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): January 19, 1998
Grossman's Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-00542 38-0524830
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
90 Hawes Way, Stoughton, MA 02072
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 297-3300
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) Order Confirming Plan of Reorganization:
(1)-(3)
On December 9, 1997 (the "Confirmation Date"), the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") entered an order
(the "Confirmation Order") confirming the Joint Plan of Reorganization Under
Chapter 11 (the "Plan") sponsored by Grossman's Inc. (the "Company"), former
subsidiaries that have been merged into the Company, and JELD-WEN, inc. ("JELD
WEN"), an Oregon corporation that manufactures window and door products. The
Bankruptcy Court set the effective date as the eleventh day after the
confirmation date, calculated in accordance with Bankruptcy Rule 9006, provided
certain conditions had been satisfied. All of the conditions were not fully
satisfied until January 19, 1998, which has been determined to be the effective
date of the Plan (the "Effective Date"). The Plan and the Confirmation Order are
filed, respectively, as Exhibits 2 and 99.1 to this Current Report on Form 8-K
and are incorporated herein by reference. The terms of the Confirmation Order
are controlling if any inconsistency exists between the Plan and the
Confirmation Order.
For a summary of the material features of the Plan, reference is made to
the information set forth under the caption "Summary of the Plan" under Section
II of the Company's Disclosure Statement regarding the Plan dated October 29,
1997, filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated
herein by reference.
The only material difference between the Confirmation Order and the Plan is
that holders of allowed unsecured claims in excess of $25,000 ("Class 8 Claims")
will receive their pro rata share of a guaranteed unsecured recovery pool (the
"Unsecured Recovery Pool") in lieu of an assured payment of 17 cents on the
dollar. Holders of allowed Class 8 Claims still are entitled to receive their
pro rata share of 50% of the new common stock of the Company that was issued
after the Effective Date and to share pro rata with holders of allowed unsecured
claims of $25,000 or less ("Class 7 Convenience Claims") in the proceeds (less
recovery costs and fees) of certain causes of action of the Company and its
former subsidiaries under the Bankruptcy Code. The Unsecured Recovery Pool
consists of $8.65 million less an amount of cash approved by the Bankruptcy
Court as necessary reasonably to assure that all holders of contested Class 7
Convenience Claims will receive their respective cash distributions under the
Plan, once such claims are allowed (the "Cash Reserve Amount"). Any excess of
the Cash Reserve Amount will be added to the Unsecured Recovery Pool to be
distributed pro rata to holders of allowed Class 8 Claims in accordance with the
Plan and Confirmation Order.
The Bankruptcy Court has approved an initial distribution of 11 cents on
the dollar from the Unsecured Recovery Pool to holders of allowed Class 8
Claims. Based upon claims processing results to date, subsequent distributions
may be made to such qualified holders of Class 8 Claims from the Unsecured
Recovery Pool.
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Statements contained in this Current Report on Form 8-K that are not based
on historical fact are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Important factors, beyond the
Company's control, that could cause actual results to differ materially from
those in the forward-looking statements include, but are not limited to, the
need for approvals by the Bankruptcy Court, competition, stability of customer
demand, the sufficiency of the Company's capital resources and the claims
processing process. Undue reliance should not be placed on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligations publicly to release revisions to these forward-looking statement to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
(4)
As of the Effective Date, the Company had approximately 27.7 million shares
of its common stock, $.01 par value per share (the "Old Common Stock"),
outstanding, held by approximately 1,700 shareholders of record. Shares of Old
Common Stock and warrants and options to purchase the Old Common Stock issued by
the Company prior to the Effective Date were cancelled. In accordance with the
Plan, the reorganized Company issued 100,000 shares of new common stock ("New
Common Stock"), of which half was issued to JELD-WEN and half is being held by a
shareholder representative for distribution on a pro rata basis to holders of
allowed Class 8 Claims. Upon distribution of the New Common Stock held by the
shareholder representative, the number of holders of the outstanding shares of
New Common Stock will be less than 300.
(5)
For information as to the consolidated assets and liabilities of the
Company, reference is made to the Company's Consolidated Balance Sheet
(unaudited) as of November 22 and October 25, 1997, as filed under Bankruptcy
Rule 4005 with the Bankruptcy Court on December 23, 1997, in the Company's
Monthly Operating Report for the Month Ending November 22, 1997. The
Consolidated Balance Sheet is filed as Exhibit 99.3 to this Current Report on
Form 8-K and incorporated herein by reference.
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<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
2 Joint Plan of Reorganization Under Chapter 11 of the
United States Bankruptcy Code dated October 1, 1997
Exhibit A Assumed Contracts and Leases
Exhibit B Allowed Reclamation Claims
Exhibit C Amended and Restated Certificate of
Incorporation of Grossman's,Inc.
Exhibit D Form of Registration Rights Agreement
Exhibit E By-Laws of Grossman's Inc.
4.1 Amended and Restated Certificate of Incorporation of
Grossman's Inc. (See Exhibit C to Exhibit 2 to this Current
Report on Form 8-K)
4.2 By-Laws of Grossman's Inc. (See Exhibit E to Exhibit 2 to
this Current Report on Form 8-K)
4.3 Form of Registration Rights Agreement (See Exhibit D to
Exhibit 2 to this Current Report on Form 8-K)
99.1 Bankruptcy Court Order Confirming Joint Plan of
Reorganization Under Chapter 11 of the
United States Bankruptcy Code
Exhibit A Joint Plan of Reorganization Under
Chapter 11 of the United States
Bankruptcy Code (See Exhibit 2 to this
Current Report on Form 8-K)
Exhibit B Declaration of Logan & Company, Inc.
Certifying (i) the Methodology for the
Tabulation of, and (ii) Results of
Voting with Respect to the Debtors'
Joint Plan of Reorganization
Exhibit C Assumed Contracts and Leases
Exhibit D Notice of Order Confirming Joint Plan
of Reorganization Under Chapter 11
of the United States Bankruptcy Code
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<PAGE>
99.2 Joint Disclosure Statement of Debtors and JELD-WEN, Inc. in
Connection With Solicitation of Ballots With Respect to Joint
Plan of Reorganization Under Chapter 11 of the United States
Bankruptcy Code Dated October 29, 1997
Exhibit I Joint Plan of Reorganization Under
Chapter 11 of the United States
Bankruptcy Code (See Exhibit 2 to this
Current Report on Form 8-K)
Exhibit II Grossman's Inc. Liquidation Analysis
Exhibit III Grossman's Inc. et. al.
Projected Financial Information
Exhibit IV* Report of Grossman's Inc. on Form 10-K for
the year ended December 31, 1997
Exhibit V Resumes/Biographical Information of
Directors
99.3 Consolidated Balance Sheet (unaudited) as of November 22 and
October 25, 1997, as filed under Bankruptcy Rule 4005 with the
Bankruptcy Court on December 23, 1997, in the Company's
Monthly Operating Report for the Month Ending November 22,
1997
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* Previously filed with the Securities and Exchange Commission
under File No. 001-00542 and incorporated herein by reference.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Grossman's Inc., has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GROSSMAN'S INC.
By: /s/ Thomas A. Ford
Thomas A. Ford
President and Chief Executive Officer
DATE: February 26, 1998
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re ) Chapter 11
)
GROSSMANS INC., dba ) Case No. 97-695 (PJW)
Contractors' Warehouse, )
Mr. 2nd's Bargain Outlet, )
Grossman's Bargain Outlet, )
GRS HOLDING COMPANY, INC. ) Case No. 97-696 (PJW)
and GRS REALTY COMPANY, INC. ) Case No. 97-697 (PJW)
)
Debtors. ) Jointly Administered
JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
SONNENSCHEIN NATH & ROSENTHAL Fruman Jacobson John Collen Robert E.
Richards Thomas A. Labuda, Jr. 8000 Sears Tower Chicago, Illinois 60606 (312)
876-8000
- and -
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Laura Davis Jones (No. 2436)
Victoria W. Counihan (No. 3488)
Rodney Square North, 11th Floor
Wilmington, Delaware 19899
(302) 571-6600
Attorneys for Debtors
Dated: October 29, 1997
<PAGE>
Grossman's Inc., GRS Holding Company, Inc., GRS Realty Company, Inc. and
JELD-WEN, inc. propose this Joint Plan of Reorganization pursuant to Section
1121(a) of the United States Bankruptcy Code.
ARTICLE 1
DEFINITIONS AND INTERPRETATION
The following underlined terms, when capitalized, shall have the meanings
specified below, and such meanings shall be equally applicable to the singular
and plural forms of such terms.
1.1 Administrative Expense means a Claim or portion of a Claim allowed
under Code Section 503(b) and entitled to priority under Code Section 507(a)(1).
1.2 Allowed, when used with respect to any Claim except a Reclamation
Claim, means the Claim or applicable portion thereof that has been allowed
pursuant to Code Section 502, and, if the Claim was objected to, means that a
Final Order has been entered allowing the Claim pursuant to Code Section 502.
For purposes of Reclamation Claims only, Allowed shall mean (i) a Reclamation
Claim in the amount listed on Exhibit B to this Plan or (ii) a Reclamation Claim
in the which the Court has entered a Final Order allowing such Reclamation
Claim.
1.3 Assigned Action means a cause of action that may be asserted by a
Debtor or its successors pursuant to Code Sections 544(b), 547, 548 or 550.
1.4 Assumed Contracts shall mean all the contracts and unexpired leases set
forth on Exhibit A to this Plan.
1.5 Bankruptcy Rules mean the Federal Rules of Bankruptcy Procedure, as
amended and promulgated under Section 2075 of Title 28 of the U.S. Code.
1.6 Bargain Outlet Division means the stores doing business as Grossman's
Bargain Outlet or Mr. 2nd's Bargain Outlet and all assets directly related
thereto.
1.7 Business Day means any day other than a Saturday, Sunday or legal
holiday in Delaware, Massachusetts or Oregon.
1.8 Cases mean the above-captioned jointly administered bankruptcy cases.
1.9 Cash means cash and cash equivalents, including but not limited to U.S.
currency on hand, U.S. currency on deposit in any bank account and checks or
other similar negotiable instruments denominated in U.S. currency.
<PAGE>
1.10 Claim means (a) right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured; or (b) right to
an equitable remedy for breach or performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
1.11 Class means a category or group of holders of Claims or Interests as
designated in Article 4 of this Plan.
1.12 Code means the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C.
Section 101 et seq.
1.13 Combined Investors Loan means that certain loan made pursuant to the
loan agreement between GRS Realty, as borrower, and Combined Investors, L.L.C.,
as lender, dated April 4, 1996, evidenced by, among other things, two promissory
notes in the principal amounts of $2,666,666.67 and $1,333,333.33, respectively,
and secured by mortgages and assignments of rents on certain real property of
GRS Realty. The Combined Investors Loan was sold to GDI pursuant to a certain
Loan Sale Agreement With Joinder By Borrower Parties dated February 20, 1997.
1.14 Committees means the Official Committee of Unsecured Creditors and the
Official Committee of Equity Security Holders appointed by the Office of the
United States Trustee for the District of Delaware.
1.15 Confirmation means the entry of the Confirmation Order by the Court
pursuant to Code Section 1129.
1.16 Confirmation Date means the date that the Court enters the
Confirmation Order.
1.17 Confirmation Order means the order of the Court confirming this Plan.
1.18 Congress Adversary Proceeding shall mean Adversary Proceeding No.
A-97-75 commenced by Congress Financial Corporation.
1.19 Contested Claim means a Claim against a Debtor to which an Objection
has been filed by a party in interest and which Objection has not been resolved
as of the relevant date.
1.20 Contested Claim Amount means the amount of the Contested Claim that
has been objected to by a party in interest.
1.21 Contested Claim Reserve means the account maintained for the benefit
of holders of Contested Claims.
1.22 Convenience Claim means an Unsecured Claim not exceeding $25,000, or
as such dollar threshold may be increased by agreement of the Debtors, JELD-WEN
and the Creditors' Committee.
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1.23 Court means the United States Bankruptcy Court for the District of
Delaware or such other court of competent jurisdiction exercising jurisdiction
over all or part of the Debtors' Cases.
1.24 Creditor means the holder of a Claim (other than as holder of an
Administrative Expense).
1.25 Creditor Stock means the New Common Stock issued to holders of Allowed
Unsecured Claims.
1.26 Creditors' Committee shall mean the Official Committee of Unsecured
Creditors formed by the Office of the United States Trustee for the District of
Delaware.
1.27 Debtor means, depending on the context, either Grossman's, GRS Holding
or GRS Realty as a Debtor or Debtor in possession and Debtors means Grossman's,
GRS Holding and GRS Realty together as Debtors and Debtors in possession.
1.28 Deficiency Amount means the amount by which the total amount of a
Claim (other than an Administrative Expense Claim) exceeds the value of the
collateral securing such Claim as of the date of the valuation of the collateral
for purposes of claim allowance.
1.29 Disallowed, when used with respect to a Claim, means that the Claim or
applicable portion thereof has been determined by a Final Order to be invalid.
1.30 Disclosure Statement means the disclosure statement filed under Code
Section 1125 in support of this Plan.
1.31 Effective Date means the eleventh day after the Confirmation Date,
calculated in accordance with Bankruptcy Rule 9006, unless the Confirmation has
been stayed or any of the other conditions set forth in Section 15.1 of this
Plan have not been met or waived, in which event it is the first day after such
stay is no longer in effect and such conditions have been met or waived (that is
also ten days after the Confirmation Date) calculated in accordance with
Bankruptcy Rule 9006, provided that all conditions to the effectiveness of the
Plan have been satisfied on or before such date. If the Effective Date does not
occur within thirty (30) days after the Confirmation Date, then this Plan shall
not become effective at all unless the Debtors, Jeld-Wen and the Creditors=
Committee all agree to extend further the time for the Plan to become effective.
1.32 Escrow Account means the interest bearing escrow account established
with an escrow agent reasonably acceptable to the Plan Proponents and the
Creditors' Committee to hold funds in accordance with Section 8.1.3 of this
Plan.
1.33 Exit Financing Facility means the financing facility contemplated in
Section 9.2 of this Plan.
<PAGE>
1.34 Final DIP Order means that certain Agreed Final Order Approving DIP
Facility With GDI Company, Inc. And Use of Cash Collateral dated April 30, 1997,
as amended on October 9, 1997.
1.35 Final Order means an order that is final and nonappealable.
1.36 GDI means GDI Company, Inc., an Oregon corporation.
1.37 GDI DIP Facility means the debtor in possession financing facility
approved by this Court pursuant to Final DIP Order.
1.38 GDI Loan Agreement means that certain Loan Agreement between GDI, as
Lender, and the Debtors, as Borrowers, dated February 25, 1997, evidenced by
that certain Secured Promissory Note dated February 25, 1997 in the principal
amount of $1,999,999.00 and secured by mortgages on the following three parcels
of real property as of the Petition Date: (i) Scarborough, Maine; (ii) Laconia,
New Hampshire; and (iii) Warrensville Heights, Ohio.
1.39 Grossman's means Grossman's Inc., a Delaware corporation and a Debtor
in Case No. 97-695 (PJW).
1.40 GRS Holding means GRS Holding Company, Inc., a Delaware corporation
and a Debtor in Case No. 97-696 (PJW).
1.41 GRS Realty means GRS Realty Company, Inc., a Delaware corporation and
a Debtor in Case No. 97-697 (PJW).
1.42 Holders shall have the meaning set forth in Section 8.7 of this Plan.
1.43 Indemnification Policies means the insurance policy or policies
obtained by the Debtors to cover their obligations to indemnify their present
and former officers and directors pursuant to any provisions of the Debtors'
charters, by-laws, and/or applicable state law.
1.44 Independent Members means the following members of the board of
directors of Grossman's: Thomas E. Arnold, Jr., Russell N. Cox, Robert K.
Swanson and Dr. Abraham Zaleznik.
1.45 Initiating Holders has the meaning set forth in the Registration
Rights Agreement.
1.46 Interest means an equity interest in Grossman's, GRS Holding and/or
GRS Realty.
1.47 Interestholder means the holder of an Interest.
1.48 JELD-WEN means JELD-WEN, inc., an Oregon corporation.
<PAGE>
1.49 Lien means a charge against or interest in property to secure payment
of a debt or performance of an obligation.
1.50 Miscellaneous Secured Claims means a Secured Claim that is held by a
Person other than GDI, Congress Financial Corporation or Associates Commercial
Corporation.
1.51 New Common Stock means the shares of common stock to be issued by the
Reorganized Company in connection with this Plan.
1.52 Offer Period shall have the meaning set forth in Section 8.6 of this
Plan.
1.53 Old Common Stock means the shares of common stock or warrants or
options to purchase the same issued by each Debtor prior to the Petition Date
and outstanding as of such date.
1.54 Person means an individual, partnership, corporation, joint venture,
unincorporated association or organization, estate, trust or governmental unit.
1.55 Petition Date means April 7, 1997, the date on which the Debtors
commenced these Cases.
1.56 Plan means the joint Chapter 11 plan of reorganization set forth
herein, as the same may be amended from time to time pursuant to the Plan's
terms, the Code or the Bankruptcy Rules.
1.57 Plan Documents means Exhibits A through E to this Plan, which exhibits
will be filed with the Court not later than the conclusion of the Confirmation
hearing on the Plan.
1.58 Priority Non-Tax Claim means a Claim entitled to priority under Code "
507(a)(3), 507(a)(4) or 507(a)(6).
1.59 Priority Tax Claim means a Claim asserted by a governmental unit
entitled to priority under Code Section 507(a)(8).
1.60 Pro Rata means the proportion that the amount of an Allowed Claim in a
particular Class bears to the aggregate amount of all Allowed Claims in the
Class (including any Contested Claim Reserve).
1.61 Professionals means any professional Person employed in these Cases at
any time before Confirmation by the Debtors or either of the Committees.
1.62 Reclamation Claim means a Claim to reclaim goods asserted under Code
Section 546(c) and applicable state law.
<PAGE>
1.63 Registrable Stock shall have the meaning set forth in the Registration
Rights Agreement.
1.64 Registration Rights Agreement means that certain registration rights
agreement substantially in the form attached as Exhibit D to this Plan.
1.65 Reorganized Company means Grossman's as a reorganized, privately held
company under the Plan (including the merger of GRS Holding and GRS Realty into
Grossman's) from and after the Effective Date.
1.66 Restated By-Laws shall mean the amended and restated by-laws of the
Reorganized Company in substantially the form attached as Exhibit E to this
Plan.
1.67 Restated Charter means the amended and restated certificate of
incorporation of the Reorganized Company in substantially the form attached as
Exhibit C to this Plan.
1.68 Secured Claim means a secured claim within the meaning of Code Section
506(a) and shall not include any Deficiency Amount.
1.69 Shareholders Agent shall have the meaning set forth in Section 8.7 of
this Plan.
1.70 Transfer Agent means the Person designated by Debtors to distribute
New Common Stock under this Plan and to keep the registry of the holders thereof
from and after the Effective Date.
1.71 Unsecured Claims means a Claim other than a Secured Claim, a
Miscellaneous Secured Claim, an Administrative Claim, a Reclamation Claim, a
Convenience Claim, a Priority Non-Tax Claim or a Priority Tax Claim. Unsecured
Claims also includes any Claim for a Deficiency Amount.
1.72 Interpretation. Any term not defined herein has the meaning ascribed
to it in the Code or the Bankruptcy Rules. The exhibits attached to this Plan
are incorporated into and are part of this Plan as if fully set forth in this
Plan. The headings in this Plan are for convenience of reference only and shall
not limit or otherwise affect the provisions hereof.
<PAGE>
ARTICLE 2
SUBSTANTIVE CONSOLIDATION OF DEBTORS
2.1 Substantive Consolidation. Pursuant to the Confirmation Order, on the
Effective Date: (i) all Claims of Debtors by and against each other shall be
eliminated; (ii) except as otherwise provided in this Plan, all assets and all
proceeds thereof and all liabilities of Debtors shall be merged or treated as
though they were merged; (iii) any obligation of any Debtor and all guarantees
thereof executed by, or joint liability of, any Debtor will be deemed to be one
obligation of the consolidated Debtors; (iv) any Claim based on any such
guaranteed obligation or joint liability shall be deemed to be one Claim against
the consolidated Debtors and treated as such under this Plan; (v) each and every
Claim filed in the individual chapter 11 case of either or both of Debtors will
be deemed filed against the consolidated Debtors and treated as a single Claim
under this Plan; and (vi) for purposes of determining the availability of the
right to setoff under Code Section 553, Debtors shall be treated as one entity
so that, subject to the other provisions of Code Section 553, debts due to any
Debtor may be set off against debts of the other Debtor.
2.2 Extinguishment of Guarantees. On the Effective Date, and in accordance
with this Plan and the Confirmation Order, all Claims based on guarantees of
collection, payment or performance, or joint liability of Debtors, as to the
obligations of the other Debtor, shall be discharged, released and of no further
force and effect.
ARTICLE 3
PROVISIONS FOR THE ALLOWANCE AND PAYMENT OF UNCLASSIFIED
CLAIMS -- ADMINISTRATIVE EXPENSES AND PRIORITY TAXES
3.1 Administrative Expenses. Each holder of an Allowed Administrative
Expense shall be paid in respect of such Claim in Cash, in full, on the
Effective Date, or, if such Claim has not been Allowed on or before the
Effective Date, promptly after the allowance of the Claim by a Final Order;
provided, however, an Allowed Administrative Expense may be satisfied on such
other terms as may be agreed to by the holder of such Claim and the Debtors.
3.1.1 Bar Date for Requests For Payment of an Administrative Expense. All
requests for payment of an Administrative Expense, except for Professionals'
requests for compensation and post-petition extensions of trade credit for goods
or services, shall be filed with the Court within forty-five (45) days of the
Effective Date or be forever barred. Within five (5) days of the Effective Date,
the Debtors shall serve notice of such Administrative Expense bar date on all
known parties asserting Administrative Expenses except for Professionals.
3.1.2 Deadline for Objections. All objections to allowance of
Administrative Expenses must be filed within thirty (30) days of the
Administrative Expense bar date. If an objection to any Administrative Expense
is not filed on or before that date, the Administrative Expense shall be deemed
Allowed as of that date.
3.2 GDI DIP Facility. The GDI DIP Facility shall be satisfied and replaced
by the Exit Financing Facility contemplated in Section 9.2 of this Plan.
3.3 Pension Plan. The Reorganized Company will continue to maintain the
Grossman's pension plan.
<PAGE>
3.4 Priority Tax Claims. Any holder of an Allowed Priority Tax Claim shall
receive at the option of the Debtors (i) the amount of the holder's Allowed
Priority Tax Claim in one Cash payment on the Effective Date or (ii) the amount
of the holder's Allowed Priority Tax Claim, with interest at a rate to be
determined by the Court at the hearing on Confirmation of this Plan, in equal
annual Cash payments on each anniversary of the Effective Date, until the last
anniversary of the Effective Date that precedes the sixth anniversary date of
the date of assessment of the Allowed Priority Tax Claim. A Priority Tax Claim
that is a Contested Claim shall not receive any distribution on the Effective
Date or thereafter unless and until such Claim becomes a Allowed Priority Tax
Claim.
ARTICLE 4
CLASSIFICATION OF CLAIMS AND INTERESTS
4.1 Class 1 -- Allowed Priority Non-Tax Claims. Class 1 consists of all
Allowed Priority Non-Tax Claims.
4.2 Class 2 -- Allowed Secured Claims of GDI. Class 2 consists of the
Allowed Secured Claims of GDI, separately classified and described below as
Classes 2A and 2B.
4.2.1 Class 2A -- The GDI Loan Agreement. Class 2A consists of the Allowed
Secured Claim of GDI under the GDI Loan Agreement.
4.2.2 Class 2B -- The Combined Investors Loan. Class 2B consists of the
Allowed Secured Claim of GDI under the Combined Investors Loan.
4.3 Class 3 -- Allowed Secured Claim of Associates Commercial Corporation.
Class 3 consists of the Allowed Secured Claim of Associates Commercial
Corporation. Associates Commercial Corporation and Grossman's are parties to a
certain Retail Installment Contract dated February 26, 1996 under which the
Debtor purchased certain equipment (the "Installment Contract").
4.4 Class 4 -- Miscellaneous Secured Claims. Class 4 claims consists of all
Allowed Secured Claims, if any, held by Persons other than GDI, Congress
Financial Corporation and Associates Commercial Corporation.
4.5 Class 5 -- Allowed Reclamation Claims. Class 5 consists of all Allowed
Reclamation Claims.
4.6 Class 6 -- Allowed Claim of Congress Financial Corporation. Class 6
consists of any Allowed Claim of Congress Financial Corporation. Congress
Financial Corporation commenced the Congress Adversary Proceeding seeking to
enforce an early termination fee of up to $1 million plus certain fees and costs
related thereto under its prepetition credit agreement with Grossman's.
<PAGE>
4.7 Class 7 -- Allowed Convenience Claims. Class 7 consists of all Allowed
Convenience Claims.
4.8 Class 8 -- Allowed Unsecured Claims. Class 8 consists of all Allowed
Unsecured Claims not specifically classified in other Classes including all
Allowed Claims for any Deficiency Amounts.
4.9 Class 9 -- Old Common Stock. Class 9 consists of Interests in
Grossman's, GRS Holding and GRS Realty, separately classified and described
below.
4.9.1 Class 9A. Class 9A consists of Old Common Stock in Grossman's.
4.9.2 Class 9B. Class 9B consists of Old Common Stock in GRS Holding.
4.9.3 Class 9C. Class 9C consists of Old Common Stock in GRS Realty.
ARTICLE 5
IDENTIFICATION OF IMPAIRED CLASSES
OF CLAIMS AND INTERESTS
5.1 Impaired Classes of Claims and Interests. Classes 2A, 4, 5, 6, 7, 8 and
9A, 9B and 9C are impaired under this Plan.
5.2 Unimpaired Classes of Claims and Interests. Classes 1, 2B and 3 are not
impaired under this Plan.
ARTICLE 6
PROVISIONS FOR TREATMENT OF
CLASSIFIED CLAIMS AND INTERESTS
6.1 Class 1 -- Allowed Priority Non-Tax Claims. Class 1 is unimpaired. Each
holder of an Allowed Priority Non-Tax Claim shall be paid the full amount of its
Allowed Claim in Cash on the Effective Date unless paid earlier pursuant to
prior order of the Court or agreed otherwise by the Debtors and the holder of
such Claim.
<PAGE>
6.2 Class 2A -- Allowed Secured Claim of GDI under GDI Loan Agreement.
Class 2A is impaired. As of the Petition Date, the outstanding balance of
principal and accrued interest under the GDI Loan Agreement was $2,022,903.77.
On August 11, 1997, however, the Court approved the sale of the Scarborough,
Maine property to Pende Associates, Inc. at a price of $505,000.00. After the
application of net sale proceeds, the outstanding balance of principal and
interest under the GDI Loan Agreement was approximately $1.7 million. If
JELD-WEN provides the Exit Financing Facility provided for in Section 9.2 of
this Plan, then the remaining balance of the Allowed Secured Claim of GDI under
the GDI Loan Agreement (after application of sale proceeds of the Scarborough
property or any other property that is sold prior to Confirmation) shall be
incorporated in the Exit Financing Facility and thus secured by the Reorganized
Company's real estate. If, however, a third-party lender provides the Exit
Financing Facility, then the remaining balance of the Allowed Claim of GDI under
the GDI Loan Agreement shall be reaffirmed with a new maturity date of the
earlier of (i) November 1, 1998 or (ii) whenever all of the real property that
secures the GDI Loan Agreement is sold.
6.3 Class 2B -- Allowed Secured Claim of GDI Under the Combined Investors
Loan. Class 2B is not impaired. The Allowed Secured Claim of GDI under the
Combined Investors Loan was fully paid on an interim basis during the course of
these Cases from the proceeds of sale of the real estate that secured the
Combined Investors Loan. The interim application of such proceeds shall be
deemed final on the Effective Date.
6.4 Class 3 -- Allowed Secured Claim of Associates Commercial Corporation.
Class 3 is not impaired. Associates Commercial Corporation was owed
approximately $15,000.00 as of the Petition Date and has received postpetition
adequate protection payments of $409.71 a month in accordance with that certain
Agreed Order Providing Adequate Protection to Associates dated July 22, 1997.
The remaining portion of the Allowed Secured Claim of Associates Commercial
Corporation shall be paid according to the terms of the Installment Contract. In
addition, Associates Commercial Corporation shall retain the lien securing its
Allowed Secured Claim. The Reorganized Company retains the right to prepay the
Allowed Secured Claim of Associates Commercial Corporation without penalty.
6.5 Class 4 -- Allowed Miscellaneous Secured Claims. Class 4 is impaired.
At the Debtors' option, the holders of any Miscellaneous Secured Claims, if any,
shall either (i) be paid the replacement value of their collateral or (ii) have
their collateral returned to them. Any Deficiency Amount shall be classified in
Classes 7 or 8. In the event any Miscellaneous Secured Claim is determined to be
an Allowed Secured Claim, then such Allowed Secured Claim shall be treated as if
it were separately classified for purposes of voting on this Plan and " 1126 and
1129 of the Bankruptcy Code.
6.6 Class 5 -- Allowed Reclamation Claims. Class 5 Claims are impaired.
Holders of Reclamation Claims may elect treatment from one of the two options
described below. Section 14.9 of this Plan provides the manner of making such an
election.
<PAGE>
6.6.1 Option A. A holder of a Reclamation Claim may elect to receive the
amount set forth below in full satisfaction of its Allowed Reclamation Claim
(including any remaining unsecured claim relating to such Allowed Reclamation
Claim). Each holder of an Allowed Reclamation Claim electing Option A shall
receive in Cash on the Effective Date a distribution equal to seventy percent
(70%) of its Allowed Reclamation Claim. With respect to each holder of any
Allowed Reclamation Claim which timely elects Option A, the amount of such
person's Reclamation Claim which shall be deemed an Allowed Reclamation Claim is
the amount shown on Exhibit B to the Plan, and no person shall be entitled to
object to such Allowed Reclamation Claim on any grounds.
6.6.2 Option B. A holder of a Reclamation Claim may elect to commence an
adversary proceeding in the Bankruptcy Court prior to the Confirmation Date and
seek the payment of its Reclamation Claim in full as an Administrative Expense.
The Debtors reserve and intend to assert all of their defenses and counterclaims
thereto. If and only if the holder of a Reclamation Claim is successful in such
an adversary proceeding, then such holder will be paid as soon as practicable
after the allowance of such Claim by a Final Order one hundred percent (100%) of
its unpaid Allowed Reclamation Claim from available Cash. If, however, the
holder of such claim either (i) is unsuccessful in such adversary proceeding or
(ii) fails to commence an adversary proceeding by the Confirmation Date and has
not elected Option A in accordance with Section 14.9 of this Plan, then such
Reclamation Claim will be treated as an Allowed Unsecured Claim in accordance
with Section 6.9 of this Plan. No distribution shall be made to the holder of a
Reclamation Claim while an adversary proceeding commenced pursuant to this
section is pending with respect to such Reclamation Claim.
6.7 Class 6 -- Allowed Claim of Congress Financial Corporation. Class 6 is
impaired. On October 21, 1997, the Court approved an agreement between the
Debtors and Congress to settle the Congress Adversary Proceeding under which the
Debtors have paid Congress$620,000, plus $75,000 of attorneys' fees and costs,
in full satisfaction of the termination fee. Thus, Class 6 has been fully
satisfied.
6.8 Class 7 -- Allowed Convenience Claims. Class 7 Claims are impaired.
Creditors in Class 7 shall be paid twenty-three percent (23%) of their Allowed
Convenience Claims in Cash. In addition, holders of Class 7 Claims shall share
Pro Rata with holders of Class 8 Claims in proceeds, if any, (less recovery
costs and fees) of the Assigned Actions. Allowed Convenience Claims shall
receive no distribution of New Common Stock or other distributions.
6.9 Class 8 -- Allowed Unsecured Claims. Class 8 Claims are impaired.
6.9.1 Creditors in Class 8 which qualify as "qualified creditors" under 26
U.S.C. Section 382(l)(5)(E) shall be paid seventeen percent (17%) of their
Allowed Unsecured Claims in Cash and receive their Pro Rata share of 50% of the
New Common Stock. In addition, holders of Class 8 Claims shall share Pro Rata
with holders of Class 7 Claims in proceeds, if any, (less recovery costs and
fees) of the Assigned Actions.
<PAGE>
6.9.2 The Debtors reserve the right to provide any Creditor in Class 8 who
does not qualify as a "qualified creditor" under 26 U.S.C. Section 382(l)(5)(E)
with alternate treatment in order to protect the Debtors' federal income tax
attributes. Such alternate treatment will be the economic equivalent of the
treatment otherwise given to holders of Class 8 Claims. Such alternate treatment
will be agreed upon by the Plan Proponents and such claimant (with notice to the
Creditors' Committee) or if no such agreement is reached, as determined by the
Bankruptcy Court after notice and a hearing. NO DISTRIBUTION OF NEW COMMON STOCK
SHALL BE MADE UNDER ANY CIRCUMSTANCES OR PURSUANT TO OR IN ACCORDANCE WITH ANY
PROVISION OF THIS PLAN TO ANY CREDITOR THAT IS NOT A "QUALIFIED CREDITOR" UNDER
26 U.S.C. SECTION 382(l)(5)(E). ONLY SUCH "QUALIFIED CREDITORS" SHALL BE ACTUAL
OR DEEMED HOLDERS OF NEW COMMON STOCK.
6.10 Classes 9A, 9B and 9C -- Old Common Stock. Classes 9A, 9B and 9C
Interests are impaired. No distributions shall be made on account of the Old
Common Stock. All of the Old Common Stock shall be canceled as soon as
practicable after the Effective Date.
ARTICLE 7
ACCEPTANCE OR REJECTION OF PLAN
AND ELECTIONS ON BALLOTS
7.1 Classes Entitled to Vote. Each impaired Class, except for Classes
9A, 9B and 9C, shall be entitled to vote separately to accept or reject this
Plan. Any unimpaired Class of Claims shall not be entitled to vote to accept or
reject this Plan.
7.2 Classes of Claims and Interests Deemed to Reject this Plan. Old Common
Stock (Classes 9A, 9B and 9C) is impaired and does not receive or retain any
property under this Plan. Under Section 1126(g) of the Code, the holders of such
Interests are conclusively presumed to reject this Plan, and the votes of such
holders will not be solicited.
ARTICLE 8
PLAN FUNDING AND DISTRIBUTIONS
8.1 Source of Funding for Cash Distributions under the Plan. Cash
Distributions provided under this Plan shall be funded as follows:
8.1.1 On the Effective Date, JELD-WEN shall pay the Debtor $8.25 million by
wire transfer in exchange for the 50% of the New Common Stock to be issued in
connection with this Plan.
8.1.2 On the Effective Date, JELD-WEN shall provide the Reorganized Company
with a $10.5 million secured line of credit subordinated to the Exit Financing
Facility.
<PAGE>
8.1.3 On the Effective Date, the Reorganized Company shall place in the
Escrow Account $8,250,000 in Cash. Until all Unsecured Claims and Convenience
Class Claims have been either Allowed or Disallowed by Final Orders and all
Allowed Unsecured Claims and Convenience Claims have been paid in accordance
with the terms of this Plan, the funds in the Escrow Account (and interest
thereon) may only be used to pay such Allowed Claims unless the Creditors'
Committee consents otherwise in writing. After all Unsecured Claims and
Convenience Claims have been Allowed or Disallowed in a Final Order and any such
Allowed Claims have been paid as provided by this Plan, any remainder in the
Escrow Account (including any remaining earned interest) shall be returned to
the Reorganized Company by the escrow agent. The establishment and funding of
the Escrow Account shall not limit or discharge the Reorganized Company's
payment obligations under this Plan to the holders of Class 7 and Class 8
Claims, and the Reorganized Company shall remain liable to make such payments
(subject to Section 15.2 of this Plan, if applicable) if the aggregate amount of
such payments exceeds the amount in the Escrow Account.
8.2 Timing of Cash Payments. Payments of Cash to holders of Allowed
Administrative Expenses and Allowed Priority Tax Claims shall be made in
accordance with Article III of this Plan. Payments of Cash to Allowed Priority
Non-Tax Claims shall be made on the Effective Date. All payments to Allowed
Reclamation Claims electing Option A shall be made on the Effective Date. All
other Cash distributions, including payments to Allowed Reclamation Claims who
do not elect Option A, Allowed Convenience Claims and Allowed Unsecured Claims
shall be made as soon as practicable after the Effective Date, but in no event
as to each Allowed Claim after the later of (i) 91 days after the Effective Date
or (ii) 35 days after a Final Order allowing the applicable Claim is entered.
8.3 Means of Cash Payment. Cash distributions made pursuant to this Plan
shall be in United States funds, by check drawn on a domestic bank or by wire
transfer from a domestic bank. Cash distributions shall be mailed to Creditors
entitled to such distributions under this Plan at the addresses set forth on the
Creditors' proofs of claim, or, if no proof of claim was filed, shall be mailed
to the Creditor's last known address contained in the records of the Reorganized
Company.
8.4 Time Bar to Cash Payments. Checks issued by the Reorganized Company
with respect to Claims shall be null and void if not cashed within ninety (90)
days of the date of issuance thereof.
8.4.1 Requests for reissuance of any check must be made directly to the
Reorganized Company by the holder of the Allowed Claim with respect to which the
check originally was issued.
<PAGE>
8.4.2 Any Claim in respect of such a voided check shall be made on or
before ninety (90) days after the date of issuance of the check, after which
time all Claims in respect of void checks shall be discharged and forever
barred, and the funds shall be retained by the Reorganized Company and added to
its cash reserves.
8.5 Issuance of New Common Stock; No Present Intent to Transfer New Common
Stock. As soon as practicable after the Effective Date (but in no event later
than five (5) Business Days after the Effective Date), the Reorganized Company
shall issue and distribute 50% of the New Common Stock to JELD-WEN on account of
the $8.25 million payment provided in Section 8.1 of this Plan and the remaining
50% of the New Common Stock to the Shareholders Agent for the benefit of the
holders of Allowed Unsecured Claims and holders of Contested Claims that may be
entitled to distributions of New Common Stock under Section 6.9 of this Plan if
Allowed. The holders of Allowed Unsecured Claims who qualify as "qualified
creditors" under 26 U.S.C. Section 382(l)(5)(E) may terminate such agency in
accordance with the provisions of Section 8.7 of this Plan. The New Common Stock
shall have the rights, powers and privileges set forth in the Restated Charter
and the Registration Rights Agreement. Any recipient of New Common Stock is
deemed by acceptance of such New Common Stock to have no present intention to
sell, transfer or otherwise convey such shares of New Common Stock.
8.6 Creditor Stock Rights. Any time during the sixty (60) day period
commencing on the 60th day following the first anniversary of the Effective Date
or during the sixty (60) day period commencing on the 60th day following each
anniversary thereafter through and including the fifth anniversary of the
Effective Date (each such period is herein referred to as an "Offer Period"),
Holders of the Registrable Stock (other than the Registrable Stock held by
JELD-WEN or any of its affiliates) shall have the right to offer their shares of
Registrable Stock to the Reorganized Company in accordance with the terms and
conditions contained in this Plan and the Registration Rights Agreement.
Notwithstanding the foregoing, Holders of such Registrable Stock shall have no
less than 45 days from the date the Creditors' Committee receives the financial
information referenced in Section 14.12 of this Plan in which to offer their
shares of Registrable Stock to the Reorganized Debtor.
8.6.1 The offer price shall be calculated on the last day of the Offer
Period in accordance with the following:
ratio of offered shares of X $8.25 million, plus
Registrable Stock to $577,500 per each
the total shares of full year that has
Registrable Stock elapsed since the
Effective Date
The Reorganized Company shall be entitled to rely on any notice given to it
by the Shareholders Agent without further inquiry, investigation or support.
<PAGE>
8.6.2 The Reorganized Company shall have thirty-five (35) days after the
expiration of an Offer Period in which the Reorganized Company has been given
notice of an offer with respect to 80% of the Registrable Stock (calculated
without regard to any Registrable Stock held by JELD-WEN or its affiliates) in
which, in its sole discretion, to accept or reject the offer. The Reorganized
Company's decision shall be given by written notice to the Shareholders Agent
and any Holders that have terminated the Shareholders Agent pursuant to Section
8.7 of this Plan; provided, however, that the Reorganized Company can, in such
notice, identify its designee, which accepts the offer in such notice (such a
notice to be deemed acceptance of the offer); provided further, the Reorganized
Company's failure to timely accept or reject the offer will be deemed to be a
rejection of the offer on the first Business Day following the aforementioned
thirty-five (35) days.
8.6.3 If the Reorganized Company or its designee accepts the offer, the
transaction shall be consummated at a closing to be held within a reasonable
time following acceptance to be determined by the Reorganized Company, but no
later than forty-five (45) days after the acceptance. The Reorganized Company
shall be deemed to guarantee the performance of its designee, if any, pursuant
to this Section 8.6.3.
8.6.4 If the Reorganized Company rejects an offer made with respect to 80%
of the Registrable Stock (other than the Registrable Stock held by JELD-WEN or
any of its affiliates), the Holders of at least 60% of the Registrable Stock
(other than the Registrable Stock held by JELD-WEN or any of its affiliates)
shall have the right for a period of sixty (60) days following the date the
Reorganized Company gives notice of the rejection of the offer, or following the
date the Reorganized Company is deemed to reject the offer if no notice of
rejection or acceptance of the offer is given by the Reorganized Company, to
demand (by written notice given to the Reorganized Company by the Shareholders
Agent and any Holders that have terminated the Shareholders Agent pursuant to
Section 8.7 of this Plan) that the Reorganized Company register the New Common
Stock and take other acts necessary to take the Reorganized Company public at
the Reorganized Company's expense as set forth in the Registration Rights
Agreement. Failure to make such a demand on a timely basis would constitute a
waiver of such registration right with respect to that particular offer. If the
Holders do not make such a registration demand, the Holders may make further
offers in the manner described in Section 8.6. The Holders, however, would not
under any circumstances be entitled to any registration after their registration
rights are deemed satisfied pursuant to Section 2(B) of the Registration Rights
Agreement.
<PAGE>
8.7 Shareholders Agent. The New Common Stock issuable under the Plan to the
holders of Allowed Unsecured Claims who qualify as "qualified creditors" under
26 U.S.C. Section 382(l)(5)(E) ("Registrable Stock") will be issued to
[__________________] (the "Shareholders Agent"), as agent for each of such
respective holders. Such agency shall terminate with respect to each such holder
or such holder's transferee (such holders and any such transferees are
collectively, "Holders") upon the earliest to occur of (i) such Holder's written
notice to the Shareholders' Agent and the Reorganized Company, terminating the
agency; (ii) the seventh anniversary of the Effective Date (after a termination
referred to in (i) or (ii)) the Shareholders Agent will deliver a certificate or
certificates representing such shares to the Reorganized Company or its Transfer
Agent, which will cancel such certificate(s) and deliver to such Holder a new
certificate representing said shares); (iii) the consummation of a sale of New
Common Stock to the Reorganized Company pursuant to Section 8.6 of the Plan; or
(iv) the consummation of a sale pursuant to a Registration Statement, as defined
in the Registration Rights Agreement (a sale pursuant to (iii) or (iv) is a
"Sale").
As soon as possible after the 60th day following the first anniversary of
the Effective Date and such additional time as may be provided under Section 8.6
of this Plan, and as soon as possible after the 60th day after each succeeding
anniversary through the fifth anniversary and such additional time as may be
provided under Section 8.6 of this Plan (but in no event after a Sale), the
Shareholders Agent shall transmit a notice to each of the Holders for whom such
Agent continues to act as such, requesting instructions as to whether or not to
offer such Holder's shares of Registrable Stock to the Reorganized Company
pursuant to Section 8.6 of the Plan. In the event that such offer is made and
rejected by the Reorganized Company, the Shareholders Agent shall promptly
transmit to each such Holder a copy of the Reorganized Company's notice of such
rejection and a request for instructions as to whether to demand registration of
such Holder's Registrable Stock pursuant to the Registration Rights Agreement.
The Shareholders Agent will offer Registrable Stock on behalf of Holders
pursuant to Section 8.6 when properly directed to do so by such Holders. Such a
direction is proper if received by the Shareholders Agent no later than the last
business day preceding the last business day of the relevant Offer Period.
If such an offer is made and rejected, the Shareholders Agent will demand
registration pursuant to the Registration Rights Agreement on behalf of Holders
when properly directed to do so by such Holders. Such a direction is proper if
received by the Shareholders Agent no later than the last business day preceding
the last business day of the relevant Request Period, as defined in the
Registration Rights Agreement.
In the event the Shareholders Agent makes such a demand for registration,
it shall, upon receipt of the Reorganized Company's notice of such proposed
registration, promptly notify each of the Holders for which it continues to act
as such, requesting instructions from Holders (other than Initiating Holders) as
to whether such Holders desire such inclusion. The Shareholders Agent will
request inclusion of the Registrable Stock of such Holders properly requesting
such inclusion. Such a request by a Holder is proper if received by the
Shareholders Agent no later than the last business day preceding the last
business day for requesting such inclusion in accordance with the Registration
Rights Agreement.
<PAGE>
The notices of the Shareholders Agent will make no recommendation with
respect to the offer of the stock to the Reorganized Company or registration.
The Shareholders Agent shall have the authority on behalf of Holders for whom it
is acting as such, (i) if such Holders direct an offer of their Registrable
Stock pursuant to Section 8.6 of this Plan, to deliver such stock against
payment therefor in accordance with Section 8.6 of this Plan, and (ii) if such
Holders request inclusion in a Registration Statement, to consent to be bound by
the Registration Rights Agreement, request an underwritten offering, consent or
object to the Reorganized Company's selection of an underwriter and a stock
exchange or market, negotiate the terms of (including the per-share price terms)
and enter into an underwriting agreement covering the sale of such Holders'
shares, select a law firm to act as legal counsel on behalf of such Holders, and
to make appropriate delivery of the Registrable Stock pursuant to such
underwriting agreement. The Shareholders Agent's actions with respect to the
registration and sale of Registrable Stock of Holders that have not earlier
terminated the agency in accordance with this Section 8.7 shall be conclusive
and binding on such Holders. The Shareholders Agent shall have no liability to
Holders for whom it acts in good faith pursuant to the Plan or the Registration
Rights Agreement.
Any notices to the Shareholders Agent shall be given in the manner provided
in the Registration Rights Agreement.
8.8 Contested Claim Reserve. As soon as practicable after the Effective
Date, the Contested Claim Reserve shall be established and funded with an amount
of New Common Stock allocable to the Pro Rata share of each Contested Claim
Amount of each Claim which: (a) would be a Class 8 Unsecured Claim if Allowed,
or (b) is a Reclamation Claim, the holder of which did not elect treatment under
Option A pursuant to Section 14.9 of this Plan, and, prior to a Final Order
allowing or disallowing such Reclamation Claim, could become a Class 8 Unsecured
Claim by operation of Section 6.6.2 of this Plan if disallowed as a Reclamation
Claim. The New Common Stock in the Contested Claim Reserve shall be held by the
Shareholders Agent in trust for the benefit of holders of such Contested Claims
that would qualify as "qualified creditors" under 26 U.S.C. Section
382(l)(5)(E), and no lien or security interest shall attach to the New Common
Stock so held by the Shareholders Agent. As provided in Section 6.9.2 of this
Plan, no distribution of New Common Stock shall be made under any circumstances
or pursuant to and in accordance with this Plan to any Creditor that is not a
"qualified creditor" under 26 U.S.C. Section 382(l)(5)(E). All dividends and
distributions of whatever kind made in respect to New Common Stock that is part
of the Contested Claim Reserve shall be made to the Shareholders Agent in trust
for the benefit of holders of such Contested Claims that would qualify as
"qualified creditors" under 26 U.S.C. Section 382(l)(5)(E) in the same manner
that the New Common Stock is held by the Shareholders Agent.
8.9 Distributions from Contested Claim Reserve. All New Common Stock held
in the Contested Claim Reserve and all dividends and other distributions made to
the Contested Claim Reserve in respect of such New Common Stock shall be
distributed as follows:
<PAGE>
8.9.1 On the date that all or part of any Contested Claim is Allowed as a
Class 8 Allowed Unsecured Claim and provided that the holder of such Claim is a
"qualified creditor" under 26 U.S.C. Section 382(l)(5)(E), the Shareholders
Agent shall withdraw from the Contested Claim Reserve an amount of New Common
Stock allocable to the portion of the Contested Claim that has been Allowed and
all dividends and other distributions made to the Contested Claim Reserve in
respect to such amount of New Common Stock and treat such shares, dividends and
distributions as being beneficially awarded to the holder of such newly Allowed
Claim. In addition, the Reorganized Company shall direct its escrow agent to pay
Cash allocable to the portion of the Contested Claim that has been Allowed from
the Escrow Account, and to the extent that the funds in the Escrow Account are
insufficient for such purpose, the Reorganized Company shall pay the required
proportion of such Allowed Claim from Cash on hand or loan proceeds.
8.9.2 On or before the first anniversary of the Effective Date and on every
anniversary date thereafter, the Shareholders' Agent shall record the
distribution of New Common Stock corresponding to any Disallowed portion of any
Claims, if any, Pro Rata to holders of Allowed Unsecured Claims on its
shareholder records who qualified as "qualified creditors" under 26 U.S.C.
Section 382(l)(5)(E).
8.10 Record Date. The record date for purposes of distributing New Common
Stock shall be the close of business on the Confirmation Date. The Debtors can
rely on the register of proofs of claim filed in the Cases to identify such
holders except to the extent a notice of transfer of claim has been filed with
the Court prior to the Confirmation Date pursuant to Bankruptcy Rule 3001.
8.11 Exchange Date. For purposes of establishing the change of ownership
referred to in 26 U.S.C. Section 382(1)(5), the exchange date shall be the
Effective Date.
ARTICLE 9
MEANS FOR IMPLEMENTATION OF THE PLAN
9.1 Continuation of Operations. On and after the Effective Date, the
Reorganized Company shall continue to operate its business. All assets of the
Debtors shall vest in the Reorganized Company on the Effective Date.
9.2 Exit Financing Facility. On or prior to the Confirmation Date, the
Debtor shall have obtained the Exit Financing Facility from either (i) JELD-WEN,
(ii) a third-party lender or (iii) a third-party lender with credit enhancement
by JELD-WEN. The Exit Financing Facility shall be a revolving loan facility
based upon inventory and receivables less than 90 days after invoice and unsold
real estate and will contain economic terms comparable to the GDI DIP Facility
and otherwise satisfactory to the Debtor and customary representations and
warranties. The Exit Financing Facility shall replace and satisfy all
obligations under the GDI DIP Facility. Specific release prices have been
assigned to each parcel of real estate. If any parcel is sold, sale proceeds
(net of customary expenses) above such release price will be used to pay down
the revolving loan (except to the extent necessary to make up for prior sales
below the applicable specific release prices to which GDI consented) but subject
to reborrowing.
<PAGE>
9.3 Bargain Outlet Division. The Bargain Outlet Division may be sold as
part of this Plan if an acceptable price is offered. The proceeds of any such
sale shall be applied first to a reduction of those portions of the GDI DIP
Facility that are secured by Bargain Outlet Division collateral. The remainder
of such sale proceeds, if any, shall be used to fund operations of the
Reorganized Company. If an acceptable offer is received prior to the
Confirmation Date, the Debtor will present such offer to the Court at the
hearing on the confirmation of this Plan.
9.4 Cancellation of Old Common Stock, Warrants and Options. As soon as
practicable after the Effective Date, the Old Common Stock and any outstanding
warrants and options shall be canceled.
9.5 Merger. Upon the Effective Date, GRS Holding and GRS Realty shall merge
into Grossman's pursuant to the Confirmation Order without need for any further
corporate action, including any shareholder vote.
9.6 Restated Charter and By-Laws. On the Effective Date, the Reorganized
Company's corporate charter and by-laws shall be amended and restated as
provided in the Restated Charter and Restated By-Laws.
9.7 Board of Directors. The board of directors of the Reorganized Company
shall be reconstituted on the Effective Date in a manner consistent with the
Restated Charter and shall be initially composed as follows: (i) four JELD-WEN
designees; (ii) two designees of the Creditors' Committee; and (iii) one
designee of the Independent Members.
9.8 Vesting of Assets. As of the Effective Date, all property of the
Debtors shall vest in the Reorganized Company free and clear of all Claims,
Interests and Liens except as provided in this Plan.
9.9 Discharge. Except as otherwise provided in the Plan, the Restated
Charter, Restated By-Laws or Confirmation Order, Confirmation shall operate as a
discharge, as of the Effective Date, of any and all debts of and Claims against
and Interests in the Debtors that arose at any time before Confirmation. On and
after the Effective Date, as to every discharged debt, Claim or Interest, the
Creditor or other holder that held such debt, Claim or Interest shall be
precluded from asserting or pursuing against (i) any Debtor formerly obligated
on such debt or with respect to such Claim or Interest, (ii) such Debtor's
assets or properties, (iii) the Reorganized Company or (iv) the Reorganized
Company's assets or properties, the debt, Claim or Interest, or any other or
further Claim based upon any document, instrument, act or omission, transaction
or other activity of any kind or nature that occurred before the Confirmation
Date. There is no discharge of obligations provided for or assumed in connection
with the Plan, the Restated Charter, Restated By-Laws or Confirmation Order.
<PAGE>
9.10 Releases. On the Effective Date, the following individuals and
entities shall be forever released and discharged from any and all claims,
actions, suits, debts, accounts, causes of action, agreements, promises,
damages, judgments, demands and liabilities which any of the Debtors or
Creditors receiving distributions under this Plan may have against them related
to the Debtors or these Cases: (i) all directors, officers, employees and agents
of the Debtors who served the Debtors on or after the Petition Date; (ii)
JELD-WEN and any of its affiliates; and (iii) John Grey, Maurice Grossman, Leo
Kahn and Samuel Witt. Claimants voting on the Plan may elect to not grant the
releases described herein.
9.11 Maintenance of Indemnification Policies; Indemnification of Certain
Present and Former Directors and Officers. The Reorganized Company shall not
terminate, cancel or otherwise affect any coverage under the Indemnification
Policies from and after the Effective Date with respect to the obligations
discussed in this Section 9.11. In addition, notwithstanding anything to the
contrary herein, the Reorganized Company shall assume and agree to pay any and
all obligations of the Debtors or their estates, including, without limitation,
any deductible under the Indemnification Policies, all Claims, whether now
existing or hereafter arising, of any Indemnified Party (as hereinafter defined)
for indemnification or contribution under Delaware law, Article Eighth of the
Restated Certificate of Incorporation of Grossman's Inc., the Restated Charter,
Article VI of the By-Laws of Grossman's, Inc. and/or agreements with any
Indemnified Party in respect of matters to which an Indemnified Party is made,
or threatened to be made a party by reason of the fact that such Indemnified
Party served as a director or officer of Grossman's or in some other capacity at
the request of Grossman's. Indemnified Party shall mean: (i) all directors,
officers, employees and agents of the Debtors who served the Debtors after the
Petition Date; and (ii) John Grey, Maurice Grossman, Leo Kahn and Samuel Witt.
9.12 Severance Obligations. The Reorganized Company shall assume certain
employee severance obligations approved by the board of directors of Grossman's
in June and July 1997. Under these severance programs, employees who are
terminated without cause post-confirmation shall be entitled to 1 to 4 weeks of
severance pay depending upon the length of their employment with the Debtors. In
addition, certain key employees shall be entitled to enhanced severance
payments. Three key employees at the Contractors' Warehouse division shall be
entitled to additional severance payments of 12 to 20 weeks in the event their
employment is terminated post-confirmation without cause. In addition, 10 key
employees at the Bargain Outlet division shall be entitled to additional
severance payments of 9 to 20 weeks in the event the Bargain Outlet division is
sold and such employee is terminated within 6 months of the sale. The Plan
Proponents estimate that the Reorganized Company's maximum liability under the
severance programs is approximately $1.35 million (assuming all employees were
terminated and eligible for such severance). Additional details concerning the
severance programs are contained in the Grossman's Inc. Restated Severance Pay
Plan and other related materials.
<PAGE>
ARTICLE 10
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
10.1 Rejected If Not Assumed. This Plan shall be deemed to constitute and
incorporate a motion by the Debtors to reject all executory contracts and
unexpired leases to which a Debtor is a party or is otherwise bound, except for
the contracts and leases that (a) have been assumed or rejected pursuant to an
order of the Court entered prior to the Confirmation Date, (b) are specifically
treated otherwise in this Plan, or (c) are the subject of a motion to assume
that is pending before the Court on the Confirmation Date. The Confirmation
Order shall represent and reflect an order of the Court approving the
assumptions or rejections as of the Confirmation Date, unless otherwise provided
in this Section 10.1.
10.2 Bar to Rejection Damages. If the rejection of an executory contract or
unexpired lease by Debtors pursuant to Section 10.1 of the Plan results in
damages to the party or parties to the contract or lease, a Claim for damages
shall be forever barred and shall not be enforceable against Debtors, their
successors or assigns, or their property unless a proof of claim is filed with
the Court and served upon Debtors or the Reorganized Company by forty-five (45)
days after entry of the Confirmation Order. The rejection claim bar date for
leases and contracts rejected prior to Confirmation shall be the date set forth
in the applicable order rejecting such lease or contract.
10.3 Assumption of Specified Contracts. Entry of the Confirmation Order
shall constitute the assumption of the Assumed Contracts.
ARTICLE 11
PROCEDURES FOR RESOLVING AND TREATING
CONTESTED CLAIMS
11.1 Objection Deadline. As soon as practicable, but in no event later than
ninety (90) days following the Effective Date, the Reorganized Company shall
file Objections to Claims with the Court and serve copies of the Objections upon
the holders of each of the Claims to which Objections are made. This Section
11.1 shall not limit the Reorganized Company's right to object to Claims, if
any, filed or amended more than ninety (90) days after the Effective Date.
11.2 Prosecution of Objections. The Reorganized Company shall litigate to
judgment, settle, or withdraw Objections to Contested Claims.
<PAGE>
11.3 Power to Compromise and Settle Without Notice and a Hearing. The
Reorganized Company may compromise and settle an Objection to a Claim without
notice and a hearing thereon where the Allowed Claim will be $100,000.00 or less
as a result of such compromise and settlement. The Reorganized Company may also
compromise and settle an Objection to a Claim without notice and a hearing
thereon where the difference between the amount of the proof of claim as filed
and the amount of the Claim as scheduled by the Debtors is less than $25,000.00.
Such compromises and settlements shall be embodied in an agreed order which
shall be submitted to the Court for entry and served on counsel to JELD-WEN and
counsel to the Creditors' Committee and shall not become effective until the
agreed order becomes a Final Order.
11.4 Power to Compromise and Settle Upon Notice and a Hearing. The
Reorganized Company may compromise and settle all Objections to Claims not
covered by Section 11.3 of this Plan only upon twenty (20) days notice to the
United States Trustee for the District of Delaware, counsel to JELD-WEN and
counsel to the Creditors' Committee and a hearing thereon.
11.5 No Distributions Pending Allowance. Notwithstanding any other
provision of this Plan, no payments or distributions shall be made with respect
to any Claim held by the holder of a Contested Claim to which an Objection has
been interposed unless and until the Contested Claim has been adjudicated and a
Final Order has been entered with respect to the Claim.
ARTICLE 12
RETENTION OF JURISDICTION
12.1 Claims and Actions. The Court shall retain jurisdiction over the
Cases, including, without limitation, such jurisdiction as is necessary to
ensure that the purposes and intent of this Plan are implemented. The Court
shall also expressly retain jurisdiction: (i) to hear and determine all Claims
against Debtors and (ii) to enforce all causes of action which belong to the
Debtors.
12.2 Retention of Additional Jurisdiction. The Court shall also retain
jurisdiction for the purpose of classification of the Claims of any Creditor and
the determination of such objections as may be filed with respect to the Claims
and Interests, including proceedings for estimation of Claims pursuant to Code
Section 502(c). The Court shall further retain jurisdiction for the following
additional purposes:
(1) to determine all questions and disputes regarding title to the assets
of a Debtor, all causes of action, controversies, disputes or conflicts, whether
or not subject to any pending action as of the Effective Date, between the
Debtors and any other party, including, without limitation, any right to recover
assets pursuant to the provisions of the Code;
(2) to modify the Plan with the consent of the Reorganized Company after
the Effective Date but prior to substantial consummation of the Plan pursuant to
Section 12.3 of this Plan, upon advance written notice to the Creditors'
Committee;
(3) to construe, interpret, implement and enforce the terms and conditions
of the Plan and Confirmation Order;
<PAGE>
(4) to determine issues and disputes concerning entitlement to
distributions to be made under and pursuant to this Plan;
(5) to enter such orders, including, but not limited to, such future
injunctions as are necessary to enforce the respective title, rights and powers
of the Debtors, and to impose such limitations, restrictions, terms and
conditions on such title, rights and powers as the Court may deem necessary;
(6) to correct any defect, cure any omission or reconcile any inconsistency
in the Plan or the Confirmation Order as may be necessary to implement the
purposes and intent of the Plan;
(7) to determine any and all objections to the allowance of Claims or
Interests, including, without limitation, any counterclaims and rights of
setoff;
(8) to determine any and all applications for allowances of compensation
and reimbursement of expenses and the reasonableness of any fees and expenses
authorized to be paid or reimbursed under the Code or the Plan;
(9) to determine any and all applications or motions for the rejection,
assumption or assumption and assignment of any executory contract or unexpired
lease and to hear and determine, and, if need be, to liquidate any and all
Claims arising therefrom;
(10) to determine any and all applications, adversary proceedings and
contested matters, including any adversary proceeding concerning any Assigned
Action, that may be pending on or initiated after the Effective Date relating to
matters which arose prior to the Effective Date;
(11) to consider any technical or immaterial modification of the Plan,
whether or not the Plan has been substantially consummated, to remedy any defect
or omission or reconcile any inconsistency in the Confirmation Order or any
other Order of the Court, to the extent authorized by the Plan or the Code and
necessitates Court approval;
(12) to determine all controversies, suits and disputes that may arise in
connection with the interpretation, enforcement or consummation of the Plan, any
agreements or instruments issued under or relating to this Plan or any other
documentation evidencing the terms of this Plan;
(13) to consider and act on the compromise and settlement of any Claim
against or cause of action by or against the Debtors arising under or in
connection with the Plan;
(14) to issue such orders in aid of execution of the Plan as may be
authorized by Code Section 1142;
<PAGE>
(15) to hear and determine all controversies, suits and disputes, if any,
as may arise with regard to Orders of this Court;
(16) to liquidate damages in connection with any disputed, contingent or
unliquidated Claims;
(17) to adjudicate all Claims to a security or ownership interest in any
property of the Debtors or in any proceeds thereof and for adequate protection
claimed by the holder of an Allowed Secured Claim;
(18) to adjudicate all claims or controversies arising out of any
purchases, sales or contracts made or undertaken by the Debtors during the
pendency of the Case; and
(19) to determine such other matters or proceedings as may be provided for
under Title 28 or other title of the United States Code, the Code, the
Bankruptcy Rules, other applicable law, the Plan or in any order or orders of
the Court, including, but not limited to, the Confirmation Order or any order
which may arise in connection with the Plan or the Confirmation Order.
12.3 Modifications of the Plan. The Debtors and JELD-WEN may modify this
Plan in the manner provided for under Code Section 1127. The Debtors and
JELD-WEN shall give notice of any proposed modification to counsel for the
Creditors' Committee, and to the United States Trustee for the District of
Delaware and to any other parties designated by the Court. The Debtors and
JELD-WEN also reserve the right to make such modifications at or prior to any
hearings on confirmation as are necessary to permit this Plan to be confirmed
under Code Section 1129.
12.4 Revocation and Withdrawal of the Plan. The Debtors and JELD-WEN
reserve the right to revoke or withdraw this Plan at any time before entry of a
Confirmation Order. If the Debtors or JELD-WEN revoke or withdraw this Plan
prior to date of Confirmation, or if the Confirmation or the Effective Date does
not occur, then this Plan shall be deemed null and void. In such event, nothing
contained herein or in any disclosure statement relating to the Plan shall be
deemed to constitute an admission of validity, waiver or release of any Claims
by or against the Debtors or any Person or to prejudice in any manner the rights
of the Debtors or any Person in any proceeding involving the Debtors.
12.5 Section 1146(c) Exemption. Pursuant to Code Section 1146(c), the
making or delivery of any instrument of transfer pursuant to, in implementation
of or as contemplated by the Plan or the holding by or transfer or sale of any
real or personal property of the Debtors pursuant to, in implementation of or as
contemplated by the Plan, shall not be taxed under any state or local law
imposing a stamp tax, transfer tax or similar tax or fee.
<PAGE>
ARTICLE 13
NOTICE PROVISIONS
13.1 Notices. All notices, requests, elections or demands in connection
with this Plan, including any change of address of any Creditor for the purposes
of receiving Distributions under this Plan and to avoid forfeiting the same
pursuant to Article 8 of this Plan, shall be in writing and shall be delivered
personally, by facsimile, overnight courier or first class mail. Such notice
shall be deemed to have been given when received or, if mailed by first class
mail, five (5) Business Days after the date of mailing, or if by overnight
courier, the next Business Day following the date of mailing and, if sent to the
Debtors, addressed to:
Debtors:
Grossman's Inc.
Attn.: President
45 Dan Road
Canton, MA 02021
Telephone: (617) 830-4000
Facsimile: (617) 830-4901
with a copy to each of the following Persons:
Debtors' Counsel:
Fruman Jacobson, Esq.
Thomas A. Labuda, Jr., Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606
Telephone: (312) 876-8000
Facsimile: (312) 876-7934
and
Laura Davis Jones, Esq.
Victoria Watson Counihan, Esq.
Young Conaway Stargatt & Taylor, LLP
11th & Market Streets
Wilmington, DE 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
<PAGE>
JELD-WEN:
Doug Kintzinger
3250 Lakeport Boulevard
Klamath Falls, OR 97601
Telephone: (541) 882-3451
Facsimile: (541) 885-7454
JELD-WEN'S Counsel:
Jack Cullen, Esq.
Foster, Pepper & Shefelman P.L.L.C.
1111 Third Avenue, #3400
Seattle, WA 98101
Telephone (206) 447-4400
Facsimile (206) 447-9700
Creditors' Committee
Mr. Dale W. Baird
Georgia-Pacific Corporation
133 Peachtree Street, N.E.
P.O. Box 105605
Atlanta, GA 30348-5605
Telephone (404) 652-4929
Facsimile (404) 654-7076
Creditors' Committee's Counsel
Michael H. Traison, Esq.
Miller Canfield Paddock
and Stone, P.L.C.
150 Jefferson Avenue, Suite 2500
Detroit, MI 48226
Telephone (313) 496-7657
Facsimile (313) 496-8452
and
David M. Fournier, Esq.
Pepper Hamilton & Scheetz
1201 Market Street, Suite 1600
P.O. Box 1709
Wilmington, DE 19899-1709
Telephone (302) 777-6565
Facsimile (302) 656-8865
<PAGE>
13.2 Limitation on Notice. The Debtors shall give the following notice with
regard to the following matters, which notice shall be deemed to be good and
sufficient notice of such matters with no requirement for any additional or
further notice:
13.2.1 Notice of Entry of Confirmation Order. Notice of the entry of the
Confirmation Order shall be sufficient if (a) mailed to all known holders of
Claims (which have not become Disallowed Claims as of the date of mailing) and
Interests and (b) published at least one time in the national edition of The
Wall Street Journal. Such notice shall be mailed within five (5) Business Days
of the date that the Confirmation Order becomes a Final Order.
13.2.2 Post-Confirmation Date Service. From and after the date the
Confirmation Order becomes a Final Order, notices of appearances and demands for
service of process filed with the Court prior to such date shall no longer be
effective. No further notices (other than notice of entry of the Confirmation
Order) shall be required to be sent to any entities or Persons, except those
Persons specified in " 12.1 and 13.3 of this Plan.
13.2.3 Notice To Creditors. All notices and requests to Creditors of any
Class shall be sent to them at the addresses set forth on the proofs of claim
or, if no proof of claim was filed, to their last known address as reflected in
the records of Debtor. Any Creditor may designate in writing any other address
for purposes of this section, which designation shall be effective upon receipt
by Debtor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Request for Cramdown. In the event this Plan is not confirmed under
Code Section 1129(a), the Debtors request that this Plan be confirmed under Code
Section 1129(b).
14.2 Causes of Action. On the Effective Date, any and all of the Assigned
Actions shall vest in the Creditors' Committee; provided, however, no Assigned
Actions against the following entities or individuals shall vest in the
Creditors' Committee: (i) JELD-WEN or any of its affiliates; and (ii) current
and former officers, directors, employees and agents of the Debtors. The
Creditors' Committee shall administer and promptly distribute proceeds, if any,
of the Assigned Actions in accordance with the terms of this Plan. All causes of
action not specifically assigned to the Creditors' Committee in this Plan shall
vest in the Reorganized Company.
<PAGE>
14.3 Dissolution of Committees. The Equity Committee shall be dissolved on
the Effective Date (unless dissolved prior to the Effective Date by order of
Court). The Creditors' Committee shall continue in effect following the
Effective Date for the purposes of (i) investigating and prosecuting the
Assigned Actions, (ii) objecting to certain Claims which the Debtors have not
elected to object to or objections to the settlement or compromise of certain
Claims, (iii) the right to negotiate and object to any proposed modifications of
the Plan, (iv) the right to object to any proposed distribution of funds from
the Escrow Account other than to Allowed Unsecured Claims or Allowed Convenience
Class Claims in accordance with the Plan (v) matters relating to the issuance
and distribution of New Common Stock and the enforcement of rights under the
Registration Rights Agreement and enforcing the Reorganized Company's obligation
to provide to the Creditors' Committee the financial information required by
Section 14.12 of this Plan and (vi) until the first anniversary of the Effective
Date (except with respect to those specific matters set forth in subparts (i) -
(v) above, which are not subject to the first anniversary date temporal
limitations), the right to enforce the provisions of the Plan and the documents
executed in connection with the Plan or to implement the provisions of the Plan
for the benefit of the holders of Class 7 Allowed Convenience Claims and Class 8
Allowed Unsecured Claims. In addition, the Creditors' Committee may act as the
Shareholders Agent if the Shareholders Agent has resigned and arranged for the
transfer of the Registrable Stock to the Creditors' Committee for the benefit of
the respective Holders.
14.3.1 At the option of the members of the Creditors' Committee or as may
be ordered by the Bankruptcy Court after notice and a hearing, a successor
committee consisting of all, or fewer than all of the existing members of the
Creditors' Committee may be appointed to fulfill the Creditors' Committee's
rights and responsibilities under the Plan.
<PAGE>
14.3.2 The Creditors' Committee may retain counsel and financial advisors
of its own selection to advise and assist the Creditors' Committee in fulfilling
its rights and responsibilities under the Plan and as set forth in this Section
14.3.2, and Counsel for the Creditors' Committee may also act as the
Shareholders Agent to enforce the rights of Holders and the Reorganized
Company's duties under the Plan and the Registration Rights Agreement. The
Reorganized Company shall pay the legal fees of counsel for the Creditors=
Committee for general legal services it renders to the Creditors= Committee
after the Effective Date (AGeneral Legal Matters@) in an aggregate amount not to
exceed $25,000 (the AGeneral Legal Fee Cap@), and shall reimburse counsel for
the Creditors= Committee for its expenses in each case upon presentation of any
invoice to the Reorganized Company and a period of 15 days for the Reorganized
Company to raise any objections. Compensation for the financial advisors for the
Creditors' Committee and reimbursement for expenses of such financial advisors
shall likewise be paid by the Reorganized Company, in an amount not to exceed
$15,000 in the aggregate after the Effective Date, upon presentation of any
invoice to the Reorganized Company and a period of 15 days for the Reorganized
Company to raise any objections. In all instances, if an objection is raised and
cannot be consensually resolved, the disputed portion of such fees and expenses
shall be determined by the Court (the AInvoice Procedure@). Notwithstanding the
preceding sentences, counsel to the Creditors' Committee and financial advisors
to the Creditors' Committee shall not receive any compensation or reimbursement
of expenses from the Reorganized Company related to the investigation or
prosecution of the Assigned Actions, which compensation and reimbursement shall
be paid solely from proceeds of such actions before any proceeds of the Assigned
Actions are distributed to the holders of Class 7 Convenience Claims and Class 8
Unsecured Claims. In addition to the General Legal Matters, if after demand by
Counsel for the Creditors= Committee, the Debtor or the Reorganized Company
refuses to take such action as the Creditors= Committee believes is appropriate
in any of the following matters described in clauses (a) - (d) below (the
ADiscretionary Activity@), Counsel for the Creditors= Committee shall be
authorized to act in such matter as is appropriate to address such Discretionary
Activity issues as are raised by the Debtor or Reorganized Company=s refusal to
act and shall be compensated by the Reorganized Company for the fees and
expenses incurred in connection therewith: (a) in objecting to certain Claims
which the Debtors have not elected to object to or objections to the settlement
or compromise of certain Claims, (b) in negotiating and objecting to any
proposed modifications of the Plan, (c) in objecting to any proposed
distribution of funds from the Escrow Account other than in accordance with the
Plan; and (d) until the first anniversary of the Effective Date, in enforcing
the provisions of the Plan and the documents executed in connection with the
Plan or to implement the provisions of the Plan for the benefit of the holders
of Class 7 Allowed Convenience Claims and Class 8 Allowed Unsecured Claims. In
matters relating to the New Common Stock and the enforcement of rights under the
Registration Rights Agreement and enforcing the Reorganized Company=s
obligations to provide to the Creditors= Committee the financial information
required by Section 14.12 of this Plan (the AStock Matters@), Counsel for the
Creditors= Committee and the financial advisors for the Creditors= Committee
shall be entitled to reasonable compensation from and reimbursement of expenses
by the Reorganized Company and shall use the Invoice Procedure to request such
payment. Neither the Distretionary Activity nor the Stock Matters shall be
subject to the General Legal Fee Cap. In addition to the foregoing, the
out-of-pocket expenses of the Shareholders Agent in collecting from the Holders
and communicating to the Reorganized Company demands for the Reorganized
Company=s purchase of the New Common Stock and for the registration of the
Registrable Stock, as permitted in this Plan, shall be reimbursed by the
Reorganized Company to the Shareholders Agent upon presentation of any invoice
to the Reorganized Company and a period of 15 days for the Reorganized Company
to raise any objections.
14.3.3. The Reorganized Company or any other party in interest shall be
entitled to seek an order from the Court disbanding the Creditors' Committee at
any time that the Reorganized Company or other party in interest believes that
the Creditors' Committee has fulfilled all of its rights and responsibilities
under the Plan, and the Court shall retain jurisdiction to enter an order
disbanding the Creditors' Committee only upon a proper showing by the
Reorganized Company or party in interest that the Creditors' Committee has
fulfilled its rights and responsibilities.
<PAGE>
14.4 Termination of Writings Evidencing Indebtedness. On the Effective
Date, all writings evidencing indebtedness of the Debtors shall be deemed
canceled as against the Debtors, and the holders of those writings shall have no
further rights against the Debtors under the writings, except as they may have
as the holder of an Allowed Claim or as otherwise provided in this Plan or
documents executed in connection with this Plan.
14.5 Severability. Should any provision in this Plan be determined to be
unenforceable, such determination shall in no way limit or affect the
enforceability and operative effect of any and all other provisions of this
Plan.
14.6 Governing Law. Except to the extent that the Code is applicable, the
rights and obligations arising under this Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without giving effect to choice of law principles.
14.7 Successors and Assigns. The rights and obligations of any entity named
or referred to in this Plan shall be binding upon, and shall inure to the
benefit of, the successors and assigns of such entity.
14.8 Setoffs/Counterclaims. Except as otherwise provided in this Plan, the
Reorganized Company may, but shall not be required to, set off or counterclaim
against any Claim and the payments or other distributions to be made pursuant to
this Plan in respect of the Claim, claims of any nature whatsoever the estate
may have against the holder of the Claim, but neither the failure to do so nor
the allowance of any Claim hereunder shall constitute a waiver or release by the
Reorganized Company of any Claim that the estate may have against the holder;
provided, however, the Reorganized Company will not seek to set off or
counterclaim for any obligation that is not yet due. Setoffs or counterclaims
arising from events after the Petition Date shall reduce the payouts under any
Allowed Claim dollar for dollar. Setoffs or counterclaims arising from
pre-petition events shall only reduce the amount of the Allowed Claim and
therefore, shall only reduce the payout amount proportionally with the reduction
in the Allowed Claim. If any counterclaim or setoff asserted by the Debtors
exceeds the amount of any Claim, the holder of such Claim shall not be entitled
to any distribution under the Plan on account of such Claims.
14.9 Reclamation Claims Election. Holders of Reclamation Claims may elect
Option A by so notifying the Debtors in writing prior to the Confirmation Date.
An election form has been provided to all Reclamation claimants in connection
with the mailing of ballots with respect to this Plan. A holder of a Reclamation
Claim electing Option B must commence an adversary proceeding in accordance with
Section 6.6.2 of this Plan. The Reclamation Claim of any holder that does not
(i) timely elect Option A or (ii) timely commence an adversary proceeding shall
be treated as an Allowed Unsecured Claim in the amount listed on Exhibit B to
this Plan.
14.10 Binding Effect. Unless this Plan is revoked and withdrawn, and except
to the extent modified in the manner set forth in Section 12.4 of this Plan, the
provisions of this Plan shall bind all Creditors and Interestholders, whether or
not they vote to accept the Plan.
<PAGE>
14.11 Effect of Confirmation Order. Except as expressly provided in this
Plan and the documents executed in connection with this Plan, the Confirmation
Order shall contain an injunction, embodying the protections of the automatic
stay of Code Section 362(a), against the prosecution against the Debtors of any
Claim or Interest, whether or not a proof of Claim or proof of Interest based on
any such debt, liability, or Interest is filed under Code Section 502, including
the pursuit of any Creditor's or Interestholder's derivative actions against any
third party derived from the rights and interests of the Debtors or the Debtors'
estates, which injunction shall come into effect on the Effective Date.
14.12 Financial Statements. The Reorganized Company shall provide the
Creditors' Committee with a copy of the Reorganized Company's annual audited
financial statements (or unaudited financial statements if audited financial
statements are not available for a particular year) upon request by the
Creditors' Committee made anytime until the sixth anniversary of the Effective
Date.
ARTICLE 15
CONDITIONS TO THE EFFECTIVENESS OF THE PLAN
AND CAP ON AGGREGATE AMOUNT OF
ALLOWED CLASS 7 AND CLASS 8 CLAIMS
15.1 Conditions.Conditions. All of the following conditions must occur and
be satisfied on or before the thirtieth (30th) day after the Confirmation Date,
or within such further time as the Debtors, JELD-WEN and the Creditors'
Committee all agree for this Plan to be effective:
15.1.1 Entry of Confirmation Order.Entry of Confirmation Order. The
Confirmation Order must be signed by the judge of the Court and duly entered on
the docket for the Case by the clerk of the Court.
15.1.2 No Stay.No Stay. There must be no stay in effect with respect to the
Confirmation Order.
15.1.3 Exit Financing Facility. The Debtor shall have obtained the Exit
Financing Facility contemplated in Section 9.2 of this Plan.
15.1.4 Establishment of Escrow Account. The Escrow Account contemplated in
Section 8.1 of this Plan shall have been established.
15.1.5 Conditions Waivable by the Debtors and JELD-WEN. The Debtors and
JELD-WEN may waive the condition contained in Section 15.1.3 of this Plan. If
either the Debtors or JELD-WEN believe that one or more of these conditions to
effectiveness have not been met by eleven (11) days after the Confirmation Date,
they will so inform each other and the Creditors' Committee in writing within
sixteen (16) days of Confirmation.
<PAGE>
15.2 Cap on Aggregate Amount of Allowed Unsecured Claims and Convenience
Claims. The Debtors and JELD-WEN have indicated that they reserve the right not
to proceed with the confirmation hearing on this Plan if it appears at the time
of the confirmation hearing that the aggregate amount of Allowed Unsecured
Claims and Allowed Convenience Claims will likely exceed $46.2 million. If the
Debtors and JELD-WEN conclude that such cap is likely to be exceeded, they will
advise the Creditors' Committee, at which point one of four courses of action
will occur:
(1) The Creditors Committee may, but is under no obligation to, agree to
cap all payouts to Unsecured Claims and Convenience Claims to $8,250,000, with
appropriate reductions to the proposed payouts to Allowed Unsecured Claims and
Convenience Claims (while preserving a comparable differential in the treatment
of Class 7 and Class 8 Claims), in which case the Debtors and JELD-WEN will
proceed to confirmation without reballoting of the Plan or further notice to
Creditors, provided there are no other circumstances which make them determine
not to proceed with confirmation.
(2) The Debtors and JELD-WEN may, but are under no obligation to, agree to
pay 23 cents to all Allowed Convenience Claims and 17 cents to all Allowed
Unsecured Claims even if the $46.2 million aggregate claims cap is exceeded,
without reballoting of the Plan or further notice to Creditors.
(3) The Debtors, JELD-WEN and the Creditors' Committee may, but are under
no obligation to, agree to a different treatment under the Plan for Class 7 and
Class 8 Claims, without reballoting of the Plan or further notice to Creditors.
(4) If none of the three courses of action are pursued, then the Debtors
and JELD-WEN expect to withdraw or modify their Plan in accordance with the
applicable provisions of this Plan and the Bankruptcy Code. The Debtors would
retain their exclusive rights to propose and solicit acceptance of a Chapter 11
plan.
In the event that options one, two or three are chosen and the Plan is
confirmed, the agreed Plan payouts will not be later modified based on the
aggregate amount of Allowed Unsecured Claims and Convenience Claims exceeding
$46.2 million or such other expectation as the Debtors and JELD-WEN and/or the
Creditors' Committee may have for such aggregate number without the consent of
the Creditors' Committee.
<PAGE>
15.3 Cap on Number of Shareholders. JELD-WEN has indicated that upon
confirmation the Reorganized Company will be a privately held company that is
not subject to the registration and reporting requirements of the Securities
Exchange Act of 1934. The Plan thus provides that the $25,000 threshold for
Class 7 Convenience Claims 47(which do not receive any New Common Stock) may be
adjusted upward to assure that there will be less than 300 creditors outside of
the Convenience Class who will receive New Common Stock. The Debtors and
JELD-WEN, however, have indicated that they reserve the right not to proceed
with the confirmation hearing on this Plan if it appears at the time of the
confirmation hearing that the number of shareholders of the Reorganized Company
will be 300 or more.
Respectfully Submitted,
GROSSMAN'S INC.
GRS HOLDING COMPANY, INC.
GRS REALTY COMPANY, INC.
By: \s\ Thomas E. Arnold, Jr.
Thomas E. Arnold, Jr.
President
Fruman Jacobson, Esq.
John Collen, Esq.
Robert E. Richards, Esq.
Thomas A. Labuda, Esq.
SONNENSCHEIN NATH & ROSENTHAL
8000 Sears Tower
Chicago, Illinois 60606
Laura Davis Jones, Esq.
Victoria Watson Counihan, Esq.
YOUNG, CONAWAY, STARGATT & TAYLOR Rodney Square North, 11th Floor Wilmington,
Delaware 19899
CO-COUNSEL TO DEBTORS AND DEBTORS IN POSSESSION
JELD-WEN, inc.
By: \s\ Richard Wendt
Richard Wendt
President
Jack Cullen, Esq.
FOSTER PEPPER SHEFELMAN
1111 Third Avenue, Suite 3400
Seattle, Washington 98101-3299
Francis Monaco, Esq.
WALSH & MONZACK
1201 N. Orange Street
400 Commerce Center
Wilmington, Delaware 19801
CO-COUNSEL TO JELD-WEN, INC.
Dated: October 29, 1997
EXHIBIT A
ASSUMED CONTRACTS AND LEASES(1)
<TABLE>
<CAPTION>
Party to Type of
Contract or Lease Contract or Lease
<S> <C>
Abraham, Ida & Cawley, Donna Real Property
6 Brownstone Terrace
Jamaica Plain, MA 02130 Address: 600 Providence Highway
Creditor ID: 00025045 Walpole, MA 02081
Lease: Store
- ----------------------------------------------------------------------------------------------------------------------------------
Angels Auto Sales, Inc. Real Property
100 Foster St.
Peabody, MA 01960 Address: 100 Foster St.
Peabody, MA 01960
Lease: Store
- ----------------------------------------------------------------------------------------------------------------------------------
Atchinson, Topeka & Sante Fe Real Property
Railway Co.
One Santa Fe Plaza Address: 7601 Telegraph Road
920 Southeast Quincy Street Montebello, CA 90640
Topeka, KS 66612 Lease: Land
Creditor ID: 00001264
- ----------------------------------------------------------------------------------------------------------------------------------
Bacon Realty Corporation Real Property
Attn: Marc Hammond or Ken Hecht
P.O. Box 404 Address: 129-137 Beacon Street
Medford, MA 02155 Waltham, MA 02154
Creditor ID: 00000186 Lease: Store
- ----------------------------------------------------------------------------------------------------------------------------------
Black Sable Properties Real Property
c/o Safari Business Center
2020 S. Lynx Trail Address: 2245 West Valley Blvd.
Ontario, CA 91761 Colton, CA 92324
Creditor ID: 00031555 Lease: Store
- ----------------------------------------------------------------------------------------------------------------------------------
Boston Safe Deposit and Trust Co. Real Property
Attn: Lori Maloney
Trustee of Bethany Realty Trust Address: 240 Wood Road
One Boston Place Braintree, MA
Boston, MA 02108 Lease: Store
Creditor ID: 00000207
- ----
1 This Exhibit A lists the leases and contracts that the Debtors intend to
assume upon confirmation of the Plan to which this list is attached. The
Debtors, however, reserve the right to amend or otherwise modify this list prior
to confirmation of the Plan. Debtors will send a notice of proposed cure amounts
to all affected landlords and other parties to the contracts in accordance with
this Court's Order approving Disclosure Statement, approving Voting and
Solicitation Procedures, and Establishing Date and Procedures for Confirmation
Hearing.
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
First Evans Associates, Limited Partnership Real Property
c/o FEA, Inc.
Attn: Alan Gordon Address: 20 Pilla Street
521 Fifth Ave., Suite 2300 Warwick, RI 02886
New York, NY 10175 Lease: Store
Creditor ID: 00000187
Address: 11200 Midlothian Pike
Richmond, VA
Lease: Store
- ----------------------------------------------------------------------------------------------------------------------------------
Harcross Lumber & Building Real Property
3517 Brandon Ave. SW
Roanoke, VA 24022 Address: Henderson, NC
- ---------------------------------------------------------------------------------------------------------------------------------
LaCava Family Trust c/o LaCava Assoc. Real Property
Attn: Anthony DeLosa
181 Boston Post Road West Address: 634 Plain Street
Marlboro, MA 01752 Marshfield, MA 02050
Creditor ID: 00000211 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Branford JS Holding LLC Real Property
c/o JW Katzen Company
40 Nomantura St. Address: Branford, CT.
Newton, MA 02158
Assignment: Store Lease
- ---------------------------------------------------------------------------------------------------------------------------------
Mary Lee Stigler Real Property
c/o The Farly Co.
15th Floor Address: Branford, CT.
100 Pearl Street
Hartford, CT 06103 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Paul DeRuyter Real Property
Trustee of Taunton Interstate Nominee Trust
224 Black Buck Cartway Address: Taunton, MA
Brewster, MA 02631
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Twin Cities Realty Co. Real Property
517 Mineral Spring Avenue
Pawtucket, RI 02860 Address: Central Falls, RI
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Vava Realty Inc. Real Property
Attn: Vincent Fedele
1020 Maple Street Address: 965 Maple Street
Rochester, NY 14611 Rochester, NY 14611
Creditor ID: 00000184 Lease: Store
-2-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
ADT Security (307) Equipment
1710 Dividend Road
Ft. Wayne, IN 46808 Description: Store Branch:
Creditor ID: 00032677 Misc. Alarm Systems 307/Ft. Wayne
- ---------------------------------------------------------------------------------------------------------------------------------
Brown Investments Real Property
Ira M. Brown & Allene E. Brown
Attn: Steve Brown Address: 7250 Laurel Canyon Boulevard
12800 Foothill Boulevard, Unit B North Hollywood, CA
Sylmar, CA 91342 Lease: Store
Creditor ID: 00000205
- ---------------------------------------------------------------------------------------------------------------------------------
Butler Real Estate Real Property
BMA Tower Penn Valley Park
Attn: Thomas Hall Address: 2560 Shadeland Avenue
31st St. & Southwest Trafficway Indianapolis, IN 46219
Kansas City, MO 64108 Lease: Store
Creditor ID: 00002267
Address: 2219 Contractors Drive
Ft. Wayne, IN 46818
Lease: Store
Address: 700 Enterprise Circle
Lexington, KY 40510
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Cancilla Properties Inc. Real Property
Attn: Edward Cancilla
2902 Stone Pine Address: 17600 S. Main Street
Orange, CA 92667 Carson, CA 90745
Creditor ID: 00000210 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
CLP Properties, Inc. Real Property
Attn: Carolwood Properties, Inc.
Elbar Investments L.P. Address: 2625 Johnson Drive
5636 Van Nuys Blvd., Suite A Ventura, CA
Van Nuys, CA 91401 Lease: Store
Creditor ID: 00000202
- ---------------------------------------------------------------------------------------------------------------------------------
Jacques Y. & Henriette Y. D'Arlin Real Property
2415 East Ocean Boulevard, Suite No. 4
Long Beach, CA 90803 Address: 601 East Imperial Highway
Creditor ID: 00001267 La Habra, CA 90631
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Davis, S. Robert Real Property
5720 Avery Road
Amlin, OH 43002 Address: 4252 Groves Road
Creditor ID: 00032578 Columbus, OH 43232
Lease: Store
-3-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware & Hudson Railroad Corp. Real Property
c/o Leasing Dept.
P.O. Box 8002 Address: Schenectady Railroad
Clifton Park, NY 12065 Lease: Land
Creditor ID: 00025857
- ---------------------------------------------------------------------------------------------------------------------------------
Delta Associates Nominee Trust Real Property
Brian S. Tedeschi & Brian P. Curtis
14 Howard Street Address: Eastway Plaza
Rockland, MA 02370 Route 123, Centre Avenue
Creditor ID: 00001278 Brockton, MA
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
HMG Fieber Realty Trust Real Property
c/o Lavin Realty Adv.
1266 Furnace Brook Pkwy. Address: 77 Southbridge Street
Attn: James Lavin Auburn, MA 01501
Quincy, MA 02169 Lease: Land
Creditor ID: 00026304
Address: 77 Southbridge Street
Auburn, MA 01501
Lease: Store
Address: 4377 N. Homer Avenue E
Cortland, NY 13045
Lease: Store
Address: 480 Water Street
Fitchburg, MA 01420
Lease: Store
Address: Harter & Folts Streets
Herkimer, NY 13350
Lease: Store
Address: 428 Albany Avenue, Rte. 9W
Kingston, NY 12401
Lease: Store
Address: 163 Troy Road
Latham, NY 12110
Lease: Store
Address: 750 South Bay Road
North Syracuse, NY 13212
Lease: Store
Address: 1410 Erie Boulevard
Schenectady, NY 12305
Lease: Store
-4-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Jonda Enterprises Ltd. Real Property
c/o David Karney #606
12011 San Vicente Blvd. Address: 7601 Telegraph Road
Los Angeles, CA 90049 Montebello, CA 90640
Creditor ID: 00030262 Lease: Store & Land
- ---------------------------------------------------------------------------------------------------------------------------------
Kimco Development of Dayton, Inc. Real Property
c/o Kimco Realty Corporation
Suite 100, 3333 New Hyde Park Road Address: 1750 Woodman Drive
P.O. Box 5020 Dayton, OH 45420
New Hyde Park, NY 11042 Lease: Store
Creditor ID: 00000203
- ---------------------------------------------------------------------------------------------------------------------------------
King Real Estate Corporation Real Property
Attn: John Finley
c/o Creative Development Company Address: 160 Lenox Street
77 Franklin Street Norwood, MA
Boston, MA 02110 Lease: Store
Creditor ID: 00000182
- ---------------------------------------------------------------------------------------------------------------------------------
Lainer Enterprises, Inc. Real Property
Attn: Simha Lainer/Sara Lainer
16215 Kittridge St. Address: 11975-77 Sherman Road
Van Nuys, CA 91408 North Hollywood, CA 91600
Creditor ID: 00000197 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Lorenz, H.J. Real Property
P.O. Box 1588
Sun Valley, ID 83353 Address: 5950 Paramount Blvd.
Creditor ID: 00000195 Long Beach, CA 90805
Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Norwood R.E. Partners Real Property
c/o Belvedere Corp. 500 Carew Tower
Attn: Joan Hensler Bittner Address: 4643 Forest Avenue
441 Vine Street (Central Park Business Park)
Cincinnati, OH 45202 Norwood (Cincinnati), OH
Creditor ID: 00032154 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trust Real Property
Attn: Lee Carson
12011 San Vicente Blvd. Address: 2625 Johnson Drive
Suite 707 Ventura, CA 93003
Los Angeles, CA 90049 Lease: Store
Creditor ID: 00001266
- ---------------------------------------------------------------------------------------------------------------------------------
Safco Equity Partnership Real Property
Attn: John Safi
1850 S. Sepulveda Blvd., Ste. 200 Address: 1680 Mission Blvd. & Corona Expressway
Los Angeles, CA 90025 Pomona, CA 91766
Creditor ID: 00000199 Lease: Store
-5-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
W.J. & R.W. Realty Corp. Real Property
Attn: W. Joseph Hotin
355 Keedsdale road Address: 1460 Military Road
P.O. Box 1860 Tonawanda, NY 14217
Milton, MA 02186
Creditor ID: 00000208 Lease: Store
- ---------------------------------------------------------------------------------------------------------------------------------
Step Ahead Investments Inc. Real Property
Attn: William D. Coyle
3222 Winona Way Address: Western Division Office
North Highlands, CA 95660 Suite 201, 3222 Winona Way
Creditor ID: 00029982 North Highlands, CA 95660
- ---------------------------------------------------------------------------------------------------------------------------------
A.C.T. Security Systems Equipment
150 Kerry Place
Norwood, MA 02062 Description: Perimeter Security-Fire; System Lease
Creditor ID: 00025033
- ---------------------------------------------------------------------------------------------------------------------------------
ADT Equipment
Attn: Nancy Lohnes
1819 O'Brien Road Description: Misc. Alarm Systems
Columbus, OH 43228
Creditor ID: 00002024 Store/Branch: 306/Columbus
- ---------------------------------------------------------------------------------------------------------------------------------
ADT Alarm Equipment
Attn: Billing
234 MacCarty Court Description: Misc. Alarm Systems
Lexington, KY 40508
Creditor ID: 00002030 Store/Branch: 305/Lexington
- ---------------------------------------------------------------------------------------------------------------------------------
American Equipment Leasing Equipment
Attn: Harry Schneider
2670 Chancellor Drive Description: Store/Branch:
Crestview Hills, KY 41017 Misc. Compressors 527/Ventura & 528/Long Beach &
Creditor ID: 00002068 703/Montebello
Misc. Tool Rental, 704/N. Hollywood & 705 Pomona &
Light Towers 707/La Habra & 708/Sacramento &
712/Carson & 713/Colton
- ---------------------------------------------------------------------------------------------------------------------------------
ASI Hoosier Alarm Equipment
Attn: Carol Arnold
7311 East 43rd Street Description:
Indianapolis, IN 46226 Misc. Alarm Systems
Creditor ID: 00002020
Store/Branch: 303/Indianapolis
-6-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Associates Leasing Equipment
Attn: Dan Petzold
333 West Pierce Road, Ste. 200 Description:
Itasca, IL 60143 Misc. Truck Radios
Creditor ID: 00002039
Store/Branch: 301/Cincinnati
- ---------------------------------------------------------------------------------------------------------------------------------
AT&T Credit Corp. Equipment
Attn: Swati Modh
2 Gatehall Drive Description: Store/Branch:
Parsippany, NJ 07054
Creditor ID: 00002011 Misc. Phone System 307/Ft. Wayne & 306/Columbus
303/Indianapolis & 302/Dayton
301/Cincinnati
Misc. POS System 307/Ft. Wayne & 306/Columbus
Misc. POS System 306/Columbus
- ---------------------------------------------------------------------------------------------------------------------------------
AT&T Capital Leasing Equipment
The Corporate Center
P.O. Box 85047 Description: Store/Branch:
Louisville, KY 40285 Misc. Copy Machine/ 528/Long Beach & 703/Montebello
Creditor ID: 00030135 FAX Machine & 705/Pomona & 708/Sacramento &
712/Carson & 713/Colton
Misc. Copy Machine 707/La Habra & West Coast Office
Misc. P.O.S. West Coast Office
Description: Store/Branch:
Misc. Computers West Coast Office
Midwest Div. Office
- ---------------------------------------------------------------------------------------------------------------------------------
AT&T Credit 40285 Equipment
Global Info Solutions
P.O. Box 85375 Description: Master Lease/POS Equipment (Western/Midwest
Attn: Rick Steffey Division)
Louisville, KY 40285
Creditor ID: 00032490
- ---------------------------------------------------------------------------------------------------------------------------------
BancBoston Leasing Inc. Equipment
Box 1730
Boston, MA 02105 Description: Master Lease Store/Branch:
Creditor ID: 00025242 Misc. Racking 301/Cincinnati
Racks, Fixtures, Sign Western & Midwest
Printer & Forklifts Division
- ---------------------------------------------------------------------------------------------------------------------------------
BancBoston Leasing Inc. Equipment
Attn: Peter Fox
100 Federal Street Description: Master Lease Store/Branch:
Boston, MA 02110 Misc. Computer, Racks & Safe West Coast Office
Creditor ID: 00029997
-7-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
BankSystems Marketing, Inc. Equipment
1253 Eagan Industrial RD2
Eagan, MN 55121 Description: Store/Branch:
Creditor ID: 00029999 Misc. Check Encoder 527/Ventura & 528/Long Beach &
703/Montebello
Misc. Check Encoder, 704/N. Hollywood & 705/Pomona
Coin Counter & 707/La Habra
- ---------------------------------------------------------------------------------------------------------------------------------
Dial One Security Equipment
Attn: Dennis Toon
6114 Madison Road Description: Store/Branch:
Cincinnati, OH 45201 Misc. Security Cameras 302/Dayton
Creditor ID: 00002036 Misc. Alarm Systems 302/Dayton
Description: Store/Branch:
Misc. Postage Machine 302/Dayton
- ---------------------------------------------------------------------------------------------------------------------------------
Ervin Leasing Equipment
Attn: Dan Petzold
3300 Washtenaw Avenue Description:
Suite 230 Misc. Architectural Store/Branch:
Ann Arbor, MI 48103 Equipment 307/Ft. Wayne & 305/Lexington
Creditor ID: 00002015 302/Dayton & 301/Cincinnati
- ---------------------------------------------------------------------------------------------------------------------------------
Fleet Capital Leasing Equipment
Attn: Richard Berkmeier Asst. VP
50 Kennedy Plaza, 5th Flr. Description: Store/Branch:
Providence, RI 02903 Misc. Computer, Racks West Coast Office
Creditor ID: 00026108
- ---------------------------------------------------------------------------------------------------------------------------------
Fleet Credit Corp. Equipment
111 Westminster St.
Providence, RI 02903 Description: Master Lease Store/Branch:
Creditor ID: 00026109 Computer Midwest Division
Equipment, H
Frames
- ---------------------------------------------------------------------------------------------------------------------------------
Gateway Leasing Equipment
Attn: Tom Lowry
6919 Brookside Avenue Description: Store/Branch:
Westchester, OH 45069 Misc. Ditchwitch 302/Dayton
Creditor ID: 00002034
- ---------------------------------------------------------------------------------------------------------------------------------
GE Capital Equipment
One Capital Drive
Attn: Cliff Bolstad Description: Master Lease Store/Branch:
Attn: Keith Berquist Auto Stack Midwest Division
Eden Prairie, MN 55344 System &
Creditor ID: 00002008 POS Equip.
-8-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
GE Capital Equipment
Drawer CS 100363
Atlanta, GA 30384 Description: Store/Branch:
Creditor ID: 00026200 Misc. Store Fixtures/POS 303/Indianapolis & 302/Dayton
Misc. Store Fixtures 303/Indianapolis & 302/Dayton
- ---------------------------------------------------------------------------------------------------------------------------------
Keycorp Leasing Ltd. Equipment
P.O. Box 1865
54 State Street Description: Store/Branch:
Albany, NY 12201 Misc. Store Fixtures 301/Cincinnati
Creditor ID: 00030739 (Racking)
Misc. (Racking Carts) 301/Cincinnati
Misc. POS Computers 301/Cincinnati
Misc. Copier, Computers Midwest Div. Office
Misc. Racks, Carts
Master Lease Western & Midwestern Div.
Step Beams
- ---------------------------------------------------------------------------------------------------------------------------------
Leasetec Corporation Equipment
Attn: Wendy Saltarelli
1401 Pearl Street Description: Sequent Computer for Contractors' Warehouse
Boulder, CA 80302
Creditor ID: 00002149 Store/Branch: West Coast Office
- ---------------------------------------------------------------------------------------------------------------------------------
Mahoney Notifier, Inc. Equipment
15 Cooper Street
P.O. Box 767 Description: Store/Branch:
Glens Falls, NY 12801 Monitoring Alarm System #296
Creditor ID: 00026784 Monitoring/Maint. Alarm Sys. #286
- ---------------------------------------------------------------------------------------------------------------------------------
Modern Leasing Equipment
Attn: Brian Greuing
319 7th Street, Ste. 600 Description: Store/Branch:
Des Moines, IA 50390 Misc. Copy Machine 301/Cincinnati
Creditor ID: 00002038 Misc. Fax Machine Midwest Div. Office
- ---------------------------------------------------------------------------------------------------------------------------------
Modern Office Methods Equipment
Attn: Mike Illing
4362 Creek Road Description: Store/Branch:
Cincinnati, OH 45241 Misc. Maintenance Midwest Div. Office
Creditor ID: 00002041 Contract
- ---------------------------------------------------------------------------------------------------------------------------------
NEC America, Inc. Equipment
365 West Passaic Street
Attn: Kathy Wagner Description: Store/Branch:
Rochelle Park, NJ 07662 Misc. Phone System 305/Lexington
Creditor ID: 00002026
-9-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Pitney Bowes Equipment
Attn: Gilbert Reiher
6480 Doubletree Avenue Description: Store/Branch:
Columbus, OH 43226 Misc. Postage Machine 303/Indianapolis & 306/Columbus
Creditor ID: 00002021
- ---------------------------------------------------------------------------------------------------------------------------------
Pitney Bowes Equipment
P.O. Box 720416
Atlanta, GA 30358 Description: Store/Branch:
Creditor ID: 00002040 Misc. Postage Machine 301/Cincinnati
- ---------------------------------------------------------------------------------------------------------------------------------
Retail Systems Leasing Inc. Equipment
5915 Coopers Ave.
Attn: William Moore Description: Master Lease POS Equipment
Mississaugua, Ontario, Canada
Creditor ID: 00002272 Store/Branch: Western Division
- ---------------------------------------------------------------------------------------------------------------------------------
Spectra-Physics Equipment
5475 Kellenbauger Road
Attn: Rene Doyle Description: Store/Branch:
Dayton, OH 45424 Misc. Ditchwitch 302/Dayton
Creditor ID: 00032657
- ---------------------------------------------------------------------------------------------------------------------------------
Stringer Company Equipment
115 West Drive
Marshall, MO 65340 Description: Store/Branch:
Creditor ID: 00002146 Misc. Copy Machine/ 708/Sacramento & West Coast
Fax Machine Office
- ---------------------------------------------------------------------------------------------------------------------------------
Symbol Technologies, Inc. Equipment
Credit Dept. A-45
One Symbol Plaza Description: Store/Branch:
Attn: Barbra Arnold Misc. Scanners 307/Ft. Wayne & 306/Columbus &
Holtsville, NY 01742-1300 303/Indianapolis &
Creditor ID: 00002013 305/Lexington
302/Dayton & 301/Cincinnati
-10-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Systech Retail Tech Co. Equipment
Attn: Shelly Zikovic
5915 Coopers Avenue Description: Store/Branch:
Mississauga, Ontario, L4Z 1RG Misc. Registers 307/Ft. Wayne & 306/Columbus &
CANADA 303/Indianapolis &
Creditor ID: 00002012 305/Lexington
302/Dayton & 301/Cincinnati
Misc. Cash Register/ 527/Ventura & 528/Long Beach &
P.O.S. 703/Montebello &
704/N. Hollywood & 705/Pomona &
707/La Habra & 712/Carson &
713/Colton & West Coast Office
Misc. Computers West Coast Office
- ---------------------------------------------------------------------------------------------------------------------------------
Telecheck Services Equipment
P.O. Box 4514
Houston, TX 77210 Description: Store/Branch:
Creditor ID: 00002131 Misc. Telecheck 707/La Habra
- ---------------------------------------------------------------------------------------------------------------------------------
Telecheck Services, Inc. Equipment
Attn: Subscriber Service
P.O. Box 4514 Description: Store/Branch:
Houston, TX 77210 Misc. Telecheck Devices 527/Ventura & 528/Long Beach &
Creditor ID: 00031709 703/Montebello
Misc. Telecheck 528/Long Beach
- ---------------------------------------------------------------------------------------------------------------------------------
United Leasing Inc. Equipment
3700 Morgan Avenue
Evansville, IN 47715 Description: Store/Branch:
Creditor ID: 00027996 Racks & Auto Mid-West Division
Stack System
- ---------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Alarm Equipment
333 Smith Street
Providence, RI 02901 Description: Alarm System & Monitoring
Creditor ID: 00001930
- ---------------------------------------------------------------------------------------------------------------------------------
Xerox Corp. Equipment
350 S. Northwest Highway
Park Ridge, IL 60068 Description: Store/Branch:
Creditor ID: 00002033 Misc. Copy Machine 302/Dayton
- ---------------------------------------------------------------------------------------------------------------------------------
A.C.T. Security Systems Maintenance/Service
150 Kerry Place
Norwood, MA 02062 Description: Store No.:
Creditor ID: 00025033 Alarm Transmission #256 - Norwood Dist. Ctr.
- ---------------------------------------------------------------------------------------------------------------------------------
ADT Security Systems, Inc. Maintenance/Service
9 Walker Way
Albany, NY 12201 Description:
Creditor ID: 00001928 Monitoring
-11-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
American Alarms, Inc. Maintenance/Service
575 Park Ave.
Cranston, RI 02910 Description: Store/Branch:
Creditor ID: 00025119 Monitoring #124 - Central Falls
- ---------------------------------------------------------------------------------------------------------------------------------
Armored Motor Service of America Maintenance/Service
65 Vantage Point Drive
Rochester, NY 14624 Description: Store/Branch:
Creditor ID: 00025183 Armored Car Service #494 - Rochester
- ---------------------------------------------------------------------------------------------------------------------------------
Hart Alarm Systems Inc. Maintenance/Service
514 Fourth Street
Watervliet, NY 12189 Description: Store/Branch:
Creditor ID: 00026345 Alarm Service #292 - Kingston
Alarm Service #296 - Schenectady
Alarm Service-Maintenance #298 - Rennselaer
Alarm Service #092 - Latham
- --------------------------------------------------------------------------------------------------------------------------------
NCR Corp. Maintenance/Service
1700 So. Patterson Blvd.
Dayton, OH 45479 Description:
Creditor ID: 00001498 Equipment Subject to Service
Cabletron/Monarch
- --------------------------------------------------------------------------------------------------------------------------------
Professional Alarm Ser. Maintenance/Service
64 Lyndale Court
West Seneca, NY 14224 Description: Store/Branch:
Creditor ID: 00027399 Alarm Monitoring #470 - Buffalo
Alarm Monitoring #293 - Brighton
Alarm Monitoring #411 -
Alarm Monitoring #287 - Cortland
Alarm Monitoring #471 - W. Seneca
Alarm Monitoring #418 - Webster
Alarm Monitoring #027 - Tonawanda
Alarm Monitoring #494 - Rochester
-12-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Special Agent Systems Inc. Maintenance/Service
67 Pleasant St.
Watertown, MA 02172 Description: Store/Branch:
Creditor ID: 00027738 Lease Monitoring/Maintenance- #285-Brockton
Security System
Monitoring Security System #297-Braintree
Monitoring Security System #295-Woonsocket
Monitoring/Maintenance- #467-Marshfield
Security System
Lease Monitoring/Maintenance- #291-
Security System
Lease Monitoring/Maintenance- #082-Waltham
Security System
Lease Monitoring/Maintenance- #288-Walpole
Security System
Lease Monitoring/Maintenance- #018-
Security System
Lease Monitoring/Maintenance- #490-
Security System
Lease Monitoring/Maintenance- #481-
Security System
Lease Monitoring/Maintenance- #289-Fitchburg
Security System
Monitoring/Maintenance-Security #496-
System
- ---------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Alarm Maintenance/Service
301 Franklin Street
Buffalo, NY 14201 Description: Store/Branch:
Creditor ID: 00001929 Monitoring #463 - N.Syracuse
Monitoring #482 - Dewitt
Alarm System/Monitoring #294 - Warwick
- ---------------------------------------------------------------------------------------------------------------------------------
American Color Miscellaneous
2500 Walden Ave.
Buffalo, NY 14225 Description: Visvita System Purchase Agreement
Creditor ID: 00001769
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Institutional Service Agreement
Operations Company
82 Devonshire Record Keeping & Other Svces. for Administration of Investment Plan
Boston, MA 02109
Creditor ID: 00002182
- ---------------------------------------------------------------------------------------------------------------------------------
Mountain Financial Corporation Service Agreement
855 East 9400 South
Sandy, UT 84070 Merchant Services Agreement
Creditor ID: 00001766
-13-
<PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Novus Services Service Agreement
FKA Discover Card
Attn: Beth Solomon Credit Card Services Agreement
2500 Lake Cook Road
Riverwoods, IL 60015
Creditor ID: 00002162
- ---------------------------------------------------------------------------------------------------------------------------------
Darling, Walter Miscellaneous
5 Spring Street
P.O. Box 129 Description: Legal Representation Agreement for Collections
Norfolk, MA 02056
Creditor ID: 00025828
- ---------------------------------------------------------------------------------------------------------------------------------
Devon Capital Management, L.P. Miscellaneous
Attn: D. Lynn Storey, Senior
2000 Powell Street Purchase and Sale Agreement
Suite 1240 For Three Real Estate Parcels
Emeryville, CA 94608 2870 Brunswick Pike,
Creditor ID: 00003302 Lawrenceville, New Jersey
2938 Walden Avenue, DePew, New York
1640 Hartford Avenue,
Johnston, Rhode Island
- ---------------------------------------------------------------------------------------------------------------------------------
Farmington Farm & Garden, Inc. Miscellaneous
5930 County #41
Farmington, NY 14425 Purchase and Sale Agreement
Creditor ID: 00003306 For Real Estate Parcel
10 Booth Street, Canandaigua, New York
- ---------------------------------------------------------------------------------------------------------------------------------
Finard Asset Management Comp., Inc. Miscellaneous
3 Burlington Woods Drive
Attn: William Beckman Description: Real Estate Marketing Consulting Agreement
Burlington, MA 01803 Expiration: 4/15/97
Creditor ID: 00026063
- ---------------------------------------------------------------------------------------------------------------------------------
Associates Commerical Corporation Equipment
Attn: William G. Wright
Farr, Burke, Gamboacorta & Wright See Attached Chart for Associates Commercial Corp - Leases to
211 Benigno Boulevard Keep
P.O. Box 788
Bellmawr, New Jersey 08099-0786
Creditor ID: 00002014
-14-
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------
GE Fleet Equipment
Attn: Cliff Bolstad
3 Capital Drive Description: Model: Store/Branch:
Eden Prairie, MN 55344 Forklifts 586E 302/Dayton & 301/Cincinnati
Creditor ID: 00002031 Forklifts GLP1050RFNUAE080 301/Cincinnati
Forklifts GLP100MFNSBV098 301/Cincinnati
Trucks Ranger 301/Cincinnati
Description: Store/Ranch:
Trailers Ranger 710/Reno
- -----------------------------------------------------------------------------------------------------------------------------
Navistar Equipment
Attn: Betty Tucknott
2650 West Golf Road Description: Model:
Rolling Meadows, IL 60608 Trucks 94 Flatbed Cabover
Creditor ID: 00002018 Store/Branch: 303/Indianapolis & 305/Lexington
- ------------------------------------------------------------------------------------------------------------------------------
Albany Times Union Miscellaneous
645 Albany Shaker Road
Albany, NY 12212
Creditor ID: 00002739
- ------------------------------------------------------------------------------------------------------------------------------
Boston Globe Miscellaneous
Attn: William Gardner
135 Morrisey Blvd Description: Annual Advertising Spending Agreement
Boston, MA 02107
Creditor ID: 00025383
- ------------------------------------------------------------------------------------------------------------------------------
Boston Herald American Miscellaneous
1 Herald Square
Boston, MA 02118 Description: Boston Herald Advertising Contract
Creditor ID: 00025384
- ------------------------------------------------------------------------------------------------------------------------------
Buffalo Evening News Inc. Miscellaneous
1 News Plaza
P.O. Box 100 Description: Retail Advertising Agreement for Mr. Second
Buffalo, NY 14240
Creditor ID: 00025468
- -------------------------------------------------------------------------------------------------------------------------------
The Call Miscellaneous
dba The Evening Call Publishing Co.
75 Main St. Description: Advertising Contract
P.O. Box A
Woonsocket, RI 02895-0992
Creditor ID: 00002187
- ------------------------------------------------------------------------------------------------------------------------------
Community Newspaper Company Miscellaneous
P.O. Box 9113
Needham, MA 02192-9113 Description: Advertising Contract
Creditor ID: 00002196
-15-
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------
Evening Telegram, The Miscellaneous
Thomsons Pub. of N.Y. Inc.
111 Green St. Description: Retail Advertising Agreement
Herkimer, NY 13350
Creditor ID: 00026025
- ------------------------------------------------------------------------------------------------------------------------------
First Data Corp. Miscellaneous
First Data Merchants Services
265 Broad Hollow Road Description: Credit Card Processing Sales Agreement
Mellville, NY 11747
Creditor ID: 00002168
- ------------------------------------------------------------------------------------------------------------------------------
Gannett Rochester Newspaper Miscellaneous
Rochester Times-Union
55 Exchange Blvd Description: Revenue Contract Agreement for Advertising for
Rochester, NY 14614 Mr. Seconds
Creditor ID: 00026179
- ------------------------------------------------------------------------------------------------------------------------------
Herald Company, The Miscellaneous
P.O. Box 4915 Clinton Sq.
Attn: Accounts Receivable Description: Retail Advertising Contract
Syracuse, NY 13221
Creditor ID: 00026368
- ------------------------------------------------------------------------------------------------------------------------------
Mark Goodson Enterprises Ltd. Miscellaneous
dba Daily Freeman
79-97 Hurley Ave. Description: Local Retail Fixed Insertion Advertising Contract
Kingston, NY 12401
Creditor ID: 00002184
- ------------------------------------------------------------------------------------------------------------------------------
Patriot Ledger, The Miscellaneous
P.O. Box 9159
400 Crown Colony Drive Description: Preprinted Insert Sections Advertising Contract
Quincy, MA 02169
Creditor ID: 00027288
- ------------------------------------------------------------------------------------------------------------------------------
Peabody & Lynnfield Weekly News Miscellaneous
10 First Ave.
P.O. Box 6039 Description: Multiple Insertion Contract-(Advertising)
Peabody, MA 01961-6039
Creditor ID: 00002189
- -----------------------------------------------------------------------------------------------------------------------------
Providence Journal Miscellaneous
75 Fountain St.
Providence, RI 02902 Description: Annual Investment Contract for Advertising
Creditor ID: 00027408
-16-
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------
Schenectady Gazette Miscellaneous
The Gazette Newspapers
2345 Maxon Road
P.O. Box 1090
Schenectady, NY 12301
Creditor ID: 00027612
- -----------------------------------------------------------------------------------------------------------------------------
Sentinel-Enterprise Miscellaneous
808 Main St.
Fitchburg, MA 01420 Description: Advertising Agreement
Creditor ID: 00002188
- -----------------------------------------------------------------------------------------------------------------------------
Site Call Miscellaneous
75 Main Street
P.O. Box A
Woonsocket, RI 02895-0992
Creditor ID: 00002738
- -----------------------------------------------------------------------------------------------------------------------------
Syracuse Newspaper Miscellaneous
Clinton Square
Syracuse, NY 13202
Creditor ID: 00002741
- ------------------------------------------------------------------------------------------------------------------------------
Times Union Miscellaneous
Address Unknown
Description: Color Comic Frequency Agreement for Advertising
Creditor ID: 00002186
- --------------------------------------------------------------------------------------------------------------------------------
United Leasing Inc. Miscellaneous
3700 Morgan Avenue
Evansville, IN 47715 Description: 1993 Oldsmobile (2)
Creditor ID: 00002010 Racks
- --------------------------------------------------------------------------------------------------------------------------------
United Leasing Equipment
Attn: Lewis Hudson
4360 Brownsboro Road, Ste. 105 Description: Model: Store:
Louisville, KY 40207 Trucks 1997 Ford Ranger 307 Ft. Wayne
Creditor ID: 00027996 Trucks 305 Lexington
Misc. Store Fixtures 305 Lexington
Trucks Ranger 301 Cincinnati
-17-
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------------
GE Capital Fleet Services Equipment
One Capital Drive
Attn: Cliff Bolstad Description: Model: Store:
Attn: Keith Berquist Forklifts ERPT040TFN36SE078 307/Ft.Wayne/306/Columbus
Eden Prarie, MN 55344 Forklifts ERPT040TFN36SE078 307/Ft. Wayne/306/Columbus
Creditor ID: 00002008 Forklifts GLP050RFNUAE080 307/Ft. Wayne/306/Columbus
Forklifts GLP070LFNSBE098 307/Ft. Wayne/306/Columbus
Forklifts GLP070LFNSBE098 307/Ft. Wayne/306/Columbus
Forklifts GLP100MENSBV098 307/Ft. Wayne/306/Columbus
Forklifts 586E 307/Ft. Wayne/306/Columbus
Trucks Ranger 303 Indianapolis/302 Dayton
Misc. POS System 303 Indianapolis
Misc. F250 302 Dayton
Misc. Auto Midwest Division Office
Misc. Auto Midwest Division Office
Misc. Racks, Carts and Midwest Division Office
Equipment
- ---------------------------------------------------------------------------------------------------------------------------------
Yale Financial Services Equipment
Attn: Juan Martin
15 Junction Road Description: Model: Store:
Flemington, NJ 08822 Forklifts ERP 303 Indianapolis
Creditor ID: 00002016 Forklifts ERP 303 Indianapolis
Forklifts ERP 303 Indianapolis
Forklifts GLP100MFNSBV098 303 Indianapolis
Forklifts GLP070LFNSBF098 303 Indianapolis
Forklifts GLP050RFNUAF096 303 Indianapolis
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts GLP050RFNUAE080 302 Dayton
Forklifts GLP050RFNUAE080 302 Dayton
Forklifts GLP100MFNSBV098 302 Dayton
- --------------------------------------------------------------------------------------------------------------------------------
Worcester Telegram Miscellaneous
Chronicle Publ. Co. Inc.
P.O. Box 15012 Description: Annual Dollar Volume Contract for Retail Advertising
20 Franklin Street
Worcester, MA 01615
Creditor ID: 00028213
=================================================================================================================================
</TABLE>
-18-
<PAGE>
EXHIBIT B
ALLOWED RECLAMATION CLAIMS
<TABLE>
<CAPTION>
Reclamation Claimant Maximum Potential Priority
Unsecured Reclamation Claim Amount
<S> <C>
Absolute Coatings $36,465.20
- --------------------------------------------------------------------------------------------------------------------------------
Adam Wholesalers $37,820.71
- --------------------------------------------------------------------------------------------------------------------------------
Adams Brush Mfg. $1,782.01
- --------------------------------------------------------------------------------------------------------------------------------
Alenco $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Aristokraft $8,377.40
- --------------------------------------------------------------------------------------------------------------------------------
Certain Teed $51,202.26
- --------------------------------------------------------------------------------------------------------------------------------
Champion, Inc. $12,910.98
- --------------------------------------------------------------------------------------------------------------------------------
Eureka $28,420.00
- --------------------------------------------------------------------------------------------------------------------------------
Fiesta Gas Grills $91,380.00
- --------------------------------------------------------------------------------------------------------------------------------
Furman Lumber $24,303.36
- --------------------------------------------------------------------------------------------------------------------------------
Georgia Pacific $504,326.68
- --------------------------------------------------------------------------------------------------------------------------------
Hoboken Wood Floors $11,722.44
- --------------------------------------------------------------------------------------------------------------------------------
Louisiana-Pacific $10,010.38
- --------------------------------------------------------------------------------------------------------------------------------
Makita, U.S.A. $20,555.25
- --------------------------------------------------------------------------------------------------------------------------------
Minwax $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Misco Shawnee $540.13
- --------------------------------------------------------------------------------------------------------------------------------
Moen $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Mfg. & Supply Co. $10,258.21
- --------------------------------------------------------------------------------------------------------------------------------
Osram-Sylvania $5,960.19
- --------------------------------------------------------------------------------------------------------------------------------
Prime Equipment $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Schrock Cabinet $98,689.33
- --------------------------------------------------------------------------------------------------------------------------------
Seaboard International $20,952.93
- --------------------------------------------------------------------------------------------------------------------------------
Sherwin-Williams $32,795.25
- --------------------------------------------------------------------------------------------------------------------------------
Sierra Craft $71,234.83
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Gypsum $9,556.34
- --------------------------------------------------------------------------------------------------------------------------------
Unity-Forest Products $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Universal Forest Products $7,148.25
- --------------------------------------------------------------------------------------------------------------------------------
Vaughn Plywood $24,532.28
- --------------------------------------------------------------------------------------------------------------------------------
Werner $52,393.25
</TABLE>
<PAGE>
EXHIBIT C
-------------------------------
Amended and Restated
Certificate of Incorporation
of
Grossman's, Inc.
------------------------------
Grossman's, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Grossman's, Inc. The original Certificate
of Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on December 26, 1923.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, as amended (the "DGCL"), this Amended and Restated
Certificate of Incorporation restates and further amends the provisions of the
Certificate of Incorporation of this Corporation.
3. This Amended and Restated Certificate of Incorporation is being filed
with the Secretary of State of Delaware on the effective date of the Company's
Plan of Reorganization (the "Plan") under the Bankruptcy Code. Upon such filing,
as provided in the Plan, all then issued and outstanding shares of this
Corporation's Common Stock, $.01 par value per share, shall be cancelled and New
Common Stock will be issued as provided in the Plan of Reorganization.
4. Pursuant to the authority of Section 303 of the DGCL, this Amended and
Restated Certificate of Incorporation was duly authorized and approved by Orders
of the United States Bankruptcy Court for the District of Delaware pursuant to
the Plan and Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. ss.ss.
101 et seq., which Orders authorize the undersigned officers to execute and
acknowledge this Amended and Restated Certificate of Incorporation on behalf of
this Corporation and copies of which Orders are attached hereto.
5. The text of the original Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
ARTICLE I
NAME
SECTION 1.1 Name. The name of the Corporation is Grossman's Inc.
<PAGE>
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
SECTION 2.1 Office and Agent. The registered office of the Corporation in
the State of Delaware is located at 1209 Orange Street, in the City of
Wilmington, in the County of New Castle. The name of its registered agent at
that address is The Corporation Trust Company.
ARTICLE III
CORPORATE PURPOSE
SECTION 3.1 Purpose. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
CAPITALIZATION
SECTION 4.1 Authorized Capital Stock. The Corporation is authorized to
issue one class of Common Stock. The total number of shares that the Corporation
is authorized to issue is _________ shares of Common Stock, par value $.001 per
share.
SECTION 4.2 Common Stock. The holders of the Common Stock shall be entitled
to one vote for each share held by them of record on the books of this
Corporation on all matters submitted to shareholders for a vote. The holders of
Common Stock shall be entitled to dividends when and as declared by the Board of
Directors out of funds legally available therefor.
SECTION 4.3 No Nonvoting Equity Securities. No nonvoting equity securities
of the Corporation shall be issued; this provision is included in this Amended
and Restated Certificate of Incorporation in compliance with Section 1123 of the
United States Bankruptcy Code, 11 U.S.C. ss. 1123, and shall have no further
force and effect beyond that required by such Section and for so long as such
Section is in effect and applicable to the Corporation.
ARTICLE V
INDEMNIFICATION
SECTION 5.1 Indemnification. (a) Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to or is involved in
or called as a witness in any Proceeding (as hereinafter defined) because he or
she is or was or had agreed to become a director, officer or Delegate of this
Corporation, shall, and, at the election of the Corporation as determined by the
Board of Directors, each person who was or is made a party or is threatened to
be made a party to or is involved in or called as a witness in any Proceeding
because he or she is or was an employee or agent of the Corporation may, be
indemnified and held harmless by the Corporation to the fullest extent permitted
under the DGCL, as the same now exists or may hereafter be amended
<PAGE>
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than the DGCL
permitted the Corporation to provide prior to such amendment). Such
indemnification shall cover all expenses incurred by an person indemnified
pursuant to this Article V (including, but not limited to, attorneys' fees and
other expenses of litigation) and all liabilities and losses (including, but not
limited to, judgments, fines, ERISA or other excise taxes or penalties and
amounts paid or to be paid in settlement) incurred by such person in connection
therewith.
Notwithstanding the foregoing, except with respect to indemnification
specified in this Section 5.1(c), the Corporation shall indemnify an Indemnified
Person in connection with a Proceeding (or part thereof) initiated by such
person only if such Proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
For purposes of this Article V:
(i) a "Proceeding" is an action, suit or proceeding, whether civil,
criminal, administrative or investigative, and any appeal therefrom including,
without limitation, any such action, suit, proceeding or appeal by or in the
right of the Corporation, including, without limitation, any action, suit or
proceeding related to acts prior to the April 7, 1997 filing of the
Corporation's Chapter 11 case or acts during that Chapter 11 proceeding;
(ii) a "Delegate" of the Corporation is (A) any employee of the Corporation
or a subsidiary of the Corporation serving as a director or officer (or in a
substantially similar capacity) of an entity or enterprise (x) in which the
Corporation and its subsidiaries collectively own a 10% or greater equity
interest or (y) the principal function of which is to service or benefit the
Corporation or a subsidiary of the Corporation; (B) any employee of the
Corporation or a subsidiary of the Corporation serving as a trustee or fiduciary
of an employee benefit plan of the Corporation or any entity or enterprise
referred to in clause (A); (C) any person acting at the request of the Board of
Directors of the Corporation in any capacity with any entity or enterprise other
than the Corporation; and (D) any officer or director of GRS Realty Company,
Inc. and GRS Holding Company, Inc., which are being merged into the Corporation
concurrently with the adoption of this amended and restated charter; and
(iii) the "Corporation" means Grossman's, Inc., a Delaware corporation, and
its successors, but does not include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger within the
meaning of Section 145(h) of the DGCL.
(b) Expenses. Expenses, including attorneys' fees, incurred by a director
or officer of the Corporation indemnified pursuant to
<PAGE>
Section 5.1(a) in defending or otherwise being involved in a Proceeding shall be
paid by the Corporation in advance of the final disposition of such Proceeding,
including any appeal therefrom, upon receipt of an undertaking (the
"Undertaking") by or on behalf of such person to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Corporation; provided that in connection with a Proceeding (or part thereof)
initiated by such person, except a Proceeding authorized by Section 5.1(c), the
Corporation shall pay said expenses in advance of final disposition only if such
Proceeding (or part thereof) was authorized by the Board of Directors. A person
to whom expenses are advanced pursuant hereto shall not be obligated to repay
pursuant to the Undertaking until the final determination of any pending
Proceeding in a court of competent jurisdiction concerning the right of such
person to be indemnified or the obligation of such person to repay pursuant to
the Undertaking. Such expenses, including attorneys' fees, incurred by other
employees and agents of the Corporation may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
(c) Protection of Rights. If a claim under Section 5.1(a) is not promptly
paid in full by the Corporation after a written claim has been received by the
Corporation or if expenses pursuant to Section 5.1(b) of this Article have not
been promptly advanced after a written request for such advancement accompanied,
in the case of such request by a director or officer, by the Undertaking has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim or the
advancement of expenses. If successful, in whole or in part, in such suit, such
claimant shall also be entitled to be paid the reasonable expense thereof
(including, without limitation, attorneys' fees). It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any Proceeding in advance of its final disposition where
the required Undertaking, if any, has been tendered to the Corporation) that
indemnification of the claimant is prohibited by law, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination, if required, prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that
indemnification of the claimant is prohibited, shall be a defense to the action
or create a presumption that indemnification of the claimant is prohibited. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in accordance with any
applicable standard of conduct which makes it permissible under the DGCL for the
Corporation to indemnify the claimant.
(d) Miscellaneous.
<PAGE>
(i) Non-Exclusivity of Rights. The rights conferred on any person by this
Article V shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise. The Board of Directors shall have the authority, by
resolution, to provide for such indemnification of employees or agents of the
Corporation or others and for such other indemnification of directors, officers
or Delegates as it shall deem appropriate.
(ii) Insurance, Contracts and Funding. If it is available on acceptable
terms, as determined by a vote of the entire Board of Directors, the Corporation
shall maintain insurance, at its expense, to protect itself and any director,
officer, Delegate, employee, or agent of the Corporation against any expenses,
liabilities or losses, arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against such
expenses, liabilities or losses under the DGCL. The Corporation may enter into
contracts with any director, officer or Delegate of the Corporation in
furtherance of the provisions of this Article V and may create a trust fund,
grant a security interest or use other means (including, without limitation, a
letter of credit) to ensure the payment of such amounts as may be necessary to
effect the advancing of expenses and indemnification as provided in this Article
V.
(iii) Contractual Nature. The provisions of this Article V shall be
applicable to all Proceedings commenced or continuing after its adoption,
whether such arise out of events, acts or omissions which occurred prior or
subsequent to such adoption, and shall continue as to a person who has ceased to
be a director, officer or Delegate and shall inure to the benefit of the heirs,
executors and administrators of such person. This Article V shall be deemed to
be a contract between the Corporation and each person who, at any time that this
Article V is in effect, serves or agrees to serve in any capacity which entitles
him to indemnification hereafter and any repeal or other modification of this
Article, the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article V or any repeal or modification of
the DGCL or any other applicable law shall not limit any such person's
entitlement to the advancement of expenses or indemnification under this Article
V for Proceedings then existing or later arising out of events, acts or
omissions occurring prior to such repeal or modification or adoption of an
inconsistent provision, including, without limitation, the right to
indemnification for Proceedings commenced after such repeal or modification or
adoption of an inconsistent provision to enforce this Article V with regard to
Proceedings arising out of acts, omissions or events occurring prior to such
repeal or modification or adoption of an inconsistent provision.
<PAGE>
ARTICLE VI
LIABILITY OF A DIRECTOR
SECTION 6.1 Director Liability. (a) A director of the Corporation shall not
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived any improper
personal benefit.
(b) If the DGCL is amended hereafter to authorize the further elimination
or limitation of the liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent authorized
by the DGCL, as so amended, without further action by either the Board of
Directors or the stockholders of the Corporation.
(c) Neither any amendment nor repeal of this Article VI, nor the adoption
of any provision of the Corporation's Certificate of Incorporation inconsistent
with this Article VI, shall eliminate or reduce the effect of this Article, in
respect of any act or omission occurring, or any action or proceeding accruing
or arising or that, but for this Article, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE VII
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
SECTION 7.1 Management of the Affairs of the Corporation. (a) The business
and affairs of the Corporation shall be managed by the Board of Directors,
consisting of seven (7) directors, which may exercise all the powers of the
Corporation and do all such lawful acts and things that are not conferred upon
or reserved to the stockholders by law, by this Certificate of Incorporation or
by the by-laws of the Corporation (the "By-Laws").
(b) The election of directors need not be by written ballot unless the
By-Laws so provide.
(c)(i) The Board of Directors of the Corporation shall assume office on
________________ [Effective date of the Plan]. The Board of Directors shall be
divided into three classes and each class shall serve for a staggered term as
follows:
Class 1 directors, initially consisting of Messrs.
Donald W. Lindstet and James V. McTevia, shall serve for an
initial term from ___________ [Effective Date] until the first
annual meeting following the end of the fiscal year ended
December 31, 2000;
Class 2 directors, initially consisting of Messrs.
Richard L. Wendt, Theodore Schnormeier and Thomas Ford,
<PAGE>
shall serve for an initial term from ______________ [Effective
Date] until the first annual meeting following the end of the
fiscal year ended December 31, 1999; and
Class 3 directors, initially consisting of Messrs.
Lawrence V. Wetter and Donald Scheffler, shall serve for an
initial term from __________________ [Effective Date] until
the first annual meeting following the end of the fiscal year
ended December 31, 1998.
At each annual meeting of stockholders commencing with the annual meeting
following the fiscal year ended December 31, 1998, directors elected to succeed
those whose terms then expire shall be elected for a term of office expiring at
the third succeeding annual meeting of stockholders after their election. Unless
sooner terminated, each director shall serve until the later of the date on
which the director's term ends or the date on which his successor is elected and
qualified.
(ii) Any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, or removal from office shall be
filled by a vote of the holders of common stock of the Corporation. Directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(iii) Any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, but only by the affirmative votes of
the holders of eighty percent (80%) of the shares of Common Stock then issued
and outstanding.
(iv) The following provisions are inserted for the limitation and
regulation of the powers of the Corporation and of its directors and
stockholders:
(A) Amendment of By-Laws. The By-Laws, or any of them, may be altered,
amended or repealed, or new By-Laws may be made, but only to the extent any such
alteration, amendment, repeal or new By-Law is not inconsistent with any
provision of this Certificate of Incorporation as it may be amended from time to
time, either by the affirmative vote of at least 66-2/3% of the whole Board of
Directors or by the stockholders of the Corporation upon the affirmative vote of
the holders of at least a 66-2/3% of the outstanding capital stock entitled to
vote thereon.
(B) Ability of Stockholders to Act by Written Consent. Any action required
or permitted to be taken at any annual or special meeting of stockholders may be
taken only upon the vote of stockholders at an annual or special meeting duly
noticed and called in accordance with the DGCL and the By-Laws of the
Corporation and may not be taken by written consent of stockholders without a
meeting.
<PAGE>
(C) Special Meetings of Stockholders. Special meetings of the stockholders
of the Corporation may be called, for any purpose or purposes, only by (A) the
Chairman of the Board of Directors, (B) the Chief Executive Officer or (C) the
Board of Directors pursuant to a resolution adopted by a majority of the members
of the Board of Directors then in office. Special meetings of the stockholders
of the Corporation may not be called by any other person or persons. Special
meetings may be held at any place, within or without the State of Delaware, as
determined by the person or persons calling such meeting. The only business that
may be conducted at such a meeting, other than procedural matters and matters
relating to the conduct of the meeting, shall be matters relating to the purpose
or purposes stated in the notice of meeting.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 Amendments. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
except as otherwise provided in Section 5.1(d)(iii) or Section 6.1(c) hereof, in
the manner now or hereafter prescribed by the DGCL, and all rights conferred
upon stockholders herein are granted subject to this reservation; provided,
however, that in addition to any vote of the holders of any class or series of
capital stock of the Corporation required by law or this Certificate of
Incorporation, the affirmative vote of the holders of shares of voting stock of
the Corporation representing at least 80% of the voting power of all of the then
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to (i) reduce or eliminate the number of authorized shares of any
capital stock set forth in Article IV, (ii) amend, repeal or adopt any provision
inconsistent with Article V or Article VI which would diminish the rights of
Indemnified Persons pursuant to Article V or the exculpation of directors
pursuant to Article VI of this Certificate of Incorporation or (iii) amend or
repeal or adopt any provision inconsistent with Article VII or this Article VIII
of this Certificate of Incorporation.
ARTICLE IX
SEVERABILITY
SECTION 9.1 In the event that any of the provisions of this Certificate of
Incorporation (including any provision within a single article, section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, the remaining provisions are severable
and shall remain enforceable to the full extent permitted by law.
This Amended and Restated Certificate of Incorporation shall become
effective upon its filing with the Secretary of State of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
of Grossman's, Inc. is signed on behalf of the Corporation by its Chairman of
the Board of Directors and attested by its Secretary as of the ____ day of
November, 1997.
GROSSMAN'S, INC.
By: _________________________
Name:
Title:
ATTEST
By: _____________________
Name:
Title: Secretary
<PAGE>
[Attach Copy of Bankruptcy Court Order]
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December __, 1997, by
Grossman's, Inc., a Delaware corporation (the "Company"), for the benefit of the
Holders of Registrable Stock (each as hereinafter defined).
RECITALS
A. This Agreement is being entered into in accordance with the Plan in
connection with the acquisition of Registrable Stock for the benefit of the
Initial Holders pursuant to the Plan (each as hereinafter defined).
B. To induce the Creditors holding Allowed Unsecured Claims (as hereinafter
defined) to vote in favor of the Plan and to accept the issuance of such
Registrable Stock under the Plan, the Company has undertaken to register the
Registrable Stock under the Securities Act in certain circumstances and to take
certain other actions with respect to the Registrable Stock.
AGREEMENTS
In consideration of the foregoing recitals (which are hereby incorporated
into and shall be deemed a part of this Agreement), the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:
1. Definitions. Terms initially capitalized but not otherwise defined
herein shall have the following meanings:
"Affiliate" shall mean any Person that directly, or indirectly through one
or more intermediaries, controls, is under common control with, or is controlled
by, such other Person. For purposes of this definition, "control" means the
ability of one Person to direct the management and policies of another Person,
whether by means of contract, securities ownership, or otherwise. The Company
and its subsidiaries are deemed to be Affiliates of JELD-WEN.
"Agent" has the same meaning as ascribed to the term Shareholders Agent in
the Plan.
"Agreement" shall mean, and the words "herein," "hereof," "hereunder" and
words of similar import shall refer to, this Agreement and any written and
signed amendment or supplement hereto.
"Allowed Unsecured Claim" has the meaning ascribed to it in the Plan.
"Claim" has the meaning ascribed to it in the Plan.
"Common Stock" shall mean the Company's common stock, $.001 par value
(referred to in the Plan as New Common Stock), and any Stock into which such
Common Stock may hereafter be changed.
<PAGE>
"Creditor" shall mean the holder of a Claim.
"Holders" shall mean the Persons who shall from time to time own of record
any Security. The term "Holder" shall mean any one of the Holders.
"Initial Holders" shall mean the Agent and those Creditors holding Allowed
Unsecured Claims who are entitled to receive Registrable Stock.
"Initiating Holders" shall have the meaning ascribed to it in Section 2(A).
"JELD-WEN" shall mean JELD-WEN, inc., an Oregon corporation.
"Parties" shall mean the Company and each Holder who consents, pursuant to
Section 2(A), to be bound by the terms and conditions of this Agreement.
"Person" shall mean an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or a governmental
organization or any agency or political subdivision thereof.
"Plan" shall mean the Joint Plan of Reorganization under Chapter 11 of the
United States Bankruptcy Code of the Company and certain affiliated entities as
confirmed by the United States Bankruptcy Court for the District of Delaware by
order entered December 9, 1997.
"Prospectus" shall mean any prospectus which is a part of a Registration
Statement, together with all amendments or supplements thereto.
"Registrable Stock" shall mean, at any time, except as otherwise provided
in Section 2(A), the shares of Common Stock issued to the Initial Holders with
respect to Allowed Unsecured Claims pursuant to the Plan, whether held by such
Initial Holders or by any subsequent Holder to the extent that such subsequent
Holder has rights hereunder pursuant to Section 8 hereof; provided, however,
that Registrable Stock shall not be deemed to include any shares after such
shares have been registered under the Securities Act and sold pursuant to such
registration.
"Registration Statement" shall mean any registration statement filed with
the Securities and Exchange Commission in accordance with the Securities Act,
together with all amendments or supplements thereto.
"Request Period" shall have the meaning ascribed to it in Section 2(A).
"Required Items" shall have the meaning ascribed to it in Section 2(A).
-2-
<PAGE>
"SEC" shall mean the Securities and Exchange Commission or any successor to
the functions thereof.
"Securities" shall mean any debt or equity securities of the Company,
whether now or hereafter authorized, and any instrument convertible into or
exchangeable for Securities or a Security. The term "Security" shall mean any
one of the Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
federal statute or statutes which shall be enacted to take the place of such
Act, together with all rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any federal statute or statutes which shall be enacted to take
the place of such Act, together with all rules and regulations promulgated
thereunder.
"Seller" shall mean each Holder of Securities of the Company as to which
Securities the Company could be required to file a Registration Statement or
which could be registered under the Securities Act at the request of such Holder
pursuant to any of the provisions of this Agreement.
"Stock" shall include any and all shares, interests or other equivalents
(however designated) of, or participation in, corporate stock.
2. Required Registrations.
(A) Subject to Section 2(B) below, upon the written request to register
under the Securities Act at least 60% of the shares of Registrable Stock then
outstanding made during any Request Period by Holders ("Initiating Holders") of
such shares (provided that, solely for purposes of such 60% calculation or the
80% calculation provided for in Section 8.6 of the Plan, no shares of Common
Stock held by or for the benefit of JELD-WEN or its Affiliates shall be deemed
to be Registrable Stock), the Company will use its best efforts to effect the
registration of Registrable Stock under the Securities Act and the registration
or qualification thereof under all applicable state securities or blue sky laws,
but only to the extent provided for in the following provisions of this
Agreement. A "Request Period" is the sixty day period commencing on the first
business day following the day the notice of rejection ("Rejection Notice")
referred to in Section 8.6.4 of the Plan is given, or, in the event no Rejection
Notice is given, the sixty day period commencing on the first business day
following the date the Company is deemed under the Plan to have rejected the
offer referred to in Section 8.6 of the Plan. A request pursuant to this Section
2(A) shall include the following "Required Items": the intended method of
disposition of the Registrable Stock sought to be registered, a representation
by the Holder submitting it as to the number of shares of Registrable Stock
owned, of record, and the number of such shares sought to be registered, and a
consent to be bound by the terms and conditions of this Agreement.
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Whenever the Company shall, pursuant to the first paragraph of this Section
2(A), be requested to effect the registration of Registrable Stock under the
Securities Act, the Company shall promptly give written notice of such proposed
registration to all Holders of Registrable Stock, stating that such Holders have
the right to request that any or all of the Registrable Stock owned by them be
included in such registration. The Company shall include in such registration
all Registrable Stock (i) requested to be registered in the requests of the
Initiating Holders pursuant to the first paragraph of this Section 2(A), and
(ii) with respect to which the Company receives (within 20 days after
transmission of such written notice from the Company) written requests from the
Holders thereof for inclusion therein (including the Required Items); and
thereupon the Company will, as expeditiously as possible, use its best efforts
to effect the registration, under the Securities Act, of such Registrable Stock
which the Company has been requested to register for disposition by such Holders
in accordance with the intended method of disposition described in the requests
of such Holders, all to the extent requisite to permit such sale or other
disposition by such Holders of the Registrable Stock so registered.
(B) The foregoing registration rights of Holders of Registrable Stock shall
be deemed satisfied by the Company when one Registration Statement shall have
been filed by the Company with and made effective by the Securities and Exchange
Commission under the Securities Act pursuant to a request made pursuant to
Section 2(A) and the offering pursuant to such Registration Statement shall have
closed (or, if such Registration Statement has not become effective or such
offering has not closed, the offering has been withdrawn by Holders of
Registrable Securities included in it or the Registration Statement is no longer
required by this Agreement to be kept effective.) The Company shall have the
right (by identifying them in the Rejection Notice) to select (i) the
underwriter(s) (who shall be of nationally recognized standing) who shall serve
as the manager and/or co-managers for the offering of Securities covered by such
Registration Statement, and (ii) the national securities exchange (or the NASDAQ
Stock Market) on which the Registrable Stock is to be listed pursuant to Section
3(G) but only in each case with the consent of the Holders of a majority of the
Registrable Stock to be registered on such Registration Statement, which consent
shall not be unreasonably withheld and shall be deemed given by any request
pursuant to Section 2(A) that does not object to underwriter(s) or an exchange
or market, as the case may be, selected by the Company. If a Rejection Notice
does not select underwriter(s) or an exchange or market, the Holders of a
majority of the shares of Registrable Stock included in a Registration Statement
filed pursuant to this Section 2(B) shall have the right to select the
underwriter(s) or the exchange or market, as the case may be.
3. Registration Procedures. Whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Stock under the Securities Act, the Company will, as
expeditiously as possible:
(A) prepare and file with the SEC a Registration Statement with respect to
such Registrable Stock and use its best efforts to cause such Registration
Statement to become and remain effective for a period of not less than one year,
or such shorter period which will terminate when all Registrable Securities
covered by such Registration Statement have been sold (but not before the
expiration of the 90-day period referred to in Section 4(3) of the Securities
Act and Rule 174 thereunder, if applicable), provided that before filing a
Registration Statement
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or Prospectus or any amendments or supplements thereto, the Company will furnish
to one counsel selected by the Holders of a majority of the shares of
Registrable Stock included in such Registration Statement copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel;
(B) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for a period of not less
than one year (or shorter period in accordance with Section 3(A)) and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all Registrable Stock covered by such Registration Statement
during such period in accordance with the intended method or methods of
disposition by the Sellers thereof set forth in such Registration Statement;
(C) furnish to each Seller such number of copies of such Registration
Statement, each amendment and supplement thereto, the Prospectus included in the
Registration Statement (including each preliminary Prospectus), and such other
documents, as such Seller may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Stock owned by such Seller;
(D) use every reasonable effort to register or qualify, to the extent
required, all the Registrable Stock covered by such Registration Statement under
such other securities or blue sky laws of such jurisdictions as each Seller
shall reasonably request, and use every reasonable effort to do any and all
other acts and things which may be necessary under such securities or blue sky
laws to enable such Seller to consummate the public sale or other disposition in
such jurisdiction of the Registrable Stock owned by such Seller covered by such
Registration Statement; provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (D), (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction.
(E) use its best efforts to cause the Registrable Stock covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Holder or Holders thereof
to consummate the disposition of such Registrable Stock.
(F) immediately notify each Seller at any time when a Prospectus relating
to the Registrable Stock of such Seller covered by such Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event that comes to the Company's attention, as a result of which the Prospectus
included in such Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading, and prepare a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of the Registrable Stock covered by such
Registration Statement, such Prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading; provided, however, that if the Company believes in good
faith that it is in the best interests of the Company or its shareholders
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to withdraw the Registration Statement rather than prepare such a supplement or
amendment, it shall promptly advise the Parties in writing and the Parties agree
to act reasonably and negotiate in good faith for up to three business days to
reach a mutually agreeable resolution; if such a resolution cannot be reached
within such period, the Company shall proceed to supplement or amend the
Registration Statement in accordance with this Agreement.
(G) use its best efforts to cause all such Registrable Stock to be listed
on such national securities exchange (or the NASDAQ Stock Market) as is selected
pursuant to Section 2(B), and on each other securities exchange (or the NASDAQ
Stock Market) on which similar securities issued by the Company are then listed,
and enter into such customary agreements including a listing application and
indemnification agreement in customary form, provided that the applicable
listing requirements are satisfied;
(H) provide a transfer agent and registrar for the Common Stock not later
than the effective date of such Registration Statement covering such Registrable
Stock;
(I) enter into such customary agreements (including an underwriting
agreement in customary form, including customary indemnification) and take all
such other actions as the Holders of a majority of the shares of Registrable
Stock included in such Registration Statement pursuant to the provisions of this
Agreement or underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Stock (including effecting a
stock split or a combination of shares);
(J) make available for inspection by any Seller, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such Seller who is the
Holder of Registrable Stock included in such registration pursuant to the
provisions of this Agreement or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement; and
(K) use its best efforts to obtain a cold comfort letter from the Company's
independent public accountants and a legal opinion letter from the Company's
counsel in customary form and covering such matters of the type customarily
covered by cold comfort letters or legal opinion letters, as the case may be, as
the underwriters or the Holders of a majority of the Registrable Stock included
in such Registration Statement pursuant to the provisions of this Agreement
reasonably request.
(L) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of at least
twelve months, beginning with the first month after the effective date of the
registration statement (as the term "effective date" is defined in Rule 158(c)
under the Securities Act), which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder or any successor
provisions thereto.
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If the Company shall determine in its good faith and reasonable judgment,
that to maintain the effectiveness of a Registration Statement pursuant to
Section 2 covering an offering that has not yet closed, or to permit such
Registration Statement to become effective (or if no Registration Statement has
yet been filed, to file such Registration Statement) would be significantly
disadvantageous to the Company's financial condition, business or prospects (a
"Disadvantageous Condition") in light of the existence,or in anticipation, of
(i) any acquisition or financing activity involving the Company, or any
subsidiary of the Company, including a proposed public offering or private
placement, (ii) an undisclosed material event, the public disclosure of which
could have a material adverse effect on the Company, (iii) a proposed material
transaction involving the Company or a substantial amount of its assets,or (iv)
any other circumstance or condition the disclosure of which would materially
disadvantage the Company, and the existence of which renders any to be filed,
then filed or effective registration statement inadequate as failing to include
material information, then the Company may, until such Disadvantageous Condition
no longer exists (but in no event for more than one period of not more than 90
days) cause such Registration Statement to be terminated, suspend the use of the
Prospectus contained therein, or if no Registration Statement has yet been
filed, elect not to file such Registration Statement. If the Company determines
to take any action pursuant to the preceding sentence, the Company shall deliver
a notice to any Holder of Registrable Securities covered or to be covered under
such withdrawn, suspended or not to be filed Registration Statement, which
indicates that the Registration Statement is no longer effective or will not be
filed. Upon the receipt of any such notice, such Holder(s) in the case of an
effective Registration Statement shall forthwith discontinue their use and any
dissemination of the Prospectus contained in such Registration Statement. If any
Disadvantageous Condition shall cease to exist, the Company shall promptly
notify any Holders who shall have ceased selling Registrable Securities pursuant
to an effective Registration Statement as a result of such Disadvantageous
Condition, indicating such cessation. After such cessation, or, if earlier, at
the end of such 90 days period, the Company shall, if any Registration Statement
required to be filed or maintained under this Agreement has been withdrawn,
suspended or not filed, file promptly, an amended, supplemented or new
Registration Statement, as applicable (to which the other provisions of Section
3 shall apply notwithstanding any prior filing or effectiveness of such
withdrawn Registration Statement), covering the Registrable Securities that were
covered by such withdrawn Registration Statement or to be covered by such
unfiled Registration Statement.
It shall be a condition precedent to the obligation of the Company to take
any action pursuant to this Agreement in respect of the Registrable Stock which
is to be registered at the request of any Holder thereof that such Holder shall
furnish to the Company such information regarding such Registrable Stock and the
intended method of disposition thereof as the Company shall reasonably request
in connection with any such registration.
Each Holder of Registrable Stock included in a Registration Statement
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(F), such Holder will forthwith
discontinue disposition of Registrable Stock pursuant to the Registration
Statement covering such Registrable Stock until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(F),
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense)
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<PAGE>
all copies, other than permanent file copies, then in such Holder's possession,
of the Prospectus covering such Registrable Stock current at the time of receipt
of such notice. In the event the Company shall give any such notice, the period
mentioned in Section 3(A) shall be extended by the greater of (i) three months
or (ii) the number of days during the period from and including the date of the
giving of such notice pursuant to Section 3(F) to and including the date when
each Holder of Registrable Stock covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 3(F) hereof.
4. Expenses. All expenses incurred in effecting the registration provided
for in Section 2 hereof, including all registration and filing fees, printing
expenses, fees and expenses incurred in connection with the listing of the
Registrable Stock on a national securities exchange (or the NASDAQ Stock Market)
and on each securities exchange (or the NASDAQ Stock Market) on which similar
Securities issued by the Company are then listed; fees and disbursements of
counsel for the Company, reasonable fees and disbursements of one law firm
serving as counsel for the Sellers (who shall be selected by Sellers holding a
majority of the Registrable Stock being offered and shall be a firm of
nationally recognized standing or which has been approved by the Company, which
consent shall not be unreasonably withheld), underwriting expenses (other than
underwriting discounts and commissions with respect to the Registrable Stock
being sold, which shall be the responsibility of the Sellers), reasonable fees
and disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Stock, expenses of any audits incident to or
required by any such registration and expenses of complying with the securities
or blue sky laws of any jurisdictions pursuant to of Section 3(D), shall be
borne and paid by the Company.
5. Indemnification.
(A) In the event of any registration of any Registrable Stock under the
Securities Act pursuant to this Agreement, the Company, to the full extent
permitted by law, shall indemnify and hold harmless each Seller of such
Registrable Stock, each underwriter (as defined in the Securities Act) who
participates in the offering of such Registrable Stock, each director, officer
and partner of such Seller and underwriter, and each other Person, if any, who
controls (within the meaning of the Securities Act) such Seller or underwriter
against any losses, claims, damages or liabilities, joint or several (including
any amounts paid in settlement effected with the Company's consent), to which
such Seller, underwriter, or controlling Person may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon: (1) any alleged untrue statement of any material fact contained,
on the effective date thereof, in any Registration Statement under which such
Registrable Stock was registered under the Securities Act, any preliminary
Prospectus or final Prospectus contained therein, or any summary Prospectus
issued in connection with any Registrable Stock being registered, or any
amendment or supplement thereto; or (2) any alleged omission to state in any
such document a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each such Seller, or
any such underwriter, or controlling Person for any legal or other expenses
reasonably incurred by such Seller, underwriter, or controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability or
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<PAGE>
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any alleged untrue statement or alleged omission made in such
Registration Statement, preliminary Prospectus, summary Prospectus, final
Prospectus, or amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any such Seller,
underwriter, director, officer, partner or controlling person specifically for
use therein, and provided, further, that the Company shall not be liable to any
Person or any other Person, if any, who controls such Person, in any such case
to the extent that any such loss, claim, damage or liability arises out of such
Person's failure to send or give a copy of the final prospectus (including any
documents incorporated by reference therein), as the same may be then be
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such person if such
statement or omissions was corrected in such final prospectus.
(B) Each Holder of Registrable Stock, by requesting its inclusion in a
Registration Statement pursuant to Section 2(A), severally and not jointly,
indemnifies and holds harmless each other such Holder of Registrable Stock, the
Company, its directors and officers, each underwriter (as defined in the
Securities Act), and each other Person, if any, who controls (within the meaning
of the Securities Act) the Company, any underwriter, or any other such Holder,
against any losses, claims, damages, or liabilities, joint or several, to which
any such other Holder, the Company, any such director or officer, any such
underwriter, or any such or controlling Person may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon: (1) any alleged untrue statement of any material fact contained,
on the effective date thereof, in any Registration Statement under which
Registrable Stock was registered under the Securities Act at the request of such
Holder, any preliminary Prospectus or final Prospectus contained therein, or any
summary Prospectus issued in connection with any Registrable Stock being
registered, or any amendment or supplement thereto; or (2) any alleged omission
to state in any such document a material fact required to be stated therein or
necessary to make the statements therein not misleading, in either case to the
extent, and only to the extent, that such alleged untrue statement or alleged
omission was made in such Registration Statement, preliminary Prospectus,
summary Prospectus, final Prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
indemnifying Holder specifically for use therein, and then only to the extent
that such alleged untrue statements or alleged omissions by such Holder were not
based on the authority of an expert as to which such Holder had no reasonable
ground to believe, and did not believe, that the statements made on the
authority of such expert were untrue or that there was an omission to state a
material fact. Each such indemnifying Holder shall reimburse each such other
Holder of Registrable Stock, the Company, its directors and officers, or any
such underwriter, or controlling Person for any legal or other expenses
reasonably incurred by such other Holder of Registrable Stock, the Company, its
directors and officers, or any such underwriter, or controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability or action. Notwithstanding the foregoing provisions of this Subsection
(B), no Holder shall be required to pay under such provisions an amount in
excess
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<PAGE>
of the proceeds (net of brokerage or underwriting commissions, discounts or the
like) received by such Holder in payment for the Registrable Stock sold by such
Holder pursuant to the Registration Statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company or any of the Holders, underwriters or any of their respective
directors, officers, or controlling persons and shall survive the transfer of
such securities by such Holder.
(C) Any Person which proposes to assert the right to be indemnified under
Subsections (A) or (B) of this Section 5 shall, promptly after receipt of notice
of commencement of any action, suit or proceeding against such Person in respect
of which a claim is to be made against an indemnifying Person under such
Subsections (A) or (B), notify each such indemnifying Person of the commencement
of such action, suit or proceeding, enclosing a copy of all papers served. The
omission to notify the indemnifying Person promptly of the commencement of any
such action shall not relieve the indemnifying Person of any liability to
indemnify the Person claiming indemnification under Section 5, except to the
extent that the indemnifying Person shall suffer any loss by reason of such
failure to give notice and shall not relieve the indemnifying Person of any
other liabilities which it may have under this Agreement or otherwise. The
indemnifying Person shall have the right, if such indemnifying Person so
notifies the Person claiming indemnification within ten days after receipt of
such notice, to investigate and defend any such loss, claim, damage, liability
or action and to employ separate counsel reasonably satisfactory to the Person
claiming indemnification in any such action and to control the defense thereof.
The Person claiming indemnification shall have the right to participate in the
defense of any such loss, claim, damage, liability or action, and so long as the
indemnifying Person is defending such claim in good faith, the person claiming
indemnification will be responsible for any of the fees and expenses of its own
counsel in connection with such participation; provided, however, that
notwithstanding the foregoing, in any case when indemnification is sought
against the Company and (i) the Person seeking indemnification has been advised
by counsel that its defenses may be different from those of the Company, or (ii)
the Company has not proceeded in a timely or good faith manner to effect such
defense, then the reasonable fees and expenses of counsel for such Person shall
be paid by the Company and the indemnified Person shall have the right to
control the defense of such action, suit or proceeding as it affects such
Person. In no event shall a Person against whom indemnification is sought be
obligated to indemnify any Person for any settlement of any claim or action
effected without the indemnifying Person's consent, which consent shall not be
unreasonably withheld.
(E) The indemnification provided for under this Section 5 will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified Person or any officer, director, partner or controlling Person
of such indemnified Person and will survive the transfer of Registrable Stock.
(F) If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an indemnified Person with
respect to any loss, liability, claim, damage, or expense referred to herein,
then the indemnifying Person, in lieu of indemnifying such indemnified Person
hereunder, shall contribute to the amount paid or payable by such indemnified
Person as a result of such loss, liability, claim, damage, or expense in such
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proportion as is appropriate to reflect the relative fault of the indemnifying
Person on the one hand and of the indemnified Person on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying Person and of the indemnified Person shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of the material fact or the omission or alleged omission to
state a material fact relates to information supplied by the indemnifying Person
or by the indemnified Person, such Persons' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a Person as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 5(C), any legal or
other fees or expenses reasonably incurred by such Person in connection with
investigating or defending any action or claim.
6. Participation in Underwritten Registrations.
(A) No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's Registrable Stock on the
basis provided in any underwriting agreement approved by the Persons entitled
hereunder to approve such underwriting agreement, and agrees to any restriction
therein against effecting any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Stock, and any
restriction therein against effecting any such public sale or distribution of
any other equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company, during the
15 days prior to, and during the 180-day period beginning on, the effective date
of such registration statement (except the sale of Registrable Stock as part of
such registration), and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided, however, that no
Holder of Registrable Stock shall be required to make any representations or
warranties or to provide information in the Registration Statement relating to
such registration except, in either case, with respect to itself and its
intended method of disposition of Registrable Stock.
(B) To the extent required by an underwriting agreement referred to in
Section 6(A), JELD-WEN (with respect to itself and its controlled Affiliates)
and the Company agree not to effect any public sale or distribution, including,
in the case of JELD-WEN and such Affiliates, any sale pursuant to Rule 144 under
the Securities Act, of any of the Company's equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Company or any subsidiary of
the Company or the acquisition by the Company or a subsidiary of the Company of
the capital stock or substantially all the assets of any other person or in
connection with an employee stock option or other benefit plan) during the 15
days prior to, and during the 180-day period beginning on, the effective date of
such registration statement (except, in the case of JELD-WEN, the sale of
Registrable Stock as part of such registration).
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<PAGE>
7. Marketing Restrictions.
(A) If:
(1) any Holder of Registrable Stock is entitled and wishes to register any
Registrable Stock in a registration made pursuant to Section 2 hereof, and
(2) the offering proposed to be made by the Holder or Holders for whom such
registration is to be made is to be an underwritten public offering, and
(3) the managing underwriters of such public offering furnish a written
opinion that the total amount of Securities to be included in such offering
would exceed the maximum amount of Securities (as specified in such opinion)
which can be marketed at a price reasonably related to the then current market
value of such Securities and without otherwise materially and adversely
affecting such offering,
then the relative rights to participate in such offering of the Holders of
Registrable Stock, the Holders, if any, of other Securities having the right to
include such Securities in such registration, and the Company shall be in the
following order of priority:
First: The Holders of Registrable Stock shall be entitled to participate in
accordance with the number of shares of Registrable Stock which each such Holder
shall request to be registered, such participation to be pro rata in accordance
with the number of shares which each such Holder shall request be registered if,
pursuant to clause 3 of this Subsection (A), the total amount of Securities to
be included in the offering will be less than the number of shares of
Registrable Stock that all of such Holders shall request be registered; and then
Second: Subject to the absolute priority of the Registrable Stock in
connection with any cutback, the Company and all Holders of other Securities
having the right to include such Securities in such registration shall be
entitled to participate in accordance with the relative priorities, if any, as
shall exist among them.
8. Assignability of Registration Rights. The registration rights set forth
in this Agreement shall accrue to each subsequent Holder of Registrable Stock
who consents in writing to be bound by the terms and conditions of this
Agreement.
9. Grant of Subsequent Registration Rights. So long as any shares of
Registrable Stock exist, the Company shall not grant to any Holder of its
Securities other than Registrable Stock the right to include such Securities in
any Registration Statement filed pursuant to Section 2 hereof without the
consent of the Holders of 100% of the existing Registrable Stock unless under
the terms of any such agreement, such Holder or prospective Holder may include
such Securities in any such registration only if and to the extent that the
inclusion of such Securities will not reduce the amount of Registrable Stock of
the Holders of Registrable Stock which is included in such registration. Section
9 may not be amended or waived.
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10. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law.
However, in the event that any court or any governmental authority or agency
declares all or any part of any Section of this Agreement to be unlawful or
invalid, such unlawfulness or invalidity shall not serve to invalidate any other
Section of this Agreement, and in the event that only a portion of any Section
is so declared to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate the balance of such Section.
11. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
12. Notices. All notices required or permitted hereunder shall be in
writing and shall be: (a) sent by telex or facsimile transmission (to be
effective when receipt is acknowledged unless sent after 5:00 p.m. on any
business day, in which event notice shall be deemed received on the next
business day); (b) personally delivered; (c) sent by certified mail, return
receipt requested; or (d) sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or delivery charges
prepaid and, except as otherwise provided in Section 12(a) above, shall be
deemed given when personally delivered or when placed in the possession of such
mail or delivery service, and addressed as follows:
To the Company: Grossman's, Inc.
45 Dan Road
Canton, MA 02021-2817
Attn.: Mr. Thomas Ford
Chief Executive Officer
Facsimile: (781) 830-4901
with a copy to: Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attn.: Mr. Dennis Newman
Facsimile: (312) 876-7934
To JELD-WEN JELD-WEN, inc.
3250 Lakeport Boulevard
Klamath Falls, OR 97601
Attn.: Mr. Doug Kintzinger
Facsimile: (541) 885-7454
with a copy to: Foster, Pepper & Shefelman P.L.L.C.
1111 Third Avenue, #3400
Seattle, WA 98101
Attn.: Mr. Jack Cullen
Facsimile: (206) 447-9700
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To the Holders of Registrable Stock (excluding such Holders
that have terminated the Agent in accordance with the Plan):
Each Holder that has The Address of such Holder as
Terminated the Agent in shown on the stock transfer
accordance with the Plan: records of the Company
Such addresses may be changed by any such Person by providing like notice to the
Company and the Holders in accordance with this Section 12.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same document.
14. Entire Agreement. This Agreement contains the entire agreement and
understanding of the Parties concerning the subject matter hereof, and
supersedes and replaces all prior and contemporaneous negotiations, proposed
agreements and agreements, written and oral, relating to such subject matter.
There are no agreements, representations or warranties between the Parties as to
the subject matter hereof other than those provided herein.
15. Amendments and Governing Law. Except in the case of Section 9, this
Agreement may be amended, modified or supplemented only by a written instrument
executed by the Company and Holders of a majority of the then existing shares of
Registrable Stock. Except in the case of Section 9, any term, covenant,
agreement or condition in this Agreement may be waived (either generally or in
particular instances and either retroactively or prospectively) by written
instruments signed by the Company and Holders of a majority of the existing
shares of Registrable Stock. Any such waiver shall be limited to its express
terms and shall not be deemed a waiver of any other term, covenant, agreement or
condition. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed in that state. Any amendment or waiver effected in accordance with
this Section shall be binding upon each Holder of Registrable Stock then
outstanding, each future Holder of such Registrable Stock and the Company.
16. Remedies. The Parties acknowledge and agree that in the event of any
breach of this Agreement by any of them, the Parties would be irreparably harmed
and could not be made whole by monetary damages. Each Party accordingly agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate and agrees that the Parties, in addition to any other remedy
to which they may be entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement.
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17. Further Assurances. Each Party agrees to take all such steps, execute
and deliver such further documents and perform such acts as may be reasonably
requested by any other Party in order to effectuate the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the day
and year first written above.
ATTEST: GROSSMAN'S, INC.
By:
Secretary Name:
Its:
CONSENTED TO (solely for purposes of Section 6(B)):
JELD-WEN, inc.
By:
Name:
Its:
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EXHIBIT E
BY-LAWS
OF
GROSSMAN'S INC.
ARTICLE I
Offices
Section 1.1. Registered Office. The registered office of the
Corporation shall be Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, and the name of the registered agent in charge thereof is The
Corporation Trust Company.
Section 1.2. Additional Offices. The Corporation may also have
offices at such other places, either within or without the State of Delaware, as
the Board of Directors may from time to time designate or the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.1. Place of Meetings. Meetings of stockholders shall
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2.2. Annual Meetings. The annual meetings of
stockholders shall be held at 10:30 A.M. local time on the second Tuesday in May
or on such other date and time as may be designated by resolution of the Board
of Directors and stated in the notice or waiver of notice of the meeting, at
which time the directors for the ensuing year shall be elected by a plurality
vote and any other proper business may be transacted. At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of directors of the
Corporation, the procedures in Article III, Sections 3.3, 3.4 and 3.5 must be
complied with. If such business relates to any other matter, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's
<PAGE>
notice must be delivered to the Secretary and received at the principal
executive offices of the Corporation not less than 60 days nor more than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within 20 days before or after such anniversary
date, such notice by the stockholder in order to be timely must be so received
not later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting is mailed or public disclosure of
the date of the annual meeting is made, whichever first occurs. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting containing all material
information relating thereto and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business, (c) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, (d)
any material interest of the stockholder in such business. Notwithstanding
anything in the By-laws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 2.2. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 2.2, and if he should
so determine, the chairman shall so declare to the meeting that any such
business not properly brought before the meeting shall not be transacted.
Section 2.3. Special Meetings. Special meetings of
stockholders, for any purpose or purposes, unless otherwise prescribed by
applicable law or by the Certificate of Incorporation, may be called by the
Chairman of the Board or President and shall be called by the Chairman of the
Board or President at the request in writing of a majority of the Board of
Directors or of stockholders owning at least fifty-one percent (51%) of the
voting power of the shares of capital stock of the Corporation then issued and
outstanding and entitled to vote generally in the election of directors. Any
such request shall state the purpose or purposes of the proposed meeting. The
purpose or purposes of any special meeting shall be set forth in the notice of
meeting, and the business transacted at any such special meeting of
stockholders, other than procedural matters and matters relating to the conduct
of the meeting, shall be limited to the purpose or purposes set forth in the
notice.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 2.3, and if he should so
determine, the chairman shall so declare to the meeting that any business not
properly brought before the meeting shall not be transacted.
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Section 2.4. Notice of Meetings. Written notice of each annual
or special meeting stating the place, date and hour of the meeting (and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called), shall be mailed not less than ten (10) nor more than sixty (60) days
before the date of the meeting (unless a different period of notice is required
by law) to each stockholder of record entitled to vote at such meeting at his
address as the same appears on the books of the Corporation at the time of such
mailing. Notice of any meeting of stockholders need not be given to any
stockholder who shall sign a waiver of such notice in writing (which need not
state the purpose of the meeting), whether before or after the time of such
meeting, or to any stockholder who shall attend such meeting in person or by
proxy except when the stockholder attends for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 2.5. Quorum and Adjournment. The holders of a majority
of the voting power of the shares of capital stock of the Corporation then
issued and outstanding and entitled to vote thereat, present in person or by
proxy, shall constitute a quorum at all meetings of stockholders for the
transaction of business except as otherwise provided by applicable law or by the
Certificate of Incorporation. When any meeting is convened the presiding
officer, if directed by the Board, may adjourn the meeting, without notice
except announcement at the meeting, if (a) no quorum is present for the
transaction of business, or (b) the Board determines that adjournment is
necessary or appropriate to enable the stockholders (i) to consider fully
information which the Board determines has not been made sufficiently or timely
available to stockholders or (ii) otherwise to exercise effectively their voting
rights. At such adjourned meetings at which a quorum shall be present, any
business may be transacted which might have been transacted at the original
meeting. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting pursuant to
Section 5.7, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.6. Voting. When a quorum is present at any meeting,
the vote of the holders of a majority of the voting power of the shares of
capital stock of the Corporation, present in person or by proxy, shall decide
any question brought before such meeting, unless the question is one upon which,
by express provision of applicable law, the Certificate of Incorporation or
these By-laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Unless
otherwise provided in the Certificate of Incorporation, each stockholder shall
at every meeting of stockholders be entitled to one vote for each share of the
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capital stock of the Corporation standing in his name on the books of the
Corporation at the close of business on the record date, if, pursuant to Section
5.7 hereof, a record date has been fixed for the determination of stockholders
entitled to vote at such meeting, or standing in his name on the books of the
Corporation at the close of business on the date next preceding the day on which
notice of the meeting is given if no record date has been so fixed, or, if
notice is waived, standing in his name at the close of business on the day next
preceding the day on which the meeting is held.
Section 2.7. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy duly executed in writing, but no such proxy shall be voted on or acted
upon after three years from its date, unless the proxy provides for a longer
period. A proxy shall not be revoked, whether by the death or incapacity of the
maker or otherwise, unless before the vote is counted or the authority is
exercised, written notice of such death or incapacity is given to the Secretary
of the Corporation.
Section 2.8. Stockholders Lists. The officer or transfer agent
who has charge of the stock ledger of the Corporation shall prepare and make, or
cause to be prepared or made, pursuant to the provisions of Section 219 of the
General Corporation Law of Delaware, as amended from time to time, a complete
list of stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours either at a place within the city where the meeting is
to be held specified in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 2.9. Action Without a Meeting.
(a) Unless otherwise provided in the Certificate of Incorporation, any
action to be taken at any annual or special meeting of the stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the actions so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
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present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within 60 days of the
earliest dated consent delivered to the Corporation, written consents signed by
a sufficient number of holders to take action are delivered to the Corporation.
(c) The record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation.
(d) For purposes of this Section 2.9, delivery to the Corporation shall
be effected by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the books in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested.
Section 2.10. Presiding Officers and Order of Business. All
meetings of stockholders shall be called to order and presided over by the
Chairman of the Board, or in his absence, by the Chief Executive Officer,
President or highest ranking Vice President, or if none of these be present by a
chairman designated by the Board of Directors. The Secretary of the Corporation
shall act as secretary, but in the absence of the Secretary, the presiding
officer may appoint a secretary.
Section 2.11. Procedural Matters. At each meeting of
stockholders, the chairman of the meeting shall fix and announce the date and
time of the opening and the closing of the polls for each matter upon which the
stockholders will vote at the meeting and shall determine the order of business
and all other matters of procedure. Except to the extent inconsistent with any
such rules and regulations as adopted by the Board of Directors, the chairman of
the meeting may establish rules, which need not be in writing, to maintain order
for the conduct of the meeting, including, without limitation, restricting
attendance to bona fide stockholders of record and their proxies and other
persons in attendance at the invitation of the chairman and making rules
governing speeches and debates. The chairman of the meeting acts in his or her
absolute discretion and his or her rulings are not subject to appeal.
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ARTICLE III
Directors
Section 3.1. Powers. The Board of Directors shall have the
power to manage the property, business and affairs of the Corporation, to
exercise all of its corporate power and do all such lawful acts and things as
are not by applicable law or by the Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders.
Section 3.2. Number, Election and Term. The number of
directors shall be as provided in the Certificate of Incorporation. Directors
need not be stockholders, and except as otherwise provided in the Certificate of
Incorporation or these By-laws, shall be elected at the annual meeting of the
stockholders and shall hold office until their respective successors shall be
elected and qualified. No decrease in the number of directors constituting the
whole Board of Directors shall shorten the term of an incumbent director.
Section 3.3. Nominations. Nominations for election to the Board of
Directors of the Corporation at a meeting of stockholders may be made by the
Board of Directors or by any stockholder of the Company entitled to vote for the
election of directors at such meeting. Such nominations, other than those made
by or on behalf of the Board of Directors, shall be made by notice in writing
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation, and received (1) in the case of an annual meeting,
not less than 60 days nor more than 90 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within 20
days before or after such anniversary date, such notice by the stockholder in
order to be timely must be so received not later than the close of business on
the tenth day following the day on which such notice of the date of the annual
meeting is mailed or public disclosure of the date of the annual meting is made,
whichever first occurs, or (2) in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close of
business on the 10th day following the day on which notice of the date of the
special meeting is mailed or public disclosure of the date of the special
meeting is made, whichever first occurs. Such notice shall set forth (a) as to
each proposed nominee (i) the name, date of birth, business address and
residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee during the past five years, (iii) the number of
shares of stock of the Corporation which are beneficially owned by each such
nominee, and (iv) any other information concerning the nominee that must
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be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to be named as a nominee and to serve as a director if elected);
and (b) as to the stockholder giving the notice (i) the name and address as they
appear on the Corporation's books, of such stockholder, (ii) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder, (iii) a description of all arrangements or understandings between
such stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such stockholder and (iv) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. At the request of the Board of Directors any
person nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 3.3 of the
By-laws. The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 3.4. Election of Directors. Except as otherwise
provided in the Certificate of Incorporation or Section 3.5 hereof, the
directors shall be elected annually at the annual meeting of the stockholders.
In the event of the failure to elect directors at an annual meeting of the
stockholders, the directors may be elected at any special meeting of
stockholders entitled to vote for the election of directors, provided that
notice of such meeting shall contain mention of such election. At each meeting
of the stockholders for the election of directors, provided a quorum is present,
the directors shall be elected by a plurality of the votes validly cast at such
election.
Section 3.5. Vacancies and Newly Created Directorships. Except
as may be required by applicable law or in the Certificate of Incorporation, any
vacancy in the Board of Directors may be filled by vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. If there are no directors in office, then an election of directors may
be held in the manner provided by Section 223 of the General Corporation Law of
Delaware or as otherwise provided by applicable law. Each director so chosen
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shall hold the office until the next annual election of directors, and until his
successor shall be elected and qualified. A vacancy in the Board of Directors
shall be deemed to exist in case of the death, resignation or removal of any
director, or, if at any annual or special meeting of stockholders at which any
director or directors are elected, the stockholders fail to elect the fully
authorized number of directors to be elected at such meeting, or if there are
any newly created directorships resulting from any increase in the authorized
number of directors.
Section 3.6. Resignations. Any director may resign at any time by
delivering a written resignation to the Chairman of the Board or the President.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
Section 3.7. Removal of Directors. Any director may be removed only as
provided in the Certificate of Incorporation.
Section 3.8. Holding Meetings Without the State. The Board of Directors may
hold meetings, both regular and special, either within or without the State of
Delaware.
Section 3.9. Annual and Regular Meetings. The annual meeting of the Board
of Directors, for the choosing of officers and for the transaction of such other
business as may come before the meeting, shall be held in each year as soon as
possible after the annual meeting of the stockholders, and notice of such annual
meeting of the Board of Directors shall not be required to be given. The Board
of Directors from time to time may provide by resolution for the holding of
regular meetings and fix the time and place thereof. Notice of such regular
meetings need not be given; provided, however, that in case the Board of
Directors shall fix or change the time or place of regular meetings, notice of
such action shall be mailed promptly to each director who shall not have been
present at the time at which such action was taken. No notice of such change
need be given to any director who shall attend such changed meeting without
protesting the lack of notice to him at the beginning of the meeting or to any
director who shall waive notice of such meeting in writing, whether before or
after the time of such meeting.
Section 3.10. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or by the
President or by any two directors, at such time and place as may be specified in
the respective notices or waivers of notice thereof. Special meetings of the
Board of Directors may be called on 24 hours' notice to each director,
personally or by telephone, telegram, telex or telecopier or sent by overnight
courier to each director at his designated address at least two days before the
meeting (with delivery scheduled to occur no later than the day before
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the meeting) or on five days' notice by mail. The notice of the meeting shall
state the general purpose of the meeting, but other routine business may be
conducted at the meeting without such matter being stated in the notice. Notice
of any special meeting need not be given to any director who shall attend such
meeting without protesting the lack of notice to him at the beginning of the
meeting, or to any director who shall waive notice of such meeting in writing,
whether before or after the time of such meeting, and any business may be
transacted thereat. No notice need be given of any adjourned meeting.
Section 3.11. Quorum. At all meetings of the Board of Directors the
presence of a majority of the Board of Directors in office shall constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
applicable law or the Certificate of Incorporation or these Bylaws. Even though
no quorum is present, a majority of the directors present at any meeting of the
Board of Directors, either regular or special, may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present, but may not adjourn such meeting to a time later than the time fixed
for the next regular meeting of the Board of Directors.
Section 3.12. Action Without a Meeting. Unless otherwise restricted by
applicable law, the Certificate of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting if all members of the Board of Directors consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 3.13. Meetings by Telephonic Communication. Unless otherwise
restricted by applicable law, the Certificate of Incorporation or these By-laws,
members of the Board of Directors may participate in the meeting of such Board
of Directors by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section shall
constitute presence in person at such meeting.
Section 3.14. Appointment of Committees. The Board of Directors may not
designate any committees to exercise any of the powers or authority of the Board
of Directors in the management of the property, affairs, or business of the
Corporation.
Section 3.15. Reliance on Accounts and Reports, Etc. A Director, in the
performance of his duties, shall be fully protected in relying in good faith on
the books of accounts or reports made to the Corporation by any of its officers,
or by an
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independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or in relying in good faith upon other
records of the Corporation.
Section 3.16. Compensation. Unless otherwise restricted by the Certificate
of Incorporation, the Board of Directors shall have authority to fix the
compensation of the Directors. The Directors may be paid their expenses, if any,
incurred on behalf of the Corporation or in connection with attendance at
meetings of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director, as the
Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
Officers
Section 4.1. Appointment by the Board of Directors. The officers of the
Corporation shall be chosen by the Board of Directors and shall include a
Chairman of the Board, a President, a Secretary and a Treasurer. The Board of
Directors may also appoint one or more Vice Presidents, one or more Assistant
Secretaries or Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 4.2. Any number of offices may be
held by the same person, unless the Certificate of Incorporation or these
By-Laws or applicable law otherwise provides.
Section 4.2. Election. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the following annual meeting of the Board of Directors. In
the event of the failure to elect officers at such annual meeting, officers may
be elected at any regular or special meeting of the Board of Directors. Each
officer shall hold office for the term for which he is elected and until his
successor has been duly elected and shall qualify, or until his death, or until
he has resigned or been removed in the manner provided in Section 4.4.
Section 4.3. Salaries. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors from time to time.
Section 4.4. Resignation, Removal. Any officer elected or appointed by the
Board of Directors may be removed, either with or without cause, at any time by
the affirmative vote of the majority of the whole Board of Directors at any
regular or
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special meeting. Any officer may resign at any time by giving written notice to
the Corporation. Any such resignation shall take effect at the date of receipt
of such notice or any later time specified therein and, unless otherwise
specified in such notice, the acceptance of the resignation shall not be
necessary to make it effective. Any vacancy occurring in any office of the
Corporation, by death, resignation, removal or otherwise, shall be filled by the
Board of Directors.
Section 4.5. Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors. The Chairman of the
Board shall be the chief executive officer of the Corporation (unless the
President shall be so designated by the Board of Directors), and he shall have
supervision over and may exercise general executive powers concerning all of the
business and other officers of the Corporation with the authority from time to
time to delegate to other officers such executive and other powers and duties as
he may deem advisable. The Chairman of the Board shall have such other powers
and duties as may be assigned to him from time to time by the Board or
prescribed by these By-laws.
Section 4.6. President. If so designated by the Board of Directors, the
President shall be the chief executive officer of the Corporation and shall have
powers and authority specified for such position in Section 4.5. In the absence
of the Chairman of the Board or in the event of his inability or refusal to act,
the President shall perform the duties and have all the powers of the Chairman
of the Board. He shall have such other powers and duties as may be assigned to
him from time to time by the Board or prescribed by these By-laws.
Section 4.7. Vice President. In the absence or in the event of the
inability or refusal to act of the Chairman of the Board and the President, the
Vice President (or if there be more than one Vice President, the Vice Presidents
in order of their rank or, if of equal rank, then in the order designated by the
Board of Directors, the Chairman of the Board or the President or, in the
absence of any designation, then in the order of their appointment) shall
perform the duties and have all the powers of and be subject to all restrictions
upon the Chairman of the Board and the President. The Vice Presidents shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe or as the President may from time to time
delegate to them. Except where by law the signature of the President is
required, any Vice President shall possess the same power as the President to
sign all certificates, contracts, obligations and other instruments of the
Corporation.
Section 4.8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings of the meetings of
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the Corporation and of the Board of Directors in a book to be kept for that
purpose. He shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board of Directors. He shall have
custody of the corporate seal of the Corporation and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by his signature. The Secretary shall perform such other duties and
have such other powers as the Board of Directors, the Chairman of the Board or
the President may from time to time prescribe.
Section 4.9. Assistant Secretary. The Assistant Secretary (or
if there be more than one Assistant Secretary, the Assistant Secretaries in the
order designated by the Board of Directors, the Chairman of the Board or the
President, or in the absence of any designation, then in the order of their
appointment) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary, and shall perform such other duties and have such other powers as the
Board of Directors, the Chairman of the Board or the President may from time to
time prescribe.
Section 4.10. Treasurer. The Treasurer shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
the receipts and disbursements in the books of the Corporation and shall deposit
all monies and other valuable effects in the name and to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors.
The Treasurer may disburse the funds of the Corporation as may be ordered by the
Board of Directors, the Chairman of the Board or the President, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
the President or the Board of Directors whenever requested, an account of all
his transactions as Treasurer and statement of the financial condition of the
Corporation. The Treasurer shall perform such other duties and have such other
powers as the Board of Directors, the Chairman of the Board or the President may
from time to time prescribe.
Section 4.11. Assistant Treasurer. The Assistant Treasurer (or
if there be more than one Assistant Treasurer, the Assistant Treasurers in the
order designated by the Board of Directors, the Chairman of the Board or the
President, or in the absence of any designation, then in the order of their
appointment) shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer, and shall perform such
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other duties and have such other powers as the Board of Directors or the
President may from time to time prescribe.
Section 4.12. Bonds. If expressly required by the Board of
Directors, the Treasurer and Assistant Treasurers and any other officers, agents
or employees shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of their respective duties and for the restoration to the
Corporation in case of their death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in their possession or under their control belonging to the Corporation.
ARTICLE V
Certificates of Stock
Section 5.1. Stock Certificates; Uncertificated Shares. The
shares of capital stock of the Corporation shall be represented by certificates,
provided that the Board of Directors may provide by resolution or resolutions
that some or all of any or all classes or series of its capital stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by uncertificated shares shall be entitled to
have a certificate, signed in the name of the Corporation by the Chairman of the
Board, the President or a Vice President and the Secretary or an Assistant
Secretary of the Corporation, and sealed with the seal of the Corporation,
certifying the number of shares in the Corporation registered in certificate
form and owned by him, with such legend or legends which may be required by the
Certificate of Incorporation, applicable law or otherwise, and such form as the
Board of Directors may determine.
Section 5.2. Signatures. If any stock certificate is manually
countersigned by either a transfer agent other than the Corporation or its
employee or by a registrar other than the Corporation or its employee, any other
signature on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
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<PAGE>
Section 5.3. Lost, Stolen or Destroyed Certificates. The Board
of Directors may direct that a new certificate or certificates be issued in
place of any certificate or certificates heretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representatives, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss, theft
or destruction of such certificate or the issuance of such new certificate.
Section 5.4. Transfers of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation, if the Board of Directors
has appointed a transfer agent, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, provided such transfer shall be permitted by applicable law and the
Certificate of Incorporation, it shall be the duty of the Corporation to issue
and such transfer agent to deliver a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 5.5. Registered Stockholders. Prior to due presentment
for transfer of a certificate for shares of capital stock, the Corporation shall
be entitled to recognize the exclusive right of a person registered on its books
as the owner of such shares to receive dividends and notifications, and to vote,
and to exercise all other rights and powers as owner, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Delaware.
Section 5.6. Transfer Agent; Registrar. The Board of Directors
may appoint one or more transfer agents and one or more registrars for shares of
capital stock of the Corporation, and may require all certificates representing
such shares to bear the signature of any such transfer agent or registrar.
Section 5.7. Record Date. In order that the Corporation may
determine the stockholders who are, and who shall be the only stockholders who
are, entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
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any rights with respect to any change, conversion or exchange of stock or for
the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any such other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
ARTICLE VI
Indemnification
The Corporation shall indemnify, in accordance with Article V of its
Certificate of Incorporation, its directors, officers, Delegates (as defined in
such Article V), agents and employees.
ARTICLE VII
General Provisions
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year or such other period as may be determined from time to time by the
Board of Directors.
Section 7.2. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal" and
"Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise. Except as otherwise required by
law, it shall not be necessary to the validity of any instrument executed by an
authorized officer or officers of the Corporation, that the execution of such
instrument be evidenced by the corporate seal, and all documents, instruments,
contracts and writings of all kinds signed on behalf of the Corporation by any
authorized officer or officers thereof shall be as effectual and binding on the
Corporation without the corporate seal, as if the execution of the same had been
evidenced by affixing the corporate seal thereto.
Section 7.3. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of capital stock of the Corporation, subject to the provisions of the
Certificate of Incorporation.
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<PAGE>
Section 7.4. Reserves. Before payment of any dividend there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors from time to time, in its absolute
discretion, thinks proper as a reserve or reserves to meeting contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve.
Section 7.5. Corporate Indebtedness. No loan shall be
contracted on behalf of the Corporation, and no evidence of indebtedness shall
be issued in its name, unless authorized by the Board of Directors. Such
authorization may be general or confined to specific instances. Loans so
authorized may be effected at any time for the Corporation from any bank, trust
company or other institution, or from any firm, corporation or individual. All
bonds, debentures, notes and other obligations or evidences of indebtedness of
the Corporation issued for such loans shall be made, executed and delivered as
the Board of Directors shall authorize. When so authorized by the Board of
Directors, any part of or all the properties, including contract rights, assets,
business or good-will of the Corporation, whether then owned or thereafter
acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in
trust as security for the payment of such bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation, and of the interest
thereon, by instruments, executed and delivered in the name of the Corporation.
Section 7.6. Deposits. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other depositaries
as may be determined by the Board of Directors, or by such officers or agents as
may be authorized by the Board to make such determination.
Section 7.7. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 7.8. Voting as Stockholder. Unless otherwise
determined by resolution of the Board of Directors, the Chairman of the Board,
the President or any Vice President shall have full power and authority on
behalf of the Corporation to attend any meeting of stockholders of any
corporation in which the Corporation may hold stock, and to act, vote (or
execute proxies to vote) and exercise in person or by proxy all other rights,
powers and privileges incident to the ownership of such stock. Such officers
acting on behalf of the Corporation shall have full power and authority to
execute any instrument expressing consent
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to or dissent from any action of any such corporation without a meeting. The
Board of Directors may by resolution from time to time confer such power and
authority upon any other person or persons.
Section 7.9. Manner of Notice. Whenever under the provisions
of any applicable law or the Certificate of Incorporation or these By-laws
notice is required to be given to any stockholder, director, or officer, such
notice may be given, in the case of stockholders, in writing, by mail, by
depositing the same in the post office or letterbox, in a postage-prepaid,
sealed wrapper, addressed to such stockholder, at such address as it appears on
the records of the Corporation, and, in the case of directors, and officers, by
mail, overnight courier, telephone or by telegram, telex or telecopier to the
last address made known to the Secretary of the Corporation of such persons.
Section 7.10. Waiver of Notice. Whenever any notice is
required to be given under the provisions of any applicable law or the
Certificate of Incorporation or these By-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
ARTICLE VIII
Amendments
Unless the Certificate of Incorporation or these Bylaws
otherwise provides, these By-laws may be altered, amended or repealed or new
By-laws may be adopted by the holders of 662/3% of the voting power of the
shares of capital stock of the Corporation then issued and outstanding and
entitled to vote generally in the election of directors or by the affirmative
vote of at least two-thirds of the directors of the Corporation (a) at any
regular meeting of the stockholders or the Board of Directors, (b) at any
special meeting of the stockholders or the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new By-laws be contained in the
notice of such special meeting, or (c) by action without a meeting taken
pursuant to these By-laws.
1299877.4
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re ) Chapter 11
)
GROSSMAN'S INC., dba ) Case No. 97-695 (PJW)
Contractors' Warehouse, )
Mr. 2nd's Bargain Outlet, )
Grossman's Bargain Outlet, )
GRS HOLDING COMPANY, INC. ) Case No. 97-696 (PJW)
and GRS REALTY COMPANY, INC. ) Case No. 97-697 (PJW)
)
Debtors. )
ORDER CONFIRMING JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
Grossman's Inc., GRS Holding Company, Inc. and GRS Realty Company, Inc.
(collectively, the "Debtors") together with JELD-WEN, inc. ("JELD-WEN") having
proposed and filed their Joint Plan of Reorganization Under Chapter 11 of the
United States Bankruptcy Code (the "Plan"); 1/ a confirmation hearing on the
Plan having been held by the Court on December 8, 1997 (the "Confirmation
Hearing"); all objections to confirmation of the Plan having been overruled,
resolved or withdrawn; and the Court being fully advised in the premises upon
the record of the Confirmation Hearing, the testimony of Dirck K. Iacobelli,
Chief Financial Officer of the Debtors, and all the proceedings held before
the Court in these cases;
NOW, THEREFORE, THE COURT HEREBY FINDS AND CONCLUDES:
A. Jurisdiction. This Court has jurisdiction over these Cases pursuant to
28 U.S.C. Section 1334. Confirmation of the Plan is a "core proceeding" pursuant
to, without limitation, 28 U.S.C. Sections 157(b)(2)(A), (L) and (O), and this
Court has jurisdiction to enter a Final Order confirming the Plan.
B. Approval of the Disclosure Statement. At a hearing held on October 27,
1997, the Court approved the Joint Disclosure Statement of Debtors and JELD-WEN,
inc. in Connection with Solicitation of Ballots with Respect to Joint Plan of
Reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Disclosure Statement") as containing "adequate information" within the meaning
of Section 1125(a)(1) of the Bankruptcy Code.
C. Filing of the Plan. The Debtors and JELD-WEN (collectively, the "Plan
Proponents") filed their Plan and Disclosure Statement on October 29, 1997. A
copy of the Plan is attached hereto as Exhibit A.
D. Solicitation. On November 5, 1997, the Plan Proponents transmitted a
copy of the Disclosure Statement and Plan, a form of ballot approved by this
Court and a notice of the Confirmation Hearing by United States mail to all
claim holders eligible to vote on the Plan in accordance with this Court's Order
Approving Disclosure Statement, Approving Voting and Solicitation Procedures and
Establishing Date and Procedures for Confirmation Hearing dated October 29, 1997
(the "Voting Procedures Order"). 2/ Notices of the Confirmation Hearing were
also mailed to unimpaired creditors and equity holders on November 5, 1997 in
accordance with the Voting Procedures Order.
E. Confirmation Hearing. The Confirmation Hearing was held by the Court on
December 8, 1997.
F. Notice. As approved by the Court, notice of the Confirmation Hearing was
provided to parties in interest as described in paragrah D above. Such notice
was adequate and sufficient under Section 102(1) of the Bankruptcy Code and
Bankruptcy Rule 2002.
G. Plan Compliance with Section 1129(a)(1). As required by
Section 1129(a)(1) of the Bankruptcy Code, the Plan complies with the applicable
provisions of the Bankruptcy Code, including, without limitation, as follows:
(i) As required by Code Section 1123(a)(1), the Plan, in Article 4,
properly designates classes of claims and interests and classifies only
substantially simiIlar claims and interests in the same classes pursuant to
Section 1122 of the Bankruptcy Code.
(ii) As required by Code Section 1123(a)(2), the Plan, in Article 5,
specifies the following classes as unimpaired:
Class 1 (Allowed Priority Non-Tax Claims);
Class 2B (Allowed Secured Claim of GDI under the Combined Investors Loan);
Section Class 3 (Allowed Secured Claim of Associates Commercial
Corporation).
(iii) Article 5 of the Plan also specifies the following classes as
impaired:
Class 2A (Allowed Secured Claim of GDI under GDI Loan
Agreement);
Class 4 (Allowed Miscellaneous Secured Claims);
Class 5 (Allowed Reclamation Claims);
Class 6 (Allowed Claims of Congress Financial Corporation);
Class 7 (Allowed Convenience Claims);
Class 8 (Allowed Unsecured Claims); and
Class 9A - 9C (Equity interests in each of the Debtors)
(iv) As required by Code SectionSection 1123(a)(3)-(4), Article 6 of the
Plan provides the treatment which each holder of an impaired claim is to
receive, and the Plan provides the same treatment or its economic equivalent for
each claim or interest in each particular class. The separate classification of
Class 7 and Class 8 claims is necessary and reasonable under the circumstances
of these Cases.
(v) As required by Code Section 1123(a)(5), the Plan provides
adequate means for its implementation. These include, but are not limited to,
the following: (a) the sources of funding for distributions under the Plan; (b)
the merger of the Debtors to form the Reorganized Company; (c) the issuance of
New Common Stock in the Reorganized Company; (d) the amendment of the Debtors'
charter and by-laws; (e) the assumption and rejection of executory contracts and
unexpired leases which have not been previously assumed or rejected; (f)
mechanisms for paying Administrative Expenses; and (g) the vesting of all assets
in the Reorganized Company.
(vi) As required by Code Section 1123(a)(6), the charter of the Reorganized
Company will include a provision prohibiting the issuance of nonvoting equity
securities and distributing the voting power as required under Section
1123(a)(6).
(vii) As required by Code Section 1123(a)(7), the terms of the Plan are
consistent with the interests of Creditors and equity security holders and with
public policy with respect to the manner of selection of the directors of the
Reorganized Company because they were selected through a consensual agreement
between the Debtors, JELD- WEN and the Creditors' Committee.
H. Plan Compliance with Section 1129(a)(2). As required by Code Section
1129(a)(2), the Plan Proponents have complied with the applicable provisions of
the Bankruptcy Code. Simultaneously with the solicitation of acceptances of the
Plan, the Debtors timely transmitted a copy of the Disclosure Statement and Plan
and form of ballot approved by this Court to all holders of claims eligible to
vote on the Plan. As noted above, the Disclosure Statement was found by the
Court to contain "adequate information" following notice and a hearing in
compliance with Bankruptcy Rule 3017.
I. Compliance with Section 1129(a)(3). There being no objection to the Plan
Proponents' good faith, and based upon the entire record of the proceedings
before the Court, the Court finds that the Plan is proposed in good faith and
not by any means forbidden by law, and therefore complies with the requirement
of Code Section 1129(a)(3). Pursuant to Bankruptcy Rule 3020(b)(2) the Court
need not take evidence on such issues and elects not to take evidence.
J. Compliance with Section 1129(a)(4). Pursuant to orders previously
entered in these Cases approving the retention of Professionals, payments made
or to be made by the Debtors for services rendered or for costs and expenses
incurred in connection with these Cases, or in connection with the Plan and
incident to these Cases, are subject to the approval of the Court as reasonable.
Accordingly, the Plan complies with Section 1129(a)(4) of the Bankruptcy Code.
K. Plan Compliance with Section 1129(a)(5).
(i) The Plan Proponents have disclosed in the Plan (Article 9) and
Disclosure Statement (pp. 27-28) the identity and affiliations of the
individuals who will serve as directors of the Reorganized Company following the
Effective Date, in compliance with Section 1129(a)(5)(A) of the Bankruptcy Code.
(ii) The appointment of the directors (or for existing directors who
continue to serve post-confirmation, their continuance in their current
positions) is consistent with the interests of Creditors and equity security
holders and with public policy. Accordingly, the Plan complies with Section
1129(a)(5)(A)(ii) of the Bankruptcy Code.
L. Plan Compliance with Section 1129(a)(6). No governmental regulatory
commission has jurisdiction over the approval of the Debtors' rates. Thus,
Section 1129(a)(6) of the Bankruptcy Code is inapplicable.
M. Plan Compliance with Section 1129(a)(7): Best Interests of Creditors. As
required by Code Section 1129(a)(7) and as evidenced by Articles VI and IX of
the Disclosure Statement and Exhibit II thereto and the undisputed testimony of
Mr. Iacobelli at the Confirmation Hearing, each holder of a Claim or interest in
an impaired class either accepted the Plan or will receive or retain property of
a value that is not less than the amount that such holder would receive or
retain were the Debtors liquidated under Chapter 7 of the Bankruptcy Code. As
demonstrated by Exhibit II to the Disclosure Statement, the holders of interests
in Classes 9A, 9B and 9C, which receive nothing pursuant to the Plan, would also
receive nothing under Chapter 7 of the Bankruptcy Code.
N. Plan Compliance with Section 1129(a)(8). The following classes are
unimpaired: Classes 1, 2B and 3. All other classes are impaired. As set forth in
the certified report of balloting filed herein and admitted into evidence at the
Confirmation Hearing, the following classes have accepted the Plan: Classes 2A,
4, 5, 6, 3/ 7 and 8. Classes 9A, 9B and 9C are impaired and will receive nothing
under the Plan and, therefore, are statutorily deemed to have rejected the Plan
under Section 1126(g) of the Bankruptcy Code. Notwithstanding the existence of
impaired, rejecting classes, confirmation is proper under Code Section 1129(b),
as set forth in ParagraphT below.
O. Compliance with Section 1129(a)(9). The Plan provides for the treatment
of administrative and priority claimants in accordance with the requirements of
Section 1129(a)(9) (except to the extent that a holder agrees otherwise) as
follows: (i) Pursuant to Article 3 of the Plan, holders of Administrative
Expenses will be paid in full on the later of:
(i) the Effective Date of the Plan or (ii) the date the Administrative
Expense is allowed by a final order of the Court.
(ii) Pursuant to Article 3 of the Plan, the Debtors have elected that
holders of Priority Tax Claims will receive the amount of the holder's Allowed
Priority Tax Claim in one Cash payment on the Effective Date or as soon as
practicable after such Priority Tax Claim is Allowed.
P. Compliance with Section 1129(a)(10). Classes 2A, 4, 5, 6, 7 and 8, each
of which is impaired pursuant to the Plan, have, excluding the votes of any
insiders of the Debtors, accepted the Plan. Based upon the certified balloting
report of Logan and Company, the Debtors' claims processing agent, offered by
the Debtors at the Confirmation Hearing, Exhibit B hereto is an accurate tally
of votes for each of these classes and shows that more than one-half in number
and at least two-thirds in amount of those actually voting in each of those
classes voted to accept the Plan.
Q. Feasibility (Section 1129(a)(11)). Based upon the testimony of Mr.
Iacobelli at the Confirmation Hearing, and Article VI and other sections of the
Disclosure Statement, the Debtors have demonstrated that implementation of the
Plan is feasible.
R. Compliance with Section 1129(a)(12). All fees payable under 28 U.S.C.
Section 1930 have been paid.
S. Compliance with Section 1129(a)(13). The Debtors have no retiree
benefits subject to Section 1114 of the Bankruptcy Code, because they have
settled the claims of all long term disability claimants. The objections of the
long-term disability claimants are being resolved by a stipulation to allow
their claim.
T. Confirmation Notwithstanding Deemed Rejection By Certain Classes
(Section 1129(b)). The Debtors have moved the Court to confirm the Plan despite
its deemed rejection by Classes 9A, 9B and 9C, each of which receives no
distribution pursuant to the Plan. In compliance with Section 1129(b), and as a
matter of law, the Plan may be confirmed despite the deemed rejection by these
classes. No holder of a claim or interest that is junior to any of these classes
receives or retains property pursuant to the Plan. Furthermore, the Plan treats
these classes according to their relative priorities and thus does not unfairly
discriminate against the holders of interests in these classes and is fair and
equitable. Accordingly, the Plan complies with the requirements of Section
1129(b) of the Bankruptcy Code.
U. Cap on Aggregate Amount of Allowed Unsecured Claims and Allowed
Convenience Claims; Treatment of Allowed Unsecured Claims.
(i) The Plan and Disclosure Statement provide, among other things, that the
Cash distributions set forth in the Plan (23 cents to Allowed Convenience Claims
and 17 cents to Allowed Unsecured Claims) are contingent upon the Plan
Proponents' determination at the time of confirmation that the total amount of
Allowed Unsecured Claims and Allowed Convenience Claims is not likely to exceed
$46.2 million. See Plan Section 15.2; Disclosure Statement pp. 7, 22, 28-29.
Based upon the testimony of Mr. Iacobelli at the Confirmation Hearing, the Court
finds that the total amount of Allowed Unsecured Claims and Allowed Convenience
Claims is likely to exceed $46.2 million.
(ii) The Plan and Disclosure Statement further provide that in the event
the total amount of such Claims is likely to exceed $46.2 million, the
Creditors' Committee may agree to cap all payouts to Allowed Unsecured Claims
and Allowed Convenience Claims to $8.25 million and proceed to confirmation
without reballoting. See Plan Section 15.2; Disclosure Statement pp. 7, 22,
28-29. The Plan and Disclosure Statement also provide that the Creditors'
Committee and the Plan Proponents may agree to a different treatment for Allowed
Unsecured and Convenience Claims without reballoting. Id.
(iii) Given that Allowed Unsecured Claims and Allowed Convenience Claims
are likely to exceed $46.2 million, the Plan Proponents and the Creditors'
Committee have agreed pursuant to Section 15.2 of the Plan that holders of
Allowed Class 8 Unsecured Claims shall receive their Pro Rata share of an
Unsecured Recovery Pool (as hereinafter defined) rather than the alternative of
an assured 17 cent distribution. Holders of Allowed Class 8 Unsecured Claims
shall still receive their Pro Rata share of 50% of the New Common Stock and
share Pro Rata with Allowed Class 7 Convenience Claims in the proceeds, if any,
(less recovery costs and fees) of the Assigned Actions. Modifications to the
Plan necessary to effectuate the above are set forth below in paragraph 4 of
this Order.
V. Other Requirements. No other Chapter 11 plan has been confirmed in these
cases and, therefore, this Plan complies with Code Section 1129(c). The
principal purpose of the Plan is neither the avoidance of taxes nor the
avoidance of the application of Section 5 of the Securities Act of 1933, as
amended, and, therefore, this Plan complies with Section 1129(d) of the
Bankruptcy Code.
W. The Releases. The releases contained in Article 9 of the Plan are
important to the overall objectives of the Plan and form a material inducement
to the execution and implementation of the Plan by the Plan Proponents. They
seek, to the greatest extent possible, to resolve claims, if any, among or
against the parties in interest in these cases, with respect to the Debtors,
their organization, capitalization and reorganization. Such resolution reduces
the possibility of post-confirmation contribution and indemnity claims against
the Debtors and reduces the likelihood of the Debtors' involvement in costly and
time-consuming litigation. The releases provided for in the Plan were
voluntarily and knowingly granted by the Debtors. In addition, Creditors voting
on the Plan could elect not to grant releases of their individual claims related
to the Debtors on their respective ballots. To the extent that the release
provisions of Article 9 of the Plan benefit non-debtor parties, such releases
constitute an integral part of the Plan and are the result of fair consideration
provided by such non-debtor parties. The concessions made by the parties are
fair, equitable and reasonable consideration sufficient to support the granting
of releases to such non-debtor parties.
X. Assumption and Rejection of Executory Contracts and Unexpired Leases.
The Plan is hereby deemed to constitute and incorporate a motion by the Debtors
to reject all executory contracts and unexpired leases to which a Debtor was a
party or is otherwise bound except for any contracts or leases that (a) are
specifically assumed under the Plan, (b) were assumed prior to the Confirmation
Hearing or (c) are subject to a motion to assume that is pending as of the
Confirmation Hearing. Attached hereto as Exhibit C is a list of the contracts
and leases that the Reorganized Company will assume upon confirmation of the
Plan. Exhibit C also sets forth the proposed cure amounts to be paid by the
Reorganized Company for each contract and lease. In accordance with the Voting
Procedures Order, the Debtors sent by United States mail a Notice of Assumption
of Executory Contracts and Unexpired Leases and Proposed Cure Payment Pursuant
to 11 U.S.C. Section 365(b) (the "Cure Notice") to all parties to the assumed
contracts and leases on November 14, 1997. Objections to the timely filed
proposed cure amounts (the "Cure Objections") will be heard on December 18, 1997
and such claims will be paid in the cure amount set forth in a final order.
Y. Objections to Confirmation. Confirmation of the Plan has been objected
to by the following parties and have been resolved, withdrawn or overruled for
the reasons set forth in the record and as set forth below:
(i) Pension Benefit Guaranty
Corporation: This informal letter objection has been resolved by inclusion of
paragraph 20 of this Order.
(ii) State of Connecticut: This objection has been resolved by the Debtors'
election set forth in Paragraph O above.
(iii) Hope Lancaster: Objection overruled. There is no unfettered choice of
forum for personal injury claims and Ms. Lancaster is subject to the global
litigation resolution procedures. The Plan does not prejudice Ms. Lancaster's
right to seek appropriate relief from this Court for cause shown if she wishes
to pursue her cause of action in Rhode Island state court, or the Reorganized
Company's right to object to any such requested relief.
(iv) Clemente Hassan: Objection overruled. Personal injury claims are
properly and commonly classified with other unsecured claims and therefore, the
Plan's classification of Mr. Hassan's claim in Class 8 is consistent with
Section 1122 and other applicable law.
(v) Dexter Abbey, John R. Alberts, James N. Belon, Roger D. Crawford,
Ronald O. Desilva, Susan N. Scully and Barbara Sollauer: Objection withdrawn
based on agreed treatment of their claims.
(vi) Board of Supervisors of Roanoke County, Virginia: Objection withdrawn
based on representations on record. (vii) Dr. and Mrs. Pelter: Objection
overruled. Disclosure was adequate and Section 1127 does not apply.
Z. Conclusions and Findings. The foregoing findings and conclusions satisfy
the requirements of Federal Rule of Bankruptcy Procedure 7052. A finding of fact
shall operate as a finding of fact, no matter how denominated, and a conclusion
of law shall operate as a conclusion of law, no matter how denominated.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED AS FOLLOWS:
0.0.1 Confirmation. The Plan, as attached to this Order and embodied in
this Order, including paragraph 4 hereof, is hereby confirmed. The terms of this
Order are controlling if any inconsistency exists between the Plan and this
Order.
0.0.2 Binding Effect. The Plan, its provisions and this Order shall be, and
hereby are, binding upon the Debtors, and any creditor or equity security holder
of the Debtors, whether or not the Claim or Interest of such creditor or equity
security holder is impaired under the Plan and whether or not such creditor or
equity security holder has accepted the Plan; provided, however, the releases of
individual claims related to the Debtors contained in Article 9 of the Plan
shall only be binding on those creditors who granted the releases in connection
with voting on the Plan.
0.0.3 Effect of Plan: Permanent Stay. On and after the Effective Date of
the Plan, except as to the enforcement of the Plan or this Order, all holders of
claims and interests arising prior to the Effective Date shall be permanently
barred and enjoined from asserting or continuing to assert against the Debtors
or their respective assets any and all claims based on any act or omission,
transaction or other activity of any kind or nature that occurred prior to the
entry of this Order.
0.0.4 Treatment of Holders of Allowed Class 8 Claims; Initial and
Subsequent Distributions. In accordance with Section 15.2 of the Plan and the
agreement of the Plan Proponents and the Creditors' Committee noted above in
Paragraph U, holders of Allowed Class 8 Claims shall be treated in accordance
with the following:
(a) Additional Definitions. In addition to the definitions contained in
Article 1 of the Plan, the terms listed below shall have the following meanings:
(i) Unsecured Recovery Pool means a guaranteed pool of $8.65 million less
the Cash Reserve Amount.
(ii) Cash Reserve Amount means an amount of cash approved by the Court as
necessary to reasonably assure that all holders of Contested Class 7 Claims,
once Allowed, will receive their respective Cash distributions in accordance
with Section 6.8 of the Plan. If such reserve for Class 7 Claims ultimately is
determined to be too large, such excess will be added to the Unsecured Recovery
Pool for distribution to Class 8 Creditors in accordance with the Plan and this
Order. All holders of Contested Class 8 Claims will receive their Pro Rata share
of the Unsecured Recovery Pool. The Plan Proponents and the Creditors' Committee
have filed a motion to establish the Cash Reserve Amount. That motion is
scheduled to be heard by the Court on December 18, 1997.
(b) Treatment of Class 8 Claims. Section 6.9.1 of the Plan shall be
replaced with the following:
6.9.1 Creditors in Class 8 which qualify as "qualified creditors"
under 26 U.S.C. Section 382(l)(5)(E) shall be paid their Pro Rata
share of the Unsecured Recovery Pool and receive their Pro Rata share
of 50% of the0 New Common Stock to be distributed as and when set
forth in (e) below. In addition, holders of Class 8 Claims shall share
Pro Rata with holders of Class 7 Claims in proceeds, if any, (less
recovery costs and fees) of the Assigned Actions.
(c) Source of Funding for Cash Distributions under the Plan. Sections
8.1.2 and 8.1.3 of the Plan shall be replaced with the following:
8.1.2. On the Effective Date, JELD-WEN shall provide the Reorganized
Company with a $10.9 million secured line of credit subordinated to
the Exit Financing Facility.
8.1.3. On the Effective Date, the Reorganized Company shall place
in the Escrow Account (i) the $8.25 million JELD-WEN cash contribution
provided for in Section 8.1.1 of this Plan and (ii) $400,000 from the
$10.9 million secured line of credit provided for in Section 8.1.2 of
this Plan. The $8.65 million in the Escrow Account shall be held by
the Escrow Agent for the sole benefit of holders of Class 7 and Class
8 Claims and shall be used solely to pay Allowed Class 7 and 8 Claims
in accordance with SectionSection 6.8 and 6.9 of this Plan.
(d) Timing of Cash Payments. Section 8.2 of the Plan shall be replaced with
the following: 8.2 Payments of Cash to holders of Allowed Administrative
Expenses and Allowed Priority Tax Claims shall be made in accordance with
Article 3 of this Plan. Payments of Cash to holders of Allowed Priority Non-Tax
Claims and Allowed Reclamation Claims who elect Option A shall be made on the
Effective Date. Cash distributions to holders of Allowed Convenience Claims and
Allowed Reclamation Claims who elect Option B shall be made as soon as
practicable after the Effective Date, but in no event as to each Allowed Claim
after the later of (i) 91 days after the Effective Date or (ii) 35 days after a
Final Order allowing the applicable Claim is entered. Payments of Cash to
holders of Allowed Unsecured Claims shall be made according to the initial,
subsequent and final distribution procedures set forth herein and in an order to
be entered in connection with Debtors' Motion to Set Reserve Amounts.
(e) Distributions to Holders of Class 8 Allowed Unsecured Claims. The
following provisions shall be inserted in the Plan as Sections 8.2.1,
8.2.2 and 8.2.3:
8.2.1 Initial Distributions to Holders of Allowed Unsecured
Claims. As soon as practicable following the Effective Date, but in no
event later than 61 days after the Effective Date, the Reorganized
Company shall make an initial distribution to holders of Allowed Class
8 Claims. The amount of the initial distribution shall be in such
percentage of each Allowed Class 8 Claim as the Court may order, but
as to each Allowed Class 8 Claim shall not exceed 14% of such Allowed
Claim.
8.2.2 Subsequent Distributions to Holders of Allowed Unsecured
Claims. Three months after the date of the initial distributions
described in Section 8.2.1 of this Plan and every three months
thereafter, the Reorganized Company shall make subsequent
distributions to holders of Class 8 Claims that have become Allowed
since the last distribution date. The subsequent distribution amount
shall be the same percentage of such Allowed Class 8 Claim as was made
to holders of Allowed Class 8 Claims in the initial distributions
described in Section 8.2.1. Upon consultation with the Creditors'
Committee, the Reorganized Company may (but is under no obligation) to
make additional distributions to recipients of initial and subsequent
distributions as is permissible in the prudent administration of the
Unsecured Recovery Pool.
8.2.3 Final Distributions to Holders of Allowed Unsecured Claims.
Whenever all Claims have been allowed or disallowed by final orders,
all holders of Allowed Class 8 Claims shall receive their Pro Rata
share (taking into account prior Class 8 distributions received by the
applicable Creditor) of the funds remaining, if any, in the Unsecured
Recovery Pool (including any interest that accrued thereon).
0.0.5 Distributions to Creditors who have Purchased Claims. In accordance
with Section 6.9.2 of the Plan, ECF Capital and any other purchasers of claims
who have acquired Class 8 Claims shall not receive any New Common Stock on
account of Claims that it has purchased during the course of these Cases. Claims
purchasers shall receive Class 7 treatment for each purchased claim which is
allowed in the amount of $25,000 or less and shall receive their Pro Rata
distribution of Cash on account of Class 8 Claims for each such purchased claim
allowed in the amount of greater than $25,000, plus a further distribution from
the Unsecured Recovery Pool when and if the Common Stock held by Class 8
Creditors is purchased by the Reorganized Company in the amount of the ratio of
the Allowed Class 8 Claims held by such Claims Purchaser to all Allowed Class 8
Claims times $8.25 million plus $577,500 per each full year that has elapsed
since the Effective Date. With respect to each Allowed Class 7 and Class 8
Claim, such claim purchaser shall share Pro Rata with other holders of Class 7
and Class 8 claims in the proceeds, if any, (less recovery costs and fees) of
the Assigned Actions.
0.0.6 Distributions of New Common Stock. New Common Stock shall be deemed
to be issued on the Effective Date. Actual physical shares of New Common Stock
shall be distributed in accordance with the Plan no later than 25 days after the
Effective Date.
0.0.7 Merger; Corporate Documents. In accordance with Code Sections
1123(a)(5)(C) and (I), GRS Holding Company, Inc. and GRS Realty Company, Inc.
shall be merged into Grossman's Inc. as soon as practicable after the Effective
Date. In addition, the Debtors' certificates of incorporation and by-laws shall
be restated to conform substantially to the Amended and Restated Certificate of
Incorporation and By- Laws attached to the Plan as Exhibits C and E.
(a) The foregoing actions shall be effectuated without the necessity of any
further corporate action, including, without limitation, the approval of the
shareholders or directors of the Debtors. 11 U.S.C. Section 1123(a)(5)(I); see
also Delaware Code Annotated tit. 8, Section 303 (1994)(the Delaware General
Corporation Law).
(b) The Debtors shall be, and hereby are, authorized and empowered to
execute documents and take any actions as may be necessary and appropriate to
merge and amend their certificates of incorporation and by-laws.
(c) The Secretary of State of the State of Delaware is instructed to accept
this Order in place of any evidence of resolutions or other corporate actions
necessary to amend and restate such certificates of incorporation which might
otherwise be required.
0.0.8 Authorizations. Upon the Effective Date, the Debtors shall be, and
hereby are, authorized and empowered, without further application to or Order of
this Court, to execute such documents and to take such actions as may be
necessary or appropriate to implement the Plan and the transactions contemplated
thereby, whether or not specifically referred to in the Plan (or related
documents).
0.0.9 No Tax or Assessment. There shall be no tax in violation of Section
1146(c) of the Bankruptcy Code. Any sales or other transfers of real estate or
other assets of the estates or distributions to Creditors hereunder either prior
to or following Confirmation shall not be subject to any stamp tax or similar
tax and all appropriate state and local officials are required and directed to
record such instrument or mortgage without payment of any such tax or
assessment.
0.0.10 Assumption of Certain Executory Contracts and Unexpired Leases. All
of the executory contracts and unexpired leases that are specified on Exhibit C
hereto are hereby assumed. Except as to those parties who filed Cure Objections,
the cure amounts listed on Exhibit C are sufficient to cure any and all existing
defaults, if any, under such contracts and leases and shall forever bind and bar
any parties to such contracts and leases from asserting any cure amounts or
other Claims under the contracts or leases that arose prior to the date of this
Order. All of the Cure Objections shall be adjourned to the Debtors' December
18, 1997 omnibus hearing before this Court. All cure amounts shall be paid as
soon as practicable after the Effective Date or the date such cure amount is
allowed by subsequent final order of this Court, whichever is later.
0.0.11 Rejection of Certain Executory Contracts and Unexpired Leases. Any
executory contract or unexpired lease that is not specified on Exhibit C is
hereby rejected. Any and all claims arising from rejection under the Plan must
be filed within 45 days of the Effective Date. For executory contracts and
unexpired leases rejected by earlier Court orders, no claims will be allowed
with respect to such rejection unless the claim is valid and previously filed
within the time specified in the order rejecting such contract or lease. As
provided further below, the Debtors shall send a notice of confirmation, the
administrative bar date and the bar date for claims relating to contracts and
leases rejected under the Plan to all creditors no later than December 30, 1997.
A notice substantially in the form of Exhibit D hereto shall be sufficient to
notify creditors of the bar date for rejection and other damages for contracts
and leases rejected under the Plan.
0.0.12 Manner of Notices and Distributions. All notices, payments and other
distributions to be made by the Debtors pursuant to the Plan, this Order or the
Voting Procedures Order shall be timely and proper if mailed by first class mail
to the address listed by such holder in its proof of claim filed in these cases,
or, if the foregoing is not applicable, the last known address of the persons
entitled thereto.
0.0.13 Releases and Injunctions. On the Effective Date, the following
individuals and entities shall be forever released and discharged from any and
all claims, actions, suites, debts, accounts, causes of action, agreements,
promises, damages, judgments, demands and liabilities which any of the Debtors
or those Creditors who gave releases in connection with voting on the Plan may
have against them related to the Debtors or these Cases: (i) all directors,
officers, employees and agents of the Debtors who served the Debtors on or after
the Petition Date; (ii) JELD-WEN and any of its affiliates; and (iii) John Grey,
Maurice Grossman, Leo Kahn and Samuel Witt. Nothing herein shall alter the
obligations of JELD-WEN and other parties under the Plan, this Order and under
the financing and other agreements which will be in place post- confirmation as
provided in the Plan.
0.0.14 Retention of Jurisdiction. The Court shall, and hereby does, retain
jurisdiction of these cases for all of the purposes set forth in Article 12 of
the Plan and for the purposes provided in Section 1127(b) and 1142 of the
Bankruptcy Code and Bankruptcy Rule 3020(d).
0.0.15 The Official Committees. The Equity Committee shall be dissolved on
the Effective Date. The Creditors' Committee shall continue in effect following
the Effective Date for the purposes described in Section 14.3 of the Plan. The
Creditors' Committee shall be compensated for services rendered from and after
the Effective Date only in accordance with Section 14.3.2 of the Plan.
0.0.16 Reporting. The Debtors' first preliminary or interim reports of
distribution shall be prepared and filed with the Court and the Office of the
United States Trustee no later than 60 days after the Effective Date of the
Plan. The Debtors shall prepare and file any further interim reports as the
Court shall deem necessary.
0.0.17 Administrative Expense Claims and Bar Date. All claims against the
Debtors for administrative expenses pursuant to Section 503 of the Bankruptcy
Code (other than Professionals' request for compensation and reimbursement of
expenses, procedures for which are described below, and post-petition extensions
of trade credit) must be filed in accordance with all of the requirements set
forth herein no later than 45 days after the Effective Date of the Plan.
(a) Administrative expense claims must be in the form of an application for
payment. Such application must be served upon the Debtors, JELD-WEN and the
Creditors' Committee and each of their respective counsel at the addresses set
forth in Article 13 of the Plan so that it is received no later than five
business days after the application is filed with the Court. The claimant must
seek a preliminary hearing date for no earlier than 30 days after filing of the
application and no later than March 31, 1998.
(b) The Debtors (or the Reorganized Company as their successor) must file
any objections to properly filed applications for such claims no later than 5
days before the hearing date established by the claimant.
(c) Administrative expense claims filed in the form of a proof of claim
shall not be valid and shall be automatically disallowed. Claimants who have
previously filed proofs of claim which include an administrative expense claim
but which have not yet been allowed must file an application or all
administrative expense claims of such claimant will be disallowed.
(d) The Debtors shall send a notice of confirmation, notice of the
administrative bar date and the bar date for claims relating to contracts and
leases rejected under the Plan to all creditors no later than December 30, 1997.
A notice substantially in the form of Exhibit D hereto shall be sufficient to
notify creditors of the administrative bar date.
(e) All administrative expense claims not filed and set for hearing within
the time limitations set forth herein will be forever barred and discharged.
0.0.18 Professional Fees and Expenses. Professionals' requests for
compensation and reimbursement of expenses shall not be subject to the
administrative bar date discussed in the preceding paragraph. Professionals
shall be compensated by the Debtors under the procedures described below.
(a) For fees and expenses incurred prior to the Effective Date,
Professionals must submit a final fee application no later than January 15,
1998. 4/ A hearing on the final fee applications and any procedures
relating thereto shall be set at the Court's convenience.
(b) For fees and expenses incurred on and after the Effective Date of this
Order, Professionals employed by the Debtors may be compensated and reimbursed
without any application to this Court. Unless otherwise agreed to between the
Reorganized Company and any Professional, the following procedures shall apply:
(i) Professionals shall submit monthly invoices to the Reorganized Company.
(ii) The Reorganized Company shall pay each monthly invoice in full
(without any holdback) within 15 days of receipt of such invoice unless the
Reorganized Company disputes or objects to the invoice.
(iii) If the Reorganized Company has an objection to a monthly invoice, the
Reorganized Company shall notify the Professional of its objection and pay the
undisputed portion of the invoice, if any, within 15 days of receipt of such
invoice. If the Reorganized Debtor and the Professional cannot resolve the
objection, then the Professional may request a hearing and the Court shall
resolve the objection.
Notwithstanding Paragraph 18(B) hereof, the Creditors' Committee shall only
be compensated in accordance with the procedures set forth in Article 14 of the
Plan for services and expenses from and after the Effective Date.
0.0.19 Statutory Fees. Any fees remaining due under 28 U.S.C. Section 1930
shall be paid on the Effective Date.
0.0.20 Pension Plan. As part of the Plan and pursuant to a Stipulation
approved by the Court on October 21, 1997, between the Debtors and the Pension
Benefit Guaranty Corporation ("PBGC"), the Reorganized Company will be the
sponsor of the Grossman's Inc. Retirement Plan ("Pension Plan"). The Reorganized
Company will continue to administer the Pension Plan in accordance with Title IV
of ERISA, 29 U.S.C. Sections 1001 et seq. and will comply with all funding and
other requirements of ERISA. The Reorganized Company will be responsible for any
liability resulting from the termination of the Pension Plan. The Reorganized
Company's liability under 29 U.S.C. Sections 1307 and 1362 shall not be affected
in any way by this reorganization proceeding, including by discharge. Any claims
for or related to the Pension Plan by PBGC will be treated as arising after
confirmation.
0.0.21 Notice of Confirmation. Service of a notice, substantially in the
form attached hereto as Exhibit D, which form is hereby approved, shall be made
by first class mail on or before December 30, 1997, upon the following: (i) the
Office of the United States Trustee, (ii) the Creditors' Committee, (iii) the
Official Committee of Equity Security Holders, (iv) all known creditors of the
Debtors, (v) all equity security holders of the Debtors and (vi) all parties
having requested notices in these cases. The Debtors shall also publish such
notice in the National Edition of the Wall Street Journal as soon as practicable
after the Effective Date of the Plan. Such notice shall constitute good and
sufficient notice of this Order in compliance with the provisions of Bankruptcy
Rules 3020(c) and 2002.
Dated: Wilmington, Delaware
_______________, 1997
The Honorable Peter J. Walsh
United States Bankruptcy Court
1/ Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Plan.
2/ Approximately 30 Class 4 creditors
(miscellaneous secured creditors) were mailed Class 4 ballots on November 13,
1997.
3/ Class 6, the Allowed Secured Claim of Congress Financial Corporation,
was fully satisfied in accordance with the terms of the settlement of the
Congress Adversary Proceeding and therefore is presumed to accept.
4/Professional need not file a second interim application for the period
August 1, 1997 through November 30, 1997 as contemplated in the Court's Order
Under Sections 105(a) and 331 of the Bankruptcy Code Establishing Procedures for
Interim Compensation and Reimbursement of Expenses for Main Professionals and
Committee Members.
<PAGE>
EXHIBIT A (see above on Exhibit 2 to this Current Report on Form 8-K)
<PAGE>
EXHIBIT B
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
:
In re: : Case No. 97-695 (PJW)
:
GROSSMAN'S INC. : Chapter 11
GRS HOLDING COMPANY, INC. :
and GRS REALTY COMPANY, INC. :
:
Debtors. : Jointly Administered
- ------------------------------------------:
DECLARATION OF LOGAN & COMPANY, INC.
CERTIFYING (i) THE METHODOLOGY FOR THE
TABULATION OF, AND (ii) RESULTS OF VOTING WITH RESPECT
TO THE DEBTORS' JOINT PLAN OF REORGANIZATION
I, KATHLEEN M. LOGAN, make the following declaration under penalty of
perjury:
1. I am the President of Logan & Company, Inc. ("Logan") and have personal
knowledge of the facts set forth herein.
2. Pursuant to (a) the "Order Approving Debtor's Agreement With Logan &
Company, Inc. And Appointing Logan & Company, Inc. As Agent Of The Bankruptcy
Court Pursuant To 28 U.S.C. Section 156(C)" (the "Order") entered by the United
States Bankruptcy Court for the District of Delaware, (the "Court"), Logan was
appointed, inter alia, to act as solicitation agent to Grossman's Inc., GRS
Holding Company, Inc. and GRS Realty Company, Inc., the above-referenced debtors
and debtors in possession (the "Debtors"), for the purposes of receiving and
tabulating the ballots accepting or rejecting the Joint Plan of Reorganization
(the "Plan") proposed in the above-referenced Chapter 11 cases.
- -----------------------------------
Capitalized terms used herein that are not otherwise defined herein have the
meanings ascribed thereto in the Plan.
<PAGE>
3. Pursuant to the Plan, Ballots were solicited from the holders of Allowed
Claims and Allowed Interests in the following Classes:
Class 2A. -- Allowed Secured Claim of GDI under the GDI Loan
Agreement
Class 4. -- Allowed Miscellaneous Secured Claims
Class 5 . -- Allowed Reclamation Claims
Class 6 . -- Allowed Claim of Congress Financial Corporation
Class 7 . -- Allowed Convenience Claims
Class 8 . -- Allowed Unsecured Claims
`4. All Ballots in the Classes set forth in paragraph 3 above, were to be
mailed or delivered by hand or overnight courier to Logan at 615 Washington
Street, Hoboken, New Jersey 07030, so as to be received no later than 4:00 p.m.,
Eastern Time, on December 3, 1997 (the "Voting Deadline").
5. Upon receipt of the envelopes containing Ballots, Logan adhered to the
following procedures:
A. The envelopes were opened and the Ballots were removed and stamped with
the date ("Julian Date") and time of receipt. The Ballots were inspected for
form.
B. Properly executed Ballots were tabulated according to the following
methodology:
(i) The Ballots were divided into groups of approximately twenty-five (25)
and each group was assigned a batch number ("Batch Number");
(ii) The Ballots assigned to each batch were sequentially numbered "1"
through "25" ("Sequence Number");
(iii) Clerical personnel then entered into a computer database, reserved
exclusively for recording votes, the Julian Date, Batch Number, Sequence Number,
and whether said Ballot indicated acceptance or rejection of the Plan.
C. The tabulation was audited on a daily basis and again at the time of
certifying the tabulation.
D. All properly executed Ballots for Classes 2A, 4, 5, 6, 7 and 8 which
were received by Logan on or before the Voting Deadline were tabulated in
accordance with the above procedures.
<PAGE>
6. The results of the aforesaid tabulation of the properly executed and
timely Ballots are set forth below. Annexed hereto as Exhibit A and Exhibit B,
respectively, are listings of the identities of the voters filing acceptances
and rejections of the Plan.
<TABLE>
<CAPTION>
ACCEPTING REJECTING
HOLDERS AMOUNT HOLDER AMOUNT
<S> <C> <C> <C> <C>
CLASS 2A - ALLOWED SECURED CLAIM
OF GDI UNDER THE GDI LOAN
AGREEMENT 1 (100%) $ 1,700,000.00 (100%) 0 0
CLASS 4 - ALLOWED MISCELLANEOUS
SECURED CLAIMS 2 (100%) $ 214,032.61 (100%) 0 0
CLASS 5 - ALLOWED RECLAMATION
CLAIMS 13 (100%) $ 987,464.30 (100%) 0 0
CLASS 7 - ALLOWED CONVENIENCE
CLASS CLAIMS 330 (95.10%) $ 1,987,880.91 (97.45%) 17 (4.90%) $52,005.63 (2.55%)
CLASS 8 - ALLOWED UNSECURED CLAIMS 137 (98.56%) $21,072,597.72 (99.58%) 2 (1.44%) $89,845.47 (0.42%)
</TABLE>
7. Any holder of an Allowed Class 5 Claim may elect on its Ballot to (A)
receive cash payments equal to 70% of its Allowed Reclamation Claim; or (B)
timely commence an adversary proceeding seeking to have its Claim paid in full
as an Administrative Expense. Of the 13 voters returning Class 5 Ballots, 11
voters elected Option A on the face of the Ballot. The remaining 2 voters did
not select either Option A or Option B. Annexed hereto is Exhibit C listing the
identities of the voters electing Option A treatment.
8. Any Eligible Class 5, 7 and 8 Claim Holder may elect on its Ballot not
to be bound by the releases set forth in Section 9.10 of the Plan. Annexed
hereto as Exhibit D is a listing of the identities of the voters electing not to
be bound by the releases set for in Section 9.10 of the Plan.
CERTIFICATION
I hereby certify that the foregoing is true and correct to the best of my
knowledge and belief, and I am aware that if any of these statements are
knowingly false, I am subject to punishment.
Hoboken, New Jersey
December , 1997
By:____________________________
Kathleen M. Logan
<PAGE>
EXHIBIT C
EXHIBIT C
ASSUMED CONTRACTS AND LEASES(1)
<TABLE>
<CAPTION>
Party to Type of Proposed
Contract or Lease Contract or Lease Cure Amount(s)
==================================== ========================================================================== ==================
<S> <C> <C>
Abraham, Ida & Cawley, Donna Real Property $1,149.65
6 Brownstone Terrace
Jamaica Plain, MA 02130 Address: 600 Providence Highway
Creditor ID: 00025045 Walpole, MA 02081
Lease: Store
Angels Auto Sales, Inc. Real Property $0.00
100 Foster St.
Peabody, MA 01960 Address: 100 Foster St.
Peabody, MA 01960
Lease: Store
Atchinson, Topeka & Sante Fe Real Property $0.00
Railway Co.
One Santa Fe Plaza Address: 7601 Telegraph Road
920 Southeast Quincy Street Montebello, CA 90640
Topeka, KS 66612 Lease: Land
Creditor ID: 00001264
Bacon Realty Corporation Real Property $1,957.51
Attn: M. Hammond or K. Hecht
P.O. Box 404 Address: 129-137 Beacon Street
Medford, MA 02155 Waltham, MA 02154
Creditor ID: 00000186 Lease: Store
Black Sable Properties Real Property $4,166.68
c/o Safari Business Center
2020 S. Lynx Trail Address: 2245 West Valley Blvd.
Ontario, CA 91761 Colton, CA 92324
Creditor ID: 00031555 Lease: Store
Boston Safe Deposit & Trust Real Property $543.20
Attn: Lori Maloney
Trustee of Bethany Realty Trust Address: 240 Wood Road
One Boston Place Braintree, MA
Boston, MA 02108 Lease: Store
-------- 1 This Exhibit A lists the leases and contracts that the Debtors
intend to assume upon confirmation of the Plan to which this list is attached.
The Debtors, however, reserve the right to amend or otherwise modify this list
prior to confirmation of the Plan. Debtors will send a notice of proposed cure
amounts to all affected landlords and other parties to the contracts in
accordance with this Court's Order approving Disclosure Statement, approving
Voting and Solicitation Procedures, and Establishing Date and Procedures for
Confirmation Hearing.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Party to Type of Proposed
Contract or Lease Contract or Lease Cure Amount(s)
==================================== ========================================================================== ==================
<S> <S> <C>
First Evans Associates, Limited Real Property $0.00
Partnership
c/o FEA, Inc. Address: 20 Pilla Street
Attn: Alan Gordon Warwick, RI 02886
521 Fifth Ave., Suite 2300 Lease: Store
New York, NY 10175
Creditor ID: 00000187 Address: 11200 Midlothian Pike
Richmond, VA $0.00
Lease: Store
Harcross Lumber & Building Real Property $0.00
3517 Brandon Ave. SW
Roanoke, VA 24022 Address: Henderson, NC
LaCava Family Trust c/o LaCava Real Property $416.67
Assoc.
Attn: Anthony DeLosa Address: 634 Plain Street
181 Boston Post Road West Marshfield, MA 02050
Marlboro, MA 01752 Lease: Store
Creditor ID: 00000211
Branford JS Holding LLC Real Property $0.00
c/o JW Katzen Company
40 Nomantura St. Address: Branford, CT.
Newton, MA 02158
Assignment: Store Lease
Mary Lee Stigler Real Property $0.00
c/o The Farly Co.
15th Floor Address: Branford, CT.
100 Pearl Street
Hartford, CT 06103 Lease: Store
Twin Cities Realty Co. Real Property $1,312.50
517 Mineral Spring Avenue
Pawtucket, RI 02860 Address: Central Falls, RI
Lease: Store
Vava Realty Inc. Real Property $2,500.00
Attn: Vincent Fedele
1020 Maple Street Address: 965 Maple Street
Rochester, NY 14611 Rochester, NY 14611
Creditor ID: 00000184 Lease: Store
ADT Security (307) Equipment $0.00
1710 Dividend Road
Ft. Wayne, IN 46808 Description: Store Branch:
Creditor ID: 00032677 Misc. Alarm Systems 307/Ft. Wayne
Brown Investments Real Property $8,622.18
Ira M. & Allene E. Brown
Attn: Steve Brown Address: 7250 Laurel Canyon Boulevard
12800 Foothill Blvd., Unit B North Hollywood, CA
Sylmar, CA 91342 Lease: Store
Creditor ID: 00000205
<PAGE>
Butler Real Estate Real Property
BMA Tower Penn Valley Park
Attn: Thomas Hall Address: 2560 Shadeland Avenue $10,364.14
31st St. & Southwest Trafficway Indianapolis, IN 46219
Kansas City, MO 64108 Lease: Store
Creditor ID: 00002267
Address: 2219 Contractors Drive $8,129.40
Ft. Wayne, IN 46818
Lease: Store
Address: 700 Enterprise Circle
Lexington, KY 40510 $7,390.83
Lease: Store
Cancilla Properties Inc. Real Property $5,000.08
Attn: Edward Cancilla
2902 Stone Pine Address: 17600 S. Main Street
Orange, CA 92667 Carson, CA 90745
Creditor ID: 00000210 Lease: Store
CLP Properties, Inc. Real Property $4,510.98
Attn: Carolwood Properties
Elbar Investments L.P. Address: 2625 Johnson Drive
5636 Van Nuys Blvd., Suite A Ventura, CA
Van Nuys, CA 91401 Lease: Store
Creditor ID: 00000202
Jacques Y. & Henriette D'Arlin Real Property $45,213.10
2415 East Ocean Boulevard
Suite No. 4 Address: 601 East Imperial Highway
Long Beach, CA 90803 La Habra, CA 90631
Creditor ID: 00001267 Lease: Store
Davis, S. Robert Real Property $76,231.89
5720 Avery Road
Amlin, OH 43002 Address: 4252 Groves Road
Creditor ID: 00032578 Columbus, OH 43232
Lease: Store
Delaware & Hudson Railroad Real Property $0.00
Corp.
c/o Leasing Dept. Address: Schenectady Railroad
P.O. Box 8002 Lease: Land
Clifton Park, NY 12065
Creditor ID: 00025857
Delta Associates Nominee Trust Real Property $0.00
Brian S. Tedeschi & Brian P.
Curtis Address: Eastway Plaza
14 Howard Street Route 123, Centre Avenue
Rockland, MA 02370 Brockton, MA
Creditor ID: 00001278 Lease: Store
<PAGE>
HMG Fieber Realty Trust Real Property $3,155.82
c/o Lavin Realty Adv. (For all of the
1266 Furnace Brook Pkwy. Address: 77 Southbridge Street leases of HMG,
Attn: James Lavin Auburn, MA 01501 Fieber Realty
Quincy, MA 02169 Lease: Land Trust)
Creditor ID: 00026304
Address: 77 Southbridge Street
Auburn, MA 01501
Lease: Store
Address: 4377 N. Homer Avenue E
Cortland, NY 13045
Lease: Store
Address: 480 Water Street
Fitchburg, MA 01420
Lease: Store
Address: Harter & Folts Streets
Herkimer, NY 13350
Lease: Store
Address: 428 Albany Avenue, Rte. 9W
Kingston, NY 12401
Lease: Store
Address: 163 Troy Road
Latham, NY 12110
Lease: Store
Address: 750 South Bay Road
North Syracuse, NY 13212
Lease: Store
Address: 1410 Erie Boulevard
Schenectady, NY 12305
Lease: Store
Jonda Enterprises Ltd. Real Property $8,861.48
c/o David Karney #606
12011 San Vicente Blvd. Address: 7601 Telegraph Road
Los Angeles, CA 90049 Montebello, CA 90640
Creditor ID: 00030262 Lease: Store & Land
Kimco Development of Dayton Real Property $61,847.01
c/o Kimco Realty Corporation
Suite 100, 3333 New Hyde Park Address: 1750 Woodman Drive
Road Dayton, OH 45420
P.O. Box 5020 Lease: Store
New Hyde Park, NY 11042
Creditor ID: 00000203
<PAGE>
King Real Estate Corporation Real Property $0.00
Attn: John Finley
c/o Creative Development Address: 160 Lenox Street
Company Norwood, MA
77 Franklin Street Lease: Store
Boston, MA 02110
Creditor ID: 00000182
Lainer Enterprises, Inc. Real Property $4,831.31
Attn: Simha Lainer/Sara Lainer
16215 Kittridge St. Address: 11975-77 Sherman Road
Van Nuys, CA 91408 North Hollywood, CA 91600
Creditor ID: 00000197 Lease: Store
Lorenz, H.J. Real Property $11,059.39
P.O. Box 1588
Sun Valley, ID 83353 Address: 5950 Paramount Blvd.
Creditor ID: 00000195 Long Beach, CA 90805
Lease: Store
Norwood R.E. Partners Real Property $67,473.31
c/o Belvedere Corp. 500 Carew
Tower Address: 4643 Forest Avenue
Attn: Joan Hensler Bittner (Central Park Business Park)
441 Vine Street Norwood (Cincinnati), OH
Cincinnati, OH 45202 Lease: Store
Creditor ID: 00032154
Real Estate Investment Trust Real Property $0.00
Attn: Lee Carson
12011 San Vicente Blvd. Address: 2625 Johnson Drive
Suite 707 Ventura, CA 93003
Los Angeles, CA 90049 Lease: Store
Creditor ID: 00001266
Safco Equity Partnership Real Property $13,378.21
Attn: John Safi
1850 S. Sepulveda Blvd., Ste. Address: 1680 Mission Blvd. & Corona Expressway
200 Pomona, CA 91766
Los Angeles, CA 90025 Lease: Store
Creditor ID: 00000199
W.J. & R.W. Realty Corp. Real Property $5,191.30
Attn: W. Joseph Hotin
355 Keedsdale road Address: 1460 Military Road
P.O. Box 1860 Tonawanda, NY 14217
Milton, MA 02186
Creditor ID: 00000208 Lease: Store
Step Ahead Investments Inc. Real Property $1,637.37
Attn: William D. Coyle
3222 Winona Way Address: Western Division Office
North Highlands, CA 95660 Suite 201, 3222 Winona Way
Creditor ID: 00029982 North Highlands, CA 95660
<PAGE>
A.C.T. Security Systems Equipment $0.00
150 Kerry Place
Norwood, MA 02062 Description: Perimeter Security-Fire; System Lease
Creditor ID: 00025033
ADT Equipment $0.00
Attn: Nancy Lohnes
1819 O'Brien Road Description: Misc. Alarm Systems
Columbus, OH 43228
Creditor ID: 00002024 Store/Branch: 306/Columbus
ADT Alarm Equipment $0.00
Attn: Billing
234 MacCarty Court Description: Misc. Alarm Systems
Lexington, KY 40508
Creditor ID: 00002030 Store/Branch: 305/Lexington
American Equipment Leasing Equipment $0.00
Attn: Harry Schneider
2670 Chancellor Drive Description: Store/Branch:
Crestview Hills, KY 41017 Misc. Compressors 527/Ventura & 528/Long Beach &
Creditor ID: 00002068
703/Montebello
Misc. Tool Rental, 704/N. Hollywood & 705 Pomona &
Light Towers 707/La Habra & 708/Sacramento &
712/Carson & 713/Colton
ASI Hoosier Alarm Equipment $0.00
Attn: Carol Arnold
7311 East 43rd Street Description:
Indianapolis, IN 46226 Misc. Alarm Systems
Creditor ID: 00002020
Store/Branch: 303/Indianapolis
Associates Leasing Equipment $0.00
Attn: Dan Petzold
333 West Pierce Road, Ste. 200 Description:
Itasca, IL 60143 Misc. Truck Radios
Creditor ID: 00002039
Store/Branch: 301/Cincinnati
AT&T Credit Corp. Equipment $871.17
Attn: Swati Modh
2 Gatehall Drive Description: Store/Branch:
Parsippany, NJ 07054
Creditor ID: 00002011 Misc. Phone System 307/Ft. Wayne & 306/Columbus
303/Indianapolis & 302/Dayton
301/Cincinnati
Misc. POS System 307/Ft. Wayne & 306/Columbus
Misc. POS System 306/Columbus
<PAGE>
AT&T Capital Leasing Equipment $898.10
The Corporate Center
P.O. Box 85047 Description: Store/Branch:
Louisville, KY 40285 Misc. Copy Machine/ 528/Long Beach & 703/Montebello
Creditor ID: 00030135 FAX Machine & 705/Pomona & 708/Sacramento &
712/Carson & 713/Colton
Misc. Copy Machine 707/La Habra & West Coast Office
Misc. P.O.S. West Coast Office
Description: Store/Branch:
Misc. Computers West Coast Office
Midwest Div. Office
AT&T Credit 40285 Equipment $0.00
Global Info Solutions
P.O. Box 85375 Description: Master Lease/POS Equipment (Western/Midwest Division)
Attn: Rick Steffey
Louisville, KY 40285
Creditor ID: 00032490
BancBoston Leasing Inc. Equipment $49,625.33
Attn: Peter Fox
100 Federal Street Description: Master Lease Store/Branch:
Boston, MA 02110 Misc. Racking 301/Cincinnati
Creditor ID: 00025242 and Racks, Fixtures, Sign Western & Midwest
00029997 Printer & Forklifts Division
Computer & Safe
BankSystems Marketing, Inc. Equipment $0.00
1253 Eagan Industrial RD2
Eagan, MN 55121 Description: Store/Branch:
Creditor ID: 00029999 Misc. Check Encoder 527/Ventura & 528/Long Beach &
703/Montebello
Misc. Check Encoder, 704/N. Hollywood & 705/Pomona
Coin Counter & 707/La Habra
Dial One Security Equipment $0.00
Attn: Dennis Toon
6114 Madison Road Description: Store/Branch:
Cincinnati, OH 45201 Misc. Security Cameras 302/Dayton
Creditor ID: 00002036 Misc. Alarm Systems 302/Dayton
Description: Store/Branch:
Misc. Postage Machine 302/Dayton
Ervin Leasing Equipment $0.00
Attn: Dan Petzold
3300 Washtenaw Avenue Description:
Suite 230 Misc. Architectural Store/Branch:
Ann Arbor, MI 48103 Equipment 307/Ft. Wayne & 305/Lexington
Creditor ID: 00002015 302/Dayton & 301/Cincinnati
<PAGE>
Fleet Capital Leasing Equipment $0.00
Attn: R. Berkmeier Asst. VP
50 Kennedy Plaza, 5th Flr. Description: Store/Branch:
Providence, RI 02903 Misc. Computer, Racks West Coast Office
Creditor ID: 00026108
Fleet Credit Corp. Equipment $0.00
111 Westminster St.
Providence, RI 02903 Description: Master Lease Store/Branch:
Creditor ID: 00026109 Computer Midwest Division
Equipment, H
Frames
Gateway Leasing Equipment $0.00
Attn: Tom Lowry
6919 Brookside Avenue Description: Store/Branch:
Westchester, OH 45069 Misc. Ditchwitch 302/Dayton
Creditor ID: 00002034
GE Capital Equipment $9,456.11
Attn: David A. Warfield
Husch & Eppenberger Description: Master Lease Store/Branch:
100 N. Broadway, Suite 1300 Auto Stack Midwest Division
St. Louis, MO 63102 System &
Creditor ID: 00002008 and POS Equip.
00026200 Store Fixtures
Keycorp Leasing Ltd. Equipment $11,528.15
P.O. Box 1865
54 State Street Description: Store/Branch:
Albany, NY 12201 Misc. Store Fixtures 301/Cincinnati
Creditor ID: 00030739 (Racking)
Misc. (Racking Carts) 301/Cincinnati
Misc. POS Computers 301/Cincinnati
Misc. Copier, Computers Midwest Div. Office
Misc. Racks, Carts
Master Lease Western & Midwestern Div.
Step Beams
Leasetec Corporation Equipment $18,740.82
Attn: Wendy Saltarelli
1401 Pearl Street Description: Sequent Computer for Contractors' Warehouse
Boulder, CA 80302
Creditor ID: 00002149 Store/Branch: West Coast Office
Mahoney Notifier, Inc. Equipment $0.00
15 Cooper Street
P.O. Box 767 Description: Store/Branch:
Glens Falls, NY 12801 Monitoring Alarm System #296
Creditor ID: 00026784 Monitoring/Maint. Alarm Sys. #286
Modern Leasing Equipment $0.00
Attn: Brian Greuing
319 7th Street, Ste. 600 Description: Store/Branch:
Des Moines, IA 50390 Misc. Copy Machine 301/Cincinnati
Creditor ID: 00002038 Misc. Fax Machine Midwest Div. Office
<PAGE>
Modern Office Methods Equipment $0.00
Attn: Mike Illing
4362 Creek Road Description: Store/Branch:
Cincinnati, OH 45241 Misc. Maintenance Midwest Div. Office
Creditor ID: 00002041 Contract
NEC America, Inc. Equipment $0.00
365 West Passaic Street
Attn: Kathy Wagner Description: Store/Branch:
Rochelle Park, NJ 07662 Misc. Phone System 305/Lexington
Creditor ID: 00002026
Pitney Bowes Equipment $0.00
Attn: Gilbert Reiher
6480 Doubletree Avenue Description: Store/Branch:
Columbus, OH 43226 Misc. Postage Machine 303/Indianapolis & 306/Columbus
Creditor ID: 00002021
Pitney Bowes Equipment $0.00
P.O. Box 720416
Atlanta, GA 30358 Description: Store/Branch:
Creditor ID: 00002040 Misc. Postage Machine 301/Cincinnati
Retail Systems Leasing Inc. Equipment $0.00
5915 Coopers Ave.
Attn: William Moore Description: Master Lease POS Equipment
Mississaugua, Ontario, Canada
Creditor ID: 00002272 Store/Branch: Western Division
Spectra-Physics Equipment $0.00
5475 Kellenbauger Road
Attn: Rene Doyle Description: Store/Branch:
Dayton, OH 45424 Misc. Ditchwitch 302/Dayton
Creditor ID: 00032657
Stringer Company Equipment $0.00
115 West Drive
Marshall, MO 65340 Description: Store/Branch:
Creditor ID: 00002146 Misc. Copy Machine/ 708/Sacramento & West Coast
Fax Machine Office
Symbol Technologies, Inc. Equipment $0.00
Credit Dept. A-45
One Symbol Plaza Description: Store/Branch:
Attn: Barbra Arnold Misc. Scanners 307/Ft. Wayne & 306/Columbus &
Holtsville, NY 01742-1300 303/Indianapolis &
Creditor ID: 00002013 305/Lexington
302/Dayton & 301/Cincinnati
<PAGE>
Systech Retail Tech Co. Equipment $0.00
Attn: Shelly Zikovic
5915 Coopers Avenue Description: Store/Branch:
Mississauga, Ontario, L4Z 1RG Misc. Registers 307/Ft. Wayne & 306/Columbus &
CANADA 303/Indianapolis &
Creditor ID: 00002012 305/Lexington
302/Dayton & 301/Cincinnati
Misc. Cash Register/ 527/Ventura & 528/Long Beach &
P.O.S. 703/Montebello &
704/N. Hollywood & 705/Pomona &
707/La Habra & 712/Carson &
713/Colton & West Coast Office
Misc. Computers West Coast Office
Telecheck Services Equipment $0.00
P.O. Box 4514
Houston, TX 77210 Description: Store/Branch:
Creditor ID: 00002131 Misc. Telecheck 707/La Habra
Telecheck Services, Inc. Equipment $0.00
Attn: Subscriber Service
P.O. Box 4514 Description: Store/Branch:
Houston, TX 77210 Misc. Telecheck Devices 527/Ventura & 528/Long Beach &
Creditor ID: 00031709 703/Montebello
Misc. Telecheck 528/Long Beach
United Leasing Inc. Equipment $0.00
3700 Morgan Avenue
Evansville, IN 47715 Description: Store/Branch:
Creditor ID: 00027996 Racks & Auto Mid-West Division
Stack System
Wells Fargo Alarm Equipment $117.27
333 Smith Street
Providence, RI 02901 Description: Alarm System & Monitoring
Creditor ID: 00001930
Xerox Corp. Equipment $0.00
350 S. Northwest Highway
Park Ridge, IL 60068 Description: Store/Branch:
Creditor ID: 00002033 Misc. Copy Machine 302/Dayton
A.C.T. Security Systems Maintenance/Service $0.00
150 Kerry Place
Norwood, MA 02062 Description: Store No.:
Creditor ID: 00025033 Alarm Transmission #256 - Norwood Dist. Ctr.
ADT Security Systems, Inc. Maintenance/Service $0.00
9 Walker Way
Albany, NY 12201 Description:
Creditor ID: 00001928 Monitoring
American Alarms, Inc. Maintenance/Service $0.00
575 Park Ave.
Cranston, RI 02910 Description: Store/Branch:
Creditor ID: 00025119 Monitoring #124 - Central Falls
<PAGE>
Armored Motor Service of Maintenance/Service $0.00
America
65 Vantage Point Drive Description: Store/Branch:
Rochester, NY 14624 Armored Car Service #494 - Rochester
Creditor ID: 00025183
Hart Alarm Systems Inc. Maintenance/Service $0.00
514 Fourth Street
Watervliet, NY 12189 Description: Store/Branch:
Creditor ID: 00026345 Alarm Service #292 - Kingston
Alarm Service #296 - Schenectady
Alarm Service-Maintenance #298 - Rennselaer
Alarm Service #092 - Latham
NCR Corp. Maintenance/Service $12,105.90
1700 So. Patterson Blvd.
Dayton, OH 45479 Description:
Creditor ID: 00001498 Equipment Subject to Service
Cabletron/Monarch
Professional Alarm Ser. Maintenance/Service $0.00
64 Lyndale Court
West Seneca, NY 14224 Description: Store/Branch:
Creditor ID: 00027399 Alarm Monitoring #470 - Buffalo
Alarm Monitoring #293 - Brighton
Alarm Monitoring #411 -
Alarm Monitoring #287 - Cortland
Alarm Monitoring #471 - W. Seneca
Alarm Monitoring #418 - Webster
Alarm Monitoring #027 - Tonawanda
Alarm Monitoring #494 - Rochester
Special Agent Systems Inc. Maintenance/Service $1,073.91
67 Pleasant St.
Watertown, MA 02172 Description: Store/Branch:
Creditor ID: 00027738 Lease Monitoring/Maintenance- #285-Brockton
Security System
Monitoring Security System #297-Braintree
Monitoring Security System #295-Woonsocket
Monitoring/Maintenance- #467-Marshfield
Security System
Lease Monitoring/Maintenance- #291-
Security System
Lease Monitoring/Maintenance- #082-Waltham
Security System
Lease Monitoring/Maintenance- #288-Walpole
Security System
Lease Monitoring/Maintenance- #018-
Security System
Lease Monitoring/Maintenance- #490-
Security System
Lease Monitoring/Maintenance- #481-
Security System
Lease Monitoring/Maintenance- #289-Fitchburg
Security System
Monitoring/Maintenance-Security #496-
System
11
<PAGE>
Wells Fargo Alarm Maintenance/Service $0.00
301 Franklin Street
Buffalo, NY 14201 Description: Store/Branch:
Creditor ID: 00001929 Monitoring #463 - N.Syracuse
Monitoring #482 - Dewitt
Alarm System/Monitoring #294 - Warwick
American Color Miscellaneous $0.00
2500 Walden Ave.
Buffalo, NY 14225 Description: Visvita System Purchase Agreement
Creditor ID: 00001769
Fidelity Investments Institutional Service Agreement $9,500.00
Operations Company
82 Devonshire Record Keeping & Other Svces. for Administration of Investment Plan
Boston, MA 02109
Creditor ID: 00002182
Mountain Financial Corporation Service Agreement $0.00
855 East 9400 South
Sandy, UT 84070 Merchant Services Agreement
Creditor ID: 00001766
Novus Services Service Agreement $0.00
FKA Discover Card
Attn: Beth Solomon Credit Card Services Agreement
2500 Lake Cook Road
Riverwoods, IL 60015
Creditor ID: 00002162
Darling, Walter Miscellaneous $0.00
5 Spring Street
P.O. Box 129 Description: Legal Representation Agreement for Collections
Norfolk, MA 02056
Creditor ID: 00025828
Finard Asset Management Comp., Miscellaneous $0.00
Inc.
3 Burlington Woods Drive Description: Real Estate Marketing Consulting Agreement
Attn: William Beckman
Burlington, MA 01803
Creditor ID: 00026063
Associates Commerical Equipment $53,787.00
Corporation
Attn: William G. Wright See Attached Chart for Associates Commercial Corp - Leases to Keep
Farr, Burke, Gamboacorta &
Wright
211 Benigno Boulevard
P.O. Box 788
Bellmawr, NJ 08099-0786
Creditor ID: 00002014
<PAGE>
GELCO Equipment $22,630.90
Attn: David A. Warfield
Husch & Eppenberger Description: Model: Store/Branch:
100 N. Broadway, Suite 1300 Forklifts 586E 302/Dayton &
St. Louis, MO 63102 301/Cincinnati
Creditor ID: 00002031 and Forklifts GLP1050RFNUAE080 301/Cincinnati
00002008 Forklifts GLP100MFNSBV098 301/Cincinnati
Trucks Ranger 301/Cincinnati
Description: Store/Branch:
Trailers Ranger 710/Reno
Description: Model: Store:
Forklifts ERPT040TFN36SE078 307/Ft.Wayne/306/Columbus
Forklifts ERPT040TFN36SE078 307/Ft. Wayne/306/Columbus
Forklifts GLP050RFNUAE080 307/Ft. Wayne/306/Columbus
Forklifts GLP070LFNSBE098 307/Ft. Wayne/306/Columbus
Forklifts GLP070LFNSBE098 307/Ft. Wayne/306/Columbus
Forklifts GLP100MENSBV098 307/Ft. Wayne/306/Columbus
Forklifts 586E 307/Ft. Wayne/306/Columbus
Trucks Ranger 303 Indianapolis/302 Dayton
Misc. POS System 303 Indianapolis
Misc. F250 302 Dayton
Misc. Auto Midwest Division Office
Misc. Auto Midwest Division Office
Misc. Racks, Carts and Midwest Division Office
Equipment
Navistar Equipment $0.00
Attn: Betty Tucknott
2650 West Golf Road Description: Model:
Rolling Meadows, IL 60608 Trucks 94 Flatbed Cabover
Creditor ID: 00002018 Store/Branch: 303/Indianapolis & 305/Lexington
Albany Times Union Miscellaneous $0.00
645 Albany Shaker Road
Albany, NY 12212
Creditor ID: 00002739
Boston Globe Miscellaneous $0.00
Attn: William Gardner
135 Morrisey Blvd Description: Annual Advertising Spending Agreement
Boston, MA 02107
Creditor ID: 00025383
Boston Herald American Miscellaneous $3,923.50
1 Herald Square
Boston, MA 02118 Description: Boston Herald Advertising Contract
Creditor ID: 00025384
Buffalo Evening News Inc. Miscellaneous $0.00
1 News Plaza
P.O. Box 100 Description: Retail Advertising Agreement for Mr. Second
Buffalo, NY 14240
Creditor ID: 00025468
<PAGE>
The Call Miscellaneous $8,291.88
dba Evening Call Publishing Co.
75 Main St. Description: Advertising Contract
P.O. Box A
Woonsocket, RI 02895-0992
Creditor ID: 00002187
Community Newspaper Company Miscellaneous $0.00
P.O. Box 9113
Needham, MA 02192-9113 Description: Advertising Contract
Creditor ID: 00002196
Cortland Standard Newspaper Miscellaneous $2,710.70
Cortland, NY
Description: Advertising Contract
Evening Telegram Miscellaneous $0.00
Thomsons Pub. of N.Y. Inc.
111 Green St. Description: Retail Advertising Agreement
Herkimer, NY 13350
Creditor ID: 00026025
First Data Corp. Miscellaneous $0.00
First Data Merchants Services
265 Broad Hollow Road Description: Credit Card Processing Sales Agreement
Mellville, NY 11747
Creditor ID: 00002168
Gannett Rochester Newspaper Miscellaneous $10,145.54
Rochester Times-Union
55 Exchange Blvd Description: Revenue Contract Agreement for Advertising for Mr. Seconds
Rochester, NY 14614
Creditor ID: 00026179
Herald Company, The Miscellaneous $0.00
P.O. Box 4915 Clinton Sq.
Attn: Accounts Receivable Description: Retail Advertising Contract
Syracuse, NY 13221
Creditor ID: 00026368
Mark Goodson Enterprises Ltd. Miscellaneous $0.00
dba Daily Freeman
79-97 Hurley Ave. Description: Local Retail Fixed Insertion Advertising Contract
Kingston, NY 12401
Creditor ID: 00002184
Patriot Ledger, The Miscellaneous $0.00
P.O. Box 9159
400 Crown Colony Drive Description: Preprinted Insert Sections Advertising Contract
Quincy, MA 02169
Creditor ID: 00027288
Peabody & Lynnfield Weekly Miscellaneous $0.00
News
10 First Ave. Description: Multiple Insertion Contract-(Advertising)
P.O. Box 6039
Peabody, MA 01961-6039
Creditor ID: 00002189
<PAGE>
Providence Journal Miscellaneous $0.00
75 Fountain St.
Providence, RI 02902 Description: Annual Investment Contract for Advertising
Creditor ID: 00027408
Schenectady Gazette Miscellaneous $1,978.44
The Gazette Newspapers
2345 Maxon Road
P.O. Box 1090
Schenectady, NY 12301
Creditor ID: 00027612
Sentinel-Enterprise Miscellaneous $975.00
808 Main St.
Fitchburg, MA 01420 Description: Advertising Agreement
Creditor ID: 00002188
Site Call Miscellaneous $0.00
75 Main Street
P.O. Box A
Woonsocket, RI 02895-0992
Creditor ID: 00002738
Syracuse Newspaper Miscellaneous $0.00
Clinton Square
Syracuse, NY 13202
Creditor ID: 00002741
Times Union Miscellaneous $0.00
Address Unknown
Description: Color Comic Frequency Agreement for Advertising
Creditor ID: 00002186
United Leasing Inc. Miscellaneous $0.00
3700 Morgan Avenue
Evansville, IN 47715 Description: 1993 Oldsmobile (2)
Creditor ID: 00002010 Racks
United Leasing Equipment $0.00
Attn: Lewis Hudson
4360 Brownsboro Road, Ste. 105 Description: Model: Store:
Louisville, KY 40207 Trucks 1997 Ford Ranger 307 Ft. Wayne
Creditor ID: 00027996 Trucks 305 Lexington
Misc. Store Fixtures 305 Lexington
Trucks Ranger 301 Cincinnati
<PAGE>
Yale Financial Services Equipment $0.00
Attn: Juan Martin
15 Junction Road Description: Model: Store:
Flemington, NJ 08822 Forklifts ERP 303 Indianapolis
Creditor ID: 00002016 Forklifts ERP 303 Indianapolis
Forklifts ERP 303 Indianapolis
Forklifts GLP100MFNSBV098 303 Indianapolis
Forklifts GLP070LFNSBF098 303 Indianapolis
Forklifts GLP050RFNUAF096 303 Indianapolis
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts ERPT040TFN36SEO078 302 Dayton
Forklifts GLP050RFNUAE080 302 Dayton
Forklifts GLP050RFNUAE080 302 Dayton
Forklifts GLP100MFNSBV098 302 Dayton
Worcester Telegram Miscellaneous $3,775.00
Chronicle Publ. Co. Inc.
P.O. Box 15012 Description: Annual Dollar Volume Contract for Retail Advertising
20 Franklin Street
Worcester, MA 01615
Creditor ID: 00028213
Rte. 28 Realty Trust Equipment $1,653.75
20 N. Main Street
S. Yarmouth, MA 02664 Description: Store Copy Machines (29)
Bay Copy Service Agreement $143.00
100 Resevoir Road
Rockland, MA 02370 Description: Office Copy Machines
Ikon Office Solutions Service Agreement $0.00
204 Second Avenue
Waltham, MA 02154 Description: Office Copy Machine
N.E. Industrial Truck Equipment $0.00
10 Ryan Road
Woburn, MA 01801 Description: Hi-Lo Forklift Rental (1)
Watson Wyatt Miscellaneous $8,138.00
80 Williams Street
Welsley Hills, MA 02181
</TABLE>
<PAGE>
EXHIBIT D
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
GROSSMAN'S INC., ) Case No. 97-00695 (PJW)
GRS HOLDING COMPANY, INC. )
and GRS REALTY COMPANY, INC. ) Jointly Administered
)
Debtors. )
NOTICE OF ORDER CONFIRMING
JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
To: ALL CREDITORS, EQUITY SECURITY HOLDERS AND OTHER PARTIES IN INTEREST IN
THE ABOVE-CAPTIONED CASES:
PLEASE TAKE NOTICE that an Order (the AConfirmation Order@) confirming the
Joint Plan of Reorganization Under Chapter 11 of the United States Bankruptcy
Code dated October 1, 1997 (the APlan@), was entered by the Honorable Peter J.
Walsh, United States Bankruptcy Judge, on December 9, 1997, and duly docketed
and filed in the Office of the Clerk of the United States Bankruptcy Court for
the District of Delaware (the ABankruptcy Court@).
PLEASE TAKE FURTHER NOTICE that the Confirmation Order is available for
inspection in the Office of the Clerk of the Bankruptcy Court at the United
States Bankruptcy Court, 5th Floor, Marine Midland Plaza, 824 Market Street,
Wilmington, Delaware 19801 or a copy is available upon request from counsel to
the Debtors.
<PAGE>
PLEASE TAKE FURTHER NOTICE that the Confirmation Order provides that any
and all claims arising from the rejection of an executory contract or unexpired
lease of real property of the Debtors under the Plan must be filed within 45
days of the Effective Date, as that term is defined in the Plan. For executory
contracts and unexpired leases rejected by earlier Court orders, no claims will
be allowed with respect to such rejection unless the claim is valid and
previously filed within the time specified in the order rejecting such contract
or lease.
PLEASE TAKE FURTHER NOTICE that the Confirmation Order provides that all
claims against the Debtors for administrative expenses pursuant to ' 503 of the
Bankruptcy Code (other than Professionals= request for compensation and
reimbursement of expenses and post-petition extensions of trade credit) must be
filed in accordance with all of the requirements set forth herein no later than
45 days after the Effective Date of the Plan, as that term is defined in the
Plan:
(a) Administrative expense claims must be in the form of an application for
payment. Such application must be served upon the Debtors, JELD-WEN and the
Creditors' Committee and each of their respective counsel at the addresses set
forth in Article 13 of the Plan so that it is received no later than five
business days after the application is filed with the Court. The claimant must
seek a preliminary hearing date for no earlier than 30 days after filing of the
application and no later than March 31, 1998.
(b) The Debtors (or the Reorganized Company as their successor) must file
any objections to properly filed applications for such claims no later than 5
days before the hearing date established by the claimant.
<PAGE>
(c) Administrative expense claims filed in the form of a proof of claim
shall not be valid and shall be automatically disallowed. Claimants who have
previously filed proofs of claim which include an administrative expense claim
but which have not yet been allowed must file an application or all
administrative expense claims of such claimant will be disallowed.
(d) All administrative expense claims not filed and set for hearing within
the time limitations set forth herein will be forever barred and discharged.
Dated: Wilmington, Delaware December 12, 1997
SONNENSCHEIN NATH & ROSENTHAL
Fruman Jacobson
John Collen
Kevin G. Mruk
8000 Sears Tower
Chicago, Illinois 60606
(312) 876-8000
and
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Laura Davis Jones (No. 2436)
Victoria Watson Counihan (No. 3488)
11th Floor, Rodney Square North
Wilmington, Delaware 19899-0391
(302) 571-6600
Co-Counsel to Debtors and
Debtors in Possession
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re ) Chapter 11
)
GROSSMAN'S INC., dba ) Case No. 97-695 (PJW)
Contractors' Warehouse, )
Mr. 2nd's Bargain Outlet, )
Grossman's Bargain Outlet, )
GRS HOLDING COMPANY, INC. ) Case No. 97-696 (PJW)
and GRS REALTY COMPANY, INC. ) Case No. 97-697 (PJW)
)
Debtors. ) Jointly Administered
JOINT DISCLOSURE STATEMENT OF DEBTORS AND
JELD-WEN, INC. IN CONNECTION WITH
SOLICITATION OF BALLOTS WITH RESPECT TO
JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11
OF THE UNITED STATES BANKRUPTCY CODE
<PAGE>
Fruman Jacobson, Esq.
John Collen, Esq.
Robert E. Richards, Esq.
Thomas A. Labuda, Esq.
SONNENSCHEIN NATH &
ROSENTHAL
8000 Sears Tower
Chicago, Illinois 60606
(312) 876-8000
Laura Davis Jones, Esq.
Victoria Watson Counihan, Esq.
YOUNG CONAWAY STARGATT
& TAYLOR, LLP
Rodney Square North
Wilmington, Delaware 19899
Co-Counsel for the Debtors and
Debtors in Possession
Jack Cullen, Esq.
FOSTER PEPPER SHEFELMAN, P.L.L.C.
1111 Third Avenue
Suite 3400
Seattle, Washington 98101-3299
Francis Monaco, Esq.
WALSH & MONZACK
1201 N. Orange Street
400 Commerce Center
Wilmington, Delaware 19801
CO-COUNSEL TO JELD-WEN, INC.
Dated: October 29, 1997
<PAGE>
TABLE OF CONTENTS
Page
I. INTRODUCTION.........................................................1
II. SUMMARY OF THE PLAN.................................................3
III. GENERAL INFORMATION REGARDING THE DEBTORS AND
THE EVENTS LEADING TO THE CHAPTER 11 FILING.....................7
A. Corporate Structure and General Business................7
B. Evans Products Company..................................8
C. Increasing Competition and Financial Difficulties.......8
D. Prepetition Restructuring Efforts.......................8
E. Impending Chapter 11 Filing.............................9
IV. SUMMARY OF BANKRUPTCY PROCEEDINGS...................................10
A. DIP Financing..........................................10
B. The Official Committees................................11
C. Certain Material Orders in the Cases ..................12
D. Development of Business Plan...........................13
E. Asset Sales............................................13
F. Schedules and Bar Date.................................13
G. Investigation of Potential Causes of Action............15
H. Marketing Efforts......................................15
V. THE PLAN.............................................................15
A. Substantive Consolidation..............................15
B. Classification and Treatment of Claims and Interests...16
C. Overview of Assets and Liabilities.....................23
D. Distributions to Creditors.............................24
E. Possible Reorganized Company Repurchase of New
Common Stock; Registration Rights Agreement...........25
F. Disputed Claims........................................26
G. Means for Execution of the Plan........................26
H. Executory Contracts and Unexpired Leases...............31
I. Retention of Jurisdiction..............................33
J. Conditions to the Effectiveness of the Plan............33
VI. CONFIRMATION AND CONSUMMATION PROCEDURE.............................33
A. Disclosure and Solicitation............................33
B. Acceptance of the Plan.................................33
C. Classification.........................................34
D. Confirmation...........................................34
VII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................37
A. To the Reorganized Company.............................37
B. To Creditors and Interestholders.......................39
VIII. CERTAIN SECURITIES LAW AND OTHER CONSIDERATIONS...................39
A. Initial Issuance of New Common Stock...................40
B. Transfer of Plan Securities............................40
C. Absence of Market for New Common Stock.................41
IX. ALTERNATIVES TO CONFIRMATIONAND CONSUMMATION OF THE PLAN.............42
X. VOTING INSTRUCTIONS...................................................43
A. Classes Entitled to Vote...............................43
B. Classes Not Entitled to Vote...........................43
C. Ballots................................................43
D. Voting Multiple Claims and Interests...................43
E. Incomplete Ballots.....................................44
F. Expiration Date........................................44
EXHIBIT I -- Chapter 11 Plan
EXHIBIT II -- Liquidation Analysis as of December 1, 1997/Chapter 11
Plan vs. Chapter 7 Liquidation
EXHIBIT III -- Projected Financial Information
EXHIBIT IV -- Report of Grossman's, Inc. on Form 10-K for
Year Ended December 31, 1996
EXHIBIT V -- Resumes/Biographical Information of Directors
<PAGE>
I. INTRODUCTION
Grossman's Inc. ("Grossman's"), GRS Holding Company, Inc. ("GRS Holding")
and GRS Realty Company, Inc. ("GRS Realty") (collectively, the "Debtors") filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code on April 7, 1997. The Debtors' proposal for the reorganization of their
business is set forth in the Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code (the "Plan"), which plan is also sponsored by JELD-WEN, inc.
("JELD-WEN" and together with the Debtors, the "Plan Proponents"). A copy of the
Plan is attached hereto as Exhibit I. This Disclosure Statement is intended to
describe the Plan and provide you with adequate information to allow you to make
an informed judgment regarding the Plan. Capitalized terms used in this
Disclosure Statement have the meaning ascribed to them in the Plan unless
otherwise defined in this Disclosure Statement.
The Plan is summarized in Section II below and described in more detail in
Section V below. Pursuant to the provisions of the Bankruptcy Code, only Classes
of Claims or Interests which are "impaired" and which receive or retain property
pursuant to the Plan are entitled to vote to accept or reject the Plan. A
description of the requirements for acceptance of the Plan is set forth in
Section VI below.
THE PLAN PROPONENTS BELIEVE THAT THE PLAN PROVIDES EQUAL OR GREATER VALUE
TO CREDITORS AND MORE RAPID DISTRIBUTIONS THAN OTHER AVAILABLE ALTERNATIVES. A
COMPARISON OF RECOVERIES UNDER THE PLAN VERSUS A CHAPTER 7 LIQUIDATION IS
ATTACHED HERETO AS EXHIBIT II. BUSINESS PLAN PROJECTIONS ARE ATTACHED HERETO AS
EXHIBIT III. THE PLAN PROPONENTS BELIEVE THAT ACCEPTANCE OF THE PLAN IS IN THE
BEST INTERESTS OF EACH AND EVERY CLASS OF CREDITORS AND RECOMMENDS THAT EACH
CREDITOR VOTE TO ACCEPT THE PLAN. THIS DISCLOSURE STATEMENT CONTAINS GOOD FAITH
ESTIMATES AND ASSUMPTIONS WHICH ARE BASED ON FACTS CURRENTLY KNOWN TO THE PLAN
PROPONENTS AND WHICH MAY BE MATERIALLY DIFFERENT FROM ACTUAL FUTURE RESULTS.
<PAGE>
EACH CREDITOR SHOULD READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR
ENTIRETY AND CONSULT WITH ITS LEGAL AND/OR BUSINESS ADVISORS BEFORE VOTING ON
THE PLAN. THIS DISCLOSURE STATEMENT IS NOT LEGAL ADVICE TO YOU. THIS DISCLOSURE
STATEMENT MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO
VOTE ON THE PLAN. THIS DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE CAREFUL
AND DETAILED REVIEW AND ANALYSIS OF THE PLAN BY EACH HOLDER OF A CLAIM ENTITLED
TO VOTE THEREON, BUT IS INTENDED TO AID AND SUPPLEMENT THAT REVIEW. THE
DESCRIPTION OF THE PLAN HEREIN IS ONLY A SUMMARY AND HOLDERS OF CLAIMS,
INTERESTS, AND OTHER PARTIES IN INTEREST ARE CAUTIONED TO REVIEW THE PLAN ITSELF
FOR A FULL UNDERSTANDING OF THE PLAN. THE TERMS OF THE PLAN ARE CONTROLLING IF
ANY INCONSISTENCY EXISTS BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT.
General information regarding the Plan Proponents, the Debtors' business
and material events leading to and during these Cases are set forth in Sections
III and IV below. Except where otherwise noted, this information is provided by
the Plan Proponents and their respective managements. THE STATEMENTS AS TO THE
DEBTORS' FINANCIAL CONDITION CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS
OF OCTOBER 27, 1997 (UNLESS ANOTHER TIME IS SPECIFIED) AND THERE IS NO
REPRESENTATION OR IMPLICATION THAT THE INFORMATION CONTAINED HEREIN WILL NOT
HAVE CHANGED AS OF ANY TIME SUBSEQUENT TO THAT DATE NOR WILL YOU RECEIVE ANY
NOTICE OF SUCH CHANGES.
Alternatives to confirmation and consummation of the Plan are described in
Section IX below. Certain Federal Income Tax consequences associated with the
Plan are described in Section VII below. Certain Securities Law and other
considerations are described in Section VIII below.
BALLOTS WITH RESPECT TO THE PLAN MUST BE RECEIVED AT THE ADDRESS SET FORTH
ON THE ENCLOSED BALLOT ON OR BEFORE DECEMBER 3, 1997. FOR YOUR CONVENIENCE, A
BALLOT AND PREADDRESSED ENVELOPE ARE ENCLOSED. ANY BALLOTS RECEIVED AFTER THE
EXPIRATION DATE SHALL NOT CONSTITUTE VALID BALLOTS AND SHALL NOT BE COUNTED IN
DETERMINING THE VOTE OF ANY CLASS. FURTHER VOTING INSTRUCTIONS ARE SET FORTH IN
SECTION X BELOW.
If you have questions concerning the procedure for voting, or if you did
not receive the appropriate Ballot or Ballots, or if you received a damaged
Ballot or have lost your Ballot, or if you have any questions concerning the
Disclosure Statement and/or the Plan, please call the Debtors= tabulation agent,
Logan & Company, at (201) 798-1031.
THIS DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE HONORABLE PETER J.
WALSH, UNITED STATES BANKRUPTCY JUDGE. APPROVAL BY JUDGE WALSH DOES NOT
CONSTITUTE A RECOMMENDATION BY THE COURT AS TO THE MERITS OF THE PLAN, BUT
INCLUDES A FINDING THAT THIS DISCLOSURE STATEMENT CONTAINS ADEQUATE INFORMATION
TO ENABLE YOU TO DECIDE WHETHER TO VOTE FOR OR AGAINST THE PLAN.
<PAGE>
II. SUMMARY OF THE PLAN
Overview of Assets and Liabilities of the Estates. Grossman is a retailer
of lumber, building materials and other home improvement products, and operates
43 stores in 7 states under the names "Contractors' Warehouse," "Mr. 2nd's
Bargain Outlet," and "Grossman's Bargain Outlet." Grossman's had annual sales in
excess of $385 million in 1996 and currently has approximately 1,700 employees.
GRS Holding is a wholly owned subsidiary of Grossman's whose sole asset is a
stock interest in GRS Realty. GRS Realty is a special purpose subsidiary that
owns certain parcels of real property which are or were used by Grossman's for
store operations. Under the plan of reorganization, the Plan Proponents will
merge GRS Realty and GRS Holding into a recapitalized and reorganized Grossman's
(the "Reorganized Company") and continue operations at existing locations with
certain additional Bargain Outlet stores opening in the future as set forth in
the Business Plan attached as Exhibit III hereto. The Debtors have a net
operating loss carryforward ("NOL"), currently in excess of $300 million, which
is projected in the business plan to protect most of the projected future
taxable income from income taxes. The Reorganized Company's ability to utilize
the NOL carryforward and other tax consequences of the Plan are discussed in
Section VII of this Disclosure Statement.
Over $260 million of claims have been filed against the Debtors to date. On
September 22, 1997, the Debtors filed objections to approximately $166 million
of these claims. The Debtors filed objections to an additional $6.9 million of
claims on October 27, 1997. In addition, the Debtors are still reviewing claims
and plan to file additional objections soon. The Grossman's schedules list
approximately $41.9 million of unsecured claims and, as described further below,
the plan payouts to unsecured creditors discussed below are subject to further
negotiations among the Plan Proponents and the Creditors Committee if it appears
at the time of confirmation that total allowed unsecured claims are likely to
exceed $46.2 million.
For a more detailed description of asserted Claims and available assets,
see Sections IV and V below.
Classification and Treatment of Claims and Interests. The following table
briefly summarizes the classification and treatment of Claims and Interests
under the Plan. This summary is qualified in its entirety by reference to the
provisions of the Plan. For a more detailed description of the terms and
provisions of the Plan, see Section V below.
<PAGE>
Class Description
Allowed Administrative Expenses. Allowed costs of the Cases, including,
without limitation, professional fees and other expenses of operating during the
Cases.
Treatment under the Plan
Allowed Administrative Expense Claims shall be paid in full in Cash on the
Effective Date, or, if such Claim has not been Allowed on or before the
Effective Date, promptly after the allowance of such Claim by a Final Order.
Such Claim may also be satisfied on such other terms as may be agreed to by the
holde of such Claim and the Debtors. The DIP Financing Facility from GDI
Company,Inc., an affiliate of JELD-WEN, shall be satisfied and replaced by the
Exit Financing Facility.
Allowed Priority Tax Claims. Claims entitled to priority under Code Section
507(a)(8).
Allowed Priority Tax Claims, if any, shall receive at the Debtors' option
(i) the amount of the Allowed Priority Tax Claim in one Cash payment on the
Effective Date or (ii) the amount of the Allowed Priority Tax Claim, with
interest at a rate to be determined by the Court at the hearing on Confirmation
of the Plan, in equal annual Cash payments on each anniversary of the Effective
Date, until the last anniversary of the Effective Date that precedes the sixth
anniversary date of the date of assessment of the Allowed Priority Tax Claim.
Class 1. Allowed Priority Non-Tax Claims entitled to priority under Code "
507(a)(3), 507(a)(4) or 507(a)(6).
Unimpaired. Unpaid Allowed Priority Non-Tax Claims will be paid in full in
Cash on the Effective Date.
Class 2A. Allowed Secured Claim of GDI under the GDI Impaired. If JELD-WEN
provides the Exit Financing Loan Agreement. Facility provided for in Section 9.2
of the Plan, then the outstanding balance of the Allowed Secured Claim of GDI
under the GDI Loan Agreement shall be incorporated in the Exit Financing
Facility. If a third-party lender provides the Exit Financing Facility, then the
remaining balance of the Allowed Claim of GDI under the GDI Loan Agreement shall
be reaffirmed with a new maturity date of the earlier of November 1, 1998 or
whenever all of the real property that secures the GDI Loan Agreement is sold.
Class 2B. Allowed Secured Claim of GDI under the Unimpaired. The Allowed
Secured Claim of GDI under Combined Investors Loan. the Combined Investors Loan
was fully paid on an interim basis during the course of these Cases from the
proceeds of sale of the real estate that secured the Combined Investors Loan.
The interim application of such proceeds shall be deemed final on the Effective
Date.
Class 3. Allowed Secured Claim of Associates Commercial Unimpaired. The
Allowed Secured Claim of Associates Corporation. Commercial Corporation shall be
paid according to the terms of the Installment Contract. The Reorganized
Company, however, retains the right to prepay the Allowed Secured Claim of
Associates Commercial Corporation without penalty. Associates Commercial
Corporation shall retain the lien securing its Allowed Secured Claim.
Class 4. Allowed Miscellaneous Secured Claims. Impaired. At the Debtors'
option, the holders of Miscellaneous Secured Claims, if any, shall either (i) be
paid the replacement value of their collateral or (ii) have their collateral
returned to them. Any Deficiency Amount related to such Claims shall be
classified in Classes 7 or 8.
Class 5. Allowed Reclamation Claims. Impaired. As explained further in
Section V below, each holder of a Reclamation Claim may elect from the following
two options: (A) Cash payments equal to 70% of its Allowed Reclamation Claim; or
(B) timely commence an adversary proceeding seeking to have its Claim paid in
full as an Administrative Expense.
Class 6. Allowed Claim of Congress Financial Corporation. Impaired. On
October 21, 1997, the Court approved an agreement between the Debtors and
Congress to settle the Congress Adversary Proceeding under which the Debtors
have paid Congress $620,000, plus $75,000 of attorneys' fees and costs, in full
satisfaction of the termination fee. As a result, Class 6 has been fully
satisfied.
Class 7. Allowed Convenience Claims. Impaired. The holders of Allowed Class
7 Claims shall be paid twenty-three percent (23%) of their Allowed Convenience
Claims in Cash. In addition, holders of Class 7 claims shall share Pro Rata with
holders of Class 8 Claims in proceeds, if any, (less recovery costs and fees) of
the Assigned Actions. As discussed in Section V below, this payout may be
subject to adjustment if the aggregate of all general unsecured and convenience
class claims appears to exceed $46.2 million at the time of the Confirmation
hearing.
Class 8. Allowed Unsecured Claims. Impaired. Creditors in Class 8 which
qualify as "qualified creditors" under 26 U.S.C. Section 382(l)(5)(E) shall be
paid seventeen percent (17%) of their Allowed Unsecured Claims in Cash and
receive their Pro Rata share of 50% of the New Common Stock. In addition,
holders of Class 8 Claims shall share Pro Rata with holders of Class 7 Claims in
proceeds, if any, (less recovery costs and fees) of the Assigned Actions. The
Debtors reserve the right to provide any Creditor in Class 8 who does not
qualify as a "qualified creditor" under 26 U.S.C. Section 382(l)(5)(E) with
alternate treatment in order to protect the Debtors' federal income tax
attributes. Such alternate treatment will be agreed upon by the Plan Proponents
and such claimant (with notice to the Creditors' Committee) or if no such
agreement is reached, as determined by the Court after notice and a hearing. NO
DISTRIBUTION OF NEW COMMON STOCK SHALL BE MADE UNDER ANY CIRCUMSTANCES OR
PURSUANT TO OR IN ACCORDANCE WITH ANY PROVISION OF ThE PLAN TO ANY CREDITOR THAT
IS NOT A "QUALIFIED CREDITOR" UNDER 26 U.S.C. Section 382(l)(5)(E). ONLY SUCH
"QUALIFIED CREDITORS" SHALL BE ACTUAL OR DEEMED HOLDERS OF NEW COMMON STOCK. As
discussed in Section V below, this payout may be subject to adjustment if the
aggregate of all general unsecured and convenience class claims appears to
exceeds $46.2 million at the time of the Confirmation hearing.
Classes 9A, 9B and 9C. Old Common Stock in the Debtors. Impaired. No
distributions shall be made on account of the Old Common Stock.
Effective Date. The Effective Date shall be the eleventh day after the
Confirmation Date, calculated in accordance with Bankruptcy Rule 9006, unless
the Confirmation has been stayed or any of the other conditions set forth in
Section 15.1 of the Plan have not been met or waived, in which event it is the
first day after such stay is no longer in effect and conditions have been meet
or waived (that is also ten days after the Confirmation Date) calculated in
accordance with Bankruptcy Rule 9006, provided that all conditions to the
effectiveness of the Plan have been satisfied on or before such date. If the
Effective Date does not occur within thirty (30) days after the Confirmation
Date, then the Plan shall not become effective at all unless the Debtors,
JELD-WEN and the Creditors' Committee all agree to extend further the time for
the Plan to become effective. If either the Debtors or JELD-WEN believe that one
or more of the conditions to effectiveness contained in Section 15.1 of the Plan
have not been met by eleven (11) days after the Confirmation Date, they will so
inform each other and the Creditors' Committee in writing within sixteen (16)
days of Confirmation.
<PAGE>
Acceptance of the Plan. A Class of Claims shall have accepted the Plan if
it is accepted by the holders of at least two-thirds in amount and more than
one-half in number of the Claims which are Allowed or deemed allowed for voting
purposes that have actually voted on the Plan. Classes of Claims that are
entitled to vote on the Plan are identified in Section X of this Disclosure
Statement. The requirements for Confirmation of the Plan are discussed in
Section VI of this Disclosure Statement. THE CREDITORS' COMMITTEE IS
RECOMMENDING THAT ALL UNSECURED AND CONVENIENCE CLASS CREDITORS VOTE IN FAVOR OF
THE PLAN. HOWEVER, IN VOTING FOR THE PLAN, YOU ARE ALSO VOTING IN FAVOR OF
DELEGATING TO THE CREDITORS' COMMITTEE THE AUTHORITY TO APPROVE AND AGREE TO
DIFFERENT AND LESSER TREATMENT FOR THE HOLDERS OF CLASS 7 AND CLASS 8 CLAIMS IN
THE EVENT IT APPEARS THAT ALLOWED UNSECURED CLAIMS AND ALLOWED CONVENIENCE
CLAIMS WILL EXCEED $46.2 MILLION AT THE TIME OF CONFIRMATION. FOR A FURTHER
DISCUSSION OF THE $46.2 MILLION CAP, SEE SECTION V(G) OF THIS DISCLOSURE
STATEMENT.
III. GENERAL INFORMATION REGARDING THE DEBTORS AND THE EVENTS LEADING TO
THE CHAPTER 11 FILINGIII. GENERAL INFORMATION REGARDING THE DEBTORS AND THE
EVENTS LEADING TO THE CHAPTER 11 FILING
A. Corporate Structure and General Business
Grossman's is a Delaware corporation that maintains its corporate
headquarters at 45 Dan Road, Canton, Massachusetts. Grossman's is a retailer of
lumber, building materials and other home improvement products and operates 43
stores in 7 states under the names "Contractors' Warehouse," "Mr. 2nd's Bargain
Outlet" and "Grossman's Bargain Outlet." The target customers of the
Contractors' Warehouse division are contractors, remodelers and serious
do-it-yourselfers. The target customers of the Bargain Outlet division are
buyers of overstock and close-out items. Grossman's had annual sales in excess
of $385 million in 1996 and had approximately 1,700 employees prior to the
commencement of these cases. More general information regarding the Debtors is
available in the report on Form 10-K for the year ended December 31, 1996 which
is attached hereto as Exhibit IV.
As of the Petition Date, Grossman's stock was publicly traded on the NASDAQ
exchange under the symbol "GROSQ," but has subsequently been delisted by NASDAQ.
Approximately 27,700,000 shares of common stock are outstanding and held by
approximately 1,700 shareholders of record.
<PAGE>
GRS Holding is a wholly owned subsidiary of Grossman's. GRS Holding is a
holding company and its sole asset is its interest in GRS Realty. GRS Realty is
a wholly owned subsidiary of GRS Holding. GRS Realty is a special purpose
subsidiary that owns approximately 13 parcels of real property at which some
Contractors' Warehouse and Mr. 2nd's Bargain Outlet stores are located, as well
as certain unimproved parcels and approximately 5 unoccupied parcels which were
previously occupied by Grossman's retail stores prior to that division going out
of business during the spring of 1996 and 1 parcel that was purchased for a new
Contractors' Warehouse store which was never built. Real estate loans of
approximately $33 million were made to the Debtors by Combined Investors LLC, an
affiliate of Gordon Brothers Partners, in the Spring of 1996 and those loans
have now been repaid through proceeds from prior sales of the former Grossman's
retail store sites. There are also 11 leased Contractors' Warehouse and Bargain
Outlet sites.
B. Evans Products Company
Prior to 1986, Grossman's was known as Evans Products Company ("Evans
Products"). Evans Products and certain of its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code in the Southern
District of Florida on March 11, 1985 and later consummated a plan of
reorganization in November 1986. Under that plan, Evans Products liquidated
certain assets unrelated to its retail building materials business and changed
the name of the remaining reorganized entity to Grossman's Inc. In connection
with the reorganization, Grossman's issued more than $238,000,000 face amount of
debt securities to its creditors, including $73,000,000 of certain 14%
Debentures due January 1, 1996 (the "14% Debentures").
C. Increasing Competition and Financial Difficulties
Competition and declining profits in the industry as a whole have had a
significant negative impact on the Debtors' performance for several years.
Grossman's responded repeatedly over several years by instituting cost cutting
measures, including selling its home office facility in September 1995, closing
unprofitable stores and investing in its Contractors' Warehouse and Bargain
Outlet divisions. Notwithstanding these efforts, Grossman's was unable to pay
the final $16.2 million installment of principal, plus related interest, on the
14% Debentures on January 1, 1996.
D. Prepetition Restructuring Efforts
In response to the increased competition and financial difficulties
discussed above, Grossman's commenced a significant restructuring of its
operations in late March 1996 by closing all sixty of its "Grossman's" retail
stores. To finance the restructuring, Grossman's contributed its real property
assets to a newly created special purpose subsidiary -- GRS Realty -- which then
borrowed approximately $33 million, secured by such real estate, from Combined
Investors, L.L.C., an affiliate of Gordon Brothers Partners. GRS Realty
distributed the loan proceeds to its parent, GRS Holding, which in turn
distributed the proceeds to Grossman's. From that time until the Petition Date,
GRS Realty sold numerous properties, the sales proceeds of which were used to
reduce the amount of the outstanding GRS Realty loan.
<PAGE>
Grossman's also refinanced the 14% Debentures in April 1996. Holders of the
14% Debentures received approximately $12 million in cash and approximately $5.7
million of notes in two series (all such notes being collectively referred to
herein as the "Debenture Refinancing Notes" or the "Notes"). The first series of
such Notes, with an aggregate principal amount of $3.0 million (the "Convertible
Refinancing Notes"), are convertible into common stock of Grossman's at $1.30 of
notes per share. The Convertible Refinancing Notes mature in April 1999 with
interest payable semi-annually at 10%. As of the Petition Date, $1.5 million of
the Convertible Notes had been converted into shares of common stock of
Grossman's. The remaining Debenture Refinancing Notes outstanding, totaling
approximately $2.8 million in principal amount, mature in April 1999 with
interest payable semi-annually at 15%.
Grossman's restructuring measures proved inadequate to arrest the
deterioration of its financial condition. Costs associated with the closing of
the "Grossman's" stores were higher than initially forecast, and the remaining
operations failed to meet sales and profit forecasts. Furthermore, the expected
sales of real estate held by GRS Realty did not occur on the timetable or in the
amounts that had been projected, and as a result the Debtors had less liquidity
than anticipated.
By early January 1997 Grossman's experienced a severe liquidity shortage
and was unable to pay its trade creditors in accordance with terms. Many
suppliers refused to continue to provide inventory on credit and some stopped
shipping completely, thereby resulting in large out-of-stock positions. As a
result, the percentage of eligible inventory by which the Debtors' prepetition
lender, Congress Financial Corporation ("Congress"), calculated secured
revolving credit available borrowings was reduced.
E. Impending Chapter 11 Filing
On January 22, 1997, Grossman's publicly announced that it was experiencing
a severe liquidity shortage. It also announced that it was reviewing all
options, including the filing of a voluntary petition for relief under Chapter
11 of the Bankruptcy Code. The Debtors immediately commenced discussions with
both Congress and other parties regarding financing. Congress, however, declined
to provide additional financing to the Debtors. In addition, Congress sent the
Debtors a notice of default with respect to its prepetition facility on or about
February 13, 1997.
At about the same time the Debtors received the Congress notice of default,
the Debtors announced that they had entered into a non-binding letter of intent
with JELD-WEN regarding the terms of certain JELD-WEN related financing to be
provided to the Debtors. JELD-WEN is a major supplier of window products to the
Debtors through its Wenco division. Mr. Richard Wendt, the Chairman of JELD-WEN,
also owns approximately 12% of the Old Common Stock in Grossman's.
<PAGE>
On March 4, 1997, the Debtors announced that an agreement had been reached
with GDI Company, Inc. ("GDI") for additional financing necessary to purchase
inventory and restock the Debtors' shelves. GDI is an affiliate of JELD-WEN. In
connection with the financing, GDI loaned the Debtors $1,999,999 secured by
mortgages on and assignment of rents for certain real property. GDI also
purchased the Combined Investors Loan described above. In addition, R&R Vista,
an affiliate of JELD-WEN, agreed to issue a $10 million guarantee in favor of
Congress supported by a standby letter of credit. As a result, Congress forbore
from exercising any of its remedies under its existing loan documents and
increased the Debtors' loan availability thereunder by $10 million.
Grossman's board of directors was also reconstituted in connection with the
GDI financing. Mr. Richard Wendt and two additional JELD-WEN related individuals
were elected to the seven member board of directors. The remaining four
directors have no connection with JELD-WEN or any its affiliates. There had
previously been an eight member board of directors.
The GDI financing also contemplated that the Debtors would seek protection
under Chapter 11 of the Bankruptcy Code. The parties contemplated that the
Debtors would propose a plan of reorganization under which GDI or another
JELD-WEN related entity would receive 50% of the outstanding shares of stock in
the reorganized company. The parties also contemplated entering into a long-term
purchase and supply agreement for door and window products manufactured by
JELD-WEN and its affiliates.
The Debtors filed voluntary petitions for relief under Chapter 11 on April
7, 1997.
IV. SUMMARY OF BANKRUPTCY PROCEEDINGS
A. DIP Financing
Immediately prior to the commencement of these Cases, the Debtors
negotiated the terms of a $50 million debtor-in-possession financing facility
(the "DIP Facility") with GDI, an affiliate of JELD-WEN. In essence, the DIP
Facility consisted of GDI taking an assignment of the Debtors' existing
prepetition secured revolving credit loan facility from Congress and then making
certain changes favorable to the Debtors in the terms of the facility. GDI,
however, was unable to close the acquisition of the Congress loan facility
immediately upon the commencement of these Cases on April 7, 1997 as the Debtors
had expected. As a result, the Debtors negotiated two interim financing
facilities. One interim facility was with GDI and provided for $11 million of
interim advances from GDI to meet payroll expenses and purchase inventory. The
other interim facility was with Congress. The Congress interim facility merely
provided for the continued use of the prepetition Congress loan facility until
it could be assigned to GDI. GDI committed to the Debtors and Congress to close
the acquisition of the Congress loan facility on or before April 29, 1997.
<PAGE>
The Court approved the GDI and Congress interim facilities by orders dated
April 9 and April 10, 1997, respectively. GDI closed the acquisition of the
prepetition Congress loan facility on or about April 29, 1997 and the Court
approved the Debtors' $50 million DIP Facility with GDI by order dated April 30,
1997 (the "Final DIP Order"). In connection with the Congress closing, the
Debtors conducted an investigation into possible causes of action against
Congress and granted Congress a release, while reserving all of their rights
with respect to Congress' $1 million claim for an early termination penalty.
On or about September 12, 1997, the Debtors filed a motion to amend the DIP
Facility (the "Amendment"). The Court granted the relief requested by the
Debtors and approved the Amendment by Order dated October 9, 1997. The Amendment
changes the formula for determining available advances under the DIP Facility;
it does not grant GDI any additional liens or collateral. In addition, the DIP
Facility, as amended, is similar to the Exit Financing Facility which JELD-WEN
will provide pursuant to the Plan if no equal or better exit facility is
available from a third party-lender.
B. The Official CommitteesB...The Official Committees
Shortly after the entry of the order for relief, the United States
Trustee's office formed an Official Committee of Unsecured Creditors (the
"Creditors' Committee"). Later, at the request of Options Opportunity
Corporation, a shareholder, an Official Committee of Equity Security Holders
(the "Equity Committee") was formed. The Creditors Committee and the Equity
Committee are collectively referred to herein as the "Committees".
The members of the Creditors' Committee are (i) Georgia Pacific Corp., (ii)
Continental Casualty Company, (iii) Schrock Cabinet Co., (iv) Osram Sylvania,
Inc., (v) GAF Materials Corp., (vi) S-B Power Tool Co. and (vii) CertainTeed
Corporation. The Creditors' Committee's counsel are Miller, Canfield, Paddock
and Stone, P.L.C. and Pepper, Hamilton & Scheetz. Coopers & Lybrand serves as
financial advisors to the Creditors' Committee.
The members of the Equity Committee are (i) Options Opportunities
Corporation, (ii) Michael A. Vickers, (iii) Granite Wine & Spirits, (iv) The
Orca Group, (v) George C. Arnold, III, (vi) Lee Fang Shaw and (vii) David R.
Newell. Its counsel are Phillips, Lytle, Hitchcock, Blaine & Huber and Williams,
Hershman & Wisler, P.A.
The Equity Committee shall be disbanded as of the Effective Date (unless
dissolved prior to the Effective Date by order of Court). The Creditors'
Committee shall continue in effect for certain limited purposes described in
Section 14.3 of the Plan.
<PAGE>
C. Certain Material Orders in the Cases
Since the Petition Date, the Debtors have obtained several material orders
discussed below.
1. Payroll and Employee Benefits
By an order entered April 8, 1997, the Debtors were authorized to honor all
prepetition payroll checks and to pay payroll and other employee benefit
payments which related to prepetition services. As a result, substantially all
of the Class 1 Claims related to employee compensation and benefits entitled to
priority under Code " 507(a)(3) and (4) have been satisfied.
2. Customer Practices
By an order entered April 8, 1997, the Debtors were authorized to honor
their customer service commitments and continue their ordinary customer
practices. These commitments included prepetition deposits, refunds and rebates.
As a result, substantially all of the Class 1 Claims related to individual
consumer deposits entitled to priority under Code Section 507(a)(6) have been
satisfied and any remaining such claims will be satisfied by giving store
purchase credits or as otherwise set forth in the April 8 Order.
3. Retention of Professionals
Upon the commencement of these cases, the Debtors retained Sonnenschein
Nath & Rosenthal and Young, Conaway, Stargatt & Taylor as their counsel and
Ernst & Young as their financial and investment advisors. The Debtors also
retained certain other ordinary course professionals and collection attorneys to
perform discrete tasks. The Committees retained the respective professionals
identified in Section IV(B).
4. Leases/Executory Contracts
During a bankruptcy case, a debtor has the right to assume or reject any
unexpired leases and executory contracts. Leases of nonresidential real
property, however, must be assumed or rejected within sixty (60) days of the
commencement of a case unless otherwise extended by the Court. By orders entered
June 24, 1997 and September 18, 1997, the Court extended the deadline for
assuming or rejecting unexpired leases of nonresidential real property to
January 3, 1998 without prejudice to the Debtors' right to seek further
extensions.
5. Sale or Transfer of Claims and Equity Interests
<PAGE>
Shortly after the commencement of these Cases, the Debtors filed a motion
seeking to establish certain notification and approval procedures for the sale
or other transfer of certain claims against and equity interests in the Debtors.
The Debtors sought these procedures in order to preserve their net operating
loss carryforward tax attributes, which currently exceed $300 million in the
aggregate. The Court granted the Debtors' motion on an interim basis by order
dated May 14, 1997. A final order granting the relief requested by the Debtors
was entered on October 9, 1997.
D. Development of Business Plan
The Debtors and their advisors have developed and begun to implement a
comprehensive business plan designed to (i) help restore lost sales volume and
maintain full inventory levels, (ii) reduce operating costs and (iii) strengthen
the future position of the business. The program has been shared with the
Committees. While sales levels have improved since the Chapter 11 petitions,
sales have run approximately 10% (on average) below the goals set forth in the
business plan. JELD-WEN and the Creditors= Committee have reviewed the
performance of the Debtors' business under the business plan to date.
E. Asset Sales
Since the commencement of these Cases, the Debtors have sold 9 parcels of
non-operating real estate.1/ In total, $8,316,000 of gross sale proceeds have
been realized from the following sales: (i) Canandaigua, New York: $482,000;
(ii) Lawrenceville, New Jersey, Depew, New York and Johnston, Rhode Island:
$3,974,000; (iii) Hamburg, New York: $750,000; (iv) Gardner, Massachusetts:
$605,000; (v) Torrington, Connecticut: $650,000; (vi) Scarborough, Maine:
$505,000; and (vii) Camillus, New York: $1,350,000. The proceeds of the
Scarborough, Maine property were applied on an interim basis to reduce the
amount owed under the GDI Loan Agreement. Proceeds from the other properties
were applied first on an interim basis to pay down (and ultimately pay off) the
Combined Investors Loan and the excess was applied to temporarily reduce the
balance owed under the DIP Facility and was reborrowed as needed.
F. Schedules and Bar Date
1. Bar Date/Schedules
The Court set August 4, 1997 as the bar date for filing prepetition Claims
against the Debtors. Individual notices were mailed to all scheduled creditors
and notices were published in the Wall Street Journal, National Edition and each
of the major markets in which the Debtors do business.2/
<PAGE>
Each of the Debtors filed its schedules of assets and liabilities and
statements of financial affairs on June 2, 1997. Grossman's schedules show that
as of the Petition Date it had total assets of $86,532,982 (book value) and
total liabilities of $69,526,331 (which amount does not include potential
rejection damage claims for unexpired leases and executory contracts and certain
other liabilities). Schedule A reflects that Grossman's owns $202,500 in real
property and Schedule B lists Grossman's personal property at a book value of
$86,330,482, consisting primarily of inventory, accounts receivables, equipment
and stock in its subsidiaries. Schedule D lists secured claims of $26,100,000
and Schedules E and F list unpaid priority claims and unsecured claims of
$1,479,082 and $41,947,249 respectively. Schedule F does not include projected
rejection damage claims. As discussed previously in Section IV of this
Disclosure Statement, most of the employee-related priority claims were paid
pursuant to a prior order of the Court.
GRS Holding's schedules show that as of the Petition Date it had total
assets of $17,204,856 (book value) and total liabilities of $2,022,904. GRS
Holding's only asset is its stock in GRS Realty and its only liability is an
unsecured guarantee of the GDI Loan Agreement.
GRS Realty's schedules show that as of the Petition Date it had total
assets of $21,305,724 and total liabilities of $6,022,904. GRS Realty's assets
are comprised of $21,204,856 of real property (estimated market value) and
$100,868 of cash in a bank account. Schedule D reflects $6,022,904 of secured
debt relating to the GDI Loan Agreement and the Combined Investors Loan. The
Combined Investors Loan has been completely paid off, and the principal balance
of the GDI Loan Agreement has been paid down to approximately $1.5 million (plus
approximately $200,000 of accrued interest as of October 1, 1997)
As noted below in Section V of this Disclosure Statement, the Debtors will
be substantively consolidated pursuant to the terms of the Plan and all
intercompany claims and guarantees will be extinguished.
<PAGE>
2. Objections to Claims
Over $260 million of Claims were filed by the August 4, 1997 bar date,
including a number of claims in partially or wholly unliquidated amounts. On
September 22, 1997, the Debtors filed their first omnibus claims objection to
approximately $166 million of claims. At a hearing on October 21, 1997, the
Court disallowed and expunged approximately $147 million of these claims; the
hearing was continued with respect to the remaining $19 million of claims
subject to the Debtors' first omnibus objection. On or about October 27, the
Debtors filed their second omnibus claims objection to an additional $6.9
million of claims. A hearing will be held on the Debtors' second omnibus claims
objection on November 24, 1997. The Debtors are reviewing the remaining claims
and will be filing and prosecuting additional objections to improper Claims. As
noted above, a number of the Claims asserted against the Debtors are either
partially or wholly unliquidated. As a result, the Claims currently asserted
against the Debtors are not a complete representation of the Debtors' maximum
exposure with respect to these Claims. Only Claims which have been either (i)
scheduled by the Debtors and are not listed as contingent, unliquidated or
disputed or are not the subject of an unadjudicated proof of claim seeking a
greater amount or (ii) allowed by a Final Order of the Court will receive
distributions under the Plan.
G. Investigation of Potential Causes of Action
The Debtors are in the process of investigating various causes of action
they may have under applicable state and federal law (including, without
limitation, the Bankruptcy Code). In addition, as noted further below in Section
V, the Debtors plan to assign certain avoidance actions to the Creditors'
Committee on the Effective Date of the Plan.
H. Marketing Efforts
During the course of these cases, the Debtors and their financial advisors,
Ernst & Young, prepared and sent a confidential offering memorandum to over 100
entities potentially interested in purchasing all or part of the Debtors=
business. The Debtors and Ernst & Young received little interest in response to
the offering memorandum and received no response that would provide Creditors a
return as good as or more favorable than the return under the terms of the Plan.
<PAGE>
V. THE PLAN
A. Substantive Consolidation
The Debtors shall be substantively consolidated under the Plan. As a
result, (i) all Claims of Debtors by and against each other shall be eliminated;
(ii) except as otherwise provided in the Plan, all assets and all proceeds
thereof and all liabilities of Debtors shall be merged or treated as though they
were merged; (iii) any obligation of any Debtor and all guarantees thereof
executed by, or joint liability of, any Debtor will be deemed to be one
obligation of the consolidated Debtors; (iv) any Claim based on any such
guaranteed obligation or joint liability shall be deemed to be one Claim against
the consolidated Debtors and treated as such under the Plan; (v) each and every
Claim filed in the individual chapter 11 case of either or both of Debtors will
be deemed filed against the consolidated Debtors and treated as a single Claim
under the Plan; and (vi) for purposes of determining the availability of the
right to setoff under Code Section 553, Debtors shall be treated as one entity
so that, subject to the other provisions of Code Section 553, debts due to any
Debtor may be set off against debts of the other Debtor. In addition, all Claims
based on guarantees of collection, payment or performance, or joint liability of
Debtors, as to the obligations of the other Debtor, shall be discharged,
released and of no further force and effect. A description of the assets and
liabilities of the three Debtors is contained in Section IV (F) of this
Disclosure Statement.
B. Classification and Treatment of Claims and Interests
The Plan treats Allowed Claims and Interests of the Debtors' Creditors and
Interestholders as stated below.
For purposes of the Plan, an Allowed Claim -- other than a Reclamation
Claim -- is a Claim against the Debtors to the extent that such Claim is allowed
under Code Section 502. An Allowed Reclamation Claim shall mean (i) a
Reclamation Claim in the amount listed on Exhibit B to the Plan or (ii) a
Reclamation Claim in the amount which the Court has entered a Final Order
allowing such Reclamation Claim. Claims listed by the Debtors in their schedules
and not designated as "contingent," "unliquidated" or "disputed" or the subject
of a pending unadjudicated proof of claim seeking an amount greater than the
scheduled amount, are Allowed Claims (although the Debtors reserve the right to
amend their schedules). All other Claims are not Allowed Claims for purposes of
distribution of the Plan until the Court enters a Final Order allowing such
Claim and only to the extent allowed by such Final Order. Unless otherwise
specified, the term "Allowed Claim" does not include (i) interest on the amount
of such Claim accruing from and after the Petition Date, (ii) fees and costs
incurred from and after the Petition Date, (iii) punitive or exemplary damages
or (iv) any fine, penalty or forfeiture. The Debtors reserve the right to pursue
and collect setoffs or counterclaims they may have against otherwise valid
claims.
The Plan designates 8 Classes of Claims (with 2 subclasses) and 1 Class of
Interests (with 3 subclasses).
1. Unclassified Claims -- Administrative Expenses and Priority Tax Claims
Administrative Expenses are Claims against the Debtors constituting a cost
or expense of administration of these Cases allowed under Code Section 503(b),
including any actual and necessary costs and expenses of preserving any of the
estates of the Debtors, any actual and necessary costs and expenses of operating
the Debtors' business, any allowance of compensation and reimbursement of
expenses of professionals to the extent allowed by the Court and certain other
amounts as set forth in the Plan. The Code does not require Administrative
Expense Claims to be classified under a plan. It does, however, require that
allowed Administrative Expense Claims be paid in full in Cash in order for a
plan to be confirmed, unless the holder of such Claim consents to different
treatment.
<PAGE>
Pursuant to the Plan, each Allowed Administrative Expense Claim will be
paid in full in Cash on the Effective Date or on such other terms as may be
agreed to by the holder of such Claim and the Debtors. If such Claim has not
been Allowed on or before the Effective Date, such Claim shall be paid in Cash
promptly after the allowance of such Claim by a Final Order. Notwithstanding
anything to the contrary, Administrative Expenses related to the Debtors'
ordinary course of business (including amounts owed to vendors and suppliers
which have sold goods or furnished services to the Debtors after the
commencement of these Cases) will continue to be paid by the Debtors during the
Cases in accordance with the terms and conditions of the particular transactions
and any agreement or court order relating thereto.
The Plan provides for an administrative bar date which falls 45 days after
the Effective Date of the Plan. All unpaid Administrative Claims arising on or
before the Effective Date shall be filed with the Court and served on Debtors'
counsel in accordance with the Plan or be forever barred. There is a separate
procedure for professional fee and expense applications and post-petition
extensions of trade credit for goods and services.
Priority Tax Claims are Claims asserted by governmental units entitled to
priority under Code Section 507(a)(8). The Code does not require Priority Tax
Claims to be classified under a plan, but requires that such claims receive the
treatment described below unless the holder of such Claim consents to different
treatment.
Any holder of an Allowed Priority Tax Claim shall receive at the option of
the Debtors (i) the amount of the holder's Allowed Priority Tax Claim in one
Cash payment on the Effective Date or (ii) the amount of the holder's Allowed
Priority Claim, with interest at a rate to be determined by the Court at the
hearing on Confirmation of the Plan in equal annual Cash payments on each
anniversary of the Effective Date, until the last anniversary of the Effective
Date that precedes the sixth anniversary date of the date of assessment of the
Allowed Priority Tax Claim. A Priority Tax Claim that is a Contested Claim shall
not receive any distribution on the Effective Date or thereafter unless and
until such Claim becomes an Allowed Priority Tax Claim.
2. Class 1 - Priority Non-Tax Claims
Class 1 Priority Non-Tax Claims are any Claims against the Debtors entitled
to priority under Code " 507(a)(3), 507(a)(4) or 507(a)(6) including: (i)
unsecured Claims for accrued but unpaid employee compensation earned within 90
days prior to the Petition Date, to the extent of $4,000 per employee; (ii)
unpaid contributions to employee benefit plans arising from services rendered
within 180 days prior to the Petition Date, but only to the extent of (a) the
number of employees covered by such plans multiplied by $4,000, less (b) the
aggregate amount paid to such employee from the estate for prepetition items
such as wages, salaries or commissions pursuant to this Section V(A)(2)(i)
hereof and (iii) unearned and currently held individual customer deposits up to
$1,800 per each such individual.
<PAGE>
Pursuant to the Plan, Allowed Class 1 Priority Non-Tax Claims shall be paid
in full in Cash on the Effective Date unless paid earlier pursuant to prior
order of the Court or agreed otherwise by the Debtors and the holders of such
Claims. Most prepetition employee-related Claims were paid pursuant to a prior
Court order described in Article IV of this Disclosure Statement.
Class 1 is unimpaired and thus holders of such Claims are conclusively
presumed pursuant to Code Section 1126(f) to have accepted the Plan.
3. Class 2A - The Allowed Secured Claim Of GDI Under the GDI Loan Agreement
Class 2A consists of the Allowed Secured Claim of GDI under the GDI Loan
Agreement. As of the Petition Date, the outstanding balance of principal and
accrued interest under the GDI Loan Agreement was $2,022,903.77 and secured by
mortgages on the following three parcels of real property: (i) Scarborough,
Maine; (ii) Laconia, New Hampshire; and (iii) Warrensville Heights, Ohio. On
August 11, 1997, however, the Court approved the sale of the Scarborough, Maine
property to Pende Associates, Inc. at a price of $505,000.00. After the
application of net sale proceeds, the outstanding balance of principal and
interest under the GDI Loan Agreement was approximately $1.7 million as of
September 8, 1997. If JELD-WEN provides the Exit Financing Facility provided for
in Section 9.2 of the Plan, then the remaining balance of the Allowed Secured
Claim of GDI under the GDI Loan Agreement (after application of sale proceeds of
the Scarborough property or any other property that is sold prior to
confirmation) shall be incorporated in the Exit Financing Facility and thus
secured by the Reorganized Company's real estate. If, however, a third-party
lender provides the Exit Financing Facility, then the remaining balance of the
Allowed Claim of GDI under the GDI Loan Agreement shall be reaffirmed with a new
maturity date of the earlier of November 1, 1998 or whenever all of the real
property that secures the GDI Loan Agreement is sold.
Class 2A is impaired and thus the holder of such Claim is entitled to vote
on the Plan.
4. Class 2B - The Allowed Secured Claim Of GDI Under The Combined Investors
Loan
The Allowed Secured Claim of GDI under the Combined Investors Loan was
fully paid on an interim basis during the course of these Cases from the
proceeds of sale of the real estate that secured the Combined Investors Loan.
The interim application of such proceeds shall be deemed final on the Effective
Date.
Class 2B is unimpaired and thus the holder such Claim is conclusively
presumed pursuant to Code Section 1126(f) to have accepted the Plan.
<PAGE>
5. Class 3 - Allowed Secured Claim Of Associates Commercial Corporation
Associates Commercial Corporation and Grossman's are parties to a certain
Retail Installment Contract dated February 26, 1996 under which the Debtor
purchased certain equipment (the "Installment Contract"). Associates was owed
approximately $15,000.00 as of the Petition Date and has received postpetition
adequate protection payments of $409.71 a month in accordance with that certain
Agreed Order Providing Adequate Protection to Associates dated July 22, 1997.
The remaining portion of the Allowed Secured Claim of Associates Commercial
Corporation shall be paid according to the terms of the Installment Contract. In
addition, Associates Commercial Corporation shall retain the lien securing its
Allowed Secured Claim. The Reorganized Company retains the right to prepay the
Allowed Secured Claim of Associates Commercial Corporation without penalty.
Class 3 is unimpaired and thus the holder of such Claim is conclusively
presumed pursuant to Code Section 1126(f) to have accepted the Plan.
6. Class 4 - Allowed Miscellaneous Secured Claims
Class 4 claims consist of all Allowed Secured Claims, if any, held by
Persons other than GDI, Congress and Associates Commercial Corporation. Although
the Debtors did not list any such Miscellaneous Secured Claims in their
schedules, approximately 67 purported Miscellaneous Secured Claims in the
aggregate amount of $3,132,495.06 were filed with the Debtors' claims processing
agent.
The Debtors are reviewing these purported Miscellaneous Secured Claims and
believe at this time that most, if not all, of these will be found to be (i)
Allowed Reclamation Claims or Priority Tax Claims, (ii) precautionary filings by
equipment lessors whose leases have not yet been assumed or rejected or (iii)
not to be valid, perfected security interests or erroneously filed as a secured
claims.
If there are any Allowed Miscellaneous Secured Claims, at the Debtors'
option, the holders of such Claims shall either (i) be paid the replacement
value of their collateral or (ii) have their collateral returned to them. Any
Deficiency Amount shall be classified in Classes 7 or 8. In the event any
Miscellaneous Secured Claim is determined to be an Allowed Secured Claim, the
such Allowed Secured Claim shall be treated as if it were separately classified
for purposes of voting on this Plan and " 1126 and 1129 of the Bankruptcy Code.
Class 4 Claims are impaired and thus the holders of such Claims are
entitled to vote on the Plan.
<PAGE>
7. Class 5 - Allowed Reclamation Claims
Holders of Allowed Reclamation Claims may elect treatment from one of the
two options described below. As noted above, an "Allowed" Reclamation Claim is
either (i) a Reclamation Claim in the amount listed on Exhibit B to the Plan or
(ii) a Reclamation Claim in the amount which the Court has entered a Final Order
allowing such Reclamation Claim, if any.
Option A. A holder of a Reclamation Claim may elect to receive the amount
set forth below in Cash in full satisfaction of its Allowed Reclamation Claim
(including any underlying portion or remaining unsecured claim relating to such
Allowed Reclamation Claim). Each holder of an Allowed Reclamation Claim electing
Option A shall receive in Cash on the Effective Date a distribution equal to
seventy percent (70%) of its Allowed Reclamation Claim. With respect to each
holder of any Allowed Reclamation Claim which timely elects Option A, the amount
of such person's Reclamation Claim which shall be deemed an Allowed Reclamation
Claim is the amount shown on Exhibit B to the Plan, and no person shall be
entitled to object to such Allowed Reclamation Claim on any grounds.
Option B. A holder of a Reclamation Claim who does not elect Option A must
commence an adversary proceeding in the Bankruptcy Court prior to the
Confirmation Date and may seek the payment of its Reclamation Claim in full as
an Administrative Expense. Grossman's intends to vigorously dispute any such
adversary and assert that based on various defenses, no valid Reclamation Claim
exists. If and only if the holder of a Reclamation Claim timely initiates its
adversary proceeding and is successful in such an adversary proceeding, then
such holder will be paid as soon as practicable after the allowance of such
Claim by a Final Order one hundred percent (100%) of its unpaid Allowed
Reclamation Claim from available Cash. If, however, the holder of such
Reclamation Claim does not timely initiate its adversary proceeding or is
unsuccessful in such adversary proceeding, then such Reclamation Claim will be
treated as an Allowed Unsecured Claim. No distribution shall be made to the
holder of a Reclamation Claim while an adversary proceeding commenced is pending
with respect to such Reclamation Claim.
Holders of Reclamation Claims may elect Option A by so notifying the
Debtors in writing prior to the Confirmation Date. To elect Option B, a holder
of a Reclamation Claim must commence an adversary proceeding prior to the
Confirmation Date. The Reclamation Claim of any holder that does not (i) timely
elect Option A or (ii) timely commence an adversary proceeding shall be treated
as an Allowed Unsecured Claim in the amount listed on Exhibit B to the Plan.
<PAGE>
To date, 29 Persons have asserted Reclamation Claims in the aggregate
amount of approximately $2,000,000. As shown on Exhibit B to the Plan, however,
the Debtors believe after communicating with each Reclamation Creditor and
reconciling information in the Debtors' records with information provided by the
Reclamation Creditors that such holders only have valid Reclamation Claims in
the aggregate amount of approximately $1.2 million after individualized defenses
to their claim, which claims are still subject to the global reclamation
defenses such as (i) the inventory being fully liened by Congress (and its
assignee), (ii) the claimant establishing insolvency, (iii) the claimant
establishing the goods were on hand and (iv) laches/estoppel.
Class 5 is impaired and thus the holders of such Claims are entitled to
vote on the Plan.
8. Class 6 - Allowed Claim Of Congress Financial Corporation
During the course of these cases, Congress commenced Adversary Proceeding
No. A-97-75 (the "Congress Adversary Proceeding") seeking to enforce an early
termination fee of up to $1 million plus certain attorneys fees and costs
related thereto under its prepetition credit agreement with the Debtors. The
Final DIP Order provided that any Allowed Claim of Congress for the termination
fee would be secured by certain property of the Debtors.
On October 21, 1997, the Court approved an agreement between the Debtors
and Congress to settle the Congress Adversary Proceeding under which the Debtors
have paid Congress $620,000, plus $75,000 of attorneys' fees and costs, in full
satisfaction of the termination fee. As a result, Class 6 has been fully
satisfied.
9. Class 7 - Allowed Convenience Claims
Class 7 consists of the Allowed Claims of unsecured claimants for $25,000
or less. Creditors in Class 7 shall be paid twenty-three percent (23%) of their
Allowed Convenience Claims in Cash. In addition, holders of Class 7 claims shall
share Pro Rata with holders of Class 8 claims in any proceeds (less recovery
costs and fees) of any of the Assigned Actions. Allowed Convenience Claims shall
receive no distribution of New Common Stock or other distributions. If
appropriate to assure that the number of shareholders in the Reorganized Company
is less than 300 on the Effective Date, the convenience class threshold may be
increased above $25,000 in the discretion of the Plan Proponents. Furthermore,
in accordance with Section 15.2 of the Plan, the 23 cents payout amount may be
reduced if it appears at the time of confirmation that total unsecured and
convenience class claims will be likely to exceed the cap of $46.2 million.
Class 7 Claims are impaired and thus the holders of such Claims are
entitled to vote on the Plan.
<PAGE>
10. Class 8 - Allowed Unsecured Claims
Class 8 consists of all Allowed Claims other than Secured Claims,
Administrative Expense Claims, Reclamation Claims, Convenience Claims, Priority
Non-Tax Claims or Priority Tax Claims. Unsecured Claims also include any Claim
for a Deficiency Amount above the threshold for the convenience class.
Creditors in Class 8 shall be paid seventeen percent (17%) of their Allowed
Unsecured Claims in Cash and receive their Pro Rata share of 50% of the New
Common Stock. In addition, holders of Allowed Class 8 claims shall share Pro
Rata with holders of Allowed Class 7 Claims in any proceeds (less recovery costs
and fees) of any of the Assigned Actions. The 17 cents payout amount may be
reduced if it appears at the time of confirmation that total unsecured and
convenience class claims will be likely to exceed the cap of $46.2 million. IN
VOTING FOR THE PLAN, YOU ARE ALSO VOTING IN FAVOR OR DELEGATING TO THE
CREDITORS' COMMITTEE THE AUTHORITY TO APPROVE AND AGREE TO DIFFERENT AND LESSER
TREATMENT FOR THE HOLDERS OF CLASS 7 AND CLASS 8 CLAIMS IN THE EVENT IT APPEARS
THAT ALLOWED UNSECURED CLAIMS AND ALLOWED CONVENIENCE CLAIMS WILL EXCEED $46.2
MILLION AT THE TIME OF CONFIRMATION. FOR A FURTHER DISCUSSION OF THE $46.2
MILLION CAP, SEE SECTION V(G) OF THIS DISCLOSURE STATEMENT.
<PAGE>
The Debtors reserve the right to provide any Creditor in Class 8 who does
not qualify as a "qualified creditor" under 26 U.S.C. Section 382(l)(5)(E) with
alternate treatment in order to protect the Debtors' federal income tax
attributes.3/ Such alternate treatment will be the economic equivalent of the
treatment otherwise given to holders of Class 8 Claims, but will not include New
Common Stock. Such alternate treatment will be agreed upon by the Plan
Proponents and such claimant (with notice to the Creditors' Committee) or if no
such agreement is reached, as determined by the Bankruptcy Court after notice
and a hearing.
Class 8 Claims are impaired and thus the holders of such Claims are
entitled to vote on the Plan.
11. Classes 9A, 9B and 9C - Old Common Stock
Classes 9A, 9B and 9C consists of the shares of common stock, warrants,
options or rights to purchase the same issued by Grossman's Inc., GRS Holding
Company, Inc. and GRS Realty Company, Inc., respectively, prior to the Petition
Date and outstanding as of such date. No distributions shall be made on account
of these Interests. All of the Old Common Stock shall be cancelled as soon as
practicable after the Effective Date.
Classes 9A, 9B and 9C are impaired and do not receive or retain any
property under the Plan and are thus conclusively presumed to reject the Plan
under Code Section 1126(g).
C. Overview of Assets and Liabilities
A detailed projected balance sheet as of December 1, 1997 is included as
part of the Business Plan attached as Exhibit III hereto. The principal assets
of the Debtors are inventory, fixtures and real estate. Another material asset
is its net operating loss carryforward discussed below in Section VII of this
Disclosure Statement.
Over $260 million of Claims were filed by the August 4, 1997 bar date,
including a number of claims in partially or wholly unliquidated amounts. On
September 22, 1997, the Debtors filed their first omnibus claims objection to
approximately $166 million of claims. At a hearing on October 21, 1997, the
Court disallowed and expunged approximately $147 million of these claims. As a
result, the remaining liquidated claims asserted against the Debtors were
reduced to approximately $113 million. The hearing was continued with respect to
the remaining $19 million of claims subject to the Debtors' first omnibus
objection. The Debtors estimate that a material percentage of these claims will
be disallowed, although there can be no assurance that this will be the case. On
or about October 27, the Debtors filed their second omnibus claims objection to
an additional $6.9 million of claims. A hearing will be held on the Debtors'
second omnibus claims objection on November 24, 1997. Thus, to date, the Debtors
have objected to approximately $173 million of claims.
<PAGE>
The Debtors also expect to file a third omnibus claims objection on or
before November 19, 1997. A hearing on the third omnibus objection should be
held in December 1997. In addition, the Debtors are reviewing certain
miscellaneous Claims, such as environmental and lease-related Claims, and will
be filing and prosecuting objections to such Claims. As noted above, a number of
the Claims asserted against the Debtors are either partially or wholly
unliquidated. As a result, the Claims currently asserted against the Debtors are
not a complete representation of the Debtor's maximum exposure with respect to
these Claims.
The $46.2 million cap on Allowed Unsecured Claims and Allowed Convenience
Claims was the Debtors= good faith estimate as of August 1997 of the total
amount of Allowed Unsecured Claims and Allowed Convenience Claims against the
Debtors plus a cushion for contingent and unliquidated Claims agreed to by
JELD-WEN. This estimate was made prior to the completion of Claims processing
and analysis. In addition, as noted above, there are many unliquidated Claims
asserted against the Debtors. AS A RESULT, THE PLAN PROPONENTS DO NOT KNOW WHAT
THE FINAL AMOUNT OF ALLOWED UNSECURED CLAIMS AND ALLOWED CONVENIENCE CLAIMS WILL
BE AND THE TOTAL AMOUNT OF SUCH CLAIMS MAY IN FACT EXCEED THE $46.2 CAP. SEE
SECTION V(G)(5) OF THE DISCLOSURE STATEMENT AND SECTION 15 OF THE PLAN FOR
FURTHER DISCUSSION OF THE $46.2 MILLION CAP AND THE POSSIBLE CONSEQUENCES OF A
DETERMINATION, AT THE TIME OF CONFIRMATION, THAT THE ALLOWED UNSECURED CLAIMS
AND ALLOWED CONVENIENCE CLAIMS ARE LIKELY TO EXCEED THE $42.6 CAP.
D. Distributions to Creditors
1. Cash Distributions.
Payments of Cash to holders of Allowed Administrative Expenses Claims and
Priority Tax Claims shall be made in accordance with Article III of the Plan and
Section V of this Disclosure Statement. Payments of Cash to Allowed Priority
Non-Tax Claims shall be made on the Effective Date. All payments to Allowed
Reclamation Claims electing Option A shall be made on the Effective Date. All
other Cash distributions, including payments to Allowed Reclamation Claims who
do not elect Option A, Allowed Convenience Claims and Allowed Unsecured Claims
shall be made as soon as practicable after the Effective Date, but in no event
as to each Allowed Claim after the later of (i) 91 days after the Effective Date
or (ii) 35 days after a Final Order allowing the applicable Claim is entered.
<PAGE>
2. New Common Stock Distributions.
The Reorganized Company shall issue 50% of the New Common Stock to JELD-WEN
and the remaining 50% of the New Common Stock Pro Rata to a Shareholder Agent on
behalf of the holders of Allowed Unsecured Claims as soon as practicable after
the Effective Date (but in no event later than five (5) Business Days after the
Effective Date). Any recipient of New Common Stock is deemed by its acceptance
of such New Common Stock to have represented that it has no present intention to
sell, transfer or otherwise convey its shares of New Common Stock.
E. Possible Reorganized Company Repurchase of New Common Stock;
Registration Rights Agreement
The New Common Stock issued pursuant to the Plan shall have the rights,
powers and privileges set forth in the Restated Charter and the Registration
Rights Agreement.
Any time during the sixty (60) day period commencing on the 60th day
following the first anniversary of the Effective Date or during the sixty (60)
day period commencing on the 60th day following each anniversary thereafter
through and including the fifth anniversary of the Effective Date (each such
period is herein referred to as an "Offer Period"), holders of Registrable Stock
(other than JELD-WEN or any of its affiliates) shall have the right to offer
their shares of Registrable Stock to the Reorganized Company in accordance with
the terms and conditions contained in the Plan and the Registration Rights
Agreement. Notwithstanding the foregoing, Holders of such Registrable Stock
shall have no less than 45 days from the date the Creditors' Committee receives
the financial information referenced in Section 14.12 of this Plan in which to
offer their shares of Registrable Stock to the Reorganized Debtor. The offer
price shall be calculated on the last day of the Offer Period in accordance with
the following:
ratio of offered shares of X $8.25 million, plus
Registrable Stock to....... $577,500 per each
the total shares of........ full year that has
Registrable Stock ......... elapsed since the
Effective Date
The Reorganized Company shall have thirty-five (35) days after the
expiration of an Offer Period in which the Reorganized Company has been given
notice of an offer with respect to 80% of the Registrable Stock in which, in its
sole discretion, to accept or reject the offer. The Reorganized Company's
decision shall be given by written notice to the Shareholders Agent and any
Holders that have terminated the Shareholders Agent pursuant to Section 8.7 of
the Plan; provided, however, the Reorganized Company's failure to timely accept
or reject the offer will be deemed to be a rejection of the offer on the first
Business Day following the aforementioned thirty-five (35) days.
<PAGE>
If the Reorganized Company accepts the offer, the transaction shall be
consummated at a closing to be held within a reasonable time following
acceptance to be determined by the Reorganized Company, but no later than
forty-five (45) days after the acceptance. If the Reorganized Company rejects an
offer made with respect to 80% of the Registrable Stock, the Holders of at least
60% of the Registrable Stock (other than JELD-WEN or any of its affiliates)
shall have the right for a period of sixty (60) days following the date the
Reorganized Company gives notice of the rejection of the offer, or following the
date the Reorganized Company is deemed to reject the offer if no notice of
rejection or acceptance of the offer is given by the Reorganized Company, to
demand (by written notice to the Reorganized Company given by the Shareholders
Agent and any Holders that have terminated the Shareholders Agent pursuant to
Section 8.7 of the Plan) that the Reorganized Company register the New Common
Stock and take other acts necessary to take the Reorganized Company public at
the Reorganized Company's expense as set forth in the Registration Rights
Agreement. Failure to make such a demand on a timely basis would constitute a
waiver of such registration right with respect to that particular offer. If the
Holders do not make such a registration demand, the Holders may make further
offers in the manner described in Section 8.6.1 of the Plan. The Holders,
however, would not under any circumstances be entitled to any registration after
their registration rights are deemed satisfied pursuant to Section 2(B) of the
Registration Rights Agreement.
REGISTERING THE NEW COMMON STOCK WILL NOT GUARANTEE THAT THE HOLDERS OF NEW
COMMON STOCK WILL RECEIVE ANY PARTICULAR PAYMENT FOR THEIR SHARES OF NEW COMMON
STOCK, BUT WILL ONLY ALLOW THE HOLDERS OF NEW COMMON STOCK AN OPPORTUNITY TO
ATTEMPT TO OFFER THEIR SHARES FOR SALE TO THE PUBLIC THROUGH AN UNDERWRITER, AT
A PER-SHARE PRICE THAT IS AGREEABLE TO AN UNDERWRITER. TO THE EXTENT THAT
PARTICULAR HOLDERS HAVE NOT TERMINATED THE SHAREHOLDERS AGENT AS THEIR
PARTICULAR AGENT, THE SHAREHOLDERS AGENT WILL BE AUTHORIZED BY THE PLAN TO
NEGOTIATE THE TERMS OF AN UNDERWRITING AGREEMENT ON BEHALF OF THE REPRESENTED
HOLDERS, INCLUDING, MOST MATERIALLY, THE PER-SHARE PRICE AT WHICH THE SHARES OF
NEW COMMON STOCK ARE OFFERED FOR SALE THROUGH THE UNDERWRITING AGREEMENT.
F. Disputed Claims
No distribution shall be made with respect to any Disputed Claim, even if a
portion of the Claim is not disputed, until the entire Claim is resolved by a
Final Order. At such time that such Disputed Claim becomes an Allowed Claim, the
holder of such Allowed Claim shall receive the Cash and/or New Common Stock
distributions to which such holder is then entitled to under the Plan under the
mechanisms described in the Plan, but in no event prior to the later of (i) the
Effective Date or (ii) the date that an order regarding such Claim becomes a
Final Order.
G. Means for Execution of the Plan
1. Restated Charter. On the Effective Date, the Debtors' corporate charter
shall be amended as provided in the Restated Charter. The Restated Charter
includes an assumption and ratification of indemnification obligations under the
bylaws of the Debtors and its current and former affiliates, employment
agreements and similar obligations.
<PAGE>
2. Cancellation of Old Common Stock, Warrants and Options. The Debtors
shall cancel the Old Common Stock and any outstanding warrants and options as
soon as practicable after the Effective Date.
3. Merger. At the time that the Restated Charter is filed with the
Secretary of State of Delaware, Grossman's shall cause GRS Holding and GRS
Realty to merge into Grossman's in accordance with all applicable law including
the law of Delaware governing corporations.
4. Board of Directors. The board of directors of the Reorganized Company
shall be reconstituted on the Effective Date in a manner consistent with the
Restated Charter and shall be initially composed as follows: (i) four JELD-WEN
designees; (ii) two designees of the Creditors' Committee; and (iii) one
designee of the Independent Members of the Debtor's Board of Directors existing
as of the Petition Date.
The four JELD-WEN designees are as follows: (i) Richard L. Wendt; (ii)
Theodore Schnormeier; (iii) Lawrence V. Wetter; and (vi) Donald Scheffler.
Messrs. Wendt, Schnormeier and Wetter have served as directors of Grossman's
since March 1997. Biographical information on Messrs. Wendt, Schnormeier and
Wetter as stated in the Debtors' 10K-A filed as of April 30, 1997 is attached
hereto as part of Exhibit V. A resume of Mr. Scheffler is also attached as part
of Exhibit V.
The two designees of the Creditors' Committee are (i) Donald W. Lindstet
and (ii) James V. McTevia. Copies of their resumes are also attached hereto as
part of Exhibit V.
The designee of the Independent Members of the Debtor's Board of Directors
is Thomas Ford, the current Chief Operating Officer of the Debtors. Biographical
information on Mr. Ford as stated in the Debtors' 10K-A filed as of April 30,
1997 is attached hereto as part of Exhibit V.
The reconstituted board will determine the extent to which existing
management at the operating levels for the Bargain Outlet and Contractors
Warehouse divisions will stay intact post-confirmation.
5. Funding of Funds; Escrow Account; Unsecured Claim Cap; Number of
Shareholders. Cash Distributions provided under the Plan shall be funded from
funds on hand, the Exit Financing Facility and from the following equity
infusion and loans as follows: (i) on the Effective Date, JELD-WEN shall pay the
Debtors $8.25 million by wire transfer in exchange for the 50% of the New Common
Stock to be issued in connection with the Plan; and (ii) on the Effective Date,
JELD-WEN shall provide the Reorganized Company with a $10.5 million secured line
of credit subordinated to any third-party working capital loan. Payments to be
made under the Plan after the Effective Date may also be paid from future cash
flow.
<PAGE>
On the Effective Date, the Reorganized Company shall place $8.25 million in
an escrow account from which to pay Allowed Claims (the "Escrow Account"). Funds
in the Escrow Account may only be used to pay such Allowed Claims (unless the
Creditors' Committee consents otherwise in writing) until all Unsecured Claims
and Convenience Class Claims have been either Allowed or Disallowed in a Final
Order and any Allowed Claim has been paid in accordance with the terms of this
Plan. After all Unsecured Claims and Convenience Claims have been Allowed or
Disallowed in a Final Order and any such Allowed Claims have been paid as
provided by the Plan, any remainder in the Escrow Account (including any
remaining earned interest) shall be returned to the Reorganized Company by the
escrow agent. The establishment and funding of the Escrow Account shall not
limit or discharge the Reorganized Company's payment obligations under the Plan
to the holders of Class 7 and Class 8 Claims, and the Reorganized Company shall
remain liable to make such payments subject to Section 15.2 of the Plan, if
applicable, if the aggregate amount of such payments exceeds the amount in the
Escrow Account.
THE DEBTORS AND JELD-WEN HAVE INDICATED THAT THEY RESERVE THE RIGHT NOT TO
PROCEED WITH THE CONFIRMATION HEARING ON THE PLAN IF IT APPEARS AT THE TIME OF
THE CONFIRMATION HEARING THAT THE AGGREGATE AMOUNT OF ALLOWED UNSECURED CLAIMS
AND ALLOWED CONVENIENCE CLAIMS WILL LIKELY EXCEED $46.2 MILLION. IF THE DEBTORS
AND JELD-WEN CONCLUDE THAT SUCH CAP IS LIKELY TO BE EXCEEDED, THEY WILL ADVISE
THE CREDITORS' COMMITTEE, AT WHICH POINT ONE OF FOUR COURSES OF ACTION WILL
OCCUR:
(1) The Creditors Committee may, but is under no obligation to, agree to
cap all payouts to Unsecured Claims and Convenience Claims to $8,250,000, with
appropriate reductions to the proposed payouts to Allowed Unsecured Claims and
Convenience Claims (while preserving a comparable differential in the treatment
of Class 7 and Class 8 Claims), in which case the Debtors and JELD-WEN will
proceed to confirmation without reballoting of the Plan or further notice to
Creditors, provided there are no other circumstances which make them determine
not to proceed with confirmation. Assuming, for example, that total Unsecured
Claims and Convenience Claims were $60 million, then cash distributions to
Unsecured Claims and Convenience Claims would be approximately 17 and 11 cents,
respectively, if the Creditors= Committee were to elect this option on behalf of
the holders of Class 7 and Class 8 Claims.
(2) The Debtors and JELD-WEN may, but are under no obligation to, agree to
pay 23 cents to all Allowed Convenience Claims and 17 cents to all Allowed
Unsecured Claims even if the $46.2 million aggregate claims cap is exceeded,
without reballoting of the Plan or further notice to Creditors.
<PAGE>
(3) The Debtors, JELD-WEN and the Creditors' Committee may, but are under
no obligation to, agree to a different treatment under the Plan for Class 7 and
Class 8 Claims, without reballoting of the Plan or further notice to Creditors.
Distributions under this scenario would depend upon what is agreed to by the
Debtors, JELD-WEN and the Creditors= Committee.
(4) If none of the three courses of action are pursued, then the Debtors
and JELD-WEN expect to withdraw or modify their Plan in accordance with the
applicable provisions of the Plan and the Bankruptcy Code. The Debtors would
retain their exclusive rights to propose and solicit acceptance of a Chapter 11
plan.
In the event that options one, two or three are chosen and the Plan is
confirmed, the agreed Plan payouts will not be later modified (i.e., after
Confirmation) based on the eventual aggregate amount of Allowed Unsecured Claims
and Convenience Claims.
JELD-WEN has also indicated that upon confirmation the Reorganized Company
will be a privately held company that is not subject to the registration and
reporting requirements of the Securities Exchange Act of 1934. The Plan thus
provides that the $25,000 threshold for Class 7 Convenience Claims (which do not
receive any New Common Stock) may be adjusted upward to assure that there will
be fewer than 300 creditors holding Class 8 Claims who will receive New Common
Stock. The Debtors and JELD-WEN, however, have indicated that they reserve the
right not to proceed with the confirmation hearing on the Plan if it appears at
the time of the confirmation hearing that the number of shareholders of the
Reorganized Company will be 300 or more.
6. Exit Financing Facility. On or prior to the Confirmation Date, the
Debtors shall have obtained a certain exit financing facility (the "Exit
Financing Facility") from either (i) JELD-WEN, (ii) a third-party lender or
(iii) a third-party lender with credit enhancement by JELD-WEN. The Exit
Financing Facility shall be a revolving loan facility based upon inventory and
receivables less than 90 days after invoice and will contain economic terms
comparable to the GDI DIP Facility and otherwise satisfactory to the Debtors and
customary representations and warranties. The Exit Financing Facility shall
replace and satisfy all obligations under the GDI DIP Facility.
7. Retention of Avoidance, Turnover and Other Actions. All avoidance
actions under " 544(b), 547, 548 and 550 of the Bankruptcy Code shall vest in
the Creditors' Committee; provided, however, no claims or actions against the
following entities or individuals shall vest in the Creditors' Committee: (i)
JELD-WEN or any of its affiliates; and (ii) current and former officers,
directors, employees and agents of the Debtors. The actions assigned to the
Creditors' Committee are defined as the "Assigned Actions" under the Plan. All
other avoidance actions and other causes of action not specifically assigned to
the Creditors' Committee shall vest in the Reorganized Company.
<PAGE>
8. Pension Plan. The Reorganized Company will continue the Grossman's
pension plan. The Debtors are contributing sponsors or members of the
contributing sponsor's controlled group of the Grossman's Inc. Retirement Plan
("Pension Plan"). The Pension Plan is covered by Title IV of the Employee
Retirement Income Security Act as 1974, as amended ("ERISA"), 29 U.S.C. Section
1301-1461. As part of Debtors Joint Plan of Reorganization and pursuant to a
Stipulation between the Debtors and the Pension Benefit Guaranty Corporation
("PBGC"), Reorganized Grossman=s will assume the obligations of the Pension Plan
and continue to administer the Pension Plan in accordance with Title IV of
ERISA. The Debtors will not seek to terminate the Pension Plan prior to December
8, 1997. Debtors do not presently intend to terminate the Pension Plan at all so
long as it appears they can be reorganized as a going-concern.
9. Discharge. Except as otherwise provided in the Plan, the amended and
restated articles of incorporation and bylaws or in the Confirmation Order,
Confirmation shall operate as a discharge, as of the Effective Date, of any and
all debts of and Claims against Debtors that arose at any time before
Confirmation. There is no discharge of obligations provided for or assumed in
connection with the Plan, the amended and restated articles of incorporation and
bylaws or the Confirmation Order.
10. Releases. On the Effective Date, the following individuals and entities
shall be forever released and discharged from any and all claims, actions,
suits, debts, accounts, causes of action, agreements, promises, damages,
judgments, demands and liabilities which any of the Debtors or claimants
receiving distributions under the Plan may have against them related to the
Debtors or these cases: (i) all directors, officers, employees and agents of the
Debtors who served the Debtors on or after the Petition Date; (ii) JELD-WEN and
any of its affiliates; and (iii) John Grey, Maurice Grossman, Leo Kahn and
Samuel Witt, four former directors of the Debtors who resigned around the time
of the initial JELD-WEN financing to facilitate that transaction. The releasees
have generally provided valuable post-petition services to the estates.
Claimants voting on the Plan may elect not to grant the releases described
herein.
<PAGE>
11. Maintenance of Indemnification Policies; Indemnification of Certain
Present and Former Directors and Officers. The Reorganized Company shall not
terminate, cancel or otherwise affect any coverage under the Indemnification
Policies from and after the Effective Date with respect to the obligations
discussed herein and in Section 9.11 of the Plan. In addition, notwithstanding
anything to the contrary, the Reorganized Company shall assume and agree to pay
any and all obligations of the Debtors or their estates, including, without
limitation, any deductible under the Indemnification Policies and all Claims,
whether now existing or hereafter arising, of any Indemnified Party (as
hereinafter defined) for indemnification or contribution under Delaware law,
Article Eighth of the Restated Certificate of Incorporation of Grossman's Inc.,
the Restated Charter, Article VI of the By-Laws of Grossman's, Inc. and/or
agreements with any Indemnified Party in respect of matters to which an
Indemnified Party is made, or threatened to be made a party by reason of the
fact that such Indemnified Party served as a director or officer of Grossman's
or in some other capacity at the request of Grossman's. Indemnified Party shall
mean: (i) all directors, officers, employees and agents of the Debtors who
served the Debtors after the Petition Date; and (ii) John Grey, Maurice
Grossman, Leo Kahn and Samuel Witt.
12. Severance Obligations. The Reorganized Company shall assume certain
employee severance obligations approved by the board of directors of Grossman's
in June and July 1997. Under these severance programs, employees who are
terminated without cause post-confirmation shall be entitled to 1 to 4 weeks of
severance pay depending upon the length of their employment with the Debtors. In
addition, certain key employees shall be entitled to enhanced severance
payments. Three key employees at the Contractors' Warehouse division shall be
entitled to additional severance payments of 12 to 20 weeks in the event their
employment is terminated post-confirmation without cause. In addition, 10 key
employees at the Bargain Outlet division shall be entitled to additional
severance payments of 9 to 20 weeks in the event the Bargain Outlet division is
sold and such employee is terminated within 6 months of the sale. The Plan
Proponents estimate that the Reorganized Company's maximum liability under the
severance programs is approximately $1.35 million (assuming all employees were
terminated and eligible for such severance). Additional details concerning the
severance programs are contained in the Grossman's Inc. Restated Severance Pay
Plan and other related materials.
13. Bargain Outlet Division. The Bargain Outlet Division may be sold as
part of the Plan if an acceptable price is offered, although no such price has
been offered to date after extensive marketing and the Debtors doubt such an
offer will be forthcoming. The proceeds of any such sale shall be applied first
to a reduction of those portions of the GDI DIP Facility that are secured by
Bargain Outlet Division collateral. The remainder of such sale proceeds, if any,
shall be used to fund operations of the Reorganized Company.
H. Executory Contracts and Unexpired Leases
The Plan shall be deemed to constitute and incorporate a motion by the
Debtors to reject all executory contracts and unexpired leases to which a Debtor
is a party or is otherwise bound, except for any contracts and leases that (a)
have been assumed or rejected pursuant to an order of the Court entered prior to
the Confirmation Date, (b) are listed as one of the Assumed Contracts and Leases
on Exhibit A to the Plan or (c) are the subject of a motion to assume that is
pending before the Court on the Confirmation Date. The Confirmation Order shall
represent and reflect an order of the Court approving the assumptions or
rejections of such contracts and leases as of the Confirmation Date. Any cure
costs which the Reorganized Company is required to pay by a Final Order in
connection with an assumed contract or lease shall be treated as an
administrative expense of the Cases and shall not count against the $46.2
million unsecured claims cap.
<PAGE>
If the rejection of an executory contract or unexpired lease by the Debtors
results in damages to the party or parties to the contract or lease, a Claim for
damages shall be forever barred and shall not be enforceable against Debtors,
their successors or assigns, or their property unless a proof of claim is filed
with the Court and served upon Debtors or the Reorganized Company by sixty (60)
days after entry of the Confirmation Order or by such earlier date as may be
fixed by an order of the Court authorizing rejection of the contract or lease.
Claims for damages resulting from the rejection of any such leases and
contracts, if Allowed, shall constitute Class 8 Claims entitled to share Pro
Rata with other Allowed Class 8 Claims as discussed below.
I. Retention of Jurisdiction
1. Claims and Actions
The Court shall retain jurisdiction over the Cases as provided in the Plan,
including, without limitation, such jurisdiction as is necessary to enforce and
construe the Plan. The Court shall also expressly retain jurisdiction: (i) to
hear and determine all Claims against the Debtors and (ii) to enforce all causes
of action which may exist on behalf of the Debtors, including the Assigned
Actions.
2. Retention of Additional Jurisdiction
The Court shall also retain jurisdiction for the purpose of classification
of the Claims of any Creditor and the determination of such objections as may be
filed with respect to the Claims and Interests, including Section 502(c)
proceedings for the estimation of Claims. The Court shall further retain
jurisdiction over matters as indicated in Article 12 of the Plan.
3. Modifications of the Plan
The Debtors and JELD-WEN may modify the Plan in the manner provided for
under Code Section 1127. The Debtors and JELD-WEN shall give notice of any
proposed modification to counsel for the Committees and to the United States
Trustee for the District of Delaware and to any other parties designated by the
Court. The Debtors and JELD-WEN also reserve the right to make such
modifications at any hearings on confirmation as are necessary to permit the
Plan to be confirmed under Code Section 1129 subject to the requirements of the
Bankruptcy Code.
<PAGE>
4. Revocation and Withdrawal of the Plan
The Debtors and JELD-WEN reserve the right to revoke or withdraw the Plan
at any time before entry of a Confirmation Order. If the Debtors and JELD-WEN
revoke or withdraw the Plan prior to date of Confirmation, or if the
Confirmation or the Effective Date does not occur, then the Plan shall be deemed
null and void. In such event, nothing contained herein or in any document
relating to the Plan shall be deemed to constitute an admission of validity,
waiver or release of any Claims by or against the Debtors or any Person or to
prejudice in any manner the rights of the Debtors or any Person in any
proceeding involving the Debtors.
5. Section 1146(c) Exemption
Pursuant to Section 1146(c) of the Bankruptcy Code, the making or delivery
of any instrument of transfer or the holding of title for administrative
purposes only by the Debtors or transfer or sale of any real or personal
property of the Debtors pursuant to, in implementation of or as contemplated by
the Plan, shall not be taxed under any state or local law imposing a stamp tax,
transfer tax or similar tax or fee.
J. Conditions to the Effectiveness of the Plan
All of the following conditions must occur and be satisfied for the Plan to
be effective:
i) The Confirmation Order must be signed by the judge of the Court and duly
entered on the docket for the Cases by the clerk of the Court;
ii) There must be no stay in effect with respect to the Confirmation Order;
iii) The Debtors shall have obtained the Exit Financing Facility
contemplated in Section 9.2 of the Plan;
iv) The Debtors shall have established the Escrow Account in accordance
with Section 8.1 of the Plan;
The Debtors and JELD-WEN may waive condition iii).
VI. CONFIRMATION AND CONSUMMATION PROCEDURE
A. Disclosure and Solicitation
The Disclosure Statement is presented to the holders of Claims in impaired
Classes which receive or retain property pursuant to the Plan to satisfy the
requirements of Bankruptcy Code " 1125 and 1126. Bankruptcy Code Section 1125
requires that full disclosure be made to all holders of Claims and Interests in
impaired Classes which receive or retain property pursuant to a plan at the
time, or before, solicitation of acceptances of such plan is commenced.
<PAGE>
B. Acceptance of the Plan
The Bankruptcy Code defines acceptance of a plan by a Class of Creditors as
acceptance by holders of more than two-thirds in dollar amount and more than
one-half in number of the Claims of that Class that have timely voted on a plan.
A vote may be disregarded if the Court determines, after notice and a hearing,
that such acceptance or rejection was not solicited or procured in good faith or
in accordance with the provisions of the Bankruptcy Code.
A vote to accept or reject the Plan can only occur by proper submission of
a duly executed Ballot. Failure of a holder to vote does not constitute a vote
to reject the Plan by that holder. EACH HOLDER OF A CLAIM SHOULD SEEK SUCH
INDEPENDENT LEGAL AND/OR BUSINESS ADVICE AS IT DEEMS APPROPRIATE REGARDING
WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN.
C. Classification
The Debtors are required under Bankruptcy Code Section 1122 to classify the
Claims and Interests of its Creditors and Interest holders into Classes that
contain Claims and Interests that are substantially similar to the other Claims
or Interests in such Class. The Plan can be confirmed so long as there is one
consenting Class of impaired Claims (not including the votes of insiders), and
so long as the other requirements for confirmation which do not involve voting
are met.
D. Confirmation
The Code requires the Court, after notice, to hold a confirmation hearing.
At the confirmation hearing, the Court will confirm the Plan only if all the
requirements of Section 1129 of the Bankruptcy Code are met. Among the
requirements for confirmation of a plan are that the plan is (i) accepted by all
impaired Classes of Claims and Interests or, if rejected by an impaired Class,
that the plan "does not discriminate unfairly" and is "fair and equitable" as to
such Class; (ii) feasible; and (iii) in the "best interests" of rejecting
Creditors and Interestholders impaired under the plan.
1. Acceptance
Classes 2A, 4, 5, 6, 7 and 8 are impaired under the Plan, and therefore,
must accept the Plan in order for it to be confirmed without application of the
"fair and equitable" test. For confirmation despite rejection by a Class, the
Court must determine that the Plan is "fair and equitable" with respect to the
rejecting Class.
The "fair and equitable" test is described below under the heading
"Confirmation without Acceptance by All Impaired Classes."
<PAGE>
2. Feasibility
Attached as Exhibit III is a business plan which has been reviewed and
approved by JELD-WEN and Debtors' management. JELD-WEN will control a majority
of the board of directors post-confirmation and is expected to utilize certain
members of senior management from JELD-WEN and its affiliates to manage the
Reorganized Company and, therefore, will be responsible for implementing the
Plan, the business plan, as well as any revisions to the business plan. JELD-WEN
and its executive teams have experience in operating a wide range of
enterprises.
The Plan Proponents expect the cash on hand on the Effective Date
(including proceeds from the JELD-WEN equity infusion and the post-confirmation
loan facilities) will be sufficient to pay (i) outstanding administrative and
priority claims, (ii) fund the initial 17 cent distribution to Allowed Unsecured
Claims as of that date, (iii) fund the initial 23 cent distribution to allowed
convenience class claims as of that date and (iv) Reclamation Claims. Remaining
cash, plus future cash flow and availability under the post-confirmation loan
facilities, are expected to be sufficient to fund operations as contemplated by
the business plan attached as Exhibit III hereto and pay remaining Claims under
the Plan.
To avoid further administrative cost from operating in Chapter 11 and gain
the business and other benefits of operating as a reorganized company outside
Chapter 11, the Plan Proponents believe a swift emergence from Chapter 11 under
the Plan is necessary, and confirmation by December 8, 1997 is a material
condition precedent to JELD-WEN's willingness to support the Plan and perform
its obligations thereunder. Claims processing will not be completed as of the
expected confirmation date and thus the Plan contemplates that the Plan
Proponents and the Creditors' Committee will review the results of Claims
processing and open Claims as of the confirmation hearing and, if necessary,
make adjustments to payouts to unsecured and convenience class Creditors if it
appears likely that the $46.2 million Unsecured Claims cap will be exceeded. It
is possible that the determination made as of Confirmation will be wrong and
that more Claims will ultimately be Allowed than expected at Confirmation. In
the event that Allowed Claims materially exceed the estimate, the value of the
equity in the Reorganized Company could materially decline and there could be an
adverse impact on the Cash and overall position of the business.
After confirmation, the Reorganized Company will be a private company, as
discussed further in Section VIII below. The Plan Proponents make no
representations or predictions about the value of the shares, either at
confirmation and thereafter, to be received by the Class 8 Creditors under the
Plan. The value of those shares will be affected by the future performance of
the business and could suffer if the Reorganized Company fails to achieve its
business plan results or due to other risks discussed further in Section VIII
below. As discussed in Section VII below, if the NOL is reduced, eliminated or
otherwise unavailable, the value of the equity and the cash flow position of the
Debtors would also be severely impacted.
<PAGE>
3. Best Interests Test
With respect to each impaired Class, confirmation of the Plan requires that
each holder of an Allowed Claim or Allowed Interest in such class either (a)
accepts the Plan or (b) receives or retains under the Plan property of a value,
as of the Effective Date, that is not less than the value such holder would
receive or retain if the Debtors were liquidated under Chapter 7 of the
Bankruptcy Code. Under the Debtor's liquidation analysis attached as Exhibit II
hereto, the projected payout for unsecured creditors in a Chapter 7 case is
zero. See Section IX, "Alternatives to Confirmation and Consummation of the
Plan," and the liquidation analysis attached as Exhibit II hereto for a further
discussion of why the Plan Proponents believe that this test is met.
4. Confirmation Without Acceptance By All Impaired Classes
The Code provides that, so long as at least one impaired Class of the
Debtors (other than insiders) accepts the Plan, the Debtors can nevertheless
seek confirmation of the Plan. To obtain such confirmation, the Debtors must
demonstrate to the Court that the Plan "does not discriminate unfairly" and is
"fair and equitable" with respect to these and any other dissenting Classes. The
"unfair discrimination" test requires, among other things, that the Plan
recognize the relative priorities among Creditors and Interestholders.
The Code establishes different "fair and equitable" tests for secured
Creditors, unsecured Creditors and Interestholders. The respective tests are as
follows:
(a) Secured Creditors
Either (i) each impaired secured Creditor of the rejecting Class (a)
retains its liens in the collateral securing such Creditor's Claim or in the
proceeds thereof to the extent of the allowed amount of the Secured Claim and
(b) receives deferred cash payments in at least the allowed amount of such
Secured Claim with a present value at the Effective Date at least equal to such
Creditor's interest in its collateral or in the proceeds thereof or (ii) the
plan provides each impaired secured Creditor with the "indubitable equivalent"
of its Secured Claim.
(b) Unsecured Creditors
Either (i) each impaired unsecured Creditor of the rejecting Class receives
or retains under the Plan property of a value equal to the amount of its Allowed
Claim or (ii) the holders of Claims and Interests that are junior to the Claims
of the dissenting Class do not receive or retain any property under the Plan.
<PAGE>
(c) Interestholders
Either (i) each Interestholder of the rejecting Class receives or retains
under the Plan property of a value equal to the greater of (a) the fixed
liquidation preference or redemption prices, if any, of the interest it holds or
(b) the value of such Interest or (ii) the holders of interests that are junior
to such Interest do not receive or retain any property under the Plan.
The Debtors believe that the Plan can meet the applicable tests described
above, even though it may be rejected by the holders of one or more Classes of
Claims and Interests.
The Bankruptcy Code provides for confirmation of a plan even if the plan is
not accepted by all impaired classes as long as at least one impaired Class of
Claims has accepted it and the other non-voting requirements of a confirmation
are met. These "cramdown" provisions for confirmation of a plan, despite the
nonacceptance of one or more impaired Classes of Claims or Interests, are set
forth in Code Section 1129(b).
VII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain of the significant federal
income tax consequences of the Plan to the Debtors, Creditors and
Interestholders. The tax consequences to Creditors and Interestholders may vary
based on the individual circumstances of each Creditor and Interestholder. No
ruling has been obtained from the Internal Revenue Service with respect to any
of the tax aspects of the Plan and no opinion of counsel has been obtained by
the Debtors with respect thereto. Accordingly, each Creditor and Interestholder
should consult its own tax adviser regarding the federal, state and local tax
consequences of the Plan.
A. To the Reorganized Company
The Debtors currently project that they will have net operating loss
("NOL") carryovers of approximately $300 million after confirmation of the Plan
after reduction for cancellation of indebtedness income. Subject to the
limitations and risks discussed below, the Reorganized Company should succeed to
the Debtors' NOL tax attributes.
<PAGE>
A corporation's tax attributes, including NOL carryovers, may be preserved
notwithstanding the transfer of all or part of its stock to new shareholders.
Section 382 of the Internal Revenue Code imposes special rules on the ability of
a corporation to continue to use its NOL's if its stock ownership has changed.
In general, an "ownership change" under Section 382 of the Internal Revenue Code
occurs if the percentage of the stock that is owned by shareholders who hold
five percent or more of the stock of the corporation is increased by more than
fifty percentage points over the lowest percentage of stock of the corporation
owned by such shareholders during a testing period which is usually three years
prior to the date on which the ownership change occurs. The change in stock
ownership can occur through a variety of ways such as an outright purchase or
through a reorganization. Once an ownership change occurs, Section 382 does not
impair the NOL carryover itself, but it does restrict the amount of income which
may be offset by NOL carryovers occurring prior to the ownership change. This
annual limitation on the ability to utilize the NOL carryover is calculated by
multiplying the value of the corporation by the "long-term tax exempt rate."
This rate is determined monthly by the Internal Revenue Service. Recently, the
rate has generally been about 5.45 percent.
Confirmation of the Plan will cause a change of ownership of the Debtors
for federal income tax purposes. Such a change in ownership, however, should not
subject the Debtors' NOL carryforward to the annual limitation described above
because the Debtors believe they would qualify for a special bankruptcy
exception to the general rule of Section 382. This special bankruptcy exception
is set forth in Section 382(1)(5) of the Internal Revenue Code. Subject to the
reduction described below, if Section 382(1)(5) applies, the NOL carryovers will
be fully deductible against post-reorganization income of the Reorganized
Company. Section 382(1)(5) requires that: (i) the Debtors be (immediately before
the ownership change) under the jurisdiction of a court in a Title 11 or similar
case, and (ii) the shareholders and creditors of the Debtors (determined
immediately before such ownership change) own at least 50 percent (both in
voting and in value) of the Reorganized Company's stock immediately after the
ownership change as a result of being shareholders and creditors immediately
before the ownership change. Stock acquired by a new shareholder, such as
JELD-WEN, is not counted toward the 50 percent ownership requirement. Stock
transferred to a creditor under the Plan may be counted toward the 50 percent
ownership requirement if the exchanged debt: (i) was held by the exchanging
creditor at least eighteen months before the bankruptcy filing, or (ii) arose in
the ordinary course of the debtor's business and is held by the person who
originally had the beneficial interest in the debt. The Debtors believe that
creditors meeting the above requirements will own 50 percent of the Reorganized
Company's stock immediately after the ownership change. There can be no
assurance, however, that the test will be met until the issuance of stock is
actually completed.
As noted above, NOL carryovers are subject to a reduction notwithstanding
the special rule of Section 382(1)(5). The NOL carryovers will be reduced by the
amount of any interest on indebtedness that was converted to stock in the
proceeding and paid or accrued during the three taxable years preceding the
taxable year in which the ownership change occurs on or prior to the change
date. It is not anticipated that any of the debt converted to stock under the
Plan will be interest-bearing debt and, accordingly, there should be no
reduction of NOL carryovers by reason of such factor.
After an ownership change that qualifies for the bankruptcy exception, a
second ownership change during the following two-year period may result in
elimination of the NOL carryovers that arose before the first ownership change.
<PAGE>
The availability of the NOL to substantially reduce future income tax
liability is an important element of the business plan and if the NOL tax
attributes were not available or reduced due to the risks set forth above, the
Reorganized Company and the value of the equity in the Reorganized Company would
be adversely affected.
B. To Creditors and Interestholders
As a result of the discharge of indebtedness under the Plan, claimants will
realize deductible losses in the amount of their cost basis of Claim or Interest
(less any distributions received under the Plan) which are extinguished under
the Plan. In the case of claimants other than Classes 9A, 9B and 9C
Interestholders, to the extent such loss arises from the claimant's trade or
business, the loss will constitute a business bad debt which can be deducted as
an ordinary deduction from gross income. If the debt is evidenced by a bond,
debenture, note or other evidence of indebtedness with interest coupons or in
registered form, the loss from the worthlessness of such debt may be subject to
capital loss limitations, except if the claimant holding such security is a
bank, a financial institution described in Section 591 of the Internal Revenue
Code or a small business investment company, the loss with respect to such
security may be claimed as an ordinary loss. In the case of an Interestholder,
such a loss will be a capital loss, assuming that the stock held by such
claimant is a capital asset in the hands of such a claimant.
VIII. CERTAIN SECURITIES LAW AND OTHER CONSIDERATIONS
The issuance and transfer of New Common Stock of the Reorganized Company
raises several legal issues under the Bankruptcy Code and securities laws, which
are discussed in this section.
EACH RECIPIENT OF NEW COMMON STOCK SHOULD SATISFY ITSELF THROUGH
CONSULTATION WITH ITS OWN LEGAL ADVISERS AS TO WHETHER OR NOT TRANSACTIONS IN
NEW COMMON STOCK ARE LAWFUL UNDER FEDERAL AND STATE SECURITIES LAWS.
THE DEBTORS HAVE NOT RECEIVED ADVICE OR OTHER ACTION FROM THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION WITH RESPECT TO ANY
MATTER DISCUSSED HEREIN.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE STATEMENTS CONTAINED HEREIN.
<PAGE>
A. Initial Issuance of New Common Stock
Section 1145 of the Bankruptcy Code provides that the securities
registration requirements of federal, state and local laws do not apply to the
offer or sale of stock, warrants or other securities issued by a debtor (or its
successor) if (i) the offer or sale occurs under a plan of reorganization and
(ii) the securities are transferred in exchange (or principally in exchange) for
a claim against or interest in a debtor. Accordingly, under Section 1145 of the
Bankruptcy Code, the issuance of New Common Stock to the holders of Class 8
Claims pursuant to the Plan is exempt from registration under the securities
laws.
B. Transfer of Plan Securities
Any person other than the Debtors who is not an "underwriter" under Section
1145 of the Bankruptcy Code or a "dealer" under the Securities Act of 1933, as
amended (the "1933 Act"), and who transfers New Common Stock received under the
Plan need not comply with the registration requirements of the 1933 Act or under
the state "blue sky" laws.
The term "underwriter," as used in Section 1145 of the Bankruptcy Code,
includes four categories of persons, which are referred to in this Disclosure
Statement as "Controlling Persons," "Accumulators," "Distributors" and
"Syndicators." Dealers and the four types of underwriters are discussed below.
EACH PARTY RECEIVING NEW COMMON STOCK PURSUANT TO THE PLAN IS URGED TO CONSULT
ITS OWN LEGAL ADVISORS TO DETERMINE WHETHER SUCH PARTY MAY BE DEEMED A DEALER OR
UNDERWRITER UNDER THESE DEFINITIONS.
1. Controlling Persons
"Controlling Persons" are persons who, after the Effective Date, have the
ability, whether direct or indirect and whether formal or informal, to control
the management and policies of the Reorganized Company. Whether a person has
such power depends on a number of factors, including the person's equity in the
Reorganized Company relative to other equity holders, and whether the person,
acting alone or in concert with others, has a contractual or other relationship
giving that person power over management policies and decisions. Controlling
Persons are permitted to sell or otherwise dispose of New Common Stock only by
complying with the registration requirements of the 1933 Act and state "blue
sky" laws, or an exemption therefrom.
Directors, executive officers and beneficial owners of 10% or more of the
outstanding stock of any issuer may be presumed to be controlling persons of
that issuer and thus an underwriter for purposes of Section 1145 of the
Bankruptcy Code.
<PAGE>
2. Accumulators and Distributors
"Accumulators" are persons who purchase a claim against or interest in the
Debtors with a view to distribution of any New Common Stock to be received under
the Plan in exchange for such claims or interest. "Distributors" are persons who
offer to sell New Common Stock for the holders of those securities.
3. Syndicators
"Syndicators" are persons who offer to buy New Common Stock from the
holders with a view to distribution, under an agreement made in connection with
the Plan, with consummation of the Plan or with the offer or sale of securities
under the Plan. The Debtors are not aware of any arrangements for the resale of
New Common Stock which would make any person a Syndicator.
4. Dealers
"Dealers" are persons who engage either for all or part of their time,
directly or indirectly, as agent, broker, or principal, in the business of
offering, buying, selling, or otherwise dealing or trading in securities.
Section 4(3) of the 1933 Act exempts transactions in New Common Stock by dealers
taking place more than 40 days after the Effective Date. Within the 40-day
period after the Effective Date, transactions by dealers who are stockbrokers
are exempt from the 1933 Act pursuant to Section 1145(a)(4) of the Bankruptcy
Code, as long as the stockbrokers deliver a copy of this Disclosure Statement
(and supplements hereto, if any, as ordered by the Court) at or before the time
of delivery of New Common Stock to their customers. This requirement
specifically applies to trading and other after-market transactions in such
securities.
C. Absence of Market for New Common Stock
Pursuant to the Plan, JELD-WEN will receive 50% of the New Common Stock on
account of its $8.25 million equity infusion. In addition, certain JELD-WEN
affiliates will receive approximately 1-2% of New Common Stock on account of
their Class 8 Unsecured Claims. Accordingly, JELD-WEN and its affiliates will
own greater than 50% of New Common Stock.
JELD-WEN's stated intention is that the Reorganized Company, upon
confirmation, will not be subject to the registration and reporting requirements
of the Securities Exchange Act of 1934 (the "1934 Act"). Accordingly, the Plan
provides that the $25,000 threshold for Class 7 Convenience Claims (which do not
receive any New Common Stock under the Plan) may be adjusted upward to assure
that there will be less than 300 creditors (including JELD-WEN and its
affiliates) outside of the Convenience Class who will receive New Common Stock.
<PAGE>
It is therefore contemplated that the New Common Stock will not be
registered under the 1933 Act or 1934 Act until such time, if ever, that such
registration is required under the Registration Rights Agreement attached to the
Plan as Exhibit D and discussed in Section V of this Disclosure Statement.
Absent such registration, the Reorganized Company, unlike Grossman's prior to
the Effective Date, will not file 1934 Act reports (such as Forms 10-K, 10-Q and
8-K) with the Securities and Exchange Commission. In addition, New Common Stock
(unlike Old Common Stock which was quoted on the Nasdaq National Market until
its delisting following the commencement of these Cases) will not be listed on
any national securities exchange or quoted on the Nasdaq Stock Market. The Plan
Proponents note that the value of the New Common Stock may be adversely affected
by (i) the absence of publicly available information regarding the Reorganized
Company and (ii) the absence of a securities exchange or stock market on which
to trade New Common Stock.
IX. ALTERNATIVES TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
If the Plan is not confirmed or consummated, the alternatives include, in
addition to dismissal of the Cases, (a) liquidation of the Debtors under Chapter
7 of the Code or (b) an alternative plan.
If no plan can be confirmed or the Court determines other cause exists for
conversion, the Chapter 11 Cases may be converted to cases under Chapter 7 of
the Bankruptcy Code. In Chapter 7, a trustee would be elected or appointed to
liquidate the assets of the Debtors for distribution to Creditors in accordance
with priorities established by the Bankruptcy Code.
The Debtors believe that liquidation under Chapter 7 would result in no
aggregate distributions to unsecured creditors (in contrast to the substantial
cash distributions at confirmation under the Plan) due to primarily the
following: (a) the fact that the Debtors' assets would be valued at liquidation
as opposed to going concern values, (b) depressed asset values associated with a
Chapter 7 disposition of assets; (c) additional administrative expenses involved
in the appointment of a trustee, attorneys and other professionals to assist
such trustee and their need to extensively study these Cases in order to fulfill
their fiduciary duties; and (d) delays while a Chapter 7 Trustee employs
professionals to analyze issues and research the background of the Debtors,
their assets and liabilities and the recovery analysis. Indeed, the Debtors'
liquidation analysis concludes that no distribution would be made to unsecured
creditors under a Chapter 7 liquidation. A copy of the liquidation analysis is
attached hereto as Exhibit II.
<PAGE>
If the Debtor's exclusive period to file a plan and solicit acceptances of
a plan has expired pursuant to Section 1121 of the Bankruptcy Code, other
parties could propose their own plans for the Debtors. By virtue of the timely
filing of the Plan and this Disclosure Statement, that Debtors' current
exclusive right to file a plan continues through December 3, 1997 and their
current exclusive right to solicit ballots continues through February 2, 1998,
without prejudice to the Debtors' right to seek a further extension of their
right to solicit acceptance of the Plan. The Debtors have consented to JELD-WEN
being a co-Plan Proponent due to JELD-WEN's leading role in post-confirmation
management and its financial commitments to the Reorganized Company set forth
above.
The Plan Proponents believe that confirmation and implementation of the
Plan are preferable to either of the above-described alternatives and recommends
that all Creditors vote in favor of the Plan.
X. VOTING INSTRUCTIONS
A. Classes Entitled to Vote
Classes 2A, 4, 5, 6, 7 and 8 are impaired and may receive or retain
property pursuant to the Plan; therefore, all Persons holding Claims in those
Classes are entitled to vote to accept or reject the Plan provided that either:
(a) the Claim has been scheduled by the Debtors and such Claim is not scheduled
as disputed, contingent or unliquidated, as set forth in the Debtors' most
current schedules; or (b) the claimant has timely filed a proof of Claim and the
Debtors have not filed an objection to such Claim. IF THE DEBTORS HAVE FILED AN
OBJECTION TO A CLAIM, THEN THE HOLDER OF SUCH CLAIM MAY NOT VOTE ON THE PLAN
UNLESS THE CLAIMANT HAS OBTAINED AN ORDER FROM THE COURT UPON NOTICE AND HEARING
ALLOWING SUCH CLAIM FOR VOTING PURPOSES.
B. Classes Not Entitled to Vote
Classes 1, 2B and 3 are unimpaired and, therefore, the holders of Claims in
such Classes are conclusively presumed pursuant to Code Section 1126(f) to have
accepted the Plan. Classes 9A, 9B and 9C are impaired and do not receive or
retain any property under the Plan and, therefore, are conclusively presumed to
reject the Plan under Code Section 1126(g).
C. Ballots
Separate ballots are used for each Class of Claims. In addition, separate
preaddressed return envelopes are supplied for voting. Creditors should take
care to use the proper pre-addressed envelope to ensure that Ballots are
returned to the proper address.
D. Voting Multiple Claims and Interests
<PAGE>
ANY PERSON WHO HOLDS CLAIMS IN MORE THAN ONE CLASS IS REQUIRED TO VOTE
SEPARATELY WITH RESPECT TO EACH CLASS IN WHICH SUCH PERSON HOLDS CLAIMS. PLEASE
USE A SEPARATE BALLOT OR THE APPROPRIATE FORM TO VOTE EACH SUCH CLASS OF CLAIM.
IF, HOWEVER, A CREDITOR CASTS MORE THAN ONE BALLOT VOTING THE SAME CLAIM PRIOR
TO THE VOTING DEADLINE, ONLY THE LAST BALLOT RECEIVED SHALL BE COUNTED.
E. Incomplete Ballots
ANY BALLOT RECEIVED WHICH DOES NOT INDICATE EITHER AN ACCEPTANCE OR
REJECTION OF THE PLAN SHALL BE DEEMED TO CONSTITUTE AN ACCEPTANCE OF THE PLAN.
F. Expiration Date
THE SOLICITATION PURSUANT TO THIS DISCLOSURE STATEMENT WILL EXPIRE ON
DECEMBER 3, 1997. TO BE COUNTED, YOUR BALLOTS MUST BE RECEIVED BY 4:00 P.M. E.T.
ON DECEMBER 3, 1997. THE PLAN PROPONENTS RESERVE THE RIGHT TO EXTEND THIS
SOLICITATION FOR SUCH PERIOD OR PERIODS AS THEY MAY DETERMINE UPON APPROVAL BY
THE COURT. THE PLAN PROPONENTS WILL PROVIDE SUCH NOTICE AS REQUIRED BY
APPLICABLE LAW AND/OR AN ORDER OF THE COURT.
<PAGE>
CONCLUSION
The Debtors and JELD-WEN believe that acceptance of the Plan is in the best
interest of each and every Class of Creditors and recommend that you vote to
accept the Plan.
GROSSMAN'S INC.
GRS HOLDING COMPANY, INC.
GRS REALTY COMPANY, INC.
By: \s\ Thomas E. Arnold, Jr.
-----------------------------
Thomas E. Arnold, Jr.
President
Fruman Jacobson, Esq.
John Collen, Esq.
Robert E. Richards, Esq.
Thomas A. Labuda, Esq.
SONNENSCHEIN NATH & ROSENTHAL
8000 Sears Tower
Chicago, Illinois 60606
Laura Davis Jones, Esq.
Victoria Watson Counihan, Esq.
YOUNG, CONAWAY, STARGATT & TAYLOR
Rodney Square North, 11th Floor Wilmington,
Delaware 19899
CO-COUNSEL TO DEBTORS AND DEBTORS IN POSSESSION
JELD-WEN, inc.
By: \s\ Richard Wendt
Richard Wendt
President
Jack Cullen, Esq.
FOSTER PEPPER SHEFELMAN, P.L.L.C.
1111 Third Avenue
Suite 3400
Seattle, Washington 98101-3299
Francis Monaco, Esq.
WALSH & MONZACK
1201 N. Orange Street
400 Commerce Center
Wilmington, Delaware 19801
CO-COUNSEL TO JELD-WEN, INC.
Dated: October 29, 1997
(1) The Debtors have also agreed to sell a 10th parcel of property
(Warrensville Heights, Ohio) for approximately $2,100,000; this sale, however,
is not expected to close until the end of December 1997 or later.
(2) The Plan provides for post-confirmation bar dates for unpaid
administrative expense claims and for rejection damage claims for certain
executory contracts and unexpired leases rejected at or following confirmation.
(3) Section 382(l)(5)(E) of the Internal Revenue Code describes debt held
by "qualified creditors" as follows:
(E) Only certain stock taken into account. -- For purposes of subparagraph
(A)(ii), stock transferred to a creditor shall be taken into account only to the
extent such stock is transferred in satisfaction of indebtedness and only if
such indebtedness --
(i) was held by the creditor at least 18 months before the date of the
filing of the title 11 or similar case, or
(ii) arose in the ordinary course of the trade or business of the old loss
corporation and is held by the person who at all times held the beneficial
interest in such indebtedness.
26 U.S.C. Section 382(l)(5)(E). Treasury Regulations 1.382-9(d)(2)(iv)
provides examples of ordinary course debt. For further information on ' 382 of
the Internal Revenue Code and other tax aspects of the Plan, see Section VII of
this Disclosure Statement.
<PAGE>
EXHIBIT I (see above Exhibit 2 to this Current Report on Form 8-K)
<PAGE>
EXHIBIT II
Grossman's Inc.
Liquidation Analysis
The Debtors have prepared this liquidation analysis (the
"Liquidation Analysis") to help holders of Claims decide whether to
accept or reject the Plan. The Liquidation Analysis indicates the
values which may be obtained by Classes of Claims if all of the
assets of the Debtors are sold, pursuant to a Chapter 7
liquidation, as an alternative to continued operation of the
business and payments under a plan of reorganization. The
Liquidation Analysis is based on the assumptions discussed below.
All capitalized terms not defined in this exhibit have the same
meanings ascribed to them in the Disclosure Statement to which this
exhibit is attached.
I. STATEMENT OF ASSETS
($ in thousands)
<TABLE>
<CAPTION>
Estimated
12/1/97 Liquidation
Projected % Value
Note Net Book Value Recovery (Unaudited)
------- ----------------- ----------- ----------------
<S> <C> <C> <C> <C>
Cash 1 $2,000 100.0% $2,000
Inventory, at cost 2 56,418 80.0%
45,134
Accounts Receivable 3 7,476 65.0%
4,859
Net Property & Equipment 4 26,104 50.0%
13,052
Other Assets 5 14,236 5.0% 712
Net Operating Loss Carryforward 6 0 0.0% -
----------- ---------- ---------
Total Assets $106,234 61.9% 65,758
===========
Interest Income/Expense 7 0
Costs Associated with Liquidation: 8
Store Operations - GOB Sales (11,420)
Wind-Down Expenses (4,655)
Severance Costs (2,000)
Professional Fees (2,550)
-----------
Net Estimated Liquidation Proceeds Available for Distribution $45,133
===========
</TABLE>
<PAGE>
II. ALLOCATION OF NET ESTIMATED LIQUIDATION PROCEEDS TO SECURED,
ADMINISTRATIVE, PRIORITY AND UNSECURED CLAIMANTS
<TABLE>
<CAPTION>
Estimated
Estimated Liquidation
Allowable % Value
Claims Recovery (Unaudited)
----------------- ----------- ----------------
<S> <C> <C> <C>
Net Estimated Liquidation Proceeds Available for Distribution $45,133
Secured Claims:
DIP Revolver 38,924 100% 38,924
DIP - L.C.'s 3,560 100% 3,560
Capital Leases 575 100% 575
Congress Termination Claim 1,000 100% 1,000
Other Administrative Claims:
Accounts Payable 5,000 14% 684
Accrued Expenses 1,750 14% 239
Reclamation Claim 1,100 14% 150
Purchase Order Cancellation Claim 0 N/A 0
-------
Net Estimated Liquidation Proceeds/(Deficit)
Available for Distribution to Unsecured Creditors $ 0
=======
Total Net Estimated Liquidation Proceeds Allocated to Unsecured Claims 0.0% $ 0
=======
</TABLE>
<PAGE>
Grossman's Inc.
Notes to the Liquidation Analysis
The Liquidation Analysis reflects the Debtors estimates of the proceeds
that would be realized if the Debtors were to be liquidated in accordance with
Chapter 7 of the Bankruptcy Code. The Liquidation Analysis is based on the
Debtors projected assets as of December 1, 1997 and has been prepared on a
substantive consolidated basis. Underlying the Liquidation Analysis are a number
of estimates and assumptions that, although developed and considered reasonable
by management, are inherently subject to significant economic and competitive
uncertainties and contingencies beyond the control of the Debtors and its
management, and upon assumptions with respect to liquidation decisions which
could be subject to change. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE REALIZED IF THE DEBTORS
WERE, IN FACT, TO UNDERGO SUCH A LIQUIDATION, AND ACTUAL RESULTS COULD VARY
MATERIALLY FROM THOSE SHOWN HERE.
The Liquidation Analysis assumes a liquidation period of approximately
eighteen months, broken down into two phases.
Phase I would entail a 2-month period in which proceeds from the sale of
inventory disposed in a going out of business sale conducted by a liquidator
(the "GOB Program") would be realized for all stores. Upon completion of the GOB
Program, stores and warehouses would be broom swept and vacated, their
operations would be shut down and most employees in these areas would be
terminated. This process is estimated to take approximately two months at a full
level of store related expenses.
Phase II would entail the next 16-month period during which other assets
would be sold, collected or otherwise monetized. Certain headquarters' personnel
would be retained as necessary to support the completion of an orderly
liquidation. Phase II would also include the completion of the claims
reconciliation process and potential payment to creditors.
Proceeds from the sale of assets have been reflected in the Liquidation
Analysis before netting any costs associated with disposing of those assets. All
costs associated with the liquidation are reflected in the "Costs Associated
with Liquidation".
The following notes describe the significant assumptions that are reflected
in the Liquidation Analysis.
1. Cash
The Liquidation Analysis assumes that operations during the liquidation
would not generate additional cash available for distribution except for net
proceeds generated by liquidation non-cash assets.
2. Inventory
Inventory on hand is assumed to be sold in the GOB Program. The Liquidation
Analysis assumes that the Debtors would sell all of their inventory to a
liquidator and realize 80% of cost value. This estimate represents gross
proceeds and is consistent with industry recovery rates and with the Company's
prior experience in liquidating certain stores. Operating expenses incurred
during the GOB Program and not picked up by the liquidator are reflected in
"Costs Associated with Liquidation" (see note 8).
Included as inventory in the analysis is prepaid inventory. For this
analysis, it is assumed such inventory will be delivered into the stores during
the liquidation period and sold during GOB sales.
3. Accounts Receivable
Accounts Receivable includes, customer accounts receivables (net of
reserve), charge card receivables and other third party receivables. The
recovery of receivables is based on the Debtors management's estimate of
collection, given such factors as the aging of the receivables, the time and
effort necessary to make inquiries and the potential uncollectible accounts.
Personnel and other operating costs incurred during the disposition period
are reflected in "Costs Associated with Liquidation" (see note 8).
4. Net Property and Equipment
Property and equipment includes owned land, store and warehouse buildings,
and furniture, fixtures and equipment at the stores, warehouses and
headquarters. Values for all property and equipment are based on the Debtors
managements' review of appraisals for owned land and buildings and its own
estimates based on market conditions and the estimated effect of liquidation
these properties and equipment in a relatively short period of time.
The estimate shown represents gross proceeds. Costs associated with the
sale of property and equipment are reflected in "Costs Associated with
Liquidation" (see note 8).
<PAGE>
5. Other Assets
Other assets include pension assets, tool rental equipment, prepaid
insurance premiums and other miscellaneous items. Although the Debtors' pension
liability is funded above the minimum funding requirements and is therefore
shown as a net asset on the balance sheet, upon termination, the current asset
level would be insufficient to fulfill all of the estimated future pension
obligations and would therefore result in an additional liability, which Debtors
management has estimated based on discussions with its actuaries as well as the
PBGC. Proceeds assumed to be received in the liquidation of tool rental
equipment is based on the Debtors previous experience with store closings.
Personnel and other operating costs incurred during the disposition period
are reflected in "Costs Associated with Liquidation" (see note 8).
6. Net Operating Loss Carryforward ("NOL")
This Liquidation Analysis assumes that any potential benefit of the NOL is
lost as a result of the liquidation.
7. Interest Income/Expense
The effects of interest income and expense has been intentionally omitted
from the Liquidation Analysis as all proceeds from the liquidation would
immediately be used to pay down the DIP revolver.
8. Costs Associated with Liquidation
These expenses represent the costs associated with operating the stores and
warehouses during the GOB Program, payroll and operating costs associated with
various corporate functions, payroll costs associated with the termination of
the positions of all employees including severance, vacation, bonus payments and
payroll taxes and Chapter 7 professional fees incurred, including those
associated with the fees of a Chapter 7 trustee in accordance with section 326
of the Bankruptcy Code.
Store and warehouse operating costs assumed to be incurred during the GOB
Program include rent, insurance, utilities, cleanup costs, real estate and
property taxes, transportation costs, employee benefits and other miscellaneous
costs. The Liquidation Analysis assumes that the liquidator would incur the
payroll costs associated with store personnel during the GOB Program.
The Liquidation Analysis assumes that essentially all the Debtors employees
would be terminated between December 1, 1997 and May 1, 1999 and that these
employees would be entitled to severance, bonus and accrued vacation in
accordance with programs currently in place.
Corporate payroll and operating costs during liquidation are based on the
assumption that certain corporate functions would operate at near full strength
during the GOB Program and would phase out as their duties are completed. Other
functions would be eliminated or substantially downsized immediately upon
liquidation.
Professional fees are estimated based upon historical experience in similar
cases and applicable provisions of the Bankruptcy Code.
<PAGE>
EXHIBIT III
GROSSMAN'S INC. et. al.
PROJECTED FINANCIAL INFORMATION
Introduction
This projected financial information was prepared to show the estimated
consolidated financial positions, results of operations, cash flows, and
capitalization of Reorganized Grossman's Inc. following December 1, 1997, which
is assumed to be the Effective Date of these projections. The Projections are
based on the assumptions discussed below and should be read in conjunction with
the Disclosure Statement.
All capitalized terms not defined in this exhibit have the same meanings
ascribed to them in the Disclosure Statement to which this exhibit is attached.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
("AICPA"), THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB") OR THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION ("SEC"). FURTHERMORE, THE
PROJECTIONS HAVE NOT BEEN AUDITED OR REVIEWED BY THE DEBTORS' INDEPENDENT
ACCOUNTANTS. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS ARE
BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, WHICH, ALTHOUGH DEVELOPED AND
CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES,
MANY OF WHICH ARE BEYOND THE CONTROL OF REORGANIZED GROSSMAN'S INC. AND ITS
MANAGEMENT. CONSEQUENTLY, THE PROJECTIONS SHOULD NOT BE REGARDED AS A
REPRESENTATION OR WARRANTY BY THE DEBTORS, OR ANY OTHER PERSON, AS TO THE
ACCURACY OF THE PROJECTIONS OR THAT THE PROJECTIONS WILL BE REALIZED. ACTUAL
RESULTS MAY VARY MATERIALLY FROM THOSE PRESENTED IN THESE PROJECTIONS.
The Projections included herein are:
1. Pro Forma Consolidated Balance Sheet of Reorganized Grossman's Inc. of
November 30, 1997, based on the historical consolidated balance sheet as of
December 31, 1997, updated to reflect the effect of projected activity up to the
Effective Date (assumed to be December 1, 1997), and reflecting the projected
accounting effects of the Plan's consummation and of "fresh start" accounting as
promulgated by the AICPA Statement of Position 90-7 entitled "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7").
2. Projected Consolidated Balance Sheets of Reorganized Grossman's as of
December 31, 1997 through 2001.
<PAGE>
3. Projected Consolidated Statements of Operations of Reorganized
Grossman's for the preconfirmation 49 week period ending November 30, 1997,
including adjustments, the 4 week period ending December 31, 1997 and for each
of the five consecutive fiscal years in the period ending December 31, 2002.
4. Projected Consolidated Statements of Cash Flows of Reorganized
Grossman's for the preconfirmation 49 week period ending November 30, 1997,
including confirmation adjustments, the 4 week period ending December 31, 1997
and for each of the five fiscal years in the period ending December 31, 2002.
The Projections have been prepared on the basis of generally accepted
accounting principles consistent with those currently utilized by the Debtors in
the preparation of its historical consolidated financial statements except as
noted in the accompanying assumptions. The Projections should be read in
conjunction with the significant assumptions, qualifications and notes set forth
below and with the consolidated financial statements for the fiscal year ended
December 31, 1996 included in the Annual Form 10-K as filed with the Securities
and Exchange Commission.
The Projections present management's estimate of the expected consolidated
financial position, results of operations, cash flows, and capitalization of
Reorganized Grossman's. Accordingly, the Projections reflect management's
judgment, as of the date of this Disclosure Statement, of expected future
operating and business conditions which are subject to change. All estimates and
assumptions shown within the Projections were developed by management in
consultation with JELD-WEN, inc. The assumptions disclosed herein are those
management believes are significant to the Projections. There will be
differences between projected and actual results because events and
circumstances frequently do not occur as expected.
The Projections reflect the effect of the consumption of the Plan and
adjustments of "fresh start" accounting. The Projections are based on a number
of estimates and assumptions that, although developed and considered reasonable
by management, are inherently subject to significant business, economic and
competitive uncertainties and contingencies, some of which are beyond the
control of Reorganized Grossman's and its management. The Projections are based
upon assumptions of future business decisions which are subject to change.
Accordingly, there can be no assurance the projected results will be realized
and actual results may vary materially from those projected. If actual results
are lower than those shown or if the assumptions used in formulating the
Projections are not realized, Reorganized Grossman's operating results and cash
flows, and hence its ability to perform under the Plan, may be materially and
adversely affected.
The Debtors do not, as a matter of course, publish their business plans and
strategies or projections of their anticipated financial position, results of
operations or cash flow. Accordingly, Reorganized Grossman's does not intend,
and disclaims any obligation to, (a) furnish updated business plans or
projections or holders or Claims or Equity Interests, or (b) include such
updated information in any documents which may be required to be filed with the
Securities and Exchange Commission.
Management does not intend to revise the Projections solely to reflect
circumstances arising after
<PAGE>
the date of this Disclosure Statement or to reflect the occurrence of
unanticipated events. Management assumes no responsibility to advise recipients
of the Projections about any subsequent changes.
Reorganized Grossman's Business
Reorganized Grossman's will continue to operate 29 Bargain Outlet stores
and 15 Contractors' Warehouse stores. The reorganized entity will have over
1,500 employees. Bargain Outlet stores will continue to target the price
conscious, do-it-yourself customer who will forego service in exchange for lower
price while Contractors' Warehouse caters to the specialized needs of the
professional builder.
Continued strong competition from numerous competitors is assumed and the
business will continue to be seasonal in nature, with a significant portion of
sales occurring during the summer selling season.
Specific Improvements and New Strategies
1. The Debtors have redesigned a traffic building marketing program to
expose its customers to its fully stocked merchandise assortments.
2. The Debtors have redesigned and redirected their store catalogs to
specifically target the professional groups within their customer base.
3. The Debtors will continue to monitor store performance and, where
appropriate, expand in certain market places.
4. The Debtors have and will continue to enhance floor coverage in the
Contractors' Warehouse division by matching labor hours to peak selling and
non-selling periods.
5. The Debtors have instilled a more motivated sales oriented culture
through improved compensation programs.
Significant Assumptions
Consolidation
These Projections include Reorganized Grossman's and its subsidiaries, all
of which are wholly-owned and are being merged into the Reorganized Grossman's
at confirmation, on a consolidated basis.
Store Count Assumptions
These Projections assume no new Contractors' Warehouse store openings and
20 new Bargain Outlet store openings over the next five years. Total company
store base will grow from 44 stores in the beginning of the projected period to
64 stores at the end of 2002.
<PAGE>
Economic Assumptions
During the projected period, the Company included a 3.0% inflation rate on
certain fixed expenses.
Sales
The sales growth is based upon the current level of sales productivity in
the store base as well as various economic factors expected in the regions of
operation. Sales for new stores were added to the base level of sales. The
resultant annual same store sales growth rate is expected to be between 3.0% to
6.0% throughout the projected period.
Gross Margin
The gross margin rates reflect the expected competitive environment within
each category. This rate reflects anticipated improvements coming from enhanced
merchandising programs, revised pricing methodologies and enhanced sourcing
capabilities. These initiatives coupled with the growth in Bargain Outlet will
improve gross margin throughout the projection period from 25.0% in 1998 to
26.3% in 2002.
Operating Expenses
Expense forecasts are projected on a detailed basis at divisional levels.
Certain expenses are forecast based upon store-specific relationships and
existing expense structures. Store level expenses, such as payroll, occupancy,
utilities and certain other costs are projected based upon relationships to
projected store weeks of operation and percentage to sales relationships.
An inflation rate of 3.0%, which was used on many of the expenses, is
offset by increasing productivity opportunities from sales increases and other
cost cutting initiatives.
Income Taxes
The projected provisions for income taxes have been calculated in
accordance with FASB Statement No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). A combined federal and state income tax rate of 40% has been assumed in
calculating the income taxes to be paid for each of the projected years. The
provisions for income taxes assume Reorganized Grossman's will have net
operating loss "NOL" carryforwards in the amount of approximately $260 million
available to offset taxable income for each of the projected years. In
considering the effects of the Plan, the provisions for income taxes have been
calculated assuming Reorganized Grossman's will elect to reduce its tax basis in
depreciable property before reducing its NOL carryforwards for cancellation of
indebtedness not excluded by the stock-for-debt exception. See Section VII of
the Disclosure Statement - CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
Subsequent utilization of NOL carryforwards and realization of other
deferred tax assets recorded upon "fresh - start" will be recorded as an
adjustment to additional paid-in capital in accordance with SOP 90-7.
Dividends
These Projections assume no dividends on the stock of Reorganized
Grossman's are paid during the projected period.
<PAGE>
Capital Expenditures
The Company will invest over $32 million during the projected period of
1998 through 2001 to refurbish and maintain its existing store base, to develop
and expand new concepts, and support the specific initiatives set forth in the
Company's strategic plan.
Exit Financing
Reorganized Grossman's will utilize a working capital facility and other
financing sources to provide primarily for potential working capital needs and
import letter of credit requirements. See Section V of the Disclosure Statement
- - The Plan.
Significant Assumptions for the Pro Forma Consolidated Balance Sheet of
Reorganized Grossman's as of December 1, 1997
1. The confirmation and consummation will be accomplished according to the
terms of the Plan as described in the Disclosure Statement to which this exhibit
is attached.
2. "Fresh start" accounting adjustments have been made to reflect the
estimated adjustments necessary to adopt "fresh start" reporting in accordance
with AICPA SOP 90-7. "Fresh start" reporting requires that the reorganization
value of Reorganized Grossman's be allocated to its assets in conformity with
Accounting Principles Bulletin ("APB") Opinion No. 16, "Business Combinations,"
for transactions reported on the basis of the purchase method. Any
reorganization value less than the fair value of specific tangible or identified
intangible assets is to be allocated back to its non-current tangible assets on
a pro rata basis after offsetting the intangible assets. Based on the
transaction with JELD-WEN, the terms of which are described in Article 8.1.1,
PLAN FUNDING AND DISTRIBUTIONS - Source of Funding for Cash Distributions under
the Plan, JELD-WEN is acquiring a 50% equity interest in Reorganized Grossman's
for $8.25 million. This transaction therefore assumes the equity of Reorganized
Grossman's is $16.5 million. Based on this assumed equity value of $16.5
million, the reorganization value used in preparing the Pro Forma Consolidated
Balance Sheet of Reorganized Grossman's is approximately $55 million (assuming
approximately $38 million of debt). This assumed equity value, however, does not
take into account risk and other factors and is based on restated values in
accordance with accounting requirements. Therefore, it cannot be relied upon as
a statement of the actual value of the stock of the Reorganized Grossman's. In
addition, the allocation of the reorganization value to individual assets and
liabilities is subject to change after the Effective Date and could result in
material differences to the allocated values estimated in these Projections.
<PAGE>
3. The significant "fresh start" accounting adjustments are summarized as
follows:
Merchandise inventories have been adjusted to reflect estimated fair
value. The estimated fair value for the property is preliminary and may be
revised after consummation. Changes in estimated fair value will not affect
Reorganized Grossman's cash flow projections.
Land, property and equipment, including property under capital leases, are
adjusted based upon the estimated fair value of property. The estimated fair
value for the property is preliminary and may be revised after consummation.
Changes in estimated fair value will not affect Reorganized Grossman's cash flow
projections.
The fair value of the identifiable assets in excess of the reorganization
value ("negative goodwill") is allocated to reduce the fair values of certain
non-current assets in accordance with generally accepted accounting principles.
Deferred income taxes are adjusted for changes in cumulative temporary
differences resulting from the plan and the application of "fresh start"
accounting.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GROSSMAN'S INC.
- ----------------------------------------------------------------------------------------------------------------------------------
PROJECTED CONSOLIDATED BALANCE SHEETS
(unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) At December 1, 1997
----------------------------------------------------
Adjustments to Record Confirmation
of Plan of Reorganization As Reorganized
------------------------------------- ----------------------------------------------
Preconfir- Debt As Adj- December 31,
mation Discharge Fresh Start usted 1997 1998 1999 2000 2001 2002
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash $ 2.3 ($0.3) $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 7.1 $ 26.0
Inventory 56.4 56.4 54.4 57.0 59.6 60.1 61.6 63.2
Accounts Receivable, net 5.5 5.5 5.1 7.4 6.9 7.2 7.6 8.0
PP&E, net 23.2 (0.1) (a) (6.6) 16.5 17.0 13.6 15.0 16.9 17.9 17.8
Other Assets 18.1 (3.4) (a) (11.5) 3.3 3.2 2.7 3.7 4.7 5.7 6.7
-------------------------------------------------- --------------------------------------------------
Total Assets $105.5 ($3.8) ($18.1) $83.7 $ 81.7 $ 82.6 $ 86.1 $ 90.9 $99.9 $121.6
=================================================== ==================================================
Liabilities
Accounts Payable $ 5.0 $0.0 $5.0 $ 5.0 $ 9.9 $21.7 $23.2 $24.8 $26.4
Accrued Liabilities 1.8 1.8 1.8 1.8 2.0 2.0 2.0 2.0
Exit Financing Facility 28.9 (b) 28.9 28.0 30.9 16.2 8.3
Real Estate Facility 8.2 (c) 8.2 8.2
Secured Line of Credit 0.5 (d) 0.5
Line of Credit 0.0
Capital Lease Obligations 0.6 (e) 0.6
GDI DIP Facility 34.4 (34.4)(f) 0.0
Liabilities Subject to
Compromise 75.0 (75.0)(e) 0.0
Other Long Term
Liabilities 22.3 (e) 22.3 22.8 22.8 22.8 23.5 24.3 25.4
-------------------------------------------------- ---------------------------------------------------
Total Liabilities 116.1 (49.0) 67.2 65.7 65.4 62.7 57.0 51.1 53.8
Total Equity (10.6) 49.7 (g) (22.6) 16.5 16.0 17.2 23.4 33.9 48.8 67.8
------------------------------------------------- ---------------------------------------------------
Total Liabilities and
Equity $105.5 $ 0.7 ($22.6) $83.7 $81.7 $82.6 $86.1 $90.9 $99.9 $121.6
================================================= ===================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GROSSMAN'S INC.
PROJECTED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) Eleven Months Ended December 1, 1997 As Reorganized
--------------------------------------- ---------------------------------------------------
One
Month
Ended
Preconfir- Confirmation As December 31, December 31,
---------------------------------------------------
mation Adjustments Adjusted 1997 1998 1999 2000 2001 2002
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Contractor's Warehouse $183.7 $183.7 $23.0 $253.0 $264.8 $277.2 $290.3 $304.0
Bargain Outlet 60.2 60.2 5.1 77.2 89.5 102.7 116.6 131.3
---------------------------------- ---------------------------------------------------
Total Sales 243.9 243.9 28.0 330.1 354.3 379.9 406.9 435.3
Cost of Goods Sold (186.2) (186.2) (21.3) (247.6) (264.2) (282.3) (301.1) (321.0)
---------------------------------- ----------------------------------------------------
Gross Margin 57.7 57.7 6.7 82.5 90.0 97.6 105.8 114.3
Other Income 2.5 2.5 0.3 4.2 4.7 4.9 5.2 5.4
Store level expenses (62.8) (62.8) (5.7) (68.5) (72.6) (76.8) (81.3) (85.9)
Corporate & divisional overhead (13.6) (13.6) (1.1) (13.0) (13.5) (13.9) (14.3) (14.8)
---------------------------------- ----------------------------------------------------
Operating profit (16.2) (16.2) 0.2 5.2 8.6 11.8 15.4 19.0
Chapter 11 Expenses (4.1) (4.1) (0.3)
Interest (2.9) (2.9) (0.3) (4.0) (2.5) (1.3) (0.4) -
---------------------------------- ----------------------------------------------------
Net Profit before Extraordinary Items (23.1) (23.1) (0.4) 1.2 6.1 10.5 14.9 19.0
Gain on Debt Discharge 35.3 35.3
Fresh Start Adjustments (22.6) (22.6)
------------------------------------ ---------------------------------------------------
Net Income before Taxes (23.1) 12.7 (10.5) (0.4) 1.2 6.1 10.5 14.9 19.0
Taxes (0.2) (0.2) (0.0)
------------------------------------ ---------------------------------------------------
Net Income (Loss) ($23.3) $12.7 ($10.6) ($0.5) $ 1.2 $ 6.1 $ 10.5 $ 14.9 $19.0
==================================== ===================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
GROSSMAN'S INC.
PROJECTED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) Eleven Months Ended December 1, 1997 As Reorganized
--------------------------------------- --------------
One
Month
Ended
Pre- Confirm- December 31, December 31,
confirm- ation As ---------------------------------------------------
ation Adj. Adjusted 1997 1998 1999 2000 2001 2002
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income (loss) ...................... ($ 23.4) ($ 23.4) ($0.5) $1.2 $6.1 $10.5 $14.9 $19.0
Adjustments to Net Income (loss)
Depreciation .................. 3.0 3.0 0.3 3.3 3.9 5.0 6.3 7.8
Fresh start adjustments
Gain on debt discharge ........ 35.3 35.3
-----------------------------------------------------------------------------------
Net cash flows b/f changes in W/C
accts ............................. (20.4) 14.9 (0.2) 4.5 10.0 15.5 21.3 26.8
Changes in working capital accounts
(Increase)/decrease in A/R ........ 3.2 3.2 0.4 (2.3) 0.5 (0.4) (0.4) (0.4)
(Increase)/decrease in Inventory .. 6.1 6.1 2.1 (2.7) (1.5) (1.5) (1.5) (1.5)
Increase/(decrease) in Accounts ... 8.1 8.1 0.0 4.9 11.8 1.5 1.6 1.6
Payable
Increase/(decrease) in Accrued .... (0.6) (0.6) (1.0) 0.0 0.3 0.0 0.0 0.0
Liabilities
-----------------------------------------------------------------------------------
Net changes in working
capital accounts............. 16.8 16.8 1.4 0.0 11.0 (0.4) (0.3) (0.3)
(Increase)/decrease in Other Assets (6.0) (6.0) 0.3 0.0 (1.0) (1.0) (1.0) (1.0)
Increase/(decrease) in Other L-T .. (0.1) (0.1) (0.0) 0.0 0.0 0.7 0.8 1.1
Liabilities
----------------------------------------------------------------------------------
Net cash flows from/(used by) op .. (9.7) 25.6 1.5 4.5 20.0 14.8 20.7 26.6
activities
INVESTING ACTIVITIES
Sale / (Purchases) of Real Estate . 9.0 9.0 5.2 0.0 0.0 0.0 0.0
Capital expenditures .............. (0.6) (0.6) (4.5) (5.3) (6.9) (7.3) (7.7)
----------------------------------------------------------------------------------
Net cash flows before financing ... (1.3) 34.0 1.5 5.2 14.7 7.9 13.4 18.8
activities
FINANCING ACTIVITES
Net cash flows from financing ..... (6.4) (35.6) (41.9) (0.1) (8.2) 0.0 0.0 0.0 0.0
activities
---------------------------------------------------------------------------------
Net cash flows before change in ... (7.6) (7.9) 1.5 (3.0) 14.7 7.9 13.4 18.8
revolver
Net cashflows from/(used by) ...... 8.9 8.9 (1.6) 3.0 (14.7) (7.9) (8.3) 0.0
revolver
NET CASH FLOWS .............................. 1.3 (0.3) 1.0 0.0 0.0 0.0 0.0 5.1 18.8
Opening Cash Balance ........................ 1.1 1.1 2.0 2.0 2.0 2.0 2.0 7.1
---------------------------------------------------------------------------------
Ending Cash Balance ($2 million min) ........ $ 2.3 ($ 0.3) $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 7.1 $26.0
================================================================================
<PAGE>
Footnotes to Grossman's Inc.
Projected Consolidated Balance Sheets
(a) Property, plant and equipment includes sale of real estate contemplated
after completion of the 1997 budget.
(b) The exit financing facility represents the outstanding amount of the
exit financing facility needed to complete the transaction. (See ARTICLE 9,
"Exit Financing Facility")
(c) The real estate facility represents the real estate facility net of the
proceeds from the sale of real estate. (See ARTICLE 9, "Real Estate Facility")
(d) The secured line of credit represents borrowing under the secured line
of credit described in ARTICLE 8, "Source of Funding for Cash Distributions
under the Plan."
(e) Liabilities subject to compromise is converted into cash, payouts,
stock and other long-term liabilities outlined in ARTICLE 8.
(f) All obligations under the GDI DIP facility are satisfied by the exit
financing facility.
(g) Equity represents the net effect of items in (e), (a) and an $8.25
million cash infusion described in ARTICLE 8, "Source of Funding for Cash
Distributions under the Plan."
<PAGE>
EXHIBIT IV (Previously filed with the Securities and Exchange Commission under
File No. 001-00542)
<PAGE>
EXHIBIT V
JELD-WEN
Manufacturer of Superior Building Products:
Windows o Doors o Millwork
Don Scheffler is Vice President of JELD-WEN, inc. and is currently
responsible for its Distribution Operations, its Paxton Hardwood Lumber
Distribution Operations, and its Canadian Window Manufacturing Operations. He
has been with JELD-WEN since 1973. He graduated from Hocking Jr. College, with a
degree in Business in 1971.
3250 Lakeport Blvd., Klamath Falls, OR 97601-1099oP.O. Box 1329,
Klamath Falls, OR 97601-0268oUSA
Telephone 541-882-3451oAdministration Fax 541-885-7454
<PAGE>
The Company filed a Voluntary Petition pursuant to the provisions of
Chapter 11 of the U.S. Bankruptcy Code on April 7, 1997. No Plan has been
submitted to the Court.
The number of shares of the registrant's class of Common Stock ($.01 par
value) outstanding on March 31, 1997 was 27,978,074.
Documents Incorporated By Reference
This amendment files Part III, Items 10, 11, 12, and 13, incorporated by
reference to this amendment into the Company's Annual Report on Form 10-K.
Part III
Capitalized terms used herein without definition have the meanings
specified in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "1996 Form 10K").
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
As of March 31, 1997, the following seven directors, constituting the Board
of Directors of the Company, were either elected by a vote of stockholders or
appointed by remaining directors to fill vacancies on the Board of Directors:
Thomas E. Arnold, Jr. Age: 52
Mr. Arnold has been President of Thomas E. Arnold & Associates, a real
estate investment firm headquartered in Phoenix, Arizona since 1992. Mr. Arnold
also served as Chairman of the Board of Trustees responsible for the liquidation
of certain assets of Executive Life Insurance Company from 1994 to 1997 and
served as court-appointed Chairman of the Board, President and Chief Executive
Officer, in the liquidation of American Continental Corporation, a real estate
investment Company, from 1990 to 1994. Mr. Arnold has been a director of the
Company since December, 1996 when he was appointed by the Board of Directors to
fill a vacancy on the Board.
Russell Cox Age: 70
Mr. Cox has been President of Resort Management Inc., a property management
and real estate consulting firm located in Waterville Valley, New Hampshire,
since 1977 and has been general partner of Real Estate Venture Fund since 1985.
Mr. Cox has been a director of the Company since 1987.
Theodore H. Schnormeier Age: 62
Mr. Schnormeier has been Senior Vice President and a director of JELD-WEN,
inc., a window, door, and mill work manufacturer headquartered in Klamath Falls,
Oregon since 1965. He also serves as a director of Arial Corporation, a
manufacturer of compressors of Mount Vernon, Ohio, and Palmer-Snyder Company, a
furniture manufacturer of Milwaukee, Wisconsin. He has been a director of the
Company since February 1997 when he was appointed by the Board of Directors to
fill a vacancy on the Board of Directors.
<PAGE>
Robert K. Swanson Age: 65
Mr. Swanson has been non-executive Chairman of the Board of the Company
since November 23, 1994 and served as Chief Executive Officer from October 1996
to February 1997. He also serves as Chairman of the Board of RKS, Inc., an
investment and marketing consulting firm in Phoenix, Arizona. He also serves as
a director of American Southwest Concepts, Inc. and Arizona Desert Saguaro Inc.
He was Chairman and Chief Executive Officer of Del Webb Corporation, a
diversified company located in Phoenix, Arizona, engaged in the management and
development of real estate and leisure operations, from 1981 to 1987, when he
retired from that position.
Richard L. Wendt Age: 66
Mr. Wendt has been Chairman of the Board of JELD-WEN, inc., a window, door
and millwork manufacturer headquartered in Klamath Falls, Oregon since 1965. Mr.
Wendt has been a director of the Company since February 1997 when he was
appointed by the Board of Directors to fill a vacancy on the Board of Directors.
Lawrence V. Wetter Age: 63
Mr. Wetter has been a Vice Chairman of JELD-WEN, inc. since 1992. Mr.
Wetter has been a Director of the Company since February 1997 when he was
appointed by the Board of Directors to fill a vacancy on the Board of Directors.
Dr. Abraham Zaleznik Age: 73
Dr. Zaleznik is Professor of Leadership Emeritus at Harvard Business School
and has been a business and government consultant since 1990. He also serves as
Chairman of the Board of King Ranch Inc., and as a director of Ogden Corp.,
Ardco Inc., Timberland Co., Freedom Communication Inc., American Greetings
Corporation and Butcher Inc. Dr. Zaleznik was a director of the Company from
1987 to 1994 and rejoined the Board as a director in December 1996 when he was
appointed by the Board of Directors to fill a vacancy on the Board of Directors.
The above elections and appointments to the Board of Directors of the
Company are effective until successor directors are elected and qualified. The
Company anticipates that the Board of Directors will call a meeting of the
stockholders of the Company when practicable to elect directors and vote upon
certain other matters. Messrs. Schnormeier, Wendt and Wetter were appointed to
the Board of Directors pursuant to the Registrant's loan agreement with G.D.I.
Company, Inc., which agreement was filed as an exhibit to the Registrant's Form
8-K dated March 1997. Under that agreement the Registrant agreed to use its best
efforts to elect Messrs. Schnormeier, Wendt and Wetter to the Board and, as long
as the loan under the agreement is outstanding, to include the JELD-WEN nominees
among the nominees for its seven member Board of Directors for whom proxies are
solicited by the Registrants' proxy material for Annual Meetings of
Stockholders.
<PAGE>
(b) Identification of Executive Officers
Seymour Kroll Age: 69
Mr. Kroll has been President and Chief Executive Officer of the Company
since February 1997. He was President of Sugarcreek Window and Door Company of
Ann Arbor, Michigan from May 1995 to February 1997 and from 1992 to 1994 was
President of Acorn Window Systems, Inc. of Quincy, Michigan.
Thomas A. Ford Age: 40
Mr. Ford has been Executive Vice President and Chief Operating Officer
since February 7, 1997. Prior to that time he was President of the Company's Mr.
2nd's Bargain Outlet Division, a position held since December 8, 1996. From 1994
through such date he was Divisional Vice President and General Manager of the
Bargain Outlet Division, and from 1992 to 1994 he was Vice President of
Operations in the Company's Eastern Division. Mr. Ford has been employed by the
Company in a variety of operational positions since 1973. Richard E. Kent Age:
68
Mr. Kent has been Vice President, Secretary and General Counsel of the
Company for more than five years and has been with the Company 26 years.
Arthur S. Ryan Age: 52
Mr. Ryan has been Vice President and Treasurer of the Company since
December 1994 and was Vice President - Taxes for more than three years prior to
December 1994. He has been with the Company 9 years.
Steven L. Shapiro Age: 39
Mr. Shapiro has been Vice President - Controller of the Company since
September 1995, was Controller from 1993 to 1995 and prior to that time was
Assistant Controller. He has been with the Company 12 years.
(c) Identification of Certain Significant Employees
Not applicable
(d) Family Relationships
Not applicable
(e) Business Experience
The business experience of each director of the Company is set forth in
Item 10(a) hereof, "Identification of Directors", and the business experience of
each executive officer of the Company is set forth in Item 10(b) hereof,
"Identification of Executive Officers".
(f) Involvement in certain Legal Proceedings
None
(g) Promoters and Control Persons
Not applicable
<PAGE>
30833 Northwestern Hwy. Suite 124 Farmington Hills, Michigan
810-855-6777 FAX 855-4719
MARX
LAYNE
MARKETING & PUBLIC RELATIONS
PROFILE: James V. McTevia, Chairman
McTEVIA & ASSOCIATES, INC.
As an advisor to companies in transition, James V. McTevia thrives on what
many business persons do their best to avoid. McTevia's job is to convince
management to confront difficult issues, assist in an analysis process and
provide expertise and structure to guide the operation successfully into the
future.
While McTevia is widely recognized and well respected as a pioneer in the
highly specialized field of crisis management, his engagements today primarily
focus on business restructuring, refinancing, management reorganization and
transition, and mergers and acquisitions. The profession demands a sense of
urgency in gathering accurate data, analyzing facts and recommending solutions
to deal effectively with these situations.
For nearly 40 years, McTevia and the other professionals from his firm,
James V. McTevia & Associates, have provided a high level of individual service
to their clients. With executive offices in Eastpointe, Michigan and regional
offices in West Palm Beach, Florida, McTevia and his firm own a well-earned
national reputation as business problem solvers.
Once retained, a preliminary analysis of the business is conducted and a
short-term plan is developed for those companies in crisis. Decisions which
normally take weeks or even months under these circumstances, must be
implemented in hours or days. Actions taken during this initial, highly critical
period often result in enabling the business to have sufficient time to conduct
a more comprehensive analysis and map out a solid, long-term business plan that
can be shared with lenders and investors to enlist their support. McTevia has
proven that, given the precious ingredient of time, a company can follow this
process to resolve literally any transition problem.
<PAGE>
James V. McTevia
Profile - Page Two
Over his extensive years of experience, McTevia has developed the ability
to gain management's support to face problems head-on. Additionally, his skill
as a diplomat is highly sought after by shareholders and professionals involved
in counseling businesses in transition. "One of the most frequent mistakes
management makes is not confronting difficult issues," contends McTevia. "That
process never solves problems. In many cases, indecision is how businesses get
into trouble in the first place. In the final analysis, the difficult path,
while painful, is often the easiest in the long run. I work with clients to help
them gather facts, focus on the problem, and implement sound solutions," McTevia
notes.
The management experience of the ownership and operation of a variety of
his own business ventures over the years, in addition to a hands-on background
in banking and commercial and industrial finance, brings a broad perspective to
McTevia's counsel. Nearly 90 percent of McTevia's engagements comprise working
with principals and their shareholders, companies in transition, or as an
advisor to lenders, state governmental agencies and pension funds with various
problems in their lending and investment portfolios.
Business restructuring can be complex, high-pressure work, not only for
McTevia and his associates, but also principals of the client company. Yet,
McTevia takes great pride in his ability to help companies chart a course for a
new, sometimes different, future, while lending emotional support for the
individuals involved.
McTevia's own career began in commercial finance, then moved into banking
and industrial finance, as the process of developing his consulting practice and
acquiring businesses emerged. A frequent lecturer to business and professional
groups, McTevia is often quoted by the national media. His bylined articles
appear regularly in leading business, legal and financial trade publications
throughout the country. The author of the recently released book, FINANCIAL
REALITY, and author of the critically acclaimed BANKRUPT: A Society Living in
the Future, McTevia has dedicated his life to salvaging businesses and
corresponding lives.
<PAGE>
James V. McTevia & Associates, Inc.
MANAGEMENT AND FINANCIAL CONSULTANTS
SOUTHERN REGIONAL OFFICES EXECUTIVE OFFICES FACSIMILE NUMBER
West Palm Beach, Florida 18181 East Eight Mile Road (810) 774-7098
Eastpointe, Michigan 48021
(810) 774-5580
SUMMARY OF BUSINESS CAREER
JAMES V. McTEVIA
Over forty years' experience in commercial and industrial credit and
finance, banking, business reorganizations and acquisitions, project
development, real estate development and syndication, management restructuring,
ownership and operation of businesses, chairman of international holding
company, advisor to lenders with customers in transition, Federal Bankruptcy
Trustee and State Court Receiver.
The focus of activities has concentrated on advisor to businesses in
transition serving clients both with or without court supervision, consultant,
receiver or trustee to companies reorganizing under Chapter 11 of the Federal
Bankruptcy Code, structuring agreements with creditors and operating businesses.
Also serving as an advisor to lenders in dealing with their more difficult
portfolio problems, to the business community in dealing with their more
difficult credit administration problems, as an expert witness in providing
testimony in causes of action, as a lecturer and author for a variety of
publications and organizations.
1974 - Present
Business and financial consulting, state court receiver, federal bankruptcy
trustee: Chairman, Formerly President - JAMES V. McTEVIA & ASSOCIATES, INC.
Credit management consulting, business acquisitions, real estate partnership
syndications: JAMES V. McTEVIA & ASSOCIATES. Orchestrated private placement for
international holding company formed to acquire companies in transition.
Chairman of the Board - INTERNATIONAL INVESTMENT COMPANY, "INTERVESCO".
1969 - 1973
Industrial credit and finance: Assistant Secretary/Treasurer and Director
of Credit - PARAGON STEEL CORPORATION. Project coordinator of new steel
production facility, Vice President PARAGON RESOURCES. Business consulting,
credit management consulting, state court receiver, business acquisitions, real
estate partnership syndications: President - JAMES V. McTEVIA & ASSOCIATES.
<PAGE>
James V. McTevia
Summary of Business Career
Page Two
1967 - 1968
Industrial credit, corporate finance, business acquisition review and
development, industrial credit management, supervision of receivable portfolio
of 32 operating companies; Assistant Director of Credit - AUTOMATIC SPRINKLER
CORPORATION OF AMERICA (A.T.O., INC.). Business consulting, credit management
consulting, business acquisitions, real estate partnership syndications:
President - JAMES V. McTEVIA & ASSOCIATES.
1963 - 1966
Industrial credit and finance: Assistant Credit Manager - PENINSULAR STEEL
CORPORATION. Business consulting, credit management consulting, business
acquisitions, real estate partnership syndications: President - JAMES V. McTEVIA
& ASSOCIATES.
1959 - 1962
Consumer and commercial banking, commercial credit new business
development: Lending Officer - MICHIGAN NATIONAL BANK. Real estate partnership
syndications, real estate development, business consultant: President - JAMES V.
McTEVIA & ASSOCIATES.
1957 - 1958
Consumer and commercial finance, automobile dealer floor planning,
commercial finance and new business development: Director of Southern Regional
Operations - E.M. DOTY DISCOUNT COMMERCIAL FINANCE CORPORATION.
<PAGE>
James V. McTevia & Associates
MANAGEMENT AND FINANCIAL CONSULTANTS
1855 Palm Beach Lakes Boulevard
Suite # 1510
West Palm Beach, Florida 33401
(581) 888-1008
JAMES V. McTEVIA
PUBLICATIONS AND SEMINARS/WORKSHOPS
Publications:
"Financial Reality"
How Individuals, Companies and Our Government Can Avoid Debt
Released November, 1994
Master Media, New York, New York
"Bankrupt: A Society Living in the Future"
Guide for Resolving Financial Problems
Released October, 1992
Momentum Books, Ltd., Ann Arbor, Michigan
"Consultant Helps Troubled Firms Face Future"
The Detroit News - December 14, 1992
"The Three Rs for Lenders for the 1990s: Re-analyze,
Restructure, Recover"
The Secured Lender - September/October, 1992
"How Small Companies Can Tighten Their Belts"
The Detroiter - August, 1992
"Mystique of Crisis Control"
Business Credit - March, 1991
"Prescription for Survival: Annual Self-Examination"
The Secured Lender - September/October, 1990
"Bracing for the Downturn"
Michigan Business - February, 1990
"90s May Not be Kind to Business"
Crain's Detroit Business - April, 1990
"Getting out of Financial Trouble"
Business Today - August, 1989
<PAGE>
James V. McTevia
Publications and Seminars/Workshops
Page Two
Seminars/Workshops:
"The Role of the CFO in Financially Troubled Companies"
Institute of Management Accountants - Macomb County Chapter -
April 19, 1995
"How to Get Out of Financial Difficulty"
Business and Ministry Fellowship Meeting - April 1, 1995
"Distressed Debtors: The Danger Signs of Failing Businesses"
Annual February Education Seminar/NACM-Great Lakes and CFDD-Detroit
February 7, 1995
"Dealing with the Illiquid or Insolvent Customer"
National Association of Flat Rolled Steel Credit Group -
August 15, 1994
"Preventive Medicine for Business"
Anchor Bay Chamber of Commerce - April 12, 1994
"How to Survive the Turbulent 90s"
The Commercial and Savings Bank of St. Clair County - October 28, 1993
"Dealing with the Commercial Loan Workout"
Robert Morris Associates - Mid-Michigan Group - October 26, 1993
"Prescription for Survival"
Eastpointe Chamber of Commerce - September 22, 1993
"Accepting Change In A Company Through Cost Reduction"
Greater Detroit Chamber of Commerce - CEO Roundtable - August 11, 1993
"How to Succeed Financially in the Turbulent 1990s"
Greater Detroit Chamber of Commerce - June 16, 1993
"Out of Court Settlements and Bankruptcy"
Detroit College of Business - June 10, 1993
"How to Avoid Financial Disaster"
Small Business Breakfast - WWJ Newsradio 95 - November 6, 1992
"Dealing With Troubled, Non-Liquid or Insolvent Companies"
Fetzer Business Center, Western Michigan University - May 22, 1991
<PAGE>
James V. McTevia
Publications and Seminars/Workshops
Page Three
Seminars/Workshops (continued):
"Alternatives for Businesses Facing Serious Financial Difficulties"
95th Annual NACM Credit Conference - Automotive Industry Group
May 14, 1991
"Symposium on Community and Business"
FCE/University of Chicago, Graduate School of Business/
James V. McTevia & Associates, Inc. - May 9 through 11, 1991
"Preventive Medicine for Michigan Business"
Economic Development Forum of the Greater Detroit Chamber of Commerce
February 26, 1991
<PAGE>
(This page intentionally left blank)
<PAGE>
Donald W. Lindstedt
Professional Instructor
Credit & Financial Management courses taught at:
University of California, 1964 - 1967
Foothills College, Los Altos, California, 1966
Portland State University, 1969 - 1982
Special Assignment
In 1985/86, I was chairman of the Creditors Committee for Evans Products -
Grossmans Chapter XI bankruptcy. The Creditors Committee Plan of Reorganization
was approved by the Federal Bankruptcy Court resulting in settlement that
returned full payment of claims to supplier creditors through the sale of stock
awarded claimants in the reorganized Grossmans.
<PAGE>
Donald W. Lindstedt
168 West Gogona
PO Box 157
Tolovaris Park, Oregon 97145
USA
(503) 436-1621 FAX: (503) 436-0568
Education
B.S. Degree, University of Oregon
Graduate Certificate, Stanford University
"Credit & Financial Management"
Three year Non-resident course, Residency - 2 weeks
each year.
Positions Held
1946 to 1950 Semi-retired - Pension Plan Consultant to Western
States Chemical Supply Corp.
1960 to 1963 Assistant Treasurer - Georgia Pacific Corp.
1984 to 1991 Export Credit Manager - Louisiana Pacific Corp.
1982 to 1984 Corporate Credit Manager - Georgia Pacific Corp.
1978 to 1982 Assistant Corporate Credit Manager, Chemical &
Paper Products, Georgia Pacific
1991 to current Credit Manager, Container Division, Georgia Pacific
1968 to 1978 Division Credit Manager, American Can Corp.
1965 to 1968 Credit Representative, American Can Company
1956 to 1965 Cashier American Can Company
1953 to 1956 Sales Trainee, American Can Company
Professional Organizations
1952 to 1953 National Paper Packaging Credit Association
(Board Member - President for two terms)
1950 to 1952 National Association of Credit Management
Several Presentations on Credit Analysis and
Financial Statement Analysis
<PAGE>
</TABLE>
Grossman's Inc. Consolidated
Balance Sheet
November 22, 1997
<TABLE>
<CAPTION>
12/22/97 Oct. Nov.
---------------------------------------
<S> <C> <C>
Cash ($2,492) ($3,535)
Inventory 52,426 54,578
Accounts Receivable
Trade 3,792 4,038
Allowance (2,080) (1,962)
---------------------------------------
Trade, net 1,712 2,076
Charge Plan Receivable 1,207 1,154
Other 702 583
---------------------------------------
Total Accounts Receivable 3,621 3,813
Property Held for Sale 3,491 3,491
Prepaid Inventory 8,107 8,079
Prepaid Other 2,299 1,859
---------------------------------------
Total Current 67,452 68,285
---------------------------------------
Fixed Capital
Gross Beginning 34,215 34,243
Additions 28 8
Deletions/Transfers (53)
---------------------------------------
Gross PP&E 34,243 34,198
Accum Depre 11,889 12,062
---------------------------------------
PP&E, net 22,354 22,136
Capitalized Interest
Gross Beginning 772 772
Additions
Deletions/Transfers
---------------------------------------
Gross PP&E 772 772
Accum Depre 180 182
---------------------------------------
Capital Interest, net 592 590
Capitalized Leases
Gross Beginning 7,062 7,062
Additions
Deletions/Transfers
---------------------------------------
Gross PP&E 7,062 7,062
Accum Depre 6,294 6,356
---------------------------------------
Capital Interest, net 768 706
Other Assets
<PAGE>
Prepaid Pension Asset 9,666 9,650
Tool Rental Inventory, net 2,339 2,382
L-T Notes
Other Assets 654 662
---------------------------------------
Total Other Assets 12,659 12,694
---------------------------------------
Total Assets $103,825 $104,411
=======================================
Liabilities
Current
Accounts Payable - Pre $40,811 $40,811
Accounts Payable - Post 1,113 2,508
Expense Payble 1,222 (33)
---------------------------------------
Total Accounts Payable 43,146 43,286
Accruals
Payroll 2,671 2,701
Taxes 4,466 3,451
Interest 310 302
Other 9,572 10,290
Store Closing Reserve 5,168 4,447
---------------------------------------
Total Accruals 22,187 21,191
Current Debt
Capital Leases 450 385
Mortgages
Jeld-Wen, Inc. Financing 1,713 1,728
Jeld-Wen, Inc. Revolver 35,847 38,806
Notes Payable
---------------------------------------
Total Current Debt 38,010 40,919
---------------------------------------
Total Current Liabilities 103,343 105,396
---------------------------------------
Long-Term Debt
Capital Leases 638 580
Mortgages
Notes Payable 5,027 5,027
Jeld-Wen, Inc. Financing 1,713 1,728
Jeld-Wen, Inc. Revolver 35,847 38,806
Congress Revolver
Less Current Portion (38,010) (40,919)
Store Closing Reserve 768 768
Other L-T Liabilities 8,431 8,429
---------------------------------------
Total Long-Term Liabilities 14,414 14,419
---------------------------------------
Total Liabilities 117,757 119,815
---------------------------------------
Equity
Prior Retained Earnings (145,414) (145,414)
<PAGE>
Foregiveness of Debt
Parent Company Investment
Common Stock 281 281
Paid in Capital 157,992 157,992
Current Retained Earnings (26,791) (28,263)
---------------------------------------
Total Equity (13,932) (15,404)
---------------------------------------
Total Liabilities & Equity $103,825 $104,411
=======================================
</TABLE>
<PAGE>
