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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 8, 1994
Commonwealth Equity Trust
-------------------------
(Exact Name of Registrant as Specified in its Charter
California
----------
(State or Other Jurisdiction of Incorporation)
0-9097 94-2255677
- - ---------------- --------------------
(Commission File (I.R.S. Employer
Number) Identification Number)
705 University Avenue, Sacramento, California 95825
- - --------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(916) 929-8244
--------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(a) Not applicable.
(b) An order confirming the Third Amended Plan of
Reorganization, as Modified (the "Plan") has been
entered by a court having jurisdiction over
substantially all of the assets and business of
Commonwealth Equity Trust (the "Company").
i) The Plan was confirmed and an order entered
by the U.S. Bankruptcy Court for the Eastern
District of California (Sacramento Division).
ii) The order confirming the Plan was entered by
the Bankruptcy Court on August 8, 1994.
iii) The following is a summary of the material
features of the Plan. Capitalized terms used
in the summary but not defined shall have the
meaning given for such terms in the Plan. A
copy of the Plan is attached hereto as
described in Item 7(a) below.
I. OVERVIEW OF THE PLAN
Pursuant to the terms of the Plan,
Reorganized CET will emerge from
Chapter 11 and retain almost all of
its properties and assets.
Virtually all of the Company's
creditors will have their debts
restructured. The Pacific Mutual
Lenders have an Allowed Claim for
$79,000,000. Under the Plan, the
Pacific Mutual Lenders will receive
secured notes in the amount of
$40,000,000 and New CET Preferred
Stock of $22,500,000.
Reorganized CET will issue about
5,000 shares of New CET Common
Stock. About 2,550,000 shares (or
51%) of New CET Common Stock will be
distributed to the Pacific Mutual
Lenders. About 2,450,000 shares (or
49%) will be available for holders
of Old CET Common Stock and those
persons who formerly owned Old CET
Common Stock and have an Allowed
Claim for damages from the purchase
and sale of the stock (Classes
17(a), 17(b), 18(a), and 18(b)).
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There are currently about
25,000,000 shares of Old CET Common Stock
outstanding, which shares are held
by about 29,000 shareholders. The
Plan will have the effect of an
approximately 10 for 1 reverse stock
split, that is, for approximately
every 10 shares of Old CET Common
Stock, a person will receive 1 share
of New CET Common Stock.
Persons who hold 1,000 shares or less
of Old CET Common Stock may elect to
receive $.20 cash for each share of
Old CET Common Stock. Persons who
hold more than 1,000 shares of Old
CET Common Stock may not elect to
receive cash and must accept New CET
Common Stock in exchange for their
existing shares.
Each shareholder must return to the
Stock Transfer Agent his or her Old
CET Common Stock within one year
after the Effective Date of the Plan
or be forever barred from receiving
a distribution under the Plan. The
Plan will take effect on October 1,
1994.
The initial Board of Trustees of
Reorganized CET will have 5 members,
each of whom will hold office for
one year, and each of whom will be
elected as follows: 1 member will
be selected by the holders of the
New CET Preferred Stock (initially,
the Pacific Mutual Lenders); 1
member will be Frank Morrow, as
elected by the Company; and 3
members will be selected by a
selection committee. Except for
Frank Morrow, no member of the Board
may be a past or present employee,
trustee, director, or member of the
Pacific Mutual Lenders, any
Committee in the Chapter 11 case, or
the Company. The selection
committee includes 1 representative
from the Equity Security Holders'
Committee, 2 representatives from
the Pacific Mutual Lenders and Frank
Morrow (as a non-voting
representative).
After the first year, the Board of
Trustees of Reorganized CET will be
selected as follows: 1 member will
be
3
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elected by the holders of New CET
Preferred Stock, and 4 members will be
elected by the holders of New CET Common
Stock.
II. HOW THE PLAN WILL WORK FOR CURRENT
AND FORMER CET SHAREHOLDERS
A. Selected Plan
Definitions.
Old CET Common Stock: All common stock
and trust shares of the Company which
were issued and outstanding or authorized
prior to August 8, 1994.
Old CET Securities: All warrants,
options, trust certificates or other
equity securities of the Company which
were issued and outstanding or
authorized prior to August 8, 1994,
other than the Old CET Common Stock.
Old CET Common Stock Record Date:
June 9, 1994, the date established by the
Bankruptcy Court for determining the
record owners of Old CET Common Stock for
purposes of voting on, and receiving
distributions under, the Plan.
B. Classification of Current and
Former CET Shareholders.
The Plan divides current and former
shareholders of the Company into the
following four classes:
Class 17 (a) (Claims By Former CET
Shareholders): This class includes
every Allowed Claim arising from a
request for rescission of a purchase or
sale of Old CET Common Stock or for
damages arising from such a purchase or
sale, or for reimbursement or
contribution, which claim is held by a
person who does not own, as of the Old
CET Common Stock Record Date, the Old
4
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CET Common Stock which forms the
basis of such claim.
Class 17 (b) (Claims By Current CET
Shareholders): This class includes
every Allowed Claim arising from a
request for the rescission of a purchase
or sale of Old CET Common Stock or for
damages arising from such a purchase or
sale, or for reimbursement or
contribution, which claim is held by a
person who owns, as of the Old CET
Common Stock Record Date, the Old CET
Common Stock which forms the basis of
such claim.
Class 18(a): This class consists of
those persons who hold 1,000 or less
shares of Old CET Common Stock on the
Old CET Common Stock Record Date.
Class 18(b): This class consists of
those persons who hold more than 1,000
shares of Old CET Common Stock on the
Old Common Stock Record Date.
C. Treatment of Current and Former CET
Shareholders:
Class 18(a): Distributions to persons
holding 200 or less shares of Old CET
Common Stock: Except as provided in
Section G below, each person in Class
18(a) who holds no more than 200 shares
of Old CET Common Stock will receive
$.20 per share for each share of his or
her Old CET Common Stock, unless the
person elects by ballot to receive a pro
rata distribution of New CET Common
Stock instead of cash.
Class 18(a): Distributions to persons
holding between 201 and 1,000 shares of
Old CET Common Stock: Each person in
Class 18(a) who holds between 201 and
1,000 shares of Old CET Common Stock
will receive a pro rata distribution of
5
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New CET Common Stock, unless the
person elects by ballot to receive
$.20 per share for each share of
his or her Old CET Common Stock
instead of and in lieu of the New
CET Common Stock.
Class 18(b): Each person in Class
18(b) who holds more than
1,000 shares of Old CET
Common Stock will receive a
pro rata distribution of New
CET Common Stock.
Class 17(a): The Plan provides that
every Allowed Claim in Class
17(a) will be subordinated to
creditors and will have the
same priority as the holders
of Old CET Common Stock in
Classes 18(a) and 18(b).
Persons in Class 17(a) will
receive distributions of cash
or New CET Common Stock
calculated on the same basis
as distributions of cash or
New CET Common Stock made to
the shareholders in Classes
18(a) and 18(b). Each
distribution to Class 17(a)
will be based on the number
of shares of Old CET Common
Stock involved in the
purchase or sale transaction
which is the basis of the
alleged claim, without regard
to the dollar amount of
damages, if any, alleged in
such claim.
Class 17(b): Every Allowed Claim in
Class 17(b) will be
subordinated to creditors and
will have the same priority
as the holders of Old CET
Common Stock in Classes 18(a)
and 18(b). Persons in Class
17(a) will receive
distributions of cash or New
CET Common Stock calculated
on the same basis as
distributions of cash or New
CET Common Stock made to
shareholders in Classes 18(a)
or 18(b). However, only one
distribution will be made on
account of each share of Old
CET Common Stock with respect
to which the same person
asserts both a Class 17(b)
claim and a Class 18(a)
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or 18(b) equity interest. Each
distribution to Class 17(b)
will be based on the number
of shares of Old CET Common
Stock involved in the
purchase or sale transaction
underlying the claim, without
regard to the dollar amount
of damages, if any, alleged
in the claim.
D. Number of Shares of New CET
Common Stock To Be
Distributed. The formula for
calculating the number of
shares to be issued is
somewhat complicated.
However, the number of shares
of New CET Common Stock to be
distributed to each person in
Classes 17(a), 17(b), 18(a)
or 18(b) is expected to be
about 1 share of New CET
Common Stock for every 10
shares of Old CET Common
Stock. The shares of New CET
Common Stock ultimately held
by Classes 17(a), 17(b),
18(a) and 18(b) may be less
than 49% of the total, after
giving effect to the cash
redemptions.
E. Cash Payments. Any cash
payments to the persons in
Classes 17(a), 17(b) or 18(a)
may or may not be made, at
the option of the Plan
proponents, depending on the
cash requirements of
Reorganized CET on the
Effective Date of the Plan.
In the event any person in
Classes 17(a), 17(b) or 18(a)
does not receive the cash
payment which he or she
elected, each such person
will receive instead a pro
rata distribution of New CET
Common Stock.
F. No Distribution of Fractional
Shares or Dollars. All
distributions of cash will be
rounded up or down to the
nearest whole dollar and all
distributions of New CET
Common Stock will be rounded
up or down to the nearest
whole number of shares.
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G. No De Minimis Distribution.
Pursuant to Rule 3010 of the
Federal Rules of Bankruptcy
Procedure, there will be no
distribution to persons in
Classes 17(a), 17(b) or 18(a)
if the claim or interest is
based on less than 25 shares
of Old CET Common Stock or
would result in less than a
$5.00 distribution. This is
to protect Reorganized CET
from the administrative
burden of accounting for and
processing minimal amounts
for which the cost to
Reorganized CET is likely to
exceed the benefit to the
present or former
shareholder. The value of
the New CET Common Stock
would hardly be in excess of
postage costs alone, and the
cost of trading or servicing
small share amounts would not
be economical to the
shareholders.
H. Cancellation of Old CET Common
Stock. All Old CET Common
Stock and old CET securities
will be cancelled and
terminated under the Plan.
Any person in Classes 18(a),
18(b) or 17(b) who does not
submit his or her original
certificates of Old CET
Common Stock to Reorganized
CET's Stock Transfer Agent
within one year of the
Effective Date of the Plan
will forfeit the right to
receive any cash redemption
or any New CET Common Stock
under the Plan.
(4) The Company has 25,093,426 shares of common
stock outstanding. Pursuant to the terms of
the Plan, all outstanding shares of common
stock will be terminated and cancelled, and
approximately 2,450,000 shares of new common
stock issued in its place. In addition,
2,550,000 shares of new common stock, and
11,250,000 shares of preferred stock,
representing 100% of the Company's preferred
stock, will be issued to the Pacific Mutual
Lenders.
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(5) Information as to the Company's assets and
liabilities is attached hereto as described
in Item 7(b) below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Third Amended Plan of Reorganization, as Modified, of
Commonwealth Equity Trust, as required pursuant to
Item 3(b)(3).
99.2 Commonwealth Equity Trust and Affiliates Consolidated
Condensed Balance Sheets as of June 30, 1994 and
September 30, 1993, as required pursuant to Item
3(b)(5).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMONWEALTH EQUITY TRUST
By: /s/ Frank A. Morrow
----------------------------------------
Name: Frank A. Morrow
-------------------------------------
Title: Chief Executive Officer
------------------------------------
Date: August 8, 1994
9
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EXHIBIT 99.1
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
RICHARD M. PACHULSKI, ESQ. [S.B. # 90073]
JAMES I. STANG, ESQ. [S.B. # 94435]
STANLEY E. GOLDICH, ESQ. [S.B. # 92659]
JEFFREY N. POMERANTZ, ESQ. [S.B. #143717]
10100 Santa Monica Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: (310) 277-6910
Attorneys for Commonwealth Equity Trust
Debtor and Debtor in Possession
MURPHY, WEIR & BUTLER
A Professional Corporation
MARGARET SHENEMAN, ESQ. [S.B. # 72718]
ROBERT A. JULIAN, ESQ. [S.B. # 88469]
ELLEN A. CARROLL, ESQ. [S.B. # 95716]
101 California Street, 39th Floor
San Francisco, California 94111
Telephone: (415) 398-4700
Attorneys for Pacific Mutual Life Insurance
Company, as Agent for Secured Lenders
BRONSON, BRONSON & McKINNON
LUCINDA DENNIS, ESQ. [S.B. # 38153]
SARAH SISSON, ESQ. [S.B. # 103041]
444 South Flower Street, #2500
Los Angeles, CA 90071-2901
Telephone: (213) 626-5314
Attorneys for the Official Unsecured Creditors' Committee
[List of Counsel continued on page i]
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF CALIFORNIA
In re ) Case No. 93-26727-C11
)
COMMONWEALTH EQUITY TRUST, ) Chapter 11
)
Debtor. ) THIRD AMENDED PLAN OF
) REORGANIZATION, AS MODIFIED
)
)
)
_________________________________________)
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GREENBERG, GLUSKER, FIELDS,
CLAMAN & MACHTINGER
MARC S. COHEN, ESQ. [S.B. # 65486]
PAULA J. PETERS, ESQ. [S.B. # 41513]
JOHN L. CHILD, ESQ. [S.B. #40725]
GARY L. KAPLAN, ESQ. [S.B. # 71414]
1900 Avenue of the Stars, Suite 2000
Los Angeles, California 90067
Telephone: (310) 553-3610
Attorneys for Commonwealth Equity Trust
Debtor and Debtor in Possession
DOWNEY BRAND SEYMOUR & ROHWER
R. DALE GINTER, ESQ. [S.B. # 100784]
LAURA REIMCHE, ESQ. [S.B. # 139804]
555 Capitol Mall, 10th Floor
Sacramento, California 95814
Telephone: (916) 441-0131
Attorneys for the Official Equity Security
Holders' Committee
i
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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ARTICLE I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW . . . . . . . . . . . . . 1
A. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. Rules of Interpretation, Computation of Time and Governing Law . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III. CLASSES OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A. Class Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV. TREATMENT OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
A. Treatment of Unclassified Claims and Unimpaired Classes . . . . . . . . . . . . . . . . . . . . . . . . 26
B. Treatment of Impaired Claims and Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V. EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
A. Executory Contracts Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
B. Franchise Agreements, Labor Agreements, and Other Contracts . . . . . . . . . . . . . . . . . . . . . . 61
C. Claims Arising From Rejection of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
D. Stipulations With Holiday Inns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VI. MEANS OF EXECUTION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
A. Sources Of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
B. New Credit Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
C. Appointment of Disbursing Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
D. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
E. Disputed Claim Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
F. Unclaimed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
G. De Minimis Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
H. Fees for Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
I. Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
J. Public Trading and Registration of New Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
K. Cancellation of Certain Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
L. Prohibition of Issuance of Non-Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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ARTICLE VII. POST-CONFIRMATION MANAGEMENT AND OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
A. Composition of Reorganized CET Initial Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . 68
B. Composition of Subsequent Reorganized CET Board of Trustees . . . . . . . . . . . . . . . . . . . . . . 68
C. Termination of Existing Members of CET Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . 69
D. Post-Confirmation Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
E. Authorized Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
F. Other Corporate and Trust Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
G. New Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
H. Revesting of Remaining Assets and Post-Confirmation Business Operations . . . . . . . . . . . . . . . . 70
I. New Stock Options for Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VIII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
A. Appointment of Reorganized CET as Representative of the Estate . . . . . . . . . . . . . . . . . . . . . 71
B. Claims Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
C. Continuing Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
D. Resolution of the Luebkeman Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
E. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
F. Waiver of Adequate Protection Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
G. Release of Lenders Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
H. Retention of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
I. Orders to Aid Consummation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
J. Modification of Plan; Revocation and Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
K. Standing of Pre-Effective Date CET Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . 77
L. Discharge of Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
M. Discharge of CET and Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
N. Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
O. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
P. Conditions to Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Q. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
R. Headings of Articles and Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
S. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
T. Stock Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
U. Confirmation Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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TABLE OF EXHIBITS
-----------------
<TABLE>
<S> <C>
EXHIBIT A SUMMARY OF TERMS OF LENDERS' SENIOR SECURED LOAN DOCUMENTS
EXHIBIT B SUMMARY OF TERMS OF NEW CET PREFERRED STOCK
EXHIBIT C SUMMARY OF TERMS OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D SUMMARY OF TERMS OF NEW CREDIT LINE
EXHIBIT E-1 [FORM OF] NEW CET UNSECURED NOTES
EXHIBIT E-2 [FORM OF] NEW KROEGER NOTE
EXHIBIT F FLORIN-PERKINS PROPERTIES LOT NUMBERS AND PARCEL NUMBERS
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Commonwealth Equity Trust, Debtor and Debtor in Possession in
this case under chapter 11 of the United States Bankruptcy Code, 11 U.S.C.
Section 101 et. seq.; Pacific Mutual Life Insurance Company, on behalf of
itself and as agent for the Lenders; and the Official Equity Security Holders'
Committee appointed in this Chapter 11 case, and the Official Unsecured
Creditors' Committee appointed in this case (collectively "Proponents") submit
this Third Amended Plan of Reorganization ("Plan") for consideration by
creditors and equity interest holders.
ARTICLE I.
INTRODUCTION
------------
This Plan designates classes of claims and classes of interests,
identifies unimpaired classes, provides for the treatment of impaired classes
and provides adequate means for the implementation of the Plan of
Reorganization, among other things. A separate document entitled Disclosure
Statement for Third Amended Plan of Reorganization is being sent as an
accompaniment to the Plan. In addition, a form of ballot is being provided by
which creditors and interest holders may vote their acceptance or rejection of
the Plan of Reorganization. CET, Lenders, the Equity Security Holders'
Committee, and the Unsecured Creditors' Committee are co-proponents of the
Plan, under Federal Rules of Bankruptcy Procedure 3016 and 3019.
ARTICLE II.
DEFINED TERMS, RULES OF
-----------------------
INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW
-----------------------------------------------------
A. DEFINED TERMS.
-------------
The definitions contained in the United States Bankruptcy Code, 11
U.S.C. Section 101, et seq., are incorporated herein by this reference
notwithstanding the foregoing the following definitions shall apply to
capitalized terms used in the Plan:
1. Account: A federally insured and/or bonded, interest bearing
deposit account selected by CET.
2. Administrative Claim: An Allowed Claim for costs and
expenses of administration under sections 503(b) and 507(b)(1) of the Code,
including (a) the actual and necessary costs and expenses incurred after the
Petition Date of preserving the Estate and operating the business of CET; (b)
compensation for legal, financial advisory, accounting, and other services and
reimbursement of expenses awarded or allowed under sections 330(a) or 331 of
the Code; (c) all fees and charges assessed against CET under chapter 123,
Title 28, United States Code, 28 U.S.C. Section Section 1911 to 1930; and (d)
all Claims for real
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property taxes and other taxes first incurred after the Petition Date, to the
extent such Claims are entitled to priority under sections 503(b)(1) and
507(a)(1) of the Code pursuant to applicable law to the extent the Court
determines they are Administrative Claims or the County agrees to apply them as
such.
3. Affiliate: Every Person that was an affiliate as of the
Petition Date, or is an affiliate as of immediately prior to the Confirmation
Date, as is defined in section 101(2) of the Code.
4. Allowed Claim or Allowed Equity Interest: A Claim against,
or Equity Interest in, CET or the Estate to the extent that: (a) a proof of
such Claim or Equity Interest was (i) timely filed; (ii) deemed filed
pursuant to section 1111(a) of the Code, and appears on schedules filed by the
Debtor on March 21, 1994; (iii) not filed for an Equity Interest of the Debtor
because the filing of a proof of interest for such Equity Interest was not
required, or (iv) deemed timely filed pursuant to a Final Order; and (b) such
Claim or Equity Interest is (i) not a Disputed Claim or Disputed Equity
Interest, or (ii) to the extent it is a Disputed Claim or Disputed Equity
Interest, it is allowed, but only to the extent allowed, by a Final Order.
5. Allowed Mechanic's Lien Claims: All Allowed Claims of
Persons who hold valid, enforceable and perfected mechanic's lien Claims
under California law against any of the Real Properties as of the Petition
Date.
6. Allowed Priority Unsecured Claims: All Allowed Claims
entitled to priority under sections 507(a)(3), (4), (5) or (6) of the Code.
7. Allowed Secured Real Property Tax Claims: All Allowed Claims
for real property taxes which are secured by any of the Real Properties.
8. Allowed Priority Unsecured Tax Claims: All Allowed Claims
entitled to priority under section 507(a)(7) of the Code.
9. Ballot: The Ballot for accepting or rejecting this Plan.
10. Ballot Date: The date set by the Bankruptcy Court by which
all Ballots with respect to this Plan must be received.
11. Bankruptcy Court or Court: The United States Bankruptcy
Court for the Eastern District of California, or such other court or tribunal
as shall hereinafter be confirmed or created by lawful authority, with
authority and jurisdiction to confirm the Plan under chapter 11 of the Code.
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12. Bankruptcy Rules: The Federal Rules of Bankruptcy
Procedure and the Local Bankruptcy Rules for the Eastern District of California
as now in effect or hereafter amended.
13. Business Day: Any day other than a Saturday, Sunday
or a legal holiday (as defined in Bankruptcy Rule 9006(a)).
14. CalREIT: California Real Estate Investment Trust, a
California real estate investment trust, and all trustees of CalREIT which are
incumbent immediately prior to the Effective Date, but only in their capacities
as trustees, and not as individuals.
15. CalREIT Stock Interest: The interest of CET, now existing or
hereafter arising, in CalREIT.
16. Cash: Cash or cash equivalents including, but not
limited to, bank deposits, checks or other similar items.
17. Chapter 11 Case: The case under chapter 11 of the
Bankruptcy Code commenced by CET and styled In re Commonwealth Equity Trust,
Case No. 93-26727-C11.
18. Claim: Every right, cause of action, defense,
setoff, recoupment, counter-claim and remedy, whether or not asserted or
encompassed within the statutory definition set forth in section 101(5) of the
Code.
19. Code: Title 11, United States Code, as amended. All
citations in the Plan to section numbers are to the Code unless expressly
indicated otherwise.
20. Commercial Federal: Commercial Federal Bank, on
behalf of itself and as loan servicer for Columbus Mutual Life Insurance
Company, their Affiliates, successors and assigns, and their predecessors in
interest, if any, under the instruments and deed of trust which evidences or
secures the Commercial Federal Secured Claim.
21. Commercial Federal Restructured Deed of Trust: That
certain modification of the deed of trust to be issued under this Plan to
Commercial Federal, which deed of trust encumbers that certain real property
owned by CET commonly known as Redding Hotel, located at 1900 Hilltop Drive,
Redding, California. The Commercial Federal Restructured Deed of Trust will
secure payment of the Commercial Federal Restructured Secured Note and shall be
in a form which will be filed with the Bankruptcy Court prior to the Effective
Date.
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22. Commercial Federal Restructured Secured Note: That
certain amendment to secured note to be issued under this Plan to Commercial
Federal on account of the Commercial Federal Secured Claim, in a form which
will be filed with the Bankruptcy Court prior to the Effective Date.
23. Commercial Federal Secured Claim: Every Allowed Claim of
Commercial Federal that is secured by a valid, perfected and not avoidable
lien on personal property or real property held by CET commonly known as
Redding Hotel, located at 1900 Hilltop Drive, Redding, California, including
(i) outstanding principal currently due to Commercial Federal plus (ii) unpaid
interest, premiums, penalties, late fees, and default interest accrued, but
unpaid as of the Effective Date to the extent provided for in the agreements
under which said Allowed Claim arises and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date;
and (iii) attorneys fees and costs accrued but unpaid as of the Effective Date
to the extent provided for by said agreements and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date.
24. Confirmation: The entry by the Court of the Order confirming
the Plan.
25. Confirmation Date: Date of the Confirmation.
26. Confirmation Order: Order of the Bankruptcy Court confirming
the Plan.
27. Creditors' Committee: The Official Unsecured Creditors'
Committee in this Chapter 11 Case which has been appointed by the Office of
the United States Trustee.
28. Debtor or CET: Commonwealth Equity Trust, a California real
estate investment trust, which is the debtor and debtor in possession in this
Chapter 11 Case, and all trustees of CET who are incumbent immediately prior
to the Effective Date, but only in their capacities as trustees and not as
individuals.
29. Declaration of Trust: That certain Declaration of Trust of
Commonwealth Equity Trust dated July 31, 1973, as amended from time to time.
30. Disbursing Agent: Reorganized CET and/or any other Person
designated by Proponents or by an order to act in the capacity of Disbursing
Agent pursuant to this Plan.
31. Disclosure Statement: The written statement describing this
Plan that is prepared by the Proponents and distributed in accordance with
sections 1125, 1126(b) and 1145 of the Code, and Bankruptcy Rule 3017, as
amended, in its present
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form or as the same may be altered, amended, or modified by the Proponents and
approved by the Bankruptcy Court.
32. Disputed Claim or Disputed Equity Interest: A Claim
against, or Equity Interest in, the Debtor (a) which has been included in any
schedules filed with the Court at any time as disputed, contingent, or
unliquidated, or (b) as to which an objection has been filed before six (6)
months following the Confirmation Date or the date upon which Reorganized CET
first becomes aware of said Claim, whichever is later, and which objection is
not the subject of a Final Order and has not been withdrawn.
33. Distribution(s): The Cash, New CET Common Stock, New
CET Unsecured Notes, New CET Preferred Stock, Lenders Restructured Loan
Documents, and all other property and instruments to be distributed under the
Plan to holders of Allowed Claims and Allowed Equity Interests.
34. Effective Date: The later of (i) the first Business
Day which is eleven (11) days following the Confirmation Date or such other
date as the Proponents may fix which shall be not later than sixty (60) days
following Confirmation, or (ii) the first business day after such date under
clause (i) on which there is not in force any stay or injunction against the
enforcement of the Plan or the Confirmation Order; or (iii) October 1, 1994,
provided that the conditions to the Effective Date set forth in Article VIII.P.
have been satisfied.
35. Estate: The Estate as created in this Chapter 11 Case under
section 541 of the Code.
36. Estate Actions: Any and all rights, defenses, or
Claims that the Estate has or may have including, without limitation, rights of
setoff, counterclaim, or recoupment, and Claims on contracts or for breaches of
duties imposed by law and Claims pursuant to sections 362, 544, 545, 547, 548,
549, 550 and 553 of the Code.
37. Equity Holders' Committee: The Official Equity
Holders' Committee in this Chapter 11 Case which has been appointed by the
Office of the United States Trustee.
38. Equity Interest: An interest in an equity security
of CET encompassed within the statutory definition set forth in section 101(16)
of the Code.
39. Final Order: An order of the Bankruptcy Court or the
district court as to which (i) any appeal or petition for rehearing,
reconsideration, or certiorari that has been filed has been finally determined
or dismissed, or (ii) the relevant time
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for such appeal or such petition has expired and a notice of appeal or petition
has not been filed timely.
40. First Nationwide: First Nationwide, its Affiliates,
successors and assigns, and First Nationwide's predecessors in interest, if
any, under the instruments and deed of trust which evidences or secures the
First Nationwide Secured Claim.
41. First Nationwide Restructured Deed of Trust: That
certain modification of the deed of trust to be issued under this Plan to First
Nationwide, which deed of trust encumbers that certain real property owned by
CET commonly known as Hurley Ethan II located at 2025, 2035 and 2045 Hurley
Way, Sacramento, California. The First Nationwide Restructured Deed of Trust
will secure payment of the First Nationwide Restructured Secured Note and shall
be in a form which will be filed with the Bankruptcy Court prior to the
Effective Date.
42. First Nationwide Restructured Secured Note: That
certain amendment to secured note to be issued under this Plan to First
Nationwide on account of the First Nationwide Secured Claim, in a form which
will be filed with the Bankruptcy Court prior to the Effective Date.
43. First Nationwide Secured Claim: Every Allowed Claim
of First Nationwide that is secured by a valid, perfected and not avoidable
lien on personal property or real property held by CET commonly known as Hurley
Ethan II located at 2025, 2035 and 2045 Hurley Way, Sacramento, California,
including (i) outstanding principal currently due to First Nationwide plus (ii)
unpaid interest, premiums, penalties, late fees, and default interest accrued,
but unpaid as of the Effective Date to the extent provided for in the
agreements under which said Allowed Claim arises and to the extent allowed by
the Bankruptcy Court or agreed to by the Proponents prior to the Effective
Date; and (iii) attorneys fees and costs accrued but unpaid as of the Effective
Date to the extent provided for by said agreements and to the extent allowed by
the Bankruptcy Court or agreed to by the Proponents prior to the Effective
Date.
44. Florin-Perkins Properties: Twenty-three (23) separate
parcels of real property owned by CET and located in Sacramento, California
at: (a) Unsworth Avenue, Outfall Circle; (b) Younger Creek Drive; and (c)
Florin-Perkins Road. Attached as Exhibit "F" to the Plan is a list of bond
numbers, lot numbers and corresponding parcel numbers for the Florin-Perkins
Properties.
45. Florin-Perkins Secured Bond Claims (Excluding Lots 21, 22 and
38): Every Claim of the City of Sacramento, as agent for the Person who holds
the beneficial interest, pursuant to
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bonds issued by the City of Sacramento in connection with City Improvement
Bonds -- 1911 Bond Act, Series No. 1987-04, which are secured by each of the
separate parcels of the Florin-Perkins Properties excluding Lots 21, 22 and 38.
46. Florin-Perkins Secured Bond Claim (OK&B/Lot 38): Every Claim
of OK&B, pursuant to bond number 37 issued by the City of Sacramento in
connection with City Improvement Bonds -- 1911 Bond Act, Series No. 1987-04,
which is secured by Lot 38 of the Florin-Perkins Properties.
47. Florin-Perkins Secured Bond Claim (Schumacher/Lot 21): Every
Claim of Schumacher pursuant to bond number 21 issued by the City of
Sacramento in connection with City Improvement Bonds -- 1911 Bond Act,
Series No. 1987-04, which is secured by Lot 21 of the Florin-Perkins
Properties.
48. Florin-Perkins Secured Bond Claim (Schumacher/Lot 22): Every
Claim of Schumacher pursuant to bond number 22 issued by the City of
Sacramento in connection with City Improvement Bonds -- 1911 Bond Act,
Series No. 1987-04, which is secured by Lot 22 of the Florin-Perkins
Properties.
49. General Unsecured Claims: All Claims against the Estate,
however arising, not entitled to priority under section 507(a) of the Code,
which are not secured by any property of the Estate including, without
limitation, Claims based upon the rejection of executory contracts or unexpired
leases, but not including the Kroeger Claim or the Claims in the Convenience
Class 15(a).
50. Insider: Every Person that was an insider as of the
Petition Date, or is an insider as of immediately prior to the Confirmation
Date, as defined in section 101(31) of the Code.
51. Kroeger: Henry and Katherine Kroeger, their Affiliates,
successors and assigns, and any Person who holds any interest in the Kroeger
Claim.
52. Kroeger Claim: The Claim of Kroeger against the Estate
arising under the partnership, note, and guaranty transactions described
in any proof of Claim filed by Kroeger.
53. Lenders or Pacific Mutual Lenders: (1) Pacific Mutual Life
Insurance Company; (2) the Prudential Insurance Company of America; (3) Pruco
Life Insurance Company; (4) Orix USA Corporation; and (5) Weyerhaeuser Company
Master Retirement Trust, TCW Special Credits Fund IV, TCW Special Credits Plus
Fund, TCW Special Credits Trust IV, and TCW Special Credits Trust IVA (as
successors in interest to First Interstate Bank of California and Merrill
Lynch Life Insurance Company); (6) First Interstate Bank of California; (7)
Merrill Lynch Life Insurance
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Company; and each of them, and each of their respective Affiliates,
predecessors, successors and assigns.
54. Lenders Litigation: That certain adversary proceeding
commenced by CET and currently pending in the Bankruptcy Court entitled
Commonwealth Equity Trust v. Pacific Mutual Life Insurance Co., et al., Adv.
Proc. No. 93-2470.
55. Lender Loans: The loans, financing and other financial
accommodations made by the Lenders and their predecessors to the Debtor before
Confirmation, including the origination, restructuring, and administration of
such loans and other financial accommodations.
56. Lenders' Restructured Deeds of Trust: Those certain
modifications of deeds of trust to be issued to the Lenders under the Plan
which will encumber the Real Properties, and will modify the deeds of trust
recorded before the Petition Date. The Lenders' Restructured Deeds of Trust
will secure payment of the Lenders' Restructured Secured Notes. The Lenders'
Restructured Deeds of Trust shall be in a form which will be filed with the
Bankruptcy Court prior to the Effective Date.
57. Lenders' Restructured Loan Documents. The Lenders'
Restructured Secured Notes, the Lenders' Restructured Deeds of Trust, the
Lenders' Restructured Security Agreement and all other related documents and
agreements which evidence CET's obligations under, and security pledged in
connection with, the Lenders' Restructured Secured Notes.
58. Lenders' Restructured Secured Notes: Those certain senior
secured notes in the aggregate amount of Forty Million Dollars ($40,000,000)
to be issued to the Lenders on account of the Lenders' Claim, substantially as
described in Exhibit A attached to this Plan. The Lenders' Restructured
Secured Notes shall be in a form which will be filed with the Bankruptcy Court
prior to the Effective Date.
59. Lenders' Restructured Security Agreement: That certain
Restructured Security Agreement to be issued to the Lenders which will secure
payment of the Lenders' Restructured Secured Notes, which will be in a form
which will be filed with the Bankruptcy Court prior to the Effective Date.
60. Lenders' Claim: Every Claim of the Lenders which arose
out of the Lender Loans, and all collateral security therefore, including any
Priority Claim or Administrative Claim arising during the Chapter 11 Case
including those arising on account of the use of collateral or cash collateral,
or continuation of the automatic stay.
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61. Luebkeman Litigation: That certain litigation currently
pending in the Superior Court for the State of California, County of Sacramento
entitled Robert H. Luebkeman, derivatively on behalf of Commonwealth Equity
Trust v. B&B Property Investment, Development and Management Company, Inc., et
al., Civil Action No. 524638.
62. Miscellaneous Claims: (1) All Claims which any Person could
assert derivatively on behalf of the Debtor; (2) all Claims which any Person
could assert against Reorganized CET, as successor to or assignee of the
Debtor; (3) all Claims which are based upon, or which arise by reason of,
losses or damages caused by any Person's investment in the Debtor; and (4) all
Claims which are based upon, or arise by reason of, any alleged impairment of
the Debtor's ability to pay its debts to any Person.
63. Morrow: Frank Morrow, the Chief Executive Officer of CET.
64. New CET Common Stock: The new common stock of Reorganized
CET to be issued pursuant to the terms of the Plan.
65. New CET Preferred Stock: The new preferred stock of
Reorganized CET to be issued to the Lenders holding Class 2 Allowed Claims, the
terms of which are summarized on Exhibit B hereto.
66. New CET Unsecured Notes: The notes which may be issued to
the holders of the Class 15(b) Claims and the Class 16 Claims under Article
IV.B.19 and 20 herein in substantially the form attached hereto as
Exhibit E-1.
67. New Credit Line: The revolving line of credit to be
provided to Reorganized CET on the Effective Date, substantially as described
in Exhibit D hereto.
68. New Credit Line Documents: The documents evidencing the New
Credit Line.
69. New Credit Line Lender: The Person which delivers a
commitment to provide the New Credit Line (or its successors or assigns).
70. New Kroeger Note: The note which may be issued to the holder
of the Allowed Kroeger Claim in Class 16 under Article IV.B.20 herein, in
substantially the form attached hereto as Exhibit E-2.
71. New Stock Options: The stock options which may be granted to
management of Reorganized CET or to the members of the
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Reorganized CET board of trustees on or after the Effective Date under Articles
VII.G. and VII.I. of this Plan.
72. Notes Receivable: Any note receivable in which CET now or
hereafter holds any equitable, beneficial, or other interest, including
pledged and fractionalized notes receivable.
73. OK&B: OK&B, a California partnership, its Affiliates,
successors and assigns on behalf of itself, or as agent, and any Person who
holds the beneficial interest in bond number 37 which is secured by Lot 38 of
the Florin-Perkins Properties.
74. Old CET Common Stock: All common stock and trust shares of
CET which is issued and outstanding or authorized immediately prior to the
Confirmation Date.
75. Old CET Common Stock Record Date: A date which shall
be established by the Bankruptcy Court under Rules 3018(a) and 3017(d) for
determining the holders of Old CET Common Stock for purposes of voting on and
Distributions under the Plan.
76. Old CET Securities: All warrants, options, trust
certificates, or other equity securities of CET which are issued and
outstanding or authorized immediately prior to Confirmation, other than the Old
CET Common Stock.
77. Original Claims Bar Date: December 14, 1993, which was
the deadline established by the Bankruptcy Court for filing proofs of Claim
against the Estate, which, the Bankruptcy Court ordered, applies to all Persons
listed on CET's original bankruptcy schedules filed with the Bankruptcy Court
on September 10, 1993 who are not subject to the Supplemental Claims and
Interests Bar Date, which Persons were mailed a copy of the notice of CET's
section 341(a) hearing which contained the Original Claims Bar Date.
78. PPI: Pacific Palisades Investors, its Affiliates,
successors and assigns, and any predecessors in interest and any Person who
holds any interest in the note or the deed of trust which evidences or secures
the PPI Claim.
79. PPI Claim: Every Claim of PPI that is evidenced by
any note or obligation which purports to be secured by real property owned by
CET commonly known as Pacific Palisades which is located at 881 Alma Real Drive
in Pacific Palisades, California whether or not the PPI Claim is secured by
property with a value equal to the Claim.
80. Partnership Interests: CET's interests in CR Properties,
Placer Ranch Partners, L.P., and other partnerships and joint ventures.
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81. Person: An individual, partnership, corporation,
association, joint stock company, joint venture, estate, trust, unincorporated
organization, or any government or any political subdivision thereof or other
entity.
82. Petition Date: August 2, 1993.
83. Plan: This Third Amended Plan of Reorganization, as is or as
further amended.
84. Principal Mutual: Principal Mutual, its Affiliates,
successors and assigns, and Principal Mutual's predecessors in interest, if
any, under the instruments and deed of trust which evidences or secures the
Principal Mutual Secured Claim.
85. Principal Mutual Secured Claim: Every Allowed Claim
of Principal Mutual that is secured by a valid, perfected and not avoidable
lien on personal property or real property held by CET commonly known as
Pacific Palisades located at 881 Alma Real Drive in Pacific Palisades,
California, including (i) outstanding principal currently due to Principal
Mutual plus (ii) unpaid interest, premiums, penalties, late fees, and default
interest accrued, but unpaid as of the Effective Date to the extent provided
for in the agreements under which said Allowed Claim arises and to the extent
allowed by the Bankruptcy Court or agreed to by the Proponents prior to the
Effective Date; and (iii) attorneys fees and costs accrued but unpaid as of the
Effective Date to the extent provided for by said agreements and to the extent
allowed by the Bankruptcy Court or agreed to by the Proponents prior to the
Effective Date.
86. Proponents: CET, the Pacific Mutual Lenders, the Equity
Holders' Committee, and the Creditors' Committee, and each of them, in their
capacities as Proponents of this Plan.
87. Pro Rata: Proportionately so that the ratio of the amount of
the Distribution made on account of a particular Allowed Claim or Allowed
Equity Interest in a class to the aggregate amount of all Distributions made
on account of all Allowed Claims and Allowed Equity Interests entitled to
participate in the Distribution to said class is the same as the ratio of the
amount of such particular Allowed Claim or Allowed Equity Interest to the
amount of all Allowed Claims or Allowed Equity Interests entitled to
participate in the Distribution to said class.
88. Real Properties: Any real property in which CET owns a
fee title or ground lease interest.
89. Redding Hotel Improvement Loan: A loan of up to one million
dollars ($1,000,000) which Reorganized CET may
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attempt to obtain from any Person which will be used by Reorganized CET to make
improvements to real property owned by CET located at 1900 Hilltop Drive,
Redding, California, which loan may be secured by a deed of trust encumbering
the Redding Hotel, which deed of trust shall be junior to the Commercial
Federal Restructured Deed of Trust.
90. Reorganized CET: CET, as reorganized pursuant to the terms
of the Plan.
91. Reorganized CET Initial Board of Trustees: The initial
members of the board of trustees or directors for Reorganized CET.
92. Reorganized CET Initial Board of Trustees Election Committee:
A committee consisting of four (4) members, two (2) of whom shall be designated
by the Lenders, one (1) of whom shall be designated by the Equity Holders'
Committee, and one (1) of whom shall be Morrow provided, however, that Morrow
shall be a non-voting member of the Reorganized CET Board of Trustees Election
Committee.
93. RTC: The Resolution Trust Corporation as receiver for
Homefed Bank N.A., its Affiliates, successors and assigns, and RTC's
predecessors in interest, if any, under the instruments and deeds of trust
which evidence or secure any of the RTC Secured Claims.
94. RTC Restructured Deed of Trust #1: That certain
modification of the deed of trust to be issued under this Plan to RTC, on
account of the RTC Restructured Secured Note #1 - Lanane Way, which deed of
trust encumbers that certain real property owned by CET commonly known as
Lanane Way located at 3900 Lanane Way, Sacramento, California. The RTC
Restructured Deed of Trust #1 will secure payment of the RTC Restructured
Secured Note #1 and shall be in a form which will be filed with the Bankruptcy
Court prior to the Effective Date.
95. RTC Restructured Deed of Trust #2: That certain
modification of the deed of trust to be issued under this Plan to RTC, on
account of the RTC Restructured Secured Note #2 - North Freeway, which deed of
trust encumbers that certain real property owned by CET commonly known as North
Freeway located at 3755 North Freeway Boulevard, Sacramento, California. The
RTC Restructured Deed of Trust #2 will secure payment of the RTC Restructured
Secured Note #2 and shall be in a form which will be filed with the Bankruptcy
Court prior to the Effective Date.
96. RTC Restructured Secured Note #1: That certain amendment to
secured note to be issued under this Plan to RTC on account of the RTC Secured
Claim #1 - Lanane Way, in a form which
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will be filed with the Bankruptcy Court prior to the Effective Date.
97. RTC Restructured Secured Note #2: That certain
amendment to secured note to be issued under this Plan to RTC on account of the
RTC Secured Claim #2 - North Freeway, in a form which will be filed with the
Bankruptcy Court prior to the Effective Date.
98. RTC Secured Claim #1 - Lanane Way: Every Allowed
Claim of the RTC that is secured by a valid, perfected, and not avoidable lien
on personal property or real property held by CET commonly known as Lanane Way
located at 3900 Lanane Way, Sacramento, California, including (i) outstanding
principal currently due to RTC plus (ii) unpaid interest, premiums, penalties,
late fees, and default interest accrued but unpaid as of the Effective Date to
the extent provided for in the agreements under which said Allowed Claim arose,
and to the extent allowed by the Bankruptcy Court or agreed to by the
Proponents prior to the Effective Date; and (iii) attorneys fees and costs
accrued unpaid as of the Effective Date to the extent provided for by said
agreements and to the extent allowed by the Bankruptcy Court or agreed to by
the Proponents prior to the Effective Date.
99. RTC Secured Claim #2 - North Freeway: Every Allowed
Claim of the RTC that is secured by a valid, perfected, and not avoidable lien
on personal property or real property held by CET commonly known as North
Freeway located at 3755 North Freeway Boulevard, Sacramento, California,
including (i) outstanding principal currently due to RTC plus (ii) unpaid
interest, premiums, penalties, late fees, and default interest accrued but
unpaid as of the Effective Date to the extent provided for in the agreements
under which said Allowed Claim arose, and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date;
and (iii) attorneys fees and costs accrued unpaid as of the Effective Date to
the extent provided for by said agreements and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date.
100. Schumacher: Kern W. Schumacher, his Affiliates,
successors and assigns, on behalf of himself or as agent, and any Person who
holds the beneficial interest in bond numbers 21 and 22 which are secured by
Lot 21 or Lot 22 of the Florin-Perkins Properties.
101. Senior Mortgages: The obligations secured by the
following: (a) The Commercial Federal Restructured Deed of Trust, (b) the
State Farm Restructured Deed of Trust, (c) the First Nationwide Restructured
Deed of Trust, (d) the deed of trust securing the Principal Mutual Secured
Claim, (e) the deed
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of trust securing the PPI Claim, (f) all of the SunLife of America Restructured
Deeds of Trust, (f) each of the RTC Restructured Deeds of Trust, (h) the
SunLife of Canada Restructured Deed of Trust and (i) the liens securing all of
the Florin-Perkins Secured Bond Claims.
102. State Farm: State Farm Life Insurance Company, its
Affiliates, successors and assigns, and State Farm's predecessors in interest,
if any, under the instruments and deed of trust which evidences or secures the
State Farm Secured Claim.
103. State Farm Restructured Deed of Trust: That certain
modification of the deed of trust to be issued under this Plan to State Farm,
which deed of trust encumbers that certain real property owned by CET commonly
known as Hurley Ethan I located at 1300 Ethan Way, Sacramento, California. The
State Farm Restructured Deed of Trust will secure payment of the State Farm
Restructured Secured Note and shall be in a form which will be filed with the
Bankruptcy Court prior to the Effective Date.
104. State Farm Restructured Secured Note: That certain
amendment to secured note to be issued under this Plan to State Farm on account
of the State Farm Secured Claim, in a form which will be filed with the
Bankruptcy Court prior to the Effective Date.
105. State Farm Secured Claim: Every Allowed Claim of
State Farm that is secured by a valid, perfected and not avoidable lien on
personal property or real property held by CET commonly known as Hurley Ethan I
located at 1300 Ethan Way, Sacramento California, including (i) outstanding
principal currently due to State Farm plus (ii) unpaid interest, premiums,
penalties, late fees, and default interest accrued, but unpaid as of the
Effective Date to the extent provided for in the agreements under which said
Allowed Claim arises and to the extent allowed by the Bankruptcy Court or
agreed to by the Proponents prior to the Effective Date; and (iii) attorneys
fees and costs accrued but unpaid as of the Effective Date to the extent
provided for by said agreements and to the extent allowed by the Bankruptcy
Court or agreed to by the Proponents prior to the Effective Date.
106. Sun Life of America: Sun Life Insurance Company of
America, a Maryland corporation, its Affiliates, successors and assigns, and
Sun Life of America's predecessors in interest, if any, under the instruments
and deed of trust which evidence or secure any of the Sun Life of America
Secured Claims.
107. [Intentionally omitted.]
108. Sun Life of America Restructured Deed of Trust #2: That
certain modification of the deed of trust to be issued under
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this Plan to Sun Life of America, which deed of trust encumbers that certain
real property owned by CET commonly known as Regency Plaza located at 7143-7263
Greenback Lane, Citrus Heights, California. The Sun Life of America
Restructured Deed of Trust #2 will secure payment of the Sun Life of America
Restructured Secured Note #2 and shall be in a form which will be filed with
the Bankruptcy Court prior to the Effective Date.
109. Sun Life of America Restructured Deed of Trust #3:
That certain modification of the deed of trust to be issued under this Plan to
Sun Life of America, which deed of trust encumbers that certain real property
owned by CET commonly known as Sierra Oaks located at 4040-4130 Douglas
Boulevard, Roseville, California. The Sun Life of America Restructured Deed of
Trust #3 will secure payment of the Sun Life of America Restructured Secured
Note #3 and shall be in a form which will be filed with the Bankruptcy Court
prior to the Effective Date.
110. Sun Life of America Restructured Deed of Trust #4:
That certain modification of the deed of trust to be issued under this Plan to
Sun Life of America, which deed of trust encumbers that certain real property
owned by CET commonly known as Sunrise Hills located at 6241-6303 Sunrise
Boulevard, Citrus Heights, California. The Sun Life of America Restructured
Deed of Trust #4 will secure payment of the Sun Life of America Restructured
Secured Note #4 and shall be in a form which will be filed with the Bankruptcy
Court prior to the Effective Date.
111. Sun Life of America Restructured Deed of Trust #5:
That certain modification of the deed of trust to be issued under this Plan to
Sun Life of America, which deed of trust encumbers that certain real property
owned by CET commonly known as University Village located at 400-484 Howe
Avenue, 65-69 University Avenue, Sacramento, California. The Sun Life of
America Restructured Deed of Trust #5 will secure payment of the Sun Life of
America Restructured Secured Note #5 and shall be in a form which will be filed
with the Bankruptcy Court prior to the Effective Date.
112. [Intentionally omitted.]
113. Sun Life of America Restructured Secured Note #2:
That certain amendment to secured note to be issued under this Plan to Sun Life
of America on account of the Sun Life of America Secured Claim #2, in a form
which will be filed with the Bankruptcy Court prior to the Effective Date.
114. Sun Life of America Restructured Secured Note #3:
That certain amendment to secured note to be issued under this Plan to Sun Life
of America on account of the Sun Life of America Secured Claim #3, in a form
which will be filed with the Bankruptcy Court prior to the Effective Date.
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<PAGE> 21
115. Sun Life of America Restructured Secured Note #4:
That certain amendment to secured note to be issued under this Plan to Sun Life
of America on account of the Sun Life of America Secured Claim #4, in a form
which will be filed with the Bankruptcy Court prior to the Effective Date.
116. Sun Life of America Restructured Secured Note #5:
That certain amendment to secured note to be issued under this Plan to Sun Life
of America on account of the Sun Life of America Secured Claim #5, in a form
which will be filed with the Bankruptcy Court prior to the Effective Date.
117. Sun Life of America Secured Claim #1 - 425 University:
Every Allowed Claim of Sun Life of America that is secured by a
valid, perfected and not avoidable lien on personal property or real property
held by CET commonly known as 425 University located at 425 University Avenue,
Sacramento, California, including (i) outstanding principal currently due to
Sun Life of America plus (ii) unpaid interest, premiums, penalties, late fees,
and default interest accrued, but unpaid as of the Effective Date to the extent
provided for in the agreements under which said Allowed Claim arises and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date; and (iii) attorneys fees and costs accrued but unpaid as of
the Effective Date to the extent provided for by said agreements and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date.
118. Sun Life of America Secured Claim #2 - Regency Plaza:
Every Allowed Claim of Sun Life of America that is secured by a valid,
perfected and not avoidable lien on personal property or real property held by
CET commonly known as Regency Plaza located at 7143-7263 Greenback Lane, Citrus
Heights, California, including (i) outstanding principal currently due to Sun
Life of America plus (ii) unpaid interest, premiums, penalties, late fees, and
default interest accrued, but unpaid as of the Effective Date to the extent
provided for in the agreements under which said Allowed Claim arises and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date; and (iii) attorneys fees and costs accrued but unpaid as of
the Effective Date to the extent provided for by said agreements and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date.
119. Sun Life of America Secured Claim #3 - Sierra Oaks:
Every Allowed Claim of Sun Life of America that is secured by a valid,
perfected and not avoidable lien on personal property or real property held by
CET commonly known as Sierra Oaks located at 4040-4130 Douglas Boulevard,
Roseville, California, including (i) outstanding principal currently due to Sun
Life of
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<PAGE> 22
America plus (ii) unpaid interest, premiums, penalties, late fees, and default
interest accrued, but unpaid as of the Effective Date to the extent provided
for in the agreements under which said Allowed Claim arises and to the extent
allowed by the Bankruptcy Court or agreed to by the Proponents prior to the
Effective Date; and (iii) attorneys fees and costs accrued but unpaid as of the
Effective Date to the extent provided for by said agreements and to the extent
allowed by the Bankruptcy Court or agreed to by the Proponents prior to the
Effective Date.
120. Sun Life of America Secured Claim #4 - Sunrise Hills:
Every Allowed Claim of Sun Life of America that is secured by a valid,
perfected and not avoidable lien on personal property or real property held by
CET commonly known as Sunrise Hills located at 6241-6303 Sunrise Boulevard,
Citrus Heights, California (which property excludes the property occupied by
the TGIF restaurant), including (i) outstanding principal currently due to Sun
Life of America plus (ii) unpaid interest, premiums, penalties, late fees, and
default interest accrued, but unpaid as of the Effective Date to the extent
provided for in the agreements under which said Allowed Claim arises and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date; and (iii) attorneys fees and costs accrued but unpaid as of
the Effective Date to the extent provided for by said agreements and to the
extent allowed by the Bankruptcy Court or agreed to by the Proponents prior to
the Effective Date.
121. Sun Life of America Secured Claim #5 - University
Village: Every Allowed Claim of Sun Life of America that is secured by a
valid, perfected and not avoidable lien on personal property or real property
held by CET commonly known as University Village located at 400-484 Howe
Avenue, 65-69 University Avenue, Sacramento, California, including (i)
outstanding principal currently due to Sun Life of America plus (ii) unpaid
interest, premiums, penalties, late fees, and default interest accrued, but
unpaid as of the Effective Date to the extent provided for in the agreements
under which said Allowed Claim arises and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date;
and (iii) attorneys fees and costs accrued but unpaid as of the Effective Date
to the extent provided for by said agreements and to the extent allowed by the
Bankruptcy Court or agreed to by the Proponents prior to the Effective Date.
122. Sun Life of Canada: Sun Life Assurance Co. of
Canada, its Affiliates, successors and assigns, and Sun Life of Canada's
predecessors in interest, if any, under the instruments and deed of trust which
evidences or secures the Sun Life of Canada Secured Claim.
17
<PAGE> 23
123. Sun Life of Canada Restructured Deed of Trust: That
certain modification of the deed of trust to be issued under this Plan to Sun
Life of Canada, which deed of trust encumbers that certain real property leased
by CET commonly known as Timberlake located at 7501 Timberlake Blvd.,
Sacramento, California. The Sun Life of Canada Restructured Deed of Trust will
secure payment of the Sun Life of Canada Restructured Secured Note and shall be
in a form which will be filed with the Bankruptcy Court prior to the Effective
Date.
124. Sun Life of Canada Restructured Secured Note: That
certain amendment to secured note to be issued under this Plan to Sun Life of
Canada on account of the Sun Life of Canada Secured Claim, in a form which will
be filed with the Bankruptcy Court prior to the Effective Date.
125. Sun Life of Canada Secured Claim: Every Allowed
Claim of Sun Life of Canada that is secured by a valid, perfected and not
avoidable lien on personal property or real property leased by CET commonly
known as Timberlake located at 7501 Timberlake Blvd., Sacramento, California,
including (i) outstanding principal currently due to Sun Life of Canada plus
(ii) unpaid interest, premiums, penalties, late fees, and default interest
accrued, but unpaid as of the Effective Date to the extent provided for in the
agreements under which said Allowed Claim arises and to the extent allowed by
the Bankruptcy Court or agreed to by the Proponents prior to the Effective
Date; and (iii) attorneys fees and costs accrued but unpaid as of the Effective
Date to the extent provided for by said agreements and to the extent allowed by
the Bankruptcy Court or agreed to by the Proponents prior to the Effective
Date.
126. Supplemental Claims and Interests Bar Date: May 31,
1994 which was the supplemental deadline established by the Bankruptcy Court
for filing proofs of Claim and proofs of Equity Interest against the Estate
which, the Bankruptcy Court ordered, applies to persons who currently hold, or
have held at any time since August 2, 1990, Old CET Common Stock or Old CET
Securities, as well as any creditors whose Claims were modified by CET's
amended bankruptcy schedules filed with the Bankruptcy Court on March 21, 1994
in any of the following ways: (a) added to the amended schedules, (b) the
amount of the Claim was reduced by the amended schedules, (c) the Claim was
scheduled as disputed, contingent or unliquidated in the amended schedules but
was originally scheduled as undisputed on the original schedules, or (d) the
Claim was scheduled as having a different priority on the amended schedules and
any unknown creditors or interest holders.
///
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B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW:
--------------------------------------------------------------
1. RULES OF INTERPRETATION: 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; (b)
any reference in the Plan to a contract, instrument, release or other agreement
or document being in a particular form or on particular terms and conditions
means that such agreement or 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 means 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; and (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.
2. COMPUTATION OF TIME: In computing any period of time
prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a)
shall apply.
3. GOVERNING LAW: Except to the extent that the
Bankruptcy Code or Bankruptcy Rules are applicable, and subject to the
provisions of any contract, note, deed of trust, security agreement,
instrument, release or other agreement or document entered into in connection
with the Plan, the rights and obligations arising under the Plan shall be
governed by, construed and enforced in accordance with the laws of the State of
California.
ARTICLE III.
------------
CLASSES OF CLAIMS AND EQUITY INTERESTS
--------------------------------------
A. CLASS OVERVIEW:
--------------
The Plan contains the following 18 classes of Claims and
Equity Interests:
1. Class 1: Non-Tax Priority Claims. (Not
impaired.) Class 1 consists of all unsecured Allowed Claims entitled to
priority pursuant to sections 507(a)(3), (4), (5), or (6) of the Code,
excluding Administrative Claims.
2. Class 2: Lenders' Claim. (Impaired.)
3. Class 3: Commercial Federal Secured Claim. (Impaired.)
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4. Class 4: Principal Mutual Secured Claim. (Not
impaired.)
5. Class 5: PPI Claim. (Not impaired.)
6. Class 6: Sun Life of America Secured Claims. (All
classes are impaired.)
a. Class 6(a): Sun Life of America Secured Claim
#1 -- 425 University.
b. Class 6(b): Sun Life of America Secured Claim
#2 -- Regency Plaza.
c. Class 6(c): Sun Life of America Secured Claim
#3 -- Sierra Oaks.
d. Class 6(d): Sun Life of America Secured Claim
#4 -- Sunrise Hills.
e. Class 6(e): Sun Life of America Secured Claim
#5 -- University Village.
7. Class 7: Sun Life of Canada Secured Claim. (Impaired.)
8. Class 8: State Farm Secured Claim. (Impaired.)
9. Class 9: RTC Secured Claims. (All classes are
impaired)
a. Class 9(a): RTC Secured Claim #1 - Lanane Way.
b. Class 9(b): RTC Secured Claim #2 - North
Freeway.
10. Class 10: First Nationwide Secured Claim. (Impaired.)
11. Class 11: [Intentionally omitted.]
12. Class 12: Allowed Mechanic's Lien Claims. (Not
Impaired.)
13. Class 13: Florin-Perkins Secured Bond Claims.
a. Class 13(a): Florin-Perkins Secured Bond
Claims (Excluding Lots 21, 22 and 38). (Not impaired.)
b. Class 13(b): Florin-Perkins Secured Bond Claim
(Schumacher/Lot 21). (Impaired.)
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c. Class 13(c): Florin-Perkins Secured Bond
Claim (Schumacher/Lot 22). (Impaired.)
d. Class 13(d): Florin-Perkins Secured Bond
Claim (OK&B/Lot 38). (Impaired.)
14. Class 14: Allowed Secured Real Property Tax
Claims, excluding Administrative Claims. (All classes are impaired except for
class 14(m) (425 University), class 14(r) (Pacific Palisades), class 14(t)
(Northridge) and 14(x) (Florin- Perkins Excluding Lots 21, 22 and 38.)
a. Class 14(a): One Sunrise Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as One Sunrise and located at 2893 Sunrise
Boulevard, 11492-11500 Sunrise Gold Circle, Rancho Cordova, California.
b. Class 14(b): 1600 K Street Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as 1600 K Street and located at 1600 K Street,
Sacramento, California.
c. Class 14(c): Burbank Mini Storage Secured
Real Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sonoma County, California Tax Collector that is secured by real property owned
by CET commonly known as Burbank Mini Storage and located at 1435 Sebastopol
Drive, Santa Rosa, California.
d. Class 14(d): Milpitas Secured Real Property
Tax Claim: every Allowed Secured Real Property Tax Claim of the Santa Clara
County, California Tax Collector that is secured by real property owned by CET
commonly known as Milpitas and located at 500 East Calaveras Boulevard,
Milpitas, California.
e. Class 14(e): Trade Center C Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as Trade Center C and located at 11157 Trade Center
Drive, Rancho Cordova, California.
f. Class 14(f): Trade Center A Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as Trade Center A and located at 11135 Trade Center
Drive, Rancho Cordova, California.
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g. Class 14(g): Chico Holiday Inn Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the Butte
County, California Tax Collector that is secured by real property owned by CET
commonly known as Chico Holiday Inn and located at 685 Manzanita Court, Chico,
California.
h. Class 14(h): Hurley Ethan I Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector which is secured by real property
owned by CET commonly known as Hurley Ethan I and located at 1300 Ethan Way,
Sacramento, California.
i. Class 14(i): Hurley Ethan II Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as Hurley Ethan II and located at 2025, 2035 and
2045 Hurley Way, Sacramento, California.
j. Class 14(j): TGIF Sunrise Hills Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as TGIF Sunrise Hills and located at 6309 Sunrise
Boulevard, Sacramento, California.
k. Class 14(k): Sierra Oaks Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the Placer
County, California Tax Collector that is secured by real property owned by CET
commonly known as Sierra Oaks and located at 4040-4130 Douglas Boulevard,
Roseville, California.
l. Class 14(l): Regency Plaza Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as Regency Plaza and located at 7143-7263 Greenback
Lane, Citrus Heights, California.
m. Class 14(m): 425 University Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as 425 University and located at 425 University
Avenue, Sacramento, California.
n. Class 14(n): University Village Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as University Village and located at 400-484 Howe
Avenue, 65-69 University Avenue, Sacramento, California.
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o. Class 14(o): Timberlake Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
leased by CET commonly known as Timberlake and located at 7501 Timberlake
Boulevard, Sacramento, California.
p. Class 14(p): North Freeway Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector which is secured by real property
owned by CET located at 3755 N. Freeway Boulevard, Sacramento, California.
q. Class 14(q): Lanane Way Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector which is secured by real property
owned by CET located at 3900 Lanane Way, Sacramento, California.
r. Class 14(r): Pacific Palisades Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim that is
secured by real property owned by CET commonly known as Pacific Palisades which
is located at 881 Alma Real Drive in Pacific Palisades, California.
s. Class 14(s): Villa Del Sol Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the Orange
County, California Tax Collector that is secured by real property owned by CET
commonly known as Villa Del Sol and located at 305 North Harbor Boulevard,
Fullerton, California.
t. Class 14(t): Northridge Secured Real Property
Tax Claim: every Allowed Secured Real Property Tax Claim of the Los Angeles
County, California Tax Collector that is secured by real property owned by CET
commonly known as Northridge and located at 19401 Parthenia Avenue, Northridge,
California.
u. Class 14(u): Town Center Secured Real Property
Tax Claim: every Allowed Secured Real Property Tax Claim of the Los Angeles
County, California Tax Collector that is secured by real property owned by CET
commonly known as Town Center and located at 2501, 2525 Cherry Avenue, Signal
Hill, California.
v. Class 14(v): Parkway Center Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the El
Dorado County, California Tax Collector that is secured by real property owned
by CET commonly known as Parkway Center and located at 5200 Golden Foothill
Parkway, El Dorado Hills, California.
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<PAGE> 29
w. Class 14(w): Mallory Service Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the Contra
Costa County, California Tax Collector that is secured by real property owned
by CET commonly known as Mallory Service and located at 2740 North Main, Walnut
Creek, California.
x. Class 14(x): Florin-Perkins Secured Real
Property Tax Claims (Excluding Lots 21, 22 and 38): every Allowed Secured Real
Property Tax Claim of the Sacramento County, California Tax Collector which
Claims are each secured by separate parcels of the Florin-Perkins Properties
excluding Lots 21, 22 and 38.
y. Class 14(y): Florin-Perkins Secured Real
Property Tax Claim (Lot 21): every Allowed Secured Real Property Tax Claim of
the Sacramento County, California Tax Collector which is secured by Lot 21 of
the Florin-Perkins Properties.
z. Class 14(z): Florin-Perkins Secured Real
Property Tax Claim (Lot 22): every Allowed Secured Real Property Tax Claim of
the Sacramento County, California Tax Collector which is secured by Lot 22 of
the Florin-Perkins Properties.
aa. Class 14(aa): Florin-Perkins Secured Real
Property Tax Claim (Lot 38): every Allowed Secured Real Property Tax Claim of
the Sacramento County, California Tax Collector which is secured by Lot 38 of
the Florin-Perkins Properties.
ab. Class 14(ab): Downtown Mini-Storage Secured
Real Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
leased by CET commonly known as Downtown Mini-Storage and located at 2318 16th
Street, Sacramento, California.
ac. Class 14(ac): North Main Plaza Hotel Secured
Real Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Contra Costa County, California Tax Collector that is secured by real property
owned by CET commonly known as North Main Plaza Hotel and located at 2730 North
Main Street, Walnut Creek, California.
ad. Class 14(ad): Sacramento Holiday Inn Secured
Real Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is secured by real property
owned by CET commonly known as Sacramento Holiday Inn and located at 5321 Date
Avenue, Sacramento, California.
ae. Class 14(ae): Sunrise Hill Secured Real
Property Tax Claim: every Allowed Secured Real Property Tax Claim of the
Sacramento County, California Tax Collector that is
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secured by real property owned by CET commonly known as Sunrise Hills and
located at 6241-6303 Sunrise Boulevard, Citrus Heights, California.
15. Class 15: Unsecured Claims.
a. Class 15(a): Convenience Class: Class 15(a)
consists of the unsecured Allowed Claims against the Debtor each of which is
Two Hundred Fifty Dollars ($250) or less, or each of which is more than Two
Hundred Fifty ($250) but reduced to Two Hundred Fifty ($250) by the holder
thereof. (Not impaired.)
b. Class 15(b): General Unsecured Claims.
(Impaired.)
16. Class 16: Kroeger Claim. (Impaired.)
17. Class 17 (Claims Based on Purchase or Sale of Old
CET Common Stock):
a. Class 17(a): Subordinated Claims Based on
Formerly Held Old CET Common Stock: Every Claim arising from a request for the
rescission of a purchase or sale of Old CET Common Stock or for damages arising
from such a purchase or sale, which Claim is held by a Person who does not own,
as of the Old CET Common Stock Record Date, the Old CET Common Stock which
forms the basis of said Claim, and every Claim for reimbursement or
contribution under section 502 of the Code on account of such a Claim for
rescission or damages. (Impaired.)
b. Class 17(b): Subordinated Claims Based on
Currently Held Old CET Common Stock: Every Claim arising from a request for
the rescission of a purchase or sale of Old CET Common Stock or for damages
arising from such a purchase or sale, which Claim is held by a Person who owns,
as of the Old CET Common Stock Record Date, the Old CET Common Stock which
forms the basis of said Claim, and every Claim for reimbursement or
contribution under section 502 of the Code on account of such a Claim for
rescission or damages. (Impaired.)
18. Class 18: Equity Interests. (Impaired.)
a. Class 18(a): Persons holding one thousand
(1,000) shares or less of Old CET Common Stock on the Old CET Common Stock
Record Date.
b. Class 18(b): Persons holding in excess of
one thousand (1000) shares of Old CET Common Stock on the Old CET Common Stock
Record Date.
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ARTICLE IV.
TREATMENT OF CLAIMS AND EQUITY INTERESTS
----------------------------------------
A. TREATMENT OF UNCLASSIFIED CLAIMS AND UNIMPAIRED CLASSES.
-------------------------------------------------------
1. PAYMENT OF ADMINISTRATIVE CLAIMS.
--------------------------------
a. ADMINISTRATIVE CLAIMS IN GENERAL. Except as
specified below, and subject to the bar date provisions set forth in Article
IV.A.3. below, each holder of an Administrative Claim shall receive Cash equal
to the amount of such Administrative Claim (unless the holder of such
Administrative Claim and the Proponents agree to other treatment) on the later
of (i) the Effective Date, or (ii) thirty (30) days after the entry of a Final
Order allowing such Administrative Claim.
b. STATUTORY FEES. On or before the Effective
Date, Administrative Claims for fees payable pursuant to section 1930 of Title
28 of the United States Code, 28 U.S.C. Section 1930, as determined by the
Bankruptcy Court at the hearing on Confirmation, shall be paid in Cash equal to
the amount of such Administrative Claims.
c. ORDINARY COURSE LIABILITIES. Administrative
Claims based on liabilities incurred by CET in the ordinary course of its
business (including Administrative Claims of trade vendors or of governmental
units for taxes) shall be paid by Reorganized CET pursuant to the terms and
conditions of the particular transaction giving rise to such Administrative
Claims, without any further action by the holders of such Claims, and the
legal, equitable, and contractual rights of such Administrative Claims shall
remain unaltered by the Plan.
2. TREATMENT OF CLASS 1 NON-TAX PRIORITY CLAIMS.
Subject to the bar date provisions in paragraph IV.A.3. below, the holders of
Allowed Claims in Class 1 shall receive Cash in the amount of such Allowed
Claims on the later of (a) thirty (30) days following the Effective Date or (b)
thirty (30) days after the date of a Final Order allowing the Allowed Claim
unless the Claim holder and Proponents agree otherwise. Class 1 is not
impaired under the Plan.
3. BAR DATES:
---------
a. BAR DATE FOR ADMINISTRATIVE CLAIMS. Except
as provided for in Article IV.A.1.c. above and as set forth below, requests for
payment of Administrative Claims must be filed and served on Reorganized CET,
and counsel for Lenders, the Equity Holders' Committee, and the Creditors'
Committee and the U.S. Trustee no later than sixty (60) days after the
Effective Date. Holders of Administrative Claims that are required to file
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and serve a request for payment of such Administrative Claims and that do not
file and serve a request by the applicable bar date shall be forever barred
from asserting such Administrative Claims against Reorganized CET.
Professionals or other entities requesting compensation or reimbursement of
expenses pursuant to sections 327, 328, 330, 331, 503(b) and 1103 of the Code
for services rendered prior to the Effective Date shall file and serve on
Reorganized CET, and counsel for Lenders, the Equity Holders' Committee, and
the Creditors' Committee, and the U.S. Trustee, an application for final
allowance of compensation and reimbursement of expenses no later than sixty
(60) days after the Effective Date. Lenders reserve (subject to Article
VIII.F.3. of the Plan), and all other parties in interest reserve, their right
to file applications for payment of professional fees and expenses under Code
section 503(b) and Administrative Claims for the same.
b. BAR DATE FOR CLASS 1 CLAIMS. Claims for
Class 1 Claims must be filed and served on Reorganized CET, and counsel for
Lenders, the Equity Holders' Committee, and the Creditors' Committee, and the
U.S. Trustee no later than sixty (60) days after the Effective Date. Holders
of Class 1 Claims that are required to file and serve a request for payment of
such Class 1 Claims and that do not file and serve a request by the applicable
bar date shall be forever barred from asserting such Claims against Reorganized
CET.
4. TREATMENT OF ALLOWED PRIORITY UNSECURED TAX CLAIMS.
Pursuant to section 1129(a)(9)(C) of the Code, unless otherwise agreed to by
the Proponents and the holder of the Allowed Priority Unsecured Tax Claim, each
holder of an Allowed Priority Unsecured Tax Claim shall receive, on account of
such Allowed Priority Unsecured Tax Claim, deferred Cash payments over a period
not exceeding six (6) years from the date of assessment of such Allowed
Priority Unsecured Tax Claim. Payment shall be made in equal annual
installments of principal, plus simple interest accruing from the Effective
Date at eight percent (8%) per annum on the unpaid portion of each Allowed
Priority Unsecured Tax Claim, until such time as the Allowed Priority Unsecured
Tax Claim is paid in full. The first payment shall be made on the later of (i)
one (1) year following the Effective Date, (ii) thirty (30) days after the date
of a Final Order allowing such Priority Unsecured Tax Claim, and (iii) such
other time agreed to by the holder of such Allowed Priority Unsecured Tax Claim
and CET. Notwithstanding anything to the contrary in the Plan, CET shall have
the right to pay any Allowed Priority Unsecured Tax Claim, or any remaining
balance, in full, at any time on or after the Effective Date, without premium
or penalty.
5. [INTENTIONALLY OMITTED.]
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6. TREATMENT OF CLASS 5 CLAIM: PPI CLAIM. The PPI
Claim is not impaired under the Plan and shall retain all legal, equitable and
contractual rights to which the PPI Claim is entitled provided, however, that
if the holder of the PPI Claim attempts to assert any unsecured Claim against
CET, CET reserves all defenses, counterclaims or offsets with respect thereto.
7. TREATMENT OF CLASS 13(A) CLAIM: FLORIN-PERKINS
SECURED BOND CLAIMS (EXCLUDING LOTS 21, 22 AND 38). The holders of the
Florin-Perkins Secured Bond Claims (Excluding Lots 21, 22 and 38) shall retain
all legal, equitable and contractual rights to which the Florin-Perkins Secured
Bond Claims (Excluding Lots 21, 22 and 38) are entitled against the collateral
which secures the Florin-Perkins Secured Bond Claims (Excluding Lots 21, 22 and
38) provided, however, that if the holder of a class 13(a) claim attempts to
assert any general unsecured claim against CET, CET reserves all defenses,
counterclaims, and offsets with respect thereto. Class 13(a) is not impaired
under the Plan.
8. TREATMENT OF CLASS 14(R) CLAIM: PACIFIC PALISADES
SECURED REAL PROPERTY TAX CLAIM. The holder of the Pacific Palisades Secured
Real Property Tax Claim shall retain all legal, equitable and contractual
rights to which the holder of the Pacific Palisades Secured Real Property Tax
Claim is entitled against the collateral which secures the Pacific Palisades
Secured Real Property Tax Claim. Class 14(r) is not impaired under the Plan.
9. TREATMENT OF CLASSES 14(X) CLAIM: FLORIN-PERKINS
SECURED REAL PROPERTY TAX CLAIMS (EXCLUDING LOTS 21, 22 AND 38). The holder of
the Florin-Perkins Secured Real Property Tax Claims (Excluding Lots 21, 22 and
38) shall retain all legal, equitable and contractual rights to which the
Florin-Perkins Secured Real Property Tax Claims (Excluding Lots 21, 22 and 38)
are entitled against the collateral which secures the Florin-Perkins Secured
Real Property Tax Claims (Excluding Lots 21, 22 and 38). Class 14(x) is not
impaired under the Plan.
10. TREATMENT OF CLASS 12 CLAIMS: ALLOWED MECHANIC'S
LIEN CLAIMS. Each holder of a Class 12 Claim shall receive Cash in the amount
of its Allowed Claim on the later of (a) thirty (30) days following the
Effective Date; or (b) thirty (30) days following entry of a Final Order
allowing such Claim. Reorganized CET retains all rights and defenses regarding
the perfection, amount or validity of such Claims. Class 12 is not impaired
under the Plan.
11. TREATMENT OF CLASS 15(A) CLAIMS: CONVENIENCE CLASS.
The Convenience Class consists of each holder of an Allowed Claim against the
Debtor which is Two Hundred Fifty Dollars ($250) or less, or each of which is
more than Two Hundred Fifty Dollars ($250) but reduced to Two Hundred Fifty
($250) by
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the holder thereof. An election by a holder of any Allowed Claim to reduce
that Allowed Claim to qualify for inclusion in Class 15(a) shall be exercised
on the Ballot. Subject to Article VI.G. hereof, on or as soon as is
practicable after the Effective Date, each holder of an Allowed Claim in Class
15(a) shall receive Cash in the amount of its Allowed Claim. Class 15(a) is
not impaired under the Plan.
12. TREATMENT OF CLASS 14(T) CLAIM: NORTHRIDGE SECURED
REAL PROPERTY TAX CLAIM. Notwithstanding the provisions of Article IV.B.18. of
the Plan, the Class 14(t) Secured Real Property Tax Claim shall be treated
pursuant to the provisions of this Article IV.A.12. The holder of the
Northridge Secured Real Property Tax Claim shall retain all legal, equitable
and contractual rights to which the holder of the Northridge Secured Real
Property Tax Claim is entitled against the collateral which secures the
Northridge Secured Real Property Tax Claim. Class 14(t) is not impaired under
the Plan.
13. TREATMENT OF CLASS 14(M) CLAIM: 425 UNIVERSITY
SECURED REAL PROPERTY TAX CLAIM. The holder of the 425 University Secured Real
Property Tax Claim shall retain all legal, equitable and contractual rights to
which the holder of the 425 University Secured Real Property Tax Claim is
entitled against the collateral which secures the 425 University Secured Real
Property Tax Claim. Class 14(m) is not impaired under the Plan.
B. TREATMENT OF IMPAIRED CLAIMS AND EQUITY INTERESTS:
-------------------------------------------------
1. CLASS 2 CLAIM: LENDERS' CLAIM. Under the Plan the
Lenders will receive the Lenders' Restructured Secured Notes, the Lenders'
Restructured Documents, New CET Preferred Stock and New CET Common Stock in
full satisfaction of the Lenders' Claim. In addition, the Lenders' Litigation
will be dismissed with prejudice and the Lenders and CET will execute mutual
general releases, as set forth in Article VIII.G. hereof. The Lenders' Claim
will receive the following treatment under the plan:
a. ALLOWANCE OF LENDERS' CLAIMS. Lenders' Claim
shall be allowed in the aggregate amount of Seventy- Nine Million Dollars
($79,000,000). Confirmation of the Plan shall be deemed to be a finding of
fact and a judgment that the value of the Lenders' prepetition collateral
equals at least $79,000,000 and that all Claims in Class 2 are Allowed Claims
which are fully secured under Code section 506(a).
b. LENDERS' RESTRUCTURED SECURED NOTES. On the
Effective Date, each of the Lenders shall receive a Pro Rata Distribution of
the Lenders' Restructured Secured Notes which shall be issued by Reorganized
CET. The Lenders' Restructured Secured Notes shall be in the aggregate
original principal amount
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of Forty Million Dollars ($40,000,000). The Lenders' Restructured Secured
Notes shall be issued pursuant to the Lenders' Restructured Loan Documents and
shall have the terms summarized in Exhibit "A" hereto. The Lenders'
Restructured Secured Notes shall be secured by all now existing and hereafter
arising real property and personal property of Reorganized CET, save and except
for the After Acquired Property (as defined in Exhibit "A"), to the extent
provided and under the terms and conditions set forth in the Lenders'
Restructured Loan Documents and in Exhibit "A". The liens and security
interests securing the Lenders' Claim and Lender Loans which existed as of the
Petition Date shall be retained, shall have the same priority they had as of
the Petition Date, and shall secure the Lenders' Restructured Secured Notes.
The Lenders' Restructured Secured Notes and the Lenders' Restructured Loan
Documents shall constitute an amendment and restatement in their entirety of
all notes, agreements, and obligations which gave rise to the Lenders' Claim.
The liens retained by and granted to the holders of the Lenders' Restructured
Secured Notes shall be junior and subordinate to the liens and security
interests granted to secure the New Credit Line and the Redding Hotel
Improvement Loan. Notwithstanding the retention and granting of liens in favor
of the Lenders, Reorganized CET shall be free (subject to the conditions in the
Lenders' Restructured Secured Notes and the Lenders' Restructured Loan
Documents) to use and dispose of all property of the Estate to consummate the
Plan and operate its business after Confirmation.
c. NEW CET COMMON STOCK. Each of the Lenders
shall receive a Pro Rata distribution of Two Million Five Hundred Fifty
Thousand (2,550,000) shares of New CET Common Stock. The shares of New CET
Common Stock distributed to Lenders shall be subject to the Registration Rights
Agreement summarized on Exhibit C hereto and shall be subject to the securities
provisions of Article VI.J of this Plan. Reorganized CET shall be a party to
the Registration Rights Agreement.
The Distribution of shares of New CET Common
Stock provided under the Plan may mathematically entitle the holder of an
Allowed Claim in Class 2 to a fractional share of New CET Common Stock.
Notwithstanding the foregoing, only whole numbers of shares of New CET Common
Stock will be issued and distributed. When a Distribution on account of an
Allowed Claim in Class 2 would otherwise result in the issuance of a number of
shares of New CET Common Stock, unless redeemed, that is not a whole number,
the shares so distributed shall be rounded to the nearest whole number.
d. NEW CET PREFERRED STOCK. Each of the Lenders
shall receive a Pro Rata Distribution of New CET Preferred Stock, which shall
have an initial stated value as of the Effective Date of Twenty Two Million
Five Hundred Thousand Dollars
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($22,500,000), and shall have the terms summarized on Exhibit B attached
hereto. The New CET Preferred Stock may be converted into New CET Common
Stock, unless redeemed, on the terms and conditions summarized in Exhibit B
hereto.
e. RELEASE OF LENDERS LITIGATION. The Lenders
Litigation shall be dismissed with prejudice, in accordance with the terms of
Article VIII.G. of the Plan.
2. PROVISIONS APPLICABLE TO CERTAIN SENIOR MORTGAGES.
The following provisions shall be applicable to all Senior Mortgages in the
following classes: Class 3 (Commercial Federal); Class 7 (Sun Life of Canada);
Class 8 (State Farm); Classes 9(a) and 9(b) (RTC); Class 10 (First Nationwide);
Classes 13(b), 13(c), and 13(d) (Florin-Perkins Secured Bond Claims Lots 21, 22
and 38):
a. The holder of said Allowed Claim secured by a
Senior Mortgage shall retain its lien upon and security interest in all real
and personal property collateral granted to secure said Allowed Claim, which
lien and security interest shall have the same priority it had as of the
Petition Date, to the extent said lien and security interest was either (i)
valid, perfected, and not avoidable as of the Petition Date, or (ii) granted
pursuant to a Final Order of the Bankruptcy Court as a form of adequate
protection for continuation of the stay or for use of collateral or cash
collateral.
b. The Claim in said class shall be an Allowed
Claim in the amount of: (i) all principal owed as of the Effective Date; (ii)
all fees and interest accrued but unpaid as of the Effective Date, at the rate
provided for in the agreements under which said Claim arose to the extent such
fees and interest are allowed by the Bankruptcy Court; provided that the
interest rate and fees shall be calculated at the pre-default rate set forth in
said agreements and shall not include any penalties, premium rates, late fees,
default interest, or charges arising solely because of default; and (iii) all
professional fees and costs provided for in the agreements under which said
Claim arose, but only to the extent there is either (a) a stipulation of the
Proponents and said Claim holder to allow such fees and costs, subject to the
Court's approval of said stipulation, or (b) a Final Order of the Bankruptcy
Court determining that such professional fees and costs are reasonable.
c. The Proponents shall seek from the Court a
finding of fact and an order that the value of the real property and personal
property liens and security interests securing said Allowed Claim equals at
least the amount of the principal, interest, fees and other charges of the
Allowed Claim as determined under subparagraph 2.b. hereof and that the Allowed
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Claim in said class is fully secured under Code sections 506(a) and 506(b).
d. The applicable Restructured Secured Note and
Restructured Deed of Trust or security instrument shall be deemed to be in full
satisfaction of all Allowed Claims asserted by the holder thereof, including,
but not limited to, any Administrative Claim and any Priority Unsecured Claim
allowable under Code sections 503 or 507 arising in connection with this
Chapter 11 case, including Claims on account of the Debtor's use of collateral
or cash collateral or continuation of the automatic stay.
e. All debt instruments and agreements under
which said Claim arises (including but not limited to recorded deeds of trust,
fixtures filings and rent assignments, and filed UCC financing statements)
shall remain in effect, except to the extent amended and superseded by the
applicable Restructured Secured Note and Restructured Deed of Trust, which
shall be issued by Reorganized CET in recordable form on the Effective Date in
a form which shall be filed with the Court prior to the Effective Date, under
which:
(1) all principal, interest, fees,
professional fees and charges of the Allowed Claim accrued but unpaid as of the
Effective Date (subject to paragraph 2.b. above) shall constitute the principal
indebtedness of the Restructured Secured Note and Restructured Deed of Trust;
(2) there shall be no late fees provided
for in the Restructured Secured Note and default interest at the rate of two
percent (2%) per annum in excess of the contract rate under the applicable
Restructured Secured Note shall be charged only on the installment of principal
or interest not paid when due from and after the Effective Date;
(3) there shall be no financial
covenants or other covenants except the duty to maintain the property and pay
taxes and insurance;
(4) the existence of the junior liens on
the collateral authorized by this Plan to secure the Lenders' Restructured
Notes, the New Credit Line and the Redding Hotel Improvement Loan, shall not be
an event of default or entitle the holder thereof to accelerate the applicable
Restructured Secured Note;
(5) The Restructured Secured Note and
Restructured Deed of Trust shall be without recourse to Reorganized CET;
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(6) The Restructured Secured Note and
Restructured Deed of Trust shall not contain prepayment penalties or any other
provisions which would give rise to a default under the terms of the Plan or
terms which would be inconsistent with the treatment of the particular Allowed
Claim provided for under the Plan;
(7) The Restructured Note and
Restructured Deed of Trust shall not contain any due on sale or due on
encumbrance clause; provided, however, that:
(i) each Restructured Note shall
provide for a loan assumption fee for sales (but not for encumbrances) equal to
one percent (1%) for loan amounts up to one million dollars ($1 million) and an
additional one quarter of one percent (1/4%) for all amounts in excess of one
million dollars ($1 million);
(ii) upon sale the Restructured Deed
of Trust shall continue to encumber the subject property in the same priority
as before sale; and
(iii) to the extent the Bankruptcy
Court determines that the Restructured Note is a recourse liability of
Reorganized CET on the Effective Date, and unless this Plan otherwise provides
to the contrary with respect to any Senior Mortgage, the holder of the
Restructured Note and Restructured Deed of Trust may require, as a condition of
sale, that the buyer of the property assume recourse liability for the
Restructured Note. Upon sale, the liability of Reorganized CET under the
Restructured Note and Restructured Deed of Trust would be as provided for under
applicable law and the parties' agreements; and
(8) The Restructured Secured Note and
Restructured Deed of Trust shall contain attorneys' fees provisions if, and to
the extent, such provisions are contained in the prepetition debt instruments
and agreements under which a given Claim arises.
f. The proponents may engage in further
negotiations with one or more Senior Mortgagees after the filing of the Plan
and may enter into stipulations which vary the terms of the Restructured Note
or Restructured Deed of Trust from the terms set forth in this Article IV.B.
The Proponents may seek approval and confirmation of such stipulations as
modifications of the Plan which do not require the re-solicitation of
acceptances, except from the particular Senior Mortgagee which is the subject
of such stipulation and Plan modification.
g. The provisions of the Confirmation Order
determining that the Allowed Claim of a Senior Mortgagee is fully
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secured under 11 U.S.C. Section 506 shall not prejudice the right of such
Senior Mortgagee to prove that a deficiency claim may exist at a later date, to
the extent Reorganized CET has recourse liability.
3. CLASS 3 CLAIM: COMMERCIAL FEDERAL SECURED CLAIM
(REDDING HOTEL). To the extent the provisions of this Article IV.B.3. are
inconsistent with provisions in Article IV.B.2., the provisions of this Article
IV.B.3. shall control. The holder of the Commercial Federal Secured Claim
shall receive the following treatment under the Plan:
a. COMMERCIAL FEDERAL RESTRUCTURED SECURED NOTE.
On the Effective Date, Commercial Federal shall receive the Commercial Federal
Restructured Secured Note. The Commercial Federal Restructured Secured Note
shall (i) be in an original principal amount equal to the amount described in
Paragraph IV.B.2.b. hereof; (ii) bear interest at the fixed rate of nine and
five-eighths percent (9-5/8%) per annum on the unpaid principal balance owed
under the Commercial Federal Restructured Secured Note; and (iii) be due and
payable in full five (5) years after the date of commencement of the operation
of the Redding Hotel under the flag of a national hotel chain. The Commercial
Federal Restructured Secured Note shall not provide Commercial Federal with the
right to "call" the loan on January 1, 1995.
Notwithstanding any other provisions of the
Plan to the contrary, Commercial Federal shall be entitled to charge and
collect default interest at the rate of eleven and five-eighths percent (11
5/8%) per annum on the entire amount of the then-outstanding principal balance
of the Commercial Federal Restructured Secured Note, so long as the note
remains in default.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE COMMERCIAL FEDERAL RESTRUCTURED SECURED NOTE. For the period which shall
commence on the earlier of the Effective Date or December 1, 1994 and
continuing for two years thereafter, Commercial Federal shall receive interest
only payments on account of the Commercial Federal Restructured Secured Note.
Interest shall be paid monthly in arrears on the first day of each calendar
month, with the first payment due on the earlier of the first day of the month
following the Effective Date or December 1, 1994. From and after the date of
the first payment due under this paragraph and until such time as the principal
amount of the Commercial Federal Restructured Secured Note has been determined
pursuant to Paragraph IV.B.2.b. of the Plan, Reorganized CET shall make
interest payments to the holder of the Commercial Federal Restructured Secured
Note based on the principal amount asserted by Commercial Federal in a written
demand made to CET prior to the Effective Date. In the event the principal
balance of the Commercial Federal Restructured Secured
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Note as determined pursuant to Paragraph IV.B.2.b. of the Plan is less than the
principal balance asserted by Commercial Federal, any excess interest paid to
the holder of the Commercial Federal Restructured Secured Note by Reorganized
CET by reason of the higher principal balance asserted by Commercial Federal
shall be offset against the next interest payment owing to the holder of the
Commercial Federal Restructured Secured Note.
c. PAYMENTS TO BE MADE DURING REMAINING TERM OF
THE COMMERCIAL FEDERAL RESTRUCTURED SECURED NOTE. For the remaining term of
the Commercial Federal Restructured Secured Note, Commercial Federal shall
receive equal payments of principal and interest, based on a twenty-five (25)
year amortization schedule, on account of the Commercial Federal Restructured
Secured Note. Principal and interest payments shall be paid monthly in arrears
on the first day of the calendar month with the first payment due on the first
day of the twenty-fifth (25th) month following the date of the first interest
payment made to Commercial Federal pursuant to paragraph b. above. The unpaid
principal balance due under the Commercial Federal Restructured Secured Note,
together with all accrued and unpaid interest thereon, shall be all due and
payable five (5) years after the date of commencement of the operation of the
Redding Hotel under the flag of a national hotel chain.
d. LIENS. The obligations under the Commercial
Federal Restructured Secured Note shall be secured by the Commercial Federal
Restructured Deed of Trust. The Commercial Federal Restructured Deed of Trust
shall be a first deed of trust encumbering the Redding Hotel. If Reorganized
CET obtains the Redding Hotel Improvement Loan, the lien securing the Redding
Hotel Improvement Loan shall be junior to the Commercial Federal Restructured
Deed of Trust. No junior encumbrances other than those securing the Redding
Hotel Improvement Loan and the Pacific Mutual Lenders' Restructured Secured
Note shall be permitted under the Commercial Federal Restructured Secured Note
and the Commercial Federal Restructured Deed of Trust.
e. RECOURSE. Notwithstanding the provisions of
Article IV.B.2.e.(5) of the Plan, the Commercial Federal Restructured Secured
Note and the Commercial Federal Restructured Deed of Trust shall be recourse as
to Reorganized CET, to the extent permitted by applicable law and the debt
instruments and agreements under which the Commercial Federal Secured Claim
arises.
f. ASSUMPTION OF LOAN. Notwithstanding any
other provisions of the Plan to the contrary, the Commercial Federal Secured
Claim may not be assumed without the written consent of Commercial Federal.
///
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g. EVENTS OF DEFAULT.
-----------------
(1) On or before December 15, 1994, the
Board of Trustees of Reorganized CET shall pass a resolution providing that one
million dollars of funds available in a credit facility (e.g. line of credit,
letter of credit or funds on deposit with a lending institution) shall be
specifically earmarked for the funding of any repair and replacement
requirements under a hotel franchisor/licensor commitment to be obtained with
respect to the Redding Hotel. This deadline may be waived by Commercial
Federal. Notwithstanding the foregoing, Reorganized CET shall be obligated to
spend only that amount that is necessary to obtain and fulfill the written
commitment described more fully in Paragraph g.(ii) and (iv) below. Absent a
waiver from Commercial Federal, Reorganized CET's failure to comply with this
deadline shall constitute a non-curable event of default. Thereafter,
Commercial Federal shall be free to commence and conclude a foreclosure sale of
the Redding Hotel property, and exercise any and all other rights and remedies
it may have under the Commercial Federal Restructured Secured Note and the
Commercial Federal Restructured Deed of Trust.
(2) On or before January 31, 1995,
Reorganized CET shall obtain a written commitment from the Holiday Inn or other
hotel franchisor/licensor acceptable to Commercial Federal. This deadline may
be waived by Commercial Federal. Commercial Federal shall have the right to
reject any franchise/license which allows lower operating standards than those
existing under the requirements of the Holiday Inn. Commercial Federal agrees
that a full service Ramada, a full service Howard Johnsons and a full service
Clarion are examples of franchises with acceptable operating standards. In the
event that Reorganized CET and Commercial Federal are unable to reach agreement
regarding whether a proposed franchisor/licensor has acceptable operating
standards, the issue shall be decided by the Bankruptcy Court. Absent a waiver
by Commercial Federal, failure of Reorganized CET to comply with the deadlines
set forth in this paragraph shall constitute a non-curable event of default.
Thereafter, Commercial Federal shall be free to commence and conclude a
foreclosure sale of the Redding Hotel property, and exercise any and all other
rights and remedies it may have under the Commercial Federal Restructured
Secured Note and the Commercial Federal Restructured Deed of Trust.
(3) An Event of Default shall occur if,
after Reorganized CET commences operation of the Redding Hotel under the flag
of a national hotel chain, Reorganized CET thereafter loses the right to
operate the Redding Hotel under that flag. If the loss of the flag is through
no fault of Reorganized CET, Reorganized CET shall have a period of six months
after the occurrence of this Event of Default within which to cure the default.
If the loss of the flag is the result of
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Reorganized CET's failure to comply with the requirements of the national hotel
chain, Commercial Federal shall be free to exercise its rights under the
Commercial Federal Restructured Secured Note and the Commercial Federal
Restructured Deed of Trust and Reorganized CET shall retain its reinstatement
rights under California law.
(4) On or before October 1, 1995,
Reorganized CET shall "raise the flag" of the chosen hotel franchisor/licensor.
If this deadline is missed:
(a) Reorganized CET shall waive its
right to seek to enjoin the enforcement of the default; and
(b) Reorganized CET will agree to
execute a deed in lieu of foreclosure if Commercial Federal so elects. If
Commercial Federal elects to receive a deed in lieu of foreclosure, Commercial
Federal will waive any deficiency claim. If Commercial Federal elects to
receive a deed in lieu of foreclosure, the Pacific Mutual Lenders will reconvey
their deed of trust on the Redding Hotel property.
4. CLASS 6(A) CLAIM: SUN LIFE OF AMERICA SECURED CLAIM
#1 -- 425 UNIVERSITY AVENUE. The holder of the Sun Life of America Secured
Claim #1 -- 425 University Avenue shall receive the following treatment under
the Plan: The holder of the Class 6(a) Claim has obtained relief from the
automatic stay. The property which is security for said Claim shall be sold at
foreclosure sale pursuant to applicable state law and in consideration of the
full and final satisfaction of said Claim. The holder of the Sun Life of
America Secured Claim #1 shall retain all legal, equitable and contractual
rights to which it is entitled; provided, that the holder of said claim shall
not be entitled to any General Unsecured Claim against CET or Reorganized CET
and CET reserves all defenses, objections, counterclaims, and offsets with
respect to any such General Unsecured Claim.
5. CLASS 6(B) CLAIM: SUN LIFE OF AMERICA SECURED CLAIM
#2 -- REGENCY PLAZA. All dollar amounts set forth in this Article IV.B.5. are
subject to verification by both the Proponents and Sun Life of America. The
holder of the Sun Life of America Secured Claim #2 -- Regency Plaza shall
receive the following treatment under the Plan:
a. SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE
#2. The Sun Life of America Secured Claim #2 shall be allowed in the sum of
(a) $9,142,968 plus (b) interest on the Sun Life of America Secured Claim #2
which has accrued, at the contract non-default rate, from May 1, 1994 through
the Effective Date and which has not been paid during the Chapter 11 Case. On
the Effective Date Sun Life of America shall receive the Sun Life
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of America Restructured Secured Note #2 in the original principal amount of
$8,868,580 which shall (i) bear interest at the fixed rate of nine and one-half
percent (9 1/2%) per annum on the unpaid principal balance owed under the Sun
Life of America Restructured Secured Note #2, and (ii) be due and payable in
full on the eighth (8th) anniversary of the Effective Date.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #2. On the Effective Date,
on account of the Sun Life of America Secured Claim #2, Sun Life of America
shall receive a payment equal to the sum of (a) $274,388 plus (b) interest on
the Sun Life of America Secured Claim #2 which has accrued, at the contract
non-default rate, from May 1, 1994 through the Effective Date and which has not
been paid during the Chapter 11 Case. For the period which shall commence on
the Effective Date and continue until the two (2) year anniversary of the
Effective Date, Sun Life of America shall receive interest only payments on
account of the Sun Life of America Restructured Secured Note #2. Interest
shall be paid monthly in arrears on the first day of each calendar month, with
the first payment due on the first day of the month following the Effective
Date.
c. PAYMENTS TO BE MADE DURING LAST SIX YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #2. For the remaining six
(6) years of the Sun Life of America Restructured Secured Note #2, Sun Life of
America shall receive equal interest and principal payments, based on a
twenty-five (25) year amortization schedule, on account of the Sun Life of
America Restructured Secured Note #2. Principal and interest payments shall be
paid monthly in arrears commencing on the first day of the calendar month with
the first payment due on the first day of the twenty-fifth (25th) month
following the Effective Date. The unpaid principal balance due under the Sun
Life of America Restructured Secured Note #2, together with all accrued and
unpaid interest thereon, shall be all due and payable on the eighth (8th)
anniversary of the Effective Date.
d. LIENS. The obligations under the Sun Life of
America Restructured Secured Note #2 shall be secured by the Sun Life of
America Restructured Deed of Trust #2.
6. CLASS 6(C) CLAIM: SUN LIFE OF AMERICA SECURED CLAIM
#3 -- SIERRA OAKS. All dollar amounts set forth in this Article IV.B.6. are
subject to verification by both the Proponents and Sun Life of America. The
holder of the Sun Life of America Secured Claim #3 -- Sierra Oaks shall receive
the following treatment under the Plan:
a. SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE
#3. The Sun Life of America Secured Claim #3 shall be allowed in the sum of
(a) $5,162,770 plus (b) interest on the Sun
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Life of America Secured Claim #3 which has accrued, at the contract non-default
rate, from June 1, 1994 through the Effective Date and which has not been paid
during the Chapter 11 Case. On the Effective Date Sun Life of America shall
receive the Sun Life of America Restructured Secured Note #3 in the original
principal amount of $4,976,259 which shall (i) bear interest at the fixed rate
of nine and one-half percent (9 1/2%) per annum on the unpaid principal balance
owed under the Sun Life of America Restructured Secured Note #3, and (ii) be
due and payable in full on the eighth (8th) anniversary of the Effective Date.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #3. On the Effective Date,
on account of Sun Life of America Secured Claim #3, Sun Life of America shall
receive a payment equal to the sum of (a) $186,511 plus (b) interest on the Sun
Life of America Secured Claim #3 which has accrued, at the contract non-default
rate, from June 1, 1994 through the Effective Date and which has not been paid
during the Chapter 11 Case. For the period which shall commence on the
Effective Date and continue until the two (2) year anniversary of the Effective
Date, Sun Life of America shall receive interest only payments on account of
the Sun Life of America Restructured Secured Note #3. Interest shall be paid
monthly in arrears on the first day of each calendar month, with the first
payment due on the first day of the month following the Effective Date.
c. PAYMENTS TO BE MADE DURING LAST SIX YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #3. For the remaining six
(6) years of the Sun Life of America Restructured Secured Note #3, Sun Life of
America shall receive equal interest and principal payments, based on a
twenty-five (25) year amortization schedule, on account of the Sun Life of
America Restructured Secured Note #3. Principal and interest payments shall be
paid monthly in arrears commencing on the first day of the calendar month with
the first payment due on the first day of the twenty-fifth (25th) month
following the Effective Date. The unpaid principal balance due under the Sun
Life of America Restructured Secured Note #3, together with all accrued and
unpaid interest thereon, shall be all due and payable on the eighth (8th)
anniversary of the Effective Date.
d. LIENS. The obligations under the Sun Life of
America Restructured Secured Note #3 shall be secured by the Sun Life of
America Restructured Deed of Trust #3.
7. CLASS 6(D) CLAIM: SUN LIFE OF AMERICA SECURED CLAIM
#4 -- SUNRISE HILLS. All dollar amounts set forth in this Article IV.B.7. are
subject to verification by both the Proponents and Sun Life of America. The
holder of the Sun Life
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of America Secured Claim #4 -- Sunrise Hills shall receive the following
treatment under the Plan:
a. SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE
#4. The Sun Life of America Secured Claim #4 shall be allowed in the sum of
(a) $4,463,250 plus (b) interest on the Sun Life of America Secured Claim #4
which has accrued, at the contract non-default rate, from June 1, 1994 through
the Effective Date and which has not been paid during the Chapter 11 Case. On
the Effective Date Sun Life of America shall receive the Sun Life of America
Restructured Secured Note #4 in the original principal amount of $4,335,750
which shall (i) bear interest at the fixed rate of nine and one-half percent (9
1/2%) per annum on the unpaid principal balance owed under the Sun Life of
America Restructured Secured Note #4; and (ii) be due and payable in full on
the eighth (8th) anniversary of the Effective Date.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #4. On the Effective Date,
on account of the Sun Life of America Secured Claim #4, Sun Life of America
shall receive a payment equal to the sum of (a) $127,500 plus (b) interest on
the Sun Life of America Secured Claim #4 which has accrued, at the contract
non-default rate, from June 1, 1994 through the Effective Date and which has
not been paid during the Chapter 11 Case. For the period which shall commence
on the Effective Date and continue until the two (2) year anniversary of the
Effective Date, Sun Life of America shall receive interest only payments on
account of the Sun Life of America Restructured Secured Note #4. Interest
shall be paid monthly in arrears on the first day of each calendar month, with
the first payment due on the first day of the month following the Effective
Date.
c. PAYMENTS TO BE MADE DURING LAST SIX YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #4. For the remaining six
(6) years of the Sun Life of America Restructured Secured Note #4, Sun Life of
America shall receive equal interest and principal payments, based on a
twenty-five (25) year amortization schedule, on account of the Sun Life of
America Restructured Secured Note #4. Principal and interest payments shall be
paid monthly in arrears commencing on the first day of the calendar month with
the first payment due on the first day of the twenty-fifth (25th) month
following the Effective Date. The unpaid principal balance due under the Sun
Life of America Restructured Secured Note #4, together with all accrued and
unpaid interest thereon, shall be all due and payable on the eighth (8th)
anniversary of the Effective Date.
d. LIENS. The obligations under the Sun Life of
America Restructured Secured Note #4 shall be secured by the Sun Life of
America Restructured Deed of Trust #4.
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8. CLASS 6(E) CLAIM: SUN LIFE OF AMERICA SECURED CLAIM
#5 -- UNIVERSITY VILLAGE. All dollar amounts set forth in this Article IV.B.8.
are subject to verification by both the Proponents and Sun Life of America.
The holder of the Sun Life of America Secured Claim #5 -- University Village
shall receive the following treatment under the Plan:
a. SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE
#5. The Sun Life of America Secured Claim #5 shall be allowed in the sum of
(a) $8,003,435 plus (b) interest on the Sun Life of America Secured Claim #5
which has accrued, at the contract non-default rate, from May 1, 1994 through
the Effective Date and which has not been paid during the Chapter 11 Case. On
the Effective Date Sun Life of America shall receive the Sun Life of America
Restructured Secured Note #5 in the original principal amount of $7,732,441
which shall (i) bear interest at the fixed rate of ten percent (10%) per annum
on the unpaid principal balance owed under the Sun Life of America Restructured
Secured Note #5, and (ii) be due and payable in full on the eighth (8th)
anniversary of the Effective Date.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #5. On the Effective Date,
on account of the Sun Life of America Secured Claim #5, Sun Life of America
shall receive a payment equal to the sum of (a) $270,994 plus (b) interest on
the Sun Life of America Secured Claim #5 which has accrued, at the contract
non-default rate, from May 1, 1994 through the Effective Date and which has not
been paid during the Chapter 11 Case. For the period which shall commence on
the Effective Date and continue until the two (2) year anniversary of the
Effective Date, Sun Life of America shall receive interest only payments on
account of the Sun Life of America Restructured Secured Note #5. Interest
shall be paid monthly in arrears on the first day of each calendar month, with
the first payment due on the first day of the month following the Effective
Date.
c. PAYMENTS TO BE MADE DURING LAST SIX YEARS OF
THE SUN LIFE OF AMERICA RESTRUCTURED SECURED NOTE #5. For the remaining six
(6) years of the Sun Life of America Restructured Secured Note #5, Sun Life of
America shall receive equal interest and principal payments, based on a
twenty-five (25) year amortization schedule, on account of the Sun Life of
America Restructured Secured Note #5. Principal and interest payments shall be
paid monthly in arrears commencing on the first day of the calendar month with
the first payment due on the first day of the twenty-fifth (25th) month
following the Effective Date. The unpaid principal balance due under the Sun
Life of America Restructured Secured Note #5, together with all accrued and
unpaid interest thereon, shall be all due and payable on the eighth (8th)
anniversary of the Effective Date.
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d. LIENS. The obligations under the Sun Life of
America Restructured Secured Note #5 shall be secured by the Sun Life of
America Restructured Deed of Trust #5.
9. CLASS 7 CLAIM: SUN LIFE OF CANADA SECURED CLAIM
(TIMBERLAKE). The holder of the Sun Life of Canada Secured Claim shall receive
the following treatment under the Plan: On the Effective Date or as soon
thereafter as practicable, (a) Reorganized CET shall pay to the holder of said
Claim an amount necessary to cure all pre-Effective Date defaults and damages,
to the extent allowed by Final Order of the Court, (b) the maturity date of the
Claim shall be June 1, 2006, (c) the loan documents which are the subject of
the Sun Life of Canada Secured Claim shall be modified as provided for in
Article IV.B.2., and (d) except as provided for in Article IV.B.2., the holder
of the Claim shall retain its lien and all legal, equitable, and contractual
rights to which the Claim holder is entitled.
10. CLASS 8 CLAIM: STATE FARM SECURED CLAIM (HURLEY
ETHAN I. The holder of the State Farm Secured Claim shall receive the
following treatment under the Plan:
a. STATE FARM RESTRUCTURED SECURED NOTE. On the
Effective Date State Farm shall receive the State Farm Restructured Secured
Note. The State Farm Restructured Secured Note shall (i) be in an original
principal amount equal to the amount described in paragraph IV.B.2(b) hereof;
(ii) bear interest at the fixed rate of eight and one-half percent (8 1/2%) per
annum on the unpaid principal balance owed under the State Farm Restructured
Secured Note; and (iii) be due and payable November 1, 2008.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE STATE FARM RESTRUCTURED SECURED NOTE. For the period which shall commence
on the Effective Date and continue until the two (2) year anniversary of the
Effective Date, State Farm shall receive interest only payments on account of
the State Farm Restructured Secured Note. Interest shall be paid monthly in
arrears on the first day of each calendar month, with the first payment due on
the first day of the month following the Effective Date.
c. PAYMENTS TO BE MADE AFTER FIRST TWO YEARS OF
THE STATE FARM RESTRUCTURED SECURED NOTE. Two (2) years after the Effective
Date, State Farm shall begin receiving equal interest and principal payments,
based on a fourteen (14) year amortization schedule, on account of the State
Farm Restructured Secured Note. Principal and interest payments shall be paid
monthly in arrears on the first day of the calendar month with the first
payment due on the first day of the twenty-fifth (25) month following the
Effective Date. Each dollar of principal amortization payments is deferred for
each dollar of capital
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expenditures or deferred maintenance expenditures made on the property. The
unpaid principal balance due under the State Farm Restructured Secured Note,
together with all accrued and unpaid interest thereon, shall be all due and
payable on November 1, 2008.
d. LIENS. The obligations under the State Farm
Restructured Secured Note shall be secured by the State Farm Restructured Deed
of Trust. The State Farm Restructured Deed of Trust will contain provisions
concerning capital expenditures, deferred maintenance, and property management
which are satisfactory to the Claim holder and Proponents and will require
monthly prepayments into an escrow account of real property taxes accrued after
the Effective Date, but will not require impounds for insurance premiums.
11. CLASS 9(A) CLAIM: RTC SECURED CLAIM #1 - LANANE WAY.
To the extent the provisions of this Article IV.B.11. are inconsistent with any
other provision of the Plan, as modified, the provisions of this Article
IV.B.11. shall control. The holder of the RTC Secured Claim #1 - Lanane Way
shall receive the following treatment under the Plan:
a. RTC RESTRUCTURED SECURED NOTE #1. On account
of the RTC Secured Claim #1 - Lanane Way, the RTC shall receive the RTC
Restructured Secured Note #1 on the Effective Date. The RTC Restructured
Secured Note #1 shall (i) be in an original principal amount equal to the
amount described in Article IV.B.2.b. hereof; (ii) bear interest at the fixed
rate of nine and one-quarter percent (9 1/4%) per annum on the unpaid principal
balance owed thereunder; and (iii) be due and payable in full on the tenth
(10th) anniversary of the Effective Date.
The RTC shall be entitled to charge and
collect late fees not to exceed six percent (6%) of the amount of any
installments that are not paid within the time provided in Article IV.B.11.b.
below, provided that a late fee shall not be chargeable as to the final payment
on the RTC Restructured Secured Note #1 if the note is not paid on the maturity
date described above. In addition, in the event of a default under the RTC
Restructured Secured Note #1, (i) the RTC shall be entitled to charge and
collect interest at a default rate not to exceed eleven and one-quarter percent
(11 1/4%) per annum on the entire amount of all delinquent installments for so
long as the note remains in default and, if unpaid at maturity, upon the entire
amount of the then-outstanding principal balance of the RTC Restructured
Secured Note #1, and (ii) Reorganized CET shall be required to make payments to
impounds for insurance and taxes as provided in the prepetition RTC debt
instruments and agreements, so long as the note remains in default. Following
a cure of a default under the RTC Restructured Secured Note #1, the RTC shall
cease to charge and collect default interest and
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Reorganized CET shall cease to make additional payments to insurance or tax
impounds, provided that monies impounded before the cure of the default shall
remain impounded and shall be applied to the next insurance or tax payments as
the case may be.
b. PAYMENTS. For the period which shall
commence on the Effective Date and continue until the second (2nd) anniversary
of the Effective Date, the RTC shall receive interest only payments on account
of the RTC Restructured Secured Note #1. Interest shall be paid monthly in
arrears on the first day of each calendar month, with the first payment due on
the first day of the month following the Effective Date. Principal and
interest payments shall be paid monthly in arrears, based on a twenty-five (25)
year amortization schedule, on the first day of the calendar month with the
first payment due on the first day of the twenty-fifth (25th) month following
the Effective Date. The unpaid principal balance due under the RTC
Restructured Secured Note #1, together with all accrued and unpaid interest and
all other unpaid charges thereon, shall be all due and payable on the tenth
(10th) anniversary of the Effective Date.
c. LIENS. The obligations under the RTC
Restructured Secured Note #1 shall be secured by the RTC Restructured Deed of
Trust #1, and by such security interests and liens on personal property of CET
as RTC may have held under prepetition personal property security agreements
with CET. The RTC Restructured Deed of Trust #1 shall be a first deed of trust
encumbering the real property currently owned by CET and commonly known as
Lanane Way located at 3900 Lanane Way, Sacramento, California. The RTC
personal property security interests and liens shall enjoy the same priority
with respect to other security interests and liens on the personal property in
question as existed at the commencement of the Chapter 11 Case.
d. Reorganized CET shall be and remain
personally liable for the performance of all obligations required under the RTC
Restructured Secured Note #1 to the extent permitted by applicable law,
including but not limited to liability for any deficiency remaining after
foreclosure of the security for the RTC Secured Note #1.
e. RTC RIGHTS ON SALE OF UNDERLYING PROPERTY.
The RTC Restructured Secured Note #1 shall be due and payable in the event of a
sale of Lanane Way; provided, however, that the RTC will consent to a single
sale of the property subject to the RTC Restructured Secured Note #1 upon the
qualification of the buyer to the reasonable satisfaction of the RTC and the
assumption by the buyer of all obligations to the RTC under the RTC
Restructured Secured Note #1. In the event of a sale and assumption of the RTC
Restructured Secured Note #1:
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(1) Reorganized CET shall remain jointly
and severally liable for all amounts owing pursuant to the RTC Restructured
Secured Note #1, including, but not limited to, liability for any deficiency
remaining after foreclosure of the security for the RTC Restructured Secured
Note #1; and
(2) the RTC shall receive the
assumption fee described in Article IV.B.2.e.(7).
f. MISCELLANEOUS PROVISIONS.
------------------------
(1) Reorganized CET will pay RTC's
reasonable costs of obtaining an endorsement on its current title insurance
policy for the Lanane Way property reflecting the modifications of the RTC
Secured Claim #1 under the Plan and insuring the RTC Restructured Deed of Trust
#1 is a first deed of trust encumbering Lanane Way.
(2) Nothing contained in this Article
IV.B.11. or elsewhere in the Plan shall constitute a waiver of any defenses
under California Code of Civil Procedure Section 726 or Section 580d based on
events or occurrences after the date of the RTC Restructured Secured Note #1
and the RTC Restructured Deed of Trust #1.
12. CLASS 9(B) CLAIM: RTC SECURED CLAIM #2 - NORTH
FREEWAY. To the extent the provisions of this Article IV.B.12. are
inconsistent with any other provision of the Plan, as modified, the provisions
of this Article IV.B.12. shall control. The holder of the RTC Secured Claim #2
- - - North Freeway shall receive the following treatment under the Plan:
a. RTC RESTRUCTURED SECURED NOTE #2. On account
of the RTC Secured Claim #2 - North Freeway, the RTC shall receive the RTC
Restructured Secured Note #2 on the Effective Date. The RTC Restructured
Secured Note #2 shall (i) be in an original principal amount equal to the
amount described in Article IV.B.2.b. hereof; (ii) bear interest at the fixed
rate of nine and one-quarter percent (9 1/4%) per annum on the unpaid principal
balance owed thereunder; and (iii) be due and payable in full on the tenth
(10th) anniversary of the Effective Date.
The RTC shall be entitled to charge and collect late
fees not to exceed six percent (6%) of the amount of any installments that are
not paid within the time provided in Article IV.B.12.b. below, provided that a
late fee shall not be chargeable as to the final payment on the RTC
Restructured Secured Note #2 if the note is not paid on the maturity date
described above. In addition, in the event of a default under the RTC
Restructured Secured Note #2, (i) the RTC shall be entitled to charge and
collect interest at a default rate not to exceed eleven and one-quarter percent
(11 1/4%) per annum on the
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entire amount of all delinquent installments for so long as the note remains in
default and, if unpaid at maturity, upon the entire amount of the
then-outstanding principal balance of the RTC Restructured Secured Note #2, and
(ii) Reorganized CET shall be required to make payments to impounds for
insurance and taxes as provided in the prepetition RTC debt instruments and
agreements, so long as the note remains in default. Following a cure of a
default under the RTC Restructured Secured Note #2, the RTC shall cease to
charge and collect default interest and Reorganized CET shall cease to make
additional payments to insurance or tax impounds, provided that monies
impounded before the cure of the default shall remain impounded and shall be
applied to the next insurance or tax payments as the case may be.
b. PAYMENTS. For the period which shall
commence on the Effective Date and continue until the second (2nd) anniversary
of the Effective Date, the RTC shall receive interest only payments on account
of the RTC Restructured Secured Note #2. Interest shall be paid monthly in
arrears on the first day of each calendar month, with the first payment due on
the first day of the month following the Effective Date. Principal and
interest payments shall be paid monthly in arrears, based on a twenty- five
(25) year amortization schedule, on the first day of the calendar month with
the first payment due on the first day of the twenty-fifth (25th) month
following the Effective Date. The unpaid principal balance due under the RTC
Restructured Secured Note #2, together with all accrued and unpaid interest and
all other unpaid charges thereon, shall be all due and payable on the tenth
(10th) anniversary of the Effective Date.
c. LIENS. The obligations under the RTC
Restructured Secured Note #2 shall be secured by the RTC Restructured Deed of
Trust #2, and by such security interests and liens on personal property of CET
as RTC may have held under prepetition personal property security agreements
with CET. The RTC Restructured Deed of Trust #2 shall be a first deed of trust
encumbering the real property currently owned by CET and commonly known as
North Freeway located at 3755 North Freeway Boulevard, Sacramento, California.
The RTC personal property security interests and liens shall enjoy the same
priority with respect to other security interests and liens on the personal
property in question as existed at the commencement of the Chapter 11 Case.
d. Reorganized CET shall be and remain
personally liable for the performance of all obligations required under the RTC
Restructured Secured Note #2 to the extent permitted by applicable law,
including but not limited to liability for any deficiency remaining after
foreclosure of the security for the RTC Secured Note #2.
e. RTC RIGHTS ON SALE OF UNDERLYING PROPERTY.
The RTC Restructured Secured Note #2 shall be due and payable in
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the event of a sale of North Freeway; provided, however, that the RTC will
consent to a single sale of the property subject to the RTC Restructured
Secured Note #2 upon the qualification of the buyer to the reasonable
satisfaction of the RTC and the assumption by the buyer of all obligations to
the RTC under the RTC Restructured Secured Note #2. In the event of a sale and
assumption of the RTC Restructured Secured Note #2:
(1) Reorganized CET shall remain jointly
and severally liable for all amounts owing pursuant to the RTC Restructured
Secured Note #2, including, but not limited to, liability for any deficiency
remaining after foreclosure of the security for the RTC Restructured Secured
Note #2; and
(2) the RTC shall receive the
assumption fee described in Article IV.B.2.e.(7).
f. MISCELLANEOUS PROVISIONS.
------------------------
(1) Reorganized CET will pay RTC's
reasonable costs of obtaining an endorsement on its current title insurance
policy for the North Freeway property reflecting the modifications of the RTC
Secured Claim #2 under the Plan and insuring the RTC Restructured Deed of Trust
#2 is a first deed of trust encumbering North Freeway.
(2) Nothing contained in this Article
IV.B.12. or elsewhere in the Plan shall constitute a waiver of any defenses
under California Code of Civil Procedure Section 726 or Section 580d based on
events or occurrences after the date of the RTC Restructured Secured Note #2
and the RTC Restructured Deed of Trust #2.
13. CLASS 10 CLAIM: FIRST NATIONWIDE SECURED CLAIM
(HURLEY ETHAN II). On or before the tenth (10th) day following approval of the
Disclosure Statement, CET shall inform First Nationwide (i) whether CET will
cure any defaults owed to First Nationwide in connection with the First
Nationwide Secured Claim and treat the First Nationwide Secured Claim as not
impaired under the Plan and (Code Section 1124) or (ii) whether CET will
restructure the First Nationwide Secured Claim by providing First Nationwide
with a Restructured Secured Note and Restructured Deed of Trust, described
below. If CET chooses the latter option, the holder of the First Nationwide
Secured Claim shall receive the following treatment under the Plan:
a. FIRST NATIONWIDE RESTRUCTURED SECURED NOTE.
On the Effective Date First Nationwide shall receive the First Nationwide
Restructured Secured Note. The First Nationwide Restructured Secured Note
shall (i) be in an original principal amount equal to the amount described in
paragraph IV.B.2.b. hereof; (ii) bear interest at the fixed rate of nine
percent (9%)
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per annum on the unpaid principal balance owed under the First Nationwide
Restructured Secured Note; and (iii) be due and payable in full on the tenth
(10th) anniversary of the Effective Date.
b. PAYMENTS TO BE MADE DURING FIRST TWO YEARS OF
THE FIRST NATIONWIDE RESTRUCTURED SECURED NOTE. For the period which shall
commence on the Effective Date and continue until the two (2) year anniversary
of the Effective Date, First Nationwide shall receive interest only payments on
account of the First Nationwide Restructured Secured Note. Interest shall be
paid monthly in arrears on the first day of each calendar month, with the first
payment due on the first day of the month following the Effective Date.
c. PAYMENTS TO BE MADE DURING LAST EIGHT YEARS
OF THE FIRST NATIONWIDE RESTRUCTURED SECURED NOTE. For the remaining eight (8)
years of the First Nationwide Restructured Secured Note, First Nationwide shall
receive equal interest and principal payments, based on a twenty-five (25) year
amortization schedule, on account of the First Nationwide Restructured Secured
Note. Principal and interest payments shall be paid monthly in arrears on the
first day of the calendar month with the first payment due on the first day of
the twenty-fifth (25th) month following the Effective Date. Each dollar of
principal amortization payments is deferred for each dollar of capital
expenditures or deferred maintenance expenditures made on the property. The
unpaid principal balance due under the First Nationwide Restructured Secured
Note, together with all accrued and unpaid interest thereon, shall be all due
and payable on the tenth (10th) anniversary of the Effective Date.
d. LIENS. The obligations under the First
Nationwide Secured Note shall be secured by the First Nationwide Restructured
Deed of Trust.
14. [INTENTIONALLY OMITTED.]
15. CLASS 13(B) CLAIM: FLORIN-PERKINS SECURED BOND
CLAIMS (SCHUMACHER/LOT 21). Notwithstanding the provisions of Article
IV.B.2.(b) hereof, the principal amount of the Florin-Perkins Secured Bond
Claim (Schumacher/Lot 21) shall be restated as of the Effective Date in the
amount of $718,735.61, which includes all amounts owing to Schumacher on
account of the Florin-Perkins Secured Bond Claim (Schumacher/Lot 21) as of
September 30, 1994 pursuant to the calculations provided for in the California
Improvement Act of 1911, the bond certificate, and the California Streets and
Highways Code Section 6400. The Florin-Perkins Secured Bond Claim
(Schumacher/Lot 21) shall accrue interest after the Effective Date at the rate
of eight percent (8%). The Florin-Perkins Secured Bond Claim (Schumacher/Lot
21) shall mature on January 1, 2000. CET shall
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make ten (10) equal semi-annual payments of the principal and interest to the
holder of the Florin-Perkins Secured Bond Claim (Schumacher/Lot 21) with the
first payment being due on January 1, 1995 and payments being due every July 1
and January 1 thereafter. Each payment shall include 1/10th of the principal
amount of the Florin-Perkins Secured Bond Claim (Schumacher/Lot 21) as of the
Effective Date plus accrued but unpaid interest up to the date of payment.
Upon the first to occur of (i) non-payment of any installment due pursuant to
the terms of this paragraph, or (ii) the failure to pay the Class 14(y) or
Class 14(Z) Secured Real Property Taxes pursuant to the terms of the Plan, or
(iii) the failure to pay any real property taxes which are secured by Lot 21
and which first become due and payable after the Effective Date ("Future
Taxes") on or before the last date upon which such Future Taxes can be paid
without penalty, the holder of the Florin-Perkins Secured Bonds Claim
(Schumacher/Lot 21) may exercise all remedies and rights to which the holder of
a 1911 Act Street Improvement bond is entitled to under California law provided
that the holder of said claim shall have no recourse to pursue Reorganized CET
for any deficiency or personal liability. Reorganized CET shall have the right
to pay the Florin-Perkins Secured Bond Claim (Schumacher/Lot 21) in full at any
time on or after the Effective Date, without premium or penalty. The
Florin-Perkins Secured Bond Claim (Schumacher/Lot 21) shall continue to be
secured by Lot 21 of the Florin-Perkins Properties until such time as the
Florin-Perkins Secured Bond (Schumacher/Lot 21) has been satisfied.
16. CLASS 13(C) CLAIM: FLORIN-PERKINS SECURED BOND
CLAIMS (SCHUMACHER/LOT 22). Notwithstanding the provisions of Article
IV.B.2.(b) hereof, the principal amount of the Florin-Perkins Secured Bond
Claim (Schumacher/Lot 22) shall be restated as of the Effective Date in the
amount of $805,208.37, which includes all amounts owing to Schumacher on
account of the Florin-Perkins Secured Bond Claim (Schumacher/Lot 22) as of
September 30, 1994 pursuant to the calculations provided for in the California
Improvement Act of 1911, the bond certificate, and the California Streets and
Highways Code Section 6400. The Florin-Perkins Secured Bond Claim
(Schumacher/Lot 22) shall accrue interest after the Effective Date at the rate
of eight percent (8%). The Florin-Perkins Secured Bond Claim (Schumacher/Lot
22) shall mature on January 1, 2000. CET shall make ten (10) equal semi-annual
payments of the principal and interest to the holder of the Florin-Perkins
Secured Bond Claim (Schumacher/Lot 22) with the first payment being due on
January 1, 1995 and payments being due every July 1 and January 1 thereafter.
Each payment shall include 1/10th of the principal amount of the Florin-Perkins
Secured Bond Claim (Schumacher/Lot 22) as of the Effective Date plus accrued
but unpaid interest up to the date of payment. Upon the first to occur of (i)
non-payment of any installment due pursuant to the terms of this paragraph, or
(ii) the failure to pay the Class 14(y) or Class
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14(Z) Secured Real Property Taxes pursuant to the terms of the Plan, or (iii)
the failure to pay any real property taxes which are secured by Lot 22 and
which first become due and payable after the Effective Date ("Future Taxes") on
or before the last date upon which such Future Taxes can be paid without
penalty, the holder of the Florin-Perkins Secured Bonds Claim (Schumacher/Lot
22) may exercise all remedies and rights to which the holder of a 1911 Act
Street Improvement bond is entitled to under California law provided that the
holder of said Claim shall have no recourse to pursue Reorganized CET for any
deficiency or personal liability. Reorganized CET shall have the right to pay
the Florin-Perkins Secured Bond Claim (Schumacher/Lot 22) in full at any time
on or after the Effective Date, without premium or penalty. The Florin-Perkins
Secured Bond Claim (Schumacher/Lot 22) shall continue to be secured by Lot 22
of the Florin-Perkins Properties until such time as the Florin-Perkins Secured
Bond (Schumacher/Lot 22) has been satisfied.
17. CLASS 13(D) CLAIMS: FLORIN-PERKINS SECURED BOND
CLAIMS (OK&B/LOT 38). The principal amount of the Florin- Perkins Secured Bond
Claim (OK&B/Lot 38) shall be restated as of the Effective Date in an amount
equal to the calculation provided for in paragraph IV.B.2(b) hereof. The
Florin-Perkins Secured Bond Claim (OK&B/Lot 38) shall accrue interest after the
Effective Date at the rate of eight percent (8%). The Florin-Perkins Secured
Bond Claim (OK&B/Lot 38) shall mature on January 1, 2000. CET shall make ten
(10) equal semi-annual payments of the principal and interest to the holder of
the Florin-Perkins Secured Bond Claim (OK&B/Lot 38) with the first payment
being due on January 1, 1995 and payments being due every July 1 and January 1
thereafter. Each payment shall include 1/10th of the principal amount of the
Florin-Perkins Secured Bond Claim (OK&B/Lot 38) as of the Effective Date plus
accrued but unpaid interest up to the date of payment. Upon the first to occur
of (i) non-payment of any installment due pursuant to the terms of this
paragraph, or (ii) the failure to pay the Class 14(y) or Class 14(Z) Secured
Real Property Taxes pursuant to the terms of the Plan, or (iii) the failure to
pay any real property taxes which are secured by OK&B/Lot 38 and which first
become due and payable after the Effective Date ("Future Taxes") on or before
the last date upon which such Future Taxes can be paid without penalty, the
holder of the Florin-Perkins Secured Bonds Claim (OK&B/Lot 38) may exercise all
remedies and rights to which the holder of a 1911 Act Street Improvement bond
is entitled to under California law provided that the holder of said Claim
shall have no recourse to pursue Reorganized CET for any deficiency or personal
liability. Reorganized CET shall have the right to pay the Florin-Perkins
Secured Bond Claim (OK&B/Lot 38) in full at any time on or after the Effective
Date, without premium or penalty. The Florin-Perkins Secured Bond Claim
(OK&B/Lot 38) shall continue to be secured by OK&B/Lot 38 of the Florin-Perkins
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Properties until such time as the Florin-Perkins Secured Bond (OK&B/Lot 38) has
been satisfied.
18. CLASS 14 CLAIMS: SECURED REAL PROPERTY TAX CLAIMS.
Payment of the Class 14(a) through 14(ae) Secured Real Property Tax Claims,
excluding Administrative Claims and excluding Classes 14(m) (425 University),
14(r) (Pacific Palisades) and 14(x) (Florin-Perkins Excluding Lots 21, 22 and
38) Secured Real Property Tax Claims, shall be made in ten (10) equal
semi-annual installments, with the first installment due on December 10, 1994.
Subsequent payments shall be made on each April 10 and December 10 thereafter.
The Secured Real Property Tax Claims, excluding Classes 14(m) (425 University),
14(r) (Pacific Palisades) and 14(x) (Florin-Perkins Excluding Lots 21, 22 and
38), shall accrue interest from and after the Effective Date at the rate of
seven percent (7%) per annum. Each installment shall include simple interest
accrued commencing on the Effective Date and unpaid as of the particular
payment date on the unpaid portion of such Claim; provided, however, that CET
shall have the right to pay the remaining balance of any of the Secured Real
Property Tax Claims in full at any time on or after the Effective Date, without
premium or penalty. CET or Reorganized CET may seek an order from the
Bankruptcy Court directing taxing authorities to apply payments on account of
(a) post-petition, pre-Effective Date real property taxes, which may be
Administrative Claims and (b) Class 14 Claims, to the extent accrued in the
appropriate periods of time and to correctly calculate interest and penalties,
if any, on account of such Claims.
19. CLASS 15(B) CLAIMS: ALLOWED GENERAL UNSECURED CLAIMS.
-----------------------------------------------------
a. If Class 15(b) votes to accept this Plan by
the vote required by for acceptance under Bankruptcy Code section 1126(c),
then, subject to the condition that Class 16 (Kroeger Claim) does not elect to
be treated as a part of Class 15(b), each holder of an Allowed Claim in Class
15(b) shall receive in full satisfaction of its Allowed Claim, Cash equal to
seventy-nine percent (79%) of its Allowed Claim, payable thirty (30) calendar
days after the Effective Date, or as soon as said Claim in Class 15(b) becomes
an Allowed Claim.
b. If Class 15(b) votes to accept this Plan by
the majorities required by Bankruptcy Code section 1126(c) and either (1) Class
16 elects to be treated as a part of Class 15(b), or (2) the holders of Allowed
Claims in Class 15(b) choose to contribute monies to treatment of the Kroeger
Claim under Class 16, then (i) each holder of an Allowed Claim in Class 15(b)
and each holder of an Allowed Claim in Class 16 shall receive in full
satisfaction of its Allowed Claim, Cash payable thirty (30) calendar days after
the Effective Date, or as soon as
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said Claim in Class 15(b) or Class 16 becomes an Allowed Claim, and (ii) said
Cash shall equal at least seventy percent (70%) of the Allowed Claims in Class
15(b) and may equal up to a maximum of seventy-nine percent (79%) of the
Allowed Claims in Class 15(b) to the extent that Claims objections filed by the
Creditors' Committee result in monies which would otherwise be distributed to
the Disputed Claims in Class 15(b) being distributed to the holders of Allowed
Claims in Class 15(b).
c. If Class 15(b) does not vote to accept this
Plan by the vote required for acceptance under Bankruptcy Code section 1126(c),
then each holder of an Allowed Claim in Class 15(b) shall receive in full
satisfaction of its Allowed Claim a Pro Rata Distribution of New CET Unsecured
Notes having a value determined by the Bankruptcy Court as of the Effective
Date equal to the aggregate amount of all Allowed Claims in Class 15(b). The
New CET Unsecured Notes shall be issued in substantially the form attached
hereto as Exhibit E-1. The New CET Unsecured Notes shall be due and payable in
full on the tenth (10th) anniversary of the Effective Date and shall bear
interest at a fixed rate of interest of ten percent (10%) per annum.
Reorganized CET shall make semi-annual interest only payments on account of the
New CET Unsecured Notes commencing on the first (1st) day of the sixth (6th)
month following the Effective Date. The New CET Unsecured Notes shall not be
enforceable or accelerated by the holders thereof for any reason other than the
failure of Reorganized CET (or its successor or assign) to pay timely. The New
CET Unsecured Notes shall have no affirmative or negative covenants other than
the promise to pay.
20. CLASS 16 CLAIM (KROEGER CLAIM).
------------------------------
a. If Class 16 votes to accept this Plan by the
vote required for acceptance under Bankruptcy Code section 1126(c), the Kroeger
Claim of Class 16 shall be an Allowed Claim in the amount of Two Million Five
Hundred Thousand Dollars ($2,500,000), shall be allowed under Bankruptcy Code
section 502 as a General Unsecured Claim, and the holders of the Kroeger Claim
in Class 16 may elect:
(1) to receive, in full satisfaction of
said Allowed Claim, an unsecured note issued by Reorganized CET, in
substantially the form attached hereto as Exhibit E-2 (the "New Kroeger Note"),
which shall be in the original principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000), shall be payable in monthly installments of
Twenty Thousand Dollars ($20,000), with the first installment due on the first
(1st) day of the first (1st) month following the Effective Date and the final
installment due on the first (1st) day of the ninety-sixth (96th) month
following the Effective Date. The New Kroeger Note shall not bear interest and
shall be secured by a third trust deed on the Regency Plaza property. The New
Kroeger Note shall
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have no affirmative or negative covenants except the promise to pay and shall
not be enforceable or accelerated due to the sale or disposition by Reorganized
CET of any assets or any changes of ownership of New Common Stock, or for any
reason other than the failure of Reorganized CET (or its successor or assign)
to pay timely; or
(2) to have said Allowed Claim be
included in Class 15(b) and treated pursuant to the provisions of paragraph
IV.B.19. of this Plan.
b. If Class 16 does not vote to accept this Plan
by the majorities required by Bankruptcy Code section 1126(c), (i) the
Proponents reserve the right to object to the Claims in Class 16 in which event
they shall be "Disputed Claims" and (ii) each holder of an Allowed Claim in
Class 16 shall receive a Distribution of New CET Unsecured Notes (in
substantially the form attached hereto as Exhibit E-1) having a value
determined by the Bankruptcy Court as of the Effective Date equal to the amount
of the Allowed Claim.
21. CLASS 17 CLAIMS:
---------------
a. CLASS 17(A) CLAIMS: SUBORDINATED CLAIMS
BASED ON FORMERLY HELD OLD CET COMMON STOCK: Pursuant to section 510(b) of the
Code, every Allowed Claim in Class 17(a) shall be subordinated to all other
Allowed Claims, and shall have the same priority as the Allowed Equity
Interests in Classes 18(a) and 18(b) of holders of Old CET Common Stock.
Subject to the provisions of Article VI.E. hereof (Disputed Claims Reserve) and
the provisions of Article VI.G hereof (De Minimis Distributions), holders of
Allowed Claims in Class 17(a) shall receive, on the later of (a) thirty (30)
days after such Class 17(a) Claim becomes an Allowed Claim pursuant to a Final
Order, or (b) as soon as practicable after the Effective Date, Distributions of
Cash (subject to Article IV.B.22.e. hereof) or New CET Common Stock calculated
on the same basis as Distributions of Cash or New CET Common Stock made to
holders of Allowed Equity Interests in Classes 18(a) and 18(b), as described in
Article IV.B.22. and IV.B.23. hereof; provided, however, that the Distribution
on account of such Allowed Claim shall be based on the number of shares of Old
CET Common Stock involved in such purchase or sale transaction, without regard
to the dollar amount of damages, if any, alleged in such Claim. The Proponents
may object to any Claim in Class 17(a).
b. CLASS 17(B) CLAIMS: SUBORDINATED CLAIMS
BASED ON CURRENTLY HELD CET COMMON STOCK: Pursuant to section 510(b) of the
Code, every Allowed Claim in Class 17(b) shall be subordinated to all other
Allowed Claims, and shall have the same priority as the Allowed Equity
Interests in Classes 18(a) and 18(b) of holders of Old CET Common Stock.
Subject to the
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provisions of Article VI.E. hereof (Disputed Claims Reserve) and the provisions
of Article VI.G hereof (De Minimis Distributions), holders of Allowed Claims in
Class 17(b) shall receive, on the later of (a) thirty (30) days after such
Class 17(b) Claim becomes an Allowed Claim pursuant to a Final Order, or (b) as
soon as practicable after the Effective Date, Distributions of Cash (subject to
Article VI.B.22.e. hereof) or New CET Common Stock calculated on the same basis
as Distributions of Cash or New CET Common Stock made to holders of Allowed
Equity Interests in Classes 18(a) and 18(b), as described in Article IV.B.22.
and IV.B.23. hereof; provided, however, that only one Distribution shall be
made on account of each share of Old CET Common Stock with respect to which
there exists both a Class 17(b) Allowed Claim and a Class 18(a) or Class 18(b)
Allowed Equity Interest, which Distribution shall be made consistent with
Article IV.B.22. and the Distribution on account of such Allowed Claim shall be
based on the number of shares of Old CET Common Stock involved in the purchase
or sale transaction underlying such Allowed Claim, without regard to the dollar
amount of damages, if any, alleged in such Allowed Claim; and provided further,
that each holder of an Allowed Equity Interest in Class 18(a) or 18(b) shall be
entitled to only a single recovery on account of, in the aggregate, such
Allowed Equity Interest and its Allowed Claim in Class 17(b) arising out of the
purchase or sale of the shares of Old CET Common Stock represented by such
Allowed Equity Interest, which single recovery shall be limited to such
holder's Distribution under Article IV.B.22. of the Plan. The Proponents may
object to any Claim in Class 17(b).
22. CLASS 18 INTERESTS: ALLOWED EQUITY INTERESTS:
---------------------------------------------
a. CLASS 18(A): ALLOWED EQUITY INTERESTS OF
1,000 SHARES OR LESS. Each holder of an Allowed Equity Interest in Class 18(a)
shall receive, as soon as practicable after the Effective Date, subject to
Article VI.G. hereof (De Minimis Distributions) and Article IV.B.22.e. hereof,
the following:
(1) DISTRIBUTIONS TO PERSONS HOLDING 200
SHARES OF OLD CET COMMON STOCK OR LESS: In the event that a holder of an
Allowed Equity Interest in Class 18(a) holds no more than two hundred (200)
shares of Old CET Common Stock as of the Old CET Common Stock Record Date, said
holder may receive, on account of his/her shares of Old CET Common Stock,
twenty cents ($0.20) for each share of Old CET Common Stock, and said holder
shall receive no New Common Stock on account of said Allowed Equity Interests,
unless said holder elects on the Ballot to receive said shares of New CET
Common Stock in lieu and instead of Cash, and each holder's Pro Rata
Distribution of New CET Common Stock shall be calculated as set forth in
Article IV.B.22. and IV.B.23. hereof.
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(2) DISTRIBUTIONS TO PERSONS HOLDING
BETWEEN 201 AND 1000 SHARES OF OLD CET COMMON STOCK: In the event that a
holder of an Allowed Equity Interest in Class 18(a) holds at least two hundred
one (201) shares but not more than one thousand (1,000) shares of Old CET
Common Stock as of the Old CET Common Stock Record Date, said holder shall
receive, on account of his shares of Old CET Common Stock, shares of New CET
Common Stock, and each holder's Pro Rata Distribution shall be calculated as
set forth in Article IV.B.23. hereof, unless said holder elects on the Ballot
to receive Cash equal to twenty cents ($0.20) per Share of said holder's Old
CET Common Stock.
b. CLASS 18(B) ALLOWED EQUITY INTERESTS OF MORE
THAN 1,000 SHARES: Each holder of an Allowed Equity Interest holding as of the
Old CET Common Stock Record Date more than one thousand (1,000) shares of Old
CET Common Stock (Class 18(b)) shall receive, as soon as practicable after the
Effective Date, a Pro Rata Distribution of 2,450,000 shares of New CET Common
Stock; provided the shares of New CET New Common Stock issued to all Allowed
Equity Interests in Class (18(b)) shall be reduced by:
(1) the number of shares of New CET Common
Stock issued to Persons in Class 18(a);
(2) the number of shares of New CET Common
Stock which would otherwise have been issued to Persons in Class 18(a) whose
shares are redeemed for Cash under Article IV.B.22.a. hereof;
(3) the number of shares of New CET Common
Stock which would otherwise have been issued to Persons in Class 17(a) whose
shares are redeemed for Cash under Article IV.B.21. hereof; and
(4) the number of shares of New CET Common
Stock issued to persons in Class 17(a) under Article IV.B.21. hereof.
c. TREATMENT OF SUBORDINATED CLAIMS BASED ON
CURRENTLY HELD CET COMMON STOCK. Each holder of an Allowed Equity Interest in
Class 18(a) or Class 18(b) shall be entitled to only a single recovery on
account of, in the aggregate, said Allowed Equity Interest and its Allowed
Claim (if any) in Class 17(b) arising out of the purchase or sale of the shares
of Old CET Common Stock represented by said Allowed Equity Interest, which
single recovery shall be based on said Allowed Equity Interest and shall be
limited to such holder's Distribution under this Article IV.B.22.
d. CANCELLATION OF OLD CET SECURITIES; NO
FRACTIONAL SHARES. All Old CET Common Stock and all Old CET
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Securities shall be canceled and terminated under the Plan as of the Effective
Date. The Distribution of shares of New CET Common Stock provided under the
Plan may mathematically entitle the holder of an Allowed Claim in Classes 17(a)
or 17(b) or an Allowed Equity Interest in Classes 18(a) or 18(b) to a
fractional share of New CET Common Stock. Notwithstanding the foregoing, only
whole numbers of shares of New CET Common Stock will be issued and distributed.
Fractional shares of New CET Common Stock of one half or greater shall be
rounded up to the next whole number, while fractional shares of New CET Common
Stock of less than one half shall be rounded down to the next whole number.
e. PLAN PROPONENTS OPTION TO MAKE CASH PAYMENT
TO ALLOWED EQUITY INTERESTS CLASS 18(A) AND CLASS 17(A) AND CLASS 17(B) ALLOWED
CLAIMS. Notwithstanding the provisions contained in Article IV.B.21. and
Article IV.B.22.a. which would otherwise entitle holders of Allowed Equity
Interests in Class 18(a) or entitle holders of Allowed Claims in Class 17(a) or
Class 17(b) to receive a Cash payment, any Cash payments shall be made at the
option of the Plan Proponents based upon the Cash requirements of Reorganized
CET on the Effective Date. In the event any holder of an Allowed Equity
Interest in Class 18(a) or holder of an Allowed Claim in Class 17(a) or Class
17(b) does not receive such Cash payments, said holder shall receive
distributions of New CET Common Stock as provided in Article IV.B.22.
23. Number of Shares of New CET Common Stock. The number
of shares of New CET Common Stock to be distributed to each holder of an
Allowed Equity Interest in Class 18(a) or Class 18(b) and to each holder of an
Allowed Claim in Class 17(a) or Class 17(b) shall be calculated as follows:
a. There shall be determined a fraction (the
"Fraction") the (i) numerator of which is the number of shares of Old CET
Common Stock held by said holder in Class 18(a), 18(b), 17(a) or 17(b), and
(ii) denominator of which is the sum of (x) the total number of shares of Old
CET Common Stock outstanding as of the Old CET Common Stock Record Date, plus
(y) the total number of shares of Old CET Common Stock that are the basis of
all Allowed Claims in Class 17(a), less (2) the number of shares of Old CET
Common Stock for which no distribution is made pursuant to Article VI.G.
hereof.
b. The Fraction shall then be multiplied by
2,450,000, to calculate the number of shares to be issued to each holder in
Classes 17(a), 17(b), 18(a) or 18(b).
c. To the extent that the mathematical
functions, such as the calculation of shares under this Article IV.B.23., the
rounding of fractional shares, or the calculations
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of Pro Rata Shares, result in the issuance of slightly greater or less than
2,550,000 shares of New CET Common Stock to Lenders, or slightly greater or
less than 2,450,000 shares of New CET Common Stock to Classes 17(a), 17(b),
18(a) and 18(b) (subject to the reductions specified in Article IV.B.22.b.),
then (x) the total number of shares of New CET Common Stock issued to Classes
17(a), 17(b), 18(a), and 18(b) shall bear the proportional relationship to (y)
the shares of New CET Common Stock issued to Lenders of 49% to 51%, before
giving effect to the reductions in Article IV.B.22.b.(2) and (3) for the shares
of New CET Common Stock which would otherwise have been issued to Persons in
Class 18(a) or Classes 17(a) or 17(b) whose shares are redeemed for Cash.
24. TREATMENT OF CLASS 4 CLAIM: PRINCIPAL MUTUAL SECURED
CLAIM. The holder of the Class 4 Claim has obtained relief from the automatic
stay. The property which is security for said Claim shall be sold at
foreclosure sale pursuant to applicable state law and in consideration of the
full and final satisfaction of said Claim. The Principal Mutual Secured Claim
shall retain all legal, equitable and contractual rights to which it is
entitled; provided, that the holder of the Principal Mutual Secured Claim shall
not be entitled to any General Unsecured Claim against CET or Reorganized CET
and CET reserves all defenses, objections, counterclaims, and offsets with
respect to any such General Unsecured Claim.
25. PROVISIONS APPLICABLE TO SUN LIFE OF AMERICA. The
following provisions shall be applicable to the following Sun Life of America
classes: Classes 6(b) -- Regency Plaza, 6(c) -- Sierra Oaks, 6(d) -- Sunrise
Hills, and 6(e) -- University Village:
a. The holder of said Allowed Claim secured by a
Senior Mortgage shall retain its lien upon and security interest in all real
and personal property collateral granted to secure said Allowed Claim, which
lien and security interest shall have the same priority it had as of the
Petition Date. The Proponents acknowledge that the Sun Life of America deeds
of trust and security interests on all of its collateral are duly recorded and
perfected first priority deeds of trust and security interests against which no
defenses or offsets exist.
b. The Proponents shall seek from the Court a
finding of fact and an order that the value of the real property and personal
property liens and security interests securing said Allowed Claim equals at
least the amount of the Allowed Claim as set forth in Article IV.B. of the Plan
hereof and that the Allowed Claim in said class is fully secured under Code
sections 506(a) and 506(b).
c. The applicable Restructured Secured Note,
Restructured Deed of Trust or security instrument and the cash
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payment required to be made on the Effective Date shall be deemed to be in full
satisfaction of all Allowed Claims asserted by the holder thereof, including,
but not limited to, any Administrative Claim and any Priority Unsecured Claim
allowable under Code sections 503 or 507 arising in connection with this
Chapter 11 Case, including Claims on account of the Debtor's use of collateral
or cash collateral or continuation of the automatic stay.
d. All debt instruments and agreements under
which said Claim arises (including but not limited to recorded deeds of trust,
fixtures filings and rent assignments, and filed UCC financing statements)
shall remain in effect, except to the extent amended and superseded by the
applicable Restructured Secured Note and Restructured Deed of Trust, which
shall be issued by Reorganized CET in recordable form on the Effective Date in
a form which shall be filed with the Court prior to the Effective Date, under
which:
(1) the Allowed Claim as set forth in
Article IV.B. of the Plan shall constitute the principal indebtedness of the
Restructured Secured Note and Restructured Deed of Trust;
(2) there shall be no late fees provided
for in the Restructured Secured Note but default interest at the rate of two
percent (2%) per annum in excess of the contract rate under the applicable
Restructured Secured Note shall be due upon unpaid principal and accrued
interest until all defaults are cured;
(3) there shall be no financial
covenants or other covenants except the duty to (i) maintain the property, (ii)
pay insurance and (iii) provide a monthly tax payment to an impound account;
(4) the recordation of the Pacific
Mutual Lenders' junior lien shall not be an event of default under the
Restructured Deed of Trust and Reorganized CET may one time transfer the
property to a third party transferee, who is reasonably acceptable to the
Senior Mortgagee, so long as CET pays the Senior Mortgagee an assumption fee of
one percent (1%) on the unpaid balance of the Senior Mortgagee's Restructured
Secured Note up to $1 million plus an additional three-eighths of one percent
(.375%) assumption fee on the remainder of the Senior Mortgagee's unpaid
principal note balance. Any other transfer, assignment or sale of the property
is an event of default that would allow the Senior Mortgagee to accelerate the
note;
(5) the Restructured Secured Note and
Restructured Deed of Trust shall be without recourse to Reorganized CET as set
forth in the prepetition documents except
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that the imposition of a junior lien or the making of a conveyance permissible
under this Third Amended Plan as modified shall not cause recourse liability;
(6) the Restructured Secured Note and
Restructured Deed of Trust shall not contain prepayment penalties or any other
provisions which would give rise to a default under the terms of the Plan or
terms which would be inconsistent with the treatment of the particular Allowed
Claim provided for under the Plan; and
(7) the Restructured Secured Note and
Restructured Deed of Trust shall provide that the filing of the Chapter 11 Case
is not a default under the Restructured Secured Note and the Restructured Deed
of Trust.
e. Notwithstanding the provisions of Article
IV.B.25(d) above, Reorganized CET shall deliver to Sun Life of America on the
Effective Date New Deeds of Trust and New Promissory Notes for Sierra Oaks,
Regency Plaza and Sunrise Hills, and a Restructured Deed of Trust and
Restructured Secured Note for University Village, containing all of the terms
and provisions contained in this Third Amended Plan, as modified, applicable to
Sierra Oaks, Regency Plaza, Sunrise Hills and University Village, whether
designated as Restructured Deeds of Trust, Restructured Secured Notes or
otherwise. Notwithstanding the foregoing, Sun Life of America shall have the
option at its sole discretion, exercisable in writing directed to the Debtor,
attention Frank Morrow, by overnight mail or facsimile transmission no later
than September 20, 1994 to require that Restructured Deeds of Trust and
Restructured Secured Notes be delivered to Sun Life of America in lieu of New
Deeds of Trust and New Promissory Notes for Sierra Oaks, Regency Plaza, Sunrise
Hills or any of them.
Upon 36 hours telefax notice to William Hugron at the
offices of Reorganized CET, but no later than September 15, 1994, Debtor shall
promptly produce for copying and/or inspection to Sun Life of America all
leases and other documents reflecting modifications, terminations, extensions,
renewals or otherwise affecting tenants' obligations and rights in and for
Sierra Oaks, Regency Plaza, Sunrise Hills and University Village. Sun Life of
America shall have the right to conduct due diligence with tenants and
otherwise respecting all such leases.
f. On the Effective Date, Sun Life of America
will pay to Reorganized CET an amount equal to the sum of (a) $60,500 (adequate
protection payments made on account of TGIF), plus (b) $3,151 (adequate
protection payments made on Sunrise Hills in excess of interest accrued at the
contract non-default rate of interest through June 1, 1994), plus (c) any other
adequate protection payments made on account of the Sunrise
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Hills property and received from June 1, 1994 to the Effective Date which
exceed the contract non-default interest.
g. On the Effective Date, CET's counsel shall
provide Sun Life of America with a legal opinion regarding the enforceability
of the loan documents provided to Sun Life of America pursuant to the Plan.
h. On the Effective Date, CET shall provide Sun
Life of America, at no cost to Sun Life of America, with the narrative
appraisals on the Regency Plaza, Sierra Oaks and Sunrise Hills properties
prepared by Coopers & Lybrand and certified to Sun Life of America in form and
substance previously filed with the Bankruptcy Court.
i. The liens granted Sun Life of America
pursuant to Articles IV.B.5, 6, 7 and 8, whether by Restructured Deeds of Trust
or, in the case of Sierra Oaks, Regency Plaza or Sunrise Hills or any of them,
by New Deeds of Trust, shall constitute a first priority lien on the property
applicable to each Restructured Deed of Trust or New Deed of Trust senior and
enforceable against each and every lien, encumbrance or interest of any kind
asserted in or against the property except for liens on each property, if any,
securing real property taxes applicable to each such property. Sun Life of
America and Pacific Mutual Life Insurance Company, as agent for several
lenders, shall execute any and all documents reasonably necessary to
subordinate the Pacific Mutual Lenders' liens in accordance with and to
effectuate the purpose of this paragraph.
j. The provisions of the Confirmation Order
determining that the Allowed Claims of Sun Life of America are fully secured
under 11 U.S.C. Section 506 shall not prejudice the right of Sun Life of
America to prove that a deficiency claim may exist at a later date, to the
extent Reorganized CET has recourse liability.
26. CLASS 14 CLAIMS: SECURED REAL PROPERTY TAX CLAIMS OF
SACRAMENTO COUNTY. Notwithstanding the provisions of Article IV.B.18. of the
Plan, the Class 14 Secured Real Property Tax Claims of Sacramento County shall
be treated pursuant to the provisions of this Article IV.B.26. Payment of the
Class 14 Secured Real Property Tax Claims of Sacramento County shall be made in
ten (10) equal semi-annual installments, with the first installment due on
December 10, 1994. Subsequent payments shall be made on each April 10 and
December 10 thereafter. The Secured Real Property Tax Claims of Sacramento
County shall accrue interest from and after the Effective Date at the rate of
seven and one-quarter percent (7 1/4%) per annum. Each installment shall
include simple interest accrued commencing on the Effective Date and unpaid as
of the particular payment date on the unpaid portion of such Claim; provided,
however, that Reorganized CET
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shall have the right to pay the remaining balance of any of the Secured Real
Property Tax Claims of Sacramento County in full at any time on or after the
Effective Date, without premium or penalty. CET or Reorganized CET may seek an
order from the Bankruptcy Court directing Sacramento County to apply payments
on account of (a) post-petition, pre-Effective Date real property taxes, which
may be Administrative Claims and (b) Class 14 Claims, to the extent accrued in
the appropriate periods of time and to correctly calculate interest and
penalties, if any, on account of such Claims.
ARTICLE V.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
----------------------------------------
A. EXECUTORY CONTRACTS GENERALLY. All executory contracts and
leases to which the Debtor was a party prior to Confirmation shall be assumed
(and, to the extent necessary, assigned to Reorganized CET) pursuant to
Bankruptcy Code sections 365 and 1123, except for: (i) the executory contracts
and unexpired leases which are subject to prior orders entered in the Chapter
11 Case authorizing the rejection or the assumption and assignment of such
executory contracts and unexpired leases, (ii) any Old CET Securities that is
determined to be an executory contract, (iii) all executory contracts which are
the subject of separate motions filed prior to Confirmation by the Proponents
pursuant to Bankruptcy Code sections 365 and 1123, and (iv) the executory
contracts and leases which are the subject of a "Schedule of Rejected Executory
Contracts" to be filed by Proponents before Confirmation. On the Effective
Date, all the executory contracts and unexpired leases described in clauses
(i), (ii) and (iv) above shall be rejected. All the executory contracts and
unexpired leases described in clause (iii) above shall be rejected upon the
entry of a Court order authorizing such rejection.
B. FRANCHISE AGREEMENTS, LABOR AGREEMENTS, AND OTHER CONTRACTS.
The Debtor may, before the Effective Date, or Reorganized CET may, after the
Effective Date, enter into new contracts, or modify existing contracts as the
Debtor and the other party to said contract may agree, including franchise
agreements for the hotels, tenant leases, and other agreements. Consistent
with applicable law, the Debtor may before the Effective Date, and Reorganized
CET may after the Effective Date, engage in negotiations and/or collective
bargaining with its employees and may enter into labor contracts and/or
collective bargaining agreements.
C. CLAIMS ARISING FROM REJECTION OF CONTRACTS. Any Claim for
damages arising out of the rejection of executory contracts and leases not
assumed before Confirmation, or with respect to which an order for rejection is
entered after Confirmation, shall be determined, and which Claim is allowed or
disallowed for
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purposes of Distributions under Bankruptcy Code section 502(g), shall be
classified in Class 15. Any Claim for damages arising from rejection of an
executory contract or lease shall be forever barred unless a proof of Claim is
filed with the Bankruptcy Court within thirty (30) calendar days after the
later of (i) Confirmation, or (ii) entry of an order of the Bankruptcy Court
authorizing the rejection of said executory contract or lease. Notwithstanding
the rejection of any executory contract or unexpired lease at any time during
this bankruptcy case, CET and Reorganized CET reserve all rights and defenses
which the Estate may have or have had against the parties to such contracts and
leases.
D. STIPULATIONS WITH HOLIDAY INNS. Any Stipulation between
Holiday Inns, Inc., its subsidiaries and affiliates and CET, which is approved
by separate order of the Court entered on or before the Effective Date of the
Plan, and the terms and provisions thereof, are hereby incorporated by
reference in and made a part of the Plan and the Order confirming the Plan. In
the event of a conflict between the terms and provisions of the Plan or the
Order confirming the Plan, the terms and provisions of the Stipulation shall
control. It is the intention of the Proponents that the terms and provisions
of the Stipulation including, but not limited to, the covenants, warranties and
representations as set forth therein, shall survive confirmation of the Plan
and the closing of the case.
ARTICLE VI.
MEANS OF EXECUTION OF PLAN
--------------------------
A. SOURCES OF PAYMENT. The sources of payment for the
distributions to be made under the Plan are the property of the Estate; the
property of Reorganized CET; Cash generated by rents, hotel revenues,
collection of Notes Receivable; the proceeds from the liquidation of any of the
assets; proceeds of and Distributions on account of the CalREIT Stock Interest;
proceeds of the Partnership Interests; and borrowings under the Redding Hotel
Improvement Loan and under the New Credit Line.
B. NEW CREDIT LINE. The terms of the New Credit Line are
summarized on Exhibit D attached hereto. The definitive documents for the New
Credit Line shall be filed with the Bankruptcy Court prior to the Effective
Date and this Plan may be modified by the Proponents at any time prior to the
Effective Date in order to make the Plan consistent with said definitive
documents. On the Effective Date, or as soon as practicable thereafter, the
Reorganized CET Initial Board of Trustees shall determine the initial principal
amount of borrowings on the New Credit Line and shall execute and deliver the
New Credit Line Documents and take such steps as necessary for Reorganized CET
to commence borrowing on the New Credit Line.
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C. APPOINTMENT OF DISBURSING AGENT. The Confirmation Order shall
provide that Reorganized CET will act as disbursing agent under the Plan and
will serve without bond. On the Effective Date, or as soon as practicable
thereafter, Reorganized CET, as disbursing agent, shall establish two or more
accounts, which shall be interest-bearing, one identified as "Plan Disbursement
Account" and the other identified as "Unpaid Claims Reserve". Reorganized CET
shall transfer sufficient funds to the Plan Disbursement Account on a periodic
basis to make all Distributions on account of Allowed Claims required by the
Plan.
D. DISTRIBUTIONS:
-------------
1. DISTRIBUTION TO CLASS 1 ADMINISTRATIVE CLAIMS.
Within thirty (30) days after the Effective Date, Reorganized CET shall make a
Cash Distribution to the holders of Allowed Claims in Class 1.
2. CASH DISTRIBUTIONS ON ALL OTHER CLAIMS. Pursuant to
the terms of the Plan, Reorganized CET, after making appropriate reserves for
any Disputed Claims in the relevant class, shall make the Pro Rata
Distributions to the classes required by Article IV of this Plan.
3. NAME AND ADDRESS OF HOLDER. For purposes of all
Distributions under this Plan, the Disbursing Agent shall be entitled to rely
on the name and address of the holder of each Allowed Equity Interest as of the
Old CET Common Stock Record Date, and to rely on the name and address of the
holder of each Allowed Claim as shown on the Debtor's Amended Schedules filed
March 21, 1994 or on any proof of Claim filed on or before May 31, 1994, except
to the extent Reorganized CET receives written notice of a transfer or change
of address, properly executed by the holder or its authorized agent.
E. DISPUTED CLAIM RESERVE:
----------------------
1. Except to the extent the Bankruptcy Court shall
estimate that a sufficient reserve for Disputed Claims or Disputed Equity
Interests is less than the full amount thereof, in determining the amount of
Distributions due to the holders of Allowed Claims and Allowed Equity Interests
and to be reserved for Disputed Claims and Disputed Equity Interests, the
appropriate Pro Rata calculations required by Article IV of the Plan shall be
made as if all Disputed Claims and Disputed Equity Interests were Allowed
Claims and Allowed Equity Interests.
2. On the Effective Date, the Distributions of Cash, New
CET Common Stock, and other property reserved for the holders of Disputed
Claims and Disputed Equity Interests shall be deposited by Reorganized CET in
the Unpaid Claims Reserve.
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3. All Cash held in the Unpaid Claims Reserve shall be
invested in such investments as are permitted under Section 345 of the Code.
The earnings on such investments shall be first applied to reimburse the
Reorganized CET for its costs and expenses incurred in connection with the
maintenance of the Unpaid Claims Reserve and the making of Distributions
subsequent to the Effective Date. All earnings in excess of such costs and
expenses shall be held in trust in the Unpaid Claims Reserve and shall be
distributed only in the manner set forth below.
4. At such time as a Disputed Claim or Disputed Equity
Interest becomes an Allowed Claim or an Allowed Equity Interest, the
Distributions due on account of such Allowed Claim or Allowed Equity Interest
(without any interest thereon) shall be released from the Unpaid Claims Reserve
for delivery to the holder of such Allowed Claim or Allowed Equity Interest.
5. Any Cash, New CET Common Stock, or other property in
the Unpaid Claims Reserve account remaining after resolution of such Disputed
Claims or Disputed Equity Interest, including the remaining net return or
interest yielded from the investment of the Cash in the Account, shall be
distributed, Pro Rata, to the holders of Allowed Claims or Allowed Equity
Interests in the particular class as provided for in the Plan. To the extent
all Allowed Claims or Allowed Equity Interests of such class have received the
Distributions required by the Plan, such property shall revest in Reorganized
CET.
6. Notwithstanding anything to the contrary contained in
this Article VI.E., holders of Allowed Claims in Classes 17(a) and 17(b) shall
share Pro Rata with the holders of Allowed Equity Interests in Class 18(a) and
Class 18(b) with respect to the shares of New CET Common Stock to be issued to
Classes 17(a), 17(b), 18(a), and 18(b) in accordance with Articles IV.B.21 and
IV.B.22.
F. UNCLAIMED PROPERTY. Any Cash, New CET Common Stock, or other
property which is unclaimed for one hundred eighty (180) days after
Distribution thereof sent by mail to the last known mailing address of the
Person entitled thereto as made known to Reorganized CET shall be revested in
Reorganized CET and shall be distributed in accordance with this Plan.
G. DE MINIMIS DISTRIBUTIONS:
------------------------
1. Notwithstanding anything to the contrary contained in
the Plan, Reorganized CET shall not (a) disburse Cash to the holder of an
Allowed Claim if the amount of Cash otherwise due is less than Five Dollars
($5.00); or (b) disburse New CET Common Stock to the holders of Allowed Equity
Interests or Class 17(a) or Class 17(b) Allowed Claims to the extent such
Persons holding such Allowed Equity Interests or Allowed Claims holds, or makes
a
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Claim on account of, less than twenty-five (25) shares of Old CET Common Stock.
Cash and New CET Common Stock not so distributed shall be deposited in the
Unpaid Claims Reserve and distributed in the same manner as unclaimed property
under Article VI.F. of the Plan.
2. Notwithstanding anything to the contrary in the Plan,
Reorganized CET shall round all amounts and Distributions of Cash to the
nearest whole dollar amount.
H. FEES FOR PROFESSIONALS. Fees and expenses for the
professionals retained by the Debtor, Reorganized CET, the Equity Holders'
Committee and the Creditors' Committee pursuant to section 327 of the Code for
services rendered and costs incurred after the Petition Date and prior to the
Effective Date, shall be fixed by the Court after notice and a hearing and
shall be paid after allowed by an order of the Bankruptcy Court. Fees and
expenses for professionals (i) retained by Reorganized CET or (ii) retained by
the Equity Holders' Committee or the Creditors' Committee or the Lenders, to
the extent such fees are agreed to be paid by Reorganized CET, for services
rendered after the Effective Date may be paid by Reorganized CET in the
ordinary course of business after submission of a bill for services rendered
and costs incurred, without review or approval by the U.S. Trustee or the
Bankruptcy Court.
I. DISPOSITION OF ASSETS:
---------------------
1. At any time after Confirmation up to and including
the Effective Date, the Debtor may consider offers to sell or lease individual
parcels of its Real Properties and, with the express written consent of
Proponents, may seek court authorization for such sales or leases, either in
the Confirmation Order or in separate orders. The property may be offered for
sale or lease in individual parcels, and on any commercially reasonable terms,
including sales on credit. With respect to any sale or lease for which the
Debtor contracts, or which closes, before the Effective Date: (i) said sale or
lease may be subject to or free and clear of liens or subject to certain liens
and free and clear of other liens, pursuant to Code section 363; (ii) all
parties in interest reserve their rights to object to or seek conditions with
respect to such sales or leases; and (iii) all Net Proceeds of any sale or
lease (as defined in Exhibit A) shall be vested in and delivered to Reorganized
CET.
2. At any time, up to and including the Effective Date,
the Debtor may, with the express written consent of the Proponents, abandon to
the holder of an Allowed Claim secured by a Senior Mortgage any real property
or related personal property securing such Allowed Claim. The Allowed Claim of
such holder shall be reduced by the full amount of said Allowed Claim,
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provided that said abandonment shall be subject to review and authorization by
the Bankruptcy Court under Code section 554.
3. Neither Lenders, any Senior Mortgagee, nor any Person
providing the New Credit Line or the Redding Hotel Improvement Loan shall have
any right under Code section 363(k) to bid for any property and offset its
claim against the purchase price with respect to (i) the vesting in Reorganized
CET of any real property or personal property contemplated by this Plan and the
definitive documents executed and delivered pursuant thereto; or (ii) (except
as set forth below) the sale, lease, financing, or other disposition by
Reorganized CET on or after the Effective Date of any real property or personal
property. Each Senior Mortgagee may credit bid its Allowed Claim against the
purchase price of the property which is encumbered by said Senior Mortgage and
which is sold at a foreclosure sale before or after the Effective Date, to the
extent permitted under Bankruptcy Code section 363 (if applicable) and to the
extent permitted under applicable non-bankruptcy law. The rights of Lenders,
all Senior Mortgagees, the New Credit Line Lender, and the Person providing the
Redding Hotel Improvement Loan shall be as set forth in the definitive
documents to which each is a party and which become effective as of the
Effective Date.
J. PUBLIC TRADING AND REGISTRATION OF NEW SECURITIES:
-------------------------------------------------
1. In connection with Distributions of New CET Common
Stock and New CET Preferred Stock under the Plan, each of the Lenders shall be
given the opportunity to become a party to a registration rights agreement (the
"Registration Rights Agreement"), on substantially the terms described in
Exhibit C hereto. All parties to the Registration Rights Agreement shall have
the "demand" and "piggyback" registration rights summarized in Exhibit C
hereto. The Registration Rights Agreement shall also include other terms and
conditions typical of similar agreements. The definitive documents for the
Registration Rights Agreement shall be agreed among the Proponents and filed
with the Court prior to the Effective Date and this Plan may be modified by the
Proponents at any time prior to the Effective Date in order to make this
Article of the Plan consistent with said definitive documents.
2. The holders of Allowed Equity Interests in Classes
18(a) and 18(b), and the holders of Allowed Claims in Classes 17(a) and 17(b),
reserve the right to require that the New CET Common Stock issued to said class
shall be publicly tradeable on the Effective Date, except to the extent that a
holder of the New CET Common Stock is not entitled to the exemption from
registration provided by Section 1145 of the Code.
K. CANCELLATION OF CERTAIN OUTSTANDING SECURITIES. All debt
instruments issued to Lenders before Confirmation, and all
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Old CET Securities are canceled and terminated under the Plan. Except as set
forth in Article IV.B. of this Plan with respect to Senior Mortgages and
Lenders, all debt instruments issued by the Debtor prior to the Confirmation
are canceled under the Plan.
L. PROHIBITION OF ISSUANCE OF NON-VOTING SECURITIES. The
declaration of trust (or articles of incorporation) of Reorganized CET shall
prohibit the issuance of non-voting equity securities by Reorganized CET, shall
provide that all voting power in Reorganized CET will be held by the New CET
Common Stock and the New CET Preferred Stock, and shall contain other
provisions to authorize and implement this Plan and the transactions hereby
contemplated.
M. STOCK TRANSFER. Distributions of Cash and New CET Common
Stock will be made to all holders of Interests in Classes 18(a) and 18(b) and
holders of Claims in Classes 17(a) and 17(b) as to which no certificates
evidencing ownership of Old CET Common Stock were issued. All holders of
Interests in Classes 18(a) and 18(b) and holders of Claims in Class 17(b) that
are evidenced by Old CET Common Stock certificates shall submit their original
certificates evidencing their ownership of Old CET Common Stock (or
affidavit(s) in a form acceptable to Reorganized CET regarding lost
certificate(s)) to Reorganized CET's stock transfer agent within one (1) year
after the Effective Date for redemption, cancellation or issuance of New CET
Common Stock, as the case may be, unless the time for submission is extended as
set forth below. Holders of Allowed Equity Interests in Classes 18(a) and
18(b) or Allowed Claims in Class 17(b) that are evidenced by certificates who
do not so tender their Old CET Common Stock certificates (or affidavits
regarding lost certificates) will forfeit the right to receive any Cash
redemption or New CET Common Stock under the Plan. Any Cash which would
otherwise be paid to such holders and any Cash in respect of uncertificated
shares that is unclaimed on such date shall revest in Reorqanized CET on the
first anniversary of the Effective Date, unless the time for submission is
extended as set forth below. On the first anniversary of the Effective Date,
any New CET Common Stock which would otherwise be distributed to such persons
under the Plan and any New CET Common Stock certificates issued in respect of
uncertificated Old CET Common Stock that is unclaimed on the first anniversary
of the Effective Date (collectively, the "Unclaimed Shares") shall be
distributed Pro Rata to the holders of Allowed Equity Interests in class 18(a)
and Class 18(b), and to the holders of Allowed Claims in Class 17(a) and Class
17(b) other than those who would originally have been entitled to Unclaimed
Shares. Upon request of any person, Reorganized CET may (but is not required
to) extend the time for submission of share certificates or affidavits or the
Court may extend the time for submission of certificates or affidavits to the
stock transfer agent upon noticed motion for cause shown, but in any event the
time for submission shall not exceed five years
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after the date of the entry of the Confirmation Order under section 1143 of the
Bankruptcy Code; provided, however, that if any Unclaimed Shares of New CET
Common stock shall have already been distributed to Classes 18(a), 18(b), 17(a)
or 17(b) pursuant to the preceding sentence, such shares shall not be recovered
from the distributees nor shall Reorganized CET be required to make any
adjustments in Pro Rata Distributions of New CET Common Stock in order to
accommodate persons who are permitted by court order to submit their shares of
Old CET Common Stock after the first anniversary.
ARTICLE VII.
POST-CONFIRMATION MANAGEMENT AND OPERATIONS
-------------------------------------------
A. COMPOSITION OF REORGANIZED CET INITIAL BOARD OF TRUSTEES:
--------------------------------------------------------
1. On the Effective Date the Reorganized CET Initial
Board of Trustees shall consist of five (5) persons. The Lenders and CET shall
each designate one (1) member to the Reorganized CET Initial Board of Trustees,
provided that CET's designee shall be Morrow. The remaining three (3) members
of the Reorganized CET Initial Board of Trustees shall be designated by a
majority vote of voting members of a committee, called the "Reorganized CET
Initial Board of Trustees Election Committee." Except for Morrow, members of
the Reorganized CET Initial Board of Directors shall not be Insiders,
Affiliates, officers or directors of the Lenders, CET, or CalREIT and shall not
be a member, Insider or Affiliate of the Equity Holders' Committee or the
Creditors' Committee. On the Effective Date, in accordance with the California
Corporations Code, such trustees shall be appointed as the trustees or
directors of Reorganized CET. The first term for the Reorganized CET Initial
Board of Trustees will expire one (1) year after the Effective Date.
2. Vacancies on the Reorganized CET Initial Board of
Trustees (other than a vacancy in the seat of the trustee initially selected by
the Lenders) shall be filled by appointment by a majority of the trustees then
in office. A vacancy during the first year after the Effective Date in the
seat of the trustee initially selected by the Lenders shall be filled by
appointment by the Lenders for the remainder of the first year.
B. COMPOSITION OF SUBSEQUENT REORGANIZED CET BOARD OF TRUSTEES.
After the expiration of the term of the Reorganized CET Initial Board of
Trustees, four (4) members of the board of trustees for Reorganized CET will be
elected by the holders of New CET Common Stock, and one (1) member will be
elected by the holders of New CET Preferred Stock. The Declaration of Trust
shall be revised to provide for cumulative voting, consistent with California
law. Vacancies on the board of trustees shall be
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filled by a majority vote of the members of the board of trustees until a new
trustee can be duly elected.
C. TERMINATION OF EXISTING MEMBERS OF CET BOARD OF TRUSTEES. The
Confirmation Order will contain provisions for termination of those trustees
and officers of CET who will not continue to serve after the Effective Date.
The declaration of trust and bylaws for Reorganized CET will provide for the
indemnification of trustees, officers, and agents of Reorganized CET to the
fullest extent provided under California law.
D. POST-CONFIRMATION CHIEF EXECUTIVE OFFICER. Reorganized CET
will continue to retain the services of Morrow as Chief Executive Officer after
the Effective Date until the first meeting after the Effective Date of the
Reorganized CET Initial Board of Trustees. Pursuant to the Bankruptcy Court's
Order Approving Services and Confidentiality Agreement Between Fama Management,
Inc. Pursuant to Which Debtor Will Employ Frank A. Morrow as Interim Chief
Executive Officer, CET will pay Fama Management, Inc. all accrued but unpaid
compensation Fama Management, Inc. is entitled to receive under the Order on
the Effective Date. The terms and conditions of any employment contract for
Morrow for his services after Confirmation shall be filed with the Court prior
to the Effective Date and shall be approved by each of the Proponents.
In addition to a Chief Executive Officer, the other officers
of Reorganized CET shall be designated by the Reorganized CET Initial Board of
Trustees prior to Confirmation. Prior to Confirmation, the Reorganized CET
Initial Board of Trustees shall file with the Bankruptcy Court the identity of
the proposed senior managers and administrators together with their
affiliations, qualifications, and initial compensation.
E. AUTHORIZED SHARES. The declaration of trust (or articles of
incorporation) of Reorganized CET shall authorize the issuance of Ten Million
(10,000,000) shares of New CET Common Stock. Five Million (5,000,000) shares
of New CET Common Stock will be issued to Class 2 (Lenders), Class 17(a)
(Subordinated Claims Based on Formerly Held Common Stock), Class 17(b)
(Subordinated Claims Based on Currently Held Common Stock), and Allowed Equity
Interests in Class 18(a) and Class 18(b) pursuant to the Plan.
F. OTHER CORPORATE AND TRUST MATTERS.
---------------------------------
1. The board of trustees of Reorganized CET shall take
such actions as are reasonable, in the exercise of their business judgment, to
determine whether Reorganized CET can or should qualify as a real estate
investment trust under California and federal tax laws and regulations, but
there is no assurance that Reorganized CET shall qualify as a real estate
investment
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trust, and it may be taxable as a corporation organized and existing under the
laws of the State of California. In the event Reorganized CET is a
corporation, all references in this Plan to Reorganized CET's "board of
trustees" shall refer to its board of directors and all references to its
"declaration of trust" shall refer to its Articles of Incorporation.
2. The declaration of trust (or articles of
incorporation) and bylaws of Reorganized CET shall not contain any
anti-takeover provisions, including without limitation, special voting
requirements or change in control provisions. The declaration of trust will
provide that Reorganized CET may change its name by action of the board of
trustees without shareholder approval.
3. The New Stock Options (as defined in Section VII.G.
hereof) shall have no voting rights with respect to the New CET Common Stock
until such New Stock Options have been exercised.
4. Reorganized CET may be self-administered or may enter
into agreements for the administration, property management, brokerage,
leasing, sales, and other contracts for the management of Reorganized CET and
its properties as the board of trustees of Reorganized CET may determine. If
Reorganized CET qualifies as a real estate investment trust under applicable
tax laws, all contracts for the management, administration, and operations of
Reorganized CET shall comply with the requirements of California and federal
law and regulations governing real estate investment trusts.
G. NEW STOCK OPTIONS. Reorganized CET may, at the discretion of
its Board of Trustees adopt a stock option plan granting stock options
provided, however, that Reorganized CET shall grant any stock options which are
contemplated by any employment agreements to be entered into in connection with
the Plan. New Stock Options may be granted as follows: Management may be
granted options (the "New Stock Options") exercisable into five percent (5%) of
the New CET Common Stock, on a fully diluted basis, after giving effect to the
New CET Common Stock issued under this Plan and the New CET Common Stock which
may be issued upon the conversion of the New CET Preferred Stock. Provisions
with respect to management compensation, including the vesting, terms of
vesting, conditions to exercise, carryover, and exercise price of the New Stock
Options, may be determined by the board of trustees of Reorganized CET in its
discretion after the Effective Date.
H. REVESTING OF REMAINING ASSETS AND POST-CONFIRMATION BUSINESS
OPERATIONS. On the Effective Date, all the assets, property, and interests in
property of Debtor and the Estate, including but not limited to any policy of
insurance in which the
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Debtor or the Estate held any interest as of the Confirmation Date, shall
revest in Reorganized CET, free and clear of all Claims and Interests of any
and all entities, except as set forth in this Plan. Reorganized CET is and
shall be, as of the Effective Date, the successor in interest to and assignee
of the Debtor and the Estate. After the Effective Date, Reorganized CET shall
be free to operate its business without further supervision or control by the
Bankruptcy Court and free of any restrictions imposed by the Code except as
provided in the Plan or by a Final Order of the Bankruptcy Court entered before
the Effective Date.
I. NEW STOCK OPTIONS FOR BOARD OF TRUSTEES. There shall be
reserved for the members of the Reorganized CET board of trustees (exclusive of
members who are employees or management of Reorganized CET) options (the "New
Stock Options") exercisable into one hundred fifty thousand (150,000) shares of
New CET Common Stock. On the Effective Date, each member of the Reorganized
CET Initial Board of Trustees (except Frank Morrow) shall be issued options for
20,000 shares of New CET Common Stock and such options may be exercised at any
time after the options are vested at an exercise price per share equal to the
fair value of one share of New CET Common Stock on the date the option is
issued, but not less than $2.00 per share. Each successor or subsequent member
of the board of trustees of Reorganized CET (except members who are management
or employees of Reorganized CET) shall, on the first date of his or her initial
term as a trustee, be issued options exercisable into 20,000 shares of the New
CET Common Stock (from the 150,000 shares described above), and such options
may be exercised at any time, at an exercise price equal to the fair value on
the date the option is issued, but not less than $2.00 per share. The term
"fair value on the date the option is issued" shall mean not less than the
20-day moving average price of New CET Common Stock which is trading during the
20 days after the option is issued. Options shall vest after issuance on the
following schedule: one-third (1/3) shall vest on the date of issuance;
one-third (1/3) shall vest on the first anniversary of the trustee becoming a
board member; and one-third (1/3) shall vest on the second anniversary of the
trustee becoming a board member. Upon termination of a board member's position
as trustee, any unvested options shall cease to vest.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS.
------------------------
A. APPOINTMENT OF REORGANIZED CET AS REPRESENTATIVE OF THE ESTATE.
--------------------------------------------------------------
1. Pursuant to Section 1123(b)(3) of the Code,
Reorganized CET is appointed as the exclusive representative of the Estate and
of the Debtor and shall retain and may enforce, before or after the Effective
Date, any and all Claims, rights,
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causes of action, powers, privileges, licenses, and franchises of the Debtor or
the Debtor's Estate, including but not limited to (i) Estate Actions, (ii) the
right pursuant to Code sections 365 and 1123 to assume, reject, or assume and
assign executory contracts and unexpired leases, and (iii) all avoidance
actions arising under applicable non-bankruptcy law or under Bankruptcy Code
sections 502(d), 544, 545, 547, 548, 549, or 550; except that neither Debtor
nor Reorganized CET may retain or enforce any Claim which is waived,
relinquished, released, compromised or settled in accordance with this Plan.
Reorganized CET may pursue or decline to pursue such rights of action, as
appropriate, in its sole and absolute discretion. Without limiting the
generality of the foregoing, CET and Reorganized CET reserve all rights with
respect to Estate Actions which may include Claims against Jeffrey Berger or
his affiliates, or Claims against SunLife of America, including Claims arising
out of various transactions among Sun Life of America, Jeffrey Berger, his
Affiliates and other related entities, and CET and CalREIT.
2. At the request of the Proponents or upon its own
authority, Reorganized CET may, but shall not be required to, set off against
any Claim and the Distributions to be made pursuant to the Plan in respect of
such Claim (other than Allowed Claims) any Claims, setoffs or recoupments of
any nature whatsoever the Debtor or Reorganized CET may have against the
claimant, but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by Reorganized CET of any such
Claim, setoff or recoupment the Debtor or Reorganized CET may have against such
claimant.
B. CLAIMS OBJECTIONS. From and after the Effective Date, each of
the following entities, and only the following entities, shall have standing to
object to the allowance of any Claim, Administrative Claim, or Equity
Interest, except an Allowed Claim or Allowed Equity Interest which is settled
or fixed under the Plan: Lenders, the Equity Holders' Committee, the
Creditors' Committee, and Reorganized CET. The United States Trustee retains
the right to object to any Administrative Claim and the right to be heard on
any issue. The U.S. Securities and Exchange Commission reserves the right to
be heard on any issue. Reorganized CET will employ Creditors' Committee
accountants and counsel to pursue vendor payables objections. Reorganized CET
may employ Lenders' professionals or Reorganized CET's professionals for any
objections to Claims of Insiders which have previously been objected to by the
Lenders to the extent said Claims objections are not settled before
Confirmation.
C. CONTINUING COMMITTEES. Notwithstanding Confirmation of the
Plan, the Equity Holders' Committee and the Creditors' Committee and their
respective professionals shall continue to serve in the Chapter 11 Case for the
purpose of exercising the right to object to any Claim or Equity Interest other
than
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Allowed Claims or Allowed Equity Interests which are settled or fixed under the
Plan, and (with respect to the Equity Committee) for purposes of monitoring the
issuance of New CET Common Stock, redemption of Old CET Common Stock, and
filing a motion or being heard on a motion to extend the date for submission of
Old CET Common Stock under Article VI.M. of the Plan. Subject to Article VI.H.
of this Plan, each committee may employ and Reorganized CET may compensate
professionals for services rendered before and after the Effective Date.
D. RESOLUTION OF THE LUEBKEMAN LITIGATION. The Proponents intend
to resolve the issues raised in and by the Luebkeman Litigation either prior
to, or concurrently with, Confirmation of the Plan. If the Luebkeman
Litigation is so resolved, the Proponents will file an appropriate motion with
the Bankruptcy Court to approve the settlement outlining the terms of any such
settlement. If the Luebkeman Litigation is not resolved prior to Confirmation,
the Luebkeman Litigation will continue to be prosecuted post-Confirmation as an
Estate Action. Reorganized CET shall be appointed as the representative of the
Estate to pursue the Luebkeman Litigation.
E. INDEMNIFICATION. CET and Reorganized CET shall indemnify
their present and former officers and trustees, pursuant to the applicable
state law or any agreement, board minutes, declaration of trust or bylaws that
were in effect at any time prior to Confirmation, in connection with any events
occurring before, on or after the Filing Date or the Confirmation, but neither
CET nor Reorganized CET shall have any indemnification obligations to (i) Sonia
Allen, Jeffrey Berger, or any insiders or affiliates of Sonia Allen or Jeffrey
Berger (except this clause (i) does not abrogate indemnification obligations to
the present officers and trustees of CET) or (ii) any present or former agent
or attorney for CET (except in such agent's or attorney's capacity as a present
or former officer or trustee). Notwithstanding the foregoing, if any
settlement agreement with Jeffrey Berger or Sonia Allen, or any settlement
agreement regarding the Luebkeman Litigation, which settlement agreement is
approved by the Bankruptcy Court, makes different provisions for
indemnification of Jeffrey Berger or Sonia Allen to the extent insurance is
available, then such Court- approved settlement agreement shall govern and
supersede to the extent this Article VIII.E. of the Plan is inconsistent with
said settlement agreement.
F. WAIVER OF ADEQUATE PROTECTION CLAIMS:
------------------------------------
1. The Lenders waive and release all Allowed Priority
Claims and Administration Claims arising from use of collateral, use of cash
collateral, failure of adequate protection, or otherwise.
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<PAGE> 79
2. Debtor and Reorganized CET each waive and release all
claims arising under Bankruptcy Code section 506(c) against Lenders, holders of
Senior Mortgages, and all real and personal property vested in Reorganized CET
pursuant to this Plan, for amounts paid or incurred by Debtor before the
Effective Date which benefitted assets vested in Reorganized CET.
3. Lenders have agreed that any Administrative Claim or
application for payment of Lenders' professional fees and expenses under Code
section 503(b) shall be limited to those fees and expenses incurred on or after
April 18, 1994.
G. RELEASE OF LENDERS LITIGATION:
-----------------------------
1. The Lenders Allowed Claim shall be allowed in full as
provided in this Plan and shall not be subject to any set off or subordination
under section 510 of the Bankruptcy Code or other applicable law. Except as
expressly provided in this Plan, all controversies, claims (including, without
limitation, any Miscellaneous Claims), objections, and defenses that were or
could have been asserted in the Chapter 11 Case or in any action, case or
proceeding with respect to the Lenders' Claim, the Lender Loans, or the
Lenders' actions or inactions at any time are fully and finally compromised,
released and extinguished. The Debtor, Reorganized CET, all creditors, holders
of claims against the Debtor or the Estate, equity security holders, and
parties in interest, and their privities, are barred and enjoined from
litigating such claims (including, without limitation, any Miscellaneous
Claims), controversies, objections and defenses.
2. The Lenders Litigation shall be dismissed with
prejudice. The Debtor, Reorganized CET, all holders of Claims against the
Debtor or Estate, all holders of any Equity Interests in or against the Debtor
or the Estate, parties in interest, any other Person and their privities, are
barred and enjoined from litigating such Claims, controversies, objections and
defenses. At the hearing on Confirmation, the Proponents shall request that
the Bankruptcy Court determine that the settlement of the Lenders Litigation is
made in good faith within the meaning of California Code of Civil Procedure
section 877.6.
3. The definitive documents for such compromise shall be
filed with the Bankruptcy Court prior to the Confirmation Date and this Plan
may be modified by the Proponents at any time prior to the Effective Date in
order to make this Article of the Plan consistent with said definitive
documents.
4. The Distributions under the Plan, the determination
of Allowed Claims and Allowed Equity Interests under Article IV. of this Plan,
and the settlements and waivers of Claims and priorities set forth in this Plan
take into account the relative priority of the Claims in each class in
connection
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<PAGE> 80
with any subordination provisions arising under law or contract, as well as any
grounds for disallowance of, or defenses, setoffs, recoupments or counterclaims
against any Allowed Claims, Allowed Equity Interests, Disputed Claims, or
Disputed Interests that are the subject of Article IV. or the compromises and
settlements in this Article VIII.G. Accordingly, the Distributions to the
holders of Allowed Claims in Class 2 shall not be subject to any complaint,
levy, garnishment, attachment or other legal process by reason of any alleged
subordination (under Bankruptcy Code section 510(c) or otherwise), defense,
setoff, recoupment or counterclaim. The Confirmation Order shall permanently
enjoin, effective as of the Effective Date, the Debtor, Reorganized CET, all
holders of Claims against or interests in the Debtor, and all parties in the
Chapter 11 Case and all of their respective privities from enforcing or
attempting to enforce any such rights with respect to the Distributions under
the Plan to the holders of Allowed Claims in Class 2.
5. Reorganized CET shall indemnify and hold each Lender
harmless from any Claims asserted against, or liabilities incurred by, Lenders
(including all professional fees and costs), in any action, claim or proceeding
commenced or continued by or prosecuted on behalf of (i) any present or former
officers, agents, or trustees of the Debtor, (ii) any holders of interest in or
Claims against the Debtor, (iii) any present or former officers, agents, or
trustees of CalREIT, (iv) any holders of interest in or claims against CalREIT,
or (v) any privities of the persons described in clauses (i) through (iv)
above, which action, Claim, or proceeding has been or could have been raised in
the Chapter 11 Case or the Lenders Litigation, or has been released, settled,
or determined under or pursuant to this Plan.
H. RETENTION OF JURISDICTION. Notwithstanding Confirmation or
the Effective Date having occurred, the Bankruptcy Court shall retain full
jurisdiction as provided in 28 U.S.C. section 1334 to enforce the provisions,
purposes, and intent of this Plan, including without limitation:
1. Prosecution of any and all Estate Actions;
2. Determination of all causes of action, controversies,
disputes or conflicts between CET and any other party which are not settled,
released, or waived under the Plan and which existed prior to the Effective
Date, whether or not pending theretofore;
3. Determination of the allowance of Claims and Equity
Interests upon objection to such Claims and Equity Interests, and estimation of
any Claim or Equity Interest;
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4. Approval, pursuant to Section 365 of the Bankruptcy
Code, of the assumption, assignment, or rejection of any executory contract or
unexpired lease;
5. Any determination necessary or appropriate under
Section 505 of the Bankruptcy Code or other determination relating to tax
returns filed or to be filed by the Debtor or Reorganized CET for all periods
through the end of the fiscal year in which the Effective Date occurs,
including the determination of the amount of basis, depreciation, net operating
losses, or other tax attributes of Debtor or Reorganized CET;
6. Determination of requests for payment of Claims
entitled to priority under Section 507(a) of the Code, including compensation
of parties entitled thereto;
7. Resolution of controversies and disputes regarding
interpretation of this Plan, except that following the Effective Date, the
Bankruptcy Court shall not have jurisdiction to resolve any controversy or
dispute regarding interpretation of any provision contained in, or rights or
interests evidenced by, the New CET Common Stock or the New CET Preferred
Stock.
8. Implementation of the provisions of this Plan and
entry of orders in aid of Confirmation, including without limitation
appropriate orders to recover all assets of the Debtor and the estate and to
vest title therein and possession thereof in Reorganized CET and to protect
Reorganized CET from creditor action, and orders for persons to perform acts
necessary for consummation of this Plan under Bankruptcy Code section 1142;
9. Adjudication of any causes of action commenced or
continued by the Debtor or by Reorganized CET.
10. Entry of such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified,
rescinded or vacated;
11. Modifications of the Plan under Code section 1127;
confirmation of a modified plan after modification by the Proponents pursuant
to Code section 1127; and entry of orders to cure any defect or omission or
reconcile any inconsistency in any order of the Bankruptcy Court including
without limitation the Confirmation Order;
12. Determination of all applications for compensation
and reimbursement of expenses of professionals under sections 328, 329, 330,
331, and 503(b) of the Code; and
13. Entry of an order or decree closing the Estate and
terminating the jurisdiction granted herein.
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<PAGE> 82
I. ORDERS TO AID CONSUMMATION OF PLAN. This Plan constitutes and
incorporates a motion under Code section 1142 and Rules 7069 and 7070 for an
order to cause Debtor and all its present and former trustees, officers,
agents, employees, attorneys, accountants, and stock transfer agents to
cooperate fully in providing Proponents and Reorganized CET (and its board of
trustees, management, and agents) with all information and access to properties
and assets of the Estate; to execute conveyances and authorizations reasonably
necessary to vest title to the Estate assets in Reorganized CET and its board
of trustees; and to execute and deliver such documents and perform such acts as
are reasonably necessary to enable Reorganized CET and its board of trustees
and management to take possession, custody, and control of all assets vested in
Reorganized CET pursuant to this Plan. None of the Debtor, its present or
former professionals, or its present or former trustees, employees, or agents
shall perform or fail to perform any act that would impair the value of
Reorganized CET or interfere with the control by Reorganized CET over property
of the estate.
J. MODIFICATION OF PLAN; REVOCATION AND WITHDRAWAL:
1. The Proponents may, with the consent of all
Proponents, alter, amend or modify the Plan under section 1127 of the Code and
Federal Rule of Bankruptcy Procedure Rules 2002 and 3017 at any time prior to
Confirmation. Any Proponent also may institute proceedings in the Bankruptcy
Court to remedy any defect or omission or reconcile any inconsistencies in the
Plan, Disclosure Statement or the Confirmation Order, and such matters as may
be necessary to carry out the purposes and effects of the Plan; provided,
however, that prior notice of such proceedings is served on all parties
affected by the same in accordance with Bankruptcy Rules 2002 and 9014.
2. Any Proponent reserves the right to cease being a
co-proponent of the Plan. The Plan may be revoked or withdrawn prior to
Confirmation either by the consent of all Proponents or by CET.
3. If all Proponents revoke or withdraw the Plan prior
to Confirmation or if Confirmation or the Effective Date do not occur, then the
Plan shall be deemed null and void. In such event, nothing contained herein
shall be deemed to constitute an admission against interest or a waiver or
release of any claims by or against any of CET, the Proponents, any claimant,
any interest holder or any other person or prejudice in any manner the rights
of CET or any person in any further proceedings involving CET.
K. STANDING OF PRE-EFFECTIVE DATE CET BOARD OF TRUSTEES After the
Effective Date, the pre-Effective Date CET Board of Trustees shall have
standing and the right to appear and be heard
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<PAGE> 83
before the Bankruptcy Court or any other court, in their capacity as the
pre-Effective Date CET Board of Trustees, but not as representatives of the
Estate or of Reorganized CET, regarding any issues or disputes which relate to
events which occurred prior to the Effective Date. Reorganized CET shall
reimburse the pre-Effective Date CET Board of Trustees for reasonable attorneys
fees and expenses incurred by them, but only in connection with any such
matters which relate to (1) objections to Administrative Claims or (2) appeals
from the Confirmation Order, subject to application and approval by the
Bankruptcy Court, and subject to an aggregate limit of $25,000 in fees and
expenses.
L. DISCHARGE OF TRUSTEES AND OFFICERS. On the Effective Date,
CET's trustees and officers are discharged from any further duties as
representatives of CET as debtor in possession under the Code.
M. DISCHARGE OF CET AND INJUNCTION:
-------------------------------
1. DISCHARGE. The rights afforded under the Plan and
the treatment of all Allowed Claims and the Allowed Equity Interests as
provided shall be in exchange for and in complete satisfaction, discharge, and
release of all Claims and Equity Interests of any nature whatsoever, including
any interest accrued on such Claims from and after the Petition Date or
interest which would have accrued but for the commencement of this case,
against CET, or any of its assets or properties. Except as otherwise provided
in this Plan: (a) on the Effective Date, CET shall be deemed discharged to the
fullest extent permitted by section 1141 of the Code from all debts and
interests, including, but not limited to, debts and interests and Old CET
Securities (including any asserted warrants or stock options) that arose before
the Confirmation Date and all debts of a kind specified in sections 502(g),
502(h), or 502(i) of the Code whether or not: (i) a proof of Claim or proof of
Equity Interest is filed or deemed filed pursuant to section 501 of the Code;
(ii) a debt or interest based on such debt or interest is allowed pursuant to
section 502 of the Code, or (iii) the holder of a debt or interest based on
such debt or interest has accepted the Plan; and (b) on the Effective Date, all
entities other than Reorganized CET shall be precluded from asserting against
CET, Reorganized CET, the Committees or their professionals, successors,
assigns, members, assets or properties any other or further debts or interests
based upon any act or omission, transaction, or other activity of any kind or
nature that occurred prior to the Confirmation Date, all of which debts and
interests shall be conclusively deemed released and discharged. The
Confirmation Order shall act as a discharge of any and all debts and
liabilities of CET, as provided in sections 524 and 1141 of the Code, and such
discharge shall void any judgment against CET or Reorganized CET at any time
obtained to the extent that it relates to a Claim discharged.
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<PAGE> 84
2. Without limiting the generality of the foregoing, the
Confirmation of this Plan shall, as of the Effective Date, constitute a
discharge, under Bankruptcy Code section 1141(d) of all claims and causes of
action that arose before Confirmation against the Debtor or Reorganized CET
which have been or could have been asserted by any creditors or equity security
holders of CalREIT.
3. All Claims, defenses, offsets, rights of recoupment,
rights to dividends, voting rights, and all powers and authority of Debtor
against CalREIT are retained and vested in Reorganized CET. Except as set
forth in Article VIII.M.2. above, all Claims, defenses, offsets, rights of
recoupment, powers and authority of CalREIT against Debtor are retained and may
be asserted against Reorganized CET.
N. INJUNCTION. Except as otherwise provided in the Plan or the
Confirmation Order, on and after the Effective Date, all Persons and entities
who have held, currently hold or may hold a Claim or Equity Interest discharged
pursuant to the terms of the Plan are permanently enjoined from taking any of
the following actions on account of any such discharged Claim or Equity
Interest: (i) commencing or continuing, in any manner and in any place, any
action or proceeding against CET, Reorganized CET, the Equity Holders'
Committee, the Creditors' Committee, and their respective successors, assigns,
agents, assets, or property; (ii) enforcing, attaching, collecting or
recovering in any manner any judgment, award, decree or order against CET,
Reorganized CET, the Committees and their respective successors, assigns,
agents, assets, or property; (iii) creating, perfecting or enforcing any lien
against CET, Reorganized CET, the Committees and their respective successors,
assigns, agents, assets, or property; (iv) asserting any setoff, right of
subrogation or recoupment of any kind against any obligation due to CET,
Reorganized CET, the Committee or their respective successors, assigns, agents,
assets, or property; and (v) commencing or continuing any action or
proceeding, in any manner and in any place, that does not comply with or is
inconsistent with the provisions of the Plan. Any entity injured by any
willful violation of such injunction shall recover actual damages, including
costs and professional fees and, in appropriate circumstances, punitive damages
from the willful violator.
O. LIMITATION OF LIABILITY. The Committees, the Debtor, CET,
Reorganized CET, the Lenders, and their respective present and former members,
officers, directors, trustees, employees, agents, designees, successors or
assigns, or any professional person employed by any of them, shall neither have
nor incur any liability to any entity for any action taken or omission made in
good faith in connection with or related to formulating, confirming or
consummating or implementing the Plan, the
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Disclosure Statement or any writing created in connection with the Plan.
P. CONDITIONS TO EFFECTIVE DATE:
1. The Effective Date of the Plan shall not occur unless
and until all the following conditions precedent have been satisfied:
a. The Proponents have filed with the Court a
statement that the Proponents have obtained a commitment for the New Credit
Line on terms satisfactory to the Proponents.
b. The Bankruptcy Court has determined that the
total of all Allowed Claims and all Disputed Claims in Class 15(b) (General
Unsecured Claims) and Class 16 (Kroeger Claim) on the Effective Date does not
exceed Six Million, Two Hundred Thousand Dollars ($6,200,000).
2. The conditions specified in this Article VIII.P. may
be waived or modified in whole or in part by consent of all the Proponents.
Q. SEVERABILITY. If the Bankruptcy Court determines, prior to
the Confirmation Date, that any provision of the Plan is illegal either as
written or as applied to any Claim or Equity Interest, as the case may be, such
provision shall be either unenforceable generally or as applied to such Claim
or Equity Interest. A determination that a provision of this Plan is illegal
or not enforceable as to a particular Claim or Equity Interest shall in no way
limit or affect the enforceability and operative effect of any other provision
of the Plan or of that provision as applied to other Claims or Equity Interests
and the Proponents may modify the Plan to withdraw such provision.
R. HEADINGS OF ARTICLES AND SECTIONS. The headings of the
Articles and Sections of the Plan are inserted for convenience only and shall
in no way affect the interpretation of its provisions.
S. SUCCESSORS AND ASSIGNS. The rights, benefits and obligations
of any entity referred to in the Plan shall be binding on, and shall inure to
the benefit of, the heirs, executors, administrators, successors or assigns of
such entity.
T. STOCK LEGEND. Pursuant to United States Trustee Guideline No.
6.16, the following legend will be included on any stock of Reorganized CET
issued under the Plan:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 and were issued
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<PAGE> 86
pursuant to an exemption provided by 11 U.S.C. Section 1145,
under an order confirming the Plan in a case entitled In re
Commonwealth Equity Trust, Case No. 93-26727-C-11, in the
United States Bankruptcy Court for the Eastern District of
California. The holder of this certificate is referred to 11
U.S.C. Section 1145(b) and (c) for guidance as to the sale of
these securities.
U. CONFIRMATION REQUEST. In the event the requirements of
section 1129(a)(8) of the Code are not met, Proponents request confirmation of
the Plan under section 1129(b) of the Code.
DATED: August 4, 1994 COMMONWEALTH EQUITY TRUST
By:
--------------------------------
Frank A. Morrow
Chief Executive Officer
DATED: August 4, 1994 EQUITY HOLDERS' COMMITTEE
By:
--------------------------------
Its:
--------------------------------
DATED: August 4, 1994 PACIFIC MUTUAL LIFE INSURANCE COMPANY
By:
--------------------------------
Sharon A. Cheever
Vice President, Investment
Counsel
On behalf of itself and as
Agent for Pacific Mutual Lenders
DATED: August 4, 1994 CREDITORS' COMMITTEE
By:
--------------------------------
Its:
--------------------------------
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Approved by:
PACHULSKI, STANG, ZIEHL & YOUNG, P.C.
AND
GREENBERG, GLUSKER, FIELDS, CLAMAN
& MACHTINGER
By:
-------------------------------------
Richard M. Pachulski
Attorneys for Debtor and Debtor-In
Possession Commonwealth Equity Trust
DOWNEY BRAND SEYMOUR & ROHWER
By:-------------------------------------
Laura Reimche
Attorneys for the Equity Holders' Committee
MURPHY, WEIR & BUTLER
By:
-------------------------------------
Ellen A. Carroll
Attorneys for Pacific Mutual
Life Insurance Company, as Agent
for Pacific Mutual Lenders
BRONSON, BRONSON & MCKINNON
By:
-------------------------------------
Sarah Sisson
Attorneys for the Creditors' Committee
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TABLE OF EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A SUMMARY OF TERMS OF LENDERS' SENIOR SECURED LOAN DOCUMENTS
EXHIBIT B SUMMARY OF TERMS OF NEW CET PREFERRED STOCK
EXHIBIT C SUMMARY OF TERMS OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D SUMMARY OF TERMS OF NEW CREDIT LINE
EXHIBIT E-1 [FORM OF] NEW CET UNSECURED NOTES
EXHIBIT E-2 [FORM OF] NEW KROEGER NOTE
EXHIBIT F FLORIN-PERKINS PROPERTIES LOT NUMBERS AND PARCEL NUMBERS
</TABLE>
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<PAGE> 89
EXHIBIT A
TO THIRD AMENDED PLAN OF REORGANIZATION
SUMMARY OF TERMS OF LENDERS' SENIOR SECURED LOAN DOCUMENTS
----------------------------------------------------------
The following is a summary of the terms of the Lenders' Senior Secured
Loan Documents. CET, the Lenders and the Equity Holders' Committee reserve the
right to propose or agree to additions, deletions or other changes in the terms
and conditions set forth herein as such parties in their mutual agreement from
time to time may see fit, without notice except as otherwise required by the
Bankruptcy Court or applicable law. Additional terms (including covenants and
events of default) may be included in the definitive agreements for the
Lenders' Senior Secured Loan Documents. Any and all documents attached to or
filed with a modification of Plan filed with the Bankruptcy Court shall
supersede the provisions of this summary and shall be controlling where
inconsistent with this summary. All capitalized terms have the meanings
defined in the First Amended Plan.
Borrower: Reorganized CET
Amount: $40 million in the aggregate
Interest Rate Eight and one-half percent (8 1/2%) per
and Payments: annum. Interest shall be payable in kind through
September 30, 1996, by means of Interest Deferral
Notes issued quarterly; thereafter interest shall be
payable monthly in cash. Interest Deferral Notes:
Interest Deferral Notes shall accrue interest at the
rate of eight and one-half percent (8 1/2%) per annum,
from date of issuance. Interest payments both on
principal and the interest accrued through September
30, 1996, shall be payable monthly, in cash,
commencing on November 1, 1996.
Maturity: October 1, 2000 for both $40 million Senior
Secured Notes and Interest Deferral Notes.
Lenders' Collateral: Lenders Senior Secured Notes and
Interest Deferral Notes are secured by all existing
and hereafter arising interests of Reorganized CET
in real property and personal property, including
all rents, notes receivable, and hotel revenues,
except for After Acquired Property. Collateral
includes any interest of Reorganized CET in any real
property or personal property hereafter acquired by
Reorganized CET as a result of
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<PAGE> 90
any merger, acquisition, tender offer, or
other business combination with CalREIT,
regardless of whether Reorganized CET or
CalREIT is the surviving entity. Lenders'
Secured Deeds of Trust are junior only to
Senior Mortgage Liens and liens securing the
New Credit Line and the Redding Hotel
Improvement Loan.
After Acquired
Property: Lenders have no lien on any property acquired
by Reorganized CET after Confirmation to the
extent that the purchase money for such
property consists solely of the proceeds of
any equity offering, unsecured financing
(exclusive of the New Credit Line), or
financing secured solely by a purchase money
security interest in the property acquired.
Optional
Prepayments: At par plus accrued interest, at any time.
Mandatory
Prepayments of
Principal: None, except as provided below from 80% of
Net Proceeds of asset transactions.
Application of
Asset Proceeds: Both (a) 80% of Net Proceeds received from
(i) the sale of any Lenders' Collateral
(other than leases in the ordinary course of
business), (ii) the granting of any options
for the sale of any Collateral, (iii) the
paydown of principal of Notes Receivable or
(iv) new financing or refinancing secured by
a lien on any Lenders' Collateral and (b)
80% of CalREIT dividends resulting from other
than net income of CalREIT (i.e., all or any
portion of special dividends or all or any
portion of ordinary dividends resulting from
the disposition of CalREIT assets or
collection of principal on CalREIT notes
receivable) shall be applied in the following
order: (i) interest accrued and unpaid on any
Interest Deferral Note; (ii) outstanding
principal on any Interest Deferral Note;
(iii) interest accrued but unpaid on
the Lenders' Senior Secured Notes, and (iv)
outstanding principal under the Lenders'
Senior Secured Notes.
Net Proceeds: Gross cash proceeds received by Reorganized
CET from a post-Confirmation Date
transaction, less the total of: (i) the
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<PAGE> 91
amount required to satisfy any liens
encumbering the asset which is the subject of
the transaction (other than a lien held by
the Lenders); (ii) the amount of any Allowed
Secured Real Property Tax Claim encumbering
the asset; (iii) any and all brokerage
commissions, closing costs, title insurance
costs or other fees or costs payable by
Reorganized CET to any non-Insider relating
thereto; and (iv) any and all fees incurred
by the Lenders in order to consummate the
transaction. Reorganized CET shall reserve a
portion of the Net Proceeds to satisfy any
federal, state or local income tax liability
of Reorganized CET arising from the
transaction. If funds remain after
Reorganized CET satisfies its income tax
obligation for the year in which the
transaction occurred, said funds shall be
deemed to be Net Proceeds and shall be
applied 80%-20% as set forth above.
Affirmative
Covenants: Including, but not limited to,inspection of
Reorganized CET's books and records,
maintenance of insurance and distribution of
financial statements at least monthly at
Lenders' request.
In addition, Reorganized CET will (i) cause
CalREIT to maintain books and records and
insurance and to pay all property taxes, and
(ii) provide Lenders with copies of all
notices and financial statements it receives
from CalREIT.
Negative Covenants: Including, but not limited to, the following:
A. Incurrence of Additional Debt. None permitted except:
1. Up to $10 million under the New Credit Line; provided
that no part of the New Credit Line shall be used to
purchase real property or to make tenant improvements
on After Acquired Property without the Lenders'
consent.
2. The Redding Hotel Improvement Loan up to $1,000,000.
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<PAGE> 92
3. Non-recourse purchase money financing to acquire new
Real Property or Personal Property.
4. Refinancing of Senior Mortgage Liens, provided that
any Net Proceeds in excess of the Senior Mortgage
Lien are applied 80% to Lenders' Senior Secured Notes
as provided above.
5. Financing of any Real Property (but no financing or
fractionalization is permitted of Notes Receivable,
Partnership Interests, or pledged Stock), provided
that 80% of Net Proceeds are applied to Lenders'
Senior Secured Notes as provided above.
6. New unsecured debt, provided that it has a maturity
longer than October 1, 2000; and further provided
that after giving effect to the new unsecured debt,
Reorganized CET has a 2 to 1 ratio of available cash
flow (EBITDA less interest expense, taxes, capital
expenditures and tenant improvements) to interest
expense.
7. Unsecured trade payables incurred in the ordinary
course of business.
B. Incurrence of Additional Liens. None permitted except:
1. To secure permitted debt described in 1. above.
2. Ad valorem real property taxes and governmental
assessments, subject to covenant to pay property
taxes before delinquency (except those taxes treated
under the First Amended Plan.)
3. Mechanics lien claim.
C. Asset Sales. Reorganized CET may sell assets which constitute
the Lenders' Collateral under the following conditions: (a)
80% of the Net Proceeds are paid to Lenders as provided above;
and (b) any note or other collateral provided as consideration
for the sale is pledged to the Lenders.
D. Merger, Sale of Assets. Without approval of Lenders,
Reorganized CET may not merge with another entity (except
CalREIT) or sell all or substantially all of its assets.
E. Restricted Payments. No repurchase of common shares and no
payment of any dividends or distributions to the holders of
New CET Common Stock are permitted, other
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<PAGE> 93
than such dividends as may be necessary, in the opinion of
counsel, in order to maintain Reorganized CET's status as a
real estate investment trust, until (1) dividends on the New
CET Preferred Stock have been paid current and in Cash,
including any interest which has accrued on any unpaid
dividends on the New CET Preferred Stock, (2) all amounts of
interest owing on the Lenders' Senior Secured Notes are paid
in Cash, and (3) the New Credit Line and the Redding Hotel
Improvement Loan have been paid in full. Repurchase of common
shares and payment of dividends or New CET Common Stock or
distributions to shareholders shall be made only from
available cash flow (EBITDA less interest expense, taxes,
capital expenditures and tenant improvements). Prior to
September 30, 1996, repurchase of New CET Preferred Stock and
payment of cash dividends on New CET Preferred Stock may be
made in any one quarter provided that (1) Reorganized CET has
paid interest in cash on the Lenders' Senior Secured Notes in
the immediately preceding quarter; and (2) Reorganized CET
thereafter pays interest in cash on the Lenders' Senior
Secured Notes and thereafter no longer has the option of
paying interest by means of Interest Deferral Notes. No
repurchase or repayment of the New Kroeger Note or the New
Unsecured Notes ahead of schedule is permitted.
F. Investment, Loans or Advances. Reorganized CET will not
invest in, purchase (except with respect to the purchase, with
After Acquired Property, of 100% of the stock of a corporation
whose primary assets are real property) or acquire (except for
the disposition of a specific asset) stock or other securities
of, or make any loans or capital contributions to, any Person
except short-term commercial paper and other short-term
taxable or tax-exempt instruments assigned either of the two
highest ratings by Moodys or S&P, or certificates of deposit
or repurchase agreements of U.S. banks having combined capital
and surplus greater than $500 million.
G. Transactions with Affiliates. Reorganized CET will not enter
into any transactions with any Affiliate (except CalREIT) or
any present or former Advisor or property manager or any
affiliates thereof, or any holder of 5% or more of the New CET
Common Stock except with Board approval, on an arms' length
basis and on terms that are no less favorable to Reorganized
CET than those that would be obtainable at the time from an
unaffiliated party.
H. CalREIT. Reorganized CET will not vote to allow CalREIT (i)
to sell substantially all of its assets or
88
<PAGE> 94
(ii) to merge with any entity other than Reorganized CET without the consent of
Lenders.
89
<PAGE> 95
EXHIBIT B
SUMMARY OF TERMS OF NEW CET PREFERRED STOCK
-------------------------------------------
The following is a summary of the terms of the Preferred Stock to be
issued to the Lenders pursuant to a Preferred Stock Purchase Agreement. CET,
the Lenders and the Equity Holders' Committee reserve the right to propose or
agree to additional, deletions or other changes in the terms and conditions set
forth herein as such parties in their mutual agreement from time to time may
see fit, without notice except as otherwise required by the Bankruptcy Court or
applicable law. Additional terms may be included in the charter documents and
other documents relating to the Preferred Stock. Any and all documents
attached to a modification of Plan filed with the Court shall supersede the
provisions of this summary and shall be controlling where inconsistent with
this summary.
Issuer: Reorganized CET
Securities: The Lenders will receive a total of _____
shares of Reorganized CET's Preferred Stock,
having a par value of [$.01] per share and a
stated value (the "Stated Value") of Two
Dollars ($2.00) per share (the "Preferred
Stock")
Priority: The Preferred Stock will have priority over
all other equity securities of Reorganized
CET with respect to dividend rights and
rights of redemption and upon voluntary or
involuntary liquidation, dissolution or
winding up.
Dividend: The Preferred Stock will earn dividends on a
cumulative basis from the date of issuance
whether or not earned or declared at a rate
of ten percent (10%) per annum of the Stated
Value; provided, however, that until October
1, 1998, dividends may be paid in additional
shares of Preferred Stock rather than cash.
Dividends will be payable quarterly on each
March 31, June 30, September 30 and December
31. No dividends will be paid or declared on
the Common Stock until (i) all accrued and
unpaid dividends on the Preferred Stock have
been paid in full and (ii) interest on the
Lender's Note has been paid current in cash.
Liquidation Upon any voluntary or involuntary
Preference: dissolution or winding up of the affairs of
Reorganized CET, the holders of Preferred
Stock will be first paid out of the assets of
the Corporation available for distribution to
its shareholders an amount in cash equal to
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<PAGE> 96
the Stated Value plus all accrued and unpaid
dividends before any payment may be made or
any assets distributed to the holders of any
junior equity securities. Holders of
Preferred Stock will not be entitled to any
other distributions in the event of such
liquidation, dissolution or winding up of the
affairs of Reorganized CET.
Voting Rights: Holders of Preferred Stock will have the
right to elect one member of the Board and to
vote upon certain major events (described
below) or as provided by law, but will have
no other voting rights. So long as any
shares of Preferred Stock are outstanding,
the Articles of Incorporation or Declaration
of Trust, as the case may be, will provide
that Reorganized CET may not, without the
approval of fifty-one percent (51%) of the
issued and outstanding shares of Preferred
Stock voting together prior to the Preferred
Stock, either as to dividends or redemption
or upon voluntary or involuntary liquidation,
dissolution or winding up, (b) increase
additional shares of Preferred Stock, except
to pay dividends on the Preferred Stock, (c)
amend, alter, waive the application of or
repeal (whether by merger, consolidation or
otherwise) any provision of the Articles of
Incorporation or the Declaration of Trust, as
the case may be, of Reorganized CET, or
enter into any agreement or take any other
action which would alter, change or otherwise
adversely affect the powers, rights or
preferences of the Preferred Stock, (d)
effect the liquidation, sale, lease,
conveyance or exchange of all or
substantially all of the assets, property or
business of Reorganized CET, or the merger
or consolidation of Reorganized CET with or
into any other corporation (other than
California Real Estate Investment Trust)
or the occurrence of a Change-In- Control
Transaction (as hereinafter defined), (e)
take any action which would cause a dividend
or other distribution to be deemed to be
received by the holders of the Preferred
Stock for federal income tax purposes unless
it is actually received by such holders, or
(f) at
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<PAGE> 97
any time after October 1, 1998, when
Reorganized CET has not paid, when due, cash
dividends on the Preferred Stock for three
consecutive quarters, incur any indebtedness
other than purchase money indebtedness.
"Change-In-Control Transaction" means any
transaction or series of related transactions
resulting in any person or persons acting in
concert who were not theretofore the holder
or holders of voting securities enabling the
holder or holders thereof to cast more than a
majority of the votes which may be cast for
the election of directors becoming the holder
or holders of at least such amount of voting
securities (for such purpose, treating
instruments or securities issued in such
transaction which are convertible into or
exchangeable or exercisable for voting
securities as being so converted, exchanged
or exercised upon issuance, regardless of the
terms thereof), provided, however, that a
change-in-control which results from the
transfer or transfers of such voting
securities by the holders of the Preferred
Stock shall not be deemed a Change-In-Control
Transaction, as defined herein.
Election So long as any Preferred Stock is
of Board: the Board will consist of up to
five members, and the holders of fifty-one
percent (51%) of the shares of then-
outstanding Preferred Stock will be entitled
to elect one director. The other directors
will be elected by the holders of Common
Stock of Reorganized CET.
Conversion: Optional Conversion
Upon the issuance in a single offering or
transaction (the "New Issuance") by
Reorganized CET of Common Stock and/or any
equity securities convertible into or
exchangeable or exercisable for Common Stock
for an aggregate purchase price equal to or
greater than one hundred fifty percent (150%)
of the sum of (i) the aggregate Stated Value
of all outstanding shares of Preferred Stock
plus (ii) all accrued and unpaid dividends
thereon, Reorganized CET will have the right
to cause the conversion of all outstanding
Preferred Stock into Common Stock at a
conversion price equal to 80% of the New
Issuance offering price.
92
<PAGE> 98
Mandatory Conversion
All outstanding Preferred Stock will
automatically convert into Common Stock at a
price per share equal to the Stated Value
upon (i) any failure on and after October 1,
1998, by the Corporation to declare and pay
any cash dividend on the Preferred Stock for
90 days after the payment date, or (ii) the
failure by Reorganized CET to redeem the
Preferred Stock (and to pay all accrued and
unpaid dividends thereon) within ten (10)
days after the occurrence of any event
requiring it to do so.
Redemption: Upon (i) either (a) the consummation by
Reorganized CET of a Major Event for which
consent of the holders of Preferred Stock has
been sought but not obtained, or (b) the
consummation by Reorganized CET of a Major
Event without the requisite consent of the
Holders of Preferred Stock having been
sought, or (ii) the maturity date, October 1,
2000, Reorganized CET must redeem all
outstanding Preferred Stock not more than ten
(10) days following such event for cash at a
redemption price per share equal to the
Stated Value plus all accrued and unpaid
dividends thereon provided, however, that the
redemption rights under subsections (i)(a)
and (i)(b), hereof, may be waived by election
of the holders of fifty one percent (51%) of
the outstanding shares of Preferred Stock.
If Reorganized CET fails to redeem the
Preferred Stock within such ten-day period,
all such shares will be converted to Common
Stock.
Registration Pursuant to the Registration Rights Agreement,
Rights: and subject to certain minimum share and
offering amount requirements set forth
therein, (i) the holders of CET Common Stock
issued upon conversion of Preferred Stock and
(ii) the holders of New CET Common Stock
issued to the Lenders pursuant to the Plan
will be entitled to two demand registrations,
unlimited short form registrations and
unlimited piggyback rights, at the expense of
Reorganized CET.
Anti-dilution Anti-dilution protection will be provided only
Rights: in the event of the issuance or issuances of
Common Stock or Common Stock equivalents at
less than Two Dollars ($2.00) per share,
any reclassification or change of the Common
Stock, any consolidation or merger of
93
<PAGE> 99
Reorganized CET (other than a merger with
California Real Estate Investment Trust), any
subdivision or combination of shares of
Common Stock or certain payments of dividends
or distribution in Common Stock. Adjustments
for issuances of Common Stock or Common Stock
equivalents at less than Two Dollars ($2.00)
per share will be on a weighted average
basis.
94
<PAGE> 100
EXHIBIT C
SUMMARY OF TERMS OF REGISTRATION RIGHTS AGREEMENT
The following is a summary of the Registration Rights
Agreement. The Proponents reserve the right to propose or agree to additions,
deletions or other changes in the terms and conditions set forth herein as the
Proponents from time to time may see fit, without notice except as otherwise
required by the Bankruptcy Court or applicable law. Additional terms may be
included in the definitive agreements for the Registration Rights Agreement.
Any and all documents attached to a Modification of Plan filed with the
Bankruptcy Court shall supersede the provisions of this summary and shall be
controlling where inconsistent with this summary.
1. Registration rights shall accrue to the Lenders with respect to New
CET Common Stock issued under the Plan and CET Common Stock issuable
upon conversion of CET Preferred Stock and to transferees (and
subsequent transferees) of such New CET Common Stock and Preferred
Stock. Reorganized CET shall be a party to the Registration Rights
Agreement.
2. Two demand registrations (each at request of holders seeking to
register at least 20% of the New CET Common Stock issued to Lenders
under the Plan).
3. Unlimited piggy-back registrations.
4. Reorganized CET pays all expenses other than underwriting discounts on
both demand and piggy-back registrations.
5. Underwriter for demand registrations is selected by holders of 51% of
the securities held by Lenders (or their transferees) which are to be
sold in the offering.
6. Cutbacks at request of the underwriter on demand registration shall
first be deducted pro rata based on shares sought to be sold by
Lenders (and their transferees) who are not initiating holders and
then pro rata based on shares sought to be sold by Lenders (and their
transferees) who are initiating holders.
7. Cutbacks at the request of the underwriter on piggy-back registrations
are on same basis as in Paragraph 6 with respect to the New CET Common
Stock held by Lenders (and their transferees); shares held by any
other holders of piggy-back rights are excluded from the offering
before any cutbacks of shares held by Lenders (and their transferees).
8. No restrictions on timing of registration rights offerings.
9. Rights to demand registration expire five (5) years after Effective
Date and rights to piggy-back registration expire ten (10) years after
Effective Date.
95
<PAGE> 101
10. Registration rights are available even if exemption from registration
would be available.
11. Provisions for customary indemnification of persons selling pursuant
to registration rights.
96
<PAGE> 102
EXHIBIT D
SUMMARY OF TERMS OF NEW CREDIT LINE
-----------------------------------
The following is a summary of the terms of the New Credit
Line. No representation is made regarding whether this summary has been or may
be approved by any other person. The Proponents reserve the right to propose
or agree to additions, deletions or other changes in the terms and conditions
set forth herein as the Proponents from time to time may see fit, without
notice to anyone except as otherwise required by the Bankruptcy Court or
applicable law. Additional terms (including covenants and events of default)
may be included in the definitive agreements for the New Credit Line Documents.
Any and all documents filed with the Bankruptcy Court shall supersede the
provisions of this summary and shall be controlling where inconsistent with
this summary.
<TABLE>
<S> <C>
Borrower: Reorganized CET
Amount: Maximum of $10 million
Interest: Market Rate of Interest
Mandatory Repayments: None; revolving credit line
Maturity Date: Up to three years after Plan Effective Date.
Collateral: First lien on certain real property and
pledged notes receivable as Reorganized CET
and New Credit Line Lender may agree. Senior
to liens securing New Lender Notes.
</TABLE>
97
<PAGE> 103
EXHIBIT E-1
[FORM OF]
NEW CET UNSECURED NOTE
----------------------
$____________
Sacramento, California
Dated as of ____________, 1994
FOR VALUE RECEIVED, the undersigned, _____________, a
California _____________________ and Reorganized CET under the ______________
Plan of Reorganization confirmed by Confirmation Order entered on
_____________, 1994 by the United States Bankruptcy Court for the Eastern
District of California in Case No. 93-26727-C11 ("Borrower") promises to pay to
the order of ________________ ("Payee") at Sacramento, California, or at such
other place as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the principal sum of
__________________ DOLLARS ($___________), with interest thereon at the rate
specified herein.
On the earlier of (i) ________, 2004 [ten calendar years from
the Effective Date] (the "Maturity Date"), or (ii) the occurrence and during
the continuance of an Event of Default (as defined below) and the receipt by
Borrower from holder of a notice of acceleration, Borrower shall pay to Payee
the aggregate principal amount then outstanding under this New CET Unsecured
Note, together with any accrued and unpaid interest thereon.
Interest hereunder shall accrue until this New CET Unsecured
Note is paid in full (computed on the basis of a 365-day year, actual days
elapsed), at ten percent (10%) per annum.
Borrower shall make semi-annual payments of interest due
hereunder commencing on ________, 1994. Each such payment shall be due on the
first (1st) day of the month, and is payable not later than the tenth (10th)
day of the month. On the Maturity Date hereunder, Borrower shall repay in full
all outstanding amounts of principal and interest due under this New CET
Unsecured Note.
Borrower may prepay all or any part of the principal on this
New CET Unsecured Note at any time without premium or penalty. Payments of
principal made by Borrower to Payee on account of this New CET Unsecured Note
may not be reborrowed.
Upon the occurrence and during the continuance of an Event of
Default (as defined below) and the receipt by Borrower from holder of a notice
of acceleration, the holder of this New CET Unsecured Note, at holder's option,
may declare all sums of principal and interest hereunder to be immediately due
and payable.
98
<PAGE> 104
As used herein, "Event of Default" shall mean the failure by
Borrower to pay as and when due any amount of principal of, or interest on,
this New CET Unsecured Note. No other event or occurrence shall be an Event of
Default hereunder nor entitle holder to accelerate the obligations under this
New CET Unsecured Note.
In no contingency or event whatsoever shall the aggregate of
all amounts deemed interest hereunder and charged or collected by Payee or any
holder hereof exceed the highest rate permissible under any law which a court
of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that Payee has charged or
received interest hereunder in excess of the highest applicable rate, the rate
in effect hereunder shall automatically be reduced to the maximum rate
permitted by applicable law and Payee shall apply all interest paid in excess
of the maximum lawful rate to the principal balance of this New CET Unsecured
Note. It is the intent of the parties hereto that Borrower not pay or contract
to pay, and that Payee not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by Borrower to Payee under applicable law.
This New CET Unsecured Note shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned Borrower has executed this
New CET Unsecured Note as of the day and year set forth on the first page
hereof.
________________________,
As Borrower
By: ______________________
Its: _____________________
99
<PAGE> 105
EXHIBIT E-2
[FORM OF]
NEW KROEGER NOTE
----------------
$2,500,000
Sacramento, California
Dated as of ____________, 1994
FOR VALUE RECEIVED, the undersigned, _____________, a
California __________________ and Reorganized CET under the _______________
Plan of Reorganization confirmed by Confirmation Order entered ______________,
1994 by the United States Bankruptcy Court for the Eastern District of
California in Case No. 93-26727-C11 ("Borrower"), promises to pay to the order
of Henry Kroeger and Kathryn Kroeger (collectively, "Payee") at Sacramento,
California, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available
funds, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000).
On the earlier of (i) ________, 2002 [eight calendar years
from the Effective Date] (the "Maturity Date"), or (ii) the occurrence and
during the continuance of an Event of Default (as defined below) and the
receipt by Borrower from holder of a notice of acceleration, Borrower shall pay
to Payee the aggregate principal amount then outstanding under this New Kroeger
Note. The obligations of Borrower under this New Kroeger Note shall not bear
interest.
Borrower shall make principal payments under this New Kroeger
Note in equal monthly installments of $20,000 each commencing on ____, 1994 and
continuing up to and including ____, 2002. Each such payment shall be due on
the first (1st) day of the month, and is payable not later than the tenth
(10th) day of the month. On the Maturity Date hereunder, Borrower shall repay
in full all outstanding amounts of principal due under this New Kroeger Note.
Borrower may prepay all or any part of the principal on this
New Kroeger Note at any time without premium or penalty. Payments of principal
made by Borrower to Payee on account of this New Kroeger Note may not be
reborrowed.
Upon the occurrence and during the continuance of an Event of
Default (as defined below) and the receipt by Borrower from holder of a notice
of acceleration, the holder of this New Kroeger Note, at holder's option, may
declare all sums of principal hereunder to be immediately due and payable.
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As used herein, "Event of Default" shall mean the failure by
Borrower to pay as and when due any amount of principal of this New Kroeger
Note. No other event or occurrence shall be an Event of Default hereunder nor
entitle Payee to accelerate the obligations under this New Kroeger Note.
This New Kroeger Note shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned Borrower has executed this
New Kroeger Note as of the day and year set forth on the first page hereof.
________________________ ,
As Borrower
By: ______________________
Its: _____________________
101
<PAGE> 107
EXHIBIT F
FLORIN-PERKINS PROPERTIES LOT NUMBERS AND PARCEL NUMBERS
--------------------------------------------------------
<TABLE>
<CAPTION>
LOT # BOND # PARCEL # BONDHOLDER
- - ----- ------ -------- ----------
<S> <C> <C> <C>
21 021 062-0140-001 Schumacher
22 022 062-0140-002 Schumacher
38 037 062-0120-021 OK&B, a California
Partnership
48 047 062-0130-018 OK&B
49 048 062-0120-012 OK&B
50 049 062-0120-013 OK&B
51 050 062-0120-014 BETSY BENNETT
52 051 062-0120-015 OK&B
53 052 062-0120-016 OK&B
54 053 062-0120-017 OK&B
55 054 062-0120-018 LEVCO SECURITIES
56 055 062-0120-019 LEVCO SECURITIES
57 056 062-0120-001 BETSY BENNETT
58 057 062-0120-002 OK&B
59 058 062-0120-003 OK&B
60 059 062-0120-004 OK&B
61 060 062-0120-005 OK&B
62 061 062-0120-006 OK&B
63 062 062-0120-007 OK&B
64 063 062-0120-008 OK&B
65 064 062-0120-009 OK&B
66 065 062-0120-010 OK&B
67 066 062-0120-011 OK&B
</TABLE>
102
<PAGE> 1
Part I. FINANCIAL INFORMATION EXHIBIT 99.2
COMMONWEALTH EQUITY TRUST
AND AFFILIATES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
June 30, September 30,
1994 1993
(Unaudited) (Audited)
----------- ------------
Assets
<S> <C> <C>
Investments:
Rental properties, less accumulated depreciation of
$33,298,000 and $31,708,000 and valuation allowance of
$73,834,000 and $78,659,000 at June 30, 1994 and
September 30, 1993, respectively $ 121,755,000 133,030,000
Partnership interests, net of valuation allowance of
$17,925,000 and $17,429,000 at June 30, 1994
and September 30, 1993, respectively 4,000,000 4,000,000
Notes receivable, net of valuation allowance of $6,320,000 and
$6,964,000 at June 30, 1994 and September 30, 1993,
respectively, and unaccreted discount of $1,843,000 and
$1,466,000 at June 30, 1994 and September 30, 1993,
respectively 18,751,000 19,262,000
------------ -------------
144,506,000 156,292,000
Cash 4,117,000 6,994,000
Restricted cash 111,000 111,000
Rents and accrued interest receivable, net of valuation allowance
of $3,373,000 and $2,478,000 at June 30, 1994 and September 30,
1993, respectively 2,032,000 1,179,000
Other assets 2,649,000 4,637,000
------------ -------------
Total assets $ 153,415,000 169,213,000
============ =============
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable, collateralized
by deeds of trust on rental properties $ 8,800,000 15,874,000
Accounts payable and accrued expenses 8,072,000 3,526,000
------------ -------------
16,872,000 19,400,000
Liabilities subject to compromise 131,522,000 133,065,000
------------ -------------
Total liabilities 148,394,000 152,465,000
------------ -------------
Minority interests 6,776,000 6,947,000
----------- ------------
Shareholders' Equity:
Shares of beneficial interest, par value of $1 a share,
unlimited authorization, 25,093,000 shares outstanding
at June 30, 1994 and September 30, 1993 25,093,000 25,093,000
Additional paid-in capital 219,848,000 219,848,000
Accumulated deficit (246,696,000) (235,140,000)
------------- -------------
Total shareholders' equity (1,755,000) 9,801,000
------------- -------------
Total liabilities and shareholders' equity $ 153,415,000 169,213,000
============ ============
See accompanying notes to consolidated condensed financial statements.
</TABLE>
