<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
Goss Holdings, Inc.
(Name of Applicant)
700 Oakmont Lane, Westmont, IL 60559
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
12.25% Subordinated Notes due 2005 $112,500,000
Approximate date of issuance: November 12, 1999
Name and address of agent for service: Jack E. Merryman
Senior Vice President/
General Counsel
700 Oakmont Lane
Westmont, IL 60559
(630) 850-5600
With a copy to:
Michael H. Kerr, P.C.
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
The applicant hereby amends this application for qualification
on such date or dates as may be necessary to delay its effectiveness until (i)
the 20th day after the filing of a further amendment which specifically states
that it shall supersede this amendment, or (ii) such date as the Commission,
acting pursuant to Section 307(c) of the Trust Indenture Act of 1939, as amended
(the "Act"), may determine upon the written request of the applicant.
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GENERAL
1. General information. Furnish the following as to the
Applicant:
(a) Form of organization:
The applicant, Goss Holdings, Inc. (the
"Company" or the "Applicant") is a
corporation.
(b) State or other sovereign power under the
laws of which organized: The Company is
organized under the laws of the State of
Delaware.
2. Securities Act exemption applicable. State briefly
the facts relied upon by the Applicant as a basis for the claim that
registration of the indenture securities under the Securities Act of 1933 is
not required.
The Company proposes to issue, as part of the Second
Amended Plan of Reorganization of Goss Graphic Systems, Inc. ("Goss"), GGS
Holdings, Inc. ("Old Holdings") and Goss Realty, LLC (collectively the
"Debtors") dated September 7, 1999 (as same may be further modified, the
"Plan of Reorganization"), its 12.25% Senior Subordinated Notes due 2005 (the
"Subordinated Notes"). Pursuant to the Plan of Reorganization (a) Old
Holdings will merge into the Company, and the Company will become the
successor to Old Holdings; and (b) the holders of the 12% Senior Subordinated
Notes due 2006 issued by Goss under the Indenture, dated as of October 15,
1996, between Goss and HSBC Bank USA, as successor trustee ("Old Notes") will
be issued the Subordinated Notes and an aggregate of 3,136,250 shares of
Class B Common Stock of the Company in exchange for their Old Notes. On
September 9, 1999, the Debtors filed with the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court") (Case No. 99-2756) a
Second Amended Disclosure Statement (the "Disclosure Statement") that was
distributed to holders of claims against or interests in the Debtors for the
purpose of soliciting their votes for the acceptance or rejection of the Plan
of Reorganization. At hearings held on October 19, 1999 (in relation to Goss
and Old Holdings) and November 2, 1999 (in relation to Goss Realty, LLC), the
Bankruptcy Court approved the Plan of Reorganization. A copy of the
Disclosure Statement, with the Plan of Reorganization annexed thereto as an
exhibit, is attached hereto as Exhibit 4. The Subordinated Notes are to be
issued under an indenture (the "Subordinated Note Indenture") between the
Company and HSBC Bank USA, as trustee, a form of which is attached hereto as
Exhibit 3.
The Company believes that the issuance of the Subordinated
Notes is exempt from the registration requirements of the Securities Act of
1933 (the "Securities Act") pursuant to Section 1145 (a) (1) of the United
States Bankruptcy Code (the "Bankruptcy Code"). Generally, Section 1145(a)
(1) of the Bankruptcy Code exempts the issuance of securities from the
registration requirements of the Securities Act and equivalent state
securities and "blue sky" laws if the following conditions are satisfied: (i)
the securities are issued by a debtor, an affiliate participating in a joint
plan of reorganization with the debtor, or a successor of the debtor under a
plan of reorganization, (ii) the recipients of the securities hold a claim
against, an interest in, or a
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claim for an administrative expense against, the debtor, and (iii) the
securities are issued entirely in exchange for the recipient's claim against
or interest in the debtor, or are issued "principally" in such exchange and
"partly" for cash or property. The Company believes that the issuance of
securities contemplated by the Plan of Reorganization will satisfy the
aforementioned requirements.
AFFILIATIONS
3. Affiliates. Furnish a list or diagram of all affiliates
of the Applicant and indicate the respective percentages of voting securities
or other bases of control.
The Applicant was incorporated on November 3, 1999. The
Applicant will not issue any shares of capital stock until the Plan of
Reorganization becomes effective.
Upon the Plan of Reorganization becoming effective (the "Effective
Date") the relationships among the Applicant and all of its affiliates will
be as follows:
The voting securities of the Applicant will be held as to 65.14% by
Stonington Partners, Inc. (Delaware) and as to 3.5% by Rockwell International
Corporation (Delaware). The balance of the voting securities of the
Applicant, 31.26%, will comprise the Class B Common Stock of the Applicant
and will be held by the holders of the Old Notes (as to affiliates in this
respect, see 5 below).
The Applicant will hold 100% of the voting securities of Goss
Graphic Systems, Inc. (Delaware).
Goss Graphic Systems, Inc. (Delaware) will hold 100% of the voting
securities of each of :
(a) Goss Graphic Systems Australasia Pty. Ltd (Australia);
(b) Goss Graphic Systems Japan Corporation (Japan);
(c) Goss Systems Graphiques Nantes S. A. (France);
(d) Goss Graphic Systems Ltd (UK); and
(e) Goss Realty LLC (Delaware).
Goss Graphic Systems, Inc. (Delaware) will hold 60% of the voting
securities in a joint venture company, Shanghai Goss Graphic Systems Co.,
Ltd. (China).
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MANAGEMENT AND CONTROL
4. Directors and executive officers. List the names mailing
addresses of all directors and executive officers of the Applicant and all
persons chosen to become directors or executive officers. Indicate all
offices with the Applicant held or to be held by each person named.
The address for each director and executive officer listed
below is 700 Oakmont Lane, Westmont, Illinois 60559.
As of November 5, 1999 the directors and executive officers
of the Applicant are, and will remain until the Effective Date:
NAME OFFICE
James P. Sheehan*..................Chairman of the Board, President & CEO
Joseph P. Gaynor, III*.............Executive Vice President of Finance
& Administration & Chief Financial Officer
Alex G. Brnilovich, Jr **...........Executive Vice President, Americas
Richard J. Sutis **.................Executive Vice President, Asia Pacific & CTO
Randall Thomas **...................Executive Vice President, Europe
Jack E. Merryman **.................Vice President & Secretary
MaryAnn Spiegel **..................Assistant Secretary
The following additional directors and executive officers
of the Applicant will be appointed upon the Plan of Reorganization becoming
effective on the Effective Date:
NAME OFFICE
Thomas R. Cochill *................Director
Lester A. Kraft *..................Director
J. Joe Adorjan *...................Director
Robert F. End *....................Director
James J. Kerley *..................Director
Sam S. McKeel *....................Director
Alexis P. Michas * ................Director
* DIRECTORS
** EXECUTIVE OFFICER ONLY
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5. Principal owners of Voting Securities. Furnish the
following information as to each person owning 10 percent or more of the
voting securities of the Applicant.
As of November 3, 1999, the Applicant had not issued any
shares of capital stock. It will not do so until the Plan of Reorganization
becomes effective. On the Effective Date, the following persons will own 10%
or more of the voting securities of the Applicant:
<TABLE>
<CAPTION>
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NAME AND COMPLETE TITLE OF AMOUNT PERCENTAGE OF VOTING
MAILING ADDRESS CLASS OWNED OWNED SECURITIES OWNED
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<S> <C> <C> <C>
Stonington Partners, Inc. Class A Common 6,513,750 65.14%
767 Fifth Avenue
48th Floor
New York, New York
10153
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Credit Suisse First Boston Class B Common 1,385,275 13.85%
11 Madison Avenue
New York, New York
10010 *
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</TABLE>
* THE CALCULATION OF WHICH HOLDERS OF CLASS B COMMON STOCK WILL HOLD IN
EXCESS OF 10% OF THE VOTING SECURITIES OF THE APPLICANT UPON THE PLAN OF
REORGANIZATION BECOMING EFFECTIVE HAS BEEN BASED ON THE MOST UP TO DATE
INFORMATION CURRENTLY AVAILABLE TO THE COMPANY. APPLYING THE DETAILS,
EXISTENT AS OF NOVEMBER 4, 1999, OF THE HOLDERS OF OLD NOTES, TO THE
CONVERSION FORMULA SET FORTH IN THE PLAN OF REORGANIZATION, UPON THE PLAN OF
REORGANIZATION BECOMING EFFECTIVE ONLY CREDIT SUISSE FIRST BOSTON (AS ABOVE)
WILL HOLD IN EXCESS OF 10% OF THE APPLICANT'S VOTING SECURITIES.
UNDERWRITERS
6. Underwriters. Give the name and complete mailing
address of (a) each person who, within three years prior to the date of
filing the application, acted as an underwriter of any securities of the
obligor which were outstanding on the date of filing the application, and (b)
each proposed principal underwriter of the securities proposed to be offered.
As to each person specified in (a), give the title of each class of
securities underwritten.
(a) None.
(b) None.
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CAPITAL SECURITIES
7. Capitalization. (a) Furnish the following information
as to each authorized class of securities of the Applicant.
As of November 3, 1999, the Applicant's authorized and
outstanding securities were as follows:
<TABLE>
<CAPTION>
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AMOUNT AMOUNT
TITLE OF CLASS AUTHORIZED OUTSTANDING
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<S> <C> <C>
Class A Common Stock, par 11,863,750 0
value $0.01 per share
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Class B Common Stock, par 3,136,250 0
value $0.01 per share
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</TABLE>
On the Effective Date of the Plan of Reorganization, the
Applicant's authorized and outstanding securities will be as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
AMOUNT AMOUNT
TITLE OF CLASS AUTHORIZED OUTSTANDING
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock, par 11,863,750 6,863,750
value $0.01 per share
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Class B Common Stock, par 3,136,250 3,136,250
value $0.01 per share
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Subordinated Notes due 2005 $112,500,000 $112,500,000
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</TABLE>
(b) Give a brief outline of the voting rights of each class
of voting securities referred to in paragraph (a) above.
Except as set forth below and except as otherwise required
by law, the holders of the Class A Common Stock and Class B Common Stock vote
together as a single class with respect to all matters submitted to the
stockholders vote. Each share of Class A Common Stock and each share of Class
B Common Stock entitles the holder thereof to exercise one vote. The number of
directors which shall initially constitute the Applicant's board of directors
shall be nine (9). Seven (7) directors shall be elected by a plurality of the
votes of the shares of Class A Common Stock present in person or represented
by proxy at the meeting and entitled to vote in the election of directors.
Two (2) directors shall be elected by a plurality of the votes of the shares
of Class B Common Stock
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present in person or represented by proxy at the meeting and entitled to vote
in the election of directors.
Holders of the Old Notes and the Subordinated Notes do not
have any voting rights by reason of ownership of those securities.
INDENTURE SECURITIES
8. Analysis of indenture provisions. Insert at this point
the analysis of indenture provisions required under section 305(a) (2) of the
Act.(1)
(A) EVENTS OF DEFAULT AND NOTICE OF DEFAULT.
Each of the following shall constitute an "EVENT OF
DEFAULT" under the Subordinated Note Indenture:
(i) the Company defaults in any payment of
interest on any Note when the same becomes due and payable,
whether or not such payment shall be prohibited by Article
XI of the Subordinated Note Indenture, and such default
continues for a period of 30 days;
(ii) the Company defaults in the payment of the
principal of any Note when the same becomes due and payable at
its Stated Maturity, upon optional redemption, upon
declaration, upon required repurchase or otherwise, whether or
not such payment shall be prohibited by Article XI of the
Subordinated Note Indenture;
(iii) the Company fails to comply with Article VI
of the Subordinated Note Indenture ("Defaults and Remedies");
(iv) the Company fails to comply for 30 days after
the notice with any of its obligations contained in Article IV
of the Subordinated Note Indenture ("Change of Control and
Enterprise Valuation Event") (other than a failure to purchase
Notes), Section 5.03, Section 5.04, Section 5.05, Section
5.06, Section 5.07, Section 5.08 (other than a failure to
purchase Notes), or Section 5.09;
(v) the Company fails to comply with any of its
agreements the Subordinated Note Indenture (other than those
referred to in clause (i), clause (ii), clause (iii) or clause
(iv) of Section 7.01 thereof) and such failure continues for
60 days after the notice specified in Section 7.01;
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(1) All capitalized terms used in this Item 8 shall have the same
meaning, unless otherwise defined, as that provided in the Subordinated Note
Indenture.
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(vi) a default under the Credit Agreement or
under any other mortgage, indenture or instrument under
which there may be issued or by which there may be secured
or evidenced any Debt for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is
Guaranteed by the Company or any of its Subsidiaries)
whether such Debt or Guarantee now exists, or is created
after the date of the Subordinated Note Indenture, which
default (1) is caused by failure to pay principal of or
premium, if any, or interest on such Debt within any
applicable grace period after final maturity ("FINAL
PAYMENT DEFAULT"), or (2) results in the acceleration of
such Debt prior to its final stated maturity and, in each
case, the principal amount of any such Debt, together with
the principal amount of any other such Debt under which
there has been a Final Payment Default or the maturity of
which has been so accelerated, aggregates $10 million or
more and such default or acceleration continues for 30 days
after the notice specified in Section 7.01;
(vii) the Company or any Significant Subsidiary
of the Company pursuant to or within the meaning of
Bankruptcy Law: (1) commences a voluntary case, (2)
consents to the entry of an order for relief against it in
an involuntary case, (3) consents to the appointment of a
Custodian of it or for all or substantially all of its
property; or (4) makes a general assignment for the benefit
of its creditors;
(viii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (1) is for
relief against the Company or any Significant Subsidiary of
the Company in an involuntary case, (2), appoints a
Custodian of the Company or any Significant Subsidiary of
the Company or for all or substantially all of the property
of the Company or any Significant Subsidiary of the
Company, or (3) orders the liquidation of the Company or
any Significant Subsidiary of the Company, and any such
order or decree remains unstayed and in effect for 60
consecutive days; and
(ix) any final non-appealable judgment or decree
for the payment of money in excess of $10 million is
rendered against the Company or a Significant Subsidiary,
remains outstanding for a period of 60 days following such
judgment and is not discharged, waived or stayed within 10
days after notice; PROVIDED, that, the amount of such money
judgment or decree shall be calculated net of any insurance
coverage that the Company has determined in good faith is
available in whole or in part with respect to such money,
judgment or decree.
A Default under clauses (iv), (v), (vi) or (ix) will not
constitute an Event of Default until the Trustee or the Holders of at least
25% in principal amount of the outstanding Notes notify the Company of the
Default and the Company does not cure such Default within the time specified
after receipt of such notice.
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The foregoing will constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, an Officers' Certificate of any Event of
Default pursuant to clause (iii), clause (vii) or clause (viii) and any event
which with the giving of notice or the lapse of time would become an Event of
Default pursuant to clauses (iv), (v), (vi) or (ix), its status and what
action the Company is taking or proposes to take in respect thereof.
If an Event of Default (other than an Event of Default
specified in clause (vii) or clause (viii) of Section 7.01) occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes, may declare the principal of and
accrued but unpaid interest on all the Notes to be due and payable
(collectively, the "DEFAULT AMOUNT") by notice in writing to the Company, the
administrative agent under the Credit Agreement (if any Debt is then
outstanding under the Credit Facility) and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration";
PROVIDED, HOWEVER, that the failure to so notify the administrative agent
under the Credit Facility shall not affect the validity of such acceleration.
Upon such a declaration, the Default Amount shall be due and payable
immediately, subject to Article IX and XI of this Indenture. Notwithstanding
the foregoing, in case of an Event of Default specified in clause (vii) or
clause (viii) of Section 7.01, all outstanding Notes shall IPSO FACTO become
and be immediately due and payable without any declaration or other act on
the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all
of the Holders rescind an acceleration and its consequences (i) if the
rescission would not conflict with any judgment or decree (ii) all existing
Events of Default (except nonpayment of principal, interest or premium that
has become due solely because of the acceleration) have been cured or waived
and (iii) the Company has paid the Trustee all amounts due pursuant to
Section 8.07.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the performance of
any provision of the Notes and the Subordinated Note Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any such Notes in the
proceeding. A delay or omission by the Trustee or any Holder of a Note in
exercising any right or remedy accruing upon any Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in such
Event of Default. No remedy shall be exclusive of any other remedy. All
remedies shall be cumulative to the extent permitted by law.
(B) AUTHENTICATION AND DELIVERY OF THE SUBORDINATED NOTE INDENTURE AND
THE APPLICATION OF THE PROCEEDS THEREOF.
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Two Officers of the Company shall sign the Notes for the
Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Notes. If an Officer whose signature is on a Note no longer
holds that office at the time such Note is authenticated, such Note shall be
valid nevertheless. A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that a Note has been authenticated in accordance with the
terms of this Indenture. The Trustee, upon a written order of the Company
signed by two Officers of the Company, shall authenticate the Notes for
original issue up to an aggregate principal amount stated in paragraph 4 of
the Notes.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate the Notes. Unless limited by the terms of such
appointment, any such authenticating agent may authenticate the Notes
whenever the Trustee may do so. Each reference in the Subordinated Note
Indenture to authentication by the Trustee includes authentication by such
authenticating agent of the Trustee. An authenticating agent has the same
rights as an Agent to deal with the Company or an Affiliate of the Company.
The Trustee shall have the right to decline to authenticate and deliver any
Notes under Section 2.02 if the Trustee, being advised by counsel, determines
that such action may not lawfully be taken or if the Trustee in good faith
shall determine that such action would expose the Trustee to personal
liability to existing Holders for which the Trustee is not indemnified.
The Notes shall be issuable only in denominations of $1,000 and
integral multiples thereof.
There will be no proceeds (and therefore no application of such
proceeds) from the issuance of the Notes because the Notes will be issued, as
part of an exchange, as provided in the Plan of Reorganization.
(C) RELEASE OF PROPERTY SUBJECT TO THE LIEN OF THE SUBORDINATED NOTE
INDENTURE
The Notes are unsecured senior subordinated obligations of the
Company limited to $112,500,000 aggregate principal amount (except as
otherwise provided in Section 1 relating to the Company's option to make
certain interest payments on the Notes in the form of additional Notes). The
Subordinated Note Indenture imposes certain limitations on the incurrence of
additional indebtedness by the Company and certain of its subsidiaries, the
payment of dividends on, and the redemption of, capital stock of the Company
and certain of its Subsidiaries, the making of Investments, restrictions on
distributions from certain Subsidiaries, the use of proceeds from the sale of
assets and Subsidiary stock and transactions with affiliates. The Indenture
also restricts the ability of the Company to consolidate or merge with or
into, or to transfer all or substantially all its assets to, another person.
(D) SATISFACTION AND DISCHARGE OF THE SUBORDINATED NOTE INDENTURE
When (i) the Company delivers to the Trustee all outstanding
Notes (other than Notes replaced pursuant to Section 2.07) for cancellation
or (ii) all outstanding Notes have become due and
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payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article III of the Subordinated Note Indenture and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes including interest thereon
to maturity or such redemption date (other than Notes replaced pursuant to
Section 2.07), and if in either case the Company pays all other sums payable
hereunder by the Company, then the Subordinated Note Indenture shall, subject
to Section 9.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and
at the cost and expense of the Company.
Subject to Section 9.01(c) and Section 9.02, the Company at
any time may terminate (i) all of the Company obligations under the Notes and
the Subordinated Note Indenture ("LEGAL DEFEASANCE"), except for certain
obligations, including those respecting the defeasance trust and obligations
to register the transfer or exchange of the Notes, to replace mutilated,
destroyed, lost or stolen Notes and to maintain a registrar and paying agent
in respect of the Notes; or (ii) its obligations under Article IV, Section
5.03, Section 5.04, Section 5.05, Section 5.06, Section 5.07, Section 5.08,
Section 5.09, Section 5.10, Section 6.01(iii), Section 6.01(iv) and the
operation of Section 7.01(iv), Section 7.01(vi), Section 7.01(vii) (with
respect only to Significant Subsidiaries), Section 7.01(viii) (with respect
only to Significant Subsidiaries) and Section 7.01(ix) ("COVENANT
DEFEASANCE"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event of Default
with respect thereto. If the Company exercises its covenant defeasance
option, payment of the Notes may not be accelerated because of an Event of
Default specified in Section 7.01 (iv), Section 7.01(vi), Section 7.01(vii)
(with respect only to Significant Subsidiaries), Section 7.01(viii) (with
respect only to Significant Subsidiaries) or Section 7.01(ix), or because of
the failure of the Company to comply with Article IV or Section 6.01(iii) or
Section 6.01(iv).
Upon satisfaction of the conditions set forth in the
Subordinated Note Indenture and at the request of the Company, the Trustee
shall acknowledge in writing the discharge of those obligations of the
Company terminated thereby.
Notwithstanding clause (a) and clause (b) above, the
Company's obligations contained in Section 2.03, Section 2.04, Section 2.05,
Section 2.06, Section 2.07, Section 8.07, Section 8.08 and Article IX shall
survive until the Notes have been paid in full. Thereafter, the Company's
obligations contained in Section 8.07, Section 9.04 and Section 9.05 shall
survive.
Conditions to Defeasance.
The Company may exercise its legal defeasance option or its
covenant defeasance option only if:
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(i) the Company irrevocably deposits in trust (the
"defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal,
premium (if any) and interest on the Notes to maturity or
redemption, as the case may be;
(ii) such defeasance does not result in a breach
or violation of, or constitute a default under, the
Subordinated Note Indenture, the Credit Agreement or any
other material agreement or instrument to which the Company
is a party or by which it is bound;
(iii) the Company delivers to the Trustee a
certificate from a nationally recognized firm of
independent accountants expressing their opinion that the
payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide
cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all
the Notes to maturity or redemption, as the case may be;
(iv) 123 days pass after the deposit is made and
during the 123-day period no Default specified in Section
7.01(vii) or Section 7.01(viii) in either case with respect
to the Company occurs which is continuing at the end of the
period;
(v) the deposit does not result in a breach or
violation of, or constitute a default under, this Indenture
(including, without limitation, Article XI), the Credit
Agreement or any other material agreement or instrument to
which the Company is a party or by which the Company is
bound;
(vi) the Company delivers to the Trustee an
Opinion of Counsel to the effect that the trust resulting
from the deposit does not constitute, or is qualified as, a
regulated investment company under the U.S. Investment
Company Act of 1940, as amended;
(vii) in the case of the legal defeasance
option, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that (1)
the Company has received from or there has been published
by, the Internal Revenue Service a ruling, or (2) since the
date of the Subordinated Note Indenture there has been a
change in the applicable U.S. Federal income tax law, in
either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders will not
recognize income, gain or loss for U.S. Federal income tax
purposes as a result of such defeasance and will be subject
to U.S. Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if
such deposit and defeasance had not occurred;
(viii) in the case of the covenant defeasance
option, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect that
the Holders will not recognize income, gain or loss for
U.S. Federal income tax
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purposes as a result of such covenant defeasance and will
be subject to U.S. Federal income tax on the same amounts,
in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(ix) the Company delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance and
discharge of the Notes as contemplated by Article IX have
been complied with.
(E) EVIDENCE AS TO COMPLIANCE WITH CONDITIONS AND COVENANTS.
The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under 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, and further
stating, as to each such Officer signing such Officers' Certificate, that to
the best of his or her knowledge the Company has kept, observed, performed
and fulfilled each covenant contained in the Subordinated Note Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions of the Subordinated Note Indenture (or, if a
Default or Event of Default shall have occurred, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action
each is taking or proposes to take with respect thereto). The Company shall
also comply with TIA Section 314(a)(4).
9. Other Obligors. Give the name and complete mailing
address of any person, other than the Applicant, who is an obligor upon the
indenture securities.
None.
10. Contents of application for qualification. This
application for qualification comprises:
(a) Pages numbered 1 to 15, consecutively.
(b) The statement of eligibility and qualification of
each trustee under the indenture or to be qualified.
(c) The following exhibits in addition to those filed as
a part of the statement of eligibility and
qualification of the trustee.
Exhibit 1 Certificate of Incorporation of the Company.
Exhibit 2 By-Laws of the Company.
Exhibit 3 Form of the Subordinated Note Indenture
between the Company and HSBC Bank USA, as
trustee.
Exhibit T3D Not applicable.
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Exhibit T3E Not applicable.
Exhibit T3F A cross reference sheet showing the location in
the Subordinated Note Indenture of the provisions
inserted therein pursuant to Sections 310 through
318(a), inclusive, of the Trust Indenture Act of
1939, included in Exhibit 3.
Exhibit 4 Disclosure Statement with annexed Plan of
Reorganization.
Exhibit 5 Statement of Eligibility on Form T-l.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Applicant, Goss Holdings, Inc., a corporation organized and existing
under the laws of Delaware, has duly caused this application to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Westmont, and State of
Illinois, on the 4th day of November, 1999.
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<PAGE>
GOSS HOLDINGS, INC.
By /s/ Joseph P. Gaynor, III
-----------------------------
Executive Vice President of
Finance & Administration &
Chief Financial Officer
Attest /s/ Mary Ann Spiegel
--------------------
Mary Ann Spiegel
Assistant Secretary
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
GOSS HOLDINGS, INC.
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
Goss Holdings, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may organized and incorporated under the General
Corporation Law of the State of Delaware.
ARTICLE IV
SECTION I. AUTHORIZED SHARES
The total number of shares of capital stock which the Corporation has
authority to issue is 15,000,000 shares, consisting of:
(1) 11,863,750 shares of Class A Common Stock, par value $0.01 per share
("Class A Common"); and
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(2) 3,136,250 shares of Class B Common Stock, par value $0.01 per share
("Class B Common").
The Class A Common and Class B Common are referred to collectively as
the "Common Stock." The shares of Common Stock shall have the rights,
preferences and limitations set forth below.
SECTION II. COMMON STOCK AND DIRECTORS
Except as otherwise provided in this Part B or as otherwise required
by applicable law, all shares of Class A Common and Class B Common shall be
identical in all respects and shall entitle the holders thereof to the same
rights, preferences and privileges, subject to the same qualifications,
limitations and restrictions, as set forth herein.
Part A. VOTING RIGHTS. Except as otherwise provided in Part B or as
otherwise required by applicable law, all holders of Class A Common and Class B
Common shall be entitled to one vote per share on all matters to be voted on by
the Corporation's stockholders, and the holders of Class A Common and Class B
Common shall vote together as a single class.
Part B. NUMBER AND ELECTION OF DIRECTORS.
(a) The number of directors which shall initially constitute the
Corporation's board of directors shall be nine (9). Seven (7)
directors (the "Class A Directors") shall be elected by a plurality of
the votes of the shares of Class A Common present in person or
represented by proxy at the meeting and entitled to vote in the
election of directors. Two (2) directors (the "Class B Directors"
and, together with the Class A Directors, the "Directors") shall be
elected by a plurality of the votes of the shares of Class B Common
present in person or represented by proxy at the meeting and entitled
to vote in the election of directors. All Directors shall have one
vote on all matters to be voted on by the Corporation's
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board of directors.
(b) Directors shall be elected at an annual meeting of
stockholders, and each Director shall hold office until a successor is
duly elected and qualified, or until his or her earlier death,
resignation or removal.
(c) Any Class A Director may be removed at any time, with or
without cause, by the holders of a majority of the Class A Common.
Any Class B Director may be removed at any time, with or without
cause, by the holders of a majority of the Class B Common. Any
Director may resign at any time upon written notice to the
Corporation.
(d) Vacancies in Class A Directorships shall be filled by a
majority of the Class A Directors then in office, though less than a
quorum, or by plurality of the votes of the holders of Class A Common
if no Class A Directors are then in office. Vacancies in Class B
Directorships shall be filled by a majority of the Class B Directors
then in office, though less than a quorum, or by plurality of the
votes of the holders of Class B Common if no Class B Directors are
then in office.
(e) A majority of the total number of Directors shall
constitute a quorum for the transaction of business. The vote of a
majority of Directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to
time, without notice other than adjournment at the meeting, until a
quorum shall be present.
Part C. STOCK SPLITS AND STOCK DIVIDENDS. The Corporation shall not in
any manner subdivide (by stock split, stock dividend or otherwise) or combine
(by stock split, stock dividend
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or otherwise) the outstanding Common Stock of one class unless the outstanding
Common Stock of all the other classes shall be proportionately subdivided or
combined. All such subdivisions and combinations shall be payable only in Class
A Common to the holders of Class A Common and in Class B Common to the holders
of Class B Common.
Part D. OPTIONAL CONVERSION INTO SHARES OF CLASS A COMMON. Any holder of
Class B Common shall have the right at any time to convert any share of Class B
Common into one share of Class A Common, by presenting the necessary
certificates to the Corporation for transfer.
Part E. AMENDMENT AND WAIVER. No amendment or waiver of any provision of
this Article IV shall be effective without the prior written consent of the
holders of at least a majority of the then outstanding shares of Class A Common
voting as a single class and the holders of at least a majority of the then
outstanding shares of Class B Common voting as a single class.
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ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time and from time to time
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omission snot in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction
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from which the director derived an improper personal benefit.
Section 2. INDEMNIFICATION AND INSURANCE.
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines amounts paid or to be paid in settlement, and
excise taxes or penalties arising under the Employee Retirement Income Security
Act of 1974) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part
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<PAGE>
thereof) was authorized by the Board. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of this final disposition; PROVIDED. HOWEVER, that, if the General
Corporation Law of the State of Delaware requires, the payment of such expenses
incurred by a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide indemnification
to employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant ha snot met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount claims,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board, independent legal counsel, or
its stockholders) to have made a
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determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation (including its
Board, independent legal counsel, or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of
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Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts stated herein are true, and accordingly have
hereunto set my hand on the 3rd day of November, 1999.
-------------------------------------
Thaddine G. Gomez
Sole Incorporator
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BY-LAWS
OF
GOSS HOLDINGS, INC.
A Delaware corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be located at The Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware, County of New Castle. The name of the
corporation's registered agent at such address shall be The Corporation Trust
Company. The registered office and/or registered agent of the corporation may
be changed from time to time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
SECTION 3. PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
<PAGE>
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 6. QUORUM. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the
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majority of shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of
an applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or
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consents delivered by certified or registered mail shall be deemed delivered
until such consent or consents are actually received at the registered
office. All consents properly delivered in accordance with this section
shall be deemed to be recorded when so delivered. No written consent shall
be effective to take the corporate action referred to therein unless, within
sixty (60) days of the earliest dated consent delivered to the corporation as
required by this section, written consents signed by the holders of a
sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing. Any action taken pursuant to such written consent
or consents of the stockholders shall have the same force and effect as if
taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of directors
which shall constitute the first board shall be __________________ (____).
Thereafter, the number of directors shall be established from time to time by
resolution of the board. The directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote in the election of directors. The directors shall be elected
in this manner at the annual meeting of the stockholders, except as provided in
Section 4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
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resignation or removal as herein provided.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least twenty-four (24) hours notice to each
director, either personally, by telephone, by mail, or by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
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SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected by
the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be
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filled or new offices created and filled at any meeting of the board of
directors. Each officer shall hold office until a successor is duly elected
and qualified or until his or her earlier death, resignation or removal as
hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving
such compensation by virtue of his or her also being a director of the
corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent
of the corporation. The president shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties
and have such other powers as the board of directors, the president or these
by-laws may, from time to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time,
-7-
<PAGE>
prescribe; and shall have custody of the corporate seal of the corporation.
The secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary.
The board of directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing by his
signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors, the president, or secretary
may, from time to time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and the board of directors,
at its regular meeting or when the board of directors so requires, an account
of the corporation; shall have such powers and perform such duties as the
board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the treasurer shall give
the corporation a bond (which shall be rendered every six (6) years) in such
sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of
treasurer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the possession or
under the control of the treasurer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's
absence or disability, the board of directors may by resolution delegate the
powers and duties of such officer to any other officer or to any director, or
to any other person whom it may select.
-8-
<PAGE>
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless by the corporation to the fullest extent which it is
empowered to do so unless prohibited from doing so by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification rights
than said law permitted the corporation to provide prior to such amendment)
against all expense, liability and loss (including attorneys' fees actually
and reasonably incurred by such person in connection with such proceeding)
and such indemnification shall inure to the benefit of his heirs, executors
and administrators; provided, however, that, except as provided in Section 2
hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only
if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall
be a contract right and, subject to Sections 2 and 5 hereof, shall include
the right to be paid by the corporation the expenses incurred in defending
any such proceeding in advance of its final disposition. The corporation may,
by action of its board of directors, provide indemnification to employees and
agents of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the corporation under Section
1 of this Article V or advance of expenses under Section 5 of this Article V
shall be made promptly, and in any event within thirty (30) days, upon the
written request of the director or officer. If a determination by the
corporation that the director or officer is entitled to indemnification
pursuant to this Article V is required, and the corporation fails to respond
within sixty (60) days to a written request for indemnity, the corporation
shall be deemed to have approved the request. If the corporation denies a
written request for indemnification or advancing of expenses, in whole or in
part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in
whole or in part, in any such action shall also be indemnified by the
corporation. It shall be a defense to any such action
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<PAGE>
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required undertaking, if any, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination
by the corporation (including its board of directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have
the power to indemnify such person against such liability under this Article
V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless
otherwise determined by the board of directors in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or
agents of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent
authorized at any time or from time to time by the board of directors.
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<PAGE>
SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of
Delaware or other applicable law are in effect, and any repeal or
modification of this Article V or any such law shall not affect any rights or
obligations then existing with respect to any state of facts or proceeding
then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or
was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under this Article V with respect to the resulting or surviving corporation
as he or she would have with respect to such constituent corporation if its
separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by the president or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares of a specific
class or series owned by such holder in the corporation. If such a
certificate is countersigned (1) by a transfer agent or an assistant transfer
agent other than the corporation or its employee or (2) by a registrar, other
than the corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall
cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or
officers of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the
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<PAGE>
holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied
by all necessary stock transfer stamps. In that event, it shall be the duty
of the corporation to issue a new certificate to the person entitled thereto,
cancel the old certificate or certificates, and record the transaction on its
books. The board of directors may appoint a bank or trust company organized
under the laws of the United States or any state thereof to act as its
transfer agent or registrar, or both in connection with the transfer of any
class or series of securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board
of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order
that the corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which record date shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting. If no record date
is fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be the close of business on the next day preceding the day on which
notice is given, or if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the
adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In
order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the board of directors may
fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors,
and which date shall not be more than ten (10) days after the date upon which
the resolution fixing the record date is adopted by the board of directors.
If no record date has been
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<PAGE>
fixed by the board of directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the board of directors is required by statute, shall be the
first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business,
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed
by the board of directors and prior action by the board of directors is
required by statute, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty (60) days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board
of directors adopts the resolution relating thereto.
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the
corporation may treat the registered owner as the person entitled to receive
dividends, to vote, to receive notifications, and otherwise to exercise all
the rights and powers of an owner. The corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined
by the board of directors. Any call made by the board of directors for
payment on subscriptions shall be uniform as to all shares of the same class
or as to all shares of the same series. In case of default in the payment of
any installment or call when such payment is due, the corporation may proceed
to collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
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<PAGE>
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation,
if any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or any other
purpose and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and
other evidences of indebtedness issued in the name of the corporation shall
be signed by such officer or officers, agent or agents of the corporation,
and in such manner, as shall be determined by resolution of the board of
directors or a duly authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected
to benefit the corporation. The loan, guaranty or other assistance may be
with or without interest, and may be unsecured, or secured in such manner as
the board of directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in this section contained
shall be deemed to deny, limit or restrict the powers of guaranty or warranty
of the corporation at common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have
inscribed thereon the name of the corporation and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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<PAGE>
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to
vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized
to vote securities shall have the power to appoint proxies, with general
power of substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under
oath stating the purpose thereof, have the right during the usual hours for
business to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies
or extracts therefrom. A proper purpose shall mean any purpose reasonably
related to such person's interest as a stockholder. In every instance where
an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney
or such other writing which authorizes the attorney or other agent to so act
on behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in the State of Delaware or at its
principal place of business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall
not be given any effect to the extent of such inconsistency but shall
otherwise be given full force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
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- -------------------------------------------------------------------------------
GOSS HOLDINGS, INC.
$112,500,000
12 1/4% SENIOR SUBORDINATED NOTES DUE 2005
-------------------
INDENTURE
DATED AS OF , 1999
-------------------
HSBC BANK USA
TRUSTEE
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION
INDENTURE SECTION
<S> <C>
310 (a)(1) 8.10
(a)(2) 8.10
(a)(3) N/A
(a)(4) N/A
(a)(5) 8.10
(b) 8.10
(c) N/A
311 (a) 8.11
(b) 8.11
(c) N/A
312 (a) 2.05
(b) 12.03
(c) 12.03
313 (a) 11.02
(b)(i) 11.02
(b)(2) 8.06
(c) 8.06; 11.02
(d) 8.06
314 (a) 8.03; 11.02
(b) 11.03
(c)(1) 12.04
(c)(2) 12.04
(c)(3) N/A
(d) 11.02; 11.03
(e) 12.05
(f) N/A
315 (a) 8.01
(b) 8.05; 12.02
(c) 8.01
(d) 8.01
(e) 7.11
316 (a)(1)(A) 7.05
(a)(1)(B) 7.04
(a)(2) N/A
i
<PAGE>
(b) 7.07
317 (a)(1) 7.08
(a)(2) 7.09
(b) 2.04
318 (a) 12.01
(b) N/A
(c) 12.01
</TABLE>
NOTE: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
RECITALS OF THE COMPANY
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 OTHER DEFINITIONS. . . . . . . . . . . . . . . . . . . 15
Section 1.03 Incorporation by Reference of Trust Indenture Act. . . 15
Section 1.04 RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . 16
ARTICLE II
THE NOTES
Section 2.01 FORM AND DATING. . . . . . . . . . . . . . . . . . . . 16
Section 2.02 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . 16
Section 2.03 REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . 17
Section 2.04 PAYING AGENT TO HOLD MONEY IN TRUST. . . . . . . . . . 17
Section 2.05 LISTS OF HOLDERS . . . . . . . . . . . . . . . . . . . 18
Section 2.06 TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . 18
Section 2.07 REPLACEMENT NOTES. . . . . . . . . . . . . . . . . . . 18
Section 2.08 OUTSTANDING NOTES. . . . . . . . . . . . . . . . . . . 19
Section 2.09 TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . 19
Section 2.10 CANCELLATION . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11 DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . 19
Section 2.12 CUSIP NUMBER . . . . . . . . . . . . . . . . . . . . . 20
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ARTICLE III
REDEMPTION
Section 3.01 NOTICES TO TRUSTEE . . . . . . . . . . . . . . . . . . 20
Section 3.02 SELECTION OF NOTES TO BE REDEEMED. . . . . . . . . . . 20
Section 3.03 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . 21
Section 3.04 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . 21
Section 3.05 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . 22
Section 3.06 NOTES REDEEMED IN PART . . . . . . . . . . . . . . . . 22
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ARTICLE IV
CHANGE OF CONTROL AND ENTERPRISE VALUATION EVENT
Section 4.01 CHANGE OF CONTROL AND ENTERPERISE VALUATION EVENT. . . 22
ARTICLE V
COVENANTS
Section 5.01 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST . . . . . . 24
Section 5.02 MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . 25
Section 5.03 SEC REPORTS. . . . . . . . . . . . . . . . . . . . . . 25
Section 5.04 LIMITATION ON DEBT . . . . . . . . . . . . . . . . . . 25
Section 5.05 LIMITATION ON DEBT AND PREFERRED STOCK OF SUBSIDIARIES
OF GOSS . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.06 LIMITATION ON RESTRICTED PAYMENTS. . . . . . . . . . . 28
Section 5.07 LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . 31
Section 5.08 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK . . 32
Section 5.09 LIMITATION ON AFFILIATE TRANSACTIONS . . . . . . . . . 33
Section 5.10 COMPLIANCE CERTIFICATES. . . . . . . . . . . . . . . . 34
Section 5.11 FURTHER INSTRUMENTS AND ACTS . . . . . . . . . . . . . 34
ARTICLE VI
SUCCESSORS
Section 6.01 WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS. . . . . 35
Section 6.02 SUCCESSOR COMPANY SUBSTITUTED. . . . . . . . . . . . . 35
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . 36
Section 7.02 ACCELERATION . . . . . . . . . . . . . . . . . . . . . 37
Section 7.03 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . 38
Section 7.04 WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . 38
Section 7.05 CONTROL BY MAJORITY. . . . . . . . . . . . . . . . . . 38
Section 7.06 LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . 38
Section 7.07 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT. . . 39
Section 7.08 COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . 39
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Section 7.09 TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . 39
Section 7.10 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.11 UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . 40
Section 7.12 WAIVER OF STAY, EXTENSION AND USURY LAWS . . . . . . . 40
ARTICLE VIII
TRUSTEE
Section 8.01 DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . 41
Section 8.02 RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . 42
Section 8.03 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . 43
Section 8.04 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . 43
Section 8.05 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . 43
Section 8.06 REPORTS BY TRUSTEE TO HOLDERS. . . . . . . . . . . . . 43
Section 8.07 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . 44
Section 8.08 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . 44
Section 8.09 SUCCESSOR TRUSTEE BY MERGER, ETC . . . . . . . . . . . 45
Section 8.10 ELIGIBILITY: DISQUALIFICATION. . . . . . . . . . . . . 46
Section 8.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. 46
Section 8.12 MAY HOLD SECURITIES. . . . . . . . . . . . . . . . . . 46
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE. . . . . . 46
Section 9.02 CONDITIONS TO DEFEASANCE . . . . . . . . . . . . . . . 47
Section 9.03 APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . 49
Section 9.04 REPAYMENT TO THE COMPANY . . . . . . . . . . . . . . . 49
Section 9.05 INDEMNITY FOR GOVERNMENT OBLIGATIONS . . . . . . . . . 49
Section 9.06 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . 49
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01 WITHOUT CONSENT OF HOLDERS . . . . . . . . . . . . . . 49
Section 10.02 WITH CONSENT OF HOLDERS. . . . . . . . . . . . . . . . 50
Section 10.03 COMPLIANCE WITH TRUST INDENTURE ACT. . . . . . . . . . 52
Section 10.04 REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. . . . . 52
Section 10.05 NOTATION ON OR EXCHANGE OF NOTES . . . . . . . . . . . 52
Section 10.06 TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . 52
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Section 10.07 PAYMENT FOR CONSENTS . . . . . . . . . . . . . . . . . 52
ARTICLE XI
SUBORDINATION OF NOTES
Section 11.01 AGREEMENT TO SUBORDINATE . . . . . . . . . . . . . . . 53
Section 11.02 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION; ETC . . . . 53
Section 11.03 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT . . . . . . . . 54
Section 11.04 ACCELERATION OF PAYMENT OF NOTES . . . . . . . . . . . 55
Section 11.05 PAYMENT PERMITTED IF NO DEFAULT. . . . . . . . . . . . 55
Section 11.06 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. . . . 55
Section 11.07 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. . . . . . 56
Section 11.08 TRUSTEE TO EFFECTUATE SUBORDINATION. . . . . . . . . . 56
Section 11.09 NO WAIVER OF SUBORDINATION PROVISIONS. . . . . . . . . 56
Section 11.10 NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . 57
Section 11.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGE. . . . . . . . . . . . . . . . . . . . 57
Section 11.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT . . . 58
Section 11.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS . . . . . . . . . . . 58
Section 11.14 ARTICLE XI APPLICABLE TO PAYING AGENTS . . . . . . . . 58
Section 11.15 TRUST MONEYS NOT SUBORDINATED. . . . . . . . . . . . . 58
Section 11.16 RELIANCE BY HOLDERS OF SENIOR DEBT ON SUBORDINATION
PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.17 DISTRIBUTION OR NOTICE TO REPRESENTATIVE . . . . . . . 59
Section 11.18 ARTICLE XI NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. . . . . . . . . . . . . . . . . . 59
ARTICLE XII
MISCELLANEOUS
Section 12.01 TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . 59
Section 12.02 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. . . . . . 60
Section 12.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . 60
Section 12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . . . 60
Section 12.06 RULES BY TRUSTEE AND AGENTS. . . . . . . . . . . . . . 61
Section 12.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES, INCORPORATORS AND STOCKHOLDERS . . . . . . 61
Section 12.08 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . 61
Section 12.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . . . 61
Section 12.10 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.11 SEVERABILILY . . . . . . . . . . . . . . . . . . . . . 62
Section 12.12 COUNTERPART ORIGINALS. . . . . . . . . . . . . . . . . 62
Section 12.13 TABLE OF CONTENTS, HEADINGS, ETC . . . . . . . . . . . 62
</TABLE>
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EXHIBIT A -- Form of Note; Form of Trustee's Certificate of Authentication
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INDENTURE, dated as of October 15, 1999, between Goss Holdings, Inc.
("the COMPANY"), a corporation duly organized and existing under the laws of
the State of Delaware, and HSBC Bank USA, a New York banking corporation, as
trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of up to $112,500,000 aggregate
principal amount of the Company's 12 1/4% Senior Subordinated Notes Due 2005
(the "NOTES") issuable as provided in this Indenture. All things necessary to
make this Indenture a valid agreement of the Company, in accordance with its
terms, have been done, and the Company has done all things necessary to make
the Notes, when executed by the Company and authenticated and delivered by
the Trustee hereunder and duly issued by the Company, the valid obligations
of the Company as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1. DEFINITIONS.
"ADDITIONAL ASSETS" means (i) any property or assets (other than Debt
and Capital Stock) used or useful in a Related Business; (ii) the Capital
Stock of a Person that becomes a Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Subsidiary or (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Subsidiary; PROVIDED, HOWEVER, that any such Subsidiary described in clause
(ii) or (iii) above is primarily engaged in a Related Business.
"AFFILIATE" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Persons means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the provisions described in Sections 5.06, 5.08
and 5.09 only, "Affiliate" shall also mean any beneficial owner of Capital
Stock representing 10% or more of the total voting power of the Voting Stock
(on a fully diluted basis) of the Company or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof. Notwithstanding the foregoing, none of the Banks shall
be deemed to be an Affiliate of the Company and its Subsidiaries solely as a
result of the security
<PAGE>
interests held by the Banks in the Capital Stock of the Company's
Subsidiaries pursuant to the Credit Agreement.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET DISPOSITION" means any sale, transfer or other disposition (or
series of related sales, transfers or dispositions) by the Company or any
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction (each referred to for the purposes of this definition as
a "disposition"), of (i) any shares of Capital Stock of a Subsidiary (other
than directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Subsidiary), (ii) all or
substantially all the assets of any division or line of business of the
Company or any Subsidiary or (iii) any other assets of the Company or any
Subsidiary outside of the ordinary course of business of the Company or such
Subsidiary (other than, in the case of (i), (ii) and (iii) above, (v) any
disposition, or related series of dispositions, of assets with an aggregate
fair market value of $1 million or less for each such disposition or related
series of dispositions, (w) dispositions permitted under Article VI, (x) a
disposition by a Subsidiary to the Company or a Subsidiary to a Wholly Owned
Subsidiary, [(y) sales of Customer Notes to third parties] and (z) for
purposes of the covenant described in Section 5.08 only, a disposition that
constitutes a Restricted Payment permitted by the covenant described under
Section 5.06.
"AVERAGE LIFE" means, as of the date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of
the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount
of such payment by (ii) the sum of all such payments.
"BANKS" means the lenders under the Credit Facility.
"BANKRUPTCY LAW" means the U.S. Bankruptcy Code, 11 U.S.C. Section
101, et. seq., 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
committee thereof duly authorized to act on behalf of such Board.
"BUSINESS DAY" means each day which is not a Legal Holiday.
"CAPITAL LEASE OBLIGATIONS" of any Person means an obligation that is
required to be classified and accounted for as a capital lease on the face of
the balance sheet of such Person prepared in accordance with GAAP, and the
amount of Debt represented by such obligation shall be the capitalized amount
of such obligation determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.
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"CAPITAL STOCK" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in such Person (however designated) or the equity of such
Person, including any Preferred Stock, but excluding any debt securities
convertible or exchangeable into such equity.
"CASH EQUIVALENTS" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or
obligations issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America, (ii) commercial paper
rated the highest grade by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group and maturing not more than one year from the date of
creation thereof, (iii) time deposits with, and certificates of deposit and
banker's acceptances issued by, any bank having capital surplus and undivided
profits aggregating at least $500 million and maturing not more than one year
from the date of creation thereof, (iv) repurchase agreements that are
secured by a perfected security interest in an obligation described in clause
(i) and are with any bank described in clause (iii), (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500 million, and (c) has the
highest rating obtainable from either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. and (vi) readily marketable direct
obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED COVERAGE RATIO" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; PROVIDED, HOWEVER, that (1) if the Company or any Subsidiary has
Incurred any Debt since the beginning of such period that remains outstanding
(other than revolving credit Debt Incurred under the Credit Facility with
respect to which the related commitment remains outstanding) or if the
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Debt, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a pro
forma basis to such Debt as if such Debt had been Incurred on the first day
of such period and the discharge of any other Debt repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Debt as if
such discharge had occurred on the first day of such period, (2) if since the
beginning of such period any Debt of the Company or any Subsidiary has been
repaid, repurchased, defeased or otherwise discharged or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio will
include any such repayment, repurchase, defeasement or discharge not
otherwise covered in clause (1) above, or both (in either case other than
revolving credit Debt Incurred pursuant to the Credit Facility or any similar
arrangement unless such revolving credit Debt has been permanently repaid and
has not been replaced), Consolidated Interest Expense for such period shall
be calculated, after giving effect thereto on a pro forma basis, as if such
Debt had been repaid, repurchased, defeased or otherwise discharged on the
first day of such period, (3) if since the beginning of such period the
Company or any Subsidiary shall have made any Asset Disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the
3
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subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any Debt of
the Company or any Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital Stock
of any Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Debt after such
sale), (4) if since the beginning of such period the Company or any Subsidiary
(by merger or otherwise) shall have made an Investment in any Subsidiary (or any
Person which becomes a Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Debt) as if such Investment or acquisition occurred on the
first day of such period and (5) if since the beginning of such period any
Person (that subsequently became a Subsidiary or was merged with or into the
Company or any Subsidiary since the beginning of such period) shall have made
any Asset Disposition, any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (3) or (4) above if made by the
Company or a Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Asset Disposition, Investment or acquisition occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Debt Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Debt bears a floating rate of interest
and is being given pro forma effect, the interest of such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Debt if such Interest Rate Agreement has a
remaining term in excess of 12 months).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense of the Company and its consolidated Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Subsidiaries, (i) interest expense
attributable to Capital Lease Obligations, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) non-cash interest expenses, (v)
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (vi) net costs
associated with Interest Rate Agreements (including amortization of fees),
(vii) Preferred Stock dividends in respect of all Preferred Stock (except
dividends payable solely in shares of Capital Stock of the Company (other
than Disqualified Stock of the Company)) held by Persons other than the
Company or a Wholly Owned Subsidiary, (viii) interest incurred in connection
with Investments in discontinued operations, (ix) interest accruing on any
Debt of any other Person to the extent such Debt is Guaranteed by the Company
or any Subsidiary and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Debt Incurred by such plan or trust; PROVIDED,
HOWEVER, that there shall not be included in such Consolidated Interest
Expense any
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amount of Interest Expense of any Subsidiary if the net income of such
Subsidiary is excluded in the calculation of Consolidated Net Income (but
only in the same proportion as such net income is excluded) because the
declaration or payment of dividends or similar distributions by such
Subsidiary of such net income is not at the time permitted by the operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Subsidiary.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there
shall not be included in such Consolidated Net Income: (i) any net income of
any Person if such Person is not a Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a Subsidiary
as a dividend or other distribution (subject, in the case of a dividend or
other distribution paid to a Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income to the extent of any cash actually contributed by the Company or a
Subsidiary to such Person during such Period; (ii) any net income (or loss)
of any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income of any Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Subsidiary during such period to
the Company or another Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid to another
Subsidiary, to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Subsidiary for such period shall be included
in determining such Consolidated Net Income to the extent of any cash
actually contributed by the Company or a Subsidiary to such Person during
such Period; (iv) any gain or loss net of tax realized upon the sale or other
disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold
or otherwise disposed of in the ordinary course of business and any gain or
loss net of tax realized upon the sale or other disposition of any Capital
Stock of any Person; (v) extraordinary gains or losses net of tax; and (vi)
the cumulative effect of a change in accounting principles, net of tax.
Notwithstanding the foregoing, for the purposes of Section 5.06 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from a Subsidiary to the
extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under such covenant pursuant to clause
(a)(3)(D) thereof.
"CONSOLIDATED NET WORTH" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on
a consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being
made, as (i) the par or stated value of all outstanding Capital Stock of the
Company plus (ii) paid-in capital or capital
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surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 12.02 or such other address as to which the
Trustee may give notice to the Company.
"CREDIT FACILITY" means the credit facility consisting of the Tranche
A, Tranche B and term facilities made pursuant to that certain Second Amended
and Restated Credit Agreement, dated as of October ___, 1999, among Goss,
certain Subsidiaries of Goss, Bankers Trust Company as administrative agent,
the co-agents named therein and the lenders named therein, including (i) any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time, in whole or in
part, and (ii) any credit agreements, notes, guarantees, collateral
documents, instruments and agreements executed in connection with any such
amendment, modification, renewal, refunding, replacement or refinancing and
any credit facilities or agreements that replace, refund or refinance any
part of the loans, credit facilities or commitments thereunder (subject to
Sections 5.04 and 5.05), including such replacement, refunding or refinancing
facility that increased the amount borrowable thereunder, alters the maturity
date thereof or alters the allocation of term loans and revolving loans.
"CREDIT FACILITY GUARANTY" means the Second Amended and Restated
Guaranty dated as of November __, 1999 between the Company and Bankers Trust
Company, as agent.
"CURRENCY AGREEMENT" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
["CUSTOMER NOTES" means notes receivable, on terms consistent with the
past practices of the Company and its Subsidiaries and with prevailing
industry practices, issued in connection with customer financing provided to
purchasers of the Company's and its Subsidiaries' products and secured by a
valid and enforceable first priority Lien on the products being purchased.]
["CUSTOMER NOTES GUARANTEES" means Guarantees by the Company and its
Subsidiaries, on terms consistent with the past practices of the Company and
its Subsidiaries and with prevailing industry practices, of all or a portion
of Customer Notes issued by the Company or its Subsidiaries and sold to third
parties, or of all or a portion of customer notes or other financing provided
by third parties to purchasers of the Company's and its Subsidiaries'
products; provided, however, that "Customer Notes Guarantees" shall not
include the provision of letters of credit in respect of financing provided
by a third party to purchasers of the Company's and its Subsidiaries'
products to the extent such letters of credit are Incurred under the
Revolving Credit Facility.]
"DEBT" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) debt of such Person for
money borrowed and (B) debt evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capital Lease Obligations of such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such Person
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and all obligations of such Person under any title retention agreement (but
excluding (x) trade accounts payable and other current trade liabilities
arising in the ordinary course of business and payable in accordance with
customary practices and (y) deferred purchase price obligations where payment
is due within six months of delivery); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, banker's
acceptance, or other similar credit transaction (other than obligations with
respect to letters of credit and related Hedging Obligations securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) the amount of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends); (vi)
all Hedging Obligations of such Person (other than Hedging Obligations
excluded pursuant to clause (iv) above); (vii) all obligations of the type
referred to in clauses (i) through (v) of other Persons and all dividends of
other Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including by means of any Guarantee; and (viii) all obligations of
the type referred to in clauses (i) through (vi) of other Persons secured by
any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the amount
of the obligation so secured. The amount of Debt of any Person at any date
shall be the outstanding balance of all obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date; PROVIDED,
HOWEVER, that the amount outstanding at any time of any Debt Incurred with
original issue discount is the face amount of such Debt less the remaining
unamortized portion of the original issue discount of such Debt at such time
as determined in conformity with GAAP.
"DEEMED ASSET VALUE" means 75% of the fair market value of assets
(other than cash) received by the Company from the issuance or sale of its
Capital Stock or as a capital contribution, in either case as determined in
good faith by the Board of Directors; PROVIDED, HOWEVER, that such
determination shall be confirmed by a nationally recognized investment
banking firm or appraisal firm in the event that the value determined by the
Board of Directors exceeds $10 million.
"DEFAULT" means any event that is, or after notice or with the passage
of time or both would be, an Event of Default.
"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 (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Debt or
Disqualified Stock or (iii) is redeemable at the option of the Holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes; PROVIDED, HOWEVER, that any Capital Stock that
would not constitute Disqualified Stock but for provisions thereof giving
Holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity
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<PAGE>
of the Notes shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions described
under Section 5.08 and Article IV.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) all income tax expense of the
Company, (b) depreciation expense, (c) amortization expense and (d) all other
non-cash items reducing Consolidated Net Income (other than any non-cash item
to the extent it represents an accrual of, or a reserve for, cash
disbursements for any subsequent period prior to the Stated Maturity of the
Notes) and less, to the extent added in calculating Consolidated Net Income,
non-cash items (other than any non-cash item to the extent it represents an
accrual for cash receipts reasonably expected to be received within 12 months
after the date of such accrual), in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in the same proportion) that the net income of such
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval other
than for the board of directors of such Subsidiary (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Subsidiary or its stockholders.
"ENTERPRISE VALUATION" means the aggregate Fair Market Value of the
Company or Goss as of the date of the occurrence of an Enterprise Valuation
Event.
"ENTERPRISE VALUATION EVENT" means: (i) any Change of Control
consisting of or resulting from one or more transactions, (ii) a Public
Equity Offering or (iii) an offering of common stock of the Company or Goss
in a transaction or series of transactions exempt from registration under the
Securities Act, in each case wherein the aggregate consideration therefor has
a value in excess of $600,000,000 or which fairly reflects an Enterprise
Valuation for the Company and its Subsidiaries in excess of $600,000,000.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means with respect to an asset or a business, the
price at which such asset or business would change hands between a willing
buyer and willing seller, neither being under compulsion to buy or sell and
both having reasonable knowledge of all relevant facts as of the applicable
valuation date.
"FOREIGN SUBSIDIARY" means a subsidiary that is organized under the
laws of any country other than the U.S. and substantially all the assets of
which are located outside of the U.S.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set
forth (i) in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (ii)
statements and pronouncements of the Financial Accounting Standards Board,
(iii) in such other statements by such other entity as approved by a
significant segment of the accounting
8
<PAGE>
profession, and (iv) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
"GOSS" means Goss Graphic Systems, Inc., a Delaware corporation or any
successor thereof.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of
any Person and any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well,
to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise); or (ii) entered into
for purposes of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the
term "Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of busine Sections The term "Guarantee" used as a verb
shall have a corresponding meaning. The term "Guarantor" shall mean any
Person guaranteeing any obligation.
"HEDGING OBLIGATIONS" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Registrar's books.
"INCUR" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Debt or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by
such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of
principal of a non-interest bearing or other discount security shall be
deemed to be the Incurrence of Debt.
"INDENTURE" means this Indenture, as amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement
designed to protect the Company or any Subsidiary against fluctuations in
interest rates.
"INVESTMENT" in any Person means any loan or advance (other than
advances to customers in the ordinary course of business on commercially
reasonable terms that are recorded as accounts receivable on the balance
sheet of such Person) to, any acquisition of Capital Stock, equity interest,
obligation or other security of, or capital contribution or other investment
in, or any other credit extension to (including by way of Guarantee of any
Debt of), such Person.
"ISSUE DATE" means the date on which the Notes are originally issued.
9
<PAGE>
"JOINT VENTURE CONTRACT" means that certain Joint Venture Contract,
dated October 29, 1993, between Rockwell Graphic Systems, Inc. and Shanghai
Printing & Packaging Machinery Corp., as in effect on ___________________.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment we authorized
by law, regulation or executive order to remain closed. If a payment date is
a Legal Holiday, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"NET AVAILABLE CASH" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Debt or other obligations
relating to such properties or assets that are the subject of such Asset
Disposition or received in any other noncash form) therefrom, in each case
net of (i) all legal, title and recording expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition; (ii) all payments made on any Debt
which is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition; (iii) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and (iv) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Subsidiary after such Asset
Disposition.
"NET CASH PROCEEDS" means with respect to any issuance or sale of
Capital Stock, the cash proceeds (including cash equivalents) of such
issuance or sale net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant
and other fees actually incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
"NOTE REGISTER" means the register of the Notes and the transfer and
exchange of the Notes as provided in Section 2.03 of this Indenture.
"NOTES" has the meaning set forth in the first recital.
"OFFICER" means with respect to any Person the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, Controller, Secretary or any
Vice-President of such Person.
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"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, principal financial officer, treasurer or principal
accounting officer of the Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel, who
may be an employee of or counsel to the Company.
"PERMITTED HOLDERS" means Stonington and its Affiliates.
"PERMITTED INVESTMENT" means (A) an Investment by the Company or any
Subsidiary in (i) the Company or a Wholly Owned Subsidiary or a Person that
will, upon the making of such Investment, become a Wholly Owned Subsidiary;
(ii) another Person if as a result of, and contemporaneously with, such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Wholly Owned Subsidiary; (iii) Temporary Cash Investments; (iv) receivables
owing to the Company or any Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes, that are made in the ordinary course of
business; (vi) loans or advances to employees, officers or directors made in
the ordinary course of business consistent with past practices of the Company
or a Subsidiary and that do not in the aggregate exceed [$___ million] at any
time; (vii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Subsidiary or in satisfaction of judgments; and (viii) any Person to the
extent such Investment represents the non-cash portion of the consideration
received for an Asset Disposition as permitted pursuant to the covenant
described under Section 5.08, (B) any Investment by the Company in the
Permitted Joint Venture at the times and in the amounts and manner required
by the Joint Venture Contract and (C) Customer Notes issued following the
Issue Date by the Company and its Subsidiaries; provided that the amount of
Investments made pursuant to Customer Notes following the Issue Date, in the
aggregate, at any one time outstanding may not exceed $30 million less the
amount of Customer Notes Guarantees Incurred following the Issue Date then
outstanding pursuant to Section 5.04(b)(4) and 5.05(i).
"PERMITTED JOINT VENTURE" means Shanghai Rockwell Graphic Systems Co.,
Ltd., a joint venture formed by the Company and Shanghai Printing & Packaging
Machinery Corp. pursuant to the Joint Venture Contract.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"PREFERRED STOCK" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"PRINCIPAL" of a Note means the principal of the Note plus the premium,
if any, payable on the Note which is due or overdue or is to become due at
the relevant time.
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"PUBLIC EQUITY OFFERING" means a primary public offering of any class
of common stock of the Company or Goss pursuant to an effective registration
statement under the Securities Act.
"PUBLIC MARKET" means any time after (x) a Public Equity Offering has
been consummated, and (y) at least 15% of the total issued and outstanding
common stock of the Company or Goss, as the case may be, has been distributed
by means of an effective registration statement under the Securities Act or
sales pursuant to Rule 144 under the Securities Act.
"REFINANCE" means, with respect to any Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Debt in exchange or replacement for, such indebtedne SS. "Refinanced"
and "Refinancing" shall have correlative meanings.
"REFINANCING DEBT" means Debt that Refinances any Debt of the Company
or any Subsidiary existing on the Issue Date or Incurred in compliance with
this Indenture, including Debt that Refinances Refinancing Debt; PROVIDED,
HOWEVER, that (i) such Refinancing Debt has a Stated Maturity no earlier than
the Stated Maturity of the Debt being Refinanced; (ii) such Refinancing Debt
has an Average Life at the time such Refinancing Debt is Incurred that is
equal to or greater than the Average Life of the Debt being Refinanced; (iii)
such Refinancing Debt has an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value) then outstanding or committed (plus
fees and expenses, including any premium and defeasance costs) under the Debt
being Refinanced; and (iv) with respect to any Refinancing Debt of Debt other
than Senior Debt, such Refinancing Debt shall rank no more senior, and shall
be at least as subordinated, in right of payment to the Notes as the Debt
being so extended, renewed, refunded or refinanced; PROVIDED, FURTHER,
HOWEVER, that Refinancing Debt shall not include Debt of a Subsidiary that
Refinances Debt of the Company.
"RELATED BUSINESS" means the business of the Company and its
Subsidiaries on the Issue Date and any business related, ancillary or
complementary to the businesses of the Company and its Subsidiaries on the
Issue Date.
"REPRESENTATIVE" means any trustee, agent or representative (if any)
for an issue of Senior Debt of the Company.
"RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee (or any successor
group of the Trustee) with direct responsibility for the administration of
the Indenture and also means with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or
her knowledge and familiarity with the particular subject.
"RESTRICTED PAYMENT" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any
sort in respect of its Capital Stock (including any payment in connection
with any merger or consolidation involving such Person) or similar payment to
the direct or indirect Holders of its Capital Stock (other than (x) dividends
or distributions payable solely in its Capital Stock (other than Disqualified
Stock) or rights to acquire its Capital Stock (other than Disqualified
Stock), (y) dividends or distributions payable solely to the Company or a
Subsidiary, and (z) pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in
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<PAGE>
the case of a Subsidiary that is an entity other than a corporation)), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company held by any Person or of any Capital Stock of a
Subsidiary held by any Affiliate of the Company (other than a Subsidiary),
including the exercise of any option to exchange any Capital Stock (other
than into Capital Stock of the Company that is not Disqualified Stock), (iii)
the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date
of acquisition) or (iv) the making of any Investment in any Person (other
than a Permitted Investment).
"SEC" means the Securities and Exchange Commission.
"SECURED DEBT" means any Debt of the Company or a Subsidiary secured by
a Lien.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) Debt of the Company whether outstanding on the
Issue Date or thereafter incurred (including, without limitation, Debt (and
other obligations including for fees, expenses, reimbursements, indemnities
or otherwise) Incurred pursuant to the Credit Agreement Guaranty, any
Interest Rate Agreement or Currency Agreement entered into with a Bank in
connection with the Credit Agreement and any other Guarantee by the Company
of any Debt or monetary obligation of any of its Subsidiaries under the
Credit Agreement or any such Interest Rate Agreement or Currency Agreement
and (ii) accrued and unpaid interest thereon (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization
relating to the Company or a Subsidiary at the rate otherwise applicable
thereto whether or not post-filing interest is allowed in such proceeding).
"SENIOR SUBORDINATED DEBT" means the Notes and any other Debt of the
Company that specifically provides that such Debt is to rank PARI PASSU with
the Notes in right of payment and is not subordinated by its terms in right
of payment to any Debt or other obligation of the Company which is not Senior
Debt.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"Significant Subsidiary" of the Company as such term is defined in Rule 1-02
of Regulation S-X, promulgated by the SEC.
"STATED MATURITY" means with respect to any security the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"STONINGTON" means Stonington Partners, Inc.
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"SUBORDINATED OBLIGATION" means any Debt of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which by its written
terms is subordinate or junior in right of payment to the Notes.
"SUBSIDIARY" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly,
by (i) such Person; (ii) such Person and one or more Subsidiaries of such
Person; or (iii) one or more Subsidiaries of such Person.
"TANGIBLE PROPERTY" means all land, buildings, machinery and equipment
and leasehold interests and improvements which would be reflected on a
balance sheet of the Company prepared in accordance with generally accepted
accounting principles, excluding (i) all rights, contracts and other
intangible assets of any nature whatsoever; and (ii) all inventories and
other current assets.
"TEMPORARY CASH INVESTMENTS" means any of the following: (i) any
investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or
any agency thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 270 days of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$50,000,000 (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued
by a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America, any jurisdiction
thereof or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Group, and (v) investments in
securities with maturities of nine months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SECTIONS
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture,
and thereafter such term shall mean such successor serving hereunder.
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"U.S. GOVERNMENT OBLIGATION" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
of America (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States of America is pledged
and which are not callable at the issuer's option.
"VOTING STOCK" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding
and normally entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Capital Stock of
which (other than directors' qualifying shares and shares held by other
Persons to the extent such shares are required by applicable law to be held
by a Person other than the Company or a Subsidiary) is owned by the Company
or one or more Wholly Owned Subsidiaries.
Section 2. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
TERM DEFINED IN
ARTICLE/SECTION
<S> <C>
"AFFILIATE TRANSACTION"...... Section 5.09
"BLOCKAGE NOTICE"............ Section 11.03
"CHANGE OF CONTROL".......... Article IV
"COVENANT DEFEASANCE"........ Section 9.01
"DEFAULT AMOUNT"............. Section 7.02
"EXCESS PROCEEDS OFFER"...... Section 5.08
"EXCESS PROCEEDS PAYMENT".... Section 5.08
"EVENT OF DEFAULT"........... Section 7.01
"FINAL PAYMENT DEFAULT"...... Section 7.01
"LEGAL DEFEASANCE"........... Section 9.01
"NON-PAYMENT DEFAULT"........ Section 7.01
"NOTES PAYMENT".............. Section 11.02
"PAYING AGENT"............... Section 2.03
"PARENT CORPORATION"......... Article IV
"PAYMENT BLOCKAGE PERIOD".... Section 11.03
"PROCEEDING"................. Section 11.02
"REGISTRAR".................. Section 2.03
"SPECIFIED CORPORATION"...... Article IV
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"SUCCESSOR COMPANY".......... Section 6.01
</TABLE>
Section 3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
(i) "INDENTURE SECURITIES" means the Notes;
(ii) "INDENTURE SECURITY HOLDER" means a Holder or Noteholder;
(iii) "INDENTURE TO BE QUALIFIED" means this Indenture;
(iv) "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee;
(v) "OBLIGOR" upon the Notes means each of the Company and
any successor obligor upon the Notes.
All other terms used in this Indenture that are (i) defined by the TIA;
(ii) defined by TIA reference to another statute; or (iii) defined by SEC
rule under the TIA have the meanings so assigned to them.
Section 4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
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(iii) the word "or" shall not be deemed to be exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular; and
(v) provisions apply to successive events and transactions.
ARTICLE I
THE NOTES
Section 1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Notes may have such
notations, legends or endorsements approved as to form by the Company and
required, as applicable, by law, stock exchange rule, agreements to which the
Company is subject and/or usage. Each Note shall be dated the date of its
authentication. The Notes shall be issuable only in denominations of $1,000
and integral multiples thereof.
Section 2. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Notes.
If an Officer whose signature is on a Note no longer holds that office
at the time such Note is authenticated, such Note shall be valid
nevertheleSections
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence
that a Note has been authenticated in accordance with the terms of this
Indenture.
The Trustee, upon a written order of the Company signed by two Officers
of the Company, shall authenticate the Notes for original issue up to an
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time shall not exceed the amount
set forth therein except as provided in Section 2.07.
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The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate the Notes. Unless limited by the terms of such
appointment, any such authenticating agent may authenticate the Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such authenticating
agent of the Trustee. An authenticating agent has the same rights as an Agent
to deal with the Company or an Affiliate of the Company.
The Trustee shall have the right to decline to authenticate and deliver
any Notes under this Section 2.02 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in
good faith shall determine that such action would expose the Trustee to
personal liability to existing Holders for which the Trustee is not
indemnified.
Section 3. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where the Notes may
be presented for registration of transfer or for exchange (including any
co-registrar, the "REGISTRAR"); and (ii) an office or agency where the Notes
may be presented for payment ("PAYING AGENT"). The Registrar shall keep a
register of the Holders and of the transfer and exchange of the Notes (the
"NOTE REGISTER"). The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Paying Agent" shall include any
such additional paying agent. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Holder. The Company
shall notify the Trustee and the Trustee shall notify the Holders of the name
and address of any Agent not a party to this Indenture. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar. The Company shall enter into an appropriate
agency agreement with any Agent not a party to this Indenture, which shall
incorporate the provisions of the TIA. Any such agency agreement shall
implement the provisions of this Indenture that relate to such Agent. If the
Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, as appropriate, and shall be
entitled to appropriate compensation in accordance with Section 8.07.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Notes.
Section 4. PAYING AGENT TO HOLD MONEY IN TRUST.
On or prior to each due date of the principal of, premium, if any, and
interest on any Note, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal, premium, if any, and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for
the benefit of the Holders or the Trustee all money held by the Paying Agent
for the payment of principal of, premium, if any, and interest on the Notes,
and shall notify the Trustee of any Default by the Company in making any such
payment. While any such Default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require
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a Paying Agent to pay all money held by it to the Trustee. Upon payment over
to the Trustee, the Paying Agent (if other than the Company or its
domestically incorporated Wholly Owned Subsidiaries) shall have no further
liability for the money delivered to the Trustee. If the Company or its
domestically incorporated Wholly Owned Subsidiaries acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent.
Section 5. LISTS OF HOLDERS.
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 the Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least five Business Days before each interest
payment date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require
of the names and addresses of the Holders.
Section 6. TRANSFER AND EXCHANGE.
Notes shall be issued in registered form. When Notes are presented to
the Registrar with a request to register the transfer or to exchange them for
an equal principal amount of Notes of other denominations, the Registrar
shall register the transfer or make the exchange; PROVIDED, HOWEVER, that any
Note 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 by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's request.
Neither the Company nor the Registrar shall be required to (i) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection
of Notes for redemption under Section 3.02; (ii) register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (iii) register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before an interest payment date and ending at the close of
business on the interest payment date.
No service charge shall be made to any Holder of a Note 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 or similar governmental charge payable in connection therewith.
Prior to due presentment to the Trustee for registration of the
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered in the Note Register as
the absolute owner of such Note for the purpose of receiving payment of
principal of, premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Trustee, any Agent nor the Company shall be affected by any notice to the
contrary.
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Section 7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee shall
authenticate a replacement Note if the Company's and the Trustee's reasonable
requirements for the replacements of Notes are met. If required by the
Trustee or the Company, an indemnity bond shall be supplied by the Holder
that is sufficient in the 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 Note is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Note.
Every replacement Note shall be an obligation of the Company.
Section 8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee, except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding. A
Note does not cease to be outstanding because the Company, a Subsidiary of
the Company or an Affiliate of the Company holds such Note.
If a Note is replaced pursuant to Section 2.07, it shall cease to be
outstanding unless the Trustee receives proof satisfactory to it that such
replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be
outstanding upon surrender of such Note and replacement thereof pursuant to
Section 2.07.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Notes (or
portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Holders on that
date pursuant to the terms of this Indenture, then on and after that date
such Notes (or portions thereof) shall cease to be outstanding and interest
thereon shall cease to accrue.
Section 9. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have such variations as
the Company and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 10. CANCELLATION.
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The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment,
the Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation, and shall dispose
of such cancelled Notes in accordance with its customary procedures, unless the
Company directs cancelled Notes to be returned to it. The Company may not issue
new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for
cancellation.
Section 11. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
the Company shall pay such defaulted interest in any lawful manner and shall
pay interest on defaulted installments of interest at the rate borne by the
Notes to the extent lawful. The Company may pay such defaulted interest to
the Persons who are Holders of the Notes on a subsequent special record date,
which date shall be at the earliest practicable date but in all events at
least five Business Days prior to the payment date, in each case at the rate
provided in the Notes. The Company shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days prior to the
special record date, the Company shall mail or cause to be mailed to each
Holder of a Note a notice that states such special record date, such related
payment date and the amount of any such defaulted interest to be paid to
Holders of the Notes.
Section 12. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number,
and, if the Company shall do so, the Trustee shall use such CUSIP number 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 accuracy of the CUSIP number printed in such notice or on
the Notes and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company will notify the Trustee of any
change in a CUSIP number.
ARTICLE IIREDEMPTION
Section 1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to paragraph 5
of the Notes, the Company shall notify the Trustee in writing of the
redemption date, the principal amount of Notes to be redeemed, the CUSIP
number of such Notes and the paragraph of the Notes pursuant to which the
redemption will occur.
The Company shall give each notice to the Trustee provided for
in this Section 3.01 at least 60 but not more than 90 days before the
redemption date unless the Trustee consents to a
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shorter period. Such notice shall be accompanied by an Officers' Certificate
and an Opinion of Counsel from the Company to the effect that such redemption
will comply with the conditions herein. If fewer than all of the Notes are to
be redeemed, the record date relating to such redemption shall be selected by
the Company and given to the Trustee, which record date shall not be less
than 15 days after the date of notice to the Trustee.
Section 2. SELECTION OF NOTES TO BE REDEEMED.
If fewer than all the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed by lot or by such other methods as the
Trustee in its sole discretion shall deem to be fair and appropriate and that
comply with the applicable legal and securities exchange requirements, if
any. The Trustee shall make the selection from outstanding Notes not
previously called for redemption. The Trustee may select for redemption
portions of the principal of Notes that have denominations larger than
$1,000. Notes and portions of Notes the Trustee selects shall be in amounts
of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called
for redemption. The Trustee shall notify the Company promptly of the Notes or
portions of Notes to be redeemed.
Section 3. NOTICE OF REDEMPTION.
The Company shall, at least 30 days but not more than 60 days
before a redemption date, mail or cause to be mailed, by first class-mail, a
notice of redemption to each Holder of Notes of that are to be redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Note is being redeemed in part, the
portion of the principal amount of such Note to be redeemed
and that, after the redemption date, upon surrender of such
Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the
original Note;
(iv) the name and address of the Paying Agent;
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(v) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(vi) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture,
interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(vii) the paragraph of the Notes and/or the Section
of this Indenture pursuant to which the Notes called for
redemption are being redeemed; and
(viii) that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in
such notice or printed on the Notes.
At the Company's request, at least five Business Days prior to
the date upon which such notice is to be mailed unless the Trustee consents
to a shorter period, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. In such event, the Company shall
provide the Trustee with the information required by this Section 3.03.
Section 4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption shall become due and payable on the
redemption date and at the redemption price stated in such notice of
redemption. Upon surrender to the Paying Agent, such Notes shall be paid at
the redemption price stated in such notice of redemption, plus accrued
interest to the redemption date. Failure to give notice to a Holder or any
defect in any notice shall not affect the validity of any notice to any other
Holder.
Section 5. DEPOSIT OF REDEMPTION PRICE.
On or prior to any redemption date, the Company shall deposit
with the Paying Agent (or, if the Company or a Subsidiary is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company
any money deposited with the Trustee or the Paying Agent by the Company in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed on that date other than Notes
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or portions of Notes called for redemption which have been delivered by the
Company to the Trustee for cancellation.
Section 6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder (at the expense
of the Company) a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
ARTICLE IIICHANGE OF CONTROL AND ENTERPRISE VALUATION EVENT
Section 1. CHANGE OF CONTROL AND ENTERPRISE VALUATION EVENT.
(a) Upon the occurrence, from time to time, of any of the
following events (each a "CHANGE OF CONTROL") or Enterprise Valuation Event,
each Holder shall have the right to require that the Company repurchase such
Holder's Notes at a purchase price in cash equal to, in the case of an
Enterprise Valuation Event, 107% or, in all other cases, 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
(i) prior to a Public Equity Offering, the Permitted
Holders cease to be the "beneficial owner" (as defined in
Rules l3d-3 and l3d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting
power of the Voting Stock of the Company or Goss, whether as a
result of issuance of securities of the Company or Goss, any
merger, consolidation, liquidation or dissolution of the
Company or Goss, any direct or indirect transfer of securities
or otherwise (for purposes of this clause (i) and clause (ii)
below, the Permitted Holders shall be deemed to beneficially
own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent
corporation") so long as the Permitted Holders beneficially
own (as so defined), directly or indirectly, in the aggregate
a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) on or after a Public Equity Offering, (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i)
above, except that for purposes of this clause (ii) such
person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire,
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whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 40%
of the total voting power of the Voting Stock of the Company
or Goss; PROVIDED, HOWEVER, that the Permitted Holders
beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company or Goss than
such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors (for the
purposes of this clause (ii), such other person shall be
deemed to beneficially own any voting stock of a specified
corporation held by a parent corporation, if such other person
is the beneficial owner (as defined in this clause (ii)),
directly or indirectly, of more than 40% of the voting power
of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined in clause (i)
above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent
corporation);
(iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or Goss (together with
any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the
Company or Goss, as the case may be, was approved by a vote of
not less than 66-2/3% of the directors of the Company or Goss,
as the case may be, then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors
then in office; or
(iv) the merger or consolidation of the Company or
Goss with or into another Person or the merger of another
Person with or into the Company or Goss or the sale or
transfer in one or a series of transactions of all or
substantially all the assets of the Company or Goss to another
Person, and, in the case only of any such merger or
consolidation, the securities of the Company or Goss, as the
case may be, that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting
power of the Voting Stock of the Company or Goss are changed
into or exchanged for cash, securities or property unless
pursuant to such transaction such securities are changed into
or exchanged for, in addition to any other consideration,
securities of the surviving corporation that represent
immediately after such transaction, at least, a majority of
the aggregate voting power of the Voting Stock of the
surviving corporation.
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(b) Notwithstanding the foregoing, if at the time of the
occurrence of a Change of Control or Enterprise Valuation Event the terms of
the Credit Agreement restrict or prohibit the repurchase of Notes pursuant to
Section 4.01(a), then, prior to the mailing of the notice to Holders provided
for in Section 4.01(c) but in any event within 30 days following any such
Change of Control or Enterprise Valuation Event, the Company shall (i) repay in
full all Debt under the Credit Agreement or offer to repay in full all such
Debt and repay the Debt of each Bank that has accepted such offer or (ii)
obtain any required consent or waiver under the Credit Agreement to permit the
repurchase of the Notes as provided for in Section 4.01(a).
(c) Within 30 days following any Change of Control or Enterprise
Valuation Event, the Company shall mail a notice to each Holder with a copy to
the Trustee stating: (1) that a Change of Control or Enterprise Valuation Event
has occurred and that such Holder has the right to require the Company to
purchase such Holder's Notes at a purchase price in cash equal to, in the case
of an Enterprise Valuation Event, 107% or, in all other cases, 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date); (2) the
circumstances and, to the extent available, relevant facts regarding such
Change of Control or Enterprise Valuation Event (including information with
respect to pro forma historical income, cash flow and capitalization after
giving effect to such Change of Control or Enterprise Valuation Event); (3) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); (4) the instructions, determined by the
Company consistent with the covenant described hereunder, that a Holder must
follow in order to have its Notes purchased and, in the case of a Change of
Control that is not treated by the Company as an Enterprise Valuation Event,
(5) a written report from a nationally recognized investment bank or financial
advisory firm addressed to the Trustee confirming such treatment and setting
forth such bank's or firm's analysis thereof in reasonable detail.
(d) 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 Notes pursuant to the
provisions of this Article IV. To the extent that the provisions of any
securities laws and regulations conflict with the provisions of this Section
4.01, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Article IV by virtue thereof.
(e) In the event that an Enterprise Valuation Event shall have
occurred within the period of 180 days following any optional redemption of
Notes pursuant to Section 5 of the Notes, the Company shall pay to each Holder
whose Notes were redeemed the difference between the optional redemption price
received by such Holder and the purchase price such Holder would have received
had redeemed Notes instead been purchased as provided in this Article IV, in
each case excluding any portion of such redemption and purchase prices
consisting of accrued interest. Such
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payment shall be made within 30 days of the occurrence of such Enterprise
Valuation Event, in a manner agreed to by the Company and the Trustee.
ARTICLE IVCOVENANTS
Section 1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the principal of
(and premium, if any) and interest on the Notes in accordance with the terms of
this Indenture and the Notes.
Section 2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be
an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in such 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 presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company also from time to time may designate one or more
additional offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and from time to time may rescind any such
designation; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
for such purposes. The Company shall 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.
Section 3. SEC REPORTS.
So long as any of the Notes remain outstanding, the Company
shall cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Company or Goss is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, to be filed with the Trustee and mailed to the Holders at
their addresses appearing in the Note Register maintained by the Registrar, in
each case, within 5 Business Days of filing with the SEC. If neither the Company
nor Goss is not subject to the requirements of such Section 13 or 15(d) of the
Exchange Act, the Company shall nevertheless continue to file with the SEC, in
conformity with Section 13 or Section 15(d) of the Exchange Act, and provide the
Trustee and
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Holders with such annual and quarterly reports (without exhibits in the case of
documents provided to the Trustee and Holders) and such information, documents
and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) which are specified in Section 13
or Section 15(d) of the Exchange Act. The Company shall also comply with the
provisions of TIA Sections 314(a).
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4. LIMITATION ON DEBT.
(a) The Company shall not, and shall not permit Goss to,
Incur, directly or indirectly, any Debt unless, on the date of such Incurrence,
the Consolidated Coverage Ratio exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Company
or Goss, as the case may be, may Incur any or all of the following Debt:
(i) Debt Incurred pursuant to the Revolving Credit
Facility (consisting of a Tranche A Facility and a Tranche B
Facility, each as defined in the Credit Agreement) and the
Credit Agreement Guaranty in respect thereof; PROVIDED,
HOWEVER, that, after giving effect to any such Incurrence, the
aggregate principal amount of such Debt then outstanding does
not exceed $250 million.
(ii) [Customer Notes Guarantees Incurred following
the Issue Date in an aggregate amount at any one time
outstanding not to exceed $30 million less the amount of
Customer Notes Guarantees Incurred following the Issue Date
then outstanding pursuant to Section 5.05(i) and less the
amount of Investments in Customer Notes made following the
Issue Date then outstanding pursuant to clause (c) of the
definition of "Permitted Investment";]
(iii) Debt owed to and held by a Wholly Owned
Subsidiary of Goss; PROVIDED, HOWEVER, that any subsequent
issuance or transfer of any Capital Stock which results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of such Debt (other than
to another Wholly
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Owned Subsidiary of Goss) shall be deemed, in each case, to
constitute the Incurrence of such Debt by the Company or Goss,
as the case may be;
(iv) the Notes;
(v) Debt (including without limitation [Customer
Notes Guarantees)] outstanding on the Issue Date (other than
Debt described in clauses (i), (ii), (iii), (iv), (v), or
(vii) of this Section 5.04);
(vi) Refinancing Debt in respect of Debt Incurred
pursuant to paragraph (a) above or pursuant to clause (iv) or
(v) above or this clause (vi);
(vii) Hedging Obligations with respect to (1) Debt
permitted to be Incurred by the Company or its Subsidiaries
pursuant to this Indenture or (2) transactions denominated in
foreign currencies; and
(viii) Debt (which Debt may, but need not, be
Incurred in whole or in part under the Credit Agreement) in an
aggregate principal amount which, together with all other Debt
of the Company and Goss outstanding on the date of such
Incurrence (other than Debt permitted by clauses (i) through
(x) of this paragraph (b) or paragraph (a) above), and giving
effect to any concurrent Refinancing of Debt permitted by this
Indenture, does not exceed $15 million.
For purposes of determining compliance with this covenant, (i)
in the event that an item of Debt meets the criteria of more than one of the
types of Debt described in paragraph (b) or is entitled to be incurred pursuant
to paragraph (a), the Company, in its sole discretion, will classify such item
of Debt in any manner that complies with this covenant and such debt will be
treated as having been incurred pursuant to only one of such clauses of
paragraph (b) or pursuant to paragraph (a); and (ii) an item of Debt may be
divided and classified in more than one of the types of Debt in paragraph (b)
or pursuant to paragraph (a).
(c) Notwithstanding paragraph (a) and paragraph (b) above, the
Company shall not Incur any Debt if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Debt shall be
subordinated to the Notes to at least the same extent as such Subordinated
Obligations.
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(d) Notwithstanding paragraph (a) and paragraph (b) above, (i)
the Company shall not Incur any Debt if such Debt is subordinated or junior in
ranking and right of payment to any Senior Debt, unless such Debt is Senior
Subordinated Debt or is expressly subordinated in right of payment to Senior
Subordinated Debt; and (ii) the Company shall not issue any Secured Debt which
is not Senior Debt unless contemporaneously therewith effective provision is
made to secure the Notes equally and ratably with such Secured Debt for so long
as such Secured Debt is secured by a Lien.
Section 5. LIMITATION ON DEBT AND PREFERRED STOCK OF SUBSIDIARIES OF GOSS.
The Company shall not permit any Subsidiary of Goss to Incur,
directly or indirectly, any Debt or Preferred Stock except:
(a) Guarantees by such Subsidiaries of Debt of the Company or
Goss described in clause (b)(i), (ii) and (iv) of Section 5.04, other Debt of
the Company or Goss Incurred under the Credit Facility which is permitted to be
Incurred pursuant to the terms of this Indenture, and Debt of Foreign
Subsidiaries described in clauses (e) and (f) below;
(b) Debt or Preferred Stock issued to and held by the Company,
Goss or a Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any subsequent
issuance or transfer of any Capital Stock which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of
such Debt or Preferred Stock (other than to the Company or a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the issuance of such
Debt or Preferred Stock by the issuer thereof;
(c) Debt or Preferred Stock of a Subsidiary of Goss Incurred
and outstanding on or prior to the date on which such Subsidiary was acquired by
the Company (other than Debt or Preferred Stock Incurred in connection with, or
to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company); PROVIDED,
HOWEVER, that on the date of such acquisition and after giving effect thereto,
the Company would have been able to Incur at least $1.00 of additional Debt
pursuant to Section 5.04(a);
(d) Debt or Preferred Stock outstanding on the Issue Date
(other than Debt described in clause (a), (b) or (c));
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(e) [Debt of a Foreign Subsidiary Incurred pursuant to the Credit
Facility; PROVIDED, HOWEVER, that, after giving effect to any such Incurrence,
the aggregate principal amount of Debt outstanding of such Foreign Subsidiary
pursuant to this clause (e) does not exceed the greater of (x) $175 million and
(y) the sum of 85% of the gross book value of the accounts receivable of such
Foreign Subsidiary and 65% of the gross book value of the inventories of such
Foreign Subsidiary;]
(f) Refinancing Debt Incurred in respect of Debt or Preferred
Stock referred to in clause (a), (c) or (d) or this clause (f); PROVIDED,
HOWEVER, that to the extent such Refinancing Debt directly or indirectly
Refinances Debt or Preferred Stock of a Subsidiary described in clause (c),
such Refinancing Debt shall be Incurred only by such Subsidiary;
(g) Hedging Obligations by a Subsidiary with respect to (x) Debt
permitted to be Incurred by such Subsidiary pursuant to this Indenture and (y)
transactions by such Subsidiary denominated in foreign currencies; and
(h) [Customer Notes Guarantees Incurred following the Issue Date
in an aggregate amount at any one time outstanding not to exceed $30 million
less the amount of Customer Notes Guarantees Incurred following the Issue Date
then outstanding pursuant to Section 5.04(b)(ii) and less the amount of
Investments in Customer Notes made following the Issue Date then outstanding
pursuant to clause (B) of the definition of "Permitted Investment."]
Section 6. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any Subsidiary,
directly or indirectly, to make a Restricted Payment if at the time the Company
or such Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or
would result therefrom);
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(ii) the Company, after giving pro forma effect to such
Restricted Payment, would not be permitted to Incur an additional
$1.00 of Debt pursuant to Section 5.04(a); or
[(a)iii the aggregate amount of such Restricted Payment and
all other Restricted Payments since the Issue Date would exceed
the sum of:
(A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting
period) from the beginning of the fiscal quarter
during which the Notes were originally issued to the
end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment
(or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (B) the
aggregate Net Cash Proceeds and aggregate Deemed
Asset Value received by the Company from the issue or
sale of its Capital Stock (other than Disqualified
Stock) or capital contributions with respect thereto
subsequent to the Issue Date (other than an issuance
or sale to a Subsidiary of the Company and except as set
forth in clause (C) other than an issuance or sale to
an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries
for the benefit of their employees); (C) the
aggregate Net Cash Proceeds received by the Company
from the issuance or sale of its Capital Stock (other
than Disqualified Stock) to an employee stock
ownership plan or trust established by the Company or
any of its Subsidiaries for the benefit of their
employees subsequent to the date on which the Notes
were originally issued, other than any such issuance
or sale to the extent the purchase by such plan or
trust is financed by Debt of such plan or trust and
for which the Company is liable as guarantor or
otherwise; and (D) the amount by which Debt of the
Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue
Date, of any Debt of the Company convertible or
exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount
of any cash, or the fair value of any other property,
distributed by the Company or any Subsidiary upon
such conversion or exchange, except to the extent
that such distribution results in a reduction in
Consolidated Net Income reflected pursuant to clause
(A) above).]
(b) The provisions of the foregoing paragraph (a) shall not
prohibit:
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(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for,
or out of the proceeds of the substantially concurrent sale
of, Capital Stock of the Company (other than Disqualified
Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan
or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees to the extent
the purchase by such plan or trust is financed by Debt of such
plan or trust and for which the Company or any Subsidiary is
liable as guarantor or otherwise), PROVIDED, HOWEVER, that (A)
such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale shall be excluded from the
calculation of amounts under clauses (iii)(B) and (iii)(C) of
paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value of Subordinated
Obligations together with any premium payable in connection
therewith made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company which is
permitted to be Incurred pursuant to Section 5.04; PROVIDED,
HOWEVER, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall
be excluded in the calculation of the amount of Restricted
Payments;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such
dividend would have complied with this covenant; PROVIDED,
HOWEVER, that at the time of declaration of such dividend, no
other Default shall have occurred and be continuing (or would
result therefrom); and provided, further, however, that such
dividend shall be included in the calculation of the amount
of Restricted Payments;
(iv) the repurchase of shares of, or options to
purchase shares of, common stock of the Company or any of its
Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under
which such individuals purchase or sell or are granted the
option to purchase or sell, shares of such common stock;
PROVIDED, HOWEVER, that the aggregate amount of such
repurchases in any calendar year shall not exceed the sum of
(x) $2 million and (y) the aggregate Net Cash Proceeds from
any reissuance during such calendar year of Capital Stock to
employees, officers or directors of the Company or its
Subsidiaries;
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provided further, however, that to the extent that the
aggregate amount of such repurchases is less than $2 million
in any calendar year, the unused portion of such $2 million may
be carried forward to the succeeding calendar year (provided
that the aggregate amount of the repurchases in any calendar
year shall, in no event, exceed $4 million plus the amount of
aggregate Net Cash Proceeds from any reissuance of Capital
Stock described above) in any calendar year; and provided,
further, however, that such repurchases shall be excluded in
the calculation of the amount of Restricted Payments;
(v) Investments in any Person primarily engaged in a
Related Business in an aggregate amount not to exceed $10
million; PROVIDED, HOWEVER, that the amount of such
Investments shall be excluded in the calculation of the amount
of Restricted Payments;
(vi) the payment of any cash dividend on the common
stock of the Company following a Public Equity Offering by the
Company and a payment to the Company used solely to pay
dividends on the common stock of the Company, in each case as
long as no Default or Event of Default has occurred and is
continuing or would thereby result; provided that the
aggregate amount of all such dividends and payments under this
clause (vi) shall not exceed 6% of the Net Cash Proceeds
received by the Company in any such Public Equity Offering in
any calendar year; provided further, however, that such
dividends and payments shall be included in the calculation of
Restricted Payments;
(vii) [Investments in Customer Notes to the extent
such Investments are in existence on the Issue Date; provided,
however, that the amount of such Investments shall be excluded
in the calculation of the amount of Restricted Payments;] or
(viii) [Restricted Payments in an aggregate amount
not to exceed $10 million; provided, however, that the amount
of such Restricted Payments shall be excluded in the
calculation of the amount of Restricted Payments.]
Section 7. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES.
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(a) The Company shall not, and shall not permit any Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions on
its Capital Stock to the Company or a Subsidiary or pay any
Debt owed to the Company,
(ii) make any loans or advances to the Company or
(iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to the Credit
Facility [or any agreement in effect or entered into on the Issue Date] or
pursuant to the issuance of the Notes;
(2) any encumbrance or restriction with respect to a Subsidiary
of Goss pursuant to an agreement relating to any Debt Incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by the
Company (other than Debt Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Incurred pursuant to an agreement referred to
in clause (1) or (2) or contained in any amendment to an agreement referred to
in clause (1) or clause (2); PROVIDED, however, that the encumbrances and
restrictions contained in any of such refinancing agreement or amendment are no
less favorable to the Noteholders than encumbrances and restrictions with
respect to such Subsidiary contained in such agreements;
(4) any such encumbrance or restriction (A) that restricts in a
customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset the subject of such encumbrance or restriction, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of the Company or any Subsidiary not otherwise
prohibited by this Indenture or (C) arising or agreed to in the ordinary course
of business, not relating to any Indebtedness, and that do not, individually or
in the aggregate, detract from the value of property or assets of the Company
or any
35
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Subsidiary in any manner material to the Company or any Subsidiary; PROVIDED
that, in each case, such encumbrance or restriction relates to, and restricts
dealings with, only the property or asset the subject of such encumbrance or
restriction; PROVIDED FURTHER, that such encumbrance or restriction does not
prohibit, limit or otherwise restrict the making or payment of any dividend or
other distribution to the Company or any Subsidiary;
(5) in the case of this clause (iii), restrictions contained in
security agreements or mortgages securing Debt of a Subsidiary of Goss to the
extent such restrictions restrict the transfer of the property subject to such
security agreements or mortgages;
(6) any encumbrance or restriction imposed solely upon a
Foreign Subsidiary pursuant to an agreement relating to Indebtedness Incurred
by such Foreign Subsidiary which is permitted under the covenant described in
Section 5.05; and
(7) any restriction with respect to a Subsidiary of Goss
imposed pursuant to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such Subsidiary pending
the closing of such sale or disposition.
Section 8. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless
(i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith by
the Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to
such Asset Disposition and at least 75% of the consideration
thereof received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents, and
(ii) the Company (x) within 180 days (in the case of (A)
below) or 360 days (in the case of (B) below) after receipt of
such Net Available Cash, (A) to the extent the Company so elects
(or is so required by the terms of any Senior Debt), applies an
amount equal to 100% of the Net Available Cash to repay, prepay,
redeem or purchase Senior Debt of the Company or Goss or Debt
(other than any Disqualified Stock) of a Wholly Owned Subsidiary
of Goss (in each case other than Debt owed to the Company or an
Affiliate of the Company) or (B) invests or commits to invest
the balance of such Net Available Cash not applied pursuant to
clause (A), in Additional Assets; PROVIDED, HOWEVER, that in
the case of any
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commitment to invest such investment must be made within one
month thereafter, and any amount not so invested shall be
treated as Excess Proceeds (as defined below); and (y) applies
the balance of such Net Available Cash not applied pursuant to
clause (x), as provided in the following paragraphs of this
covenant. Notwithstanding the foregoing provisions of this
paragraph, the Company and its Subsidiaries shall not be
required to apply any Net Available Cash in accordance with
this paragraph except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not
applied in accordance with this paragraph exceeds [$10
million]. The amount of Net Available Cash required to be
applied and not applied as so required shall constitute
"Excess Proceeds". Pending application of Net Available Cash
pursuant to this covenant, such Net Available Cash shall be
invested in Temporary Cash Investments or applied to repay
Debt Incurred under the Revolving Credit Facility without
commitment reduction thereunder.
For the purposes of this covenant, the following are deemed to
be included in Cash Equivalents: (x) the assumption of Debt of the Company or
any Subsidiary and the release of the Company or such Subsidiary from all
liability on such Debt in connection with such Asset Disposition, (y) Temporary
Cash Investments, and (z) securities received by the Company or any Subsidiary
from the transferee that are promptly converted by the Company or such
Subsidiary into cash.
(b) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not theretofore subject to an Excess
Proceeds Offer (as defined below) totals at least [$10 million], the Company
must, not later than the fifteenth Business Day of such month, make an offer (an
"EXCESS PROCEEDS OFFER") to purchase from the Holders (and to purchase Debt
from the holders of any other Senior Subordinated Debt) on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds (rounded down
to the nearest multiple of $1,000) on such date, at a purchase price equal to
100% of the principal amount of such Notes, plus, in each case, accrued interest
(if any) to the date of purchase (or, in respect of such other Senior
Subordinated Debt, such lesser price, if any, as may be provided for by the
terms of such Senior Subordinated Debt) (the "EXCESS PROCEEDS PAYMENT").
(c) 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 Notes pursuant to this
Section 5.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 5.08, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this clause by virtue thereof.
Section 9. LIMITATION ON AFFILIATE TRANSACTIONS.
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(a) The Company shall not, and shall not permit any Subsidiary
to, enter into or permit to exist any transaction or series of similar
transactions (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service with any
Affiliate of the Company or of Goss (an "AFFILIATE TRANSACTION") unless the
terms thereof:
(i) are no less favorable to the Company or such
Subsidiary than those that could be obtained at the time of
such transaction in arm's length dealings with a Person who is
not such an Affiliate,
(ii) if such Affiliate Transaction involves an amount
in excess of $3 million, (1) are set forth in writing and (2)
have been approved by a majority of the members of the Board
of Directors having no personal stake in such Affiliate
Transaction, and
(iii) if such Affiliate Transaction involves an
amount in excess of $15 million, have been determined by a
nationally recognized investment banking firm to be fair, from
a financial standpoint, to the Company and its Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit:
(i) any Restricted Payment permitted to be paid pursuant
to Section 5.06;
(ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to,
or the funding of, employment arrangements, stock options and
stock ownership plans approved by the Board of Directors and
issued pursuant to the [INSERT NAME OF MANAGEMENT INCENTIVE
PLAN];
(iii) the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans
approved by the Board of Directors;
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(iv) loans or advances to employees in the ordinary
course of business in accordance with the past practices of
the Company or its Subsidiaries and their predecessors, but in
any event not to exceed [$___ million] in the aggregate
outstanding at any one time;
(v) the payment of reasonable and customary fees to
directors of the Company and its Subsidiaries who are not
employees of the Company or its Subsidiaries; and
(vi) any Affiliate Transaction between the Company
and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries.
Section 10. COMPLIANCE CERTIFICATES.
The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under 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, and further
stating, as to each such Officer signing such Officers' Certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action each is taking or proposes to take with respect thereto). The
Company shall also comply with TIA Section 314(a)(4).
Section 11. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.
ARTICLE V SUCCESSORS
Section 1. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS.
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The Company shall not consolidate with or merge with or into,
or convey, transfer or lease, in one transaction or a series of transactions,
all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person
(the "Successor Company") shall be a Person organized and
existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor
Company (if not the Company) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and this Indenture;
(ii) immediately after giving effect to such
transaction (and treating any Debt which becomes an obligation
of the Successor Company or any Subsidiary of the Successor
Company as a result of such transaction as having been
Incurred by such Successor Company or such Subsidiary at the
time of such transaction), no Default shall have occurred and
be continuing;
(iii) immediately after giving effect to such
transaction, the Successor Company would be able to Incur an
additional $1.00 of Debt pursuant to Section 5.04(a);
(iv) immediately after giving effect to such
transaction, the Successor Company shall have Consolidated Net
Worth in an amount which is not less than the Consolidated Net
Worth of the Company prior to such transaction; and
(v) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the terms of this
Indenture.
Section 2. SUCCESSOR COMPANY SUBSTITUTED.
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The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, but the predecessor Company in the
case of a conveyance, transfer or lease shall not be released from the
obligation to pay the principal of and interest on the Notes.
ARTICLE VIDEFAULTS AND REMEDIES
Section 1. EVENTS OF DEFAULT.
Each of the following shall constitute an "EVENT OF DEFAULT":
(i) the Company defaults in any payment of interest
on any Note when the same becomes due and payable, whether or
not such payment shall be prohibited by Article XI, and such
default continues for a period of 30 days;
(ii) the Company defaults in the payment of the
principal of any Note when the same becomes due and payable at
its Stated Maturity, upon optional redemption, upon
declaration, upon required repurchase or otherwise, whether or
not such payment shall be prohibited by Article XI;
(iii) the Company fails to comply with Article VI;
(iv) the Company fails to comply for 30 days after
the notice specified in this Section 7.01 with any of its
obligations contained in Article IV (other than a failure to
purchase Notes), Section 5.03, Section 5.04, Section 5.05,
Section 5.06, Section 5.07, Section 5.08 (other than a failure
to purchase Notes), or Section 5.09;
(v) the Company fails to comply with any of its
agreements in this Indenture (other than those referred to in
clause (i), clause (ii), clause (iii) or clause (iv) of this
Section 7.01) and such failure continues for 60 days after the
notice specified in this Section 7.01;
(vi) a default under the Credit Agreement or under
any other mortgage, indenture or instrument under which there
may be issued or by which there may be
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secured or evidenced any Debt for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is
Guaranteed by the Company or any of its Subsidiaries) whether
such Debt or Guarantee now exists, or is created after the
date of this Indenture, which default (1) is caused by failure
to pay principal of or premium, if any, or interest on such
Debt within any applicable grace period after final maturity
("FINAL PAYMENT DEFAULT"), or (2) results in the acceleration
of such Debt prior to its final stated maturity and, in each
case, the principal amount of any such Debt, together with the
principal amount of any other such Debt under which there has
been a Final Payment Default or the maturity of which has been
so accelerated, aggregates $10 million or more and such
default or acceleration continues for 30 days after the notice
specified in this Section 7.01;
(vii) the Company or any Significant Subsidiary of
the Company pursuant to or within the meaning of Bankruptcy
Law: (1) commences a voluntary case, (2) consents to the entry
of an order for relief against it in an involuntary case, (3)
consents to the appointment of a Custodian of it or for all or
substantially all of its property; or (4) makes a general
assignment for the benefit of its creditors;
(viii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (1) is for
relief against the Company or any Significant Subsidiary of
the Company in an involuntary case, (2), appoints a Custodian
of the Company or any Significant Subsidiary of the Company or
for all or substantially all of the property of the Company or
any Significant Subsidiary of the Company, or (3)
orders the liquidation of the Company or any Significant
Subsidiary of the Company, and any such order or decree
remains unstayed and in effect for 60 consecutive days; and
(ix) any final non-appealable judgment or decree for
the payment of money in excess of $10 million is rendered
against the Company or a Significant Subsidiary, remains
outstanding for a period of 60 days following such judgment
and is not discharged, waived or stayed within 10 days after
notice; PROVIDED, that, the amount of such money judgment or
decree shall be calculated net of any insurance coverage that
the Company has determined in good faith is available in whole
or in part with respect to such money, judgment or decree.
A Default under clauses (iv), (v), (vi) or (ix) will not
constitute an Event of Default until the Trustee or the Holders of at least 25%
in principal amount of the outstanding Notes notify
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the Company of the Default and the Company does not cure such Default within
the time specified after receipt of such notice.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, an Officers' Certificate of any Event of Default
pursuant to clause (iii), clause (vii) or clause (viii) and any event which
with the giving of notice or the lapse of time would become an Event of Default
pursuant to clauses (iv), (v), (vi) or (ix), its status and what action the
Company is taking or proposes to take in respect thereof.
Section 2. ACCELERATION.
If an Event of Default (other than an Event of Default specified
in clause (vii) or clause (viii) of Section 7.01) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
then outstanding Notes, may declare the principal of and accrued but unpaid
interest on all the Notes to be due and payable (collectively, the "DEFAULT
AMOUNT) by notice in writing to the Company, the administrative agent under the
Credit Agreement (if any Debt is then outstanding under the Credit Facility)
and the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration"; PROVIDED, HOWEVER, that the failure to so notify the
administrative agent under the Credit Facility shall not affect the validity of
such acceleration. Upon such a declaration, the Default Amount shall be due and
payable immediately, subject to Article IX and XI of this Indenture.
Notwithstanding the foregoing, in case of an Event of Default specified in
clause (vii) or clause (viii) of Section 7.01, all outstanding Notes shall IPSO
FACTO become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders rescind an acceleration and its consequences (i) if the rescission
would not conflict with any judgment or decree (ii) all existing Events of
Default (except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived and (iii) the
Company has paid the Trustee all amounts due pursuant to Section 8.07.
Section 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, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Notes and this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any such Notes in the proceeding.
A delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon any Event of Default shall not
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impair the right or remedy or constitute a waiver of or acquiescence in such
Event of Default. No remedy shall be exclusive of any other remedy. All
remedies shall be cumulative to the extent permitted by law.
Section 4. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default and its consequences, except (i) a
Default in the payment of the principal of, premium, if any, or interest on, the
Notes; or (ii) a Default in respect of a provision that under Section 10.02
cannot be amended without the consent of each Holder affected thereby. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 5. CONTROL BY MAJORITY.
Subject to certain restrictions, Holders of a majority in
principal amount of the Notes then outstanding may direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or the terms
of this Indenture or if, subject to Section 8.01, the Trustee reasonably
determines that such action, if taken, would be unduly prejudicial to the rights
of other Holders or may involve the Trustee in personal liability.
Section 6. LIMITATION ON SUITS.
Except to enforce the right to receive payment of principal,
premium, if any, or interest when due, no Holder of a Note may pursue any remedy
with respect to this Indenture or the Notes, unless:
(i) such Holder has previously given the Trustee written
notice that an Event of Default is continuing;
(ii) Holders of at least 25% in principal amount of
the Notes then outstanding have made a written request to the
Trustee to pursue the remedy;
(iii) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense;
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(iv) the Trustee has not complied with such request
within 60 days after the receipt thereof and the offer of
security or indemnity; and
(v) Holders of a majority in principal amount of the
Notes then outstanding have not given the Trustee a direction
inconsistent with such request within such 60-day period.
A Holder of a Note shall not use this Indenture to prejudice
the rights of another Holder of a Note or to obtain a preference or priority
over another Holder of a Note.
Section 7. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on such Note, on or after the respective due dates expressed in
such Note, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
any such Holder of a Note.
Section 8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 7.01(i) or Section
7.01(ii) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company for the entire
amount then due and owing, plus the amounts provided for in Section 8.07.
Section 9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may 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 and the Holders of the Notes allowed in any judicial proceedings
relative to the Company, the Company's creditors or the Company's property,
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee, and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to Trustee under Section
8.07. Nothing herein contained shall be deemed to
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authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 10. PRIORITIES.
If the Trustee collects any money pursuant to this Article VII,
it shall pay out the money in the following order:
(i) FIRST: to the Trustee for amounts due to it under
Section 8.07;
(ii) SECOND: to holders of Senior Debt to the extent
required by Article XI;
(iii) THIRD: to Holders for amounts due and unpaid on
the Notes for principal, premium, if any, and interest,
ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal,
premium, if any, and interest, respectively; and
(iv) FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 7.10.
Section 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 reasonable 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 7.11 shall not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 7.07, or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
Section 12. WAIVER OF STAY, EXTENSION AND USURY LAWS.
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The Company (to the extent that it may lawfully do so) 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, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE VIITRUSTEE
Section 1. DUTIES OF TRUSTEE.
(a) If an Event of Default of which a Responsible Officer of the
Trustee is aware 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
degree 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.
(b) Except during the continuance of an Event of Default of
which a Responsible Officer of the Trustee is aware:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the
Trustee need perform only those duties that are specifically
set forth in this Indenture and no others; and
(ii) 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 opinions expressed
therein, upon certificates or opinions 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
requirements of this Indenture.
(c) The Trustee shall not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct or bad faith, except that:
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(i) this paragraph does not limit the effect of
paragraph (b) of this Section 8.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with a direction received by it pursuant to Section
7.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraph (a), paragraph (b) and paragraph (c) of this Section 8.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if the Trustee shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) 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.
(g) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 8.01 and to the provisions of the TIA.
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Section 2. RIGHTS OF TRUSTEE.
(a) The Trustee may rely upon any document reasonably believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in any such document
(b) Before the Trustee acts or refrains from taking any action,
the Trustee may require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action taken or omitted to be
taken by it in good faith in reliance on such Officers' Certificate or such
Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent; PROVIDED, HOWEVER,
that any such agent is appointed by the Trustee with due care.
(d) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this Indenture;
PROVIDED, HOWEVER, that the Trustee's conduct does not constitute negligence,
willful misconduct or bad faith.
(e) The Trustee may consult with counsel of its selection, and
the written advice or opinion of counsel with respect to legal matters shall be
full and complete authorization and protection from liability in respect to any
action taken, omitted or suffered by the Trustee hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
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but the Trustee in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney at the sole cost of the Company, and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation, PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute negligence, willful misconduct or bad faith.
Section 3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights as it would have if the Trustee
were not the trustee hereunder. However, in the event the Trustee acquires any
conflicting interest in accordance with the TIA it must eliminate such
conflicting interest within 90 days, apply to the SEC for permission to continue
as Trustee or resign. Any Paying Agent, Registrar or co-registrar may do the
same-with like rights and duties. The Trustee shall at all times remain subject
to Section 8.10 and Section 8.11.
The Trustee shall not be charged with knowledge of any default
or event of default with respect to the Notes, other than a Default or Event of
Default under Section 7.01(i) or (ii), unless either (i) a Responsible Officer
of the Trustee shall have actual knowledge of such Default or Event of default
or (ii) written notice of such Default or Event of Default shall have been given
to the Trustee by the Company or by any Holder of the Notes.
Section 4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds of the Notes
and it shall not be responsible for any statement contained herein or any
statement contained in the Notes or any other document in connection with the
sale of the Notes or pursuant to this Indenture other than the Trustee's
certificates of authentication.
Section 5. NOTICE OF DEFAULT.
If a Default occurs and is continuing and if such Default is
known to the Responsible Officer of the Trustee, the Trustee must mail to each
Holder a notice of such Default within 90 days (or such shorter period as may
be required by applicable law) after such Default occurs. Except in the case of
a Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders.
Section 6. REPORTS BY TRUSTEE TO HOLDERS.
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Within 60 days after each May 15, beginning with the May 15
following the date of this Indenture, the Trustee shall mail to Holders of
the Notes a brief report dated as of such reporting date that complies with
TIA Section 313(a) to the extent such a report is required by TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to the
Holders shall be mailed to the Company and filed with the SEC and each stock
exchange, if any, on which the Notes may be listed. The Company shall
promptly notify the Trustee upon the Notes being listed on any stock exchange
and any delisting thereof.
Section 7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
compensation as such parties shall agree in writing for the Trustee's
acceptance of this Indenture and its services hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of
the trustee of an express trust). The Company shall reimburse the Trustee for
all reasonable out-of-pocket expenses incurred or made by it in the course of
its services hereunder. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's
agents, counsel, accountants and experts.
The Company shall indemnify the Trustee and any predecessor
Trustee and their agents against any and all loss, liability or reasonable
expense, including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee) incurred in connection with the administration of
this trust, including attorneys fees and expenses, and the performance of its
duties under this Indenture, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its power or duties hereunder, except any such loss,
liability or expense attributable to the negligence, willful misconduct or bad
faith of the Trustee.
The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company may be materially prejudiced by such failure. The Company shall
defend the claim and the Trustee shall cooperate in the defense of such claim.
The Trustee may have separate counsel of its selection and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own negligence, willful misconduct or bad faith.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Company's payment obligations under this Section 8.07
shall survive the resignation or removal of the Trustee or the satisfaction and
discharge of this Indenture.
To secure the Company's payment obligations under this Section
8.07, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except
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such money or property that is held by it in trust for the benefit of Holders
to pay principal and interest on particular Notes.
If the Trustee shall incur expenses after the occurrence of a
Default specified in Section 7.01(vii) or Section 7.01(viii), such expenses
(including the reasonable fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under Bankruptcy Law.
Section 8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 8.08.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company in writing. The Holders of not
less than a majority in principal amount of the Notes then outstanding may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company shall remove the Trustee if:
(i) the Trustee fails to comply with Section
8.10;
(ii) the Trustee is adjudged bankrupt or
insolvent;
(iii) a Custodian or other public officer takes
charge of the Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee gives notice of its resignation or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in principal
amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 8.10, such
Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Any successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all of the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the Lien provided for
in Section 8.07. Notwithstanding replacement of the Trustee pursuant to this
Section 8.08, the Company's obligations under Section 8.07 shall continue for
the benefit of the retiring Trustee.
Section 9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee entity without any further act shall constitute the successor
Trustee; PROVIDED, HOWEVER, that such entity shall be otherwise qualified and
eligible under this Article VIII.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated, and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
Section 10. ELIGIBILITY: DISQUALIFICATION.
This Indenture at all times shall have a Trustee which
satisfies the requirements of TIA Section 310(a). Trustee 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 exercise
corporate trustee power, shall be subject to supervision or examination by
federal or state authority and shall have a combined capital and surplus of
at least $50 million as set forth in its most recently published annual
report of condition. The Trustee shall be subject to TIA Section 310 (b);
PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities
or certificates of interest or participation in other securities of the
Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
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The Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b). A Trustee
which has resigned or been removed shall be subject to TIA Section 311(a) to
the extent indicated therein.
Section 12. MAY HOLD SECURITIES
The Trustee, any authenticating agent, any paying agent,
any registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Section 8.11 hereof and the provisions of the TIA, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
authenticating agent, paying agent, security registrar or such other agent.
ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE
Section 1. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.
(a) When (i) the Company delivers to the Trustee all
outstanding Notes (other than Notes replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Notes have become due and payable, whether
at maturity or as a result of the mailing of a notice of redemption pursuant to
Article III of this Indenture and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Notes including interest thereon to maturity or such redemption date (other than
Notes replaced pursuant to Section 2.07), and if in either case the Company pays
all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 9.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Section 9.01(c) and Section 9.02, the
Company at any time may terminate (i) all of the Company obligations under
the Notes and this Indenture ("LEGAL DEFEASANCE"), except for certain
obligations, including those respecting the defeasance trust and obligations
to register the transfer or exchange of the Notes, to replace mutilated,
destroyed, lost or stolen Notes and to maintain a registrar and paying agent
in respect of the Notes; or (ii) its obligations under Article IV, Section
5.03, Section 5.04, Section 5.05, Section 5.06, Section 5.07, Section 5.08,
Section 5.09, Section 5.10, Section 6.01(iii), Section 6.01(iv) and the
operation of Section 7.01(iv), Section 7.01(vi), Section 7.01(vii) (with
respect only to Significant Subsidiaries), Section 7.01(viii) (with respect
only to Significant Subsidiaries) and Section 7.01(ix) ("COVENANT
DEFEASANCE"). The
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Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Notes may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Notes may not be accelerated because of an Event of Default specified in Section
7.01 (iv), Section 7.01(vi), Section 7.01(vii) (with respect only to Significant
Subsidiaries), Section 7.01(viii) (with respect only to Significant
Subsidiaries) or Section 7.01(ix), or because of the failure of the Company to
comply with Article IV or Section 6.01(iii) or Section 6.01(iv).
Upon satisfaction of the conditions set forth herein and at
the request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations of the Company terminated thereby.
(c) Notwithstanding clause (a) and clause (b) above, the
Company's obligations contained in Section 2.03, Section 2.04, Section 2.05,
Section 2.06, Section 2.07, Section 8.07, Section 8.08 and this Article IX shall
survive until the Notes have been paid in full. Thereafter, the Company's
obligations contained in Section 8.07, Section 9.04 and Section 9.05 shall
survive.
Section 2. CONDITIONS TO DEFEASANCE.
The Company may exercise its legal defeasance option or its
covenant defeasance option only if:
(i) the Company irrevocably deposits in trust (the
"defeasance trust") with the Trustee money or U.S. Government
Obligations for the payment of principal, premium (if any) and
interest on the Notes to maturity or redemption, as the case
may be;
(ii) such defeasance does not result in a breach or
violation of, or constitute a default under, this Indenture,
the Credit Agreement or any other material agreement or
instrument to which the Company is a party or by which it is
bound;
(iii) the Company delivers to the Trustee a
certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of
principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited
money without
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investment will provide cash at such times and in such
amounts as will be sufficient to pay principal and interest
when due on all the Notes to maturity or redemption, as the
case may be;
(iv) 123 days pass after the deposit is made and
during the 123-day period no Default specified in Section
7.01(vii) or Section 7.01(viii) in either case with respect to
the Company occurs which is continuing at the end of the
period;
(v) the deposit does not result in a breach or
violation of, or constitute a default under, this Indenture
(including, without limitation, Article XI hereof), the Credit
Agreement or any other material agreement or instrument to
which the Company is a party or by which the Company is bound;
(vi) the Company delivers to the Trustee an Opinion
of Counsel to the effect that the trust resulting from the
deposit does not constitute, or is qualified as, a regulated
investment company under the U.S. Investment Company Act of
1940, as amended;
(vii) in the case of the legal defeasance option, the
Company shall have delivered to the Trustee an Opinion of
Counsel in the United States stating that (1) the Company has
received from or there has been published by, the Internal
Revenue Service a ruling, or (2) since the date of this
Indenture there has been a change in the applicable U.S.
Federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the
Holders will not recognize income, gain or loss for U.S.
Federal income tax purposes as a result of such defeasance and
will be subject to U.S. Federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such deposit and defeasance had not
occurred;
(viii) in the case of the covenant defeasance option,
the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States to the effect that the Holders
will not recognize income, gain or loss for U.S. Federal
income tax purposes as a result of such covenant defeasance
and will be subject to U.S. Federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not
occurred; and
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(ix) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the
Notes as contemplated by this Article IX have been complied
with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of the Notes at a future date in
accordance with Article III.
Section 3. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article IX. The Trustee shall
apply the deposited money and the money from U.S. Government Obligations through
the Paying Agent and in accordance with this Indenture to the payment of
principal of, premium, if any, and interest on the Notes.
Section 4. REPAYMENT TO THE COMPANY.
The Trustee and the Paying Agent shall promptly turn over to
the Company upon request any excess money or securities held by them at any
time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money shall look to the Company
for payment as general creditors.
Section 5. INDEMNITY FOR GOVERNMENT OBLIGATIONS.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
Section 6. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with this Article IX 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 Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article IX until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations
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in accordance with this Article IX; PROVIDED, HOWEVER, that, if the Company
has made any payment of interest on or principal of any of the Notes because
of the reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Notes to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER
Section 1. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Holder:
(i) to cure any ambiguity, omission, defect or
inconsistency;
(ii) to provide for the assumption of the Company's
obligations to the Holders in the case of a merger or
consolidation pursuant to Article VI;
(iii) to provide for uncertificated Notes in addition
to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code);
(iv) to add guarantees with respect to the Notes;
(v) to secure the Notes;
(vi) to add to the covenants of the Company and its
Subsidiaries hereunder for the benefit of the Holders or to
surrender any right or power conferred upon the Company;
(vii) to make any change that would provide any
additional rights or benefits to the Holders or that does not
adversely affect the rights hereunder of any Holder; or
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(viii) to comply with requirements of the SEC in
order to effect or maintain the qualification of this
Indenture under the TIA.
No amendment may be made to any provision of Article XI that
would adversely affect the rights of any holder of Senior Debt then outstanding
unless the holders of such Senior Debt (or their Representative) consent to such
change.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the
documents described in Sections 10.06 and 12.04, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be contained therein, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
which affects its own rights, dudes or immunities under this Indenture or
otherwise.
After an amendment, supplement or waiver under this Section
10.01 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing any such amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not in
any way impair or affect the validity of any such amended or supplement
Indenture or waiver. Subject to Section 7.04 and Section 7.07, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance by the Company in any particular instance with any provision of this
Indenture or the Notes.
Section 2. WITH CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this
Indenture, the Notes or any amended or supplemental Indenture with the written
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a Lender offer or exchange for the Notes) and any existing Event of Default
and its consequences or compliance with any provision of this Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the Notes then outstanding. However, without the consent of each
Holder of an outstanding Note affected thereby, any amendment, supplement or
waiver may not, among other things:
(i) reduce the amount of Notes the Holders of
which must consent to an amendment;
(ii) reduce the rate of or extend the time for
payment of interest on any Note;
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(iii) reduce the principal of or extend the Stated
Maturity of any Note;
(iv) reduce the premium payable upon the redemption
of any Note or change the time at which any Note may be
redeemed in accordance with Article III;
(v) make any Note payable in money other than that
stated in the Note;
(vi) impair the right of any Holder of the Notes to
receive payment of principal of and interest on such Holder's
Notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such
Holder's Notes;
(vii) make any change in Section 7.04 or Section 7.07
or the second sentence of this Section 10.02; or
(viii) make any change in any provision of Article XI
that adversely affects the interests of any Holder.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory with the Trustee of the consent of the Holders as
aforesaid and upon receipt by the Trustee of the documents described in Sections
10.06 and 12.04, the Trustee shall join with the Company in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties 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 amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under
this Section 10.02 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
10.02 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing any such amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any
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defect therein, shall not in any way impair or affect the validity of any
such amended or supplemental Indenture or waiver. Subject to Section 7.04 and
Section 7.07, the Holders of a majority in aggregate principal amount of the
Notes then outstanding may waive compliance by the Company in any particular
instance with any provision of this Indenture or the Notes.
Section 3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 4. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS.
Until an amendment, supplement or waiver becomes effective,
a consent to such amendment, supplement or waiver by a Holder is a continuing
and binding consent by the Holder and every subsequent Holder of the Notes or
portion of a Note that evidences the same Debt as the consenting Holder's
Note, even if a notation of the consent or waiver is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to
its Note if the Trustee receives written notice of revocation before the date
the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver shall become effective in accordance with its terms and
thereafter shall bind every Holder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, such Persons which were Holders at such record
date (or their duly designated proxies), and only such Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
Section 5. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment or supplement changes the terms of a Note, the
Trustee may require the Holder to deliver such Note to the Trustee. The Trustee
may place an appropriate notation on the Note regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for such Note shall issue and the Trustee
shall authenticate a new Note that reflects such changed terms. Failure to make
the appropriate notation or to issue a new Note shall not affect the validity of
such amendment or supplement.
Section 6. TRUSTEE TO SIGN AMENDMENTS, ETC.
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The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article X if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment or
supplement the Trustee shall be entitled to receive, and (subject to Section
8.01) shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel stating that such amendment or supplement is authorized or
permitted pursuant to this Indenture. The Company shall not sign any amendment
or supplemental Indenture until the Board of Directors approves any such
amendment or supplemental Indenture.
Section 7. PAYMENT FOR CONSENTS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, amendment, supplement or waiver with respect
to any term or provision of this Indenture or the Notes, unless such
consideration is offered to be paid or agreed to be paid to all Holders that
consent, waive or agree to amend or supplement in the time frame set forth in
the solicitation documents relating to any such consent, waiver or agreement to
amend or supplement.
ARTICLE XSUBORDINATION OF NOTES
Section 1. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting the Notes
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article XI, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt and that
the subordination is for the benefit of and enforceable by the holders of Senior
Debt. The Notes shall in all respects rank PARI PASSU with all other Senior
Subordinated Debt of the Company and only Indebtedness of the Company which is
Senior Debt shall rank senior to the Notes in accordance with the provisions set
forth herein. All provisions of this Article XI shall be subject to Section
11.15 hereof.
Section 2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION; ETC.
In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets; or (ii) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy; or (iii) any assignment for the benefit
of creditors or any other marshalling
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of assets or liabilities of the Company, then and in any such event specified
in clause (i), clause (ii) or clause (iii) above (each such event, if any,
herein sometimes referred to as a "PROCEEDING"):
(1) the holders of Senior Debt will be entitled to receive payment of
such Senior Debt in full in cash or Cash Equivalents before the
Noteholders are entitled to receive any payment or distribution of
cash, securities or other property with respect to the principal of,
premium, (if any), or interest on or other obligations in respect of
the Notes, or on account of any purchase or other acquisition of Notes
by the Company (all such payments, distributions, purchases and
acquisitions herein referred to, individually and collectively, as a
"NOTES PAYMENT"), and to that end the holders of Senior Debt of the
Company shall be entitled to receive, for application to the payment
thereof, any Notes Payment which may be payable or deliverable in
respect of the Notes in any such Proceeding; and
(2) until the Senior Debt is paid in full in cash or Cash Equivalents,
any Notes Payment to which Noteholders would be entitled but for this
Article XI will be made to holders of such Senior Debt as their
interests may appear. If a Notes Payment is made to Noteholders that,
due to this Article XI should not have been made to them such
Noteholders are required to hold it in trust for the holders of Senior
Debt and pay it over to them as their interests may appear.
In the event that, notwithstanding the foregoing provisions
of this Section 11.02, the Trustee receives payment or distribution of assets
of the Company of any kind or character, before all the Senior Debt of the
Company is paid in full in cash or Cash Equivalents, then and in such event,
such Notes Payment shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Company for
application to the payment of all Senior Debt of the Company remaining
unpaid, to the extent necessary to pay the Senior Debt of the Company in full
in cash or Cash Equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt of the Company.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Article VI shall not be deemed a Proceeding for the
purposes of this Section 11.02 if the person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or
transfer such properties and assets as an entirety, as the case may be, shall,
as part of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article VI.
Section 3. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
The Company may not make any Notes Payment or make any deposit
pursuant to the provisions described under Article IX if (i) any Senior Debt is
not paid when due or (ii) any other default on Senior Debt occurs and the
maturity of such Senior Debt is accelerated in accordance with its terms unless,
in either case, the default has been cured or waived or has ceased to exist and
any
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such acceleration has been rescinded or such Senior Debt has been discharged
or paid in full; PROVIDED, HOWEVER, that the Company may make Notes Payments
or make any deposit pursuant to the provisions described under Article IX
without regard to the foregoing if the Company and the Trustee receive
written notice approving such payment from the Representative of the Senior
Debt with respect to which either of the events set forth in clause (i) or
(ii) of the immediately preceding sentence has occurred and is continuing.
During the continuance of any default (other than a default described in
clause (i) or (ii) of the second preceding sentence) (a "non-payment
default") with respect to any Senior Debt pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such accelerations) or the expiration of
any applicable grace periods, the Company may not make Notes Payments for a
period (a "Payment Blockage Period") commencing upon the receipt by the
Trustee (with a copy to the Company) of written notice (a "Blockage Notice")
of such default from the Representative of the holders of such Designated
Senior Debt specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the
Person or Persons who gave such Blockage Notice, (ii) because the default
giving rise to such Blockage Notice is no longer continuing or (iii) because
Senior Debt has been discharged or repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence, unless an event
described in clause (i) or (ii) of the first sentence of this paragraph has
occurred, the Company may resume payments on the Notes after the end of such
Payment Blockage Period. The Notes shall not be subject to more than one
Payment Blockage Period in any consecutive 360-day period. For all purposes
of this paragraph, no non-payment default with respect to Senior Debt that
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Senior Debt initiating such Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, unless such default has been cured or waived
for a period of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Company
shall make any Notes Payment to the Trustee or any Holder prohibited by the
foregoing provisions of this Section 11.03, then and in such event, such Notes
Payment shall be paid over and delivered forthwith to the holders of the Senior
Debt of the Company remaining unpaid, to the extent necessary to pay in full in
cash or Cash Equivalents all the Senior Debt of the Company.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify the holders of Senior Debt or the
Representative of such holders of the acceleration.
The provisions of this Section 11.03 shall not apply to any
Notes Payment with respect to which Section 11.02 would be applicable.
Section 4. ACCELERATION OF PAYMENT OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of all
Senior Debt (or the Representative of such holders) of the acceleration. If any
Senior Debt is outstanding none of the Company or any
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Guarantor may pay the Notes until five Business Days after the Representative
of all Senior Debt receives notice of such acceleration and, thereafter, may
pay the Notes only if such payments are otherwise permitted pursuant to this
Article XI at such time.
Section 5. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article XI or elsewhere in this
Indenture or in any of the Notes shall prevent the Company, at any time except
during the pendency of any Proceeding referred to in Section 11.02 or under the
conditions described in Section 11.03, from making Notes Payments.
Section 6. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
Subject to the payment in full of all amounts due or to become
due on or in respect of Senior Debt of the Company, or the provision for such
payment, in cash or Cash Equivalents or otherwise in a manner satisfactory to
the holders of Senior Debt of the Company, the Holders shall be subrogated
(equally and ratably with the holders of all Debt of the Company, if any, which
by its express terms is subordinated to Senior Debt of the Company to
substantially the same extent as the Notes are subordinated to the Senior Debt
of the Company and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Debt) in right of
payment to the rights of the holders of such Senior Debt of the Company to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt of the Company until the principal of (and premium, if any)
and interest on the Notes shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt of
the Company of any cash, property or securities to which the Holders or the
Trustee would be entitled except for the provisions of this Article XI, and no
payments over pursuant to the provisions of this Article XI to the holders of
Senior Debt of the Company by Holders or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt and the Holders, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Debt of the Company.
Section 7. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article XI are and are intended solely
for the purpose of defining the relative rights of the Holders on the one hand
and the holders of Senior Debt of the Company on the other hand. Nothing
contained in this Article XI or elsewhere in this Indenture or in the Notes is
intended to or shall (i) impair, as among the Company, its creditors other than
holders of Senior Debt and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal of (and premium,
if any) and interest on the Notes as and when the same shall become due and
payable in accordance with their terms; or (ii) affect the relative rights
against the Company of the Holders and creditors of the Company other than the
holders of Senior Debt; or (iii) prevent the Trustee or the Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this
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Article XI of the holders of Senior Debt of the Company to receive cash,
property and securities otherwise payable or deliverable to the Trustee or
such Holder.
Section 8. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Note by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article XI and appoints the Trustee his attorney-in-fact for any and all
such purposes. If the Trustee does not file a proper claim or proof of debt in
the form required in any bankruptcy, insolvency or receivership proceeding prior
to 30 days before the expiration of the time to file such claim or claims, then
the holders of the Senior Debt or their Representative are hereby authorized to
file an appropriate claim for and on behalf of the Holders. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of Senior Debt
or their Representative to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arraignment, adjudication or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee for the holder of Senior Debt or their Representative to
vote in respect of the claim of any Holder in any such proceeding.
Section 9. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Debt of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture.
Without in any way limiting the generality of the foregoing
paragraph, the holders of the Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing
the subordination provided in this Article or the obligations hereunder of
the Holders to the holders of Senior Debt, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding;
PROVIDED, HOWEVER, that any such alteration shall not increase the amount of
Senior Debt outstanding in a manner prohibited by this Indenture; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (c) release any Person liable in any manner
for the collection of Senior Debt; and (d) exercise of refrain from
exercising any rights against the Company or any other Person; PROVIDED,
HOWEVER, that in no event shall any such actions limit the right of the
Holder to take any action to accelerate the maturity of the Notes in
accordance with the provisions set forth in Article V or to pursue any rights
or remedies against the parties to the Indenture under the Indenture or under
applicable laws if the taking of such action does not otherwise violate the
terms of this Article.
Section 10. NOTICE TO TRUSTEE.
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The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article XI or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which could prohibit the
making of any payment to or by the Trustee in respect of the Notes, unless and
until the Trustee shall have received written notice thereof specifically
referencing this Article XI from the Company or a holder of Senior Debt of the
Company or from any Representative or trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 8.01, shall be entitled in all respects to assume that no such facts
exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice
provided for in this Section 11.10 at least three Business Days prior to the
date upon which by the terms hereof any money may became payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest on any Note), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
within three Business Days prior to such date.
Subject to the provisions of Section 8.01, the Trustee and the
Holders shall be entitled to rely on the Representative for the holders of
Senior Debt for the purpose of ascertaining the Persons entitled to participate
in any payment or distribution pursuant to this Article XI. In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any person as a holder of Senior Debt of the Company to
participate in any payment or distribution pursuant to this Article XI, the
Trustee may request each Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt of the Company held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of such
Person under this Article XI, and if such evidence is not finished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 11. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGE.
Upon any payment or distribution of assets of the Company
referred to in this Article XI, the Trustee, subject to the provisions of
Section 8.01, and the Holders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining
the persons entitled to participate in such payment or distribution, the
holders of the Senior Debt of the Company and other Debt of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XI.
Section 12. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
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The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt of the Company and shall not be liable to any such
holders if it shall mistakenly in the absence of gross negligence or willful
misconduct pay over or distribute to Holders or to the Company or to any other
Person cash, property or securities to which any holders of Senior Debt of the
Company shall be entitled by virtue of this Article XI or otherwise. With
respect to the holders of Senior Debt of the Company, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article XI and no implied covenants or
obligations with respect to holders of Senior Debt of the Company shall be read
into this Indenture against the Trustee.
Section 13. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XI with respect to any Senior Debt of
the Company which may at any time be held by it, to the same extent as any other
holder of Senior Debt of the Company, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XI shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 8.07.
Section 14. ARTICLE XI APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article XI shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article XI in addition to or in place of the Trustee;
PROVIDED, HOWEVER, that Section 11.13 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 15. TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government Obligations held in trust
under Article IX by the Trustee for the payment of principal of, premium, if
any, and interest on the Notes shall not be subordinated to the prior payment of
any Senior Debt or subject to the restrictions on this Article XI, and none of
the Trustee or the Holders shall be obligated to pay over any such amount to the
Company or any holder of Senior Debt of the Company or any other creditor of the
Company.
Section 16. RELIANCE BY HOLDERS OF SENIOR DEBT ON SUBORDINATION PROVISIONS.
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Each Holder by accepting a Note acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Debt, whether
such Senior Debt was created or acquired before or after theissuance of the
Notes, to acquire and continue to hold, or to continue to hold, such Senior
Debt and such holder of Senior Debt shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold,
or in continuing to hold, such Senior Debt.
Section 17. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative (if any).
Section 18. ARTICLE XI NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO
ACCELERATE.
The failure to make a payment pursuant to the Notes by reason
of any provision in this Article XI shall not be construed as preventing the
occurrence of a Default. Nothing in this Article XI shall have any effect on the
right of the Holders or the Trustee to accelerate the maturity of the Notes.
ARTICLE XIMISCELLANEOUS
Section 1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Sections 318(c), such imposed duties
shall control.
Section 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 certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
Goss Holdings, Inc.
700 Oakmont Lane
Westmont, Illinois 60559
Telecopier No.: (708) 850-5807
Attention: _______________
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If to the Trustee:
HSBC Bank USA
140 Broadway
New York, NY 10005
Telecopier No: (212) 658-6425
Attention: Vice President - Issuer Services
The Company or the Trustee, by notice each to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; 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 Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
Note Register. Any notice or communication shall also be so mailed to any Person
described in TIA Section 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in such notice shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner set forth
above within the time prescribed, such notice or communication shall be deemed
to be duly given whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it
shall make a copy to the Trustee and each Agent at the same time.
Section 3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders pursuant to TIA Section 312(b) may communicate with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar, the Paying Agent and any other Person
shall have the protection of TIA Section 312(c).
Section 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 Company shall furnish to the
Trustee:
(i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the
opinion of the signers, all conditions and covenants,
70
<PAGE>
if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(ii) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the
opinion of such counsel, all conditions and covenants have
been satisfied.
Section 5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant contained in this Indenture shall include:
(i) a statement that the Person making such
certificate or opinion has read such condition or covenant;
(ii) 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;
(iii) a statement that, in the opinion of such
Person, he or she has made such examination or investigation
as is necessary to enable him or her to express an informed
opinion as to whether such condition or covenant has been
satisfied; and
(iv) a statement as to whether, in the opinion of
such Person, such condition or covenant has been satisfied.
Section 6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar and Paying Agent may make reasonable rules and
set reasonable requirements for their functions.
Section 7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES,
INCORPORATORS AND STOCKHOLDERS.
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<PAGE>
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or this Indenture or for
any claim based on, in respect of, or by reason of, such obligations. Each
Holder by accepting a Note waives and releases all such liability. Such
waiver and release form a part of the consideration for issuance of the Notes.
Section 8. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not he used to interpret another
indenture, loan or debt agreement of the Company or its Subsidiaries. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 10. SUCCESSORS.
All agreements of the Company contained in this Indenture
and the Notes shall bind the Company and its successors. All agreements of
the Trustee in this Indenture shall bind the Trustee and its successors.
Section 11. SEVERABILILY.
In case any provision of this Indenture or the Notes shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this
Indenture. Each such signed copy shall be deemed to be an original, and all
of such signed copies together shall represent one and the same agreement.
Section 13. TABLE OF CONTENTS, HEADINGS, ETC.
72
<PAGE>
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
only, and shall not, for any reason, be deemed to be part of this Indenture and
shall in no way modify or restrict any of the terms or provisions hereof.
73
<PAGE>
SIGNATURES
DATED AS OF OCTOBER __, 1999 GOSS HOLDINGS, INC.
By:
Name:
Title:
DATED AS OF OCTOBER __, 1999 HSBC BANK USA
as Trustee
By:
Title:
<PAGE>
EXHIBIT A
FORM OF FACE OF NOTE
GOSS HOLDINGS, INC.
No. Principal Amount $
CUSIP No. _________
12 1/4% Senior Subordinated Notes Due 2005
GOSS HOLDINGS, INC., a Delaware corporation, promises to pay
to ____________________, or registered assigns, the principal sum of __________
Dollars on October 15, 2005.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Note are set forth on the
reverse side of this Note.
Date:
[SEAL] GOSS HOLDINGS, INC.
By
Title:
By
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
HSBC BANK USA,
as Trustee, certifies
that this is one of the
Notes referred to in the
Indenture.
Dated:___________________________
By:__________________________________
Authorized Signatory
A-1
<PAGE>
FORM OF REVERSE SIDE OF NOTE
12 1/4% Senior Subordinated Notes Due 2005
1. INTEREST
GOSS HOLDINGS, INC., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called "THE COMPANY"), promises to pay interest on
the principal amount of this Note at the rate per annum shown above provided,
however, interest payments due on and before October 15, 2001 shall be paid
in the form of additional Notes identical in form to this Note, in lieu of
cash.. The Company will pay interest, whether in cash or in the form of
additional Notes as aforesaid, semi-annually on April 15 and October 15 of
each year, commencing April 15, 2000. Interest on the Notes will accrue from
the most recent date to which interest has been paid, or, if no interest has
been paid, from October 15, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months. The Company shall pay interest on
overdue principal at the rate borne by the Notes and shall pay interest on
overdue installments of interest at such rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered holders of Notes at the
close of business on the April 1 or October 1 next preceding the interest
payment date even if Notes are cancelled after the record date and on or
before the interest payment date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal and interest by check payable in such money. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. On each Interest Payment Date on and prior
to October 15, 2001, the Trustee shall authenticate additional Notes for
original issuance to each Holder on the relevant Record Date in the aggregate
principal amount required to pay such interest. Additional Notes are an
additional obligation of the Company and shall be governed by, and entitled
to the benefits of, the Indenture (as such term is defined below) and shall
be subject to the terms of the Indenture and shall rank pari passu with and
be subject to the same terms (including the rate of interest from time to
time payable thereon) as this Note (except, as the case may be, with respect
to the issuance date and aggregate principal amount).
A-2
<PAGE>
3. PAYING AGENT AND REGISTRAR
Initially, HSBC Bank USA, a New York banking corporation
(the "TRUSTEE"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Notes under an Indenture dated as of
October 15, 1999 (the "INDENTURE"), between the Company and the Trustee. The
terms of the Notes 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 "TIA").
Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of
those terms.
The Notes are unsecured senior subordinated obligations of
the Company limited to $112,500,000 aggregate principal amount (except as
otherwise provided in Section 1 of this Note relating to the Company's option
to make certain interest payments on the Notes in the form of additional
Notes). The Indenture imposes certain limitations on the incurrence of
additional indebtedness by the Company and certain of its subsidiaries, the
payment of dividends on, and the redemption of, capital stock of the Company
and certain of its Subsidiaries, the making of Investments, restrictions on
distributions from certain Subsidiaries, the use of proceeds from the sale of
assets and Subsidiary stock and transactions with affiliates. The Indenture
also restricts the ability of the Company to consolidate or merge with or
into, or to transfer all or substantially all its assets to, another person.
5. OPTIONAL REDEMPTION
(a) The Notes will be redeemable, at the Company's option,
in whole or in part, at any time and from time to time, upon not less than 30
nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at a redemption price (expressed as a percentage
of principal amount), equal to 103.5%, plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
A-3
<PAGE>
In the case of any partial redemption, selection of the
Notes for redemption will be made by the Trustee on a pro rata basis, by lot
or by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate and in compliance with the applicable legal and
securities exchange requirements, if any, and, although no Note of $1,000 in
original principal amount or less shall be redeemed in part. If any Note is
to be redeemed in part only, the notice of redemption relating to such Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Note.
6. NOTICE OF REDEMPTION
Notice of redemption shall be mailed at least 30 days but
not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Notes (or such portions thereof) called for redemption.
7. PUT PROVISIONS
Upon a Change of Control or Enterprise Valuation Event, any
Holder will have the right to cause the Company to repurchase all or any part
of the Notes of such Holder at a purchase price equal to, in the case of an
Enterprise Valuation Event, 107% or, in all other cases, 101% of the
principal amount of the Notes to be repurchased plus accrued interest to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the interest payment date) as provided
in, and subject to the terms of, the Indenture.
8. SUBORDINATION
The Notes are subordinated to Senior Debt, as such term is
defined in the Indenture. To the extent provided in the Indenture, Senior
Debt must be paid in full in cash or Cash Equivalents before the Notes may be
paid. The Company agrees, and each Holder by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the
Trustee to give effect to such subordination provisions and appoints the
Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS, TRANSFER, EXCHANGE
A-4
<PAGE>
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000 (except that, as
provided in Section 1 of this Note, additional Notes shall be issued in the
amount of accrued and unpaid interest on the Notes due on and before October
15, 2001). Holders may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Note selected for redemption
(except, in the case of a Note to be redeemed in part, the portion of the
Note not to be redeemed) or any Notes for a period of 15 days before a
selection of Notes to be redeemed or 15 days before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Note may be treated as the
sole owner of such Note for all purposes.
11. UNCLAIMED MONEY
Subject to applicable abandoned property law, if money for
the payment of principal or interest remains unclaimed for two years, the
Trustee or Paying Agent shall pay the money back to the Company at its
request. After any such payment, Holders entitled to the money must look only
to the Company and not to the Trustee or Paying Agent for payment as general
creditors.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Notes and the Indenture if
the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Notes to redemption or
maturity, as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture,
(i) the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Notes;
and (ii) any default or compliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount of the Notes
then outstanding. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article VI of the Indenture, or to provide
for uncertificated Notes, in addition to or in place of certificated Notes,
or to add guarantees with respect
A-5
<PAGE>
to the Notes or add additional covenants or surrender rights and powers
conferred on the Company, or to make any change that would provide additional
rights or benefits to the Holders or that does not adversely affect the
rights of any Holder or to comply with requirements of the SEC in connection
with the qualification of the Indenture under the TIA.
14. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest; (ii) default in payment of principal on
the Notes at maturity, upon redemption, upon declaration, upon required
repurchase or otherwise; (iii) failure by the Company to comply with other
covenants in the Indenture or the Notes, in certain cases subject to notice
and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Debt of the Company or
any of its Subsidiaries if the amount accelerated (or so unpaid) aggregates
$10 million or more; (v) certain events of bankruptcy or insolvency with
respect to the Company and its Significant Subsidiaries; and (vi) certain
judgments or decrees for the payment of money in excess of $10 million. If an
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Notes may declare all the Notes to be
due and payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Notes being due and payable
immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default (except a Default in
payment of principal or interest) if it determines that withholding such
notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have if
it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
A past, present or future director, officer, employee or
stockholder, as such, of the Company or the Trustee shall not have any liability
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations. By
A-6
<PAGE>
accepting a Note, each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Notes.
17. AUTHENTICATION
This Note shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the face of this Note.
18. 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 entireties), JT TEN (=joint tenants with rights of survivorship and not
as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. GOVERNING LAW
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
20. CUSIP NUMBERS
Pursuant to the recommendation promulgated by the Committee
on Uniform Security Identification Procedures the Company has caused CUSIP
numbers to be printed on the Notes and has directed the Trustee to use such
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 Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
------------------------
The Company will furnish to any Holder upon written request
and without charge to such Holder a copy of the Indenture which contains the
text of this Note in larger type. Requests may be made to:
Goss Holdings, Inc.
700 Oakmont Lane,
Westmont Illinois 60559
A-7
<PAGE>
Attention: ___________________
A-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, complete the form below:
I or we assign and transfer this Note to:
[PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE]
[INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO. ]
and irrevocably appoint agent to transfer this Note 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 face of this Note.
==============================================================================
Guaranteed:
(Signature must be guaranteed by an "eligible guarantor
institution", that is, a bank, stockbroker, saving and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or participation
in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as
amended.)
A-9
<PAGE>
OPTION OF HOLDER OF NOTE TO ELECT PURCHASE
If you elect to have this Note purchased by the Company pursuant to Article IV,
check the box:
---
If you elect to have only part of this Note purchased by the Company pursuant to
Article IV, state the amount:
$
Date: Your Signature: ______
(Sign exactly as your name
appears on the face of the
Note)
Guaranteed:
(Signature must be guaranteed by an "eligible guarantor
institution", that is, a bank, stockbroker, saving and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or participation
in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as
amended.)
A-10
<PAGE>
GOSS HOLDINGS, INC.
EXHIBIT 3F
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
(b)(i) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 8.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.06; 11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02; 11.03
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.05; 12.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 7.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.07
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
</TABLE>
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: ) CHAPTER 11
)
GOSS GRAPHIC SYSTEMS, INC., ET AL.,(1) ) CASE NO. 99-2756 (PJW)
) (JOINTLY ADMINISTERED)
DEBTORS. )
- -------------------------------------------------------------------------------
SECOND AMENDED DISCLOSURE STATEMENT FOR PLAN OF
REORGANIZATION OF GOSS GRAPHIC SYSTEMS, INC., GGS HOLDINGS, INC.
AND GOSS REALTY, L.L.C., UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
- -------------------------------------------------------------------------------
IMPORTANT DATES
- - Date by which Ballots must be received: October 12, 1999
- - Date by which objections to Confirmation of the Plan must be filed and
served: October 12, 1999
- - Hearing on Confirmation of the Plan: October 19, 1999
- -------------------------------------------------------------------------------
[11 U.S.C. Section 1125(b) PROHIBITS SOLICITATION OF AN ACCEPTANCE OR
REJECTION OF A PLAN OF REORGANIZATION UNLESS A COPY OF THE PLAN OF
REORGANIZATION OR A SUMMARY THEREOF IS ACCOMPANIED OR PRECEDED BY A
COPY OF A DISCLOSURE STATEMENT APPROVED BY THE BANKRUPTCY COURT. THIS
PROPOSED DISCLOSURE STATEMENT HAS NOT YET BEEN APPROVED BY THE
BANKRUPTCY COURT, AND, THEREFORE, THE FILING AND DISSEMINATION OF THIS
PROPOSED DISCLOSURE STATEMENT IS NOT INTENDED TO BE, NOR SHOULD IT BE
CONSTRUED AS, AN AUTHORIZED SOLICITATION PURSUANT TO 11 U.S.C. Section
1125 AND RULE 3017 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE. NO
SUCH SOLICITATION WILL BE MADE EXCEPT AS AUTHORIZED PURSUANT TO SUCH
LAW AND RULES.]
James H.M. Sprayregen Laura Davis Jones (No. 2436)
Matthew N. Kleiman Maureen D. Luke
James W. Kapp III Michael R. Nestor
Chris L. Dickerson YOUNG CONAWAY STARGATT
KIRKLAND & ELLIS & TAYLOR, LLP
200 East Randolph Drive 11th Floor, Rodney Square North
Chicago, Illinois 60601 P.O. Box 391
(312) 861-2000 Wilmington, Delaware 19899
(302) 571-6600
Co-Counsel for Goss Graphic Systems, Inc, GGS Holdings, Inc. and Goss Realty,
L.L.C.
- -------------------------
(1) The Debtors are the following entities: Goss Graphic Systems, Inc., GGS
Holdings, Inc., and Goss Realty, L.L.C.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. EXECUTIVE SUMMARY AND BACKGROUND
OF PLAN AND DISCLOSURE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .1
A. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
B. EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. Purposes of the Disclosure Statement . . . . . . . . . . . . . . . .2
2. Record Date; Voting; Required Approvals . . . . . . . . . . . . . . .2
C. BACKGROUND OF THE DEBTORS AND EVENTS LEADING TO THE PLAN . . . . . . . . .3
1. Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . .3
2. The Company's Business. . . . . . . . . . . . . . . . . . . . . . . .3
3. Summary of Certain Pre-Existing Lending Facilities. . . . . . . . . .4
4. Prepetition Restructuring Activities. . . . . . . . . . . . . . . . .5
5. Assets and Liabilities of the Debtors . . . . . . . . . . . . . . . .7
D. COMPONENTS OF THE PLAN; TREATMENT OF CLASSES OF CLAIMS AND EQUITY
INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2. DIP Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3. Funding the Plan. . . . . . . . . . . . . . . . . . . . . . . . . . .8
4. Treatment of the Old Notes. . . . . . . . . . . . . . . . . . . . . .8
5. Treatment of Equity . . . . . . . . . . . . . . . . . . . . . . . . .8
6. Management Equity . . . . . . . . . . . . . . . . . . . . . . . . . .8
7. No Substantive Consolidation. . . . . . . . . . . . . . . . . . . . .9
8. Classification of Claims. . . . . . . . . . . . . . . . . . . . . . .9
9. Treatment of Classes. . . . . . . . . . . . . . . . . . . . . . . . 11
10. Liquidation Analysis. . . . . . . . . . . . . . . . . . . . . . . . 13
E. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
F. REORGANIZED DEBTORS AND THE POST-CONFIRMATION ESTATES. . . . . . . . . . 14
G. PREPETITION COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . 14
H. RELATIONSHIP BETWEEN SYSTEMS AND REALTY. . . . . . . . . . . . . . . . . 14
II. THE PLAN OF REORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. CLASSIFICATION OF CLAIMS AND INTERESTS . . . . . . . . . . . . . . . . . 16
1. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2. Classification and Treatment. . . . . . . . . . . . . . . . . . . . 17
III. FINANCIAL ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
A. LIQUIDATION ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1. Estimate of Net Proceeds. . . . . . . . . . . . . . . . . . . . . . 24
2. Estimate of Costs . . . . . . . . . . . . . . . . . . . . . . . . . 24
3. Distribution of Net Proceeds under Absolute Priority. . . . . . . . 25
B. PROJECTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1. Responsibility for and Purpose of the Projections . . . . . . . . . 30
2. Summary of Significant Assumptions. . . . . . . . . . . . . . . . . 31
3. Special Note Regarding Forward-Looking Statements. . . . . . . . . 33
4. Financial Projections . . . . . . . . . . . . . . . . . . . . . . . 33
IV. PROCEDURES FOR TREATMENT OF DISPUTED, CONTINGENT AND UNLIQUIDATED
CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
A. RESOLUTION OF DISPUTED CLAIMS. . . . . . . . . . . . . . . . . . . . . . 39
1. Prosecution of Objections to Claims . . . . . . . . . . . . . . . . 39
2. Estimation of Claims. . . . . . . . . . . . . . . . . . . . . . . . 39
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3. Payments and Distributions on Disputed Claims . . . . . . . . . . . 39
B. ALLOWANCE OF CLAIMS AND INTERESTS. . . . . . . . . . . . . . . . . . . . 39
C. CONTROVERSY CONCERNING IMPAIRMENT. . . . . . . . . . . . . . . . . . . . 40
V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . 40
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . 40
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED
LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
C. CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES
ASSUMED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
D. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES . . . . . . . . . . 41
E. COMPENSATION AND BENEFIT PROGRAMS. . . . . . . . . . . . . . . . . . . . 41
VI. MEANS FOR IMPLEMENTATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . 41
A. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE
REORGANIZED DEBTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
B. CANCELLATION OF NOTES, INSTRUMENTS, DEBENTURES, COMMON STOCK AND
STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
C. ISSUANCE OF NEW SECURITIES; EXECUTION OF RELATED DOCUMENTS . . . . . . . 42
D. NEW HOLDINGS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . 42
E. NEW SYSTEMS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . 42
F. NEW REALTY MEMBER INTERESTS. . . . . . . . . . . . . . . . . . . . . . . 42
G. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS, AND CORPORATE
ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
1. Officers and Directors of Systems . . . . . . . . . . . . . . . . . 42
2. Officers and Directors of Holdings. . . . . . . . . . . . . . . . . 43
3. Officers and Members of Realty. . . . . . . . . . . . . . . . . . . 44
H. AMENDED CERTIFICATES OF INCORPORATION AND FORMATION. . . . . . . . . . . 44
I. CORPORATE ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
J. SOURCES OF CASH FOR PLAN DISTRIBUTION. . . . . . . . . . . . . . . . . . 44
VII. PROVISIONS GOVERNING DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 44
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE
DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. DISTRIBUTIONS BY THE REORGANIZED DEBTORS; DISTRIBUTIONS WITH
RESPECT TO DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 45
C. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
1. Delivery of Distributions in General. . . . . . . . . . . . . . . . 45
2. Undeliverable Distributions . . . . . . . . . . . . . . . . . . . . 45
D. DISTRIBUTION RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . 46
E. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED. . . . . . . . . . . 46
F. MINIMUM DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 46
G. SETOFFS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
H. SURRENDER OF CANCELED INSTRUMENTS OR SECURITIES. . . . . . . . . . . . . 46
1. Notes and Debentures. . . . . . . . . . . . . . . . . . . . . . . . 47
2. Failure to Surrender Canceled Instruments . . . . . . . . . . . . . 47
I. LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES . . . . . . . . . . 47
VIII. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 47
A. CONDITIONS PRECEDENT TO CONFIRMATION . . . . . . . . . . . . . . . . . . 47
B. CONDITIONS PRECEDENT TO CONSUMMATION . . . . . . . . . . . . . . . . . . 48
C. WAIVER OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
D. EFFECT OF NON-OCCURRENCE OF CONDITIONS TO
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CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
IX. RELEASE, INJUNCTIVE AND RELATED PROVISIONS. . . . . . . . . . . . . . . . . . 48
A. SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
B. LIMITED RELEASES BY THE DEBTORS. . . . . . . . . . . . . . . . . . . . . 49
C. LIMITED RELEASES BY HOLDER OF CLAIMS . . . . . . . . . . . . . . . . . . 49
D. PRESERVATION OF RIGHTS OF ACTION . . . . . . . . . . . . . . . . . . . . 50
E. EXCULPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
F. INJUNCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
X. RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . 50
XI. PROCESS OF VOTING AND CONFIRMATION . . . . . . . . . . . . . . . . . . . . . 51
A. VOTING INSTRUCTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
B. VOTING TABULATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
C. SPECIAL VOTING PROCEDURES FOR HOLDERS OF OLD NOTES . . . . . . . . . . . 53
1. Beneficial Holders. . . . . . . . . . . . . . . . . . . . . . . . . 53
2. Nominees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
D. CONFIRMATION HEARING . . . . . . . . . . . . . . . . . . . . . . . . . . 54
E. STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN. . . . . . . . . . . 54
1. Best Interests of Creditors Test/Liquidation Analysis . . . . . . . 55
2. Financial Feasibility . . . . . . . . . . . . . . . . . . . . . . . 56
3. Acceptance by Impaired Class. . . . . . . . . . . . . . . . . . . . 56
4. Confirmation Without Acceptance by All Impaired Classes . . . . . . 56
XII. RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
A. FINANCIAL INFORMATION; DISCLAIMER. . . . . . . . . . . . . . . . . . . . 57
B. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . 57
1. Certain Federal Income Tax Consequences to the Holders. . . . . . . 57
2. Certain Federal Income Tax Consequences to New
Holdings and Systems. . . . . . . . . . . . . . . . . . . . . . . . 58
C. CERTAIN BANKRUPTCY CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . 60
1. Risk of Non-Confirmation of the Plan. . . . . . . . . . . . . . . . 60
2. Nonconsensual Confirmation. . . . . . . . . . . . . . . . . . . . . 60
3. Delays of Confirmation and/or Effective Date. . . . . . . . . . . . 61
D. PENDING LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
XIII. POST FILING DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . 61
A. CUSTOMER SERVICE PROGRAMS. . . . . . . . . . . . . . . . . . . . . . . . 61
B. EMPLOYEE CLAIMS AND EXISTING BENEFIT PROGRAMS. . . . . . . . . . . . . . 61
C. CASH MANAGEMENT SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . 61
D. DIP FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
E. DISCLOSURE STATEMENT AND PLAN. . . . . . . . . . . . . . . . . . . . . . 62
F. MISCELLANEOUS PROCEDURAL AND ADMINISTRATIVE MOTIONS. . . . . . . . . . . 62
XIV. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
A. DISSOLUTION OF COMMITTEE(S). . . . . . . . . . . . . . . . . . . . . . . 62
B. PAYMENT OF STATUTORY FEES. . . . . . . . . . . . . . . . . . . . . . . . 62
C. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEE . . . . . . . 62
D. DISCHARGE OF DEBTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 63
E. MODIFICATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 63
F. REVOCATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . 63
H. RESERVATION OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . 63
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I. SECTION 1146 EXEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 63
J. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
K. SERVICE OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 64
L. FILING OF ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 64
XV. RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
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I.
EXECUTIVE SUMMARY AND BACKGROUND
OF PLAN AND DISCLOSURE STATEMENT
A. GENERAL
This Disclosure Statement is being furnished by Goss Graphic Systems,
Inc. ("Systems"), GGS Holdings, Inc. ("Holdings"), and Goss Realty, L.L.C.
("Realty," and along with Systems and Holdings, the "Debtors" or the "Company"),
as proponents of the Plan of Reorganization of Goss Graphic Systems, Inc., GGS
Holdings, Inc. and Goss Realty, L.L.C. (the "Plan," a copy of which is annexed
hereto as Exhibit A), pursuant to section 1125 of the Bankruptcy Code, in
connection with the solicitation of votes (the "Solicitation") for the
acceptance or rejection of the Plan, as it may be altered, amended, modified or
supplemented from time to time in accordance with the Bankruptcy Code and the
Bankruptcy Rules with respect to the outstanding Claims against and Equity
Interests in the Company. CAPITALIZED TERMS USED HEREIN BUT NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE PLAN.
Holders of Claims against and Equity Interests in the Debtors should read
this Disclosure Statement, together with the Plan, the form of Ballot and the
Voting Instructions, as applicable (collectively, the "Solicitation Materials")
in their entirety before voting on the Plan. The sources of the information
provided in this Disclosure Statement are the Debtors' books and records and
certain publicly available filings in the Chapter 11 Cases.
THIS DISCLOSURE STATEMENT CONTAINS A SUMMARY OF CERTAIN PROVISIONS OF THE
PLAN AND CERTAIN OTHER DOCUMENTS AND CERTAIN FINANCIAL INFORMATION. THE DEBTORS
BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE. IN THE EVENT OF ANY
INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT
AND THE TERMS AND PROVISIONS OF THE PLAN, OR THE OTHER DOCUMENTS AND FINANCIAL
INFORMATION TO BE INCORPORATED THEREIN BY REFERENCE, THE PLAN SHALL GOVERN FOR
ALL PURPOSES.
THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED HEREIN HAVE BEEN MADE
AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND EQUITY
INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER AT THE TIME OF
SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH HEREIN UNLESS
SO SPECIFIED. EACH HOLDER OF A CLAIM AND EQUITY INTEREST SHOULD CAREFULLY
REVIEW THE PLAN, THIS DISCLOSURE STATEMENT AND THE EXHIBITS TO BOTH DOCUMENTS IN
THEIR ENTIRETY BEFORE CASTING A BALLOT.
NO PARTY IS AUTHORIZED TO GIVE ANY INFORMATION WITH RESPECT TO THE PLAN
OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT. NO
REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE OF ITS PROPERTY HAVE BEEN
AUTHORIZED BY THE DEBTORS OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT
OR, SUBSEQUENT TO A FILING BY THE DEBTORS UNDER THE BANKRUPTCY CODE, BY ANY
BANKRUPTCY COURT. ANY INFORMATION, REPRESENTATIONS OR INDUCEMENTS MADE TO
OBTAIN YOUR ACCEPTANCE OF THE PLAN WHICH ARE OTHER THAN OR INCONSISTENT WITH THE
INFORMATION CONTAINED HEREIN AND IN THE PLAN SHOULD NOT BE RELIED UPON BY ANY
HOLDER OF A CLAIM OR EQUITY INTEREST.
B. EXECUTIVE SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED ELSEWHERE IN THIS DISCLOSURE STATEMENT.
<PAGE>
1. PURPOSES OF THE DISCLOSURE STATEMENT
The Solicitation Materials, including this Disclosure Statement and a
Ballot to be used for voting on the Plan, are being distributed to Impaired
Classes of Claims and Equity Interests. Classes of Claims impaired under the
Plan and entitled to vote are class H2, S2, S4, S5, R4, R5 and R6. In addition,
Classes of Claims and Equity Interests impaired under the Plan and, as described
below, not entitled to vote on the Plan, are classes H4, H5, H6, H7, S6 and R7.
The purpose of such solicitation, among other things, is to obtain the requisite
number of acceptances of the Plan under the Bankruptcy Code from the Impaired
Classes ("Statutory Requirements for Confirmation of Plan" are described in
Article XI.C herein). Assuming the requisite acceptances are obtained, the
Debtors intend to seek confirmation of the Plan at the Confirmation Hearing (as
defined in Article XI.B herein) commencing on October 19, 1999.
2. RECORD DATE; VOTING; REQUIRED APPROVALS
The Debtors have established July 30, 1999 (the "Record Date") as the
date for determining which Holders of Claims and Equity Interests are eligible
to vote on the Plan. After carefully reviewing this Disclosure Statement, the
Plan and the other Solicitation Materials, each Holder of a Claim or Equity
Interest in an Impaired Class entitled to vote on the Plan should vote to accept
or reject the Plan in accordance with the Voting Instructions, and return the
Ballot to Bankruptcy Services LLC (the "Information Agent"), Heron Tower, 70
East 55th Street, 6th Floor, New York, New York 10022 in a manner so that it is
received by 4:00 p.m., prevailing Eastern Time on or BEFORE October 12, 1999.
Any Ballot received after that date and time may not be counted. Ballots should
be returned in accordance with the instructions for delivery set forth in the
Voting Instructions.
Each Holder of a Claim in Class H2, S2, S4, S5, R4, R5 and R6 is entitled
to vote either to accept or to reject the Plan. Holders of Claims in such
Classes shall have accepted the Plan if (i) the Holders of at least two-thirds
in dollar amount of the Allowed Claims actually voting in each such Class have
voted to accept the Plan and (ii) the Holders of more than one-half in number of
the Allowed Claims actually voting in each such Class have voted to accept the
Plan. Because, as noted below, certain impaired classes will receive no
distribution nor retain any property under the Plan, and thus are conclusively
presumed to have rejected the Plan, the Debtors will seek confirmation of the
Plan pursuant to a procedure commonly known as cram-down. The cram-down
procedure is described in more detail in Article XI.C.4 herein.
On and after the Effective Date, each Holder of a Claim (i) who has
accepted the Plan, (ii) whose Claim is in a Class that has accepted or is deemed
to have accepted the Plan pursuant to section 1126 of the Bankruptcy Code, or
(iii) who is entitled to receive a distribution of property under the Plan other
than the Holder of a claim in Class who signs and returns a timely Ballot and
marks Item 4 or Item 5 of the Ballot (whichever is applicable), shall be deemed
to have unconditionally released the Stonington Releasees, the D&O Releasees,
the Prepetition Lender Releasees and the Noteholder Releasees from any and all
claims (as defined in section 101(5) of the Bankruptcy Code), obligations,
rights, suits, damages, causes of action, remedies and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, that such Person or Entity would have been legally
entitled to assert (whether individually or collectively), based in whole or in
part upon any act or omission, transaction, agreement, event or other occurrence
taking place on or before the Effective Date in any way relating or pertaining
to (x) the Debtors or the Reorganized Debtors, (y) the Debtors' Chapter 11
Cases, or (z) the negotiation, formulation and preparation of the Plan, the
Lock-Up Agreement or any related agreements, instruments or other documents.
Classes under the Plan are designated with an "H", a "S" or a "R" to
indicate Claims against Holdings, Systems and Realty respectively. Please
review these designations carefully so that you are aware to which Class your
Claim is classified.
THE MAJORITY OF CREDITORS RECEIVING THIS DISCLOSURE STATEMENT AND BALLOTS
TO VOTE ON THE PLAN ARE CLASSIFIED IN THE FOLLOWING CLASSES:
CLASS S4 GENERAL UNSECURED CLAIMS (SYSTEMS ONLY)
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CLASS S5 OLD NOTE CLAIMS (SYSTEMS ONLY)
The following classes are unimpaired under the Plan, and Holders of
Claims in such Classes are conclusively presumed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code:
Class H1, S1, and R1 Other Priority Claims (all Debtors)
Class R2 LaSalle Secured Claims (Realty ONLY)
Class H3, S3 and R3 Other Secured Claims (all Debtors)
The following Classes will receive no distribution nor retain any
property under the Plan and are conclusively presumed to have rejected the Plan
pursuant to section 1126(g) of the Bankruptcy Code:
Class H4, R5 General Unsecured Claims (Holdings and Realty ONLY)
Class H5 Stonington Preferred Equity Interests (Holdings
ONLY)
Class H6 Rockwell Preferred Equity Interests (Holdings ONLY)
Class R6 LaSalle Deficiency Claim (Realty ONLY)
Class H7, S6 and R7 Equity Interests (all Debtors)
C. BACKGROUND OF THE DEBTORS AND EVENTS LEADING TO THE PLAN
1. CORPORATE STRUCTURE
Systems is a manufacturing company which is among the leading producers
of newspaper and insert printing press systems and a major producer of
commercial printing press systems. Holdings is a holding company which owns
100% of the common stock of Systems, and which is in turn owned by Stonington
Capital Appreciation 1994 Fund, LP ( together with certain of its affiliates
"Stonington") (approximately 95.4%) and certain directors and members of
Systems' management (approximately 3.7%) and an institutional investor
(approximately 0.9%). Realty is a wholly-owned subsidiary of Systems, and owns
the real estate and improvements in suburban Chicago that serve as Goss'
worldwide headquarters.
2. THE COMPANY'S BUSINESS
Goss is among the leading producers of newspaper and insert printing
press systems and a major producer of commercial printing press systems. Goss'
products fall into three broad categories:
- newspaper press systems for publishers of national,
regional and local news;
- commercial press systems for printers of brochures and
promotional materials, catalogues, magazines, books,
financial publications and directories; and
- insert press systems for printers of advertising inserts,
including Sunday newspaper inserts and direct
mail/point-of-purchase inserts
Goss is one of only six major global suppliers of newspaper web offset
printing press systems, and is the only U.S.-based producer of newspaper
printing presses. Goss, through its non-debtor foreign subsidiaries, also has
significant manufacturing and sales facilities in Europe and Asia. During
fiscal year 1998, approximately 48% of the Debtors' consolidated revenue was
generated from sales by international operations.
Goss' core business, in which they have been engaged for 114 years, is
the production of newspaper printing press systems. Approximately three out of
four U.S. daily newspapers and many prestigious newspapers in over 130 countries
are printed on Goss presses. Goss produces both "large newspaper" press
systems, which print on 50" and wider paper and are used by large national and
major metropolitan newspapers, and "small newspaper" press systems, which print
on 36" wide paper and which are used by some major metropolitan newspapers as
well as smaller regional and local newspapers. All are sold under the "Goss"
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trade name. Goss custom designs and engineers each newspaper press system to
meet the specific printing requirements and physical space limitations of their
customers. Sales of new equipment to large newspaper customers, together with
additions and modifications to existing equipment, accounted for approximately
44% of the Debtors' consolidated fiscal 1998 sales, while sales to and additions
and modifications for small newspaper customers accounted for approximately 31%
of the Debtors' consolidated fiscal 1998 sales.
Goss also designs and manufactures web offset "commercial" printing
presses in North America used to print a broad variety of specialty products,
including brochures, promotional materials, catalogs, magazines, books,
financial publication and directories. Based on customer configuration, the
commercial presses may also include integration of essential third-party
auxiliary equipment. Systems sells these products principally in North America.
Sales from Goss' commercial press business represented approximately 6% of their
consolidated fiscal 1998 sales.
Goss pioneered the development of specialized web offset presses for
printing advertising inserts, and continues to be a leader in the "insert press"
business. Sales from the Company's insert press business represented
approximately 7% of the Debtors' consolidated fiscal 1998 sales.
Finally, Goss provides aftermarket parts and customer service in
connection with the equipment that it has sold. Sales of aftermarket parts and
equipment were approximately 12% of the Debtors' consolidated fiscal 1998 sales.
Service and technical support include site preparation and inspection, equipment
installation, preventative and corrective maintenance, paper width changes and
color capability upgrades. Service and technical support is provided by Goss'
staff of approximately 100 field service engineers and additional field services
engineers who work for Goss' international agents. Goss' high level of customer
service, technical support and training are important factors in establishing
and maintaining long-term relationships with customers and in encouraging repeat
business.
The global newspaper printing press, insert printing press and commercial
printing press industries are highly competitive in most product categories and
geographic regions. Competition is based on price, product features, quality,
reliability, customer service and ability to meet the specialized needs of
customers. The gross profit margins on large orders for newspaper presses are
in general lower than the gross profit margins realized for smaller orders for
newspaper presses due to competitive pressures on pricing. Competition in the
various markets served by Goss comes from companies of various sizes, many of
which are larger and have greater financial and other resources than Goss.
Moreover, many purchasers utilize a multi-round, price-focused bidding process
that can result in a significantly competitive impact on pricing and gross
profit margins.
Like most printing press manufacturers, Goss' business is highly
cyclical. The timing of a printing press purchase is influenced by numerous
factors beyond Goss' control, including the age and capabilities of the
customer's current equipment, general economic conditions, the customer's
ability to finance the press acquisition, total advertising revenues, the price
of newsprint, paper and other raw materials, and competition with print and
non-print media in the marketplace. As a result of these factors, sales of Goss'
products can vary significantly from period to period.
3. SUMMARY OF CERTAIN PRE-EXISTING LENDING FACILITIES
PREPETITION BANK CREDIT FACILITY
Prior to the Petition Date, Systems partially funded its and its
subsidiaries' operations through a $200 million revolving credit facility (the
"Prepetition Bank Credit Facility") established under that certain Amended and
Restated Multicurrency Credit Agreement dated as of January 29, 1998, by and
among Goss Graphic Systems, Goss Graphic Systems Limited ("Goss-UK"), Goss
Systemes Graphiques Nantes, S.A. ("Goss-France"), Goss Graphic Systems Japan
Corporation ("Goss-Japan"), Bankers Trust Company, as administrative agent for
the lenders, and certain other lenders specified therein. As of March 31, 1999,
borrowings and letters of credit under this facility totaled $195.2 million.
The Prepetition Bank Credit Facility is secured by substantially all assets of
Systems, including a pledge of 66% of Systems' stock in Goss-UK,
-5-
<PAGE>
Goss-France, and Goss-Japan. The Prepetition Bank Credit Facility is
guaranteed by Holdings, and such guarantee is secured by substantially all
assets of Holdings, including a pledge of its common stock in Systems.
Realty is also a guarantor of the Prepetition Bank Credit Facility. In
addition, Systems has guaranteed the facilities provided to Goss-UK,
Goss-France, and Goss-Japan under the Prepetition Bank Credit Facility.
SUBORDINATED NOTES
In 1996, Systems issued $225 million of 12% Senior Subordinated Notes
(the "Old Notes") due 2006 pursuant to an Indenture dated October 15, 1996
between Goss and The Bank of New York as Trustee (the "Old Note Indenture").
(On April 16, 1999 HSBC Bank USA (f/k/a Marine Midland Bank) ("HSBC") succeeded
The Bank of New York as the indenture trustee.) The Old Notes are subordinate
to certain senior indebtedness as defined in the Old Note Indenture.
LASALLE MORTGAGE
Realty owns certain real property and improvements commonly known as 700
Oakmont Lane, Westmont, Illinois, which serves as worldwide headquarters for the
Company. The headquarters property is subject to an approximately $29 million
mortgage in favor of LaSalle National Bank.
4. PREPETITION RESTRUCTURING ACTIVITIES
Increased competition and cyclical declines, among other factors, have
resulted in the Company experiencing operating losses in 1998 and 1999. These
losses have caused Goss to exhaust virtually all of its available liquidity
under the Prepetition Bank Facility. In the quarter ended March 31, 1999,
operating activities used $52.5 million of cash, as compared to the same period
in 1998, when operating activities used only $2.4 million of cash.
In response to the company's liquidity problems, the Company has taken
certain actions in the last several years intended to increase its profitability
and cash availability, including senior management changes, a revised business
plan, workforce reductions, a sale of $35.6 million in accounts receivable, a
renegotiation of its bank facility, and a repurchase and capital contribution by
Stonington of the $35.6 million in accounts receivable previously sold by
Systems. However, Goss' customer orders for the 1999 first fiscal quarter of
$94.5 million are substantially below the prior year level of $230.4 million,
and its order backlog at March 31, 1999 has dropped to $527.1 million from
$606.3 million at December 31, 1998 and $818.9 million at March 31, 1998. This
drop in orders, combined with the fact that liquidity from existing sources had
been substantially exhausted, led the Debtors to explore potential options for
obtaining additional financing.
The Debtors commenced these chapter 11 cases after it became apparent
these efforts would be unable to timely and sufficiently address the Debtors'
liquidity needs. The purpose of the Plan is to restructure the Debtors'
current lending facilities to provide the Debtors with the ability to emerge
from bankruptcy with the liquidity needed to move forward in their business
activities. The Debtors believe that the reorganization contemplated by the
Plan is in the best interests of their creditors and equity holders. If the
Plan is not confirmed, the Debtors believe that they will be forced to either
file an alternate plan of reorganization or liquidate under Chapter 7 of the
Bankruptcy Code. In either event, the Debtors believe that the Company's
unsecured creditors and equity holders would realize a less favorable
distribution of value, if any, for their Claims or Equity Interests. See
"LIQUIDATION ANALYSIS."
THE PREPETITION NOTEHOLDER COMMITTEE
In June 1999, the Company commenced discussions with certain holders of
the Old Notes, including Alliance Capital Management L.P., Credit Suisse First
Boston, and Franklin Advisors, Inc. (the "Prepetition Noteholder Committee"), to
discuss the financial condition of the Company and the proposed restructuring.
The Prepetition Noteholder Committee retained Akin, Gump, Strauss, Hauer & Feld,
L.L.P. ("Akin Gump") as its legal advisor and Chanin Kirkland Messina LLC
("Chanin") as its financial advisor.
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<PAGE>
The Company entered into a letter agreement, dated June 8, 1999, with
Akin Gump pursuant to which the Company agreed to pay the reasonable legal fees
and expenses of Akin Gump in connection with its representation of the
Prepetition Noteholder Committee. As compensation for its services, the Company
agreed to provide Akin Gump with an initial fee reserve of $75,000 to be applied
against fees and expenses to be incurred in connection with Akin Gump's
representation of the Prepetition Noteholder Committee. The letter agreement is
terminable at will by either the Company or Akin Gump on ten business days prior
written notice provided to the other party. Through July 27, 1999, the Company
has paid approximately $183,000 to Akin Gump in respect of such arrangements.
The Company entered into a letter agreement, dated June 7, 1999, with
Chanin pursuant to which, among other things, the Company agreed to pay to
Chanin certain fees in consideration of Chanin's agreement to render financial
advisory services on behalf of the Prepetition Noteholder Committee in
connection with the proposed restructuring of the Company. As compensation for
its services, the Company agreed to pay Chanin $100,000 per month from June 7,
1999 through November 6, 1999, and $85,000 in cash per month thereafter. The
letter agreement is terminable by the majority (in dollar amount) of the
Prepetition Noteholder Committee and the Company upon ten days prior written
notice. The Company may terminate the letter agreement with Chanin if it has
also contemporaneously terminated Akin Gump.
The Company engaged in extensive, arms' length negotiations with the
Company's majority equity holder, Stonington and certain of the lenders under
the Company's Prepetition Bank Credit Facility (the "Prepetition Lenders")
regarding the terms of a consensual restructuring of the Company. In July 1999,
shortly before the filing, these negotiations resulted in an agreement in
principle between these parties on the terms of a restructuring.
THE LOCK-UP AGREEMENT
On or about July 28, 1999, the Company, Stonington, certain of the
lenders under the Prepetition Bank Credit Facility and certain members of the
Prepetition Noteholder Committee and certain other holders of the Old Notes
entered into a Forbearance, Lock-Up and Voting Agreement (the "Lock-Up
Agreement") with respect to the terms of the Company's proposed plan of
reorganization. A copy of both the Lock-Up Agreement and the underlying term
sheet attached thereto as Exhibit A (the "Term Sheet") will be filed with the
Bankruptcy Court. Pursuant to the Lock-Up Agreement the parties agreed that:
- holders of the Old Notes would receive under the Plan $112.5
million in New Notes and 3,250,000 shares of the New Holdings
Common Stock, representing 32.5% of the New Holdings Common Stock,
subject to dilution by the distribution of shares of the New
Holdings Common Stock to certain management of the Debtors and/or
Reorganized Debtors;
- Stonington will make a $50 million capital contribution to the
Company on the Plan Effective Date;
- Stonington would receive under the Plan 6,750,000 shares of the
New Holdings Common Stock, representing 67.5% of the New Holdings
Common Stock, subject to dilution by the distribution of shares
of the New Holdings Common Stock to certain management of the
Debtors and/or Reorganized Debtors;
- the Company would obtain a $50 million debtor-in-possession
financing facility (the "DIP Facility") funded by Stonington in
the amount of $25 million and certain of the Prepetition Lenders
in the amount of $25 million. The DIP Lenders are entitled to
the payment of their fees and reimbursement of their expenses in
connection with the DIP Facility. On the Effective Date, however,
Stonington shall contribute its DIP fees to the restructured
Company's capital.
- each would vote their claims in favor of the Plan and to support
Confirmation of the Plan;
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<PAGE>
- each would forbear from enforcement of any defaults that might
occur until the Plan is confirmed;
- no party would transfer their interests in the Company unless the
transferee agrees to be bound by the terms of the Lock-Up
Agreement;
- each would grant the releases and exculpations described herein
and not to object to the entry of an order by the Bankruptcy
Court approving the releases; and
- the Lock-Up Agreement is subject to termination 120 days after
the filing of a bankruptcy petition.
The obligations of the parties under the Lock-Up Agreement terminate for
certain reasons, including: (a) the Plan provides or is modified to provide for
a treatment different than the treatment described in the Term Sheet; (b) the
Plan provides or is modified to provide for a treatment to the holders of
Prepetition Bank Secured Claims, the Holders of Old Notes or the holders of
general unsecured claims that is materially more favorable than the treatment
described in the Term Sheet; or (c) the Effective Date of the plan is not within
120 days from the date the Company commences the chapter 11 proceeding.
5. ASSETS AND LIABILITIES OF THE DEBTORS
Holding's principal asset is the common stock of Systems. Holding's
principal liability is its guarantee of the indebtedness under the Prepetition
Bank Credit Facility.
Realty's principal asset is the real property and improvements in
suburban Chicago, Illinois which serve as the worldwide headquarters for Goss.
Systems leases this headquarters space from Realty through a "triple net" lease
dated July 25, 1997 (the "Lease") under which Systems is required to pay all
real estate taxes and all expenses related to the care and maintenance of the
property. Realty's principal liabilities are (i) a $30 million mortgage in
favor of LaSalle, and (ii) its indebtedness under the Prepetition Bank Credit
Facility. The only Cash held by Realty consists of the Cash held by LaSalle in
Realty's tax reserve account and the Cash held in another LaSalle account
containing one months postpetition rent paid by Systems to Realty. All accounts
of Realty are held at LaSalle, its mortgagor. Realty's sole account receivable
is its entitlement to rent and other performance from Systems under the Lease.
Except as described above under the Lease, Realty is not aware of any avoidance
claims or other cause of action against any of its affiliates or any other
entity, including any avoidance action against Systems for the payment of
dividends while Realty was insolvent.
Systems' assets are set forth more completely in the liquidation analysis
included herein, but principally are (i) its ownership, both wholly and jointly,
of its overseas subsidiaries and (ii) the facilities involved in its
manufacturing process. Systems' principal liabilities are likewise set forth
more fully in the liquidation analysis, but principally are (i) the indebtedness
under the Prepetition Bank Credit Facility (ii) the indebtedness under the Old
Notes, and (iii) trade debt.
D. COMPONENTS OF THE PLAN; TREATMENT OF CLASSES OF CLAIMS AND EQUITY
INTERESTS
1. PURPOSE
The principal purpose of the Plan is to provide the Debtors with the
liquidity necessary to stabilize the Restructured Debtors and to allow them to
continue their respective businesses. This is accomplished as follows.
2. DIP FINANCING
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In conjunction with the filing of this Plan, the Debtors have sought
approval of a $50 million debtor-in-possession financing facility (the "DIP
Facility") to be funded by Stonington in the amount of $25 million and by
certain of the Debtor's existing secured creditors under the Prepetition Bank
Credit Facility in the amount of $25 million (together with Stonington, the "DIP
Lenders"). As set forth in more detail in the Debtors' motion seeking approval
of the DIP Facility, the DIP Lenders are entitled to the payment of certain fees
and reimbursement of expenses in connection with their respective participation
in the DIP Facility. The DIP Facility will provide the Debtors with necessary
liquidity between the Petition Date and the Effective Date of the Plan.
3. FUNDING THE PLAN
On the Effective Date, the Plan provides for two sources of new
liquidity. First, Stonington will make a capital contribution of $50 million
plus any fees which it accrued in connection with the DIP Facility, such capital
contribution to include any applicable portion of the DIP Facility amount so
that Stonington's total contributions under the Plan will be $50 million plus
fees, to the New Holdings on the Effective Date. In exchange for this capital
contribution, Stonington will receive 6,750,000 shares of New Holdings Common
Stock, representing 67.5% of the primary equity ownership of New Holdings.
These shares are subject to dilution by the shares of New Holdings Common Stock
and related Equity Interests provided to certain management of the Debtors
and/or Reorganized Debtors (the "Management Equity") pursuant to the terms of
the Lock-Up Agreement. In addition, the existing Prepetition Bank Credit
Facility, the DIP Facility, and any other interim financing obtained by the
Debtors will be refinanced by portions of the New Bank Credit Facilities,
consisting of the $150 million Term Loan Facility, by and among Systems, certain
of its affiliates, and the Prepetition Lenders (the "Term Loan Facility"), the
$50 million Revolving Credit Facility, by and among Systems, certain of its
affiliates and the DIP Lenders (the "Tranche A Revolving Credit Facility") and
the $50 million Revolving Credit Facility, by and among Systems, certain of its
affiliates and the Prepetition Lenders (the "Tranche B Revolving Credit
Facility"). All three of these facilities are hereinafter referred to as the
"New Bank Credit Facilities" and are subject to the terms and conditions of the
Forbearance, Lock-Up and Voting Agreement dated July 27, 1999, by and among the
Debtors, Stonington, certain of the lenders under the Prepetition Bank Credit
Facilities and certain Holders of Old Notes that are signatories thereto (the
"Lock-Up Agreement"). The New Bank Credit Facilities will be available for the
working capital and general corporate purposes of the Debtors. The New Bank
Credit Facilities will be secured by liens on all of the Reorganized Debtors'
assets (other than those subject to existing mortgages) and will be on terms and
conditions customary for a facility of this type. The Debtors believe that
Stonington's receipt of the New Holdings Common Stock in exchange for the
capital contribution described above is permissible under the Bankruptcy Code,
but acknowledge that arguments exist that certain case law could permit a
contrary conclusion.
4. TREATMENT OF THE OLD NOTES
The Plan also provides that the outstanding principal amount of the Old
Notes, including all accrued and unpaid interest thereon, will be converted into
(i) $112.5 million of New Notes issued by New Holdings; and (ii) 3,250,000
shares of Restructured Common Stock of the New Holdings, representing 32.5% of
primary equity ownership of the New Holdings. These shares are also subject to
dilution by the Management Equity pursuant to the terms of the Lock-Up
Agreement. These Notes will be unsecured obligations of New Holdings and will
mature six years from the Effective Date (2005). For the first two years
following the Effective Date, the New Notes will bear interest at 12.25% per
annum, payable semi-annually via the issuance of additional New Notes.
Thereafter interest will be payable in cash (with the first cash interest
payment to be paid beginning in the 30th month after the Effective Date). The
New Notes are callable, in whole or in part, at any time by New Holdings at a
purchase price equal to 103.5% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase. In the event that the Debtors
and their non-debtor affiliates (the "Company") are sold for greater than $600
million, the New Noteholders shall have the right to cause the Company to
purchase the New Notes at a purchase price equal to 107.0% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase. The New Notes will be subordinated to New Holdings' guaranties of the
New Bank Credit Facilities and will be otherwise issued by the New Holdings on
terms and conditions substantially similar to those applicable to the Old Notes.
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<PAGE>
5. TREATMENT OF EQUITY
Under the Plan, Holders of Equity Interests in all three Debtors will
receive no distribution.
6. MANAGEMENT EQUITY
As set forth in the Lock-Up Agreement, certain management of the Debtors
and/or Reorganized Debtors shall receive on the Effective Date $2.5 million of
New Holdings Common Stock, which represents approximately 3.3% of the total $75
million equity base. These shares shall be restricted and will vest over a 2-3
year period. Certain management shall also receive a restricted stock option
package equal to 10% of the outstanding primary shares, which represents a total
of $7.5 million in options based on a $75 million equity base. The options are
exercisable at fair market value with vesting periods from 1-4 years, with one
half vesting based on time and one half vesting based on performance. No more
than 80% of the restricted stock options will be granted on the Effective Date,
with the remaining 20% reserved for future grants.
7. NO SUBSTANTIVE CONSOLIDATION
The Debtors are not being substantively consolidated under the Plan.
Thus, except as provided in the Lock-Up Agreement, any claims held against one
of the debtors will be satisfied solely from the cash and assets of such Debtor.
Separate classes have been established for each of the three debtor entities,
Holdings (H), Systems (S), and Realty (R). The Plan classifies claims and
equity interests into the following classes:
8. CLASSIFICATION OF CLAIMS
The classification of Claims and Equity Interests against Holdings
pursuant to this Plan is as follows:
Class H1: consists of all Claims against Holdings accorded the
priority and right of payment under subsection
507(a) of the Bankruptcy Code (including priority
employee salary and wage claims to the extent not
paid prior to confirmation pursuant to any first-day
orders authorizing payment of prepetition wage,
salary and benefits claims), other than a Priority
Tax Claim or an Administrative Expense.
Class H2: consists of all Secured Claims against Holdings
arising from or relating to the Prepetition Bank
Credit Facility. A Secured Claim against Holdings
consists of a Claim against Holdings that is secured
by a lien on property in which Holdings has an
interest, which lien is valid, perfected and
enforceable under applicable law or by reason of a
final order, or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of
the amount subject to setoff, as applicable, as
determined pursuant to section 506(a) of the
Bankruptcy Code, or a claim allowed under the Plan
as a Secured Claim.
Class H3: consists of all Secured Claims against Holdings
other than the Claims classified in Class H2 above.
Class H4: consists of any Claim against Holdings that is not a
Secured Claim, Administrative Claim, Priority Tax
Claim or Other Priority Claim.
Class H5: consists of the Equity Interests of Stonington
Partners, Inc. against Holdings relating to the 10%
Cumulative Senior Convertible Preferred Stock.
Class H6: consists of the Equity Interests of Rockwell
International Corporation against Holdings relating
to the 6.5% Redeemable Preferred Stock.
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<PAGE>
Class H7: consists of all Equity Interests against Holdings
other than the Equity Interests classified in
Classes H5 and H6 above.
The classification of Claims and Equity Interests against Systems
pursuant to this Plan is as follows:
Class S1: consists of all Claims against Systems accorded the
priority and right of payment under subsection
507(a) of the Bankruptcy Code (including priority
employee salary and wage claims to the extent not
paid prior to confirmation pursuant to any first-day
orders authorizing payment of prepetition wage,
salary and benefits claims), other than a Priority
Tax Claim or an Administrative Expense.
Class S2: consists of all Secured Claims against Systems
arising from or relating to the Prepetition Bank
Credit Facility. A Secured Claim against Systems
consists of a Claim against Systems that is secured
by a lien on property in which Systems has an
interest, which lien is valid, perfected and
enforceable under applicable law or by reason of a
final order, or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent
of the amount subject to setoff, as applicable, as
determined pursuant to section 506(a) of the
Bankruptcy Code, or a claim allowed under the Plan
as a Secured Claim.
Class S3: consists of all Secured Claims against Systems other
than the Claims classified in Class S2 above.
CLASS S4: CONSISTS OF ANY CLAIM AGAINST SYSTEMS THAT IS NOT A
SECURED CLAIM, ADMINISTRATIVE CLAIM, PRIORITY TAX
CLAIM OR OTHER PRIORITY CLAIM, AND WHICH DOES NOT
ARISE FROM OR RELATE TO THE 12% NOTES ISSUED BY
SYSTEMS UNDER THE INDENTURE, DATED AS OF OCTOBER 15,
1996 BETWEEN SYSTEMS AND THE BANK OF NEW YORK, AS
TRUSTEE.
CLASS S5: CONSISTS OF ANY CLAIM ARISING FROM OR RELATING TO
THE 12% NOTES ISSUED BY SYSTEMS UNDER THE INDENTURE,
DATED AS OF OCTOBER 15, 1996 BETWEEN SYSTEMS AND THE
BANK OF NEW YORK, AS TRUSTEE.
Class S6: consists of all Equity Interests against Systems.
The classification of Claims and Equity Interests against Realty pursuant
to this Plan is as follows:
Class R1: consists of all Claims against Realty accorded the
priority and right of payment under subsection
507(a) of the Bankruptcy Code (including priority
employee salary and wage claims to the extent not
paid prior to confirmation pursuant to any first-day
orders authorizing payment of prepetition wage,
salary and benefits claims), other than a Priority
Tax Claim or an Administrative Expense.
Class R2: consists of the Secured Claim of LaSalle National
Bank arising from or related to the $30,000,000
mortgage by Realty for the benefit of LaSalle
National Bank dated July 25, 1997. A Secured Claim
against Realty consists of a Claim against Systems
that is secured by a lien on property in which
Systems has an interest, which lien is valid,
perfected and enforceable under applicable law or by
reason of a final order, or that is subject to
setoff under section 553 of the Bankruptcy Code, to
the extent of the amount subject to setoff, as
applicable, as determined pursuant to
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<PAGE>
section 506(a) of the Bankruptcy Code, or a claim
allowed under the Plan as a Secured Claim.
Class R3: consists of all Secured Claims against Realty other
than the Claims classified in Class R2 above.
Class R4: consists of all Claims against Realty arising from
or relating to the Prepetition Bank Credit Facility.
Class R5: consists of any Claim against Realty that is not a
Secured Claim, Administrative Claim, Priority Tax
Claim, an Other Priority Claim, or the Unsecured
Claim arising from or relating to the $30,000,000
mortgage by Realty for the benefit of LaSalle
National Bank dated July 25, 1997 in accordance with
section 506(a) of the Bankruptcy Code.
Class R6: consists of the Unsecured Claim arising from or
relating to the $30,000,000 mortgage by Realty for
the benefit of LaSalle National Bank dated July 25,
1997 in accordance with section 506(a) of the
Bankruptcy Code.
Class R7: consists of all Equity Interests against Realty.
The Plan provides that Administrative Expenses, Priority Tax Claims, and
Claims in class H1, S1, and R1 will be satisfied in full.
Holders of Class H2 Claims will receive the same treatment afforded to
Holders of Class S2 Claims, described below. Holders of Other Secured Claims in
Class H3 will have their legal, equitable and contractual rights unaltered by
the Plan. Holders of General Unsecured Claims in Class H4 will receive no
distribution under the Plan. Equity Interests in Class H5, H6 and H7 shall
neither receive any distributions nor retain any property under the Plan.
On or prior to the Effective Date, each Holder of a Class S2 Claim will
be satisfied by the Holder receiving and providing its Pro Rata share of the
Tranche B Revolving Credit Facility and the Term Loan Facility, so that each
Class S2 Claim is paid in full. The form and substance of the definitive
documentation constituting the Tranche B Revolving Credit Facility and the Term
Loan Facility shall be satisfactory to sufficient Holders of Class S2 Claims so
that such Class will be deemed to accept such documentation. Holders of Secured
Claims in Class S3 will have their legal, equitable and contractual rights
unaltered by the Plan.
HOLDERS OF GENERAL UNSECURED CLAIMS IN CLASS S4 WILL BE PAID THE FULL
AMOUNT, WITHOUT INTEREST, OF THEIR ALLOWED CLAIMS, PAYABLE IN THREE EQUAL
INSTALLMENTS THREE, SIX AND NINE MONTHS AFTER THE EFFECTIVE DATE, OR ON SUCH
DATES THEREAFTER IF THE CLAIM BECOMES FIRST PAYABLE IN THE ORDINARY COURSE OF
BUSINESS AT SUCH TIME. HOLDERS OF NON-ALLOWED CLASS S4 CLAIMS WILL PRESERVE ALL
OF THEIR RIGHTS, CLAIMS AND DEFENSES.
HOLDERS OF CLASS S5 CLAIMS WILL RECEIVE A PRO RATA DISTRIBUTION OF NEW
NOTES UNDER THE PLAN, AS WELL AS A PRO RATA SHARE OF 3,250,000 SHARES OF
RESTRUCTURED COMMON STOCK, REPRESENTING 32.5% OF THE COMMON STOCK OF NEW
HOLDINGS SUBJECT TO DILUTION BY THE MANAGEMENT EQUITY AS PROVIDED UNDER THE
LOCK-UP AGREEMENT.
Equity Interests in Class S6 shall neither receive any distributions nor
retain any property under the Plan.
Holders of Secured Claims in Class R2 and R3 will have their legal,
equitable and contractual rights unaltered by the Plan. Holders of Bank
Unsecured Claims in Class R4 will receive the treatment afforded to
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<PAGE>
them as members of Class S2. Holders of General Unsecured Claims in Class R5
and R6 will share pro rata, pari passu, all assets or property of Realty's
estate after payment of Classes R1 through R3. Equity Interests in Class R7
shall neither receive any distributions nor retain any property under the
Plan.
The following tables summarize the classification of Claims, projected
aggregate amounts of such Class Claims and the projected recovery of such
Classes for Goss, Systems and Realty, respectively. The assumptions made in
determining such projected recoveries and the risk factors relating to the Plan
are contained in Articles III and XIII herein, respectively.
9. TREATMENT OF CLASSES
The treatment of Classes in Holdings is summarized as follows:
<TABLE>
<CAPTION>
PROJECTED
CLASS DESCRIPTION CLAIMS ($MIL) PROJECTED RECOVERY
----- ----------- ------------- ------------------
<S> <C> <C> <C>
Unclassified Administrative Expenses $0 Paid in full
Claims
Unclassified Tax Priority Tax Claims $0 Paid in full
Claims
Class H1 Claims Other Priority Claims $0 Paid in full
Class H2 Claims Bank Secured Claims $200 Treated as Class S2
Class H3 Claims Other Secured Claims $0 Paid in full
Class H4 Claims General Unsecured Claims $0 0%
Class H5 Claims Stonington Preferred Equity Interests N/A 0%
Class H6 Claims Rockwell Preferred Equity Interests N/A 0%
Class H7 Claims Equity Interest N/A 0%
</TABLE>
The treatment of Classes in Systems is summarized as follows:
<TABLE>
<CAPTION>
PROJECTED
CLASS DESCRIPTION CLAIMS ($MIL) PROJECTED RECOVERY
----- ----------- ------------- ------------------
<S> <C> <C> <C>
Unclassified Administrative Expenses $6 Paid in full
Claims
Unclassified Priority Tax Claims $0 Paid in full
Tax Claims
Class S1 Other Priority Claims $0 Paid in full
Claims
Class S2 Bank Secured Claims $200 Tranche B Revolving
Claims Credit Facility and the
Term Loan Facility
Class S3 Other Secured Claims $0 Paid in full
Claims
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<PAGE>
<CAPTION>
PROJECTED
CLASS DESCRIPTION CLAIMS ($MIL) PROJECTED RECOVERY
----- ----------- ------------- ------------------
<S> <C> <C> <C>
CLASS S4 GENERAL UNSECURED CLAIMS $218 100%
CLAIMS OVER NINE MONTHS OR IN
THE ORDINARY COURSE AS
COMES DUE
CLASS S5 OLD NOTE CLAIMS $233 $112.5 MILLION IN NEW
CLAIMS NOTES PLUS 3,250,000
SHARE OF NEW HOLDINGS
COMMON STOCK, SUBJECT TO
DILUTION BY THE MANAGEMENT
EQUITY
Class S6 Equity Interests N/A 0%
Claims
</TABLE>
The treatment of Classes in Realty is summarized as follows:
<TABLE>
<CAPTION>
PROJECTED
CLASS DESCRIPTION CLAIMS ($MIL) PROJECTED RECOVERY
----- ----------- ------------- ------------------
<S> <C> <C> <C>
Unclassified Administrative Expenses $0 Paid in full
Claims
Unclassified Priority Tax Claims $0 Paid in full
Tax Claims
Class R1 Other Priority Claims $0 Paid in full
Claims
Class R2 LaSalle Secured Claims $25 Paid in full
Claims
Class R3 Other Secured Claims $0 Paid in full
Claims
Class R4 Bank Unsecured Claims $200 Treated as Class S2
Claims
Class R5 General Unsecured Claims $0 0%
Claims
Class R6 LaSalle Deficiency Claim $5 0%
Claims
Class R7 Equity Interests N/A 0%
Claims
</TABLE>
10. LIQUIDATION ANALYSIS
The Debtors believe that the Plan will produce a greater recovery for
Holders of Claims and Equity Interests than would be achieved in a Chapter 7
liquidation. Houlihan Lokey Howard & Zukin, financial advisors to the Company,
prepared a liquidation analysis, set forth in Article III herein, on behalf of
the Debtors to assist holders of Claims and Equity Interests to reach their
determination as to whether to accept or reject the Plan. This liquidation
analysis estimates the proceeds to be realized if the Debtors were to be
liquidated under Chapter 7 of the Bankruptcy Code. The Liquidation Analysis is
based upon projected assets and liabilities of the Debtors as of November 30,
1999 and incorporates estimates and assumptions developed by the Debtors which
are subject to potentially material changes with respect to economic and
business conditions, as well as uncertainties not within the Debtors' control.
In valuing the Plan recoveries, the analysis values debt and notes issued under
the Plan at par and the New Holdings Common Stock at $74.07 million based upon
Stonington's investment of $50 million for 67.5% of the outstanding equity.
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<PAGE>
NO EFFECT TO CREDITOR RECOVERIES HAS BEEN ASSUMED FOR PROCEEDS FROM ANY
CAUSES OF ACTION, INCLUDING PREFERENCE RECOVERIES, FRAUDULENT CONVEYANCES AND
OTHER AVOIDANCE CLAIMS, OR ANY LITIGATION THAT THE DEBTORS MAY BE CAPABLE OF
ASSERTING. THIS LIQUIDATION ANALYSIS DOES NOT, THEREFORE, INCLUDE ANY ESTIMATE
OF THE NECESSARY EXPENSES TO LITIGATE SUCH CLAIMS.
E. RISK FACTORS
THERE ARE A VARIETY OF FACTORS THAT ALL IMPAIRED HOLDERS SHOULD CONSIDER
PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN. Such factors, which are described
in more detail in Article XII herein, consist of the following and in each case
likely impact the recoveries under the Plan:
- the financial information contained in this Disclosure Statement
has not been audited and is based upon an analysis of data
available at the time of the preparation of the Plan and
Disclosure Statement;
- although the Debtors believe the Plan complies with all applicable
standards of the Bankruptcy Code, the Debtors can provide no
assurance that the Plan will comply with Section 1129 of the
Bankruptcy Code and that the Plan will be confirmed by the
Bankruptcy Court;
- the Debtors will be required to request confirmation of the Plan
without the acceptance of all Impaired Classes entitled to vote in
accordance with subsection 1129(b) of the Bankruptcy Code;
- the Debtors' Plan will not have become effective within 120 days
of the Petition Date, thereby permitting the parties thereto to
terminate the Lock-Up Agreement;
- any delays of either confirmation or effectiveness of the Plan
could result in, among other things, increased professional fee
claims; and
- the occurrence of any and all such contingencies which could
affect distributions available to Holders under the Plan, however,
will not affect the validity of the vote taken by the Impaired
Classes to accept or reject the Plan or require any revote by the
Impaired Classes.
F. REORGANIZED DEBTORS AND THE POST-CONFIRMATION ESTATES
The Debtors shall, as Reorganized Debtors, continue to exist after the
Effective Date as separate corporate entities, with, in the case of Holdings and
Systems, all the powers of a corporation or, in the case of Realty, a Limited
Liability Company under the laws of the State of Delaware and without prejudice
to any right to alter or terminate such existence (whether by merger or
otherwise) under such applicable state law. Except as otherwise provided in the
Plan, the Lock-Up Agreement, the New Notes, or any agreement, instrument or
indenture relating thereto, on or after the Effective Date, all property of the
Estates, and any property acquired by the Debtors or the Reorganized Debtors
under the Plan, shall vest in the Reorganized Debtors, free and clear of all
Claims, liens, charges, or other encumbrances and Equity Interests. On and after
the Effective Date, the Reorganized Debtors may operate their business and may
use, acquire or dispose of property and compromise or settle any Claims or
Equity Interests, without supervision or approval by the Bankruptcy Court and
free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than
those restrictions expressly imposed by the Plan and the Confirmation Order. In
accordance with section 1109(b) of the Bankruptcy Code, nothing herein shall
preclude any party in interest from appearing and being heard on any issue in
the Chapter 11 Cases.
G. PREPETITION COMMITTEES
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<PAGE>
Certain of the Holders of the 12% notes due 2006, issued by Systems under
the Old Note Debenture, formed the Prepetition Noteholder Committee prior to the
Petition Date. The members of the Prepetition Noteholder Committee who as of the
Petition Date have executed a confidentiality agreement with the Company are
Alliance Capital Management L.P., Credit Suisse First Boston, AIG Global
Investment Corp. and Franklin Advisors, Inc. Prior to the Petition Date, the
Prepetition Noteholder Committee retained the law firm of Akin, Gump, Strauss,
Hauer & Feld, L.L.P. as its counsel and Chanin Kirkland Messina LLC as its
financial advisor. The Debtors have had close contact and extensive negotiations
concerning the terms of the Plan with the Prepetition Noteholder Committee.
H. RELATIONSHIP BETWEEN SYSTEMS AND REALTY
As described above, Realty and Systems are landlord and tenant under the
Lease and are generally performing their respective obligations under the Lease.
As well, Realty and Systems are currently in negotiations with LaSalle, the
mortgagor, regarding the disposition of the property, the Lease and the
mortgage. As of the date hereof, neither Realty or Systems have filed any
request to reject the Lease. If such a request is filed it will be filed in
accordance with the terms and procedures set forth in the Plan. Realty and
Systems believe that their respective continued performance under the Lease, as
set forth above, is appropriate, but acknowledge that arguments exist that could
permit a contrary conclusion.
II.
THE PLAN OF REORGANIZATION
A. INTRODUCTION
The following summary and the other descriptions in this Disclosure
Statement are qualified in their entirety by reference to the provisions of the
Plan and its exhibits, a copy of which is annexed hereto as Exhibit A. It is
urged that each Holder of a Claim or Equity Interest carefully review the terms
of the Plan.
In general, a chapter 11 plan of reorganization (i) divides claims and
equity interests into separate classes, (ii) specifies the property that each
class is to receive under the plan and (iii) contains other provisions necessary
to the reorganization of the debtor. Under the Bankruptcy Code, "claims" and
"equity interests" are classified rather than "creditors" and "shareholders"
because such entities may hold claims or equity interests in more than one
class. For purposes of this Disclosure Statement, the term "Holder" refers to
the holder of a Claim or Equity Interest, respectively, in a particular Class
under the Plan.
A chapter 11 plan may specify that certain classes of claims or equity
interests are either to be paid in full upon effectiveness of the plan or are to
remain unchanged by the reorganization effectuated by the plan. Such classes
are referred to as "unimpaired" and, because of such favorable treatment, are
deemed to accept the plan. Accordingly, it is not necessary to solicit votes
from the holders of claims or equity interests in such classes. A chapter 11
plan also may specify that certain classes will not receive any distribution of
property or retain any claim against a debtor. Such classes are deemed not to
accept the plan and, therefore, need not be solicited to vote to accept or
reject the plan.
THE MAJORITY OF CREDITORS RECEIVING THIS DISCLOSURE STATEMENT AND BALLOTS
TO VOTE ON THE PLAN ARE CLASSIFIED IN THE FOLLOWING CLASSES:
CLASS S4 GENERAL UNSECURED CLAIMS (SYSTEMS ONLY)
CLASS S5 OLD NOTE CLAIMS (SYSTEMS ONLY)
The following classes are unimpaired under the Plan, and Holders of
Claims in such Classes are conclusively presumed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code:
Class H1, S1, and R1 Other Priority Claims (all Debtors)
Class R2 LaSalle Secured Claims (Realty ONLY)
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<PAGE>
Class H3, S3 and R3 Other Secured Claims (all Debtors)
The following Classes will receive no distribution nor retain any
property under the Plan and are conclusively presumed to have rejected the Plan
pursuant to section 1126(g) of the Bankruptcy Code:
Class H4 General Unsecured Claims (Holdings)
Class H5 Stonington Preferred Equity Interests (Holdings
ONLY)
Class H6 Rockwell Preferred Equity Interests (Holdings ONLY)
Class H7, S6 and R7 Equity Interests (all Debtors)
Payments to be made under the Plan will be made on the Effective Date or
as soon thereafter as is practicable, or at such other time or times as are
specified in the Plan.
As set forth in Article III of the Plan, the Debtors believe that under
the Plan, each Holder will obtain a recovery in an amount not less than the
recovery which otherwise would be obtained if the assets of the Debtors were
liquidated under chapter 7 of the Bankruptcy Code.
B. CLASSIFICATION OF CLAIMS AND INTERESTS
1. SUMMARY
The categories of Claims and Equity Interests and their treatment listed
below classify Claims and Equity Interests for all purposes, including voting,
confirmation and distribution pursuant to the Plan, except as otherwise provided
herein, and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A
Claim or Equity Interest shall be deemed classified in a particular Class only
to the extent that the Claim or Equity Interest qualifies within the description
of that Class and shall be deemed classified in a different Class to the extent
that any remainder of such Claim or Equity Interest qualifies within the
description of such different Class. A Claim or Equity Interest is in a
particular Class only to the extent that such Claim or Equity Interest is
Allowed in that Class and has not been paid or otherwise settled prior to the
Effective Date.
The classification of Claims and Equity Interests against Holdings
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
CLASS STATUS VOTING RIGHTS
<S> <C> <C> <C>
Class H1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class H2 -- Bank Secured Claims Impaired -- entitled to vote
Class H3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class H4 -- General Unsecured Claims Impaired -- not entitled to vote
Class H5 -- Stonington Preferred Equity Interests Impaired -- not entitled to vote
Class H6 -- Rockwell Preferred Equity Impaired -- not entitled to vote
Class H7 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
The classification of Claims and Equity Interests against Systems
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
CLASS STATUS VOTING RIGHTS
<S> <C> <C> <C>
Class S1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class S2 -- Bank Secured Claims Impaired -- entitled to vote
-17-
<PAGE>
<CAPTION>
CLASS STATUS VOTING RIGHTS
<S> <C> <C> <C>
Class S3 -- Other Secured Claims Unimpaired -- not entitled to vote
CLASS S4 -- GENERAL UNSECURED CLAIMS IMPAIRED -- ENTITLED TO VOTE
CLASS S5 -- OLD NOTE CLAIMS IMPAIRED -- ENTITLED TO VOTE
Class S6 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
The classification of Claims and Equity Interests against Realty
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
CLASS STATUS VOTING RIGHTS
<S> <C> <C> <C>
Class R1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class R2 -- LaSalle Secured Claims Unimpaired -- not entitled to vote
Class R3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class R4 -- Bank Unsecured Claims Impaired -- entitled to vote
Class R5 -- General Unsecured Claims Impaired -- entitled to vote
Class R6 -- LaSalle Deficiency Claims Impaired -- entitled to vote
Class R7 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
2. CLASSIFICATION AND TREATMENT
a. ADMINISTRATIVE EXPENSE CLAIMS
Subject to the provisions of section 330(a) and 331 of the Bankruptcy
Code, each Holder of an Allowed Administrative Claim will be paid the full
unpaid amount of such Allowed Administrative Claim in Cash on the Effective
Date, or upon such other terms as may be agreed upon by such Holder and the
Reorganized Debtors or otherwise upon order of the Bankruptcy Court; PROVIDED,
HOWEVER, that Allowed Administrative Claims representing obligations incurred in
the ordinary course of business or otherwise assumed by the Debtors pursuant to
the Plan will be assumed on the Effective Date and paid or performed by the
Reorganized Debtors when due in accordance with the terms and conditions of the
particular agreements governing such obligations.
b. PRIORITY TAX CLAIMS
On the Effective Date, each Holder of a Priority Tax Claim due and
payable on or prior to the Effective Date shall be paid Cash in an amount equal
to the amount of such Allowed Claim, or shall be paid on account of its Allowed
Claim on such other terms as have been or may be agreed upon by such Holder and
the Debtors. The amount of any Priority Tax Claim that is not an Allowed Claim
or that is not otherwise due and payable on or prior to the Effective Date, and
the rights of the Holder of such Claim, if any, to payment in respect thereof
shall (i) be determined in the manner in which the amount of such Claim and the
rights of the Holder of such Claim would have been resolved or adjudicated if
the Chapter 11 Cases had not been commenced, (ii) survive the Effective Date
and Consummation of the Plan as if the Chapter 11 Cases had not been commenced,
and (iii) not be discharged pursuant to section 1141 of the Bankruptcy Code. In
accordance with section 1124 of the Bankruptcy Code, the Plan shall leave
unaltered the legal, equitable, and contractual rights of each Holder of a
Priority Tax Claim.
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<PAGE>
c. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST HOLDINGS
CLASS H1: OTHER PRIORITY CLAIMS (NOT IMPAIRED)
Under the Plan, Class H1 consists of all Claims against Holdings accorded
the priority and right of payment under subsection 507(a) of the Bankruptcy Code
(including priority employee salary and wage claims to the extent not paid prior
to confirmation pursuant to any first-day orders authorizing payment of
prepetition wage, salary and benefits claims), other than a Priority Tax Claim
or an Administrative Expense. The legal, equitable and contractual rights of
the Holders of Class H1 Claims are unaltered by the Plan. Unless the Holder of
such Claim and Holdings agree to a different treatment, each Holder of an
Allowed Class H1 Claim shall receive one of the following alternative
treatments, at the election of Holdings:
(i) to the extent then due and owing on the Effective Date,
such Claim will be paid in full in Cash by the New
Holdings;
(ii) to the extent not due and owing on the Effective Date, such
Claim (A) will be paid in full in Cash by the New Holdings,
or (B) will be paid in full in Cash by the New Holdings
when and as such Claim becomes due and owing in the
ordinary course of business; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class H1 Claim that existed immediately prior to
the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date.
Class H1 is not impaired and conclusively deemed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of
Claims in Class H1 are not entitled to vote to accept or reject the Plan.
CLASS H2: BANK SECURED CLAIMS (IMPAIRED)
Under the Plan, Class H2 consists of all Secured Claims against Holdings
arising from or relating to the Prepetition Bank Credit Facility. Under the
Plan, the Holders of Class H2 Claims will receive the same treatment as Holders
of valid Class S2 Claims described below. Class H2 is impaired and approval of
the Plan by Holders of at least two-thirds in amount and one-half in number of
Class H2 Claims with respect to which votes are received is required for the
Plan to be confirmed. Holdings believes that all Class H2 Claims will be fully
satisfied by Systems as Class S2 Claims. As such, Holdings believes that no
property or assets of Holdings will be distributed to this Class.
CLASS H3: OTHER SECURED CLAIMS (NOT IMPAIRED)
A secured claim is (i) a Claim against Holdings held by any person or
entity, including a judgment creditor of the Debtors, secured by a lien on any
asset of Holdings, which lien is valid, perfected and enforceable under
applicable law, and is not subject to avoidance under the Bankruptcy Code or
applicable non-bankruptcy law, but only to the extent of the value of any
interest in property of the Estate securing such Claim; or (ii) a Claim Allowed
under the Plan as a Secured Claim. Under the Plan, Class H3 consists of all
Secured Claims against Holdings other than the Claims classified in Class H2
above. The Debtors are not aware of any holders of Class H3 other Secured
Claims. The legal, equitable and contractual rights of the Holders of Class H3
Claims are unaltered by the Plan. On the Effective Date, each holder of an
Allowed Class H3 Claim shall receive one of the following alternative
treatments, at the election of Holdings:
(i) the legal, equitable and contractual rights to which such
Claim entitles the Holder thereof shall be unaltered by the
Plan;
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<PAGE>
(ii) Holdings shall surrender all collateral securing such Claim
to the Holder thereof, without representation or warranty
by or recourse against Holdings or the New Holdings;
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Class H3 is not impaired and conclusively deemed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of
Claims in Class H3 are not entitled to vote to accept or reject the Plan.
CLASS H4: GENERAL UNSECURED CLAIMS (IMPAIRED)
Under the Plan, Class H4 consists of any Claim against Holdings that is
not a Secured Claim, Administrative Claim, Priority Tax Claim or Other Priority
Claim. On the Effective Date, the Holders of General Unsecured Claims against
Holdings shall neither receive any distributions nor retain any property under
the Plan. Class H4 is impaired, but because no distributions will be made to
Holders of Class H4 General Unsecured Claims nor will such Holders retain any
property, such Holders are deemed to reject the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Class H4 is not entitled to vote to accept or reject
the Plan.
CLASS H5: STONINGTON PREFERRED EQUITY INTERESTS (IMPAIRED)
Under the Plan, Class H5 consists of the Equity Interests of Stonington
relating to the 10% Cumulative Senior Preferred Stock of Holdings. On the
Effective Date, Holders of such Equity Interests shall neither receive any
distributions nor retain any property under the Plan. Under the Plan, all
Common and Preferred Stock issued before the Petition Date will be canceled.
Class H5 is impaired, but because no distributions will be made to Holders of
Class H5 Stonington Preferred Equity Interests nor will such Holders retain any
property, such Holders are deemed to reject the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Class H5 is not entitled to vote to accept or reject
the Plan.
CLASS H6: ROCKWELL PREFERRED EQUITY INTERESTS (IMPAIRED)
Under the Plan, Class H6 consists of the Equity Interests of Rockwell
International Corporation relating to the 6.5% Redeemable Preferred Stock of
Holdings. On the Effective Date, Holders of such Equity Interests shall neither
receive any distributions nor retain any property under the Plan. Under the
Plan, all Common and Preferred Stock issued before the Petition Date will be
canceled. Class H6 is impaired, but because no distributions will be made to
Holders of Class H6 Rockwell Preferred Equity Interests nor will such Holders
retain any property, such Holders are deemed to reject the Plan pursuant to
section 1126(g) of the Bankruptcy Code. Class H6 is not entitled to vote to
accept or reject the Plan.
CLASS H7: EQUITY INTERESTS (IMPAIRED)
An equity interest means any equity interest of Holdings, including, but
not limited to, all issued, unissued, authorized or outstanding shares of stock
(including the Common Stock), together with any warrants, options or contract
rights to purchase or acquire such interests at any time.
Under the Plan, Class H6 consists of all Equity Interests against
Holdings other than the Equity Interests classified in Classes H5 and H6 above.
Under the Plan, all Common and Preferred Stock issued before the Petition Date
will be canceled. Class H7 is impaired, but because no distributions will be
made to Holders of Class H7 Equity Interests nor will such Holders retain any
property, such Holders are deemed to reject the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Class H7 is not entitled to vote to accept or reject
the Plan.
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<PAGE>
d. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST SYSTEMS
CLASS S1: OTHER PRIORITY CLAIMS (NOT IMPAIRED)
Under the Plan, Class S1 consists of all Claims against Systems accorded
the priority and right of payment under subsection 507(a) of the Bankruptcy Code
(including priority employee salary and wage claims to the extent not paid prior
to confirmation pursuant to any first-day orders authorizing payment of
prepetition wage, salary and benefits claims), other than a Priority Tax Claim
or an Administrative Expense. The legal, equitable and contractual rights of
the Holders of Class S1 Claims are unaltered by the Plan. Unless the Holder of
such Claim and Systems agree to a different treatment, each Holder of an Allowed
Class S1 Claim shall receive one of the following alternative treatments, at the
election of Systems:
(i) to the extent then due and owing on the Effective Date,
such Claim will be paid in full in Cash by the Reorganized
Systems;
(ii) to the extent not due and owing on the Effective Date, such
Claim (A) will be paid in full in Cash by the Reorganized
Systems, or (B) will be paid in full in Cash by the
Reorganized Systems when and as such Claim becomes due and
owing in the ordinary course of business; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class S1 Claim that existed immediately prior to
the filing of the Chapter 11 Case shall be deemed cured upon the Effective
Date. Class S1 is not impaired and conclusively deemed to have accepted the
Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders
of Claims in Class S1 are not entitled to vote to accept or reject the Plan.
CLASS S2: BANK SECURED CLAIMS (IMPAIRED)
Under the Plan, Class S2 consists of all Secured Claims against Systems
arising from or relating to the Prepetition Bank Credit Facility. The
Prepetition Bank Credit Facility is an agreement dated January 29, 1998 among
Systems, Goss Japan, Goss UK, certain lenders designated therein, Bankers Trust
Company, as Administrative Agent and Credit Suisse First Boston, as Syndication
Agent, together with all related notes, certificates, security agreements,
mortgages, pledges, indemnities, collateral assignments, undertakings,
guaranties, and other instruments and documents, as each may have been amended
or modified from time to time. Under the Plan, on or prior to the Effective
Date, each Holder of a Prepetition Bank Secured Claim will be satisfied by the
Holder receiving and providing its pro rata share of the Tranche B Revolving
Credit Facility and the Term Loan Facility, so that each Class S2 Claim is paid
in full. The form and substance of the definitive documentation constituting
the Tranche B Revolving Credit Facility and the Term Loan Facility shall be
satisfactory to sufficient Holders of Class S2 Claims so that such Class will be
deemed to accept such documentation.
CLASS S3: OTHER SECURED CLAIMS (NOT IMPAIRED)
A secured claim is (i) a Claim against Systems held by any person or
entity, including a judgment creditor of Systems, secured by a lien on any asset
of Systems, which lien is valid, perfected and enforceable under applicable law,
and is not subject to avoidance under the Bankruptcy Code or applicable
non-bankruptcy law, but only to the extent of the value of any interest in
property of the Estate securing such Claim; or (ii) a Claim Allowed under the
Plan as a Secured Claim. Under the Plan, Class S3 consists of all Secured Claims
against Systems other than the Claims classified in Class S2 above. The Debtors
are not aware of any Holders of Class S3 Other Secured Claims. The legal,
equitable and contractual rights of the Holders of Class S3 Claims are unaltered
by the Plan. On the Effective Date, each holder of an Allowed Class S3 Claim
shall receive one of the following alternative treatments, at the election of
Systems:
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<PAGE>
(i) the legal, equitable and contractual rights to which such
Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Systems shall surrender all collateral securing such Claim
to the Holder thereof, without representation or warranty
by or recourse against Systems or the Reorganized Systems;
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Class S3 is not impaired and conclusively deemed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of
Claims in Class S3 are not entitled to vote to accept or reject the Plan.
CLASS S4: GENERAL UNSECURED CLAIMS (IMPAIRED)
Under the Plan, Class S4 consists of any Claim against Systems that is
not a Secured Claim, Administrative Claim, Priority Tax Claim or Other Priority
Claim, and which does not arise from or is related to the 12% notes issued by
Systems under the Indenture, dated as of October 15, 1996 between Systems and
HSBC as successor indenture trustee. Under the Plan, unless the Holder of such
Class S4 General Unsecured Claim and Systems agree to a different treatment,
each Holder of an Allowed Class S4 Claim shall be paid the full amount, without
interest, of its Allowed Class S4 Claim, payable in three equal installments
three, six and nine months after the Effective Date, or on such dates thereafter
if the Claim becomes first payable in the ordinary course of business at such
time. Unless the Holder of such Claim and Systems agree to a different
treatment, and except as otherwise specifically provided herein, each Holder of
a non-Allowed Class S4 Claim shall preserve all of its rights, claims and
defenses against Systems; provided, however, that if any such non-Allowed Class
S4 Claim becomes a liquidated, undisputed, fixed Claim (i) prior to the date
that is three months after the Effective Date, such Claim shall be paid as if
such Claim were allowed as of the Effective Date, (ii) prior to the date that is
six months after the Effective Date, such Claim shall be paid two-thirds of the
Allowed amount on the date that is six months after the Effective Date and
one-third of the Allowed amount on the date that is nine months after the
Effective Date, or (iii) prior to the date that is nine months after the
Effective Date, such Claim shall be paid in full on the date that is nine months
after the Effective Date; provided, further, that Systems shall preserve all of
its rights, claims and defenses against each Holder of a non-Allowed Class S5
Claim. Any default with respect to any Class S4 Claim that existed immediately
prior to the filing of the Chapter 11 Cases shall be deemed cured upon the
Effective Date. Class S4 is impaired under the Plan approval of the Plan by
Holders of at least two-thirds in amount and one-half in number of Class S4
Claims with respect to which votes are received is required for the Plan to be
confirmed.
CLASS S5: OLD NOTE CLAIMS (IMPAIRED)
Under the Plan, Class S5 consists of any Claim arising from or relating
to the 12% notes issued by Systems under the Indenture, dated as of October 15,
1996 between Systems and HSBC as successor indenture trustee. On or as soon as
practicable after the Effective Date, each Holder of an Allowed Old Note Claim
shall receive in full and final satisfaction of such Claim, a pro rata
distribution of the New Notes and a pro rata share of 3,250,000 of New Holdings
Common Stock, subject to dilution by the Management Equity as provided under the
Lock-Up Agreement. Class S5 is impaired and approval of the Plan by Holders of
at least two-thirds in amount and one-half in number of Class S5 Claims with
respect to which votes are received is required for the Plan to be confirmed.
CLASS S6: EQUITY INTERESTS (IMPAIRED)
An equity interest means any equity interest of Systems, including, but
not limited to, all issued, unissued, authorized or outstanding shares of stock
(including the Common Stock), together with any warrants, options or contract
rights to purchase or acquire such interests at any time.
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<PAGE>
Under the Plan, Class S6 consists of consists of all Equity Interests
against Systems. Under the Plan, all Common and Preferred Stock issued before
the Petition Date will be canceled. Class S6 is impaired, but because no
distributions will be made to Holders of Class S6 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan pursuant
to section 1126(g) of the Bankruptcy Code. Class S6 is not entitled to vote to
accept or reject the Plan.
E. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST REALTY
CLASS R1: OTHER PRIORITY CLAIMS (NOT IMPAIRED)
Under the Plan, Class R1 consists of all Claims against Realty accorded
the priority and right of payment under subsection 507(a) of the Bankruptcy Code
(including priority employee salary and wage claims to the extent not paid prior
to confirmation pursuant to any first-day orders authorizing payment of
prepetition wage, salary and benefits claims), other than a Priority Tax Claim
or an Administrative Expense. The legal, equitable and contractual rights of
the Holders of Class R1 Claims are unaltered by the Plan. Unless the Holder of
such Claim and Realty agree to a different treatment, each Holder of an Allowed
Class R1 Claim shall receive one of the following alternative treatments, at the
election of Realty:
(i) to the extent then due and owing on the Effective Date,
such Claim will be paid in full in Cash by the Reorganized
Realty;
(ii) to the extent not due and owing on the Effective Date, such
Claim (A) will be paid in full in Cash by the Reorganized
Realty, or (B) will be paid in full in Cash by the
Reorganized Realty when and as such Claim becomes due and
owing in the ordinary course of business; or
(iii) such Claim will be otherwise treated in any other manner so
that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class R1 Claim that existed immediately prior to
the filing of the Chapter 11 Case shall be deemed cured upon the Effective
Date. Class R1 is not impaired and conclusively deemed to have accepted the
Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders
of Claims in Class R1 are not entitled to vote to accept or reject the Plan.
CLASS R2: LASALLE SECURED CLAIMS (NOT IMPAIRED)
Under the Plan, Class R2 consists of the Secured Claim of LaSalle
National Bank arising from or related to the $30,000,000 mortgage by Realty for
the benefit of LaSalle National Bank dated July 25, 1997. A Secured Claim
against Realty consists of a Claim against Systems that is secured by a lien on
property in which Systems has an interest, which lien is valid, perfected and
enforceable under applicable law or by reason of a final order, or that is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of the
amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy code, or a claim allowed under the Plan as a Secured
Claim. The legal, equitable and contractual rights of the Holders of Class R2
Claims are unaltered by the Plan. Unless the Holder of such Claim and Realty
agree to a different treatment, each Holder of an Allowed Class R2 Claim shall
receive one of the following alternative treatments, at the election of Realty:
(i) the legal, equitable and contractual rights to which such
Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Realty shall surrender all collateral securing such Claim
to the Holder thereof, without representation or warranty
by or recourse against Realty or the Reorganized Realty; or
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<PAGE>
(iii) such Claim will be otherwise treated in any other matter so
that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class R2 Claim that existed immediately prior to
the filing of the Chapter 11 Case shall be deemed cured upon the Effective
Date. Class R2 is not impaired and the Holders of Class R2 Claims are
conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the
Bankruptcy Code. Therefore, the Holders of Claims in Class R2 are not entitled
to vote to accept or reject the Plan. Notwithstanding the foregoing, Realty
acknowledges that the Holder of the Class R2 Claim may assert that the treatment
selected by Realty as provided above constitutes an impairment of such Claim
within the meaning of section 1124 of the Bankruptcy Court. Accordingly, the
Holder of the Class R2 Claim will be provided with a Ballot for purposes of
accepting or rejected the Plan, and, in the event the Bankruptcy Court
determines that such Holder is entitled to vote, such Ballot shall be accepted
by Realty.
CLASS R3: OTHER SECURED CLAIMS (NOT IMPAIRED)
A secured claim is (i) a Claim against Realty held by any person or
entity, including a judgment creditor of Realty, secured by a lien on any asset
of Realty, which lien is valid, perfected and enforceable under applicable law,
and is not subject to avoidance under the Bankruptcy Code or applicable
non-bankruptcy law, but only to the extent of the value of any interest in
property of the Estate securing such Claim; or (ii) a Claim Allowed under the
Plan as a Secured Claim. Under the Plan, Class R3 consists of all Secured Claims
against Realty other than the Claims classified in Class R2 above. The Debtors
are not aware of any Holders of Class R3 Other Secured Claims. The legal,
equitable and contractual rights of the Holders of Class R3 Claims are unaltered
by the Plan. On the Effective Date, each holder of an Allowed Class R3 Claim
shall receive one of the following alternative treatments, at the election of
Realty:
(i) the legal, equitable and contractual rights to which such
Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Realty shall surrender all collateral securing such Claim
to the Holder thereof, without representation or warranty
by or recourse against Realty or the Reorganized Realty;
(iii) such Claim will be otherwise treated in any other manner so
that such Claim shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Class R3 is not impaired and conclusively deemed to have accepted the Plan
pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of
Claims in Class R3 are not entitled to vote to accept or reject the Plan.
CLASS R4: BANK UNSECURED CLAIMS (IMPAIRED)
Under the Plan, Class R4 consists of any Claim against Realty arising
from or relating to the Prepetition Bank Credit Facility, of which Realty is a
guarantor. Under the Plan, the Holders of Class R4 Claims will receive the
same treatment as Holders of valid Class S2 Claims described above. Class R4 is
impaired and approval of the Plan by Holders of at least two-thirds in amount
and one-half in number of Class R4 Claims with respect to which votes are
received is required for the Plan to be confirmed. Realty believes that all
Class R4 Claims will be fully satisfied by Systems as Class S2 Claims. As such,
Realty believes that no property or assets of Realty will be distributed to this
Class.
CLASS R5: GENERAL UNSECURED CLAIMS (IMPAIRED)
Under the Plan, Class R5 consists of any Claim against Realty that is not
a Secured Claim, Administrative Claim, Priority Tax Claim or Other Priority
Claim. On the Effective Date, the Holders of Class
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<PAGE>
R5 General Unsecured Claims shall share with Class R6, Pro Rata, pari passu,
all assets or property of the Realty after payment of Classes R1 through R3.
Class R5 is impaired and approval of the Plan by Holders of at least
two-thirds in amount and one-half in number of Class R5 Claims with respect
to which votes are received is required for the Plan to be confirmed. Realty
does not believe that there are any Holders of a Class R5 Claim and,
therefore, believes that no distribution will be made to this Class.
CLASS R6: LASALLE DEFICIENCY CLAIM (IMPAIRED)
Under the Plan, Class R6 consists of the Unsecured Claim arising from or
relating to the $30,000,000 mortgage by Realty for the benefit of LaSalle
National Bank dated July 25, 1997 in accordance with section 506(a) of the
Bankruptcy Code. On the Effective Date, the Holders of Class R6 LaSalle
Deficiency Claims against Realty shall share with Class R5, Pro Rata, pari
passu, all assets or property of Realty after payment of Classes R1 through R3.
Class R6 is impaired and approval of the Plan by Holders of at least two-thirds
in amount and one-half in number of Class R6 Claims with respect to which votes
are received is required for the Plan to be confirmed.
CLASS R7: EQUITY INTERESTS (IMPAIRED)
An equity interest means any equity interest of Realty, including, but
not limited to, all issued, unissued, authorized or outstanding shares of stock
(including the Common Stock), together with any warrants, options or contract
rights to purchase or acquire such interests at any time.
Under the Plan, Class R7 consists of all Equity Interests against Realty.
Under the Plan, all Common and Preferred Stock issued before the Petition Date
will be canceled. Class R7 is impaired, but because no distributions will be
made to Holders of Class R7 Equity Interests nor will such Holders retain any
property, such Holders are deemed to reject the Plan pursuant to section 1126(g)
of the Bankruptcy Code. Class R7 is not entitled to vote to accept or reject
the Plan.
III.
FINANCIAL ANALYSIS
A. LIQUIDATION ANALYSIS
Pursuant to section 1129(a)(7) of the Bankruptcy Code (sometimes called
the "Best Interests Test"), the Bankruptcy Code requires that each holder of an
impaired Claim or Equity Interest either (a) accept the Plan or (b) receive or
retain under the Plan property of a value, as of the Effective Date, that is not
less than the value such holder would receive or retain if the Debtors were
liquidated under chapter 7 of the Bankruptcy Code on the Effective Date. The
first step in meeting this test is to determine the dollar amount that would be
generated from the hypothetical liquidation of the Debtors' assets and
properties in the context of a chapter 7 liquidation case. The gross amount of
cash available would be the sum of the proceeds from the disposition of the
Debtors' assets and the cash held by the Debtor at the time of the commencement
of the chapter 7 case. Such amount is reduced by the amount of any Claims
secured by such assets, the costs and expenses of the liquidation, and such
additional administrative expenses and priority claims that may result from the
termination of the Debtors' business and the use of chapter 7 for the purposes
of a hypothetical liquidation. Any remaining net cash would be allocated to
creditors and shareholders in strict priority in accordance with section 726 of
the Bankruptcy Code. In valuing the Plan recoveries, the analysis values debt
and notes issued under the Plan at par and the New Holdings Common Stock at
$74.07 million based upon Stonington's investment of $50 million for 67.5% of
the outstanding equity.
A general summary of the assumptions used by the Debtors' management in
preparing the liquidation analysis follows. The more specific assumptions are
discussed below.
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<PAGE>
1. ESTIMATE OF NET PROCEEDS
Estimates were made of the cash proceeds which might be realized from the
liquidation of Goss' assets. The chapter 7 liquidation period is assumed to
commence on November 30, 1999 and to average six months following the
appointment of a chapter 7 trustee. While some assets may be liquidated in less
than six months, other assets may be more difficult to collect or sell,
requiring a liquidation period substantially longer than six months; this time
would allow for the collection of receivables, sale of assets and wind down of
daily operations. For certain assets, such as certain real property, estimates
of the liquidation proceeds were made for each asset individually. For other
assets, such as machinery and equipment, liquidation values were assessed for
general classes of assets by estimating the percentage recoveries which Goss
might achieve through their disposition.
The Debtors have assumed disposition of the Goss business and other
assets in multiple transactions, rather than the disposition of the Company as
an entirety, over a 6 month period commencing on November 30, 1999. The
analysis assumes that each foreign business division (Europe and Asia/Pacific
operations) would be sold as a going concern within 6 months, and that the
Americas division (including the Company's Corporate function) would be
liquidated on an orderly basis. There can be no assurance, however, that all or
any foreign businesses can be sold as going concerns or that the Company can
liquidate all of the Americas operations over 6 months.
2. ESTIMATE OF COSTS
Goss' costs of liquidation under chapter 7 would include the fees payable
to a chapter 7 trustee, as well as those which might be payable to attorneys and
other professionals that such a trustee may engage. Further, costs of
liquidation would include any obligations and unpaid expenses incurred by Goss
during the chapter 11 cases and allowed in the chapter 7 case, such as trade
obligations, compensation for attorneys, financial advisors, appraisers,
accountants and other professionals, and costs and expenses of members of any
statutory committee of unsecured creditors appointed by the United States
Trustee pursuant to section 1102 of the Bankruptcy Code and any other committee
so appointed.
3. DISTRIBUTION OF NET PROCEEDS UNDER ABSOLUTE PRIORITY
The foregoing post-petition types of claims, costs, expenses, fees and
such other claims that may arise in a liquidation case would be paid in full
from the liquidation proceeds before the balance of those proceeds would be made
available to pay prepetition priority and unsecured claims. Under the absolute
priority rule, no junior creditor would receive any distribution until all
senior creditors are paid in full, and no equity holder would receive any
distribution until all creditors are paid in full. THE DEBTORS BELIEVE THAT IN A
CHAPTER 7 CASE, GENERAL UNSECURED CREDITORS AND HOLDERS OF BOTH THE OLD NOTES
AND THE OLD COMMON STOCK INTERESTS WOULD RECEIVE NO DISTRIBUTIONS OF LIQUIDATION
PROCEEDS.
After consideration of the effects that a chapter 7 liquidation would
have on the ultimate proceeds available for distribution to creditors in a
chapter 11 case, including (i) the increased costs and expenses of a liquidation
under chapter 7 arising from fees payable to a trustee in bankruptcy and
professional advisors to such trustee, (ii) the erosion in value of assets in a
chapter 7 case in the context of the expeditious liquidation required under
chapter 7 and the "forced sale" atmosphere that would prevail, and (iii)
substantial increases in claims which would be satisfied on a priority basis,
THE DEBTORS HAVE DETERMINED, AS SUMMARIZED ON THE FOLLOWING CHART, THAT
CONFIRMATION OF THE PLAN WILL PROVIDE EACH CREDITOR AND EQUITY HOLDER WITH A
RECOVERY THAT IS EQUAL TO OR GREATER THAN IT WOULD RECEIVE PURSUANT TO A
LIQUIDATION OF THE DEBTORS UNDER CHAPTER 7 OF THE BANKRUPTCY CODE.
<TABLE>
<CAPTION>
SUMMARY OF RECOVERIES
---------------------
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<PAGE>
<CAPTION>
DESCRIPTION CLASS NO. UNDER THE PLAN CHAPTER 7
- ----------- -------------- -------------- ---------
<S> <C> <C> <C>
Secured Claims Classes H2, H3, 100% 70%
S2, S3, R2, and
R3
General Unsecured Claims Classes H4, R4, 0% 0%
(Holdings and Realty) and R5
General Unsecured Claims Class S4 100% 0%
(Systems)
Old Note Claims Class S5 59% 0%
LaSalle Deficiency Class R6 0% 0%
Claims
Equity Interests Classes H5, H6, 0% 0%
H7, S6, and R7
</TABLE>
Moreover, the Debtors believes that the value of the distributions
from the liquidation proceeds to each class of Allowed Claims in a chapter 7
case would be the same or less than the value of distributions under the Plan
because such distributions in a chapter 7 case may not occur for a
substantial period of time. In this regard, it is possible that distribution
of the proceeds of the liquidation could be delayed for a year or more after
the completion of such liquidation in order to resolve the Claims and prepare
for distributions. In the event litigation were necessary to resolve Claims
asserted in the chapter 7 case, the delay could be further prolonged and
administrative expenses further increased. The effects of this delay on the
value of distributions under the hypothetical liquidation have not been
considered.
THE DEBTORS' LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE PROCEEDS THAT
MAY BE GENERATED AS A RESULT OF A HYPOTHETICAL CHAPTER 7 LIQUIDATION OF THE
ASSETS OF THE DEBTORS. Underlying the liquidation analysis are a number of
estimates and assumptions that are inherently subject to significant
economic, competitive and operational uncertainties and contingencies beyond
the control of the Company or a chapter 7 trustee. Additionally, various
liquidation decisions upon which certain assumptions and estimates employed
in determining the liquidation values of the Company's assets will result in
an accurate estimate of the proceeds which would be realized were the Company
to undergo an actual liquidation. The actual amounts of claims against the
estate could vary significantly from the Company's estimate, depending on the
claims asserted during the pendency of the chapter 7 case. This liquidation
analysis does not include liabilities that may arise as a result of
litigation, certain new tax assessments or other potential claims. No value
was assigned to additional proceeds which might result from the sale of
certain items with intangible value. This analysis also does not include
potential recoveries from avoidance actions. Therefore, the actual
liquidation value of Goss could vary materially from the estimates provided
herein.
The liquidation analysis set forth below was based on the estimated
values of Goss' assets immediately prior to the Effective Date. To the
extent operations through such date are different than estimated, the asset
values may change. These values have not been subject to any review,
compilation or audit by any independent accounting firm.
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<PAGE>
GOSS GRAPHIC SYSTEMS INC.
LIQUIDATION ANALYSIS
($ IN 000s)
<TABLE>
<CAPTION>
NOVEMBER 30, 1999
PROCEEDS FROM LIQUIDATION OF AMERICAS: ESTIMATED BALANCE ESTIMATED RECOVERY % ESTIMATED LIQUIDATION
----------------- PROCEEDS
LOWER HIGHER LOWER HIGHER
----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
Cash and Investments $10,000 100.0% - 100.0% $10,000 - $10,000
Accounts and Notes Receivable 68,799 3.4% - 5.4% 2,339 - 3,715
Inventories 94,941 12.8% - 17.5% 12,152 - 16,615
Other Current Assets 18,881 0.0% - 0.0% 0 - 0
Net Property, Plant and Equipment 93,035 42.5% - 59.8% 39,540 - 55,635
Goodwill 206,781 0.0% - 0.0% 0 - 0
Other Assets 21,038 0.0% 0.0% 0 - 0
------ ---- - ---- - -
PROCEEDS FROM LIQUIDATION $513,474 12.5% 16.7% 64,031 - 85,965
OF AMERICAS -------- ----- - -----
PROCEEDS FROM THE SALE OF 72,386 - 90,023
EUROPEAN OPERATIONS
PROCEEDS FROM THE SALE OF 66,728 - 84,020
ASIA/PACIFIC OPERATIONS ------ ------
TOTAL PROCEEDS AVAILABLE $203,145 - 260,008
FOR DISTRIBUTION -------- -------
-------- -------
TOTAL PROCEEDS AVAILABLE FOR $231,57
DISTRIBUTION, MIDPOINT -------
-------
</TABLE>
<TABLE>
<CAPTION>
ALLOCATION OF PROCEEDS: NOVEMBER 30, 1999 ESTIMATED ESTIMATED %
CHAPTER 7 ADMINISTRATIVE CLAIMS ESTIMATED CLAIM RECOVERY RECOVERY
--------------- -------- --------
<S> <C> <C> <C>
Trustee Fees $6,947 $6,947 100.0%
Wind-down Fees 26,932 26,932 100.0%
Carve-out for Professional Fees 1,500 1,500 100.0%
----- ----- ------
TOTAL CHAPTER 7 ADMINISTRATIVE CLAIMS 35,380 35,380 100.0%
PROCEEDS AVAILABLE FOR PAYMENT OF SECURED CLAIMS 196,197
SECURED CLAIMS
DIP Facility 50,000 50,000 100.0%
Revolver (including letters of credit) 199,525 118,697 59.5%
Other Secured Debt 29,877 27,500 92.0%
------ ------ -----
TOTAL OTHER SECURED CLAIMS 279,402 196,197 70.2%
PROCEEDS AVAILABLE FOR PAYMENT OF 0
ADMINISTRATIVE CLAIMS
CHAPTER 11 ADMINISTRATIVE CLAIMS
Professional Fees $4,500 $0 0.0%
------ ----- ----
TOTAL CHAPTER 11 ADMINISTRATIVE CLAIMS 4,500 0 0.0%
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<PAGE>
<CAPTION>
ALLOCATION OF PROCEEDS: NOVEMBER 30, 1999 ESTIMATED ESTIMATED %
CHAPTER 7 ADMINISTRATIVE CLAIMS ESTIMATED CLAIM RECOVERY RECOVERY
--------------- -------- --------
<S> <C> <C> <C>
PROCEEDS AVAILABLE FOR PAYMENT OF 0
GENERAL UNSECURED CLAIMS
GENERAL UNSECURED CLAIMS
Old Notes (including accrued interest)
$232,575 $0 0.0%
Trade Accounts Payable 81,631 0 0.0%
Accrued Liabilities 64,789 0 0.0%
Other Unsecured Claims (Customer Advances) 73,782 0 0.0%
------ - ----
TOTAL GENERAL UNSECURED CLAIMS 452,777 0 0.0%
PROCEEDS AVAILABLE FOR DISTRIBUTION TO EQUITY $0
--
--
</TABLE>
FOOTNOTES TO LIQUIDATION ANALYSIS
CASH AND CASH EQUIVALENTS
Cash consists of all cash in banks or operating accounts and liquid
investments with maturities of three months or less and is assumed to be
fully recoverable.
ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of customer receivables for the
sale of presses, after market parts, and other used equipment, and
receivables from installation and consulting services. The recovery of
accounts and notes receivable is based on management's estimate of
collection, given such factors as the aging and historical collection
patterns of the receivables, the status of work-in-process orders, customer
advances received from customers, and future service, installation, and
warranty obligations. For the purposes of this liquidation analysis, it is
assumed that the Company will not honor any service and warranty obligations
due to the liquidation of the Company. As a result, the liquidation analysis
assumes that a very low percentage of accounts receivable will be collected.
INVENTORIES
Inventories are comprised of raw materials, work-in-process, and
finished goods. The overall inventory recovery considers, among other
things, reference to advance rates under Goss' post-petition financing
facility, and is net of costs incurred to liquidate the inventories.
OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist primarily of
miscellaneous prepaid expenses such as rent, insurance, taxes, and deposits.
Prepaids are assumed to have no estimated liquidation value.
PROPERTY, PLANT AND EQUIPMENT
Property Plant and Equipment includes owned land, buildings, machinery
and equipment, and leasehold improvements.
LAND AND BUILDINGS: The value of Land and Buildings was based upon
management's assessment of the value of each property considering both
recent appraisals and the effects of the chapter 7 environment.
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<PAGE>
MACHINERY AND EQUIPMENT: Machinery and Equipment include manufacturing
equipment and office fixtures. The value of machinery and equipment was
based upon recent appraisals and management's review of these assets.
LEASEHOLD IMPROVEMENTS: No separate value has been ascribed in
liquidation to leasehold improvements as the value of these improvements
will either revert to the purchaser or lessor upon the sale or rejection
of leases.
GOODWILL
Although the liquidation of the Company's tradename and other
intangible assets may have value in a liquidation, no liquidation proceeds
were assumed from the sale of goodwill or other intangible assets due to the
uncertainty of realizable value.
OTHER NON-CURRENT ASSETS
Other non-current assets primarily include deferred financing costs,
club memberships, and other miscellaneous assets. These assets are assumed
to have no value in a liquidation.
OTHER SECURED DEBT
Represents the Company's mortgage debt on the Westmont real estate
facility. Liquidation proceeds are based upon recent appraisals and
management's best estimate of market value.
TRUSTEE AND PROFESSIONAL FEES
Trustee fees are estimated at 3% of gross liquidation proceeds. No
priority claims, other than trustee and professional fees are assumed.
WIND DOWN COSTS
Wind down costs consist of corporate overhead, severance, stay
bonuses, and other related costs to be incurred during the chapter 7
liquidation period. Management assumes that the liquidation would occur over
a nine-month period and that such expenses, costs and overhead would decrease
over time.
PROFESSIONAL FEES
Professional fees represent the costs of a chapter 7 case related to
attorneys, accountants, appraisers and other professionals retained by the
trustee. Based on management review of the nature of these costs and the
outcomes of similar liquidations, fees were estimated to average
approximately $1 million per month for six months during the liquidation
period.
TRADE ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Represents trade accounts payable and accrued liabilities in America,
which are general unsecured claims. For the purposes of this liquidation
analysis, it is assumed that all foreign trade accounts payable were assumed
by the buyer of the foreign operations.
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<PAGE>
OTHER UNSECURED CLAIMS
Primarily represents customer advances received from customers in
America, which are general unsecured claims. For the purposes of this
liquidation analysis, it is assumed that all customer advances liabilities were
assumed by the buyer of the foreign operations.
B. PROJECTIONS
1. RESPONSIBILITY FOR AND PURPOSE OF THE PROJECTIONS
As a condition to confirmation of a plan, the Bankruptcy Code requires,
among other things, that the bankruptcy court determine that confirmation is not
likely to be followed by a liquidation or the need for further financial
reorganization of the debtor. In connection with the development of the Plan,
and for purposes of determining whether the Plan satisfies feasibility
standards, the Debtors' management has, through the development of financial
projections (the "Projections"), analyzed the ability of the Debtors to meet
their obligations under the Plan to maintain sufficient liquidity and capital
resources to conduct its business. The Projections were also prepared to assist
each holder of a Claim in Classes H2, S2, S4, S5, R4, R5, and R6 in determining
whether to accept or reject the Plan.
The Projections should be read in conjunction with the assumptions,
qualifications and footnotes to tables containing the Projections set forth
herein, the historical consolidated financial information (including the notes
and schedules thereto) and the other information set forth in Systems' Annual
Report on Form 10-K for the fiscal year ended September 30, 1998, and Systems'
Quarterly Report on Form 10-Q for the period ended March 31, 1999. The
Projections were prepared in good faith based upon assumptions believed to be
reasonable and applied in a manner consistent with past practice. Most of the
assumptions about the operations of the business after the assumed Effective
Date which are utilized in the Projections were prepared in June 1999 and were
based, in part, on economic, competitive, and general business conditions
prevailing at the time. While as of the date of this Disclosure Statement such
conditions have not materially changed, any future changes in these conditions
may materially impact the ability of the Debtors to achieve the Projections.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARDS COMPLYING WITH THE
GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. GOSS' INDEPENDENT ACCOUNTANT HAS
NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL INFORMATION
TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAS NOT EXPRESSED AN
OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.
THE DEBTORS DO NOT, AS A MATTER OF COURSE, PUBLISH PROJECTIONS OF THEIR
ANTICIPATED FINANCIAL POSITION, RESULTS OF OPERATIONS OR CASH FLOWS.
ACCORDINGLY, THE DEBTORS DO NOT INTEND TO, AND DISCLAIM ANY OBLIGATION TO (A)
FURNISH UPDATED PROJECTIONS TO HOLDERS OF CLAIMS OR EQUITY INTERESTS PRIOR TO
THE EFFECTIVE DATE OR TO HOLDERS OF NEW COMMON STOCK OR ANY OTHER PARTY AFTER
THE EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION IN ANY DOCUMENTS THAT
MAY BE REQUIRED TO BE FILED WITH THE SEC, OR (C) OTHERWISE MAKE SUCH UPDATED
INFORMATION PUBLICLY AVAILABLE.
THE PROJECTIONS PROVIDED IN THE DISCLOSURE STATEMENT HAVE BEEN PREPARED
EXCLUSIVELY BY THE DEBTORS' MANAGEMENT. THESE PROJECTIONS, WHILE PRESENTED WITH
NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND
ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE
REALIZED, AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND
COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF
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<PAGE>
WHICH ARE BEYOND THE DEBTORS' CONTROL. THE DEBTORS CAUTION THAT NO
REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE FINANCIAL PROJECTIONS
OR TO THE REORGANIZED DEBTORS' ABILITY TO ACHIEVE THE PROJECTED RESULTS.
SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE. FURTHER, EVENTS AND
CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS
WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY, MAY HAVE
BEEN UNANTICIPATED, AND THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT
FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER. THE PROJECTIONS,
THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER ASSURANCE OF THE
ACTUAL RESULTS THAT WILL OCCUR.
FINALLY, THE FOLLOWING PROJECTIONS INCLUDE ASSUMPTIONS AS TO THE
ENTERPRISE VALUE OF THE REORGANIZED DEBTORS, THE FAIR VALUE OF ITS ASSETS AND
ITS ACTUAL LIABILITIES AS OF THE EFFECTIVE DATE. THE REORGANIZED DEBTORS WILL
BE REQUIRED TO MAKE SUCH ESTIMATIONS AS OF THE EFFECTIVE DATE. SUCH
DETERMINATION WILL BE BASED UPON THE FAIR VALUES AS OF THAT DATE, WHICH COULD BE
MATERIALLY GREATER OR LOWER THAN THE VALUES ASSUMED IN THE FOREGOING ESTIMATES.
2. SUMMARY OF SIGNIFICANT ASSUMPTIONS
The Debtors have developed the Projections (summarized below) to assist
both creditors and shareholders in their evaluation of the Plan and to analyze
its feasibility. THE PROJECTIONS ARE BASED UPON A NUMBER OF SIGNIFICANT
ASSUMPTIONS DESCRIBED BELOW. ACTUAL OPERATING RESULTS AND VALUES MAY AND WILL
VARY FROM THOSE PROJECTED.
a. FISCAL YEARS
Goss' fiscal year ends on December 31 of each year.
b. PLAN TERMS AND CONSUMMATION
The Projections assume an Effective Date of December 1, 1999 with Allowed
Claims and Equity Interests treated in accordance with the treatment provided in
the Plan with respect to such Allowed Claims and Equity Interests. Whether or
not consummation of the Plan occurs on or about December 1, 1999, there is no
guarantee that, among other things, the trade creditors will support Goss as
projected. A material reduction in trade credit and terms would materially
impact Goss' ability to achieve the projected results. Further, if the
Effective Date does not occur by December 1, 1999, additional bankruptcy
expenses will be incurred until such time as a plan of reorganization is
confirmed. These expenses could significantly impact Goss' results of
operations and cash flows.
c. ASSUMPTIONS PRECEDING THE EFFECTIVE DATE
As a basis for the Projections, management has estimated the operating
results for the period of time leading up to the Effective Date. Specifically,
it has been assumed that during the chapter 11 cases, trade vendors will
continue to provide Goss with goods on customary terms and credit.
d. GENERAL ECONOMIC CONDITIONS
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<PAGE>
The Projections were prepared assuming that economic conditions in the
markets served by Goss do not differ significantly over the next four years from
current economic conditions. Inflation in revenues and costs is assumed to
remain relatively low.
e. REVENUES
Goss' projected revenues reflect an assumed increase in revenues of
approximately 2% from 1999 to 2000, 5.9% from 2000 to 2001, 3.2% from 2001 to
2002 and 1.0% from 2002 to 2003. Projected revenues are based upon the
Company's assessment of future orders, taking into consideration timing and risk
factors, and assume the stabilization of the business and the return to the
company's historical operating environment. The assumed increases in revenues
are based upon the assumptions as to general market conditions referred to
above, certain growth rate assumptions, and through current and future new
product development.
f. GROSS MARGINS
Gross margins show a gradual increase from 2000 levels as a result of
planned cost reduction initiatives and the anticipated expansion of the parts
and service business, which historically has generated higher margins than press
sales.
g. INCOME TAXES
The Debtor anticipates having substantial NOL carryforwards on the
Effective Date, which will be used to offset future domestic income. Projected
tax expense is related to taxes payable on income generated by the Company's
foreign operations.
h. WORKING CAPITAL
Working capital components have been estimated based upon underlying
sales volumes and the analysis of historical averages. Given the nature of the
business, working capital requirements for Goss swing greatly at any point in
time.
i. CAPITAL EXPENDITURES
Capital expenditures consist of investments in new machinery and
equipment, computer systems, and technological improvements. The Projections
assume a level of capital expenditures which, consistent with management's
business plan, can be supported by the capital structure and forecast operating
results of Reorganized Goss.
j. EBITDA
EBITDA is defined for purposes of the Projections as earnings before
interest expense, income tax provision, depreciation and amortization, unusual
items, reorganization items, and extraordinary items.
k. INTEREST EXPENSE
Interest expense reflects interest on the $112.5 million of New Notes,
interest on obligations under capital leases and interest on the post-petition
exit facility and other miscellaneous indebtedness. The New
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<PAGE>
Notes will be unsecured obligations of New Holdings and will mature six years
from the Effective Date (2005). For the first two years following the
Effective Date, the New Notes will be payable semi-annually via the issuance
of additional New Notes. Thereafter interest shall be payable in cash.
l. POST PETITION EXIT FACILITY
Reorganized Goss is assumed to enter into a new four year revolving
credit and term loan facility as set forth in the Lock-Up Agreement (the "Post
Petition Exit Facility")
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<PAGE>
3. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for historical information, statements contained in this
Disclosure Statement and incorporated by reference, including the projections in
this section, may be considered "forward-looking statements" within the meaning
of federal securities law. Such forward-looking statements are subject to
risks, uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. Potential risks and uncertainties include, but are not limited to,
general economic and business conditions, the competitive environment in which
Goss operates and will operate, the success or failure of Goss in implementing
its current business and operational strategies, the level of vendor trade
support, labor relations and labor costs, the ability of Goss to maintain and
improve its revenues and margins, the liquidity of Goss on a cash flow basis
(including the ability to comply with the financial covenants of its credit
arrangements and to fund Goss capital expenditure program). For additional
information about Goss and relevant risk factors, see Section XII, Risk Factors.
4. FINANCIAL PROJECTIONS
The financial projections prepared by management are summarized in the following
tables. Specifically, the attached tables include:
a. Pro-forma Reorganized Goss balance sheet at November 30, 1999
("Estimated Pre-Consummation"), including all reorganization
adjustments.
b. Projected balance sheets for fiscal years ending in 2000 through
2003.
c. Projected income statements for the fiscal years ending in 2000
through 2003.
d. Projected statements of cash flow for the fiscal years ending 2000
through 2003.
All captions in the attached projections do not respond exactly to Goss'
historical external reporting; some captions have been combined for
presentation purposes.
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<PAGE>
REORGANIZED GOSS GRAPHIC SYSTEMS, INC.
UNAUDITED PRO-FORMA REORGANIZED BALANCE SHEET
REFLECTING REORGANIZATION ADJUSTMENTS
($ IN 000S)
<TABLE>
<CAPTION>
PLAN OF ESTIMATED
PRE-ESTIMATED REORGANIZATION POST-
CONSUMMATION ADJUSTMENTS CONSUMMATION(g)
------------- -------------- ---------------
<C> <C> <C>
<S>
ASSETS
Cash (including China) $ 16,206 $ 16,206
Accounts Receivable, Net 160,390 160,390
Inventories, Net 205,448 205,448
Other Current Assets 29,497 29,497
------------- ---------------
TOTAL CURRENT ASSETS 411,541 411,541
Net Property, Plant and Equipment 134,928 (h) 134,928
Net Goodwill 296,308 296,308
Other Assets 28,160 28,160
------------- ---------------
TOTAL ASSETS $ 870,938 $0 $ 870,938
============= ============== ===============
LIABILITIES & EQUITY
CURRENT LIABILITIES
Trade Payables $ 157,435 $ 157,435
Customer Advances 127,926 127,926
Accrued Interest on the Old Notes 7,875 $ (7,875) (a) -
Other Accrued Liabilities 154,916 154,916
Prepetition revolver (plus China) 188,325 (188,325) (b) -
DIP Facility 45,149 (45,149) (b) -
Current Portion of Long-Term Debt 4,318 (h) 4,318
------------- ------------- ---------------
TOTAL CURRENT LIABILITIES 685,644 (241,349) 444,595
NON-CURRENT LIABILITIES
Old Notes 225,000 (225,000) (a) -
Post-petition exit facility - 233,474 (c) 183,474
(50,000) (d)
Long-Term Debt, Net of Current Portion 16,716 (h) 16,716
New Notes - 112,500 (e) 112,500
Other Long-Term Liabilities 49,987 49,987
Minority Interest 8,610 8,610
------------- -------------- ---------------
TOTAL NON-CURRENT 300,314 70,974 371,288
Retained Earnings (302,640) 85,900 (a) (11,001)
7,875 (a)
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<PAGE>
REORGANIZED GOSS GRAPHIC SYSTEMS, INC.
UNAUDITED PRO-FORMA REORGANIZED BALANCE SHEET
REFLECTING REORGANIZATION ADJUSTMENTS
($ IN 000S)
197,684(f)
Currency Translation (10,544) (10,544)
Shareholders Equity 197,864 (197,864)(f) 76,600
76,600(d)
------------- -------------- ---------------
TOTAL EQUITY (115,320) 170,375 55,055
TOTAL LIABILITIES & EQUITY $ 870,938 $0 $ 870,938
============= ============== ===============
</TABLE>
NUMBERS MAY NOT TOTAL DUE TO ROUNDING.
NOTES TO PRO-FORMA REORGANIZED BALANCE SHEET
(a) The Plan provides for, among other things, a deleveraging of Goss
through an exchange of all of the Company's Senior Subordinated
Notes (plus all accrued but unpaid interest) for $112.5 million of
12.25% New Senior Subordinated Notes and 3,250,000 shares of
Restructured Common Stock. This amount represents the forgiveness
of obligations owing in respect of the Senior Subordinated Notes.
(b) These amounts represent the Company's outstanding borrowings under
the Pre-petition Revolver and the DIP facility, which, under the
terms of the Plan of Reorganization, will be paid off by the Post
Petition Exit Facility and the Stonington Capital Contribution.
(c) Represents the anticipated borrowings under the post petition Exit
Facility upon emergence from bankruptcy. This amount is equal to
the Company's Pre-petition Revolver (plus China) plus the DIP
facility (both of which will paid off by the Post Petition Exit
Facility and the Stonington Capital Contribution upon emergence from
bankruptcy).
(d) Represents a $50 million equity contribution by Stonington to the
Company, a $24.1 million equity value for the 32.5% of Restructured
Common Stock received by the New Senior Subordinated Noteholders in
exchange for the Old Senior Subordinated Notes, and $2.5 million for
Restructured Restricted Common Stock issuable to management in
accordance with the restructuring Plan and Lock-Up Agreement.
(e) This amount represents the issuance of the new 12.25% Senior
Subordinated Notes due 2005.
(f) Represents the cancellation of all old common stock.
(g) Estimated Post-Consummation balance sheet numbers consolidate Goss
and New Holdings.
(h) Assumes that the Company has disposed of the Westmont property and
satisfied the related mortgage.
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<PAGE>
REORGANIZED GOSS GRAPHIC SYSTEMS, INC.
PROJECTED INCOME STATEMENTS
FISCAL YEARS 2000 THROUGH 2003
($ IN 000S)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDING
------------------------------------------------------
DECEMBER DECEMBER DECEMBER DECEMBER
31, 31, 31, 31,
2000 2001 2002 2003
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $758,332 $772,000 $797,000 $803,000
Cost of Sales 638,525 633,040 647,961 648,824
-------- -------- -------- --------
GROSS PROFIT 119,807 138,960 149,039 154,176
Total Operating Expenses 86,733 88,500 89,000 90,800
Other (Income)/Expense (279) - - -
Goodwill Amortization 8,064 8,100 8,100 8,100
-------- -------- -------- --------
EARNINGS BEFORE INTEREST 25,288 42,360 51,939 55,276
AND TAXES
Interest Expense 33,983 32,491 32,274 30,868
Taxes (Benefit) 5,737 8,000 8,800 8,800
Minority Interest 1,609 1,609 1,609 1,609
-------- -------- -------- --------
NET INCOME $(16,040) $ 261 $ 9,256 $ 13,999
-------- -------- -------- --------
-------- -------- -------- --------
SUPPLEMENTAL DATA:
Interest Expense 33,983 32,491 32,274 30,868
Taxes 5,737 8,000 8,800 8,800
Depreciation 18,520 14,266 14,453 14,834
Amortization 8,064 8,100 8,100 8,100
Other 242 - - -
-------- -------- -------- --------
EBITDA $ 50,506 $ 63,118 $ 72,883 $ 76,601
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
NUMBERS MAY NOT TOTAL DUE TO ROUNDING.
-38-
<PAGE>
REORGANIZED GOSS GRAPHIC SYSTEMS, INC.
UNAUDITED PROJECTED REORGANIZED BALANCE SHEET
($ IN 000S)
<TABLE>
<CAPTION>
AS OF
---------------------------------------------------------
DECEMBER DECEMBER DECEMBER DECEMBER
31, 31, 31, 31,
2000 2001 2002 2003
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash (including China) $ 21,034 $ 20,000 $ 20,000 $ 20,000
Accounts Receivable, Net 142,077 163,308 168,596 169,865
Inventories, Net 234,864 176,231 176,466 176,466
Other Current Assets 21,015 21,015 21,015 21,015
--------- --------- --------- ---------
TOTAL CURRENT ASSETS 418,990 380,553 386,077 387,346
Net Property, Plant and Equipment 132,811 134,545 138,093 143,259
Net Goodwill 287,121 279,021 270,921 262,821
Other Assets 27,735 27,736 27,736 27,736
--------- --------- --------- ---------
TOTAL ASSETS $ 866,658 $ 821,856 $ 822,826 $ 821,162
--------- --------- --------- ---------
--------- --------- --------- ---------
LIABILITIES & EQUITY
CURRENT LIABILITIES
Trade Payables $ 136,931 $ 121,616 $ 125,132 $ 125,130
Customer Advances 161,312 159,708 164,880 164,880
Other Accrued Liabilities 139,482 125,000 125,000 125,000
Current Portion of Long-Term Debt 4,288 4,300 4,300 4,300
--------- --------- --------- ---------
TOTAL CURRENT LIABILITIES 442,013 410,624 419,312 419,311
NON-CURRENT LIABILITIES
Long-Term Debt, Net of Current Portion 14,978 11,778 8,578 5,378
Post-petition exit facility 188,625 161,859 146,486 132,424
New senior subordinated notes 127,997 142,700 142,700 142,700
Other Long-Term Liabilities 49,987 49,987 49,987 49,987
Minority Interest 10,456 12,065 13,674 15,283
--------- --------- --------- ---------
TOTAL NON-CURRENT LIABILITIES 392,043 378,389 361,425 345,772
Retained Earnings (203,856) (203,616) (194,370) (180,378)
Currency Translation (11,406) (11,406) (11,406) (11,406)
Shareholders Equity 247,864 247,864 247,864 247,864
--------- --------- --------- ---------
TOTAL EQUITY 32,602 32,842 42,088 56,080
TOTAL LIABILITIES & EQUITY $ 866,658 $ 821,856 $ 822,826 $ 821,162
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
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<PAGE>
NUMBERS MAY NOT TOTAL DUE TO ROUNDING.
REORGANIZED GOSS GRAPHIC SYSTEMS, INC.
STATEMENT OF CASH FLOWS
FISCAL YEARS 2000 THROUGH 2003
($ IN 000S)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDING
--------------------------------------------------------
DECEMBER DECEMBER DECEMBER DECEMBER
31, 31, 31, 31,
2000 2001 2002 2003
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income $(16,040) $ 216 $ 9,256 $ 13,999
Depreciation 18,520 14,266 14,453 14,834
Amortization, goodwill 8,064 8,100 8,100 8,100
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 9,674 (21,230) (5,288) (1,269)
(Increase) Decrease in Inventory (41,347) 58,633 (235) -
(Increase) Decrease in Other Current Assets 6,578 - - -
Increase (Decrease) in Trade Payables (31,795) (15,315) 3,515 (1)
Increase (Decrease) in Customer Advances 36,293 (1,603) 5,172 -
Increase (Decrease) in Non-cash Interest (PIK) 14,348 14,703 - -
Increase (Decrease in Other Accrued Liabilities (6,213) (14,482) - -
--------- -------- -------- --------
Net cash from operations (1,917) 43,332 34,973 35,662
INVESTING ACTIVITIES
Capital Expenditures (16,403) (16,000) (18,000) (20,000)
Other 1,368 1,600 1,600 1,600
--------- -------- -------- --------
Net cash from investing activities (15,035) (14,400) (16,400) (18,400)
Operating Cash Flow (16,953) 28,932 18,573 17,262
FINANCING ACTIVITIES
Repayment of mortgage notes & term loan (2,419) (3,200) (3,200) (3,200)
Net borrowings (paydown) under bank facility 23,928 (26,766) (15,373) (14,062)
--------- -------- -------- --------
Net cash from financing activities 21,509 (29,966 (18,573) (17,262)
Net increase (decrease) in cash 4,556 (1,034) - -
Cash and Cash Equivalents, Beginning 16,477 21,034 20,000 20,000
--------- -------- -------- --------
ENDING CASH BALANCE $ 21,034 $ 20,000 $ 20,000 $ 20,000
--------- -------- -------- --------
--------- -------- -------- --------
</TABLE>
NUMBERS MAY NOT TOTAL DUE TO ROUNDING.
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<PAGE>
IV.
PROCEDURES FOR TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
A. RESOLUTION OF DISPUTED CLAIMS
1. PROSECUTION OF OBJECTIONS TO CLAIMS
After the Confirmation Date, the Debtors and the Reorganized Debtors
shall have the exclusive authority to File objections, settle, compromise,
withdraw or litigate to judgment objections to Claims. From and after the
Confirmation Date, the Debtors and the Reorganized Debtors may settle or
compromise any Disputed Claim without approval of the Bankruptcy Court. The
Debtors also reserve the right to resolve any Disputed Claims outside the
Bankruptcy Court under applicable governing law.
2. ESTIMATION OF CLAIMS
The Debtors or the Reorganized Debtors may, at any time, request that the
Bankruptcy Court estimate any contingent or unliquidated Claim pursuant to
section 502(c) of the Bankruptcy Code regardless of whether the Debtors or the
Reorganized Debtor has previously 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 during the pendency of any
appeal relating to any such objection. In the event that the Bankruptcy Court
estimates any contingent or unliquidated Claim, that estimated amount will
constitute either the allowed amount of such Claim or a maximum limitation on
such Claim, as determined by the Bankruptcy Court. If the estimated amount
constitutes a maximum limitation on such Claim, the Debtors or Reorganized
Debtors may elect to pursue any supplemental proceedings to object to any
ultimate payment on such Claim. All of the aforementioned Claims objection,
estimation and resolution procedures are cumulative and not necessarily
exclusive of one another. Claims may be estimated and subsequently compromised,
settled, withdrawn or resolved by any mechanism approved by the Bankruptcy
Court.
3. PAYMENTS AND DISTRIBUTIONS ON DISPUTED CLAIMS
Notwithstanding any provision in the Plan to the contrary, except as
otherwise agreed by the Reorganized Debtors in their sole discretion, no partial
payments and no partial distributions will be made with respect to a Disputed
Claim until the resolution of such disputes by settlement or Final Order.
Subject to the provisions of the Plan, as soon as practicable after a Disputed
Claim becomes an Allowed Claim, the Holder of such Allowed Claim will receive
all payments and distributions to which such Holder is then entitled under the
Plan. Notwithstanding the foregoing, any Person or Entity who holds both an
Allowed Claim(s) and a Disputed Claim(s) will receive the appropriate payment or
distribution on the Allowed Claim(s), although, except as otherwise agreed by
the Reorganized Debtors in their sole discretion, no payment or distribution
will be made on the Disputed Claim(s) until such dispute is resolved by
settlement or Final Order. In the event there are Disputed Claims requiring
adjudication and resolution, the Debtors reserve the right, or upon order of the
Court, to establish appropriate reserves for potential payment of such claims.
B. ALLOWANCE OF CLAIMS AND INTERESTS
Except as expressly provided in the Plan or any order entered in the
Chapter 11 Cases prior to the Effective Date (including the Confirmation Order),
no Claim or Equity Interest shall be deemed Allowed, unless and until such Claim
or Equity Interest is deemed Allowed under the Code or the Bankruptcy Court
enters a Final Order in the Chapter 11 Cases allowing such Claim or Equity
Interest. Except as expressly provided in the Plan or any order entered in the
Chapter 11 Cases prior to the Effective Date (including the Confirmation Order),
the Reorganized Debtors after confirmation will have and retain any and all
rights and defenses the Debtors had with respect to any Claim or Equity Interest
as of the date the appropriate Debtor filed its petition for relief under the
Bankruptcy Code.
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<PAGE>
All Claims of any entity that owes money to the Debtors shall be disallowed
unless and until such entity pays the amount it owes the Debtors in full.
Any objection to an Administrative Claim, Priority Claim or Secured Claim
must be filed and served within ninety (90) days of the Effective Date.
C. CONTROVERSY CONCERNING IMPAIRMENT
If a controversy arises as to whether any Claims or Equity Interests, or
any Class of Claims or Equity Interests, are Impaired under the Plan, the
Bankruptcy Court shall, after notice and a hearing, determine such controversy
before the Confirmation Date.
V.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Immediately prior to the Effective Date, all executory contracts or
unexpired leases of the Reorganized Debtors will be deemed assumed in accordance
with the provisions and requirements of sections 365 and 1123 of the Bankruptcy
Code except those executory contracts and unexpired leases that (1) have been
rejected by order of the Bankruptcy Court, (2) are the subject of a motion to
reject pending on the Effective Date, (3) are identified on a list to be filed
with the Bankruptcy Court on or before the Confirmation Date, as to be rejected,
or (4) are rejected pursuant to the terms of the Plan. Entry of the
Confirmation Order by the Bankruptcy Court shall constitute approval of such
assumptions and rejections pursuant to sections 365(a) and 1123 of the
Bankruptcy Code.
The Debtors will determine which of their executory contracts should be
assumed or rejected at or prior to confirmation by analyzing all information
pertinent to that determination including the costs associated with continuing
or rejecting their executory contracts and the benefit to the estates against
which such costs must be compared.
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES
All proofs of claim with respect to Claims arising from the rejection of
executory contracts or unexpired leases, if any, must be Filed with the
Bankruptcy Court within sixty (60) days after the date of entry of an order of
the Bankruptcy Court approving such rejection. Any Claims arising from the
rejection of an executory contract or unexpired lease not Filed within such
times will be forever barred from assertion against the Debtors or Reorganized
Debtors, their estates and property unless otherwise ordered by the Bankruptcy
Court or provided in this Plan, all such Claims for which proofs of claim are
required to be Filed will be, and will be treated as, General Unsecured Claims
subject to the provisions of Article VIII of the Plan.
C. CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES ASSUMED
Any monetary amounts by which each executory contract and unexpired lease
to be assumed pursuant to the Plan is in default shall be satisfied, pursuant to
section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in
Cash on the Effective Date or on such other terms as the parties to such
executory contracts or unexpired leases may otherwise agree. In the event of a
dispute regarding: (1) the amount of any cure payments, (2) the ability of the
Reorganized 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 (3) 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 the dispute
and approving the assumption.
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<PAGE>
D. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The obligations of the Debtors to indemnify any Person or Entity serving
at any time on or prior to the Effective Date as one of their directors,
officers or employees by reason of such Person's or Entity's service in such
capacity, or as a director, officer or employee of any other corporation or
legal entity, to the extent provided in the Debtors constituent documents, by a
written agreement with the Debtors, the Delaware General Corporation Law or the
Delaware LLC Law, shall be deemed and treated as executory contracts that are
assumed by the Debtors pursuant to the Plan and section 365 of the Bankruptcy
Code as of the Effective Date. Accordingly, such indemnification obligations
shall be treated as General Unsecured Claims, and shall survive unimpaired and
unaffected by entry of the Confirmation Order, irrespective of whether such
indemnification is owed for an act or event occurring before or after the
Petition Date.
E. COMPENSATION AND BENEFIT PROGRAMS
Except as otherwise expressly provided hereunder, all employment and
severance policies, and all compensation and benefit plans, policies, and
programs of the Debtors applicable to their employees, retirees and non-employee
directors and the employees and retirees of its subsidiaries, including, without
limitation, all savings plans, retirement plans, health care plans, disability
plans, severance benefit plans, incentive plans, and life, accidental death, and
dismemberment insurance plans are treated as executory contracts under the Plan
and on the Effective Date will be assumed pursuant to the provisions of
sections 365 and 1123 of the Bankruptcy Code.
VI.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED
DEBTORS
Systems and Realty shall, as Reorganized Debtors, continue to exist after
the Effective Date as separate corporate entities, with, in the case of Systems,
all the powers of a corporation or, in the case of Realty, a limited liability
company under the laws of the State of Delaware and without prejudice to any
right to alter or terminate such existence (whether by merger or otherwise)
under such applicable state law. As of the Effective Date, Holdings shall be
merged into New Holdings with New Holdings becoming the surviving entity.
Except as otherwise provided in the Plan, the Lock-Up Agreement, the New Notes,
or any agreement, instrument or indenture relating thereto, on or after the
Effective Date, all property of the Estates, and any property acquired by the
Debtors or the Reorganized Debtors under the Plan, shall vest in the Reorganized
Debtor, free and clear of all Claims, liens, charges, or other encumbrances and
Equity Interests. On and after the Effective Date, the Reorganized Debtors may
operate their business and may use, acquire or dispose of property and
compromise or settle any Claims or Equity Interests, without supervision or
approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy
Code or Bankruptcy Rules, other than those restrictions expressly imposed by the
Plan and the Confirmation Order. In accordance with section 1109(b) of the
Bankruptcy Code, nothing in the Plan shall preclude any party in interest from
appearing and being heard on any issue in the Chapter 11 Cases.
B. CANCELLATION OF NOTES, INSTRUMENTS, DEBENTURES, COMMON STOCK AND STOCK
OPTIONS
On the Effective Date, except to the extent provided otherwise in the
Plan, (i) all notes, instruments, certificates, and other documents evidencing
the Bank Secured Claims, Other Secured Claims, and Prepetition Bank Lender
Claims, (ii) the Old Notes, and (iii) all Equity Interests, including all Common
Stock and Member Interests, shall be canceled and the obligations of the Debtors
thereunder, shall be discharged. On the Effective Date, except to the extent
provided otherwise in the Plan, any indenture relating to any of the foregoing,
including, without limitation, the Old Note Indenture, shall be deemed to be
canceled, as permitted by section 1123(a)(5)(F) of the Bankruptcy Code,
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<PAGE>
and the obligations of the Debtors thereunder, except for the obligation to
indemnify the Old Notes Indenture Trustee, shall be discharged; PROVIDED
HOWEVER, that the indenture or other agreement that governs the rights of the
Holder of a Claim and that is administered by the Old Notes Indenture
Trustee, an agent or servicer shall continue in effect solely for the
purposes of (i) allowing such Old Notes Indenture Trustee, agent or servicer
to make the distributions to be made on account of such Claims under the Plan
and (ii) permitting such Old Indenture Trustee, agent or servicer to maintain
any rights or liens it may have for fees, costs and expenses under such
indenture or other agreement. Upon payment in full of the fees and expenses
of the Old Notes Indenture Trustee pursuant to Section VII.B. of the Plan,
the liens (if any) of the Old Notes Indenture Trustee shall terminate.
C. ISSUANCE OF NEW SECURITIES; EXECUTION OF RELATED DOCUMENTS
On the Effective Date, the Reorganized Debtors shall issue all
securities, notes instruments, certificates, and other documents of the Debtors
required to be issued pursuant to the Plan, including, without limitation, the
New Notes, the New Bank Credit Facility, the New Holdings Common Stock, the New
Systems Common Stock and the New Realty Member Interests, each of which shall be
distributed as provided in the Plan. The Reorganized Debtors shall execute and
deliver such other agreements, documents and instruments, including the New
Notes Indenture, as are required to be executed pursuant to the terms of the
Plan or the Lock-Up Agreement. The New Notes and the New Notes Indenture shall
be in a form and substance substantially similar to the Old Notes and the Old
Notes Indenture. Any change to the Old Notes or the Old Notes Indenture shall be
reasonably satisfactory to the Creditors' Committee and the postpetition
lenders.
D. NEW HOLDINGS COMMON STOCK
In exchange for receiving the New Systems Common Stock and in exchange
for the treatment provided to Class H2 Claims by Systems, on the Effective Date,
New Holdings will transfer to Systems the New Holdings Common Stock and the New
Notes for distribution in accordance with the terms of the Plan.
E. NEW SYSTEMS COMMON STOCK
In exchange for receiving the New Holdings Common Stock and the New
Notes, on the Effective Date Systems will transfer to New Holdings the New
Systems Common Stock.
F. NEW REALTY MEMBER INTERESTS
In exchange for the treatment provided to Class R4 Claims by Systems, on
the Effective Date, Realty will transfer to Systems the New Realty Member
Interests.
G. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS, AND CORPORATE ACTION
Subject to any requirement of Bankruptcy Court approval pursuant to
section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the initial
officers and member of the Reorganized Debtors shall be the officers and member
of the Debtors immediately prior to the Effective Date. Pursuant to section
1129(a)(5), the Debtors will disclose, on or prior to the Confirmation Date,
identity and affiliations of any Person proposed to serve (i) on the initial
board of directors of the New Holdings and Systems and (ii) to serve as a member
of the Reorganized Realty. To the extent any such Person is an Insider, the
nature of any compensation for such Person will also be disclosed. The
classification and composition of the boards of directors and the membership
shall be consistent with the Amended Certificates of Incorporation or Formation.
Each such director, officer and member shall serve from and after the Effective
Date pursuant to the terms of the Amended Certificates of Incorporation or
Formation, other constituent documents, the Delaware General Corporation Law or
the Delaware LLC Law.
1. OFFICERS AND DIRECTORS OF SYSTEMS
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<PAGE>
The following table sets forth certain information with respect to the current
officers of Systems:
<TABLE>
<CAPTION>
NAME POSITION
- ------------------------------- ---------------------------------------------------
<S> <C>
James P. Sheehan Chairman of the Board, President and Chief
Executive Officer
Alex G. Brnilovich, Jr, Executive Vice President - Americas
Joseph P. Gaynor, III Executive Vice President of Finance &
Administration & Chief Financial Office
Richard J. Sutis Executive Vice President, Asia Pacific
Randall Thomas Executive Vice President, Europe
Jack E. Merryman Senior Vice President, General Counsel & Secretary
Greg T. Blue Vice President, Customer Project Management
J. Matthew Cribari Vice President & General Manager, Cedar Rapids
Donald D. Gustafson Vice President, North America Sales
Thomas W. Hojnicki Vice President, Sales and Service - Americas
David J. Olivero Vice President & General Manager, Reading
M. Eric Schroeder Vice President, Strategic/Finance Planning &
Analysis
Barbara L. Gora Director of Marketing and Communications
Daniel E. Dillman Assistant Treasurer
Mary Ann Spiegel Assistant Secretary
</TABLE>
The following are the current directors of Systems: James P. Sheehan, J.
Joe Adorjan, A. Clark Daugherty, Robert F. End, Joseph P. Gaynor, III, Bradley
J. Hoecker, James J. Kerley, Alexis P. Michas
2. OFFICERS AND DIRECTORS OF HOLDINGS
The following table sets forth certain information with respect to the
current officers of Holdings.
<TABLE>
<CAPTION>
NAME POSITION
- ------------------------------- ---------------------------------------------------
<S> <C>
James P. Sheehan Chairman of the Board and President
Alex G. Brnilovich, Jr. Executive Vice President, Americas
Joseph P. Gaynor, III Executive Vice President of Finance &
Administration & Chief Financial Officer
Richard J. Sutis Executive Vice President, Asia Pacific
Randall Thomas Executive Vice President, Europe
Jack E. Merryman Vice President & Secretary
Mary Ann Spiegel Assistant Secretary
</TABLE>
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Listed below are the current directors of Holdings: James P. Sheehan,
J. Joe Adorjan, Alfred C. Daugherty, Robert F. End, James J. Kerley, Alexis P.
Michas, Scott M. Shaw.
New Holdings will have a nine-person board of directors consisting of the
following designations: two management directors; two independent directors;
three directors appointed by Stonington; and two directors appointed by the
Prepetition Noteholder Committee.
3. OFFICERS AND MEMBERS OF REALTY
Realty acts through its sole member, Systems, and the authorized
signatories thereof.
H. AMENDED CERTIFICATES OF INCORPORATION AND FORMATION
On the Effective Date, the Reorganized Debtors will file their Amended
Certificates of Incorporation or Formation with the Secretary of the State of
Delaware in accordance with sections 102 and 103 of the Delaware General
Corporation Law and section 201 of the Delaware LLC Law. The Amended
Certificates of Incorporation and Formation will, among other things, prohibit
the issuance of nonvoting equity securities to the extent required by section
1123(a) of the Bankruptcy Code, change the number of authorized shares of New
Holdings Common Stock to 15,000,000, and eliminate the authorization of
preferred stock by Systems. After the Effective Date, the Reorganized Debtors
may amend and restate their Amended Certificates of Incorporation and Formation
and other constituent documents as permitted by the Delaware General Corporation
Law and the Delaware LLC Law.
I. CORPORATE ACTION
On the Effective Date, the adoption of the Amended Certificates of
Incorporation, Certificates of Formation or similar constituent documents, the
amendment of the By-laws, the selection of directors, officers and members for
the Reorganized Debtors, and all actions contemplated by the Plan and the
Lock-Up Agreement shall be authorized and approved in all respects (subject to
the provisions of the Plan). All matters provided for in the Plan and the
Lock-Up Agreement involving the corporate structure of the Debtors or the
Reorganized Debtors, and any corporate action required by the Debtors or the
Reorganized Debtors in connection with the Plan, shall be deemed to have
occurred and shall be in effect, without any requirement of further action by
the security holders or directors of the Debtors or the Reorganized Debtors. On
the Effective Date, the appropriate officers and members of the Reorganized
Debtors and members of the board of directors of the Reorganized Debtors are
authorized and directed to issue, execute and deliver the agreements, documents,
securities and instruments contemplated by the Plan in the name of and on behalf
of the Reorganized Debtors.
J. SOURCES OF CASH FOR PLAN DISTRIBUTION
All Cash necessary for the Reorganized Debtors to make payments pursuant
to the Plan shall be obtained from existing Cash balances, the operations of the
Debtors or Reorganized Debtors, or post-confirmation borrowing under other
available facilities of the Debtors or Reorganized Debtors including, without
limitation, to the extent available, the New Bank Credit Facilities and the
Stonington Capital Contribution. The Reorganized Debtors may also make such
payments using Cash received from its subsidiaries through the Reorganized
Debtors consolidated cash management systems and from advances or dividends from
such subsidiaries in the ordinary course.
VII.
PROVISIONS GOVERNING DISTRIBUTIONS
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE
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Except as otherwise provided in Article VII of the Plan or as may be
ordered by the Bankruptcy Court, distributions to be made on the Effective Date
on account of Claims that are allowed as of the Effective Date and are entitled
to receive distributions under the Plan shall be made on the Effective Date, or
as soon as practicable thereafter. Distributions on account of Claims that
become Allowed Claims after the Effective Date shall be made as detailed in
Articles VII.C and VIII.C of the Plan.
For purposes of determining the accrual of interest or rights in respect
of any other payment from and after the Effective Date, the New Notes, the New
Bank Credit Facility, the New Holdings Common Stock, the New Systems Common
Stock and the New Realty Member Interests to be issued under the Plan shall be
deemed issued as of the Effective Date regardless of the date on which they are
actually dated, authenticated or distributed; provided, however, that the
Reorganized Debtors shall withhold any actual payment until such distribution is
made and no interest shall accrue or otherwise be payable on any such withheld
amounts.
B. DISTRIBUTIONS BY THE REORGANIZED DEBTORS; DISTRIBUTIONS WITH RESPECT TO
DEBT SECURITIES
Except as provided in the Plan, the Reorganized Debtors shall make all
distributions required under the Plan. Notwithstanding the provisions of
Article V.8 of the Plan regarding the cancellation of the Old Note Indenture,
the Old Note Indenture shall continue in effect to the extent necessary to allow
the Old Notes Indenture Trustee to receive New Notes and New Holdings Common
Stock on behalf of the Holders of the Old Notes and make distributions pursuant
to the Plan on account of the Old Notes as agent for the Reorganized Debtors.
The Old Notes Indenture Trustee providing services related to distributions to
the Holders of Allowed Old Note Claims shall receive, from the Reorganized
Debtors, reasonable compensation for such services and reimbursement of
reasonable expenses incurred in connection with such services and upon the
presentation of invoices to the Reorganized Debtors. These payments shall be
made on terms agreed to with the Reorganized Debtors.
C. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS
1. DELIVERY OF DISTRIBUTIONS IN GENERAL
Distributions to Holders of Allowed Claims shall be made at the address
of the Holder of such Claim as indicated on records of the Debtors. Except as
otherwise provided by the Plan or the Bankruptcy Code with respect to
undeliverable distributions, distributions to Holders of Prepetition Bank
Secured Claims, and Old Note Claims shall be made in accordance with the
provisions of the applicable indenture, participation agreement, loan agreement
or analogous instrument or agreement, and distributions will be made to Holders
of record as of the Distribution Record Date.
2. UNDELIVERABLE DISTRIBUTIONS
a. HOLDING OF UNDELIVERABLE DISTRIBUTIONS
If any Allowed Claim Holder's distribution is returned to the
Reorganized Debtors as undeliverable, no further distributions shall be made to
such Holder unless and until the Reorganized Debtors are notified in writing of
such Holder's then-current address. Undeliverable distributions shall remain in
the possession of the Reorganized Debtors pursuant to Article VII.C of the Plan
until such time as a distribution becomes deliverable. Undeliverable cash
(including interest and maturities on the New Notes) shall not be entitled to
any interest, dividends or other accruals of any kind.
b. AFTER DISTRIBUTIONS BECOME DELIVERABLE
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<PAGE>
Within 20 days after the end of each calendar quarter following
the Effective Date, the Reorganized Debtors shall make all distributions that
become deliverable during the preceding calendar quarter.
c. FAILURE TO CLAIM UNDELIVERABLE DISTRIBUTIONS
In an effort to ensure that all holders of valid claims receive
their allocated distributions, the Company will file with the Bankruptcy Court,
a listing of unclaimed distribution holders. This list will be maintained for
as long as the bankruptcy cases stay open. Any Holder of an Allowed Claim that
does not assert a Claim pursuant to the Plan for an undeliverable distribution
within five years after the Effective Date shall have its Claim for such
undeliverable distribution discharged and shall be forever barred from asserting
any such Claim against the Reorganized Debtors or their property. In such
cases: (i) any Cash held for distribution on account of such Claims shall be
property of the Reorganized Debtors, free of any restrictions thereon; and (ii)
any New Notes held for distribution on account of such Claims shall be canceled
and of no further force or effect. Nothing contained in the Plan shall require
the Reorganized Debtors to attempt to locate any Holder of an Allowed Claim.
d. COMPLIANCE WITH TAX REQUIREMENTS
In connection with the Plan, to the extent applicable, the
Reorganized Debtors shall comply with all tax withholding and reporting
requirements imposed on it by any governmental unit, and all distributions
pursuant to the Plan shall be subject to such withholding and reporting
requirements.
D. DISTRIBUTION RECORD DATE
As of the close of business on the Distribution Record Date, the transfer
register for the Old Notes as maintained by the Debtors, the Old Notes
Indenture, or their respective agents, shall be closed and there shall be no
further changes in the record holders of any Old Notes. Moreover, the
Reorganized Debtors shall have no obligation to recognize the transfer of any
Old Notes occurring after the Distribution Record Date, and shall be entitled
for all purposes herein to recognize and deal only with those Holders of record
as of the close of business on the Distribution Record Date.
E. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED
On the Effective Date, each Holder of an Allowed Claim against the
Debtors shall receive the full amount of the distributions that the Plan
provides for Allowed Claims in the applicable Class. Beginning on the date that
is 20 calendar days after the end of the calendar quarter following the
Effective Date and 20 calendar days after the end of each calendar quarter
thereafter, distributions shall also be made, pursuant to Article VIII.C of the
Plan, to Holders of Disputed Claims in any such Class whose Claims were allowed
during the preceding calendar quarter. Such quarterly distributions shall also
be in the full amount that the Plan provides for Allowed Claims in the
applicable Class.
F. MINIMUM DISTRIBUTION
The New Notes will be issued in denominations of $1. No New Note will be
issued in a denomination of less than $1 (including any notes reflecting payment
in kind interest). In the event a Holder of an Allowed Class S5 Claim is
entitled to distribution of New Notes that is a fraction of $1, the actual
payment or issuance made will reflect a rounding of such fraction down to the
nearest whole dollar.
G. SETOFFS
The Reorganized Debtors may, pursuant to section 553 of the Bankruptcy
Code or applicable non-bankruptcy 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
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<PAGE>
the Debtors or Reorganized Debtors may hold against the Holder of such
Allowed Claim; PROVIDED, HOWEVER, that neither the failure to effect such a
setoff nor the allowance of any Claim hereunder shall constitute a waiver or
release by the Debtors or Reorganized Debtors of any such claims, rights and
causes of action that the Debtors or Reorganized Debtors may possess against
such Holder.
H. SURRENDER OF CANCELED INSTRUMENTS OR SECURITIES
Except as set forth in subsection VII.I of the Plan, as a condition
precedent to receiving any distribution pursuant to the Plan on account of an
Allowed Claim evidenced by the instruments, securities or other documentation
canceled pursuant to Article V.B above, the Holder of such Claim shall tender
the applicable instruments, securities or other documentation evidencing such
Claim to the Reorganized Debtors. Any New Notes, New Holdings Common Stock, New
Systems Common Stock or New Realty Member Interests to be distributed pursuant
to the Plan on account of any such Claim shall, pending such surrender, be
treated as an undeliverable distribution pursuant to Article VII.C of the Plan.
1. NOTES AND DEBENTURES
Each Holder of an Old Note Claim shall tender its Old Notes relating to
such Claim to the Reorganized Debtors in accordance with written instructions to
be provided to such Holders by the Reorganized Debtors as promptly as
practicable following the Effective Date. Such instructions shall specify that
delivery of such Old Note will be effected, and risk of loss and title thereto
will pass, only upon the proper delivery of such Old Notes with a letter of
transmittal in accordance with such instructions. All surrendered Old Notes
shall be marked as canceled.
2. FAILURE TO SURRENDER CANCELED INSTRUMENTS
Any Holder of Old Notes that fails to surrender or is deemed to have
failed to surrender the applicable Old Notes required to be tendered hereunder
within five years after the Effective Date shall have its Claim for a
distribution pursuant to the Plan on account of such Old Notes discharged and
shall be forever barred from asserting any such Claim against the Reorganized
Debtors or its respective property. In such cases, any New Notes held for
distribution on account of such Claim shall be disposed of pursuant to the
provisions set forth above in Article VII.C of the Plan.
I. LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES
In addition to any requirements under the Old Note Indenture or any
related agreement (including the Prepetition Bank Credit Facility, if required),
any Holder of a Claim evidenced by an Old Note or a note issued under the
Prepetition Bank Credit Facility that has been lost, stolen, mutilated or
destroyed shall, in lieu of surrendering such Old Note or a note issued under
the Prepetition Bank Credit Facility, deliver to the Reorganized Debtors: (1) an
affidavit of loss reasonably satisfactory to the Reorganized Debtors or the Old
Notes Indenture Trustee, as applicable, setting forth the unavailability of note
or instrument; and (2) such additional security or indemnity as may be required
by the Reorganized Debtors to hold the Reorganized Debtors or the Old Notes
Indenture Trustee, as applicable, harmless from any damages, liabilities or
costs incurred in treating such individual as a Holder of an Allowed Claim.
Upon compliance with this procedure by a Holder of a Claim evidenced by an Old
Note or a note issued under the Prepetition Bank Credit Facility, such Holder
shall, for all purposes under the Plan, be deemed to have surrendered such note
or debenture.
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<PAGE>
VIII.
CONDITIONS PRECEDENT
A. CONDITIONS PRECEDENT TO CONFIRMATION
It shall be a condition to Confirmation of the Plan that the following
condition shall have been satisfied or waived pursuant to the provisions of
Article IX.C of the Plan: approval of all provisions, terms and conditions of
the Plan in the Confirmation Order.
B. CONDITIONS PRECEDENT TO CONSUMMATION
It shall be a condition to Consummation of the Plan that the following
conditions shall have been satisfied or waived pursuant to the provisions of
Article IX.C of the Plan:
i) the Confirmation Order shall have been signed by the
Bankruptcy Court and duly entered on the docket for the
Chapter 11 Case by the Clerk of the Bankruptcy Court in form and
substance acceptable to the Debtor;
ii) the Confirmation Order shall be a Final Order;
iii) the Tranche A Revolving Credit Facility shall be
available to the Debtors in an amount not less than $50 million
and on such terms and conditions as set forth in the Lock-Up
Agreement; and
iv) the Tranche B Revolving Credit Facility shall be
available to the Debtors in an amount not less than $50 million
and on such terms and conditions as set forth in the Lock-Up
Agreement; and
v) the Term Loan Facility shall be available to the
Debtors in an amount not less than $150 million and on such terms
and conditions as set forth in the Lock-Up Agreement; and
vi) the Stonington Capital Contribution shall be
available to the Debtors in an amount equal to $50 million and on
such terms and conditions as set forth in the Lock-Up Agreement.
C. WAIVER OF CONDITIONS
Except as otherwise required by the Lock-Up Agreement, the Debtors, in
their sole discretion, may waive any of the conditions to Confirmation of the
Plan and/or to Consummation of the Plan set forth in Articles IX.A and IX.B of
the Plan at any time, without notice, without leave or order of the Bankruptcy
Court, and without any formal action other than proceeding to confirm and/or
consummate the Plan.
D. EFFECT OF NON-OCCURRENCE OF CONDITIONS TO CONSUMMATION
If the Confirmation Order is vacated, the Plan shall be null and void in
all respects and nothing contained in the Plan or the Disclosure Statement
shall: (1) constitute a waiver or release of any Claims by or against, or any
Equity Interests in, the Debtor; (2) prejudice in any manner the rights of the
Debtor, or (3) constitute an admission, acknowledgment, offer or undertaking by
the Debtors in any respects.
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IX.
RELEASE, INJUNCTIVE AND RELATED PROVISIONS
A. SUBORDINATION
The classification and manner of satisfying all Claims and Equity
Interests and the respective distributions and treatments under the Plan take
into account and/or conform to the relative priority and rights of the Claims
and Equity Interests in each Class in connection with any contractual, legal and
equitable subordination rights relating thereto whether arising under general
principles of equitable subordination, section 510(b) of the Bankruptcy Code or
otherwise, and any and all such rights are settled, compromised and released
pursuant to the Plan. The Confirmation Order shall permanently enjoin,
effective as of the Effective Date, all Persons and Entities from enforcing or
attempting to enforce any such contractual, legal and equitable subordination
rights satisfied, compromised and settled in this manner.
B. LIMITED RELEASES BY THE DEBTORS
Except as otherwise specifically provided in the Plan, for good and
valuable consideration, including, but not limited to, the commitment and
obligation of Stonington to provide financial support necessary for consummation
of the Plan, including the obligations and undertakings of Stonington Releasees
and Noteholder Releasees set forth in the Lock-Up Agreement, including
Stonington's agreement to the treatment of its Claims and Equity Interests as
provided in the Plan, the agreement of the Prepetition Lenders to their
treatment set forth in the Plan and their financial support thereof, and the
service of the D&O Releasees to facilitate the expeditious reorganization of the
Debtors and the implementation of the restructuring contemplated by the Plan,
Stonington Releasees, the D&O Releasees, the Prepetition Lender Releasees, and
the Noteholder Releasees, on and after the Effective Date, are released by the
Debtors and the Reorganized Debtors and their subsidiaries from any and all
claims (as defined in section 101(5) of the Bankruptcy Code), obligations,
rights, suits, damages, causes of action, remedies and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, that the Debtors or their subsidiaries would have
been legally entitled to assert in their own right (whether individually or
collectively) or on behalf of the Holder of any Claim or Equity Interest or
other Person or Entity, based in whole or in part upon any act or omission,
transaction, agreement, event or other occurrence taking place on or before the
Effective Date, except in the case of the D&O Releasees, for claims or
liabilities (i) in respect of any loan, advance or similar payment by the
Debtors or their subsidiaries to any such Person, or (ii) in respect of any
contractual obligation owed by such Person to the Debtors or their subsidiaries.
No portion of the limited releases by the Debtors in any way impairs (other than
as provided in Article III of the Plan) any cause of action or claim of any
person or entity against the Debtors or any other party not specifically
released by the Plan. The Company is not generally aware of any specific
potential cause or causes of action, including avoidance actions, against the
Stonington Releasees, the Noteholder Releasees, the Prepetition Lender Releasees
or the D&O Releasees, that would be extinguished by the limited releases
provided in the Plan. The Company believes that the release and exculpation
provisions of the Plan are permissible under the Bankruptcy Code but
acknowledges that arguments exist that certain case law would permit a contrary
conclusion. At or prior to Confirmation, the Debtors may agree to provide the
releases set forth in this paragraph to Rockwell International Corporation and
its affiliates; in the event the Debtors agree to provide such releases to
Rockwell International Corporation or its affiliates, the Debtors will provide
notice in open court at the Confirmation Hearing.
C. LIMITED RELEASES BY HOLDER OF CLAIMS
On and after the Effective Date, each Holder of a Claim (i) who has
accepted the Plan, or (ii) who is entitled to receive a distribution of property
under the Plan other than the Holder of a claim in a Class who signs and returns
a timely Ballot and marks Item 4 or Item 5 of the Ballot (whichever is
applicable), shall be deemed to have unconditionally released the Stonington
Releasees, the D&O Releasees, the Prepetition Lender Releasees and the
Noteholder Releasees from any and all claims (as defined in section 101(5) of
the Bankruptcy Code), obligations, rights, suits, damages, causes of action,
remedies and liabilities whatsoever, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, in law, equity or otherwise, that
such Person or Entity would have been legally
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entitled to assert (whether individually or collectively), based in whole or
in part upon any act or omission, transaction, agreement, event or other
occurrence taking place on or before the Effective Date in any way relating
or pertaining to (x) the Debtors or the Reorganized Debtors, (y) the Debtors
Chapter 11 Cases, or (z) the negotiation, formulation and preparation of the
Plan, the Lock-Up Agreement or any related agreements, instruments or other
documents. No portion of the limited releases by the Holders of Claims in
any way impairs (other than as provided in Article III of the Plan) any cause
of action or claim against any party not specifically released by the Plan.
The Company is not generally aware of any specific potential cause or causes
of action, including avoidance actions, against the Stonington Releasees, the
Noteholder Releasees, the Prepetition Lender Releasees or the D&O Releasees,
that would be extinguished by the limited releases provided in the Plan. The
Company believes that the release and exculpation provisions of the Plan are
permissible under the Bankruptcy Code but acknowledges that arguments exist
that certain case law would permit a contrary conclusion. At or prior to
Confirmation, the Debtors may agree to provide the releases set forth in this
paragraph to Rockwell International Corporation and its affiliates; in the
event the Debtors agree to provide such releases to Rockwell International
Corporation or its affiliates, the Debtors will provide notice in open court
at the Confirmation Hearing.
D. PRESERVATION OF RIGHTS OF ACTION
Except as otherwise provided in the Plan or in any contract, instrument,
release, indenture or other agreement entered into in connection with the Plan,
in accordance with section 1123(b) of the Bankruptcy Code, the Reorganized
Debtors shall retain and may exclusively enforce any claims, rights and Causes
of Action that the Debtors or Estates may hold against any Person or Entity.
The Reorganized Debtors may pursue such retained claims, rights or causes of
action, as appropriate, in accordance with the best interests of the Reorganized
Debtors. On the Effective Date, the Reorganized Debtors shall be deemed to waive
and release any claims, rights or Causes of Action arising under sections 544,
547, 548, 549 and 550 of the Bankruptcy Code held by the Reorganized Debtors
against any Person or Entity.
E. EXCULPATION
The Debtors, the Reorganized Debtors, the Stonington Releasees, the
Noteholder Releasees, the D&O Releasees, the Prepetition Lender Releasees, and
the Committee(s) and their members and Professionals (acting in such capacity)
shall neither have nor incur any liability to any Person or Entity for any act
taken or omitted to be taken in connection with or related to the formulation,
preparation, dissemination, implementation, administration, Confirmation or
Consummation of the Plan, the Disclosure Statement or any contract, instrument,
release or other agreement or document created or entered into in connection
with the Plan, including the Lock-Up Agreement, or any other act taken or
omitted to be taken in connection with the Debtors Chapter 11 Cases; provided,
however, that the foregoing provisions of Article X.E of the Plan shall have no
effect on the liability of any Person or Entity that results from any such act
or omission that is determined in a Final Order to have constituted gross
negligence or willful misconduct. The Company believes that the release and
exculpation provisions of the Plan are permissible under the Bankruptcy Code but
acknowledges that arguments exist that certain case law would permit a contrary
conclusion.
F. INJUNCTION
From and after the Effective Date, all Persons and Entities will be
permanently enjoined from commencing or continuing in any manner, any suit,
action or other proceeding, on account of or respecting any claim, obligation,
debt, right, Cause of Action, remedy or liability released or to be released
pursuant to Article X of the Plan.
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X.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence of
the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the
Chapter 11 Case after the Effective Date as legally permissible, including
jurisdiction to:
- allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any
Claim, including the resolution of any request for payment of any
Administrative Claim and the resolution of any and all objections
to the allowance or priority of Claims;
- grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy
Code or the Plan, for periods ending on or before the Effective
Date;
- resolve any matters related to the assumption, assumption and
assignment or rejection of any executory contract or unexpired
lease to which the Debtors are parties 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 Article VI of the Plan to add any executory contracts
or unexpired leases to the list of executory contracts and
unexpired leases to be rejected;
- ensure that distributions to Holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan, including
ruling on any motion Filed pursuant to Article VII of the Plan;
- decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any
applications involving the Debtors that may be pending on the
Effective Date;
- 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 or the Disclosure
Statement;
- resolve any cases, controversies, suits or disputes that may arise
in connection with the Consummation, interpretation or enforcement
of the Plan or any Person's or Entity's obligations incurred in
connection with the Plan;
- issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain
interference by any Person or Entity with Consummation or
enforcement of the Plan, except as otherwise provided herein;
- resolve any cases, controversies, suits or disputes with respect
to the releases, injunction and other provisions contained in
Article X of the Plan and enter such orders as may be necessary or
appropriate to implement such releases, injunction and other
provisions;
- enter and implement such orders as are necessary or appropriate if
the Confirmation Order is for any reason modified, stayed,
reversed, revoked or vacated;
- determine any other matters that may arise in connection with or
relate to the Plan, the Disclosure Statement, the Confirmation
Order or any contract, instrument, release, indenture or other
agreement or document created in connection with the Plan or the
Disclosure Statement; and
- enter an order and/or final decree concluding the Chapter 11
Case.
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XI.
PROCESS OF VOTING AND CONFIRMATION
The following is a brief summary regarding the acceptance and
confirmation of the Plan. Holders of Claims and Equity Interests are encouraged
to review the relevant provisions of the Bankruptcy Code and/or to consult their
own attorneys. Additional information regarding voting procedures is set forth
in the Notice accompanying this Disclosure Statement.
A. VOTING INSTRUCTIONS
This Disclosure Statement, accompanied by a Ballot to be used for voting
on the Plan, is being distributed to Holders of Claims in Classes H2, S2, S4,
S5, R4, R5 and R6. Only such Holders are entitled to vote to accept or reject
the Plan and may do so by completing the Ballot and returning it to the
Information Agent. IN LIGHT OF THE BENEFITS TO BE ATTAINED BY THE PLAN ON
BEHALF OF EACH CLASS OF CLAIMS, THE DEBTORS RECOMMEND THAT HOLDERS OF CLAIMS IN
EACH OF THE IMPAIRED CLASSES VOTE TO ACCEPT THE PLAN AND RETURN THE BALLOT.
BALLOTS MUST BE RECEIVED BY THE BANKRUPTCY SERVICES, LLC ("BSI"), HERON
TOWER, 70 EAST 55TH STREET, 6TH FLOOR, NEW YORK, NEW YORK 10022, ATTENTION:
KATHY GERBER ON OR BEFORE 4:00 P.M., PREVAILING EASTERN TIME, ON OCTOBER 12,
1999. ANY BALLOT RECEIVED AFTER THAT TIME MAY NOT BE COUNTED. ANY BALLOT WHICH
IS EXECUTED BY THE HOLDER OF AN ALLOWED CLAIM OR EQUITY INTEREST BUT WHICH DOES
NOT INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN SHALL BE DEEMED AN
ACCEPTANCE OF THE PLAN.
B. VOTING TABULATION
In tabulating votes, the following hierarchy shall be used to determine
the claim amount associated with a creditors vote: (1) the claim amount
established by Court order; (2) the claim amount contained on an unobjected to
proof of Claim; (3) the claim amount contained on an unobjected to Ballot; (4)
the claim amount listed in the Debtors' schedules; and (5) in the absence of any
of the foregoing, zero. The claim amount established through this process
controls for voting purposes only and does not constitute the Allowed amount of
any Claim. Further, the designation of a Claim as disputed, contingent or
unliquidated on the Debtors' schedules will not be used to disqualify any vote.
To ensure that a vote is counted, a Claim Holder must (i) complete a
Ballot, (ii) indicate the Holder's decision either to accept or reject the Plan
in the boxes provided in Item 3 of the Ballot, (iii) indicate the Holder's
decision as to whether he does not consent to the release described in Clause C
of Article X of the Plan and (iv) sign and return the Ballot to the address set
forth on the enclosed prepaid envelope.
The Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Plan and to determine the
alleged amount of a beneficial holder's claim. Accordingly, at the time the
Ballot is transmitted, creditors should NOT surrender certificates or
instruments representing or evidencing their Claims, and neither the Company nor
the Solicitation Agent will accept delivery of such certificates or instruments
surrendered together with a Ballot. The remittance of notes or other evidence
of claims for exchange pursuant to the Plan may only be made by a Holder and
will not be accepted if certificates or instruments representing Claims (in
proper form for transfer) are delivered together with a letter of transmittal
that will be furnished to as provided under the Plan or as notified following
confirmation of the Plan by the Bankruptcy Court.
The Ballot does not constitute, and shall not be deemed to be, a Proof of
Claim or equity interest or an assertion or admission of a claim or equity
interest.
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If a Holder holds Claims in more than one class under the Plan, the
Holder may receive more than one Ballot coded for each Ballot received.
Except to the extent the Debtors so determine or as permitted by the
Bankruptcy Court, Ballots received after October 12, 1999 (the "Voting
Deadline") will not be accepted or counted by the Debtors in connection with the
Debtors' request for confirmation of the Plan. THE METHOD OF DELIVERY OF
BALLOTS TO BE SENT TO THE SOLICITATION AGENT IS AT THE ELECTION AND RISK OF EACH
HOLDER OF A CLAIM. Except as otherwise provided herein, such delivery will be
deemed made only when the original executed Ballot is actually received by the
Solicitation Agent. Instead of effecting delivery by mail, it is recommended,
though not required, that such holders use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. DELIVERY OF A BALLOT BY FACSIMILE, E-MAIL OR ANY OTHER ELECTRONIC
MEANS WILL NOT BE ACCEPTED. NO BALLOT SHOULD BE SENT TO THE COMPANY, ANY
INDENTURE TRUSTEE, OR THE COMPANY'S FINANCIAL OR LEGAL ADVISORS. The Debtors
expressly reserve the right to amend, at any time and from time to time, the
terms of the Plan (subject to compliance with the requirements of Section 1127
of the Bankruptcy Code). If the Debtors make a material change in the terms of
the Plan or if the Debtors waive a material condition, the Debtors will
disseminate additional solicitation materials and will extend the solicitation,
in each case to the extent required by law.
If multiple Ballots are received from an individual holder of Claims with
respect to the same Claims prior to the Expiration Date, the last Ballot timely
received will supersede and revoke any earlier received Ballot.
If a Ballot is signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should indicate such capacity when signing
and, unless otherwise determined by the Debtors, must submit proper evidence
satisfactory to the Debtors to so act on behalf of a beneficial interest holder.
In the event a designation is requested under section 1126(e) of the
Bankruptcy Code, any vote to accept or reject the Plan cast with respect to such
Claim will not be counted for purposes of determining whether the Plan has been
accepted or rejected, unless the Bankruptcy Court orders otherwise.
Any Holder of Impaired Claims who has delivered a valid Ballot voting on
the Plan may withdraw such vote solely in accordance with Rule 3018(a) of the
Federal Rules of Bankruptcy Procedure.
Subject to any contrary order of the Bankruptcy Court, the Debtors
reserve the absolute right to reject any and all Ballots not proper in form, the
acceptance of which would, in the opinion of the Debtors or their counsel, not
be in accordance with the provisions of the Bankruptcy Code. Subject to
contrary order of the Bankruptcy Court, the Debtors further reserve the right to
waive any defects or irregularities or conditions of delivery as to any
particular Ballot unless otherwise directed by the Bankruptcy Court. The
Debtors' interpretation of the terms and conditions of the Plan (including the
Ballot and the Voting Instructions), unless otherwise directed by the Bankruptcy
Court, shall be final and binding on all parties. Unless waived or as ordered
by the Bankruptcy Court, any defects or irregularities in connection with
deliveries of Ballots must be cured within such time as the Debtors (or the
Bankruptcy Court) determine. Neither the Debtors nor any other person or entity
will be under any duty to provide notification of defects or irregularities with
respect to deliveries of Ballots nor will any of them incur any liabilities for
failure to provide such notification. Unless otherwise directed by the
Bankruptcy Court, delivery of such Ballots will not be deemed to have been made
until such irregularities have been cured or waived. Ballots previously
furnished (and as to which any irregularities have not theretofore been cured or
waived) will not be counted.
C. SPECIAL VOTING PROCEDURES FOR HOLDERS OF OLD NOTES
The record date for determining which Holders of Old Notes are entitled
to vote on the Plan is July 30, 1999. The Indenture Trustees will not vote on
behalf of the Holders. Holders must submit their own Ballots.
1. BENEFICIAL HOLDERS
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Any Beneficial Holder of the Old Notes holding as a record holder in its
own name should vote on the Plan by completing and signing the enclosed Ballot
and returning it directly to BSI, at the address set forth above, on or before
the Voting Deadline.
Any beneficial owner holding either the Old Notes in "street name"
through a Nominee should vote on the Plan through such Nominee by following
these instructions.
- Complete and sign the Ballot.
- Return the Ballot to your Nominee or Nominees as promptly as
possible in sufficient time to allow such Nominee to process the
ballot and return it to BSI by the Voting Deadline.
Any Ballot returned to a Nominee by a Beneficial owner will not be
counted for purposes of accepting or rejecting the Plan until such Nominee
properly completes and delivers to the Voting Agent a Master Ballot that
reflects the vote of the Beneficial Holder.
If a Beneficial Holder holds the Old Notes through more than one Nominee,
such Beneficial Holder may receive more than one Ballot. Each such Beneficial
Holder should execute a separate Ballot for each block of Old Notes that it
holds through any Nominee and return the Ballot to the respective Nominee that
holds the Old Notes in record name.
If a Beneficial Holder a holds a portion of its Old Notes through a
Nominee and other portion in its own name as the record holder, such owner
should follow the procedures described above in (1) to vote the portion held in
its own name and the procedures described in (2) above to vote the portion held
by the Nominee or Nominees.
2. NOMINEES
Any entity (other than a beneficial owner) which is the registered holder
of the Old Notes should vote on behalf of the Beneficial Holder of such Old
Notes by (i) immediately distributing a copy of this Disclosure Statement and
accompanying materials including the Ballots to all Beneficial Holders for which
it holds the Old Notes, (ii) promptly collecting all such ballots from the
Beneficial Holders, (iii) compiling and validating the votes of all its
Beneficial Holders on the Master Ballot, and (iv) transmitting the Master Ballot
to BSI, at the address set forth above, on or before the Voting Deadline.
A Nominee may also pre-validate a Ballot by completing all the
information to be entered on the Ballot (the "Pre-Validated Ballot") and
forwarding the Pre Validated Ballot to the Beneficial Holder for voting. A
proxy intermediary acting on behalf of a brokerage firm or bank may follow the
procedures outlined in the preceding sentences to vote on behalf of a party.
D. CONFIRMATION HEARING
Subsection 1128(a) of the Bankruptcy Code requires the Bankruptcy Court,
after notice, to hold a hearing on confirmation of the Plan (the "Confirmation
Hearing"). Subsection 1128(b) of the Bankruptcy Code provides that any
party-in-interest may object to confirmation of the Plan.
The Bankruptcy Court has scheduled the Confirmation Hearing for
October 19, 1999, before the Honorable Peter J. Walsh, United States Bankruptcy
Judge, in the room normally occupied by the Bankruptcy Judge in the United
States Bankruptcy Court for the District of Delaware, Marine Midland Plaza, 824
Market Street, Wilmington, Delaware 19801. The Confirmation Hearing may be
adjourned from time to time by the Bankruptcy Court without further notice
except for an announcement of the adjourned date made at the Confirmation
Hearing or any adjournment thereof.
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Objections to confirmation of the Plan must be filed and served on or
before October 12, 1999 in accordance with the Notice accompanying this
Disclosure Statement. UNLESS OBJECTIONS TO CONFIRMATION ARE TIMELY SERVED AND
FILED IN COMPLIANCE WITH THE APPROVAL ORDER, THEY WILL NOT BE CONSIDERED BY THE
BANKRUPTCY COURT.
E. STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN
At the Confirmation Hearing, the Bankruptcy Court shall determine whether
the requirements of section 1129 of the Bankruptcy Court have been satisfied.
If so, the Bankruptcy Court shall enter the Confirmation Order. The Debtors
believe that the Plan satisfies or will satisfy the applicable requirements, as
follows:
- The Plan complies with the applicable provisions of the Bankruptcy
Code.
- The Debtors, as Plan proponents, will have complied with the
applicable provisions of the Bankruptcy Code.
- The Plan has been proposed in good faith and not by any means
forbidden by law.
- Any payment made or promised under the Plan for services or for
costs and expenses in, or in connection with, this Bankruptcy
Case, or in connection with the Plan and incident to the case, has
been disclosed to the Bankruptcy Court, and any such payment made
before the confirmation of the Plan is reasonable, or if such
payment is to be fixed after the confirmation of the Plan, such
payment is subject to the approval of the Bankruptcy Court as
reasonable.
- With respect to each class of Impaired Claims or Equity Interests,
either each Holder of a Claim or Equity Interest of such class has
accepted the Plan, or will receive or retain under the Plan on
account of such Claim or Equity Interest, property of a value, as
of the Effective Date of the Plan, that is not less than the
amount that such Holder would receive or retain if the Debtors
were liquidated on such date under chapter 7 of the Bankruptcy
Code.
- Each class of Claims or Equity Interests that is entitled to vote
on the Plan has either accepted the Plan or is not impaired under
the Plan.
- Except to the extent that the Holder of a particular Claim will
agree to a different treatment of such Claim, the Plan provides
that Allowed Administrative, Allowed Priority Tax Claims and
Allowed Other Priority Claims will be paid in full on the
Effective Date, or as soon thereafter as practicable.
- At least one class of impaired Claims or Equity Interests will
accept the Plan, determined without including any acceptance of
the Plan by any insider holding a Claim of such class.
- Confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of
the Debtors or any successor to the Debtors under the Plan, unless
such liquidation or reorganization is proposed in the Plan.
- All fees of the type described in 28 U.S.C. Section 1930,
including the fees of the United States Trustee will be paid as of
the Effective Date.
The Debtors believe that (a) the Plan satisfies or will satisfy all of
the statutory requirements of chapter 11 of the Bankruptcy Code; (b) it has
complied or will have complied with all of the requirements of chapter 11; and
(c) the Plan has been proposed in good faith.
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1. BEST INTERESTS OF CREDITORS TEST/LIQUIDATION ANALYSIS
Before the Plan may be confirmed, the Bankruptcy Court must find (with
certain exceptions) that the Plan provides, with respect to each class, that
each Holder of a Claim or Equity Interest in such class either (a) has accepted
the Plan or (b) will receive or retain under the Plan property of a value, as of
the Effective Date, that is not less than the amount that such person would
receive or retain if the Debtors liquidated under chapter 7 of the Bankruptcy
Code.
In chapter 7 liquidation cases, unsecured creditors and interest holders
of a debtor are paid from available assets generally in the following order,
with no lower class receiving any payments until all amounts due to senior
classes have been paid fully or payment provided for:
- Secured creditors (to the extent of the value of their
collateral).
- Priority creditors.
- Unsecured creditors.
- Debt expressly subordinated by its terms or by order of the
Bankruptcy Court.
- Equity Interest Holders.
As described in more detail in the Liquidation Analysis in Article IV
herein, the Debtors believe that the value of any distributions in a chapter 7
case would be equal or less than the value of distributions under the Plan
because such distributions in a chapter 7 case may not occur for a longer period
of time thereby reducing the present value of such distributions. In this
regard, it is possible that distribution of the proceeds of a liquidation could
be delayed for a period in order for a chapter 7 trustee and its professionals
to become knowledgeable about the Bankruptcy Case and the Claims against the
Debtors. In addition, the fees and expenses of a chapter 7 trustee would likely
exceed those of the Estate Representative, thereby further reducing cash
available for distribution.
2. FINANCIAL FEASIBILITY
The Bankruptcy Code requires the Bankruptcy Court to find, as a condition
to confirmation, that confirmation is not likely to be followed by the
liquidation of the Debtors or the need for further financial reorganization,
unless such liquidation is contemplated by the Plan. Pursuant to the terms of
the Plan, the Debtors will possess sufficient cash to satisfy post-petition
obligations under the Plan.
3. ACCEPTANCE BY IMPAIRED CLASS
The Bankruptcy Code requires, as a condition to confirmation, that each
class of Claims or Equity Interests that is impaired under the Plan accept the
Plan, with the exception described in the following section. A class that is
not "impaired" under a plan of reorganization is deemed to have accepted the
plan and, therefore, solicitation of acceptances with respect to such class is
not required. A class is "impaired" unless the plan (a) leaves unaltered the
legal, equitable and contractual rights to which the claim or equity interest
entitles the holder of such claim or equity interest; (b) cures any default and
reinstates the original terms of the obligation; or (c) provides that on the
consummation date, the holder of the claim or interest receives cash equal to
the allowed amount of such claim or, with respect to any interest, any fixed
liquidation preference to which the interest holder is entitled or any fixed
price at which the debtor may redeem the security.
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4. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES
Section 1129(b) of the Bankruptcy Code allows a Bankruptcy Court to
confirm a plan, even if such plan has not been accepted by all impaired classes
entitled to vote on such plan, provided that such plan has been accepted by at
least one impaired class. Holders of Claims in Classes H4, H5 and H6, and
Equity Interests in Classes H7, S6 and R7 are impaired and are deemed to have
rejected the Plan. Thus, the Debtors will seek the application of the statutory
requirements set forth in Section 1129(b) of the Bankruptcy Code for
confirmation of the Plan despite lack of acceptance by all Impaired Classes.
Section 1129(b) of the Bankruptcy Code states that notwithstanding the
failure of an impaired class to accept a plan of reorganization, the plan shall
be confirmed, on request of the proponent of the plan, in a procedure commonly
known as "cram-down," so long as the plan does not "discriminate unfairly," and
is "fair and equitable" with respect to each class of claims or equity interests
that is impaired under, and has not accepted, the plan.
The condition that a plan be "fair and equitable" with respect to a
non-accepting class of secured claims includes the requirements that (a) the
holders of such secured claims retain the liens securing such claims to the
extent of the allowed amount of the claims, whether the property subject to the
liens is retained by the debtor or transferred to another entity under the plan
and (b) each holder of a secured claim in the class receives deferred cash
payments totaling at least the allowed amount of such claim with a present
value, as of the effective date of the plan, at least equivalent to the value of
the secured claimant's interest in the debtor's property subject to the liens.
The condition that a plan be "fair and equitable" with respect to a
non-accepting class of unsecured claims includes the following requirement that
either: (i) the plan provides that each holder of a claim of such class receive
or retain on account of such claim property of a value, as of the effective date
of the plan, equal to the allowed amount of such claim; or (ii) the holder of
any claim or interest that is junior to the claims of such class will not
receive or retain under the plan on account of such junior claim or interest any
property.
The condition that a plan be "fair and equitable" with respect to a
non-accepting class of equity interests includes the requirements that either:
(a) the plan provide that each holder of an equity interest in such class
receive or retain under the plan, on account of such equity interest, property
of a value, as of the effective date of the plan, equal to the greater of (i)
the allowed amount of any fixed liquidation preference to which such holder is
entitled; (ii) any fixed redemption price to which such holder is entitled; or
(iii) the value of such interest; or (b) if the class does not receive such an
amount as required under (a), no class of equity interests junior to the
non-accepting class may receive a distribution under the plan.
XII.
RISK FACTORS
ALL IMPAIRED HOLDERS SHOULD READ AND CAREFULLY CONSIDER THE FACTORS SET
FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED
IN THIS DISCLOSURE STATEMENT, PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN.
A. FINANCIAL INFORMATION; DISCLAIMER
ALTHOUGH THE DEBTORS HAVE USED THEIR BEST EFFORTS TO ENSURE THE ACCURACY
OF THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT, THE
FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN
AUDITED AND IS BASED UPON AN ANALYSIS OF DATA AVAILABLE AT THE TIME OF THE
PREPARATION OF THE PLAN AND DISCLOSURE STATEMENT. WHILE THE DEBTORS BELIEVE
THAT SUCH FINANCIAL INFORMATION FAIRLY REFLECTS THE FINANCIAL
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CONDITION OF THE DEBTORS, THE DEBTORS ARE UNABLE TO WARRANT OR REPRESENT THAT
THE INFORMATION CONTAINED HEREIN AND ATTACHED HERETO IS WITHOUT INACCURACIES.
B. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of
the Plan to Holdings and Systems, and to the holders of the Old Notes. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder, and administrative and judicial interpretations
and practice, all as in effect on the date hereof and all of which are subject
to change, with possible retroactive effect. Due to the lack of definitive
judicial or administrative authority in a number of areas, substantial
uncertainty may exist with respect to some of the tax consequences described
below. No opinion of counsel has been obtained, and the Company does not intend
to seek a ruling from the Internal Revenue Service (the "Service") as to any of
such tax consequences and there can be no assurance that the Service will not
challenge one or more of the tax consequences of the Plan described below.
The following discussion is limited to Holders that hold the Old Notes as
capital assets and does not address all matters that may be relevant to
particular classes of holders that are subject to special rules under the Code,
including, without limitation, financial institutions, securities dealers,
broker-dealers, tax-exempt entities, insurance companies, foreign persons, and
holders that hold their Old Notes as part of a "straddle" or a "conversion
transaction" (as defined in the Code). Consequently, such Holders may be
subject to special rules not discussed below. In addition, the tax treatment of
the Holders of Claims other than the Old Notes is not described below.
THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. ALL HOLDERS
OF THE OLD NOTES SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE PLAN AND THE OWNERSHIP AND DISPOSITION OF THE OLD
NOTES AND RESTRUCTURED COMMON STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX LAWS.
1. CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE HOLDERS
A. IN GENERAL
For federal tax purposes, holders of Old Notes will be treated as
exchanging their Old Notes for New Notes and New Holdings Common Stock in a
taxable exchange under section 1001 of the Code. Accordingly, Holders of Old
Notes should recognize gain or loss equal to the difference between (i) the fair
market value as of the Effective Date of the New Notes and New Holdings Common
Stock received therefor that is not allocable to accrued but untaxed interest
and (ii) the Holder's basis in the Old Notes. Such gain or loss should be
capital in nature and should be long-term capital gain or loss if the Old Notes
were held for more than one year. To the extent that a portion of the New Notes
or New Holdings Common Stock received in exchange for the Old Notes is allocable
to accrued but untaxed interest, the Holder will recognize ordinary income.
A Holder's tax basis in New Holdings Common Stock received should be
equal to the stock's fair market value as of the Effective Date and a Holder's
tax basis in a New Note will at any time be equal to the sum of its issue price
and the amount of previously accrued OID with respect to the note, reduced by
the sum of all prior payments made under the New Note, except qualified stated
interest (as described below). A holder's holding period in the New Notes and
New Holdings Common Stock should begin on the day following the Effective Date.
B. ORIGINAL ISSUE DISCOUNT
In general, a debt instrument is considered for federal income tax
purposes to be issued with original issue discount ("OID") if the "stated
redemption price at maturity" of the instrument exceeds its "issue price" by
more
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than a DE MINIMIS amount (0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years from the date of issue to
the maturity date).
The issue price of a debt instrument will depend on whether a
substantial amount of the debt instruments, or the property for which the debt
instrument is exchanged, is treated as "traded on an established market" at any
time during the 60-day period ending 30 days after the Effective Date. In
general, a debt instrument (or the property exchanged therefor) will be treated
as traded on an established market if (a) it is listed on (i) the New York Stock
Exchange or certain other qualifying national securities exchanges, (ii) certain
qualifying interdealer quotation systems, or (iii) certain qualifying foreign
securities exchanges; (b) it appears on a system of general circulation that
provides a reasonable basis to determine fair market value; or (c) price
quotations are readily available from dealers, brokers or traders. If the Old
Notes or the New Notes are traded on an established market, the issue price of
the New Notes will be the fair market value of the notes on the issue date as
determined by such trading. If the Old Notes or New Notes are not traded on an
established market, the issue price of the notes will be their stated principal
amount (assuming interest is payable at a rate at least equal to the applicable
federal rate).
The stated redemption price at maturity of a debt instrument is
the aggregate of all payments due to the holder under such debt instrument at or
before its maturity date, other than stated interest that is actually and
unconditionally payable in cash or other property (other than debt instruments
of the issuer) at fixed intervals of one year or less during the entire term of
the instrument at certain specified rates ("qualified stated interest"). Under
this definition, the New Notes will be issued with OID because New Holdings will
pay interest in additional New Notes for the first two interest periods and,
therefore, no interest payable with respect to the notes will be treated as
qualified interest and all such interest will be included in the calculation of
the stated redemption price at maturity. As a result, the stated redemption
price at maturity of the New Notes will exceed their issue price by more than
the DE MINIMIS amount.
In general, OID with respect to a debt instrument is includible in
income on a constant yield method, based on the original yield to maturity of
the debt instrument calculated by reference to the issue price, regardless of
the taxpayer's method of accounting and regardless of when the interest on the
debt instrument is actually paid in cash. New Holdings will be required to
furnish annually to the Service and to each U.S. holder of the New Notes
information regarding the amount of OID attributable to that year with respect
to the New Notes.
2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO NEW HOLDINGS AND
SYSTEMS
A. CANCELLATION OF INDEBTEDNESS
As a result of the anticipated exchange of Old Notes for New Notes
and Restructured Common Stock, the amount of Systems' aggregate outstanding
indebtedness will be greatly reduced. In general, for federal income tax
purposes, a debtor will realize cancellation of debt ("COD") income when a
creditor accepts less than full payment in satisfaction of its debt. In the
case of Systems, the amount of COD would equal the excess of (i) the adjusted
issue price (as defined in the Code) of the Old Notes over (ii) the aggregate of
the issue price of the New Notes and the fair market value of the Restructured
Common Stock received in exchanged therefor. Absent an exception, the amount of
COD income realized by a debtor must be included in taxable income. Section 108
of the Code provides in part that gross income does not include COD income if
the discharge occurs in a Chapter 11 case. Instead the taxpayer must, as of the
first day of the next taxable year, reduce its tax attributes (in general, first
its net operating loss carryover and then tax credits and capital loss
carryovers, and then the tax basis of its assets) by the amount of COD income
excluded from gross income by this exception. As an exception to the order of
tax attribute reduction described above, a taxpayer can elect to reduce its tax
basis in its depreciable assets first, then its net operating loss carryovers.
Systems believes that it will realize significant COD income upon
the exchange of Old Notes for New Notes and Restructured Common Stock. Because
the realization of COD income will occur in a chapter 11 case, Systems will not
recognize such COD income, but will instead reduce its tax attributes. In the
context of an affiliated
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group of corporations filing a consolidated return, there is uncertainty
under current law whether the attribute reduction rules apply on a separate
company basis or to the tax attributes of the consolidated group as a whole.
B. LIMITATION OF NET OPERATING LOSS CARRYOVERS FOLLOWING AN
OWNERSHIP CHANGE
Section 382 of the Code generally limits a corporation's use of
its net operating losses (and may limit a corporation's use of certain built-in
losses recognized within a five-year period) if the corporation undergoes an
"ownership change." Section 383 of the Code applies similar limitations to
capital loss carryovers and tax credits. In general, an ownership change occurs
when the percentage of the corporation's stock owned by certain "5 percent
shareholders" increases by more than 50 percentage points over the lowest
percentage owned at any time during the applicable "testing period" (generally
the shorter of (i) the three-year period preceding the testing date or (ii) the
period of time since the most recent ownership change of the corporation). A "5
percent shareholder" for these purposes includes, very generally, an individual
or entity that directly or indirectly owns 5 percent or more of the
corporation's stock during the relevant period, and may include one or more
groups of shareholders that in the aggregate own less than 5 percent of the
value of the corporation's stock. Under applicable Treasury regulations, an
ownership change with respect to an affiliated group of corporations filing a
consolidated return that have consolidated net operating losses is generally
measured by changes in stock ownership of the parent corporation of the group
(e.g., New Holdings).
As a result of the Plan it is not anticipated that New Holdings
will undergo an "ownership change" within the meaning of section 382 of the
Code. Consequently, the ability of New Holdings to use its net operating loss
carryovers should not be subject to an annual limitation under section 382 of
the Code. However, any subsequent changes in the capital structure of New
Holdings could trigger the limitations under Section 382 unless the exception
described below applies.
If New Holdings undergoes an ownership change, the use by New
Holdings or Systems of their net operating loss carryovers (and certain built-in
losses) to offset taxable income earned after the ownership change could be
subject to the "Section 382 Limitation." In general, the Section 382 Limitation
on a corporation's net operating loss carryover (and certain built-in losses)
will be equal to the product of (i) the net equity value of all of New Holdings'
stock immediately before the ownership change and (ii) the long-term exempt rate
for the month in which the ownership change occurs. The Section 382 Limitation
is applied on an annual basis.
The rules regarding ownership changes are extremely complicated
and, although the Company believes there will not be an ownership change upon
consummation of the Plan, it is possible that the contemplated transactions (or
subsequent shifts in the capital structure of New Holdings or Systems) will
constitute an ownership change.
C. APPLICABLE HIGH YIELD DEBT OBLIGATIONS
In general, OID, if any, on the New Notes will not be deductible
until paid by New Holdings if the New Notes are treated as "applicable high
yield debt obligations" ("AHYDOs"). Under the AHYDO rules contained in section
163(e) and 163(i) of the Code, if the New Notes have a term of more than five
years, significant OID (as defined in the Code), and a yield to maturity of 5%
or more in excess of the applicable federal rate ("AFR") in effect for the month
in which the notes are issued, interest deductions in respect of OID accruing on
such notes will be deferred until amounts in respect of such OID are paid in
cash. Moreover, to the extent the yield to maturity exceeds the AFR for the
applicable month plus 6%, the deduction for a ratable portion of the OID will be
permanently disallowed (the "Disqualified OID").
It is possible that the New Notes may be treated as AHYDOs.
Accordingly, in such an event, New Holdings would not be permitted to deduct any
OID in respect of the New Notes until such interest is paid. In addition, the
company will be denied OID deductions in respect of a ratable portion of the OID
equal to any Disqualified OID.
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THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE
FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT
MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH HOLDER'S CIRCUMSTANCES
AND INCOME TAX SITUATION. ALL HOLDERS OF THE OLD NOTES SHOULD CONSULT WITH
THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE
TRANSACTION CONTEMPLATED BY THE RESTRUCTURING AND THE OWNERSHIP AND DISPOSITION
OF THE NEW NOTES AND RESTRUCTURED COMMON STOCK, INCLUDING THE APPLICABILITY AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE
TAX LAWS.
C. CERTAIN BANKRUPTCY CONSIDERATIONS
1. RISK OF NON-CONFIRMATION OF THE PLAN
Even if the requisite acceptances are received, there can be no assurance
that the Bankruptcy Court will confirm the Plan. A non-accepting creditor of the
Company might challenge the solicitation procedures and results, or the terms of
the Plan as not being in compliance with the Bankruptcy Code. Even if the
Bankruptcy Court were to determine that the balloting procedures and results
were appropriate, the Bankruptcy Court could still decline to confirm the Plan
if it were to find that any statutory conditions to Confirmation had not been
met, including that the terms of the Plan are fair and equitable to
non-accepting Classes. Section 1129 of the Bankruptcy Code sets forth the
requirements for Confirmation and requires, among other things, a finding by the
Bankruptcy Court that the Plan "does not unfairly discriminate" and is "fair and
equitable" with respect to any non-accepting Classes and that the Confirmation
of the Prepackaged Plan is not likely to be followed by a liquidation or a need
for further financial reorganization and that the value of distributions to
non-accepting Classes of Impaired Claims and Equity Interests will not be less
than the value of distributions such Classes of Impaired Claims and Equity
Interests would receive if the Company were liquidated under chapter 7 of the
Bankruptcy Code. While there can be no assurance that the Bankruptcy Court will
conclude that these requirements have been met, the Company believes that the
Plan will not be followed by a liquidation or the need for further financial
reorganization and that non-accepting holders of Impaired Claims and Equity
Interests will receive distributions at least as great as would be received
following a liquidation pursuant to chapter 7 of the Bankruptcy Code. The
Company believes that holders of Equity Interests in any of the Debtors would
receive no distribution under either a liquidation pursuant to chapter 7 or a
liquidation or reorganization pursuant to chapter 11.
2. NONCONSENSUAL CONFIRMATION
Pursuant to the "cramdown" provisions of section 1129(b) of the
Bankruptcy Code, the Bankruptcy Court can confirm the Plan at the Debtors'
request if at least one other Impaired Class has accepted the Plan (with such
acceptance being determined without including the acceptance of any "insider" in
such Class) and, as to each Impaired Class which has not accepted the Plan, the
Bankruptcy Court determines that the Plan "does not discriminate unfairly" and
is "fair and equitable" with respect to Impaired Classes. IN ACCORDANCE WITH
SUBSECTION 1129(a)(8) OF THE BANKRUPTCY CODE, THE DEBTORS WILL BE REQUIRED TO
REQUEST CONFIRMATION OF THE PLAN WITHOUT THE ACCEPTANCE OF ALL IMPAIRED CLASSES
ENTITLED TO VOTE IN ACCORDANCE WITH SUBSECTION 1129(b) OF THE BANKRUPTCY CODE.
The Debtors, except as provided for in the Lock-Up Agreement, reserve the
right to modify the terms of the Plan as necessary for the confirmation of the
Plan without the acceptance of all Impaired Classes. Such modification could
result in a less favorable treatment of any non-accepting Class or Classes, as
well as of any Classes junior to such non-accepting Classes, than the treatment
currently provided in the Plan. Such less favorable treatment could include a
distribution of property to the Class affected by the modification of a lesser
value than that currently provided in the Plan or no distribution of property
whatsoever under the Plan.
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<PAGE>
3. DELAYS OF CONFIRMATION AND/OR EFFECTIVE DATE
Any delays of either confirmation or effectiveness of the Plan could
result in, among other things, increased professional fee claims. These or any
other negative effects of delays of either confirmation or effectiveness of the
Plan could endanger the ultimate approval of the Plan by the Bankruptcy Court.
D. PENDING LITIGATION
The Debtors are involved from time to time in routine litigation that is
incidental to their businesses. Typically, these matters consist of product
liability claims brought by the individuals who operate the equipment sold by
the Debtors disputes with customers over the performance and completion of
equipment installation, and workers compensation claims by the Debtors'
employees. The Debtors do not believe that the outcome of any such litigation
will have a material adverse effect upon the Debtors. The Debtors expressly
reserve their rights to, among other things, enforce, pursue, prosecute and
settle (or decline to do any of the foregoing) all claims, defenses or causes of
action, among other things, that arise from or relate in any way to the
operation of its business.
XIII.
POST FILING DEVELOPMENTS
On July 30, 1999, the Debtors sought and obtained approval from the
Bankruptcy Court of certain motions and applications (the "First Day Motions")
which the Debtors filed simultaneously with their petitions for relief
commencing the Chapter 11 Cases. Set forth below is a brief summary of the First
Day motions filed by the Debtors and others in the Chapter 11 Cases.
A. CUSTOMER SERVICE PROGRAMS
The Debtors obtained an order authorizing the Debtors to perform
obligations and to pay certain claims arising under their customer service
programs. This relief should enable the Debtors to maintain their important
relationships with their customers.
B. EMPLOYEE CLAIMS AND EXISTING BENEFIT PROGRAMS
The Debtors obtained an order authorizing the Debtors to pay and honor
their prepetition obligations to certain employees in the ordinary course of
business. Consistent with this order, the Debtors are continuing to honor their
obligations to employees regarding vacation pay in accordance with applicable
law and internal Company policies and such policies shall be unaffected by the
Plan. This relief should enable the Debtors to maintain their excellent
relationships with their employees.
C. CASH MANAGEMENT SYSTEM
Pursuant to this motion, the Debtors obtained authorization to use their
current cash management system and bank accounts.
D. DIP FINANCING
The Debtors obtained entry of both an interim and a final order
permitting borrowings under the DIP Facility. Such borrowing permits the Debtors
to operate their businesses during the Chapter 11 Cases and pay pre-petition
obligations (to the extent authorized by the Bankruptcy Court) and post-petition
obligations.
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<PAGE>
E. DISCLOSURE STATEMENT AND PLAN
This motion requested that the Bankruptcy Court (a) schedule hearings (i)
to approve the adequacy of the Debtors' Disclosure Statement and (ii) to confirm
the Plan, (b) establish deadlines to object to the Disclosure Statement and the
Plan and (c) approve a form of notice.
F. MISCELLANEOUS PROCEDURAL AND ADMINISTRATIVE MOTIONS
These motions sought approval of non-substantive procedures to be
employed in the Bankruptcy Court governing the Chapter 11 Cases. The motions
also seek to employ bankruptcy counsel and advisors to the Debtors.
On August 20, 1999, an official committee of general unsecured creditors
was appointed by the United States Trustee. The Creditor's Committee consists
of Alliance Capital Management L.P., Credit Suisse First Boston, HSBC Bank USA,
Merrill Lynch Phoenix Fund, Inc., Megtec Systems, Baldwin Technology Corp. and
Trace-a-matic Corp. The Creditors' Committee retained Akin Gump as its legal
advisor and Chanin as its financial advisor.
XIV.
MISCELLANEOUS PROVISIONS
Certain additional miscellaneous information regarding the Plan is set
forth below.
A. DISSOLUTION OF COMMITTEE(S)
On the Effective Date, the Creditors' Committee shall dissolve and
members shall be released and discharged from all rights and duties arising
from, or related to, the Chapter 11 Case.
B. 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 hearing pursuant to
section 1128 of the Bankruptcy Code, shall be paid on or before the Effective
Date.
C. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEE
The reasonable fees and expenses incurred after the Petition Date by the
Prepetition Noteholders Committee's counsel and financial advisor (together with
the reasonable fees and expenses of local counsel) through the date of the
appointment of the Creditors' Committee with respect to these Chapter 11 Cases
shall be paid (without application by or on behalf of any such professionals to
the Bankruptcy Court and without notice and a hearing) by the Reorganized
Debtors as an Administrative Claim under the Plan. If the Reorganized Debtors
and any such professional retained by the Prepetition Noteholders Committee
cannot agree on the amount of fees and expenses to be paid to such professional,
the amount of any such fees and expenses shall be determined by the Bankruptcy
Court.
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<PAGE>
D. DISCHARGE OF DEBTORS
Except as otherwise provided in the Plan: (1) the rights afforded in the
Plan and the treatment of all Claims and Equity Interests therein, shall be in
exchange for and in complete satisfaction, discharge and release of Claims and
Equity Interests of any nature whatsoever, including any interest accrued on
such Claims from and after the Petition Date, against the Debtors and the
Debtors in Possession, or any of their assets or properties, (2) on the
Effective Date, all such Claims against, and Equity Interest in the Debtors
shall be satisfied, discharged and released in full and (3) all Persons and
Entities shall be precluded from asserting against the Reorganized Debtor, their
successors or their assets or properties any other or further Claims or Equity
Interests based upon any act or omission, transaction or other activity of any
kind or nature that occurred prior to the Confirmation Date. Except as
expressly provided therein, the Plan does not impair the rights of any Holders
of Class S4 Claims, including but not limited to: (i) Holders of Claims under
executory and nonexecutory contracts and leases; (ii) persons or entities
entitled to contractual or common law rights of indemnity, contribution and
reimbursement; (iii) or claims of any party or entity relating to any
environmental condition as to which any of the Debtors are or may be liable.
E. MODIFICATION OF PLAN
Subject to the limitations contained in the Plan and the Lock-Up
Agreement, (1) the Debtors reserve the right, in accordance with the Bankruptcy
Code and the Bankruptcy Rules, to amend or modify the Plan prior to the entry of
the Confirmation Order and (2) after the entry of the Confirmation Order, the
Debtors or the Reorganized Debtors, as the case may be, 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.
F. REVOCATION OF PLAN
The Debtors reserve the right, at any time prior to the entry of the
Confirmation Order, to revoke and withdraw the Plan.
G. SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any Person or Entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of
any heir, executor, administrator, successor or assign of such Person or Entity.
H. RESERVATION OF RIGHTS
Except as expressly set forth in the Plan, the Plan shall have no force
or effect unless the Bankruptcy Court shall enter the Confirmation Orders. None
of the filing of the Plan, any statement or provision contained herein, or the
taking of any action by the Debtor with respect to the Plan shall be or shall be
deemed to be an admission or waiver of any rights of the Debtors with respect to
the Holders of Claims or Equity Interests prior to the Effective Date.
I. SECTION 1146 EXEMPTION
Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer, or exchange of any security under the Plan, or the making or delivery
of an instrument of transfer under the Plan, may not be taxed under any law
imposing a stamp tax or similar tax.
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<PAGE>
J. FURTHER ASSURANCES
The Debtors, the Reorganized Debtors and all Holders of Claims receiving
distributions under the Plan and all other parties in interest shall, from time
to time, prepare, execute and deliver any agreements or documents and take any
other actions as may be necessary or advisable to effectuate the provisions and
intent of the Plan.
K. SERVICE OF DOCUMENTS
Except as otherwise provided by order of the Bankruptcy Court, any
pleading, notice or other document required by the Plan to be served on or
delivered to the Reorganized Debtors shall be sent by first class U.S. mail,
postage prepaid to:
Goss Graphic Systems, Inc.
700 Oakmont Lane
Westmont, Illinois 60559-5546
Attn: General Counsel
with copies to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Matthew N. Kleiman, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
20th Floor
New York, New York 10022
Attn: Daniel H. Golden, Esq.
L. FILING OF ADDITIONAL DOCUMENTS
On or before the Effective Date, the Debtors may file with the Bankruptcy
Court such agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan.
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<PAGE>
XV.
RECOMMENDATION
In the opinion of the Debtors, the Plan is preferable to the alternatives
described herein because it provides for a larger distribution to the Holders
than would otherwise result in a liquidation under chapter 7 of the Bankruptcy
Code. In addition, any alternative other than confirmation of the Plan could
result in extensive delays and increased administrative expenses resulting in
smaller distributions to the Holders of Claims and Equity Interests.
ACCORDINGLY, THE DEBTORS RECOMMEND THAT HOLDERS OF CLAIMS AND EQUITY INTERESTS
ENTITLED TO VOTE ON THE PLAN SUPPORT CONFIRMATION OF THE PLAN AND VOTE TO ACCEPT
THE PLAN.
Dated: September 7, 1999 Respectfully Submitted,
GOSS GRAPHIC SYSTEMS, INC.
GGS HOLDINGS, INC.
By:
---------------------------------
Name:
Title:
GOSS REALTY, L.L.C.
By:
---------------------------------
Name:
Title:
PREPARED BY:
James H.M. Sprayregen
Matthew N. Kleiman
James W. Kapp III
Chris L. Dickerson
KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
and
Laura Davis Jones (No. 2436)
Maureen D. Luke
Michael R. Nestor
YOUNG CONAWAY STARGATT & TAYLOR, LLP
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899
(302) 571-6600
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<PAGE>
CO-COUNSEL TO DEBTORS AND DEBTORS IN POSSESSION
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<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
GOSS GRAPHIC SYSTEMS, INC., ET AL.,(1) ) Case No. 99-2756(PJW)
) (Jointly Administered)
Debtors. )
SECOND AMENDMENT TO SECOND AMENDED PLAN OF REORGANIZATION
OF GOSS GRAPHIC SYSTEMS, INC., GGS HOLDINGS, INC. AND
GOSS REALTY, L.L.C. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
-----------------------------------------------------------
The above-captioned debtors and debtors in possession in the above-
captioned chapter 11 cases (the "Debtors") as proponents of the Second Amended
Plan of Reorganization of Goss Graphic Systems, Inc., GGS Holdings, Inc. and
Goss Realty, L.L.C. under Chapter 11 of the Bankruptcy Code (the "Plan") hereby
amend the Plan as set forth in the Stipulation and Plan Modification attached
hereto as Exhibit A.
Wilmington, Delaware Respectfully submitted,
Dated: November 2, 1999
KIRKLAND & ELLIS
James H.M. Sprayregen
Matthew N. Kleiman
200 East Randolph Drive
Chicago, IL 60601
(312) 861-2000
- and -
YOUNG CONAWAY STARGATT & TAYLOR, LLP
------------------------------------
Laura Davis Jones (No. 2436)
Maureen D. Luke (No. 3062)
Michael R. Nestor (No. 3526)
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6600
Co-Counsel for the Debtors and Debtors in
Possession
- -----------------------
(1)The Debtors are the following entities: Goss Graphic Systems, Inc., GGS
Holdings, Inc., and Goss Realty, L.L.C.
<PAGE>
EXHIBIT A
<PAGE>
STIPULATION AND PLAN MODIFICATION
The secured claim (Class R2) and deficiency claim (Class R6) of LaSalle Bank
National Association ("LaSalle") against Goss Realty, L.L.C. ("Realty"),
together with all other claims of LaSalle against Goss Graphic Systems, Inc.
("Systems"), GGS Holdings, Inc. ("Holdings") or any of their affiliates, shall
be fully settled and satisfied as follows:
1. On the Effective Date, that certain Mortgage Note dated July 25, 1997 in
the original amount of $30 million made by Realty in favor of LaSalle
(the "Note") shall be reinstated by payment of the sums set forth in
paragraph 2 below.
The maturity date of the Note shall be November 30, 2001. The Prepayment
Premium shall be fixed at $4.30 million, $2.15 million of which shall be
part of the Compromised Note Balance (as defined in paragraph 10.a.
below) and paid as set forth in paragraph 3, and $2.15 million of which
shall be paid (if at all) as set forth in paragraph 6.d.(ii).
The terms of the Mortgage, Assignment of Rents and all other Loan
Documents (as defined in the Note) shall remain in full force and effect
EXCEPT as specifically modified herein. In the event that there is a
conflict between the terms of this Plan Modification and the Note,
Mortgage, Loan Documents, or any other document by and between LaSalle,
Realty and/or Systems, the terms of this Plan Modification shall govern.
All capitalized terms used herein not otherwise defined shall have the
meanings ascribed thereto in that certain Second Amended Plan of
Reorganization of Goss Graphic Systems, Inc. and Goss Realty, L.L.C.
under Chapter 11 of the Bankruptcy Code, and if not defined therein, as
ascribed thereto in the Loan Documents.
2. On the Confirmation Date, Realty shall pay LaSalle in cash the sum of the
following amounts to reinstate and cure, in full, the Note, Mortgage and
all related obligations and to pay the November 1, 1999 Note payment:
a. principal of $168,386.15; plus
b. interest of $645,006.45 (contract rate); plus
c. interest of $397,232.61 (default rate); plus
d. late fees of $39,508.92; plus
e. real estate tax escrow payments of $141,200 to be deposited
into the account set forth in paragraph 4(e) below for
application as provided for in paragraph 4(e) and the Loan
Documents; plus
f. all reasonable attorney fees and costs incurred by
LaSalle's counsel, Schwartz, Cooper, Greenberger & Krause
and Klehr, Harrison, Harvey,
<PAGE>
Branzburg & Ellers L.L.P. up to the Confirmation Date
(which fees and costs were estimated at $60,000 as of
October 10, 1999); plus
g. $9210.70 in fees and costs of LaSalle's expert, Michael
Maglocci; plus
h. $3541.12 in costs and expenses incurred by LaSalle
including without limitation that incurred in travel to
Delaware for Court hearings for LaSalle's officer, counsel,
expert, depositions, meetings and other experts incurred in
connection with the bankruptcy of Realty and Systems.
3. As of the Confirmation Date, Systems, as lessee, shall reject that
certain Single Tenant Net lease dated July 25, 1997 (the "Old Lease") for
700 Oakmont, Westmont, Illinois (the "Premises").
As of the Confirmation Date, Realty, as lessor, shall assume the Old
Lease.
The claim filed by LaSalle on behalf of Realty against Systems for unpaid
pre-petition rent in the approximate amount of $3.1 million shall be
disallowed with prejudice. Except as expressly set forth herein, Realty
shall have no pre-petition claim against Systems, including, without
limitation, any claim for monetary or non-monetary cure costs associated
with Realty's assumption of the Old Lease. Systems represents and
warrants as an inducement to Realty and LaSalle that it is not in default
with respect to the Old Lease except for the claimed pre-petition Base
Rent.
Realty shall have an allowed unsecured Class S4 Claim against Systems in
the amount of not less than $8 million (the "Rejection Claim"), which
shall be satisfied and paid by Systems with payments to LaSalle as
follows:
a. In the event Systems pays LaSalle, without default, $8 million
(the "Periodic Payment Amount") payable in forty-eight (48)
installments of $166,666.66 each (the "Periodic Payments"), with
each installment being paid on or before the first day of each
month commencing on December 1, 1999, then the Rejection Claim
shall be deem satisfied in full. The principal portion of the
Compromised Note Balance shall be reduced dollar-for-dollar by the
amount of all Periodic Payments paid to LaSalle.
b. Systems shall be entitled to prepay all or any portion of the
Periodic Payment Amount without penalty at any time, and any such
payments shall reduce the principal portion of the Compromised
Note Balance on a dollar-for-dollar basis.
c. If Systems fails to make any Periodic Payment when due (a
"Periodic Payment Default"), LaSalle may declare the entire
Rejection Claim (less the amount of all Periodic Payments)
immediately due without further act or deed or notice.
d. After a Periodic Payment Default, LaSalle can take all action it
deems appropriate to liquidate, adjudicate and collect the unpaid
portion of the Rejection Claim,
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<PAGE>
consistent with the terms of the Note, Mortgage, Loan Documents
and applicable governing law including, without limitation,
rights set forth in paragraph 7 below.
(i) LaSalle reserves the right to assert that the Rejection Claim
equals an amount greater than $8 million, and Systems reserves the
right to contest that the Rejection Claim is any amount in excess
of $8 million.
(ii) Determination of whether the Rejection Claim exceeds $8 million
and the amount by which it exceeds $8 million is subject to final
order of the Bankruptcy Court in accordance with applicable
provisions of state and bankruptcy law, including without
limitation, Section 502(b)(6) of the Bankruptcy Code.
(iii) The unpaid portion of the Rejection Claim shall commence to bear
interest at the rate of 8.66% upon the occurrence of either of the
following events: (i) Realty defaults in any of its obligations to
LaSalle, including payment obligations, under the Note or Loan
Documents; or (ii) Systems defaults in any of its payment
obligations of the Periodic Payment Amount.
On the Effective Date, Realty shall assign all of its right, title and
interest in and to the Rejection Claim to LaSalle to secure payment of
the Compromised Note Balance and shall execute all documents reasonably
necessary to perfect said interest. Except as otherwise set forth in
this Plan Modification, LaSalle shall have all rights to enforce said
claim without further act or deed, and to the extent and on the terms set
forth in the Note, Mortgage and Loan Documents.
If the Compromised Note Balance has been (x) paid in full or (y) paid in
accordance with paragraph 6.d. below in the event of a sale of the
Premises generating Net Sale Proceeds in excess of the Compromised Note
Balance, at any time prior to the payment in full of the Periodic Payment
Amount or the Rejection Claim, then (i) the Periodic Payment Amount and
the Rejection Claim shall be deemed paid in full and satisfied, and (ii)
LaSalle shall have no further lien or interest in the Periodic Payment
Amount or the Rejection Claim.
4. On the Effective Date, Realty and Systems shall execute and enter into a
new lease for the Premises ("New Lease"), which New Lease shall have an
effective date as of the Petition Date. The New Lease shall be identical
to the Old Lease except as follows:
a. the installments of Base Rent payable monthly shall be
reduced to $263,392.92;
b. the Lease Term shall end on November 30, 2001 (the "Lease
Termination Date"); PROVIDED, HOWEVER, that in the event
LaSalle takes delivery of the Bill of Sale and Deed (each,
as defined below) for recording, Systems shall have the
option to extend the Lease Termination Date for up 12
additional months by giving LaSalle written notice of its
exercise of the option thirty (30) days before the Lease
Termination Date; PROVIDED, FURTHER, that during such
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<PAGE>
extension Systems shall continue to render performance to
LaSalle, as lessor, under the terms and conditions of the
New Lease;
c. the New Lease shall not terminate prior to the earlier of
the Lease Termination Date or the date on which the sale of
the Premises is closed; and
d. Systems shall pay and deliver the base rent directly to
LaSalle by the first day of each month commencing with
December 1, 1999;
e. the monthly Installments to be paid under paragraph 5.4 of
the New Lease shall be $35,300; said Installments shall be
delivered to LaSalle by the first day of each month
commencing with December 1, 1999 and deposited into Account
# 8600769213; said Account is in the name of Realty and
bears no interest; said monthly Installment amounts may be
adjusted from time to time to the extent and as provided in
the Loan Documents; and
f. the New Lease shall terminate upon a closing of a sale of
the Premises.
5. On the Effective Date, Realty shall execute in favor of LaSalle, or its
nominee as directed by LaSalle, and deliver to LaSalle for deposit in
Escrow (as hereinafter defined) (i) a special warranty deed for Premises
in recordable form subject only to customary easements and restrictions
("Deed"), and (ii) a bill of sale ("Bill of Sale") for all personal
property of Realty.
In the event LaSalle or its nominee has the right to record the Deed and
take the Bill of Sale in accordance with the terms of the Modified Plan,
Realty shall also execute and deliver to LaSalle any and all additional
documents a title company or LaSalle may require to effectuate the
conveyance of the Premises and personalty contemplated herein
(collectively "Supplemental Documents").
In the event Realty refuses or is unable to execute such documents,
Realty grants to LaSalle as of the Effective Date a limited power of
attorney to execute any one or more of the Supplemental Documents in its
name.
6. At all times from and after the Effective Date, Realty shall use its best
efforts to sell the Premises for the best price possible subject to the
following conditions:
a. Any broker retained to sell the Premises shall be entitled only to
a customary and usual commission in the event of a sale; PROVIDED,
HOWEVER, that the commission shall not exceed 2% of the gross sale
proceeds without the consent of LaSalle, which consent shall not
be unreasonably withheld, denied or delayed.
b. Realty shall have the right to sell the Premises WITHOUT THE
CONSENT of LaSalle provided the Net Sale Proceeds are equal to or
greater than the then outstanding Compromised Note Balance.
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<PAGE>
c. In the event Realty has a contract to sell the Premises which it
wants to execute, the Net Sale Proceeds from which will be LESS
THAN the Compromised Note Balance, then, at the sole option of
LaSalle, (i) Realty will be allowed to proceed with said sale with
LaSalle retaining all of the Net Sale Proceeds and the Compromised
Note Balance shall be reduced by the amount of such Net Sale
Proceeds, or (ii) LaSalle will take delivery of the Bill of Sale
and Deed for recording and the Compromised Note Balance shall be
reduced (as of the outside date in the contract for closing the
sale) by an amount equal to the Net Sale Proceeds under the
contract to sell the Premises; PROVIDED, HOWEVER, that LaSalle
shall not have the right to select option (ii) of this paragraph
6.c. if the aggregate of (x) the Net Sale Proceeds under the
contract to sell the Premises calculated using the date of sale as
the outside closing date of the contract, plus (y) the then
outstanding Periodic Amount, exceeds (z) the Compromised Note
Balance. In either event, LaSalle shall have no further claim
against Realty, and LaSalle shall have no further claim against
Systems except for its right to be paid (if at all) the remaining
balance (if any) of the Periodic Amount and/or the Rejection Claim
and the Indemnity Claim in accordance with paragraph 8 below.
d. In the event Realty has a contract to sell the Premises under
which the Net Sale Proceeds will be GREATER than the Compromised
Note Balance, the Net Sale Proceeds shall be paid to LaSalle on
closing and applied as follows:
(i) first, to the Compromised Note Balance until paid in full;
and
(ii) second, 50% of the remaining Net Sale Proceeds to the $2.15
million balance of the Prepayment Premium until paid in
full.
After payment in full of the Compromised Note Balance and the
balance of the Prepayment Premium as set forth in paragraph
6.d.(ii) hereof, LaSalle shall have no further claim against
Realty or Systems or the remaining Net Sale Proceeds.
7. LaSalle shall have the absolute right to have the Deed recorded and the
Bill of Sale delivered to LaSalle immediately upon the occurrence of any
of the following events:
a. closing of the sale of the Premises has not occurred by November
30, 2001;
b. Realty defaults in any of its obligations to LaSalle, including
payment obligations, under the Note or Loan Documents;
c. Systems defaults in any of its payment obligations of the Periodic
Payment Amount;
d. Systems vacates the Premises prior to the close of a sale of the
Premises or the Lease Termination Date.
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<PAGE>
Upon the recording of the Deed, the Compromised Note Balance shall be
credited against all sums due under the Note, and LaSalle will have no
further claim against Realty or Systems except with respect to its right
to be paid (if at all) the remaining balance (if any) of Periodic Payment
Amount and/or the Rejection Claim as set forth herein and the Indemnity
Claim in accordance with paragraph 8 below.
8. The claim filed by LaSalle against Systems based on the Indemnity
Agreement executed by Systems in favor of LaSalle dated July 25, 1997
("Indemnity Claim"), shall remain unadjudicated until default by Systems
or Realty of any payment or non-payment obligation under the Note, New
Lease or Rejection Claim or Modified Plan.
9. Notwithstanding the closing of the bankruptcy case for Realty and
Systems, the Bankruptcy Court shall retain the exclusive jurisdiction to
adjudicate all matters related to (i) the Plan Modification and (ii) the
Rejection Claim and the Indemnity Claim.
10. As used in this Plan Modification:
a. "Compromised Note Balance" shall be the sum of (i) the amount of
principal, interest, fees, expenses, and late charges (if any)
then due under the Note, plus (ii) $2.15 million.
b. "Net Sale Proceeds" shall be all consideration for which the
Premises is sold less (i) pro-rations for real estate taxes, costs
of sale (e.g., reasonable attorney fees and costs, title
insurance, survey, transfer taxes customarily charged to the
seller) and a brokerage commission not to exceed 2% of the
purchase price in accordance with paragraph 6.a. above.
c. "Escrow" shall mean the escrow established by written agreement
between a title company or other entity selected by LaSalle and
Realty, Realty and LaSalle. The terms of the Escrow shall include
that the Deed and Bill of Sale shall be delivered to LaSalle upon
receipt by escrow agent of an affidavit from an officer of LaSalle
that states as follows:
I hereby certify that the following
circled event(s) have occurred and,
with respect to events in paragraphs b
through e below, notice of default was
given and said defaults were not cured
within five (5) calendar days of such
notice:
(i) The Lease Termination Date has
passed and the Premises have
not been sold; or
(ii) Realty is in default under the
Note; or
(iii) Systems is in default under the
New Lease; or
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<PAGE>
(iv) Systems has defaulted on its
payment obligations of the
Periodic Payments or the
Rejection Claim; or
(v) Realty or Systems has violated
a term of the Plan
Modification.
The terms of the Escrow shall also include a provision
requiring that the Deed and Bill of Sale shall be delivered
to Realty upon receipt by escrow agent of an affidavit from
an officer of Realty and an officer of LaSalle that states
that the Note has been discharged and satisfied in full.
11. The grace period with respect to any payment or non-payment obligations
in the Note, Loan Documents, New Lease or payment of the Periodic
Payments and/or Rejection Claim shall be as set forth in the Mortgage;
PROVIDED, HOWEVER, that a Late Charge as set forth in PARA 6 of the Note
shall be immediately due and payable if a payment due to LaSalle is not
made on the day such payment is due, even though such payment is made
within the applicable grace period. Any notice required by the terms of
the Escrow, Note or Loan Documents shall be delivered to:
REALTY AND SYSTEMS:
Goss Graphic Systems, Inc.
Goss Realty, L.L.C.
700 Oakmont Lane
Westmont, Illinois 60559-5546
Telecopy: 630-850-5899
Attn: Joseph P. Gaynor, III, EVP & CFO
and
KIRKLAND & ELLIS:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Telecopy: 312-861-2200
Attn: James H.M. Sprayregen &
Matthew N. Kleiman
12. All payments to be made by Realty or Systems shall be by wire transfer or
personal delivery receipted for.
-7-
<PAGE>
13. Except as otherwise provided herein, all payments received by LaSalle,
whether on the Note, the New Lease, the Rejection Claim or from the sale
of the Premises, shall be applied as follows: first, to fees and costs;
second, to interest; and third, to principal.
14. If the Effective Date of the Plan and execution of all documents
necessary to consummate the transactions contemplated herein do not occur
by November 30, 1999, confirmation of the Plan for Realty shall be null
and void.
15. If Realty prepays the Compromised Note Balance in full other than by a
sale of the Premises, and within six (6) months of said payment date
Realty or its nominee, Systems or one of their affiliates enters into a
contract to sell the Premises, the Net Sale Proceeds of which would
exceed the Compromised Note Balance, then, Realty shall owe and pay
LaSalle the full remaining balance of the $4.30 million Prepayment
Premium.
(remainder of this page intentionally blank)
-8-
<PAGE>
GOSS REALTY, L.L.C.
By: ______________________________________
Its: ______________________________________
Printed Name: _____________________________
GOSS GRAPHIC SYSTEMS, INC.
By: ______________________________________
Its: ______________________________________
Printed Name: _____________________________
LASALLE BANK NATIONAL ASSOCIATION
By: ______________________________________
Its: ______________________________________
Printed Name: _____________________________
-9-
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
) CHAPTER 11
GOSS GRAPHIC SYSTEMS, INC., ET AL.,(1) )
) CASE NO. 99-2756(PJW)
DEBTORS. ) (JOINTLY ADMINISTERED)
AMENDMENT TO SECOND AMENDED PLAN OF REORGANIZATION OF
GOSS GRAPHIC SYSTEMS, INC., GGS HOLDINGS, INC. AND
GOSS REALTY, L.L.C. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
-----------------------------------------------------------
The above-captioned debtors and debtors in possession in the
above-captioned chapter 11 cases (the "Debtors") as proponents of the Second
Amended Plan of Reorganization of Goss Graphic Systems, Inc., GGS Holdings,
Inc. and Goss Realty, L.L.C. under Chapter 11 of the Bankruptcy Code (the
"Plan") hereby make the following amendments to the Plan:
1. The following definition will be added to Article I.B. of
the Plan:
"New Rockwell Equity Distribution" means the 350,000 shares of New
Holdings Common Stock issued to Rockwell International Corporation
or its designee, subject to dilution by the Management Equity as
provided under the Lock-Up Agreement.
2. The definition of Stonington Capital Contribution in
Article I.B. of the Plan will be deleted in its entirety and replaced with the
following language:
"Stonington Capital Contribution" means that certain $50 million
contribution of capital to the Debtors made pursuant to the terms
of the Lock-Up Agreement, and in exchange for which on the
Effective Date Stonington shall receive 6,513,750 shares of New
Holdings Common Stock, subject to dilution by the Management
Equity as provided under the Lock-Up Agreement.
- ---------------------
(1)The Debtors are the following entities: Goss Graphic Systems, Inc.; GGS
Holdings, Inc.; and Goss Realty, L.L.C.
<PAGE>
3. Article III.C.5.(b), Treatment of Class S5 - Old Note
Claims will be deleted in its entirety and replaced with the following language:
TREATMENT: On or as soon as practicable after the Effective Date,
each Holder of an Allowed Old Note Claim shall receive, in full
and final satisfaction of such Claim, a Pro Rata distribution of
the New Notes and a Pro Rata share of 3,136,250 shares of New
Holdings Common Stock, subject to dilution by the Management
Equity as provided under the Lock-Up Agreement.
4. Article III.B.6.(b), Treatment of Class H6 - Rockwell
Preferred Equity Interests will be deleted in its entirety and replaced with the
following language:
On or as soon as practicable after the Effective
Date, the Holder of the Rockwell Preferred Equity
Interest shall receive, in full and final
satisfaction of such Claim, the New Rockwell Equity
Distribution.
KIRKLAND & ELLIS
James H.M. Sprayregen
Matthew N. Kleiman
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
and
YOUNG CONAWAY STARGATT & TAYLOR, LLP
____________________________________
Laura Davis Jones (#2436)
Michael R. Nestor (No. 3526)
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6600
Co-Counsel for the Debtors and Debtors
in Possession
Dated: October 21, 1999
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: ) CHAPTER 11
)
GOSS GRAPHIC SYSTEMS, INC., ET AL.,(1) ) CASE NO. 99-2756 (PJW)
) (JOINTLY ADMINISTERED)
DEBTORS. )
- -------------------------------------------------------------------------------
SECOND AMENDED PLAN OF REORGANIZATION
OF GOSS GRAPHIC SYSTEMS, INC.,
GGS HOLDINGS, INC. AND GOSS REALTY, LLC
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
- -------------------------------------------------------------------------------
James H.M. Sprayregen
Matthew N. Kleiman
James W. Kapp III
Chris L. Dickerson
KIRKLAND & ELLIS
200 E. Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
Laura Davis Jones
Maureen D. Luke
Michael R. Nestor
YOUNG CONWAY STARGATT &
TAYLOR, LLP
11th Floor, Rodney Square North
PO Box 391
Wilmington, Delaware 19899-0391
(302) 571-6600
Co-Counsel to
GOSS GRAPHIC SYSTEMS, INC.,
GGS HOLDINGS, INC. AND
GOSS REALTY, LLC
Debtors and Debtors in Possession
Dated: September 7, 1999
- -----------------------------
(1) The Debtors are the following entities: Goss Graphic Systems, Inc., GGS
Holdings, Inc., and Goss Realty, L.L.C.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW....................................................................1
A. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW.........................1
B. DEFINED TERMS..........................................................................1
ARTICLE II.
ADMINISTRATIVE AND PRIORITY TAX CLAIMS...................................................................8
A. ADMINISTRATIVE CLAIMS..................................................................8
B. PRIORITY TAX CLAIMS....................................................................8
ARTICLE III.
CLASSIFICATION AND TREATMENT
OF CLASSIFIED CLAIMS AND EQUITY INTERESTS................................................................9
A. SUMMARY................................................................................9
B. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST HOLDINGS...............................10
C. Classification and Treatment of Claims against Systems ...............................12
D. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST REALTY.................................14
E. SPECIAL PROVISION GOVERNING UNIMPAIRED CLAIMS.........................................17
ARTICLE IV.
ACCEPTANCE OR REJECTION OF THE PLAN.....................................................................17
A. VOTING CLASSES........................................................................17
B. ACCEPTANCE BY IMPAIRED CLASSES........................................................17
C. PRESUMED ACCEPTANCE OF PLAN...........................................................17
D. PRESUMED REJECTION OF PLAN............................................................17
E. NON-CONSENSUAL CONFIRMATION...........................................................17
ARTICLE V.
MEANS FOR IMPLEMENTATION OF THE PLAN....................................................................17
A. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED DEBTORS........17
B. CANCELLATION OF NOTES, INSTRUMENTS, MEMBER INTERESTS,
COMMON STOCK AND STOCK OPTIONS........................................................18
C. ISSUANCE OF NEW SECURITIES; EXECUTION OF RELATED DOCUMENTS............................18
D. NEW HOLDINGS COMMON STOCK ............................................................18
E. NEW SYSTEMS COMMON STOCK .............................................................18
F. NEW REALTY MEMBER INTERESTS...........................................................19
G. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS, AND CORPORATE ACTION....................19
H. SOURCES OF CASH FOR PLAN DISTRIBUTION.................................................19
ARTICLE VI.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES....................................................................................20
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................20
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES..................20
C. CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES ASSUMED.................20
D. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES..................................20
E. COMPENSATION AND BENEFIT PROGRAMS.....................................................20
ARTICLE VII.
PROVISIONS GOVERNING DISTRIBUTIONS......................................................................21
<PAGE>
PAGE
----
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE.............................21
B. DISTRIBUTIONS BY THE REORGANIZED DEBTORS; DISTRIBUTIONS WITH RESPECT TO DEBT
SECURITIES............................................................................21
C. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS...............21
D. DISTRIBUTION RECORD DATE..............................................................22
E. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED...................................22
F. MINIMUM DISTRIBUTION..................................................................22
G. SETOFFS...............................................................................22
H. SURRENDER OF CANCELED INSTRUMENTS OR SECURITIES.......................................22
I. LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES..................................23
ARTICLE VIII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS................................................................23
A. PROSECUTION OF OBJECTIONS TO CLAIMS...................................................23
B. ESTIMATION OF CLAIMS..................................................................23
C. PAYMENTS AND DISTRIBUTIONS ON DISPUTED CLAIMS.........................................24
ARTICLE IX.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN............................................................................24
A. CONDITION PRECEDENT TO CONFIRMATION...................................................24
B. CONDITIONS PRECEDENT TO CONSUMMATION..................................................24
C. WAIVER OF CONDITIONS..................................................................25
D. EFFECT OF NON-OCCURRENCE OF CONDITIONS TO CONSUMMATION................................25
ARTICLE X.
RELEASE, INJUNCTIVE AND RELATED PROVISIONS..............................................................25
A. SUBORDINATION.........................................................................25
B. LIMITED RELEASES BY THE DEBTORS.......................................................25
C. LIMITED RELEASES BY HOLDER OF CLAIMS..................................................25
D. PRESERVATION OF RIGHTS OF ACTION......................................................26
E. EXCULPATION...........................................................................26
F. INJUNCTION............................................................................26
ARTICLE XI.
RETENTION OF JURISDICTION...............................................................................26
ARTICLE XII.
MISCELLANEOUS PROVISIONS................................................................................27
A. DISSOLUTION OF COMMITTEE(S)...........................................................27
B. PAYMENT OF STATUTORY FEES.............................................................27
C. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEE............................27
D. DISCHARGE OF DEBTORS..................................................................28
E. MODIFICATION OF PLAN..................................................................28
F. REVOCATION OF PLAN....................................................................28
G. SUCCESSORS AND ASSIGNS................................................................28
H. RESERVATION OF RIGHTS.................................................................28
I. SECTION 1146 EXEMPTION................................................................28
J. FURTHER ASSURANCES....................................................................28
K. SERVICE OF DOCUMENTS..................................................................29
L. FILING OF ADDITIONAL DOCUMENTS........................................................30
</TABLE>
- ii -
<PAGE>
- ------------------------------------------------------------------------------
PLAN OF REORGANIZATION
OF GOSS GRAPHIC SYSTEMS, INC.,
GGS HOLDINGS, INC. AND GOSS REALTY, LLC
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
- -------------------------------------------------------------------------------
Pursuant to chapter 11, title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq., Goss Graphic Systems, Inc., GGS Holdings, Inc. and Goss
Realty, LLC, debtors and debtors-in-possession in the above-captioned and
numbered cases, hereby respectfully propose the following Plan of Reorganization
under chapter 11 of the Bankruptcy Code:
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW
1. For purposes of the Plan: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, shall
include both the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine and the neuter
gender; (b) any reference in the Plan to a contract, instrument, release,
indenture or other agreement or document being in a particular form or on
particular terms and conditions means that such document shall be substantially
in such form or substantially on such terms and conditions; (c) any reference in
the Plan to an existing document or exhibit Filed, or to be Filed, shall mean
such document or exhibit, as it may have been or may be amended, modified or
supplemented; (d) unless otherwise specified, all references in the Plan to
Sections, Articles and Exhibits are references to Sections, Articles and
Exhibits of or to the Plan; (e) the words "herein" and "hereto" refer to the
Plan in its entirety rather than to a particular portion of the Plan; (f)
captions and headings to Articles and Sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
interpretation of the Plan; (g) the rules of construction set forth in
section 102 of the Bankruptcy Code shall apply; and (h) any term used in
capitalized form in the Plan that is not defined herein but that is used in the
Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to such
term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be.
2. In computing any period of time prescribed or allowed by the Plan,
the provisions of Bankruptcy Rule 9006(a) shall apply.
3. Except to the extent that the Bankruptcy Code or Bankruptcy Rules
are applicable, and subject to the provisions of any contract, instrument,
release, indenture or other agreement or document entered into in connection
with the Plan, the rights and obligations arising under the Plan shall be
governed by, and construed and enforced in accordance with, the laws of the
State in which the Bankruptcy Court resides, without giving effect to the
principles of conflict of laws thereof.
B. DEFINED TERMS
Unless the context otherwise requires, the following terms shall have the
following meanings when used in capitalized form in the Plan:
1. "Administrative Claim" means a Claim for costs and expenses of
administration under section 503(b), 507(b) or 1114(e)(2) of the Bankruptcy
Code, including: (a) the actual and necessary costs and expenses incurred after
the Petition Date of preserving the Estates and operating the businesses of the
Debtors (such as wages, salaries or commissions for services and payments for
goods and other services and leased premises);
<PAGE>
(b) compensation for legal, financial advisory, accounting and other services
and reimbursement of expenses awarded or allowed under section 330(a) or 331
of the Bankruptcy Code; and (c) all fees and charges assessed against the
Estates under chapter 123 of title 28 United States Code, 28 U.S.C. Sections
1911-1930.
2. "Allowed" means, with respect to any Claim, except as otherwise
provided herein: (a) a Claim that has been scheduled by the Debtors in their
schedules of liabilities as other than disputed, contingent or unliquidated and
as to which the Debtors or other party in interest have not Filed an objection
by the Effective Date; (b) a Claim that either is not a Disputed Claim or has
been allowed by a Final Order; (c) a Claim that is allowed: (i) in any
stipulation with the Debtors of amount and nature of Claim executed prior to the
Confirmation Date and approved by the Bankruptcy Court; (ii) in any stipulation
with the Debtors of amount and nature of Claim executed on or after the
Confirmation Date and, to the extent necessary, approved by the Bankruptcy
Court; or (iii) in any contract, instrument, indenture or other agreement
entered into or assumed in connection with the Plan; (d) a Claim relating to a
rejected executory contract or unexpired lease that either (i) is not a Disputed
Claim or (ii) has been allowed by a Final Order, in either case only if a proof
of Claim has been Filed by the Bar Date or has otherwise been deemed timely
Filed under applicable law; or (e) a Claim that is allowed pursuant to the terms
of this Plan.
3. "Allowed ... Claim" means an Allowed Claim in the particular Class
described.
4. "Amended Certificates of Incorporation" means the Certificates of
Incorporation of New Holdings and Systems as Reorganized Debtors, as restated as
described in Article V.G.1 of the Plan, the forms of which shall be Filed on or
before the Confirmation Date.
5. "Amended Certificate of Formation" means the Certificate of
Formation of Realty as a Reorganized Debtor, as restated as described in
Article V.G.1 of the Plan, the form of which shall be Filed on or before the
Conformation Date.
6. "Ballot Date" means the date stated in the Voting Instructions by
which all Ballots must be received.
7. "Ballots" mean the ballots accompanying the Disclosure Statement
upon which Holders of Impaired Claims shall indicate their acceptance or
rejection of the Plan in accordance with the Plan and the Voting Instructions.
8. "Bankruptcy Code" means title I of the Bankruptcy Reform Act of
1978, as amended from time to time, as set forth in sections 101 et seq. of
title 11 of the United States Code, and applicable portions of titles 18 and 28
of the United States Code.
9. "Bankruptcy Court" means the United States District Court having
jurisdiction over the Chapter 11 Cases and, to the extent of any reference made
pursuant to section 157 of title 28 of the United States Code and/or the General
Order of such District Court pursuant to section 151 of title 28 of the United
States Code, the bankruptcy unit of such District Court.
10. "Bankruptcy Rules"means the Federal Rules of Bankruptcy Procedure,
as amended from time to time, as applicable to the Chapter 11 Cases,
promulgated under 28 U.S.C. Section 2075 and the General, Local and Chambers
Rules of the Bankruptcy Court.
11. "Bar Date" means the Bar Date for filing of proofs of claim with
respect to executory contracts and unexpired leases which are rejected pursuant
to this Plan or otherwise pursuant to section 365 of the Bankruptcy Code.
12. "Beneficial Holder" means the Person or Entity holding the
beneficial interest in a Claim or Equity Interest.
13. "Business Day" means any day, other than a Saturday, Sunday or
legal holiday (as defined in Bankruptcy Rule 9006(a)).
-2-
<PAGE>
14. "By-Laws" mean the By-Laws of the Reorganized Debtors, the forms
of which shall be Filed on or before the Confirmation Date.
15. "Cash" means cash and cash equivalents.
16. "Causes of Action" mean all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialities,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages or judgments.
17. "Chapter 11 Cases" means the cases under chapter 11 of the
Bankruptcy Code, commenced by the Debtors in the Bankruptcy Court.
18. "Claim" means a claim (as defined in section 101(5) of the
Bankruptcy Code) against the Debtors, including, but not limited to: (a) any
right to payment from the Debtors whether or not such right is reduced to
judgment, liquidated, unliquidated, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured; or (b) any right to an
equitable remedy for breach of performance if such performance gives rise to a
right of payment from the Debtors, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
19. "Claim Holder" or "Claimant" means the Holder of a Claim.
20. "Class" means a category of Holders of Claims or Equity Interests
as set forth in Article III of the Plan.
21. "Committee" or "Committees" means a statutory official committee
(or committees, if more than one) appointed in the Chapter 11 Cases pursuant to
section 1102 of the Bankruptcy Code, if any.
22. "Common Stock" means the authorized common stock of Holdings, New
Holdings and Systems.
23. "Confirmation" means the entry of the Confirmation Order, subject
to all conditions specified in Article IX.A of the Plan having been (i)
satisfied or (ii) waived pursuant to Article IX.C.
24. "Confirmation Date" means the date upon which the Confirmation
Order is entered by the Bankruptcy Court in its docket, within the meaning of
Bankruptcy Rules 5003 and 9021.
25. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
26. "Consummation" means the occurrence of the Effective Date.
27. "Creditor" means any Holder of a Claim.
28. "Creditors' Committee" means that certain official committee of
general unsecured creditors appointed August 20, 1999, consisting of Alliance
Capital Management L.P., C.S. First Boston, HSBC Bank USA, Merrill Lynch Phoenix
Fund, Inc., Megtec Systems, Baldwin Technology Corp. and Trace-a-matic Corp.
29. "D&O Releasees" means all officers, directors, employees,
attorneys, financial advisors, accountants, investment bankers, agents and
representatives of the Debtors and their subsidiaries who served in such
capacity on or after August 1, 1998 in each case in their capacity as such.
30. "Debtors" means Goss Graphic Systems, Inc., GGS Holdings, Inc. and
Goss Realty L.L.C., as debtors in the Chapter 11 Cases.
-3-
<PAGE>
31. "Debtors in Possession" means Goss Graphic Systems, Inc., GGS
Holdings, Inc. and Goss Realty LLC, as debtors in possession in the Chapter
11 Cases.
32. "Delaware General Corporation Law" means title 8 of the
Delaware Code, as now in effect or hereafter amended.
33. "Delaware LLC Law" means title 6 of the Delaware Code, as now
in effect or hereafter amended.
34. "DIP Facility" means, collectively, that certain
Debtor-in-Possession Multicurrency Credit Agreement with the DIP Lenders and
the Amendment to Multicurrency Credit Agreement with the Prepetition Lenders
and Bankers Trust Company, as agent.
35. "DIP Lenders" means those certain financial institutions party
to the DIP Facility.
36. "Disclosure Statement" means the Disclosure Statement for the
Plan of Reorganization for Goss Graphic Systems, Inc., GGS Holdings, Inc. and
Goss Realty L.L.C. under chapter 11 of the Bankruptcy Code, as amended,
supplemented, or modified from time to time, describing the Plan, that is
prepared and distributed in accordance with sections 1125, 1126(b) and/or
1145 of the Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable
law.
37. "Disputed" means, with respect to any Claim or Equity Interest,
any Claim or Equity Interest: (a) listed on the Schedules as unliquidated,
disputed or contingent; or (b) as to which the Debtors or any other party in
interest have interposed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules or is otherwise
disputed by the Debtors in accordance with applicable law, which objection,
request for estimation or dispute has not been withdrawn or determined by a
Final Order.
38. "Distribution Record Date" means the close of business on the
Business Day immediately preceding the Effective Date.
39. "Effective Date" means the date selected by the Debtors which
is a Business Day after the Confirmation Date on which: (a) no stay of the
Confirmation Order is in effect, and (b) all conditions specified in both
Article IX.A and IX.B of the Plan have been (i) satisfied or (ii) waived
pursuant to Article IX.C.
40. "Entity" means an entity as defined in section 101(15) of the
Bankruptcy Code.
41. "Equity Interest" means any equity interest of the Debtors,
including, but not limited to, all issued, unissued, authorized or
outstanding shares or stock (including the Common Stock), together with any
warrants, options or contract rights to purchase or acquire such interests at
any time.
42. "Estates" means the estates of the Debtors created by section
541 of the Bankruptcy Code upon the commencement of the Chapter 11 Cases.
43. "File" or "Filed" means file or filed with the Bankruptcy Court
in the Chapter 11 Cases.
44. "Final Decree" means the decree contemplated under Bankruptcy
Rule 3022.
45. "Final Order" means an order or judgment of the Bankruptcy
Court, or other court of competent jurisdiction with respect to the subject
matter, which has not been reversed, stayed, modified or amended, and as to
which the time to appeal or seek certiorari has expired and no appeal or
petition for certiorari has been timely taken, or as to which any appeal that
has been taken or any petition for certiorari that has been or may be filed
has been resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought.
46. "General Unsecured Claim" means any Unsecured Claim that is not
a Pre-petition Bank Lender Claim or Old Note Claim.
-4-
<PAGE>
47. "Goss France" means Goss Systemes Graphiques Nantes SA.
48. "Goss Japan" means Goss Graphic Systems Japan Corporation.
49. "Goss UK" means Goss Graphic Systems, Limited.
50. "Holder" means a Person or Entity holding an Equity Interest or
Claim, and with respect to a vote on the Plan, means the Beneficial Holder as
of the Voting Record Date or any authorized signatory who has completed and
executed a Ballot or on whose behalf a Master Ballot has been completed and
executed in accordance with the Voting Instructions.
51. "Holdings" or "Goss Holdings" means GGS Holdings, Inc., debtor
and debtor in possession in the above-captioned and numbered case.
52. "HSBC" means HSBC Bank USA (f/k/a Marine Midland Bank).
53. "Impaired Claim" means a Claim classified in an Impaired Class.
54. "Impaired Class" means each of Classes H2, H4, H5, H6, H7, S2,
S4, S5, S6, R4, R5, and R6 as set forth in Article III of the Plan.
55. "LaSalle Deficiency Claim" means the Unsecured Claim arising
from or related to the LaSalle Mortgage, as such Claim is determined in
accordance with section 506(a) of the Bankruptcy Code.
56. "LaSalle Mortgage" means that certain $30,000,000 mortgage by
Realty for the benefit of LaSalle National Bank dated July 25, 1997, together
with all related notes, certificates, security agreements, mortgages,
pledges, indemnities, collateral assignments, undertakings, guaranties, and
other instruments and documents, as each may have been amended or modified
from time to time.
57. "LaSalle Secured Claim" means the Secured Claim arising from
or related to the LaSalle Mortgage.
58. "Lock-Up Agreement" means that certain Forbearance, Lock-Up,
and Voting Agreement dated July 27, 1999, by and among the Debtors,
Stonington, certain of the lenders under the Prepetition Bank Credit
Facilities and certain Holders of Old Notes that are signatories thereto.
59. "Management Equity" means that certain New Holdings Common
Stock and related Equity Interests provided to certain management of the
Debtors and/or Reorganized Debtors pursuant to the terms of the Lock-Up
Agreement.
60. "Master Ballots" mean the master ballots accompanying the
Disclosure Statement upon which the Nominees of the Beneficial Holders of the
Old Notes shall indicate acceptances or rejections of the Plan by the
Beneficial Holders in accordance with the Voting Instructions.
61. "Member Interest" means the authorized member interest of
Realty.
62. "New Bank Credit Facilities" means, collectively, the Tranche A
Revolving Credit Facility, the Tranche B Revolving Credit Facility and the
Term Loan Facility.
63. "New Holdings" means the new Delaware corporation created on
the Effective Date through a merger with Holdings whose articles of
incorporation and by-laws will be substantially similar to those of Holdings.
64. "New Holdings Common Stock" means the 15,000,000 shares of
Common Stock of New Holdings authorized pursuant to the Certificate of
Incorporation of New Holdings.
-5-
<PAGE>
65. "New Notes" means those certain 12.25% Subordinated Notes due
2005 issued by New Holdings, issued to the Holders of Allowed Claims in Class
S5, with the terms and conditions set forth in the Lock-Up Agreement, the
form of which shall be Filed on or before the Confirmation Date.
66. "New Notes Indenture" means the indenture, dated as of the
Effective Date, with respect to the New Notes to be entered into by New
Holdings and the Old Note Indenture Trustee who shall serve as indenture
trustee under the New Note Indenture.
67. "New Realty Member Interest" means the member interest of the
Reorganized Realty authorized pursuant to the Amended Certificate of
Formation.
68. "New Systems Common Stock" means the 100 shares of Common Stock
of the Reorganized Systems authorized pursuant to the Amended Certificate of
Incorporation.
69. "Nominee" means any Beneficial Holder whose securities were
registered or held of record in the name of his broker, dealer, commercial
bank, trust company, savings and loan or other nominee.
70. "Noteholder Releasees" means the members of the Prepetition
Noteholders Committee and other holders of Old Notes that are signatories to
the Lock-Up Agreement and their attorneys, financial advisors, accountants,
investment banker, agents and representatives.
71. "Old Note Claims" means all Claims arising from or related to
the Old Notes or the Old Note Indenture.
72. "Old Notes" mean the 12% notes due 2006, issued by Systems
under the Old Note Indenture.
73. "Old Note Indenture" means the Indenture, dated as of October
15, 1996, between Systems and The Bank of New York, as trustee and HSBC Bank
USA as successor trustee, relating to the Old Notes.
74. "Other Priority Claims" mean any Claim accorded priority in
right of payment under section 507(a) of the Bankruptcy Code, other than a
Priority Tax Claim or an Administrative Claim.
75. "Other Secured Claims" mean, collectively, all Secured Claims
against the Debtors held by any Person or Entity, other than Claims
classified in Class H2, S2 and R2.
76. "Person" means a person as defined in section 101(41) of the
Bankruptcy Code.
77. "Petition Date" means the date on which the Debtors filed their
petition for relief commencing the Chapter 11 Case.
78. "Plan" means this Chapter 11 Plan of Reorganization, either in
its present form or as it may be altered, amended, modified or supplemented
from time to time in accordance with the Plan, the Bankruptcy Code and the
Bankruptcy Rules.
79. "Prepetition Bank Credit Facility" means that certain $200
million Amended and Restated Credit Agreement dated January 29, 1998, by and
among Systems, Goss Japan, Goss France and Goss UK, the Lenders designated
therein, Bankers Trust Company, as Administrative Agent and Credit Suisse
First Boston, as Syndication Agent, together with all related notes,
certificates, security agreements, mortgages, pledges, indemnities,
collateral assignments, undertakings, guaranties, and other instruments and
documents, as each may have been amended or modified from time to time.
80. "Prepetition Bank Secured Claims" means all Claims arising from
or relating to the Prepetition Bank Credit Facility, which Claims shall be
deemed Allowed without the need to file any proof of Claim.
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<PAGE>
81. "Prepetition Bank Unsecured Claims" means all Claims of Holders
of Unsecured Claims against Realty arising from Realty's guarantee of the
Prepetition Bank Credit Facility.
82. "Prepetition Lenders" means those certain financial
institutions party to the Prepetition Bank Credit Facility.
83. "Prepetition Lender Releasees" means the Prepetition Lenders,
the Administrative Agent under the Prepetition Bank Credit Facility, and
their attorneys, financial advisors, accountants, investment banker, agents
and representatives.
84. "Prepetition Noteholder Committee" means that committee of
certain holders of the Old Notes and the Old Notes Indenture Trustee
established prior to the Petition Date.
85. "Priority Tax Claim" means a Claim of a governmental unit of
the kind specified in section 507(a)(8) of the Bankruptcy Code.
86. "Pro Rata" means proportionately so that with respect to an
Allowed Claim, the ratio of (a) (i) the amount of property distributed on
account of a particular Allowed Claim to (ii) the amount of the Allowed
Claim, is the same as the ratio of (b) (i) the amount of property distributed
on account of all Allowed Claims of the Class in which the particular Allowed
Claim is included to (ii) the amount of all Allowed Claims in that Class.
87. "Professionals" means a Person or Entity (a) employed pursuant
to a Final Order in accordance with sections 327 and 1103 of the Bankruptcy
Code and to be compensated for services rendered prior to the Effective Date,
pursuant to sections 327, 328, 329, 330 and 331 of the Bankruptcy Code, or
(b) for which compensation and reimbursement has been allowed by the
Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code.
88. "Realty" or "Goss Realty" means Goss Realty L.L.C., debtor and
debtor in possession in the above-captioned and numbered case.
89. "Reorganized Debtors" means the Debtors and the Debtors in
Possession, or any successor thereto, by merger, consolidation, or otherwise,
on and after the Effective Date.
90. "Reorganized Holdings" means Holdings, or any successor
thereto, by merger, consolidation, or otherwise, on and after the Effective
Date.
91. "Reorganized Realty" means Realty, or any successor thereto, by
merger, consolidation, or otherwise, on and after the Effective Date.
92. "Reorganized Systems" means Systems, or any successor thereto,
by merger, consolidation, or otherwise, on and after the Effective Date.
93. "Rockwell" means Rockwell International Corporation, a Delaware
corporation.
94. "Rockwell Preferred Stock" means the 6.5% Redeemable
Pay-in-Kind Preferred Stock of Holdings issued to Rockwell.
95. "Schedules" mean the schedules of assets and liabilities,
schedules of executory contracts, and the statement of financial affairs as
the Bankruptcy Court requires the Debtors to file pursuant to section 521 of
the Bankruptcy Code, the Official Bankruptcy Forms and the Bankruptcy Rules,
as they may be amended and supplemented from time to time.
96. "Secured Claim" means (a) a Claim that is secured by a lien on
property in which the Estates have an interest, which lien is valid,
perfected and enforceable under applicable law or by reason of a Final Order,
or that is subject to setoff under section 553 of the Bankruptcy Code, to the
extent of the value of the Claim Holder's
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<PAGE>
interest in the Estates' interest in such property or to the extent of the
amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy Code, or (b) a Claim Allowed under this Plan as a
Secured Claim.
97. "Securities Act" means the Securities Act of 1933, 15 U.S.C.
sections 77a-77aa, as now in effect or hereafter amended.
98. "Stonington" means Stonington Partners, Inc., a Delaware
corporation.
99. "Stonington Capital Contribution" means that certain $50
million contribution of capital to the Debtors made pursuant to the terms of
the Lock-Up Agreement, and in exchange for which on the Effective Date
Stonington shall receive 6,750,000 shares of New Holdings Common Stock,
subject to dilution by the Management Equity as provided under the Lock-Up
Agreement.
100. "Stongington Preferred Stock" means the 15% Cumulative Senior
Convertible Preferred Stock of Holdings issued to Stonington.
101. "Stonington Releasees" means Stonington and their current and
former parents, subsidiaries and affiliates and their respective officers,
directors, employees, attorneys, financial advisors, accountants, investment
bankers, agents and representatives, in each case in their capacity as such.
102. "Systems" or "Goss Graphic Systems" means Goss Graphic Systems,
Inc., debtor and debtor in possession in the above-captioned and numbered
case.
103. "Term Loan Facility" means that certain $150 million Term Loan
Facility, by and among Systems, certain of its affiliates, and the
Prepetition Lenders, the form of which shall be Filed on or before the
Confirmation Date and which is referenced in the Lock-Up Agreement.
104. "Tranche A Revolving Credit Facility" means that certain $50
million Revolving Credit Facility, by and among Systems, certain of its
affiliates and the lender parties thereto (excluding Stonington), the form of
which shall be Filed on or before the Confirmation Date and which is
referenced in the Lock-Up Agreement.
105. "Tranche B Revolving Credit Facility" means that certain $50
million Revolving Credit Facility, by and among Systems, certain of its
affiliates and the Prepetition Lenders, the form of which shall be Filed on
or before the Confirmation Date and which is referenced in the Lock-Up
Agreement.
106. "Unimpaired Claim" means an unimpaired Claim within the meaning
of section 1124 of the Bankruptcy Code.
107. "Unimpaired Class" means an unimpaired Class within the meaning
of section 1124 of the Bankruptcy Code.
108. "Unsecured Claim" means any Claim against the Debtors that is
not a Secured Claim, Administrative Claim, Priority Tax Claim or Other
Priority Claim.
109. "Voting Instructions" mean the instructions for voting on the
Plan contained in the section of the Disclosure Statement entitled "PROCESS
OF VOTING AND CONFIRMATION; VOTING ON THE PLAN" and in the Ballots and the
Master Ballots.
110. "Voting Record Date" means July 27, 1999.
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<PAGE>
ARTICLE II.
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
A. ADMINISTRATIVE CLAIMS
Subject to the provisions of section 330(a) and 331 of the Bankruptcy
Code, each Holder of an Allowed Administrative Claim will be paid the full
unpaid amount of such Allowed Administrative Claim in Cash on the Effective
Date, or upon such other terms as may be agreed upon by such Holder and the
Reorganized Debtors or otherwise upon order of the Bankruptcy Court;
provided, however, that Allowed Administrative Claims representing
obligations incurred in the ordinary course of business or otherwise assumed
by the Debtors pursuant to the Plan will be assumed on the Effective Date and
paid or performed by the Reorganized Debtors when due in accordance with the
terms and conditions of the particular agreements governing such obligations.
B. PRIORITY TAX CLAIMS
On the Effective Date, each Holder of a Priority Tax Claim due and
payable on or prior to the Effective Date shall be paid Cash in an amount
equal to the amount of such Allowed Claim, or shall be paid on account of its
Allowed Claim on such other terms as have been or may be agreed upon by such
Holder and the Debtors. The amount of any Priority Tax Claim that is not an
Allowed Claim or that is not otherwise due and payable on or prior to the
Effective Date, and the rights of the Holder of such Claim, if any, to
payment in respect thereof shall (i) be determined in the manner in which the
amount of such Claim and the rights of the Holder of such Claim would have
been resolved or adjudicated if the Chapter 11 Cases had not been commenced,
(ii) survive the Effective Date and Consummation of the Plan as if the
Chapter 11 Cases had not been commenced, and (iii) not be discharged pursuant
to section 1141 of the Bankruptcy Code. In accordance with section 1124 of
the Bankruptcy Code, the Plan shall leave unaltered the legal, equitable, and
contractual rights of each Holder of a Priority Tax Claim.
ARTICLE III.
CLASSIFICATION AND TREATMENT
OF CLASSIFIED CLAIMS AND EQUITY INTERESTS
A. SUMMARY
The categories of Claims and Equity Interests listed below classify
Claims and Equity Interests for all purposes, including voting, confirmation
and distribution pursuant to the Plan and pursuant to sections 1122 and
1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest shall be
deemed classified in a particular Class only to the extent that the Claim or
Equity Interest qualifies within the description of that Class and shall be
deemed classified in a different Class to the extent that any remainder of
such Claim or Equity Interest qualifies within the description of such
different Class. A Claim or Equity Interest is in a particular Class only to
the extent that such Claim or Equity Interest is Allowed in that Class and
has not been paid or otherwise settled prior to the Effective Date.
THE ESTATES OF THE DEBTORS HAVE NOT BEEN CONSOLIDATED, SUBSTANTIVELY
OR OTHERWISE. EXCEPT AS PROVIDED IN THE LOCK-UP AGREEMENT, THE CLAIMS HELD
AGAINST ONE OF THE DEBTORS WILL BE SATISFIED SOLELY FROM THE CASH AND ASSETS
OF SUCH DEBTOR. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NOTHING IN THIS
PLAN OR THE DISCLOSURE STATEMENT SHALL CONSTITUTE OR BE DEEMED TO CONSTITUTE
AN ADMISSION THAT ONE OF THE DEBTORS IS SUBJECT TO OR LIABLE FOR ANY CLAIM
AGAINST THE OTHER DEBTOR. THE CLAIMS OF CREDITORS THAT HOLD CLAIMS AGAINST
ALL THREE DEBTORS WILL BE TREATED AS SEPARATE CLAIMS WITH RESPECT TO EACH
DEBTOR'S ESTATE FOR ALL PURPOSES (INCLUDING, BUT NOT LIMITED TO,
DISTRIBUTIONS AND VOTING), AND SUCH CLAIMS WILL BE ADMINISTERED AS PROVIDED
IN THE PLAN.
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<PAGE>
The classification of Claims and Equity Interests against Holdings
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
Class Status Voting Rights
----- ------ -------------
<S> <C> <C>
Class H1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class H2 -- Prepetition Bank Secured Claims Impaired -- entitled to vote
Class H3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class H4 -- General Unsecured Claims Impaired -- not entitled to vote
Class H5 -- Stonington Preferred Equity Interests Impaired -- not entitled to vote
Class H6 -- Rockwell Preferred Equity Interests Impaired -- not entitled to vote
Class H7 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
The classification of Claims and Equity Interests against Systems
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
Class Status Voting Rights
----- ------ -------------
<S> <C> <C>
Class S1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class S2 -- Prepetition Bank Secured Claims Impaired -- entitled to vote
Class S3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class S4 -- General Unsecured Claims Impaired -- entitled to vote
Class S5 -- Old Note Claims Impaired -- entitled to vote
Class S6 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
The classification of Claims and Equity Interests against Realty
pursuant to this Plan is as follows:
<TABLE>
<CAPTION>
Class Status Voting Rights
----- ------ -------------
<S> <C> <C>
Class R1 -- Other Priority Claims Unimpaired -- not entitled to vote
Class R2 -- LaSalle Secured Claims Unimpaired -- not entitled to vote
Class R3 -- Other Secured Claims Unimpaired -- not entitled to vote
Class R4 -- Bank Unsecured Claims Impaired -- entitled to vote
Class R5 -- General Unsecured Claims Impaired -- entitled to vote
Class R6 -- LaSalle Deficiency Claims Impaired -- entitled to vote
Class R7 -- Equity Interests Impaired -- not entitled to vote
</TABLE>
B. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST HOLDINGS
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<PAGE>
1. CLASS H1 -- OTHER PRIORITY CLAIMS
(a) CLASSIFICATION: Class H1 consists of all Other Priority
Claims against Holdings.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class H1 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Holdings agree to a different treatment, each
Holder of an Allowed Class H1 Claim shall receive one of the following
alternative treatments, at the election of the Debtor:
(i) to the extent then due and owing on the Effective
Date, such Claim will be paid in full in Cash by Reorganized
Holdings;
(ii) to the extent not due and owing on the Effective
Date, such Claim (A) will be paid in full in Cash by Reorganized
Holdings, or (B) will be paid in full in Cash by Reorganized
Holdings when and as such Claim becomes due and owing in the
ordinary course of business; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class H1 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class H1 is not impaired and the Holders of Class
H1 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class H1 are not entitled to vote to accept or reject the Plan.
2. CLASS H2 -- PREPETITION BANK SECURED CLAIMS
(a) CLASSIFICATION: Class H2 consists of the Bank Secured
Claims against Holdings.
(b) TREATMENT: In full and complete satisfaction of all Claims
in Class H2, the Holders of Class H2 Claims will receive the treatment
set forth for Holders of Class S2 Claims described below.
(c) VOTING: Class H2 is impaired and the Holders of Class H2
Claims are entitled to vote to accept or reject the Plan.
3. CLASS H3 -- OTHER SECURED CLAIMS
(a) CLASSIFICATION: Class H3 consists of the Other Secured
Claims against Holdings.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class H3 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Holdings agree to a different treatment, each
Holder of an Allowed Class H3 Claim shall receive one of the following
alternative treatments, at the election of Holdings:
(i) the legal, equitable and contractual rights to which
such Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Holdings shall surrender all collateral securing
such Claim to the Holder thereof, without representation or
warranty by or recourse against the Debtor or Reorganized
Holdings; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
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<PAGE>
Any default with respect to any Class H3 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class H3 is not impaired and the Holders of Class
H3 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class H3 are not entitled to vote to accept or reject the Plan.
4. CLASS H4 -- GENERAL UNSECURED CLAIMS
(a) CLASSIFICATION: Class H4 consists of the Claims of Holders
of General Unsecured Claims against Holdings.
(b) TREATMENT: On the Effective Date, the Holders of General
Unsecured Claims shall neither receive any distributions nor retain any
property under the Plan.
(c) VOTING: Class H4 is impaired, but because no distributions
will be made to Holders of Class H4 General Unsecured Claims nor will
such Holders retain any property, such Holders are deemed to reject the
Plan pursuant to section 1126(g) of the Bankruptcy Code. Class H4 is not
entitled to vote to accept or reject the Plan.
5. CLASS H5 -- STONINGTON PREFERRED EQUITY INTERESTS
(a) CLASSIFICATION: Class H5 consists of all Equity Interests
held by Stonington relating to the 10% Cumulative Senior Convertible
Preferred Stock of Holdings.
(b) TREATMENT: On the Effective Date, the Holders of Stonington
Preferred Equity Interests shall neither receive any distributions nor
retain any property under the Plan. All Stonington Preferred Stock
issued before the Petition Date will be canceled.
(c) VOTING: Class H5 is impaired, but because no distributions
will be made to Holders of Class H5 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan
pursuant to section 1126(g) of the Bankruptcy Code. Class H5 is not
entitled to vote to accept or reject the Plan.
6. CLASS H6 -- ROCKWELL PREFERRED EQUITY INTERESTS
(a) CLASSIFICATION: Class H6 consists of all Equity Interests
held by Rockwell against Holdings relating to the 6.5% Redeemable
Preferred Stock.
(b) TREATMENT: On the Effective Date, the Holders of Other
Equity Interests shall neither receive any distributions nor retain any
property under the Plan. All Rockwell Preferred Stock issued before the
Petition Date will be canceled.
(c) VOTING: Class H6 is impaired, but because no distributions
will be made to Holders of Class H6 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan
pursuant to section 1126(g) of the Bankruptcy Code. Class H6 is not
entitled to vote to accept or reject the Plan.
7. CLASS H7 -- EQUITY INTERESTS
(a) CLASSIFICATION: Class H7 consists of all other Equity
Interests against Holdings.
(b) TREATMENT: On the Effective Date, the Holders of other
Equity Interests shall neither receive any distributions nor retain any
property under the Plan. All Common Stock issued before the Petition
Date will be canceled.
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<PAGE>
(c) VOTING: Class H7 is impaired, but because no distributions
will be made to Holders of Class H7 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan
pursuant to section 1126(g) of the Bankruptcy Code. Class H7 is not
entitled to vote to accept or reject the Plan.
C. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST SYSTEMS
1. CLASS S1 -- OTHER PRIORITY CLAIMS
(a) CLASSIFICATION: Class S1 consists of all Other Priority
Claims against Systems.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class S1 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Systems agree to a different treatment, each
Holder of an Allowed Class S1 Claim shall receive one of the following
alternative treatments, at the election of Systems:
(i) to the extent then due and owing on the Effective
Date, such Claim will be paid in full in Cash by the Reorganized
Systems;
(ii) to the extent not due and owing on the Effective
Date, such Claim (A) will be paid in full in Cash by the
Reorganized Systems, or (B) will be paid in full in Cash by the
Reorganized Systems when and as such Claim becomes due and owing
in the ordinary course of business; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class S1 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class S1 is not impaired and the Holders of Class
S1 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class S1 are not entitled to vote to accept or reject the Plan.
2. CLASS S2 -- PREPETITION BANK SECURED CLAIMS
(a) CLASSIFICATION: Class S2 consists of the Prepetition Bank
Secured Claims against Systems.
(b) TREATMENT: On or prior to the Effective Date, each
Prepetition Bank Secured Claim will be satisfied by the Holder receiving
and providing its Pro Rata share of the Tranche B Revolving Credit
Facility and the Term Loan Facility, so that each Class S2 Claim is paid
in full. The form and substance of the definitive documentation
constituting the Tranche B Revolving Credit Facility and the Term Loan
Facility shall be satisfactory to sufficient Holders of Class S2 claims
so that such Class will be deemed to accept such documentation.
(c) VOTING: Class S2 is impaired and the Holders of Class S2
Claims are entitled to vote to accept or reject the Plan.
3. CLASS S3 -- OTHER SECURED CLAIMS
(a) CLASSIFICATION: Class S3 consists of the Other Secured
Claims against Systems.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class S3 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Systems agree to a different treatment,
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<PAGE>
each Holder of an Allowed Class S3 Claim shall receive one of the
following alternative treatments, at the election of Systems:
(i) the legal, equitable and contractual rights to which
such Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Systems shall surrender all collateral securing such
Claim to the Holder thereof, without representation or warranty by
or recourse against Systems or the Reorganized Systems; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class S3 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class S3 is not impaired and the Holders of Class
S3 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class S3 are not entitled to vote to accept or reject the Plan.
4. CLASS S4 -- GENERAL UNSECURED CLAIMS
(a) CLASSIFICATION: Class S4 consists of the Claims of Holders
of General Unsecured Claims against Systems.
(b) TREATMENT: Unless the Holder of such Claim and Systems
agree to a different treatment, each Holder of an Allowed Class S4 Claim
shall be paid the full amount of its Allowed Class S4 Claim, without
interest, payable in three equal installments on the first Business Day
after the dates that are three, six and nine months after the Effective
Date, or on such dates thereafter if the Claim becomes first payable in
the ordinary course of business at such time. Unless the Holder of such
Claim and Systems agree to a different treatment, and except as otherwise
specifically provided herein, each Holder of a non-Allowed Class S4 Claim
shall preserve all of its rights, claims and defenses against Systems;
provided, however, that if any such non-Allowed Class S4 Claim becomes a
liquidated, undisputed, fixed Claim (i) prior to the date that is three
months after the Effective Date, such Claim shall be paid as if such
Claim were allowed as of the Effective Date, or (ii) prior to the date
that is six months after the Effective Date, such Claim shall be paid
two-thirds of the Allowed amount on the date that is six months after the
Effective Date and one-third of the Allowed amount on the date that is
nine months after the Effective Date, or (iii) prior to the date that is
nine months after the Effective Date, such Claim shall be paid in full on
the date that is nine months after the Effective Date; provided, further,
that Systems shall preserve all of its rights, claims and defenses
against each Holder of a non-Allowed Class S4 Claim. Any default with
respect to any Class S4 Claim that existed immediately prior to the
filing of the Chapter 11 Cases shall be deemed cured upon the Effective
Date.
(c) VOTING: Class S4 is impaired and the Holders of Class S4
Claims are entitled to vote to accept or reject the Plan.
5. CLASS S5 -- OLD NOTE CLAIMS
(a) CLASSIFICATION: Class S5 consists of the Claims of Holders
of Old Notes against Systems.
(b) TREATMENT: On or as soon as practicable after the Effective
Date, each Holder of an Allowed Old Note Claim shall receive, in full and
final satisfaction of such Claim, a Pro Rata distribution of the New
Notes and a Pro Rata share of 3,250,000 shares of New Holdings Common
Stock, subject to dilution by the Management Equity as provided under the
Lock-Up Agreement.
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<PAGE>
(c) VOTING: Class S5 is impaired and the Holders of Allowed
Class S5 Claims are entitled to vote to accept or reject the Plan.
6. CLASS S6 -- EQUITY INTERESTS
(a) CLASSIFICATION: Class S6 consists of all Equity Interests
against Systems.
(b) TREATMENT: On the Effective Date, the Holders of Equity
Interests shall neither receive any distributions nor retain any property
under the Plan. All Common Stock issued before the Petition Date will be
canceled.
(c) VOTING: Class S6 is impaired, but because no distributions
will be made to Holders of Class S6 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan
pursuant to section 1126(g) of the Bankruptcy Code. Class S6 is not
entitled to vote to accept or reject the Plan.
D. CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST REALTY
1. CLASS R1 -- OTHER PRIORITY CLAIMS
(a) CLASSIFICATION: Class R1 consists of all Other Priority
Claims against Realty.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class R1 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Realty agree to a different treatment, each
Holder of an Allowed Class R1 Claim shall receive one of the following
alternative treatments, at the election of Realty:
(i) to the extent then due and owing on the Effective
Date, such Claim will be paid in full in Cash by the Reorganized
Debtor;
(ii) to the extent not due and owing on the Effective
Date, such Claim (A) will be paid in full in Cash by the
Reorganized Debtor, or (B) will be paid in full in Cash by the
Reorganized Debtors when and as such Claim becomes due and owing
in the ordinary course of business; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class R1 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class R1 is not impaired and the Holders of Class
R1 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class R1 are not entitled to vote to accept or reject the Plan.
2. CLASS R2 -- LASALLE SECURED CLAIMS
(a) CLASSIFICATION: Class R2 consists of the LaSalle Secured
Claim against Realty.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holder of the Class R2 Claim is unaltered by the Plan. Unless the
Holder of such Claim and Realty agree to a different treatment, the
Holder of an Allowed Class R2 Claim shall receive one of the following
alternative treatments, at the election of Realty:
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<PAGE>
(i) the legal, equitable and contractual rights to which
such Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Realty shall surrender all collateral securing such
Claim to the Holder thereof, without representation or warranty by
or recourse against Realty or the Reorganized Realty; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class R2 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class R2 is not impaired and the Holder of the
Class R2 Claim is conclusively deemed to have accepted the Plan pursuant
to section 1126(f) of the Bankruptcy Code. Therefore, the Holder of the
Claim in Class R2 is not entitled to vote to accept or reject the Plan.
3. CLASSES R3 -- OTHER SECURED CLAIMS
(a) CLASSIFICATION: Class R3 consists of the Other Secured
Claims against Realty.
(b) TREATMENT: The legal, equitable and contractual rights of
the Holders of Class R3 Claims are unaltered by the Plan. Unless the
Holder of such Claim and Realty agree to a different treatment, each
Holder of an Allowed Class R3 Claim shall receive one of the following
alternative treatments, at the election of Realty:
(i) the legal, equitable and contractual rights to which
such Claim entitles the Holder thereof shall be unaltered by the
Plan;
(ii) Realty shall surrender all collateral securing such
Claim to the Holder thereof, without representation or warranty by
or recourse against Realty or the Reorganized Realty; or
(iii) such Claim will be otherwise treated in any other
manner so that such Claims shall otherwise be rendered unimpaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Class R3 Claim that existed immediately
prior to the filing of the Chapter 11 Case shall be deemed cured upon
the Effective Date.
(c) VOTING: Class R3 is not impaired and the Holders of Class
R3 Claims are conclusively deemed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims
in Class R3 are not entitled to vote to accept or reject the Plan.
4. CLASS AND R4 -- PREPETITION BANK UNSECURED CLAIMS
(a) CLASSIFICATION: Class R4 consists of the Claims of Holders
of Unsecured Claims against Realty arising from Realty's guarantee of the
Prepetition Bank Credit Facility.
(b) TREATMENT: In full and complete satisfaction of all claims
in Class R4, the Holders of Class R4 Claims will receive the treatment
set forth for Holders of Class S2 Claims described above.
(c) VOTING: Class R4 is impaired and the Holders of Class R4
Claims are entitled to vote to accept or reject the Plan.
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5. CLASS R5 -- GENERAL UNSECURED CLAIMS
(a) CLASSIFICATION: Class R5 consists of the Claims of Holders
of General Unsecured Claims against Realty.
(b) TREATMENT: On the Effective Date, the Holders of General
Unsecured Claims shall share with Class R6, pro rata, pari passu, all
assets or property of the Estate after payment in full of Classes R1
through R3.
(c) VOTING: Class R5 is impaired and is entitled to vote to
accept or reject the Plan.
6. CLASS R6 -- LASALLE DEFICIENCY CLAIM
(a) CLASSIFICATION: Class R6 consists of the LaSalle Deficiency
Claim against Realty.
(b) TREATMENT: On the Effective Date, the Holders of LaSalle
Deficiency claims shall share with Classes R5, pro rata, pari passu, all
assets or property of the Estate after payment in full of Classes R1
through R3.
(c) VOTING: Class R6 is impaired and is entitled to vote to
accept or reject the Plan.
7. CLASS R7 -- EQUITY INTERESTS
(a) CLASSIFICATION: Class R7 consists of all Equity Interests
against Realty.
(b) TREATMENT: On the Effective Date, the Holders of Equity
Interests shall neither receive any distributions nor retain any property
under the Plan. All Member Interests issued before the Petition Date
will be canceled.
(c) VOTING: Class R7 is impaired, but because no distributions
will be made to Holders of Class R7 Equity Interests nor will such
Holders retain any property, such Holders are deemed to reject the Plan
pursuant to section 1126(g) of the Bankruptcy Code. Class R7 is not
entitled to vote to accept or reject the Plan.
E. SPECIAL PROVISION GOVERNING UNIMPAIRED CLAIMS
Except as otherwise provided in the Plan, including as provided in
Article X, nothing under the Plan shall affect the Debtors or the Reorganized
Debtors rights in respect of any Unimpaired Claims, including, but not limited
to, all rights in respect of legal and equitable defenses to or setoffs or
recoupments against such Unimpaired Claims.
ARTICLE IV.
ACCEPTANCE OR REJECTION OF THE PLAN
A. VOTING CLASSES
Each Holder of an Allowed Claim in Classes H2, S2, S4, S5, R4, R5, and R6
shall be entitled to vote to accept or reject the Plan.
B. ACCEPTANCE BY IMPAIRED CLASSES
An Impaired Class of Claims shall have accepted the Plan if (a) the
Holders (other than any Holder designated under section 1126(e) of the
Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually
voting in such Class have voted to accept the Plan and (b) the Holders (other
than any Holder designated
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under section 1126(e) of the Bankruptcy Code) of more than one-half in number
of the Allowed Claims actually voting in such Class have voted to accept the
Plan.
C. PRESUMED ACCEPTANCE OF PLAN
Classes H1, H3, S1, S3, R1, R2 and R3 are unimpaired under the Plan, and,
therefore, conclusively are presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code.
D. PRESUMED REJECTION OF PLAN
Classes H4, H5, H6, H7, S6, and R7 are impaired and shall receive no
distributions, and, therefore, are presumed to have rejected the Plan pursuant
to section 1126(g) of the Bankruptcy Code.
E. NON-CONSENSUAL CONFIRMATION
The Debtors will seek Confirmation of the Plan under section 1129(b) of
the Bankruptcy Code, to the extent applicable, in view of the deemed rejection
by Classes H4, H5, H6, H7, S5, S6, and R7. In the event that any Impaired Class
of Claims shall fail to accept the Plan in accordance with section 1129(a)(8) of
the Bankruptcy Code, the Debtors reserve the right to request that the
Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the
Bankruptcy Code.
ARTICLE V.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED
DEBTORS
Systems and Realty shall, as Reorganized Debtors, continue to exist after
the Effective Date as separate entities, with, in the case of Systems, all the
powers of a corporation or, in the case of Realty, a limited liability company,
under the laws of the State of Delaware and without prejudice to any right to
alter or terminate such existence (whether by merger or otherwise) under such
applicable state law. As of the Effective Date, Holdings shall be merged into
New Holdings with New Holdings becoming the surviving entity. Except as
otherwise provided in the Plan, the Lock-Up Agreement, the New Bank Credit
Facilities, the New Notes, or any agreement, instrument or indenture relating
thereto, on or after the Effective Date, all property of the Estates, and any
property acquired by the Debtors or the Reorganized Debtors under the Plan,
shall vest in the Reorganized Debtors, free and clear of all Claims, liens,
charges, or other encumbrances and Equity Interests. On and after the Effective
Date, the Reorganized Debtors may operate their businesses and may use, acquire
or dispose of property and compromise or settle any Claims or Equity Interests,
without supervision or approval by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those
restrictions expressly imposed by the Plan and the Confirmation Order. In
accordance with section 1109(b) of the Bankruptcy Code, nothing in this
Article V shall preclude any party in interest from appearing and being heard on
any issue in the Chapter 11 Cases.
B. CANCELLATION OF NOTES, INSTRUMENTS, MEMBER INTERESTS, COMMON STOCK
AND STOCK OPTIONS
On the Effective Date, except to the extent provided otherwise in the
Plan, (i) all notes, instruments, certificates, and other documents of the
Debtors evidencing the Other Secured Claims, and Prepetition Bank Secured
Claims, (ii) the Old Notes, and (iii) all Equity Interests, including all Common
Stock and Member Interests, shall be canceled and the obligations of the Debtors
thereunder, shall be discharged. On the Effective Date, except to the extent
provided otherwise in the Plan, any indenture relating to any of the foregoing,
including, without limitation, the Old Note Indenture, shall be deemed to be
canceled, and the obligations of the debtors thereunder, except for the
obligation to indemnify the Old Notes Indenture Trustee, shall be discharged;
PROVIDED HOWEVER, that the indenture or other agreement that governs the rights
of the Holder of a Claim and that is administered by the Old Notes Indenture
Trustee, an agent or servicer shall, continue in effect solely for the purposes
of (i) allowing such Old Notes Indenture Trustee, agent or servicer to make the
distributions to be made on account of such Claims
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under the Plan and (ii) permitting such Old Indenture Trustee, agent or
servicer to maintain any rights or liens it may have for fees, costs, and
expenses under such indenture or other agreement. Upon payment in full of
the fees and expenses of the Old Notes Indenture Trustee pursuant to Article
VII.B hereof, the liens (if any) of the Old Notes Indenture Trustee shall
terminate.
C. ISSUANCE OF NEW SECURITIES; EXECUTION OF RELATED DOCUMENTS
On the Effective Date, the Reorganized Debtors shall issue all
securities, notes, instruments, certificates, and other documents required to be
issued pursuant to the Plan, including, without limitation, the New Notes, the
New Bank Credit Facilities, the New Holdings Common Stock, the New Systems
Common Stock and the New Realty Member Interests, each of which shall be
distributed as provided in the Plan. The Reorganized Debtors shall execute and
deliver such other agreements, documents and instruments, including the New
Notes Indenture, as are required to be executed pursuant to the terms of the
Plan or the Lock-Up Agreement. The New Notes and the New Notes Indenture shall
be in a form and substance substantially similar to the Old Notes and the Old
Notes Indenture. Any changes to the Old Notes or the Old Notes Indenture shall
be reasonably satisfactory to the Creditors' Committee and the postpetition
lenders.
D. NEW HOLDINGS COMMON STOCK
In exchange for receiving the New Systems Common Stock and in exchange
for the treatment provided to Class H2 Claims by Systems, on the Effective Date,
New Holdings will transfer to Systems the New Holdings Common Stock and the New
Notes for distribution in accordance with the terms of the Plan.
E. NEW SYSTEMS COMMON STOCK
In exchange for receiving the New Holdings Common Stock and the New
Notes, on the Effective Date, Systems will transfer to New Holdings the New
Systems Common Stock.
F. NEW REALTY MEMBER INTERESTS
In exchange for the treatment provided to Class R4 Claims by Systems, on
the Effective Date, Realty will transfer to Systems the New Realty Member
Interests.
G. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS, AND CORPORATE ACTION
1. AMENDED CERTIFICATES OF INCORPORATION AND FORMATION
On the Effective Date, the Reorganized Debtors will file their Amended
Certificates of Incorporation or Formation with the Secretary of the State of
Delaware in accordance with sections 102 and 103 of the Delaware General
Corporation Law and section 201 of the Delaware LLC Law. The Amended
Certificates of Incorporation and Formation will, among other things, prohibit
the issuance of nonvoting equity securities to the extent required by
section 1123(a) of the Bankruptcy Code, change the number of authorized shares
of New Holdings Common Stock to 15,000,000, and eliminate the authorization of
preferred stock by Systems. After the Effective Date, the Reorganized Debtors
may amend and restate their Amended Certificates of Incorporation and Formation
and other constituent documents as permitted by the Delaware General Corporation
Law and the Delaware LLC Law.
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2. DIRECTORS, OFFICERS, AND MEMBERS OF THE REORGANIZED DEBTORS
Subject to any requirement of Bankruptcy Court approval, pursuant to
section 1129(a)(5), the Debtors will disclose, on or prior to the Confirmation
Date, the identity and affiliations of any Person proposed to serve (i) on the
initial board of directors of New Holdings and Systems and (ii) to serve as a
member of the Reorganized Realty. To the extent any such Person is an Insider,
the nature of any compensation for such Person will also be disclosed. The
classification and composition of the boards of directors and the membership
shall be consistent with the Amended Certificates of Incorporation or Formation
and as set forth in the Lock-Up Agreement. Each such director, officer and
member shall serve from and after the Effective Date pursuant to the terms of
the Amended Certificates of Incorporation or Formation, other constituent
documents, the Delaware General Corporation Law or the Delaware LLC Law. New
Holdings will have a nine-person board of directors consisting of the following
designations: two management directors; two independent directors; three
directors appointed by Stonington and two directors appointed by the Prepetition
Noteholders Committee.
3. CORPORATE ACTION
On the Effective Date, the adoption of the Amended Certificates of
Incorporation, Certificates of Formation or similar constituent documents, the
amendment of the By-laws, the selection of directors, officers and members for
the Reorganized Debtors, and all actions contemplated by the Plan shall be
authorized and approved in all respects (subject to the provisions of the Plan).
All matters provided for in the Plan involving the corporate structure of the
Debtors or the Reorganized Debtors, and any corporate action required by the
Debtors or the Reorganized Debtors in connection with the Plan, shall be deemed
to have occurred and shall be in effect, without any requirement of further
action by the security holders or directors of the Debtors or the Reorganized
Debtors. On the Effective Date, the appropriate officers and members of the
Reorganized Debtors and members of the board of directors of the Reorganized
Debtors are authorized and directed to issue, execute and deliver the
agreements, documents, securities and instruments contemplated by the Plan in
the name of and on behalf of the Reorganized Debtors.
H. SOURCES OF CASH FOR PLAN DISTRIBUTION
All Cash necessary for the Reorganized Debtors to make payments pursuant
to the Plan shall be obtained from existing Cash balances, the operations of the
Debtors or Reorganized Debtors, or post-confirmation borrowing under other
available facilities of the Debtors or Reorganized Debtors including, without
limitation, to the extent available, the New Bank Credit Facilities and the
Stonington Capital Contribution. The Reorganized Debtors may also make such
payments using Cash received from its subsidiaries through the Reorganized
Debtors consolidated cash management systems and from advances or dividends from
such subsidiaries in the ordinary course.
ARTICLE VI.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Immediately prior to the Effective Date, all executory contracts or
unexpired leases of the Reorganized Debtors will be deemed assumed in accordance
with the provisions and requirements of sections 365 and 1123 of the Bankruptcy
Code except those executory contracts and unexpired leases that (1) have been
rejected by order of the Bankruptcy Court, (2) are the subject of a motion to
reject pending on the Effective Date, (3) are identified on a list to be Filed
with the Bankruptcy Court on or before the Confirmation Date, as to be rejected,
or (4) are rejected pursuant to the terms of the Plan. Entry of the
Confirmation Order by the Bankruptcy Court shall constitute approval of such
assumptions and rejections pursuant to sections 365(a) and 1123 of the
Bankruptcy Code.
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B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES
All proofs of claim with respect to Claims arising from the rejection of
executory contracts or unexpired leases, if any, must be Filed with the
Bankruptcy Court within sixty (60) days after the date of entry of an order of
the Bankruptcy Court approving such rejection. Any Claims arising from the
rejection of an executory contract or unexpired lease not Filed within such
times will be forever barred from assertion against the Debtors or Reorganized
Debtors, their estates and property unless otherwise ordered by the Bankruptcy
Court or provided in this Plan, all such Claims for which proofs of claim are
required to be Filed will be, and will be treated as, General Unsecured Claims
subject to the provisions of Article VIII hereof.
C. CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES ASSUMED
Any monetary amounts by which each executory contract and unexpired lease
to be assumed pursuant to the Plan is in default shall be satisfied, pursuant to
section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in
Cash on the Effective Date or on such other terms as the parties to such
executory contracts or unexpired leases may otherwise agree. In the event of a
dispute regarding: (1) the amount of any cure payments, (2) the ability of the
Reorganized 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 (3) 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 the dispute
and approving the assumption.
D. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The obligations of the Debtors to indemnify any Person or Entity serving
at any time on or prior to the Effective Date as one of their directors,
officers, members or employees by reason of such Person's or Entity's service in
such capacity, or as a director, officer, member or employee of any other
corporation or legal entity, to the extent provided in the Debtors' constituent
documents, by a written agreement with the Debtors, the Delaware General
Corporation Law or the Delaware LLC Law, shall be deemed and treated as
executory contracts that are assumed by the Debtors pursuant to the Plan and
section 365 of the Bankruptcy Code as of the Effective Date. Accordingly, such
indemnification obligations shall be treated as General Unsecured Claims, and
shall survive unimpaired and unaffected by entry of the Confirmation Order,
irrespective of whether such indemnification is owed for an act or event
occurring before or after the Petition Date.
E. COMPENSATION AND BENEFIT PROGRAMS
Except as otherwise expressly provided hereunder, all employment and
severance policies, and all compensation and benefit plans, policies, and
programs of the Debtors applicable to their employees, retirees and non-employee
directors and the employees and retirees of its subsidiaries, including, without
limitation, all savings plans, retirement plans, health care plans, disability
plans, severance benefit plans, incentive plans, and life, accidental death, and
dismemberment insurance plans are treated as executory contracts under the Plan
and on the Effective Date will be assumed pursuant to the provisions of
sections 365 and 1123 of the Bankruptcy Code.
ARTICLE VII.
PROVISIONS GOVERNING DISTRIBUTIONS
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE
1. Except as otherwise provided in this Article VII or as may be
ordered by the Bankruptcy Court, distributions to be made on the Effective Date
on account of Claims that are allowed as of the Effective Date and are entitled
to receive distributions under the Plan shall be made on the Effective Date, or
as soon as practicable thereafter. Distributions on account of Claims that
become Allowed Claims after the Effective Date shall be made pursuant to
Articles VII.C and VIII.C below.
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2. For purposes of determining the accrual of interest or rights
in respect of any other payment from and after the Effective Date, the New
Notes, the New Bank Credit Facilities, the New Holdings Common Stock, the New
Systems Common Stock and the New Realty Member Interests to be issued under
the Plan shall be deemed issued as of the Effective Date regardless of the
date on which they are actually dated, authenticated or distributed;
provided, however, that the Reorganized Debtors shall withhold any actual
payment until such distribution is made and no interest shall accrue or
otherwise be payable on any such withheld amounts.
B. DISTRIBUTIONS BY THE REORGANIZED DEBTORS; DISTRIBUTIONS WITH RESPECT
TO DEBT SECURITIES
Except as provided herein, the Reorganized Debtors shall make all
distributions required under the Plan. Notwithstanding the provisions of
Article V.B above regarding the cancellation of the Old Note Indenture, the
Old Note Indenture shall continue in effect to the extent necessary to allow
the Old Notes Indenture Trustee to receive New Notes and New Holdings Common
Stock on behalf of the Holders of the Old Notes and make distributions
pursuant to the Plan on account of the Old Notes as agent for the Reorganized
Debtor. The Old Notes Indenture Trustee providing services related to
distributions to the Holders of Allowed Old Note Claims shall receive, from
the Reorganized Debtors, reasonable compensation for such services and
reimbursement of reasonable expenses incurred in connection with such
services and upon the presentation of invoices to the Reorganized Debtors.
These payments shall be made on terms agreed to with the Reorganized Debtors.
C. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS
1. DELIVERY OF DISTRIBUTIONS IN GENERAL
Distributions to Holders of Allowed Claims shall be made at the
address of the Holder of such Claim as indicated on records of the Debtors.
Except as otherwise provided by the Plan or the Bankruptcy Code with respect
to undeliverable distributions, distributions to Holders of Prepetition Bank
Secured Claims, and Old Note Claims shall be made in accordance with the
provisions of the applicable indenture, participation agreement, loan
agreement or analogous instrument or agreement, and distributions will be
made to Holders of record as of the Distribution Record Date.
2. UNDELIVERABLE DISTRIBUTIONS
(a) HOLDING OF UNDELIVERABLE DISTRIBUTIONS. If any Allowed
Claim Holder's distribution is returned to the Reorganized Debtors as
undeliverable, no further distributions shall be made to such Holder
unless and until the Reorganized Debtors are notified in writing of such
Holder's then-current address. Undeliverable distributions shall remain
in the possession of the Reorganized Debtors pursuant to this
Article VII.C until such time as a distribution becomes deliverable.
Undeliverable cash (including interest and maturities on the New Notes)
shall not be entitled to any interest, dividends or other accruals of any
kind.
(b) AFTER DISTRIBUTIONS BECOME DELIVERABLE. Within 20 days
after the end of each calendar quarter following the Effective Date, the
Reorganized Debtors shall make all distributions that become deliverable
during the preceding calendar quarter.
(c) FAILURE TO CLAIM UNDELIVERABLE DISTRIBUTIONS. In an effort
to ensure that all holders of valid claims receive their allocated
distributions, the Company will file with the Bankruptcy Court, a listing
of unclaimed distribution holders. This list will be maintained for as
long as the bankruptcy cases stay open. Any Holder of an Allowed Claim
that does not assert a Claim pursuant to the Plan for an undeliverable
distribution within five years after the Effective Date shall have its
Claim for such undeliverable distribution discharged and shall be forever
barred from asserting any such Claim against the Reorganized Debtors or
their property. In such cases: (i) any Cash held for distribution on
account of such Claims shall be property of the Reorganized Debtors, free
of any restrictions thereon; and (ii) any New Notes held for distribution
on account of such Claims shall be canceled and of no further force or
effect. Nothing contained in the Plan shall require the Reorganized
Debtors to attempt to locate any Holder of an Allowed Claim.
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(d) COMPLIANCE WITH TAX REQUIREMENTS. In connection with the
Plan, to the extent applicable, the Reorganized Debtors shall comply with
all tax withholding and reporting requirements imposed on it by any
governmental unit, and all distributions pursuant to the Plan shall be
subject to such withholding and reporting requirements.
D. DISTRIBUTION RECORD DATE
As of the close of business on the Distribution Record Date, the transfer
register for the Old Notes as maintained by Systems, the Old Notes Indenture
Trustee, or their respective agents, shall be closed and there shall be no
further changes in the record holders of any Old Notes. Moreover, Reorganized
Systems shall have no obligation to recognize the transfer of any Old Notes
occurring after the Distribution Record Date, and shall be entitled for all
purposes herein to recognize and deal only with those Holders of record as of
the close of business on the Distribution Record Date.
E. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED
Unless otherwise provided for in section III of the Plan or agreed to
by the Holder of a Claim and the Debtors, on the Effective Date, each Holder
of an Allowed Claim against the Debtors shall receive the full amount of the
distributions that the Plan provides for Allowed Claims in the applicable
Class. Beginning on the date that is 20 calendar days after the end of the
calendar quarter following the Effective Date and 20 calendar days after the
end of each calendar quarter thereafter, distributions shall also be made,
pursuant to Article VIII.C below, to Holders of Disputed Claims in any such
Class whose Claims were allowed during the preceding calendar quarter. Such
quarterly distributions shall also be in the full amount that the Plan
provides for Allowed Claims in the applicable Class.
F. MINIMUM DISTRIBUTION
The New Notes will be issued in denominations of $1. No New Note will
be issued in a denomination of less than $1 (including any notes reflecting
payment in kind interest). In the event a Holder of an Allowed Class S5
Claim is entitled to distribution of New Notes that is a fraction of $1, the
actual payment or issuance made will reflect a rounding of such fraction down
or up to the nearest whole dollar, but in any case not to exceed the total
issuance of notes.
G. SETOFFS
The Reorganized Debtors may, pursuant to section 553 of the Bankruptcy
Code or applicable non-bankruptcy 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
Debtors may hold against the Holder of such Allowed Claim; provided, however,
that neither the failure to effect such a setoff nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtors or
Reorganized Debtors of any such claims, rights and causes of action that the
Debtors or Reorganized Debtors may possess against such Holder.
H. SURRENDER OF CANCELED INSTRUMENTS OR SECURITIES
Except as set forth in subsection VII.I below, as a condition
precedent to receiving any distribution pursuant to the Plan on account of an
Allowed Claim evidenced by the instruments, securities or other documentation
canceled pursuant to Article V.B above, the Holder of such Claim shall tender
the applicable instruments, securities or other documentation evidencing such
Claim to the Reorganized Debtors. Any New Notes, New Holdings Common Stock,
New Systems Common Stock or New Realty Member Interests to be distributed
pursuant to the Plan on account of any such Claim shall, pending such
surrender, be treated as an undeliverable distribution pursuant to Article
VII.C above.
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1. NOTES
Each Holder of an Old Note Claim shall tender its Old Note relating to
such Claim to the Reorganized Debtors in accordance with written instructions
to be provided to such Holders by the Reorganized Debtors as promptly as
practicable following the Effective Date. Such instructions shall specify
that delivery of such Old Note will be effected, and risk of loss and title
thereto will pass, only upon the proper delivery of such Old Notes with a
letter of transmittal in accordance with such instructions. All surrendered
Old Notes shall be marked as canceled.
2. FAILURE TO SURRENDER CANCELED INSTRUMENTS
Any Holder of Old Notes that fails to surrender or is deemed to have
failed to surrender the applicable Old Notes required to be tendered
hereunder within five years after the Effective Date shall have its Claim for
a distribution pursuant to the Plan on account of such Old Note discharged
and shall be forever barred from asserting any such Claim against the
Reorganized Debtors or its respective property. In such cases, any New Notes
held for distribution on account of such Claim shall be disposed of pursuant
to the provisions set forth above in Article VII.C.
I. LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES
In addition to any requirements under the Old Note Indenture or any
related agreement (including the Prepetition Bank Credit Facility, if
required), any Holder of a Claim evidenced by an Old Note or a note issued
under the Prepetition Bank Credit Facility that has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such Old Note or a note
issued under the Prepetition Bank Credit Facility, deliver to the Reorganized
Debtors: (1) an affidavit of loss reasonably satisfactory to the Reorganized
Debtors or the Old Notes Indenture Trustee, as applicable, setting forth the
unavailability of note or instrument; and (2) such additional security or
indemnity as may reasonably be required by the Reorganized Debtors to hold
the Reorganized Debtors or the Old Notes Indenture Trustee, as applicable,
harmless from any damages, liabilities or costs incurred in treating such
individual as a Holder of an Allowed Claim. Upon compliance with this
Article VII.I by a Holder of a Claim evidenced by an Old Note or a note
issued under the Prepetition Bank Credit Facility, such Holder shall, for all
purposes under the Plan, be deemed to have surrendered such note or debenture.
ARTICLE VIII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
A. PROSECUTION OF OBJECTIONS TO CLAIMS
After the Confirmation Date, the Debtors and the Reorganized Debtors
shall have the exclusive authority to File objections, settle, compromise,
withdraw or litigate to judgment objections to Claims. From and after the
Confirmation Date, the Debtors and the Reorganized Debtors may settle or
compromise any Disputed Claim without approval of the Bankruptcy Court. The
Debtors also reserve the right to resolve any Disputed Claims outside the
Bankruptcy Court under applicable governing law.
B. ESTIMATION OF CLAIMS
The Debtors or the Reorganized Debtors may, at any time, request that
the Bankruptcy Court estimate any contingent or unliquidated Claim pursuant
to section 502(c) of the Bankruptcy Code regardless of whether the Debtors or
the Reorganized Debtors have previously 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 during the pendency of any
appeal relating to any such objection. In the event that the Bankruptcy
Court estimates any contingent or unliquidated Claim, that estimated amount
will constitute either the allowed amount of such Claim or a maximum
limitation on such Claim, as determined by the Bankruptcy Court. If the
estimated amount constitutes a maximum limitation on such Claim, the Debtors
or Reorganized Debtors may elect to pursue any supplemental proceedings to
object to any ultimate payment on such Claim. All of the aforementioned
Claims objection, estimation and resolution procedures are
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cumulative and not necessarily exclusive of one another. Claims may be
estimated and subsequently compromised, settled, withdrawn or resolved by any
mechanism approved by the Bankruptcy Court.
C. PAYMENTS AND DISTRIBUTIONS ON DISPUTED CLAIMS
Notwithstanding any provision in the Plan to the contrary, except as
otherwise agreed by the Reorganized Debtors in its sole discretion, no
partial payments and no partial distributions will be made with respect to a
Disputed Claim until the resolution of such disputes by settlement or Final
Order. Subject to the provisions of this Article VIII.C, as soon as
practicable after a Disputed Claim becomes an Allowed Claim, the Holder of
such Allowed Claim will receive all payments and distributions to which such
Holder is then entitled under the Plan. Notwithstanding the foregoing, any
Person or Entity who holds both an Allowed Claim(s) and a Disputed Claim(s)
will receive the appropriate payment or distribution on the Allowed Claim(s),
although, except as otherwise agreed by the Reorganized Debtors in their sole
discretion, no payment or distribution will be made on the Disputed Claim(s)
until such dispute is resolved by settlement or Final Order. In the event
there are Disputed Claims requiring adjudication and resolution, the Debtors
reserve the right, or upon order of the Court, to establish appropriate
reserves for potential payment of such claims.
ARTICLE IX.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. CONDITION PRECEDENT TO CONFIRMATION
It shall be a condition to Confirmation of the Plan that the following
condition shall have been satisfied or waived pursuant to the provisions of
Article IX.C of the Plan: approval of all provisions, terms and conditions of
the Plan in the Confirmation Order.
B. CONDITIONS PRECEDENT TO CONSUMMATION
It shall be a condition to Consummation of the Plan that the following
conditions shall have been satisfied or waived pursuant to the provisions of
Article IX.C of the Plan:
1. the Confirmation Order shall have been signed by the Bankruptcy
Court and duly entered on the docket for the Chapter 11 Case by the Clerk of
the Bankruptcy Court in form and substance acceptable to the Debtor;
2. the Confirmation Order shall be a Final Order;
3. the Tranche A Revolving Credit Facility shall be available to
the Debtors in an amount not less than $50 million and on such terms and
conditions as set forth in the Lock-Up Agreement; and
4. the Tranche B Revolving Credit Facility shall be available to
the Debtors in an amount not less than $50 million and on such terms and
conditions as set forth in the Lock-Up Agreement;
5. the Term Loan Facility shall be available to the Debtors in an
amount not less than $150 million and on such terms and conditions as set
forth in the Lock-Up Agreement; and
6. the Stonington Capital Contribution shall be available to the
Debtors in an amount not less than $50 million and on such terms and
conditions as set forth in the Lock-Up Agreement.
-25-
<PAGE>
C. WAIVER OF CONDITIONS
Except as otherwise required by the Lock-Up Agreement, the Debtors, in
their sole discretion, may waive any of the conditions to Confirmation of the
Plan and/or to Consummation of the Plan set forth in Articles IX.A and IX.B
of the Plan at any time, without notice, without leave or order of the
Bankruptcy Court, and without any formal action other than proceeding to
confirm and/or consummate the Plan.
D. EFFECT OF NON-OCCURRENCE OF CONDITIONS TO CONSUMMATION
If the Confirmation Order is vacated, the Plan shall be null and void
in all respects and nothing contained in the Plan or the Disclosure Statement
shall: (1) constitute a waiver or release of any Claims by or against, or any
Equity Interests in, the Debtor; (2) prejudice in any manner the rights of
the Debtor, or (3) constitute an admission, acknowledgment, offer or
undertaking by the Debtors in any respects.
ARTICLE X.
RELEASE, INJUNCTIVE AND RELATED PROVISIONS
A. SUBORDINATION
The classification and manner of satisfying all Claims and Equity
Interests and the respective distributions and treatments under the Plan take
into account and/or conform to the relative priority and rights of the Claims
and Equity Interests in each Class in connection with any contractual, legal
and equitable subordination rights relating thereto whether arising under
general principles of equitable subordination, section 510(b) of the
Bankruptcy Code or otherwise, and any and all such rights are settled,
compromised and released pursuant to the Plan. The Confirmation Order shall
permanently enjoin, effective as of the Effective Date, all Persons and
Entities from enforcing or attempting to enforce any such contractual, legal
and equitable subordination rights satisfied, compromised and settled
pursuant to this Article X.A.
B. LIMITED RELEASES BY THE DEBTORS
Except as otherwise specifically provided in the Plan, for good and
valuable consideration, including, but not limited to, the commitment and
obligation of Stonington to provide financial support necessary for
consummation of the Plan, including the obligations and undertakings of
Stonington Releasees and Noteholder Releasees set forth in the Lock-Up
Agreement, including Stonington's agreement to the treatment of its Claims
and Equity Interests as provided in the plan, the agreement of the
Prepetition Lenders to their treatment set forth in the Plan and their
financial support thereof, and the service of the D&O Releasees to facilitate
the expeditious reorganization of the Debtors and the implementation of the
restructuring contemplated by the Plan, Stonington Releasees, the D&O
Releasees, the Prepetition Lender Releasees and the Noteholder Releasees, on
and after the Effective Date, are released by the Debtors and the Reorganized
Debtors and their subsidiaries from any and all claims (as defined in section
101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes
of action, remedies and liabilities whatsoever, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise, that the Debtors or their subsidiaries would have been legally
entitled to assert in their own right (whether individually or collectively)
or on behalf of the Holder of any Claim or Equity Interest or other Person or
Entity, based in whole or in part upon any act or omission, transaction,
agreement, event or other occurrence taking place on or before the Effective
Date, except in the case of the D&O Releasees, for claims or liabilities (i)
in respect of any loan, advance or similar payment by the Debtors or their
subsidiaries to any such Person, or (ii) in respect of any contractual
obligation owed by such Person to the Debtors or their subsidiaries.
C. LIMITED RELEASES BY HOLDER OF CLAIMS
On and after the Effective Date, each Holder of a Claim (i) who has
accepted the Plan, or (ii) who is entitled to receive a distribution of property
under the Plan other than the Holder of a claim in a Class who signs and returns
a timely Ballot and marks either Item 4 or Item 5 of the Ballot (whichever is
applicable), shall be deemed to have unconditionally released the Stonington
Releasees, the D&O Releasees, the Prepetition Lender
-26-
<PAGE>
Releasees and the Noteholder Releasees from any and all claims (as defined in
section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages,
causes of action, remedies and liabilities whatsoever, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law,
equity or otherwise, that such Person or Entity would have been legally
entitled to assert (whether individually or collectively), based in whole or
in part upon any act or omission, transaction, agreement, event or other
occurrence taking place on or before the Effective Date in any way relating
or pertaining to (x) the Debtors or the Reorganized Debtors, (y) the Debtors
Chapter 11 Cases, or (z) the negotiation, formulation and preparation of the
Plan, the Lock-Up Agreement or any related agreements, instruments or other
documents.
D. PRESERVATION OF RIGHTS OF ACTION
Except as otherwise provided in the Plan or in any contract,
instrument, release, indenture or other agreement entered into in connection
with the Plan, in accordance with section 1123(b) of the Bankruptcy Code, the
Reorganized Debtors shall retain and may exclusively enforce any claims,
rights and Causes of Action that the Debtors or Estates may hold against any
Person or Entity. The Reorganized Debtors may pursue such retained claims,
rights or causes of action, as appropriate, in accordance with the best
interests of the Reorganized Debtors. On the Effective Date, the Reorganized
Debtors shall be deemed to waive and release any claims, rights or Causes of
Action arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy
Code held by the Reorganized Debtors against any Person or Entity.
E. EXCULPATION
The Debtors, the Reorganized Debtors, the Stonington Releasees, the
Noteholder Releasees, the D&O Releasees, the Prepetition Lender Releasees and
the Committee(s) and their members and Professionals (acting in such
capacity) shall neither have nor incur any liability to any Person or Entity
for any act taken or omitted to be taken in connection with or related to the
formulation, preparation, dissemination, implementation, administration,
Confirmation or Consummation of the Plan, the Disclosure Statement or any
contract, instrument, release or other agreement or document created or
entered into in connection with the Plan, including the Lock-Up Agreement, or
any other act taken or omitted to be taken in connection with the Debtors
Chapter 11 Cases; provided, however, that the foregoing provisions of this
Article X.E shall have no effect on the liability of any Person or Entity
that results from any such act or omission that is determined in a Final
Order to have constituted gross negligence or willful misconduct.
F. INJUNCTION
From and after the Effective Date, all Persons and Entities are
permanently enjoined from commencing or continuing in any manner, any suit,
action or other proceeding, on account of or respecting any claim,
obligation, debt, right, Cause of Action, remedy or liability released or to
be released pursuant to this Article X.
ARTICLE XI.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court shall retain such jurisdiction
over the Chapter 11 Cases after the Effective Date as legally permissible,
including jurisdiction to:
A. allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim, including
the resolution of any request for payment of any Administrative Claim and the
resolution of any and all objections to the allowance or priority of Claims;
B. grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the
Plan, for periods ending on or before the Effective Date;
-27-
<PAGE>
C. resolve any matters related to the assumption, assumption and
assignment, or rejection of any executory contract or unexpired lease to
which the Debtors are parties 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 Article VI above to add any executory contracts or
unexpired leases to the list of executory contracts and unexpired leases to
be rejected;
D. ensure that distributions to Holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan, including ruling on any
motion Filed pursuant to Article VII;
E. decide or resolve any motions, adversary proceedings, contested
or litigated matters and any other matters and grant or deny any applications
involving the Debtors that may be pending on the Effective Date;
F. 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 or the Disclosure Statement;
G. resolve any cases, controversies, suits or disputes that may
arise in connection with the Consummation, interpretation or enforcement of
the Plan or any Person's or Entity's obligations incurred in connection with
the Plan;
H. issue injunctions, enter and implement other orders or take
such other actions as may be necessary or appropriate to restrain
interference by any Person or Entity with Consummation or enforcement of the
Plan, except as otherwise provided herein;
I. resolve any cases, controversies, suits or disputes with
respect to the releases, injunction and other provisions contained in Article
X and enter such orders as may be necessary or appropriate to implement such
releases, injunction and other provisions;
J. enter and implement such orders as are necessary or appropriate
if the Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;
K. determine any other matters that may arise in connection with
or relate to the Plan, the Disclosure Statement, the Confirmation Order or
any contract, instrument, release, indenture or other agreement or document
created in connection with the Plan or the Disclosure Statement; and
L. enter an order and/or final decree concluding the Chapter 11
Cases.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
A. DISSOLUTION OF COMMITTEE(S)
On the Effective Date, the Committee(s) shall dissolve and members
shall be released and discharged from all rights and duties arising from, or
related to, the Chapter 11 Cases.
B. 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 hearing pursuant to
section 1128 of the Bankruptcy Code, shall be paid on or before the Effective
Date.
C. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEE
-28-
<PAGE>
The reasonable fees and expenses incurred after the Petition Date by
the Prepetition Noteholders Committee's counsel and financial advisor
(together with the reasonable fees and expenses of local counsel) through the
date of the appointment of the Creditors' Committee with respect to these
Chapter 11 Cases shall be paid (without application by or on behalf of any
such professionals to the Bankruptcy Court and without notice and a hearing)
by the Reorganized Debtors as an Administrative Claim under the Plan. If the
Reorganized Debtors and any such professional retained by the Prepetition
Noteholders Committee cannot agree on the amount of fees and expenses to be
paid to such professional, the amount of any such fees and expenses shall be
determined by the Bankruptcy Court.
D. DISCHARGE OF DEBTORS
Except as otherwise provided herein and the Lock-Up Agreement: (1) the
rights afforded in the Plan and the treatment of all Claims and Equity
Interests therein, shall be in exchange for and in complete satisfaction,
discharge and release of Claims and Equity Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the
Petition Date, against the Debtors and the Debtors in Possession, or any of
their assets or properties, (2) on the Effective Date, all such Claims
against, and Equity Interests in the Debtors shall be satisfied, discharged
and released in full and (3) all Persons and Entities shall be precluded from
asserting against the Reorganized Debtors, their successors or their assets
or properties any other or further Claims or Equity Interests based upon any
act or omission, transaction or other activity of any kind or nature that
occurred prior to the Confirmation Date. Except as expressly provided
herein, the Plan does not impair the rights of any Holders of Class S4
Claims, including, but not limited to: (i) Holders of Claims under executory
and nonexecutory contracts and leases; (ii) persons or entities entitled to
contractual or common law rights of indemnity, contribution and/or
reimbursement; or (iii) claims of any party or entity relating to any
environmental condition as to which any of the Debtors are or may be liable.
E. MODIFICATION OF PLAN
Subject to the limitations contained herein, (1) the Debtors reserve
the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules,
to amend or modify the Plan prior to the entry of the Confirmation Order and
(2) after the entry of the Confirmation Order, the Debtors or the Reorganized
Debtors, as the case may be, 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.
F. REVOCATION OF PLAN
The Debtors, subject to the Lock-Up Agreement, reserve the right, at
any time prior to the entry of the Confirmation Order, to revoke and withdraw
the Plan.
G. SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any Person or Entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit
of any heir, executor, administrator, successor or assign of such Person or
Entity.
H. RESERVATION OF RIGHTS
Except as expressly set forth herein, this Plan shall have no force or
effect unless the Bankruptcy Court shall enter the Confirmation Orders. None
of the filing of this Plan, any statement or provision contained herein, or
the taking of any action by the Debtor with respect to this Plan shall be or
shall be deemed to be an admission or waiver of any rights of the Debtors
with respect to the Holders of Claims or Equity Interests prior to the
Effective Date.
-29-
<PAGE>
I. SECTION 1146 EXEMPTION
Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer, or exchange of any security under the Plan, or the making or
delivery of an instrument of transfer under this Plan, may not be taxed under
any law imposing a stamp tax or similar tax.
J. FURTHER ASSURANCES
The Debtors, the Reorganized Debtors and all Holders of Claims
receiving distributions under the Plan and all other parties in interest
shall, from time to time, prepare, execute and deliver any agreements or
documents and take any other actions as may be necessary or advisable to
effectuate the provisions and intent of this Plan.
K. SERVICE OF DOCUMENTS
Any pleading, notice or other document required by the Plan to be
served on or delivered to the Reorganized Debtors shall be sent by first
class U.S. mail, postage prepaid to:
Goss Holdings, Inc.
Goss Graphic Systems, Inc.
Goss Realty, L.L.C
700 Oakmont Lane
Westmont, Illinois 60559-5546
Attn: General Counsel
with copies to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Matthew N. Kleiman, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
20th Floor
New York, New York 10022
Attn: Daniel H. Golden, Esq.
-30-
<PAGE>
L.. FILING OF ADDITIONAL DOCUMENTS
On or before the Effective Date, the Debtors may file with the
Bankruptcy Court such agreements and other documents as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of
the Plan.
Respectfully Submitted,
GOSS GRAPHIC SYSTEMS, INC. and
GGS HOLDINGS, INC.
By: ___________________________________
Name:
Title:
GOSS REALTY, L.L.C.
By: ___________________________________
Name:
Title:
-31-
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------------------------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
HSBC BANK USA
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, NY 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Warren L. Tischler
Senior Vice President
HSBC Bank USA
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-5167
(Name, address and telephone number of agent for service)
GOSS HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
Delaware 25-1200273
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
700 Oakmont Lane
Westmont, Illinois 60559-5546
(630) 850-5600 (Zip Code)
(Address of principal executive offices)
Debt Securities
(Title of Indenture Securities)
<PAGE>
General
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE>
Item 16. LIST OF EXHIBITS
EXHIBIT
T1A(i) (1) Copy of the Organization Certificate of HSBC Bank USA.
T1A(ii) (1) Certificate of the State of New York Banking
Department dated December 31, 1993 as to the
authority of HSBC Bank USA to commence business as
amended effective on March 29, 1999.
T1A(iii) Not applicable.
T1A(iv) (1) Copy of the existing By-Laws of HSBC Bank USA as
adopted on January 20, 1994 as amended on October
23, 1997.
T1A(v) Not applicable.
T1A(vi) (2) Consent of HSBC Bank USA required by Section 321(b)
of the Trust Indenture Act of 1939.
T1A(vii) Copy of the latest report of condition
of the trustee (June 30, 1999),
published pursuant to law or the
requirement of its supervisory or
examining authority.
T1A(viii) Not applicable.
T1A(ix) Not applicable.
(1) Exhibits previously filed with the Securities and Exchange Commission
with registration No. 022-22429 and incorporated herein by reference
thereto.
(2) Exhibit previously filed with the Securities and Exchange Commission
with Registration No. 33-53693 and incorporated herein by reference
thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HSBC Bank USA, a banking corporation and trust company organized under the
laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of New York and State of New York on the 2nd day of November,
1999.
HSBC BANK USA
By: /s/ ROBERT A. CONRAD
--------------------
Robert A. Conrad
Vice President
<PAGE>
EXHIBIT T1A (VII)
Board of Governors of the
Federal Reserve System
OMB Number: 7100-0036
Federal Deposit
Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller
of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 2000
- -------------------------------------------------------------------------------
Please refer to page i,
Table of Contents, for the
required disclosure of
estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(19980930)
----------
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1999 (RCRI9999)
This report is required by law; 12 U.S.C. Section.324 (State member
banks); 12 U.S.C. Section. 1817 (State nonmember banks); and 12 U.S.C.
Section.161 (National banks).
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
--------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and believe.
/s/ Gerald A. Ronning
- -----------------------------------------------------------------
Signature of Officer Authorized to Sign Report
July 23, 1999
- -----------------------------------------------------------------
Date of Signature
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate
Federal regulatory authority and is true and correct.
/s/ Bernard J. Kennedy
- -----------------------------------------------------------------
Director (Trustee)
/s/ Malcolm Burnett
- -----------------------------------------------------------------
Director (Trustee)
/s/ Sal H. Alfieri
- -----------------------------------------------------------------
Director (Trustee)
- -------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each Bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with the
banking agencies' collection agent, Electronic Data System Corporation
(EDS), by modem or computer diskette; or
b) in hard-copy (paper) form and arrange for another party to convert the
paper report to automated for. That party (if other than EDS) must transmit
the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call report Services, 2150 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy f the completed report that the bank places in its files.
- -------------------------------------------------------
FDIC Certificate Number 0 0 5 8 9
- ----------------------------------------------------
(RCRI 9030)
- ----------------------------------------------------
http://WWW.BANKING.US.HSBC.COM
- ---------------------------------------------------------------------
Primary Internet Web Address of Bank (Home Page), if any (TEXT 4087)
(Example: www.examplebank.com)
HSBC Bank USA
- ---------------------------------------------------------------------
Legal Title of Bank (TEXT 9010)
Buffalo
- ---------------------------------------------------------------------
City (TEXT 9130)
N.Y. 14203
- ---------------------------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
REPORT OF CONDITION
Consolidated domestic and foreign subsidiaries of the
HSBC Bank USA of Buffalo
- ---------------------------------------------------------------------
Name of Bank City
in the state of New York, at the close of business June 30, 1999
ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Non-interest-bearing balances currency and coin $ 1,127,147
Interest-bearing balances 1,390,182
Held-to-maturity securities -
Available-for-sale securities 3,454,383
Federal funds sold and securities purchased under agreements to resell 3,065,533
Loans and lease financing receivables:
Loans and leases net of unearned income $ 23,063,375
LESS: Allowance for loan and lease losses 369,444
LESS: Allocated transfer risk reserve -
Loans and lease, net of unearned income, allowance, and reserve $ 22,693,931
Trading assets 834,032
Premises and fixed assets (including capitalized leases) 200,386
Other real estate owned 3,059
Investments in unconsolidated subsidiaries and associated companies -
Customers' liability to this bank on acceptances outstanding 219,995
Intangible assets 484,044
Other assets 618,261
Total assets 34,090,953
<PAGE>
LIABILITIES
Deposits:
In domestic offices 21,989,426
Non-interest-bearing 3,223,308
Interest-bearing 18,766,118
In foreign offices, Edge and Agreement subsidiaries and IBF's 5,910,332
Non-interest-bearing -
Interest-bearing 5,910,332
Federal funds purchased and securities sold under agreements to repurchase 724,111
Demands notes issued to the U.S. Treasury 93,732
Trading Liabilities 47,182
Other borrowed money (including mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less 1,011,100
With a remaining maturity of more than one year through three years 75,266
With a remaining maturity of more than three years 237,741
Bank's liability on acceptances executed and outstanding 219,995
Subordinated notes and debentures 698,152
Other liabilities 639,805
Total liabiiities 31,646,842
EQUITY CAPTIAL
Perpetual preferred stock and related surplus -
Common Stock 205,000
Surplus 1,987,736
Undivided profits and capital reserves 277,110
Net unrealized holding gains (losses) on available-for-sale securities (25,735)
Accumulated net gain (losses) on cash flow hedges -
Cumulative foreign currency translation adjustments -
Total equity capital 2,444,111
Total liabilities and equity capital 34,090,953
</TABLE>
