SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: June 15, 1996
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file No.: 33-48862
HOMELAND HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1311075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2601 Northwest Expressway
Oil Center-East, Suite 1100
Oklahoma City, Oklahoma 73112
(Address of principal executive offices) (Zip Code)
(405) 879-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of July 15, 1996.
Class A Common Stock, including redeemable common stock: 32,599,707 shares
Class B Common Stock: None
HOMELAND HOLDING CORPORATION
FORM 10-Q
FOR THE TWELVE WEEKS AND TWENTY-FOUR WEEKS
ENDED JUNE 15, 1996
INDEX
Page
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements......................... 1
Consolidated Balance Sheets
June 15, 1996 and December 30, 1995......... 1
Consolidated Statements of Operations
Twelve Weeks Ended June 15, 1996
and June 17, 1995........................... 3
Consolidated Statements of Operations
Twenty-Four Weeks Ended June 15, 1996
and June 17, 1995........................... 4
Consolidated Statements of Stockholders
Equity (Deficit)
Twelve Weeks Ended June 15, 1996 and
June 17, 1995.............................. 5
Consolidated Statements of Cash Flows
Twenty-Four Weeks Ended June 15, 1996 and
June 17, 1995............................... 6
Notes to Consolidated Financial Statements
June 15, 1996............................... 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 9
PART II OTHER INFORMATION
ITEM 5. Other Information............................ 14
ITEM 6. Exhibits and Reports on Form 8-K............. 14
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
ASSETS
June 15, December 30,
1996 1995
Current assets:
Cash and cash equivalents $ 6,854 $ 6,357
Receivables, net of allowance for uncollectible
accounts of $1,848 and $2,661 7,502 8,051
Inventories 39,476 42,830
Prepaid expenses and other current assets 2,055 2,052
Total current assets 55,887 59,290
Property, plant and equipment:
Land 9,810 9,919
Buildings 22,219 22,101
Fixtures and equipment 43,935 44,616
Land and leasehold improvements 22,582 23,629
Software 3,012 1,991
Leased assets under capital leases 27,079 29,062
Construction in progress 2,697 4,201
131,334 135,519
Less accumulated depreciation
and amortization 64,874 63,827
Net property, plant and equipment 66,460 71,692
Other assets and deferred charges 6,749 6,600
Total assets $129,096 $137,582
Continued
The accompanying notes are an integral part
of these consolidated financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands, except share and per share amounts)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
June 15, December 30,
1996 1995
Current liabilities:
Accounts payable - trade $ 17,501 $ 17,732
Salaries and wages 1,556 1,609
Taxes 5,146 4,876
Accrued interest payable 6,540 2,891
Other current liabilities 13,119 14,321
Long-term obligations in default classified as current 97,053 100,467
Current portion of obligations under capital
leases 2,746 2,746
Current portion of restructuring reserve 3,062 3,062
Total current liabilities 146,723 147,704
Long-term obligations:
Obligations under capital leases 6,141 9,026
Other noncurrent liabilities 5,224 6,133
Noncurrent restructuring reserve 2,455 2,808
Total long-term obligations 13,820 17,967
Commitments and contingencies - -
Redeemable common stock, Class A, $.01 par value,
1,720,718 shares at June 15, 1996 and at
December 30, 1995, at redemption value 17 17
Stockholders' deficit:
Common stock
Class A, $.01 par value, authorized - 40,500,000
shares, issued - 33,748,482 shares at June 15,
1996 and at December 30, 1995,
outstanding - 30,878,989 shares 337 337
Additional paid-in capital 55,886 55,886
Accumulated deficit (83,546) (80,188)
Minimum pension liability adjustment (1,327) (1,327)
Treasury stock, 2,869,493 shares at June 15, 1996
and at December 30, 1995, at cost (2,814) (2,814)
Total stockholders' deficit (31,464) (28,106)
Total liabilities and stockholders' deficit $129,096 $137,582
The accompanying notes are an integral part
of these consolidated financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
12 weeks 12 weeks
ended ended
June 15, June 17,
1996 1995
Sales, net $121,981 $147,059
Cost of sales 91,703 110,530
Gross profit 30,278 36,529
Selling and administrative 27,442 36,039
Operating profit 2,836 490
Interest expense 2,051 3,899
Income (loss) before reorganization items,
income taxes and extraordinary items 785 (3,409)
Reorganization items 1,800 -
Loss before income taxes and
extraordinary items (1,015) (3,409)
Income tax expense - -
Loss before extraordinary items (1,015) (3,409)
Extraordinary items - (2,330)
Net loss $ (1,015) $ (5,739)
Loss before extraordinary items per
common share $ (.03) $ (.10)
Extraordinary items per common share - (.07)
Net loss per common share $ (.03) $ (.17)
Weighted average shares outstanding 33,599,707 33,264,305
The accompanying notes are an integral part
of these consolidated financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
24 weeks 24 weeks
ended ended
June 15, June 17,
1996 1995
Sales, net $246,331 $325,068
Cost of sales 185,910 246,015
Gross profit 60,421 79,053
Selling and administrative 55,422 76,008
Operating profit 4,999 3,045
Interest expense 5,207 8,310
Loss before reorganization items,
income taxes and extraordinary items (208) (5,265)
Reorganization items 3,150 -
Loss before income taxes and
extraordinary items (3,358) (5,265)
Income tax expense - -
Loss before extraordinary items (3,358) (5,265)
Extraordinary items - (2,330)
Net loss $ (3,358) $ (7,595)
Loss before extraordinary items per
common share $ (.10) $ (.15)
Extraordinary items per common share - (.07)
Net loss per common share $ (.10) $ (.22)
Weighted average shares outstanding 32,599,707 33,957,711
The accompanying notes are an integral part
of these consolidated financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum
Class A Additional Pension Total
Common Stock Paid-in Accumulated Liability Treasury Stock Stockholders'
Shares Amount Capital Deficit Adjustment Shares Amount Equity (Deficit)
Balance, December
31, 1994 31,604,989 $316 $53,896 $(48,398) $ - 726,000 $(1,743) $ 4,071
Purchase of treasury
stock 2,116,183 21 1,037 - - 2,116,183 (1,058) -
Net loss - - - (7,595) - - - (7,595)
Balance, June
17, 1995 33,721,172 $337 $54,933 $(55,993) $ - 2,842,183 $(2,801) $ (3,524)
Balance, December
30, 1995 33,748,482 $337 $55,886 $(80,188) $(1,327) 2,869,493 $(2,814) $(28,106)
Net loss - - - (3,358) - - - (3,358)
Balance, June
15, 1996 33,748,482 $337 $55,886 $(83,546) $(1,327) 2,869,493 $(2,814) $(31,464)
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)
(Unaudited)
24 weeks 24 weeks
ended ended
June 15, June 17,
1996 1995
Cash flows from operating activities:
Net loss $(3,358) $(7,595)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,282 6,460
Amortization of financing costs 315 585
Write-off of financing costs on long
term debt retired - 1,424
Gain on disposal of assets (41) (146)
Amortization of beneficial interest in operating
leases 59 105
Change in assets and liabilities:
Decrease in receivables 549 2,920
Decrease in receivable for taxes - 719
Decrease in inventories 3,354 17,374
Decrease (increase) in prepaid expenses and
other current assets (3) 3,723
Decrease (increase) in other assets and
deferred charges (540) 26
Decrease in accounts payable - trade (231) (14,146)
Increase (decrease) in salaries and wages (53) 418
Increase (decrease) in taxes 270 (472)
Increase (decrease) in accrued interest payable 3,649 (808)
Decrease in other current liabilities (1,201) (5,771)
Decrease in restructuring reserve (353) (10,338)
Decrease in other noncurrent liabilities (872) (938)
Net cash provided by (used in)
operating activities 4,826 (6,460)
Cash flows from investing activities:
Capital expenditures (1,404) (409)
Cash received from sale of assets 1,729 73,038
Net cash provided by investing activities 325 72,629
Cash flows from financing activities:
Payments under senior secured floating rate notes - (9,375)
Payments under senior secured fixed rate notes - (15,625)
Borrowings under revolving credit loans 60,423 34,582
Payments under revolving credit loans (63,838) (56,644)
Net payments under swing loans - (1,500)
Principal payments under notes payable - (750)
Principal payments under capital lease obligations (1,239) (5,612)
Payments to acquire treasury stock - (1,058)
Net cash used by financing activities (4,654) (55,982)
Net increase in cash and cash equivalents 497 10,187
Cash and cash equivalents at beginning of period 6,357 339
Cash and cash equivalents at end of period $ 6,854 $10,526
Supplemental information:
Cash paid during the period for interest $ 1,287 $ 8,533
The accompanying notes are an integral part
of these financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation of Consolidated Financial Statements:
The accompanying unaudited consolidated financial statements
of Homeland Holding Corporation ("Holding") and its
Subsidiary, Homeland Stores, Inc. ("Stores" and together
with Holding, the "Company"), reflect all adjustments
consisting only of normal and recurring adjustments which
are, in the opinion of management, necessary to present
fairly the consolidated financial position and the
consolidated results of operations and cash flows for the
periods presented. These unaudited consolidated financial
statements should be read in conjunction with the
consolidated financial statements of the Company for the 52
weeks ended December 30, 1995 and the notes thereto.
The accompanying consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The
consolidated financial statements do not include any
adjustments to the assets or liabilities that may result
from the outcome of the bankruptcy proceedings.
2. Accounting Policies:
The policies of the Company are summarized in the
consolidated financial statements of the Company for the 52
weeks ended December 30, 1995 and the notes thereto.
3. Operational Restructuring:
On April 21, 1995, the Company sold 29 of its stores and its
distribution center to Associated Wholesale Grocers, Inc. ("AWG"),
pursuant to a strategic plan approved by the Board of Directors in
December 1994. In connection with the plan, the Company closed 14
underperforming stores in 1995, sold one store and closed one store in
the second quarter of 1996. The Company closed one final store in July
1996 pursuant to such plan. During the first 24 weeks ended June 15,
1996, the Company incurred expenses associated with the operational
restructuring as follows:
<TABLE>
<S> <C> <C> <C>
Payments applied
against
operational
Operational restructuring Operational
restructuring reserve for restructuring
reserve at the 24 weeks ended reserve at
December 30, 1995 June 15, 1996 June 15, 1996
Expenses associated with the
planned store closings,
primarily occupancy costs
from closing date to lease
termination or sublease date $4,860 $ (350) $4,510
Expenses associated with the AWG
transaction, primarily service
and equipment contract
cancellation fees 58 - 58
Estimated severance costs
associated with the AWG
transaction 927 5 932
Legal and consulting fees
associated with the
AWG transaction 25 (8) 17
Operational restructuring
reserve $5,870 $ (353) $5,517
</TABLE>
The separately identifiable revenue and store contribution
to operating profit related to the stores sold to AWG or
closed and expenses related to the warehouse facility are
as follows:
24 weeks 24 weeks
ended ended
June 15, June 17,
1996 1995
Sales, net $6,429 $81,079
Store contribution to
operating profit before
allocation of administrative
and advertising expenses (394) 2,407
Warehouse expenses - 3,853
4. Reorganization:
On May 13, 1996, the Company filed chapter 11 petitions with
the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). Simultaneous with the
filing of such petitions, the Company filed a plan of
reorganization and a disclosure statement, which sets forth
the terms of a proposed restructuring of the Company. On
June 13, 1996, the Company filed a first amended plan of
reorganization and disclosure statement. The Company's plan
of reorganization was confirmed by the Bankruptcy Court on
July 19, 1996. As a result of the chapter 11 filings,
certain claims against the Company that existed prior to the
filing date are stayed and will be subject to compromise.
Liabilities subject to compromise as of June 15, 1996, are
as follows (dollars in thousands):
June 15, 1996
(unaudited)
Long-term obligation in default
classified as current $ 95,000
Other 43,732
$138,732
Resolution of the above liabilities subject to compromise
is contingent upon the approval of the Bankruptcy Court.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Comparison of Twelve and Twenty-Four Weeks Ended June
15, 1996 with Twelve and Twenty-Four Weeks Ended June 17, 1995.
Net sales for the 12 weeks and 24 weeks ended June 15,
1996 decreased 17.1% and 24.2% respectively, over the net sales
of the corresponding periods of 1995. The decrease in net sales
was due primarily to the sale of 29 stores to AWG on April 21,
1995 and the closing of 14 stores in 1995, 5 of which occurred
during the first quarter of 1995, 2 during the second quarter of
1995, and the remainder over the balance of 1995. Comparable
store sales for the 12 weeks ended June 15, 1996 decreased by
0.2% compared to the corresponding period of 1995. The decrease
in comparable store sales was primarily due to higher 1995
general merchandise sales resulting from certain continuity
programs that did not recur in 1996.
Gross profit as a percentage of sales for both the 12
weeks ended June 15, 1996 and the corresponding period of 1995
amounted to 24.8%. Gross profit as a percentage of sales for the
24 weeks ended June 15, 1996 increased to 24.5% compared to 24.3%
for the corresponding period of 1995. The improvement was
primarily due to higher vendor allowances and rebates, which were
lower in 1995 due to the pending sale of the Company's
distribution center and 29 stores to AWG. The higher vendor
allowances and rebates are somewhat offset by the higher cost of
goods purchased through AWG versus self-supply.
Selling and administrative expenses for the 12 weeks
ended June 15, 1996 decreased to 22.5% compared to 24.5% for the
corresponding period of 1995. For the 24 weeks ended June 15,
1996, selling and administrative expenses decreased to 22.5% from
23.4%. The decrease in expenses was due to a reduction in health
and welfare costs and lower corporate office expenses.
Interest expense for the 12 weeks ended June 15, 1996
decreased to $2.1 million from $3.9 million in the corresponding
period of 1995. Interest expense for the 24 weeks ended June 15,
1996 decreased to $5.2 million from $8.3 million in the
corresponding period of 1995. The decrease in interest expense
is primarily a result of the Company filing chapter 11 petitions
with the Bankruptcy Court on May 13, 1996. The filing stayed the
Company's interest obligation on the Senior Notes. Additionally,
interest expense decreased due to the redemption of $25.0 million
of Senior Secured Notes on June 1, 1995.
The Company incurred $1.8 million of reorganization
expenses for the 12 weeks ended June 15, 1996. For the 24 weeks
ended June 15, 1996, reorganization expenses were $3.2 million.
The reorganization expenses were primarily professional fees.
Extraordinary items for the 12 weeks and 24 weeks ended
June 17, 1995 consisted of refinancing costs associated with the
Company's sale of 29 stores and its distribution center to AWG on
April 21, 1995.
Liquidity and Capital Resources
The primary sources of liquidity for the Company's
operations have been borrowings under credit facilities and
internally generated funds. In March 1992, the Company
refinanced its indebtedness by entering into an Indenture with
United States Trust Company of New York, as trustee, pursuant to
which the Company had outstanding as of July 15, 1996, $59.4
million of Series C Senior Secured Fixed Rate Notes due 1999,
$26.1 million of Series D Senior Secured Floating Rate Notes due
1997 and $9.5 Series A Senior Secured Floating Rates Notes due
1997 (collectively the "Senior Notes").
On April 21, 1995, the Company entered into a Revolving
Credit Agreement (the "Revolving Credit Agreement") with National
Bank of Canada, ("NBC"), as agent and as lender, Heller
Financial, Inc. The Revolving Credit Agreement permits
borrowings up to $25 million, subject to a borrowing base, for
working capital needs including certain letters of credit.
On May 13, 1996, the Company filed chapter 11 petitions
with the Bankruptcy Court. Simultaneous with the filing of such
petitions, the Company filed a "pre-arranged" plan of
reorganization and a disclosure statement, which sets forth the
terms of a proposed restructuring of the Company. On June 13,
1996, the Company filed its first amended plan of reorganization
(the "Plan") and first amended disclosure statement. The
restructuring is designed to reduce substantially the Company's
debt service obligations and labor costs and to create a capital
and cost structure that will allow the Company to maintain and
enhance the competitive position of its business and operations.
The restructuring was negotiated with, and is supported by, the
lenders under the Company's existing revolving credit facility,
the adhoc noteholders committee and the Company's labor unions.
As part of the restructuring, the $95 million of
Homeland's outstanding Senior Notes, plus accrued interest of
approximately $6.6 million, will be canceled and such noteholders
will receive (in the aggregate) $60 million face amount of new
senior subordinated notes and $1.5 million in cash. The new
senior subordinated notes will mature in 2003, bear interest
semi-annually at a rate of 10% per annum and will not be secured.
Additionally, it is anticipated that the noteholders and the
Company's general unsecured creditors will receive approximately
60% and 35%, respectively, of the equity of the reorganized
Holding (assuming total unsecured claims of approximately $63
million, including noteholders's unsecured claims). Holding's
existing equity holders will receive 5% of the new equity, plus
five-year warrants to purchase an additional 5% of such equity.
An integral part of the restructuring is the Company's
previously-announced deal with its labor unions to modify certain
elements of the Company's existing collective bargaining
agreements. The modified collective bargaining agreements will
provide for, among other things, wage and benefit modifications,
the buyout of certain employees and the issuance and purchase of
new equity to a trust acting on behalf of the unionized
employees. The modified collective bargaining agreements are
conditioned on, and will become effective upon, the consummation
of the restructuring.
On May 13, 1996, the Company also entered into an
interim debtor-in-possession lending facility ("DIP Facility"),
with its existing bank group to provide up to $27 million of
working capital financing. The Bankruptcy Court issued an order
approving the DIP facility on June 7, 1996.
The DIP Facility permits the Company to borrow up to
the lesser of $27 million and the Borrowing Base. The borrowings
under the DIP Facility bear interest at a rate equal to the prime
rate announced publicly by NBC from time to time in New York, New
York plus two percent. Interest is payable quarterly in arrears
on the last day of March, June, September and December,
commencing on June 30, 1996. The DIP Facility will mature on the
earlier of (1) one year from the date of filing of the Company's
voluntary petition under Chapter 11 of the United States Federal
Bankruptcy Code, and (2) the effective date of the Plan.
Management believes that the DIP Facility will be adequate to
meet the Company's working capital requirements while it is
operating under the auspices of the Bankruptcy Court.
The DIP Facility provides that NBC, on behalf of itself
and as agent for the lenders under the DIP Facility, will have
liens on, and security interests in, all of the pre-petition and
post-petition property of the Company (other than the collateral
under the Indenture), which liens and security interests will
have priority over substantially all other liens on, and security
interests in, the Company's property (other than properly
perfected liens and security interests which existed prior to the
date of filing of the Company's voluntary petition under the
Bankruptcy Code).
The DIP Facility includes certain customary restrictive
covenants, including restrictions on acquisitions, asset
dispositions, capital expenditures, consolidations and mergers,
distributions, divestitures, indebtedness, liens and security
interests and transactions with affiliates. The DIP Facility
also requires the Company to comply with certain financial
maintenance and other covenants. At July 15, 1996, the net
unused and available amount under the DIP Facility was $14.4
million.
On July 19, 1996, the Bankruptcy Court confirmed the
Plan. It is expected that the Plan will become effective on the
first business day on which all of the conditions to the
effective date contained in the Plan are satisfied or waived as
provided in the Plan. The Company currently anticipates that the
effective date of the Plan will occur on or about August 2, 1996.
On the effective date of the Plan, the Company intends
to enter into a loan agreement (the "Loan Agreement") with NBC,
as agent and lender, and two other lenders, Heller Financial,
Inc. and IBJ Schroder Bank and Trust Company, under which those
lenders will provide (a) a working capital and letter of credit
facility and (b) a term loan. The Company has received and
executed a commitment letter from these lenders. The commitment
letter is subject to the approval of the Bankruptcy Court.
The Loan Agreement will permit the Company to borrow,
under the working capital and letter of credit facility, up to
the lesser of (a) $27.5 million and (b) the applicable borrowing
base. Funds borrowed under such facility will be available for
general corporate purposes of the Company.
The Loan Agreement will also provide the Company a
$10.0 million term loan, which will be used to fund certain
obligations of the Company under the plan of reorganization,
including an employee buyout offer and a health and welfare plan
required by the modified collective bargaining agreements,
professional fees and "cure amounts" which must be paid in
connection with executory contracts, secured financings and
unexpired leases.
The interest rate under the Loan Agreement will be
based on the prime rate publicly announced by National Bank of
Canada from time to time in New York, New York plus a percentage
which varies based on a number of factors, including (a) the
amount which is part of the working capital and letter of credit
facility and the amount which is part of the term loan, (b) the
time period (c) whether the Company elects to use a London
Interbank Offered Rate, and (d) the earnings of the Company
before interest, depreciation and amortization expenses.
The indebtedness under the Loan Agreement will mature
three years from the effective date of the Plan.
The obligations of the Company under the Loan Agreement
will be secured by liens on, and security interests in,
substantially all of the assets of Homeland and will be
guaranteed by Holding, with a pledge of its Homeland stock to
secure its obligation. The collateral will include the assets
which, prior to the effective date of the Plan, secured the
obligations of the Company to the holders of the Senior Notes.
The Company anticipates that the Loan Agreement will
include certain customary restrictions on acquisitions, asset
dispositions, capital expenditures, consolidations and mergers,
distributions, divestitures, indebtedness, liens and security
interests and transactions with affiliates. The Company also
anticipates that the Loan Agreement will require the Company to
comply with certain financial and other covenants.
Consummation of the Plan is subject to a number of
contingencies. The Company believes that the restructuring under
the Plan will have a favorable effect on the Company's liquidity.
However, there can be no assurance that the Company's operations
will yield positive net cash flows or that the restructuring will
be successful. If the Company is not able to generate positive
net cash flows from its operations or if the restructuring is not
consummated successfully, management believes that this could
have a material adverse effect on the Company's business and the
continuing viability of the Company.
PART II - OTHER INFORMATION
Item 5. Other Information
On the effective date of the Plan, the current members
of the Company's board of directors are expected to
resign their positions except for Mr. James A. Demme
and Mr. John A. Shields. On and after the effective
date of the Plan, the following individuals will also
become members of the Company's board of directors:
Mr. Gene Burris, Mr. Edward B. Krekeler, Ms. Laurie M.
Shahon, Mr. William B. Snow and Mr. David N. Weinstein.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit: The following exhibit are filed as part
of this report:
Exhibit No. Description
2b First Amended Plan of
Reorganization of Homeland Stores,
Inc. and Homeland Holding
Corporation.
99h Press release issued by Homeland
Stores, Inc. on July 19, 1996.
27 Financial Data Schedule.
(b) Report on Form 8-K: The following report on Form
8-K was filed during the quarter ended June 15,
1996.
Date Description
May 31, 1996 The filing of chapter 11 petitions
by Homeland Holding Corporation
and Homeland Stores, Inc. on May
13, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
HOMELAND HOLDING CORPORATION
Date: July 30, 1996 By: /s/ James A. Demme
James A. Demme, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
Date: July 30, 1996 By: /s/ Larry W. Kordisch
Larry W. Kordisch, Executive
Vice President/Finance,
Treasurer, Chief Financial
Officer and Secretary
(Principal Financial Officer)
Date: July 30, 1996 By: /s/ Terry M. Marczewski
Terry M. Marczewski, Chief
Accounting Officer, Assistant
Treasurer and Assistant
Secretary (Principal
Accounting Officer)
188893
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
)
HOMELAND STORES, INC., ) Case No. 96-747(PJW)
) Chapter 11
Debtor. )
IN RE: )
)
HOMELAND HOLDING CORPORATION, ) Case No. 96-748(PJW)
) Chapter 11
Debtor. ) Jointly Administered
FIRST AMENDED JOINT PLAN OF REORGANIZATION OF
HOMELAND STORES, INC. AND HOMELAND HOLDING CORPORATION
Homeland Stores, Inc., a Delaware
corporation ("Company"), and Homeland Holding
Corporation, a Delaware corporation ("Holding" and,
together with the Company, the "Debtors"), hereby
propose this First Amended Joint Plan of
Reorganization of Homeland Stores, Inc. and Homeland
Holding Corporation ("Plan") to resolve claims
against, and interests in, the Company and Holding.
The Debtors are the proponents of the Plan within the
meaning of Section 1129 of the United States
Bankruptcy Code, as amended ("Bankruptcy Code").
The First Amended Disclosure Statement for
Plan of Reorganization of Homeland Stores, Inc. and
Homeland Holding Corporation ("Disclosure Statement")
provides certain information with respect to the
Debtors and the Plan.
Nothing in the Plan should be construed as
constituting a solicitation of acceptances of the Plan
unless and until the Disclosure Statement has been
approved and distributed to all holders of claims and
interests to the extent required by Section 1125 of
the Bankruptcy Code.
All holders are encouraged to read the
Disclosure Statement and the Plan in their entirety
before voting to accept or to reject the Plan.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
A. Defined Terms. The following terms used in
the Plan shall have the respective meanings specified.
1. Administrative Claim. The term
"Administrative Claim" means a Claim for
administrative expenses allowed under Section 503(b)
of the Bankruptcy Code and entitled to priority in
payment under Section 507(a)(1) of the Bankruptcy
Code, including, without limitation, any actual and
necessary costs and expenses of preserving the
respective Estates and operating the businesses of the
Debtors during the Cases, any indebtedness or
obligations incurred by either Debtor during the
pendency of the Cases in connection with the conduct
of the business of, the acquisition or the lease of
property by, or the rendition of services to, such
Debtor, all allowances of compensation for legal and
other professional services and reimbursement of
expenses to the extent allowed under Section 330 or
503 of the Bankruptcy Code and all Statutory Fees.
2. Affiliated Released Party. The term
"Affiliated Released Party" means each officer,
director, shareholder, affiliate, employee,
consultant, attorney, accountant, agent and other
representative of the Debtors.
3. Allowed Claim. The term "Allowed
Claim" means any Claim against either Debtor, proof of
which has been filed with the Bankruptcy Court, or, if
no proof of Claim is filed, which Claim has been or
hereafter is listed by such Debtor in its Schedules as
liquidated in amount, not disputed and not contingent,
and in all cases, as to which no objection to the
allowance thereof, or motion for estimation thereof,
has been interposed within the applicable period of
limitation fixed by the Plan, the Bankruptcy Code, the
Bankruptcy Rules or the Bankruptcy Court, or as to
which an objection or motion for estimation has been
interposed, following which such Claim has been
allowed in whole or in part by a Final Order or
otherwise settled as provided in Article VII.
4. Allowed . . . Claim. The term "Allowed
. . . Claim" means an Allowed Claim of the type
described or in the Class described, as the case may
be.
5. Allowed Interest. The term "Allowed
Interest" means an Interest registered as of the
Record Date in the stock register maintained by, or on
behalf of, Holding or the Company, as the case may be.
6. Allowed . . . Interest. The term
"Allowed . . . Interest" means an Allowed Interest of
the type described or in the Class described, as the
case may be.
7. Amended Holding Charter. The term
"Amended Holding Charter" means the amended and
restated certificate of incorporation of the Company
containing substantially the terms summarized in the
Disclosure Statement and contained in the Plan
Supplement.
8. Amended Homeland Charter. The term
"Amended Homeland Charter" means the amended and
restated certificate of incorporation of the Company
containing substantially the terms summarized in the
Disclosure Statement and contained in the Plan
Supplement.
9. Bankruptcy Code. The term "Bankruptcy
Code" means the Bankruptcy Reform Act of 1978, as
amended, as set forth in Title 11 of the United States
Code.
10. Bankruptcy Court. The term "Bankruptcy
Court" means the United States Bankruptcy Court for
the District of Delaware or, if the United States
Bankruptcy Court for the District of Delaware ceases
to exercise jurisdiction over the Cases, the court
that exercises jurisdiction over the Cases in lieu of
the United States Bankruptcy Court for the District of
Delaware.
11. Bankruptcy Rules. The term "Bankruptcy
Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure, as amended, and the Local
Bankruptcy Rules for the United States Bankruptcy
Court for the District of Delaware, as amended.
12. Business Day. The term "Business Day"
means any day, other than a Saturday, a Sunday or a
"legal holiday," as defined in Rule 9006(a) of the
Bankruptcy Rules.
13. Case. The term "Case" means the
Homeland Case or the Holding Case.
14. Cash Amount. The term "Cash Amount"
means the cash sum of $1,500,000.
15. Claim. The term "Claim" means any
right to payment from either Debtor arising before the
Effective Date, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or any right
arising or incurred before the Effective Date of the
Plan to an equitable remedy for breach of performance
if such breach gives rise to a right to payment from
either Debtor, whether or not such right to an
equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
16. Class. The term "Class" means a class
of Claims against, or Interests in, a Debtor as
defined in Article II of the Plan.
17. Company. The term "Company" means
Homeland Stores, Inc., a Delaware corporation.
18. Confirmation. The term "Confirmation"
means the entry of the Confirmation Order entered by
the Bankruptcy Court with respect to the Plan pursuant
to Section 1129 of the Bankruptcy Code.
19. Confirmation Date. The term
"Confirmation Date" means the date on which the
Bankruptcy Court enters the Confirmation Order on its
docket.
20. Confirmation Hearing. The term
"Confirmation Hearing" means the hearing before the
Bankruptcy Court on the confirmation of the Plan
pursuant to Section 1129 of the Bankruptcy Code.
21. Confirmation Order. The term
"Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan pursuant to Section 1129 of
the Bankruptcy Code.
22. Debtor. The term "Debtor" means either
Homeland Stores, Inc., a Delaware corporation, or
Homeland Holding Corporation, a Delaware corporation,
in their respective individual corporate or other
capacity and in their respective capacity as debtor
and debtor-in-possession under Chapter 11 of the
Bankruptcy Code.
23. Disclosure Statement. The term
"Disclosure Statement" means the First Amended
Disclosure Statement for Joint Plan of Reorganization
of Homeland Stores, Inc. and Homeland Holding
Corporation relating to the Plan, as such statement is
amended, supplemented or modified from time to time,
that is prepared and distributed pursuant to Sections
1125, 1126(b) and 1145 of the Bankruptcy Code and
Bankruptcy Rule 3018.
24. Disputed Claim. The term "Disputed
Claim" means any Claim against either Debtor (a)
listed on the schedules of either Debtor as
unliquidated, disputed or contingent, or (b) as to
which either Debtor or any other party in interest has
interposed a timely objection or request for
estimation in accordance with the Bankruptcy Code and
the Bankruptcy Rules, which objection or request has
not been withdrawn or determined by a Final Order or
otherwise settled as provided in Article VII.
25. Disputed Class 5 Claims Reserve. The
term "Disputed Class 5 Claims Reserve" means the
reserve established by the Debtors on the Effective
Date for the account of each a holder of a Disputed
Claim which, if allowed, would be a Class 5 Claim.
26. Disputed Interest. The term "Disputed
Interest" means any asserted Interest (other than an
Allowed Interest) in either Debtor as to which either
Debtor or any other party in interest has interposed a
timely objection in accordance with the Bankruptcy
Code and the Bankruptcy Rules, which objection or
request has not been withdrawn or determined by a
Final Order or otherwise settled as provided in
Article VII.
27. Distribution Agent. The term
"Distribution Agent" means the Person selected by the
Reorganized Debtors to make distributions pursuant to
the Plan, which Person may be a Reorganized Debtor and
shall be employed on such terms as may be determined
by the Reorganized Debtors, in their sole discretion.
28. District Court. The term "District
Court" means the United States District Court for the
District of Delaware.
29. Effective Date. The term "Effective
Date" means the first Business Day on which all of the
conditions to the Effective Date set forth in Article
VIII have been satisfied or waived as provided in
Article VIII.
30. Equity Registration Rights Agreement.
The term "Equity Registration Rights Agreement" means
the Equity Registration Rights Agreement, dated as of
the Effective Date, executed by Reorganized Holding in
favor of the holders of the Old Common Stock
containing substantially the terms summarized in the
Disclosure Statement and contained in the Plan
Supplement.
31. Estate. The term "Estate" means the
Homeland Estate or the Holding Estate.
32. Estate Release. The term "Estate
Release" means the release of the Debtors referred to
in Article IV(J).
33. Excluded Claims. The term "Excluded
Claims" means any Claim, obligation, right, cause of
action or liability relating to: (a) any indebtedness
of any Affiliated Released Party or any such entity
for money borrowed; (b) any set-off or any
counterclaim which the Debtors, or either of them, may
have or assert against an Affiliated Released Party,
provided that the aggregate amount thereof shall not
exceed the aggregate amount of any Claims held or
asserted by such Affiliated Released Party against the
Debtors; (c) the uncollected amount of any Claim made
by the Debtors, or either of them, (whether in a
filed pleading, by letter or otherwise) prior to the
Effective Date against an Affiliated Released Party,
which Claim has not been adjudicated to Final Order,
settled or compromised; or (d) any Claim arising from
the fraud, willful misconduct or gross negligence of
an Affiliated Released Party.
34. Fee Claim. The term "Fee Claim" means
any Claim asserted by a Person retained or requesting
compensation in the Cases pursuant to Section 327,
Section 328, Section 330, Section 331, Section 503(b),
Section 1103 or Section 1129(a)(4) of the Bankruptcy
Code.
35. Filing Date. The term "Filing Date"
means May 13, 1996, the date on which the petitions
for relief under Chapter 11 of the Bankruptcy Code
with respect to the Debtors were filed.
36. Final Order. The term "Final Order"
means an order of the Bankruptcy Court, as entered by
the clerk of the Bankruptcy Court on a docket in, or
related to, the Cases, or an order of another court of
competent jurisdiction that the Bankruptcy Court has
specifically permitted to proceed to enter such order,
as entered by the clerk of such court on the
appropriate docket, as to which the time to appeal or
to seek certiorari has expired and no appeal or
petition for certiorari has been timely taken or as to
which any appeal that has been or may be taken or any
petition for certiorari that has been or may be filed
has been resolved by the highest court to which the
order was appealed or from which certiorari was sought
and the time to appeal or any extension thereof or to
seek certiorari of such appellate order has expired.
37. Financing Order. The term "Financing
Orders" means (a) the Joint Stipulation and Agreed
Order Authorizing Interim Financing, Granting Senior
Liens and Providing Administrative Expense Status,
Providing for Adequate Protection, Modifying the
Automatic Stay, and Authorizing Debtors to Enter into
Agreements with Lenders and Agent, (b) the Joint
Stipulation and Agreed Order Extending Interim
Financing, Granting Senior Liens and Priority
Administrative Expense Status, Providing for Adequate
Protection and Modifying Automatic Stay and (c) the
Joint Stipulation and Agreed Order Authorizing Final
Financing, Granting Senior Liens and Providing
Administrative Expense Status, Providing for Adequate
Protection, Modifying the Automatic Stay, and
Authorizing Debtors to Enter into Agreements with
Lenders and Agent.
38. Holding. The term "Holding" means
Homeland Holding Corporation, a Delaware corporation.
39. Holding Case. The term "Holding Case"
means the case styled In re Homeland Holding
Corporation, Debtor, Case No. 96-748(PJW), pending
before the Bankruptcy Court.
40. Holding Charter. The term "Holding
Charter" means the certificate of incorporation of
Holding as in effect on the Filing Date.
41. Holding Estate. The term "Holding
Estate" means the estate created for Holding pursuant
to Section 541 of the Bankruptcy Code upon
commencement of the Holding Case.
42. Homeland Case. The term "Homeland
Case" means the case styled In re Homeland Stores,
Inc., Debtor, Case No. 96-747(PJW), pending before
the Bankruptcy Court.
43. Homeland Charter. The term "Homeland
Charter" means the certificate of incorporation of the
Company as in effect on the Filing Date.
44. Homeland Common Stock. The term
"Homeland Common Stock" means the shares of Common
Stock, par value $.01 per share, of the Company issued
and outstanding on the Filing Date.
45. Homeland Estate. The term "Homeland
Estate" means the estate created for the Company
pursuant to Section 541 of the Bankruptcy Code upon
commencement of the Homeland Case.
46. Indemnification Agreements. The term
"Indemnification Agreements" means, collectively, (a)
the Indemnification Agreement, dated as of August 14,
1990, by and among Holding, the Company, Clayton &
Dubilier, Inc. and The Clayton & Dubilier Private
Equity Fund III Limited Partnership and (b) the
Indemnification Agreement, dated as of March 4, 1992,
by and among Holding, the Company, Clayton & Dubilier,
Inc., The Clayton & Dubilier Private Equity Fund III
Limited Partnership and The Clayton & Dubilier Private
Equity Fund IV Limited Partnership.
47. Indemnitees. The term "Indemnitees"
means those Persons named as "Indemnitees" in the
Indemnification Agreements.
48. Insured Claim. The term "Insured
Claim" means any Claim arising from an incident or an
occurrence that is covered, in whole or in part, under
a contract of insurance between the Debtor and an
Insurer.
49. Insurer. The term "Insurer" means any
Person that provides insurance to a Debtor pursuant to
a contract of insurance.
50. Interest. The term "Interest" means
any right or equity interest in either Debtor
represented by the Homeland Common Stock, the Old
Common Stock or the Old Warrants.
51. Management Stock Option Plan. The term
"Management Stock Option Plan" means the management
stock option plan of Reorganized Holding.
52. Modified Union Agreements. The term
"Modified Union Agreements" means the separate
collective bargaining agreements, dated no later than
the Effective Date, described in the Disclosure
Statement under "DESCRIPTION OF MODIFIED UNION
AGREEMENTS" and containing terms substantially similar
to the terms summarized therein.
53. New Common Stock. The term "New Common
Stock" means the shares of Common Stock, par value
$.01 per share, of Reorganized Holding to be issued by
Reorganized Holding pursuant to the Plan and the
Amended Holding Charter.
54. New Credit Agreement. The term "New
Credit Agreement" means an agreement, dated as of the
Effective Date, among the Reorganized Debtors and
certain financial institutions, pursuant to which the
Reorganized Debtors shall have, among other things,
credit availability from and after the Effective Date.
Such agreement may be an amendment and restatement of
the Old Credit Agreement.
55. New Indenture. The term "New Indenture"
means the Indenture, dated as of the Effective Date,
among the Reorganized Company, as issuer, Reorganized
Holding, as guarantor, and the New Trustee containing
substantially the terms summarized in the Disclosure
Statement and contained in the Plan Supplement.
56. New Notes. The term "New Notes" means
the 10% Senior Subordinated Notes due 2003 to be
issued in an aggregate principal amount of $60,000,000
by the Reorganized Company pursuant to the Plan and
the New Indenture.
57. New Securities. The term "New
Securities" means, collectively, the New Notes, the
New Common Stock and the New Warrants.
58. New Trustee. The term "New Trustee"
means the indenture trustee with respect to the New
Notes.
59. New Warrant Agent. The term "New
Warrant Agent" means the warrant agent with respect to
the New Warrants.
60. New Warrant Agreement. The term "New
Warrant Agreement" means the Warrant Agreement, dated
as of the Effective Date, by and between Reorganized
Holding and the New Warrant Agent containing
substantially the terms summarized in the Disclosure
Statement and contained in the Plan Supplement.
61. New Warrants. The term "New Warrants"
means the Warrants to purchase up to 263,150 shares of
New Common Stock to be issued by Reorganized Holding
pursuant to the Plan and the New Warrant Agreement.
62. Noteholder Advisor. The term
"Noteholder Advisor" means Paul, Weiss, Rifkind,
Wharton & Garrison, Houlihan, Lokey, Howard & Zukin
and Potter, Anderson & Corroon.
63. Noteholder Registration Rights
Agreement. The term "Noteholder Registration Rights
Agreement" means the Noteholder Registration Rights
Agreement, dated as of the Effective Date, executed by
the Reorganized Debtors in favor of the holders of
Class 5 Claims who were the holders of the Old Notes,
containing substantially the terms summarized in the
Disclosure Statement and contained in the Plan
Supplement.
64. Noteholders' Committee. The term
"Noteholders' Committee" means the ad hoc committee
representing certain holders of Old Notes.
65. Official Committee. The term "Official
Committee" means any official committee appointed in
the Cases pursuant to Section 1102 of the Bankruptcy
Code.
66. Old Agent. The term "Old Agent means
National Bank of Canada, in its capacity as agent
under the Old Credit Agreement.
67. Old Banks. The term "Old Banks" means
Heller Financial, Inc. and National Bank of Canada, in
their capacity as lenders, under the Old Credit
Agreement.
68. Old Class B Common Stock. The term
"Old Class B Common Stock" means Holding's Class B
Common Stock, par value $.01 per share.
69. Old Common Stock. The term "Old Common
Stock" means the shares of Class A Common Stock, par
value $.01 per share, of Holding issued and
outstanding as of the Filing Date.
70. Old Credit Agreement. The term "Old
Credit Agreement" means the Amended and Restated
Revolving Credit Agreement, dated as of April 21,
1995, as amended, by and among the Reorganized
Debtors, the Old Banks and the Old Agent.
71. Old Indenture. The term "Old
Indenture" means the Indenture, dated as of March 4,
1992, as supplemented, among the Company, as issuer,
Holding, as guarantor, and the Old Trustee.
72. Old Notes. The term "Old Notes" means
the Series A Senior Secured Floating Rate Notes due
1997, the Series C Senior Secured Fixed Rate Notes due
1999 and the Series D Senior Secured Floating Rate
Notes due 1997, in each case issued by the Company
pursuant to the Old Indenture.
73. Old Trustee. The term "Old Trustee"
means United States Trust Company of New York, in its
capacity as trustee and collateral trustee under the
Old Indenture.
74 Old Trustee Expenses. The term "Old
Trustee Expenses" means any unpaid Old Trustee's fees,
and reasonable unpaid out-of-pocket costs or expenses
incurred through the Effective Date by the Old
Trustee, including, without limitation, reasonable out-
of-pocket costs and expenses and reasonable fees of
legal counsel to the Old Trustee, which are secured or
which are entitled to be secured under the Old
Indenture by a lien or other priority in payment
against distributions to be made to holders of Claims
under the Old Indenture.
75. Old Warrants. The term "Old Warrants"
means the warrants to purchase Old Common Stock issued
and outstanding as of the Filing Date.
76. Other Released Party. The term "Other
Released Party" means, collectively, (a) any Official
Committee and, solely in their capacity as members or
representatives of such Official Committee, each
member, consultant, attorney, accountant or
representative of such Official Committee, (b) the
Unofficial Committee and, solely in their capacity as
members or representatives of such Official Committee,
each member, consultant, attorney, accountant or
representative of such Unofficial Committee, (c) the
Old Agent, the Old Banks and each consultant,
attorney, accountant or other representative of the
Old Agent and/or the Old Banks and (d) the Old Trustee
and each consultant, attorney, accountant or other
representative of the Old Trustee.
77. Person. The term "Person" means an
individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, a
limited liability company, an estate, a trust, an
unincorporated organization, a government or any
public subdivision thereof or other entity.
78. Plan. The term "Plan" means the First
Amended Joint Plan of Reorganization of Homeland
Stores, Inc. and Homeland Holding Corporation as set
forth herein, as the same may be amended or modified
by the Debtors from time to time pursuant to the Plan,
the Bankruptcy Code or the Bankruptcy Rules.
79. Plan Documents. The term "Plan
Documents" means the New Indenture, the New Warrant
Agreement and the Registration Rights Agreements,
substantially in the form contained in the Plan
Supplement.
80. Plan Supplement. The term "Plan
Supplement" means the supplement which shall be filed
as soon as practicable after the Filing Date with the
clerk of the Bankruptcy Court, containing the Plan
Documents.
81. Priority Tax Claim. The term "Priority
Tax Claim" means a Claim entitled to priority pursuant
to Section 507(a)(8) of the Bankruptcy Code, but only
to the extent such Claim is entitled to such priority.
82. Ratable Share. The term "Ratable
Share" means a number (expressed as a percentage)
equal to the proportion that an Allowed Claim or an
Allowed Interest, as the case may be, in a particular
Class bears to the aggregate amount of all Allowed
Claims or all Allowed Interests, as the case may be,
in such Class as of the date of determination.
83. Record Date. The term "Record Date"
means the Confirmation Date.
84. Registration Rights Agreements. The
term "Registration Rights Agreements" means,
collectively, the Equity Registration Rights Agreement
and the Noteholder Registration Rights Agreement.
85. Released Parties. The term "Released
Parties" means , collectively, (a) the Affiliated
Released Parties and (b) the Other Released Parties.
86. Reorganized Company. The term
"Reorganized Company" means the Company on and after
the Effective Date.
87. Reorganized Debtor. The term
"Reorganized Debtor" means the Reorganized Company or
Reorganized Holding.
88. Reorganized Holding. The term
"Reorganized Holding" means Holding on and after the
Effective Date.
89. Schedules. The term "Schedules" means
the respective statements of assets and liabilities
and statements of financial affairs filed by the
Debtors with the Bankruptcy Court pursuant to Section
521 of the Bankruptcy Code and Bankruptcy Rule 1007.
90. Secured Claim. The term "Secured
Claim" means a Claim that is secured by a lien on, or
a security interest in, property in which an Estate
has an interest or that is subject to setoff under
Section 553 of the Bankruptcy Code to the extent of
the value of the holder's interest in the interest of
such Estate in such property or to the extent of the
amount subject to setoff, as the case may be, as
determined pursuant to Section 506(a) of the
Bankruptcy Code.
91. Secured Noteholder Claims. The term
"Secured Noteholder Claims" means the Secured Claims
of the holders of the Old Notes against either Debtor,
arising from, under, or in connection with, the
issuance or the ownership of the Old Notes or any
guarantee thereof.
92. Statutory Fees. The term "Statutory
Fees" means all of the fees payable to the United
States Trustee pursuant to 28 U.S.C. 1930.
93. Unsecured Claim. The term "Unsecured
Claim" means any Claim that is not an Administrative
Claim, a Priority Tax Claim or a Secured Claim.
94. Unsecured Noteholder Claims. The term
"Unsecured Noteholder Claims" means the Unsecured
Claims of the holders of the Old Notes against either
Debtor, arising from, under, or in connection with,
the issuance or the ownership of, the Old Notes or any
guarantee thereof.
B. Rules of Interpretation. The following
rules shall be used in construing and interpreting the
Plan:
1. Application of Section 102 of the
Bankruptcy Code. The rules of construction contained
in Section 102 of the Bankruptcy Code apply to the
construction and the interpretation of the Plan.
2. Article and Section References. Unless
otherwise expressly stated in the Plan, all references
to Articles and Sections shall refer to the Articles
and the Sections of the Plan.
3. Calculation of Time. Any period of
time under the Plan shall be computed in accordance
with Rule 9006(a) of the Bankruptcy Rules.
4. Singular and Plural Terms. Whenever
the context is appropriate, each term, whether stated
in the singular or the plural, shall include both the
singular and the plural.
5. Use of Article and Section Headings.
Headings for Articles and Sections have been inserted
in the Plan solely for convenience of reference and
are not intended to be a part of, or to affect the
construction or the interpretation of, the Plan.
C. Plan Supplement. Forms of the New
Indenture, the New Warrant Agreement, the Registration
Rights Agreements, the Amended Holding Charter and the
Amended Homeland Charter shall be contained in a
separate Plan Supplement which shall be filed with the
Bankruptcy Court as soon as practicable after the
Filing Date. The Plan Supplement may be inspected
after such filing in the office of the clerk of the
Bankruptcy Court during normal office hours of the
clerk of the Bankruptcy Court. Holders of Claims and
Interests may obtain a copy of the Plan Supplement
upon written request to the Debtors. The Plan
Supplement is incorporated into, and is a part of the
Plan, as if set forth in full herein, and all
references herein to the Plan shall refer to the Plan
together with the Plan Supplement.
ARTICLE II
CLASSES OF CLAIMS AND INTERESTS
A. Classification of Claims and Interests in
the Debtors. All Claims against, and Interests in,
the Debtors (other than Administrative Claims and
Priority Tax Claims) are classified in the following
Classes:
1. Class 1 - Allowed Priority Claims.
Class 1 consists of Allowed Claims which are entitled
to priority under Section 507(a) of the Bankruptcy
Code (other than Administrative Claims and Priority
Tax Claims).
2. Class 2 - Allowed Secured Claims of the
Old Banks. Class 2 consists of the Allowed Secured
Claims of the Old Banks under the Old Credit
Agreement.
3. Class 3 - Allowed Secured Noteholder
Claims. Class 3 consists of the Allowed Secured
Noteholder Claims. The aggregate amount of the
Allowed Secured Noteholder Claims shall be equal to
$61,500,000.
4. Class 4 - Allowed Miscellaneous Secured
Claims. Class 4 consists of Allowed Secured Claims
(other than Class 2 Claims and Class 3 Claims). Class
4 Claims include, without limitation, Claims secured
by equipment in connection with equipment financings
and Claims secured by mechanic's, materialmen's and
artisan's liens on miscellaneous personal and/or real
property. Each Class 4 Claim is treated for all
purposes under the Bankruptcy Code and the Plan as a
separate sub-Class.
5. Class 5 - General Unsecured Claims.
Class 5 consists of all Allowed Unsecured Claims
(other than Administrative Claims, Priority Tax Claims
and Claims otherwise classified). Class 5 Claims
shall include, without limitation, Allowed Unsecured
Noteholder Claims. The aggregate amount of Allowed
Unsecured Noteholder Claims shall be equal to
$40,100,000.
6. Class 6 - Allowed Interests of Holding
as Sole Shareholder of Homeland Common Stock. Class 6
consists of the Allowed Interests of Holding as the
sole holder of the Homeland Common Stock.
7. Class 7 - Allowed Interests of Holders
of Old Common Stock. Class 7 consists of the Allowed
Interests of holders of the Old Common Stock.
8. Class 8 - Allowed Interests of Holders
of Old Warrants. Class 8 consists of the Allowed
Interests of holders of the Old Warrants.
A Claim or an Interest is classified in a
Class only to the extent that Claim or that Interest
falls within the description of that Class and is
classified in another Class to the extent that Claim
or that Interest falls within the description of the
other Class. For purposes of receiving a distribution
under the Plan, a Claim or an Interest is classified
in a Class only to the extent that the Claim or the
Interest is an Allowed Claim or an Allowed Interest in
that Class and only to the extent the Claim or the
Interest has not been otherwise satisfied prior to the
date on which any distribution is to be made under the
Plan.
B. Unclassified Claims. Administrative Claims
and Priority Tax Claims against the Company and
Holding are not classified under the Plan.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
A. Treatment of Administrative Claims. Unless
otherwise agreed to by a holder of an Allowed
Administrative Claim, each such holder shall be paid
in full, in cash, in an amount equal to such holder's
Allowed Administrative Claim on the later of (1) the
Effective Date and (2) the date on which such Claim
becomes an Allowed Claim; provided, however, that (a)
all Statutory Fees shall be paid in accordance with
applicable law and (b) Administrative Claims which
represent liabilities incurred by a Debtor in the
ordinary course of business (including, without
limitation, Administrative Claims owed to suppliers
that have sold products or furnished goods or services
to either Debtor after the Filing Date) shall be paid
by the relevant Debtor when due in accordance with
the terms of the particular transaction and agreements
relating thereto.
The Reorganized Debtors shall pay the
reasonable fees and expenses incurred on or after the
Effective Date by the Noteholder Advisors (without
application by, or on behalf of, any such Noteholder
Advisor to the Bankruptcy Court and without notice and
a hearing, unless specifically ordered by the
Bankruptcy Court upon request of a party in interest)
as an Administrative Claim (unless any such Noteholder
Advisor has been retained by a Official Committee
pursuant to Sections 327 or 1103 of the Bankruptcy
Code). If the Reorganized Debtors and any Noteholder
Advisor cannot agree on the amount of fees and
expenses to be paid to such Noteholder Advisor, the
amount of such fees and expenses shall be determined
by the Bankruptcy Court.
Notwithstanding anything else contained in
the Plan and notwithstanding the confirmation of the
Plan, the secured Administrative Claims held by the
Old Banks in connection with post-petition advances
and other financial accommodations given by the Old
Banks under the Financing Orders shall be entitled to
all of the liens, protections, benefits and priorities
granted them in the Financing Orders All such liens,
protections, benefits and priorities granted to the
Old Banks in such orders shall continue until their
Administrative Claims are indefeasibly paid in full,
which Administrative Claims, by reason of the
Financing Orders, (1) are allowed and payable in their
entirety, (2) include unpaid principal and accrued but
unpaid interest through the date of full payment of
the Administrative Claims of the Old Banks and (3) are
secured by the reason of the first, valid, prior and
perfected liens and security interests granted under,
or in connection with the Old Credit Agreement and
confirmed by the Financing Orders. The Old Banks'
secured Administrative Claims shall be paid in full on
the Effective Date through advances made under the New
Credit Agreement.
B. Priority Tax Claims. Unless otherwise
agreed to by a holder of an Allowed Priority Tax
Claim, each such holder shall (at the option of the
Reorganized Debtors), (1) be paid in full, in cash, on
the later of (a) the Effective Date and (b) the date
on which such Allowed Priority Tax Claim becomes an
Allowed Claim or (2) be paid deferred cash payments
over a period not exceeding six years after the date
of assessment equal to (in the aggregate) the amount
of the Allowed Priority Tax Claim, including an
interest component as required by Section
1129(a)(9)(C). In fixing such interest component, the
Debtors shall use the federal judgment rate in effect
on the Confirmation Date, unless the Bankruptcy Court
determines otherwise. Notwithstanding anything else
contained herein, the interest rate payable with
respect to the Allowed Priority Tax Claim of the
Internal Revenue Service and the Allowed Priority Tax
Claim of the Texas Comptroller of Public Accounts
shall be 8.7% per annum. If a Reorganized Debtor
elects to make deferred cash payments, the Reorganized
Debtor shall make six equal annual principal payments,
with accrued interest, commencing on the later of (1)
the Effective Date and (2) the date on which such
Allowed Priority Tax Claim becomes an Allowed Claim;
provided, however, the Reorganized Debtors may elect
to make payments on a more frequent basis. The
Reorganized Company shall be deemed to have elected to
pay the Allowed Priority Tax Claim of the Internal
Revenue Service and the Allowed Priority Tax Claim of
the Texas Comptroller of Public Accounts in twenty-
four quarterly payments commencing on the later of (1)
the Effective Date and (2) the date on which such
Allowed Priority Tax Claim becomes an Allowed Claim
and continuing on each quarterly anniversary thereof.
To the extent that a Reorganized Debtor
elects to make deferred cash payments on any Allowed
Priority Tax Claim, the Reorganized Debtor may prepay
the remaining amount of such Allowed Priority Tax
Claim at any time, without penalty or premium.
Notwithstanding anything to the contrary in
this Plan, a failure by either Reorganized Debtor to
make a timely deferred cash payment to the Texas
Comptroller of Public Accounts pursuant to the Plan
shall constitute an event of default. The Reorganized
Debtor shall have five days from the receipt of
written notice from the Texas Comptroller of Public
Accounts to cure the event of default. If the event
of default is not cured within that period, the Texas
Comptroller of Public Accounts may (1) enforce the
entire amount of the balance of the Claim then
existing, (2) pursue any and all remedies available to
it under applicable non-bankruptcy law and/or (3) seek
such relief as may be appropriate in the Bankruptcy
Court.
C. Treatment of Unimpaired Classes. Claims in
Class 1, Class 2, Class 4, Class 6 and Class 8 are not
impaired under the Plan. Therefore, pursuant to
Section 1126(f) of the Bankruptcy Code, the holders of
Claims and Interests in such Classes are conclusively
presumed to have accepted the Plan. The unimpaired
Claims against, and Interests in, the Debtors will be
treated in the following manner under the Plan:
1. Class 1 - Allowed Priority Claims.
Unless otherwise agreed to by a holder of a Class 1
Claim, each such holder shall be paid in full, in
cash, in an amount equal to such holder's Class 1
Claim on the later of (a) the Effective Date and (b)
the date on which such Class 1 Claim becomes an
Allowed Claim.
2. Class 2 - Allowed Claims of the Old
Banks. Each Class 2 Claim shall be (a) paid in full,
in cash, or (b) satisfied by the execution and the
delivery of the New Credit Agreement by, among other
Persons, the Old Banks and the modification of the Old
Credit Agreement in accordance with the terms of the
New Credit Agreement (in which case, the Class 2
Claims, as so modified, shall continue to be secured
by the collateral which secured the Class 2 Claims on
the Filing Date and shall also be secured by certain
additional collateral described in the Disclosure
Statement).
Notwithstanding anything else contained in
the Plan and notwithstanding the confirmation of the
Plan, the Old Banks holding Class 2 Claims shall be
entitled to all of the liens, the protections, the
benefits and the priorities granted them in, or
confirmed by, the Financing Orders. All such liens,
protections, benefits and priorities granted to the
Old Banks in such orders shall continue until their
Class 2 Claims are indefeasibly paid in full, which
Class 2 Claims, by reason of the Financing Orders, (a)
are allowed and payable in their entirety, (b) include
unpaid principal and accrued but unpaid interest
through the date of full payment of the Class 2 Claims
of the Old Banks and (iii) are secured by the reason
of the first, valid, prior and perfected liens and
security interests granted under, or in connection
with, the Old Credit Agreement and confirmed by the
Financing Orders. Moreover, the contingent Class 2
Claims of the Old Banks, to the extent that they
become non-contingent, shall be paid in full on the
earlier of May 12, 1997, or the Effective Date.
3. Class 4 - Allowed Miscellaneous Secured
Claims. At the option of the relevant Debtor, each
Allowed Claim in any subclass of Class 4 shall (unless
the holder of any such Class 4 Claim agrees to a
different treatment) (a) be unaltered as to the
legal, equitable and contractual rights to which such
Class 4 Claim entitles the holder thereof or (b) be
treated in another manner that will not result in the
impairment of such Class 4 Claim under Section 1124 of
the Bankruptcy Code. Each Class 4 Claim shall be
treated for all purposes of the Plan and the
Bankruptcy Code as a separate subclass. The Plan does
not alter the rights of any holder of a Class 4 Claim
in any collateral securing the Class 4 Claim as of the
Filing Date and the liens and the security interests
securing each Class 4 Claim are ratified and affirmed.
4. Class 6 - Allowed Interests of Holding
as Sole Holder of Homeland Common Stock. The legal,
equitable and contractual rights of the holder of
Class 6 Interests shall not be altered by the Plan.
5. Class 8 - Allowed Interests of the
Holders of the Old Warrants. The legal, equitable and
contractual rights of each holder of a Class 8
Interest shall not be altered by the Plan.
D. Treatment of Impaired Classes. Claims and
Interests in Class 3, Class 5 and Class 7 are
impaired. Therefore, the holders of Claims and
Interests in such Classes are entitled to vote to
accept or to reject the Plan. The impaired Classes of
Claims against, and Interests in, the Debtors will be
treated in the following manner under the Plan:
1. Class 3 - Allowed Secured Noteholder
Claims. Unless otherwise agreed to by a holder of a
Class 3 Claim, each such holder shall receive its
Ratable Share of (a) the New Notes and (b) the Cash
Amount.
The Debtors shall pay to the Old Trustee an
amount equal to the amount of the Old Trustee
Expenses. Payment of such expenses shall constitute
distributions on account of Class 3 Claims, in
addition to the distributions provided for under the
Plan to holders of Class 3 Claims; and distributions
otherwise provided under the Plan to holders of
Allowed Secured Noteholder Claims shall not be reduced
on account of such payment of Old Trustee Expenses.
Notwithstanding anything in the Plan to the contrary,
the Debtors' obligation to pay the Old Trustee
Expenses shall be subject to the bar date and dispute
resolution provisions set forth in the Plan.
2. Class 5 - General Unsecured Claims.
Unless otherwise agreed to by a holder of a Class 5
Claim, each such holder shall receive its Ratable
Share of 4,450,000 shares of New Common Stock on the
later of (a) the Effective Date and (b) the date on
which such Claim becomes an Allowed Claim.
Any covered portion of any Class 5 Claim
which is an Insured Claim shall be paid by the
applicable Insurer to the extent of such coverage. The
Debtors reserve the right to consent to the
modification of the automatic stay imposed by Section
362 of the Bankruptcy Court so as to permit the
prosecution of Insured Claims solely to the extent of
such coverage.
3. Class 7 - Allowed Interests of Holders
of Old Common Stock. Unless otherwise agreed to by a
holder of a Class 7 Interest, each such holder shall
receive its Ratable Share of (a) 250,000 shares of New
Common Stock and (b) the New Warrants.
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN
. Operation as Debtor-in-Possession Until the
Effective Date. Until the Effective Date, the Debtors
shall operate their respective businesses as debtors-
in-possession pursuant to Section 1107 and Section
1108 of the Bankruptcy Code. After the Effective
Date, the Reorganized Debtors shall operate their
businesses and may buy, use, acquire and dispose of
their assets free of any restrictions contained in the
Bankruptcy Code or imposed by the Bankruptcy Court,
except as provided in the Plan, the Plan Supplement
and the Confirmation Order.
B. Issuance of New Securities.
Reorganized Holding shall be deemed to have authorized
and, on the Effective Date, shall issue the requisite
shares of New Common Stock and the requisite New
Warrants. The Reorganized Company shall be deemed to
have authorized and, on the Effective Date, shall
issue the New Notes.
C. Listing of New Common Stock; Exchange
Act Filing. Reorganized Holding shall use its best
efforts to (1) cause, as promptly as practicable after
the Effective Date, the shares of New Common Stock to
be listed on the NASDAQ National Market System (or, in
the event Reorganized Holding fails to meet the
listing requirements of the NASDAQ National Market
System, on such other exchange or system on which the
New Common Stock may be listed) and (2) (a) file,
within 60 days of the Effective Date, a Form 10
registration statement with respect to the New Common
Stock under the Securities Act of 1934, as amended,
and (b) cause such registration statement to remain
effective until the earlier of (x) the seventh
anniversary of the Effective Date and (y) the first
date on which less than 10% of the outstanding New
Common Stock is publicly held.
D. Effectiveness of Agreements. On the
Effective Date, the following agreements shall become
effective: (1) the New Credit Agreement; (2) the New
Indenture; (3) the New Warrant Agreement; (4) the
Registration Rights Agreements; and (5) the Modified
Union Agreements.
E. Charter Amendments. On the Effective
Date, (1) the Holding Charter shall be amended and
restated to eliminate the Old Common Stock and the Old
Class B Common Stock, to authorize the issuance of the
New Common Stock and to include a provision that
prohibits the issuance of nonvoting securities to the
extent required by Section 1123(a)(6) of the
Bankruptcy Code and (2) the Homeland Charter shall be
amended and restated to include a provision that
prohibits the issuance of nonvoting securities to the
extent required by Section 1123(a)(6) of the
Bankruptcy Code.
F. Management/Boards of Directors. The
executive officers of the Company and Holding
immediately before confirmation of the Plan shall
continue to serve in their respective capacities after
confirmation of the Plan. On the Effective Date, the
Board of Directors of each Reorganized Debtor shall
consist of (1) James A. Demme, (2) John A. Shields,
(3) one Person designated by the United Food and
Commercial Workers Union of North America and (4) four
Persons designated by the Unofficial Committee. Prior
to confirmation of the Plan, in accordance with
Section 1129(a)(5) of the Bankruptcy Code, the Company
and Holding shall disclose (a) the identity and
affiliations of any individual proposed to serve,
after confirmation of the Plan, as a director of the
Company or Holding, as the case may be, and (b) the
identity of any "insider" (as such term is defined in
Section 101(31) of the Bankruptcy Code) who shall be
employed and retained by the Company or Holding, and
the nature of any compensation for such insider. On
and after the Effective Date, each officer and
director shall hold his or her office on the terms,
and subject to the conditions, set forth in the
Amended Homeland Charter, the Amended Holding Charter
and the amended and restated bylaws of the relevant
Reorganized Debtor.
G. Management Stock Option Plan. On the
Effective Date, 263,158 shares of New Common Stock
shall be reserved for issuance under the Management
Stock Option Plan. The terms and the conditions of
the Management Stock Option Plan (including the
identity of the participants and the number of options
to be granted) shall be determined by the Board of
Directors of Reorganized Holding.
H. Retiree Benefits. From and after the
Effective Date, to the extent required by Section
1129(a)(13) of the Bankruptcy Code, the Reorganized
Debtors shall continue to pay all retiree benefits (as
defined in Section 1114 of the Bankruptcy Code), if
any, established or maintained by the Debtors prior to
the Effective Date.
Notwithstanding anything else contained
in the Plan, in the event that the Homeland Stores,
Inc. Employees' Retirement Plan does not terminate
prior to the Confirmation Date of the Plan, all Claims
of, or with respect to, such retirement plan
(including the contingent Claim of the Pension Benefit
Guaranty Corporation pursuant to 29 U.S.C. 1362(b)
for unfunded benefit liabilities of such retirement
plan and the contingent Claim of the Pension Benefit
Guaranty Corporation pursuant to 29 U.S.C. 1362(c)
for due and unpaid employer contributions owing to
such retirement plan) shall not be affected by the
confirmation of the Plan, and such Claims shall not be
discharged or released or otherwise affected by the
Plan or the Cases.
I. Workers' Compensation Claims under
Prior Self-Insurance Program. The Company's
obligations with respect to its self-insurance program
in existence prior to July 1994, for Oklahoma workers'
compensation purposes were secured by a $2 million
letter of credit payable to the Oklahoma Workers'
Compensation Court. On May 22, 1996, the Oklahoma
Workers' Compensation Court drew down the letter of
credit in full and is holding the $2 million cash
proceeds, together with interest accruing thereon from
the draw date, to pay workers' compensation claims,
and expenses related thereto, with respect to the
period that the Company maintained such self-insurance
program. The Company expects that it will consent to
the modification of the automatic stay provision of
Section 362(a) of the Bankruptcy Code so as to permit
workers' compensation claimants to prosecute their
workers' compensation claims with respect to such self-
insurance period in the Oklahoma Workers' Compensation
Court under Oklahoma law. To the extent the proceeds
from such letter of credit are insufficient to pay all
Oklahoma workers' compensation claims with respect to
the period that the Company maintained such self-
insurance program, such excess claims shall be
classified and treated as Class 5 Claims. In
addition, to the extent that, upon the liquidation and
the payment of all of the Oklahoma workers'
compensation claims with respect to the period that
the Company maintained a self-insurance program, there
are any proceeds then remaining available from such
letter of credit, the Company shall have the right to
direct the Oklahoma Workers' Compensation Court to pay
such remaining proceeds to the Reorganized Company.
J. Releases. On the Effective Date, each
Reorganized Debtor shall release unconditionally each
Released Party from any and all Claims, obligations,
rights, causes of action and liabilities, whether
known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, based
in whole or in part upon any act or omission,
transaction or other occurrence taking place on or
prior to the Effective Date in any way relating to
such Released Party, the Debtors, the Cases and the
Plan other than, in the case of an Affiliated Released
Party, any Excluded Claims.
On the Effective Date, each holder of a
Claim or an Interest who (1) has accepted the Plan,
(2) whose Claim or Interest is in a Class that has
accepted or been deemed to have accepted the Plan, or
(3) who may be entitled to receive a distribution of
property pursuant to the Plan, shall be deemed to have
released unconditionally each Released Party from any
and all Claims, obligations, rights, causes of action
and liabilities, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, in law,
equity or otherwise, based in whole or in part upon
any act or omission, transaction or other occurrence
taking place on or prior to the Effective Date in any
way relating to such Released Party, the Debtors, the
Cases or the Plan.
Notwithstanding the foregoing, if and
to the extent that the Bankruptcy Court concludes that
the Plan cannot be confirmed with any portion of the
foregoing releases, then the Plan may be confirmed
with that portion excised so as to give maximum effect
to the foregoing releases without precluding
confirmation of the Plan.
Notwithstanding anything else contained
in this Article IV (J) or elsewhere in the Plan,
nothing contained in this Plan shall limit or restrict
the ability of the Internal Revenue Service or the
Texas Comptroller of Public Accounts to collect tax
claims from Persons (other than the Debtors) in
accordance with applicable non-bankruptcy law.
K. Final Order. Any requirement of the
Plan for a Final Order may be waived in the sole and
absolute discretion of the Debtors upon written notice
to the Bankruptcy Court; provided, however that
nothing contained herein or elsewhere in the Plan
shall prejudice the right of any party in interest to
seek a stay pending appeal with respect to such Final
Order.
L. Term of Injunction or Stays. Unless
otherwise provided, all injunctions or stays provided
for in the Cases pursuant to Section 105 and Section
362 of the Bankruptcy Code or otherwise and in effect
on the Confirmation Date shall remain in full force
and effect until the Effective Date. The Confirmation
Order shall provide that the distributions and
transfers of property to be made pursuant to the terms
of the Plan are made free and clear of all Claims
(except as otherwise provided in, and governed by,
the Plan) and that upon the confirmation of the Plan
(except as otherwise provided in, and governed by, the
Plan) all holders of Claims and Interests shall be
permanently enjoined from, and restrained against,
commencing or continuing any suit, action or
proceeding or asserting against either Reorganized
Debtor or its assets any Claim, interest or cause of
action based upon any Claim or Interest that arose or
existed before the Confirmation Date.
M. Waiver and Rescissions. Except as
otherwise provided in, , and governed by, the Plan or
in the Confirmation Order, the entry of the
Confirmation Order by the Bankruptcy Court shall
operate as a waiver of all defaults and events of
default and any accelerations that have been declared
or occurred with respect to any such events of default
through the Effective Date.
N. Corporate Action. On the Effective
Date, all actions contemplated by the Plan shall be
authorized and approved in all respects (subject to
the provisions of the Plan), including, without
limitation, the following: (1) the adoption and the
filing with the Secretary of State of the State of
Delaware of the Amended Holding Charter and the
Amended Homeland Charter; (2) the issuance by
Reorganized Holding of the New Common Stock and New
Warrants; (3) the issuance by the Reorganized Company
of the New Notes; and (4) the execution, the delivery
and the performance of the New Credit Agreement, the
New Indenture, the New Warrant Agreement, the
Registration Rights Agreements, the Modified Union
Agreements and all documents and agreements relating
to any of the foregoing. All matters provided for
under the Plan involving the corporate structure of
the Debtors and/or the Reorganized Debtors in
connection with the Plan and any corporate action
required by the Debtors and/or the Reorganized Debtors
in connection with the Plan shall be deemed to have
occurred and shall be in effect pursuant to Section
303 of the Delaware General Corporation Law and the
Bankruptcy Code, without any requirement of further
action by the shareholders or the directors of the
Debtors and/or the Reorganized Debtor. On the
Effective Date, the appropriate officers of the
relevant Reorganized Debtors are authorized and
directed to execute and to deliver the agreements,
documents and instruments contemplated by the Plan,
the Plan Supplement and the Disclosure Statement in
the name and on behalf of such Reorganized Debtor.
O. Further Actions. The Debtors and the
Reorganized Debtors may make and may cause their
respective officers to make such other filings, to
execute and to deliver such other documents and
instruments and take such other actions as may be
appropriate or advisable in connection with the Plan
and the transactions contemplated by the Plan and as
are not inconsistent with the Plan.
ARTICLE V
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. Assumption. All executory contracts and
unexpired leases shall be deemed assumed by the
relevant Debtor pursuant to Section 1123(b)(2) of the
Bankruptcy Code unless expressly rejected or subject
to a motion by such Debtor to reject them filed on or
prior to 4:30 p.m., Wilmington, Delaware time, on July
10, 1996. All cure payments that may be required
under Section 365(b)(1) of the Bankruptcy Code in
connection with such assumption shall be made on the
Effective Date.
In the event of a dispute concerning
(1) the amount of any cure payment, (2) the ability of
the relevant Debtor to provide "adequate assurance of
future performance" (within the meaning of Section 365
of the Bankruptcy Code) under the executory contract
or the unexpired lease to be assumed or (3) any other
matter pertaining to the assumption of an executory
contract or an unexpired lease, such Debtor shall make
such cure payment or provide such assurance, as
required, in accordance with Final Orders of the
Bankruptcy Court.
To the extent that the personal
property lease of Homeland with Sanwa Business Credit,
Inc. is rejected, Homeland shall return the personal
property covered thereby to Sanwa Business Credit
Corporation. within 60 days of the date on which the
order approving such rejection is entered. Homeland
shall timely perform all of its obligations under the
personal property lease which first arise from and
after 60 days after the Petition Date in accordance
with Section 365 of the Bankruptcy Code and, on the
Effective Date, shall pay the Administrative Claim
(based on the amounts owed under the personal property
lease) of Sanwa Business Credit Corporation for the
period from the Filing Date to the date on which
Homeland resumes performance of its obligations under
Section 365 of the Bankruptcy Code.
B. Rejection. An Allowed Claim under an
executory contract or an unexpired lease that has been
rejected, if any, shall constitute a Class 4 Claim, if
secured, or a Class 5 Claim, if unsecured. Any proof
of Claim with respect to Claims arising from the
rejection of an executory contract or an unexpired
lease must be filed with the Bankruptcy Court within
30 days after the rejection by the relevant Debtor of
such contract or such lease.
C. Indemnification Obligations. The
obligations of the Debtors to indemnify (1) their
respective present and former directors and officers
against any obligations pursuant to their certificate
of incorporation, by-laws, applicable state law,
specific agreements or any combination of the
foregoing and (2) the Indemnitees under the
Indemnification Agreements, shall survive
Confirmation, remain unaffected thereby, and not be
discharged, irrespective of whether indemnification is
owed in connection with an event occurring before, on
or after the Filing Date.
ARTICLE VI
DISTRIBUTIONS
A. Distributions. The Distribution Agent shall
be responsible for making all of the distributions
required to be made by the Reorganized Debtors under
the Plan. All costs and expenses in connection with
such distributions, including, without limitation, the
fees and the expenses, if any, of the Distribution
Agent, shall be borne by the Reorganized Debtor
required to make such distributions.
Neither a Reorganized Debtor nor the
Distribution Agent shall be required to provide any
bond in connection with the making of any
distributions pursuant to the Plan.
B. Date of Distribution. The Distribution
Agent shall make each required distribution by the
date stated in the Plan with respect to such
distribution. Any distribution required to be made on
the Effective Date or the date on which a Claim
becomes an Allowed Claim shall be deemed to be made on
such date if made as soon as practicable after such
date and, in any event, within 30 days after such
date.
C. Undeliverable Distributions. If a
distribution is returned to the Distribution Agent as
undeliverable, the Distribution Agent shall hold such
distribution and shall not be required to take any
further action with respect to the delivery of the
distribution unless and until the earlier of (1) the
date on which the Distribution Agent is notified in
writing of the then current address of the holder
entitled to receive the distribution and (2) the date
on which the distribution reverts to a Reorganized
Debtor in accordance with the Plan. If the
Distribution Agent is notified in writing of the then
current address of the holder prior to date on which
the distribution reverts to a Reorganized Debtor, the
Distribution Agent shall promptly make the
distribution required by the Plan to the holder at the
then current address.
The Distribution Agent shall not be entitled
to vote any securities which the Distribution Agent
holds as undeliverable.
D. Surrender and Cancellation of Instruments.
As a condition to receiving any distribution pursuant
to the Plan, each holder of an Old Note, share
certificate, or other instrument evidencing a Claim or
Interest (other than certificates representing the
Homeland Common Stock or the Old Warrants) as of the
Record Date must surrender such Old Note, share
certificate or other instrument to the Distribution
Agent or deliver to the Reorganized Debtors or the
Distribution Agent, as the case may be, an affidavit
of loss and indemnity (in form and substance
satisfactory to the Reorganized Debtors), in all
cases, in proper form for transfer. In accordance
with the provisions of Section 1143 of the Bankruptcy
Code, any holders of such Claims or Interests as of
such Record Date that fail to surrender such Old
Notes, share certificates or other instruments within
five years from the Confirmation shall be deemed to
have forfeited all rights, Claims and Interests and
shall not participate in any distribution under the
Plan.
On the Effective Date, (1) all such Old
Notes, share certificates or other instruments shall
be canceled and (2) the Company's obligations under
such Old Notes, share certificates and other
instruments (together with, in the case of the Old
Notes, the Old Indenture and the other agreements
governing such Old Notes) shall be discharged.
On the Effective Date, the lien and the
security interest of the Old Trustee in the Old
Indenture collateral shall be released and the Old
Trustee shall be authorized and directed to release
any collateral or other property of the Debtors
(including without limitation, any cash collateral)
held by the Old Trustee and to take such actions as
may be requested by the Reorganized Debtors to
evidence the release of such liens and the security
interests, including, without limitation, the
execution, the delivery and the filing and/or the
recording of such releases as may be requested by the
Reorganized Debtors.
E. Manner of Payment. At the option of the
Reorganized Debtors, distributions may be made in
cash, by wire transfer or by a check drawn on a money
center bank. Distributions of New Securities shall be
made by the issuance and, in the case of the New
Notes, the authentication of such New Notes.
F. Fractional Shares. No fractional shares of
New Common Stock shall be issued under the Plan. Each
holder otherwise entitled to an amount of the New
Common Stock that includes fractional amounts shall
receive either one whole share (if such fraction is
equal to, or greater than, one-half) or no share (if
such fraction is less than one-half) in lieu of
fractional amount.
No New Warrants to purchase fractional
shares of New Common Stock shall be issued under the
Plan. Each holder otherwise entitled to a New Warrant
that includes fractional amounts of New Common Stock
shall receive a New Warrant that has been rounded down
to the next whole number of shares (if such fraction
is less than one-half) or rounded up to the next whole
number of shares (if such fraction is equal to, or
greater than, one-half).
G. Compliance with Tax Requirements. The
Reorganized Debtors shall comply with all withholding
and reporting requirements imposed by federal, state
or local taxing authorities in connection with making
distributions pursuant to the Plan.
In connection with each distribution with
respect to which the filing of an information return
(such as an Internal Revenue Service Form 1099 or
1042) and/or withholding is required, the Reorganized
Debtors shall file such information return with the
Internal Revenue Service and provide any required
statements in connection therewith to the recipients
of such distribution, and/or effect any such
withholding and deposit all moneys so withheld to the
extent required by law. With respect to any Person
from whom a tax identification number, certified tax
identification number or other tax information
required by law to avoid withholding has not been
received by the Reorganized Debtors (or the
Distribution Agent), the Reorganized Debtors may, at
their sole option, withhold the amount required and
distribute the balance to such Person or decline to
make such distribution until the information is
received; provided, however, the Reorganized Debtors
shall not be obligated to liquidate New Securities to
perform such withholding.
H. Allocation Between Principal and Interest.
The consideration paid to holders of Old Notes shall
be allocated first to accrued but unpaid interest and
next to principal on the Old Notes.
I. Distribution of Unclaimed Property. If any
Person entitled to receive cash or New Securities
pursuant to the Plan does not present itself on the
Effective Date or on such other date on which such
Person becomes eligible for distribution of such cash
or securities, such cash or New Securities shall be
set aside and (in the case of cash) held in a
segregated interest-bearing fund to be maintained by
the Distribution Agent. If such Person presents
itself within five years following the Confirmation
Date, such cash or New Securities, together with any
interest or dividends earned thereupon, shall be paid
or distributed to such Person. If such Person does
not present itself within five years following the
Confirmation Date, any such cash or securities and
accrued interest or dividends thereon shall become the
property of, and shall be released to, the relevant
Reorganized Debtor. Nothing contained in the Plan
shall require the Reorganized Debtors to attempt to
locate such Persons.
J. Setoff. Each Reorganized Debtor may, but is
not be required to, setoff against any Claim and the
payment to be made pursuant to the Plan in respect of
such Claim, any Claims of any nature which the
Reorganized Debtor may not have against the holder of
such Claim. Neither the failure by a Reorganized
Debtor to effect such a setoff nor the allowance of
any Claim shall constitute a waiver or a release of
any Claim which the Reorganized Debtors may have
against the holder of a Claim.
K. Record Date. Only holders of Old Notes and
Old Common Stock as of the Record Date will be
entitled to receive distributions under the Plan. As
of the close of business on the Record Date, the Old
Note and Old Common Stock transfer ledger as
maintained by, or on behalf of, the Debtors shall be
closed and the Reorganized Debtors and the Old Trustee
shall have no obligation to recognize any transfer of
the Old Common Stock or the Old Notes occurring
thereafter.
ARTICLE VII
PROCEDURES FOR RESOLVING CLAIMS AND INTERESTS
A. Bar Dates for Claims Generally. Each holder
of a Claim (other than an Administrative Claim) shall
file, or shall have filed, a proof of Claim with the
Bankruptcy Court (1) no later than July 1, 1996, or
(2), to the extent such holders were not subject to
such bar date, (a) within 30 days after the Effective
Date or (b) by such other date as may be established
by the Bankruptcy Court. Any holder who does not file
a proof of Claim within the applicable time period
shall be forever barred from asserting its Claim
unless, and to the extent such Claim is listed by the
Debtors in their respective Schedules as liquidated in
amount, not disputed and not contingent.
B. Bar Dates for Administrative Claims. All
requests for payment of Administrative Claims shall be
filed with the Bankruptcy Court in the following
manner:
1. Fee Claims. Each holder of a Fee Claim
shall be entitled to file an application for allowance
of final compensation and reimbursement of expenses
for services rendered on or before the Effective Date.
All applications in respect of such Fee Claims shall
be filed not later than 45 days after the Effective
Date. If a holder of a Fee Claim fails to file an
application with respect to its Fee Claim within such
45-day period, such holder shall be forever barred
from asserting its Fee Claim.
2. Other Administrative Claims. Except as
otherwise provided by Article III(A), all requests for
payment of Administrative Claims, other than Fee
Claims and Administrative Claims incurred and paid in
ordinary course, must be filed with the Bankruptcy
Court within 30 days after the Effective Date. Any
holder of such an Administrative Claim that does not
file a request for payment within such a 30-day period
shall be forever barred from asserting its
Administrative Claim.
C. Prosecution of Objections. Each Reorganized
Debtor and any other party in interest shall have the
authority (1) to object to Claims against, and
Interests in, such Reorganized Debtor, and (2) to
litigate any Claim or any Interest to Final Order, to
settle or to compromise any Claim or any Interest or
to withdraw any objection to any Claim or any Interest
(other than a Claim or an Interest that is deemed to
be allowed pursuant to the Plan or a Final Order).
Unless another date is established by the
Bankruptcy Court or the Plan, any objection to a Claim
or an Interest shall be filed with the Bankruptcy
Court and served on the holder of such Claim or
Interest within 90 days after the later of (1) the
Effective Date and (2) in the case of a Claim, the
date that a proof of Claim with respect to such Claim
is filed or is deemed to have been filed with the
Bankruptcy Court. The relevant Reorganized Debtor
shall have the right to petition the Bankruptcy Court
for an extension of such date if a complete review of
such Claim or Interest cannot be completed by such
date.
Except as otherwise provided by Section
III(A), any objection to a Fee Claim shall be filed
within the later of (1) 60 days after the Effective
Date and (2) 30 days after the date on which the
application is filed with respect to such Fee Claim.
If no objection has been filed to a Claim or an
Interest (other than a Fee Claim which shall be
allowed only by order of the Bankruptcy Court) within
the applicable period, the Claim or the Interest shall
be treated as an Allowed Claim or an Allowed Interest,
as the case may be, to the extent that the Claim or
the Interest has not been previously allowed or
disallowed by the Bankruptcy Court.
D. Treatment of Disputed Claims and Disputed
Interests. Disputed Claims and Disputed Interests
shall be treated in the following manner:
1. No Distribution Pending Allowance. If
any portion of a Claim is a Disputed Claim, no payment
or distribution provided under the Plan shall be made
on account of the portion of such Claim that is a
Disputed Claim unless and until such Disputed Claim
becomes an Allowed Claim but the payment or
distribution provided for under the Plan shall be made
on account of the portion of such Claim that is an
Allowed Claim.
2. Disputed Class 5 Claims Reserve.
Notwithstanding anything else to the contrary in this
Article VII(D), on the Effective Date, the Reorganized
Debtors shall deposit into the Disputed Class 5 Claims
Reserve, the New Common Stock that would otherwise
have been distributed to holders of Disputed Claims
which, if allowed on the Effective Date, would have
been Class 5 Claims (each, a "Disputed Class 5 Claim")
in accordance with the Plan as if such Disputed Class
5 Claims were Allowed Claims. No interest or other
amounts shall accrue on New Common Stock held in the
Disputed Class 5 Claims Reserve. In calculating the
amount to be held in the Disputed Class 5 Claims
Reserve, the Reorganized Debtors shall (a) treat all
liquidated Disputed Class 5 Claims as if allowed in
full and (b) make a good faith estimate of the
amounts, if any, likely to be allowed in respect of
contingent or unliquidated Class 5 Claims. If, and to
the extent, any such Disputed Class 5 Claim becomes an
Allowed Claim, the property so reserved for the
creditor holding such Claim shall be distributed to
such creditor within thirty days of the date that such
Disputed Class 5 claim becomes an Allowed Claim.
In the event that, after the Effective Date,
a Disputed Claim is disallowed in whole or in part,
the relevant Reorganized Debtor shall distribute (or
cause the Distribution Agent to distribute) the
property held in reserve for the disallowed portion of
such Disputed Class 5 Claim as follows: (a) such
property shall be distributed to holders of Allowed
Class 5 Claims; (b) such distribution shall be based
on the applicable Ratable Share of each such holder,
as adjusted to take into account the disallowance or
the allowance of all Disputed Claims since the
Effective Date; and (c) such distribution shall be
made on December 31, 1996, and on June 30 and December
31 of each following year (each such date, a
"Distribution Date"), to the extent a Disputed Class 5
claim has been disallowed in whole or in part since
the Effective Date or the last Distribution Date, as
the case may be, until the earlier of (i) the date on
which all Disputed Class 5 Claims have been resolved
and (ii) less than 5,000 shares of New Common Stock
are on deposit in the Disputed Class 5 Claims Reserve.
If, at any time after the Effective Date, the number
of shares of New Common Stock held in the Disputed
Class 5 Claims Reserve is less than 5,000, the
remaining shares of Common Stock held in such reserve
shall, at the option of the Reorganized Debtors, be
canceled or treated as treasury stock.
3. No Other Reserves. The Reorganized
Debtors shall not be required to establish a reserve
with respect to any class of Disputed Claims or
Disputed Interests other than Class 5 Disputed
Claims.
4. Method of Resolution - General. Each
Disputed Claim (other than a Disputed Claim which
involves a personal injury, property damage or
wrongful death claim) and each Disputed Interest shall
be resolved by the Bankruptcy Court.
5. Method of Resolution - Personal Injury
and Wrongful Death Claims. Each Disputed Claim
involving a personal injury, property damage or
wrongful death claim shall be resolved in the
following manner:
a. Information Assembly. Within 30
days after the Effective Date, the relevant
Reorganized Debtor shall mail to each holder of such a
Disputed Claim a form prepared by such Reorganized
Debtor, requesting such information as such
Reorganized Debtor believes is necessary to evaluate
such Disputed Claim.
No later than 30 days after each holder
of such a Disputed Claim receives such form, the
holder shall return the completed form to such
Reorganized Debtor and any Insurer on such Claim.
The completed form must be signed, under penalty of
perjury, by the holder and the holder's counsel, if
any, and the signature of the holder must be
notarized. Each form must have the following
documentation attached to such form:
(i) For personal injuries and
wrongful death claims: (A) copies of all medical
bills, (B) copies of all medical reports, (C) copies
of all expert reports, (D) copies of all tax returns
for the last five years, (E) copies of all x-rays, (F)
copies of all MRI's, (G) copies of all wage
statements, W-2 forms, W-4 forms, and 1099 forms for
the past five years, (H) copies of all pictures of any
accident scene, (I) an executed SSA-7004-SM, Social
Security Administration Request for Earnings and
Benefit Statement, designating a Person specified by
such Reorganized Debtor as addressee, (J) an executed
IRS 4506 Form, Request for Copy of Transcript of Tax
Form, designating a Person specified by such
Reorganized Debtor as the recipient of the documents,
and (K), in the case of wrongful death claims, copies
of all autopsy reports.
(ii) For property damage claims,
(A) copies of all repair invoices and records and (B)
copies of all expert reports.
If the form is not returned in accordance herewith
within the required 30-day period, the Disputed Claim
shall be deemed disallowed.
Within 90 days from the date on which such
Reorganized Debtor and the Insurer, if any, receive a
form returned in accordance herewith, such Reorganized
Debtor or, if there is an Insurer, the Insurer shall:
(i) offer to settle the Disputed
Claim;
(ii) deny the Disputed Claim; or
(iii) request additional
information from the holder of the Disputed Claim,
including, without limitation, for personal injury
claims, submission to an independent medical
examination.
If an offer of settlement is made, the
holder must accept or reject the offer of settlement
within 30 days after the offer of settlement is made.
If the offer of settlement is not accepted or rejected
within such 30-day period, the Disputed Claim shall be
deemed disallowed. If the holder accepts the offer of
settlement, the Disputed Claim shall be deemed allowed
on the date on which such Reorganized Debtor or the
Insurer, as the case may be, receives notice of such
acceptance.
If additional information is requested, the
holder must provide such additional information within
30 days of the request. If the holder fails to
provide such additional information within such 30-day
period, the Disputed Claim shall be deemed disallowed.
If the requested additional information is provided
within such 30-day time period, such Reorganized
Debtor or, if there is an Insurer, the Insurer must
make an offer of settlement or deny a Disputed Claim
within 90 days after it receives such additional
information.
If a holder of a Disputed Claim rejects an
offer of settlement within 30 days after the offer of
settlement is made or the Disputed Claim is denied,
the holder shall notify such Reorganized Debtor and
the Insurer, if any, that mediation is requested. If
a holder fails to request mediation, the Disputed
Claim shall be deemed disallowed.
b. Mediation. Each such Disputed
Claim for which mediation is requested shall be
submitted to mediation by a mediator assigned by the
Bankruptcy Court. Such mediator shall work with all
Persons involved, including, without limitation, any
Insurer, to negotiate a mutually satisfactory
resolution with respect to the Disputed Claim. Within
30 days of the date on which a mediator is appointed,
the mediator shall schedule a mediation conference in
Oklahoma City, Oklahoma at which all Persons involved
shall either (i) appear personally or (ii) be
represented by a Person authorized to enter into a
binding settlement agreement on behalf of such
involved Person. The mediator shall give each such
involved Person at least 10 days prior written notice
of the date, the time and the place of the conference.
If any Person which has received notice of such
mediation (or his, her or its designated
representative) fails to appear at such mediation
conference, any other Person may petition the
Bankruptcy Court for an award of costs, including,
without limitation, reasonable attorneys' fees against
the non-attending Person. In addition, if the holder
or the holder's counsel, if any, fails to attend, the
Disputed Claim shall be deemed disallowed.
At the conclusion of the mediation
conference, each Person (or its designated
representative) shall sign before the mediator a
statement to the effect that (i) the Disputed Claim
has been resolved by mutual agreement (subject to
approval of the Bankruptcy Court) and the basis of
such resolution, (ii) that the Disputed Claim shall be
submitted to binding arbitration or (iii) that the
Disputed Claim shall proceed before the District
Court.
c. Arbitration. If a Disputed Claim
is submitted to binding arbitration, the Disputed
Claim shall be resolved by binding arbitration
conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association. No Person involved in such arbitration
shall be permitted to appeal any award except as
expressly permitted by Section 10 of the Federal
Arbitration Act, as amended, and there shall be no
right to a de novo trial subsequent to the
arbitration.
d. Trial. Upon compliance with the
procedures set forth in this Article VII(D)(5), the
holder of a Disputed Claim subject to this Article
VII(D)(5) shall have the right to pursue such Disputed
Claim in a federal district court in accordance with
28 U.S.C. 157(b)(5) and the Federal Rules of Civil
Procedure. Any case filed prior to the Filing Date
shall be transferred from the forum in which it is
pending to the District Court and, regardless of
whether a case has been filed prior to the Filing
Date, the District Court shall transfer the case to
the federal district court for the district in which
the Disputed Claim arose. The Disputed Claim shall be
prosecuted in the federal district court to which it
is transferred by the District Court.
ARTICLE VIII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE PLAN
Conditions to Consummation. The Plan shall
not become effective unless and until each of the
following conditions have been satisfied or have been
waived in accordance with this Article VIII:
A. Entry of the Confirmation Order. The
Plan shall have been confirmed by the Bankruptcy Court
and the Confirmation Order shall not have been
vacated, reversed or stayed.
B. New Credit Agreement. The New Credit
Agreement shall have been entered into and all
conditions to the effectiveness thereof shall have
been satisfied or waived by the lenders as required
thereunder.
C. Other Agreements. All other agreements
contemplated by, or entered into pursuant to, the
Plan, including, without limitation, the Plan
Documents, shall have been duly and validly executed
and delivered by the parties thereto and all
conditions to their effectiveness shall have been
satisfied or waived.
The Reorganized Debtors may waive at any
time, without notice, leave or order of the Bankruptcy
Court, and without any formal action other than
proceeding to consummate the Plan, any condition
precedent to consummation and effectiveness of the
Plan; provided, however, that the Debtors may not
waive the condition precedent specified in Article
VIII(C) insofar as it relates to the execution,
delivery and effectiveness of the New Indenture and
the Noteholder Registration Rights Agreement without
the consent of the Noteholders' Committee.
ARTICLE IX
CONFIRMABILITY AND SEVERABILITY OF A PLAN AND CRAMDOWN
If all of the applicable requirements for
confirmation of the Plan are met as set forth in
Section 1129(a) of the Bankruptcy Code except
paragraph (8) thereof, the Debtors may, at their
option, amend the Plan as necessary to request the
Bankruptcy Court to confirm the Plan pursuant to
Section 1129(b) of the Bankruptcy Code,
notwithstanding the requirements of paragraph (8) of
Section 1129(a) of the Bankruptcy Code, provided that
the Plan, as so amended, is fair and equitable and
does not discriminate unfairly with respect to any
impaired Class or Classes that have not accepted the
Plan. The right of the Debtors to modify the Plan
under this Article IX does not limit the ability of
the Debtors to modify the Plan under Article XII(A).
ARTICLE X
EFFECTS OF THE CONFIRMATION OF THE PLAN
A. Binding Effect. The provisions of the Plan
shall bind all holders of Claims and Interests,
whether or not any such holder has accepted the Plan.
B. Discharge. Except as otherwise expressly
provided herein, the confirmation of the Plan shall,
provided the Effective Date shall have occurred,
discharge all Claims and Interests to the fullest
extent authorized or provided by the Bankruptcy Code,
including, without limitation, to the fullest extent
authorized or provided for by Section 524 of the
Bankruptcy Code.
C. Vesting of Assets; Reservation of Claims.
Except as expressly provided in, and governed by, the
Plan or the Confirmation Order, on the Effective Date,
the assets and property of each Debtor's Estate shall
vest in the relevant Reorganized Debtor free and clear
of all Claims, liens, encumbrances, charges and
interests. Except as provided in the Estate Release,
all causes of action arising under Chapter 5 of the
Bankruptcy Code (other than fraudulent conveyance and
preference claims, if any, of the Debtors against the
holders of the Old Notes), all Claims against third
parties, and all other causes of action against third
parties, and all other causes of action and rights
belonging to or in favor of the Debtors, including,
without limitation, under Section 502, Section 544,
Section 545, Section 547, Section 548 and Section 549
of the Bankruptcy Code, are hereby preserved and
retained for assertion and enforcement solely and
exclusively by, and in the discretion of, the
Reorganized Debtors and shall revest in the relevant
Reorganized Debtor on the Effective Date.
D. Injunction. Except as otherwise expressly
provided in, and governed by, the Plan, the entry of
the Confirmation Order shall, provided that the
Effective Date shall have occurred, permanently enjoin
all Persons that have held, currently hold or may hold
a Claim, or other debt or liability that is discharged
pursuant to the Plan or who have held, currently hold
or may hold an Interest that is terminated pursuant to
the Plan from taking any of the following actions in
respect of such discharged Claim, debt or liability or
such terminated Interest:
(1) commencing, conducting or continuing
in any manner, directly or indirectly, any suit,
action or other proceeding of any kind against the
Reorganized Debtors or the property of the Reorganized
Debtors;
(2) enforcing, levying, attaching,
collecting or recovering in any manner or by any
means, whether directly or indirectly, any judgment,
award, decree or order against the Reorganized Debtors
or the property of the Reorganized Debtors;
(3) creating, perfecting or enforcing in
any manner, directly or indirectly, any lien or any
security interest of any kind against the Reorganized
Debtors or the property of the Reorganized Debtors;
(4) asserting a setoff, right of
subrogation or recoupment of any kind, directly or
indirectly, against any debt, liability or obligation
due to the Reorganized Debtors or the property of the
Debtors; or
(5) commencing or continuing any action in
any manner or in any place that does not comply with,
or is inconsistent with, the Plan.
Notwithstanding anything else contained in
the Plan, to the extent that a Reorganized Debtor
makes a claim for refund against the Texas Comptroller
of Public Accounts for the period prior to the
Confirmation Date, the Texas Comptroller of Public
Accounts shall be permitted to assert any setoff or
recoupment in accordance with applicable non-
bankruptcy law.
E. Insured Claims. Confirmation of the Plan
shall not discharge the duty of any Insurer under any
contract of insurance to continue to provide coverage
to all parties covered under the contract of insurance
in accordance with the terms and subject to the
conditions of the contract of insurance.
ARTICLE XI
RETENTION OF JURISDICTION
Notwithstanding entry of the Confirmation
Order or the Effective Date having occurred, the
Bankruptcy Court shall retain jurisdiction over the
Cases and any proceedings arising from, or relating
to, the Cases pursuant to Section 1142 of the
Bankruptcy Code and Section 1334 of Title 28 of the
United States Code to the fullest extent permitted by
the Bankruptcy Code and any other applicable law,
including, without limitation, such jurisdiction as is
necessary to ensure that the purpose and the intent of
the Plan are carried out. Without limiting the
generality of the foregoing, the Bankruptcy Court
shall retain the following jurisdiction:
A. Executory Contract and Lease
Determinations. The Bankruptcy Court shall retain the
jurisdiction to hear and to determine any motions
pending before the Bankruptcy Court on the Effective
Date to reject any executory contract or unexpired
lease to which a Debtor is a party or with respect to
which a Debtor may be liable and to hear and to
determine the allowance of any Claim resulting
therefrom.
B. Pending Motions and Adversary Proceedings.
The Bankruptcy Court shall retain the jurisdiction to
determine any adversary proceedings, applications,
contested matters and other litigated matters that are
pending on the Effective Date or that may be commenced
thereafter as provided in the Plan.
C. Distributions. The Bankruptcy Court shall
retain the jurisdiction to ensure that distributions
to the holders of Allowed Claims and Allowed Interests
are accomplished as provided in the Plan.
D. Claim Determinations. The Bankruptcy Court
shall retain the jurisdiction to hear and determine
objections to, or requests for estimation of, Claims,
including, without limitation, any objections to the
classification of any Claim, in whole or in part.
E. Stay Matters. The Bankruptcy Court shall
retain the jurisdiction to enter and to implement such
orders as may be appropriate in the event that the
Confirmation Order is for any reason stayed, revoked,
modified or vacated.
F. Support of Plan. The Bankruptcy Court shall
retain the jurisdiction to issue appropriate orders in
aid of the execution of the Plan and to enforce the
Confirmation Order and/or the discharge, or the effect
of the discharge, provided to the Reorganized Debtors.
G. Modifications. The Bankruptcy Court shall
retain the jurisdiction to hear and to determine any
applications to modify the Plan, to cure any defect or
any omission in any order of the Bankruptcy Court or
in the Plan, including, without limitation, the
Confirmation Order, and to reconcile any
inconsistency in any order entered by the Bankruptcy
Court and the Plan, including, without limitation, the
Confirmation Order.
H. Compensation and Expense Determinations.
The Bankruptcy Court shall retain the jurisdiction to
hear and to determine any applications for
compensation and reimbursement of expenses of
professionals and members of any Official Committee
(and, if applicable, the Unofficial Committee) under
Section 330, Section 331, Section 503(b), Section 1103
and/or Section 1129(a)(4) of the Bankruptcy Code.
I. Resolution of Controversies. The Bankruptcy
Court shall retain the jurisdiction to hear and to
determine resolve any disputes arising in connection
with the interpretation, the implementation or the
enforcement of the Plan.
J. Other Plan-Related Matters. The Bankruptcy
Court shall retain the jurisdiction to hear and to
determine other issues presented by, arising under, or
related to, the Plan and other matters related to the
Plan and not inconsistent with the Bankruptcy Code.
K. Final Decree. The Bankruptcy Court shall
retain the jurisdiction to enter a final decree
closing the Cases.
L. Recovery of Assets. The Bankruptcy Court
shall retain the jurisdiction to enter such orders as
may be appropriate in connection with the recovery of
the assets of the Debtors and the Estates wherever
located.
M. Tax Related Matters. The Bankruptcy Court
shall retain the jurisdiction to hear and to determine
any motions or contested matters involving taxes, tax
refunds, tax attributes and tax benefits and similar
or related matters with respect to the Debtors arising
prior to the Effective Date or relating to the
administration of the Cases, including, without
limitation, matters involving federal, state and local
taxes in accordance with Section 346, Section 505 and
Section 1146 of the Bankruptcy Code.
N. Other Determinations. The Bankruptcy Court
shall retain the jurisdiction to determine any other
matter not inconsistent with the Bankruptcy Code.
ARTICLE XII
MISCELLANEOUS PROVISIONS
A. Modification of the Plan. The Plan may be
modified at any time or from time to time by the
Debtors before or after the Effective Date, whether or
not the Plan has been substantially consummated, upon
such notice and hearing and other requirements as
shall be required by the Bankruptcy Code and
applicable law.
B. Revocation and Withdrawal of Plan. The
Debtors reserve the right to revoke or to withdraw the
Plan at any time before the Confirmation Date. If the
Debtors revoke or withdraw the Plan prior to the
Confirmation Date, or if the Confirmation Date or the
Effective Date does not occur, then the Plan shall be
deemed null and void. In such event, nothing
contained herein or in the Disclosure Statement shall
be deemed to constitute an admission of the validity,
waiver or release of any Claims by or against the
Debtors or any other Person or to prejudice in any
manner the rights of the Debtors or any Person in any
proceeding involving the Debtors.
C. Exculpation. Neither the Reorganized
Debtors, the Old Banks and the Agent, any Official
Committee, the Unofficial Committee, nor any of their
respective members, officers, directors, shareholders,
employees, agents, attorneys, accountants or other
advisors, shall have or incur any liability to any
holder of a Claim or Interest for any act or failure
to act in connection with, or arising out of, the
pursuit of confirmation of the Plan, the consummation
of the Plan or the administration of the Plan or the
property to be distributed under the Plan, except for
any act or failure to act that constitutes willful
misconduct or recklessness as determined pursuant to a
Final Order, and in all respects, such Persons (1)
shall be entitled to rely upon the advice of counsel
with respect to their duties and responsibilities
under the Plan, and shall be fully protected from
liability in acting or in refraining from action in
accordance with such advice and (2) shall be fully
protected from liability with respect to any act or
failure to act that is approved or ratified by the
Bankruptcy Court.
D. Payment Dates. Whenever any payment to be
made under the Plan is due on a day other than a
Business Day, such payment shall instead be made,
without interest, on the next following Business Day.
E. Payment of Statutory Fees. All fees payable
pursuant to Section 1930 of Title 28 of the United
States Code, shall be paid as required by the
Bankruptcy Code.
F. Payment of Post-Petition Interest or
Attorney Fees. Unless otherwise expressly provided in
the Plan, or allowed by order of the Bankruptcy Court,
the Debtors shall not be required to pay any holder of
a Claim any interest occurring on or after the Filing
Date, or any attorneys' fees, with respect to such
Claim.
G. Section 1146 Exemption. Pursuant to Section
1146(c) of the Bankruptcy Code, the issuance, transfer
or exchange of any security under the Plan or the
making or delivery of any instrument of transfer
pursuant to, in implementation of, or as contemplated
by, the Plan or the revesting, transfer or sale of any
real or personal property of the Debtors pursuant to,
in implementation of, or as contemplated by, the Plan
shall not be taxed under any state or local law
imposing a stamp tax, transfer tax or similar tax or
fee.
H. Dissolution of Committees. On the Effective
Date, each Official Committee shall automatically
dissolve and all members of such committees shall be
discharged from all rights and all duties arising
from, or related to, the Cases.
I. Governing Law. Except to the extent that
the Bankruptcy Code or the Bankruptcy Rules are
applicable, the Plan shall be governed by, and
construed and interpreted in accordance with, the
internal laws of the State of Delaware.
J. Notices. After the Effective Date, any
notice or other communication to the Reorganized
Debtors required or permitted under the Plan shall be
in writing and shall be hand delivered or sent by
certified or registered mail, postage pre-paid, return
receipt requested, as follows:
Homeland Stores, Inc. or Homeland Holding Corporation
2601 Northwest Expressway
Oklahoma City, Oklahoma 73112
Attn: President
Telephone: (405)879-6600
Telecopy: (405) 879-4605
with copies to:
Crowe & Dunlevy, A Professional Corporation
1800 Mid-America Tower
20 North Broadway
Oklahoma City, Oklahoma 73102
Attn: Judy Hamilton Morse
Telephone: (405) 235-7700
Telecopy: (405) 239-6651
Young, Conaway, Stargatt & Taylor
Eleventh Floor, Rodney Square North
1100 North Market Street
Wilmington Trust Center 19801
Attn: James L. Patton, Jr.
Telephone: (302) 571-6600
Telecopy: (302) 571-1253
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Robert D. Drain
Telephone: (212) 373-3000
Telecopier: (212) 757-3990
Hahn & Hessen, L.L.P.
Empire State Building
350 Fifth Avenue
New York, New York 10118
Attn: Jeffrey L. Schwartz
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
Hughes & Luce, L.L.P,
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: David Weitman
Telephone: (214) 939-5500
Telecopier: (214) 939-6100
After the Effective Date, any notice or
other communication to a holder of a Claim or an
Interest required or permitted under the Plan shall be
hand delivered or shall be sent by certified or
registered mail, postage pre-paid, return receipt
requested, to the holder at the address set forth on
any proof of claim filed by the holder or, if the
holder has not filed or been deemed to have filed a
proof of claim, at the last known address of the
holder as reflected by the records of the relevant
Reorganized Debtor.
A notice or other communication sent
pursuant to this Article XII(J) shall be deemed given
and received upon delivery if hand delivered and three
business days after deposited in the United States
mail if sent by registered or certified mail.
K. Successors and Assigns. The rights of any
Person named or referred to in the Plan shall inure to
the benefit of, and the obligations of any Person
named or referred to in the Plan shall be binding on,
any heir, executor, administrator, successor or assign
of such Person.
L. Severability. To the extent that any
provision of the Plan would, by its inclusion of the
Plan, prevent or preclude the Bankruptcy Court from
entering the Confirmation Order, the Bankruptcy Court,
on the request of the Debtors, may modify or amend, or
permit the Debtors to modify or amend such provision,
in whole or in part as necessary to cure any defect or
remove any impediment to the confirmation of the Plan
existing by reason of such provision.
M. Objections to Claims or Interests. The
failure by the Debtors to object to or examine any
Claim or Interest for purposes of voting shall not be
deemed a waiver of the Debtors' right to object to or
re-examine such Claim or Interest, in whole or in
part.
[REST OF PAGE INTENTIONALLY OMITTED]
Dated: June 13, 1996.
HOMELAND STORES, INC.
By: /s/ James A.Demme
James A. Demme
President and Chief Executive Officer
HOMELAND HOLDING CORPORATION.
By: /s/ James A. Demme
James A. Demme
President and Chief Executive Officer
CROWE & DUNLEVY, A PROFESSIONAL CORPORATION
By: /s/ Judy Hamilton Morse
Judy Hamilton Morse, OBA #6450
Kenni B. Merritt, OBA #6147
Roger A. Stong, OBA #11710
William H. Hoch, OBA #15788
1800 Mid-America Tower
20 North Broadway
Oklahoma City, Oklahoma 73102
(405) 235-7700
COUNSEL TO HOMELAND STORES, INC. AND
HOMELAND HOLDING CORPORATION
YOUNG, CONAWAY, STARGATT & TAYLOR
By: /s/ James L. Patton, Jr.
James L. Patton, Jr.
Rodney Square North, 11th Floor
Wilmington, Delaware 19899
(302) 571-6600
LOCAL COUNSEL TO HOMELAND STORES, INC.
AND HOMELAND HOLDING CORPORATION
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<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-15-1996
<CASH> 6,854
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<RECEIVABLES> 7,502
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<INVENTORY> 39,476
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<TOTAL-LIABILITY-AND-EQUITY> 129,096
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IMMEDIATE RELEASE NEWS
Contact: Thomas C. Franco
Rohit J. Menezes
(212) 229-2222
HOMELAND WINS COURT APPROVAL OF REORGANIZATION PLAN
___________________________________________________________
OKLAHOMA CITY, OK, July 19, 1996 -- Homeland Stores, Inc., a private
company, announced today that the United States Bankruptcy Court for the
District of Delaware confirmed Homeland's plan of reorganization. Court
confirmation of the plan, which follows overwhelming approval by the company's
creditors, stockholders and labor unions, clears the way for the reorganized
Homeland to exit from Chapter 11, which the company expects will occur in the
first week of August, 1996.
Pursuant to the restructuring, the $95 million of Homeland's senior secured
bonds currently outstanding (plus accrued interest) will be canceled, and the
bondholders will receive (in the aggregate) $60 million face amount of new
senior subordinated notes and $1.5 million in cash. The new senior
subordinated notes will mature in 2003, bear interest semi-annually at a rate
of 10% per annum, and will not be secured. In addition, the bondholders and
the company's general unsecured creditors will receive approximately 60% and
35% respectively, of the equity of the reorganized Homeland (assuming total
unsecured claims of approximately $63 million,including bondholder unsecured
claims). Homeland's existing equity holders will receive the remaining 5% of
the new equity, together with 5-year warrants to purchase an additional 5% of
equity. The company will use its best efforts to have the equity listed on
the NASDAQ National Market System or on such other exchange or system
on which the equity may be listed. July 19, 1996 is the record date for
purposes of determining bondholders and stockholders entitled to receive
distributions under the plan.
Homeland is the leading supermarket chain in Oklahoma, southern Kansas,
and the Texas panhandle region, operating a total of 65 stores. The company
operates in four distinct marketplaces: Oklahoma City, Oklahoma; Tulsa,
Oklahoma; Amarillo, Texas; and certain rural areas of Oklahoma, Kansas and
Texas.
# # #
