<PAGE> 1
As filed with the Securities and Exchange Commission on September 24, 1997
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):
September 10, 1997
THE CLOTHESTIME, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-12203 33-0469138
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification Number)
Incorporation)
5325 EAST HUNTER AVENUE
ANAHEIM, CALIFORNIA 92807
(Address of Principal Executive Offices) (Zip Code)
(714) 779-5881
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On December 8, 1995, The Clothestime, Inc. (the "Registrant") and
five of its direct and indirect subsidiaries, MRJ Industries, Inc., Clothestime
Stores, Inc. ("Stores"), Clothestime Investment, Inc., Clothestime Acquisition
Corporation and Clothestime International, Inc. (collectively, the "Debtors")
commenced reorganization cases (the "Reorganization Cases") by filing voluntary
petitions for relief under chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the Central District of California, Santa
Ana Division (the "Bankruptcy Court").
On September 10, 1997, the Bankruptcy Court entered an order (the
"Confirmation Order") confirming the Third Amended Joint Plan of Reorganization
of The Clothestime, Inc. and Certain of its Subsidiaries, as modified (the
"Plan"). The following is a summary of the material features of the Plan and is
qualified in its entirety by reference to the Plan itself. The Plan,
Modifications to the Plan and Second Modifications to the Plan are attached
hereto as Exhibits 2.1, 2.2 and 2.3, respectively, and are incorporated herein
by reference.
The Plan generally provides for, among other things: (i) the
substantive consolidation of the Reorganization Cases and the Debtors'
respective estates into a single chapter 11 case for the purposes of the Plan
and distributions thereunder; (ii) the cancellation of certain indebtedness in
exchange for cash, conveyances of collateral and/or new indebtedness; (iii) the
creation of a creditor trust (the "Creditor Trust") for the purpose of
satisfying the claims of unsecured creditors; (iv) the assumption or rejection
of executory contracts and unexpired leases to which any Debtor is a party; and
(v) the intercompany mergers of certain Debtors (the "Mergers") with and into
Stores, the surviving parent corporation following the Mergers ("New
Clothestime").
The Plan provides for the issuance of 100,000 shares of New
Clothestime's common stock, par value $0.001 per share ("New Stock") issued as
follows: (i) 25,000 shares to the Creditor Trust; (ii) 25,000 shares to secured
bank lenders; and (iii) 50,000 shares to certain officers and directors of New
Clothestime. The Plan also provides for the issuance of certain debt of New
Clothestime, consisting of a $4,000,000 and a $600,000 promissory note issued to
the Creditor Trust and promissory notes in an aggregate principal amount of
$1,000,000 issued to secured bank lenders.
Under the terms of the Plan, all administrative and priority claims
will be paid in full, and priority tax claims will be paid in accordance with
the Plan. Unsecured creditors will receive (i) a distribution of $0.07 in cash
for each $1.00 of allowed unsecured claim and (ii) an uncertificated,
nontransferable, pro rata, beneficial interest in the Creditor Trust. The claims
of certain secured creditors will be paid pursuant to the Plan and various
stipulations entered into between the Debtors and such creditors and approved by
the Bankruptcy Court.
After the consummation of the Plan and the Mergers, all existing and
outstanding shares of the Registrant's common stock will be canceled, and New
Clothestime will be the parent surviving entity with a single wholly-owned
subsidiary, Clothestime Insurance Company, a Vermont corporation, which is not a
Debtor. The Registrant, or New Clothestime on behalf of
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the Registrant, intends to file a Form 15 under the Securities Exchange Act of
1934 to terminate the Registrant's registration under Section 12 of such Act.
On September 10, 1997, the Registrant issued a press release, a copy
of which is attached hereto as Exhibit 99.1 and is incorporated herein by
reference, which describes the confirmation of the Plan by the Bankruptcy Court.
Subject to the terms and conditions of the Plan, the Debtors expect
to consummate the Plan by the end of September 1997. Certain of the foregoing
information is forward looking in its nature and involves risks and
uncertainties that could significantly impact the ability of the Debtors to
achieve their currently anticipated goals and objectives.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following exhibits are filed as part of this report:
2.1 Third Amended Joint Plan of Reorganization of The Clothestime, Inc.
and Certain of its Subsidiaries
2.2 Modifications to Third Amended Joint Plan of Reorganization of The
Clothestime, Inc. and Certain of its Subsidiaries
2.3 Second Modifications to Third Amended Joint Plan of Reorganization
of The Clothestime, Inc and Certain of its Subsidiaries
99.1 Press Release
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned thereunto duly authorized.
THE CLOTHESTIME, INC.
By /s/ David A. Sejpal
----------------------------------------------
David A. Sejpal
Chairman of the Board and Chief
Executive Officer and President
and Chief Operating Officer
Date: September 23, 1997
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EXHIBIT INDEX
2.1 Third Amended Joint Plan of Reorganization of The Clothestime, Inc.
and Certain of its Subsidiaries
2.2 Modifications to Third Amended Joint Plan of Reorganization of The
Clothestime, Inc. and Certain of its Subsidiaries
2.3 Second Modifications to Third Amended Joint Plan of Reorganization
of The Clothestime, Inc and Certain of its Subsidiaries
99.1 Press Release
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<PAGE> 1
Paul E. Harner
Charles M. Oellermann
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand
JONES, DAY, REAVIS & POGUE
2603 Main Street, Suite 900
Irvine, California 92614
Telephone: (714) 851-3939
ATTORNEYS FOR DEBTORS
AND DEBTORS IN POSSESSION
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Jointly Administered
) Case Nos. SA95-22533-JW
THE CLOTHESTIME, INC., ) through SA95-22538-JW
a Delaware corporation, )
et al., ) Chapter 11
)
) THIRD AMENDED JOINT
Debtors. )
) PLAN OF REORGANIZATION OF
) THE CLOTHESTIME, INC. AND
) CERTAIN OF ITS SUBSIDIARIES
)
) Date, Time and Place for Confirmation Hearing:
) Date: September 10, 1997
) Time: 1:30 p.m.
) Place: Courtroom 604
) 34 Civic Center Plaza
) Santa Ana, California 92701
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TABLE OF CONTENTS
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INTRODUCTION............................................................................... 1
ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW.................................... 1
A. Defined Terms............................................................ 1
1. "Additional Distribution Date"...................................... 1
2. "Administrative Claim".............................................. 1
3. "Advanced Lighting Agreement"....................................... 2
4. "Advanced Lighting Stipulation"..................................... 2
5. "Agent"............................................................. 2
6. "Allowed Claim"..................................................... 2
7. "Allowed . . . Claim"............................................... 3
8. "Allowed Insured Claim"............................................. 3
9. "Allowed Interest".................................................. 3
10. "Bank Notes"........................................................ 3
11. "Bankruptcy Code"................................................... 3
12. "Bankruptcy Court".................................................. 4
13. "Bankruptcy Rules".................................................. 4
14. "Banks"............................................................. 4
15. "Bank Stock"........................................................ 4
16. "Bar Date Order".................................................... 4
17. "Business Day"...................................................... 4
18. "CITBC"............................................................. 4
19. "Claim"............................................................. 4
20. "Claims Bar Date"................................................... 4
21. "Claims Objection Bar Date"......................................... 4
22. "Class"............................................................. 5
23. "Common Stock of . . ."............................................. 5
24. "Confirmation"...................................................... 5
25. "Confirmation Date"................................................. 5
26. "Confirmation Order"................................................ 5
27. "Creditors' Committee".............................................. 5
28. "Creditor Trust".................................................... 5
29. "Creditor Trust Agreement".......................................... 5
30. "Creditor Trust Committee".......................................... 5
31. "Creditor Trust Termination Date"................................... 5
32. "CSI"............................................................... 5
33. "CTA"............................................................... 5
34. "CTI"............................................................... 5
35. "CT International".................................................. 6
36. "Debt Instruments".................................................. 6
37. "Debtors"........................................................... 6
38. "DIP Financing Agreement"........................................... 6
39. "DIP Financing Order"............................................... 6
40. "Disbursing Agent".................................................. 6
41. "Disclosure Statement".............................................. 6
42. "Disputed Claim".................................................... 7
43. "Disputed Claims Reserve"........................................... 7
44. "Disputed Insured Claim" and "Disputed Uninsured Claim"............. 7
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45. "Disputed Interest"................................................. 7
46. "Distribution Record Date".......................................... 8
47. "Document Reviewing Centers"........................................ 8
48. "Effective Date".................................................... 8
49. "Estate"............................................................ 8
50. "Excess Cash Flow Obligation"....................................... 8
51. "Face Amount"....................................................... 8
52. "Federal Priority Tax Claim"........................................ 10
53. "File," "Filed" or "Filing"......................................... 10
54. "Final Order"....................................................... 10
55. "Final Put Exercise Date"........................................... 10
56. "Fiscal 1997 Cash Flow"............................................. 10
57. "Fiscal 1997 Liquidity"............................................. 10
58. "GE Capitalized Leases"............................................. 11
59. "GE Stipulation".................................................... 11
60. "IBM Capitalized Lease"............................................. 11
61. "IBM Stipulation"................................................... 12
62. "Initial 7% Distribution"........................................... 12
63. "Initial Excess Cash Flow Payment".................................. 12
64. "Insured Claim"..................................................... 12
65. "Intercompany Claim"................................................ 12
66. "Interests"......................................................... 12
67. "Internal Revenue Code"............................................. 12
68. "Investment Yield".................................................. 12
69. "IRS"............................................................... 13
70. "IRS Audit"......................................................... 13
71. "Management Stock".................................................. 13
72. "MetLife Capitalized Lease"......................................... 13
73. "MetLife Stipulation"............................................... 13
74. "MRJ"............................................................... 13
75. "New Clothestime"................................................... 13
76. "New Loan Agreement"................................................ 13
77. "New Notes"......................................................... 14
78. "New Stock"......................................................... 14
79. "Nonrecourse Guaranty".............................................. 14
80. "Office Building"................................................... 14
81. "Office Building Loan Agreement".................................... 14
82. "Other Priority Tax Claim".......................................... 14
83. "Petition Date"..................................................... 14
84. "Plan".............................................................. 14
85. "Plan Participants"................................................. 14
86. "Postpetition Lawsuit".............................................. 15
87. "Prime Rate"........................................................ 15
88. "Priority Claim".................................................... 15
89. "Priority Tax Claims"............................................... 15
90. "Pro Rata".......................................................... 15
91. "Professional"...................................................... 16
92. "Put Exercise Date"................................................. 16
93. "Put Option"........................................................ 16
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94. "Put Stock"......................................................... 16
95. "Reinstated"........................................................ 16
96. "Reorganization Case"............................................... 16
97. "Restricted Stock Agreement"........................................ 16
98. "Sale Order"........................................................ 16
99. "Schedules"......................................................... 17
100. "Secured Claim"..................................................... 17
101. "Security Agreement"................................................ 17
102. "Special Trust Note"................................................ 17
103. "Stipulation of Amount and Nature of Claim"......................... 17
104. "Substantive Consolidation"......................................... 17
105. "TCI"............................................................... 17
106. "Trust Note"........................................................ 18
107. "Trust Stock"....................................................... 18
108. "Uninsured Claim"................................................... 18
109. "Union"............................................................. 18
110. "United States Trustee"............................................. 18
111. "Unsecured Claim"................................................... 18
112. "Unsecured Creditors Class"......................................... 18
113. "Unsecured Deficiency Claim"........................................ 18
114. "USL Capitalized Lease"............................................. 18
115. "USL Stipulation"................................................... 18
116. "Valuation"......................................................... 19
117. "Wells"............................................................. 19
118. "Wells/Union Credit Agreement"...................................... 19
B. Rules of Interpretation, Computation of Time and Governing Law........... 19
1. Rules of Interpretation............................................. 19
2. Computation of Time................................................. 20
3. Governing Law....................................................... 20
ARTICLE II. CLASSES OF CLAIMS AND INTERESTS.......................................... 20
A. Unimpaired Classes of Claims (Classes 1 and 2)........................... 20
B. Impaired Classes of Claims (Classes 3 through 13)........................ 21
C. Impaired Classes of Interests (Classes 14 and 15)........................ 21
ARTICLE III. TREATMENT OF CLAIMS AND INTERESTS................................... 22
A. Unclassified Claims...................................................... 22
1. Payment of Administrative Claims and Superpriority Claims
Under or Evidenced by the DIP Financing Agreement................... 22
a. Administrative Claims in General.............................. 22
b. Payment of Statutory Fees..................................... 22
c. Ordinary Course Liabilities................................... 22
d. Claims Under or Evidenced by the DIP Financing Agreement...... 23
e. Bar Dates for Administrative Claims........................... 23
2. Payment of Priority Tax Claims...................................... 24
a. Federal Priority Tax Claims................................... 24
b. Other Priority Tax Claims..................................... 24
B. Classified Claims and Interests.......................................... 25
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1. Unimpaired Classes of Claims (Classes 1 and 2)...................... 25
a. Unsecured Claims Entitled to Priority Under Section 507(a)(3),
507(a)(4) or 507(a)(6) of the Bankruptcy Code (Class 1)....... 25
b. Secured Claims Not Otherwise Classified (Class 2)............. 25
2. Impaired Classes of Claims (Classes 3 through 13)................... 25
a. Secured Claims Under or Evidenced by the Office
Building Loan Agreement (Class 3)............................. 25
b. Secured Claims Under or Evidenced by the
Wells/Union Credit Agreement (Class 4)........................ 26
c. Secured Claims Under or Evidenced by the
MetLife Capitalized Lease (Class 5)........................... 26
d. Secured Claims Under or Evidenced by the
GE Capitalized Leases (Class 6)............................... 26
e. Secured Claims Under or Evidenced by the
USL Capitalized Lease (Class 7)............................... 26
f. Secured Claims Under or Evidenced by the
IBM Capitalized Lease (Class 8)............................... 26
g. Secured Claims Under or Evidenced by the
Advanced Lighting Agreement (Class 9)......................... 26
h. General Unsecured Claims (Class 10)........................... 27
i. Intercompany Claims (Class 11)................................ 27
j. Subordinated Unsecured Claims Related to Rescission,
Damages or Indemnity Claims Arising From Securities
Transactions (Class 12)....................................... 27
k. Unsecured Claims for Penalties, Fines
and Punitive Damages (Class 13)............................... 27
3. Impaired Classes of Interests (Classes 14 and 15)................... 27
a. Interests in TCI, CTA, CTI, CT
International and MRJ (Class 14).............................. 27
b. Interests in CSI (Class 15)................................... 28
C. Accrual of Postpetition Interest......................................... 28
ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN..................................... 28
A. Substantive Consolidation................................................ 28
B. Continued Existence; Vesting of Assets in New Clothestime................ 28
C. Intercompany Mergers and Related Transactions............................ 29
D. Corporate Governance, Directors and Officers,
Employment-Related Agreements and Compensation Programs.................. 30
1. Certificates of Incorporation and Bylaws............................ 30
2. Directors and Officers of New Clothestime........................... 30
a. Identity of Initial Officers.................................. 30
b. Identity of Initial Directors................................. 31
3. New Employment, Retirement, Indemnification and Other Agreements
and Incentive Compensation Programs................................. 31
4. No Additional Corporate Action Required............................. 31
E. Creditor Trust and Distributions of New Stock............................ 32
1. Creation of Creditor Trust.......................................... 32
2. Designation of Trustee and Succession Thereto....................... 32
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3. Distributions of New Stock to Creditor Trust
and Officers and Directors of New Clothestime....................... 32
a. Distribution of Trust Stock to Creditor Trust................. 32
b. Distribution of Management Stock to Certain Officers and
Directors of New Clothestime; Pledges on Account of Trust
Note and Special Trust Note................................... 32
4. Distribution of Trust Note and Special Trust Note to Creditor
Trust............................................................... 33
5. Contingent Payments by New Clothestime to Creditor Trust............ 34
a. Contingent Payments on Account of Excess Cash Flow............ 34
b. Contingent Payment Relating to Resolution of IRS Audit
and Postpetition Lawsuits..................................... 34
6. Sale of Put Stock Pursuant to Put Option............................ 35
a. Management Stock Pledged as Security for
Nonrecourse Guaranties........................................ 35
b. Put Option.................................................... 35
c. Conditions to Exercise of Put Option.......................... 36
7. Sale of Remaining Put Stock Through Alternative Means............... 37
a. Purchase of Remaining Put Stock by New Clothestime or
Other Holders of New Stock.................................... 37
b. Sale of Put Stock to Third Parties............................ 38
c. Limitation on Right to Purchase Certain Put Stock............. 38
8. Matters Relating to Valuations and Purchase of Put Stock............ 39
a. Banks' Joint Selection of Third Parties to Conduct
Valuations.................................................... 39
b. Responsibility for Costs of Valuations........................ 39
c. Cancellation of Repurchased Stock............................. 39
9. Distributions from Creditor Trust to Be
Governed by Plan; Recourse.......................................... 39
10. Exercise of Voting Rights of Creditor Trust......................... 40
11. Board of Directors of New Clothestime............................... 40
12. Termination and Liquidation of Creditor Trust....................... 40
F. Sources of Cash for Plan Distributions................................... 41
G. Execution of New Loan Agreement.......................................... 41
H. Preservation and Waiver of Certain Rights of
Action; Releases by Debtors, New Clothestime and
Recipients of Distributions.............................................. 41
1. Preservation and Waiver of Certain Rights of Action................. 41
2. Releases by Recipients of Distributions............................. 42
3. Releases of Banks and Committee by Debtors
and New Clothestime................................................. 42
I. Limitations on Amounts to be Distributed to
Holders of Allowed Insured Claims........................................ 43
J. Cancellation and Surrender of Debt Instruments
and Other Documentation.................................................. 44
K. Release of Liens......................................................... 44
L. Effectuating Documents; Further Transactions;
Exemption from Certain Transfer Taxes.................................... 44
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ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................... 45
A. Executory Contracts and Unexpired Leases to be Assumed................... 45
1. Assumptions and Assignments of Executory
Contracts and Unexpired Leases Generally............................ 45
2. Assumptions of Executory Contracts and
Unexpired Leases Related to Real Property........................... 46
3. Assignments Related to Intercompany Mergers
or Related Transactions............................................. 46
4. Approval of Assumptions and Assignments............................. 46
B. Cure Payments Related to Assumption of Executory
Contracts and Unexpired Leases........................................... 47
C. Executory Contracts and Unexpired Leases to be Rejected.................. 47
D. Bar Date for Rejection Damages Claims.................................... 48
E. Special Executory Contract and Unexpired Lease Matters;
Obligations to Indemnify Directors, Officers and Employees............... 48
F. Executory Contracts and Unexpired Leases Entered
Into and Other Obligations Incurred After the Petition Date.............. 49
ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS....................................... 49
A. Distributions for Claims and Interests Allowed
as of the Effective Date................................................. 49
B. Distributions by Disbursing Agents....................................... 50
C. Delivery of Distributions and Undeliverable or
Unclaimed Distributions.................................................. 51
1. Delivery of Distributions in General................................ 51
2. Undeliverable Distributions......................................... 51
a. Holding and Investment of Undeliverable Distributions......... 51
b. After Distributions Become Deliverable........................ 52
c. Failure to Claim Undeliverable Distributions.................. 52
D. Distribution Record Date................................................. 53
E. Means of Cash Payments................................................... 53
F. Timing and Calculation of Amounts to be Distributed...................... 53
1. Timing and Amounts of Distributions to Holders of Allowed Claims
in Classes 1, 2, 4 and 9 and Initial 7% Distributions............... 53
2. Timing and Amounts of Distributions on Account of Payments by
New Clothestime to Creditor Trust................................... 54
a. Additional Distributions to Holders of Allowed Claims......... 54
b. Additional Distributions on Account of
Previously Allowed Claims..................................... 55
c. Provision of Updated Claims Information
by New Clothestime to Creditor Trust.......................... 56
3. Distributions of Shares of New Stock................................ 56
4. De Minimis Distributions............................................ 56
5. Compliance with Tax Requirements.................................... 57
G. Setoffs.................................................................. 58
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H. Surrender of Canceled Instruments........................................ 58
1. Debt Instruments.................................................... 58
2. Lost, Stolen, Mutilated or Destroyed Debt Instruments............... 59
3. Failure to Surrender Canceled Debt Instruments...................... 59
ARTICLE VII. PROCEDURES FOR RESOLVING DISPUTED CLAIMS............................ 59
A. Prosecution of Objections to Claims...................................... 59
1. Objections to Claims................................................ 59
2. Authority to Prosecute Objections................................... 60
B. Treatment of Disputed Claims............................................. 60
1. No Payments on Account of Disputed Claims
and Establishment of Disputed Claims Reserve........................ 60
2. Funding of Disputed Claims Reserve.................................. 61
3. Property Held in Disputed Claims Reserve............................ 61
C. Distributions on Account of Disputed Claims Once They Are Allowed........ 61
1. After Allowance of a Disputed Claim................................. 61
2. After Resolution of All Disputed Claims............................. 62
ARTICLE VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND
CONSUMMATION OF THE PLAN............................................ 62
A. Conditions to Confirmation............................................... 62
B. Conditions to Effective Date............................................. 63
C. Waiver of Conditions to Confirmation and Effective Date.................. 64
D. Effect of Occurrence or Nonoccurrence of
Conditions to Effective Date............................................. 64
ARTICLE IX. DISCHARGE OF CLAIMS, TERMINATION OF
INTERESTS, INJUNCTIONS AND SUBORDINATION RIGHTS.......................... 65
A. Discharge of Claims and Termination of Interests......................... 65
B. Injunctions.............................................................. 66
C. Termination of Subordination Rights and
Settlement of Related Claims and Controversies........................... 67
ARTICLE X. RETENTION OF JURISDICTION................................................ 67
ARTICLE XI. MISCELLANEOUS PROVISIONS................................................. 70
A. Cramdown................................................................. 70
B. Dissolution of Creditors' Committee and Creation
of Creditor Trust Committee.............................................. 70
1. Dissolution of Creditors' Committee................................. 70
2. Creditor Trust Committee............................................ 70
a. Function and Composition of Creditor Trust Committee.......... 70
b. Employment of Professionals by Committee
and Reimbursement of Committee Members........................ 71
c. Dissolution of Creditor Trust Committee....................... 71
C. Limitation of Liability.................................................. 71
D. Modification of the Plan................................................. 72
E. Revocation of the Plan................................................... 72
F. Severability of Plan Provisions.......................................... 73
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G. Postconfirmation Conversion/Dismissal.................................... 73
H. Successors and Assigns................................................... 73
I. Service of Certain Plan and Disclosure Statement Exhibits................ 74
J. Service of Documents on the Debtors, New Clothestime, the Creditor
Trust Committee, the Agent or the United States Trustee.................. 74
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TABLE OF EXHIBITS
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Exhibit No. Exhibit Name
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I.A.10 Bank Note
I.A.29 Creditor Trust Agreement
I.A.78 Nonrecourse Guaranty
I.A.101 Security Agreement
I.A.102 Special Trust Note
I.A.106 Trust Note
IV.D.1.a.i Certificate of Incorporation of New
Clothestime
IV.D.1.a.ii Bylaws of New Clothestime
V.A.1 Schedule of Executory Contracts and Unexpired
Leases to be Assumed or Assumed and Assigned
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THE FOREGOING EXHIBITS TO THE PLAN, AS AMENDED FROM TIME TO TIME, WILL BE
AVAILABLE FOR REVIEW IN THE DOCUMENT REVIEWING CENTERS.
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INTRODUCTION
The Clothestime, Inc. and the other debtors and debtors in
possession in the above-captioned chapter 11 cases (collectively, the "Debtors")
propose the following joint plan of reorganization (the "Plan") for the
resolution of outstanding creditor claims against and equity interests in the
Debtors. Reference is made to the Debtors' disclosure statement (the "Disclosure
Statement") for a discussion of their history, businesses, properties, results
of operations and projections for future operations and for a summary and
analysis of the Plan and certain related matters. The Debtors are the proponents
of the Plan within the meaning of section 1129 of the Bankruptcy Code, 11 U.S.C.
Section 1129.
All holders of claims against and interests in the Debtors are
encouraged to read the Plan and the Disclosure Statement in their entirety
before voting to accept or reject the Plan.
Subject to certain restrictions and requirements set forth in the
Plan, the Debtors reserve the right to alter, amend, modify, revoke or withdraw
the Plan prior to its consummation.
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. DEFINED TERMS
As used in the Plan, capitalized terms and phrases have the
meanings set forth below. Any term or phrase used in the Plan that is not
defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules,
shall have the meaning assigned to that term or phrase in the Bankruptcy Code or
the Bankruptcy Rules.
1. "ADDITIONAL DISTRIBUTION DATE" means the 60th day after any date
on which the aggregate amount of cash and cash equivalents in the Creditor Trust
increases to an amount exceeding $500,000.
2. "ADMINISTRATIVE CLAIM" means a Claim for costs and expenses of
administration allowed under sections 503(b), 507(b) or 1114(e)(2) of the
Bankruptcy Code, including: (a) the actual and necessary costs and expenses
incurred after the Petition Date of
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preserving the Estates and operating the businesses of the Debtors (such as
wages, salaries or commissions for services and payments for inventories and
leased equipment and premises); (b) compensation for legal, financial advisory,
accounting and other services and reimbursement of expenses awarded or allowed
under section 330(a) or 331 of the Bankruptcy Code; (c) all fees and charges
assessed against the Estates under chapter 123 of title 28, United States Code,
28 U.S.C. Section 1911-1930; and (d) any such Claim held by another Debtor
arising on or after the Petition Date.
3. "ADVANCED LIGHTING AGREEMENT" means, collectively: (a) the
Agreement, dated October 1995, by and among the Debtors and Advanced Lighting
Systems, Inc.; and (b) all related contracts, instruments and other documents
entered into in connection with such agreement.
4. "ADVANCED LIGHTING STIPULATION" means the Stipulation Regarding
Treatment of Claims of Advanced Lighting Systems, Inc., as submitted to the
Bankruptcy Court no fewer than 20 days prior to the initial hearing by the
Bankruptcy Court
regarding Confirmation.
5. "AGENT" means Wells, in its capacity as agent for itself and
Union under the Wells/Union Credit Agreement.
6. "ALLOWED CLAIM" means:
a. if no proof of Claim has been Filed by the
applicable Claims Bar Date or has otherwise been
deemed timely Filed under applicable law, a Claim
that has been listed in the Schedules as other than
disputed, contingent or unliquidated and as to
which the applicable Debtor has neither: (i) filed
an objection (I) by the Effective Date or (II)
within such other applicable period of limitation
as may be fixed by the Plan, the Bankruptcy Code or
the
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Bankruptcy Rules; nor (ii) delivered to the holder
of the Claim a Stipulation of Amount and Nature of
Claim;
b. if a proof of Claim or request for payment of
an Administrative Claim has been Filed by the
applicable Claims Bar Date or has otherwise been
deemed timely Filed under applicable law, a Claim
that is not a Disputed Claim; or
c. irrespective of whether a proof of Claim or
request for payment of an Administrative Claim has
been Filed by the applicable Claims Bar Date or has
otherwise been deemed timely Filed under applicable
law, a Claim that is allowed: (i) in any
Stipulation of Amount and Nature of Claim executed
prior to the Confirmation Date and approved by the
Bankruptcy Court; (ii) in any Stipulation of Amount
and Nature of Claim executed on or after the
Confirmation Date; (iii) pursuant to applicable
provisions of the Plan; or (iv) in any contract,
instrument or other agreement or document entered
into in connection with the Plan.
7. "ALLOWED . . . CLAIM" means an Allowed Claim in the particular
Class described.
8. "ALLOWED INSURED CLAIM" means an Insured Claim that is an
Allowed Claim.
9. "ALLOWED INTEREST" means an Interest that either (a) is not a
Disputed Interest or (b) has been allowed by a Final Order.
10. "BANK NOTES" means the promissory notes, in the aggregate
principal amount of $1,000,000, to be distributed to the Agent or as directed by
the Agent pursuant to Section III.B.2.b, each substantially in the form of
Exhibit I.A.10 to the Plan.
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11. "BANKRUPTCY CODE" means title 11 of the United States Code, as
now in effect or hereafter amended.
12. "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Central District of California, Santa Ana Division, or, if such court ceases
to exercise jurisdiction over the Reorganization Cases, such court or adjunct
thereof that exercises jurisdiction over the Reorganization Cases in lieu of the
United States Bankruptcy Court for the Central District of California, Santa Ana
Division.
13. "BANKRUPTCY RULES" means, collectively, the Federal Rules of
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as now in
effect or hereafter amended.
14. "BANKS" means, collectively, (a) Wells and (b) Union.
15. "BANK STOCK" means the separate class of New Stock that shall
be designated as Class C pursuant to New Clothestime's certificate of
incorporation and that shall be issued and distributed to the Agent or as
directed by the Agent pursuant to Section III.B.2.b.
16. "BAR DATE ORDER" means the Order Establishing Bar Date for
Filing Proofs of Claim and Approving Form and Manner of Notice Thereof, entered
by the Bankruptcy Court on May 6, 1996.
17. "BUSINESS DAY" means any day other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).
18. "CITBC" means The CIT Group/Business Credit, Inc., a New York
corporation.
19. "CLAIM" means a claim (as defined in section 101(5) of the
Bankruptcy Code) against any Debtor.
20. "CLAIMS BAR DATE" means the applicable bar date by which a
proof of Claim or request for payment of an Administrative Claim must be Filed,
as established by an order of the Bankruptcy Court, including the Bar Date Order
and the Confirmation Order.
21. "CLAIMS OBJECTION BAR DATE" means, for all Claims, other than
those Claims allowed in accordance with Section I.A.6.c, the latest of: (a) 60
days after the Effective
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Date; (b) 60 days after the Filing of a proof of claim for such Claim; and (c)
such other period of limitation as may be specifically fixed by the Plan, the
Confirmation Order, the Bankruptcy Rules or an order of the Bankruptcy Court for
objecting to a Claim.
22. "CLASS" means a class of Claims or Interests, as described in
Article II.
23. "COMMON STOCK OF . . ." means, when used with
reference to a particular Debtor, the common stock of any class
of such Debtor issued and outstanding immediately prior to the
Effective Date.
24. "CONFIRMATION" means the entry of the Confirmation
Order.
25. "CONFIRMATION DATE" means the date on which the
Bankruptcy Court enters the Confirmation Order on the docket of
the Reorganization Cases.
26. "CONFIRMATION ORDER" means the order of the
Bankruptcy Court confirming the Plan pursuant to section 1129 of
the Bankruptcy Code.
27. "CREDITORS' COMMITTEE" means the official committee of
unsecured creditors of the Debtors appointed by the United States Trustee in the
Reorganization Cases pursuant to section 1102 of the Bankruptcy Code.
28. "CREDITOR TRUST" means the trust created pursuant to the
Creditor Trust Agreement.
29. "CREDITOR TRUST AGREEMENT" means the trust agreement to be
entered into pursuant to Section IV.E.1, substantially in the form of Exhibit
I.A.29 to the Plan.
30. "CREDITOR TRUST COMMITTEE" means the committee to be
established pursuant to Section XI.B.2.
31. "CREDITOR TRUST TERMINATION DATE" means the date on which the
Creditor Trust terminates pursuant to the terms of the Creditor Trust Agreement.
32. "CSI" means Clothestime Stores, Inc., a Delaware corporation.
33. "CTA" means Clothestime Acquisition Corporation, a Delaware
corporation.
34. "CTI" means Clothestime Investment, Inc., a Delaware
corporation.
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35. "CT INTERNATIONAL" means Clothestime International, Inc., a
Delaware corporation.
36. "DEBT INSTRUMENTS" means, collectively, any and all promissory
notes, mortgages, deeds of trust, financing statements under the Uniform
Commercial Code and other similar instruments or documents relating to the
Office Building Loan Agreement or the Wells/Union Credit Agreement.
37. "DEBTORS" means, collectively, (a) TCI, (b) CSI, (c) MRJ, (d)
CT International, (e) CTI and (f) CTA.
38. "DIP FINANCING AGREEMENT" means, collectively: (a) the
Financing Agreement, dated as of December 28, 1995, among CITBC, as lender; CSI,
as borrower; and TCI, MRJ, CT International, CTI and CTA, as guarantors; and (b)
all related contracts, instruments and other documents, all as approved by the
DIP Financing Order and as subsequently modified, supplemented or amended.
39. "DIP FINANCING ORDER" means the Final Order Authorizing
Incurrence of Indebtedness With Administrative Superpriority and Granting Other
Relief, entered by the Bankruptcy Court on January 9, 1996.
40. "DISBURSING AGENT" means: (a) New Clothestime, in its capacity
as Disbursing Agent for distributions on account of Administrative Claims,
Priority Claims, Priority Tax Claims and Secured Claims and the Initial 7%
Distributions; or (b) the Trustee, in its capacity as Disbursing Agent for
distributions on account of Unsecured Claims other than the Initial 7%
Distributions, pursuant to Section VI.B.
41. "DISCLOSURE STATEMENT" means the disclosure statement (and all
exhibits or schedules annexed thereto or referenced therein) that relates to the
Plan and that is approved by the Bankruptcy Court pursuant to section 1125 of
the Bankruptcy Code, as such disclosure statement may be amended, modified or
supplemented.
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42. "DISPUTED CLAIM" means:
a. a Claim as to which, if no proof of Claim has
been Filed by the applicable Claims Bar Date or has
otherwise been deemed timely Filed under applicable
law, and such Claim has been listed on the
Schedules as other than disputed, contingent or
unliquidated, a Debtor or any other party in
interest has Filed an objection: (i) by 90 days
after the Effective Date; or (ii) within such other
applicable period of limitation as may be fixed by
the Plan, the Bankruptcy Code or the Bankruptcy
Rules; or
b. a Claim as to which, if a proof of Claim or
request for payment of an Administrative Claim has
been Filed by the applicable Claims Bar Date or has
otherwise been deemed timely Filed under applicable
law, an objection has been timely Filed by a Debtor
or any other party in interest and such objection
has not been withdrawn on or before any date fixed
by the Plan or order of the Bankruptcy Court for
Filing such objections and such objection has not
been denied by a Final Order. If an objection is
timely Filed to a portion of a Claim asserted in a
proof of Claim or request for payment of an
Administrative Claim, the portion of the Claim
objected to shall be considered a Disputed Claim,
and the portion of the Claim not objected to shall
be considered an Allowed Claim.
43. "DISPUTED CLAIMS RESERVE" means the reserve established
pursuant to Section VII.B for Disputed Claims in the Unsecured Creditors Class.
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<PAGE> 18
44. "DISPUTED INSURED CLAIM" and "DISPUTED UNINSURED CLAIM" mean,
respectively, an Insured Claim or an Uninsured Claim that is a Disputed Claim.
45. "DISPUTED INTEREST" means any Interest as to which an objection
has been timely Filed by a Debtor or any other party in interest that (a) has
not been withdrawn on or before any date fixed by the Plan or by order of the
Bankruptcy Court for Filing such objection and (b) has not been denied by a
Final Order.
46. "DISTRIBUTION RECORD DATE" means the close of business on the
Business Day immediately preceding the Effective Date.
47. "DOCUMENT REVIEWING CENTERS" means, collectively, the offices
of TCI located at 5325 East Hunter Avenue, Anaheim, California 92807 and any
other location designated by the Debtors at which any party in interest may
review all of the exhibits and schedules to the Plan and the Disclosure
Statement.
48. "EFFECTIVE DATE" means a day, as determined by the Debtors,
that is at least 11 days after the Confirmation Date and on which (a) no stay of
the Confirmation Order is in effect and (b) all conditions to the Effective Date
set forth in Section VIII.B have been satisfied or waived pursuant to Section
VIII.C; provided, however, that such date shall be no later than December 31,
1997, unless the Bankruptcy Court has entered an order authorizing such later
date.
49. "ESTATE" means, as to each Debtor, the estate created for that
Debtor in its Reorganization Case pursuant to section 541 of the Bankruptcy
Code.
50. "EXCESS CASH FLOW OBLIGATION" means 50% of the greater of: (a)
the amount by which Fiscal 1997 Cash Flow exceeds $5,849,000, as determined no
later than July 1, 1998; and (b) the amount by which Fiscal 1997 Liquidity
exceeds $8,601,000, as determined within 10 days after the report on New
Clothestime's audited consolidated financial statements for the fiscal year
ending January 31, 1998 has been rendered.
51. "FACE AMOUNT" means:
a. when used with reference to a Disputed Insured
Claim: (i) unless clause (ii) or (iii) below
applies,
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the full stated amount claimed by the holder of
such Claim in any proof of Claim Filed by the
Claims Bar Date or otherwise deemed timely Filed
under applicable law if the proof of Claim
specifies only a liquidated amount, or the disputed
portion of such stated amount if an objection is
timely Filed to a portion of such Claim; (ii) the
deductible under the relevant insurance policy,
minus any reimbursement obligations of the
applicable Debtor to the insurance carrier for sums
expended by the insurance carrier on account of
such Claim (including defense costs), if such
amount is less than the amount specified in clause
(i) above or the proof of Claim specifies an
unliquidated amount; or (iii) zero if the Claim is
fully insured with no deductible;
b. when used with reference to a Disputed
Uninsured Claim, either: (i) if the holder of such
Claim has Filed a proof of Claim by the Claims Bar
Date or such proof of Claim is deemed timely Filed
under applicable law and such proof of Claim
specifies only a liquidated amount: (I) the full
stated amount claimed in such proof of Claim or, if
an objection is timely Filed to a portion of such
Claim, the disputed portion of such stated amount;
or (II) if the amount of the Claim has been
estimated by the Bankruptcy Court in a Final Order
entered pursuant to section 502 of the Bankruptcy
Code, the amount of such estimate; or (ii) if no
proof of Claim has been Filed by the Claims Bar
Date or has otherwise been deemed timely Filed
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under applicable law or the proof of Claim
specifies an unliquidated amount, the greater of
the amount of the Claim set forth in (I) any
objection Filed to such Claim or (II) any
Stipulation of Amount and Nature of Claim delivered
to the holder of such Claim; and
c. when used with reference to an Allowed Claim,
the amount of such Allowed Claim, as determined in
accordance with Section I.A.6 and applicable
provisions of the Bankruptcy Code.
52. "FEDERAL PRIORITY TAX CLAIM" means a Claim of the IRS that is
entitled to priority in payment pursuant to section 507(a)(8) of the Bankruptcy
Code.
53. "FILE," "FILED" or "FILING" means file, filed or filing with
the Bankruptcy Court in a Reorganization Case.
54. "FINAL ORDER" means an order or judgment of the Bankruptcy
Court, or other court of competent jurisdiction, as entered on the docket in any
Reorganization Case, that has not been reversed, stayed, modified or amended,
and as to which the time to appeal or seek certiorari has expired and no appeal
or petition for certiorari has been timely taken, or as to which any appeal that
has been or may be taken or any petition for certiorari that has been or may be
filed has been resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought.
55. "FINAL PUT EXERCISE DATE" means the date that is 70 days after
the fourth anniversary of the Effective Date.
56. "FISCAL 1997 CASH FLOW" means, for New Clothestime's fiscal
year ending on January 31, 1998: consolidated net income as reflected on New
Clothestime's audited consolidated statement of operations; plus (a) to the
extent deducted in determining such consolidated net income, all interest
expense, tax expense, depreciation expense and amortization expense, each
determined and consolidated in accordance with GAAP; plus (b) to the extent
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deducted in determining such consolidated net income, all non-cash charges
required under GAAP; plus (c) to the extent deducted in determining such
consolidated net income, cash reorganization costs; minus (d) to the extent
included in determining such consolidated net income, all non-cash revenues and
income items required under GAAP; minus (e) actual interest paid during such
fiscal year; minus (f) actual payments to federal, state and local taxing
authorities on account of income or franchise tax obligations for such fiscal
year.
57. "FISCAL 1997 LIQUIDITY" means the sum of: (a) cash and cash
equivalents at January 31, 1998, as reflected on New Clothestime's audited
consolidated balance sheet, minus the sum of: (i) cash and cash equivalents held
as restricted cash, as collateral for borrowings or in segregated accounts to
which New Clothestime does not have access, all as reflected on New
Clothestime's audited consolidated balance sheet or the notes thereto; (ii)
amounts owing at January 31, 1998 under the Plan on account of distributions,
including Initial 7% Distributions, to be made on the Effective Date but that
have not yet been made pending resolution of Disputed Claims, as reflected on
New Clothestime's audited consolidated balance sheet; and (iii) the amount by
which accrued sales taxes, accrued payroll and related taxes and current income
or franchise taxes payable, as reflected on the audited consolidated balance
sheet of New Clothestime at January 31, 1998, exceed $1,747,000; and (b) the
amount available for borrowing under the New Loan Agreement at January 31, 1998.
58. "GE CAPITALIZED LEASES" means, collectively: (a) the Lease
Agreement, dated as of December 11, 1990, between Matrix Funding Corporation and
TCI, together with all schedules, amendments, supplements, attachments and
addenda thereto, all as subsequently modified, supplemented or amended; (b) the
Master Lease Agreement, dated as of September 13, 1994, between Matrix Funding
Corporation and CSI, together with all schedules, amendments, supplements,
attachments and addenda thereto, all as subsequently modified, supplemented or
amended; and (c) all related contracts, instruments and other documents entered
into in connection with such agreements.
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59. "GE STIPULATION" means the Stipulation Regarding Treatment of
Claims of Matrix Funding Corporation, as submitted to the Bankruptcy Court for
approval no fewer than 20 days prior to the initial hearing by the Bankruptcy
Court regarding Confirmation.
60. "IBM CAPITALIZED LEASE" means, collectively: (a) the Term Lease
Master Agreement, dated as of April 27, 1995, between IBM Credit Corporation and
MRJ, together with all schedules, amendments, supplements, attachments and
addenda thereto, all as subsequently modified, supplemented or amended; and (b)
all related contracts, instruments and other documents entered into in
connection with such agreement.
61. "IBM STIPULATION" means the Stipulation Regarding Treatment of
Claims of IBM Credit Corporation, as submitted to the Bankruptcy Court for
approval no fewer than 20 days prior to the initial hearing by the Bankruptcy
Court regarding Confirmation.
62. "INITIAL 7% DISTRIBUTION" means a distribution on the Effective
Date or, as and to the extent authorized by the Plan, thereafter to a holder of
an Allowed Claim in the Unsecured Creditors Class of $0.07 in cash for each
$1.00 of the allowed amount of such Claim, as provided for under Section
III.B.3.h.
63. "INITIAL EXCESS CASH FLOW PAYMENT" means an amount equal to the
lesser of: (a) the Excess Cash Flow Obligation; and (b) 3.0% of the aggregate
amount of all Unsecured Claims that have become Allowed Claims as of July 1,
1998.
64. "INSURED CLAIM" means any Unsecured Claim that arises from an
incident or occurrence that is covered under a Debtor's general liability
insurance policies.
65. "INTERCOMPANY CLAIM" means any Claim held by a Debtor that
arose before the Petition Date.
66. "INTERESTS" means, collectively, the rights of the holders of
the Common Stock or other equity securities of, or any other equity interests
in, any Debtor, and the rights of any entity to purchase or demand the issuance
of any such common stock, securities or interests, including: (a) redemption,
conversion, exchange, voting, participation and dividend rights; (b) liquidation
preferences; and (c) stock options and warrants.
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67. "INTERNAL REVENUE CODE" means title 26 of the United States
Code, as now in effect or hereafter amended.
68. "INVESTMENT YIELD" means the net yield earned by a Disbursing
Agent from the investment of cash (including cash received by the Trustee, in
his or her capacity as Disbursing Agent, on account of dividends and other
distributions on New Stock) in a manner consistent with: (a) in the instance of
New Clothestime, New Clothestime's investment and deposit guidelines; and (b) in
the instance of the Trustee, the investment guidelines set forth in the Creditor
Trust Agreement.
69. "IRS" means the Internal Revenue Service of the United States
of America.
70. "IRS AUDIT" means the IRS's audit of the Debtors' income tax
returns for certain prior tax years, which audit was commenced in 1996.
71. "MANAGEMENT STOCK" means the separate class of New Stock that
shall be designated as Class B pursuant to New Clothestime's certificate of
incorporation and that shall be issued or reserved for issuance as restricted
shares to certain officers and directors of New Clothestime pursuant to Section
IV.E.3.b.
72. "METLIFE CAPITALIZED LEASE" means, collectively: (a) the Master
Lease Purchase Agreement, dated as of April 29, 1993, between MetLife Capital
Corporation and TCI, together with all schedules, amendments, supplements,
attachments and addenda thereto, all as subsequently modified, supplemented or
amended; and (b) all related contracts, instruments and other documents entered
into in connection with such agreement.
73. "METLIFE STIPULATION" means the Stipulation re Allowance and
Treatment of Secured and Unsecured Claims and Compromise of Controversies that
is attached as Exhibit A to the Order Approving Compromise and Settlement of
Secured and Unsecured Claims of MetLife Capital Corporation, Pursuant to Rule
9019 of the Federal Rules of Bankruptcy Procedure, entered by the Bankruptcy
Court on July 23, 1996.
74. "MRJ" means MRJ Industries, Inc., a Delaware corporation.
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75. "NEW CLOTHESTIME" means Reorganized CSI, the surviving
corporation following the intercompany mergers authorized by Section IV.C.
76. "NEW LOAN AGREEMENT" means, collectively: (a) the loan
agreement, to be entered into as of the Effective Date, pursuant to which
financing will be available to New Clothestime from and after the Effective
Date; and (b) all related security agreements, deeds of trust, mortgages,
instruments and other documents entered into in connection with such agreement,
all as subsequently modified, supplemented or amended, or any similar such
instruments and other documents entered into in connection with the
establishment of a substitute working capital financing facility.
77. "NEW NOTES" means, collectively, (a) the Bank Notes, (b) the
Special Trust Note and (c) the Trust Note.
78. "NEW STOCK" means the 100,000 shares of common stock of New
Clothestime to be issued and distributed or reserved for issuance and
distribution pursuant to the Plan, which common stock shall be in three classes
and be substantially on the terms set forth in the certificate of incorporation
of New Clothestime.
79. "NONRECOURSE GUARANTY" means a nonrecourse guaranty,
substantially in the form of Exhibit I.A.79 to the Plan, to be entered into by a
holder of Management Stock with respect to either the Trust Note or the Special
Trust Note, pursuant to Section IV.E.3.b.
80. "OFFICE BUILDING" means the office facility and associated real
property owned by CSI that is located at 5395 East Hunter Avenue in Anaheim,
California.
81. "OFFICE BUILDING LOAN AGREEMENT" means, collectively: (a) the
Real Estate Loan Letter Agreement, dated as of February 28, 1995, and the
Supplemental Letter Agreement, dated as of March 13, 1995, between CSI, as
borrower, and Wells, as lender; and (b) all related promissory notes, security
agreements, deeds of trust, mortgages, instruments and other documents entered
into in connection with such agreements, all as subsequently modified,
supplemented or amended.
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82. "OTHER PRIORITY TAX CLAIM" means a Claim that is entitled to
priority in payment pursuant to section 507(a)(8) of the Bankruptcy Code, other
than a Federal Priority Tax Claim.
83. "PETITION DATE" means December 8, 1995.
84. "PLAN" means this joint plan of reorganization for the Debtors
and all exhibits annexed hereto or referenced herein, as the same may be
amended, modified or supplemented in accordance with their terms.
85. "PLAN PARTICIPANTS" means, collectively: (a) the Debtors, New
Clothestime and their respective directors, officers, employees and
Professionals (acting in such capacity); and (b) the Creditors' Committee and
its members and Professionals (acting in such capacity).
86. "POSTPETITION LAWSUIT" means any lawsuit, cause of action or
proceeding commenced on or before the Effective Date in any court or before any
federal, state or local administrative agency, in the United States or in any
foreign jurisdiction, based upon any act, omission, transaction or other
activity by the Debtors after the Petition Date.
87. "PRIME RATE" means the prime interest rate that is publicly
announced from time to time by the lender under the New Loan Agreement.
88. "PRIORITY CLAIM" means a Claim that is entitled to priority in
payment pursuant to section 507(a) of the Bankruptcy Code and that is not an
Administrative Claim or a Priority Tax Claim.
89. "PRIORITY TAX CLAIMS" means, collectively, the Federal Priority
Tax Claims and the Other Priority Tax Claims.
90. "PRO RATA" means:
a. when used with reference to distributions of
cash (other than distributions of any Investment
Yield pursuant to clause (b) below) or New Stock,
proportionally so that with respect to an Allowed
Claim, the ratio of (i)(I) the amount of property
distributed on account of a
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particular Allowed Claim to (II) the amount of the
Allowed Claim, is the same as the ratio of (ii)(I)
the amount of property distributed on account of
all Allowed Claims of the Class in which the
particular Allowed Claim is included to (II) the
amount of all Allowed Claims in that Class; and
b. when used with reference to distributions of
any Investment Yield pursuant to Sections VI.A.2,
VI.C.2.b, VI.F.2.b and VII.C.1, the portion of the
Investment Yield allocable to a particular Allowed
Claim on the basis of the amount of cash then being
distributed on account of such Allowed Claim
(including dividends and other distributions on New
Stock being distributed on account of such Allowed
Claim).
91. "PROFESSIONAL" means any professional employed in the
Reorganization Cases pursuant to section 327 or 1103 of the Bankruptcy Code, or
any professional seeking compensation or reimbursement of expenses in connection
with the Reorganization Cases pursuant to section 503(b)(4) of the Bankruptcy
Code.
92. "PUT EXERCISE DATE" means any of the dates on which a holder of
Put Stock is authorized to exercise the Put Option pursuant to Section IV.E.6.
Such dates shall include each of the dates that are 70 days after the second,
third and fourth anniversaries of the Effective Date.
93. "PUT OPTION" means the option provided to any holder of Put
Stock to sell all or a portion of the Put Stock held by such holder pursuant to
Section IV.E.6.
94. "PUT STOCK" means, collectively, (a) the Bank Stock and (b) the
Trust Stock.
95. "REINSTATED" means rendering a Claim unimpaired pursuant to
section 1124 of the Bankruptcy Code.
96. "REORGANIZATION CASE" means: (a) when used with reference to a
particular Debtor, the chapter 11 case pending for that Debtor in the Bankruptcy
Court; and (b) when used
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with reference to all of the Debtors, the chapter 11 cases pending for the
Debtors in the Bankruptcy Court.
97. "RESTRICTED STOCK AGREEMENT" means the agreement to be entered
into among New Clothestime and certain officers and directors of New Clothestime
in connection with the distribution of restricted shares of New Stock to such
officers and directors pursuant to Section IV.E.3.b.
98. "SALE ORDER" means the Order, Pursuant to Section 363 of the
Bankruptcy Code, Approving Sale of Office Building and Associated Real Property
Located at 5395 East Hunter Avenue in Anaheim, California Free and Clear of
Liens, Claims and Encumbrances, entered by the Bankruptcy Court on or about June
26, 1997.
99. "SCHEDULES" means, collectively, the schedules of assets and
liabilities and statements of financial affairs Filed by the Debtors, as
required by section 521 of the Bankruptcy Code, as subsequently amended,
modified or supplemented.
100. "SECURED CLAIM" means a Claim that is secured by a lien on
property in which an Estate has an interest or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of the value of the Claim
holder's interest in the Estate's interest in such property or to the extent of
the amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy Code.
101. "SECURITY AGREEMENT" means a security agreement, substantially
in the form of Exhibit I.A.101 to the Plan, to be entered into by a holder of
Management Stock in connection with such holder's entry into a Nonrecourse
Guaranty pursuant to Section IV.E.3.b.
102. "SPECIAL TRUST NOTE" means the promissory note, in the
principal amount of $600,000, to be distributed to the Creditor Trust pursuant
to Section IV.E.4, substantially in the form of Exhibit I.A.102 to the Plan.
103. "STIPULATION OF AMOUNT AND NATURE OF CLAIM" means a
stipulation or other agreement that a Debtor has sent or may send to a holder of
a Claim that states that Debtor's
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position regarding the amount or nature of the holder's Claim and requests such
holder's agreement with that Debtor's position.
104. "SUBSTANTIVE CONSOLIDATION" means the consolidation of the
Reorganization Cases and the combining of the Estates, for purposes of the Plan
and the distributions to be made thereunder, by aggregating the Estates' assets
and liabilities and eliminating cross-corporate guaranties and inter- Estate
debt pursuant to Section IV.A.
105. "TCI" means The Clothestime, Inc., a Delaware corporation.
106. "TRUST NOTE" means the promissory note, in the principal
amount of $4,000,000, to be distributed to the Creditor Trust pursuant to
Section IV.E.4, substantially in the form of Exhibit I.A.106 to the Plan.
107. "TRUST STOCK" means the separate class of New Stock that shall
be designated as Class A pursuant to New Clothestime's certificate of
incorporation and that shall be issued and distributed to the Creditor Trust
pursuant to Section IV.E.3.a.
108. "UNINSURED CLAIM" means any Claim that is not an Insured
Claim.
109. "UNION" means Union Bank of California, N.A., successor to
Union Bank.
110. "UNITED STATES TRUSTEE" means the Office of the United States
Trustee for the Central District of California.
111. "UNSECURED CLAIM" means any Claim that is not an
Administrative Claim, Priority Claim, Priority Tax Claim or
Secured Claim.
112. "UNSECURED CREDITORS CLASS" means Class 10.
113. "UNSECURED DEFICIENCY CLAIM" means any portion of a Claim to
the extent that the value of the Claim holder's interest in an Estate's interest
in any property securing the Claim is less than the amount of the Claim, or to
the extent that the amount of any Claim subject to setoff is less than the
amount of such Claim, as determined pursuant to section 506(a) of the Bankruptcy
Code.
114. "USL CAPITALIZED LEASE" means, collectively: (a) the Master
Lease Agreement, dated as of November 17, 1994, between USL Capital Corporation
and CSI, together
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with all schedules, amendments, supplements, attachments and addenda thereto,
all as subsequently modified, supplemented or amended; (b) the written guaranty
executed by TCI in favor of USL Capital Corporation whereby TCI guaranteed the
obligations of CSI arising under such agreement; and (c) all related contracts,
instruments and other documents entered into in connection with such agreement.
115. "USL STIPULATION" means the Stipulation Regarding Treatment of
Claims of Mellon US Leasing Corporation, as Successor in Interest to USL Capital
Corporation, as submitted to the Bankruptcy Court for approval no fewer than 20
days prior to the initial hearing by the Bankruptcy Court regarding
Confirmation.
116. "VALUATION" means an independent determination of the fair
market value of certain Put Stock, for the purposes set forth in Section IV.E,
to be conducted by a third party retained jointly by: (a) New Clothestime; and
(b) the Agent, Wells, Union or the Trustee, as applicable.
117. "WELLS" means Wells Fargo Bank, N.A.
118. "WELLS/UNION CREDIT AGREEMENT" means, collectively: (a) the
Credit Agreement, dated as of February 28, 1995, among CSI, as borrower; Wells
and Union, in their individual capacities, and the Agent, as lenders; and TCI,
CTA, CTI, CT International, Clothestime Insurance Company and MRJ, as
guarantors; and (b) all related security agreements, deeds of trust, mortgages,
instruments and other documents entered into in connection with such agreement,
all as subsequently modified, supplemented or amended.
B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND
GOVERNING LAW
1. RULES OF INTERPRETATION
For purposes of the Plan: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, shall
include both the singular and the plural; (b) any reference in the
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Plan to a contract, instrument, release or other agreement or document being in
a particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions; (c) any reference in the Plan to an existing document or exhibit
Filed or to be Filed means such document or exhibit, as it may have been or may
be amended, modified or supplemented; (d) unless otherwise specified, all
references in the Plan to Sections, Articles and Exhibits are references to
Sections, Articles and Exhibits of or to the Plan; (e) the words "herein" and
"hereto" refer to the Plan in its entirety rather than to a particular portion
of the Plan; (f) captions and headings to Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the interpretation of the Plan; and (g) the rules of construction set forth in
section 102 of the Bankruptcy Code shall apply.
2. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by the Plan,
the provisions of Bankruptcy Rule 9006(a) shall apply.
3. GOVERNING LAW
Except to the extent that the Bankruptcy Code or Bankruptcy Rules
are applicable, and subject to the provisions of any contract, instrument,
release or other agreement or document entered into in connection with the Plan,
all rights and obligations arising under the Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without giving effect to the principles of conflicts of law thereof.
ARTICLE II.
CLASSES OF CLAIMS AND INTERESTS
All Claims and Interests, except Administrative Claims and Priority
Tax Claims, are placed in the Classes described below. In accordance with
section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority
Tax Claims, as described below in Article III, have not been classified and thus
are excluded from the Classes described below.
A Claim or Interest is classified in a particular Class only to the
extent that the Claim or Interest qualifies within the description of that Class
and is classified in other Classes to the extent that any remainder of the Claim
or Interest qualifies within the description of such other
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Classes. A Claim or Interest is also classified in a particular Class only to
the extent that such Claim or Interest is an Allowed Claim or Allowed Interest
in that Class and has not been paid, released or otherwise satisfied prior to
the Effective Date.
A. UNIMPAIRED CLASSES OF CLAIMS (CLASSES 1 AND 2)
CLASS 1: Unsecured Claims against a Debtor that are entitled to
priority under section 507(a)(3), 507(a)(4) or 507(a)(6) of the Bankruptcy Code.
CLASS 2: Secured Claims against a Debtor that are not classified in
Classes 3 through 9.
B. IMPAIRED CLASSES OF CLAIMS (CLASSES 3 THROUGH 13)
CLASS 3: Secured Claims under or evidenced by the
Office Building Loan Agreement.
CLASS 4: Secured Claims under or evidenced by the Wells/Union
Credit Agreement.
CLASS 5: Secured Claims under or evidenced by the MetLife
Capitalized Lease.
CLASS 6: Secured Claims under or evidenced by the GE Capitalized
Leases.
CLASS 7: Secured Claims under or evidenced by the USL Capitalized
Lease.
CLASS 8: Secured Claims under or evidenced by the IBM Capitalized
Lease.
CLASS 9: Secured Claims under or evidenced by the Advanced Lighting
Agreement.
CLASS 10: Unsecured Claims that are not classified in Class 1, 11,
12 or 13, including (a) lease rejection damages Claims and (b) Unsecured
Deficiency Claims.
CLASS 11: Intercompany Claims.
CLASS 12: Unsecured Claims arising from the rescission of a
purchase or sale of a security of a Debtor, for damages arising from a purchase
or sale of such security or for the reimbursement or contribution allowed under
section 502 of the Bankruptcy Code on account of such Claims.
CLASS 13: Unsecured Claims for any fine, penalty or forfeiture, or
for multiple, exemplary or punitive damages, to the extent that such Claims are
not compensation for the Claim holder's actual pecuniary loss.
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C. IMPAIRED CLASSES OF INTERESTS (CLASSES 14 AND 15)
CLASS 14: Interests in TCI, CTA, CTI, CT International
and MRJ.
CLASS 15: Interests in CSI.
ARTICLE III.
TREATMENT OF CLAIMS AND INTERESTS
A. UNCLASSIFIED CLAIMS
1. PAYMENT OF ADMINISTRATIVE CLAIMS AND SUPERPRIORITY
CLAIMS UNDER OR EVIDENCED BY THE DIP FINANCING
AGREEMENT
a. ADMINISTRATIVE CLAIMS IN GENERAL
Except as otherwise specified in this Section III.A.1, and subject
to the bar date provisions herein, each holder of an Administrative Claim shall
receive cash equal to the amount of such Administrative Claim (unless the holder
of such Claim agrees to other treatment) on the latest of: (i) the Effective
Date; (ii) 30 days after the date on which an order allowing such Claim becomes
a Final Order; and (iii) such other time or times as may be agreed upon by the
holder of the Administrative Claim and the applicable Debtor or New Clothestime.
b. PAYMENT OF STATUTORY FEES
On or before the Effective Date, Administrative Claims for fees
payable pursuant to section 1930 of title 28 of the United States Code, 28
U.S.C. Section 1930, shall be paid in cash equal to the amount of such
Administrative Claims. From and after the Effective Date, New Clothestime shall
pay timely in cash all fees payable pursuant to section 1930(a)(6) of title 28
of the United States Code, 28 U.S.C. Section 1930(a)(6).
c. ORDINARY COURSE LIABILITIES
Administrative Claims that are based on liabilities incurred in (i)
a Debtor's purchase, lease or use of goods and services in the ordinary course
of its business or (ii) a Debtor's sale or provision of goods and services to
its customers, including Administrative Claims for amounts due on account of
services provided to a Debtor by employees, shall be paid by New
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Clothestime pursuant to the terms and conditions of the particular transaction
giving rise to such Administrative Claims.
d. CLAIMS UNDER OR EVIDENCED BY THE DIP FINANCING
AGREEMENT
On the Effective Date, Claims under or evidenced by the DIP
Financing Agreement shall be satisfied pursuant to the terms of the DIP
Financing Agreement and the DIP Financing Order.
e. BAR DATES FOR ADMINISTRATIVE CLAIMS
i. GENERAL BAR DATE PROVISIONS
Except as provided in Section III.A.1.e.ii, requests for payment of
Administrative Claims, including Administrative Claims of governmental units for
any taxes, or for interest or penalties related to such taxes, must be Filed and
served on the Debtors or New Clothestime no later than 30 days after the
Effective Date. Holders of Administrative Claims that are required to File and
serve a request for payment of such Claims and that do not File and serve a
request by the applicable bar date shall be forever barred from asserting such
Claims against the Debtors, New Clothestime or their respective property.
Objections to such requests must be Filed and served on the Debtors or New
Clothestime and the requesting party no later than 60 days after the date on
which the request for payment was Filed.
ii. BAR DATES FOR CERTAIN ADMINISTRATIVE CLAIMS
i. PROFESSIONALS
Professionals or other entities requesting compensation or
reimbursement of expenses pursuant to sections 327, 328, 330, 331, 503(b) and
1103 of the Bankruptcy Code for services rendered before the Effective Date
(including compensation requested pursuant to section 503(b)(4) of the
Bankruptcy Code by any Professional or other entity for making a substantial
contribution in any Reorganization Case) shall File and serve on New Clothestime
an application for final allowance of compensation and reimbursement of expenses
no later than 60 days after the Effective Date.
ii. ORDINARY COURSE LIABILITIES
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Holders of Administrative Claims that are based on liabilities
incurred in (A) a Debtor's purchase, lease or use of goods and services in the
ordinary course of its business or (B) a Debtor's sale or provision of goods and
services to its customers, including Administrative Claims for amounts due on
account of services provided to a Debtor by employees, shall not be required to
File or serve any request for payment of such Claims.
2. PAYMENT OF PRIORITY TAX CLAIMS
a. FEDERAL PRIORITY TAX CLAIMS
Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code, except as
otherwise agreed by the parties, the IRS shall receive, in full satisfaction of
all Federal Priority Tax Claims, deferred cash payments over a period of six
years from the date of assessment of such Claims. Payments shall be made in
equal quarterly installments of principal, plus simple interest accruing from
the Effective Date at the rate established under 26 U.S.C. Section 6621 on the
unpaid portion of such Allowed Federal Priority Tax Claims. The first payment
shall be payable on the latest of (i) the Effective Date, (ii) 30 days after the
date on which an order allowing such Claims becomes a Final Order and (iii) such
other time or times as may be agreed upon by the IRS and the Debtors or New
Clothestime; provided, however, that, so long as no Event of Default as defined
in the Trust Note or the Bank Notes has occurred and is continuing, New
Clothestime shall have the right to pay any Federal Priority Tax Claim, or any
remaining balance of such Claim, in full, at any time after 30 days after the
second anniversary of the Effective Date, without premium or penalty.
b. OTHER PRIORITY TAX CLAIMS
Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code, except as
otherwise agreed by the parties, each holder of an Other Priority Tax Claim
shall receive, on account of such Claim, deferred cash payments over a period of
six years from the date of assessment of such Claim. Payments shall be made in
equal annual installments of principal, plus simple interest accruing from the
Effective Date at the Prime Rate on the unpaid portion of each Other Priority
Tax Claim. The first payment shall be payable on the latest of (i) the Effective
Date, (ii) 30 days
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after the date on which an order allowing such Claim becomes
Fa Final Order and (iii) such other time or times as may be agreed upon by the
holder of such Claim and the Debtors or New Clothestime; provided, however,
that, so long as no Event of Default as defined in the Trust Note or the Bank
Notes has occurred and is continuing, New Clothestime shall have the right to
pay any Other Priority Tax Claim, or any remaining balance of such Claim, in
full, at any time after 30 days after the second anniversary of the Effective
Date, without premium or penalty.
B. CLASSIFIED CLAIMS AND INTERESTS
1. UNIMPAIRED CLASSES OF CLAIMS
(CLASSES 1 AND 2)
a. UNSECURED CLAIMS ENTITLED TO PRIORITY UNDER
SECTION 507(a)(3), 507(a)(4) OR 507(a)(6) OF
THE BANKRUPTCY CODE (CLASS 1)
On the Effective Date, each holder of an Allowed Claim in Class 1
shall receive cash equal to the amount of such Claim.
b. SECURED CLAIMS NOT OTHERWISE CLASSIFIED
(CLASS 2)
For purposes of the Plan, each Allowed Claim in Class 2 shall be
deemed classified in a separate Class. On the Effective Date, except as
otherwise agreed by the Debtors or New Clothestime and the holder of the
applicable Allowed Claim, each Allowed Claim in Class 2 shall be Reinstated as
follows: (i) any default, other than a default of a kind specified in section
365(b)(2) of the Bankruptcy Code, shall be cured; (ii) the maturity of the Claim
shall be reinstated as such maturity existed before any default; (iii) the
holder of the Claim shall be compensated for any damages incurred as a result of
any reasonable reliance by such holder on any contractual provision that
entitled the holder to demand or receive accelerated payment of the Claim; and
(iv) no other legal, equitable or contractual rights to which the Claim entitled
the holder shall be altered.
2. IMPAIRED CLASSES OF CLAIMS (CLASSES 3 THROUGH 13)
a. SECURED CLAIMS UNDER OR EVIDENCED BY THE
OFFICE BUILDING LOAN AGREEMENT (CLASS 3)
On or prior to the Effective Date, in satisfaction of all Allowed
Claims in Class 3: Wells shall receive such payments as are provided for
pursuant to the Sale Order.
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b. SECURED CLAIMS UNDER OR EVIDENCED BY THE
WELLS/UNION CREDIT AGREEMENT (CLASS 4)
In satisfaction of all Allowed Claims in Class 4: (i) on or prior
to the Effective Date, the Agent shall receive such payments as are provided for
pursuant to the Sale Order; and (ii) on the Effective Date, New Clothestime
shall distribute to the Agent or as directed by the Agent the following
property: (I) cash in the amount of $500,000; (II) the Bank Notes; (III) the net
proceeds of any dispositions of furniture, fixtures and equipment by the Debtors
on or after the Petition Date but prior to the Effective Date, to the extent
that such net proceeds have not previously been paid to the Agent; and (IV)
25,000 shares of Bank Stock.
c. SECURED CLAIMS UNDER OR EVIDENCED BY THE
METLIFE CAPITALIZED LEASE (CLASS 5)
On the Effective Date, each Allowed Claim in Class 5 shall be
Reinstated pursuant to the terms of the MetLife Stipulation.
d. SECURED CLAIMS UNDER OR EVIDENCED BY THE GE
CAPITALIZED LEASES (CLASS 6)
On the Effective Date, each Allowed Claim in Class 6 shall be
Reinstated pursuant to the terms of the GE Stipulation.
e. SECURED CLAIMS UNDER OR EVIDENCED BY THE USL
CAPITALIZED LEASE (CLASS 7)
On the Effective Date, each Allowed Claim in Class 7 shall be
Reinstated pursuant to the terms of the USL Stipulation.
f. SECURED CLAIMS UNDER OR EVIDENCED BY THE IBM
CAPITALIZED LEASE (CLASS 8)
On the Effective Date, each Allowed Claim in Class 8 shall be
Reinstated pursuant to the terms of the IBM Stipulation.
g. SECURED CLAIMS UNDER OR EVIDENCED BY THE
ADVANCED LIGHTING AGREEMENT (CLASS 9)
In satisfaction of the Allowed Claims in Class 9, the holders of
such Claims shall receive such payments as are provided for pursuant to the
terms of the Advanced Lighting Stipulation.
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h. GENERAL UNSECURED CLAIMS (CLASS 10)
On the Effective Date, each holder of an Allowed Claim in Class 10
shall receive, in full satisfaction of such Claim: (i) $0.07 in cash for each
$1.00 of the allowed amount of such Claim; and (ii) an uncertificated,
nontransferable, Pro Rata beneficial interest in the Creditor Trust. On the
Effective Date, the Allowed Unsecured Claim of the Banks shall equal
$15,228,175.16 minus the proceeds of the sale of the Office Building paid
pursuant to the Sale Order and applied to the Class 4 Claim and minus any
payments made after the date of filing the Plan but prior to the Effective Date
of the net proceeds of any dispositions of furniture, fixtures and equipment.
i. INTERCOMPANY CLAIMS (CLASS 11)
No property shall be distributed to or retained by the holders of
Allowed Claims in Class 11 on account of such Claims.
j. SUBORDINATED UNSECURED CLAIMS RELATED TO
RESCISSION, DAMAGES OR INDEMNITY CLAIMS
ARISING FROM SECURITIES TRANSACTIONS
(CLASS 12)
No property shall be distributed to or retained by the holders of
Allowed Claims in Class 12 on account of such Claims.
k. UNSECURED CLAIMS FOR PENALTIES, FINES AND
PUNITIVE DAMAGES (CLASS 13)
No property shall be distributed to or retained by the holders of
Allowed Claims in Class 13 on account of such Claims.
3. IMPAIRED CLASSES OF INTERESTS (CLASSES 14 AND 15)
a. INTERESTS IN TCI, CTA, CTI, CT INTERNATIONAL
AND MRJ (CLASS 14)
No property shall be distributed to or retained by the holders of
Allowed Interests in Class 14 on account of such Interests, which will be
cancelled upon consummation of the intercompany mergers authorized by Section
IV.C.1.
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b. INTERESTS IN CSI (CLASS 15)
No property shall be distributed to or retained by the holders of
Allowed Interests in Class 15 on account of such Interests, which shall be
cancelled.
C. ACCRUAL OF POSTPETITION INTEREST
Except as otherwise provided in the Plan, no holder of an Allowed
Claim shall be entitled to the accrual of postpetition interest on account of
such Claim for any purpose.
ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. SUBSTANTIVE CONSOLIDATION
As of the Confirmation Date, the Reorganization Cases and the
Debtors' respective Estates shall be substantively consolidated pursuant to this
Section IV.A. The Confirmation Order shall constitute an order of the Bankruptcy
Court approving the Substantive Consolidation of the Debtors' respective Estates
as described in this Section IV.A. Pursuant to the Confirmation Order and this
Section IV.A, from and after the Confirmation Date: (1) all assets and
liabilities of the Debtors shall be treated as though the Debtors had been
merged into a single entity; (2) any Claim against or other obligation or
liability of any Debtor, including any guaranty of any obligation or liability
of the other Debtor, shall be treated as a single obligation of the Debtors; and
(3) each and every proof of Claim Filed in the Reorganization Case of any Debtor
shall be deemed Filed in a substantively consolidated case.
B. CONTINUED EXISTENCE; VESTING OF ASSETS IN NEW
CLOTHESTIME
New Clothestime shall exist after the Effective Date as a separate
entity, with all of the powers of a corporation under applicable law and without
prejudice to any right to alter or terminate its existence (whether by merger or
otherwise). Except as otherwise provided in the Plan, on and after the Effective
Date, all property of the respective Estates of the Debtors, including all
claims and causes of action, and any property acquired by a Debtor or New
Clothestime under or in connection with the Plan, shall vest in New Clothestime
free and clear
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of all Claims, liens, charges, other encumbrances and Interests. On and after
the Effective Date, New Clothestime may operate its businesses and may use,
acquire and dispose of property and compromise or settle any Claims or Interests
without supervision or approval by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules, other than restrictions
expressly imposed by the Plan or the Confirmation Order. Without limiting the
foregoing, New Clothestime may pay the charges that it incurs on or after the
Effective Date for professionals' fees, disbursements, expenses or related
support services without application to the Bankruptcy Court, except for
compensation or reimbursement of expenses for any services rendered after the
Effective Date in connection with any applications for such compensation or
reimbursement pending on the Effective Date or Filed and served after the
Effective Date pursuant to Section III.A.1.e.ii.I.
C. INTERCOMPANY MERGERS AND RELATED TRANSACTIONS
1. On the Effective Date, New Clothestime shall take such actions
as may be necessary or appropriate to effect the following intercompany merger
transactions: (a) the merger of CTI with and into TCI; (b) the mergers of TCI,
CT International and MRJ with and into CTA; and (c) the merger of CTA with and
into CSI.
2. On or after the Effective Date, but only to the extent not
inconsistent with the Plan including the exhibits hereto, New Clothestime shall
be authorized to enter into such additional transactions or take such other
actions as may be necessary or appropriate to simplify or otherwise alter its
overall corporate structure, including such mergers, consolidations,
restructurings, liquidations or dissolutions as New Clothestime may determine
are necessary or appropriate. The actions to effect the mergers and other
restructuring transactions authorized by this Section IV.C may include: (a) the
execution and delivery of appropriate agreements or other documents of merger,
consolidation or reorganization containing terms that are consistent with the
terms of the Plan and that satisfy the requirements of applicable state law, as
well as such other terms to which the applicable entities may agree; (b) the
execution and delivery of appropriate instruments of transfer, assignment,
assumption or delegation of any asset, property, right,
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liability, duty or obligation on terms consistent with the terms of the Plan and
having such other terms to which the applicable entities may agree; (c) the
filing of appropriate certificates of merger or consolidation with the Secretary
of State of the State of Delaware pursuant to the applicable provisions of state
law; and (d) all other actions that such entities determine to be necessary or
appropriate, including making filings or recordings that may be required by
applicable state law in connection with the transactions contemplated as part of
the mergers authorized by this Section IV.C.
D. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS,
EMPLOYMENT-RELATED AGREEMENTS AND COMPENSATION PROGRAMS
1. CERTIFICATES OF INCORPORATION AND BYLAWS
As of the Effective Date, the certificate of incorporation and the
bylaws of New Clothestime shall be in the forms of Exhibits IV.D.1.a.i and
IV.D.1.a.ii, respectively, to the Plan. The initial certificate of incorporation
of New Clothestime shall, among other things: (a) prohibit the issuance of
nonvoting equity securities, to the extent required by section 1123(a) of the
Bankruptcy Code; and (b) authorize the issuance of the New Stock in an amount
not less than the amount necessary to permit the distributions thereof required
or contemplated by the Plan. After the Effective Date, New Clothestime may amend
and restate its certificate of incorporation or bylaws as permitted by the
Delaware General Corporation Law, such certificate of incorporation or such
bylaws; provided, however, that any such amendment or restatement shall not
conflict with any provisions of the Plan.
2. DIRECTORS AND OFFICERS OF NEW CLOTHESTIME
a. IDENTITY OF INITIAL OFFICERS
The initial officers of New Clothestime will be listed in the
Disclosure Statement or a notice to be Filed with the Bankruptcy Court no fewer
than 10 days prior to the initial hearing by the Bankruptcy Court regarding
Confirmation. Such notice or the Disclosure Statement shall contain sufficient
information regarding such officers' identities, affiliations and compensation
to comply with section 1129(a)(5) of the Bankruptcy Code.
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b. IDENTITY OF INITIAL DIRECTORS
Subject to any requirement of Bankruptcy Court approval pursuant to
section 1129(a)(5) of the Bankruptcy Code, New Clothestime's initial board of
directors shall be comprised of the individuals named in the Disclosure
Statement or a notice to be Filed with the Bankruptcy Court no fewer than 10
days prior to the initial hearing by the Bankruptcy Court regarding
Confirmation. Such notice or the Disclosure Statement shall contain sufficient
information regarding such individuals' identities and affiliations to comply
with section 1129(a)(5) of the Bankruptcy Code.
3. NEW EMPLOYMENT, RETIREMENT, INDEMNIFICATION AND
OTHER AGREEMENTS AND INCENTIVE COMPENSATION
PROGRAMS
As of the Effective Date, New Clothestime shall have the authority
to: (a) enter into employment, retirement, indemnification and other agreements
with its active directors, officers and employees; and (b) implement retirement
income plans, welfare benefit plans and other incentive plans in which
directors, officers and other active employees of New Clothestime may be
eligible to participate. No fewer than 10 days prior to the initial hearing by
the Bankruptcy Court regarding Confirmation, the Debtors shall File a notice
containing sufficient information to comply with section 1129(a)(5)(B) of the
Bankruptcy Code as to disclosure of compensation to be paid to insiders who are
the subject of such agreements, plans or programs.
4. NO ADDITIONAL CORPORATE ACTION REQUIRED
The intercompany mergers and related transactions authorized by
Section IV.C; the adoption of a new or amended and restated certificate of
incorporation and bylaws or similar constituent documents for New Clothestime;
the initial selection of directors and officers of New Clothestime; the
distribution of cash and the issuance and distribution of the New Stock and the
New Notes pursuant to the Plan; the grant of mortgages, deeds of trust, liens
and other security interests pursuant to the New Loan Agreement; the adoption,
execution, delivery and implementation of all contracts, leases, instruments,
releases, indentures and other agreements or documents related to any of the
foregoing, including the New Loan Agreement; the adoption, execution, delivery
and implementation of employment, retirement and indemnification
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agreements, incentive compensation programs, retirement income plans, welfare
benefit plans and other employee plans and related agreements; and the other
matters provided for under the Plan involving the corporate structure of any
Debtor or New Clothestime or corporate action to be taken by or required of any
Debtor or New Clothestime shall be deemed to have occurred and be effective as
provided herein, and shall be authorized and approved in all respects, without
any requirement of further action by the stockholders or the directors of any
Debtor or New Clothestime, and with like effect as if such actions had been
taken by unanimous action of the stockholders and directors of the Debtor or New
Clothestime, as applicable.
E. CREDITOR TRUST AND DISTRIBUTIONS OF NEW STOCK
1. CREATION OF CREDITOR TRUST
On the Effective Date, the Debtors shall take any and all such
actions as may be necessary or appropriate to establish the Creditor Trust,
including the execution and delivery of the Creditor Trust Agreement.
2. DESIGNATION OF TRUSTEE AND SUCCESSION THERETO
No fewer than 10 days prior to the initial hearing by the
Bankruptcy Court regarding Confirmation, the Creditors' Committee shall take
such actions and employ such procedures as it deems necessary and appropriate to
designate the Trustee. The designation of any successor to the individual who is
initially designated as the Trustee shall be governed by the Creditor Trust
Agreement.
3. DISTRIBUTIONS OF NEW STOCK TO CREDITOR TRUST AND
OFFICERS AND DIRECTORS OF NEW CLOTHESTIME
a. DISTRIBUTION OF TRUST STOCK TO CREDITOR TRUST
On the Effective Date, 25,000 shares of Trust Stock shall be issued
and distributed to the Creditor Trust.
b. DISTRIBUTION OF MANAGEMENT STOCK TO CERTAIN
OFFICERS AND DIRECTORS OF NEW CLOTHESTIME;
PLEDGES ON ACCOUNT OF TRUST NOTE AND SPECIAL
TRUST NOTE
i. On and after the Effective Date, a total of
50,000 shares of Management Stock shall be issued or reserved for issuance as
restricted shares to certain officers
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and directors of New Clothestime, with such restrictions to lapse by the
Creditor Trust Termination Date, in accordance with the applicable provisions of
the Restricted Stock Agreement.
ii. On the Effective Date, holders of Management
Stock shall enter into (A) Nonrecourse Guaranties of New Clothestime's
obligations under the Trust Note and (B) accompanying Security Agreements.
Pursuant to such Security Agreements, a total of 25,000 shares of Management
Stock shall be pledged as security for such Nonrecourse Guaranties. The number
of shares pledged pursuant to each such Security Agreement shall be in
proportion to the number of shares of Management Stock held by each party
entering into such a Security Agreement. Such shares of Management Stock shall
be released from such pledge in accordance with the applicable provisions of the
Security Agreement documenting such pledge.
iii. On the Effective Date, holders of Management
Stock shall enter into (A) Nonrecourse Guaranties of New Clothestime's
obligations under the Special Trust Note and (B) accompanying Security
Agreements. Pursuant to such Security Agreements, a total of 5,000 shares of
Management Stock shall be pledged as security for such Nonrecourse Guaranties.
The number of shares pledged pursuant to each such Security Agreement shall be
in proportion to the number of shares of Management Stock held by each party
entering into such a Security Agreement. Such shares of Management Stock shall
be released from such pledge in accordance with the applicable provisions of the
Security Agreement documenting such pledge.
4. DISTRIBUTION OF TRUST NOTE AND SPECIAL TRUST NOTE
TO CREDITOR TRUST
On the Effective Date, the Trust Note and the Special Trust Note
shall be issued and distributed to the Creditor Trust.
5. CONTINGENT PAYMENTS BY NEW CLOTHESTIME TO CREDITOR
TRUST
a. CONTINGENT PAYMENTS ON ACCOUNT OF EXCESS CASH
FLOW
i. New Clothestime shall pay to the Creditor
Trust an amount (if any) equal to the Initial Excess Cash Flow Payment no more
than 10 Business Days after July 1, 1998.
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ii. On the second anniversary of the Effective Date,
New Clothestime shall pay to the Creditor Trust the amount (if any) determined
by taking: (I) the lesser of (A) the Excess Cash Flow Obligation and (B) 3.0% of
the aggregate amount of all Allowed Class 10 Claims as of 30 days prior to such
second anniversary of the Effective Date; and deducting (II) the Initial Excess
Cash Flow Payment.
b. CONTINGENT PAYMENT RELATING TO RESOLUTION OF
IRS AUDIT AND POSTPETITION LAWSUITS
If the aggregate amount of Claims that are actually paid or become
due and owing by New Clothestime to (i) federal, state and local taxing
authorities as a result of the resolution of the IRS Audit, together with any
interest, penalties or other amounts payable on account of such Claims, and (ii)
the plaintiffs in Postpetition Lawsuits, either pursuant to settlements of or
judgments entered in such lawsuits, is less than $2,500,000, New Clothestime
shall pay to the Creditor Trust an amount equal to 50% of the amount by which
such aggregate amount is less than $2,500,000. Such payment shall be made to the
Creditor Trust no more than 10 Business Days after the later of: (i) the date on
which (I) New Clothestime and the IRS have reached final agreement regarding the
IRS Audit and (II) such agreement has received all necessary approvals from the
IRS; and (ii) the date on which each of the Postpetition Lawsuits has been
resolved with finality, either pursuant to an executed settlement agreement or a
final, nonappealable judgment.
6. SALE OF PUT STOCK PURSUANT TO PUT OPTION
a. MANAGEMENT STOCK PLEDGED AS SECURITY FOR
NONRECOURSE GUARANTIES
Subject to the provisions of Section IV.E.7.c, any and all shares
of Management Stock that are pledged as security for a Nonrecourse Guaranty and
are subsequently foreclosed upon by the Creditor Trust as a result of an Event
of Default as defined in the Trust Note or the Special Trust Note shall, from
the date of such foreclosure, be deemed and treated as Put Stock for all
purposes under the Plan.
b. PUT OPTION
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The Put Option shall be exercisable by any holder of Put Stock with
respect to all or a portion of the Put Stock held by such entity on each of the
dates that are 70 days after the second, third and fourth anniversaries of the
Effective Date; provided, however, that the Put Option shall not be exercised
with respect to any fewer than 2,500 shares of the Put Stock unless, at the time
of such exercise, the entity exercising the Put Option holds fewer than 2,500
shares of the Put Stock, in which case such holder may exercise the Put Option
only with respect to all of the Put Stock owned by such holder. No fewer than 60
days prior to each Put Exercise Date, any holder of Put Stock intending to
exercise the Put Option shall provide New Clothestime with a written notice
specifying the number of shares of Put Stock, if any, with respect to which such
holder of Put Stock intends to exercise the Put Option on such date. If such
holder of Put Stock provides New Clothestime with such timely notice of
intention to exercise the Put Option, then, subject to the conditions set forth
in Section IV.E.6.c, New Clothestime shall: (i) retain jointly with such holder
or holders of Put Stock a third party who shall conduct a Valuation of the fair
market value of the Put Stock with respect to which the Put Option is being
exercised, as of the applicable Put Exercise Date, which Valuation shall be
completed and delivered to New Clothestime and such holder or holders of Put
Stock no fewer than 10 days prior to the applicable Put Exercise Date; and (ii)
on the applicable Put Exercise Date, subject to the final sentence of this
Section IV.E.6.b, purchase the Put Stock with respect to which the Put Option is
being exercised by the payment in cash to such holder of Put Stock of an amount
equal to the fair market value thereof, as determined pursuant to such
Valuation. If any such holder of Put Stock, in its sole discretion, determines
that the Valuation of the fair market value of the Put Stock under this Section
IV.E.6.b with respect to which the Put Option is being exercised is
unsatisfactory, then: (I) by written notice delivered to New Clothestime prior
to the Put Exercise Date, such holder of Put Stock shall be permitted to
withdraw (A) its exercise of the Put Option in total or (B) any portion of such
exercise of the Put Option that exceeds 2,500 shares of Put Stock; (II) such
holder's withdrawn exercise of the Put Option, or the withdrawn portion of such
holder's exercise
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of the Put Option, shall be of no force or effect; and (III) such holder of Put
Stock shall continue to hold the Put Stock with respect to which the exercise of
the Put Option was withdrawn.
c. CONDITIONS TO EXERCISE OF PUT OPTION
Notwithstanding the provisions of Section IV.E.6.b, New Clothestime
shall not be obligated to honor any exercise of the Put Option if, based on the
results of the applicable Valuation: (i) New Clothestime otherwise would be
prohibited from redeeming or repurchasing the Put Stock with respect to which
the Put Option is being exercised under applicable provisions of the Delaware
General Corporation Law or Delaware common law; or (ii) after payment of the
purchase price for the Put Stock with respect to which the Put Option is being
exercised, New Clothestime will not have remaining cash on hand, together with
funds available for borrowing under existing lines of credit, in an amount
sufficient for New Clothestime to operate its businesses. If New Clothestime
provides the exercising holder or holders of Put Stock with a written notice, to
be delivered no later than the applicable Put Exercise Date, that New
Clothestime is unable to pay such purchase price in cash on the applicable Put
Exercise Date solely as a result of the liquidity condition set forth in clause
(ii) above, then, at the option of the applicable holder of Put Stock: (I) New
Clothestime shall pay such purchase price through the delivery of a promissory
note in the principal amount of the purchase price, payable on such terms and
conditions as may be agreed by the parties; or (II) such exercise of the Put
Option shall be of no force or effect, and such holder of Put Stock shall
continue to hold the Put Stock with respect to which the Put Option was
exercised. Any such promissory note shall be nonrecourse except to the Put Stock
for which the promissory note was issued.
7. SALE OF REMAINING PUT STOCK THROUGH ALTERNATIVE
MEANS
a. PURCHASE OF REMAINING PUT STOCK BY NEW
CLOTHESTIME OR OTHER HOLDERS OF NEW STOCK
Subject to the provisions of Section IV.E.7.c, if either the Agent,
Wells, Union or the Creditor Trust does not exercise the Put Option with respect
to all of the Put Stock that it holds, if any, on the Final Put Exercise Date,
New Clothestime or holders of New Stock other than the Agent, Wells, Union and
the Creditor Trust may purchase such Put Stock following the
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Final Put Exercise Date, according to the following procedures: (i) New
Clothestime shall have the right to purchase for cash, on the 10th day following
the Final Put Exercise Date or, if such day is not a Business Day, the first
Business Day thereafter, a portion or all of such Put Stock at its fair market
value, as determined pursuant to: (I) any Valuation conducted pursuant to
Section IV.E.6.b in respect of an exercise of the Put Option on the Final Put
Exercise Date; or (II) if no such Valuation was conducted, a separate Valuation
that shall be conducted by a third party retained jointly by New Clothestime and
the holder or holders of such Put Stock no fewer than 50 days prior to, and that
shall be completed and delivered to New Clothestime and such holder or holders
of Put Stock no later than, the Final Put Exercise Date; or (ii) if New
Clothestime does not purchase all of such Put Stock under the procedure
described in clause (i) above, the holders of New Stock other than the Agent,
Wells, Union and the Creditor Trust shall have the right to purchase for cash,
on the 20th day following the Final Put Exercise Date or, if such day is not a
Business Day, the first Business Day thereafter, that portion of the Put Stock
held by the Agent, Wells, Union and the Creditor Trust that New Clothestime has
not purchased for fair market value, as determined pursuant to: (I) any
Valuation conducted pursuant to Section IV.E.6.b in respect of an exercise of
the Put Option on the Final Put Exercise Date; or (II) if no such Valuation was
conducted, a Valuation conducted pursuant to subclause (i)(II) above; or (III)
if neither of the Valuations described in subclauses (I) and (II) was conducted,
a separate Valuation that shall be conducted by a third party retained jointly
by such other holders of New Stock and the holder or holders of such Put Stock
no fewer than 40 days prior to, and that shall be completed and delivered to
such other holders of New Stock, New Clothestime and such holder or holders of
Put Stock no more than 10 days after, the Final Put Exercise Date. For purposes
of Sections IV.E.7 and IV.E.8, references to the Agent, Wells and Union include
their respective permitted transferees.
b. SALE OF PUT STOCK TO THIRD PARTIES
As of 100 days after the fourth anniversary of the Effective Date,
if (i) either the Agent, Wells, Union or the Creditor Trust has not exercised
the Put Option with respect to all of
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the Put Stock that it holds and (ii) New Clothestime or the holders of New Stock
other than the Agent, Wells, Union and the Creditor Trust have not purchased
such Put Stock under the procedures set forth in Section IV.E.7.a, New
Clothestime and the holder or holders of Put Stock on such date shall jointly
retain professional financial advisors and shall use reasonable efforts to
effect (I) an arm's-length sale of New Clothestime or substantially all of its
assets to noninsiders of New Clothestime, (II) an arm's-length private placement
or other third party sale of such Put Stock to noninsiders of New Clothestime or
(III) a public offering of such Put Stock; provided, however, that such holder
or holders of Put Stock shall have the right to review the terms of any such
transaction and, at such holder's sole option or such holders' joint option, as
applicable, direct that such transaction shall not be consummated.
c. LIMITATION ON RIGHT TO PURCHASE CERTAIN PUT
STOCK
If, on the Final Put Exercise Date, an Event of Default as defined
by the Trust Note or either of the Bank Notes has occurred and is continuing,
New Clothestime and the holders of New Stock other than the Agent, Wells, Union
and the Creditor Trust shall not have the right to purchase any Trust Stock or
Bank Stock for cash pursuant to Section IV.E.7.a. In addition, New Clothestime
and the holders of New Stock other than the Agent, Wells, Union and the Creditor
Trust shall not have the right to purchase any Management Stock that has been
foreclosed upon, pursuant to the terms of either the Trust Note or the Special
Trust Note, for cash pursuant to Section IV.E.7.a.
8. MATTERS RELATING TO VALUATIONS AND PURCHASE OF PUT
STOCK
a. BANKS' JOINT SELECTION OF THIRD PARTIES TO
CONDUCT VALUATIONS
In any instance in which, pursuant to the terms of Section IV.E.6
or IV.E.7, both Wells and Union are to retain jointly with New Clothestime or
the Creditor Trust, as applicable, a third party to conduct a Valuation, Wells
and Union shall act jointly with respect to such retention.
b. RESPONSIBILITY FOR COSTS OF VALUATIONS
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Except as provided in this Section IV.E.8.b, the costs of any
Valuation conducted pursuant to Section IV.E.6 or IV.E.7 shall be borne by New
Clothestime. Any holder of Put Stock who withdraws an exercise of the Put Option
in full pursuant to the final sentence of Section IV.E.6.b, however, shall, no
later than 10 days after the applicable Put Exercise Date, reimburse New
Clothestime for such holder's portion of the cost of the Valuation conducted
pursuant to the holder's and, if applicable, other Put Stock holders' exercise
of the Put Option. For purposes of the immediately preceding sentence, each such
holder's portion of the cost of a Valuation shall be determined by dividing (i)
the number of shares with respect to which such holder withdrew its exercise of
the Put Option by (ii) the aggregate number of shares with respect to which
holders of Put Stock provided New Clothestime with timely notice of their
intention to exercise the Put Option.
c. CANCELLATION OF REPURCHASED STOCK
Any Put Stock purchased by New Clothestime pursuant to Section
IV.E.6 or IV.E.7 shall be canceled immediately following such purchase.
9. DISTRIBUTIONS FROM CREDITOR TRUST TO BE GOVERNED
BY PLAN; RECOURSE
a. The procedures for distributions from the
Creditor Trust to holders of beneficial interests therein shall be governed by
the applicable provisions of the Plan, including Articles VI and VII.
b. The Trust Stock, the Trust Note and the
Special Trust Note distributed to the Creditor Trust, and any cash paid by New
Clothestime to the Creditor Trust, shall become the property of the Creditor
Trust upon such distribution or payment, as applicable, and shall not thereafter
be property of New Clothestime or the Estates. Other than with respect to the
Initial 7% Distributions, holders of Claims that are allowed in the Unsecured
Creditors Class shall have no recourse to New Clothestime, its property or any
assets previously distributed on account of
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any Allowed Claim, but shall have recourse only to the undistributed property of
the Creditor Trust.
10. EXERCISE OF VOTING RIGHTS OF CREDITOR TRUST
The New Stock held by the Creditor Trust shall be
voted in accordance with the direction of the Board of Directors of New
Clothestime, except with respect to the matters specified in New Clothestime's
certificate of incorporation.
11. BOARD OF DIRECTORS OF NEW CLOTHESTIME
a. Subject to the provisions of Section IV.E.11.b, the
Board of Directors of New Clothestime shall have five members, who shall
include: (i) one member who is elected by the Trustee, on behalf of the Creditor
Trust; and (ii) one member who is elected by the holders of the Bank Stock.
b. Upon notice after any Covenant Default as
defined in the Bank Notes or any Event of Default as defined in the Bank Notes
or the Trust Note, the Board of Directors of New Clothestime shall be expanded
to seven members, who shall include, in addition to the members described in
Section IV.E.11.a: (i) one additional member who is elected by the Trustee, on
behalf of the Creditor Trust; and (ii) at least one additional member, other
than the members elected by the Trustee or the holders of the Bank Stock, who
shall at no time be, or have been, (I) a director, stockholder, officer or
employee of, or any consultant or advisor to, the Debtors, New Clothestime or
any affiliate of the Debtors or New Clothestime or (II) any affiliate of any
entity or relative of any individual specified in clause (I).
12. TERMINATION AND LIQUIDATION OF CREDITOR TRUST
The Creditor Trust shall terminate as soon as practicable following
the Creditor Trust Termination Date, whereupon all property remaining in the
Creditor Trust, including any cash and New Stock, shall be distributed Pro Rata
to the holders of beneficial interests in the Creditor Trust, subject to and in
accordance with the applicable provisions of the Creditor Trust Agreement and
the Plan, including Section VI.F.2.a.
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F. SOURCES OF CASH FOR PLAN DISTRIBUTIONS
Except as otherwise provided in the Plan or the Confirmation Order,
all cash necessary for New Clothestime to make payments pursuant to the Plan
shall be obtained from New Clothestime's cash balances and operations,
postconfirmation working capital or other borrowing facilities or the sale of
assets.
G. EXECUTION OF NEW LOAN AGREEMENT
On the Effective Date, New Clothestime shall take such actions as
may be necessary or appropriate to enter into the New Loan Agreement.
H. PRESERVATION AND WAIVER OF CERTAIN RIGHTS OF ACTION;
RELEASES BY DEBTORS, NEW CLOTHESTIME AND RECIPIENTS OF
DISTRIBUTIONS
1. PRESERVATION AND WAIVER OF CERTAIN RIGHTS OF
ACTION
a. Except as otherwise provided in the Plan, any
contract, instrument, release or other agreement entered into in connection with
the Plan or any order of the Bankruptcy Court entered in the Reorganization
Cases, in accordance with section 1123(b) of the Bankruptcy Code, New
Clothestime shall retain and may enforce any claims, rights and causes of action
that any Debtor or its Estate may hold against any entity, including claims and
causes of action arising under section 542, 543, 544, 548, 549, 550 or 553 of
the Bankruptcy Code. New Clothestime or its successors may pursue such retained
claims, rights or causes of action, as appropriate, in accordance with the best
interests of New Clothestime.
b. Except as otherwise provided in the Plan, on
the Effective Date, New Clothestime shall be deemed to forever release, waive
and discharge any claims, rights and causes of action arising under section 547
of the Bankruptcy Code or analogous provisions of applicable nonbankruptcy law
that any Debtor or its Estate may hold against any entity; provided, however,
that nothing in this Section IV.H.1.b shall be interpreted to provide that New
Clothestime is releasing, waiving or discharging any claim, right or cause of
action, including any right of setoff, other than the claims, rights and causes
of action specifically released, waived and discharged herein.
2. RELEASES BY RECIPIENTS OF DISTRIBUTIONS
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Except as otherwise provided in the Plan, each entity receiving
property pursuant to the Plan on account of its Administrative Claims or Allowed
Claims shall be deemed to forever release, waive and discharge all known and
unknown claims, debts, rights, causes of action, liabilities, offsets or
defenses of any nature that such entity has, had or may have against the Debtors
and New Clothestime, other than claims that arise under the Plan or after the
Effective Date, to the fullest extent permitted under applicable law. The
Confirmation Order will enjoin the prosecution, whether directly, derivatively
or otherwise, of any claim, debt, right, cause of action, liability, offset or
defense released or to be released pursuant to this Section IV.H.2.
3. RELEASES OF BANKS AND COMMITTEE BY DEBTORS AND NEW
CLOTHESTIME
Notwithstanding Section IV.H.1.a, on the Effective Date, each of
the Debtors, the Estates and New Clothestime shall be deemed to forever release,
waive and discharge all known and unknown claims, debts, rights, causes of
action, liabilities, offsets or defenses of any nature that it has, had or may
have against the Agent, Wells or Union or any of their respective present and
former directors, officers, affiliates, employees, agents, attorneys,
accountants and other representatives, other than claims that arise after the
Effective Date, to the fullest extent permitted under applicable law. Except as
otherwise provided in the Plan, on the Effective Date, each of the Debtors, the
Estates and New Clothestime shall be deemed to forever release, waive and
discharge all known and unknown claims, debts, rights, causes of action,
liabilities, offsets or defenses of any nature that it has, had or may have
against the Creditors' Committee, the attorneys and accountants employed by the
Creditors' Committee pursuant to section 1103 of the Bankruptcy Code and the
members of the Creditors' Committee, other than claims that arise after the
Effective Date and other than claims that do not arise out of such person's
service as an attorney or accountant to, or member of, the Creditors' Committee,
to the fullest extent permitted under applicable law. With respect to the
foregoing releases, each of the Debtors, the Estates and New Clothestime agree
to waive California Civil Code Section 1542 or any other similar statute or
principle of law that may be applicable. California Civil Code Section 1542
reads as follows:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.
By accepting distributions under the Plan, each of the Agent, Wells and Union
and each member of the Creditors' Committee acknowledges and agrees that it
shall not pursue against any directors, officers, employees, agents, affiliates,
attorneys or accountants of each of the Debtors and New Clothestime any claim
that, if brought against the Debtors or New Clothestime, would be the subject
of: (a) the release provided in Section IV.H.2; or (b) the discharge of claims
against and termination of interests in the Debtors under Article IX of the
Plan, applicable provisions of the Confirmation Order or section 1141 of the
Bankruptcy Code. The Confirmation Order will enjoin the prosecution, whether
directly, derivatively or otherwise, of any claim, debt, right, cause of action,
liability, offset or defense released or to be released pursuant to this Section
IV.H.3 or that the entity holding such claim or other debt or liability agrees
not to pursue pursuant to this Section IV.H.3.
I. LIMITATIONS ON AMOUNTS TO BE DISTRIBUTED TO
HOLDERS OF ALLOWED INSURED CLAIMS
Distributions under the Plan to each holder of an Allowed Insured
Claim shall be in accordance with the treatment provided under the Plan for the
Class in which such Allowed Insured Claim is classified; provided, however, that
the maximum amount of any distribution under the Plan on account of an Allowed
Insured Claim shall be limited to an amount equal to: (1) the applicable
deductible under the relevant insurance policy; minus (2) any reimbursement
obligations of the applicable Debtor to the insurance carrier for sums expended
by the insurance carrier on account of such Claim (including defense costs).
Nothing in this Section IV.I shall constitute a waiver of any claim, debt,
right, cause of action, liability, offset or defense that any entity may hold
against any other entity, including the applicable Debtor's insurance carriers.
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J. CANCELLATION AND SURRENDER OF DEBT INSTRUMENTS AND OTHER
DOCUMENTATION
On the Effective Date, the Debt Instruments shall be canceled and
of no further force and effect, without any further action on the part of the
Debtors or New Clothestime. The holders of such canceled instruments shall have
no rights arising from or relating to such instruments, or the cancellation
thereof, except the rights provided pursuant to the Plan; provided, however,
that no distribution under the Plan shall be made to or on behalf of any holder
of an Allowed Claim evidenced by such canceled instruments unless and until such
instruments are received by the applicable Disbursing Agent pursuant to Section
VI.H.
K. RELEASE OF LIENS
Except as otherwise provided in the Plan, in the DIP Financing
Agreement, in the New Loan Agreement or in any contract, instrument or other
agreement or document created in connection with the Plan, on the Effective
Date, all mortgages, deeds of trust, liens or other security interests against
the property of the Estates will be released, and all the right, title and
interest of any holder of such mortgages, deeds of trust, liens or other
security interests shall revert to New Clothestime and its successors and
assigns.
L. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS; EXEMPTION
FROM CERTAIN TRANSFER TAXES
The Chairman of the Board, Chief Executive Officer, President,
Chief Operating Officer, Chief Financial Officer or any Vice President of each
Debtor or New Clothestime shall be authorized to execute, deliver, file or
record such contracts, instruments, releases and other agreements or documents
and take such actions as may be necessary or appropriate to effectuate and
implement the terms and conditions of the Plan. The Secretary or any Assistant
Secretary of each Debtor or New Clothestime shall be authorized to certify or
attest to any of the foregoing actions. Pursuant to section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of New Notes or New Stock;
the creation or transfer of any mortgage, deed of trust or other security
interest; the making or assignment of any lease or sublease; or the making or
delivery of any deed or other instrument of transfer under, in furtherance of or
in connection with the Plan, including any merger agreements; agreements of
consolidation, restructuring, disposition,
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liquidation or dissolution; deeds; bills of sale; or assignments executed in
connection with any intercompany mergers or related transactions consummated
pursuant to Section IV.C, shall not be subject to any stamp tax, real estate
transfer tax or similar tax.
ARTICLE V.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. EXECUTORY CONTRACTS AND UNEXPIRED LEASES TO BE ASSUMED
1. ASSUMPTIONS AND ASSIGNMENTS OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES GENERALLY
Except as otherwise provided in the Plan, in any contract,
instrument, release or other agreement or document entered into in connection
with the Plan or in any order entered by the Bankruptcy Court, on the Effective
Date, pursuant to section 365 of the Bankruptcy Code, the Debtors shall assume
or assume and assign, as indicated, each of the executory contracts and
unexpired leases listed on Exhibit V.A.1 to the Plan; provided, however, that
the Debtors reserve the right, at any time on or prior to the Confirmation Date,
to amend Exhibit V.A.1: (a) to delete any executory contract or unexpired lease
listed therein, thus providing for its rejection pursuant to Section V.C; or (b)
to add any executory contract or unexpired lease, thus providing for its
assumption or assumption and assignment pursuant to this Section V.A.1. The
Debtors shall provide notice of any amendments to Exhibit V.A.1 to the parties
to the executory contracts or unexpired leases affected thereby and the parties
on the then-current limited service list in the Reorganization Cases. Each
contract and lease listed on Exhibit V.A.1 shall be assumed only to the extent
that any such contract or lease constitutes an executory contract or unexpired
lease. Listing a contract or lease on Exhibit V.A.1 shall not constitute an
admission by a Debtor or New Clothestime that such contract or lease (including
any related agreements, as described in Section V.A.2) is an executory contract
or unexpired lease or that a Debtor or New Clothestime has any liability
thereunder.
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2. ASSUMPTIONS OF EXECUTORY CONTRACTS AND UNEXPIRED
LEASES RELATED TO REAL PROPERTY
Each executory contract and unexpired lease listed on Exhibit V.A.1
that relates to the use or occupancy of real property shall include: (a)
modifications, amendments, supplements, restatements or other agreements made
directly or indirectly by any agreement, instrument or other document that in
any manner affects such executory contract or unexpired lease, irrespective of
whether such agreement, instrument or other document is listed on Exhibit V.A.1;
and (b) executory contracts or unexpired leases appurtenant to the premises
listed on Exhibit V.A.1, including all easements, licenses, permits, rights,
privileges, immunities, options, rights of first refusal, powers, uses,
usufructs, reciprocal easement agreements, vault, tunnel or bridge agreements or
franchises, and any other interests in real estate or rights in rem related to
such premises.
3. ASSIGNMENTS RELATED TO INTERCOMPANY MERGERS OR
RELATED TRANSACTIONS
As of the effective time of any intercompany merger or related
transaction consummated pursuant to Section IV.C, any executory contract or
unexpired lease (including any related agreements, as described in Section
V.A.2) to be held by a surviving, resulting or acquiring entity in such
transaction shall be deemed assigned, irrespective of any provision of such
contract or lease prohibiting, conditioning or otherwise restricting such
assignment, to the applicable entity, pursuant to section 365 of the Bankruptcy
Code. Any such antiassignment or other similar provision in any executory
contract or unexpired lease being so assigned shall be deemed of no force or
effect in respect of such assignment.
4. APPROVAL OF ASSUMPTIONS AND ASSIGNMENTS
The Confirmation Order shall constitute an order of the Bankruptcy
Court approving the assumptions and assignments described in this Section V.A,
pursuant to section 365 of the Bankruptcy Code, as of the Effective Date.
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B. CURE PAYMENTS RELATED TO ASSUMPTION OF EXECUTORY
CONTRACTS AND UNEXPIRED LEASES
Any monetary amounts by which each executory contract and unexpired
lease to be assumed or assumed and assigned pursuant to the Plan is in default
shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, at the
option of the Debtor assuming such contract or lease, (1) by payment of the
default amount in cash on the Effective Date or (2) on such other terms as are
agreed to by the parties to such executory contract or unexpired lease. No later
than the Confirmation Date, the Debtors shall File and serve on the parties to
each executory contract and unexpired lease to be assumed or assumed and
assigned pursuant to the Plan a document setting forth such default amounts for
each such executory contract and unexpired lease. If any party disputes any such
default amount or any other matter pertaining to the assumption of the contract
or lease, such party shall, no later than 30 days after the Confirmation Date,
File and serve on the Debtors or New Clothestime, as applicable, one or more
papers setting forth the basis for such dispute. If there is such a dispute with
respect to the assumption of an executory contract or unexpired lease pursuant
to the Plan, the cure payments required by section 365(b)(1) of the Bankruptcy
Code shall be made following the entry of a Final Order resolving the dispute;
provided, however, that, based upon the Bankruptcy Court's resolution of any
such dispute, the applicable Debtor or New Clothestime shall have the right
within 30 days of the entry of such Final Order to determine, subject to
approval by the Bankruptcy Court pursuant to section 365 of the Bankruptcy Code,
that it is in such Debtor's or New Clothestime's best interests to reject the
applicable executory contract or unexpired lease, which rejection shall be
deemed and treated as the nullification ab initio of any prior assumption of
such contract or lease pursuant to the Confirmation Order.
C. EXECUTORY CONTRACTS AND UNEXPIRED LEASES TO BE REJECTED
On the Effective Date, except for an executory contract or
unexpired lease that was previously assumed or rejected by an order of the
Bankruptcy Court pursuant to section 365 of the Bankruptcy Code or that is
assumed pursuant to Section V.A (including any agreements assumed pursuant to
Section V.A.2), each executory contract and unexpired lease entered into by
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a Debtor prior to the Petition Date that has not previously expired or
terminated pursuant to its own terms shall be rejected pursuant to section 365
of the Bankruptcy Code. The Confirmation Order shall constitute an order of the
Bankruptcy Court approving such rejections, pursuant to section 365 of the
Bankruptcy Code, as of the Effective Date.
D. BAR DATE FOR REJECTION DAMAGES CLAIMS
If the rejection of an executory contract or unexpired lease
pursuant to Section V.C gives rise to a Claim by the other party or parties to
such contract or lease, such Claim shall be forever barred and shall not be
enforceable against the Debtors, New Clothestime, their respective successors or
their respective properties unless a proof of Claim is Filed and served on New
Clothestime, in accordance with the procedures specified in the Confirmation
Order and the notice of the entry of the Confirmation Order or another order of
the Bankruptcy Court, no later than 30 days after the later of (1) the Effective
Date and (2) the entry of a Final Order approving such rejection.
E. SPECIAL EXECUTORY CONTRACT AND UNEXPIRED LEASE MATTERS;
OBLIGATIONS TO INDEMNIFY DIRECTORS, OFFICERS AND
EMPLOYEES
1. Except as otherwise provided in any order of the Bankruptcy
Court entered in the Reorganization Cases, the obligations of each Debtor and
New Clothestime to indemnify any person serving as one of its directors,
officers or employees as of or following the Effective Date, by reason of such
person's past or future service in such a capacity, or as a director, officer or
employee of another corporation, partnership or other legal entity, to the
extent provided in the certificate of incorporation, bylaws or other similar
constituent documents or by statutory law or written agreement of or with such
Debtor or New Clothestime, shall be deemed and treated as executory contracts
that are assumed by such Debtor pursuant to the Plan and section 365 of the
Bankruptcy Code as of the Effective Date. Accordingly, such indemnification
obligations shall survive and be unaffected by entry of the Confirmation Order,
irrespective of whether such indemnification is owed for an act or event
occurring before or after the Effective Date.
2. Except as otherwise provided in any order of the Bankruptcy
Court entered in the Reorganization Cases, the obligations of any Debtor to
indemnify any person who, of the
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Effective Date, was no longer serving as one of its directors, officers or
employees, which indemnity obligation arose by reason of such person's prior
service in any such capacity, or as a director, officer or employee of another
corporation, partnership or other legal entity, to the extent provided in the
certificate of incorporation, bylaws or other similar constituent documents or
by statutory law or written agreement of or with such Debtor, shall terminate
and be discharged pursuant to section 502(e) of the Bankruptcy Code or
otherwise, as of the Effective Date.
3. Nothing in this Section V.E shall be exclusive of or limit the
terms of any indemnification agreement entered into pursuant to Section IV.D.3.
F. EXECUTORY CONTRACTS AND UNEXPIRED LEASES ENTERED INTO
AND OTHER OBLIGATIONS INCURRED AFTER THE PETITION DATE
Executory contracts and unexpired leases entered into and other
obligations incurred after the Petition Date by a Debtor shall be performed by
the applicable Debtor or New Clothestime in the ordinary course of its business.
Accordingly, such executory contracts, unexpired leases and other obligations
shall survive and remain unaffected by entry of the Confirmation Order.
ARTICLE VI.
PROVISIONS GOVERNING DISTRIBUTIONS
A. DISTRIBUTIONS FOR CLAIMS AND INTERESTS ALLOWED AS OF THE
EFFECTIVE DATE
1. Except as otherwise provided in this Article VI, or as may be
ordered by the Bankruptcy Court, distributions to be made on the Effective Date
on account of Claims that are allowed as of the Effective Date shall be made on
the Effective Date. Distributions shall be deemed made on the Effective Date if
made on the Effective Date or as promptly thereafter as practicable, but in any
event no later than (a) 90 days after the Effective Date or (b) such later date
when the applicable conditions of Section IV.G (regarding execution of the New
Loan Agreement), V.B (regarding cure payments for executory contracts and
unexpired leases being assumed), VI.C.2 (regarding undeliverable distributions),
VI.F.5.b (regarding arrangements for the satisfaction and payment of tax
obligations relating to distributions of cash and New Stock
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pursuant to the Plan) or VI.H (regarding surrender of canceled instruments) are
satisfied. Distributions on account of Claims that become Allowed Claims after
the Effective Date shall be made pursuant to Sections VI.F and VII.C.
2. From and after the Effective Date, cash to be distributed on the
Effective Date on account of Claims allowed as of the Effective Date shall be
held pending distribution in trust in segregated bank accounts in the name of
New Clothestime, in its capacity as Disbursing Agent, or in the Creditor Trust,
as applicable, for the benefit of the holders of such Claims. The applicable
Disbursing Agent shall invest such cash in a manner consistent with: (a) in the
instance of New Clothestime, New Clothestime's investment and deposit
guidelines; and (b) in the instance of the Trustee, the investment guidelines
set forth in the Creditor Trust Agreement. Distributions of cash on account of
each Claim allowed as of the Effective Date shall include a Pro Rata share of
the Investment Yield from such investment of cash. New Stock and New Notes to be
issued shall be issued as of the Effective Date regardless of the date on which
such securities are actually issued and distributed.
B. DISTRIBUTIONS BY DISBURSING AGENTS
New Clothestime, in its capacity as Disbursing Agent for
distributions on account of Administrative Claims, Priority Claims, Priority Tax
Claims and Secured Claims and the Initial 7% Distributions, and the Trustee, in
its capacity as Disbursing Agent for distributions on account of Unsecured
Claims other than the Initial 7% Distributions, shall make all distributions of
property required under the Plan. Any Disbursing Agent may employ or contract
with other entities to assist in or make the distributions required by the Plan.
Each Disbursing Agent shall serve without bond, and the Trustee shall receive,
without further Bankruptcy Court approval, the compensation specified in the
Creditor Trust Agreement.
C. DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
DISTRIBUTIONS
1. DELIVERY OF DISTRIBUTIONS IN GENERAL
Distributions to holders of Allowed Claims shall be made: (a) at
the addresses set forth in the proofs of Claim Filed by such holders; (b) at the
addresses set forth in any written
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notices of address change delivered to the Disbursing Agents after the date on
which any related proof of Claim was Filed; or (c) at the addresses reflected in
the Schedules relating to the applicable Claim if no proof of Claim has been
Filed and the Disbursing Agents have not received a written notice of a change
of address.
2. UNDELIVERABLE DISTRIBUTIONS
a. HOLDING AND INVESTMENT OF UNDELIVERABLE
DISTRIBUTIONS
If the distribution to any holder of an Allowed Claim is returned
to a Disbursing Agent as undeliverable, no further distributions shall be made
to such holder unless and until the applicable Disbursing Agent is notified in
writing of such holder's then-current address. The applicable Disbursing Agent
shall provide notice to the Creditor Trust Committee if any distribution to any
holder of an Allowed Unsecured Claim is returned to a Disbursing Agent as
undeliverable. Undeliverable distributions shall remain in the possession of the
applicable Disbursing Agent pursuant to this Section VI.C.2.a until such time as
a distribution becomes deliverable. Undeliverable cash (including dividends and
distributions on undeliverable New Stock) shall be held in trust in segregated
bank accounts in the name of New Clothestime, in its capacity as Disbursing
Agent, or in the Creditor Trust, as applicable, for the benefit of the potential
claimants of such funds, and shall be accounted for separately. Any Disbursing
Agent holding undeliverable cash shall invest such cash in a manner consistent
with: (i) in the instance of New Clothestime, New Clothestime's investment and
deposit guidelines; and (ii) in the instance of the Trustee, the investment
guidelines set forth in the Creditor Trust Agreement. Undeliverable New Stock
shall be held in the Creditor Trust for the benefit of the potential claimants
of such New Stock by the Trustee in a number of shares sufficient to make future
distributions on account of the unclaimed amounts of such New Stock and shall be
accounted for separately.
b. AFTER DISTRIBUTIONS BECOME DELIVERABLE
On or before each Additional Distribution Date, the applicable
Disbursing Agents shall make all distributions that become deliverable during
the period (i) beginning on the Effective Date or 30 days prior to the
immediately preceding Additional Distribution Date, as
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applicable, and (ii) ending on the 30th day preceding such Additional
Distribution Date. Each such distribution shall include: (i) matured and payable
interest, if any, at the rate provided for the Class on account of which the
distribution is made; (ii) any dividends or other distributions that have
theretofore been paid to the Disbursing Agent in respect of any New Stock
included in the distribution; and (iii) a Pro Rata share of the Investment Yield
from the investment of any undeliverable cash, from the date that such
distribution would have first been due had it then been deliverable to the date
that such distribution becomes deliverable.
c. FAILURE TO CLAIM UNDELIVERABLE DISTRIBUTIONS
Any holder of an Allowed Claim that does not assert a claim
pursuant to the Plan for an undeliverable distribution to be made by a
Disbursing Agent within two years after the Effective Date shall have its claim
for such undeliverable distribution discharged and shall be forever barred from
asserting any such claim for an undeliverable distribution against New
Clothestime or its property. In such cases: (i) any cash held for distribution
on account of such claims for undeliverable distributions in respect of
Administrative Claims, Priority Claims, Priority Tax Claims and Secured Claims
and undeliverable Initial 7% Distributions shall be property of New Clothestime,
free of any restrictions thereon; (ii) any cash held for distribution on account
of such claims for undeliverable distributions in respect of Unsecured Claims
(including dividends and distributions on New Stock) other than undeliverable
Initial 7% Distributions shall be property of the Creditor Trust, to be
distributed Pro Rata in connection with the termination and liquidation of the
Creditor Trust; and (iii) any New Stock held on account of such claims for
undeliverable distributions in respect of Unsecured Claims shall be property of
the Creditor Trust, to be distributed Pro Rata in connection with the
termination and liquidation of the Creditor Trust. Nothing contained in the Plan
shall require the Debtors, New Clothestime or any Disbursing Agent to attempt to
locate any holder of an Allowed Claim.
D. DISTRIBUTION RECORD DATE
Except as otherwise provided in an order of the Bankruptcy Court
that is not subject to any stay, the transferees of Claims in the Unsecured
Creditors Class that are transferred
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pursuant to Bankruptcy Rule 3001 on or prior to the Distribution Record Date
will be treated as the holders of such Claims for all purposes, notwithstanding
that any period provided by Bankruptcy Rule 3001 for objecting to such transfer
has not expired by the Distribution Record Date. On the Effective Date, or as
soon thereafter as practicable, New Clothestime shall deliver to the Trustee a
list, as of the Distribution Record Date, of the names and addresses of all
holders of Allowed Claims and Disputed Claims, together with the amount of such
Claims, in the Unsecured Creditors Class.
E. MEANS OF CASH PAYMENTS
Cash payments made pursuant to the Plan shall be in U.S. dollars by
checks drawn on a domestic bank selected by New Clothestime or the Trustee, as
applicable; or by wire transfer from a domestic bank, at the option of New
Clothestime; provided, however, that cash payments to foreign creditors may be
made, at the option of New Clothestime or the Trustee, as applicable, in such
funds and by such means as are necessary or customary in a particular foreign
jurisdiction.
F. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED
1. TIMING AND AMOUNTS OF DISTRIBUTIONS TO HOLDERS OF
ALLOWED CLAIMS IN CLASSES 1, 2, 4 AND 9 AND
INITIAL 7% DISTRIBUTIONS
a. On the Effective Date: (i) to the extent that
the Plan provides for distributions on account of Allowed Claims in the
applicable Class, each holder of an Allowed Claim in Classes 1, 2, 4 and 9 shall
receive the amount of the distributions that the Plan provides for Allowed
Claims in the applicable Class; and (ii) each holder of an Allowed Claim in the
Unsecured Creditors Class shall receive an Initial 7% Distribution. On each
Additional Distribution Date, such distributions shall also be made, pursuant to
Section VII.C.1, to holders of Disputed Claims in any such Class whose Claims
were allowed during the period (I) beginning on the Effective Date or 30 days
prior to the immediately preceding Additional Distribution Date, as applicable,
and (II) ending on the 30th day preceding such Additional Distribution Date.
Such additional distributions shall also be in the amount that the Plan provides
for Allowed Claims in the applicable Class.
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b. On the Effective Date, New Clothestime shall
deposit $1,734,028 in to an interest-bearing, restricted account. Until the
amounts in such account are exhausted, New Clothestime shall make all payments
of the Initial 7% Distribution, other than the payment of the Initial 7%
Distribution to be paid to the Banks, from such account. Funds in such account
shall not be used for any other purpose except that interest on funds in the
account shall be paid to New Clothestime. On the second anniversary of the
Effective Date, the funds in the restricted account shall be released to New
Clothestime. New Clothestime shall furnish to the Creditor Trust Committee
quarterly reports on payments of the Initial 7% Distribution.
2. TIMING AND AMOUNTS OF DISTRIBUTIONS ON ACCOUNT OF
PAYMENTS BY NEW CLOTHESTIME TO CREDITOR TRUST
a. ADDITIONAL DISTRIBUTIONS TO HOLDERS OF ALLOWED
CLAIMS
Subject to the applicable provisions of the Plan and necessary
reserve requirements, any cash payments by New Clothestime to the Creditor Trust
shall be distributed to the holders of beneficial interests therein on the next
succeeding Additional Distribution Date; provided, however, that neither the
Agent, Wells nor Union shall receive any distribution on account of proceeds
from the Special Trust Note, any of the 5,000 shares of Management Stock
foreclosed upon under the terms of any Security Agreement related to the Special
Trust Note or any income generated from such proceeds or such Management Stock;
and provided further that the amounts of all distributions to be made, and the
numbers of shares of any of the 5,000 shares of Management Stock foreclosed upon
under the terms of any Security Agreement related to the Special Trust Note to
be distributed, to other holders of beneficial interests in the Creditor Trust
on account of such proceeds, such Management Stock or income from such proceeds
shall be determined as though neither the Agent, Wells nor Union had any Claim
in the Unsecured Creditors Class. Notwithstanding the immediately preceding
sentence, the Agent, Wells and Union shall be entitled to receive distributions
on account of any payments made by New Clothestime to the Creditor Trust
pursuant to Section IV.E.5. The amount of distributions to be made from the
Creditor Trust, on account of payments made by New Clothestime to the Creditor
Trust pursuant to the Plan, to holders of Allowed Claims in the Unsecured
Creditors Class shall
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be calculated as if each Disputed Claim in the Unsecured Creditors Class were an
Allowed Claim in its Face Amount. On each Additional Distribution Date,
distributions shall also be made pursuant to Section VII.C.1 from the Creditor
Trust to holders of Disputed Claims in the Unsecured Creditors Class whose
Claims were allowed during the period (i) beginning on the Effective Date or 30
days prior to the immediately preceding Additional Distribution Date, as
applicable, and (ii) ending on the 30th day preceding such Additional
Distribution Date. Such additional distributions shall also be calculated
pursuant to the provisions set forth in this Section VI.F.2.a.
b. ADDITIONAL DISTRIBUTIONS ON ACCOUNT OF
PREVIOUSLY ALLOWED CLAIMS
On each Additional Distribution Date, each holder of a previously
allowed Claim in the Unsecured Creditors Class shall receive an additional
distribution from the Disputed Claims Reserve established on account of such
Claim in an amount equal to: (i) the amount of consideration that such holder
would be entitled to receive pursuant to Section VI.F.2.a as if such Claim had
become an Allowed Claim on the applicable Additional Distribution Date; minus
(ii) the aggregate amount of consideration previously distributed on account of
such Claim. Each such additional distribution shall also include, on the basis
of the amount then being distributed, a Pro Rata share of the Investment Yield
from the investment of any cash in the Disputed Claims Reserve, from the date
such amounts would have been due had the holder of such Claim initially been
paid 100% of the allowed amount to the date that such distribution is made.
c. PROVISION OF UPDATED CLAIMS INFORMATION BY NEW
CLOTHESTIME TO CREDITOR TRUST
No fewer than 15 days before each Additional Distribution Date, New
Clothestime shall deliver to the Trustee a list, as of 30 days preceding the
Additional Distribution Date, of the names and addresses of all holders of
Allowed Claims and Disputed Claims, together with the amounts of such Claims, in
the Unsecured Creditors Class. Such list shall reflect revisions from, as
applicable, the list of Claims delivered to the Trustee pursuant to Section VI.D
or the list of
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Claims delivered to the Trustee prior to the immediately preceding Additional
Distribution Date pursuant to this Section VI.F.2.c.
3. DISTRIBUTIONS OF SHARES OF NEW STOCK
Notwithstanding any other provision of the Plan, if any New Stock
remains in the Creditor Trust at the time of its termination and liquidation,
only whole numbers of shares of New Stock shall be issued to holders of
beneficial interests in the Creditor Trust upon such termination and
liquidation. When any distribution on account of such a beneficial interest
would otherwise result in the issuance of a number of shares of stock that is
not a whole number, the actual distribution of shares of such stock shall be
rounded to the next higher or lower whole number as follows: (a) fractions of
1/2 or greater shall be rounded to the next higher whole number and (b)
fractions of less than 1/2 shall be rounded to the next lower whole number. The
Trustee shall be authorized, but only to the extent necessary, to adjust upward
or downward proportionately the total number of shares of New Stock to be
distributed to the 10 largest holders of such beneficial interests to account
for the rounding provided for in this Section VI.F.3. No consideration shall be
provided in lieu of fractional shares that are rounded down.
4. DE MINIMIS DISTRIBUTIONS
The Disbursing Agents shall not be required to distribute cash to
the holder of an Allowed Claim in an impaired Class if the amount of cash to be
distributed on account of such Claim is less than $25. Any holder of an Allowed
Unsecured Claim on account of which the amount of the Initial 7% Distribution
is less than $10, and any holder of an Allowed Claim other than an Allowed
Unsecured Claim on account of which the amount of cash to be distributed is less
than $25, shall have its claim for such distribution discharged and shall be
forever barred from asserting any such claim against New Clothestime or its
property. Any distribution to the holder of an Allowed Administrative Claim,
Allowed Priority Claim, Allowed Priority Tax Claim or Allowed Secured Claim or
any Initial 7% Distribution
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not made as a result of the operation of this Section VI.F.4 shall be the
property of New Clothestime, free of any restrictions thereon. Any distribution
to the holder of an Allowed Unsecured Claim other than an Initial 7%
Distribution not made as a result of the operation of this Section VI.F.4 shall
be distributed Pro Rata in connection with the termination and liquidation of
the Creditor Trust, subject to and in accordance with the applicable provisions
of the Creditor Trust Agreement and the Plan.
5. COMPLIANCE WITH TAX REQUIREMENTS
a. In connection with the Plan, to the extent
applicable, each Disbursing Agent shall comply with all tax withholding and
reporting requirements imposed on it by any governmental unit, and all
distributions pursuant to the Plan shall be subject to such withholding and
reporting requirements. Each Disbursing Agent shall be authorized to take any
and all actions that may be necessary or appropriate to comply with such
withholding and reporting requirements.
b. Notwithstanding any other provision of the
Plan: (i) each entity receiving a distribution of property
pursuant to the Plan shall have sole and exclusive responsibility for the
satisfaction and payment of any tax obligations imposed by any governmental
unit, including income, withholding and other tax obligations, on account of
such distribution; and (ii) no distribution pursuant to the Plan shall be made
to or on behalf of such entity unless and until such entity has made
arrangements satisfactory to New Clothestime for the satisfaction and payment of
such tax obligations. Any property to be distributed pursuant to the Plan shall,
pending the implementation of such arrangements, be treated as an undeliverable
distribution pursuant to Section VI.C.2.
G. SETOFFS
New Clothestime may, pursuant to section 553 of the Bankruptcy Code
or applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of such Claim (before
any distribution is made on account of such Claim), the claims, rights and
causes of action of any nature that the applicable Debtor or New Clothestime may
hold against the holder of such Allowed Claim; provided, however, that neither
the failure to effect such a setoff nor the allowance of any Claim hereunder
shall constitute a waiver or release by such Debtor or New Clothestime of any
such claims, rights and causes of action that such Debtor or New Clothestime may
possess against such holder.
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H. SURRENDER OF CANCELED INSTRUMENTS
As a condition precedent to receiving any distribution pursuant to
the Plan on account of an Allowed Claim evidenced by the instruments canceled
pursuant to Section IV.J, the holder of such Claim shall tender the applicable
instruments evidencing such Claim to the applicable Disbursing Agent. Any cash
and New Stock to be distributed pursuant to the Plan on account of any such
Claim shall, pending such surrender, be treated as an undeliverable distribution
pursuant to Section VI.C.2.
1. DEBT INSTRUMENTS
Except as provided in Section VI.H.2 for lost, stolen, mutilated or
destroyed Debt Instruments, each holder of an Allowed Claim evidenced by a Debt
Instrument shall tender such Debt Instrument to the applicable Disbursing Agent
in accordance with written instructions to be provided to such holders by the
Disbursing Agents as promptly as practicable following the Effective Date. Such
instructions shall specify that delivery of such Debt Instruments will be
effected, and risk of loss and title thereto will pass, only upon the proper
delivery of such Debt Instruments with a letter of transmittal in accordance
with such instructions. All surrendered Debt Instruments shall be marked as
canceled and delivered to New Clothestime.
2. LOST, STOLEN, MUTILATED OR DESTROYED DEBT INSTRUMENTS
In addition to any requirements under the certificate of
incorporation and bylaws or other similar constituent documents of the
applicable Debtor, any holder of a Claim evidenced by a Debt Instrument that has
been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such
Debt Instrument, deliver to the applicable Disbursing Agent: (a) evidence
satisfactory to the Disbursing Agent of the loss, theft, mutilation or
destruction; and (b) such security or indemnity as may be required by the
Disbursing Agent to hold the Disbursing Agent harmless from any damages,
liabilities or costs incurred in treating such individual as a holder of a Debt
Instrument. Upon compliance with this Section VI.H.2 by a holder of a Claim
evidenced by a Debt Instrument, such holder shall, for all purposes under the
Plan, be deemed to have surrendered a Debt Instrument.
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3. FAILURE TO SURRENDER CANCELED DEBT INSTRUMENTS
Any holder of a Debt Instrument that fails to surrender or be
deemed to have surrendered such Debt Instrument within two years after the
Effective Date shall have its claim for a distribution pursuant to the Plan on
account of such Debt Instrument discharged and shall be forever barred from
asserting any such claim against New Clothestime or its property. In such cases,
any cash, New Stock or New Notes held for distribution on account of such claim
shall be disposed of pursuant to the provisions of Section VI.C.2.
ARTICLE VII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
A. PROSECUTION OF OBJECTIONS TO CLAIMS
1. OBJECTIONS TO CLAIMS
All objections to Claims must be Filed and served on the holders of
such Claims by the Claims Objection Bar Date. If an objection has not been Filed
to a proof of Claim or a scheduled Claim by the Claims Objection Bar Date, the
Claim to which the proof of Claim or scheduled Claim relates shall be treated as
an Allowed Claim if such Claim has not been allowed earlier.
2. AUTHORITY TO PROSECUTE OBJECTIONS
After the Effective Date, only the Debtors, New Clothestime and the
Creditor Trust Committee shall have the authority to File, withdraw or litigate
to judgment objections to Claims. From and after the Effective Date, the Debtors
and New Clothestime may settle or compromise any Disputed Claim without approval
of the Bankruptcy Court. Notice of any such settlement or compromise shall be
provided to the Creditor Trust Committee. If the Creditor Trust Committee does
not dispute a prospective settlement or compromise by notice to New Clothestime
within 10 days of the date of the notice of such settlement or compromise, New
Clothestime may proceed with such settlement or compromise. If the Creditor
Trust Committee disputes the settlement or compromise in accordance with the
preceding sentence, then the settlement or compromise must
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be approved by the Creditor Trust Committee or the dispute must be submitted to
the Bankruptcy Court.
B. TREATMENT OF DISPUTED CLAIMS
1. NO PAYMENTS ON ACCOUNT OF DISPUTED CLAIMS AND
ESTABLISHMENT OF DISPUTED CLAIMS RESERVE
Notwithstanding any other provisions of the Plan, no payments or
distributions shall be made on account of a Disputed Claim until such Claim
becomes an Allowed Claim. For purposes of receiving distributions pursuant to
the Plan, each creditor that has Filed one or more proofs of Claim against a
particular Debtor shall be deemed to hold one Claim against such Debtor, which
Claim shall be deemed a Disputed Claim unless and until each account (as defined
in Section 9106 of the California Commercial Code) that is a portion of the
creditor's Claim becomes an Allowed Claim. In lieu of distributions from the
Creditor Trust to holders of Disputed Claims that would be in the Unsecured
Creditors Class if allowed, the Trustee shall establish the Disputed Claims
Reserve on the Effective Date. The Disputed Claims Reserve shall be funded with
cash held by the Creditor Trust, pursuant to the computation set forth in
Section VII.B.2.
2. FUNDING OF DISPUTED CLAIMS RESERVE
After New Clothestime makes any payment to the Creditor Trust and
before the Trustee makes any distributions on account of such payment, subject
to the provisions of Section VI.F.2, the Trustee shall place in the Disputed
Claims Reserve an amount of cash to be determined by multiplying the amount of
such payment by a fraction, the numerator of which shall be the aggregate Face
Amount of Disputed Claims in the Unsecured Creditors Class as of the date on
which such payment was made, and the denominator of which shall be the aggregate
Face Amount of Disputed Claims in the Unsecured Creditors Class as of the date
on which such payment was made plus the aggregate Face Amount of Allowed Claims
in the Unsecured Creditors Class as of the date on which such payment was made.
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3. PROPERTY HELD IN DISPUTED CLAIMS RESERVE
Cash held in the Disputed Claims Reserve shall be held in trust for
the benefit of the potential claimants of such funds and shall be accounted for
separately. The Trustee shall invest the cash so held in compliance with the
applicable provisions of the Creditor Trust Agreement. The Trustee also shall
place in the Disputed Claims Reserve the Investment Yield from such investment
of cash.
C. DISTRIBUTIONS ON ACCOUNT OF DISPUTED CLAIMS ONCE THEY
ARE ALLOWED
1. AFTER ALLOWANCE OF A DISPUTED CLAIM
On each Additional Distribution Date, the Trustee shall make all
distributions that are due and owing on account of any Disputed Claim that has
become an Allowed Claim during the period (a) beginning on the Effective Date or
30 days prior to the immediately preceding Additional Distribution Date, as
applicable, and (b) ending on the 30th day preceding such Additional
Distribution Date. Such distributions shall be made pursuant to the provisions
of the Plan governing the Unsecured Creditors Class, including the incremental
distribution provisions set forth in Section VI.F.2. Holders of Disputed Claims
that are ultimately allowed shall also be entitled to receive, on the basis of
the amount ultimately allowed, a Pro Rata share of the Investment Yield from the
investment of any cash in the Disputed Claims Reserve, from the date such
amounts would have been due had such Claim then been allowed to the date that
such distribution is made from the Disputed Claims Reserve.
2. AFTER RESOLUTION OF ALL DISPUTED CLAIMS
If any property allocated to the Disputed Claims Reserve remains in
the Disputed Claims Reserve after all objections to the Disputed Claims have
been resolved, then, subject to the provisions of Section VI.F.2, such remaining
property shall be distributed Pro Rata to the holders of Allowed Claims in the
Unsecured Creditors Class on the next succeeding Additional Distribution Date,
pursuant to the provisions of the Plan governing the Unsecured Creditors Class.
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ARTICLE VIII.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. CONDITIONS TO CONFIRMATION
The Bankruptcy Court shall not enter the Confirmation Order unless
and until each of the following conditions has been satisfied or duly waived
pursuant to Section VIII.C:
1. Prior to or concurrent with Confirmation, the
Bankruptcy Court shall have entered an order
substantively consolidating the Reorganization
Cases and providing that for purposes of the Plan
and the distributions thereunder: (a) all
Intercompany Claims by and among the Debtors shall
be deemed eliminated; (b) all assets and
liabilities of the Debtors shall be merged or
treated as though they were merged; (c) any
obligations of any Debtor and all guaranties
thereof executed by any other Debtor shall be
deemed to be one obligation; (d) any Claims Filed
or to be Filed in connection with any such
obligation and guaranties shall be deemed one Claim
against the consolidated Debtors; (e) each Claim or
Interest Filed in the Reorganization Case of any
Debtor shall be deemed Filed against the
consolidated Debtors in the consolidated
Reorganization Cases; and (f) all transfers,
disbursements and distributions made by any Debtor
shall be deemed to have been made by the
consolidated Debtors.
2. The aggregate amounts of certain individual
Allowed Claims designated by the Debtors shall have
been estimated or finally determined in amounts
satisfactory to the Debtors pursuant to Bankruptcy
Court orders that are not subject to any stay.
3. The Bankruptcy Court shall have approved the
Disclosure Statement pursuant to sections 1125 and
1126 of the Bankruptcy Code prior to the
Confirmation Date.
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4. The Confirmation Order and accompanying
judgment entry shall be acceptable in form and
substance to the Debtors, the Creditors' Committee
and the Agent.
5. The sale of the Office Building shall have
occurred, or the treatment of the Class 3 and Class
4 Claims shall have been modified in a manner
satisfactory to Wells and the Agent, respectively.
6. The Confirmation Date shall occur no later
than October 31, 1997.
B. CONDITIONS TO EFFECTIVE DATE
The Effective Date shall not occur and the Plan shall not be
consummated unless and until each of the following conditions has been satisfied
or duly waived pursuant to Section VIII.C:
1. The Bankruptcy Court shall have entered an
order (contemplated to be part of the Confirmation
Order) approving and authorizing the Debtors and
New Clothestime to take all actions necessary or
appropriate to enter into, implement and consummate
the contracts, instruments, releases, leases,
guaranties and other agreements or documents
created in connection with the Plan.
2. The Confirmation Order shall have become a
Final Order.
3. The applicable parties shall have executed and
delivered to New Clothestime the New Loan
Agreement.
4. The Debtors shall have received written
confirmation from the Securities and Exchange
Commission that the staff of the Securities and
Exchange Commission will not recommend any
enforcement action if New Clothestime does not
comply with the provisions of the Securities
Exchange Act of 1934, as amended, 15 U.S.C.
Sections 78a-78mm.
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5. The mergers provided for in Section IV.C shall
have occurred and become effective.
6. The Effective Date shall occur no later than
November 29, 1997.
C. WAIVER OF CONDITIONS TO CONFIRMATION AND EFFECTIVE DATE
The conditions to Confirmation and the Effective Date set forth in
Sections VIII.A and VIII.B, respectively, other than the conditions to the
Confirmation Date set forth in Sections VIII.A.4, VIII.A.5 and VIII.A.6 and the
conditions to the Effective Date set forth in Sections VIII.B.5 and VIII.B.6,
may be waived in whole or in part by the Debtors, to the extent required,
without any requirement of further Bankruptcy Court approval. Subject to the
condition to the Effective Date set forth in Section I.A.48, any of the
conditions to the Confirmation Date set forth in Sections VIII.A.4, VIII.A.5 and
VIII.A.6 and the conditions to the Effective Date set forth in Sections VIII.B.5
and VIII.B.6 may be waived jointly by the Debtors, the Creditors' Committee and
the Agent, without any requirement of further Bankruptcy Court approval. The
failure of the Debtors, the Creditors' Committee or the Agent to exercise the
foregoing rights shall not be deemed a waiver of any other rights, and each such
right shall be deemed an ongoing right that may be asserted at any time.
D. EFFECT OF OCCURRENCE OR NONOCCURRENCE OF CONDITIONS TO
EFFECTIVE DATE
If each condition to the Effective Date has not been satisfied or
duly waived pursuant to Section VIII.C, then upon motion by the Debtors made
before the time that each of such conditions has been satisfied or duly waived
and upon notice to such parties in interest as the Bankruptcy Court may direct,
the Confirmation Order may be vacated by the Bankruptcy Court. If the
Confirmation Order is vacated pursuant to this Section VIII.D, the Plan shall be
deemed null and void in all respects, including the discharge of Claims and
termination of Interests pursuant to section 1141 of the Bankruptcy Code and the
assumptions, assumptions and assignments or rejections of executory contracts
and unexpired leases pursuant to Sections V.A and V.C, and nothing contained in
the Plan shall: (1) constitute a waiver or release of any claims
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by or against, or any Interests in, the Debtors; or (2) prejudice in any manner
the rights of the Debtors.
ARTICLE IX.
DISCHARGE OF CLAIMS, TERMINATION OF
INTERESTS, INJUNCTIONS AND SUBORDINATION RIGHTS
A. DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS
1. Except as provided in the Plan or the Confirmation Order,
Confirmation shall: (a) discharge the Debtors from all Claims or other debts
that arose before the Confirmation Date and all debts of the kind specified in
section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a
proof of Claim based on such debt is Filed or deemed Filed pursuant to section
501 of the Bankruptcy Code, (ii) a Claim based on such debt is allowed pursuant
to section 502 of the Bankruptcy Code or (iii) the holder of a Claim based on
such debt has accepted the Plan; and (b) terminate all Interests and other
rights of equity security holders in TCI.
2. As of the Effective Date, except as provided in the Plan or the
Confirmation Order, all entities shall be precluded from asserting against the
Debtors, New Clothestime, their respective successors or their respective
property, any other or further claims, debts, rights, causes of action,
liabilities or equity interests based upon any act, omission, transaction or
other activity of any kind or nature that occurred prior to the Effective Date.
In accordance with the foregoing, except as provided in the Plan or the
Confirmation Order, the Confirmation Order shall be a judicial determination, as
of the Effective Date, of discharge of all such Claims and other debts and
liabilities against the Debtors and termination of all such Interests and other
rights of equity security holders in TCI, pursuant to sections 524 and 1141 of
the Bankruptcy Code, and such discharge shall void any judgment obtained against
the Debtors at any time, to the extent that such judgment relates to a
discharged Claim.
B. INJUNCTIONS
1. Except as provided in the Plan or the Confirmation Order, as of
the Effective Date, all entities that have held, currently hold or may hold a
Claim or other debt or liability that
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is discharged or an Interest or other right of an equity security holder that is
terminated pursuant to the terms of the Plan are permanently enjoined from
taking any of the following actions against the Debtors, New Clothestime, their
respective successors or their respective property on account of any such
discharged Claims, debts or liabilities or terminated Interests or rights: (a)
commencing or continuing, in any manner or in any place, any action or other
proceeding; (b) enforcing, attaching, collecting or recovering in any manner any
judgment, award, decree or order; (c) creating, perfecting or enforcing any lien
or encumbrance; (d) asserting a setoff, right of subrogation or recoupment of
any kind against any debt, liability or obligation due to a Debtor or New
Clothestime; and (e) commencing or continuing any action, in any manner or in
any place, that does not comply with or is inconsistent with the provisions of
the Plan.
2. As of the Effective Date, all entities that have held, currently
hold or may hold a claim or other debt or liability that is released pursuant to
Section IV.H.2 or that the entity holding such claim or other debt or liability
agrees not to pursue pursuant to Section IV.H.3 are permanently enjoined from
taking any of the following actions on account of such released claims, debts or
liabilities: (a) commencing or continuing, in any manner or in any place, any
action or other proceeding; (b) enforcing, attaching, collecting or recovering
in any manner any judgment, award, decree or order; (c) creating, perfecting or
enforcing any lien or encumbrance; (d) asserting a setoff, right of subrogation
or recoupment of any kind against any debt, liability or obligation due to any
released entity; and (e) commencing or continuing any action, in any manner or
in any place, that does not comply with or is inconsistent with the provisions
of the Plan.
3. By accepting distributions pursuant to the Plan, each holder of
an Allowed Claim receiving distributions pursuant to the Plan shall be deemed to
have consented to be bound by the terms and conditions of the Plan and, in the
instance of a holder of an Allowed Unsecured Claim, the Creditor Trust
Agreement, and to have specifically consented to the injunctions set forth in
this Section IX.B.
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C. TERMINATION OF SUBORDINATION RIGHTS AND SETTLEMENT OF
RELATED CLAIMS AND CONTROVERSIES
The classification and manner of satisfying all Claims and
Interests under the Plan take into consideration all contractual, legal and
equitable subordination and turnover rights, whether arising under general
principles of equitable subordination, section 510(c) of the Bankruptcy Code or
otherwise, that a holder of a Claim or Interest may have against other Claim or
Interest holders with respect to any distribution made pursuant to the Plan. On
the Effective Date, all contractual, legal or equitable subordination rights
that a holder of a Claim or Interest may have with respect to any distribution
to be made pursuant to the Plan shall be discharged and terminated, and all
actions related to the enforcement of such subordination rights shall be
permanently enjoined. Accordingly, distributions pursuant to the Plan to holders
of Allowed Claims shall not be subject to payment to a beneficiary of such
terminated subordination rights, or to levy, garnishment, attachment or other
legal process by any beneficiary of such terminated subordination rights.
ARTICLE X.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the
occurrence of the Effective Date, the Bankruptcy Court shall retain such
jurisdiction over the Reorganization Cases after the Effective Date as is
legally permissible, including jurisdiction to:
1. Allow, disallow, determine, liquidate,
classify, estimate or establish the priority or
secured or unsecured status of any Claim or
Interest, including the resolution of any request
for payment of any Administrative Claim and the
resolution of any and all objections to the
allowance or priority of Claims or Interests;
2. Grant or deny any applications for allowance
of compensation or reimbursement of expenses
authorized pursuant to the
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Bankruptcy Code or the Plan, for periods ending
on or before the Effective Date;
3. Resolve all controversies and disputes arising
under or in connection with the Creditor Trust or
the interpretation of the provisions of the
Creditor Trust Agreement;
4. Resolve any matters related to the assumption,
assumption and assignment or rejection of any
executory contract or unexpired lease to which any
Debtor is a party or with respect to which any
Debtor or New Clothestime may be liable, and to
hear, determine and, if necessary, liquidate any
Claims arising therefrom;
5. Ensure that distributions to holders of
Allowed Claims are accomplished pursuant to the
provisions of the Plan;
6. Decide or resolve any motions, adversary
proceedings, contested or litigated matters and any
other matters and grant or deny any applications
involving a Debtor or New Clothestime that may be
pending on the Effective Date;
7. Enter such orders as may be necessary or
appropriate to implement or consummate the
provisions of the Plan and all contracts,
instruments, releases and other agreements or
documents created in connection with the Plan, the
Disclosure Statement or the Confirmation Order;
8. Resolve any cases, controversies, suits or
disputes that may arise in connection with the
consummation, interpretation or enforcement of the
Plan or the Confirmation Order, including the
release and injunction provisions set forth in and
contemplated by the Plan and the Confirmation
Order, or any entity's rights arising under or
obligations incurred in connection with the Plan or
the Confirmation Order;
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9. Subject to Section XI.D, permit the Debtors or
New Clothestime, as applicable, to modify the Plan
before or after the Effective Date pursuant to
section 1127 of the Bankruptcy Code or modify the
Disclosure Statement, the Confirmation Order or any
contract, instrument, release or other agreement or
document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order; or
remedy any defect or omission or reconcile any
inconsistency in any Bankruptcy Court order, the
Plan, the Disclosure Statement, the Confirmation
Order or any contract, instrument, release or other
agreement or document created in connection with
the Plan, the Disclosure Statement or the
Confirmation Order, in such manner as may be
necessary or appropriate to consummate the Plan, to
the extent authorized by the Bankruptcy Code;
10. Issue injunctions, enter and implement other
orders or take such other actions as may be
necessary or appropriate to restrain interference
by any entity with consummation, implementation or
enforcement of the Plan or the Confirmation Order;
11. Enter and implement such orders as are
necessary or appropriate if the Confirmation Order
is for any reason modified, stayed, reversed,
revoked or vacated, or distributions pursuant to
the Plan are enjoined or stayed;
12. Determine any other matters that may arise in
connection with or relating to the Plan, the
Disclosure Statement, the Confirmation Order or any
contract, instrument, release or other agreement or
document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order; and
13. Enter an order concluding the Reorganization
Cases.
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ARTICLE XI.
MISCELLANEOUS PROVISIONS
A. CRAMDOWN
The Debtors may request Confirmation under section 1129(b) of the
Bankruptcy Code if any impaired Class does not accept the Plan pursuant to
section 1126 of the Bankruptcy Code. In that event, the Debtors reserve the
right to modify the Plan to the extent, if any, that Confirmation pursuant to
section 1129(b) of the Bankruptcy Code requires modification of the Plan.
B. DISSOLUTION OF CREDITORS' COMMITTEE AND CREATION OF
CREDITOR TRUST COMMITTEE
1. DISSOLUTION OF CREDITORS' COMMITTEE
On the Effective Date, the Creditors' Committee shall dissolve, and
the members of the Creditors' Committee shall be released and discharged from
all duties and shall have no further rights in their capacities as such members
arising from or related to the Reorganization Cases. The Professionals retained
by the Creditors' Committee and the members thereof shall not be entitled to
compensation or reimbursement of expenses for any services rendered after the
Effective Date, except for services rendered and expenses incurred in connection
with any applications for allowance of compensation and reimbursement of
expenses pending on the Effective Date or Filed and served after the Effective
Date pursuant to Section III.A.1.e.ii.I.
2. CREDITOR TRUST COMMITTEE
a. FUNCTION AND COMPOSITION OF CREDITOR TRUST
COMMITTEE
On the Effective Date, the Creditor Trust Committee will
be established. Its sole functions will be to: (i) advise and
direct the Trustee with respect to those matters specified in the Creditor Trust
Agreement; and (ii) monitor New Clothestime's progress in (I) reconciling and
resolving Disputed Claims in the Unsecured Creditors Class and (II) making
payments to the Creditor Trust pursuant to the applicable provisions of the
Plan. The Creditor Trust Committee will consist of (A) two holders of Claims
each of whom has previously served as a member of the
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Creditors' Committee and (B) one member designated by the Banks. The Creditor
Trust Committee will adopt bylaws that will control its functions.
b. EMPLOYMENT OF PROFESSIONALS BY COMMITTEE AND
REIMBURSEMENT OF COMMITTEE MEMBERS
The Creditor Trust Committee will be authorized to retain and
employ one law firm and one accounting firm. The role of the Creditor Trust
Committee's professionals will be strictly limited to assisting the committee in
its functions as set forth herein. New Clothestime will pay the actual,
necessary, reasonable and documented fees and expenses of the professionals
retained by the Creditor Trust Committee, as well as the actual, necessary,
reasonable and documented expenses incurred by each committee member in the
performance of its duties, in accordance with New Clothestime's normal business
practices for compensating and reimbursing professionals. Other than as
specified in the preceding sentence, the members of the Creditor Trust Committee
will serve without compensation. If there is any unresolved dispute between New
Clothestime and the Creditor Trust Committee, its professionals or a member
thereof as to any fees or expenses, such dispute will be submitted to the
Bankruptcy Court for resolution.
c. DISSOLUTION OF CREDITOR TRUST COMMITTEE
Subject to further order of the Bankruptcy Court, the Creditor
Trust Committee will dissolve upon the termination and liquidation of the
Creditor Trust. The professionals retained by the Creditor Trust Committee and
the members of the committee will not be entitled to compensation or
reimbursement of expenses for any services rendered after the date of
dissolution of the committee.
C. LIMITATION OF LIABILITY
1. None of the Plan Participants, acting in such capacity, shall
either have or incur any liability to any entity for any violation of any
applicable law, rule or regulation governing solicitation of acceptance or
rejection of a plan of reorganization or the offer, issuance, sale or purchase
of securities arising from or relating to any act taken or omitted to be taken
in connection with or related to the Reorganization Cases, including any act
taken or omitted to be taken in connection with or related to the formulation,
preparation, dissemination,
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implementation, confirmation or consummation of the Plan, the Disclosure
Statement, the Confirmation Order or any contract, instrument, release or other
agreement or document created or entered into, or any other act taken or omitted
to be taken in connection with the Plan, the Disclosure Statement or the
Confirmation Order, or any act taken or omitted to be taken in connection with
any estimation, projection, evaluation or investigation undertaken or prepared
in connection with the formulation of the Plan, the Disclosure Statement or the
Confirmation Order; provided, however, that the provisions of this Section
XI.C.1 shall have no effect on the liability of any Plan Participant that would
otherwise result from any such act or omission to the extent that such act or
omission is determined in a Final Order to have been unauthorized or ultra vires
or to have constituted gross negligence or willful misconduct.
2. The Confirmation Order shall enjoin the commencement,
continuation or prosecution of any claim, cause of action or other proceeding
based upon or arising from any liability described in this Section XI.C.
D. MODIFICATION OF THE PLAN
Subject to the restrictions on modifications set forth in section
1127 of the Bankruptcy Code, the Debtors reserve the right to alter, amend or
modify the Plan before its substantial consummation. The documents and
agreements the forms of which are attached as Exhibits to the Plan may only be
amended or modified in accordance with the terms of such documents, and such
modifications or amendments shall not be subject to the provisions of section
1127 of the Bankruptcy Code.
E. REVOCATION OF THE PLAN
The Debtors reserve the right to revoke or withdraw the Plan prior
to the Confirmation Date. If the Debtors revoke or withdraw the Plan, or if
Confirmation does not occur, the Plan shall be null and void in all respects,
and nothing contained in the Plan shall: (1) constitute a waiver or release of
any claims by or against, or any Interests in, the Debtors; or (2) prejudice in
any manner the rights of the Debtors.
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<PAGE> 83
F. SEVERABILITY OF PLAN PROVISIONS
If, prior to Confirmation, any term or provision of the Plan is
held by the Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court shall have the power to alter and interpret such term or
provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision shall then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
G. POSTCONFIRMATION CONVERSION/DISMISSAL
If, after the Confirmation Date, there is a default in performance
of the Plan, a creditor or party in interest may bring a motion to convert or
dismiss the Reorganization Cases under section 1112(b) of the Bankruptcy Code.
If an order is entered converting the Reorganization Cases to cases under
chapter 7 of the Bankruptcy Code after the Plan is confirmed, then all property
of New Clothestime that has not been distributed to holders of Claims pursuant
to the Plan as of the date of entry of such order shall revest in the chapter 7
estates of the Debtors. Immediately upon the entry of such an order, the
automatic stay established pursuant to section 362 of the Bankruptcy Code shall
be reimposed with respect to such revested property, but only to the extent that
relief from the automatic stay was not previously authorized by the Bankruptcy
Court during the Reorganization Cases.
H. SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of,
any heir, executor, administrator, successor or assign of such entity.
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I. SERVICE OF CERTAIN PLAN AND DISCLOSURE STATEMENT
EXHIBITS
Because certain of the exhibits referred to in the Plan or the
Disclosure Statement are voluminous, these exhibits are not being served with
copies of the Plan and the Disclosure Statement. Any party in interest may
review the Plan exhibits and Disclosure Statement exhibits during normal
business hours (9:00 a.m. to 4:30 p.m.) in the Document Reviewing Centers.
J. SERVICE OF DOCUMENTS ON THE DEBTORS, NEW CLOTHESTIME,
THE CREDITOR TRUST COMMITTEE, THE AGENT OR THE UNITED
STATES TRUSTEE
Any pleading, notice or other document required by the Plan or the
Confirmation Order to be served on or delivered to the Debtors, New Clothestime,
the Creditor Trust Committee, the Agent or the United States Trustee, as
applicable, shall be sent by first class U.S. mail, postage prepaid, to the
following respective persons and addresses:
1. Debtors or New Clothestime:
Clothestime Stores, Inc.
5325 East Hunter Avenue
Anaheim, California 92807
Attention: Mr. Douglas L. Pereira
Chief Financial Officer
with copies to:
Jones, Day, Reavis & Pogue
5 Park Plaza, Suite 1100
Irvine, California 92614
Attention: Dulcie D. Brand, Esq.
and
Jones, Day, Reavis & Pogue
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Attention: Paul E. Harner, Esq.
2. Creditor Trust Committee:
Heller Financial, Inc.
505 North Brand Boulevard
Glendale, California 91203
Attention: Mr. Eugene Schwartz
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<PAGE> 85
with a copy to:
Siegel, Sommers & Schwartz, L.L.P.
470 Park Avenue South
16th Floor
New York, New York 10016
Attention: Lawrence C. Gottlieb, Esq.
Cathy R. Hershcopf, Esq.
3. Agent:
Wells Fargo Bank, N.A.
333 South Grand Avenue
Suite 940
Los Angeles, California 90071
Attention: Mr. Greg Richardson
with a copy to:
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street
Suite 3200
Los Angeles, California 90017
Attention: Lawrence Peitzman, Esq.
4. United States Trustee:
Office of United States Trustee
Civic Center Plaza Towers
600 West Santa Ana Boulevard
Suite 501
Santa Ana, California 92701
Attention: Terri E. Hawkins-Andersen, Esq.
Dated: July 28, 1997
Anaheim, California
THE CLOTHESTIME, INC. CLOTHESTIME STORES, INC.
By: /s/ David A. Sejpal
By: /s/ David A. Sejpal David A. Sejpal
------------------------------------- ----------------------------------
David A. Sejpal Chairman of the Board and Chief
Chairman of the Board and Chief Executive Officer, and
Executive Officer, President and Chief Operating Officer
Chief Operating Officer
CLOTHESTIME ACQUISITION
CLOTHESTIME INVESTMENT, INC. CORPORATION
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------------- ----------------------------------
David A. Sejpal David A. Sejpal
President and Secretary President and Secretary
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<PAGE> 86
MRJ INDUSTRIES, INC. CLOTHESTIME INTERNATIONAL, INC.
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
---------------------------------- --------------------------
David A. Sejpal David A. Sejpal
Chairman of the Board and Chief President and Secretary
Executive Officer, President and
Chief Operating Officer
COUNSEL:
/s/ Dulcie D. Brand
- ----------------------------------
Paul E. Harner
Charles M. Oellermann
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand
JONES, DAY, REAVIS & POGUE
2603 Main Street, Suite 900
Irvine, California 92614
Telephone: (714) 851-3939
ATTORNEYS FOR DEBTORS AND
DEBTORS IN POSSESSION
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<PAGE> 1
Paul E. Harner
Charles M. Oellermann
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand, Bar No. 176624
JONES, DAY, REAVIS & POGUE
5 Park Plaza
Suite 1100
Irvine, California 92614
Telephone: (714) 851-3939
Attorneys for Debtors and
Debtors in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Jointly Administered
) Case Nos. SA95-22533-JW
THE CLOTHESTIME, INC., a ) through SA95-22538-JW
Delaware corporation, )
et al., ) Chapter 11
)
Debtors. ) MODIFICATIONS TO THIRD AMENDED JOINT
) PLAN OF REORGANIZATION OF THE
) CLOTHESTIME, INC. AND CERTAIN OF ITS
) SUBSIDIARIES
)
) Date: September 10, 1997
) Time: 1:30 p.m.
) Place: Courtroom 604
) 34 Civic Center Plaza
) Santa Ana, California 92701
- ---------------------------
<PAGE> 2
The above-captioned debtors and debtors in possession
(collectively, the "Debtors") hereby make the following Modifications to the
Third Amended Joint Plan of Reorganization of The Clothestime, Inc. and Certain
of Its Subsidiaries (the "Plan"),(1) dated July 28, 1997, pursuant to section
1127 of the Bankruptcy Code and Section XI.D of the Plan:
I. MODIFICATIONS TO DEFINED TERMS
A. The definition of "Advanced Lighting Stipulation" is
modified and restated(2) as follows:
4. "ADVANCED LIGHTING STIPULATION" means the Stipulation
Regarding Treatment of Claims of Advanced Lighting Systems, Inc., as
submitted to the Bankruptcy Court on August 25, 1997.
B. The definition of "GE Stipulation" is modified and restated as
follows:
59. "GE STIPULATION" means the Stipulation Regarding Treatment of
Claims of General Electric Capital Corporation, as submitted to the
Bankruptcy Court on August 25, 1997.
C. The definition of "IBM Stipulation" is modified and restated as
follows:
61. "IBM STIPULATION" means the Stipulation Regarding Treatment
of Claims of IBM Credit Corporation, as submitted to the Bankruptcy
Court on August 25, 1997.
(1) Unless otherwise defined in these Modifications, the capitalized terms
used herein have the meanings assigned to them in the Plan.
(2) All modified and restated Plan provisions are marked to reflect the
modifications thereto.
<PAGE> 3
D. The definition of "USL Stipulation" is modified and restated as
follows:
115. "USL STIPULATION" means the Stipulation Regarding Treatment
of Claims of Mellon Leasing Corporation, as submitted to the Bankruptcy
Court on August 25, 1997.
II. MODIFICATIONS TO INTERCOMPANY MERGER PROVISIONS
Section IV.C.1. is modified and restated as follows:
1. Prior to the Effective Date, New Clothestime shall
take such actions as may be necessary or appropriate to effect the
following intercompany merger transactions: (a) the merger of CTI with
and into TCI; (b) the mergers of TCI, CT International and MRJ with and
into CTA; and (c) the merger of CTA with and into CSI.
III. MODIFICATIONS TO INITIAL DIRECTORS PROVISIONS
Section IV.D.2.b is modified and restated as follows:
b. IDENTITY OF INITIAL DIRECTORS
Subject to any requirement of Bankruptcy Court approval
pursuant to section 1129(a)(5) of the Bankruptcy Code, New Clothestime's
initial board of directors shall be comprised of the individuals named
in the Disclosure Statement, a notice to be Filed with the Bankruptcy
Court no fewer than 10 days prior to the initial hearing by the
Bankruptcy Court regarding Confirmation or pursuant to the procedures
set forth in the certificate of incorporation and bylaws of New
Clothestime. Such notice or the Disclosure Statement shall contain
sufficient information regarding such individuals' identities and
affiliations to comply with section 1129(a)(5) of the Bankruptcy Code.
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<PAGE> 4
IV. MODIFICATIONS TO NEW LOAN AGREEMENT PROVISIONS
Section IV.G is modified and restated as follows:
G. EXECUTION OF NEW LOAN AGREEMENT
Prior to or on the Effective Date, New Clothestime
shall take such actions as may be necessary or appropriate to enter into
the New Loan Agreement.
Dated: July 28, 1997
Anaheim, California
THE CLOTHESTIME, INC. CLOTHESTIME STORES, INC.
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
Chairman of the Board and Chairman of the Board and
Chief Executive Officer, Chief Executive Officer,
President and Chief President and Chief
Operating Officer Operating Officer
CLOTHESTIME INVESTMENT, INC. CLOTHESTIME ACQUISITION
CORPORATION
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
President and Secretary President and Secretary
MRJ INDUSTRIES, INC. CLOTHESTIME INTERNATIONAL,
INC.
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
Chairman of the Board and President and Secretary
Chief Executive Officer,
President and Chief
Operating Officer
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<PAGE> 5
COUNSEL:
/s/ Paul E. Harner
- ------------------------------------
Paul E. Harner
Charles M. Oellermann
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand
JONES, DAY, REAVIS & POGUE
5 Park Plaza, Suite 1100
Irvine, California 92614
Telephone: (714) 851-3939
ATTORNEYS FOR DEBTORS AND
DEBTORS IN POSSESSION
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<PAGE> 1
Paul E. Harner
Joseph M. Witalec
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand, Bar No. 176624
JONES, DAY, REAVIS & POGUE
5 Park Plaza
Suite 1100
Irvine, California 92614
Telephone: (714) 851-3939
Attorneys for Debtors and
Debtors in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Jointly Administered
) Case Nos. SA95-22533-JW
THE CLOTHESTIME, INC., a ) through SA95-22538-JW
Delaware corporation, )
et al., ) Chapter 11
)
Debtors. ) SECOND MODIFICATIONS TO THIRD
) AMENDED JOINT PLAN OF REORGANIZATION
) OF THE CLOTHESTIME, INC. AND CERTAIN
) OF ITS SUBSIDIARIES
)
) Date: September 10, 1997
) Time: 1:30 p.m.
) Place: Courtroom 604
) 34 Civic Center Plaza
) Santa Ana, California 92701
- ------------------------------
<PAGE> 2
The above-captioned debtors and debtors in possession
(collectively, the "Debtors") hereby make the following Second Modifications to
the Third Amended Joint Plan of Reorganization of The Clothestime, Inc. and
Certain of Its Subsidiaries (the "Plan"),(1) dated July 28, 1997, pursuant to
section 1127 of the
Bankruptcy Code and Section XI.D of the Plan:
I. MODIFICATIONS TO PRIORITY TAX CLAIMS PROVISIONS
A. Section III.A.2.b of the Plan is modified and restated(2)
as follows:
b. OTHER PRIORITY TAX CLAIMS
Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code,
except as otherwise agreed by the parties, each holder of an Other
Priority Tax Claim shall receive, on account of such Claim, deferred
cash payments over a period of six years from the date of assessment of
such Claim. Payments shall be made in equal quarterly installments of
principal, plus simple interest accruing from the Effective Date at the
rate established under 26 U.S.C. Section 6621 on the unpaid portion of
each Other Priority Tax Claim. The first payment shall be payable on the
latest of (i) the Effective Date, (ii) 30 days after the date on which
an order allowing such Claim becomes a Final Order and (iii) such other
time or times as may be agreed upon by the holder of such Claim and the
Debtors or New Clothestime; provided, however, that, so long as no Event
of Default as defined in the Trust Note or the Bank Notes has occurred
and is continuing, New Clothestime shall have the right to pay any Other
Priority Tax Claim, or any remaining balance of such Claim, in full, at
any time after 30 days after the second anniversary of the Effective
Date, without premium or penalty.
(1) Unless otherwise defined in these Second Modifications, the capitalized
terms used herein have the meanings assigned to them in the Plan.
(2) All modified and restated Plan provisions are marked to reflect the
modifications thereto.
<PAGE> 3
Dated: September 10, 1997
Anaheim, California
THE CLOTHESTIME, INC. CLOTHESTIME STORES, INC.
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
Chairman of the Board and Chairman of the Board and
Chief Executive Officer, Chief Executive Officer,
President and Chief President and Chief
Operating Officer Operating Officer
CLOTHESTIME INVESTMENT, INC. CLOTHESTIME ACQUISITION CORPORATION
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
President and Secretary President and Secretary
MRJ INDUSTRIES, INC. CLOTHESTIME INTERNATIONAL, INC.
By: /s/ David A. Sejpal By: /s/ David A. Sejpal
------------------------------ ------------------------------
David A. Sejpal David A. Sejpal
Chairman of the Board and President and Secretary
Chief Executive Officer,
President and Chief
Operating Officer
-2-
<PAGE> 4
COUNSEL:
/s/ Paul E. Harner
- --------------------------------
Paul E. Harner
Joseph M. Witalec
JONES, DAY, REAVIS & POGUE
1900 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: (614) 469-3939
Dulcie D. Brand
JONES, DAY, REAVIS & POGUE
5 Park Plaza, Suite 1100
Irvine, California 92614
Telephone: (714) 851-3939
ATTORNEYS FOR DEBTORS AND
DEBTORS IN POSSESSION
-3-
<PAGE> 1
EXHIBIT 99.1
[CLOTHESTIME LETTERHEAD]
FOR IMMEDIATE RELEASE
SEPTEMBER 10, 1997
COMPANY CONTACT:
DOUGLAS L. PEREIRA
SENIOR VICE PRESIDENT/CFO
(714)779-5881, EXT. 2410
CLOTHESTIME TO EMERGE FROM BANKRUPTCY
ANAHEIM, CALIFORNIA - The Clothestime, Inc. (OTC: CTMEQ) ("Clothestime")
announced today that Judge John J. Wilson of the United States Bankruptcy Court
for the Central District of California has entered an order confirming the joint
chapter 11 reorganization plan of Clothestime and its five debtor affiliates,
clearing the way for the companies to emerge officially from bankruptcy.
David Sejpal, the Chairman of the Board, President and Chief Executive Officer
of Clothestime, hailed the confirmation of the companies' plan of reorganization
as "the culmination of months of extraordinarily hard work by Clothestime's more
than 1700 associates and its numerous suppliers and other creditors. Sejpal also
expressed thanks to the Company's customers. "Our customers have remained
extremely supportive of Clothestime throughout this difficult process. In fact,
notwithstanding the bankruptcy, we have continued to experience strong customer
loyalty to the Clothestime concept." Mr. Sejpal indicated he was delighted that,
now that the process has concluded, the Company "will be able to devote its full
attention to providing its customers with the best selection of fashion
merchandise at 20 to 40% below department and specialty store prices."
Clothestime and it affiliates will continue to operate over 260 women's apparel
stores located primarily in California, Florida and Texas. Clothestime is a
leading apparel fashion retailer providing current junior women's fashions and
accessories at value prices every day.
