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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): May 27, 1999
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THE PENN TRAFFIC COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-9930 25-0716800
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1200 State Fair Boulevard
Syracuse, New York 13221-4737
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 453-7284
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Not Applicable
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Page 1
This document consists of 4 pages.
The exhibit index is contained on page 4 of this document.
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Item 3. BANKRUPTCY OR RECEIVERSHIP
On May 27, 1999, The Penn Traffic Company issued a press
release attached as Exhibit 99.1 hereto that announced that the U.S. Bankruptcy
Court for the District of Delaware (the "BANKRUPTCY COURT") confirmed its Joint
Plan of Reorganization (the "PLAN") under chapter 11 of the Bankruptcy Code.
Penn Traffic initially filed for chapter 11 protection on
March 1, 1999, seeking Bankruptcy Court approval to implement a prenegotiated
financial restructuring with the holders of its senior and subordinated notes in
accordance with the Plan. Penn Traffic expects that the Plan will be effective
in June.
The restructuring will cancel Penn Traffic's existing $1.13
billion of senior and subordinated notes and (i) distribute $100 million of new
senior notes and 19,000,000 shares of new common stock to the holders of the
existing senior notes and (ii) distribute 1,000,000 shares of the new common
stock and 6 year warrants to purchase 1,000,000 shares of new common stock
having an exercise price of $18.30 per share to the holders of the existing
senior subordinated notes. In addition, each 100 shares of Penn Traffic's common
stock outstanding immediately prior to the restructuring will be converted into
one share of new common stock for a total of approximately 106,955 shares of
additional new common stock.
Penn Traffic also announced it expects to enter into a new
secured credit facility with a bank group led by Fleet Capital Corporation as
agent. Proceeds from the new facility will be used to satisfy Penn Traffic's
obligations under its debtor-in-possession facility and pay certain costs of the
debt restructuring process and for its ongoing working capital and capital
expenditure requirements.
Upon consummation of the Plan in June 1999 and taking into
account all costs and expenditures related to the debt restructuring and related
transactions, the Company expects to have approximately $330 - $335 million of
outstanding indebtedness (including capital leases). Such indebtedness is
expected to include $100 million of new senior notes, approximately $100 million
of capitalized lease obligations and $130 - $135 million of secured indebtedness
including borrowings under the new secured credit facility.
As of May 1, 1999, Penn Traffic had approximately $1.16
billion in total assets and $1.65 billion in total liabilities.
For a further description of the Plan, see the Joint Plan of
Reorganization as confirmed by the Bankruptcy Court on May 27, 1999 attached
hereto as Exhibit 2.1 and the Press Release attached hereto as Exhibit 99.1.
Certain statements included in this Current Report on Form
8-K which are not statements of historical fact are intended to be, and are
hereby identified as, "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Without limiting the
foregoing, the words "believe," "anticipate," "plan," "expect," "estimate,"
"intend" and other similar expressions are intended to identify
forward-looking statements. The Company cautions readers that forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; the ability of the Company to consummate the new secured credit
facility in the time period indicated or at all; and the amount of
indebtedness outstanding when the Plan of Reoranization is consummated.
Page 2
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Item 7. EXHIBITS.
(c) Exhibits.
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2.1 Joint Plan of Reorganization, as confirmed by the
Bankruptcy Court
99.1 Press Release, dated May 27, 1999, announcing the
confirmation of Penn Traffic's Plan of Reorganization
under chapter 11 of the Bankruptcy Code.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
THE PENN TRAFFIC COMPANY
By /S/ GARY D. HIRSCH
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Gary D. Hirsch
Chairman
Dated: June 11, 1999
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EXHIBIT INDEX
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Sequentially
Exhibit Numbered
Number Exhibit Page
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2.1 Joint Plan of Reorganization, as confirmed
by the Bankruptcy Court
99.1 Press Release, dated May 27, 1999,
announcing the confirmation of Penn
Traffic's Plan of Reorganization under
chapter 11 of the Bankruptcy Code.
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Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
)
THE PENN TRAFFIC COMPANY, ET AL., ) Case No. 99-462 (PJW)
)
) Jointly Administered
Debtors. )
AMENDED JOINT PLAN OF REORGANIZATION OF THE PENN TRAFFIC
COMPANY, DAIRY DELL, INC., BIG M SUPERMARKETS, INC. AND PENNY
CURTISS BAKING COMPANY, INC. UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
Alan W. Kornberg
Jeffrey D. Saferstein
Brian S. Hermann
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
-and-
YOUNG CONAWAY STARGATT & TAYLOR, LLP
James L. Patton, Jr.
Pauline K. Morgan
1110 N. Market Street
P.O. Box 391
Rodney Square North, 11th Floor
Wilmington, Delaware 19801
(302) 571-6600
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Attorneys for the Debtors
Dated: Wilmington, Delaware
April 2, 1999, as amended, May 25, 1999
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The Penn Traffic Company, Dairy Dell, Inc., Big M
Supermarkets, Inc. and Penny Curtiss Baking Company, Inc. propose the following
joint plan of reorganization under section 1121(a) of the Bankruptcy Code.
I.
DEFINITIONS AND CONSTRUCTION OF TERMS
A. DEFINITIONS. Unless otherwise defined herein, or the
context otherwise requires, the following terms shall have the respective
meanings set forth below:
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ADMINISTRATIVE CLAIM means any right to payment constituting a cost
or expense of administration of the Chapter 11
Cases of a kind specified under section 503(b)
of the Bankruptcy Code and entitled to priority
under section 507(a)(1), 507(b) or 1114(e)(2) of
the Bankruptcy Code, including, without
limitation, any actual and necessary costs and
expenses of preserving the Debtors' estates, any
actual and necessary costs and expenses of
operating the Debtors' businesses, any
indebtedness or obligations incurred or assumed
by the Debtors in Possession in connection with
the conduct of their businesses, including,
without limitation, for the acquisition or lease
of property or an interest in property or the
rendition of services, all compensation and
reimbursement of expenses to the extent
awarded by the Court under sections 330, 331
or 503 of the Bankruptcy Code, and any fees or
charges assessed against the Debtors' estates
under section 1930 of chapter 123 of title 28 of
the United States Code.
ADMINISTRATIVE AND PRIORITY CLAIMS has the meaning assigned to such term in
RESERVE Section VII.C.4(b)(i) of the Plan.
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ALLOWED CLAIM OR ALLOWED INTEREST means, with reference to any Claim or Equity
Interest, (a) any Claim against or Equity
Interest in the Debtors which has been listed by
the Debtors in their Schedules, as such
Schedules may be amended by the Debtors from
time to time in accordance with Bankruptcy
Rule 1009, as liquidated in amount and not
disputed or contingent, and with respect to
which no contrary proof of claim or interest has
been filed, (b) any Claim or Equity Interest
specifically allowed under the Plan, (c) any
Claim or Equity Interest which is not Disputed
or (d) any Claim or Equity Interest the amount
or existence of which, if Disputed, (i) has been
determined by a Final Order of a court of
competent jurisdiction other than the Court, or
(ii) has been allowed by Final Order of the
Court; PROVIDED, HOWEVER, that any Claims or
Equity Interests allowed solely for the purpose
of voting to accept the Plan pursuant to an order
of the Court shall not be considered "Allowed
Claims" or "Allowed Equity Interests"
hereunder.
AMENDED PENN TRAFFIC BY-LAWS means the Amended and Restated By-Laws of Reorganized Penn
Traffic, which shall be in substantially the form
contained in the Plan Supplement.
AMENDED PENN TRAFFIC CERTIFICATE OF means the amended and restated Certificate of
INCORPORATION Incorporation of Reorganized Penn Traffic,
which shall be in substantially the form
contained in the Plan Supplement.
AMENDED SUBSIDIARIES BY-LAWS means the Amended and Restated
By-Laws of the Reorganized Subsidiaries,
which shall be in substantially the forms
contained in the Plan Supplement.
AMENDED SUBSIDIARIES CERTIFICATES OF means the amended and restated Certificates of
INCORPORATION Incorporation of the Reorganized Subsidiaries,
which shall be in substantially the forms
contained in the Plan Supplement.
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BALLOTS means each of the ballot forms distributed with the
Disclosure Statement to each holder of an Impaired Claim
or Equity Interest (other than to holders not entitled
to vote on the Plan) upon which is to be indicated,
among other things, acceptance or rejection of
the Plan.
BANKRUPTCY CODE means title 11 of the United States Code,
11 U.S.C. Sections 101 ET seq., as in effect on the
date hereof.
BANKRUPTCY RULES means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under
section 2075 of title 28 of the United States Code, and
local rules of the Court, as the context may require.
BIG M means Big M Supermarkets, Inc.
BUSINESS DAY means any day on which commercial banks are open for
business, and not authorized to close, in the City of New
York, New York, except any day designated as a legal
holiday by Bankruptcy Rule 9006(a).
CASH means legal tender of the United States of America.
CAUSES OF ACTION means all claims, choses in action and causes of
action (including those assertable derivatively),
liabilities, obligations, suits, debts, sums of
money, damages, demands, judgments, whether
known or unknown, now owned or hereafter
acquired by the Debtors, and the Cash and
non-Cash proceeds thereof, whether arising
under the Bankruptcy Code or other Federal,
state or foreign law, equity or otherwise,
including, without limitation, any causes of
action arising under sections 510, 544, 547,
548, 549, 550, 551 or any other section of the
Bankruptcy Code.
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CHAPTER 11 CASES means the chapter 11 cases commenced by the Debtors.
COLLATERAL means any property or interest in property of the Debtors'
estates subject to a Lien to secure the payment or
performance of a Claim, which Lien is not subject to
avoidance under the Bankruptcy Code or otherwise invalid
under the Bankruptcy Code or applicable state law.
CONFIRMATION DATE means the date on which the Confirmation Order is entered
by the Court.
CONFIRMATION HEARING means the hearing to consider confirmation of the Plan
pursuant to section 1128 of the Bankruptcy Code, as it may
be adjourned or continued from time to time.
CONFIRMATION ORDER means the order entered by the Court confirming the Plan
pursuant to section 1129 of the Bankruptcy Code.
COURT means, (a) the United States Bankruptcy Court
for the District of Delaware, having jurisdiction
over the Chapter 11 Cases; (b) to the extent
there is no reference pursuant to section 157 of
title 28 of the United States Code, the United
States District Court for the District of
Delaware; and (c) any other court having
jurisdiction over the Chapter 11 Cases.
CREDITORS COMMITTEE means the Official Committee of Unsecured Creditors
appointed by the United States Trustee in the Chapter 11
Cases, as constituted from time to time.
DEBTORS means The Penn Traffic Company, Dairy Dell,
Inc., Big M Supermarkets, Inc. and Penny
Curtiss Baking Company, Inc.
DEBTORS IN POSSESSION means the Debtors in their capacity as debtors in
possession in the Chapter 11 Cases pursuant to sections
1107(a) and 1108 of the Bankruptcy Code.
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DIP CREDIT FACILITY means the Loan and Security Agreement dated as of March 2,
1999 among Penn Traffic, Big M, Dairy Dell and Penny
Curtiss, as debtors and debtors in possession, the lenders
identified therein, including Fleet Capital Corporation and
Fleet Capital Corporation, as Agent.
DIP FINANCING CLAIMS means all Claims arising under or relating to the DIP
Credit Facility and all agreements and instruments relating
thereto.
DISCLOSURE STATEMENT means the written disclosure statement that relates to this
Plan, as approved by the Court pursuant to section 1125 of
the Bankruptcy Code, as such disclosure statement may be
amended, modified or supplemented from time to time.
DISPUTED means any Claim, or Equity Interest, or any
portion thereof, that is not an Allowed Claim or
Allowed Interest, including, but not limited to,
Claims or Interests (a)(i) that have not been
Scheduled by the Debtors or (ii) have been
Scheduled at zero or as contingent, unliquidated
or disputed, or (b) that are the subject of a
proof of claim that differs in nature, amount or
priority from the Debtors' Schedules, and (c) in
either case, the allowance or disallowance of
which is not yet the subject of a Final Order.
EFFECTIVE DATE means the first Business Day on which all of the
conditions specified in Section XIII.B.1 of the
Plan have been satisfied or waived in
accordance with Section XIII.B.2 of the Plan;
PROVIDED, HOWEVER, that if a stay of the
Confirmation Order is in effect on such date,
the Effective Date will be the first Business Day
after such stay is no longer in effect.
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8 5/8% NOTE INDENTURE means that certain Indenture, dated as of
December 15, 1993, between Penn Traffic, as
issuer, and United States Trust Company of
New York, as Trustee, pursuant to which the
8 5/8% Senior Notes were issued, together with
any amendments or supplements thereto.
8 5/8% SENIOR NOTES means the 8 5/8% Notes, due December 15, 2003,
of Penn Traffic issued and outstanding under the 8 5/8% Note
Indenture.
11 1/2% 2001 NOTE INDENTURE means that certain Indenture, dated as of October 16, 1991,
between Penn Traffic, as issuer, and Bankers Trust Company,
as Trustee, pursuant to which the 11 1/2% 2001 Senior Notes
were issued, together with any amendments or supplements
thereto.
11 1/2% 2001 SENIOR NOTES means the 11 1/2% Notes, due October 15, 2001, of Penn
Traffic issued and outstanding under the 11 1/2% 2001 Note
Indenture.
11 1/2% 2006 NOTE INDENTURE means that certain Indenture, dated as of December 15,
1993, between Penn Traffic, as issuer, and United States
Trust Company of New York, as Trustee, pursuant to which
the 11 1/2% 2006 Senior Notes were issued, together with
any amendments or supplements thereto.
11 1/2% 2006 SENIOR NOTES means the 11 1/2% Notes, due April 15, 2006, of Penn
Traffic issued and outstanding under the 11 1/2% 2006 Note
Indenture.
EQUITY INCENTIVE PLAN has the meaning assigned to such term in
Section V.E. of the Plan.
EQUITY INTEREST OR INTEREST means any share of preferred stock or common
stock or other instrument evidencing an
ownership interest in the Debtors, whether or
not transferable, and any option, warrant, or
right, contractual or otherwise, to acquire, sell
or subscribe for any such interest.
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ERISA has the meaning assigned to such term in Section XII of the
Plan.
FINAL ORDER means an order or judgment of the Court, or
other court of competent jurisdiction, as entered
on the docket in the Chapter 11 Cases, the
operation or effect of which has not been
stayed, reversed, vacated or amended, and as to
which order or judgment (or any revision,
modification, or amendment thereof) the time to
appeal, petition for certiorari, or seek review or
rehearing has expired and as to which no
appeal, petition for certiorari, or petition for
review or rehearing was filed or, if filed,
remains pending.
GENERAL UNSECURED CLAIM means any Unsecured Claim other than a Trade Claim, Senior
Note Claim or Senior Subordinated Note Claim.
GOVERNMENT has the meaning assigned to such term in Section VIII.J.3
of the Plan.
IMPAIRED means, when used with reference to a Claim or Equity
Interest, a Claim or Equity Interest that is impaired
within the meaning of section 1124 of the Bankruptcy Code.
INDENTURE TRUSTEES means, (i) with respect to the 8 5/8% Note Indenture, the
10.65% Note Indenture, the 11 1/2% 2006 Note Indenture and
the 10 3/8% Note Indenture, United States Trust Company of
New York, in its capacity as trustee under such indentures,
(ii) with respect to the 10 1/4% Note Indenture, Norwest
Bank Minnesota, N.A., in its capacity as trustee under such
indenture, (iii) with respect to the 11 1/2% 2001 Note
Indenture, Bankers Trust Company, in its capacity as
trustee under such indenture, and (iv) with respect to the
9 5/8% Note Indenture, U.S. Bank Trust, N.A., in its
capacity as trustee under such indenture.
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INDENTURE TRUSTEE CHARGING LIEN means any Lien or priority in payment available to any
Indenture Trustee pursuant to its applicable Indenture or
applicable law for payment of fees or expenses incurred by
such Indenture Trustee.
INFORMAL COMMITTEE means the informal committee of certain holders of Senior
Notes and Senior Subordinated Notes that was formed prior
to the Petition Date.
INFORMAL TRADE COMMITTEE has the meaning assigned to such term in
Section III.C. of the Plan.
INITIAL DISTRIBUTION DATE means the Effective Date or as soon thereafter as
practicable.
INITIAL HOLDER means, (a) any person or entity who will initially hold
shares of New Common Stock on the Effective Date, (b) any
investment fund for which any person thereof acts as
manager, (c) any partnership or other entity for which any
person thereof acts directly or indirectly as a general
partner, managing member or controlling stockholder, and
(d) any person otherwise affiliated with any of the
foregoing individuals or entities.
INTERCOMPANY CLAIMS means any Claim held by one of the Debtors against any
other Debtor, including, without limitation, (a) any
account reflecting intercompany book entries by such Debtor
with respect to any other Debtor, (b) any Claim not
reflected in book entries that is held by such Debtor, and
(c) any derivative Claim asserted or assertable by or on
behalf of such Debtor against any other Debtor.
LIEN has the meaning set forth in Section 101 of the
Bankruptcy Code.
NEW COMMON STOCK means the common stock of Reorganized Penn Traffic, par
value $.01 per share, to be authorized and issued by
Reorganized Penn Traffic on the Effective Date pursuant to
the Plan.
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NEW NOTES INDENTURE has the meaning assigned to such term in
Section V.C.2. of the Plan.
NEW NOTES INDENTURE TRUSTEE means the bank or trust company that will serve as trustee
under the New Notes Indenture.
NEW SENIOR NOTES means the promissory notes authorized and to be issued
pursuant to the Plan and the New Notes Indenture, on the
terms and subject to the conditions described in Exhibit
"A" hereto, and - which shall be in substantially the form
contained in the Plan Supplement.
NEW MANAGEMENT AGREEMENT has the meaning assigned to such term in
Section V.A.4 of the Plan
NEW WARRANTS means the warrants to purchase in the aggregate 1,000,000
shares of New Common Stock, on the terms and subject to the
conditions described in Exhibit "B" hereto, and which shall
be issued pursuant to the terms of the Warrant Agreement.
95/8% NOTE INDENTURE means that certain Indenture, dated as of April 15, 1993,
between Penn Traffic, as issuer, and First Trust of
California, N.A., as Trustee, pursuant to which the 9 5/8%
Notes were issued, together with any amendments or
supplements thereto.
95/8% SENIOR SUBORDINATED NOTES means the 9 5/8% Notes, due April 15, 2005, of Penn Traffic
issued and outstanding under the 9 5/8% Note Indenture.
NOTE INDENTURE means any of the Senior Note Indentures or the
Senior Subordinated Note Indenture
OLD COMMON STOCK means the common stock, par value $.10 per share, issued by
Penn Traffic and outstanding on the Petition Date.
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OTHER PRIORITY CLAIM means Claims entitled to priority pursuant to section
507(a) of the Bankruptcy Code (other than Administrative
Claims and Priority Tax Claims), including, without
limitation, certain allowed employee compensation and
benefit claims of the Debtors' employees incurred within
ninety (90) and one hundred eighty (180) days,
respectively, prior to the Petition Date.
OTHER SECURED CLAIMS means any Claim, other than a DIP Financing
Claim, to the extent reflected in the Schedules
or a proof of claim as a Secured Claim, which
is secured by a Lien on Collateral to the extent
of the value of such Collateral, as determined in
accordance with section 506(a) of the
Bankruptcy Code, or, in the event that such
Claim is subject to setoff under Section 553 of
the Bankruptcy code, to the extent of such
setoff.
PBGC has the meaning assigned to such term in Article XII of the
Plan.
PENN TRAFFIC means The Penn Traffic Company.
PENNY CURTISS means Penny Curtiss Baking Company, Inc.
PENSION PLANS means the P&C Foods Pension Plan for Represented Employees,
the Big Bear General Merchandise Plan, the Big Bear Food
Warehouse Hourly Plan, the Penn Traffic Company Cash
Balance Plan, the Riverside Division of Penn Traffic
Company Pension Plan for Bargaining Employees, Pension Plan
for the Bargaining Employees of Insalco Markets, and any
other tax qualified defined benefit pension plan, insured
by PBGC under Title IV of ERISA and maintained by the
Debtors, as well as any successor plan.
PETITION DATE means March 1, 1999, the date on which the Debtors filed
their petitions for relief commencing the Chapter 11 Cases.
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PLAN means this Plan, as it may be amended or modified from time
to time, together with all addenda, exhibits, schedules or
other attachments, if any.
PLAN SUPPLEMENT means the forms of documents specified in Section X.M. of
the Plan.
PREFERRED STOCK has the meaning assigned to such term in Section V.A.3 of
the Plan.
PRO RATA means, at any time, the proportion that (x) with respect to
Claims, the amount of a Claim in a particular Class bears
to the aggregate amount of all Claims (including Disputed
Claims) in such Class and (y) with respect to Equity
Interests, the number of shares or other equity interests
held by a particular holder in a particular Class bears to
the aggregate number of all shares and other equity
interests in a particular Class, unless in each case the
Plan provides otherwise.
PRIORITY TAX CLAIM means any unsecured Claim held by a governmental unit
entitled to a priority in right of payment under section
507(a)(8) of the Bankruptcy Code.
QUARTER means the period beginning on the Effective Date and ending
on the immediately succeeding June 30, September 30,
December 31 or March 31, and each three-month period
thereafter, as the context may require.
RECORD DATE means the record date for purposes of making distributions
under the Plan on account of Allowed Claims and Allowed
Equity Interests, which date shall be the Confirmation
Date.
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REGISTRATION RIGHTS AGREEMENT means a registration rights agreement by Reorganized Penn
Traffic in favor of certain Initial Holders, which shall be
in substantially the form contained in the Plan Supplement.
RELEASED PARTIES has the meaning assigned to such term in
Section VIII.I. of the Plan.
REORGANIZED DEBTORS means the Debtors, or any successors thereto by merger,
consolidation, or otherwise, on and after the Effective
Date.
REORGANIZED PENN TRAFFIC means Penn Traffic, or any successors thereto by merger,
consolidation, or otherwise, on and after the Effective
Date.
REORGANIZED SUBSIDIARIES means the Subsidiaries, or any successors thereto by
merger, consolidation, or otherwise, on and after the
Effective Date.
RESERVE has the meaning assigned to such term in Section
VII.C.2(a)(i) of the Plan.
SCHEDULES means the schedules of assets and liabilities, statements
of financial affairs, and lists of holders of Claims and
Equity Interests filed with the Court by the Debtors,
including any amendments or supplements thereto.
SCHEDULED means, with respect to any Claim or Equity Interest, the
status and amount, if any, of such Claim or Equity Interest
as set forth in the Schedules.
SECURED CLAIM means a Claim that is secured by a Lien on property or
interests in property, in which the Debtors have an
interest, to the extent of the value as of the Effective
Date, or such other date as is established by the Court, of
such interest or Lien determined by a Final Order of the
Court pursuant to section 506 of the Bankruptcy Code or as
otherwise agreed upon in writing by the Debtors and the
holder of such Claim.
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SEGREGATED ACCOUNT has the meaning assigned to such term in
Section VII.C.6. of the Plan.
SENIOR NOTE CLAIMS means the unsecured Claims of the Senior Noteholders
(excluding the fees and expenses of the Indenture
Trustees).
SENIOR NOTES means, collectively, the 11 1/2% 2001 Senior Notes; the 10
1/4% Senior Notes; the 8 5/8% Senior Notes; the 10 3/8%
Senior Notes; the 10.65% Senior Notes; and the 11 1/2% 2006
Senior Notes.
SENIOR NOTEHOLDERS means the holders of the Senior Notes.
SENIOR NOTE INDENTURES means collectively the 8 5/8% Note Indenture, the 10.65%
Note Indenture, the 11 1/2% 2001 Note Indenture, the 10 3/8%
Note Indenture, the 10 1/4% Note Indenture and the 11 1/2%
2006 Note Indenture.
SENIOR SUBORDINATED NOTE CLAIMS means the unsecured Claims of the Senior Subordinated
Noteholders (excluding the fees and expenses of the
Indenture Trustees).
SENIOR SUBORDINATED NOTE INDENTURE means the 9 5/8% Note Indenture.
SENIOR SUBORDINATED NOTEHOLDERS means the holders of the Senior Subordinated
Notes.
SENIOR SUBORDINATED NOTES means the 9 5/8% Senior Subordinated Notes.
SUBORDINATION-RELATED RIGHTS has the meaning assigned to such term in Section VIII.C of
the Plan.
SUBSEQUENT DISTRIBUTION DATE means the twentieth day after the end of the Quarter
following the Quarter in which the Initial Distribution
Date occurs and the twentieth day after the end of each
such subsequent Quarter.
SUBSIDIARIES means Dairy Dell, Big M and Penny Curtiss.
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SUBSIDIARY EQUITY INTERESTS means any share of common stock or other
instrument evidencing a present ownership
interest in any of the Subsidiaries, whether or
not transferable, and any options, warrants or
rights, contractual or otherwise, to acquire any
such interest.
10.65% NOTE INDENTURE means that certain Indenture, dated as of December 15,
1993, between Penn Traffic, as issuer, and United States
Trust Company of New York, as Trustee, pursuant to which
the 10.65% Senior Notes were issued, together with any
amendments or supplements thereto.
10 1/4% NOTE INDENTURE means that certain Indenture, dated as of February 18,
1992, between Penn Traffic, as issuer, and Marine Midland
Bank, N.A., as original Trustee, pursuant, to which the 10
1/4% Senior Notes were issued, together with any amendments
or supplements thereto.
10 3/8% NOTE INDENTURE means that certain Indenture, dated as of October 1, 1992,
between Penn Traffic, as issuer, and United States Trust
Company of New York, as Trustee, pursuant to which the
10 3/8% Senior Notes were issued, together with any
amendments or supplements thereto.
10.65% SENIOR NOTES means the 10.65% Notes, due November 1, 2004, of Penn
Traffic issued and outstanding under the 10.65% Note
Indenture.
10 1/4% SENIOR NOTES means the 10 1/4% Notes, due February 15, 2002, of Penn
Traffic issued and outstanding under the 10 1/4% Note
Indenture.
10 3/8% SENIOR NOTES means the 10 3/8% Notes, due October 1, 2004, of Penn
Traffic issued and outstanding under the 10 3/8% Note
Indenture.
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<S> <C>
TRADE-CLAIM means an unsecured Claim of an entity against the Debtors
for (i) goods provided prior to the Petition Date by such
entity to the Debtors for resale to the general public in
the ordinary course of business; PROVIDED, HOWEVER, that
such entity has continued to provide goods to the Debtors
before and after the Petition Date on customary terms and
credit, or as otherwise acceptable to the Debtors, and (ii)
goods (not resold to the general public) and services
provided to the Debtors in the ordinary course of the
Debtors' businesses.
TRANSFER AGENT means the transfer agent for the New Common Stock and New
Warrants.
UNSECURED CLAIM means any Claim that is not a Secured Claim, Administrative
Claim, Priority Tax Claim or Other Priority Claim.
WARRANT AGENT means the warrant agent for the New Warrants.
WARRANT AGREEMENT means a warrant agreement pursuant to which the New
Warrants will be issued, which shall be in substantially
the form contained in the Plan Supplement.
</TABLE>
B. INTERPRETATION, APPLICATION OF DEFINITIONS AND RULES OF
CONSTRUCTION.
Wherever from the context it appears appropriate, each term
stated in either the singular or the plural shall include both the singular and
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter, such meanings to be applicable to
both the singular and plural forms of the terms defined. Capitalized terms in
the Plan that are not defined herein shall have the same meaning assigned to
such terms by the Bankruptcy Code or Bankruptcy Rules, as the case may be. The
words "herein," "hereof," and "hereunder" and other words of similar import
refer to the Plan as a whole and not to any particular section or subsection in
the Plan unless expressly provided otherwise. All gender references shall be
deemed to refer to both genders. The words "includes" and "including" are not
limiting and mean that the things specifically identified are set forth for
purposes of illustration, clarity or
<PAGE>
specificity and do not in any respect qualify, characterize or limit the
generality of the class within which such things are included. Captions and
headings to articles, sections and exhibits are inserted for convenience of
reference only, are not a part of this Plan, and shall not be used to interpret
this Plan. The rules of construction set forth in section 102 of the Bankruptcy
Code shall apply to this Plan. In computing any period of time prescribed or
allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
II.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
A. INTRODUCTION.
All Claims and Equity Interests, except Administrative Claims
and Priority Tax Claims, are placed in the Classes set forth below. In
accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims
and Priority
Tax Claims, as described below, have not been classified.
A Claim or Equity Interest is placed in a particular Class
only to the extent that the Claim or Equity Interest falls within the
description of that Class, and is classified in other Classes to the extent that
any portion of the Claim or Equity Interest falls within the description of such
other Classes. A Claim is also placed in a particular Class for the purpose of
receiving distributions pursuant to the Plan only to the extent that such Claim
is an Allowed Claim in that Class and such Claim has not been paid, released, or
otherwise settled prior to the Effective Date.
1. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON THE
PLAN).
(a) ADMINISTRATIVE CLAIMS.
(b) PRIORITY TAX CLAIMS.
2. UNIMPAIRED CLASSES OF CLAIMS (DEEMED TO HAVE
ACCEPTED THE PLAN AND, THEREFORE, NOT ENTITLED TO VOTE
ON THE PLAN).
(a) CLASS 1: OTHER PRIORITY CLAIMS.
Class 1 consists of all Other Priority
Claims.
(b) CLASS 2: OTHER SECURED CLAIMS.
Class 2 consists of all Other Secured
Claims.
<PAGE>
(c) CLASS 3: DIP FINANCING CLAIMS.
Class 3 consists of all DIP Financing
Claims.
(d) CLASS 4: TRADE CLAIMS.
Class 4 consists of all Trade Claims.
3. IMPAIRED CLASSES OF CLAIMS AND EQUITY
INTERESTS (ENTITLED TO VOTE ON THE PLAN).
(a) CLASS 5: GENERAL UNSECURED CLAIMS.
Class 5 consists of all General Unsecured
Claims.
(b) CLASS 6: SENIOR NOTE CLAIMS.
Class 6 consists of all Senior Note Claims.
(c) CLASS 7: SENIOR SUBORDINATED NOTE CLAIMS.
Class 7 consists of all Senior Subordinated
Note Claims.
(d) CLASS 8: EQUITY INTERESTS.
Class 8 consists of all Equity Interests.
III.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
A. ADMINISTRATIVE CLAIMS.
Except to the extent that any entity entitled to payment of
any Allowed Administrative Claim agrees to a different treatment, each holder of
an Allowed Administrative Claim shall receive Cash in an amount equal to such
Allowed Administrative Claim on the later of the Effective Date and the date
such Administrative Claim becomes an Allowed Administrative Claim, or as soon
thereafter as is practicable; PROVIDED, HOWEVER, that Allowed Administrative
Claims representing liabilities incurred in the ordinary course of business by
the Debtors in Possession or liabilities arising under loans or advances to or
other obligations incurred by the Debtors in Possession (to the extent
authorized and approved by the Court if such authorization and approval was
required under the Bankruptcy
<PAGE>
Code) shall be paid in full and performed by the Reorganized Debtors, as the
case may be, in the ordinary course of business in accordance with the terms and
subject to the conditions of any agreements governing, instruments evidencing,
or other documents relating to, such transactions.
B. PROFESSIONAL COMPENSATION AND REIMBURSEMENT CLAIMS.
All entities seeking an award by the Court of compensation for
services rendered or reimbursement of expenses incurred through and including
the Confirmation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Confirmation Date by the date
that is 30 days after the Effective Date or such other date as may be fixed by
the Court and (b) if granted, such an award by the Court shall be paid in full
in such amounts as are awarded by the Court (i) on the date such Administrative
Claim becomes an Allowed Administrative Claim, or as soon thereafter as is
practicable or (ii) upon such other terms as may be mutually agreed upon between
such holder of an Administrative Claim and the Debtors in Possession or, on and
after the Effective Date, the Reorganized Debtors.
C. FEES AND EXPENSES OF THE INFORMAL COMMITTEE AND INFORMAL
TRADE COMMITTEE.
The reasonable fees and expenses incurred after the Petition
Date by (i) the Informal Committee's counsel and financial advisors, including,
without limitation, the success fee payable to Houlihan, Lokey, Howard & Zukin,
Inc. pursuant to its engagement letter with the Debtors dated as of December 15,
1998 and (ii) the counsel to the Trade Relations Committee of the National Food
Manufacturers Credit Association (the "Informal Trade Committee") (which were
retained by agreement with the Debtors prior to the Petition Date (together with
the reasonable fees and expenses of local counsel) with respect to these Chapter
11 Cases) shall be paid (without application by or on behalf of any such
professionals to the Bankruptcy Court and without notice and a hearing) by the
Reorganized Debtors as an Administrative Claim under the Plan. If the
Reorganized Debtors and any such professional retained by the Informal Committee
or
the Informal Trade Committee cannot agree on the amount of fees and expenses to
be paid to such professional, the amount of any such fees and expenses shall be
determined by the Bankruptcy Court.
D. PRIORITY TAX CLAIMS.
Except to the extent that a holder of an Allowed Priority Tax
Claim has been paid by the Debtors prior to the Effective Date or agrees to a
different treatment, each holder of an Allowed Priority Tax Claim shall receive,
at the sole option of the Reorganized Debtors, (a) Cash in an amount equal to
such Allowed Priority Tax Claim on the later of the Effective Date and the date
such Priority Tax
<PAGE>
Claim becomes an Allowed Priority Tax Claim, or as soon thereafter as is
practicable, or (b) equal quarterly Cash payments in an aggregate amount
equal to such Allowed Priority Tax Claim, together with interest at a fixed
annual rate equal to the federal statutory rate as provided in 26 U.S.C.
Section 6621, over a period through the sixth anniversary of the date of
assessment of such Allowed Priority Tax Claim. Each Priority Tax Claim which
is not payable on or before the Effective Date will survive confirmation of
the Plan, remain unaffected thereby, and be paid as and when due, except to
the extent that a holder of such Claim agrees to a different treatment.
IV.
TREATMENT OF CLAIMS AND
EQUITY INTERESTS
A. CLASS 1 - OTHER PRIORITY CLAIMS.
1. DISTRIBUTIONS. Except to the extent that a holder
of an Allowed Other Priority Claim agrees to a different treatment, in full and
final satisfaction of such claim, each holder of an Allowed Other Priority Claim
shall receive payment in full in Cash on the later of the Effective Date and the
date when such Other Priority Claim becomes an Allowed Claim, or as soon
thereafter as practicable.
2. IMPAIRMENT AND VOTING. Class 1 shall be unimpaired
under the Plan. Holders of Allowed Claims in Class 1 are presumed to accept the
Plan and are not entitled to vote to accept or reject the Plan.
B. CLASS 2 - OTHER SECURED CLAIMS.
1. DISTRIBUTIONS. Except to the extent that a holder
of an Allowed Secured Claim agrees to a different treatment, at the sole option
of the Debtors, in full and final satisfaction of such claim, (i) each Allowed
Other Secured Claim shall be reinstated and rendered unimpaired in accordance
with section 1124(2) of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law that entitles the holder of an Allowed
Other Secured Claim to demand or receive payment of such Allowed Other Secured
Claim prior to the stated maturity of such Allowed Other Secured Claim from and
after the occurrence of a default, (ii) each holder of an Allowed Other Secured
Claim shall receive Cash in an amount equal to such Allowed Other
<PAGE>
Secured Claim, including any interest on such Allowed Other Secured Claim
required to be paid pursuant to section 506(b) of the Bankruptcy Code, on the
later of the Effective Date and the date such Allowed Other Secured Claim
becomes an Allowed Other Secured Claim, or as soon thereafter as is practicable,
or (iii) each holder of an Allowed Other Secured Claim shall receive the
collateral securing its Allowed Other Secured Claim and any interest on such
Allowed Other Secured Claim required to be paid pursuant to section 506(b) of
the Bankruptcy Code, in full and complete satisfaction of such Allowed Other
Secured Claim on the later of the Effective Date and the date such Allowed Other
Secured Claim becomes an Allowed Other Secured Claim, or as soon thereafter as
is practicable.
2. IMPAIRMENT AND VOTING. Class 2 shall be unimpaired
under the Plan. The holders of Allowed Claims in Class 2 are presumed to accept
the Plan and are not entitled to vote to accept or reject the Plan.
C. CLASS 3 - DIP FINANCING CLAIMS.
1. DISTRIBUTIONS. On the Effective Date, or as soon
thereafter as practicable, in full and final satisfaction of such claims, each
holder of a DIP Financing Claim (which shall be deemed Allowed) shall receive
payment in full in Cash.
2. IMPAIRMENT AND VOTING. Class 3 shall be unimpaired
under the Plan. The holders of the DIP Financing Claims are presumed to accept
the Plan and are not entitled to vote to accept or reject the Plan.
D. CLASS 4 - TRADE CLAIMS.
1. DISTRIBUTIONS. To the extent not satisfied by the
Debtors in the ordinary course of business, in full and final satisfaction of
such claims, the legal, equitable and contractual rights to which such Allowed
Trade Claim entitles the holder thereof shall be left unaltered and,
accordingly, shall be satisfied on the latest of (i) the Effective Date, (ii)
the date such Trade Claim becomes an Allowed Claim, (iii) the date an Allowed
Trade Claim becomes due and payable in the ordinary course of business
consistent with the Debtors' ordinary payment practices, and (iv) the date on
which the Debtors and the holder of such Allowed Trade Claim agree in writing.
Holders of Allowed Trade Claims shall retain any prepetition security
arrangements that were in existence as of the Petition Date (and extended
pursuant to the Order Authorizing Payment of Prepetition Claims of Certain Trade
Creditors and Goods and Service Providers dated March 2, 1999) to secure
post-confirmation obligations and such prepetition security interests shall
continue to the same extent and priority as they existed as of the Petition
Date, without the necessity of any further actions to continue the perfection of
such security interests.
2. IMPAIRMENT AND VOTING. Class 4 shall be unimpaired
under the Plan. The holders of Allowed Claims in Class 4 are presumed to accept
the Plan and are not entitled to vote to accept or reject the Plan.
E. CLASS 5 - GENERAL UNSECURED CLAIMS.
1. DISTRIBUTIONS. On the Effective Date, or as soon
thereafter
<PAGE>
as practicable, or upon such later date when such Claim becomes an Allowed
Claim, in full and final satisfaction of such claim, at the Debtors' option (i)
each holder of an Allowed General Unsecured Claim will receive payment in full
in Cash of its Allowed General Unsecured Claim, or (ii) each Allowed General
Unsecured Claim will be reinstated by curing all outstanding defaults with all
legal, equitable and contractual rights remaining unaltered.
2. IMPAIRMENT AND VOTING. Class 5 is impaired under
the Plan. The holders of Allowed Claims in Class 5 are entitled to vote to
accept or reject the Plan.
F. CLASS 6 - SENIOR NOTE CLAIMS.
1. DISTRIBUTIONS. On the Effective Date, or as soon
thereafter as is practicable, in full and final satisfaction of such claims,
each holder of an Allowed Senior Note Claim will receive its Pro Rata share of
(i) $100 million of New Senior Notes; and (ii) 19,000,000 shares of New Common
Stock. In addition, if Class 7 does not vote in favor of the Plan, the holders
of Allowed Senior Note Claims shall receive, on the Effective Date, the New
Warrants that would have been distributed to the holders of Allowed Senior
Subordinated Note Claims if Class 7 voted in favor of the Plan and the New
Common Stock that would have been distributed to the holders of Allowed Equity
Interests. The New Warrants and New Common Stock received by the holders of
Allowed Senior Note Claims pursuant to the preceding sentence shall be
distributed to the holders of Allowed Senior Subordinated Note Claims and
Allowed Equity Interests that voted in favor of the Plan and did not object to
the Plan. Any New Warrants and New Common Stock remaining after distribution of
such New Warrants and New Common Stock to the holders of Allowed Senior
Subordinated Note Claims and Equity Interests shall be canceled.
2. IMPAIRMENT AND VOTING. Class 6 is impaired under
the Plan. The holders of Allowed Claims in Class 6 are entitled to vote to
accept or reject the Plan.
3. ALLOWANCE. The Senior Note Claims shall be Allowed
in the following aggregate amounts: the 11 1/2% 2001 Senior Notes, $111,933,239;
the 10 1/4% Senior Notes, $132,004,878; the 8 5/8% Senior Notes, $212,423,714;
the 10 3/8% Senior Notes, $104,322,917; the 10.65% Senior Notes, $103,550,000;
and the 11 1/2 2006 Senior Notes, $104,344,444. The holders of Senior Note
Claims and Indenture Trustees under the Senior Note Indentures shall not be
required to file proofs of claim. The fees and expenses owed to the Indenture
Trustees shall be paid in accordance with Section VII.C.6. hereof.
G. CLASS 7 - SENIOR SUBORDINATED NOTE CLAIMS.
1. DISTRIBUTIONS. On the Effective Date, or as soon
thereafter
<PAGE>
as is practicable, in full and final satisfaction of such claims, each holder of
an Allowed Senior Subordinated Note Claim will receive its pro rata share of (i)
1,000,000 shares of New Common Stock; and (ii) the New Warrants. Notwithstanding
anything to the contrary, it shall be a condition to the receipt by holders of
Allowed Senior Subordinated Notes of the distribution of the New Warrants that
Class 7 vote in favor of the Plan. If such condition is not satisfied, holders
of Allowed Senior Subordinated Note Claims shall receive only the New Common
Stock and the holders of Allowed Senior Note Claims shall receive the New
Warrants that would have been distributed to the holders of Allowed Senior
Subordinated Note Claims if Class 7 voted in favor of the Plan; PROVIDED,
HOWEVER, that any holder of an Allowed Senior Subordinated Note Claim that
votes in favor of the Plan (and does not object to confirmation of the Plan)
shall receive its Pro Rata share of New Warrants from the holders of Allowed
Senior Note Claims as if Class 7 voted in favor of the Plan. All remaining New
Warrants held by the holders of Allowed Senior Note Claims after distribution to
holders of Allowed Senior Subordinated Note Claims that vote in favor of the
Plan (and do not object to the Plan) shall be canceled.
2. IMPAIRMENT AND VOTING. Class 7 is impaired under
the Plan. The holders of Allowed Claims in Class 7 are entitled to vote to
accept or reject the Plan.
3. ALLOWANCE. The Senior Subordinated Note Claims
shall be Allowed in the aggregate amount of $414,437,500 and the holders of
Senior Subordinated Note Claims and Indenture Trustee under the Senior
Subordinated Note Indenture shall not be required to file proofs of claim. The
fees and expenses owed to the Indenture Trustee shall be paid in accordance with
Section VII.C.6. hereof.
H. CLASS 8 - EQUITY INTERESTS.
1. DISTRIBUTIONS. On the Effective Date or as soon
thereafter as practicable, each 100 shares of Old Common Stock shall entitle the
holder thereof to receive 1 share of New Common Stock; PROVIDED, HOWEVER, that
if Class 7 (Senior Subordinated Note Claims) or Class 8 votes against the Plan,
the holders of Allowed Class 8 Equity Interests shall receive no distributions
whatsoever and the holders of Allowed Senior Note Claims shall receive the New
Common Stock that would have been distributed to the holders of Allowed Equity
Interests if Classes 7 and 8 voted in favor of the Plan; PROVIDED, HOWEVER, that
a holder of an Equity Interest that votes in favor of the Plan (and does not
object to confirmation of the Plan) shall receive its Pro Rata share of New
Common Stock from the holders of Allowed Senior Note Claims as if Classes 7 and
8 voted in favor of the Plan. All remaining New Common Stock held by the holders
of Allowed Senior Note Claims that would have been distributed to holders of
Equity Interests had they voted in favor of the Plan, shall be canceled. All
Equity Interests other than Old Common Stock shall be canceled on the Effective
Date and the holders thereof shall receive
<PAGE>
no distributions.
2. IMPAIRMENT AND VOTING. Class 8 is impaired under
the Plan. The holders of Allowed Equity Interests are entitled to vote to accept
or reject the Plan.
V.
PROVISIONS REGARDING CORPORATE
GOVERNANCE AND MANAGEMENT
OF THE REORGANIZED DEBTORS
A. DIRECTORS AND OFFICERS OF REORGANIZED PENN TRAFFIC; AMENDED
CERTIFICATE OF INCORPORATION AND AMENDED BY-LAWS.
1. THE INITIAL BOARD OF DIRECTORS. The initial board
of directors of Reorganized Penn Traffic shall consist of ten (10) members,
seven (7) of whom shall be designated by Satellite Fund Management, LLC, DDJ
Capital Management, LLC and Loomis Sayles & Company, LP whose names shall be
disclosed on or before the date of the Confirmation Hearing, and three (3) of
whom shall be Joseph V. Fisher, Martin A. Fox and Gary D. Hirsch. The Board of
Directors of Reorganized Penn Traffic will select a Chairman of the Board of
Directors of Reorganized Penn Traffic at their initial meeting who will not
initially serve as an executive officer of Reorganized Penn Traffic.
2. MANAGEMENT OF REORGANIZED PENN TRAFFIC.
(a) MANAGEMENT OF PENN TRAFFIC. Effective as
of the Effective Date, an Executive Committee of the Board of Directors shall
manage the business of Reorganized Penn Traffic and shall have all of the
authority customarily delegated to the senior executive officers of a
corporation, subject to oversight of the entire Board of Directors. The members
of the Executive Committee will consist of Gary M. Hirsch, Martin A. Fox and
Joseph V. Fisher, with Mr. Hirsch serving as Chairman of the Executive Committee
and Mr. Fox as Vice-Chairman thereof. Mr. Fisher, Penn Traffic's President and
Chief Executive Officer, will report to the Chairman of the Executive Committee
and to Reorganized Penn Traffic's Board of Directors.
(b) OTHER COMMITTEES OF THE BOARD OF
DIRECTORS. The Board of Directors will also establish such other committees it
deems appropriate including an Audit Committee and a Compensation and Stock
Option Committee that will be composed only of independent Directors who do not
serve as executive officers of Reorganized Penn Traffic. The Audit Committee
will be responsible for review and approval of Reorganized Penn Traffic's
financial statements and for the selection of Reorganized Penn Traffic's
independent certified public accountants
<PAGE>
(currently PricewaterhouseCoopers LLP). The Compensation and Stock Option
Committee will, subject to existing contractual arrangements, approve
compensation arrangements for Reorganized Penn Traffic's executive officers and
grant additional stock options under Reorganized Penn Traffic's Equity Incentive
Plan, taking into account, in each case, the recommendations of the Executive
Committee.
(c) OFFICERS. The officers of Penn Traffic
immediately prior to the Effective Date shall serve as the initial officers of
Reorganized Penn Traffic on and after the Effective Date. Such officers shall
serve in accordance with any employment agreement with Reorganized Penn Traffic
and applicable nonbankruptcy law.
3. AMENDED PENN TRAFFIC CERTIFICATE OF INCORPORATION
AND AMENDED PENN TRAFFIC BY-LAWS.
The adoption of the Amended Penn Traffic Certificate
of Incorporation and Amended Penn Traffic By-Laws will be deemed to have
occurred and be effective as of the Effective Date without any further action by
the directors or stockholders of the Debtors or the Reorganized Debtors. The
Amended Penn Traffic Certificate of Incorporation will, among other things,
contain appropriate provisions (i) governing the authorization of up to
30,000,000 shares of New Common Stock (up to 20,109,846 will be issued on the
Effective Date) and 1,000,000 shares of preferred stock, par value of $.01 per
share (the "PREFERRED STOCK"), that will be available for issuance and whose
terms and conditions may be established by the Board of Directors, (ii)
prohibiting the issuance of nonvoting equity securities as required by section
1123(a)(6) of the Bankruptcy Code, (iii) establishing the Executive Committee,
an Audit Committee and a Compensation and Stock Option Committee and defining
their roles, and (iv) implementing such other matters as stockholders and
directors of Reorganized Penn Traffic believe are necessary and appropriate to
effectuate the terms and conditions of the Plan. The Amended Penn Traffic
Certificate of Incorporation will not include any "super-majority" voting
provisions. On or prior to the Effective Date, Penn Traffic will file with the
Secretary of State of the State of Delaware, in accordance with sections 103 and
303 of the Delaware General Corporation Law, the Amended Penn Traffic
Certificate of Incorporation and such certificate shall be the certificate of
incorporation for Reorganized Penn Traffic. The Amended Penn Traffic Certificate
of Incorporation shall be substantially in the form contained in the Plan
Supplement.
4. NEW MANAGEMENT AGREEMENT.
On the Effective Date, Reorganized Penn Traffic shall
enter into a new management agreement with Hirsch & Fox, LLC (the "NEW
MANAGEMENT AGREEMENT"), pursuant to which Hirsch & Fox will provide the services
of Gary D. Hirsch, as Chairman of the Executive Committee, and Martin A. Fox, as
Vice Chairman of the Executive Committee, as directed by the Board of Directors.
The
<PAGE>
New Management Agreement will be on the terms as described in Exhibit "C"
hereto and shall be in substantially the form included in the Plan Supplement.
B. DIRECTORS AND OFFICERS OF THE REORGANIZED SUBSIDIARIES.
1. THE INITIAL BOARD OF DIRECTORS. The initial board
of directors of the Reorganized Subsidiaries shall be Gary D. Hirsch, Martin A.
Fox and Joseph V. Fisher. Mr. Hirsch shall be Chairman.
2. MANAGEMENT OF THE REORGANIZED SUBSIDIARIES. The
officers of the Reorganized Subsidiaries immediately prior to the Effective Date
shall serve as the initial officers of the Reorganized Subsidiaries on and after
the Effective Date. Such officers shall serve in accordance with any employment
agreement with the Reorganized Subsidiaries and applicable nonbankruptcy law.
3. AMENDED SUBSIDIARIES CERTIFICATES OF
INCORPORATION AND AMENDED SUBSIDIARIES BY-LAWS.
The adoption of the Amended Subsidiaries Certificate
of Incorporation and Amended Subsidiaries By-Laws will be deemed to have
occurred and be effective as of the Effective Date without any further action by
the directors or stockholders of the Debtors or the Reorganized Debtors. The
Amended Subsidiaries Certificate of Incorporation will, among other things,
contain appropriate provisions (i) prohibiting the issuance of nonvoting equity
securities as required by section 1123(a)(6) of the Bankruptcy Code, and (ii)
implementing such other matters as stockholders and directors of the Reorganized
Subsidiaries believe are necessary and appropriate to effectuate the terms and
conditions of the Plan. The Amended Subsidiaries Certificate of Incorporation
will not include any "super-majority" voting provisions. On or prior to the
Effective Date, the Subsidiaries will file with the Secretary of State of the
State of Delaware, in accordance with sections 103 and 303 of the Delaware
General Corporation Law, the Amended Subsidiaries Certificate of Incorporation
and such certificate shall be the certificate of incorporation for the
Reorganized Subsidiaries. The Amended Subsidiaries Certificate of Incorporation
shall be substantially in the form contained in the Plan Supplement.
C. SECURITIES TO BE ISSUED PURSUANT TO THE PLAN.
1. NEW COMMON STOCK.
On the Effective Date, Reorganized Penn Traffic will
issue 20,109,846 shares of New Common Stock without further act or action under
applicable law, regulation, rule or order. Each share of New Common Stock will
entitle its holder to one vote. Holders of New Common Stock will have the right
to participate proportionately in any dividends distributed by Reorganized Penn
Traffic, subject to the dividend preference of any shares of Preferred Stock
that may be
<PAGE>
issued after the Effective Date.
2. NEW SENIOR NOTES.
The New Senior Notes will be issued by Reorganized
Penn Traffic pursuant to an indenture (the "NEW NOTES INDENTURE"), which will be
qualified under the Trust Indenture Act of 1939, as amended. An indenture
trustee will be selected prior to the Confirmation Hearing. The New Notes
Indenture and the New Senior Notes will be in substantially the forms included
in the Plan Supplement.
3. THE NEW WARRANTS.
On the Effective Date, Reorganized Penn Traffic will
issue New Warrants to purchase up to 1,000,000 shares of New Common Stock
(without giving effect to any options that may be issued under the Equity
Incentive Plan) without further act or action under applicable law, regulation,
rule or order. The New Warrants will be in substantially the form included in
the Plan Supplement.
D. SECURITIES LAWS MATTERS.
Each Initial Holder receiving a distribution of New Common
Stock representing more than 10% of the aggregate New Common Stock issued on the
Effective Date shall be entitled to become a party to the Registration Rights
Agreement, which provides that Reorganized Penn Traffic will file and maintain
the effectiveness of a shelf registration right statement for such Holder for
the New Common Stock, shares of New Common Stock issued upon exercise of the New
Warrants, the New Warrants and the New Senior Notes, covering the resale of all
such securities. Certificates evidencing shares of New Common Stock received by
an Initial Holder who is deemed to be an affiliate of the Debtors by reason of
its equity holdings or otherwise will bear a legend stating, in substance, that
such shares have not been registered under the Securities Act or under the
securities laws of any state or other jurisdiction and may not be sold, offered
for sale or otherwise transferred unless registered or qualified under such Act
and applicable state securities laws or unless the Reorganized Debtors receive a
certificate executed by a duly authorized officer of such Initial Holder or an
opinion of counsel, as applicable, reasonably satisfactory to the Reorganized
Debtors, that such registration or qualification is not required. The
Registration Rights Agreement will be in substantially the form included in the
Plan Supplement.
E. REORGANIZED PENN TRAFFIC EQUITY INCENTIVE PLAN.
On the Effective Date, Reorganized Penn Traffic will adopt a
stock option plan (the "EQUITY INCENTIVE PLAN") which permits Reorganized Penn
Traffic to grant to its officers and directors options to acquire shares of New
Common Stock. Such stock option plan shall be on the terms described in Exhibit
"D" hereto and shall be in substantially the form contained in the Plan
Supplement.
<PAGE>
VI.
SUBSTANTIVE CONSOLIDATION OF THE DEBTORS
On the Confirmation Date, the Chapter 11 Cases shall be
substantively consolidated for all purposes related to the Plan, including,
without limitation, for purposes of voting, confirmation and distribution.
Subject to the occurrence of the Effective Date, (i) all assets and liabilities
of Dairy Dell, Big M and Penny Curtiss shall be deemed merged or treated as
though they were merged into and with the assets and liabilities of Penn
Traffic, (ii) no distributions shall be made under the Plan on account of
intercompany Claims among the Debtors and such Claims shall be discharged on the
Effective Date, (iii) no distributions shall be made under the Plan on account
of Subsidiary Equity Interests, (iv) all guarantees of the Debtors of the
obligations of any other Debtor shall be deemed eliminated so that any claim
against any Debtor and any guarantee thereof executed by any other Debtor and
any joint or several liability of any of the Debtors shall be deemed to be one
obligation of the consolidated Debtors and (v) each and every Claim filed or to
be filed in the Chapter 11 Case of any of the Debtors shall be deemed filed
against the consolidated Debtors, and shall be deemed one Claim against and
obligation of the consolidated Debtors. Such substantive consolidation shall not
(other than for purposes related to the Plan) affect (i) the legal and corporate
structure of the Reorganized Debtors, (ii) Subsidiary Equity Interests and (iii)
pre and post Petition Date guarantees that are required to be maintained (a) in
connection with executory contracts or unexpired leases that were entered into
during the Chapter 11 Cases or that have been or will be assumed, (b) pursuant
to the Plan, or (c) in connection with any financing entered into by the
Reorganized Debtors on the Effective Date.
VII.
PROVISIONS REGARDING VOTING AND
DISTRIBUTIONS UNDER THE PLAN AND TREATMENT
OF DISPUTED, CONTINGENT AND UNLIQUIDATED
ADMINISTRATIVE CLAIMS, CLAIMS AND EQUITY INTERESTS
A. VOTING OF CLAIMS AND EQUITY INTERESTS. Each holder of an
Allowed Claim or an Allowed Equity Interest in an Impaired Class of Claims or
Equity Interests shall be entitled to vote separately to accept or reject the
Plan as provided in such order as may be entered by the Court establishing
certain procedures with respect to the solicitation and tabulation of votes to
accept or reject the Plan, or any other order or orders of the Court.
B. NONCONSENSUAL CONFIRMATION. If any Impaired Class of Claims
or Equity Interests entitled to vote shall not accept the Plan by the requisite
statutory majorities provided in sections 1126(c) or 1126(d) of the Bankruptcy
Code, as
<PAGE>
applicable, the Debtors reserve the right to have the Court confirm the Plan
under section 1129(b) of the Bankruptcy Code.
C. DISTRIBUTIONS.
1. METHOD OF DISTRIBUTIONS UNDER THE PLAN.
(a) DATE AND DELIVERY OF DISTRIBUTIONS.
Distributions under the Plan shall be made by the Reorganized Debtors or their
designee to the holders of Allowed Administrative Claims, Allowed Priority Tax
Claims, Allowed Other Priority Claims, Allowed DIP Financing Claims, Allowed
Other Secured Claims, Allowed Trade Claims, Allowed General Unsecured Claims and
Allowed Equity Interests at the addresses set forth on the Schedules, unless
such addresses are superseded by proofs of claim or transfers of claim filed
pursuant to Bankruptcy Rule 3001 (or at the last known addresses of such holders
if the Debtors or the Reorganized Debtors have been notified in writing of a
change of address). Distributions under the Plan to the holders of Allowed
Senior Note Claims and Allowed Senior Subordinated Note Claims shall be made to
the New Notes Indenture Trustee who shall make the distributions to the holders
of Allowed Senior Note Claims and Allowed Senior Subordinated Note Claims. New
Senior Notes (including any interest earned thereon), New Common Stock
(including dividends paid on account thereof) and New Warrants shall be held in
trust by the disbursing agent or the Reorganized Debtors, as applicable, for the
benefit of the potential claimants of such securities and shall not constitute
property of the Reorganized Debtors.
(b) DISTRIBUTION OF CASH. Any payment of
Cash by the Reorganized Debtors pursuant to the Plan shall be made at the option
and in the sole discretion of the Reorganized Debtors, by (i) a check drawn on,
or (ii) wire transfer from, a domestic bank selected by the Reorganized Debtors.
(c) DISTRIBUTION OF UNCLAIMED PROPERTY. Any
distribution of Cash under the Plan which is unclaimed after the later to occur
of (a) two years after distribution or (b) six months after the date on which
such claimant's Claim is Allowed shall be transferred to the Reorganized Debtors
notwithstanding state or other escheat or similar laws to the contrary.
Distributions under the Plan consisting of New Notes, New Common Stock or New
Warrants that are unclaimed for a period of two years after distribution shall
be cancelled and any dividends or interest which has been paid with respect to
such securities shall be transferred to the Reorganized Debtors and entitlement
by the holder of a Claim or Equity Interest to such distribution shall be
extinguished and forever barred. The Debtors shall file with the Court a list of
holders of unclaimed distributions of Cash, New Notes, New Common Stock and New
Warrants on the first and second anniversaries of the Effective Date.
(d) SATURDAYS, SUNDAYS, OR LEGAL HOLIDAYS.
If any payment
<PAGE>
or act under the Plan is required to be made or performed on a date that is not
a Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, and shall be deemed to
have been completed as of the required date.
(e) FRACTIONAL DOLLARS AND FRACTIONAL SHARES
AND WARRANTS.
(i) FRACTIONAL DOLLARS. Whenever the
issuance of any New Senior Note would otherwise call for the issuance
in an amount for a fraction of a dollar, the actual issuance of such
New Senior Note shall reflect a rounding of such fraction to the
nearest whole dollar (up or down), with half dollars being rounded
down.
(ii) FRACTIONAL SHARES AND WARRANTS.
Whenever any distribution of shares of New Common Stock or New Warrant
to a holder would otherwise call for the distribution of a fractional
share or warrant, the Transfer Agent or Warrant Agent shall allocate
one whole share or one whole warrant to holders in order of the
fractional portion of their entitlements, starting with the largest
fractional portion until all remaining shares and warrants have been
allocated. Upon the allocation of a whole share or a whole warrant to a
holder in respect of the fraction portion of its entitlement, such
fractional portion shall be canceled. If two or more holders are
entitled to equal fractional entitlements and the number of holders so
entitled exceeds the number of whole shares or whole warrants, as the
case may be, which remain to be allocated, the Transfer Agent or
Warrant Agent shall allocate the remaining whole shares or whole
warrants to such holders by random lot or such other impartial method
as the Transfer Agent or Warrant Agent deems fair, in the Transfer
Agent's or Warrant Agent's sole discretion. Upon the allocation of all
of the whole shares or whole warrants authorized under the Plan, all
remaining fractional portions of the entitlements shall be canceled and
shall be of no further force and effect.
(f) DISTRIBUTIONS TO HOLDERS AS OF THE
RECORD DATE. As at the close of business on the Record Date, the claims register
(for Claims) and transfer ledger (for Equity Interests) shall be closed, and
there shall be no further changes in the record holders of any Claims or Equity
Interests. The Debtors and the Reorganized Debtors shall have no obligation to
recognize any transfer of any Claims or Equity Interests occurring after the
Record Date. The Debtor and the Reorganized Debtors shall instead be entitled to
recognize and deal for purposes under the Plan (except as to voting to accept or
reject the Plan pursuant to Section VII.A) with only those record holders stated
on the claims register (for Claims) and transfer ledgers (for Equity Interests)
as of the close of business on the Record Date.
2. DISPUTED TRADE CLAIMS AND GENERAL UNSECURED
CLAIMS.
(a) DISTRIBUTIONS WITHHELD FOR DISPUTED TRADE
CLAIMS.
<PAGE>
(i) ESTABLISHMENT AND MAINTENANCE OF
RESERVE. On the Effective Date, the Reorganized Debtors shall place
into a reserve an amount of Cash, equal to 100% of the distributions to
which holders of Disputed Trade Claims would be entitled under the Plan
as of such date if such Disputed Trade Claims, were Allowed Claims (the
"RESERVE").
(ii) PROPERTY HELD IN RESERVE. Cash held in
the Reserve, if any, shall be deposited in a segregated bank account or
accounts in the name of the Reorganized Debtors and designated as held
in trust for the benefit of holders of Allowed Trade Claims. Cash held
in the Reserve shall not constitute property of the Reorganized
Debtors. The Reorganized Debtors shall invest the Cash held in the
Reserve in a manner consistent with the investment guidelines set forth
in the Plan Supplement. The Reorganized Debtors shall pay, or cause to
be paid, out of the funds held in the Reserve, any tax imposed on the
Reserve by any governmental unit with respect to income generated by
the property held in the Reserve. The yield earned on such invested
Cash (net of applicable taxes) shall be distributed to the Reorganized
Debtors on the last Subsequent Distribution Date under the Plan.
(iii) DISTRIBUTIONS UPON ALLOWANCE OF
DISPUTED TRADE CLAIMS. The holder of a Disputed Trade Claim that
becomes an Allowed Claim subsequent to the Initial Distribution Date
shall receive a distribution of Cash from the Reserve on the next
Subsequent Distribution Date that follows the Quarter during which such
Disputed Trade Claim becomes an Allowed Claim pursuant to a Final
Order. Such distributions shall be made in accordance with the Plan
based upon the distributions that would have been made to such holder
under the Plan if the Disputed Trade Claim had been an Allowed Claim on
or prior to the Effective Date. Any Cash held in the Reserve after all
Trade Claims have been Allowed or disallowed shall be transferred to
and become the property of the Reorganized Debtors.
(b) DISTRIBUTIONS WITHHELD FOR DISPUTED GENERAL
UNSECURED CLAIMS. The holder of a Disputed General Unsecured Claim that becomes
an Allowed Claim subsequent to the Initial Distribution Date shall receive a
distribution of cash from the Reorganized Debtors on the next Subsequent
Distribution Date that follows the Quarter during which such Disputed General
Unsecured Claim becomes an Allowed Claim pursuant to Final Order. Such
distributions shall be made in accordance with the Plan based on the
distributions that would have been made to such holder under the Plan if the
Disputed General Unsecured Claim had been an Allowed Claim on or prior to the
Effective Date.
3. OBJECTIONS TO AND RESOLUTION OF ADMINISTRATIVE
CLAIMS, CLAIMS AND EQUITY INTERESTS; ADMINISTRATIVE AND PRIORITY CLAIMS RESERVE.
<PAGE>
(a) OBJECTIONS TO AND RESOLUTION OF
ADMINISTRATIVE CLAIMS, CLAIMS AND EQUITY INTERESTS. Except as to applications
for allowances of compensation and reimbursement of expenses under sections 330
and 503 of the Bankruptcy Code, the Debtors, and the Reorganized Debtors shall
have the exclusive right to make and file objections to Administrative Claims,
Claims and Equity Interests subsequent to the Confirmation Date. All objections
shall be litigated to a Final Order; PROVIDED, HOWEVER, that the Reorganized
Debtors shall have the authority to compromise, settle, otherwise resolve or
withdraw any objections, without approval of the Court. Unless otherwise ordered
by the Court, the Debtors and the Reorganized Debtors shall file all objections
to Administrative Claims, Claims and Equity Interests that are the subject of
proofs of claims, requests for payment filed with the Court (other than
applications for allowances of compensation and reimbursement of expenses) or
proofs of interest and serve such objections upon the holders of the
Administrative Claim, Claim or Equity Interest as to which the objection is made
as soon as is practicable, but in no event later than 60 days after the
Effective Date or such later date as may be approved by the Court.
(b) ADMINISTRATIVE AND PRIORITY CLAIMS
RESERVE.
(i) ESTABLISHMENT OF ADMINISTRATIVE
AND PRIORITY CLAIMS RESERVE. On the Effective Date, the Reorganized
Debtors shall place into reserve an amount of Cash equal to (i) the sum
of the aggregate amount of all Disputed Administrative Claims, Disputed
Priority Tax Claims, and Disputed Other Priority Claims, plus (ii) an
amount to be determined by the Court to be reserved for any Disputed
Administrative Claims, Disputed Priority Tax Claims and Disputed Other
Priority Claims that are unliquidated (the "ADMINISTRATIVE AND PRIORITY
CLAIMS RESERVE").
(ii) CASH HELD IN ADMINISTRATIVE AND
PRIORITY CLAIMS RESERVE. Cash held in the Administrative and Priority
Claims Reserve shall be deposited in a segregated bank account or
accounts in the name of the Reorganized Debtors and designated as held
in trust for the benefit of holders of Allowed Administrative Claims,
Allowed Priority Tax Claims and Allowed Other Priority Claims. Cash
held in the Administrative and Priority Claims Reserve shall not
constitute property of the Reorganized Debtors. The Reorganized Debtors
shall invest the Cash held in the Administrative and Priority Claims
Reserve in a manner consistent with investment guidelines to be
included in the Plan Supplement. The Reorganized Debtors shall pay, or
cause to be paid, out of the funds held in the Administrative and
Priority Claims Reserve, any tax imposed on the Administrative and
Priority Claims Reserve by any governmental unit with respect to income
generated by Cash held in the Administrative and Priority Claims
Reserve. Any Cash held in the Administrative and Priority Claims
Reserve after all Administrative and Priority Claims have been Allowed
or disallowed shall be transferred to and become the property of the
Reorganized Debtors.
<PAGE>
4. ALLOCATION OF CONSIDERATION.
The aggregate consideration to be distributed to the
holders of Allowed Claims in each Class under the Plan (other than the Claims,
if any, of the Internal Revenue Service) shall be treated as first satisfying an
amount equal to the stated principal amount of the Allowed Claim for such
holders and any remaining consideration as satisfying accrued, but unpaid,
interest and costs, if any, and attorneys' fees where applicable.
5. CANCELLATION AND SURRENDER OF EXISTING
SECURITIES AND AGREEMENTS.
On the Effective Date, the Senior Notes, Senior
Subordinated Notes and Equity Interests shall be deemed canceled and such
agreements and securities, including the Senior Note Indentures and the Senior
Subordinated Note Indenture, together with all instruments issued pursuant
thereto, shall have no further legal effect other than as evidence of any right
to receive distributions, fees and expenses under the Plan. In addition, the
Note Indentures shall be terminated and the Indenture Trustee's obligations
shall be discharged.
Notwithstanding any other provision of the Plan, as a
condition precedent to receiving any distribution under the Plan, each holder of
a promissory note, share certificate, or other instrument or security evidencing
a Claim or Equity Interest must surrender such promissory note, share
certificate, or other instrument or security to the Reorganized Debtors or their
designee or must execute and deliver an affidavit of loss and furnish an
indemnity or bond in substance and amount reasonably satisfactory to the
Reorganized Debtors.
Any holder of a Claim or Equity Interest that fails
to surrender such instrument or security or to provide the affidavit and
indemnity or bond, before the later to occur of (i) the second anniversary of
the Effective Date and (ii) six months following the date such holder's Claim
becomes an Allowed Claim or Equity Interest, shall be deemed to have forfeited
all rights, Claims, and/or Equity Interests and may not receive or participate
in any distribution under the Plan.
6. INDENTURE TRUSTEE FEES.
On or prior to the Effective Date, each Indenture
Trustee shall furnish to the Debtors a certification stating the aggregate
amount of (i) its previously invoiced but then unpaid fees and unreimbursed
expenses (including the fees and expenses of its counsel), in accordance with
and to the extent provided for in its Note Indenture, whether incurred prior or
subsequent to the Petition Date, and (ii) an estimate of such fees and expenses
from the latest date covered by its last invoice to and including the Effective
Date and an estimate of any post- Effective Date fees and expenses. On the
Effective Date, in full satisfaction of such fees and
<PAGE>
expenses, each Indenture Trustee shall receive an amount of Cash equal to the
aggregate amount stated in its aforementioned certification, without application
by or on behalf of such Indenture Trustee or its respective counsel to the
Court. In the event the Debtors deliver written notice to an Indenture Trustee
that the Debtors contest the amount certified to by such Indenture Trustee, the
amount not in dispute shall be paid to such Indenture Trustee on the Effective
Date, and the balance of the amount so certified will be held in trust, in a
segregated interest bearing money market account (the "SEGREGATED ACCOUNT"),
until the final resolution of the dispute. The respective Indenture Trustee and
the Reorganized Debtors, to the extent to which each is entitled to the funds so
held in the Segregated Account, shall also be entitled to all interest and
income earned thereon. Distributions made to the holders of Allowed Claims
pursuant to the Plan will not be reduced on account of such payments to each
Indenture Trustee or funds held in the Segregated Account as set forth above.
The Confirmation order shall provide that each
Indenture Trustee Charging Lien shall attach to all Cash to be distributed under
the Plan until the aggregate amount stated in its certification has been paid in
full or, to the extent contested by the Debtors, paid into the Segregated
Account referred to in the preceding paragraph and the balance paid the
Indenture Trustee, whereupon the respective Indenture Trustee Charging Lien
shall be released as to funds paid to the Indenture Trustee and shall be
transferred to the Segregated Account to the extent of the amount in dispute.
The amount by which an Indenture Trustee's actual fees and expenses which were
estimated as referred to in (ii) above are later determined by the Indenture
Trustee to exceed or be less than its estimate, as well as the amount of any
Indenture Trustee's fees and expenses for services requested by any of the
Reorganized Debtors after the Effective Date, shall be promptly paid by or
reimbursed to (as the case may be) the Reorganized Debtors upon receipt of
certification thereof from the Indenture Trustee or, where appropriate, the
amount held in the Segregated Account adjusted accordingly.
Any dispute between the Debtors or the Reorganized
Debtors and any Indenture Trustee regarding such Indenture Trustee's fees and
expenses, unless resolved by agreement of the Debtors or the Reorganized Debtors
and any Indenture Trustee, shall be determined only in the appropriate state
court in accordance with the provisions of the respective Note Indenture. If no
such action is instituted by the Debtors or the Reorganized Debtors within 90
days after the Effective Date, the amount in dispute and all interest and income
earned thereon shall be promptly turned over to the respective Indenture
Trustee, free and clear of any interest of the Reorganized Debtors. The
Reorganized Debtors shall bear all reasonable legal fees and expenses of each
Indenture Trustee to the extent incurred in the Indenture Trustee's successful
pursuit of funds held in the aforementioned Segregated Account.
VIII.
<PAGE>
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF THIS PLAN
A. REGISTRATION RIGHTS AGREEMENT, NEW NOTES INDENTURE,
THE AMENDED PENN TRAFFIC CERTIFICATE OF
INCORPORATION, THE AMENDED PENN TRAFFIC
BY-LAWS, THE AMENDED SUBSIDIARIES
CERTIFICATES OF INCORPORATION, THE AMENDED
SUBSIDIARIES BY- LAWS, THE NEW MANAGEMENT
AGREEMENT, THE EQUITY INCENTIVE PLAN, THE
WARRANT AGREEMENT, THE SUPPLEMENTAL
RETIREMENT PLAN, THE AMENDMENT TO JOSEPH V.
FISHER'S EMPLOYMENT AGREEMENT AND OTHER
IMPLEMENTATION DOCUMENTS.
On or before the Effective Date, the Reorganized Debtors will
execute the Registration Rights Agreement, the New Notes Indenture, the Amended
Penn Traffic Certificate of Incorporation, the Amended Penn Traffic By-Laws, the
Amended Subsidiaries Certificates of Incorporation, the Amended Subsidiaries
ByLaws and Other Implementation Documents, the New Management Agreement, the
Equity Incentive Plan, the Warrant Agreement, the Supplemental Retirement Plan,
the Amendment to Joseph V. Fisher's Employment Agreement and all other documents
required and necessary to implement the Plan, without the requirement of any
further corporate action.
B. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN
REORGANIZED DEBTORS.
The Debtors, as Reorganized Debtors, shall continue to exist
after the Effective Date with all powers of corporations under the laws of their
state of incorporation and without prejudice to any right to alter or terminate
such existence (whether by merger or otherwise) under such applicable state law.
Except as otherwise expressly provided in the Plan, on the Effective Date, the
Reorganized Debtors shall be vested with all of the property of their estates
free and clear of all claims, liens, encumbrances, charges and other interests
of creditors and equity security holders; and the Reorganized Debtors may
operate their businesses free of any restrictions imposed by the Bankruptcy
Code, the Bankruptcy Rules or by the Court, subject only to the terms and
conditions of the Plan.
C. TERMINATION OF SUBORDINATION RIGHTS.
All Claims of the Senior Noteholders and the Senior
Subordinated Noteholders against the Debtors and all rights and Claims between
or among the Senior Noteholders and the Senior Subordinated Noteholders relating
in any manner whatsoever to claimed subordination rights, rights to postpetition
and default interest, or similar rights, if any (collectively,
"SUBORDINATION-RELATED RIGHTS"), shall be deemed satisfied by the distributions
under, described in, contemplated by, and/or implemented by, this Plan to
holders of such Claims, and
<PAGE>
such rights shall be deemed waived, released, discharged, and terminated as of
the latest to occur of the Effective Date and the Initial Distribution Date, and
all actions related to the enforcement of such Subordination-Related Rights
shall be permanently enjoined. Distributions under, described in, contemplated
by, and/or implemented by, this Plan shall not be subject to levy, garnishment,
attachment, or like legal process by any holder of a Claim, including, but not
limited to, the Senior Noteholders, by reason of any claimed
Subordination-Related Rights or otherwise, so that each holder of a Claim shall
have and receive the complete benefit of the distributions in the manner set
forth and described in this Plan.
D. DISCHARGE OF THE DEBTORS.
The rights afforded herein and the treatment of all Claims and
Equity Interests herein shall be in exchange for and in complete satisfaction,
discharge, and release of all Claims and Equity Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the
Petition Date, against the Debtors, the Debtors in Possession, the Reorganized
Debtors or any of their assets or properties, arising prior to the Effective
Date. Except as otherwise expressly specified in the Plan, the Confirmation
Order shall act as of the Effective Date as a discharge of all debts of, Claims
against, liens on, and Equity Interests in the Debtors, their assets and
properties, arising at any time before the entry of the Confirmation Order,
regardless of whether a proof of Claim or Equity Interest with respect thereto
was filed, whether the Claim or Equity Interest is Allowed, or whether the
holder thereof votes to accept the Plan or is entitled to receive a distribution
thereunder. Except as otherwise expressly specified in the Plan, after the
Effective Date, any holder of such discharged Claim or Equity Interest shall be
precluded from asserting against the Debtors, Reorganized Debtors, or any of
their assets or properties, any other or further Claim or Equity Interest based
on any document, instrument, act, omission, transaction, or other activity of
any kind or nature that occurred before the entry of the Confirmation Order.
E. INJUNCTION.
Except as otherwise expressly provided in the Plan, the
Confirmation Order, or a separate order of the Court, all entities who have
held, hold, or may hold Claims against or Equity Interests in the Debtors which
arose before or were held as of the Effective Date, are permanently enjoined, on
and after the Effective Date, from (a) commencing or continuing in any manner
any action or other proceeding of any kind against the Debtors, with respect to
any such Claim or Equity Interest, (b) the enforcement, attachment, collection,
or recovery by any manner or means of any judgment, award, decree, or order
against the Debtors on account of any such Claim or Equity Interest, (c)
creating, perfecting, or enforcing any encumbrance of any kind against the
Debtors or against the property
<PAGE>
or interests in property of the Debtors on account of any such Claim or Equity
Interest and (d) asserting any right of setoff, subrogation, or recoupment of
any kind against any obligation due from the Debtors or against the property or
interests in property of the Debtors on account of any such Claim or Equity
Interest. Such injunction shall extend to successors of the Debtors (including,
without limitation, the Reorganized Debtors) and their respective properties and
interests in property.
F. PRESERVATION/WAIVER OF CAUSES OF ACTION.
1. PRESERVATION OF RIGHTS. Pursuant to the Plan, and
sections 544, 548, 549, 550, 551, 553 and 1123(b)(3)(B) of the Bankruptcy Code,
the Debtors (and the Reorganized Debtors) shall retain all rights and all Causes
of Action accruing to the Debtors, their estates, or the Reorganized Debtors,
including, without limitation, (i) the avoidance of any transfer of an interest
of the Debtors in property or any obligation incurred by the Debtors; PROVIDED,
HOWEVER, that the Debtors waive any and all claims and Causes of Action related
to payments made before the Petition Date on account of the Senior Notes or the
Senior Subordinated Notes, or (ii) the turnover of any property to their
estates, and except as expressly noted in the Plan or Confirmation Order,
nothing contained in the Plan or the Confirmation Order shall be deemed to be a
waiver or relinquishment of any such rights or Causes of Action. Nothing
contained in the Plan or the Confirmation Order shall be deemed to be a waiver
or relinquishment of any Claim, Cause of Action, right of setoff, or other legal
or equitable defense which the Debtors had immediately prior to the Petition
Date which is not specifically waived or relinquished by the Plan. The
Reorganized Debtors shall have, retain, reserve and be entitled to assert all
such Claims, Causes of Action, rights of setoff and other legal or equitable
defenses which the Debtors had immediately prior to the Petition Date as fully
as if the Chapter 11 Cases had not been commenced; and all of the Reorganized
Debtors' legal and equitable rights respecting any Claim which is not
specifically waived or relinquished by the Plan may be asserted after the
Effective Date to the same extent as if the Chapter 11 Cases had not been
commenced.
G. VOTES SOLICITED IN GOOD FAITH.
The Debtors have, and upon confirmation of the Plan shall be
deemed to have, solicited acceptances of the Plan in good faith and in
compliance with the applicable provisions of the Bankruptcy Code. The Debtors
(and each of their affiliates, agents, directors, officers, employees, advisors,
and attorneys) have participated in good faith and in compliance with the
applicable provisions of the Bankruptcy Code in the offer, issuance, sale, and
purchase of the securities offered and sold under the Plan and therefore have
not, and on account of such offer, issuance, sale, solicitation, and/or purchase
will not be, liable at any time for the violation of any applicable law, rule,
or regulation governing the solicitation of acceptances or rejections of the
Plan or the offer, issuance, sale, or purchase of the securities offered and
sold under the Plan.
H. ADMINISTRATIVE CLAIMS INCURRED AFTER THE CONFIRMATION
DATE.
Administrative Claims incurred by the Reorganized Debtors
after the date
<PAGE>
and time of the entry of the Confirmation Order, including (without limitation)
Claims for professionals' fees and expenses incurred after such date, shall not
be subject to application and may be paid by the Reorganized Debtors in the
ordinary course of business and without application for or Court approval.
I. THE DEBTORS' RELEASE.
On the Effective Date, the Debtors and the Reorganized
Debtors, on behalf of themselves and their estates, shall be deemed to release
unconditionally all of their respective officers, directors, employees,
advisors, attorneys, financial advisors, accountants, and other professionals
and each of the Indenture Trustees, counsel to each of the respective Indenture
Trustees, the Creditors Committee members, counsel to the Creditors Committee,
the Informal Committee members, counsel to the Informal Committee, financial
advisors to the Creditors Committee and Informal Committee and each of their
representatives and agents (including any professionals retained by such persons
or entities) (the "RELEASED PARTIES") from any and all claims, obligations,
suits, judgments, damages, rights, Causes of Action and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, based in whole or in part upon actions taken in
their respective capacities described above or any omission, transaction, event
or other occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Chapter 11 Cases or the Plan, except that (i) no
individual shall be released from any act or omission that constitutes gross
negligence or willful misconduct, and (ii) the Reorganized Debtors shall not
relinquish or waive the right to assert any of the foregoing as a legal or
equitable defense or right of set-off or recoupment against any Claims of any
such persons asserted against the Debtors.
J. EXCULPATION, RELEASE AND INJUNCTION OF RELEASED PARTIES.
1. EXCULPATION. The Debtors and the Reorganized
Debtors and the Released Parties shall have no liability whatsoever to any
holder or purported holder of an Administrative Claim, Claim, or Equity Interest
for any act or omission in connection with, or arising out of, the Plan, the
Disclosure Statement, the negotiation of the Plan, the negotiation of the other
documents included in the Plan Supplement, the pursuit of approval of the
Disclosure Statement or the solicitation of votes for confirmation of the Plan,
the Chapter 11 Cases, the consummation of the Plan, the administration of the
Plan or the property to be distributed under the Plan, or any transaction
contemplated by the Plan or Disclosure Statement or in furtherance thereof
(including, without limitation, the Equity Incentive Plan, employment contracts,
programs and arrangements adopted in connection with the Plan or the Chapter 11
Cases), except for willful misconduct or gross negligence as determined by a
Final Order, and, in all respects, shall be entitled to rely upon the advice of
counsel with respect to their duties and responsibilities under the Plan. This
exculpation shall be in addition to, and not in limitation of, all other
releases, indemnities, exculpations and any other applicable
<PAGE>
law or rules protecting such Released Parties from liability.
2. INJUNCTION. Pursuant to section 105 of the
Bankruptcy Code, no holder or purported holder of an Administrative Claim, Claim
or Equity Interest shall be permitted to commence or continue any action,
employment of process, or any act to collect, offset, or recover any claim
against a Released Party that accrued on or prior to the Effective Date and has
been released or waived pursuant to Section VIII.J.1.
3. LIMITATION OF GOVERNMENTAL RELEASES.
Notwithstanding Sections VIII.J.1. and 2 of the Plan, the Plan shall not
release, discharge, or exculpate any non-debtor party from any debt owed to the
United States Government and/or its agencies, including the Pension Benefit
Guaranty Corporation (the "GOVERNMENT"), or from any liability arising under the
Internal Revenue Code, the Employee Retirement Income Security Act of 1974, as
amended, or the environmental laws, securities laws or criminal laws of the
United States. In addition, notwithstanding Sections VIII.J.1. and 2 of the
Plan, the Plan shall not enjoin or prevent the Government from collecting any
such liability from any such non-debtor party.
K. TERM OF BANKRUPTCY INJUNCTION OR STAYS.
All injunctions or stays provided for in the Chapter 11 Cases
under sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence
on the Confirmation Date, shall remain in full force and effect until the
Effective Date.
L. PRESERVATION OF INSURANCE.
The Debtors' discharge and release from all Claims as provided
herein, except as necessary to be consistent with this Plan, shall not diminish
or impair the enforceability of any insurance policy that may cover Claims
against the Debtors, the Reorganized Debtors (including, without limitation, its
officers and directors) or any other person or entity.
M. OFFICERS' AND DIRECTORS' INDEMNIFICATION RIGHTS AND
INSURANCE.
Notwithstanding any other provisions of the Plan, the
obligations of the Debtors to indemnify their directors, officers, and employees
against any obligations, liabilities, costs or expenses pursuant to the articles
of incorporation or by-laws of the Debtors, applicable state law, specific
agreement, or any combination of the foregoing, shall survive the Effective
Date. In addition, the Reorganized Debtors shall obtain tail coverage under
their existing directors and officers liability insurance policy covering their
existing directors and officers for any and all Claims brought against them,
which coverage shall extend for a period of not less than six (6) years after
the Effective Date, subject to the reasonable approval of price and terms
thereof by Satellite Fund Management, LLC, DDJ
<PAGE>
Capital Management LLC and Loomis Sayles & Company LP.
IX.
RETENTION OF JURISDICTION
The Court shall have exclusive jurisdiction of all matters
arising out of, and related to, the Chapter 11 Cases and the Plan pursuant to,
and for the purposes of, section 105(a) and section 1142 of the Bankruptcy Code
and for, among other things, the following purposes: (1) to hear and determine
applications for the assumption or rejection of executory contracts or unexpired
leases pending on the Confirmation Date, and the allowance of Claims resulting
therefrom; (2) to determine any other applications, adversary proceedings, and
contested matters pending on the Effective Date; (3) to ensure that
distributions to holders of Allowed Claims and Allowed Equity Interests are
accomplished as provided herein; (4) to resolve disputes as to the ownership of
any Claim or Equity Interest; (5) to hear and determine timely objections to
Administrative Claims, Claims and Equity Interests; (6) to enter and implement
such orders as may be appropriate in the event the Confirmation Order is for any
reason stayed, revoked, modified or vacated; (7) to issue such orders in aid of
execution of the Plan, to the extent authorized by section 1142 of the
Bankruptcy Code; (8) to consider any modifications of the Plan, to cure any
defect or omission, or to reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order; (9) to hear and determine
all applications for compensation and reimbursement of expenses of professionals
under sections 330, 331, and 503(b) of the Bankruptcy Code; (10) to hear and
determine disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan; (11) to hear and determine any issue
for which the Plan requires a Final Order of the Court; (12) to hear and
determine matters concerning state, local, and federal taxes in accordance with
sections 346, 505 and 1146 of the Bankruptcy Code; (13) to hear any other matter
not inconsistent with the Bankruptcy Code; (14) to hear and determine disputes
arising in connection with compensation and reimbursement of expenses of
professionals for services rendered during the period commencing on the
Confirmation Date through and including the Effective Date; and (15) to enter a
final decree closing the Chapter 11 Cases.
X.
MISCELLANEOUS PROVISIONS
A. PAYMENT OF STATUTORY FEES.
All fees payable on or before the Effective Date (i) pursuant
to section 1930 of title 28 of the United States Code, as determined by the
Court at the
<PAGE>
Confirmation Hearing, and (ii) to the United States Trustee, shall be paid by
the Debtors on or before the Effective Date and all such fees payable after the
Effective Date shall be paid by the Reorganized Debtors.
B. DISSOLUTION OF CREDITORS COMMITTEE.
The appointment of the Creditors Committee shall terminate on
the Effective Date except that it shall survive for the limited purposes of
reviewing applications for final allowance of compensation and reimbursement of
expenses of professionals and with respect to any appeal of the Confirmation
Order.
C. MODIFICATION OF THE PLAN.
The Debtors reserve the right, in accordance with the
Bankruptcy Code, to amend or to modify the Plan prior to the entry of the
Confirmation Order. After entry of the Confirmation Order, the Reorganized
Debtors or the Debtors may amend or modify the Plan, or remedy any defect or
omission or reconcile any inconsistency in the Plan in such a manner as may be
necessary to carry out the purpose and intent of the Plan. Any material
modifications to the Plan shall be subject to the Creditors Committee's consent.
D. GOVERNING LAW.
Unless a rule of law or procedure is supplied by Federal law
(including the Bankruptcy Code and Bankruptcy Rules) or the Delaware General
Corporation Law or such other corporate law that may apply to the Subsidiaries,
the laws of the State of New York (without reference to the conflicts of laws
provisions thereof) shall govern the construction and implementation of the Plan
and any agreements, documents, and instruments executed in connection with the
Plan.
E. FILING OR EXECUTION OF ADDITIONAL DOCUMENTS.
On or before the Effective Date, the Debtors or the
Reorganized Debtors, shall file with the Court or execute, as appropriate, such
agreements and other documents as may be necessary or appropriate to effectuate
and further evidence the terms and conditions of the Plan.
F. WITHHOLDING AND REPORTING REQUIREMENTS.
In connection with the Plan and all instruments issued in
connection therewith and distributions thereon, the Reorganized Debtors shall
comply with all withholding and reporting requirements imposed by any federal,
state, local, or foreign taxing authority and all distributions hereunder shall
be subject to any such withholding and reporting requirements.
G. EXEMPTION FROM TRANSFER TAXES.
<PAGE>
Pursuant to section 1146(c) of the Bankruptcy Code, the
issuance, transfer or exchange of New Senior Notes, New Common Stock or New
Warrants under the Plan, the making or assignment of any lease or sublease or
the making or delivery of any other instrument whatsoever, in furtherance of or
in connection with the Plan shall not be subject to any stamp, real estate
transfer, recording or other similar tax.
H. SECTION 1145 EXEMPTION.
Pursuant to, in accordance with, and solely to the extent
provided under section 1145 of the Bankruptcy Code, the issuance of the New
Senior Notes, New Common Stock and New Warrants under the Plan is exempt from
the registration requirements of Section 5 of the Securities Act, as amended,
and any State or local law requiring registration for offer or sale of a
security or registration or licensing of an issuer of, underwriter of, or broker
or dealer in such New Senior Notes, New Common Stock or New Warrants and is
deemed to be a public offering of New Senior Notes, New Common Stock and New
Warrants.
I. WAIVER OF FEDERAL RULE OF CIVIL PROCEDURE 62(A).
The Debtors may request that the Confirmation Order include
(a) a finding that Fed. R. Civ. P. 62(a) shall not apply to the Confirmation
Order and (b) authorization for the Debtors to consummate the Plan immediately
after entry of the Confirmation Order.
J. HEADINGS.
Headings used in the Plan are for convenience and reference
only and shall not constitute a part of the Plan for any purpose.
K. EXHIBITS/SCHEDULES.
All Exhibits and Schedules to the Plan are incorporated into
and constitute a part of the Plan as if set forth herein.
L. NOTICES.
All notices, requests, and demands hereunder to be effective
shall be in writing and unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when actually delivered or, in the case
of notice by facsimile transmission, when received and telephonically confirmed,
addressed as follows:
TO THE DEBTORS: The Penn Traffic Company, 411 Theodore Fremd
Avenue, Attention: Martin A. Fox, with a copy to Paul, Weiss, Rifkind, Wharton
& Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064,
<PAGE>
attention: Alan W. Kornberg, Tel.: (212) 373-3000/Fax: (212) 757-3990.
TO THE CREDITORS COMMITTEE: Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 590 Madison Avenue, New York, New York 10022, attention: Daniel H.
Golden, Tel.: (212) 872-8010/Fax: (212) 872-1002.
M. PLAN SUPPLEMENT.
Forms of the documents relating to the Amended Penn Traffic
Certificate of Incorporation, the Amended Penn Traffic Bylaws, the Amended
Subsidiaries Certificates of Incorporation, the Amended Subsidiaries By-Laws,
the New Notes Indenture, the Warrant Agreement, the Registration Rights
Agreement, New Management Agreement, investment guidelines referred to in
Section VII.C.2.(a)(ii), the Supplemental Retirement Plan, the Amendment to
Joseph V. Fisher's Employment Agreement and Equity Incentive Plan shall be
contained in the Plan Supplement which has been filed with the Clerk of the
Court. The Plan Supplement may be inspected in the office of the Clerk of the
Court during normal court hours. Holders of Claims or Equity Interests may
obtain a copy of the Plan Supplement upon written request to the Debtors in
accordance with Section X.L. of the Plan.
N. CONFLICT.
The terms of this Plan shall govern in the event of any
inconsistency with the summaries of the Plan set forth in the Disclosure
Statement.
O. SETOFF BY THE UNITED STATES.
The valid setoff rights, if any, of the United States of
America will be unaffected by this Plan or confirmation thereof.
XI.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Other than (i) executory contacts or unexpired leases which
(x) are the subject of a motion to reject pending on the Confirmation Date, (y)
were previously assumed or rejected by the Debtors, or (z) have expired or
terminated pursuant to their own terms during the pendency of the Chapter 11
Cases, (ii) employment agreements, if any, terminated prior to or in connection
with the Plan, and (iii) Pension Plans, which are specifically dealt with in
Article XII of the Plan, all of the executory contracts, unexpired leases and
employment agreements that exist between the Debtors and any person are
specifically assumed as of the Effective Date pursuant to the Plan. All Claims
for damages arising from the rejection of
<PAGE>
executory contracts or unexpired leases must be filed with the Court in
accordance with the terms of the order authorizing such rejection. Any Claims
not filed within such time will be forever barred from assertion against the
Debtors, their estates and the Reorganized Debtors. All Allowed Claims arising
from the rejection of executory contracts or unexpired leases shall be treated
as Class 5 Claims. The Reorganized Debtors, except as otherwise agreed by the
parties, will cure any and all undisputed defaults within 60 days of the
Effective Date under any executory contract, unexpired lease or employment
agreement assumed pursuant to the Plan in accordance with section 365 of the
Bankruptcy Code. All disputed defaults that are required to be cured shall be
cured either within 30 days of the entry of a Final Order determining the
amount, if any, of the Debtors or the Reorganized Debtors' liability with
respect thereto, or as may otherwise be agreed to by the parties.
XII.
BENEFIT PLANS
All employment and severance agreements and policies, and all
employee compensation and benefit plans, policies, and programs of the Debtors
applicable generally to its employees, including agreements and programs subject
to section 1114 of the Bankruptcy Code, as in effect on the Effective Date,
including, without limitation, all savings plans, retirement plans, health care
plans, disability plans, severance benefit plans, incentive plans, and life,
accidental death, and dismemberment insurance plans, but not including the
Pension Plans, shall be deemed to be, and shall be treated as though they are,
executory contracts that are assumed under the Plan, and the Debtors'
obligations under such agreements and programs shall survive the Effective Date
of the Plan, without prejudice to the Reorganized Debtors' rights under
applicable non-bankruptcy law to modify, amend, or terminate the foregoing
arrangements, except for (i) such executory contracts or plans specifically
rejected pursuant to the Plan (to the extent such rejection does not violate
section 1114 of the Bankruptcy Code) and (ii) such executory contracts or plans
as have previously been terminated, or rejected, pursuant to a Final Order, or
specifically waived by the beneficiaries of such plans, contracts, or programs.
Debtors affirm and agree that they are and will, immediately
following the Effective Date, continue to be the contributing sponsors of the
Pension Plans which are defined benefit pension plans insured by the Pension
Benefit Guaranty Corporation (the "PBGC") under Title IV of the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sections 1301-1461;
that the Pension Plans are subject to minimum funding requirements of ERISA and
Section 412 of the Internal Revenue Code; that no provision of the Plan, the
Confirmation Order, or Section 1141 of the Bankruptcy Code, shall, or shall be
construed to, discharge, release, or relieve the Debtors or any other party, in
any capacity, from any liability with respect to the Pension Plans under ERISA
or under Internal Revenue Code Section 412; and that neither the PBGC nor the
Pension Plans shall be enjoined from enforcing such liability as a result of the
Plan's provisions for satisfaction, release and discharge of claims.
<PAGE>
XIII.
EFFECTIVENESS OF THE PLAN
A. CONFIRMATION OF THE PLAN.
The Plan can be confirmed either under section 1129(a) of the
Bankruptcy Code or in a non-consensual manner under section 1129(b) of the
Bankruptcy Code so long as the conditions of Section XIII.B.1. have been
satisfied or waived pursuant to Section XIII.B.2.
B. EFFECTIVENESS OF THE PLAN.
1. CONDITIONS PRECEDENT TO EFFECTIVENESS
The Plan shall not become effective unless and until
it has been confirmed and the following conditions have been satisfied in full
or waived pursuant to Section XIII.B.2.: (1) the Confirmation Order in a form
satisfactory to the Debtors and the Creditors Committee shall have become a
Final Order; (2) the Effective Date shall have occurred within six months
following the Petition Date; (3) the Amended Penn Traffic Certificate of
Incorporation and Amended Subsidiaries Certificates of Incorporation shall have
been properly filed with the Secretary of State in their respective state of
incorporation; (4) all authorizations, consents and regulatory approvals
required (if any) for the Plan's effectiveness shall have been obtained; (5) the
Court shall have ordered the substantive consolidation of the Chapter 11 Cases
as provided in Section VI of the Plan; (6) the aggregate amount of Class 5
Claims does not exceed $50 million; and (7) on the Effective Date, the
Reorganized Debtors have entered into a senior secured credit facility of not
less than $275 million consisting of a term loan and a revolving working capital
facility that will have not less than $50 million of undrawn availability
thereunder in form acceptable to Satellite Fund Management, LLC, DDJ Capital
Management, LLC and Loomis Sayles & Company, LP.
2. WAIVER OF CONDITIONS
The Debtors may waive any or all of the conditions
set forth in Section XIII.B.1. above at any time, with the prior consent of the
Creditors Committee, without leave of or order of the Court and without any
formal action.
3. EFFECT OF FAILURE OF CONDITIONS
In the event that the Effective Date does not occur
on or before one hundred and twenty (120) days after the Confirmation Date, upon
notification submitted by the Debtors to the Court: (a) the Confirmation Order
shall be vacated, (b) no distributions under the Plan shall be made, (c) the
Debtors and all holders of
<PAGE>
Claims and Equity Interests shall be restored to the STATUS QUO ANTE as of the
day immediately preceding the Confirmation Date as though the Confirmation Date
had never occurred, and (d) the Debtors' obligations with respect to the Claims
and Equity Interests shall remain unchanged and nothing contained in the Plan
shall constitute or be deemed a waiver or release of any Claims or Equity
Interests by or against the Debtors or any other person or to prejudice in any
manner the rights of the Debtors or any person in any further proceedings
involving the Debtors.
<PAGE>
4. VACATUR OF CONFIRMATION ORDER
If an order denying confirmation of the Plan is
entered, then the Plan shall be null and void in all respects, and nothing
contained in the Plan shall (a) constitute a waiver or release of any Claims
against or Equity Interests in the Debtors; (b) prejudice in any manner the
rights of the holder of any Claim against, or Equity Interest in, the Debtors;
(c) prejudice in any manner any right, remedy or claim of the Debtors; or (d) be
deemed an admission against interest by the Debtors.
Dated: April 2, 1999, as amended, May 25, 1999
THE PENN TRAFFIC COMPANY
By:
---------------------------------
Name: Martin A. Fox
Title: Vice Chairman-Finance
DAIRY DELL, INC.
By:
---------------------------------
Name: Martin A. Fox
Title: Vice President
BIG M SUPERMARKETS, INC.
By:
---------------------------------
Name: Martin A. Fox
Title: Vice President
PENNY CURTISS BAKING COMPANY, INC.
By:
---------------------------------
Name: Martin A. Fox
Title: Vice President
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
I. DEFINITIONS AND CONSTRUCTION OF TERMS..............................................................1
A. Definitions...................................................................................1
B. Interpretation, Application of Definitions and Rules of
Construction.................................................................................15
II. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.....................................................15
A. Introduction.................................................................................15
1. Unclassified Claims (not entitled to vote on the Plan)...................................16
2. Unimpaired Classes Of Claims (deemed to have accepted the Plan
and, therefore, not entitled to vote on the Plan)........................................16
3. Impaired Classes of Claims and Equity Interests (entitled to vote on
the Plan)................................................................................16
III. TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS............................................................17
A. Administrative Claims. ......................................................................17
B. Professional Compensation And Reimbursement Claims...........................................17
C. Fees and Expenses of the Informal Committee and Informal Trade
Committee....................................................................................18
D. Priority Tax Claims..........................................................................18
IV. TREATMENT OF CLAIMS AND EQUITY INTERESTS..........................................................18
A. Class 1 - Other Priority Claims..............................................................18
1. Distributions............................................................................18
2. Impairment and Voting....................................................................19
B. Class 2 - Other Secured Claims...............................................................19
1. Distributions............................................................................19
2. Impairment and Voting....................................................................19
C. Class 3 - DIP Financing Claims...............................................................19
D. Class 4 - Trade Claims.......................................................................20
1. Distributions............................................................................20
2. Impairment and Voting....................................................................20
E. Class 5 - General Unsecured Claims...........................................................20
1. Distributions............................................................................20
2. Impairment and Voting....................................................................20
F. Class 6 - Senior Note Claims.................................................................20
1. Distributions............................................................................20
2. Impairment and Voting....................................................................21
3. Allowance................................................................................21
G. Class 7 - Senior Subordinated Note Claims....................................................21
1. Distributions............................................................................21
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2. Impairment and Voting....................................................................22
3. Allowance................................................................................22
H. Class 8 - Equity Interests...................................................................22
1. Distributions............................................................................22
2. Impairment and Voting....................................................................22
V. PROVISIONS REGARDING CORPORATE GOVERNANCE AND
MANAGEMENT OF THE REORGANIZED DEBTORS.............................................................23
A. Directors and Officers of Reorganized Penn Traffic; Amended
Certificate of Incorporation and Amended By-Laws.............................................23
1. The Initial Board of Directors...........................................................23
2. Management of Reorganized Penn Traffic...................................................23
3. Amended Penn Traffic Certificate of Incorporation and Amended
Penn Traffic By-Laws.....................................................................24
4. New Management Agreement.................................................................24
B. Directors and Officers of the Reorganized Subsidiaries.......................................25
1. The Initial Board of Directors...........................................................25
2. Management of the Reorganized Subsidiaries...............................................25
3. Amended Subsidiaries Certificates of Incorporation and Amended
Subsidiaries By-Laws.....................................................................25
C. Securities to Be Issued Pursuant to the Plan.................................................25
1. New Common Stock.........................................................................25
2. New Senior Notes.........................................................................26
3. The New Warrants.........................................................................26
D. Securities Laws Matters......................................................................26
E. Reorganized Penn Traffic Equity Incentive Plan...............................................26
VI. SUBSTANTIVE CONSOLIDATION OF THE DEBTORS..........................................................27
VII. PROVISIONS REGARDING VOTING AND DISTRIBUTIONS UNDER
THE PLAN AND TREATMENT OF DISPUTED, CONTINGENT AND
UNLIQUIDATED ADMINISTRATIVE CLAIMS, CLAIMS AND
EQUITY INTERESTS..................................................................................27
A. Voting of Claims and Equity Interests........................................................27
B. Nonconsensual Confirmation...................................................................27
C. Distributions................................................................................28
1. Method of Distributions Under the Plan...................................................28
2. Disputed Trade Claims and General Unsecured Claims.......................................30
(a) Distributions Withheld For Disputed Trade Claims.....................................30
(b) Distributions Withheld for Disputed General Unsecured
Claims..........................................................................30
3. Objections To And Resolution Of Administrative Claims, Claims
and Equity Interests; Administrative and Priority Claims Reserve.........................31
4. Allocation of Consideration..............................................................32
5. Cancellation and Surrender of Existing Securities and Agreements.........................32
6. Indenture Trustee Fees...................................................................33
</TABLE>
<PAGE>
<TABLE>
<S> <C>
VIII. IMPLEMENTATION AND EFFECT OF CONFIRMATION OF
THIS PLAN.........................................................................................34
A. Registration Rights Agreement, New Notes Indenture, the Amended
Penn Traffic Certificate of Incorporation, the Amended Penn Traffic
By-Laws, the Amended Subsidiaries Certificates of Incorporation, the
Amended Subsidiaries By-Laws, the New Management Agreement, the
Equity Incentive Plan, the Warrant Agreement, the Supplemental
Retirement Plan, the Amendment to Joseph V. Fisher's Employment
Agreement and Other Implementation Documents.................................................34
B. Continued Corporate Existence and Vesting of Assets in Reorganized
Debtors......................................................................................34
C. Termination of Subordination Rights..........................................................35
D. Discharge of the Debtors.....................................................................35
E. Injunction...................................................................................35
F. Preservation/Waiver of Causes of Action......................................................36
1. Preservation of Rights...................................................................36
G. Votes Solicited in Good Faith................................................................36
H. Administrative Claims Incurred after the Confirmation Date...................................37
I. The Debtors' Release.........................................................................37
J. Exculpation, Release and Injunction of Released Parties......................................37
1. Exculpation..............................................................................37
2. Injunction...............................................................................38
3. Limitation of Governmental Releases......................................................38
K. Term of Bankruptcy Injunction or Stays.......................................................38
L. Preservation of Insurance....................................................................38
M. Officers' and Directors' Indemnification Rights and Insurance................................39
IX. RETENTION OF JURISDICTION.........................................................................39
X. MISCELLANEOUS PROVISIONS..........................................................................40
A. Payment of Statutory Fees....................................................................40
B. Dissolution of Creditors Committee...........................................................40
C. Modification of the Plan.....................................................................40
D. Governing Law................................................................................40
E. Filing or Execution of Additional Documents..................................................41
F. Withholding and Reporting Requirements.......................................................41
G. Exemption From Transfer Taxes................................................................41
H. Section 1145 Exemption.......................................................................41
I. Waiver of Federal Rule of Civil Procedure 62(a)..............................................41
J. Headings.....................................................................................41
K. Exhibits/Schedules...........................................................................42
L. Notices......................................................................................42
M. Plan Supplement..............................................................................42
N. Conflict.....................................................................................42
O. Setoff by the United States..................................................................42
XI. EXECUTORY CONTRACTS AND UNEXPIRED LEASES..........................................................43
</TABLE>
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<TABLE>
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XII. BENEFIT PLANS.....................................................................................43
XIII. EFFECTIVENESS OF THE PLAN.........................................................................44
A. Confirmation of the Plan.....................................................................44
B. Effectiveness of the Plan....................................................................44
1. Conditions Precedent to Effectiveness....................................................44
2. Waiver of Conditions.....................................................................45
3. Effect of Failure of Conditions..........................................................45
4. Vacatur of Confirmation Order............................................................46
</TABLE>
EXHIBITS TO THE PLAN
A - Summary of New Senior Notes
B - Summary of New Warrants
C - Summary of New Management Agreement
D - Summary of Equity Incentive Plan
<PAGE>
Exhibit 99.1
Immediate Release: Contact: Marc Jampole
Jampole Communications, Inc.
412-471-2463
PENN TRAFFIC ANNOUNCES CONFIRMATION
OF PRE-NEGOTIATED FINANCIAL RESTRUCTURING
SYRACUSE, NEW YORK, MAY 27, 1999 --- The Penn Traffic Company (OTC:
PNFT) today announced that the U.S. Bankruptcy Court for the District of
Delaware confirmed its Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code.
Penn Traffic expects that its Plan of Reorganization will be effective
in approximately two weeks.
"The Company has successfully completed its financial restructuring,"
said Gary D. Hirsch, Chairman of Penn Traffic. "We now look forward to
continuing the process of rebuilding our franchise and profitability. This has
certainly been a challenging time for our Company. We have come through this
process very well with the cooperation of all parties and the efforts of our
employees."
"The creditors are pleased with the rapid confirmation of the
restructuring plan and look forward to the future success of the Company," said
Jeffrey Werbalowsky, Senior Managing Director, Houlihan, Lokey, Howard & Zukin
Capital, financial advisor to the Official Committee of Unsecured Creditors.
"Our employees continue to dedicate themselves to improving our
business and serving our customers," said Joseph V. Fisher, President and Chief
Executive Officer of Penn Traffic. "We now have a great opportunity to attract
more customers to our stores and rebuild our market share. It's an exciting time
at Penn Traffic."
Penn Traffic filed its petition for relief under Chapter 11 on March 1,
1999, seeking to implement a pre-negotiated financial restructuring with the
holders of its senior and subordinated notes.
(more)
<PAGE>
The Penn Traffic Company
Page 2
The restructuring will cancel Penn Traffic's existing $1.13 billion of
senior and subordinated notes and (i) distribute $100 million of new senior
notes and 19,000,000 shares of new common stock to the holders of existing
senior notes and (ii) distribute 1,000,000 shares of new common stock and
six-year warrants to purchase 1,000,000 shares of new common stock having an
exercise price of $18.30 per share to the holders of the existing senior
subordinated notes. In addition, each 100 shares of Penn Traffic's common stock
outstanding immediately prior to the restructuring will be converted into one
share of new common stock for a total of approximately 107,000 shares of
additional new common stock.
Penn Traffic also announced it expects to enter into a new $340 million
secured credit facility with a bank group led by Fleet Capital Corporation as
agent. Proceeds from the new facility will be used to satisfy the Company's
obligations under its debtor-in-possession facility and for its ongoing working
capital and capital expenditure requirements. The credit facility is initially
expected to have more than $100 million in unused borrowing capacity.
"Our new capital structure will enable us to launch an aggressive store
and infrastructure capital program," said Mr. Hirsch. "We expect over the next
18 months to make capital expenditures of approximately $100 million for new,
enlarged and remodeled stores and for other investments. With our dramatically
reduced debt burden, we expect to be able to implement this program while
maintaining substantial financial flexibility and liquidity."
Certain statements included above which are not statements of
historical fact are intended to be, and are hereby identified as,
"forward-looking statements" as defined in the Securities Exchange Act of 1934,
as amended, and involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the success or failure of the Company in implementing its
current business and operational strategies; the ability of the Company to
consummate its Chapter 11 Plan and close the new secured credit facility
described above; and availability and terms of necessary or desirable financing
or refinancing.
********************************************************************************
The Penn Traffic Company operates 214 supermarkets in Pennsylvania,
upstate New York, Ohio and West Virginia under the "Big Bear," "Big Bear Plus,"
"Bi-Lo Foods,"
<PAGE>
"P&C Foods," and "Quality Markets" trade names. Penn Traffic also operates
wholesale food distribution businesses serving 93 licensed franchises and 77
independent operators.
