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): March 1, 1999
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 of File Number) Identification No.)
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 March 1, 1999, The Penn Traffic Company issued a press release
attached as Exhibit 99.1 hereto that announced that The Penn Traffic Company and
certain of its subsidiaries filed a petition for relief under chapter 11 of the
Bankruptcy Code in the Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"). The petition seeks Bankruptcy Court approval to implement a
prenegotiated financial restructuring with the holders of its senior and
subordinated noteholders in accordance with the Joint Plan of Reorganization
(the "Plan"), which was also filed with the Bankruptcy Court and is attached
hereto as Exhibit 2.1. In addition to the approval of the Bankruptcy Court, the
Plan is also subject to receiving the approval of the requisite number and
amount of certain of Penn Traffic's creditors and equity holders.
The proposed restructuring plan contemplates the substantial
deleveraging of Penn Traffic by canceling its existing $1.13 billion of senior
and subordinated notes and (i) distributing $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) distributing 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, the restructuring contemplates that each 100 shares of Penn
Traffic's common stock outstanding immediately prior to the restructuring shall
be converted into 1 share of new common stock for a total of approximately
110,000 shares of new common stock.
As part of the chapter 11 case, Penn Traffic will immediately seek
Bankruptcy Court permission to continue to pay in full its trade creditors that
provide customary credit and terms during the chapter 11 case. Penn Traffic also
agreed to a $300 million in Debtor-in-Possession credit facility with a bank
group led by Fleet Capital Corporation as agent, which facility is also subject
to Bankruptcy Court approval. This facility will have approximately $100 million
in unused borrowing capacity.
For a further description of Penn Traffic's proposed restructuring
plan, see the Joint Plan of Reorganization filed with the Bankruptcy Court on
March 1, 1999 attached hereto as Exhibit 2.1 and the Press Release attached
hereto as Exhibit 99.1.
Item 7. Exhibits.
(c) Exhibits.
Page 2
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2.1 Joint Plan of Restructuring 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.
99.1 Press Release, dated March 1, 1999, announcing the filing of a
prenegotiated financial restructuring.
Page 3
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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: March 2, 1999
Page 4
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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 Restructuring 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.
99.1 Press Release, dated March 1, 1999,
announcing the filing of a prenegotiated
financial restructuring.
Page 5
EXHIBIT 2.1
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
)
THE PENN TRAFFIC COMPANY, et al., ) Case No. 99-_____ ( )
)
) Jointly Administered
Debtors. )
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.
1110 N. Market Street
P.O. Box 391
Rodney Square North, 11th Floor
Wilmington, Delaware 19801
(302) 571-6600
Attorneys for the Debtors
Dated: Wilmington, Delaware
March 1, 1999
<PAGE>
Table of Contents
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Page
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I. DEFINITIONS AND CONSTRUCTION OF TERMS.................................1
A. Definitions.......................................................1
B. Interpretation, Application of Definitions and Rules of
Construction.....................................................14
II. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS........................15
A. Introduction.....................................................15
1. Unclassified Claims (not entitled to vote on the Plan).......15
2. Unimpaired Classes Of Claims (deemed to have accepted
the Plan and, therefore, not entitled to vote on the Plan)...15
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...16
A. Administrative Claims. ..........................................16
B. Professional Compensation And Reimbursement Claims...............17
C. Fees and Expenses of the Informal Committee .....................17
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........................................18
B. Class 2 - Other Secured Claims...................................18
1. Distributions................................................18
2. Impairment and Voting........................................19
C. Class 3 - DIP Financing Claims...................................19
D. Class 4 - Trade Claims...........................................19
1. Distributions................................................19
2. Impairment and Voting........................................19
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........................................20
3. Allowance....................................................20
G. Class 7 - Senior Subordinated Note Claims........................21
1. Distributions................................................21
2. Impairment and Voting........................................21
3. Allowance....................................................21
H. Class 8 - Equity Interests.......................................21
1. Distributions................................................21
2. Impairment and Voting........................................22
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Page
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V. PROVISIONS REGARDING CORPORATE GOVERNANCE AND MANAGEMENT
OF THE REORGANIZED DEBTORS...........................................22
A. Directors and Officers of Reorganized Penn Traffic; Amended
Certificate of Incorporation and Amended By-Laws.................22
1. The Initial Board of Directors...............................22
2. Management of Reorganized Penn Traffic.......................22
3. Amended Penn Traffic Certificate of Incorporation
and Amended Penn Traffic By-Laws.............................23
4. New Management Agreement.....................................24
B. Directors and Officers of the Reorganized Subsidiaries...........24
1. The Initial Board of Directors...............................24
2. Management of the Reorganized Subsidiaries...................24
3. Amended Subsidiaries Certificates of
Incorporation and Amended Subsidiaries By-Laws...............24
C. Securities to Be Issued Pursuant to the Plan.....................25
1. New Common Stock.............................................25
2. New Senior Notes.............................................25
3. The New Warrants.............................................25
D. Securities Laws Matters..........................................25
E. Reorganized Penn Traffic Equity Incentive Plan...................26
VI. SUBSTANTIVE CONSOLIDATION OF THE DEBTORS.............................26
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....................................................27
1. Method of Distributions Under the Plan.......................27
2. Disputed General Unsecured Claims, Senior Note Claims,
Senior Subordinated Note Claims and Equity Interests.........29
3. Surplus Distributions to Holders of Allowed Unsecured
Claims.......................................................30
4. Objections To And Resolution Of Administrative Claims,
Claims and Equity Interests; Administrative and Priority
Claims Reserve...............................................31
5. Allocation of Consideration..................................32
6. Cancellation and Surrender of Existing Securities and
Agreements...................................................32
7. Indenture Trustee Fees.......................................32
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Page
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VIII. IMPLEMENTATION AND EFFECT OF CONFIRMATION OF THIS PLAN...............33
A. Registration Rights Agreement, New Notes Indenture, New
Warrants, Warrant Agreement, the Amended Penn Traffic
Certificate of Incorporation, the Amended Penn Traffic By-Laws,
the Amended Subsidiaries Certificates of Incorporation, the
Amended Subsidiaries By-Laws and Other Implementation
Documents........................................................33
B. Continued Corporate Existence and Vesting of Assets in
Reorganized Debtors..............................................33
C. Termination of Subordination Rights..............................33
D. Discharge of the Debtors.........................................34
E. Injunction.......................................................34
F. Preservation/Waiver of Causes of Action..........................35
1. Preservation of Rights.......................................35
G. Votes Solicited in Good Faith....................................35
H. Administrative Claims Incurred after the Confirmation Date.......36
I. The Debtors' Release.............................................36
J. Exculpation, Release and Injunction of Released Parties..........36
1. Exculpation..................................................36
2. Injunction...................................................37
3. Limitation of Governmental Releases..........................37
K. Term of Bankruptcy Injunction or Stays...........................37
L. Preservation of Insurance........................................37
M. Officers' and Directors' Indemnification Rights and Insurance....37
IX. RETENTION OF JURISDICTION............................................38
X. MISCELLANEOUS PROVISIONS.............................................39
A. Payment of Statutory Fees........................................39
B. Dissolution of Creditors Committee...............................39
C. Modification of the Plan.........................................39
D. Governing Law....................................................39
E. Filing or Execution of Additional Documents......................39
F. Withholding and Reporting Requirements...........................40
G. Exemption From Transfer Taxes....................................40
H. Section 1145 Exemption...........................................40
I. Waiver of Federal Rule of Civil Procedure 62(a)..................40
J. Headings.........................................................40
K. Exhibits/Schedules...............................................40
L. Notices..........................................................41
M. Plan Supplement..................................................41
N. Conflict.........................................................41
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Page
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XI. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.............................42
XII. BENEFIT PLANS........................................................42
XIII. EFFECTIVENESS OF THE PLAN............................................43
A. Confirmation of the Plan.........................................43
B. Effectiveness of the Plan........................................43
1. Conditions Precedent to Effectiveness........................43
2. Waiver of Conditions.........................................43
3. Effect of Failure of Conditions..............................43
4. Vacatur of Confirmation Order................................45
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
iv
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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:
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 has the meaning assigned to such term in
CLAIMS RESERVE Section VII.C.4(b)(i) of the Plan.
<PAGE>
ALLOWED CLAIM OR ALLOWED means, with reference to any Claim or Equity
INTEREST 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 means the amended and restated Certificate of
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 means the amended and restated Certificates of
CERTIFICATES OF INCORPORATION Incorporation of the Reorganized Subsidiaries,
which shall be in substantially the forms
contained in the Plan Supplement.
2
<PAGE>
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. ss.ss. 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.
CHAPTER 11 CASES means the chapter 11 cases commenced by the
Debtors.
3
<PAGE>
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, if one is 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.
4
<PAGE>
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.
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.
5
<PAGE>
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
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%
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
October 16, 1991, between Penn Traffic, as
issuer, and Bankers Trust Company, 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.
6
<PAGE>
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% 2001 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% 2006 Note
Indenture, Bankers Trust Company, in its
capacity as trustee under such indenture, and
(iv) with respect to the 9 5/8% Note Indenture,
First Trust of California, N.A., in its capacity
as trustee under such indenture.
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.
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<PAGE>
INFORMAL COMMITTEE means the informal committee of certain holders
of Senior Notes and Senior Subordinated Notes
that was formed prior to the Petition Date.
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.
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.
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<PAGE>
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.
9 5/8% 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.
9 5/8% SENIOR SUBORDINATED means the 9 5/8% Notes, due April 15, 2005, of
NOTES Penn Traffic issued and outstanding under the 9
5/8% Note Indenture.
OLD COMMON STOCK means the common stock, par value $.10 per
share, issued by Penn Traffic and outstanding on
the Petition Date.
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.
9
<PAGE>
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.
OUTSTANDING NOTE AMOUNT has the meaning assigned to such term in Section
VII.C.2.(a)(i) of the Plan.
PENN TRAFFIC means The Penn Traffic Company.
PENNY CURTISS means Penny Curtiss Baking Company, Inc.
PETITION DATE means March 1, 1999, the date on which the
Debtors filed their petitions for relief
commencing the Chapter 11 Cases.
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.
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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.
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.
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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.
SENIOR NOTE CLAIMS means the unsecured Claims of the Senior
Noteholders.
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
SENIOR SUBORDINATED NOTE means the 9 5/8% Note Indenture.
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.
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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.
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.
SURPLUS DISTRIBUTIONS has the meaning assigned to such term in Section
VII.C.3 of the Plan.
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
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.
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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.
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.
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
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the things specifically identified are set forth for purposes of illustration,
clarity or 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.
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(b) Class 2: Other Secured Claims.
Class 2 consists of all Other Secured Claims.
(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
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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 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.
The reasonable fees and expenses incurred after the Petition Date by
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
(who 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
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
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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 Claim becomes an Allowed Priority Tax Claim, or as soon thereafter as is
practicable, or (b) equal annual Cash payments in an aggregate amount equal to
such Allowed Priority Tax Claim, together with interest at a fixed annual rate
equal to 8 1/4%, or such other rate determined by the Court, 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 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
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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.
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
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
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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 conditionally
Allowed in the following aggregate amounts: the 11 1/2% 2001 Senior Notes,
$111,835,000; the 10 1/4% Senior Notes, $131,915,000; the 8 5/8% Senior Notes,
$212,170,000; the 10 3/8% Senior Notes, $104,264,000; the 10.65% Senior Notes,
$103,472,000; and the 11 1/2 2006 Senior Notes, $104,285,000. The holders of
Senior Note Claims and Indenture Trustees under the Senior Note Indentures shall
not be required to file proofs of claim; provided, however, that the Debtors and
the Reorganized Debtors reserve the right to object to any Senior Note Claim for
any purpose whatsoever; provided, further, however, that any objections to the
Senior Note Claims shall be filed by the Confirmation Date.
G. CLASS 7 - SENIOR SUBORDINATED 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 Subordinated Note Claim will receive its pro rata
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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
conditionally Allowed in the aggregate amount of $414,345,000 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;
provided, however, that the Debtors and the Reorganized Debtors reserve the
right to object to any Senior Subordinated Note Claim for any purpose
whatsoever; provided, further, however, that any objections to the Senior
Subordinated Note Claims shall be filed by the Confirmation Date.
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
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Interests other than Old Common Stock shall be canceled on the Effective Date
and the holders thereof shall receive 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 the Informal Committee 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
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statements and for the selection of Reorganized Penn Traffic's independent
certified public accountants (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.
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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
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.
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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 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 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
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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.
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 Diary
Dell, Big M and Penn 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, (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) intercompany claims by and among the
Debtors or Reorganized Debtors, (iii) Subsidiary Equity Interests and (iv) 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.
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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 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.
(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.
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(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 five years after distribution shall
be added to the Reserve 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 third, fourth and
fifth anniversaries of the Effective Date.
(d) SATURDAYS, SUNDAYS, OR LEGAL HOLIDAYS. If any
payment 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
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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 GENERAL UNSECURED CLAIMS, SENIOR NOTE CLAIMS,
SENIOR SUBORDINATED NOTE CLAIMS AND EQUITY INTERESTS.
(a) DISTRIBUTIONS WITHHELD FOR DISPUTED GENERAL
UNSECURED CLAIMS, SENIOR NOTE CLAIMS, SENIOR SUBORDINATED NOTE CLAIMS AND EQUITY
INTERESTS.
(i) Establishment And Maintenance Of
Reserve. On the Effective Date, the Reorganized Debtors shall place
into a reserve an amount of Cash, New Senior Notes, New Common Stock
and New Warrants equal to 100% of the distributions to which holders of
Disputed General Unsecured Claims, Senior Note Claims, Senior
Subordinated Note Claims and Equity Interests would be entitled under
the Plan as of such date if such Disputed General Unsecured Claims,
Senior Note Claims, Senior Subordinated Note Claims or Equity Interests
were Allowed General Unsecured Claims, Senior Note Claims, Senior
Subordinated Note Claims and Equity Interests (the "Reserve"). With
respect to the Disputed Senior Note Claims and Disputed Senior
Subordinated Note Claims, such amounts shall be the principal amount of
such Disputed Senior Note Claim or Disputed Senior Subordinated Note
Claims plus interest accrued thereon up to and including the Petition
Date (the "Outstanding Note Amount").
(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 General Unsecured
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
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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. New Senior Notes
(including any interest earned thereon), New Common Stock (including
dividends paid on account thereof) and New Warrants held in the Reserve
shall be held in trust by the Reorganized Debtors for the benefit of
the potential claimants of such securities and shall not constitute
property of the Reorganized Debtors.
(iii) Distributions Upon Allowance Of
Disputed General Unsecured Claims, Senior Note Claims, Senior
Subordinated Note Claims and Equity Interests. The holder of a Disputed
General Unsecured Claim, Senior Note Claim, Senior Subordinated Note
Claim or Equity Interest that becomes an Allowed Claim or Equity
Interest subsequent to the Initial Distribution Date shall receive a
distribution of Cash, New Senior Notes, New Common Stock or New
Warrants, as the case may be, from the Reserve on the next Subsequent
Distribution Date that follows the Quarter during which such Disputed
General Unsecured Claim, Senior Note Claim, Senior Subordinated Note
Claim or Equity Interest becomes an Allowed Claim or Equity Interest
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 General
Unsecured Claim, Senior Note Claim, Senior Subordinated Note Claim or
Equity Interest had been an Allowed Claim or Equity Interest on or
prior to the Effective Date. Any Cash held in the Reserve after all
General Unsecured Claims have been Allowed or disallowed shall be
transferred to and become the property of the Reorganized Debtors.
3. SURPLUS DISTRIBUTIONS TO HOLDERS OF ALLOWED UNSECURED
CLAIMS. The following consideration shall constitute surplus distributions (the
"Surplus Distributions") pursuant to the Plan: (i) pursuant to Section
VII.C.1.(c), distributions under the Plan to holders of Allowed Senior Note
Claims, Senior Subordinated Note Claims and Equity Interests that are unclaimed
for a period of two years after distribution thereof; and (ii) to the extent
that a Disputed Senior Note Claim, Senior Subordinated Note Claim or Equity
Interest is not Allowed or becomes an Allowed Claim in an amount less than the
Outstanding Note Amount, the excess of New Senior Notes, shares of New Common
Stock and New Warrants in the Reserve over the amount of New Senior Notes, New
Common Stock and New Warrants actually distributed on account of such Disputed
Senior Note Claims, Senior Subordinated Note Claims and Equity Interests. Any
Surplus Distributions shall be canceled by the Reorganized Debtors.
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4. OBJECTIONS TO AND RESOLUTION OF ADMINISTRATIVE CLAIMS,
CLAIMS AND EQUITY INTERESTS; ADMINISTRATIVE AND PRIORITY CLAIMS RESERVE.
(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
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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.
5. ALLOCATION OF CONSIDERATION.
The aggregate consideration to be distributed to the holders
of Allowed Claims in each Class under the Plan 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.
6. 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, together with all instruments issued pursuant thereto, shall have no
further legal effect other than as evidence of any right to receive
distributions under the Plan.
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.
7. INDENTURE TRUSTEE FEES.
On the Effective Date, in full satisfaction of Allowed Claims
secured by an Indenture Trustee Charging Lien, each Indenture Trustee shall
receive an amount of Cash equal to the amount of reasonable fees and expenses of
such Indenture Trustee (including the reasonable fees and expenses of the
respective counsel retained by each Indenture Trustee), in accordance with and
to the extent provided for in the Senior Note Indentures or the Senior
Subordinated Note
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Indenture, as applicable, whether incurred prior or subsequent to the Petition
Date, without application by or on behalf of such Indenture Trustee or their
respective counsel to the Court, and any Indenture Trustee Charging Lien will be
released. Distributions made to the holders of Allowed Claims pursuant to the
Plan will not be reduced on account of such payments to each Trustee. Any
disputes between the Debtors or the Reorganized Debtors and any Indenture
Trustee with respect to such Indenture Trustee's fees and expenses shall be
determined by the Bankruptcy Court.
VIII.
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF THIS PLAN
A. REGISTRATION RIGHTS AGREEMENT, NEW NOTES INDENTURE, NEW WARRANTS,
WARRANT AGREEMENT, THE AMENDED PENN TRAFFIC CERTIFICATE OF
INCORPORATION, THE AMENDED PENN TRAFFIC BY-LAWS, THE AMENDED
SUBSIDIARIES CERTIFICATES OF INCORPORATION, THE AMENDED SUBSIDIARIES
BY-LAWS AND OTHER IMPLEMENTATION DOCUMENTS.
On or before the Effective Date, the Reorganized Debtors will execute
the Registration Rights Agreement, the New Notes Indenture, the Warrant
Agreement, the Amended Penn Traffic Certificate of Incorporation, the Amended
Penn Traffic By-Laws, the Amended Subsidiaries Certificates of Incorporation,
the Amended Subsidiaries By-Laws and Other Implementation Documents 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
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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 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. 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
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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 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
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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 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
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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 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
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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 Informal Committee's reasonable approval of price and terms
thereof.
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; (15) to hear and
determine disputes arising in connection with any fees and expenses of any
Indenture Trustee for services rendered through and including the Effective
Date; and (16) to enter a final decree closing the Chapter 11 Cases.
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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 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 later
of the sixtieth day following the Effective Date and the first date on which
there exists a Final Order with respect to the applications for final allowances
of compensation and reimbursement of expenses of the attorneys and financial
advisors to the Creditors Committee.
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 Informal 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, 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.
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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.
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.
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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, attention:
Alan W. Kornberg, Tel.: (212) 373-3000/Fax: (212) 757-3990.
To the Informal Committee: Stroock & Stroock & Lavan LLP, 180 Maiden
Lane, New York, New York 10038, attention: Daniel H. Golden, Tel: (212)
806-5400/Fax: (212) 806-6006.
[To the Creditors Committee:]
M. PLAN SUPPLEMENT.
Forms of the documents relating to the Amended Penn Traffic Certificate
of Incorporation, the Amended Penn Traffic Bylaws, Amended Subsidiaries
Certificates of Incorporation, Amended Subsidiaries By-Laws, New Senior Notes,
New Notes Indenture, New Warrants, Registration Rights Agreement, New Management
Agreement, investment guidelines referred to in Section VII.C.2.(a)(ii), 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.J. 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.
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XI.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Other than (i) executory contacts or unexpired leases which are the
subject of a motion to reject pending on the Confirmation Date, and (ii)
employment agreements, if any, terminated prior to or in connection with 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 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 Debtor, 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, shall be deemed to be, and shall be
treated as through they are, executory contracts that are assumed under the
Plan, but only to the extent that rights under such agreements and, programs are
held by the Debtors or individuals who are the Reorganized Debtors' employees as
of the Effective Date, and the Debtors' obligations under such agreements and
programs to individuals who are employees of the Debtors on the Effective Date
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
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been terminated, or rejected, pursuant to a Final Order, or specifically waived
by the beneficiaries of such plans, contracts, or programs.
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 Informal 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 the Informal Committee.
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 Informal
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
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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 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 Debtor or
any other person or to prejudice in any manner the rights of the Debtor or any
person in any further proceedings involving the Debtor.
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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: Wilmington, Delaware
March 1, 1999
THE PENN TRAFFIC COMPANY
By:___________________________
Name:
Title:
DAIRY DELL, INC.
By:___________________________
Name:
Title:
BIG M SUPERMARKETS, INC.
By:___________________________
Name:
Title:
PENNY CURTISS BAKING COMPANY, INC.
By:___________________________
Name:
Title:
45
EXHIBIT 99.1
------------
02/25/99
For Immediate Release
Contact: Marc Jampole
Jampole Communications, Inc.
(412) 471-2463
Penn Traffic Announces Filing
of Prenegotiated Financial Restructuring
March 1, 1999, Syracuse, New York - The Penn Traffic Company today
announced that, as planned, it has filed in the Bankruptcy Court for the
District of Delaware a petition for relief under Chapter 11 of the Bankruptcy
Code seeking to implement a prenegotiated financial restructuring with the
holders of its senior and subordinated notes. The filing also includes a
proposed plan of reorganization and related disclosure statement. This action
follows Penn Traffic's previously announced agreement in principle on the terms
of a financial restructuring with an informal committee of noteholders.
The restructuring will result in the substantial deleveraging of the
Company by canceling its existing $1.13 billion of senior and subordinated notes
and (i) distributing $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)
distributing 1,000,000 shares of 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,
the restructuring provides that each 100 shares of Penn Traffic's common stock
outstanding immediately prior to the restructuring shall be converted into 1
share of new common stock for a total of approximately 110,000 shares of
additional new common stock.
Penn Traffic will immediately seek Bankruptcy Court permission to
continue during the Chapter 11 case to provide for payment in full of all
obligations as they come due to Penn Traffic's trade creditors that continue to
support Penn Traffic with customary credit and terms. Penn Traffic also
announced it has agreed to a $300 million Debtor-in- Possession credit facility
(DIP) with a bank group led by Fleet Capital Corporation as agent; the DIP will
have approximately $100 million in unused borrowing capacity. This facility is
also subject to approval of the Bankruptcy Court.
It is expected that the Delaware Bankruptcy Court will hold hearings
promptly to consider approval of the DIP and Penn Traffic's motion to pay trade
creditors.
"The debt restructuring process has moved forward very expeditiously
with the cooperation of all parties," said Gary D. Hirsch, Chairman of The Penn
Traffic Company. "Our Company will emerge from the debt restructuring process
with an excellent capital
<PAGE>
2
structure and the financial flexibility to resume investing in and growing our
business. We appreciate the support of our employees, customers, vendors and
bank lenders during this challenging time. With their continued support, we
expect Penn Traffic to emerge as a prosperous and successful company."
"The noteholders are pleased that this next important step has been
taken and that the restructuring is progressing on a rapid schedule," said
Jeffrey Werbalowsky, Senior Managing Director, Houlihan, Lokey, Howard & Zukin
Capital, financial advisor to the informal committee. "The bondholders are
looking forward to participating in Penn Traffic's future successes as both
equity and debt holders."
Implementation of the restructuring is subject to consummation of the
Chapter 11 plan, which requires, among other things, Bankruptcy Court approval,
and no assurances of such approval can be given. This press release is not an
offer with respect to any securities or solicitation of acceptances of a Chapter
11 plan. Such an offer or solicitation will be made in compliance with all
applicable securities laws and provisions of the Bankruptcy Code.
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
conclude a consensual restructuring with its noteholders, its bank lenders and
other creditors on satisfactory terms or at all and the timing of such
restructuring; and availability, terms and access to capital and customary trade
credit.
The Penn Traffic Company operates 224 supermarkets in Pennsylvania,
upstate New York, Ohio and West Virginia under the "Big Bear," "Big Bear Plus,"
"Bi-Lo Foods," "P&C Foods," and "Quality Markets" trade names. Penn Traffic also
operates wholesale food distribution businesses serving 100 licensed and 83
independent operators.
