorganized Leslie Fay
common stock, with another 0.1% granted for each
additional $500,000 in enterprise value up to
$100 million.
For purposes of the foregoing thresholds, a
transaction that was begun in the prior year (pursuant to
execution of definitive documentation) but not consummated
until the following year, will be valued as occurring in the
prior year.
D. Target EBITDA. "Target EBITDA" means (i) for 1996, $4.2
million (before profit sharing, excluding Castleberry, and
including Hue licensing revenues), (ii) for 1997, the
projected EBITDA used by Reorganized Leslie Fay to procure
exit financing from the Chapter 11 Cases and (iii) for all
years thereafter, the target EBITDA for Reorganized Leslie
Fay established by the Reorganized Leslie Fay board of
directors.
E. Board of Directors. The initial board of directors will
have seven members, five of whom will be designees of the
Committee and two of whom will be Pomerantz and a designee
of Pomerantz.
D-1<PAGE>
Index No. 93 B 41724 (TLB) Year 19 97
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
======================================================================
In re
THE LESLIE FAY COMPANIES, INC.,
et al.,
Debtors.
======================================================================
FOURTH AMENDED AND RESTATED JOINT PLAN OF
REORGANIZATION FOR DEBTORS PURSUANT TO CHAPTER 11 OF THE UNITED
STATES BANKRUPTCY CODE PROPOSED BY DEBTORS AND CREDITORS' COMMITTEE
=======================================================================
WEIL, GOTSHAL & MANGES LLP
Attorneys for The Leslie Fay Companies, Inc.
767 FIFTH AVENUE
BOROUGH OF MANHATTAN, NEW YORK, N.Y. 10153
(212) 310-8000
========================================================================
To:
Attorney(s) for
========================================================================
Service of a copy of the within is hereby admitted.
Dated:
...............................................
Attorney(s) for
=======================================================================
PLEASE TAKE NOTICE
Check Applicable Box
[ ] that the within is a true copy of a
NOTICE OF entered in the office of the clerk of the within named
ENTRY court on 19
[ ] that an Order of which the within is a true copy will be
NOTICE OF presented for settlement to the Hon.
SETTLEMENT one of the judges of the within named Court,
at
on 19 , at M.
Dated:
WEIL, GOTSHAL & MANGES LLP
Attorneys for
767 FIFTH AVENUE
BOROUGH OF MANHATTAN, NEW YORK, N.Y. 10153
To:
Attorney(s) for
