SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
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Walter Industries, Inc.
(Name of applicant)
1500 North Dale Mabry Highway
Tampa, Florida 33607
(Address of Principal Executive Offices)
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SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
- -----------------------------------------------------------
TITLE OF CLASS AMOUNT
Senior Notes Due 2000 $490,000,000
(Series B, Series B-1)
Approximate date of proposed public offering: On or as soon as
practicable after the Effective Date (as defined in the
Amended Joint Plan of Reorganization, dated as of December 9,
1994, of Walter Industries, Inc. and the other debtors named
therein).
Name and address of agent for service:
Kenneth J. Matlock
Executive Vice President and Chief
Financial Officer
Walter Industries, Inc.
1500 North Dale Mabry Highway
Tampa, Florida 33607
The applicant hereby amends this application for qualification on
such date or dates as may be necessary to delay its effectiveness
until (i) the 20th day after the filing of a further amendment
which specifically states that it shall supersede this amendment,
or (ii) such date as the Commission, acting pursuant to Section
307(c) of the Act, may determine upon the written request of the
applicant.
GENERAL
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS
TO THE APPLICANT:
a. Form of organization: A corporation.
b. State or other sovereign power under the laws of which
organized: Delaware
2. SECURITIES ACT EXEMPTION APPLICABLE. STATE BRIEFLY THE FACTS
RELIED UPON BY THE APPLICANT AS A BASIS FOR THE CLAIM THAT
REGISTRATION OF THE INDENTURE SECURITIES UNDER THE SECURITIES ACT
OF 1933 IS NOT REQUIRED.
The applicant, Walter Industries, Inc. (the
"Company"),
formerly known as Hillsborough Holdings Corporation
("Hillsborough"), proposes to issue, as part of its Amended Joint
Plan of Reorganization dated as of December 9, 1994 (the
"Consensual Plan"), pursuant to Section 1121(a) of the United
States Bankruptcy Code, up to $490,000,000 of its Series B Senior
Notes due 2000 (the "Series B Notes"). The Series B Notes will
be
issued to discharge in part claims of existing creditors in the
Bankruptcy Proceedings described below. The Series B Notes may
be
exchanged pursuant to an offer which may be made by the Company
following effectiveness of the Consensual Plan, under a
Registration Rights Agreement to be executed as part of the
Consensual Plan, for Series B-1 Senior Notes due 2000 (the
"Series
B-1 Notes" and, together with the Series B Notes, the "Notes").
As further described below, the Series B Notes are
proposed to be issued in reliance upon the exemption from
registration under the Securities Act of 1933, as amended (the
"Securities Act"), set forth in Section 1145(a)(1) of the United
States Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), applicable to the offer or sale under a
Chapter
11 reorganization plan by an entity that is not an underwriter of
a security of a debtor in exchange for a claim against such
debtor.
On December 27, 1989 (the "Petition Date"),
Hillsborough
and thirty-one of its affiliates (together with the corporation
referred to in the next sentence, the "Debtors") filed voluntary
petitions under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the Middle District of Florida, Tampa
Division (the "Court"). On December 3, 1990, one additional
subsidiary filed a voluntary petition for reorganization under
Chapter 11 with the Court. Under provisions of the Bankruptcy
Code
and an order of the Court dated December 28, 1989, the Debtors
continue to own and manage their respective properties and assets
as debtors in possession.
Pursuant to an order of the Court dated November 5, 1990,
certain asset transfers were made among the Debtors and certain
of the Debtors were merged with one another, including the merger
of
a subsidiary of Hillsborough into Hillsborough, which thereafter
changed its
name to Walter Industries, Inc., and was the surviving
entity.
On December 9, 1994, the Consensual Plan was filed as a
modification of the Creditors' Joint Plan of Reorganization dated
as of August 1, 1994 (the "Creditors' Plan"). The Debtors, which
had filed a competing Fifth Amended Plan of Reorganization dated
as
of July 25, 1994 (the "Debtors' Plan"), and Kohlberg Kravis
Roberts
& Co. and certain of its affiliates ("KKR"), which had joined as
proponents of the Debtors' Plan, agreed not to pursue
confirmation
of the Debtor's Plan and became proponents of the Consensual
Plan.
At a hearing before the Court on December 15, 1994, the Court,
pursuant to Section 1125 of the Bankruptcy Code, approved the
Supplement to Disclosure Statement for the Amended Joint Plan
dated
as of December 9, 1994 (the "Supplemental Disclosure Statement")
as
containing adequate information. On January 24, 1995, the
proponents of the Consensual Plan completed soliciting vote
changes
in light of the modifications to the Creditors' Plan contained in
the Consensual Plan. The voting for a class of claims relating
to the "Veil Piercing Settlement Agreement" described in the Plan
and Supplemental Disclosure Statement related thereto is expected
to be
completed on February 22, 1995. A copy of the Supplemental
Disclosure Statement is attached as Exhibit T3E2 to this Form
T-3;
the Consensual Plan is attached as Exhibit 1 to the Disclosure
Statement.
Section 1145 of the Bankruptcy Code exempts the offer or
sale of securities under a plan of reorganization from
registration
under the Securities Act and state law. Under Section
1145, the issuance of securities is exempt from registration if
three principal requirements are satisfied: (1) the securities
are
issued by a debtor, its successor, or an affiliate participating
in
a joint plan with the debtor (provided that such entity is not an
underwriter as defined in section 1145(b) of the Bankruptcy Code)
under a plan of reorganization; (2) the recipients of
the securities hold a claim against the debtor or such affiliate,
an interest in the debtor or such affiliate, or a claim for an
administrative expense against the debtor or such affiliate; and
(3) the securities are issued entirely in exchange for the
recipients' claim against or interest in the debtor or such
affiliate, or "principally" in such exchange and "partly" for
cash or property.
The applicant believes that the issuance of the Series B
Notes under the Indenture to holders of various creditor classes
under the Consensual Plan will satisfy all three conditions of
Section 1145 of the Bankruptcy Code because (a) the issuances are
expressly contemplated under the Consensual Plan as part of the
reorganization; (b) the recipients are holders of "Claims"
against
the Debtors; and (c) the recipients would obtain such Notes in
exchange for their prepetition claims. Under the terms of the
Registration Rights Agreement, the Series B-1 Notes are to be
issued, if at all, pursuant to an exchange offer by the Company
which would be registered in conformity with the Securities Act
and any relevant state law. The applicant does not hereby
claim any exemption from the Securities Act or any state
law for the issuance of the Series B-1 Notes.
AFFILIATIONS
3. AFFILIATES. FURNISH A LIST OR DIAGRAM OF ALL AFFILIATES OF
THE APPLICANT AND INDICATE THE RESPECTIVE PERCENTAGES OF VOTING
SECURITIES OR OTHER BASES OF CONTROL.
AS OF FEBRUARY 2, 1995
WALTER INDUSTRIES, INC. (DE) (formerly named Hillsborough
Holdings
Corporation (DE)) - owns all of the stock of the subsidiary
companies numbered 1 through 19.
1. BEST INSURORS, INC. (FL)
Wholly owned subsidiaries of Best Insurors, Inc.:
Best Insurors of Mississippi, Inc. (MS)
Jim Walter Insurance Services, Inc. (FL)
2. CARDEM INSURANCE CO., LTD. (Bermuda)
3. COAST TO COAST ADVERTISING, INC. (FL)
4. COMPUTER HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of Computer Holdings
Corporation:
Jim Walter Computer Services, Inc. (DE)
5. DIXIE BUILDING SUPPLIES, INC. (FL)
6. HAMER HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of Hamer Holdings
Corporation:
Hamer Properties, Inc. (WV)
7. HOMES HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of Homes Holdings
Corporation:
Jim Walter Homes, Inc. (FL)
Wholly owned subsidiaries of Jim Walter Homes,
Inc.:
Jim Walter Homes of Louisiana, Inc. (LA)
Walter Home Improvement, Inc. (FL)
8. JW ALUMINUM COMPANY (DE)
9. JIM WALTER RESOURCES, INC. (AL) (formerly named JW
Resources Inc. (AL))
Jim Walter Resources, Inc. has a 50% stock
ownership interest in Black Warrior Transmission
Corp. and Black Warrior Methane Corp.
10. JW WINDOW COMPONENTS, INC. (DE)
Wholly owned subsidiaries of JW Window Components,
Inc.:
D. J. Dinsmore Co. (SD) (inactive)
Jim Walter Window Components, Inc. (WI)
Warren Industries, Inc. (FL) (inactive)
11. J.W.I. HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of J.W.I. Holdings
Corporation:
J. W. Walter, Inc. (DE)
12. LAND HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of Land Holdings
Corporation:
Walter Land Company (DE)
13. MID-STATE HOLDINGS CORPORATION (DE)
Wholly owned subsidiary of Mid-State Holdings
Corporation:
Mid-State Homes, Inc. (FL)
14. RAILROAD HOLDINGS CORPORATION
Wholly owned subsidiary of Railroad Holdings
Corporation:
Jefferson Warrior Railroad Company, Inc. (AL)
15. SLOSS INDUSTRIES CORPORATION (DE)
16. SOUTHERN PRECISION CORPORATION (DE)
17. UNITED LAND CORPORATION (DE) (formerly named U.S. Pipe
Realty, Inc. (DE))
18. UNITED STATES PIPE AND FOUNDRY COMPANY (DE) (formerly
named Pipe Holdings Corporation (DE))
19. VESTAL MANUFACTURING COMPANY (DE)
AS OF EFFECTIVE DATE
Same As That Of February 2, 1995
MANAGEMENT AND CONTROL
4. DIRECTORS AND EXECUTIVE OFFICERS. LIST THE NAMES AND
COMPLETE
MAILING ADDRESSES OF ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE
APPLICANT AND ALL PERSONS CHOSEN TO BECOME DIRECTORS OR EXECUTIVE
OFFICERS. INDICATE ALL OFFICES WITH THE APPLICANT HELD OR TO BE
HELD BY EACH PERSON NAMED.
AS OF FEBRUARY 2, 1995
Name Address Office
James W. Walter (a) Chairman
Henry R. Kravis (b) Director
Paul E. Raether (b) Director
George R. Roberts (c) Director
G. Robert Durham (a) Director, President
and Chief
Executive Officer
Kenneth J. Matlock (a) Director, Executive Vice
President and Chief
Financial Officer
Perry Golkin (b) Director and Vice
President
Michael T. Tokarz (b) Director and Vice
President
William H. Weldon (a) Senior Vice President -
Finance and Chief
Accounting Officer
William N. Temple (d) Senior Vice President and
Group Executive
Robert W. Michael (f) Senior Vice President and
Group Executive
David L. Townsend (a) Vice President -
Human Resources/Public
Relations
John F. Turbiville (a) Vice President -
Legal and Secretary
Donald M. Kurucz (a) Vice President and
Treasurer
AS OF EFFECTIVE DATE1
Name Address Office
James W. Walter (a) Chairman
G. Robert Durham (a) Director, Chief
Executive
Officer and President
Michael T. Tokarz (b) Director
Elliot M. Fried (e) Director
Howard L. Clark (e) Director
Kenneth A. Buckfire (e) Director
Kenneth J. Matlock (a) Director, Executive Vice
President
and Chief Financial
Officer
William H. Weldon (a) Senior Vice President -
Finance and Chief
Accounting Officer
William N. Temple (d) Senior Vice President and
Group Executive
Robert W. Michael (f) Senior Vice President and
Group Executive
David L. Townsend (a) Vice President - Human
Resources/Public Relations
John F. Turbiville (a) Vice President -
Legal and Secretary
Donald M. Kurucz (a) Vice President and
Treasurer
1 In addition to the directors listed below, pursuant to
the Consensual Plan, the current management of Company will
designate two independent directors at a later date.
(a) Walter Industries
1500 North Dale Mabry Highway
Tampa, FL 33607
(b) Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
(c) Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road (Suite 200)
Menlo Park, CA 94025
(d) United States Pipe and Foundry Company
3300 First Avenue North
Birmingham, AL 35202
(e) Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
(f) Jim Walter Homes, Inc.
1500 North Dale Highway
Tampa, Florida 33607
5. PRINCIPAL OWNERS OF VOTING SECURITIES. FURNISH THE
FOLLOWING INFORMATION AS TO EACH
PERSON OWNING 10% OR MORE OF THE VOTING SECURITIES OF THE
APPLICANT.
<TABLE>
<CAPTION>
AS OF FEBRUARY 2, 1995
Name and Complete Title of Class Amount Percentage of
Mailing Address Owned Owned Voting Securities
Owned
<S> <C> <C> <C>
JWC Associates, L.P. Common Shares 27,646,600 88.84%
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
JWC Associates II, L.P. Common Shares 183,200 .59
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
KKR Partners II, L.P. Common Shares 670,200 2.15
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Henry R. Kravis Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
George R. Roberts Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Robert I. MacDonnell Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Michael W. Michelson Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Paul E. Raether Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Michael T. Tokarz Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
James H. Greene, Jr. Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Perry Golkin Common Shares 28,500,000(1)(2) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Scott M. Stewart Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Clifton S. Robbins Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Edward A. Gilhuly Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Saul A. Fox Common Shares 28,500,000(1) 91.58
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
(1) Messrs. Kravis, Roberts, MacDonnell, Michelson, Fox, Raether, Tokarz, Greene, Golkin,
Stewart, Robbins and Gilhuly are general partners of KKR Associates, the sole general partner
of each of JWC Associates, L.P., JWC Associates II, L.P. and KKR Partners II, L.P. (the "KKR
Investors"). Such persons may be deemed to be "beneficial owners" of the shares owned by the
KKR Investors within the meaning of Rule 13d-3 under the Exchange act, although each such
person disclaims beneficial ownership of such shares.
(2) Mr. Golkin currently is an officer and
director of the Company and certain of its subsidiaries.
</TABLE>
<TABLE>
<CAPTION>
AS OF EFFECTIVE DATE
Name and Complete Title of Class Amount Percentage of
Mailing Address Owned Owned Voting Securities
Owned
<S> <C> <C> <C>
The Celotex Settlement Fund Recipient Common Shares 10,941,000(3) 21.7%(3)
1 Metro Center
4010 Boy Scout Boulevard
Tampa, Florida 33607
Lehman Brothers Inc. Common Shares 7,746,000(1) 15.3%(1)
3 World Financial Center
New York, NY 10285
The KKR Investors (JWC Associates, Common Shares 5,901,000(2) 11.7%(2)
L.P., JWC Associates II L.P. and
KKR Partners II, L.P.)
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
</TABLE>
(1) Approximate amounts based on a March 15, 1995 effective date
for the reorganization and
$555 million of "Qualified Securities" (as defined in the
Consensual Plan, consisting of cash
and Notes) being issued under the Consensual Plan. To the extent
that less than $555 million
of Qualified Securities are issued (minimum amount is $530
million), the number of shares and
percentage would increase. If all the shares of common stock
that may be issued to the KKR
Investors (see note (2) below) are issued, the percentage would
be reduced to approximately
14.1%.
(2) Approximate amounts based on a March 15, 1995 effective date
and $555 million of
Qualified Securities being issued under the Consensual Plan. To
the extent that less than $555 million of Qualified Securities
are
issued (minimum amount is $530 million), the number of shares and
percentages would decrease.
Approximately 452,000 additional shares of common stock will be
issued to the KKR Investors
six months after the Effective Date. In addition, approximately
3,553,000 shares of common
stock will be issued after six months into an escrow account.
The KKR Investors will have the right to vote the escrowed
shares. To the extent that certain contingencies regarding
Federal income tax claims of the Company are resolved
satisfactorily, the escrowed shares will
be distributed to the KKR Investors. To the extent such matters
are not settled satisfactorily, the escrowed
shares will be returned to the Company and canceled. If all such
shares are distributed to the
KKR Investors, the KKR Investors would hold approximately
9,907,000 shares of common stock,
or 18.1% of the then outstanding shares of common stock.
(3) Approximate amounts based on a March 15, 1995 effective date
for the reorganization and $555 million of
Qualified Securities being issued under the Consensual Plan. To
the extent that less than $555 million of Qualified Securities
are
issued (minimum amount is $530 million) the number of shares and
percentage would increase. If all the
shares of common stock that may be issued to the KKR Investors
(see note 2 above) are issued,
the percentage would be reduced to approximately 19.9%.
UNDERWRITERS
6. UNDERWRITERS. GIVE THE NAME AND COMPLETE MAILING ADDRESS
OF (A) EACH PERSON WHO,
WITHIN THREE YEARS PRIOR TO THE DATE OF FILING THE APPLICATION,
ACTED AS AN UNDERWRITER OF
ANY SECURITIES OF THE OBLIGOR WHICH WERE OUTSTANDING ON THE DATE
OF FILING THE APPLICATION,
AND (B) EACH PROPOSED PRINCIPAL UNDERWRITER OF THE SECURITIES
PROPOSED TO BE OFFERED. AS TO
EACH PERSON SPECIFIED IN (A) GIVE THE TITLE OF EACH CLASS OF
SECURITIES UNDERWRITTEN.
a. Merrill Lynch & Co.; World Financial Center, North
Tower, New York, NY 10281
b. The Series B Notes proposed to be offered will be
exchanged with certain holders of claims against the applicant
and the applicant's affiliates, as set forth in the Consensual
Plan, without the assistance of any underwriter.
CAPITAL SECURITIES
7. CAPITALIZATION. (A) FURNISH THE FOLLOWING INFORMATION AS
TO EACH AUTHORIZED CLASS OF
SECURITIES OF THE APPLICANT.
<TABLE>
<CAPTION>
AS OF FEBRUARY 2, 1995
AMOUNT AMOUNT
TITLE OF CLASS AUTHORIZED OUTSTANDING
<S> <C> <C>
Mortgage-Backed Notes $1,450,000,000 $605,750,000
Asset-Backed Notes $ 249,864,000 $179,065,213
Series B Senior
Extendible Reset Notes $ 180,000,000 $176,300,000
Series C Senior
Extendible Reset Notes $ 20,000,000 $5,000,000
Senior Subordinated
Extendible Reset Notes $ 350,000,000(1) $350,000,000
Subordinated Notes $ 350,000,000 $350,000,000
13-1/8% Subordinated
Notes $ 50,000,000 $50,000,000
13-3/4% Subordinated
Notes $ 100,000,000 $100,000,000
10-7/8% Subordinated
Notes $ 90,000,000 $ 90,000,000
Common Stock,
$.01 par value 50,000,000 shares 31,120,773 shares
(1) Plus the amount of such Notes issued in payment of interest thereon
</TABLE>
<TABLE>
<CAPTION>
AS OF EFFECTIVE DATE
AMOUNT AMOUNT
TITLE OF CLASS AUTHORIZED OUTSTANDING
<S> <C> <C>
Series B Senior Notes $ 490,000,000 $490,000,000(1)
Due 2000
Mortgage-Backed Notes $1,450,000,000 $605,750,000
Asset-Backed Notes $ 249,864,000 $179,065,213
Asset and Residual
Backed Notes $ 925,000,000(2) $925,000,000(2)
Common Stock,
$.01 par value 200,000,000 shares 50,484,000 shares(3)
(1) This is the maximum amount to be issued under the Indenture. If $555 million of
Qualified Securities are issued under the Consensual Plan, this amount will be reduced
by any cash in excess of $45 million available to pay subordinated note claims after
paying all other claims that have to be paid in cash.
(2) This is an estimate of the amount to be issued to the public on or prior to the
effective date in a public offering being registered under the Securities Act by Mid-
State Trust IV and Mid-State Trust V, business trusts owned by Mid-State Homes, Inc.,
a subsidiary of the Company. Such offering is being underwritten by Lehman Brothers,
Inc., Merrill Lynch Pierce Fenner & Smith Incorporated, NatWest Capital Markets Group
and Nomura Securities, Inc. Approximate amount based on a March 15, 1995 effective
date, and $555 million of Qualified Securities.
(3) If all of the shares of common stock that may be issued to the KKR Investors, described
in note (2) to Item 5 above, were issued as of the effective date, a total of
approximately 54,869,000 shares of common stock will be outstanding.
</TABLE>
(B) GIVE A BRIEF OUTLINE OF THE VOTING RIGHTS OF EACH CLASS OF
VOTING SECURITIES REFERRED TO IN PARAGRAPH (A) ABOVE.
AS OF FEBRUARY 2, 1995
With respect to the voting rights of the common stock of the
Company, each
holder of a share of such common stock is entitled to one vote on
all matters
on which such shareholders are entitled to vote.
AS OF EFFECTIVE DATE
With respect to the voting rights of the common stock of the
Company, including the shares to be issued into escrow (as
described in Note 2 to Item
5 above as of the effective date), each holder of a share of such
common stock will be entitled to one vote on all matters on which
such shareholders
are entitled to vote, except that pursuant to a Shareholders'
Agreement all
shares of such common stock issued to the Celotex Settlement Fund
Recipient under the Consensual Plan will be voted by the Celotex
Settlement Fund
Recipient (or by the beneficiaries of the Celotex Settlement
Fund ),
except with respect to matters that only affect such shares held
by the
Celotex Settlement Fund Recipient, in the same proportion as the
votes cast
by all other holders of shares of common stock on all matters and
for all
purposes. Upon transfer of such shares to a person not
affiliated with a
beneficiary of the Celotex Settlement Fund, such shares shall
receive normal voting rights.
INDENTURE SECURITIES<F1>
<F1>Capitalized terms used in this Section 8, "Analysis of
Indenture Provisions," and not otherwise defined herein shall
have the meaning ascribed to them in the Indenture.
8. ANALYSIS OF INDENTURE PROVISIONS. INSERT AT THIS POINT THE
ANALYSIS OF
INDENTURE PROVISIONS REQUIRED UNDER SECTION 305(A)(2) OF THE ACT.
(a) Definition of Default: Withholding of Notice.
The following events are defined in the Indenture as
"Events of Default":
(i) failure by the Company to pay interest on the
Notes for 5 days after becoming due;
(ii) failure by the Company to pay the principal of
or premium on the Notes (whether due to failure to make payment
pursuant to a Change of
Control Offer or Asset Sale Offer or otherwise) when due and
payable;
(iii) failure by the Company to perform any of its
obligations
under the Pledge Agreement or failure by any Subsidiary to
perform any of its
obligations under its Subsidiary Pledge Agreement or the Trustee
is entitled
to exercise any remedies pursuant to Section 11 of the Pledge
Agreement or any Subsidiary Pledge Agreement;
(iv) failure by the Company or any of its
Subsidiaries to comply
with any other covenant for 30 days after written notice from the
Trustee or
Holders of 25% in principal amount of the Notes outstanding
(except failure
to comply with the provisions of Sections 4.08, 4.09 and 5.01 of
the
Indenture which failure shall constitute an Event of Default with
notice but without passage of time);
(v) failure by the Company or any of its
Significant Subsidiaries
to make any payments when due (after giving effect to any
applicable grace
period and whether by reason of maturity, acceleration or
otherwise) under
any issue or issues of Indebtedness of the Company and/or one or
more of its
Significant Subsidiaries having an outstanding principal amount
of $25
million or more individually or $50 million or more in the
aggregate for all such issues of all such Persons;
(vi) any final judgment or order (not covered by
insurance) is
entered against the Company or any Significant Subsidiary in
excess of $25
million individually or $50 million in the aggregate for all such
final
judgments or orders against all such Persons and remains
undischarged or unstayed for 60 days;
(vii) the Company or any of its Significant
Subsidiaries pursuant
to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of a judgment,
decree or order for relief against it in an involuntary case or
proceeding,
(c) consents to the appointment of a
Custodian of it or for all or substantially all of its property,
(d) consents to or acquiesces in the
institution of a
bankruptcy or an insolvency proceeding against it,
(e) makes a general assignment for the
benefit of its
creditors, or
(f) takes any corporate action to authorize
or effect any of
the foregoing;
(viii) a court of competent jurisdiction enters a
judgment, decree
or order under any Bankruptcy Law that is for relief against the
Company or
any Significant Subsidiary of the Company, in an involuntary case
or proceeding which shall:
(a) approve a petition seeking
reorganization, arrangement,
adjustment or composition in respect of the Company
or any Significant Subsidiary of the Company,
(b) appoint a Custodian for the Company or
any Significant
Subsidiary of the Company or for all or substantially
all of the property of any of them, or
(c) order the merger, winding-up or
liquidation of the
Company or any Significant Subsidiary of the Company,
and in each case the judgment, order or decree remains unstayed
and in effect for 60 days; and
(ix) any Lien granted or purported to be granted
pursuant to the Pledge Agreement or any Subsidiary Pledge
Agreement shall be or become
unenforceable or invalid, or the priority thereof shall become
diminished, or the Company or any Subsidiary or any Person acting
by or on behalf of the
Company or any Subsidiary shall contest or disaffirm any such
Lien. (Section 6.01)
If an Event of Default occurs and is continuing, the
Trustee by
written notice to the Company, or the Holders of at least 25% of
the
aggregate principal amount of the then outstanding Notes, by
written notice
to the Company and the Trustee, may declare all of the Notes to
be due and
payable immediately. Upon such declaration, the unpaid principal
of,
premium, if any, and accrued interest on the Notes shall be due
and payable.
Notwithstanding the foregoing, in the case of an Event of Default
specified
in clause (vii) or (viii) above with respect to the Company or
any
Significant Subsidiary, such an amount shall ipso facto become
immediately
due and payable without any declaration, notice or other act on
the part of
the Trustee or any Holder. (Section 6.02)
If a Default or an Event of Default occurs and is
continuing and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail
to Holders a notice of the Default or Event of Default within 90
days after
it occurs. Except in the case of a Default or Event of Default
in payment of
principal, premium, if any, or interest on any Note, the Trustee
may withhold
the notice if and so long as a committee of its Responsible
Officers in good
faith determines that withholding the notice is in the interests
of the Holders. (Section 7.05)
(b) Authentication and Delivery: Application of
Proceeds.
Securities may be authenticated and delivered from
time to time
pursuant to the Indenture and upon confirmation of the Consensual
Plan to (i)
Holders of Subordinated Note Claims that claim entitlement
thereto based upon
the making of or the failure to make the Subordinated Note Claim
Election
(and the Class U-4 Exchange Election, if applicable) with respect
to a portion of such
Holders' Subordinated Note Claim and (ii) the Celotex Settlement
Fund Recipient for the benefit of the Holders of Veil Piercing
Claims (Class U-7) with respect to a portion of such Holders'
Veil Piercing Claim. The Trustee shall, upon a written order of
the Company signed by two Officers, authenticate Series B Notes
for original
issue up to the aggregate principal amount stated above. The
aggregate
principal amount of Notes outstanding at any time may not exceed
such amount.
The Trustee may appoint an authenticating agent
acceptable to the
Company to authenticate the Notes. An authenticating agent may
authenticate
the Notes whenever the Trustee may do so. Each reference in the
Indenture to
authentication by the Trustee includes authentication by such
agent. An
authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate of the Company. (Section 2.02)
The Notes will be issued in exchange for claims
against the Company or its affiliates as provided in the
Consensual Plan, and accordingly, the
issuance of the Notes will not result in proceeds to the
applicant.
(c) Release and Substitution of Property Subject to the
Lien of the Indenture.
The Company will not, and will not permit any of its
Subsidiaries
to, sell, pledge, hypothecate or otherwise convey or dispose of
any Capital
Stock of the Company's Subsidiaries (other than pursuant to the
Pledge
Agreement or Subsidiary Pledge Agreement governing the Pledged
Shares) except
for the sale by the Company or a Subsidiary of all or part of the
Capital
Stock of a Non-Core Subsidiary and except for the sale of 100% of
the Capital
Stock of any other Subsidiary owned collectively by the Company
and/or its
Subsidiaries; provided that in either case such sale complies
with the
requirements of Section 4.09 of the Indenture. (Section 4.17)
Section 7 of the Pledge Agreement and Section 7 of
each Subsidiary
Pledge Agreement provides that the Company and each Subsidiary,
respectively,
agrees that it will not (i) sell, pledge, hypothecate or
otherwise convey or
dispose of any or all of the Pledged Collateral, (ii) create or
permit to
exist any Lien upon or with respect to any of the Pledged
Collateral, except
for the Lien and security interest under such Pledge Agreement,
or (iii)
permit any of the Subsidiaries to merge or consolidate, unless
all the
outstanding capital stock of the surviving or resulting
corporation is, upon
such merger or consolidation, pledged under such Pledge Agreement
and no
cash, securities or other property is distributed in respect of
the
outstanding shares of any other constituent corporation;
provided, however,
that the Company and its Subsidiaries may conduct Asset Sales in
accordance
with Section 4.09 of the Indenture, and upon the consummation of
any such
Asset Sale, any Pledged Collateral subject to such Asset Sale
shall be
released from the Lien of the Pledge Agreement or Subsidiary
Pledge
Agreement, as the case may be.
(d) Satisfaction and Discharge. The Indenture shall
cease to be of
further effect other than with respect to:
(A)(i) the Company's compensation and indemnity
obligations and the
Lien granted by the Company to the Trustee to secure such
obligations
(Section 7.07), and (ii) the Company's, the Trustee's and any
Paying Agent's
obligations with respect to money remaining unclaimed for two
years (Section
8.06);
when all outstanding Notes theretofore authenticated and issued
have been
delivered (other than destroyed, lost or stolen Notes that have
been replaced
or paid) to the Trustee for cancellation and the Company has paid
all sums
payable under the Indenture (Section 8.01).
(B)(i) the Company's compensation and indemnity
obligations and the
Lien granted by the Company to the Trustee to secure such
obligations
(Section 7.07), (ii) the rights of Holders of outstanding Notes
to receive
solely from the trust fund described in Section 8.04 of the
Indenture, and as
more fully set forth in such Section, payments in respect of the
principal,
of, premium, if any, and interest on such Notes when such
payments are due,
(Section 8.02(a)), (iii) the Company's obligations with respect
to such Notes
under Article Two and Section 4.02 of the Indenture (Section
8.02(b)) and
(iv) Article Eight of the Indenture (Section 8.03(c));
upon the Company's exercise of its option to legally defease the
Notes
pursuant to Section 8.02 of the Indenture and when the Company
has complied
with all the conditions to such exercise set forth in Section
8.04 of the
Indenture (Section 8.02), including the condition that the
Company
irrevocably deposit for the benefit of the Holders of the Notes
such amounts
as will be sufficient to pay the principal of, premium, if any,
and interest
on the outstanding Notes on the stated date for payment thereof
or on the
applicable redemption date, as the case may be, of such
principal, premium,
if any, or interest on the outstanding Notes.
(e) Evidence of Compliance.
(i) The Company shall deliver to the Trustee, within 120
days after the
end of each fiscal year, an Officers' Certificate stating that to
the best of
each such officer's knowledge no Default or Event of Default has
occurred
(or, if a Default or Event of Default shall have occurred,
describing all
such Defaults or Events of Default of which he or she may have
knowledge and
what action the Company is taking or proposes to take with
respect thereto)
and that to the best of his or her knowledge no event has
occurred and
remains in existence by reason of which payments on account of
the principal
of or interest, if any, on the Notes is prohibited (or if such
event has
occurred, a description of the event and what action the Company
is taking or
proposes to take with respect thereto).
(ii) The Company shall deliver to the Trustee within 3
Business Days of
any Officer becoming aware of any Default or Event of Default, an
Officers'
Certificate specifying such Default or Event of Default and what
action the
Company is taking or proposes to take with respect thereto.
(Section 4.04)
9. OTHER OBLIGORS. GIVE THE NAME AND COMPLETE MAILING ADDRESS
OF ANY
PERSON, OTHER THAN THE APPLICANT, WHO IS AN OBLIGOR UPON THE
INDENTURE SECURITIES.
There are no other obligors with respect to the Notes.<F2>
<F2> Certain Subsidiaries will pledge shares of common stock of
Subsidiaries of the Company owned by them as security for the
obligations of the Company under the Indenture and the Notes
issued thereunder.
CONTENTS OF APPLICATION FOR QUALIFICATION. This
application for
qualification comprises:
a. Pages numbered 1 to 21, consecutively.
b. The statement of eligibility and qualification of the
trustee under the Indenture to be qualified.
c. The following exhibits in addition to those filed as
a part of the statement of eligibility and qualification of each
trustee.
Exhibit T3A1.* Certificate of Incorporation of the Company
filed with Delaware Secretary of State on
______ __, ____
Exhibit T3A2.* Restated Certificate of Incorporation
of the Company filed with Delaware Secretary of
State on ___________ __, ____
Exhibit T3B.* Amended and Restated By Laws of the Company
Exhibit T3C. Form of indenture including exhibits thereto
Exhibit T3E1.* Disclosure Statement for Creditors Plan dated as
of August 1, 1994, including Creditors Plan of
Reorganization as an exhibit thereto, as filed
with the United States Bankruptcy Court, Middle
District of Florida, Tampa Division
Exhibit T3E2. Supplement to Disclosure Statement for Amended
Joint Plan of Reorganization, dated as of
December 9, 1994, including the Amended Joint
Plan of Reorganization (the
"Consensual Plan") as an exhibit thereto,
as filed with the United States
Bankruptcy Court, Middle District of
Florida, Tampa Division
Exhibit T3E3. Notice of Order (A) approving Debtors'
disclosure statement and Creditors'
disclosure statement, (B)
establishing procedures and deadlines for
voting on and
objecting to the debtors' joint plan of
reorganization, (C) fixing the date of the
initial confirmation hearing
and of the scheduling of related hearings, and (D)
approving related relief
Exhibit T3E4. Notice of Order (A) approving disclosure
statement supplement respecting consensual plan,
(B) establishing procedures and deadlines
regarding acceptances and
rejections of, and objections to, the
consensual plan and
objections to the veil piercing settlement,
(C) fixing
the date of the hearing on confirmation of
the consensual
plan and on the veil piercing settlement and (D)
approving related relief
Exhibit T3E5.* Individual Ballot for Class S-6 (for accepting
or rejecting the Creditors' Plan)
Exhibit T3E6.* Master Ballot for Class S-6 (for accepting or
or rejecting the Creditors' Plan)
Exhibit T3E7.* Individual Ballot for Class U-4 (for
accepting or
rejecting the Creditors' Plan)
Exhibit T3E8.* Master Ballot for Class U-4 (for
accepting or rejecting
the Creditors' Plan)
Exhibit T3E9.* Individual Ballot for Class U-5 (for
accepting or
rejecting the Creditors' Plan)
Exhibit T3E10.* Master Ballot for Class U-5 (for
accepting or rejecting
the Creditors' Plan)
Exhibit T3E11.* Individual Ballot for Class U-6 (for
accepting or
rejecting the Creditors' Plan)
Exhibit T3E12.* Master Ballot for Class U-6 (for
accepting or rejecting
the Creditors' Plan)
Exhibit T3E13. Individual Class U-4 Vote Change
Certification for the Consensual Plan
Exhibit T3E14. Master Class U-4 Vote Change
Certification for the Consensual Plan
Exhibit T3E15. Individual Class U-5 Exchange Election Form
for the
Consensual Plan
Exhibit T3E16. Master Class U-5 Exchange Election Form
for the
Consensual Plan
Exhibit T3E17. Individual Class U-6 Vote Change
Certification for the
Consensual Plan
Exhibit T3E18. Master Class U-6 Vote Change
Certification for the
Consensual Plan
Exhibit T3E19.* Class U-7 Ballot for Accepting or
Rejecting the Consensual Plan
Exhibit T3E20. Individual Class S-6 Vote Change
Certification for the
Consensual Plan
Exhibit T3E21. Master Class S-6 Vote Change
Certification for the
Consensual Plan
Exhibit T3E22. Class U-4 Exchange Election Form for
the Consensual Plan
Exhibit T3E23. Master Class U-4 Exchange Election Form
for the Consensual Plan
Exhibit T3F. See Cross Reference Sheet showing the
location in the
Indenture of the provisions inserted
therein pursuant to
Section 310 through 318(a), inclusive, of
the Trust
Indenture Act of 1939 (included in Exhibit
T3C hereof)
* To be filed by amendment.
SIGNATURE
Pursuant to the requirements of the Trust indenture Act of
1939, the applicant, Walter Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware,
has duly caused this application to
be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all
in the City of Tampa and
State of Florida, on the sixth day of February, 1995.
WALTER INDUSTRIES, INC.
By:/s/ G. Roberth Durham
G. Robert Durham
Chief Executive Officer
and President
By:/s/ Kenneth J. Matlock
Kenneth J. Matlock
Executive Vice President
and Chief Financial
Officer
Attest:
/s/ John F. Turbiville
<PAGE>
FORM T-1
===================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5459866
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
__________________
Walter Industries, Inc.
(Exact name of obligor as specified in its charter)
Dellaware 13-3429953
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1500 North Dale Mabry Highway
Tampa, FL 33607
(Address of principal executive offices) (Zip Code)
New Senior Notes Due 2000
(Title of the indenture securities)
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Federal Reserve Bank of New York (2nd District),
New York, New York (Board of Governors of the Federal Reserve
System) Federal Deposit Insurance Corporation, Washington,
D.C. New York State Banking Department, Albany, New
York
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate
trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
3. Voting Securities of the Trustee
2,999,020 shares of Common Stock - par value $5 per share
4. Trusteeships under Other Indentures
Not applicable.
5. Interlocking Directorates and Similar Relationships with the
Obligor or Underwriters
Not applicable.
6. Voting Securities of the Trustee Owned by the Obligor or its
Officials
Not applicable.
7. Voting Securities of the Trustee Owned by Underwriters or
their Officials
Not applicable.
8. Securities of the Obligor Owned or Held by the Trustee
Not applicable.
9. Securities of Underwriters Owned or Held by the Trustee
Not applicable.
10. Ownership or Holdings by the Trustee of Voting Securities of
Certain Affiliates or Securities Holders of the Obligor
Not applicable.
11. Ownership or Holdings by the Trustee of any Securities of a
Person Owning 50 Percent or More of the Voting Securities of the
Obligor
Not applicable.
12. Indebtedness of the Obligor to the Trustee
Not applicable.
13. Defaults by the Obligor
Not applicable.
14. Affiliations with the Underwriters
Not applicable.
15. Foreign Trustee
Not applicable.
16. List of Exhibits.
T-1.1 - "Chapter 204, Laws of 1853, An Act to
Incorporate the United States Trust Company of New York, as
Amended", is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 20, 1991 with the Securities and Exchange
Commission (the "Commission") pursuant to the Trust Indenture Act
of 1939 (Registration No. 2221291).
T-1.2 - The trustee was organized by a special act of
the New York Legislature in 1853 prior to the time that the New
York Banking Law was revised to require a Certificate of
authority to commence business. Accordingly, under New York
Banking Law, the Charter (Exhibit T-1.1) constitutes an
equivalent of a certificate of authority to commence business.
T-1.3 - The authorization of the trustee to exercise
corporate trust powers is contained in the Charter (Exhibit
T-1.1).
T-1.4 - The By-laws of the United States Trust
Company of New York, as amended to date, are incorporated by
reference to Exhibit T-1.4 to Form T-1 filed on September 20,
1991 with the Commission pursuant to the Trust Indenture Act of
1939 (Registration No. 2221291).
T-1.6 - The consent of the trustee required by
Section 321(b) of the Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of
the trustee published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of February 3, 1995, the trustee had 2,999,020 shares of
Common Stock outstanding, all of which are owned by its parent
company, U.S. Trust Corporation. The term "trustee" in Item 2,
refers to each of United States Trust Company of New York and its
parent company, U.S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to
matters peculiarly within the knowledge of the obligor or its
directors, the trustee has relied upon information furnished to
it by the obligor and will rely on information to be furnished by
the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, United States Trust Company of New York, a
corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State
of New York, on the 3rd day of February, 1995.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By:
William Eising
Assistant Vice President
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
March 19, 1992
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform
Act of 1990, and subject to the limitations set forth therein,
United States Trust Company of New York ("U.S. Trust") hereby
consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon
request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
Consolidated Report of Condition of
United States Trust Company of New York
and Foreign and Domestic Subsidiaries, a member of the Federal
Reserve System, at the close of business on September 30, 1994,
published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal
Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depository
institutions:
a. Noninterest bearing balances
and currency and coin: $ 356,398
b. Interest bearing balances: 70,000
Held to maturity securities: 448,254
Available for sale securities: 1,021,191
Federal funds sold and securities
purchased under agreements to
resell in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in IBF's:
a: Federal funds sold: 24,448
b: Securities purchased under
agreements to resell: 0
Loans and lease financing receivables:
a. Loans and leases, net of
unearned income: 1,392,864
b. LESS: Allowance for loan
and lease losses: 12,619
c. Loans and leases,
net of unearned income, allowance
and reserve: 1,380,245
Assets held in trading accounts: 0
Premises and fixed assets
(including capitalized leases): 95,900
Other real estate owned: 11,418
Investments in unconsolidated
subsidiaries and associated companies: 581
Customers' liability to this bank on
acceptance outstanding: 0
Intangible assets: 1,854
Other assets: 123,230
TOTAL ASSETS: $ 3,533,519
LIABILITIES
Deposits:
a. In domestic offices: $ 2,032,684
(1) Non interest bearing: 898,457
(2) Interest bearing: 1,134,227
b. In foreign offices, Edge
and Agreement subsidiaries, and IBF's: 7,611
(1) Noninterest bearing 0
(2) Interest bearing: 7,611
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's:
a. Federal funds purchased: 1,148,301
b. Securities sold under
agreements to repurchase: 8,099
Demand notes issued to the U.S. Treasury: 2,000
Trading Liabilities 0
Other Borrowed Money:
With original maturity of one year or less: 35,035
With original maturity of more than one year: 0
Mortgage indebtedness and obligations
under capitalized leases: 1,243
Bank's liability on acceptances
executed and outstanding: 0
Subordinated notes and debentures: 12,453
Other liabilities: 84,934
TOTAL LIABILITIES: $ 3,332,360
Limited life preferred stock
and related surplus: 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus: 0
Common Stock: $ 14,995
Surplus: 41,500
Undivided profits and capital reserves: 148,014
Net unrealized holding gains (losses)
on available-for-sale securities (3,350)
Cumulative foreign currency
translation adjustments: 0
TOTAL EQUITY CAPITAL: $ 201,159
TOTAL LIABILITIES, LIMITED LIFE
PREFERRED STOCK, AND EQUITY CAPITAL: $ 3,533,519
<PAGE>
I, RICHARD E. BRINKMANN, SENIOR VICE PRESIDENT & CONTROLLER, of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System
and is true to the best of my knowledge and belief.
RICHARD E. BRINKMANN, SVP & CONTROLLER
October 31, 1994
We, the undersigned directors, attest the correctness of this
Report of Condition and declare that it has been examined by us
and to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true and correct.
H. MARSHALL SCHWARZ : Directors
JEFFREY S. MAURER :
FREDERICK S. WONHAM :
<PAGE>
Exhibit T3C
[DRAFT - 02/03/95]
WALTER INDUSTRIES, INC.
____________________
$490,000,000
SENIOR NOTES DUE 2000
Series B and Series B-1
____________________
INDENTURE
Date as of _______ __, 1995
____________________
____________________
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1). . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1). . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . 7.06, 11.02
(d) . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . 4.03, 4.04, 11.02
(b) . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . 11.04
(c)(2). . . . . . . . . . . . . . . . . . . 11.04
(c)(3). . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . N.A.
(f) . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . 7.05, 11.02
(c) . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . 6.04
(a)(2). . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . 2.12
317(a)(1). . . . . . . . . . . . . . . . . . . 6.08
(a)(2). . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . 18
Section 1.03. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . 18
Section 1.04. Rules of Construction . . . . . . . . . . . . 19
ARTICLE TWO
THE NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . 19
Section 2.02. Execution and Authentication. . . . . . . . . 20
Section 2.03. Registrar and Paying Agent. . . . . . . . . . 20
Section 2.04. Paying Agent to Hold Money in Trust . . . . . 21
Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . 21
Section 2.06. Transfer and Exchange . . . . . . . . . . . . 21
Section 2.07. Replacement Notes . . . . . . . . . . . . . . 22
Section 2.08. Outstanding Notes . . . . . . . . . . . . . . 23
Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . 23
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . 23
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . 24
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . 24
Section 2.13. Exchange Offer. . . . . . . . . . . . . . . 24
ARTICLE THREE
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . 25
Section 3.02. Selection of Notes to Be Redeemed . . . . . . 26
Section 3.03. Notice of Redemption. . . . . . . . . . . . . 26
Section 3.04. Effect of Notice of Redemption. . . . . . . . 27
Section 3.05. Deposit of Redemption Price . . . . . . . . . 27
Section 3.06. Notes Redeemed in Part. . . . . . . . . . . . 27
Section 3.07. Optional Redemption . . . . . . . . . . . . . 28
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . 28
Section 3.09. Offers to Purchase By Application
of Excess Proceeds. . . . . . . . . . . . . 28
ARTICLE FOUR
COVENANTS
Section 4.01. Payment of Notes. . . . . . . . . . . . . . . 30
Section 4.02. Maintenance of Office or Agency . . . . . . . 31
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . 31
Section 4.04. Compliance Certificate. . . . . . . . . . . . 32
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . 33
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . 33
Section 4.07. Corporate Existence . . . . . . . . . . . . . 33
Section 4.08. Change of Control . . . . . . . . . . . . . . 34
Section 4.09. Limitation on Asset Sales . . . . . . . . . . 35
Section 4.10. Limitation on Restricted Payments . . . . . . 37
Section 4.11. Limitation on Incurrence of Indebtedness;
Issuance of Capital Stock . . . . . . . . . 39
Section 4.12. Limitation on Liens . . . . . . . . . . . . . 39
Section 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries . . . . 40
Section 4.14. Limitation on Transactions with
Affiliates. . . . . . . . . . . . . . . . . 40
Section 4.15. Limitation on Sale and Leaseback
Transactions. . . . . . . . . . . . . . . . 41
Section 4.16. Compliance with Laws. . . . . . . . . . . . . 41
Section 4.17. Limitation on Sale of Capital Stock of
Subsidiaries. . . . . . . . . . . . . . . . 41
ARTICLE FIVE
SUCCESSORS
Section 5.01. Limitation on Mergers, Consolidations
and Sales of Assets . . . . . . . . . . . . 42
Section 5.02. Successor Corporation Substituted . . . . . . 42
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . 43
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . 45
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . 45
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . 45
Section 6.05. Control by Majority . . . . . . . . . . . . . 46
Section 6.06. Limitation on Suits . . . . . . . . . . . . . 46
Section 6.07. Rights of Holders of Notes to
Receive Payment . . . . . . . . . . . . . . 47
Section 6.08. Collection Suit by Trustee. . . . . . . . . . 47
Section 6.09. Trustee May File Proofs of Claim. . . . . . . 47
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . 48
Section 6.11. Undertaking for Costs . . . . . . . . . . . . 48
Section 6.12. Event of Default from Willful Action. . . . . 48
ARTICLE SEVEN
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . 49
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . 50
Section 7.03. Individual Rights of Trustee. . . . . . . . . 51
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . 51
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . 51
Section 7.06. Reports by Trustee to Holders of the
Notes . . . . . . . . . . . . . . . . . . . 52
Section 7.07. Compensation and Indemnity. . . . . . . . . . 52
Section 7.08. Replacement of Trustee. . . . . . . . . . . . 53
Section 7.09. Successor Trustee by Merger, etc. . . . . . . 54
Section 7.10. Eligibility; Disqualification . . . . . . . . 54
Section 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . 55
ARTICLE EIGHT
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Indenture; Option to Effect
Legal Defeasance or Covenant Defeasance . . 55
Section 8.02. Legal Defeasance and Discharge. . . . . . . . 55
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . 56
Section 8.04. Conditions to Legal or Covenant Defeasance. . 57
Section 8.05. Deposited Money and Government Securities
to be Held in Trust; Other Miscellaneous
Provisions. . . . . . . . . . . . . . . . . 58
Section 8.06. Repayment to Company. . . . . . . . . . . . . 59
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . 59
ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes . . . . . 60
Section 9.02. With Consent of Holders of Notes. . . . . . . 61
Section 9.03. Compliance with Trust Indenture Act . . . . . 62
Section 9.04. Revocation and Effect of Consents . . . . . . 62
Section 9.05. Notation on or Exchange of Notes. . . . . . . 63
Section 9.06. Trustee to Sign Amendments, etc.. . . . . . . 63
ARTICLE TEN
SECURITY
Section 10.01. Pledge Agreement . . . . . . . . . . . . . . 63
Section 10.02. Recording, Etc. . . . . . . . . . . . . . . . 64
Section 10.03. Suits to Protect the Pledged Shares. . . . . 66
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls. . . . . . . . . 66
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . 67
Section 11.03. Communication by Holders of Notes with
Other Holders of Notes. . . . . . . . . . . 68
Section 11.04. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . 68
Section 11.05. Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . . 68
Section 11.06. Rules by Trustee and Agents . . . . . . . . . 69
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders. . . . . . . . . 69
Section 11.08. Governing Law . . . . . . . . . . . . . . . . 69
Section 11.09. No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . . . . 69
Section 11.10. Successors. . . . . . . . . . . . . . . . . . 70
Section 11.11. Severability. . . . . . . . . . . . . . . . . 70
Section 11.12. Counterpart Originals . . . . . . . . . . . . 70
Section 11.13. Table of Contents, Headings, etc. . . . . . . 70
EXHIBITS
Exhibit A FORM OF SERIES B AND SERIES B-1 NOTES
Exhibit B FORM OF PLEDGE AGREEMENT
Exhibit C FORM OF SUBSIDIARY PLEDGE AGREEMENT
Exhibit D SUBORDINATION PROVISIONS FOR SUBORDINATED
INDEBTEDNESS
SCHEDULE I
<PAGE>
INDENTURE dated as of __________, 1995 between WALTER
INDUSTRIES, INC., a Delaware corporation (the "Company"), and
United States Trust Company of New York as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of
the Holders of the Company's Series B Senior Notes due 2000 (the
"Series B Notes") and the Company's Series B-1 Senior Notes due
2000 (the "Series B-1 Notes" and, together with the Series B
Notes, the "Notes"):
ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Indebtedness" means Indebtedness of a Person
existing at the time such Person becomes a Subsidiary of the
Company (or such Person is merged into the Company or one of its
Subsidiaries) or assumed in connection with the acquisition of
assets from any such Person and not incurred in connection with,
or in the contemplation of, such Person becoming a Subsidiary or
such acquisition.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting
securities of a publicly traded company shall be deemed to be
control.
"Agent" means any Registrar, Paying Agent or
co-registrar.
"Asset Sale" means any sale, lease, transfer or other
disposition or series of related sales, leases, transfers or
other dispositions, including, without limitation, by merger or
consolidation, pursuant to any sale and leaseback transaction
(other than to the extent included in clause (vi) of the
definition of Permitted Indebtedness) or by exchange of assets
and whether by operation of law or otherwise (other than sales
in the ordinary course of business consistent with past
practice), made by the Company or any of its Subsidiaries to any
Person other than the Company or one of its Wholly Owned
Subsidiaries of any assets of the Company or any of its
Subsidiaries including, without limitation, assets consisting of
any Capital Stock or other securities held by the Company or any
of its Subsidiaries, to the extent that any such sale, lease,
transfer, or other disposition or series of related sales,
leases, transfers or other dispositions relates to properties or
assets having a Fair Market Value in excess of $5 million or
results in net proceeds in excess of $5 million.
"Attributable Debt" means, in respect of a sale and
leaseback transaction, at the time of determination, the greater
of (a) the Fair Market Value of the property subject to such
transaction and (b) the present value (discounted at the actual
rate of interest implicit in such transaction) of the obligation
of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or
may, at the option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any
similar federal, state or foreign law for the relief of debtors.
"Bank Revolving Credit Facility" means the line of
credit in a principal amount not to exceed $150,000,000 extended
to the Company and certain of its Subsidiaries pursuant to an
agreement dated as of _______, 1995, among the Company, certain
of its Subsidiaries and _____________.
"Board of Directors" means the Board of Directors of
the Company, or any authorized committee of the Board of
Directors.
"Business Day" means any day other than a Legal
Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be so
required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's capital stock whether now
outstanding or issued after the Issue Date, including, without
limitation, all Preferred Stock.
"Cash Equivalents" means (i) United States dollars,
(ii) securities issued directly or fully Guaranteed or insured
by the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the
date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits,
in each case with any domestic commercial bank having capital
and surplus in excess of $500 million and a Thomson Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types
described in clauses (ii) and (iii) entered into with any
financial institution meeting the qualifications specified in
clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or
Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition.
"Change of Control" means (i) any sale, lease or other
transfer of all or substantially all of the assets of the
Company to any Person (other than a Wholly Owned Subsidiary of
the Company) in one transaction or a series of related
transactions; (ii) the Company consolidates or merges with or
into another Person pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property, other than any
such transaction where (a) the outstanding Voting Stock of the
Company is changed into or exchanged for Voting Stock of the
surviving corporation which is not Disqualified Stock and (b)
the holders of the Voting Stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a
majority of the Voting Stock of the surviving corporation
immediately after such transaction; (iii) a Person or group
becomes the beneficial owner of Capital Stock of the Company
representing more than 50% of the voting power of such Capital
Stock; provided, however, that this clause (iii) shall not apply
to Lehman Brothers Inc. and its Affiliates and Kohlberg Kravis
Roberts & Co. and its Affiliates or any group including any of
the foregoing; (iv) Continuing Directors cease to constitute at
least a majority of the Board of Directors of the Company;
provided, however, that this clause (iv) shall not be applicable
if the Continuing Directors do not constitute at least a
majority of the Board of Directors as a result of the election
of directors nominated by Lehman Brothers Inc. or its Affiliates
or KKR or its Affiliates or any group including any of the
foregoing; or (v) the shareholders of the Company shall approve
any plan or proposal for the liquidation or dissolution of the
Company.
"Commodity Agreement" means the obligation of any
Person pursuant to any commodity purchase agreement, commodity
swap agreement or other similar agreement designed to protect
such Person or any of its Subsidiaries against fluctuations in
commodity values.
"Company" means the party named as such above, until a
successor replaces such Person in accordance with the terms of
this Indenture, and thereafter means such successor.
"Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board,
President or Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered
to the Trustee.
"Consensual Plan" means the Amended Joint Plan of
Reorganization dated as of December 9, 1994, adopted with
respect to the Company.
"Consolidated Depreciation and Amortization Expense"
of the Company and its Subsidiaries means, for any period for
which the determination thereof is to be made, the depreciation
and amortization expense (including, without limitation,
amortization of goodwill, other intangibles, debt discount and
debt issue costs) of the Company and such Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP.
"Consolidated EBITDA" means, for any period, on a
consolidated basis for the Company and its Subsidiaries, the sum
(without duplication) for such period of (i) Consolidated Net
Income plus, to the extent deducted in determining Consolidated
Net Income, each of (ii) Consolidated Income Tax Expense, (iii)
Consolidated Depreciation and Amortization Expense, and (iv)
Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, for the Company
and its Subsidiaries, for any period, the sum (without
duplication) of (i) the aggregate amount of interest, whether
expensed or capitalized, paid, accrued or scheduled to be paid
or accrued during such period (including any non-cash interest
payments or accruals, the interest portion of Capital Lease
Obligations, all amortization of original issue discount, net
cash costs pursuant to Interest Rate Agreements, Currency
Agreements and Commodity Agreements (including amortization of
fees) and the interest component of any deferred payment
obligation) of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP and (ii) dividends in
respect of Preferred Stock.
"Consolidated Income Tax Expense" of the Company and
its Subsidiaries means, for any period for which the
determination thereof is to be made, the aggregate of the income
tax expense of the Company and such Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP[; provided, however, that amounts payable for any period by
Mid-State Homes, Inc. and its Subsidiaries pursuant to the Tax
Sharing Agreement shall be excluded from the foregoing to the
extent excluded in determining Consolidated Net Income of the
Company and its Subsidiaries].
"Consolidated Net Income" means, with respect to any
Person for any period, the aggregate of the Net Income of such
Person and its Subsidiaries for such period, on a consolidated
basis, determined in accordance with GAAP; provided, that (i)
the Net Income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly
Owned Subsidiary thereof, (ii) the Net Income of any Subsidiary
that is subject to any Payment Restriction shall be excluded to
the extent such Payment Restriction would limit the amount that
otherwise could be paid to, or received by, such Person or a
Wholly Owned Subsidiary of such Person not subject to any
Payment Restriction, (iii) the Net Income of any Person acquired
in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any
Person as of any date, the sum of (i) the consolidated equity of
the common stockholders of such Person and its consolidated
Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with
respect to any series of Preferred Stock (other than
Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and
paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such Preferred Stock,
less (x) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets
of a going concern business made within 12 months after the
acquisition of such business) subsequent to the Issue Date in
the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as
of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and expense
and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Continuing Directors" means, with respect to the
Company or any Subsidiary of the Company, a director who either
was a member of the Board of Directors of the Company or such
Subsidiary, as the case may be, on the Issue Date or who became
a director of the Company or such Subsidiary subsequent to such
date and whose election, or nomination for election by the
Company's or such Subsidiary's stockholders, was duly approved
by a majority of the Continuing Directors then on the Board of
Directors of the Company or such Subsidiary, either by a
specific vote or, with respect to the Company only, by approval
of the proxy statement issued by the Company on behalf of the
entire Board of Directors of the Company in which such
individual is named as nominee for director.
"Corporate Trust Office of the Trustee" shall be at
the address of the Trustee specified in Section 11.02 hereof or
such other address as to which the Trustee may give notice to
the Company.
"Currency Agreement" means the obligation of any
Person pursuant to any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to
protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any
Bankruptcy Law.
"Default" means any event that is or with the passage
of time or the giving of notice or both would be an Event of
Default.
"Disqualified Stock" means any Capital Stock of the
Company or any Subsidiary of the Company which, by its terms (or
by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event or
with the passage of time, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in
part, on or prior to the maturity date of the Notes, or which is
exchangeable or convertible (whether at the option of the
Company or the holder thereof or upon the happening of any
event) into debt securities of the Company or any Subsidiary of
the Company, except to the extent and only to the extent that
such exchange or conversion rights cannot be exercised prior to
the maturity of the Notes.
"Equity Interests" means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Indebtedness" means Indebtedness of the
Company and its Subsidiaries outstanding on the Issue Date,
until such Indebtedness is repaid.
"Exchange Offer" means the offer that may be made by
the Company pursuant to the Registration Rights Agreement to
exchange Series B Notes for Series B-1 Notes.
"Fair Market Value" means with respect to any asset,
property or Capital Stock, the price which could be negotiated
in an arm's length free market transaction between a willing
seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. "Fair Market
Value" shall be determined by the Board of Directors of the
Company acting in good faith and shall be evidenced by a duly
and properly adopted resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee;
except that any determination of the Fair Market Value made with
respect to any real property or personal property which is
customarily appraised shall be based upon an appraisal by an
independent qualified appraiser when such property is material
to the transaction giving rise to the need to determine Fair
Market Value.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of
the accounting profession, which are in effect from time to
time.
"Global Note" means the temporary global certificate
initially issued to the Trustee representing all the Series B
Notes initially issued pursuant to the Consensual Plan.
"Government Securities" means direct obligations of,
or obligations Guaranteed by, the United States of America for
the payment of which Guarantee or obligations the full faith and
credit of the United States is pledged.
"Guarantee" means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part
of any Indebtedness or other liabilities.
"Holder" means the owner of the Notes as reflected on
the books of the Company.
"incur" means, with respect to any Indebtedness or
other obligation of any Person, to create, issue, incur (by
conversion, exchange or otherwise), assume, Guarantee (including
the Guarantee of the Indebtedness of a Subsidiary or other
Affiliate) or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required
pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person (and "incurrence,
incurred," "incurrable" and "incurring" shall have meanings
correlative to the foregoing), provided that the accrual of
interest (whether such interest is payable in cash or in kind)
and the accretion of original issue discount shall not be deemed
an incurrence of Indebtedness, provided, further that (a) any
Indebtedness or Disqualified Stock of a Person existing at the
time such Person becomes (after the Issue Date) a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) of
the Company shall be deemed to be incurred by such Subsidiary at
the time it becomes a Subsidiary of the Company and (b) any
amendment, modification or waiver of any document pursuant to
which Indebtedness was previously incurred shall be deemed to be
an incurrence of Indebtedness unless such amendment,
modification or waiver does not (i) increase the principal or
premium thereof or interest rate thereon (including by way of
original issue discount), (ii) change to an earlier date the
stated maturity thereof or the date of any scheduled or required
principal payment thereon or the time or circumstances under
which such Indebtedness may or shall be redeemed, (iii) if such
Indebtedness is subordinated to the Notes, modify or affect, in
any manner adverse to the holders, such subordination, (iv) if
the Company is the obligor thereon, provide that a Subsidiary of
the Company not already an obligor thereon shall be an obligor
thereon or (v) violate, or cause the Indebtedness to violate,
the provisions of Sections 4.12 or 4.13.
"Indebtedness" means, with respect to any Person,
without duplication, (i) all liabilities contingent or
otherwise, of such Person (a) for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (b) evidenced by bonds,
notes, debentures, drafts accepted or similar instruments or
letters of credit or representing the balance deferred and
unpaid of the purchase price of any property (other than any
such balance that represents a Trade Payable which is not
overdue by more than 90 days, according to the original terms of
sale, unless such Trade Payable is being contested or has been
renegotiated in good faith) or (c) for the payment of money
relating to a Capital Lease Obligation; (ii) reimbursement
obligations of such Person with respect to letters of credit;
(iii) obligations of such Person with respect to Interest Rate
Agreements, Currency Agreements or Commodity Agreements; (iv)
all liabilities of others of the kind described in the preceding
clause (i), (ii) or (iii) that such Person has Guaranteed, that
have been incurred by a partnership in which it is a general
partner (to the extent such Person is liable, contingently or
otherwise therefor) or that is otherwise its legal liability
(other than endorsements for collection in the ordinary course
of business); and (v) all obligations of others secured by a
Lien to which any of the properties or assets (including,
without limitation, leasehold interests and any other tangible
or intangible property rights) of such Person are subject,
whether or not the obligations secured thereby shall have been
assumed by such Person or shall otherwise be such Person's legal
liability.
"Indenture" means this Indenture, as amended or
supplemented from time to time.
"Interest Rate Agreement" means the obligation of any
Person pursuant to any interest rate swap agreement, interest
rate collar agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries
against fluctuations in interest rates.
"Investment" of any Person means (i) all investments
by such Person in any other Person in the form of loans,
advances or capital contributions, (ii) all Guarantees of
Indebtedness or other obligations of any other Person by such
Person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or
other securities of any other Person and (iv) all other items
that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of
business) on a balance sheet of such Person prepared in
accordance with GAAP.
"Issue Date" means March 15, 1995, the date on which
Notes are first to be issued under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on
which banking institutions are not required to be open. If a
payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the
intervening period.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or
give a security interest in and any filing of or agreement to
give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction).
"Marketable Securities" means securities listed and
trading on any national securities exchange or listed and
trading on the NASDAQ National Market.
"Maturity Date" means ___________, 2000.
"Net Cash Proceeds" means, with respect to any Asset
Sale, the cash proceeds of such Asset Sale, including payments
in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component
thereof) when received in the form of cash (except to the extent
such obligations are financed or sold with recourse to the
Company or any Subsidiary of the Company) and proceeds from the
conversion of other property received when converted to cash,
net of (a) reasonable third-party brokerage commissions and
other reasonable third-party fees and expenses (including fees
and expenses of counsel and investment bankers) related to such
Asset Sale, (b) provisions for all taxes as a result of such
Asset Sale, as computed on a consolidated basis, and (c)
payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that was incurred in
accordance with this Indenture and that either (i) is secured by
a Lien incurred in accordance with this Indenture on the
property or assets sold or (ii) is, by terms in effect on the
Issue Date, required to be paid as a result of such sale, in
each case to the extent actually repaid in cash.
"Net Equity Proceeds" means (a) in the case of any
sale by the Company of Qualified Capital Stock of the Company,
the aggregate net cash proceeds received by the Company, after
payment of expenses, commissions and the like incurred in
connection therewith, and (b) in the case of any exchange,
exercise, conversion or surrender of any outstanding
Indebtedness of the Company or any Subsidiary for or into shares
of Qualified Capital Stock of the Company, the amount of such
Indebtedness (or, if such Indebtedness was issued at an amount
less than the stated principal amount thereof, the accrued
amount thereof as determined in accordance with GAAP) as
reflected in the consolidated financial statements of the
Company prepared in accordance with GAAP as of the most recent
date next preceding the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to
be paid by the holder of such Indebtedness to the Company or to
any Wholly Owned Subsidiary of the Company upon such exchange,
exercise, conversion or surrender and less any and all payments
made to the holders of such Indebtedness, and all other expenses
incurred by the Company in connection therewith), in the case of
each of clauses (a) and (b)to the extent consummated after the
Issue Date.
"Net Income" means, with respect to any Person, the
net income (loss) of such Person, determined in accordance with
GAAP, excluding, however, (i) any gain (but not loss), together
with any related provisions for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale
and leaseback transactions and, for purposes of this definition
only, disregarding limitations in the definition of "Asset Sale"
with respect to Fair Market Value and net proceeds), or (b) the
disposition of any securities or the extinguishment of any
Indebtedness of such Person or any of its Subsidiaries, (ii) any
extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss),
(iii) for purposes of Section 4.10 only, amortization of
existing goodwill of the Company on the Issue Date in the amount
of $450 million [and (iv) in the case of the Company and its
Subsidiaries, income tax expense payable for any period by Mid-
State Homes, Inc. and its Subsidiaries pursuant to the Tax
Sharing Agreement so long as such Persons are not in default
thereunder].
"Non-Core Assets" means any assets other than those
used directly or indirectly in the same or a similar line of
business as the Company and the Persons listed on Schedule I
hereto were engaged in on the Issue Date.
"Non-Core Subsidiary" means any Subsidiary
substantially all of whose assets consist of Non-Core Assets.
"Note Custodian" means the Trustee, as custodian of
the Global Note, or any successor entity thereto.
"Notes" means, collectively, the Series B Notes and
the Series B-1 Notes.
"Officer" means, with respect to any Person, the
Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed on
behalf of the Company by two Officers of the Company, one of
whom must be the principal executive officer, the principal
financial officer or the treasurer of the Company, that meets
the requirements of Section 11.05 hereof.
"Opinion of Counsel" means a written opinion from
legal counsel acceptable to the Trustee that meets the
requirements of Section 11.05 hereof. The counsel may be an
employee of or counsel to the Company, any Subsidiary of the
Company or the Trustee.
"Other Permitted Liens" means (i) Liens for taxes,
assessments, governmental charges or claims which are being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and for which a reserve or
other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made, which (x) do not in
the aggregate materially detract from the value of the property
or assets subject thereto or materially impair the use thereof
in the operation of the business of the Company or any
Subsidiary or (y) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset
subject to such Lien; (ii) statutory Liens of landlords, and
carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's, or other like Liens arising in the
ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate
process of law, for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been
made which (x) do not in the aggregate materially detract from
the value of the property or assets subject thereto or
materially impair the use thereof in the operation of the
business of the Company or any Subsidiary or (y) are being
contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale
of the property or asset subject to such Lien; (iii) Liens
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance
and other types of social security; (iv) Liens incurred or
deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and
other obligations of a like nature incurred in the ordinary
course of business (exclusive of obligations for the payment of
borrowed money); and (v) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect
with the business of the Company or any Subsidiary incurred in
the ordinary course of business.
"Payment Restriction" means with respect to a
Subsidiary of any Person, any encumbrance, restriction or
limitation, whether by operation of the terms of its charter or
by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (i)
such Subsidiary to (a) pay dividends or make other distributions
on its Capital Stock or make payments on any obligation,
liability or Indebtedness owed to such Person or any other
Subsidiary of such Person, (b) make loans or advances to such
Person or any other Subsidiary of such Person, or (c) transfer
any of its properties or assets to such Person or any other
Subsidiary of such Person, or (ii) such Person or any other
Subsidiary of such Person to receive or retain any such (a)
dividends, distributions or payments, (b) loans or advances, or
(c) transfer of properties or assets.
"Permitted Indebtedness" means (i) Indebtedness of the
Company and its Subsidiaries under the Bank Revolving Credit
Facility; (ii) Existing Indebtedness; (iii) unsecured
Indebtedness of the Company to any Wholly Owned Subsidiary of
the Company and unsecured Indebtedness of any Subsidiary of the
Company to the Company or another Wholly Owned Subsidiary of the
Company to the extent permitted by Section 4.10; (iv)
obligations with respect to Interest Rate Agreements, Currency
Agreements and Commodity Agreements; (v) Permitted Refinancing
Indebtedness; and (vi) the incurrence by the Company or any
Subsidiary of Indebtedness represented by Capital Lease
Obligations, Attributable Debt, mortgage financings or Purchase
Money Obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of
construction of property newly acquired or constructed for use
in the business of the Company or such Subsidiary, in an
aggregate principal amount not to exceed $[25] million at any
time outstanding.
"Permitted Investments" means (i) any Investments in
the Company or in a Wholly Owned Subsidiary of the Company that
is engaged primarily in the same or a similar line of business
as the Company and its Subsidiaries were engaged in on the Issue
Date; (ii) any Investments in Cash Equivalents; (iii)
Investments by the Company or any Wholly Owned Subsidiary of the
Company in a Person, if as a result of such Investment (a) such
Person becomes a Wholly Owned Subsidiary of the Company that is
engaged primarily in the same or a similar line of business as
the Company and its Subsidiaries were engaged in on the Issue
Date; or (b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned
Subsidiary of the Company (which remains a Wholly Owned
Subsidiary following consummation of the transaction) and is
engaged primarily in the same or a similar line of business as
the Company and its Subsidiaries were engaged in on Issue Date;
and (iv) other Investments in one or more Persons that do not
exceed $25 million in the aggregate at any time outstanding.
"Permitted Liens" means (i) Liens existing on the
Issue Date; (ii) Liens now or hereafter securing Indebtedness
outstanding under the Bank Revolving Credit Facility; (iii)
Liens now or hereafter securing any obligations with respect to
Interest Rate Agreements, Currency Agreements or Commodity
Agreements; (iv) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company
or any Subsidiary of the Company or at the time such Person
becomes a Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or
the Subsidiary of the Company; (v) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary
of the Company; provided that such Liens were in existence prior
to the contemplation of such acquisition; (vi) Purchase Money
Liens and Liens to secure Capital Lease Obligations and mortgage
financings included in clause (vi) of the definition of
Permitted Indebtedness covering only the property acquired with
such Indebtedness; (vii) Liens on assets of Subsidiaries
securing Indebtedness of Subsidiaries (other than Permitted
Indebtedness) incurred in compliance with Section 4.11; (viii)
Liens securing Permitted Refinancing Indebtedness; provided that
such Liens extend to or cover only the property or assets then
securing the Indebtedness being refinanced; and (ix) Other
Permitted Liens in the ordinary course of business.
"Permitted Refinancing Indebtedness" means any
Indebtedness of the Company or any of its Subsidiaries issued in
exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness
of the Company or any of its Subsidiaries; provided that, except
in the case of the redemption of all of the outstanding Notes,
in which case none of the following shall be applicable, (l) the
principal amount of such Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith), (2) such
Indebtedness has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded, (3) with respect to Subordinated
Indebtedness, such Indebtedness is subordinated in right of
payment pursuant to terms at least as favorable to the Holders
of Notes as those, if any, contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, and (4) such Indebtedness is
incurred only by the Company or the Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency
or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement dated as
of the date of this Indenture, as amended, amended and restated
or otherwise modified from time to time, pursuant to which the
Company pledged the Pledged Shares owned by it to the Trustee, a
copy of which is attached hereto as Exhibit B.
"Pledged Shares" means all the outstanding shares of
Common Stock of _________, _________ and _________, and of all
other direct or indirect Subsidiaries of the Company, owned by
the Company and/or its Subsidiaries, whether currently owned or
hereafter acquired or created.
"Preferred Stock" means, with respect to any Person,
all Capital Stock of such Person which has a preference in
liquidation or a preference with respect to the payment of
dividends to another class of Capital Stock.
"principal" of a Note means the principal of such Note
plus the premium, if any, thereon.
"pro forma" means, with respect to any calculation
made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article 11 of
Regulation S-X under the Securities Act.
"Purchase Money Liens" means Liens to secure or
securing Purchase Money Obligations permitted to be incurred
under this Indenture.
"Purchase Money Obligations" means Indebtedness
representing, or incurred to finance, the cost (a) of acquiring
any assets and (b) of construction or improvement of property,
in each case for use in the business of the Company and its
Subsidiaries (including Purchase Money Obligations of any other
Person at the time such other Person is merged with or into or
is otherwise acquired by the Company or a Subsidiary), provided
that (i) the principal amount of such Indebtedness does not
exceed 100% of such cost, including construction charges, (ii)
any Lien securing such Indebtedness does not extend to or cover
any other asset or property other than the asset or property
being so acquired or constructed and (iii) such Indebtedness is
incurred, and any Liens with respect thereto are granted, within
180 days of the acquisition of such property or asset.
"Qualified Capital Stock" means, with respect to any
Person, any Equity Interest of such Person that is not
Disqualified Stock.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of , 1995, relating to the
Notes, for the benefit of certain Holders, as such agreement may
be amended, modified or supplemented from time to time.
"Responsible Officer," when used with respect to the
Trustee, means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"Restricted Investment" means an Investment other than
a Permitted Investment.
"Restricted Payment" means, with respect to any
Person, any of the following: (i) any dividend or other
distribution in respect of such Person's Capital Stock (other
than (a) dividends or distributions payable solely in Capital
Stock (other than Disqualified Stock) and (b) in the case of
Subsidiaries of the Company, dividends or distributions payable
to the Company or to a Wholly Owned Subsidiary of the Company);
(ii) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock, or any option, warrant, or other
right to acquire shares of Capital Stock, of the Company or any
of its Subsidiaries; (iii) the making of any principal payment
on, or the purchase, defeasance, repurchase, redemption or other
acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment,
of any Indebtedness which is subordinated in right of payment to
the Notes; and (iv) the making of any Investment (other than a
Permitted Investment).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series B Notes" means the Series B Notes issued
pursuant to this Indenture.
"Series B-1 Notes" means the Series B-1 Notes issued
pursuant to this Indenture.
"Significant Subsidiary" means any Subsidiary that
would be a "significant subsidiary" as defined in Article 1,
Rule l-02 of Regulation S-X, promulgated pursuant to the
Securities Act, as such Regulation is in effect on the date
hereof.
"Specified Holder" means a Holder to which one or more
Notes is initially issuable pursuant to the Consensual Plan.
"Subordinated Indebtedness" means any Indebtedness of
the Company that (i) has a final maturity date after, and a
Weighted Average Life to Maturity longer than, that of the
Notes, (ii) is subordinated in right of payment to the Notes
pursuant to subordination provisions contained in the agreements
or instruments evidencing such Indebtedness or pursuant to which
such Indebtedness is issued, which subordination provisions are
not less favorable to the Holders than the subordination
provisions set forth in Exhibit D to this Indenture and (iii) is
not Guaranteed by any Subsidiary of the Company.
"Subsidiary" means, with respect to any Person, (i) a
corporation a majority of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries
thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof has
at least a majority ownership interest; provided, however, that
Mid-State Homes, Inc. and its Subsidiaries shall not be deemed
to be a Subsidiary of the Company for purposes of the Indenture.
For purposes of this definition, any directors' qualifying
shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership
of a Subsidiary.
"Subsidiary Pledge Agreements" means the Subsidiary
Pledge Agreements to be executed by the Subsidiaries of the
Company with respect to any Pledged Shares owned by them,
substantially in the form of Exhibit C attached hereto, as
amended, amended and restated or otherwise modified from time to
time.
["Tax Sharing Agreement" means that certain tax
sharing agreement by and among the Company and its Subsidiaries
and Mid-State Homes, Inc. and its Subsidiaries dated as of the
Issue Date.]
"TIA" means the Trust Indenture Act of 1939(15 U.S.C.
sections 77aaa-77bbbb), as amended, as in effect on the date on
which
this Indenture is qualified under the TIA.
"Trade Payables" means any accounts payable or any
other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by a Person arising in the
ordinary course of business of such Person in connection with
the acquisition of goods and services.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor
serving hereunder.
"Voting Stock" means, with respect to any Person, (i)
one or more classes of the Capital Stock of such Person having
general voting power to elect at least a majority of the board
of directors, managers or trustees of such Person (irrespective
of whether or not at the time Capital Stock of any other class
or classes have or might have voting power by reason of the
happening of any contingency) and (ii) any Capital Stock of such
Person convertible or exchangeable without restriction at the
option of the holder thereof into Capital Stock of such Person
described in clause (i) above.
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (a) the sum of the products obtained by
multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect
thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making
of such payment, by (b) the then outstanding principal amount of
such Indebtedness.
"Wholly Owned Subsidiary" means, with respect to any
Person, a Subsidiary of such Person all of the outstanding
Capital Stock of which (and all options, warrants or other
rights to acquire any shares of such Capital Stock) shall at the
time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction. . . . . . . . . 4.14
"Asset Sale Offer". . . . . . . . . . . 3.09
"Change of Control Offer" . . . . . . . 4.08
"Change of Control Payment" . . . . . . 4.08
"Change of Control Payment Date". . . . 4.08
"Covenant Defeasance" . . . . . . . . . 8.03
"Event of Default". . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . 4.09
"Legal Defeasance". . . . . . . . . . . 8.02
"Offer Amount". . . . . . . . . . . . . 3.09
"Offer Period". . . . . . . . . . . . . 3.09
"Paying Agent". . . . . . . . . . . . . 2.03
"Purchase Date" . . . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . . . 2.03
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a
part of this Indenture.
The following TIA terms used in this Indenture have
the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means
the Trustee;
"obligor" on the indenture securities means the
Company and any successor obligor.
All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by SEC rule under the TIA have the meanings so
assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in
the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the
SEC from time to time.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING.
The Series B Notes and the Series B-1 Notes and the
related Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, which is part of
this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage.
Each Note shall be dated the date of its authentication. The
Notes shall be in denominations of $1,000 and integral multiples
thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this
Indenture and the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
On the Issue Date the Global Note representing all the
initially issued Series B Notes shall be issued to the Note
Custodian. The Global Note shall provide that it shall
represent the aggregate amount of outstanding Series B Notes
from time to time endorsed thereon and that the aggregate amount
of outstanding Series B Notes represented thereby may from time
to time be reduced, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the
amount of any decrease in the amount of Series B Notes
represented thereby shall be made by the Note Custodian.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal shall be
reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer
holds that office at the time a Note is authenticated, the Note
shall nevertheless be valid.
A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under
this Indenture.
The Trustee shall, upon a written order of the Company
signed by two Officers, authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the
respective Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed $490,000,000.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate the Notes. An
authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent
to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where
the Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where the Notes
may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes
any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of
any Agent not a party to this Indenture. If the Company fails
to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints the Trustee to act as
the Registrar and Paying Agent.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent will hold
in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal or
interest on the Notes, and will notify the Trustee of any
default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent
to pay all money held by it to the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary
acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it
as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of all Holders and shall otherwise
comply with TIA section 312(a). If the Trustee is not the
Registrar,
the Company shall furnish to the Trustee, at least fifteen
Business Days before each interest payment date and at such
other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders.
SECTION 2.06 TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar with a
request to register the transfer or to exchange them for an
equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer or make
the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfer and
exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's request. No service
charge to the Holder shall be made for any registration of
transfer or exchange, but the Company or the Trustee may require
from the transferring or exchanging Holder payment of a sum
sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such
transfer taxes or similar governmental charges payable upon
exchanges pursuant to Section 2.13, 3.06, 4.08, 4.09 or 9.05).
The Registrar shall not be required (A) to issue, to
register the transfer of, or to exchange Notes during a period
beginning at the opening of business 15 days before the day of
any selection of Notes for redemption under Section 3.07 hereof
and ending at the close of business on the day of selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or (C)to
register the transfer of or to exchange a Note between a record
date and the next succeeding interest payment date.
The Note Custodian shall, in accordance with the
instructions and procedures contained in an Agreement dated
_______________, 1995 between the Company and the Note
Custodian, cause the aggregate principal amount of the Global
Note to be reduced and, following such reduction, the Company
shall execute and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall
authenticate and deliver to the Holder a definitive Series B
Note in the appropriate principal amount.
SECTION 2.07. REPLACEMENT NOTES.
If the Holder claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the
Trustee, upon the written order of the Company signed by two
Officers of the Company, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and
the Company to protect the Company, the Trustee, any Agent and
any authenticating agent from any loss that any of them may
suffer if a Note is replaced. The Company or Trustee may charge
for its expenses in replacing a Note.
Every replacement Note is an additional obligation of
the Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Notes duly
issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, and those described in
this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide
purchaser.
If the Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to
accrue.
SECTION 2.09. TREASURY NOTES.
(a) In determining whether the Holders of the required
principal amount of Notes have concurred in any direction,
waiver or consent, Notes owned by the Company, by any
Subsidiary, or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with
the Company (other than a Specified Holder), shall be considered
as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that the
Trustee knows are so owned shall be so disregarded.
(b) In determining whether the Holders of the required
principal amount of Notes have (i) directed the time, method or
place of conducting any proceeding for any remedy available to
the Trustee hereunder, or exercised any trust or power conferred
upon the Trustee; (ii) consented to the waiver of any past Event
of Default and its consequences; or (iii) consented to the
postponement of any interest payment, Notes owned by a Specified
Holder shall be disregarded and considered as though not
outstanding only if such Specified Holder directly or indirectly
controls, or is controlled by or under direct or indirect common
control with, the Company, except that for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction or consent, only Notes that the Trustee knows
are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Notes upon a written order of the Company signed by two Officers
of the Company. Temporary Notes shall be substantially in the
form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of
the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and
no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and,
unless otherwise directed by the Company, shall retain or
destroy canceled Notes in accordance with its normal practices.
If such notes are destroyed, certification of the destruction of
all canceled Notes shall be delivered to the Company, at the
Company's request. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to
the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the
defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate
provided in the Notes and in Section 4.01 hereof. The Company
shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the
proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no
such special record date shall be less than 10 days prior to the
related payment date for such defaulted interest. At least 15
days before the special record date, the Company shall mail or
cause to be mailed to Holders a notice that states the special
record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13. EXCHANGE OFFER.
The Series B Notes may be exchanged for Series B-1
Notes pursuant to the terms of the Exchange Offer. The Trustee
and Registrar shall make the exchange as follows:
(i) The Company shall present the Trustee with
an Officers' Certificate certifying the
following:
(A) upon issuance of the Series B-1 Notes,
the transactions contemplated by the
Exchange Offer have been consummated;
and
(B) the principal amount at maturity of
Series B Notes properly tendered in the
Exchange Offer (together with such
Notes), the name of each Holder of such
Notes, the principal amount at maturity
properly tendered in the Exchange Offer
by each such Holder and the name and
address to which Series B-1 Notes shall
be registered and sent for each such
Holder.
(ii) The Trustee, upon receipt of such Officers'
Certificate, an Opinion of Counsel
satisfactory to the Trustee that the Series
B-1 Notes have been registered under Section
5 of the Securities Act and the Indenture
has been qualified under the TIA, and a
Company Order, shall authenticate Series B-1
Notes registered in the names, and in the
principal amounts at maturity, indicated in
such Officers' Certificate.
(iii) The Trustee shall deliver such Series B-1
Notes to the Holders thereof as indicated in
such Officers' Certificate.
ARTICLE THREE
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of the Notes and Section 3.07
hereof, it shall furnish to the Trustee, at least 45 days but
not more than 60 days before a redemption date (unless a shorter
notice shall be satisfactory to the Trustee), an Officers'
Certificate setting forth (i) the redemption date, (ii) the
principal amount of Notes to be redeemed and (iii) the
redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed among the Holders
of the Notes on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate (and
in such manner as complies with applicable legal and stock
exchange requirements, if any).
The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of
any Note selected for partial redemption, the principal amount
thereof to be redeemed. Notes and portions of Notes selected
shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed,
the entire outstanding amount of Notes held by such Holder, even
if not a multiple of $1,000, shall be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture
that apply to Notes called for redemption also apply to portions
of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed,
by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the
portion of the principal amount of such Note to be redeemed
and that, after the redemption date upon surrender of such
Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption
ceases to accrue on and after the redemption date; and
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption
are being redeemed.
At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at its expense;
provided, however, that the Company shall have delivered to the
Trustee, at least 45 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with
Section 3.03 hereof, Notes called for redemption become
irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest
on all Notes to be redeemed on that date. Whichever of the
Trustee or the Paying Agent receiving the money shall promptly
return to the Company any money deposited with it by the Company
in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest
shall cease to accrue on the Notes or the portions of Notes
called for redemption. If a Note is redeemed on or after an
interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid
to the Person in whose name such Note was registered at the
close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at a redemption price of
101% of the principal amount then outstanding, plus accrued and
unpaid interest thereon to the applicable date of redemption,
provided, however, that if a redemption is made from the Excess
Proceeds of any Asset Sales as described in Section 4.09, the
redemption price will be 100% of the principal amount then
outstanding, plus accrued and unpaid interest thereon to the
applicable date of redemption; and provided further, however,
that if such redemption is in part, not less than $150 million
principal amount of the Notes in the aggregate remain
outstanding after giving effect to such redemption.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.08 and 4.09
hereof, the Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.
SECTION 3.09. OFFERS TO PURCHASE BY APPLICATION OF EXCESS
PROCEEDS.
In the event that, pursuant to Section 4.09 hereof,
the Company shall commence an offer to all Holders of Notes to
purchase such Notes (an "Asset Sale Offer"), it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of
20 Business Days following its commencement and no longer,
except to the extent that a longer period is required by
applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section
4.09 hereof (the "Offer Amount") or, if less than the Offer
Amount has been tendered, all Notes tendered in response to the
Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record
date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose
name a Note is registered at the close of business on such
record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Within 10 days of each date on which the aggregate,
amount of Excess Proceeds exceeds $25 million, the Company shall
send, by first class mail, a notice to the Trustee and each of
the Holders of the Notes, with a copy to the Trustee and shall
specify the purchase date, which shall be no earlier than 30
days nor later than 40 days from the date such notice is mailed.
The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders of Notes. The notice, which shall govern the terms of
the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant
to this Section 3.09 and Section 4.09 hereof and the length
of time the Asset Sale Offer shall remain open;
(b) the Asset Sale Offer Amount, the purchase price
and the Purchase Date;
(c) that any Note not tendered or accepted for
payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest after the
Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all
of such Note purchased and may not elect to have only a
portion of such Note purchased;
(f) that Holders electing to have a Note purchased
pursuit to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary if appointed by the
Company, or a Paying Agent at the address specified in the
notice at least three Business Days before the Purchase
Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying
Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a pro
rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof,
shall be purchased); and
(i) that Holders whose Notes were purchased only in
part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable in connection with the repurchase of the Notes in
connection with an Asset Sale Offer.
On or before the Purchase Date, the Company shall, to
the extent lawful, accept for payment on a pro rata basis to the
extent necessary, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the
Offer Amount has been tendered, all Notes tendered, and shall
deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The
Company or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal
to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee shall authenticate
and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the
Purchase Date.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the
dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds at least one Business Day before that
date, money deposited by the Company in immediately available
funds and designated for and sufficient to pay all principal,
premium, if any, and interest then due.
The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy
Law) on overdue principal at the rate equal to 1% per annum in
excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace
period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may
be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of, the Notes and this
Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one
or more other offices or agencies where the Notes may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York for
such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the
Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations
of the SEC, so long as any Notes are outstanding, the Company
will furnish to the Holders (i) all reports that would be
required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's
certified independent accountants and (ii) all reports that
would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports. In addition,
whether or not required by the rules and regulations of the SEC,
the Company will file a copy of all such information and reports
with the SEC for public availability (unless the SEC will not
accept such a filing) for so long as any Notes are outstanding.
The Company will also make such information available to
investors who request it in writing. In addition, the Company
has agreed that, for so long as any Notes remain outstanding, it
will furnish to the Holders and to beneficial holders of Notes
and to prospective purchasers of Notes designated by the
Holders, upon their request, the information required to be
delivered pursuant to Rule 144(A)(d)(4) under the Securities
Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within
120 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with
a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture,
and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default
in the performance or observance of any of the terms, provisions
and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on
the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered
pursuant to Section 4.03 above shall be accompanied by a written
statement of the Company's independent public accountants (who
shall be a firm of established national reputation) that in
making the examination necessary for certification of such
financial statements, nothing has come to their attention that
would lead them to believe that the Company has violated any
provisions of Article Four or Article Five hereof or, if any
such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes
are outstanding, deliver to the Trustee, promptly, but in any
case within 3 Business Days of any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where
the failure to effect such payment is not adverse in any
material respect to the Holders.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, that may affect the
covenants, or the performance, of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such
power as though no such law has been enacted
SECTION 4.07. CORPORATE EXISTENCE.
Subject to Article Five and Section 4.17 hereof, the
Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time
to time) of the Company or any such Subsidiary and (ii) the
rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other
existence of any of its Subsidiaries, if the Board of Directors
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.08. CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each
Holder will have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described
below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company will mail a notice to each Holder
stating: (1) that the Change of Control Offer is being made
pursuant to this Section 4.08 and that all Notes tendered will
be accepted for payment; (2) the purchase price and the purchase
date, which will be no earlier than 30 days nor later than 40
days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Note not tendered will continue to
accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer will cease to
accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes,
with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have
such Notes purchased; and (7) that Holders whose Notes are being
purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000
in principal amount or an integral multiple thereof. The
Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in
connection with a Change of Control.
On the Change of Control Payment Date, the Company
shall (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3)
deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying
Agent shall promptly mail to each Holder of Notes so accepted
the Change of Control payment for such Notes, and the Trustee
shall promptly authenticate and mail to each Holder a new Note
equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided, that each such new Note
shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
SECTION 4.09. LIMITATION ON ASSET SALES.
The Company shall not, and shall not permit any of its
Subsidiaries to, consummate any Asset Sale, unless (i) the
Company (or its Subsidiaries, as the case may be) receives
consideration at the time of such sale or other disposition at
least equal to the Fair Market Value thereof; (ii) not less than
85% of the consideration received by the Company (or its
Subsidiaries, as the case may be) is in the form of cash or Cash
Equivalents; provided, however, that the amount of (a) any
liabilities (as shown on the Company's or such Subsidiary's most
recent balance sheet or in the notes thereto), of the Company or
any Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of
any such assets, (b) any notes or other obligations received by
the Company or its Subsidiaries from such transferee that are
immediately converted by the Company or such Subsidiary into
cash (to the extent of the cash received) and (c) any Marketable
Securities received by the Company or its Subsidiaries from such
transferee that are converted by the Company or such Subsidiary
into cash within 90 days following receipt (to the extent of the
cash received), shall be deemed to be cash for purposes of this
clause (ii); and (iii) the Net Cash Proceeds received by the
Company (or its Subsidiaries, as the case may be) from such
Asset Sale are applied in accordance with the following
paragraphs.
The Company may, (i) within 60 days following the
receipt of Net Cash Proceeds from any Asset Sale, apply such Net
Cash Proceeds to the repayment of Indebtedness of the Company
under the Bank Revolving Credit Facility to the extent required
by the terms thereof as in effect on the Issue Date, provided
that any such repayment shall result in a permanent reduction in
the revolving credit or other commitment relating thereto in an
amount equal to the principal amount so repaid; or (ii) in the
case of the sale of Non-Core Assets or Capital Stock of Non-Core
Subsidiaries to the extent the aggregate proceeds are less than
$25 million in any twelve consecutive months, within 180 days
following the receipt of Net Cash Proceeds from any such Asset
Sale, apply such Net Cash Proceeds to make an investment in the
same or similar lines of business as the Company and its
Subsidiaries were engaged in on the Issue Date.
If, upon completion of the applicable period, any
portion of the Net Cash Proceeds of any Asset Sale shall not
have been applied by the Company as described in clause (i) or
(ii) above (the "Excess Proceeds") and such Excess Proceeds,
together with any remaining unapplied Excess Proceeds from any
prior Asset Sale, exceed $25 million, then the Company will be
obligated either to (A) redeem the Notes pursuant to
Sections 3.01 through 3.07 (on a pro rata basis if the amount
available for such redemption is less than the outstanding
principal amount of the Notes plus accrued and unpaid interest,
if any, to the date of redemption) at a redemption price of 100%
of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of redemption or (B) make an offer
to repurchase the Notes pursuant to Section 3.09 (on a pro rata
basis if the amount available for such repurchase is less than
the outstanding principal amount of the Notes plus accrued and
unpaid interest, if any, to the date of repurchase) at a
purchase price of 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase;
provided, however, that if following such a redemption or an
offer to repurchase, assuming 100% acceptance, the outstanding
principal amount of the Notes would be less than $150 million in
the aggregate, the Excess Proceeds shall be utilized as provided
in the following paragraph until such time as the aggregate of
all unapplied Excess Proceeds from all Asset Sales is sufficient
to redeem or repurchase 100% of the outstanding principal amount
of the Notes, at which time the Company will be obligated to
either redeem or offer to repurchase the Notes as provided
above. If the aggregate principal amount of Notes surrendered
by Holders thereof plus accrued and unpaid interest, if any,
exceeds the amount of Excess Proceeds, the Company shall select
the Notes to be purchased on a pro rata basis. If the aggregate
principal amount of Notes surrendered by Holders thereof plus
accrued and unpaid interest, if any, is less than the amount of
Excess Proceeds, the unused portion of such Excess Proceeds may
be used by the Company for general corporate purposes. This
Section 4.09 does not apply to a transaction which is governed
by Sections 4.08 or 5.01 hereof.
Pending application pursuant to the above paragraphs,
including to the extent unapplied Excess Proceeds do not exceed
$25 million, Net Cash Proceeds shall be either invested in Cash
Equivalents or remitted to the applicable lender to pay down
any Indebtedness outstanding under the Bank Revolving Credit
Facility.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall cause each of its
Subsidiaries not to, directly or indirectly, make any Restricted
Payment unless:
(i) no Default or Event of Default shall have
occurred and be continuing at the time of or
immediately after giving effect to such
Restricted Payment;
(ii) at the time of and immediately after giving
effect to such Restricted Payment, at least
$1.00 of additional Indebtedness could be
incurred under the Consolidated EBITDA to
Consolidated Fixed Charges test applicable
to Indebtedness incurred by the Company
(other than Subordinated Indebtedness) or a
Subsidiary pursuant to Section 4.11 hereof;
(iii) immediately after giving effect to such
Restricted Payment, the aggregate amount of
all Restricted Payments declared or made
after the Issue Date does not exceed the sum
of (a) 50% of the Consolidated Net Income of
the Company (or in the event such
Consolidated Net Income shall be a deficit,
minus 100% of such deficit) during the
period (treated as one accounting period)
beginning with _______________, 1995 and
ending on the last day of the fiscal quarter
immediately preceding the date of
declaration or making of such Restricted
Payment; plus (b) 100% of the aggregate Net
Equity Proceeds received by the Company from
the issue or sale, after the Issue Date, of
Capital Stock of the Company (other than the
issue or sale of (1) Disqualified Stock or
(2) Capital Stock of the Company to any
Subsidiary of the Company or (3) Capital
Stock issued pursuant to the Consensual
Plan) and any Indebtedness or other
securities of the Company (other than the
issue or sale to any Subsidiary of the
Company) convertible into or exercisable for
Qualified Capital Stock of the Company which
has been so converted or exercised, as the
case may be; plus (c) 100% of the aggregate
net cash proceeds received by the Company or
any Subsidiary, after payment of expenses,
commissions and the like incurred in
connection therewith, in repayment and
termination of any Investment made after the
Issue Date which was a Restricted Payment
not to exceed the amount of such Restricted
Payment and less any such amounts included
in Consolidated Net Income of the Company;
plus (d) $25 million.
Notwithstanding the foregoing, the above limitations
will not prevent:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at
such date of declaration such payment
complied with the provisions hereof;
(ii) the purchase, redemption, acquisition or
retirement of any shares of Capital Stock of
the Company in exchange for, or out of the
net proceeds of the substantially concurrent
sale (other than to a Subsidiary of the
Company) of, shares of Qualified Capital
Stock of the Company;
(iii) the redemption or retirement of Indebtedness
of the Company which is subordinate in right
of payment to the Notes, in exchange for, by
conversion into, or out of the net proceeds
of the substantially concurrent issue or
sale (other than to a Subsidiary of the
Company) of Qualified Capital Stock of the
Company or Permitted Refinancing
Indebtedness; or
(iv) commencing on or after the first anniversary
of the Issue Date, the declaration or
payment of a regular quarterly dividend in
respect of the Common Stock of the Company
at a rate not to exceed $.025 per share;
provided that no Default or Event of Default has occurred and is
continuing at the time, or shall occur as a result, of any of
the actions contemplated in clauses (i) through (iv) above, and
provided further, in the case of clause (iv) above, at the time
of and immediately after giving effect to such Restricted
Payment, at least $1.00 of additional indebtedness could be
incurred under the Consolidated EBITDA to Consolidated Fixed
Charges test applicable to Indebtedness incurred by the Company
(other than Subordinated Indebtedness) or a Subsidiary pursuant
to Section 4.11 hereof.
SECTION 4.11. LIMITATION ON INCURRENCE OF INDEBTEDNESS;
ISSUANCE OF CAPITAL STOCK.
(a) The Company will not, and will not permit any
Subsidiary to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness); provided the Company or any
Subsidiary may incur Indebtedness, including Acquired
Indebtedness, if (i) at the time of such incurrence, the ratio
of Consolidated EBITDA to Consolidated Fixed Charges for the
period of the four consecutive fiscal quarters then ended
immediately prior to such incurrence, taken as one period and
calculated on a pro forma basis as if such Indebtedness had been
incurred and the proceeds therefrom applied on the first day of
such four-quarter period and, in the case of Acquired
Indebtedness, as if the related acquisition (whether by means of
purchase, merger or otherwise) also had occurred on such date
with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation, would
have been, in the case of an incurrence of Subordinated
Indebtedness by the Company, greater than 2.25 to 1 and, in the
case of an incurrence of any other Indebtedness by the Company
or of any Indebtedness by a Subsidiary, greater than 3.0 to 1
and (ii) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence
of such Indebtedness. For purposes of making the computation
referred to above, acquisitions and divestitures that have been
made by the Company or any of its Subsidiaries, including all
mergers or consolidations, during such four-quarter period or
subsequent to such four-quarter period and on or prior to the
time of such incurrence shall be calculated on a pro forma basis
assuming that all such acquisitions, divestitures, mergers and
consolidations had occurred on the first day of such four-
quarter period.
The foregoing limitation will not apply to the
incurrence of Permitted Indebtedness.
(b) The Company will not permit any of its
Subsidiaries to issue any Capital Stock (other than to the
Company or to a Wholly Owned Subsidiary of the Company). The
Company will not issue Disqualified Stock.
SECTION 4.12. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind (other
than Permitted Liens) upon any property or assets of the Company
or of any Subsidiary of the Company or any Capital Stock or
Indebtedness of any Subsidiary of the Company, now owned or
hereafter acquired, unless all payments due under this Indenture
and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are
no longer secured by a Lien.
SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of
the Company to (i) pay dividends or make any other distributions
on its Capital Stock, or any other interest or participation in
or measured by its profits, owned by the Company or a
Subsidiary; (ii) pay any Indebtedness owed to the Company or a
Subsidiary of the Company; (iii) make loans or advances to the
Company or a Subsidiary of the Company or Guarantee Indebtedness
of the Company or a Subsidiary; or (iv) transfer any of its
properties or assets to the Company or a Subsidiary of the
Company, except for (a) [describe any existing agreements which
must remain in place]; (b) consensual encumbrances binding upon
any Person at the time such Person becomes a Subsidiary of the
Company (unless the agreement creating such consensual
encumbrance was entered into in connection with, or in
contemplation of, such entity becoming a Subsidiary);
(c) consensual encumbrances or restrictions under any agreement
that refinances or replaces any agreement described in clauses
(a) or (b) above, provided that the terms and conditions of any
such restrictions are no less favorable to the Holders than
those under the agreement so refinanced or replaced;
(d) customary non-assignment provisions in leases, purchase
money financings and any encumbrance or restriction due to
applicable law; (e) restrictions imposed by law;
(f) restrictions imposed on a Subsidiary pursuant to a bona fide
contract for sale of such Subsidiary by the Company; and
(g) restrictions on the transfer of assets subject to Liens
permitted by this Indenture.
SECTION 4.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into any
transaction or series of transactions (including, without
limitation, the sale, purchase or lease of any assets or
properties or the rendering of any services) with any Affiliate
or holder of 5% or more of the Company's or any Subsidiary's
common stock (other than with a Wholly Owned Subsidiary of the
Company) (an "Affiliate Transaction"), on terms that are less
favorable to the Company or such Subsidiary, as the case may be,
than would be available in a comparable transaction negotiated
on an arm's length basis with an unrelated Person. In addition,
the Company will not, and will not permit any Subsidiary of the
Company to, enter into an Affiliate Transaction, or any series
of related Affiliate Transactions, unless (i) with respect to
such Affiliate Transaction or Transactions involving or having a
value of more than $1 million, the Company has obtained the
approval of a majority of the Board of Directors of the Company
(including a majority of the Company's disinterested directors)
and (ii) with respect to such Affiliate Transaction or
Transactions involving or having a value of more than $5
million, the Company has delivered to the Trustee an opinion of
an independent investment banking firm or appraisal firm of
national standing to the effect that such Transaction or
Transactions are fair to the Company or such Subsidiary, as the
case may be, from a financial point of view.
SECTION 4.15. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
Except to the extent included in clause (vi) of the
definition of Permitted Indebtedness, the Company will not, and
will not permit any of its Subsidiaries to, enter into any sale
and leaseback transaction with respect to any property (whether
now owned or hereafter acquired) unless (i) the sale or transfer
of the property to be leased complies with the requirements of
Section 4.09 hereof and (ii) the Company or such Subsidiary
would be entitled pursuant to Section 4.11 hereof to incur
additional Indebtedness under the Consolidated EBITDA to
Consolidated Fixed Charges test applicable to Indebtedness
incurred by the Company (other than Subordinated Indebtedness)
or a Subsidiary in an amount at least equal to the Attributable
Debt in respect of such sale and leaseback transaction.
SECTION 4.16. COMPLIANCE WITH LAWS
The Company shall comply, and shall cause each of its
Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of
America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing,
in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are
being contested in good faith and by appropriate proceedings and
except for such noncompliances as would not in the aggregate
have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries taken
as a whole.
SECTION 4.17. LIMITATION ON SALE OF CAPITAL STOCK OF
SUBSIDIARIES
The Company will not, and will not permit any of its
Subsidiaries to, sell, pledge, hypothecate or otherwise convey
or dispose of any Capital Stock of the Company's Subsidiaries
(other than pursuant to the Pledge Agreement or Subsidiary
Pledge Agreement governing the Pledged Shares) except for the
sale by the Company or a Subsidiary of all or part of the
Capital Stock of a Non-Core Subsidiary and except for the sale
of 100% of the Capital Stock of any other Subsidiary owned
collectively by the Company and/or its Subsidiaries; provided
that in either case such sale complies with the requirements of
Section 4.09.
ARTICLE FIVE
SUCCESSORS
SECTION 5.01. LIMITATION ON MERGERS, CONSOLIDATIONS AND SALES
OF ASSETS
The Company will not consolidate or merge with or into
any other Person, or permit any other Person to consolidate or
merge with or into the Company, nor will the Company sell,
lease, convey or otherwise dispose of all or substantially all
of its assets unless (i) the entity formed by or surviving any
such consolidation or merger, or to which such sale, lease,
conveyance or other sale shall have been made (the "Surviving
Entity"), is a corporation organized and existing under the laws
of the United States, any state thereof, or the District of
Columbia; (ii) the Surviving Entity assumes by supplemental
indenture all of the obligations of the Company under the Notes
and this Indenture; (iii) immediately after giving effect to
such transaction, no Default or Event of Default shall have
occurred and be continuing; (iv) immediately after giving effect
to such transaction (but prior to any purchase accounting
adjustments resulting from the transaction), the Consolidated
Net Worth of the Company or the Surviving Entity, as the case
may be, would be at least equal to the Consolidated Net Worth of
the Company immediately prior to such transaction; and (v)
immediately after giving effect to such transaction, the Company
or the Surviving Entity, as the case may be, could incur at
least $1.00 of additional Indebtedness under the Consolidated
EBITDA to Consolidated Fixed Charges test applicable to
Indebtedness incurred by the Company (other than Subordinated
Indebtedness) or a Subsidiary pursuant to Section 4.11.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01
hereof, the successor corporation formed by such consolidation
or into or with which the Company is merged or to which such
sale, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture and the
Notes referring to the "Company" shall refer instead to the
successor corporation and not to the Company), and may exercise
every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as
the Company herein. When a successor corporation assumes all of
the obligations of the Company hereunder and under the Notes and
agrees to be bound hereby and thereby, the predecessor Company
shall be released from such obligations.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" shall occur upon:
(i) failure by the Company to pay interest on the
Notes for 5 days after becoming due;
(ii) failure by the Company to pay the principal of or
premium on the Notes (whether due to failure to
make payment pursuant to a Change of Control
Offer or Asset Sale Offer or otherwise) when due
and payable;
(iii) failure by the Company to perform any of its
obligations under the Pledge Agreement or failure
by any Subsidiary to perform any of its
obligations under its Subsidiary Pledge Agreement
or the Trustee is entitled to exercise any
remedies pursuant to Section 11 of the Pledge
Agreement or any Subsidiary Pledge Agreement;
(iv) failure by the Company or any of its Subsidiaries
to comply with any other covenant for 30 days
after written notice from the Trustee or Holders
of 25% in principal amount of the Notes
outstanding (except failure to comply with the
provisions of Sections 4.08, 4.09 and 5.01 which
failure shall constitute an Event of Default with
notice but without passage of time);
(v) failure by the Company or any of its Significant
Subsidiaries to make any payments when due (after
giving effect to any applicable grace period and
whether by reason of maturity, acceleration or
otherwise) under any issue or issues of
Indebtedness of the Company and/or one or more of
its Significant Subsidiaries having an
outstanding principal amount of $25 million or
more individually or $50 million or more in the
aggregate for all such issues of all such
Persons;
(vi) any final judgment or order (not covered by
insurance) is entered against the Company or any
Significant Subsidiary in excess of $25 million
individually or $50 million in the aggregate for
all such final judgments or orders against all
such Persons and remains undischarged or unstayed
for 60 days;
(vii) the Company or any of its Significant
Subsidiaries pursuant to or within the meaning of
any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or
proceeding,
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(d) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it,
(e) makes a general assignment for the benefit of its
creditors, or
(f) takes any corporate action to authorize or effect
any of the foregoing;
(viii) a court of competent jurisdiction enters a
judgment, decree or order under any Bankruptcy
Law that is for relief against the Company or any
Significant Subsidiary of the Company, in an
involuntary case or proceeding which shall:
(a) approve a petition seeking reorganization,
arrangement, adjustment or composition in respect of the
Company or any Significant Subsidiary of the Company,
(b) appoint a Custodian for the Company or any
Significant Subsidiary of the Company or for all or
substantially all of the property of any of them, or
(c) order the winding-up or liquidation of the
Company or any Significant Subsidiary of the Company,
and in each case the judgment, order or decree remains unstayed
and in effect for 60 days; and
(ix) any Lien granted or purported to be granted
pursuant to the Pledge Agreement or any
Subsidiary Pledge Agreement shall be or become
unenforceable or invalid, or the priority thereof
shall become diminished, or the Company or any
Subsidiary or any Person acting by or on behalf
of the Company or any Subsidiary shall contest or
disaffirm any such Lien.
SECTION 6.02. ACCELERATION.
If an Event of Default occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at
least 25% of the aggregate principal amount of the then
outstanding Notes, by written notice to the Company and the
Trustee, may declare all of the Notes to be due and payable
immediately. Upon such declaration, the unpaid principal of,
premium, if any, and accrued interest on the Notes shall be due
and payable. Notwithstanding the foregoing, in the case of an
Event of Default specified in clause (vii) or (viii) of Section
6.01 with respect to the Company or any Significant Subsidiary,
such an amount shall ipso facto become immediately due and
payable without any declaration, notice or other act on the part
of the Trustee or any Holder.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment
of the principal of, premium, if any, and interest on the Notes
and to enforce the performance of any provision of the Notes or
this Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Holder of a Note in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Sections 6.07 and 9.02, the Holders of not
less than a majority in aggregate principal amount of the then
outstanding Notes, by written notice to the Trustee, may on
behalf of the Holders of all of the Notes (a) waive any existing
Default or Event of Default and its consequences, except a
continuing Default or Event of Default in the payment of
interest on, premium, if any, or the principal of, the Notes
and/or (b)rescind an acceleration and its consequences,
including any related payment default that resulted from such
acceleration. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in aggregate principal amount of
the then outstanding Notes may direct the time, method and place
of conducting any proceeding for exercising any remedy available
to the Trustee or exercising any trust or power conferred on it
under this Indenture; provided that the Trustee may take any
other actions it deems proper that are not inconsistent with
these directions. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of
other Holders or that may involve the Trustee in personal
liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder gives to the Trustee written notice of
a continuing Event of Default;
(b) the Holders of at least 25% in principal amount
of the then outstanding Notes make a written request to the
Trustee to pursue the remedy;
(c) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer
and, if requested, the provision of indemnity; and
(e) during such 60-day period the Holders of a
majority in principal amount of the then outstanding Notes
do not give the Trustee a direction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over
another Holder.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture,
the right of any Holder to receive payment of principal,
premium, if any, and interest on the Notes, on or after the
respective due dates expressed in the Notes (including in
connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(1) or
(2) occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal,
premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim
and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and the Holders
allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the
estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled
to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07 and 6.09 hereof, including
payment of all compensation, expense and liabilities incurred,
and all advances made, by the Trustee and the costs and expenses
of collection;
Second: to Holders for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if
any and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for
any payment to Holders.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the
claim or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. EVENT OF DEFAULT FROM WILLFUL ACTION.
In the case of any Event of Default occurring by
reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if
the Company then had elected to redeem any series of Notes
pursuant to Section 3.07 hereof, a one percent premium shall
also become and be immediately due and payable to the extent
permitted by law.
The Trustee will have no responsibility for making, or
obligation to make, any determination that any such Event of
Default has occurred by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company
pursuant to this Section 6.12. The Company will provide the
Trustee with an Officers' Certificate setting forth the date
such premium is required to be paid at least 45 days prior to
such payment date.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree
of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of
Default:
(i) the duties of the Trustee shall be
determined solely by the express provisions
of this Indenture and the Trustee need
perform only those duties that are
specifically set forth in this Indenture and
no others, and no implied covenants or
obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the
truth of the statements and the correctness
of the opinions expressed therein, upon
certificates or opinions furnished to the
Trustee conforming to the requirements of
this Indenture. However, in the case of any
such certificates or opinions which, by any
provision hereof, are required to be
furnished to the Trustee, the Trustee shall
examine such certificates and opinions to
determine whether or not they conform to the
requirements of this Indenture.
(c) No provision of this Indenture shall be construed
to relieve the Trustee from liabilities for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any
error of judgment made in good faith by a
Responsible Officer, unless it is proved
that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in
good faith in accordance with a direction
received by it pursuant to Section 6.05
hereof.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability.
The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any
Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to the Trustee against any
cost, loss, liability or expense.
(e) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree in
writing with the Company. Money held in trust by the Trustee
need not be segregated from other funds except to the extent
required by law.
(f) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 7.01.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any attorney or agent appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by
this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the
Company.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company with the same
rights it would have if it were not Trustee. However, in the
event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture
or the Notes, shall not be accountable for any money paid to the
Company or upon the Company's direction under any provision of
this Indenture, shall not be responsible for the use or
application of any money received by any Paying Agent other than
the Trustee, and shall not be responsible for any statement or
recital herein or any statement in the Notes or any other
document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or an Event of Default occurs and is
continuing and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment
of principal, premium, if any, or interest on any Note, the
Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each [__________] 15 beginning
with the [__________] 15 following the date of this Indenture,
the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA
section 313(a) (but if no event described in TIA section 313(a)
has occurred
within the twelve months preceding the reporting date, no report
need be transmitted). The Trustee also shall comply with TIA
section
313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA section 313(c).
A copy of each report at the time of its mailing to
the Holders shall be mailed to the Company and filed with the
SEC and each stock exchange on which the Notes are listed. The
Company shall promptly notify the Trustee whenever the Notes
become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and
services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon
request for all disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services.
Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any
and all losses, damages, claims, liabilities or expenses
incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, damage, claim,
liability or expense may be attributable to its negligence or
bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a Lien prior to the Notes
on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(vii) or
Section 6.01(viii), the expenses and the compensation for the
services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as
provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the
Company. The Holders of a majority in principal amount of the
then outstanding Notes may remove the Trustee by so notifying
the Trustee and the Company in writing. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10
hereof;
(b) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to
the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of the Trustee for any reason, the Company
shall promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a
majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not accept its appointment
within 30 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company, or the Holders of at least
10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee, after written request by any Holder
who has been a Holder for at least six months, fails to comply
with Section 7.10, such Holder may petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Thereupon, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor
Trustee, provided all sums owing to the Trustee hereunder have
been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that
is a corporation organized and doing business under the laws of
the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of
at least $100 million or, in the event that the Trustee is part
of a bank holding company system, the bank holding company must
have a combined capital and surplus of at least $ 100 million,
in either case as set forth in its most recent published annual
report of condition.
This Indenture shall always have a Trustee who
satisfies the requirements of TIA section 310(a)(1), (2) and (5).
The
Trustee is subject to TIA section 310(b), including the provision
permitted by the second sentence of TIA section 310(b)(9).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY.
The Trustee is subject to TIA section 311(a), excluding
any
creditor relationship listed in TIA section 311(b). A Trustee
who has
resigned or been removed shall be subject to TIA section 311(a)
to the
extent indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF INDENTURE; OPTION TO EFFECT LEGAL
DEFEASANCE OR COVENANT DEFEASANCE.
(a) This Indenture shall cease to be of further
effect (except that the Company's obligations under Section 7.07
and the Company's, the Trustee's and any Paying Agent's
obligations under Section 8.06 shall survive) when all
outstanding Notes theretofore authenticated and issued have been
delivered (other than destroyed, lost or stolen Notes that have
been replaced or paid) to the Trustee for cancellation and the
Company has paid all sums payable hereunder.
(b) In addition, the Company may, at the option of
its Board of Directors evidenced by a resolution set forth in an
Officers' Certificate, at any time, elect to have either Section
8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article
Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof
of the option applicable to this Section 8.02, the Company
shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be deemed to have been discharged from
its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes, this
Indenture, the Pledge Agreement and any Subsidiary Pledge
Agreement (and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Notes to receive solely from
the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the
principal, of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with
respect to such Notes under Article Two and Section 4.02 hereof
and (c) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof
of the option applicable to this Section 8.03, the Company
shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be released from its obligations under
the covenants contained in Sections 4.08, 4.09, 4.10, 4.11,
4.12, 4.13, 4.14, 4.15 and 4.17 hereof with respect to the
outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act
of Holders (and the consequences of any thereof) in connection
with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Notes, the Company
may omit to comply with and shall have no liability in respect
of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof
of the option applicable to this Section 8.03 hereof, subject to
the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(iv) through 6.01(vi) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the
application of either Section 8.02 or 8.03 hereof to the
outstanding Notes:
In order to exercise either Legal Defeasance or
Covenant Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the
Notes, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as
the case may be, of such principal or installment of
principal of, premium, if any, or interest on the
outstanding Notes;
(b) in the case of an election under Section 8.02
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States acceptable to the
Trustee confirming that (A) the Company has received from,
or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income
tax law, in either case to the effect that the Holders of
the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.03
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States acceptable to the
Trustee confirming that the Holders of the outstanding
Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from
the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes
pursuant to this Article Eight concurrently with such
incurrence) or insofar as Section 6.01(vii) or 6.01(viii)
hereof is concerned, at any time in the period ending on
the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute
a default under, this Indenture or any other material
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not
made by the Company with the intent of preferring the
Holders over the other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any
other creditors of the Company; and
(h) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating
to the Legal Defeasance or the Covenant Defeasance have
been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-
callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the "Trustee")
pursuant to Section 8.04 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture,
to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee
may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal, premium, if any,
and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the cash or non-callable Government Securities deposited
pursuant to Section 8.04 hereof or the principal and interest
received in respect thereof other than any such tax, fee or
other charge which by law is for the account of the Holders of
the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon the request of the Company any money or
non-callable Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which
may be the opinion delivered under Section 8.04(a) hereof), are
in excess of the amount thereof that would then be required to
be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as a creditor, look only to the
Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New
York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any
United States Dollars or non-callable Government Securities in
accordance with Section 8.02 or 8.03 hereof, as the case may be,
by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof
until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or
interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the money
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the
Company and the Trustee may amend or supplement this Indenture
or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to Holders in the case of a merger or
consolidation or sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all
of the Company's properties or assets pursuant to Article
Five hereof;
(d) to make any change that would provide any
additional rights or benefits to the Holders or that does
not adversely affect the legal rights hereunder of any
Holder; or
(e) to comply with requirements of the SEC in order
to effect or maintain the qualification of this Indenture
under the TIA.
Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution
of any such amended or supplemental Indenture, and upon receipt
by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
The Company and the Trustee may amend or supplement
this Indenture, the Pledge Agreement or any Subsidiary Pledge
Agreement and the Notes may be amended or supplemented, with the
consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for
the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium, if
any, or interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Pledge
Agreement or any Subsidiary Pledge Agreement or the Notes, may
be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange
offer for the Notes).
Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution
of any such amended or supplemental Indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee
of the consent of the Holders as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated
to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
of any proposed amendment or waiver, but it shall be sufficient
if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of the Notes a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and
6.07 hereof, the Holders of a majority in aggregate principal
amount of the Notes then outstanding may waive compliance in a
particular instance by the Company with any provision of this
Indenture, the Pledge Agreement or any Subsidiary Pledge
Agreement or the Notes. However, without the consent of each
Holder affected, an amendment or waiver may not (with respect to
any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver
of any provision of this Indenture, the Pledge Agreement or
any Subsidiary Pledge Agreement or the Notes;
(b) reduce the principal of or change the fixed
maturity of any Note;
(c) alter any of the provisions with respect to the
redemption of the Notes except with respect to Sections
4.08 and 4.09 hereof or reduce the purchase price payable
in connection with repurchases of Notes pursuant to
Sections 4.08 or 4.09 hereof;
(d) reduce the rate of or change the time for payment
of interest, including default interest, on any Note;
(e) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on
the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(f) make the principal of, or the interest on, any
Note payable in money other than that stated in the Notes;
(g) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the
rights of Holders to receive payments of principal of,
premium, if any, or interest on the Notes;
(h) waive a redemption payment with respect to any
Note except for a payment required by Section 4.08 or 4.09;
(i) alter the ranking of the Notes relative to other
Indebtedness of the Company; or
(j) make any change in Section 6.04 or 6.07 hereof or
in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the
Notes shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Note or portion
of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on
any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the
Trustee receives written notice of revocation before the date
the waiver, supplement or amendment becomes effective. An
amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
Upon the direction of the Company, the Trustee may
place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall
authenticate new Notes that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a
new Note shall not affect the validity and effect of such
amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee need not sign any supplemental indenture
adversely affecting its rights. The Company may not sign an
amendment or supplemental Indenture until its Board of Directors
approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject
to Section 7.01) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE TEN
SECURITY
SECTION 10.01. PLEDGE AGREEMENT.
In order to secure the due and punctual payment of the
principal of, premium, if any, and interest on the Notes when
and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, call for redemption,
or otherwise, and interest on the overdue principal, premium and
interest, if any, of the Notes and performance of all other
obligations of the Company to the Holders or the Trustee under
this Indenture and the Notes, according to the terms hereunder
or thereunder, the Company will, and to the extent applicable
will cause each Subsidiary to, make an assignment of its right,
title and interest in and to the Pledged Shares to the Trustee
pursuant to the Pledge Agreement or a Subsidiary Pledge
Agreement, as the case may be, and to the extent therein
provided, no later than the Issue Date. The Company shall cause
each Subsidiary not a party to a Subsidiary Pledge Agreement to
execute a Subsidiary Pledge Agreement at the time such
Subsidiary acquires any Pledged Shares. At the time the Pledge
Agreement or any Subsidiary Pledge Agreement is executed, the
Company or the Subsidiary, as the case may be, will have full
right, power and lawful authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm, absolutely, the Pledged Shares owned by it in the
manner and form done, or intended to be done, in the Pledge
Agreement or the Subsidiary Pledge Agreement, as the case may
be, free and clear of all Liens whatsoever, except the Liens
created by the Pledge Agreement or the Subsidiary Pledge
Agreement, as the case may be, and except to the extent
otherwise provided therein, and (a) will forever warrant and
defend the title to the same against the claims of all Persons
whatsoever, (b) will execute, acknowledge and deliver to the
Trustee such further assignments, transfer, assurances, or other
instruments as the Trustee may require or request, and (c) will
do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the Trustee, to
assure and confirm to the Trustee the security interest in the
Pledged Shares contemplated hereby, and by the Pledge Agreement
or the Subsidiary Pledge Agreement, as the case may be, or any
part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this
Indenture and of the Notes secured hereby, according to the
intent and purposes herein expressed. The Pledge Agreement and
each Subsidiary Pledge Agreement, as the case may be, will
create a direct and valid Lien on the Pledged Shares, as set
forth therein. To the extent applicable, the Pledge Agreement
and any Subsidiary Pledge Agreement will be governed by the
Uniform Commercial Code.
SECTION 10.02. RECORDING, ETC.
The Company will cause, at its own expense, the Pledge
Agreement, any Subsidiary Pledge Agreement, this Indenture and
all amendments or supplements thereto to be registered, recorded
and filed or re-recorded, re-filed and renewed in such manner
and in such place or places, if any, as may be required by law
in order fully to preserve and protect the security interest
created under the Pledge Agreement and any Subsidiary Pledge
Agreement in the Pledged Shares and to effectuate and preserve
the security therein of the Holders and all rights of the
Trustee.
The Company shall furnish to the Trustee:
(1) promptly after the execution and delivery of the
Pledge Agreement and any Subsidiary Pledge Agreement covering
the Pledged Shares, an Opinion of Counsel either (a) stating
that, in the opinion of such Counsel, this Indenture and the
assignment of the Pledged Shares intended to be made by the
Pledge Agreement and any Subsidiary Pledge Agreement and all
other instruments of further assurance or amendment have been
properly recorded, registered and filed to the extent necessary
to make effective the security interest in the Pledged Shares
intended to be created by the Pledge Agreement and any
Subsidiary Pledge Agreement, and reciting the details of such
action or referring to prior Opinions of Counsel in which such
details are given, and stating that as to the security interests
in the Pledged Shares created pursuant to the Pledge Agreement
and any Subsidiary Pledge Agreement such recording, registering
and filing are the only recordings, registering and filings
necessary to give notice thereof and that no re-recordings, re-
registering or refilings are necessary to maintain such notice,
and further stating that all financing statements and
continuation statements have been executed and filed that are
necessary to preserve and protect fully the rights of the
Holders and the Trustee with respect to the security interests
in the Pledged Shares hereunder and under the Pledge Agreement
and any Subsidiary Pledge Agreement or (b) stating that, in the
opinion of such counsel, no such action is necessary to make
such Lien and assignment effective; and
(2) within 30 days after __________ 1 in each year
beginning with __________ 1, 1996, an Opinion of Counsel, dated
as of such date, either (a) stating that, in the opinion of such
counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and
refiling of all supplemental indentures, financing statements,
continuation statements or other instruments of further
assurance as is necessary to maintain the Lien of the Pledge
Agreement and any Subsidiary Pledge Agreement and reciting with
respect to the security interests in the Pledged Shares the
details of such action or referring to prior Opinions of Counsel
in which such details are given, and stating that all financing
statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the
rights of the Holders and the Trustee hereunder and under the
Pledge Agreement and any Subsidiary Pledge Agreement with
respect to the security interests in the Pledged Shares or
(b) stating that, in the opinion of such counsel, no such action
is necessary to maintain such Lien and assignment.
If at any time the Notes are no longer secured
pursuant to the Pledge Agreement and any Subsidiary Pledge
Agreement, whether due to the payment in full or defeasance of
the Notes, the release of the collateral thereunder or
otherwise, and if all amounts due the Trustee under the Pledge
Agreement, any Subsidiary Pledge Agreement and hereunder have
been paid, the security interest hereunder and under the Pledge
Agreement for the benefit of the Notes may be released at the
sole option of the Company.
The release of any Pledged Shares from the terms
hereof and the Pledge Agreement and any Subsidiary Pledge
Agreement will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to
the extent the Pledged Shares are released pursuant to the
Pledge Agreement and any Subsidiary Pledge Agreement. The
Trustee and each of the Holders acknowledge that a release of
Pledged Shares in accordance with the terms of the Pledge
Agreement and any Subsidiary Pledge Agreement will not be deemed
for any purpose to be an impairment of the security under this
Indenture. To the extent applicable, the Company shall cause
TIA section 314(d) relating to the release of property or
securities
from the Lien of the Pledge Agreement and any Subsidiary Pledge
Agreement to be complied with. Any certificate or opinion
required by TIA section 314(d) may be made by an Officer of the
Company, except in cases in which TIA section 314(d) requires
that
such certificate or opinion be made by an independent Person.
SECTION 10.03. SUITS TO PROTECT THE PLEDGED SHARES.
At the expense of the Company, the Trustee shall have
power to institute and to maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Pledged
Shares by any acts which may be unlawful or in violation of the
Pledge Agreement or any Subsidiary Pledge Agreement or this
Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the
interests of the Holders in the Pledged Shares (including power
to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the
security hereunder or be prejudicial to the interest of the
Holders or the Trustee).
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by the TIA, the TIA
controls.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered
in Person or mailed by first class mail (registered or
certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
WALTER INDUSTRIES, INC.
With a copy to:
If to the Trustee:
UNITED STATES TRUST COMPANY OF NEW YORK
With a copy to:
Each of the Company and the Trustee, by notice to the
others may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent
to Holders) shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after
timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to a Holder shall be
mailed by first class mail, certified or registered, return
receipt requested, or by overnight air courier guaranteeing next
day delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed
to any Person described in TIA section 313(c), to the extent
required
by the TIA. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at
the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES.
Holders may communicate pursuant to TIA section 312(b)
with
other Holders with respect to their rights under this Indenture
or the Notes. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that,
in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating
to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that,
in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture
(other than a certificate provided pursuant to TIA section
314(a)(4))
shall comply with the provisions of TIA section 314(e) and shall
include:
(a) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of such Person,
he or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or
at a meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its
functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or this
Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view
of the SEC that such a waiver is against public policy.
SECTION 11.08. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE CONSTRUED,
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CHOICE OF LAW PROVISIONS.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its
Subsidiaries or of any other Person. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and
the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify
or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first
written above.
Dated as of __________ __, 1995 WALTER INDUSTRIES, INC.
Attest:_____________________ By:_______________________
Name:
Title:
(SEAL)
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:_____________________ By:________________________
Name:
Title:
(SEAL)
<PAGE>
EXHIBIT A
(Face of Series B and Series B-1 Note)
[Series B] [Series B-1] Senior Note due 2000
No.
WALTER INDUSTRIES, INC.
promises to pay to
or registered assigns.
the principal sum of
Dollars on __________, 2000.
Interest Payment Dates: August 15 and February 15
Record Dates: August 1 and February 1
Dated:___________________________
WALTER INDUSTRIES, INC.
By:_______________________
Name:
Title:
By:_______________________
Trustee's Certificate of Name:
Authentication Title:
(SEAL)
This is one of the Notes
referred to in the within-
mentioned Indenture:
UNITED STATES TRUST COMPANY NEW YORK,
as Trustee
By:___________________________________
Authorized Signatory
<PAGE>
(Back of Note)
[Series B] [Series B-1] Senior Note due 2000
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless
otherwise indicated.
1. INTEREST. Walter Industries, Inc., a Delaware
corporation (the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to),
promises to pay interest on the principal amount of this Note at
____% per annum from the Issue Date until maturity. The Company
will pay interest semi-annually on August 15 and February 15 of
each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid,
from the Issue Date; provided that if there is no existing
Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be
August 15, 1995. The Company shall pay interest (including
post-petition interest in any proceeding under Bankruptcy Law)
on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the interest
rate then in effect on the Notes; it shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without
regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest
on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the
August 1 or February 1 preceding the Interest Payment Date, even
if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The
Notes will be payable as to principal and interest at the office
or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the
Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders.
Such payment will be in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United
States Trust Company of New York, the Trustee under the
Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. INDENTURE. The Company issued the Notes under an
Indenture dated as of ____________, 1995 (the"Indenture")
between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code sections 77aaa-77bbbb). The Notes are
subject
to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. The [Series B] [Series
B-1] Notes are secured obligations of the Company limited to
$490,000,000 in aggregate principal amount, plus amounts, if
any, sufficient to pay interest and premium, if any, on
outstanding Notes as set forth in Paragraph 2 hereof. The Notes
are secured by the outstanding Capital Stock of each of the
Company's direct and indirect Subsidiaries (which term excludes
Mid-State Homes, Inc. and its Subsidiaries), whether currently
owned or hereafter acquired or created, which Capital Stock has
been pledged by the Company and certain of its Subsidiaries
pursuant to the Pledge Agreement and certain Subsidiary Pledge
Agreements dated __________, 1995.
5. OPTIONAL REDEMPTION. The Notes will be subject
to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice,
at a redemption price of 101% of the principal amount then
outstanding, plus accrued and unpaid interest thereon to the
applicable date of redemption; provided, however, that if a
redemption is made from the Excess Proceeds of any Asset Sales
as described in paragraph 9 below, the redemption price will be
100% of the principal amount then outstanding, plus accrued and
unpaid interest thereon to the applicable date of redemption;
and provided, further, however, that if any such redemption is
in part, not less than $150 million principal amount of the
Notes in the aggregate remain outstanding after giving affect to
such redemption.
6. MANDATORY REDEMPTION. Except as set forth under
Sections 4.08 or 4.09 of the Indenture, the Company shall not be
required to make mandatory redemption payments with respect to
the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will
be mailed at least 30 days but not more than 60 days before the
redemption date to each Holder whose Notes are to be redeemed at
its registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to
accrue on Notes or portions thereof called for redemption.
8. CHANGE OF CONTROL. Upon the occurrence of a
Change of Control, the Company will be required to make an offer
to repurchase all or any part (equal to $1,000 principal amount
or an integral multiple thereof) of a Holder's Notes at a
purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of
purchase. Within 10 days following any Change of Control, the
Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by
the Indenture. Holders of Notes may elect to have such Notes
purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below.
9. ASSET SALES. If the Company consummates any
Asset Sales, and when the aggregate amount of Excess Proceeds
exceeds $25 million, the Company shall either (A) redeem the
Notes (on a pro rata basis if the amount available for such
redemption is less than the outstanding principal amount of the
Notes plus accrued and unpaid interest, if any, to the date of
redemption) at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the
date of redemption or (B) make an offer to all Holders of Notes
to purchase the maximum principal amount of Notes that may be
purchased out of such Excess Proceeds, at an offer price in cash
equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase; provided,
however, that if following such a redemption or an offer to
repurchase, assuming 100% acceptance, the outstanding principal
amount of the Notes would be less than $150 million in the
aggregate, the Excess Proceeds shall be utilized as provided in
the Indenture until such time as the aggregate of all unapplied
Excess Proceeds from all Asset Sales is sufficient to redeem or
repurchase 100% of the outstanding Notes, at which time the
Company will be obligated to either redeem or offer to purchase
the Notes as provided above. Holders of Notes that are the
subject of an offer to purchase shall receive an Asset Sale
Offer from the Company prior to any related purchase date and
may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are
in registered form without coupons in denominations of $1,000
and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the
Indenture. The Registrar shall not be required (A) to issue, to
register the transfer of, or to exchange Notes during a period
beginning at the opening of business 15 days before the day of
any selection of Notes for redemption under Section 3.07 of the
Indenture and ending at the close of business on the day of
selection; or (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or (C) to
register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of
a Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to
certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and
any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note,
the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's
obligations to Holders in case of a merger or consolidation or
sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's
properties or assets, to make any change that would provide any
additional rights or benefits to the Holders or that does not
adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
13. RESTRICTIVE COVENANTS. The Indenture imposes
certain limitations on the ability of the Company and its
Subsidiaries to, among other things, pay dividends or make
certain other Restricted Payments, incur additional Indebtedness
or Liens, enter into transactions with Affiliates, make payments
in respect of its Capital Stock or issue additional or sell
Capital Stock, merge or consolidate with any other person or
sell, lease, transfer or otherwise dispose of substantially all
of its properties or assets or enter into sale and leaseback
transactions. The limitations are subject to certain
qualifications and exceptions. The Company must annually report
to the Trustee regarding compliance with such limitations.
14. SUCCESSOR CORPORATION. When a successor
corporation assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor corporation will be
released from those obligations.
15. DEFAULTS AND REMEDIES. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of Notes then outstanding may
declare all the Notes to be due and payable immediately in the
manner and with the effect provided in the Indenture. Holders
of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in
aggregate principal amount of the Notes then outstanding may
direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any
continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that
withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in
its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company, as such,
shall not have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration
for the issuance of the Notes.
18. AUTHENTICATION. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
19. NOTES. The term "Notes" refers to, collectively,
the Series B Notes and the Series B-1 Notes issuable under the
Indenture.
20. ABBREVIATIONS. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
21. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the
Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests
for such documents and for additional information may be made
to: Walter Industries, Inc. __________________________________.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent
may substitute another to act for him.
Date: _____________
Your Signature:
(Sign exactly as your name appears on
the face of this
Note)
Signature Guarantee: ________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by
the Company pursuant to Section 4.08 or 4.09 of the Indenture,
check the box below*:
/ / Section 4.08 / / Section 4.09
If you want to elect to have only part of the Note
purchased by the Company pursuant to Section 4.09 of the
Indenture, state the amount you elect to have purchased:
$__________
Date:__________________ Your Signature:_________________
(Sign exactly as your name appears on the
Note)
Tax Identification No.:___________
Signature Guarantee: _______________
___________________
* Check applicable box.
<PAGE>
EXHIBIT B
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT (as amended, amended and
restated or otherwise modified from time to time, herein called
the "Agreement") is dated as of ____ __, 1995, between Walter
Industries, Inc., a Delaware corporation (the "Pledgor"), and
United States Trust Company of New York, a ____________, as
trustee (the "Trustee") for and representative of the holders of
the Series B Notes and Series B-1 Notes (each as hereinafter
defined) under the Indenture (as hereinafter defined).
RECITALS
WHEREAS, the Pledgor is the legal and beneficial owner
of the issued and outstanding Capital Stock (the "Pledged
Shares") of the Subsidiaries listed on Schedule I;
WHEREAS, the Pledgor, in order to retire certain debt
obligations as part of its emergence in proceedings under
Chapter 11 of the U.S. Bankruptcy Code, and the Trustee have
entered into an indenture dated as of ________ __, 1995 (the
"Indenture") pursuant to which the Pledgor has issued
approximately $490,000,000 in aggregate principal amount of
Series B Senior Notes due 2000 (the "Series B Notes");
WHEREAS, the Pledgor may offer to issue Series B-1
Senior Notes due 2000 (the "Series B-1 Notes" and, with the
Series B Notes, the "Notes") in exchange for outstanding
Series B Notes;
WHEREAS, in order to induce the Trustee to execute and
deliver the Indenture, the Pledgor has agreed to pledge the
Pledged Shares as collateral security for the performance of the
Secured Obligations (as hereinafter defined); and
WHEREAS, the Pledgor will derive direct and indirect
economic benefit from the issuance of the Notes pursuant to the
Indenture;
NOW THEREFORE, in consideration of the premises herein
set forth the parties hereto agree as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the
Trustee and grants to the Trustee for the benefit of the holders
of the Notes (the "Noteholders") a first priority security
interest in the following (the "Pledged Collateral") to secure
the Secured Obligations:
(i) the Pledged Shares and the certificates
representing the Pledged Shares and, subject to Section 6,
all dividends, cash, options, warrants, rights, instruments
and other property and proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and
(ii) all additional shares of Capital Stock of
any Subsidiary now owned or hereafter acquired from time to
time acquired by the Pledgor in any manner (which shares
shall be deemed to be part of the Pledged Shares) and the
certificates representing such additional shares and,
subject to Section 6, all dividends, cash, options,
warrants, rights, instruments and other property and
proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such shares.
The foregoing pledge and grant of a security interest
confirms the pledge and grant of a first priority security
interest in the Pledged Collateral to secure the Secured
Obligations.
SECTION 2. Secured Obligations. This Agreement
secures, and the Pledged Collateral is collateral security for,
the prompt payment or performance in full when due, whether at
stated maturity, by acceleration or otherwise (including the
payment of amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. section 362(a)), of all obligations of the
Pledgor now
or hereafter existing under the Indenture and the Notes issued
thereunder, whether for principal, premium, interest (including,
without limitation, interest which, but for the filing of a
petition in a bankruptcy, or other similar proceeding with
respect to the Pledgor, would accrue on such obligations), fees,
expenses, including, without limitation, all amounts due the
Trustee under the Indenture, or otherwise and all obligations of
the Pledgor now or hereafter existing under this Agreement (all
such obligations being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. (i) All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Trustee pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank and (ii)
each of the certificates, instruments, certifications or other
documents delivered pursuant to (i) shall be in form and
substance satisfactory to the Trustee. At any time upon or
after the occurrence of an Event of Default (as defined in the
applicable Indenture) with respect to the Notes, the Trustee
shall have the right, without notice to the Pledgor, to transfer
to or to register in the name of the Trustee or any of its
nominees any or all of the Pledged Collateral. In addition, the
Trustee shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The
Pledgor represents and warrants as follows:
(i) The Pledgor has full corporate power and
authority to enter into this Agreement. This Agreement has
been duly authorized, executed and delivered by the Pledgor
and constitutes a valid and binding agreement of the
Pledgor and is enforceable against the Pledgor in
accordance with the terms hereof. The performance of this
Agreement and the consummation of the transactions
contemplated hereby do not and will not result in the
creation or imposition of any Lien upon any of the assets
of the Pledgor or any of its Subsidiaries pursuant to the
terms or provisions of, or result in a breach or violation
of or conflict with any of the terms or provisions of, or
constitute a default under, or give any other party a right
to terminate any of its obligations under, or result in the
acceleration of any obligation under, (i) the certificate
of incorporation or by-laws of the Pledgor or any of its
Subsidiaries; or (ii) any contract or other agreement to
which the Pledgor or any of its Subsidiaries is a party or
by which the Pledgor or any of its Subsidiaries or any of
its properties is bound or affected, or any judgment,
ruling, decree, order, law, statute, rule or regulation of
any court or other governmental agency or body applicable
to the business or properties of the Pledgor or any of its
Subsidiaries.
(ii) The Pledgor is, and at the time of delivery
of any Pledged Collateral to the Trustee pursuant to
Section 3 of this Agreement will be, the legal and
beneficial owner of the Pledged Collateral free and clear
of any Lien except for the Lien and security interest
created by this Agreement.
(iii) The Pledgor has full power, authority and
legal right to pledge all the Pledged Collateral pursuant
to this Agreement.
(iv) No consent of any other party (including,
without limitation, stockholders or creditors of the
Pledgor) and no consent, authorization, approval or other
action by, and no notice to or filing with, any
governmental authority or regulatory body is required
either (x) for the pledge by the Pledgor of the Pledged
Collateral pursuant to this Agreement or (y) for the
exercise by the Trustee of the voting or other rights
provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement;
except as may be required in connection with such
disposition by laws affecting the offering and sale of
securities generally.
(v) All of the Pledged Shares have been duly
authorized and validly issued and are fully paid and
non-assessable.
(vi) The pledge of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral
securing the payment of the Secured Obligations.
(vii) All information set forth herein relating to
the Pledged Collateral is accurate and complete in all
material respects.
SECTION 5. Supplements, Further Assurances. The
Pledgor agrees that at any time and from time to time, at the
expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be necessary or that the Trustee may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
The Pledgor further agrees that it will (a) upon the
creation or acquisition of a Subsidiary promptly deliver to the
Trustee the shares of Capital Stock of such Subsidiary owned by
it and an amended Schedule I (each, a "Schedule I Amendment")
which shall include such Subsidiary therein and (b) upon
obtaining any shares of Capital Stock of any company required to
be pledged pursuant to Section 1(ii), promptly deliver to the
Trustee such shares and a pledge amendment, duly executed by the
Pledgor, in substantially the form of Schedule II hereto (a
"Pledged Share Amendment"), in respect of the additional Pledged
Shares which are to be pledged pursuant to this Agreement. The
Pledgor hereby authorizes the Trustee to attach each Schedule I
Amendment and Pledged Share Amendment to this Agreement and the
Pledgor agrees that all Pledged Shares listed, respectively, on
any Pledged Share Amendment and any Pledged Shares delivered to
the Trustee shall for all purposes hereunder be considered
Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) As
long as no Event of Default (as defined in the Indenture) shall
have occurred and be continuing with respect to the Notes:
(i) The Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement
or the Indenture. It is understood, however, that neither
(A) the voting by the Pledgor of any Pledged Shares for, or
the Pledgor's consent to, the election of directors at an
annual or other meeting of stockholders or with respect to
incidental matters at any such meeting nor (B) the
Pledgor's consent to or approval of any action otherwise
permitted under this Agreement and the Indenture shall be
deemed inconsistent with the terms of this Agreement or the
Indenture within the meaning of this Section 6(a)(i), and
no notice of any such voting or consent need be given to
the Trustee.
(ii) The Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien and
security interest under this Agreement, any and all
dividends, distributions, principal, interest or other
amounts paid in respect of the Pledged Collateral.
(iii) In order to permit the Pledgor to exercise
the voting and other rights which it is entitled to
exercise pursuant to Section 6(a)(i) above and to receive
the dividends, distributions, principal, interest or other
payments which it is authorized to receive and retain
pursuant to Section 6(a)(ii) above, the Trustee shall, if
necessary, upon written request of the Pledgor, from time
to time execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies, dividend
payment orders and other instruments as the Pledgor may
reasonably request.
(b) Upon the occurrence and during the
continuance of an Event of Default under the Indenture:
(i) Upon written notice from the Trustee to the
Pledgor, all rights of the Pledgor to exercise the voting
and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 6(a)(i) above
shall cease, and all such rights shall thereupon become
vested in the Trustee which shall thereupon have the sole
right to exercise such voting and other consensual rights
during the continuance of such Event of Default.
(ii) All rights of the Pledgor to receive the
dividends, distributions, principal, interest and other
payments which it would otherwise be authorized to receive
and retain pursuant to Section 6(a)(ii) above shall cease
and all such rights shall thereupon become vested in the
Trustee who shall thereupon have the sole right to receive
and hold as Pledged Collateral such dividends, distribu-
tions, principal, interest and other payments during the
continuance of such Event of Default.
(iii) In order to permit the Trustee to exercise
the voting and other consensual rights which it may be
entitled to exercise pursuant to Section 6(b)(i) above, and
to receive all dividends, distributions, principal,
interest and other payments which it may be entitled to
receive under section 6(b)(ii) above, the Pledgor shall, if
necessary, upon the request of the Trustee, from time to
time execute and deliver to the Trustee appropriate
proxies, dividend payment orders and other instruments as
the Trustee may reasonably request.
(c) All dividends, distributions, principal,
interest and other payments which are received by the Pledgor
contrary to the provisions of Section 6(b)(ii) above shall be
received in trust for the benefit of the Trustee, shall be
segregated from other funds of the Pledgor and shall be
forthwith paid over to the Trustee as Pledged Collateral in the
same form as so received (with any necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional
Shares.
A. Transfers and Other Liens. The Pledgor agrees
that it will not (i) sell, pledge, hypothecate or otherwise
convey or dispose of any of the Pledged Collateral, (ii) create
or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the Lien and security interest
under this Agreement, or (iii) permit any of the Subsidiaries to
merge or consolidate, unless all the outstanding Capital Stock
of the surviving or resulting corporation is, upon such merger
or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided, however,
that the Company and its Subsidiaries may conduct Asset Sales in
accordance with Section 4.09 of the Indenture, and upon the
consummation of any such Asset Sale, any Pledged Collateral
subject to such Asset Sale shall be released from the Lien of
this Pledge Agreement.
B. Additional Shares. The Pledgor agrees that it will
(i) cause each of the Subsidiaries not to issue any shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock in addition to or in substitution
for the Pledged Shares issued by the Subsidiaries and (ii)
pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or
other equity securities of the Subsidiaries.
SECTION 8. Trustee Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Trustee the Pledgor's attorney-in-
fact, with full authority in the place and stead of the Pledgor
and in the name of the Pledgor or otherwise, from time to time
in the Trustee's discretion to take any action and to execute
any instrument which the Trustee may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect
all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution or payment in
respect of the Pledged Collateral or any part thereof and to
give full discharge for the same.
SECTION 9. Trustee May Perform. If the Pledgor fails
to perform any agreement contained herein after receipt of a
written request to do so from the Trustee, the Trustee may,
within thirty days after such notice is effective pursuant to
Section 20, itself perform, or cause performance of, such
agreement and the reasonable expenses of the Trustee, including
the reasonable fees and expenses of its agents and counsel,
incurred in connection therewith shall be payable by the Pledgor
under Section 13 hereof.
SECTION 10. Reasonable Care. The Trustee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially
equivalent to that which the Trustee, in its individual
capacity, accords its own property consisting of negotiable
securities, it being understood that the Trustee shall not have
responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not
the Trustee is deemed to have knowledge of such matters or (ii)
taking any necessary steps (other than steps taken in accordance
with the standard of care set forth above to maintain possession
of the Pledged Collateral) to preserve any rights respecting any
of the Pledged Collateral.
SECTION 11. Remedies Upon Default; Decisions Relating
to Exercise of Remedies; Payments Under Notes.
A. Remedies Upon Default. Subject to Section 11B, if
any Event of Default under the Indenture shall have occurred and
be continuing:
(i) The Trustee may exercise in respect of the
Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "Code") in effect in
the State of New York at that time, and the Trustee may
also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at a public or private sale,
at any exchange, broker's board or at any of the Trustee's
offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other
terms as the Trustee may deem commercially reasonable,
irrespective of the impact of any such sales on the market
price of the Pledged Collateral. The Trustee or any
Noteholder may be the purchaser of any or all of the
Pledged Collateral at any such sale but shall not be
entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of
the Pledged Collateral sold at such sale, to use and apply
any of the Secured Obligations owed to such person as a
credit on account of the purchase price of any Pledged
Collateral payable by such person at such sale. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the
Pledgor, and the Pledgor hereby waives (to the extent
permitted by law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future
have under any rule of law or statute now existing or
hereafter enacted. The Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public
sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given.
The Trustee may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
The Pledgor hereby waives any claim against the Trustee
arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private
sale was less than the price which might have been obtained
at a public sale, even if the Trustee accepts the first
offer received and does not offer such Pledged Collateral
to more than one party.
(ii) The Pledgor recognizes that, by reason of
certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), and applicable
state securities laws, the Trustee may be compelled, with
respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Collateral for
their own account, for investment and not with a view to
the distribution or resale thereof. The Pledgor
acknowledges that any such private sales may be at prices
and on terms less favorable to the Trustee than those
obtainable through a public sale without such restrictions
(including, without limitation, a public offering made
pursuant to a registration statement under the Securities
Act), and, notwithstanding such circumstances, agrees that
any private sale shall be deemed to have been made in a
commercially reasonable manner and that the Trustee shall
have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof
to register it for a form of public sale requiring
registration under the Securities Act or under applicable
state securities laws, even if the Pledgor would agree to
do so.
(iii) If the Trustee determines to exercise its
right to sell any or all of the Pledged Collateral, upon
written request, the Pledgor shall and shall cause each
issuer of any Pledged Collateral to be sold hereunder from
time to time to furnish to the Trustee all such information
as the Trustee may request and to cause any financial
intermediary to furnish any such information, in order to
determine the number of shares, notes and other instruments
included in the Pledged Collateral, which may be sold by
the Trustee as exempt transactions under the Securities Act
and the rules of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
B. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Agreement to the contrary, the
Trustee shall exercise, or shall refrain from exercising, any
remedy provided for in Section 11A as provided in Article Ten of
the Indenture.
SECTION 12. Application of Proceeds. During and
after the continuance of an Event of Default, any cash held by
the Trustee as Pledged Collateral and all cash proceeds received
by the Trustee (all such cash being "Proceeds") in respect of
any sale of, collection from, or other realization upon all or
any part of the Pledged Collateral pursuant to the exercise by
the Trustee of its remedies as a secured creditor as provided in
Section 11 of this Agreement shall be applied promptly from time
to time by the Trustee as follows:
First, to the payment of the costs and expenses
of such sale, collection or other realization,
including reasonable compensation to the Trustee and
its agents and counsel, and all expenses, liabilities
and advances made or incurred by the Trustee in
connection therewith including all amounts due to the
Trustee under Article Seven of the Indenture;
Second, to the payment of the Secured Obligations
as provided pursuant to the Indenture; and
Third, after payment in full of all Secured
Obligations, to the Pledgor.
SECTION 13. Expenses. The Pledgor will, upon demand,
pay to the Trustee the amount of any and all reasonable
expenses, disbursements and advances, including reasonable fees
and expenses of its counsel and of any experts and agents, which
the Trustee may incur in connection with (i) the acceptance and
administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Trustee or
the Noteholders hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
SECTION 14. No Waiver. No failure on the part of the
Trustee to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise by the Trustee of any right, power or remedy
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies
herein provided are to the fullest extent permitted by law
cumulative and are not exclusive of any other remedies provided
by law.
SECTION 15. Trustee. The Trustee has been appointed
as Trustee hereunder pursuant to the Indenture. The Trustee
shall be obligated, and shall have the right, hereunder to make
demands, to give notices, to exercise or refrain from exercising
any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of
Pledged Collateral) solely in accordance with this Agreement and
the Indenture. The Trustee may resign and a successor Trustee
may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as a Trustee by a successor
Trustee, that successor Trustee shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties
of the retiring Trustee under this Agreement, and the retiring
Trustee shall thereupon be discharged from its duties and
obligations under this Agreement and, after payment to it of all
amounts due it hereunder, shall deliver any Pledged Collateral
in its possession to the successor Trustee. After any retiring
Trustee's resignation, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Trustee. Anything
contained in this Agreement to the contrary notwithstanding, in
the event of any conflict between the express terms and
provisions of this Agreement and the express terms and
provisions of the Indenture, such terms and provisions of the
Indenture shall control.
SECTION 16. Indemnification. The Pledgor hereby
agrees to indemnify the Trustee for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against the Trustee in any way relating to or arising out of
this Agreement or the Notes, the Indenture or any instrument
relating thereto, or any other documents contemplated by or
referred to therein or the transactions contemplated thereby or
the enforcement of any of the terms hereof or of any such other
documents or otherwise arising or relating in any manner to the
pledges, dispositions of Pledged Collateral or proceeds of
Pledged Collateral, or other actions of any nature with respect
to the Pledged Collateral contemplated hereunder and under the
Indenture to secure the payment of the Secured Obligations;
provided, however, that the Pledgor shall not be liable for any
of the foregoing to the extent they arise from the negligence or
willful misconduct of the Trustee or failure by the Trustee to
exercise reasonable care in the custody and preservation of the
Pledged Collateral as provided in Section 10.
SECTION 17. Lien Created. To secure Pledgor's
obligations under Sections 13 and 16, the Trustee shall have a
Lien against the Pledged Collateral.
SECTION 18. Amendments, Etc. Prior to such time as
all Secured Obligations shall have been indefeasibly paid in
full, this Agreement may be amended by a writing duly signed for
and on behalf of the Trustee and with the consent of the Note-
holders as provided in the Indenture.
SECTION 19. Termination. When all Secured
Obligations have been indefeasibly paid in full, this Agreement
shall terminate, and the Trustee shall, upon the request and at
the expense of the Pledgor, forthwith assign, transfer and
deliver, against receipt and without recourse to the Trustee,
such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof to or on the
order of the Pledgor.
SECTION 20. Addresses for Notices. All notices and
other communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to the Pledgor,
addressed to it at the address set forth on the signature page
of this Agreement, and if to the Trustee, addressed to it at the
address set forth on the signature page of this Agreement. All
such notices and other communications shall, when mailed or
telegraphed, be effective when deposited in the mails or
delivered to the telegraph company, respectively, and shall,
when delivered or telecopied, be effective when received.
SECTION 21. Continuing Security Interest; Transfer of
Notes. Subject to Section 18, this Agreement shall create a
continuing security interest in the Pledged Collateral and shall
(i) remain in full force and effect until indefeasible payment
in full of all Secured Obligations, (ii) be binding upon the
Pledgor, its successors and assigns, and (iii) inure, together
with the rights and remedies of the Trustee hereunder, to the
benefit of the Trustee and the Noteholders and each of their
respective successors, transferees and assigns.
SECTION 22. Governing Law, Terms. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. Unless otherwise defined
herein or in the Indenture, terms defined in Articles 8 and 9 of
the Uniform Commercial Code as in effect in the State of New
York are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of
Process. All judicial proceedings brought against the Pledgor
with respect to this Agreement may be brought in any state or
federal court of competent jurisdiction in the State of New
York, and by execution and delivery of this Agreement the
pledgor accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with
this Agreement. Nothing herein shall limit the right of the
Trustee to bring proceedings against the Pledgor in the courts
of any other jurisdiction.
SECTION 24. Advances. The Trustee shall not be
obligated or required to expend, advance or risk any of its own
funds in the performance of its obligations hereunder.
SECTION 25. Agents, Attorneys. The Trustee may act
through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care. The Trustee
may consult with counsel of its selection and the advice of such
counsel or a written opinion rendered by such counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
SECTION 26. Waiver. Pledgor waives presentment,
demand, protest or notice of any kind.
SECTION 27. Security Interest Absolute. All rights
of the Trustee and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of
any of the Notes, the Indenture or any instrument relating
thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or
any consent to any departure from any of the Notes or the
Indenture;
(iii) any exchange, release or non-perfection of
any other collateral securing, or any release or amendment
or waiver of or consent to departure from any guaranty of,
all or any of the Secured Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the
Pledgor.
SECTION 28. Defined Terms. Terms used but not
defined herein shall have the meaning ascribed to them in the
Indenture.
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Trustee have
caused this Agreement to be duly executed and delivered by their
respective duly authorized officers as of the date first above
written
Pledgor
WALTER INDUSTRIES, INC.
By: _____________________________
Name:
Title:
Notice Address:
[address]
Attn: Chief Financial Officer
Trustee
UNITED STATES TRUST COMPANY
OF NEW YORK
By: _____________________________
Name:
Title:
Notice Address:
[address]
Attn: Corporate Trust Department
<PAGE>
SCHEDULE I
LIST OF SUBSIDIARIES
Percentage of
Class Stock Number All Capital
of Certificate Par of Stock
Issuer Stock No(s). Value Shares Outstanding
<PAGE>
SCHEDULE II
To the Pledge Agreement
PLEDGED SHARE AMENDMENT
This Pledged Share Amendment, dated as of ______, is
delivered pursuant to Section 5 of the Pledge Agreement referred
to below. The undersigned hereby agrees that this Pledged Share
Amendment may be attached to the Pledge Agreement dated as of
____ __, 1995, between the undersigned and United States Trust
Company of New York, as Trustee (the "Pledge Agreement";
capitalized terms defined therein being used herein as therein
defined), and that the Pledged Shares listed on this Pledged
Share Amendment shall be deemed to be part of the Pledged Shares
and shall become part of the Pledged Collateral and shall secure
all Secured Obligations as provided in the Pledge Agreement.
WALTER INDUSTRIES, INC.
By: _________________________
Name:
Title:
Percentage of
Class Stock Number All Capital
of Certificate Par of Stock
Issuer Stock No(s). Value Shares Outstanding
<PAGE>
EXHIBIT C
FORM OF SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (as amended, amended
and restated or otherwise modified from time to time, herein
called the "Agreement") is dated as of ____ __, 1995, between
_______________________________________________ (the "Pledgor"),
and United States Trust Company of New York, a ____________, as
trustee (the "Trustee") for and representative of the holders of
the Series B Notes and Series B-1 Notes (each as hereinafter
defined) under the Indenture (as hereinafter defined).
RECITALS
WHEREAS, the Pledgor is the legal and beneficial owner
of the issued and outstanding Capital Stock (the "Pledged
Shares") of the Subsidiaries of the Company (as hereinafter
defined) listed on Schedule I;
WHEREAS, the Pledgor is a Subsidiary of Walter
Industries, Inc., a Delaware corporation (the "Company");
WHEREAS, the Company, in order to retire certain debt
obligations as part of its and certain of its Subsidiaries
emergence in proceedings under Chapter 11 of the U.S. Bankruptcy
Code, and the Trustee have entered into an indenture dated as of
________ __, 1995 (the "Indenture") pursuant to which the
Company has issued approximately $490,000,000 in aggregate
principal amount of Series B Senior Notes due 2000 (the "Series
B Notes");
WHEREAS, the Company may offer to issue its Series B-1
Senior Notes due 2000 (the "Series B-1 Notes" and, with the
Series B Notes, the "Notes") in exchange for outstanding
Series B Notes;
WHEREAS, in order to induce the Trustee to execute and
deliver the Indenture, the Company has agreed to cause the
Pledgor to pledge the Pledged Shares as collateral security for
the performance of the Secured Obligations (as hereinafter
defined); and
WHEREAS, the Pledgor will derive direct and indirect
economic benefit from the issuance of the Notes pursuant to the
Indenture;
NOW THEREFORE, in consideration of the premises herein
set forth the parties hereto agree as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the
Trustee and grants to the Trustee for the benefit of the holders
of the Notes (the "Noteholders") a first priority security
interest in the following (the "Pledged Collateral") to secure
the Secured Obligations:
(i) the Pledged Shares and the certificates
representing the Pledged Shares and, subject to Section 6, all
dividends, cash, options, warrants, rights, instruments and
other property and proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares; and
(ii) all additional shares of Capital Stock of any
Subsidiary of the Company now owned or hereafter acquired from
time to time acquired by the Pledgor in any manner (which shares
shall be deemed to be part of the Pledged Shares) and the
certificates representing such additional shares and, subject to
Section 6, all dividends, cash, options, warrants, rights,
instruments and other property and proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares.
The foregoing pledge and grant of a security interest
confirms the pledge and grant of a first priority security
interest in the Pledged Collateral to secure the Secured
Obligations.
SECTION 2. Secured Obligations. This Agreement
secures, and the Pledged Collateral is collateral security for,
the prompt payment or performance in full when due, whether at
stated maturity, by acceleration or otherwise (including the
payment of amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. section 362(a)), of all obligations of the
Company now
or hereafter existing under the Indenture and the Notes issued
thereunder, whether for principal, premium, interest (including,
without limitation, interest which, but for the filing of a
petition in a bankruptcy, or other similar proceeding with
respect to the Company, would accrue on such obligations), fees,
expenses, including, without limitation, all amounts due the
Trustee under the Indenture, or otherwise and all obligations of
the Pledgor now or hereafter existing under this Agreement (all
such obligations being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. (i) All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Trustee pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank and (ii)
each of the certificates, instruments, certifications or other
documents delivered pursuant to (i) shall be in form and
substance satisfactory to the Trustee. At any time upon or
after the occurrence of an Event of Default (as defined in the
applicable Indenture) with respect to the Notes, the Trustee
shall have the right, without notice to the Pledgor, to transfer
to or to register in the name of the Trustee or any of its
nominees any or all of the Pledged Collateral. In addition, the
Trustee shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The
Pledgor represents and warrants as follows:
(i) The Pledgor has full corporate power and
authority to enter into this Agreement. This Agreement has been
duly authorized, executed and delivered by the Pledgor and
constitutes a valid and binding agreement of the Pledgor and is
enforceable against the Pledgor in accordance with the terms
hereof. The performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not
result in the creation or imposition of any Lien upon any of the
assets of the Pledgor or any of its Subsidiaries pursuant to the
terms or provisions of, or result in a breach or violation of or
conflict with any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any
of its obligations under, or result in the acceleration of any
obligation under, (i) the certificate of incorporation or
by-laws of the Pledgor or any of its Subsidiaries; or (ii) any
contract or other agreement to which the Pledgor or any of its
Subsidiaries is a party or by which the Pledgor or any of its
Subsidiaries or any of its properties is bound or affected, or
any judgment, ruling, decree, order, law, statute, rule or
regulation of any court or other governmental agency or body
applicable to the business or properties of the Pledgor or any
of its Subsidiaries.
(ii) The Pledgor is, and at the time of delivery
of any Pledged Collateral to the Trustee pursuant to Section 3
of this Agreement will be, the legal and beneficial owner of the
Pledged Collateral free and clear of any Lien except for the
Lien and security interest created by this Agreement.
(iii) The Pledgor has full power, authority and
legal right to pledge all the Pledged Collateral pursuant to
this Agreement.
(iv) No consent of any other party (including,
without limitation, stockholders or creditors of the Pledgor)
and no consent, authorization, approval or other action by, and
no notice to or filing with, any governmental authority or
regulatory body is required either (x) for the pledge by the
Pledgor of the Pledged Collateral pursuant to this Agreement or
(y) for the exercise by the Trustee of the voting or other
rights provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement; except as
may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
(v) All of the Pledged Shares have been duly
authorized and validly issued and are fully paid and
non-assessable.
(vi) The pledge of the Pledged Collateral pursuant
to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral securing the payment
of the Secured Obligations.
(vii) All information set forth herein relating to
the Pledged Collateral is accurate and complete in all material
respects.
SECTION 5. Supplements, Further Assurances. The
Pledgor agrees that at any time and from time to time, at the
expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be necessary or that the Trustee may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
The Pledgor further agrees that it will (a) upon the
creation or acquisition of a Subsidiary of the Company promptly
deliver to the Trustee the shares of Capital Stock of such
Subsidiary owned by it and an amended Schedule I (each, a
"Schedule I Amendment") which shall include such Subsidiary
therein and (b) upon obtaining any shares of Capital Stock of
any company required to be pledged pursuant to Section 1(ii),
promptly deliver to the Trustee such shares and a pledge
amendment, duly executed by the Pledgor, in substantially the
form of Schedule II hereto (a "Pledged Share Amendment"), in
respect of the additional Pledged Shares which are to be pledged
pursuant to this Agreement. The Pledgor hereby authorizes the
Trustee to attach each Schedule I Amendment and Pledged Share
Amendment to this Agreement and the Pledgor agrees that all
Pledged Shares listed, respectively, on any Pledged Share
Amendment and any Pledged Shares delivered to the Trustee shall
for all purposes hereunder be considered Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) As
long as no Event of Default (as defined in the Indenture) shall
have occurred and be continuing with respect to the Notes:
(i) The Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Indenture.
It is understood, however, that neither (A) the voting by the
Pledgor of any Pledged Shares for, or the Pledgor's consent to,
the election of directors at an annual or other meeting of
stockholders or with respect to incidental matters at any such
meeting nor (B) the Pledgor's consent to or approval of any
action otherwise permitted under this Agreement and the
Indenture shall be deemed inconsistent with the terms of this
Agreement or the Indenture within the meaning of this Section
6(a)(i), and no notice of any such voting or consent need be
given to the Trustee.
(ii) The Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien and security
interest under this Agreement, any and all dividends,
distributions, principal, interest or other amounts paid in
respect of the Pledged Collateral.
(iii) In order to permit the Pledgor to exercise
the voting and other rights which it is entitled to exercise
pursuant to Section 6(a)(i) above and to receive the dividends,
distributions, principal, interest or other payments which it is
authorized to receive and retain pursuant to Section 6(a)(ii)
above, the Trustee shall, if necessary, upon written request of
the Pledgor, from time to time execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies,
dividend payment orders and other instruments as the Pledgor may
reasonably request.
(b) Upon the occurrence and during the
continuance of an Event of Default under the Indenture:
(i) Upon written notice from the Trustee to the
Pledgor, all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 6(a)(i) above shall cease, and all
such rights shall thereupon become vested in the Trustee which
shall thereupon have the sole right to exercise such voting and
other consensual rights during the continuance of such Event of
Default.
(ii) All rights of the Pledgor to receive the
dividends, distributions, principal, interest and other payments
which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease and all such
rights shall thereupon become vested in the Trustee who shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends, distributions, principal, interest
and other payments during the continuance of such Event of
Default.
(iii) In order to permit the Trustee to exercise
the voting and other consensual rights which it may be entitled
to exercise pursuant to Section 6(b)(i) above, and to receive
all dividends, distributions, principal, interest and other
payments which it may be entitled to receive under section
6(b)(ii) above, the Pledgor shall, if necessary, upon the
request of the Trustee, from time to time execute and deliver to
the Trustee appropriate proxies, dividend payment orders and
other instruments as the Trustee may reasonably request.
(c) All dividends, distributions, principal,
interest and other payments which are received by the Pledgor
contrary to the provisions of Section 6(b)(ii) above shall be
received in trust for the benefit of the Trustee, shall be
segregated from other funds of the Pledgor and shall be
forthwith paid over to the Trustee as Pledged Collateral in the
same form as so received (with any necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional
Shares.
A. Transfers and Other Liens. The Pledgor agrees that
it will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any of the Pledged Collateral, (ii) create or permit
to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the Lien and security interest under this
Agreement, or (iii) permit any of the Subsidiaries to merge or
consolidate, unless all the outstanding Capital Stock of the
surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided, however,
that the Pledgor and its Subsidiaries may conduct Asset Sales in
accordance with Section 4.09 of the Indenture, and upon the
consummation of any such Asset Sale, any Pledged Collateral
subject to such Asset Sale shall be released from the Lien of
this Pledge Agreement.
B. Additional Shares. The Pledgor agrees that it will
(i) cause each of its Subsidiaries not to issue any shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock in addition to or in substitution
for the Pledged Shares issued by the Subsidiaries and (ii)
pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or
other equity securities of the Subsidiaries of the Company.
SECTION 8. Trustee Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Trustee the Pledgor's attorney-in-
fact, with full authority in the place and stead of the Pledgor
and in the name of the Pledgor or otherwise, from time to time
in the Trustee's discretion to take any action and to execute
any instrument which the Trustee may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect
all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution or payment in
respect of the Pledged Collateral or any part thereof and to
give full discharge for the same.
SECTION 9. Trustee May Perform. If the Pledgor fails
to perform any agreement contained herein after receipt of a
written request to do so from the Trustee, the Trustee may,
within thirty days after such notice is effective pursuant to
Section 20, itself perform, or cause performance of, such
agreement and the reasonable expenses of the Trustee, including
the reasonable fees and expenses of its agents and counsel,
incurred in connection therewith shall be payable by the Pledgor
under Section 13 hereof.
SECTION 10. Reasonable Care. The Trustee shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially
equivalent to that which the Trustee, in its individual
capacity, accords its own property consisting of negotiable
securities, it being understood that the Trustee shall not have
responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not
the Trustee is deemed to have knowledge of such matters or (ii)
taking any necessary steps (other than steps taken in accordance
with the standard of care set forth above to maintain possession
of the Pledged Collateral) to preserve any rights respecting any
of the Pledged Collateral.
SECTION 11. Remedies Upon Default; Decisions Relating
to Exercise of Remedies; Payments Under Notes.
A. Remedies Upon Default. Subject to Section 11B, if
any Event of Default under the Indenture shall have occurred and
be continuing:
(i) The Trustee may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform
Commercial Code (the "Code") in effect in the State of New York
at that time, and the Trustee may also in its sole discretion,
without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of
the Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other
terms as the Trustee may deem commercially reasonable,
irrespective of the impact of any such sales on the market price
of the Pledged Collateral. The Trustee or any Noteholder may be
the purchaser of any or all of the Pledged Collateral at any
such sale but shall not be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all
or any portion of the Pledged Collateral sold at such sale, to
use and apply any of the Secured Obligations owed to such person
as a credit on account of the purchase price of any Pledged
Collateral payable by such person at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free
from any claim or right on the part of the Pledgor, and the
Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or
may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Trustee may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned. The Pledgor hereby waives any claim
against the Trustee arising by reason of the fact that the price
at which any Pledged Collateral may have been sold at such a
private sale was less than the price which might have been
obtained at a public sale, even if the Trustee accepts the first
offer received and does not offer such Pledged Collateral to
more than one party.
(ii) The Pledgor recognizes that, by reason
of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), and applicable state
securities laws, the Trustee may be compelled, with respect to
any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private sales
may be at prices and on terms less favorable to the Trustee than
those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant
to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any private sale
shall be deemed to have been made in a commercially reasonable
manner and that the Trustee shall have no obligation to engage
in public sales and no obligation to delay the sale of any
Pledged Collateral for the period of time necessary to permit
the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under
applicable state securities laws, even if the Pledgor would
agree to do so.
(iii) If the Trustee determines to exercise its
right to sell any or all of the Pledged Collateral, upon written
request, the Pledgor shall and shall cause each issuer of any
Pledged Collateral to be sold hereunder from time to time to
furnish to the Trustee all such information as the Trustee may
request and to cause any financial intermediary to furnish any
such information, in order to determine the number of shares,
notes and other instruments included in the Pledged Collateral,
which may be sold by the Trustee as exempt transactions under
the Securities Act and the rules of the Securities and Exchange
Commission thereunder, as the same are from time to time in
effect.
B. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Agreement to the contrary, the
Trustee shall exercise, or shall refrain from exercising, any
remedy provided for in Section 11A as provided in Article Ten of
the Indenture.
SECTION 12. Application of Proceeds. During and
after the continuance of an Event of Default, any cash held by
the Trustee as Pledged Collateral and all cash proceeds received
by the Trustee (all such cash being "Proceeds") in respect of
any sale of, collection from, or other realization upon all or
any part of the Pledged Collateral pursuant to the exercise by
the Trustee of its remedies as a secured creditor as provided in
Section 11 of this Agreement shall be applied promptly from time
to time by the Trustee as follows:
First, to the payment of the costs and expenses of such
sale, collection or other realization, including reasonable
compensation to the Trustee and its agents and counsel, and all
expenses, liabilities and advances made or incurred by the
Trustee in connection therewith including all amounts due to the
Trustee under Article Seven of the Indenture;
Second, to the payment of the Secured Obligations as
provided pursuant to the Indenture; and
Third, after payment in full of all Secured
Obligations, to the Pledgor.
SECTION 13. Expenses. The Pledgor will, upon demand,
pay to the Trustee the amount of any and all reasonable
expenses, disbursements and advances, including reasonable fees
and expenses of its counsel and of any experts and agents, which
the Trustee may incur in connection with (i) the acceptance and
administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Trustee or
the Noteholders hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
SECTION 14. No Waiver. No failure on the part of the
Trustee to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise by the Trustee of any right, power or remedy
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies
herein provided are to the fullest extent permitted by law
cumulative and are not exclusive of any other remedies provided
by law.
SECTION 15. Trustee. The Trustee has been appointed
as Trustee hereunder pursuant to the Indenture. The Trustee
shall be obligated, and shall have the right, hereunder to make
demands, to give notices, to exercise or refrain from exercising
any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of
Pledged Collateral) solely in accordance with this Agreement and
the Indenture. The Trustee may resign and a successor Trustee
may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as a Trustee by a successor
Trustee, that successor Trustee shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties
of the retiring Trustee under this Agreement, and the retiring
Trustee shall thereupon be discharged from its duties and
obligations under this Agreement and, after payment to it of all
amounts due it hereunder, shall deliver any Pledged Collateral
in its possession to the successor Trustee. After any retiring
Trustee's resignation, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Trustee. Anything
contained in this Agreement to the contrary notwithstanding, in
the event of any conflict between the express terms and
provisions of this Agreement and the express terms and
provisions of the Indenture, such terms and provisions of the
Indenture shall control.
SECTION 16. Indemnification. The Pledgor hereby agrees
to indemnify the Trustee for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against the Trustee in any way relating to or arising out of
this Agreement or the Notes, the Indenture or any instrument
relating thereto, or any other documents contemplated by or
referred to therein or the transactions contemplated thereby or
the enforcement of any of the terms hereof or of any such other
documents or otherwise arising or relating in any manner to the
pledges, dispositions of Pledged Collateral or proceeds of
Pledged Collateral, or other actions of any nature with respect
to the Pledged Collateral contemplated hereunder and under the
Indenture to secure the payment of the Secured Obligations;
provided, however, that the Pledgor shall not be liable for any
of the foregoing to the extent they arise from the negligence or
willful misconduct of the Trustee or failure by the Trustee to
exercise reasonable care in the custody and preservation of the
Pledged Collateral as provided in Section 10.
SECTION 17. Lien Created. To secure Pledgor's
obligations under Sections 13 and 16, the Trustee shall have a
Lien against the Pledged Collateral.
SECTION 18. Amendments, Etc. Prior to such time as
all Secured Obligations shall have been indefeasibly paid in
full, this Agreement may be amended by a writing duly signed for
and on behalf of the Trustee and with the consent of the
Noteholders as provided in the Indenture.
SECTION 19. Termination. When all Secured Obligations
have been indefeasibly paid in full, this Agreement shall
terminate, and the Trustee shall, upon the request and at the
expense of the Pledgor, forthwith assign, transfer and deliver,
against receipt and without recourse to the Trustee, such of the
Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof to or on the order of the
Pledgor.
SECTION 20. Addresses for Notices. All notices and
other communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to the Pledgor,
addressed to it at the address set forth on the signature page
of this Agreement, and if to the Trustee, addressed to it at the
address set forth on the signature page of this Agreement. All
such notices and other communications shall, when mailed or
telegraphed, be effective when deposited in the mails or
delivered to the telegraph company, respectively, and shall,
when delivered or telecopied, be effective when received.
SECTION 21. Continuing Security Interest; Transfer of
Notes. Subject to Section 18, this Agreement shall create a
continuing security interest in the Pledged Collateral and shall
(i) remain in full force and effect until indefeasible payment
in full of all Secured Obligations, (ii) be binding upon the
Pledgor, its successors and assigns, and (iii) inure, together
with the rights and remedies of the Trustee hereunder, to the
benefit of the Trustee and the Noteholders and each of their
respective successors, transferees and assigns.
SECTION 22. Governing Law, Terms. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. Unless otherwise defined
herein or in the Indenture, terms defined in Articles 8 and 9 of
the Uniform Commercial Code as in effect in the State of New
York are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of
Process. All judicial proceedings brought against the Pledgor
with respect to this Agreement may be brought in any state or
federal court of competent jurisdiction in the State of New
York, and by execution and delivery of this Agreement the
pledgor accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with
this Agreement. Nothing herein shall limit the right of the
Trustee to bring proceedings against the Pledgor in the courts
of any other jurisdiction.
SECTION 24. Advances. The Trustee shall not be
obligated or required to expend, advance or risk any of its own
funds in the performance of its obligations hereunder.
SECTION 25. Agents, Attorneys. The Trustee may act
through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care. The Trustee
may consult with counsel of its selection and the advice of such
counsel or a written opinion rendered by such counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
SECTION 26. Waiver. Pledgor waives presentment,
demand, protest or notice of any kind.
SECTION 27. Security Interest Absolute. All rights of
the Trustee and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of any
of the Notes, the Indenture or any instrument relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent
to any departure from any of the Notes or the Indenture;
(iii) any exchange, release or non-perfection of
any other collateral securing, or any release or amendment or
waiver of or consent to departure from any guaranty of, all or
any of the Secured Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the
Pledgor.
SECTION 28. Limitation of Liability. It is the
intention of the parties that in no event shall Pledgor's
obligations hereunder constitute or result in a violation of any
applicable fraudulent conveyance or similar law of any relevant
jurisdiction. Therefore, in the event that this Agreement
would, but for this sentence, constitute or result in such a
violation, then the liability of Pledgor hereunder shall be
reduced to the extent necessary to eliminate such violation
under the applicable fraudulent conveyance or similar law.
SECTION 29. Defined Terms. Terms used but not defined
herein shall have the meaning ascribed to them in the Indenture.
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Trustee
have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the date first
above written
Pledgor
[NAME]
By: _____________________________
Name:
Title:
Notice Address:
[address]
Attn: Chief Financial Officer
Trustee
UNITED STATES TRUST COMPANY
OF NEW YORK
By: _____________________________
Name:
Title:
Notice Address:
[address]
Attn: Corporate Trust Department
<PAGE>
SCHEDULE I
LIST OF COMPANY SUBSIDIARIES
Percentage of
Class Stock Number All Capital
of Certificate Par of Stock
Issuer Stock No(s). Value Shares Outstanding
<PAGE>
SCHEDULE II
To the Pledge Agreement
PLEDGED SHARE AMENDMENT
This Pledged Share Amendment, dated as of ______, is
delivered pursuant to Section 5 of the Pledge Agreement referred
to below. The undersigned hereby agrees that this Pledged Share
Amendment may be attached to the Pledge Agreement dated as of
____ __, 1995, between the undersigned and United States Trust
Company of New York, as Trustee (the "Pledge Agreement";
capitalized terms defined therein being used herein as therein
defined), and that the Pledged Shares listed on this Pledged
Share Amendment shall be deemed to be part of the Pledged Shares
and shall become part of the Pledged Collateral and shall secure
all Secured Obligations as provided in the Pledge Agreement.
[NAME]
By: _________________________
Name:
Title:
Percentage of
Class Stock Number All Capital
of Certificate Par of Stock
Issuer Stock No(s). Value Shares Outstanding
<PAGE>
EXHIBIT D
SUBORDINATION PROVISIONS FOR
SUBORDINATED INDEBTEDNESS
"Subordinated Notes" means any notes of the Company
subject to the following provisions.
The Subordinated Notes will be Subordinated
Indebtedness of the Company. The payment of the Subordinated
Obligations (as defined below) will, to the extent set forth
herein, be subordinated in right of payment to the prior payment
in full, in Cash or Cash Equivalents, of the Notes.
"Subordinated Obligations" is defined to mean any
principal of, premium, if any, and interest on the Subordinated
Notes payable pursuant to the terms of the Subordinated Notes or
upon acceleration, including any amounts received upon the
exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent
relating to the purchase price of the Subordinated Notes or
amounts corresponding to such principal, premium, if any, or
interest on the Subordinated Notes.
Upon any payment or distribution of assets or
securities of the Company, of any kind or character, whether in
cash, property or securities, in connection with any dissolution
or winding up or total or partial liquidation or reorganization
of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon the Notes (including any
interest accruing subsequent to an event of bankruptcy, whether
or not such interest is an allowed claim enforceable against the
debtor under the United States Bankruptcy Code) shall first be
paid in full, in cash or Cash Equivalents, before the holders of
the Subordinated Notes or any trustee on their behalf shall be
entitled to receive any payment by the Company on account of
Subordinated Obligations, or any payment to acquire any of the
Subordinated Notes for cash, property or securities, or any
distribution with respect to the Subordinated Notes of any cash,
property, or securities. Before any payment may be made by, or
on behalf of, the Company on any Subordinated Obligations in
connection with any such dissolution, winding up, liquidation or
reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in
cash, property or securities, to which the holders of
Subordinated Notes or any trustee on their behalf would be
entitled, but for the subordination provisions hereof, shall be
made by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such
payment or distribution or by the holders of Subordinated Notes
or any trustee if received by them or it, directly to the
Holders of the Notes (pro rata to such Holders on the basis of
the respective amounts of Notes held by such Holders) or their
representatives or to the Trustee under the Indenture, as their
respective interests appear, to the extent necessary to pay all
such Notes in full, in cash or Cash Equivalents after giving
effect to any concurrent payment, distribution or provision
therefor to or for the Holders of the Notes.
No direct or indirect payment by or on behalf of the
Company of Subordinated Obligations, whether pursuant to the
terms of the Subordinated Notes or upon acceleration or
otherwise, shall be made if, at the time of such payment, there
exists a default in the payment of all or any portion of the
obligations on any Senior Indebtedness, and such default shall
not have been cured or waived or the benefits of this sentence
waived by or on behalf of the Holders of the Notes. In
addition, during the continuance of any other Event of Default
with respect to the Notes (a) if such Event of Default under the
Notes results from the acceleration of the Subordinated Notes,
from and after the date of such acceleration, or (b) with
respect to any other Event of Default upon receipt by the
trustee of written notice from the Trustee or other
representative for the Holders of the Notes (or the Holders of
at least a majority in principal amount of the outstanding
Notes), no payment of Subordinated Obligations may be made by or
on behalf of the Company upon or in respect of the Subordinated
Notes for a period (a "Payment Blockage Period") commencing on
the earlier of the date of receipt of such notice or the date of
such acceleration and ending [179] days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to
the trustee from the Trustee or other representative of the
Holders or by repayment in full in cash or Cash Equivalents of
the Notes). Not more than one Payment Blockage Period may be
commenced with respect to the Subordinated Notes during any
period of 360 consecutive days. Notwithstanding anything herein
to the contrary, there must be 180 consecutive days in any
360-day period in which no Payment Blockage Period is in effect.
No Event of Default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to
an Event of Default pursuant to any provision under which an
Event of Default previously existed or was continuing shall
constitute a new Event of Default for this purpose) on the date
of commencement of any Payment Blockage Period shall be, or
shall be made, the basis for the commencement of a second
Payment Blockage Period by the representative for, or the
Holders of, the Notes, whether or not within a period of 360
consecutive days, unless such Event of Default shall have been
cured or waived for a period of not less than 90 consecutive
days.
To the extent any payment of Notes (whether by or on
behalf of the Company, as proceeds of security or enforcement of
any right of setoff or otherwise) is declared to be fraudulent
or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such
payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar
Person, the Notes or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. To the extent the obligation to
repay any Notes is declared to be fraudulent, invalid, or
otherwise set aside (and all other amounts that would come due
with respect thereto had such obligation not been so affected),
the Notes shall be deemed to be reinstated and outstanding as
Notes for all purposes hereof as if such declaration, invalidity
or setting aside had not occurred.
<PAGE>
Schedule I
Best Insurors, Inc.
Coast to Coast Advertising, Inc.
Dixie Building Supplies, Inc.
Hamer Holdings Corporation
Hamer Properties, Inc.
Homes Holdings Corporation
Jim Walter Computer Services, Inc.
Jim Walter Homes, Inc.
Jim Walter Insurance Services, Inc.
Jim Walter Resources, Inc.
Jim Walter Window Components, Inc.
JW Aluminum Company
JW Resources, Inc.
JW Resources Holdings Corporation
JW Window Components, Inc.
Land Holdings Corporation
Mid-State Homes, Inc.
Mid-State Holdings Corporation
Railroad Holdings Corporation
Sloss Industries Corporation
Southern Precision Corporation
United States Pipe and Foundry Company
U.S. Pipe Realty, Inc
Vestal Manufacturing Company
Walter Home Improvement, Inc.
Walter Industries, Inc.
Walter Land Company
<PAGE>
Exhibit T3E2
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
In re Chapter 11
Jointly Administered
HILLSBOROUGH HOLDINGS CORPORATION, Case No. 89-9715-8P1
BEST INSURORS, INC., Case No. 89-9740-8P1
BEST INSURORS OF MISSISSIPPI, INC., Case No. 89-9737-8P1
COAST TO COAST ADVERTISING, INC., Case No. 89-9727-8P1
COMPUTER HOLDINGS CORPORATION, Case No. 89-9724-8P1
DIXIE BUILDING SUPPLIES, INC., Case No. 89-9741-8P1
HAMER HOLDINGS CORPORATION, Case No. 89-9735-8P1
HAMER PROPERTIES, INC., Case No. 89-9739-8P1
HOMES HOLDINGS CORPORATION, Case No. 89-9742-8P1
JIM WALTER COMPUTER SERVICES, INC., Case No. 89-9723-8P1
JIM WALTER HOMES, INC., Case No. 89-9746-8P1
JIM WALTER INSURANCE SERVICES, INC., Case No. 89-9731-8P1
JIM WALTER RESOURCES, INC., Case No. 89-9738-8P1
JIM WALTER WINDOW COMPONENTS, INC., Case No. 89-9716-8P1
JW ALUMINUM COMPANY, Case No. 89-9718-8P1
JW RESOURCES, INC., Case No. 90-11997-8P1
JW RESOURCES HOLDINGS CORPORATION, Case No. 89-9719-8P1
J.W.I. HOLDINGS CORPORATION, Case No. 89-9721-8P1
J.W. WALTER, INC., Case No. 89-9717-8P1
JW WINDOW COMPONENTS, INC., Case No. 89-9732-8P1
LAND HOLDINGS CORPORATION, Case No. 89-9720-8P1
MID-STATE HOMES, INC., Case No. 89-9725-8P1
MID-STATE HOLDINGS CORPORATION, Case No. 89-9726-8P1
RAILROAD HOLDINGS CORPORATION, Case No. 89-9733-8P1
SLOSS INDUSTRIES CORPORATION, Case No. 89-9743-8P1
SOUTHERN PRECISION CORPORATION, Case No. 89-9729-8P1
UNITED LAND CORPORATION, Case No. 89-9730-8P1
UNITED STATES PIPE AND FOUNDRY COMPANY,Case No. 89-9744-8P1
U.S. PIPE REALTY, INC., Case No. 89-9734-8P1
VESTAL MANUFACTURING COMPANY, Case No. 89-9728-8P1
WALTER HOME IMPROVEMENT, INC., Case No. 89-9722-8P1
WALTER INDUSTRIES, INC. and Case No. 89-9745-8P1
WALTER LAND COMPANY, Case No. 89-9736-8P1
Debtors.
SUPPLEMENT TO DISCLOSURE STATEMENT FOR AMENDED JOINT PLAN
OF REORGANIZATION DATED AS OF DECEMBER 9, 1994
(THE "CONSENSUAL PLAN", FORMERLY THE "CREDITORS' PLAN")
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
Co-Counsel to Apollo
65 East 55th Street
33rd Floor
New York, NY 10022
(212) 872-1000
STUTMAN, TRIESTER & GLATT, P.C.
Co-Counsel to Apollo
3699 Wilshire Boulevard
Suite 900
Los Angeles, CA 90010
(213) 251-5100
JONES, DAY, REAVIS & POGUE
Counsel to Official Committee
of General Unsecured Creditors
599 Lexington Avenue
New York, NY 10022
(212) 326-3939
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
Counsel to Lehman Brothers Inc.
1285 Avenue of the Americas
New York, NY 10019
(212) 373-3000
STROOCK & STROOCK & LAVAN
Counsel to Official Bondholders Committee
Seven Hanover Square
New York, NY 10004-2594
(212) 806-5400
MARCUS MONTGOMERY WOLFSON P.C.
Counsel to Ad Hoc Committee of
Pre-LBO Bondholders
53 Wall Street
New York, NY 10005
(212) 858-5200
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
Co-Counsel to the Debtors
425 Park Ave.
New York, NY 10022
(212) 836-8000
STICHTER, RIEDEL, BLAIN & PROSSER, P.A.
Co-Counsel to the Debtors
110 E. Madison St.
Suite 200
Tampa, FL 33602
(813) 229-0144
CARLTON, FIELDS, WARD, EMMANUEL,
SMITH & CUTLER, P.A.
Counsel to KKR
One Harbour Place
Tampa, FL 33602
(813) 223-7000
<PAGE>
THE AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF
DECEMBER 9, 1994 (THE "CONSENSUAL PLAN") WHICH IS THE SUBJECT OF
THIS DISCLOSURE STATEMENT SUPPLEMENT MODIFIES THE "CREDITORS'
JOINT PLAN OF REORGANIZATION DATED AS OF AUGUST 1, 1994" (THE
"CREDITORS' PLAN"). ON AUGUST 2, 1994, THE BANKRUPTCY COURT
APPROVED THE "DISCLOSURE STATEMENT FOR CREDITORS' PLAN DATED AS
OF AUGUST 1, 1994" (THE "CREDITORS' DISCLOSURE STATEMENT"),
WHICH WAS TRANSMITTED TO CREDITORS AND EQUITY HOLDERS ENTITLED
TO VOTE ON THE CREDITORS' PLAN. THIS SUPPLEMENT TO DISCLOSURE
STATEMENT (THE "DISCLOSURE STATEMENT SUPPLEMENT") SHOULD BE
CONSIDERED IN CONJUNCTION WITH THE CREDITORS' DISCLOSURE
STATEMENT.
ON DECEMBER 9, 1994, THE CONSENSUAL PLAN AND THIS
DISCLOSURE STATEMENT SUPPLEMENT WERE FILED WITH THE BANKRUPTCY
COURT. PURSUANT TO AN ORDER DATED DECEMBER 15, 1994, THE
BANKRUPTCY COURT DETERMINED THAT, WHEN TAKEN TOGETHER WITH THE
CREDITORS' DISCLOSURE STATEMENT, WHICH WAS PREVIOUSLY APPROVED
BY THE BANKRUPTCY COURT, THIS DISCLOSURE STATEMENT SUPPLEMENT
COMPLIES WITH THE REQUIREMENTS OF THE BANKRUPTCY CODE. ALL
CLAIMANTS ARE HEREBY ADVISED AND ENCOURAGED TO READ THIS
DISCLOSURE STATEMENT SUPPLEMENT AND THE CONSENSUAL PLAN IN THEIR
ENTIRETY. CONSENSUAL PLAN SUMMARIES AND STATEMENTS MADE IN THIS
DISCLOSURE STATEMENT SUPPLEMENT ARE QUALIFIED IN THEIR ENTIRETY
BY REFERENCE TO THE CONSENSUAL PLAN, THE CREDITORS' DISCLOSURE
STATEMENT, OTHER EXHIBITS ANNEXED HERETO AND THERETO AND OTHER
DOCUMENTS REFERENCED AS FILED WITH THE COURT PRIOR TO OR
CONCURRENT WITH THE FILING OF THIS DISCLOSURE STATEMENT
SUPPLEMENT. DELIVERY OF THIS DISCLOSURE STATEMENT SUPPLEMENT
SHALL NOT CREATE THE IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN RESPECT OF THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF
THIS DISCLOSURE STATEMENT SUPPLEMENT AND THE DATE OF THE
MATERIALS RELIED UPON IN PREPARATION OF THIS DISCLOSURE
STATEMENT SUPPLEMENT OR THE CREDITORS' DISCLOSURE STATEMENT.
NO REPRESENTATION IS MADE HEREIN REGARDING THE TRADING
VALUE OR OTHER MARKET VALUE OF ANY SECURITY TO BE ISSUED
PURSUANT TO OR IN CONNECTION WITH THE CONSENSUAL PLAN.
THIS DISCLOSURE STATEMENT SUPPLEMENT HAS BEEN PREPARED IN
ACCORDANCE WITH SECTIONS 1125 AND 1127(C) OF THE BANKRUPTCY CODE
AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR
OTHER APPLICABLE NONBANKRUPTCY LAW. PERSONS OR ENTITIES TRADING
IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES
OF THE DEBTORS SHOULD EVALUATE THIS DISCLOSURE STATEMENT
SUPPLEMENT AND THE CONSENSUAL PLAN ONLY IN LIGHT OF THE PURPOSE
FOR WHICH THEY WERE PREPARED.
THIS DISCLOSURE STATEMENT SUPPLEMENT HAS NEITHER BEEN
APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY
OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER
ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT
SUPPLEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION
OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER BUT RATHER AS A
STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.
THIS DISCLOSURE STATEMENT SUPPLEMENT SHALL NOT BE
ADMISSIBLE IN ANY PROCEEDING INVOLVING THE PROPONENTS OR ANY
OTHER PARTY NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON
THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE REORGANIZATION
AS TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN THE
DEBTORS.
<PAGE>
TABLE OF CONTENTS
Page
I. INTRODUCTION 1
A. Settlement Reached Among Representatives of Bondholders
Committee, Apollo, Lehman Brothers Inc., Debtors, KKR and
Veil Piercing Claimants 1
B. Events Preceding The Settlement 3
1. Competing Debtor and Creditor Plans 3
2. Balloting Results 4
3. Debtors' Motion Challenging Ballots and Seeking
Invalidation of the Balloting Process 4
4. Creditor Proponents' and Debtors' Motions Regarding
Post-Petition Interest 4
5. Litigation Regarding Veil Piercing Settlement and
Settlement Claims 4
6. Adversary Proceeding Commenced by KKR et al., against
Apollo, Leon Black et al 5
7. October 17, 1994 Hearing; Negotiation of Settlement 6
C. Option for Holders of Claims and Interests in Certain
Classes to Change Vote on Creditors' Plan on or Prior to
January 24, 1995 6
D. Election for Holders of Class U-4 Claims that Made the
Subordinated Note Claim Election to Receive Qualified
Securities 8
E. Voting on Consensual Plan by Holders of Settlement
Claims 8
F. Confirmation Hearing 9
G. Approval of Supplement to Disclosure
Statement 10
II. DESCRIPTION OF MATERIAL AMENDMENTS TO CREDITORS' PLAN
CONTAINED IN CONSENSUAL PLAN 10
A. Allocation of New Common Stock 10
1. Distribution in Respect of Settlement Claims (Veil
Piercing Claimants) 10
2. Allocation of Initial Issuance of 50 Million Shares of
New Common Stock On The Effective Date 13
3. Issuance of Additional New Common Stock To Holders of
Old Common Stock Interests 14
4. Issuance of Additional New Common Stock to Holders of
Pre-LBO Debenture Claims In Connection With Dismissal
of Fraudulent Conveyance Lawsuit, Related Releases
and Pre-LBO Bondholders Settlement Agreement 16
5. Valuation of Debtors and of Equity Represented by
New Common Stock 18
B. Allocation of Qualified Securities 19
C. Terms of Qualified Securities and New Senior Notes 20
D. Amount of Qualified Securities 22
E. Illustration of Effect of Plan Amendment on Recovery to
Impaired Classes 22
F. Sources and Uses of Consideration Relating to
Consummation of Consensual Plan 24
G. Matters Relating to Financing 26
H. Matters Relating to Corporate Governance 27
1. Elimination of High-Vote Class of New Common Stock 27
2. Designation of New Board of Directors of Walter
Industries 27
I. Mutual Releases by and Among Apollo, Lehman Brothers
Inc., Debtors and KKR 29
J. Releases Granted by Holders of Claims and Interests to
Stockholders, Directors, Officers, etc. of Debtors 29
K. Conditions Precedent to Confirmation and Effectiveness of
the Consensual Plan 30
L. Material Amendments to Amended and Restated Veil Piercing
Settlement Agreement 31
III. UPDATED INFORMATION CONCERNING BUSINESSES, PROPERTIES AND
OTHER INFORMATION WITH RESPECT TO THE DEBTORS 32
IV. UPDATED INFORMATION REGARDING CERTAIN FEDERAL INCOME TAX
CONSEQUENCES 33
<PAGE>
INDEX OF EXHIBITS
1. Amended Joint Plan of Reorganization (the "Consensual Plan")
Exhibits:
1. Restated Certificate of Incorporation of Walter
Industries
2. Summary of Terms for the New Senior Notes
3A. Second Amended and Restated Veil Piercing Settlement
Agreement
3B. Pre-LBO Bondholders Settlement Agreement
4. Form of New Common Stock Registration Rights Agreement
5. Form of Qualified Securities Registration Rights
Agreement
6. Rejected Executory Contracts
7. Mutual Releases
8. List of Record Holders of Subordinated Note Claims That
Made Subordinated Note Claim Election and Aggregate
Amount of Claim of Each Such Holder Elected to be
Received in the Form of Qualified Securities Pursuant to
Subordinated Note Claim Election
2. Summary of Classes and Treatment of Claims Under the
Consensual Plan for Each Debtor
3. Consolidated Financial Statements of Walter Industries:
A.1. Year ended May 31, 1994 (audited)
A.2. Management's Discussion and Analysis of Financial
Condition and Results of Operations For Year Ended
May 31, 1994
B.1. Three Months Ended August 31, 1994 (unaudited)
B.2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three
Months ended August 31, 1994
C. Financial Projections for the Five Fiscal Years ending
May 31, 1995 through May 31, 1999
<PAGE>
UNLESS OTHERWISE INDICATED HEREIN, CAPITALIZED TERMS NOT DEFINED
HEREIN SHALL HAVE THE MEANING ASCRIBED TO THEM IN THE CONSENSUAL
PLAN OR, IF NOT DEFINED IN THE CONSENSUAL PLAN, IN THE
CREDITORS' DISCLOSURE STATEMENT.
I. INTRODUCTION
This Supplement to Disclosure Statement For Amended Joint
Plan of Reorganization Dated as of December 9, 1994 (the
"Consensual Plan", formerly the "Creditors' Plan") (the
"Supplement") supplements the Disclosure Statement for
Creditors' Plan dated as of August 1, 1994 (the "Creditors'
Disclosure Statement"). The Supplement is submitted jointly by
the proponents of the Consensual Plan (the "Consensual Plan
Proponents") pursuant to Sections 1125 and 1127(c) of Title 11
of the United States Code, 11 U.S.C. Section 101, et seq. (the
"Code"). The Consensual Plan has been filed with the United
States Bankruptcy Court for the Middle District of Florida,
Tampa Division (the "Court") in connection with the Debtors'
pending Chapter 11 Cases.
The Consensual Plan amends the Creditors' Plan to include
the terms of a settlement reached among: (i) the proponents of
the Creditors' Plan (the "Creditor Proponents"), consisting of
the Creditors Committee, the Bondholders Committee, Apollo,
Lehman Brothers Inc. and the Ad Hoc Committee of Pre-LBO
Bondholders; (ii) the Debtors; (iii) KKR; and
(iv) representatives of the Veil Piercing Claimants. The
Debtors and KKR have agreed not to pursue confirmation of the
Debtors' Fifth Amended Plan of Reorganization dated as of
July 25, 1994 (the "Debtors' Plan"), but instead to become
Consensual Plan Proponents with the Creditor Proponents. KKR
and senior management shareholders of Walter Industries have
represented that they intend to change their votes as Holders of
Class E-1 Interests so as to accept the Consensual Plan.
Voting on the Creditors' Plan and the Debtors' Plan took
place from August 12, 1994 through September 23, 1994. All
Classes of Claims and Interests that were characterized as
impaired under the Creditors' Plan, other than Class E-1 and
seven Classes of Other Unsecured Claims (which rejecting
creditor classes consist principally of professionals hired by
the Debtors and present management and directors of the Debtors)
voted to accept the Creditors' Plan. Under Section 1127(d) of
the Code, each holder of a claim or interest that has accepted
or rejected the Creditors' Plan is deemed to have accepted or
rejected, as the case may be, the Creditors' Plan as it has been
modified to become the Consensual Plan unless, within the time
fixed by the Court, such holder changes such holder's previous
acceptance or rejection. Classes of Claims that accepted the
Creditors' Plan and whose treatment is not adversely changed in
the Consensual Plan will be deemed to have accepted the
Consensual Plan, without any provision for changing votes
previously cast. See "Option for Holders of Claims and
Interests in Certain Classes to Change Vote on Creditors' Plan
on or Prior to January 24, 1995."
In addition, although the Consensual Plan characterizes
Class U-7 (Settlement Claims, i.e., Veil Piercing Claims and
claims based on or arising from LBO-Related Issues raised or
assertable by Veil Piercing Claimants) as being unimpaired (on
the basis that Class U-7 is being treated in accordance with the
Second Amended and Restated Veil Piercing Settlement Agreement),
the Consensual Plan Proponents are nevertheless affording
Holders of Class U-7 Claims the opportunity to complete and
return ballots upon which they may cast a vote to accept or
reject the Consensual Plan. See "Voting on Consensual Plan by
Holders of Settlement Claims."
A. SETTLEMENT REACHED AMONG REPRESENTATIVES OF BONDHOLDERS
COMMITTEE, APOLLO, LEHMAN BROTHERS INC., DEBTORS, KKR AND
VEIL PIERCING CLAIMANTS
On October 17, 1994, the Court commenced the trial of
certain preliminary issues relating to the then-pending Debtors'
Plan and Creditors' Plan. On October 20, 1994, representatives
of the Bondholders Committee, Apollo, Lehman Brothers Inc., the
Debtors, KKR and the Veil Piercing Claimants reached an
agreement in principle on the terms of an amendment to the
Creditors' Plan (now embodied in the Consensual Plan) and an
amendment to the Amended and Restated Veil Piercing Settlement
Agreement (now embodied in the Second Amended and Restated Veil
Piercing Settlement Agreement dated as of November 22, 1994)
that would resolve their disputes regarding plan confirmation.
The terms of the settlement were read into the record (but
placed under seal) on the same day, and the Court thereupon
adjourned the hearings that had begun on October 17, 1994,
pending efforts to document the settlement.
The principal terms of the settlement, which are discussed
more fully below under "MATERIAL AMENDMENTS TO CREDITORS' PLAN
CONTAINED IN CONSENSUAL PLAN" are as follows:
* The Debtors and KKR join with the Creditor Proponents
as co-proponents of the Consensual Plan.
* The Allowed Claim of the Veil Piercing Claimants is
reduced from $450 million to $375 million.
* The Negotiated Enterprise Value is increased from
$2.525 billion to $2.6 billion (and the New Common
Stock Value is fixed at $2.6 billion, less the sum of
$902 million and the aggregate principal amount of
Qualified Securities distributed pursuant to the
Consensual Plan), except that the New Common Stock
used to satisfy a part of the $375 million Veil
Piercing Claims Amount will be calculated so as to
prevent any dilution that would otherwise have
resulted from the increase in the Negotiated
Enterprise Value.
* If Holders of Old Common Stock Interests (Class E-1)
accept the Consensual Plan, then such Holders will
receive their Pro Rata share of shares of New Common
Stock having an aggregate New Common Stock Value Per
Share equal to the sum of:
(a) Approximately $75 million as a result of the
decrease in the Allowed Claim of the Veil
Piercing Claimants;
(b) Approximately $75 million as a result of the
increase in the Negotiated Enterprise Value from
$2.525 billion to $2.6 billion;
(c) The extent by which Federal Income Tax Claims are
reduced to below $27 million in the aggregate
(the Creditors' Disclosure Statement estimated
these claims at $27 million for purposes of
estimating the amount of Senior Claims at
December 31, 1993 (which were estimated at $902
million), whereas the Debtors' Disclosure
Statement estimated these claims at $14 million);
and
(d) The amount of the tax benefits claimed as a
deduction or a refund by the Debtors as a result
of distributions made pursuant to the Veil
Piercing Settlement (such shares to initially be
placed into escrow and released to Holders of
Class E-1 Interests only when, as and if such
claimed deductions or refunds are actually
realized), but limited to an amount that, when
added to (a)-(c) above, does not exceed $250
million; provided, however, that $11.3 million of
such New Common Stock will be distributed
directly to Holders of Class E-1 Interests not
later than 180 days after the Effective Date,
regardless of whether any tax benefits have been
claimed or realized.
* The initial board of directors of Walter Industries
(serving for a three-year term) will be initially
designated as follows:
(a) One KKR designee;
(b) Three Lehman Brothers Inc. designees;
(c) Three members of senior management (Messrs.
Walter, Durham and Matlock); and
(d) Two Independent Directors selected by existing
management from a list prepared by an independent
executive search firm.
* There will be only one class of common stock of
reorganized Walter Industries, with each share
entitled to one vote.
* The following amendments have been made to the Veil
Piercing Settlement Agreement:
(a) The Allowed Claim of the Veil Piercing Claimants
is reduced from $450 million to $375 million.
(b) The amount of the New Common Stock to be received
by the Celotex Settlement Fund Recipient under
the Veil Piercing Settlement Agreement is
calculated based upon a $2.525 billion Negotiated
Enterprise Value so that such recipient will be
unaffected by the $75 million increase in the
Negotiated Enterprise Value (the effect of this
will be to nominally dilute the percentage of New
Common Stock to be distributed to other Classes;
See "DESCRIPTION OF MATERIAL AMENDMENTS TO
CREDITORS' PLAN CONTAINED IN CONSENSUAL PLAN--
Allocation of Initial Issuance of 50 Million
Shares of New Common Stock on the Effective
Date."
(c) The Debtors and KKR agree to support the request
by Caplin and Drysdale, one of the law firms
representing the Veil Piercing Claimants, for an
award from the Debtors of $15 million in
attorneys' fees on behalf of Caplin & Drysdale
and the other Claimants' Attorneys. To the
extent that the Court awards less than $15
million, the settlement distribution to the
Celotex Settlement Fund Recipient will include a
cash payment equal to this differential.
(d) The Debtors, KKR and existing senior management
shareholders will become signatories to, and
receive the benefits of, the Second Amended and
Restated Veil Piercing Settlement Agreement and
Walter Industries and the Bondholders Committee
will cooperate in good faith to insure that such
agreement results in finality with respect to all
past, present and future asbestos litigation.
The procedures to be followed in pursuing
finality will include those specifically
described in the amended agreement.
* In connection with the final settlement of all Pre-LBO
Issues and the dismissal with prejudice of the pending
fraudulent transfer lawsuit instituted by the
Indenture Trustees for the Pre-LBO Debenture Claims,
if Class U-6 accepts the Consensual Plan and if the
existing Pre-LBO Bondholders Settlement Agreement
expires by its terms as contemplated (because the
Confirmation Order will not have been entered on or
before December 31, 1994), the recovery to Class U-6
will be increased by the issuance of New Common Stock
having an aggregate New Common Stock Value Per Share
equal to $11.3 million, consisting of
(a) $6.3 million, representing the estimated amount
by which the Allowed Amount of the Series B & C
Senior Note Claims is reduced by paying part of
these claims in cash rather than by the issuance
of New Senior Notes as permitted under the Series
B & C Senior Note Claim Election; and
(b) $5 million, representing the savings that are
estimated to result from the agreement of Apollo
and Lehman Brothers Inc., as part of the
Consensual Plan only, not to file administrative
expense claims which had been estimated at $5
million in the aggregate.
B. EVENTS PRECEDING THE SETTLEMENT
1. COMPETING DEBTOR AND CREDITOR PLANS
Since mid-May 1994, the Debtors and the Creditor Proponents
have been the only proponents actively pursuing competing plans
of reorganization. On August 2, 1994, the Court approved, under
Section 1125 of the Code, (i) the Creditors' Disclosure
Statement and related ballots and solicitation materials, and
(ii) the Debtors' Fifth Amended Disclosure Statement dated as of
July 25, 1994 (the "Debtors' Disclosure Statement") relating to
the Debtors' Plan, and related ballots and solicitation
materials.
In connection with the confirmation process for the
Creditors' Plan and the Debtors' Plan, the Court scheduled a
hearing to commence on October 17, 1994 to consider three
preliminary items: (i) the contested matter filed by the Debtors
asserting that unsecured creditors are not entitled to
post-petition interest on account of their Claims and any
response or motion filed by the Creditor Proponents with respect
to the issue of post-petition interest; (ii) the application by
the Creditor Proponents seeking approval of the Amended and
Restated Veil Piercing Settlement Agreement and the Debtors'
motion to void that agreement; and (iii) any properly asserted
challenges or objections to the vote of any party on either
plan. Extensive discovery was taken on these issues during
August, September and the first half of October 1994. The Court
also scheduled a status conference for November 16, 1994 for the
purpose of scheduling the date on which the confirmation hearing
would begin.
2. BALLOTING RESULTS
Disclosure statements, ballots and other solicitation
materials with respect to the Debtors' Plan and the Creditors'
Plan were mailed to creditors and interest holders on August 12,
1994, and ballots were required to be returned no later than
September 23, 1994. The balloting results for the Creditors'
Plan and the Debtors' Plan were as follows:
* 98 classes of creditors accepted the Creditors' Plan.
* One class of interest holders (Class E-1) and seven
unsecured creditor classes (subclasses within
Class U-3 (collectively, the "Non-Accepting U-3 Debtor
Classes"))<F1> rejected the Creditors' Plan.
* 99 classes preferred the Creditors' Plan over the
Debtors' Plan.
* No class of creditors accepted the Debtors' Plan; 74
creditor classes rejected the Debtors' Plan.
* One class of interest holders accepted the Debtors'
Plan (Class E-1).
* Seven classes of creditors (subclasses within Class
U-3) preferred the Debtors' Plan over the Creditors'
Plan.
3. DEBTORS' MOTION CHALLENGING BALLOTS AND SEEKING
INVALIDATION OF THE BALLOTING PROCESS
On October 6, 1994, the Debtors filed a motion with the
Court requesting that the ballots cast by every member of the
Creditors Committee, the Bondholders Committee, and the Ad Hoc
Committee of Pre-LBO Bondholders (a total of 26 creditors) be
designated under Section 1126(e) of the Code and excluded from
the computation of the vote on the Debtors' Plan and the
Creditors' Plan, and also sought to invalidate the voting
process as a whole and require a resolicitation of votes, based
on various theories, including alleged improprieties by certain
Creditor Proponents. The Creditor Proponents and others filed
objections or responses in opposition to this motion. This
matter was one of the matters set for trial at the hearings
scheduled to commence on October 17, and would be resolved by
the settlement and the releases to be exchanged under the
Consensual Plan.
4. CREDITOR PROPONENTS' AND DEBTORS' MOTIONS REGARDING
POST-PETITION INTEREST
On September 9, 1994, the Creditor Proponents filed a
motion seeking a determination that (i) unsecured creditors are
entitled to post-petition interest before interest Holders may
receive any distribution under a chapter 11 plan for the
Debtors, and (ii) it is permissible for a chapter 11 plan for
the Debtors to provide for post-petition interest to unsecured
creditors before any distribution to interest Holders. The
hearing on this motion, and on the Debtors' proceeding seeking a
determination that unsecured creditors in these cases are not
entitled to post-petition interest, was also part of the October
17 hearings and would be resolved by the settlement under the
Consensual Plan.
- -----------------
[FN] These subclasses consist of Class U-3 Claims against
Hillsborough Holdings Corporation, Walter Home Improvement,
Inc., Mid-State Homes, Inc., United Land Corporation,
Walter Land Company, Walter Industries, Inc. and Jim Walter
Homes, Inc.
<PAGE>
5. LITIGATION REGARDING VEIL PIERCING SETTLEMENT AND
SETTLEMENT CLAIMS
A. MOTIONS REGARDING APPROVAL OF VEIL PIERCING
SETTLEMENT
On September 8, 1994, the Creditor Proponents filed a
motion with the Court for an order approving the Amended and
Restated Veil Piercing Settlement Agreement. On August 5, 1994,
the Debtors filed a motion seeking to have that settlement
agreement voided. The Creditor Proponents filed a response to
this motion on October 12, 1994. Among the arguments made by
the Debtors in their motion is the argument that, because the
Settlement Claims (i.e., Veil Piercing Claims and claims based
on or arising from LBO-Related Issues raised or assertable by
Veil Piercing Claimants) were found by the Court to have no
merit, and because, according to the Debtors and KKR, unsecured
creditors are not legally entitled to receive post-petition
interest in these Chapter 11 Cases, the Debtors' shareholders
would be entitled to receive all of the value in the Debtors in
excess of the Allowed prepetition Claims of all Unsecured
Creditors (the Debtors estimated this value to be in excess of
$600 million using a $2.805 billion enterprise value) and that,
therefore, the settlement reached by the Creditor Proponents
improperly and unreasonably distributed value to the Veil
Piercing Claimants that allegedly belonged to the shareholders.
Those arguments were among the matters scheduled to be heard at
the October 17 hearings, and would be resolved by the settlement
under the Consensual Plan.
B. DISTRICT COURT AFFIRMANCE OF COURT'S DECISION
AGAINST CERTAIN VEIL PIERCING CLAIMANTS IN
DECLARATORY JUDGMENT PROCEEDING
In its opinion dated April 18, 1994, the Court had
determined, in the Declaratory Judgment Proceeding filed by the
Debtors against certain parties asserting Settlement Claims
against the Debtors, that such claims lacked merit. The
defendants in that action had appealed that determination to the
District Court for the Middle District of Florida (the "District
Court").
On October 13, 1994, the District Court affirmed the
Court's decision in favor of the Debtors in the Declaratory
Judgment Proceeding. On or about November 14, 1994,
representatives of the Veil Piercing Claimants filed a timely
notice of appeal of the District Court's decision. A copy of
the District Court's 71-page opinion can be obtained by making a
request therefor to the Balloting Agent at the address or
telephone number set forth in Section I.C. below. Counsel for
the defendants in the Declaratory Judgment Proceeding have
stated that, absent the settlement, they intend to pursue their
appeal of the District Court's ruling. Absent a settlement, the
Debtors would oppose the appeal and seek a final affirmance of
the determination by the Court and the District Court that the
Settlement Claims are without merit.
C. DISMISSAL OF CELOTEX DECLARATORY JUDGMENT ACTION
On April 28, 1994, the Debtors filed a complaint for
declaratory relief against Celotex in the Celotex Chapter 11
Proceeding (the "Celotex DJ Action") which sought a
determination that (i) Celotex alone has standing to assert
Settlement Claims against any of the Debtors, and (ii) all
creditors of Celotex are bound by the outcome of the Court's
decision in the Declaratory Judgment Proceeding. Following a
hearing held on October 13, 1994, the Celotex Bankruptcy Court
dismissed without prejudice the Debtors' request for declaratory
relief in the Celotex DJ Action, on the grounds that it failed
to state a case or controversy and that it failed to join
necessary parties (the individual Veil Piercing Claimants who do
not agree that Celotex has sole standing to assert Settlement
Claims). The Celotex Bankruptcy Court granted the Debtors until
December 22, 1994 to file an amended complaint, and if such an
amended complaint is filed, fixed January 20, 1995 as the last
date by when the named defendants shall be permitted to file
their answers or other responsive pleadings to the amended
complaint.
6. ADVERSARY PROCEEDING COMMENCED BY KKR ET AL., AGAINST
APOLLO, LEON BLACK ET AL.
On September 8, 1994, KKR, certain affiliates of KKR and
certain Debtors instituted an adversary proceeding (Adv. Pro.
No. 94-562) against Apollo (a proponent of the Creditors' Plan)
and certain affiliated entities and individuals (the "KKR-Apollo
Action"). The KKR-Apollo Action asserts claims based on the
alleged misuse of certain information allegedly obtained by
certain individuals affiliated with Apollo from KKR and certain
Debtors prior to the filing of these Chapter 11 Cases. The
KKR-Apollo Action seeks various forms of relief, including a
reduction in the allowed amount of the Subordinated Note Claims
held by Apollo to the consideration paid therefor and the
recovery of any profits made by Apollo on its Subordinated Note
Claims. The time by which an answer must be filed has been
extended, and an answer denying all of the substantive
allegations of the complaint will be filed within the applicable
time period. The Consensual Plan provides that the KKR-Apollo
Action will be dismissed with prejudice, and the parties thereto
will exchange mutual releases.
7. OCTOBER 17, 1994 HEARING; NEGOTIATION OF SETTLEMENT
On October 17 and 18, 1994, the Court heard evidence on the
issue of whether unsecured creditors are entitled to, or may
receive, post-petition interest before any distribution to
interest holders under a chapter 11 plan for the Debtors. On
October 18, 1994, the Court began hearing evidence regarding the
approval of the Amended and Restated Veil Piercing Settlement
Agreement. On the morning of October 19, 1994, the Court
advised counsel of the Court's view that the issues under
consideration could and should be consensually resolved, and
held separate meetings with representatives of each of the
Debtors, KKR, Apollo, counsel to the Bondholders Committee and
the Veil Piercing Claimants. At the conclusion of these
individual meetings, the parties agreed to attempt to reach a
consensual resolution and the hearing was adjourned temporarily
to give them an opportunity to do so. The parties, consisting
primarily of representatives of each of Apollo, Lehman Brothers
Inc., the Bondholders Committee, the Veil Piercing Claimants and
Walter Industries and KKR, spent the remainder of October 19,
1994 and most of the morning of October 20, 1994 negotiating a
potential settlement. At mid-afternoon on October 20, 1994
these parties reached a consensus in principle on the terms of a
proposed settlement and reported those terms to the Court under
seal and to representatives of the other creditor
constituencies. Thereafter, the settlement was documented in
the form of a modification of the Creditors' Plan to become the
Consensual Plan, and a modification of the Amended and Restated
Veil Piercing Settlement Agreement to become the Second Amended
and Restated Veil Piercing Settlement Agreement.
C. OPTION FOR HOLDERS OF CLAIMS AND INTERESTS IN CERTAIN
CLASSES TO CHANGE VOTE ON CREDITORS' PLAN ON OR PRIOR TO
JANUARY 24, 1995
Pursuant to Section 1127(d) of the Code, a Holder's vote
cast to accept or reject the Creditors' Plan shall be deemed
binding on such Holder with respect to the Consensual Plan
(which represents a modification of the Creditors' Plan), except
to the extent that a previous acceptance or rejection is
permitted to be changed and is changed by such Holder within the
time fixed by the Court. Under Bankruptcy Rule 3019, if the
Court finds that the Consensual Plan does not adversely change
the treatment provided under the Creditors' Plan of the claim of
any creditor or the interest of any equity security holder, the
Consensual Plan will be deemed accepted by all such creditors
and equity security holders who had previously accepted the
Creditors' Plan.
The modification of the Creditors' Plan contained in the
Consensual Plan does not adversely change the treatment or
consideration to be afforded to Holders of Other Unsecured
Claims, including Creditors in the 26 Classes of Other Unsecured
Claims that accepted the Creditors' Plan (i.e., the Classes of
Class U-3 Claims other than the Non-Accepting U-3 Debtor
Classes; hereinafter the "Accepting Other Unsecured Classes").
As a result, the Court has ordered that the Consensual Plan is
deemed accepted by all Creditors in the Accepting Other
Unsecured Classes who voted to accept the Creditors' Plan.
The distribution on account of Claims in Classes S-1
(Revolving Credit Bank Claims), S-2 (Working Capital Bank
Claims), S-6 (Series B & C Senior Note Claims), U-4 (Senior
Subordinated Note Claims), U-5 (17% Subordinated Note Claims)
and U-6 (Pre-LBO Debenture Claims) (the "Voting Creditor
Classes") is reduced by the modification of the Creditors' Plan
contained in the Consensual Plan, because the allocation of New
Common Stock to each of those classes has been changed from the
allocation contained in the Creditors' Plan. Although this
reallocation affects the Voting Creditor Classes in varying
degrees, it generally has the effect of reducing the percentage
of the New Common Stock to be received by each of the Voting
Creditor Classes, as a result of the distribution to Holders of
Old Common Stock Interests of the approximately $75 million of
New Common Stock resulting from the increase in the Negotiated
Enterprise Value, and the fact that the number of shares of New
Common Stock to be issued to Class U-7 is calculated under the
Consensual Plan so as to avoid any dilution that would otherwise
occur as a result of such increase in the Negotiated Enterprise
Value and such share issuance to Holders of Old Common Stock
Interests. The Consensual Plan also changes the treatment of
Old Common Stock Interests (Class E-1) to provide for the
allocation of specified amounts of New Common Stock (including
the aforementioned amount) to Class E-1. The Consensual Plan
also changes the treatment of Class U-6 to provide for the
allocation of an additional amount ($11.3 million) of New Common
Stock if, among other things, Class U-6 accepts the Consensual
Plan; however, after considering the reallocation of New Common
Stock described above, the net effect of the modification of the
Creditors' Plan contained in the Consensual Plan on Class U-6 is
adverse.
The Court has ordered that each Holder of a Claim or
Interest in any of the Voting Creditor Classes, the
Non-Accepting U-3 Debtor Classes and in Class E-1 (collectively,
the "Resolicitation Classes") who voted to accept or reject the
Creditors' Plan will have an opportunity to change its vote
under Section 1127(d) of the Code in light of the modification
to the Creditors' Plan contained in the Consensual Plan, within
a time fixed by the Court. In particular, any Holder of a Claim
or Interest in the Resolicitation Classes that accepted or
rejected the Creditors' Plan will be deemed to have accepted or
rejected, as the case may be, the Consensual Plan, unless such
Holder changes such Holder's previous acceptance or rejection by
returning a properly completed Vote Change Certification to the
Balloting Agent in accordance with the following deadlines:
Each record holder of a claim or interest in any of the
Resolicitation Classes who is also the beneficial owner thereof
and who voted on the Creditors' Plan is required to transmit the
applicable Vote Change Certification to the Balloting Agent, so
as to be actually received by the Balloting Agent, on or before
5:00 p.m. Eastern Time, on January 24, 1995 (the "Vote Change
Deadline").
The beneficial owners of securities held through Record
Holder Nominees are required to transmit the applicable Vote
Change Certification to their respective Record Holder Nominee
so as to be received by the beneficial owners' Record Holder
Nominee on or before January 19, 1995 at 5:00 p.m. Eastern
Time. Master Vote Change Certifications completed by Record
Holder Nominees must be forwarded so as to be received by the
Balloting Agent on or before the Vote Change Deadline.
Any attempted vote change received after the applicable
deadline set forth above will not be counted. If you voted to
accept or reject the Creditors' Plan and have not received a
Vote Change Certification form, please contact the Balloting
Agent immediately. The Balloting Agent's address and phone
number are as follows:
If by Mail:
Donlin, Recano & Company, Inc.
P.O. Box 2022
Murray Hill Station
New York, NY 10156-0701
If by Courier or Hand:
Donlin, Recano & Company, Inc.
419 Park Avenue South
Suite 206
New York, NY 10016
Telephone: 1-800-489-7444
The Consensual Plan Proponents believe that because only a
small portion of the distribution to Classes S-1, S-2, and S-6
under the Consensual Plan consists of New Common Stock, the
effect on those three Classes of the modification of the
Creditors' Plan contained in the Consensual Plan is sufficiently
de minimus that the modification does not "adversely change"
their treatment within the meaning of Bankruptcy Rule 3019, and
that, having accepted the Creditors' Plan, those three Classes
should be deemed to have accepted the Consensual Plan. Although
Creditors in those three Classes are being given an opportunity
to change their votes, that opportunity is without prejudice to
the ability of the Consensual Plan Proponents to argue that
those three Classes are so minimally affected by the plan
modification that they should be deemed to have accepted the
Consensual Plan.
The Creditors' Plan also provided for certain elections to
be made by the Holders of Series B & C Senior Note Claims,
Subordinated Note Claims, and Other Unsecured Claims.<F2> The
Consensual Plan provides that such elections are binding and
does not provide for an opportunity to change any such elections
at any time.
D. ELECTION FOR HOLDERS OF CLASS U-4 CLAIMS THAT MADE THE
SUBORDINATED NOTE CLAIM ELECTION TO RECEIVE QUALIFIED
SECURITIES
The Consensual Plan provides for a new election regarding
distributions to Class U-4. The election can be made only by
completing the election form transmitted with this Supplement
and returning it to the Balloting Agent by the Vote Change
Deadline.
Under the "Class U-4 Exchange Election", Holders of Senior
Subordinated Note Claims (Class U-4) that had elected to receive
all or part of their Class U-4 Claims in Qualified Securities
pursuant to the Subordinated Note Claim Election under the
Creditors' Plan (other than Lehman Brothers Inc.) (the "Electing
Class U-4 Holders") will be entitled to "exchange" their pro
rata share of New Common Stock having an aggregate New Common
Stock Value Per Share of $39.4 million that they otherwise would
have received on account of their Class U-4 Claims (unless a
lesser principal amount of Qualified Securities is sufficient to
satisfy all Class U-4 Subordinated Note Claim Elections for
Qualified Securities, in which event such lesser amount shall
apply), for an identical aggregate principal amount of Qualified
Securities that would otherwise have been issued to Lehman
Brothers Inc. on the Effective Date in respect of the Class U-4
Claim held by Lehman Brothers Inc., with any New Senior Notes
that would otherwise have been so issued to Lehman Brothers Inc.
to be reallocated before any Cash that would otherwise have been
so distributed is reallocated.
E. VOTING ON CONSENSUAL PLAN BY HOLDERS OF SETTLEMENT CLAIMS
Although the Consensual Plan characterizes the Settlement
Claims (Class U-7) as not being impaired under the Consensual
Plan, the Consensual Plan Proponents are nevertheless affording
to Holders of Settlement Claims in Class U-7 (Veil Piercing
Claimants) the opportunity to complete and return ballots upon
which they may cast a vote to accept or reject the Consensual
Plan. Holders of Class U-7 Claims did not vote on the
Creditors' Plan, nor on the Debtors' Plan (which did not provide
for a recovery or a class in respect of Settlement Claims).
Holders of Class U-7 Claims are being given an opportunity to
vote on the Consensual Plan as a precautionary measure, so that
if the position of the Consensual Plan Proponents that Class U-7
Claims are unimpaired under the Consensual Plan is challenged,
such a challenge could be rendered moot if Class U-7 votes on
and accepts the Consensual Plan.
The Court has ordered that, solely for purposes of voting
on the Consensual Plan: (i) each individual or entity voting in
Class U-7 must certify in the appropriate space on the Class U-7
Ballot either that it holds a Class U-7 Claim, or that it is
authorized to vote on behalf of a Class U-7 Claimant that has
certified that it holds a Class U-7 Claim; (ii) each Holder of a
Class U-7 Claim is deemed to be added to the Debtors' Schedule
of Assets and Liabilities as a creditor holding a Claim in the
amount of one dollar ($1.00); and (iii) each such Class U-7
Claim is deemed provisionally to be an Allowed Claim in the
amount of one dollar ($1.00) against each Debtor for purposes of
voting on the Consensual Plan.
The affording of Class U-7 Claims the opportunity to cast a
vote to accept or reject the Consensual Plan is without
prejudice to the right of the Consensual Plan Proponents to
assert, as they have asserted, that Class U-7 Claims are not
impaired under the Consensual Plan.
- ---------------
[FN] See "INTRODUCTION--Summary--Other Ballot Elections" at
pp. 11-12 of the Creditors' Disclosure Statement. Unlike
the Creditors' Plan, the Consensual Plan does not provide
for the Series B & C Senior Note Claim Election or the
Subordinated Note Claim Election to be reconducted if the
Effective Date does not occur prior to December 31, 1994.
<PAGE>
HOLDERS OF CLASS U-7 CLAIMS ALSO MAY OBTAIN OR REVIEW A
COPY OF THE CREDITORS' DISCLOSURE STATEMENT THAT WAS TRANSMITTED
TO HOLDERS OF CLAIMS AND INTERESTS THAT VOTED ON THE CREDITORS'
PLAN. HOLDERS OF CLASS U-7 CLAIMS ARE ENCOURAGED TO CAREFULLY
READ THE CREDITORS' DISCLOSURE STATEMENT, AS SUPPLEMENTED BY
THIS SUPPLEMENT. THE CREDITORS' DISCLOSURE STATEMENT MAY BE
REVIEWED WEEKDAYS FROM 9:00 A.M. TO 4:30 P.M. AT THE OFFICE OF
THE CLERK OF THE COURT FOR THE U.S. BANKRUPTCY COURT FOR THE
MIDDLE DISTRICT OF FLORIDA, TAMPA DIVISION, LOCATED AT 4921
MEMORIAL HIGHWAY, TAMPA, FLORIDA 33634, AND A COPY OF THE
CREDITORS' DISCLOSURE STATEMENT WILL BE MAILED FREE OF CHARGE TO
ANY PERSON THAT MAKES A REQUEST THEREFOR BY MAIL OR TELEPHONE TO
THE BALLOTING AGENT AT: DONLIN, RECANO & COMPANY, INC., P.O. BOX
2022, MURRAY HILL STATION, NEW YORK, NY 10156-0701, TELEPHONE
1-800-489-7444. ALTHOUGH HOLDERS OF CLASS U-7 CLAIMS ARE
ENCOURAGED TO REVIEW THOSE DOCUMENTS IN THEIR ENTIRETY, THE
CONSENSUAL PLAN PROPONENTS BELIEVE THAT THE FOLLOWING SECTIONS
OF THE CREDITORS' DISCLOSURE STATEMENT ARE PARTICULARLY RELEVANT
TO HOLDERS OF CLASS U-7 CLAIMS: "INTRODUCTION--LITIGATION OF
VEIL PIERCING PROCEEDINGS" (PAGES 25-29); "OVERVIEW OF THE
CREDITORS' PLAN--SPECIAL FEATURES OF THE CREDITORS' PLAN--
SETTLEMENT OF THE VEIL PIERCING/FRAUDULENT CONVEYANCE ISSUES AND
OTHER ISSUES" (PAGES 38-50); AND "--DISTRIBUTION OF COMBINATION
OF QUALIFIED SECURITIES AND NEW COMMON STOCK TO HOLDERS OF
SUBORDINATED NOTE CLAIMS AND TO VEIL PIERCING CLAIMANTS" (PAGES
50-73).
The procedure for Holders of Class U-7 Claims to cast a
vote to accept or reject the Consensual Plan is as follows:
Each holder of a claim in Class U-7 is required to transmit
a completed and executed Class U-7 Ballot to the Balloting
Agent, so as to be actually received by the Balloting Agent, on
or before 5:00 p.m. Eastern Time, on February 22, 1995 (the
"Class U-7 Voting Deadline"). Any Class U-7 Ballot received
after the Class U-7 Voting Deadline set forth above will not be
counted. If you believe that you hold a Claim in Class U-7 and
have not received a Class U-7 Ballot, please contact the
Balloting Agent immediately. The Balloting Agent's address and
phone number are as follows:
If by Mail:
Donlin, Recano & Company, Inc.
P.O. Box 2022
Murray Hill Station
New York, NY 10156-0701
If by Courier or Hand:
Donlin, Recano & Company, Inc.
419 Park Avenue South
Suite 206
New York, NY 10016
Telephone: 1-800-489-7444
F. CONFIRMATION HEARING
The confirmation hearing on the Consensual Plan (the
"Confirmation Hearing") has been scheduled to begin at 9:00 a.m.
on March 1, 1995 and continuing, if necessary, through March 3,
1995, at the United States Bankruptcy Court for the Middle
District of Florida, Tampa Division, 4921 Memorial Highway,
Tampa, Florida 33634. The Confirmation Hearing may be adjourned
from time to time by the Court without further notice except for
an announcement of the adjournment made at the Confirmation
Hearing. At the Confirmation Hearing, the Court will
(i) determine whether the Consensual Plan has been accepted by
the requisite majorities of each Voting Class after considering
any permitted and timely vote changes, and whether Class U-7 has
accepted the Consensual Plan by the requisite majority,
(ii) hear and determine any objections to Confirmation of the
Consensual Plan, (iii) determine whether the Consensual Plan
meets the requirements of the Code, (iv) determine whether the
conditions to Confirmation have occurred, have been satisfied or
have been waived, (v) determine whether to approve the Second
Amended and Restated Veil Piercing Settlement Agreement, and
(vi) confirm or deny Confirmation of the Consensual Plan.
Objections to Confirmation of the Consensual Plan, if any,
must be in writing and must be filed with the Court, and
personally served upon the parties identified in the notice that
accompanies this Supplement so that they are received by such
parties, on or before 5:00 p.m., Eastern Time, on January 24,
1995 with respect to objections made by persons other than
Holders of Class U-7 Claims (in their capacity as Holders of
Class U-7 Claims), and on or before 5:00 p.m., Eastern Time, on
February 22, 1995 with respect to Holders of Class U-7 Claims
(in their capacity as Holders of Class U-7 Claims).
Objections to Confirmation of the Consensual Plan are
governed by Bankruptcy Rule 9014 and Local Bankruptcy Rule 3.05.
G. APPROVAL OF SUPPLEMENT TO DISCLOSURE STATEMENT
This Supplement was filed with the Court on November 22,
1994 and amended on December 9, 1994. Pursuant to an order of
the Court entered on November 22, 1994, a notice of the deadline
for objecting to the Supplement and of the hearing thereon was
transmitted to Creditors and Interest Holders and was published
in various newspapers and journals. The Notice stated that,
among other things, objections to the Supplement other than
objections to disclosure therein regarding the Second Amended
and Restated Veil Piercing Settlement Agreement were required to
be in writing and were required to be filed with the Court, and
personally served upon the parties identified in the notice so
that they would be received by such parties, on or before
5:00 p.m. Eastern Time on December 12, 1994, and that objections
to the Supplement based on disclosure therein regarding the
Second Amended and Restated Veil Piercing Settlement Agreement
were required to be in writing and were required to be filed
with the Court, and personally served upon the parties
identified in the notice so that they would be received by such
parties, on or before 5:00 p.m. Eastern Time on December 14,
1994. Three objections were timely filed with respect to the
Supplement. Two objections were filed by Holders of
Subordinated Note Claims arguing, among other things, that the
Subordinated Note Claim Election should be reconducted and that
Holders of Subordinated Note Claims that did not make the
Subordinated Note Claim Election should be able to make the
Class U-4 Exchange Election. The third objection, filed by the
Aetna Casualty and Surety Company, requested that disclosure be
added regarding the possible appointment of a future asbestos
claimants representative in the Celotex Chapter 11 Proceeding.
At a hearing held on December 15, 1994, the Court overruled the
two objections filed by Holders of Subordinated Note Claims, and
approved certain language to be added to the Supplement in
response to the Aetna objection. On December 15, 1994, the
Court entered an order determining that, when taken together
with the Creditors' Disclosure Statement, which was previously
approved by the Court, the Supplement complies with the
requirements of the Code.
II. DESCRIPTION OF MATERIAL AMENDMENTS TO CREDITORS' PLAN
CONTAINED IN CONSENSUAL PLAN
The following is a summary of what, in the view of the
Consensual Plan Proponents, are the material amendments to the
Creditors' Plan that are contained in the Consensual Plan.
These descriptions are summaries only, do not purport to be
complete, and do not describe all changes contained in the
Consensual Plan. Such summaries are qualified in their entirety
by reference to the Consensual Plan and the exhibits thereto, a
copy of which is attached as Exhibit I hereto.
A. ALLOCATION OF NEW COMMON STOCK
The principal changes in the treatment of Claims and
Interests effected by the modification of the Creditors' Plan
contained in the Consensual Plan relate to the allocation of New
Common Stock, and include the following: (i) the increase by $75
million of the Negotiated Enterprise Value<F3>; (ii) the
decrease by $75 million of the Allowed Claim of the Veil
Piercing Claimants; (iii) if Class E-1 accepts the Consensual
Plan, the distribution of New Common Stock having an aggregate
New Common Stock Value Per Share of at least $150 million and
(depending on the outcome of certain contingencies) as much as
$250 million to interest holders (Class E-1); and (iv) the
distribution of additional New Common Stock having an aggregate
New Common Stock Value Per Share equal to $11.3 million to
Holders of Pre-LBO Debenture Claims (Class U-6) if, among other
things, Class U-6 accepts the Consensual Plan.
- ----------------------
[FN] Under the Consensual Plan, such increase in the Negotiated
Enterprise Value will not dilute the percentage of the 50
million shares of New Common Stock to be initially issued
on the Effective Date that will be distributed to and
retained by the Celotex Settlement Fund Recipient in
respect of Veil Piercing Claims.
<PAGE>
1. DISTRIBUTION IN RESPECT OF SETTLEMENT CLAIMS (VEIL
PIERCING CLAIMANTS)
The Creditors' Plan and the Amended and Restated Veil
Piercing Settlement Agreement provided for a distribution in
respect of Settlement Claims (Class U-7) of $450 million,
payable in a combination of Qualified Securities and New Common
Stock. The Debtors' Plan did not provide for any distribution
on account of Settlement Claims. The Consensual Plan reduces
the amount of this distribution to $375 million. In addition,
the Celotex Settlement Fund Recipient will receive (i) a
contingent cash payment in the event that the application of
Caplin & Drysdale (counsel to the Veil Piercing Claimants in the
Declaratory Judgment Proceeding) for payment of $15 million in
attorney's fees on behalf of itself and the Claimants' Attorneys
is not granted in full by the Court (the amount of the
additional cash payment to the Celotex Settlement Fund Recipient
will equal that part of the $15 million fee request not granted
by the Court), and (ii) in the event that the Effective Date
occurs after March 31, 1995, additional New Senior Notes (or, if
no New Senior Notes are issued as Qualified Securities, Cash) as
compensation for any delay in receiving distributions of
Qualified Securities beyond March 31, 1995. See "Allocation of
Qualified Securities."
Although the aggregate Class U-7 Claim (other than the
contingent cash payment) is still payable in Qualified
Securities and New Common Stock, the Consensual Plan changes the
method of allocating each component of the distribution. With
respect to Qualified Securities, the Creditors' Plan provided
that Qualified Securities would be divided between Settlement
Claims and Subordinated Note Claims on the basis of a 450/1548
fraction to Holders of Settlement Claims, and the balance to
Holders of Subordinated Note Claims. Under the Consensual Plan,
this fraction has been changed to 375/1473, resulting in a
relatively smaller principal amount of Qualified Securities for
Veil Piercing Claimants and a relatively larger principal amount
of Qualified Securities for Subordinated Noteholders at any
given level of Qualified Securities.
With respect to New Common Stock, the Creditors' Plan
provided that shares of New Common Stock would be allocated
based upon a per-share stock value derived from a $2.525 billion
Negotiated Enterprise Value. Although the Consensual Plan now
generally provides that the Negotiated Enterprise Value will be
increased from $2.525 billion to $2.6 billion, this change does
not apply to the determination of the number of shares of New
Common Stock to be distributed on account of that part of the
$375 million Veil Piercing Claims Amount that is not satisfied
by the issuance of Qualified Securities. Consequently, the
$2.525 billion enterprise value used for purposes of allocating
New Common Stock under the Creditors' Plan will continue to
apply solely for the purpose of determining the number of shares
of New Common Stock to be received by the Celotex Settlement
Fund Recipient under the Veil Piercing Settlement, with the
result that the Celotex Settlement Fund Recipient will receive
and retain the same percentage of the 50 million shares of New
Common Stock to be issued initially on the Effective Date (which
does not include the Pre-LBO Settlement Equity Amount) as would
have been received at a $2.525 billion Negotiated Enterprise
Value.
The example set forth on the following page illustrates the
Class U-7 recovery under the Consensual Plan, assuming that $530
million of Qualified Securities are available for distribution
thereunder.
<PAGE>
ALLOCATION OF QUALIFIED SECURITIES AND
NEW COMMON STOCK TO VEIL PIERCING CLAIMANTS (CLASS U-7)
ALLOWED CLAIM OF CLASS U-7 $ 375,000,000
ALLOCATION OF QUALIFIED SECURITIES
Qualified Securities Available to Classes
U-4 through U-7 $ 530,000,000
Allocation Percentage for Class U-7(a)
25.5%
- --------------
QUALIFIED SECURITIES ALLOCATED TO CLASS U-7 $ 134,928,717
ALLOCATION OF NEW COMMON STOCK
Allowed Claim of Class U-7 $ 375,000,000
Qualified Securities Allocated to Class U-7 (134,928,717)
- --------------
"Veil Piercing Residual Claim Amount" $ 240,071,283
Negotiated Enterprise Value per
Creditors' Plan $2,525,000,000
Amount of Senior Claims per Creditors'
Plan and Consensual Plan 902,000,000
Amount of Qualified Securities Available to
Classes U-4 to U-7 530,000,000
"Veil Piercing New Common Stock Value" $1,093,000,000
Shares to be Initially Issued 50,000,000
"Veil Piercing New Common Stock Value Per Share"(b) $ 21.86
New Common Stock Shares to Be Issued to Veil Piercing
Claimants--
"Veil Piercing New Common Stock Amount"(c) 10,982,218
New Common Stock Value Per Share(d) $ 23.36
NEW COMMON STOCK VALUE ALLOCATED TO CLASS U-7 $ 256,544,612
TOTAL VALUE ALLOCATED TO CLASS U-7(E) $ 391,473,329
(a) Represents proportional sharing amount of Class U-7
pursuant to Section 2.a.ii. of the Second Amended and
Restated Veil Piercing Settlement Agreement
($375,000,000/$1,473,000,000).
(b) Veil Piercing New Common Stock Value divided by Shares to
be Initially Issued.
(c) Veil Piercing Residual Claim Amount divided by Veil
Piercing New Common Stock Value Per Share.
(d) Negotiated Enterprise Value of $2.600 billion less Senior
Claim amount of $902 million and Qualified Securities of
$530 million divided by 50 million shares to be initially
issued.
(e) Represents total Qualified Securities and New Common Stock
Value allocated to Class U-7.
The allocation to individual veil piercing claimants of the
consideration to be distributed to the Celotex Settlement
Recipient Fund under the Consensual Plan will be determined by
the Celotex Bankruptcy Court as part of the Celotex Chapter 11
Proceeding, and not by the Court in the Chapter 11 Cases. The
Consensual Plan, the Second Amended and Restated Veil Piercing
Settlement Agreement and the restated certificate of
incorporation of Walter Industries provide that shares of New
Common Stock issued to the Celotex Settlement Fund Recipient
under the Consensual Plan and not yet transferred to persons
other than Veil Piercing Claimants shall be voted only in the
same percentage as the other shares of New Common Stock are
voted on the matter in question. The Consensual Plan Proponents
anticipate that this provision will be enforced through the
issuance of a separate class of New Common Stock to the
beneficiaries of the Celotex Settlement Fund Recipient that has
all of the rights and privileges of the class of New Common
Stock issued to other Creditors and Interest Holders, except
that the shares of such class shall be voted only in the same
percentage as the shares of the other class of New Common Stock
are voted on the matter in question (the shares of this class
will be automatically converted into the other class of New
Common Stock upon transfer to a Person other than a Veil
Piercing Claimant or its Affiliate). These shares may also be
deposited in a voting trust in connection with the Celotex
Chapter 11 Proceeding.
2. ALLOCATION OF INITIAL ISSUANCE OF 50 MILLION SHARES OF
NEW COMMON STOCK ON THE EFFECTIVE DATE
A. IN GENERAL
Before the Creditors' Plan was modified to become the
Consensual Plan, it provided that 50 million shares of New
Common Stock would be issued on the Effective Date and would be
allocated among the Voting Creditor Classes (Classes S-1, S-2,
S-6, U-4, U-5 and U-6) and the Veil Piercing Claimants in the
manner specified therein. The Creditors' Plan also provided
that Holders of Old Common Stock Interests would receive (i) the
"Equity Call Option" and (ii) any "excess" shares of New Common
Stock that remained after Holders of Subordinated Note Claims
received Qualified Securities and New Common Stock with an
aggregate value equal to the Allowed Amount of their Claims,
which would have included post-petition interest to the extent
permitted by law. The Creditor Proponents anticipated that no
New Common Stock would be issued to the Holders of Old Common
Stock Interests under the Creditors' Plan (other than upon any
exercise of an Equity Call Option).
Under the Consensual Plan, a specified portion of the 50
million shares of New Common Stock to be issued initially on the
Effective Date will be allocated to the Holders of Old Common
Stock Interests, based on the formula described below. In
addition, depending on certain occurrences and contingencies,
additional shares of New Common Stock (which shall not be part
of the initial 50 million share issuance) will be issued to such
Holders. The effect of these modified provisions for the
distribution of New Common Stock to Class E-1 will be dilutive
as to the Voting Creditor Classes, when compared to the
distribution of New Common Stock that they would have received
under the Creditors' Plan (before it was modified to become the
Consensual Plan), had the Court adopted the "Negotiated
Enterprise Value" of $2.525 billion contained in the Creditors'
Plan. The Debtors claimed, however, that the use of this
"Negotiated Enterprise Value" significantly undervalued the
Debtors. The Consensual Plan provides for a $2.6 billion
Negotiated Enterprise Value. See "Allocation of New Common
Stock--Valuation of Debtors and of Equity Represented by New
Common Stock".
B. FORMULA FOR ALLOCATING THE INITIAL ISSUANCE OF 50
MILLION SHARES OF NEW COMMON STOCK TO BE ISSUED ON THE
EFFECTIVE DATE.
Under the Consensual Plan, 50 million shares of New Common
Stock will be issued on the Effective Date and will be allocated
among the Voting Creditor Classes, the Holders of Settlement
Claims and Holders of Old Common Stock Interests in the
following manner:
Initially, a determination will be made of the number of
shares of New Common Stock to be allocated to the Celotex
Settlement Fund Recipient so that it receives the same
percentage of the 50 million shares of New Common Stock that it
would have received absent the increase in the Negotiated
Enterprise Value. This determination is made by first
calculating the amount by which the $375 million Veil Piercing
Claims Amount exceeds the principal amount of the Qualified
Securities issued on account thereof (the remainder being the
"Veil Piercing Residual Claim Amount"), and providing for the
Celotex Settlement Fund Recipient to receive that number of
shares of New Common Stock which has a value equal to the Veil
Piercing Residual Claim Amount, determined by using a value per
share for the New Common Stock which is derived on the basis of
a $2.525 billion enterprise value. This result is accomplished
by using a New Common Stock value per share (the "Veil Piercing
New Common Stock Value Per Share") which is derived by
subtracting the sum of $902 million and the aggregate principal
amount of the Qualified Securities issued to all Classes from
$2.525 billion, and dividing that amount by 50 million shares.
This results in the "Veil Piercing New Common Stock Value Per
Share." The number of shares to be distributed to the Celotex
Settlement Fund Recipient will have an aggregate Veil Piercing
New Common Stock Value Per Share equal to the Veil Piercing
Residual Claim Amount. The aggregate number of shares thus
derived, which will be distributed to the Celotex Settlement
Fund Recipient, is the "Veil Piercing New Common Stock
Amount."<F4>
- ----------------
<F4> This provision will result in the distribution of
additional shares to Class U-7 having an aggregate New
Common Stock Value Per Share of approximately $16 million
(assuming total Qualified Securities available for
distribution under the Consensual Plan of $530 million),
compared to the number of shares that Class U-7 would have
received under the Consensual Plan absent this
anti-dilution provision.
<PAGE>
The number of shares of New Common Stock that remain after
deducting the shares allocated to the Celotex Settlement Fund
Recipient from 50 million shares (the "New Common Stock Residual
Amount") will then be prorated among the Classes listed below by
assigning the following dollar amounts to each of them for
purposes of this proration in order to determine their
respective percentages of the New Common Stock Residual Amount.
a. Revolving Credit Bank Claims (Class S-1)--$28,220,625;
b. Working Capital Bank Claims (Class S-2)--$9,279,375;
c. Series B & C Senior Note Claims (Class S-6)--
$37,500,000;
d. Subordinated Note Claims (Classes U-4, U-5 and U-6) --
the difference between the aggregate principal amount
of the Qualified Securities distributed on account of
the Subordinated Note Claims and the Allowed Amount
thereof (this difference being known as the
"Subordinated Note Claims Residual Amount"); and
e. Old Common Stock Interests (Class E-1)--$150 million
(but only if Class E-1 accepts the Consensual Plan;
otherwise zero).
The sum of (a)-(e) is referred to as the "New Common Stock
Residual Allocation Denominator." The number of shares to be
allocated to each of these Classes (or, in the case of
Subordinated Note Claims, a group of Classes) out of the
aggregate number of shares available to them is determined by
multiplying the New Common Stock Residual Amount by a fraction,
the numerator of which is the dollar amount assigned to that
Class or group of Classes, as set forth above, and the
denominator of which is the New Common Stock Residual Allocation
Denominator. With respect to the stock allocated to the Holders
of Subordinated Note Claims (the "Subordinated Note Claims New
Common Stock Amount"), each Holder of a Subordinated Note Claim
will share ratably in that number of shares, based on the
following proration: the difference between the principal amount
of the Qualified Securities distributed to that Holder and the
total Allowed Amount of that Holder's Claim is calculated (the
"Subordinated Note Claim Deficiency Amount"). That Holder's
share of the New Common Stock allocated to the Subordinated Note
Claims under the above formula is determined by using a
fraction, the numerator of which is that particular Holder's
Subordinated Note Claim Deficiency Amount, and the denominator
of which is the total Subordinated Note Claims Residual Amount.
3. ISSUANCE OF ADDITIONAL NEW COMMON STOCK TO HOLDERS OF
OLD COMMON STOCK INTERESTS
In addition to the 50 million shares of New Common Stock to
be initially issued on the Effective Date and allocated as
described above, if Class E-1 accepts the Consensual Plan,
Holders of Old Common Stock Interests (Class E-1) will receive
additional shares of New Common Stock, the amount of which
depends on certain contingencies. Class E-1 will receive shares
of New Common Stock with an aggregate New Common Stock Value Per
Share equal to the sum of:
(a) The extent by which Federal Income Tax Claims are
reduced to below $27 million in the aggregate by a Final
Order (the Creditors' Disclosure Statement estimated these
claims at $27 million for purposes of estimating the total
Senior Claims at December 31, 1993 (which was estimated at
$902 million), whereas the Debtors' Disclosure Statement
estimated these claims at $14 million; the total amount of
such claims asserted by the IRS is over $186 million) (the
"Federal Income Tax Claims Differential"); and
(b) The amount of federal, state and local tax
benefits when, as and if actually realized by the Debtors
(as described in more detail below) in respect of the
distribution made pursuant to the Veil Piercing Settlement
(the "Veil Piercing Settlement Tax Savings Amount"). This
amount will be determined by the Tax Oversight Committee
upon the filing of a tax return or a refund claim by the
Walter Industries consolidated tax group or a member
thereof for each taxable year ending after the Effective
Date (or for a prior taxable year for which a carryback
claim is filed), which tax return or refund claim includes
a deduction or refund claim for a Veil Piercing Settlement
Tax Savings Amount; at such time, shares of New Common
Stock having an aggregate New Common Stock Value Per Share
equal to such Veil Piercing Settlement Tax Savings Amount
will be issued and placed in escrow with an independent
financial institution acceptable to KKR and the Tax
Oversight Committee, and released from escrow as soon as
practicable after the Tax Oversight Committee determines
that the applicable Veil Piercing Settlement Tax Savings
Amount is no longer subject to adjustment because (i) the
statutory period during which assessments (or denial of a
refund claim) can be made with respect to such Veil
Piercing Settlement Tax Savings Amount has passed,
(ii) Walter Industries and the Internal Revenue Service or
other relevant taxing authority have entered into a closing
or similar agreement governing the years or issues in
question with respect to such Veil Piercing Settlement Tax
Savings Amount, or (iii) a court decision determining the
income tax liability (or the right to such refund) with
respect to such Veil Piercing Settlement Tax Savings Amount
has been rendered and the time period for the filing of an
appeal has passed. Notwithstanding and in addition to the
foregoing, the Consensual Plan provides that in the event
that, on or prior to the 160th day following the Effective
Date, (i) one or more Veil Piercing Settlement Tax Savings
Events shall not have occurred in respect of (and the Tax
Oversight Committee shall not have determined) the maximum
Veil Piercing Settlement Tax Savings Amount that could
result from a good faith claim by the Walter Industries
consolidated tax group both of (a) a refund with respect to
tax years prior to the tax year in which the Effective Date
occurs, and (b) a deduction with respect to the tax year in
which the Effective Date occurs (collectively, the "Initial
Claim"), or (ii) Walter Industries shall not have issued
and delivered into escrow certificates representing shares
of New Common Stock having an aggregate New Common Stock
Value Per Share equal to the full amount of such maximum
Veil Piercing Settlement Tax Savings Amount, then not later
than the 180th day after the Effective Date, Walter
Industries shall issue and deliver into escrow certificates
representing New Common Stock having an aggregate New
Common Stock Value Per Share equal to the sum of (i) that
part of the Veil Piercing Settlement Tax Savings Amount
arising from the Initial Claim in respect of which shares
of New Common Stock had not theretofore been issued into
escrow, as such Veil Piercing Settlement Tax Savings Amount
(whether or not a Veil Piercing Settlement Tax Savings
Event shall previously have occurred) shall be estimated in
good faith by the Chief Financial Officer of Walter
Industries and set forth in a certificate delivered to the
Tax Oversight Committee (and such amount shall be the Veil
Piercing Settlement Tax Savings Amount for purposes of this
sentence) and (ii) an additional amount equal to the lesser
of (A) $13 million and (B) an amount that would cause the
total number of shares of New Common Stock to be issued
into escrow to have an aggregate New Common Stock Value Per
Share equal to $88.7 million; provided, that $11.3 million
of New Common Stock (using the New Common Stock Value Per
Share) shall be issued directly to Holders of Class E-1
Interests on a Pro Rata basis, at the same time as shares
are first issued into escrow. Holders of Class E-1
Interests, on a Pro Rata basis, shall be entitled to
exercise all voting rights of, and receive dividends and
other distributions on, the New Common Stock held in
escrow. The amount of such dividends and other
distributions must be returned to Walter Industries if such
shares are subsequently cancelled prior to release from
escrow.
The Consensual Plan limits the number of shares issuable
under (a) and (b) above to that number of Shares that, when
added to the shares to be issued to Class E-1 out of the initial
issuance of 50 million shares on the Effective Date, has an
aggregate New Common Stock Value Per Share of $250 million. The
Consensual Plan also contains an arbitration provision for the
final determination of any dispute that may arise between KKR
and the Tax Oversight Committee with respect to any
determination made by the Tax Oversight Committee under Section
3.26 of the Consensual Plan.
For purposes of calculating the distribution of these
additional shares of New Common Stock to Class E-1 under (a) and
(b) above, the New Common Stock Value Per Share will be
determined based on a Negotiated Enterprise Value of $2.6
billion. In order to derive the New Common Stock Value Per
Share, two amounts are deducted from the Negotiated Enterprise
Value of $2.6 billion: (i) $902 million; and (ii) the principal
amount of the Qualified Securities to be distributed on the
Effective Date. The net remaining amount is divided by 50
million to calculate the New Common Stock Value Per Share. The
$902 million represents an estimate of administrative, priority,
secured and Other Unsecured Claims as of December 31, 1993.
This amount is estimated to increase to approximately $987
million as of December 31, 1994 (exclusive of the amount of such
Claims to be satisfied in the form of shares of New Common
Stock), based primarily on the increase in postpetition interest
on Secured Claims and the increase in Administrative and
Priority Claims over this period. As a result, in order for the
aggregate value per share of the New Common Stock to equal the
aggregate New Common Stock Value Per Share derived by using the
Negotiated Enterprise Value of $2.6 billion, the value of the
Debtors as of December 31, 1994, would in fact have to be
approximately $2.706 billion, which amount reflects and takes
into account the allocation of New Common Stock to Class U-7
that neutralizes the otherwise dilutive effect of the increase
in the Negotiated Enterprise Value and the distribution of
approximately $75 million of New Common Stock to Class E-1 from
such increase in the Negotiated Enterprise Value. See
"Valuation of Debtors and of Equity Represented by New Common
Stock."
The $902 million and $987 million amounts referred to above
assume $27 million in Federal Income Tax Claims. The IRS has
asserted Federal Income Tax Claims of over $186 million. Of the
Federal Income Tax Claims asserted by the IRS, the Court has
ruled in the Debtors' favor on claims aggregating approximately
$50 million, but has not yet ruled on the remainder. While the
Debtors and the other Consensual Plan Proponents believe that
the Debtors have meritorious defenses against the Federal Income
Tax Claims, neither the Debtors nor the other Consensual Plan
Proponents can predict the amount of such Claims that will be
allowed, or the timing of any such allowance or allowances. The
Consensual Plan provides that, for purposes of the Federal
Income Tax Claims Differential, the amount of Federal Income Tax
Claims shall not be reduced by any Veil Piercing Settlement Tax
Savings Amount. The Consensual Plan also provides that the
Allowed Amount of, and any other terms of any settlement or
agreement regarding, Federal Income Tax Claims shall not be
agreed to by any Debtor without the prior consent of the Tax
Oversight Committee. The Tax Oversight Committee is a committee
of the New Board of Walter Industries, consisting at all times
of the two Independent Directors and a director (or other
person) designated by Lehman Brothers Inc. (the initial
appointment of the Lehman Brothers Inc. designee is required to
be made on or prior to the Effective Date). The Tax Oversight
Committee is given oversight authority under the Consensual Plan
with respect to the Federal Income Tax Claim Differential and
the Veil Piercing Settlement Tax Savings Amount. The Tax
Oversight Committee has the right to select and retain legal and
financial professionals at the expense of Walter Industries.
Walter Industries intends to take the position that
payments made under the Consensual Plan to the Celotex
Settlement Fund Recipient will be deductible in full in the year
of payment, subject to applicable limitations, by the Walter
Industries consolidated tax group. The Consensual Plan
Proponents believe that such payments are properly deductible,
but there can be no assurance that the IRS will not challenge
the amount or timing of such deduction, and if it does so
whether such challenge will succeed.
The Consensual Plan Proponents estimate that, assuming full
deductibility (without limitation) for federal and state income
tax purposes of the $375 million veil piercing settlement amount
in the year in which such amount is paid, the tax benefits to
Walter Industries would be approximately $114 million.
4. ISSUANCE OF ADDITIONAL NEW COMMON STOCK TO HOLDERS OF
PRE-LBO DEBENTURE CLAIMS IN CONNECTION WITH DISMISSAL
OF FRAUDULENT CONVEYANCE LAWSUIT, RELATED RELEASES AND
PRE-LBO BONDHOLDERS SETTLEMENT AGREEMENT
Also in addition to the 50 million shares of New Common
Stock to be issued on the Effective Date, if the "Pre-LBO
Condition" does not occur, then Holders of Pre-LBO Debenture
Claims (Class U-6) will receive additional shares of New Common
Stock having an aggregate New Common Stock Value Per Share equal
to $11.3 million, consisting of the following (the "Pre-LBO
Settlement Equity Amount"):
(a) $6.3 million, representing the estimated claim
amount differential for the Series B & C Senior Note Claims
(i.e., savings to the Debtors) that results from paying
part of these claims in cash rather than by the issuance of
New Senior Notes (the "Series B & C Senior Note Interest
Differential"). The differential arises because that
portion of the Allowed Amount of such claims that is
satisfied by cash is calculated using a post-petition
interest rate from the Filing Date through June 30, 1994
that is one percent (1.0%) lower than that used to
calculate the Allowed Amount of the portion of such claims
that is satisfied by New Senior Notes; and
(b) $5 million, representing the savings which are
estimated to result from the agreement of Apollo and Lehman
Brothers Inc., as part of the Consensual Plan only, not to
file administrative expense claims which had been estimated
at $5 million in the aggregate (the "Bondholder Proponents
Expense Differential").
The Pre-LBO Settlement Equity Amount is fixed at $11.3
million, regardless of the actual amount of the foregoing
differentials. Assuming $530 million of Qualified Securities
available for distribution under the Consensual Plan, this would
result in the issuance of an additional 483,733 shares of New
Common Stock to Class U-6.
If the Pre-LBO Condition occurs: (i) the Pre-LBO Settlement
Equity Amount will not be distributed to Class U-6; (ii) the
Qualified Securities that Class U-6 would otherwise receive if
the Pre-LBO Condition does not occur will instead be reallocated
to Classes U-4 and U-5, with the result that Holders of Class
U-6 Claims would receive only shares of New Common Stock in
respect of such Claims (see "Allocation of Qualified
Securities"); and (iii) the waiver of subordination rights by
Classes U-4 and U-5 will not be applicable to any post-petition
interest that is claimed by, or distributed to, Holders of
Pre-LBO Debenture Claims.
The "Pre-LBO Condition" will occur if either (i) Class U-6
rejects the Consensual Plan, or (ii) the Pre-LBO Bondholders
Settlement Agreement is not terminated prior to or as of
December 31, 1994 pursuant to Section 7C or Section 7D thereof.
As more fully set forth in the Creditors' Disclosure Statement,
in March 1994, the Bondholder Proponents, the Ad Hoc Committee
of Pre-LBO Bondholders, The Acacia Group ("Acacia") and Gabriel
Capital, L.P. ("Gabriel") (Acacia and Gabriel being significant
Holders of Pre-LBO Debenture Claims) and other Holders of
Pre-LBO Debenture Claims entered into the Pre-LBO Bondholders
Settlement Agreement. That Agreement includes, among other
provisions, the agreement of the signatories thereto to support
a creditor-proposed plan of reorganization that includes certain
distributive provisions and provides for a release of all
LBO-Related Issues and a dismissal of the Fraudulent Conveyance
Lawsuit. Section 7C of the Pre-LBO Bondholders Settlement
Agreement permits the Bondholder Proponents or Acacia and
Gabriel to terminate that Agreement at any time after
December 31, 1994 if the Court has not entered the Confirmation
Order on or prior to December 31, 1994. Section 7D of the
Pre-LBO Bondholders Settlement Agreement permits termination
thereof if all of the parties thereto mutually agree in writing
to terminate the Agreement.
If the Pre-LBO Condition occurs, notwithstanding the fact
that Gabriel and Acacia did not change their prior vote in favor
of the Creditors' Plan, and that the Ad Hoc Committee of Pre-LBO
Bondholders was a co-proponent of the Consensual Plan, such
parties reserve all of their rights to object to Confirmation of
the Consensual Plan.
Based on statements made in November 1994 by a significant
Holder of Pre-LBO Debenture Claims, the Consensual Plan
Proponents had reason to believe that certain Holders of Pre-LBO
Debenture Claims would have rejected a previous draft of the
Consensual Plan that did not provide for a distribution of New
Common Stock equal to the Pre-LBO Settlement Equity Amount, and
would have pursued the LBO-Related Issues and the Fraudulent
Conveyance Lawsuit.
The Consensual Plan Proponents believe that the provision
in the Consensual Plan for the additional distribution to Class
U-6 of New Common Stock having an aggregate New Common Stock
Value Per Share equal to the Pre-LBO Settlement Equity Amount
will result in the release of all LBO-Related Issues contained
in Section 6.1 of the Consensual Plan being obtained without
objection by Class U-6, and that such release will be of
substantial value to creditors and interest holders. In
addition, the release in Section 6.3 of the Consensual Plan
provides for the dismissal, with prejudice, of the Fraudulent
Conveyance Lawsuit that was commenced in January 1994 by the
Indenture Trustees for the Pre-LBO Debentures. While the
Consensual Plan Proponents (other than the Ad Hoc Committee of
Pre-LBO Bondholders) believe that meritorious defenses could
have been asserted against the allegations made in the
Fraudulent Conveyance Lawsuit, the Consensual Plan Proponents
concluded that the possibility of an adverse outcome (which
could have a substantially adverse effect on distributions
contemplated under the Consensual Plan), the risk of potential
delay in consummation of the Consensual Plan and the uncertainty
as to whether a release of LBO-Related Issues would be found to
be fair and reasonable if Class U-6 did not accept the
Consensual Plan, justified the provision of additional New
Common Stock having an aggregate New Common Stock Value Per
Share equal to the Pre-LBO Settlement Equity Amount to Class U-6
if it accepts the Consensual Plan. The Holders of a substantial
amount of Class U-6 Claims have indicated that they will support
the Consensual Plan and the Consensual Plan Proponents
anticipate that Class U-6 will accept the Consensual Plan. It
should be noted that the Pre-LBO Settlement Equity Value is
based on the amount of savings realized by the Debtors from
foregone expense claims that could have been made by the
Bondholder Proponents, and from savings in the Class S-6
distribution realized by satisfying part of those Claims in Cash
rather than in New Senior Notes.
As of November 22, 1994, the Bondholder Proponents, Acacia,
Gabriel and the Ad Hoc Committee of Pre-LBO Bondholders entered
into a letter agreement providing, among other things, that
(i) the parties would support the Consensual Plan; (ii) the Ad
Hoc Committee of Pre-LBO Bondholders would continue to be a
co-proponent of the Consensual Plan; (iii) the parties agreed to
terminate the Pre-LBO Bondholders Settlement Agreement pursuant
to its terms as of December 31, 1994; (iv) the parties agreed
that because of,
inter alia, such termination, the filing of the Consensual Plan
does not breach or contravene any of the terms of the Pre-LBO
Bondholders Settlement Agreement; and (v) each of the parties
agreed to release each of the other parties from and against any
claim or liability under the Pre-LBO Bondholders Settlement
Agreement.
5. VALUATION OF DEBTORS AND OF EQUITY REPRESENTED BY NEW
COMMON STOCK
At the hearing that began on October 17, 1994, the Debtors
presented evidence of an enterprise valuation for the Debtors of
$2.805 billion as of May 31, 1995. This enterprise valuation
was arrived at by adding to the midpoint of the valuation range
of the Debtors' and non-Debtor subsidiaries' operating
businesses and other miscellaneous assets at May 31, 1993
exclusive of cash ($2.347 billion) (i) the projected cash
balance of the Debtors and non-Debtor subsidiaries as of May 31,
1995 ($149.8 million) and (ii) the projected increase in the
Economic Balance of the unencumbered mortgage notes to be
purchased by Mid-State Homes from Jim Walter Homes from June 1,
1993 to May 31, 1995 ($308.2 million). The Debtors' valuation
range at May 31, 1993 (including cash balances) was $2.293
billion to $2.757 billion. The Debtors' experts testified that,
at December 31, 1994, such $2.805 billion valuation would be
reduced by an estimated $60 million (to $2.745 billion),
representing the estimated increase in the Economic Balance of
unencumbered mortgage notes from December 31, 1994 to May 31,
1995. These valuations did not include the value of any tax
benefits that are expected to result from distributions to be
made under the Consensual Plan.
At the same hearing, Ernst & Young, the financial advisor
to the Bondholders Committee, presented evidence of an
enterprise valuation range, as of December 31, 1994, of between
$2.344 billion and $2.700 billion, prior to giving effect to tax
benefits that are expected to result from consummation of the
Consensual Plan.
Given the uncertainty as to the enterprise valuation that
the Court would have adopted, and the potential effect of that
valuation on creditor recoveries, the Consensual Plan Proponents
agreed (for purposes of the Consensual Plan) on a Negotiated
Enterprise Value of $2.6 billion as of December 31, 1993. At a
valuation at December 31, 1994 of $2.706 billion or more, all
Creditors will receive at least 100% of the Allowed Amount of
their Claims under the Consensual Plan. A valuation amount of
$2.706 billion as of December 31, 1994 is within the Debtors'
valuation range.
B. ALLOCATION OF QUALIFIED SECURITIES
As noted in Section II.A.1, above, the proportion of
Qualified Securities to be received on account of Settlement
Claims has been changed from 450 divided by 1548 (that is, the
sum of 1,098 plus 450), to 375 divided by 1473 (that is, the sum
of 1,098 plus 375) (the 1,098 amount is derived from the
aggregate pre-Filing Date amount of Subordinated Note Claims,
which is approximately $1,098 million). This change will result
in the distribution of a relatively greater amount of Qualified
Securities in respect of Subordinated Note Claims, and a
relatively smaller amount of Qualified Securities in respect of
Settlement Claims. Except as provided below, the Consensual
Plan does not change the method for allocating the Qualified
Securities to be distributed among the three Classes of
Subordinated Note Claims.
In the event that the Pre-LBO Condition occurs, then
(i) the $80 million aggregate principal amount of Qualified
Securities (subject to adjustment based upon the amount of
Qualified Securities available for distribution under the
Consensual Plan) that would otherwise have been distributed to
Holders of Class U-6 Claims under paragraph (b)(i) of the
definition of "Applicable Consideration" in Section 1.26 of the
Consensual Plan shall instead be distributed to Holders of Class
U-4 and Class U-5 Claims until all unsatisfied elections of,
first, Holders of Class U-4 and, second, Holders of Class U-5
Claims to receive Qualified Securities under the Subordinated
Note Claims Election are satisfied; and (ii) shares of New
Common Stock having an aggregate New Common Stock Value Per
Share equal to the principal amount of the Qualified Securities
which are reallocated from Class U-6 to Holders of Class U-4 and
Class U-5 Claims pursuant to this provision will be deducted
from the number of shares of New Common Stock that would
otherwise have been distributable to such Holders and
distributed to Class U-6 in lieu of the Qualified Securities
which are reallocated to Classes U-4 and U5 pursuant to this
provision. The "preferred" allocation of the $80 million (which
amount is subject to adjustment) in Qualified Securities to
Class U-6 which is eliminated by this provision was originally
incorporated into the Creditors' Plan from the Pre-LBO
Bondholders Settlement Agreement.
In addition, and after taking into account the foregoing,
the Consensual Plan provides that Holders of Senior Subordinated
Note Claims (Class U-4) that elected to receive all or part of
their Class U-4 Claims in Qualified Securities pursuant to the
Subordinated Note Claim Election (other than Lehman Brothers
Inc.) (the "Electing Class U-4 Holders") will be entitled to
"exchange" (the "Class U-4 Exchange Option") their pro rata
share of New Common Stock having an aggregate New Common Stock
Value Per Share of $39.4 million (assuming Qualified Securities
available for distribution under the Consensual Plan to Classes
U-4 through U-7 of $530 million), $0 (assuming Qualified
Securities available for distribution under the Consensual Plan
to Classes U-4 through U-7 of $700 million or more), or if
Qualified Securities available for distribution under the
Consensual Plan to Classes U-4 through U-7 are greater than $530
million but less than $700 million, then the proportionate ratio
of $39.4 million and $0, that they otherwise would have received
on account of their Class U-4 Claim (unless a lesser principal
amount of Qualified Securities is sufficient to satisfy all
Subordinated Note Claim Elections for Qualified Securities, in
which event such lesser amount shall apply), for an identical
aggregate principal amount of Qualified Securities that would
otherwise have been issued to Lehman Brothers Inc. on the
Effective Date in respect of the Class U-4 Claim held by Lehman
Brothers Inc., with any New Senior Notes that would otherwise
have been so issued to Lehman Brothers Inc. to be reallocated
before any Cash that would otherwise have been so distributed is
reallocated.
The willingness of Lehman Brothers Inc. to reallocate up to
$39.4 million of Qualified Securities, that it would otherwise
be entitled to receive is based on its and the Debtors' desire
to strengthen the Debtors' balance sheet. In this connection,
Lehman Brothers Inc. and the Debtors agreed that the Debtors
would emerge from Chapter 11 with a stronger balance sheet if
the total amount of Qualified Securities to be distributed on
the Effective Date were reduced to an anticipated $530 million.
If, however, the amount of Qualified Securities available for
distribution under the Consensual Plan is greater than $530
million but less than $700 million, this $39.4 million number
decreases proportionately as the aggregate principal amount of
Qualified Securities increases, declining to zero at a $700
million level of Qualified Securities. Exercise of the Class
U-4 Exchange Option will result in an increase in the principal
amount of Qualified Securities and an identical decrease in the
amount of New Common Stock (measured using the New Common Stock
Value Per Share) to be distributed to each Electing Class U-4
Holder, and an identical (but opposite) decrease in the
principal amount of Qualified Securities, and increase in the
amount of New Common Stock (based on the New Common Stock Value
Per Share) to be distributed to Lehman Brothers Inc. in respect
of its Class U-4 Claim. The "exchange" will not, therefore,
require an actual transaction between the Holder and Lehman
Brothers Inc., but will be accounted for in the allocations
actually made under the Consensual Plan on the Effective Date.
The Class U-4 Exchange Option can be exercised only by a Holder
of an Eligible Class U-4 Claim and only by completing and
returning (in accordance with the instructions contained
therein) the Class U-4 Exchange Option Form, which is being
transmitted to each Holder of an Eligible Class U-4 Claim
together with this Supplement, so that it is received by the
Balloting Agent no later than 5:00 P.M. Eastern Time on
January 24, 1995 (if the record Holder is a bank, broker or
nominee on behalf of a beneficial holder, the beneficial holder
must complete and return its ballot to such bank, broker or
nominee so that it is received no later than 5:00 P.M. on
January 19, 1995). The aggregate New Common Stock Value Per
Share of New Common Stock that an Electing Class U-4 Holder may
exchange for an identical principal amount of Qualified
Securities is equal to (a) the product of multiplying the
aggregate principal amount of the Qualified Securities to be
reallocated from Lehman Brothers Inc. to Holders that exercise
the Class U-4 Exchange Option by the quotient of (i) the amount
of such Holder's Class U-4 Claim that such Holder requested to
be satisfied by Qualified Securities, divided by (ii) the
aggregate amount of all Class U-4 Claims that were requested to
be satisfied by Qualified Securities (other than Class U-4
Claims held by Lehman Brothers Inc.), in each case pursuant to
the prior Subordinated Note Claim Election, or (b) if less, the
amount necessary to enable such Holder to receive the full
principal amount of the Qualified Securities for which such
Holder made the Subordinated Note Claim Election.
In order to compensate Creditors that are to be issued
Qualified Securities under the Consensual Plan for any delay in
the Effective Date beyond March 31, 1995, during which time the
value of the Debtors (and thus the New Common Stock) is expected
to appreciate in value (while the amount of Qualified Securities
remains constant), in the event that the Effective Date occurs
after March 31, 1995 each Holder of a Subordinated Note Claim
who receives Qualified Securities in accordance with
subparagraphs (a)-(e) of Section 1.26 of the Consensual Plan,
and the Celotex Settlement Fund Recipient on behalf of Veil
Piercing Claimants under Section 3.22 of the Consensual Plan,
shall also receive an additional distribution consisting of New
Senior Notes of the same series and with all of the same terms
and provisions as the New Senior Notes issued as Qualified
Securities, in a principal amount equal to the product of
multiplying the principal amount of Qualified Securities to be
received by such Holder (in the case of Holders of Subordinated
Note Claims, after applying all of the provisions, calculations
and elections of subparagraphs (a)-(e) of Section 1.26 of the
Consensual Plan) by the Qualified Securities Adjuster; provided,
however, that if no New Senior Notes are issued as Qualified
Securities as a result of the issuance of Replacement
Indebtedness under Section 4.19 of the Consensual Plan, such
additional distribution shall be made solely in Cash.
"Qualified Securities Adjuster" is defined under the
Consensual Plan to mean the product of multiplying the rate of
interest on the New Senior Notes to be issued as Qualified
Securities (or, if no New Senior Notes are issued as Qualified
Securities, a rate equal to the rate of interest per annum of
five year U.S. Treasury Notes on the Effective Date plus 487.5
basis points) by a fraction, the numerator of which is the
number of days after March 31, 1995 on which the Effective Date
occurs, and the denominator of which is 360.
C. TERMS OF QUALIFIED SECURITIES AND NEW SENIOR NOTES
The Creditors' Plan provided that Qualified Securities were
to have consisted of (a) Cash, or (b) one or more types of debt
securities having the following terms: (i) if secured by real
property mortgages and the promissory notes secured thereby,
rated BB or higher by either Rating Service, and if not so
secured, rated B or higher by either Rating Service, in each
case as of the Effective Date (unless neither Rating Service
provides a rating after proper application was made therefor),
and (ii) valued at par as of the Effective Date (on a fully
distributed basis) by Lehman Brothers Inc. and a qualified
valuation expert selected by Apollo (provided that, if Lehman
Brothers Inc. and the qualified valuation expert selected by
Apollo did not agree, the Bondholders Committee would select a
third qualified valuation expert of national reputation, whose
determination would be binding). The Qualified Securities were
expected to consist primarily of mortgage-backed debt
instruments. However, because a substantial portion of the
Mid-State Homes mortgage portfolio is to be financed in
connection with the Consensual Plan, a relatively greater
portion of Qualified Securities will consist of Cash under the
Consensual Plan compared to what was anticipated under the
Creditors' Plan.
Under the Consensual Plan, the debt securities constituting
Qualified Securities will consist of 5-year New Senior Notes
issued under the New Senior Note Indenture. Rather than
requiring that the New Senior Notes issued as Qualified
Securities be valued at par on the Effective Date in the same
manner as Qualified Securities under the Creditors' Plan, the
Consensual Plan provides that the annual interest on the New
Senior Notes will be equal to the interest rate on 5-year U.S.
Treasury Notes on the Effective Date plus 450 basis points if
the New Senior Notes are rated BB or higher, or plus 525 basis
points if the New Senior Notes are rated lower than BB or if
Walter Industries does not apply for a rating of the New Senior
Notes issued as Qualified Securities, and if neither Rating
Service provides a rating of the security proposed to be rated
after proper application is made therefor, such interest rate
shall be the average of the two foregoing rates. The Consensual
Plan further provides that such rate will in no event be less
than the rate selected for the New Senior Notes issued in
respect of Series B & C Senior Note Claims.<F5>
- ------------------
<F5> The Consensual Plan provides that, in the event of a
material adverse change in the financial or securities
markets in the United States or in political, financial or
economic conditions in the United States, or outbreak or
material escalation of hostilities such that it is
inadvisable to price the New Senior Notes in such manner,
then Lehman Brothers Inc. and a qualified valuation expert
selected by Apollo will fix the rate of the New Senior
Notes so that such New Senior Notes are valued by Lehman
Brothers Inc. and such qualified valuation expert selected
by Apollo at par as of the Effective Date, and if they
cannot agree on such a rate, the Bondholders Committee will
select a third qualified valuation expert of national
reputation, whose determination of such rate will be
binding.
<PAGE>
The Consensual Plan Proponents anticipate that Walter
Industries will apply for a rating for the New Senior Notes from
the Rating Services, although Walter Industries is not obligated
to do so and no minimum rating is required to be obtained for
the New Senior Notes issued as Qualified Securities. Such New
Senior Notes will be redeemable in whole or in part by the
issuer at any time at 101% of principal amount plus accrued but
unpaid interest (in the case of partial redemptions, the
remaining unredeemed securities must have an aggregate principal
amount of not less than $150 million). Such New Senior Notes
are anticipated to be secured by the common stock of certain
subsidiaries of Walter Industries or by equivalent collateral.
The other anticipated terms of the New Senior Notes, which will
be customary and reasonable for securities of this type and
quality under then-existing market conditions, are set forth in
Exhibit 2 to the Consensual Plan. The Consensual Plan provides
that the aggregate principal amount of New Senior Notes to be
issued as Qualified Securities on the Effective Date shall be
equal to the amount of Qualified Securities that do not consist
of Cash; provided, that the aggregate principal amount of New
Senior Notes to be issued as Qualified Securities, when added to
the aggregate principal amount of New Senior Notes to be issued
in respect of Class S-6 Claims ($94.9 million as at December 31,
1994) shall not exceed $490 million, unless a greater aggregate
principal amount is agreed to by Lehman Brothers Inc.; provided,
further, that the Debtors shall use their best efforts to
minimize, to the extent consistent with obtaining a BB rating
for the New Senior Notes issued as Qualified Securities, the
aggregate principal amount of New Senior Notes required to be
issued as Qualified Securities under the Consensual Plan.
However, the Consensual Plan permits the Debtors to raise
additional indebtedness (the "Replacement Indebtedness") in
order to pay in Cash either or both of the following: (i) all,
but not less than all, of the Claims that would otherwise have
been satisfied by New Senior Notes issued as Qualified
Securities, and/or (ii) all, but not less than all, of the Class
S-6 Claims that would otherwise have been satisfied by New
Senior Notes. See "Matters Relating to Financing." If New
Senior Notes are issued as Qualified Securities under the
Consensual Plan, then the amount of Cash that will be
distributed as Qualified Securities will be equal to the Cash of
the Debtors on hand as of the Effective Date (after giving
effect to the mortgage financing(s) that are part of the Exit
Financing), other than Reserved Cash, after giving effect to
Cash payments to be made (other than as part of Qualified
Securities) on or promptly after the Effective Date under the
Consensual Plan, and the remaining Qualified Securities will
consist of New Senior Notes. The Consensual Plan defines
"Reserved Cash" to mean (i) restricted Cash that the Debtors
have paid, segregated or identified as a deposit, as security or
otherwise reasonably reserved for a particular purpose, and
(ii) at the Debtors' option, up to $45 million of Cash
(excluding bank overdrafts) that may be reserved by the Debtors
for general corporate purposes, in each case as of the Effective
Date; provided, however, that Reserved Cash does not include any
Cash that is to be paid (or is reserved for payment of Disputed
Claims) pursuant to the terms of the Consensual Plan.
The Creditors' Plan provided that Holders of Senior B & C
Senior Note Claims (Class S-6 Claims) would receive, on account
of such Claims, Cash and New Senior Notes (as that term was
defined under the Creditors' Plan) in the proportion determined
by the Bondholders Committee, except that a Holder that made the
Series B & C Senior Note Claim Election would have had all of
such Holder's Class S-6 Claim (other than such Holder's Pro Rata
share of the Class S-6 Fund) satisfied by New Senior Notes.
The Consensual Plan changes the terms of the New Senior
Notes that may be issued in respect of Class S-6 Claims by
providing that in the event that neither Rating Service provides
a rating of BB or higher for such New Senior Notes (or if Walter
Industries elects in its sole discretion to make payment in
Cash), then the Class S-6 Claims that would otherwise have been
satisfied by such New Senior Notes will instead be satisfied by
an amount of Cash equal to the principal amount of New Senior
Notes that would otherwise have been issued. The Consensual
Plan also provides that all Class S-6 Claims will be paid in
Cash, other than those Class S-6 Claims as to which the Series B
& C Senior Note Claim Election was made, which, except as
partially satisfied by Cash from the Class S-6 Fund and by New
Common Stock, will be satisfied in full by New Senior Notes
(which differ from the New Senior Notes to be issued as
Qualified Securities with respect to the method of establishing
the interest rate, the rating, the optional redemption provision
and, possibly, other terms) unless satisfied by Cash as
described in the preceding sentence.
Holders of Class S-6 Claims having an aggregate Allowed
Amount of approximately $94.9 million (as of December 31, 1994)
made the Series B & C Senior Note Claim Election. The
Consensual Plan permits these Holders to exchange, within 90
days after the Effective Date, all of the New Senior Notes that
are issued to such Holder for an identical principal amount of
New Senior Notes issued as Qualified Securities. This exchange
right allows such Holders to participate in a significantly
larger issuance that may result in more liquidity. The exchange
will not be available, however, if no New Senior Notes are
issued as Qualified Securities.
D. AMOUNT OF QUALIFIED SECURITIES
Under the Consensual Plan, the minimum aggregate principal
amount of Qualified Securities that is required to be available
for distribution to Classes U-4, U-5, U-6 and U-7 in order to
satisfy a condition to the Effective Date of the Consensual Plan
is equal to the sum of: (i) $530 million; (ii) the net proceeds
of the Mid-State Trust IV mortgage financing(s) described below
in excess of $900 million, if any, up to but not in excess of
$25 million, and (iii) the amount, if any, by which the
Replacement Indebtedness exceeds the amount of Cash necessary to
pay all Claims that would otherwise have been satisfied by New
Senior Notes issued as Qualified Securities. The Creditors'
Plan, which required $700 million of Qualified Securities,
permitted this condition to be waived by the Bondholder
Proponents. The Consensual Plan does not permit this condition
to be waived.
THERE CAN BE NO ASSURANCE AS TO THE AMOUNT, IF ANY, OR TRADING
VALUE OF QUALIFIED SECURITIES THAT WILL BE AVAILABLE FOR
DISTRIBUTION UNDER THE CONSENSUAL PLAN, NOR CAN THERE BE ANY
ASSURANCE THAT THE SHARES OF NEW COMMON STOCK ISSUED ON THE
EFFECTIVE DATE WILL TRADE AT OR ABOVE THE VALUES INDICATED
HEREIN AT ANY TIME. TRADING PRICES WILL DEPEND ON NUMEROUS
FACTORS, INCLUDING MARKET CONDITIONS, PREVAILING INTEREST RATES
AND THE FINANCIAL CONDITION AND PERFORMANCE OF WALTER INDUSTRIES
AND ITS SUBSIDIARIES.
E. ILLUSTRATION OF EFFECT OF PLAN AMENDMENT ON RECOVERY TO
IMPAIRED CLASSES
The example set forth on the following two pages
illustrates the application of the formula for allocating the
Qualified Securities and the 50 million shares of New Common
Stock to be initially issued on the Effective Date under the
Consensual Plan, based on an assumed amount of $530 million of
Qualified Securities available for distribution under the
Consensual Plan. This illustration does not include the
additional shares of New Common Stock that will be issued to
Holders of Old Common Stock Interests beyond their distribution
out of the initial 50 million shares, that is described in
Section II.A.3. above, or to Holders of Pre-LBO Debenture
Claims with respect to the Pre-LBO Settlement Equity Amount that
is described in Section II.A.4. above.
<TABLE>
ALLOCATION OF
QUALIFIED SECURITIES
ALLOCATION BETWEEN SUBORDINATED NOTE HOLDERS AND VEIL PIERCING
CLAIMANTS
<CAPTION>
PROPORTIONAL PROPORTIONAL AVAILABLE
ALLOCATION VEIL PIERCING
SHARING SHARING QUALIFIED
OF QUALIFIED RESIDUAL CLAIM
AMOUNTS(A) PERCENTAGES SECURITIES
SECURITIES AMOUNT"(B)
<S> <C> <C> <C>
<C> <C>
Subordinated Notes
(Classes U-4, U-5, U-6) $1,098,000,000 74.5% X $530,000,000
= $395,071,283
Veil Piercing
Claimants (Class U-7) 375,000,000 25.5% X 530,000,000
= 134,928,717 $240,071,283
--------------- ------
- -------------
Total $1,473,000,000 100.0%
$530,000,000
=============== ======
=============
</TABLE>
<TABLE>
ALLOCATION AMONG SUBORDINATED NOTE HOLDERS
<CAPTION>
PRIORITY ALLOCATION OF
ALLOCATION OF REMAINING TOTAL
QUALIFIED QUALIFIED QUALIFIED REMAINDER
CLASS CLAIM SECURITIES(C) SECURITIES(D) SECURITIES OF CLAIM
----------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
U-4 $ 479,260,923 $240,000,000 $34,642,156 $274,642,156 $204,618,767
U-5 379,254,167 0 54,911,524 54,911,524 324,342,643
U-6 239,471,887 65,517,603 0 65,517,603 173,954,285
-------------- ------------- ----------- ------------ ------------
Total $1,097,986,977 305,517,603 $89,553,680 $395,071,283 $702,915,694
============== ============= =========== ============ ============
Total Qualified
Securities Available 395,071,283
--------------
Remaining Qualified
Securities $ 89,553,680(d)
==============
</TABLE>
(a) Proportional sharing amounts of $1,098 million for
Subordinated Note Holders and $375 million for Class U-7
per Section 2.a.ii. of the Second Amended and Restated Veil
Piercing Settlement Agreement.
(b) Represents Veil Piercing Allowed Claim less allocation of
Qualified Securities.
(c) Priority Allocations pursuant to Section 1.26(b) of the
Consensual Plan.
(d) Allocated pro rata between Class U-4 and U-5 based on claim
remaining after priority allocations.
<TABLE>
ALLOCATION OF NEW COMMON STOCK
<CAPTION>
Total Shares to Be Issued 50,000,000
Shares to Be Issued to Veil Piercing Claimants(a) (10,982,218)
New Common Stock Residual Amount 39,017,782
REMAINDER OF % OF TOTAL
CLAIM OR NEW COMMON
INTEREST TO BE STOCK NEW COMMON NEW COMMON % OF
RECEIVED IN NEW RESIDUAL STOCK RESIDUAL STOCK SHARES TO EQUITY
CLASS COMMON STOCK(B) AMOUNT AMOUNT BE RECEIVED OWNED
<S> <C> <C> <C> <C> <C>
S-1 $ 28,220,625 3.0% X 39,017,782 = 1,186,645 2.4%
S-2 9,279,375 1.0% X 39,017,782 = 390,187 0.8%
S-6 37,500,000 4.0% X 39,017,782 = 1,576,832 3.2%
U-4 204,618,767 22.1% X 39,017,782 = 8,603,982 17.2%
U-5 324,342,643 35.0% X 39,017,782 = 13,638,233 27.3%
U-6 173,954,285 18.7% X 39,017,782 = 7,314,576 14.6%
E-1 150,000,000 16.2% X 39,017,782 = 6,307,327 12.6%
Total $927,915,694 100.0% 39,017,782 78.0%
Shares Issued to Veil Piercing Claimants (Class U-7) 10,982,218 22.0%
Total New Common Stock Issued at Confirmation 50,000,000 100.0%
</TABLE>
(a) See Section II.A.1. of the Supplement for allocation of New
Common Stock to Class U-7.
(b) Represents claim or interest remaining after the allocation
of Qualified Securities and other consideration to each
class.
F. SOURCES AND USES OF CONSIDERATION RELATING TO CONSUMMATION
OF CONSENSUAL PLAN
In light of the consensual nature of the Consensual Plan,
and the beneficial effect that this consensus is expected to
have on financing, the Consensual Plan Proponents anticipate
that the sources and uses of consideration relating to
consummation of the Consensual Plan will be as follows, assuming
a December 31, 1994 Effective Date:
ESTIMATED AMOUNT
AS OF
DECEMBER 31,
1994(1)
(IN MILLIONS)
SOURCES OF FUNDS
Unrestricted Cash $ 125
Financing of unencumbered mortgages
(Mid-State Trust IV)(2) 900
Total $1,025
USES OF FUNDS
Estimated Cash necessary to satisfy Claims
of Administrative, Priority, Secured and Other
Unsecured (trade) Claims(3) $ 837
Cash reserved for general corporate purposes 45
Cash available as part of Qualified Securities 143
Total $1,025
(1) This chart is provided for illustrative purposes only, and
there can be no assurance that financing will be available
in the foregoing forms and amounts.
(2) This financing is expected to be effected through an
underwritten offering or private placement to be completed
in connection with the Consensual Plan. Lehman Brothers
will be the lead manager in such underwriting or private
placement. It is expected that any underwriter retained in
connection with these financings, including Lehman
Brothers, would be required to seek the approval of the
Court, under Section 1129(a)(4) of the Code, for their fees
and reimbursement of expenses.
(3) This amount is derived by subtracting, from the estimated
Senior Claims of approximately $987 million as of
December 31, 1994, $44 million for reinstated and assumed
claims described in the immediately following chart, $5
million of savings resulting from the Bondholder Proponents
Expense Differential, and approximately $6.3 million of
savings resulting from the Series B & C Senior Note
Interest Differential; the remaining Senior Claims not
satisfied by New Common Stock will be satisfied by New
Senior Notes having an aggregate principal amount of
approximately $94.9 million.
As a result of the foregoing sources and uses, Cash and New
Senior Notes issued as Qualified Securities are estimated as
follows (in millions):
Cash $143.0
New Senior Notes 387.0
Total $530.0
The amount of New Senior Notes issued as Qualified
Securities will be equal to the aggregate amount of Qualified
Securities, less that part of Qualified Securities consisting of
Cash, except that no such New Senior Notes will be issued if the
Cash component of Qualified Securities is increased so that all
Claims that would otherwise have been paid in New Senior Notes
issued as Qualified Securities are instead paid in Cash. This
Cash may be financed by the "Replacement Indebtedness." See
"Matters Relating to Financing." The aggregate principal amount
of New Senior Notes to be issued under the Consensual Plan is
limited to $490 million, unless a greater principal amount is
agreed to by Lehman Brothers Inc.
Using this estimate, the anticipated capitalization of the
Debtors on the Effective Date would be as follows (in millions):
Reinstated/Assumed Claims<F1> $ 44.0
New Senior Notes issued in respect of Class
S-6 Claims<F2> 94.9
New Senior Notes issued as Qualified Securities 387.0
Total $525.9
- ----------------
[FN] Assumed trade claims refers to the payment of 25% of the
Allowed Amount of Class U-3 Claims (plus interest for such
period at the Chemical Bank Prime Rate as from time to time
in effect, but not to exceed 10% per annum) six months
after the Effective Date, as provided in the Consensual
Plan.
[FN] This amount will be increased by the amount of
post-petition interest accrued after December 31, 1994 on
Class S-6 Claims that are to be satisfied by New Senior
Notes.
<PAGE>
To the extent that (i) the net proceeds of the Mid-State
Trust IV mortgage financing are greater than $900 million (up to
a cap of $25 million) or (ii) the Replacement Indebtedness
exceeds the amount necessary to pay all Claims that would
otherwise have been satisfied by New Senior Notes issued as
Qualified Securities, any such Cash will be added to the amount
of Qualified Securities to be distributed under the Consensual
Plan.
Given the foregoing, and the amount of Cash expected to be
available to the Debtors at and immediately after Confirmation,
the Consensual Plan Proponents do not anticipate paying, prior
to the Effective Date, that portion of the Allowed Amount of the
Revolving Credit Bank Claims and the Working Capital Bank Claims
described in clauses (a) and (b) of Sections 3.6 and 3.7 of the
Consensual Plan, respectively (these clauses describe
post-petition interest accruing on such claims from the Filing
Date through the date of payment of such post-petition
interest); the Consensual Plan provides that such amounts are to
be paid within 5 days following the Confirmation Date and on the
last Business Day of each subsequent calendar quarter until the
Effective Date, or such other date as the Court may order (but
in any event not later than the Effective Date). The Consensual
Plan Proponents intend to request that the Court order that such
payments be made on the Effective Date.
G. MATTERS RELATING TO FINANCING
Recognizing that Holders of Subordinated Note Claims will
receive the majority of the Qualified Securities and New Common
Stock to be issued under the Consensual Plan, and that Lehman
Brothers Inc. will be entitled to designate only three of the
nine directors that will comprise the New Board (under the
Creditors' Plan, the Creditor Proponents were to have designated
eight of eleven directors), the Consensual Plan provides that
Walter Industries and the Bondholder Proponents shall consult
and cooperate for purposes of obtaining the Exit Financing and
entering into the New Working Capital Facility and the Mid-State
Homes Warehouse Credit Facility, in each case as of the
Effective Date. The Consensual Plan defines "Exit Financing" as
(i) any third party financing to be obtained as of the Effective
Date in connection with funding distributions to be made under
the Consensual Plan, which shall be directly or indirectly
secured by the unencumbered notes and mortgages held by
Mid-State Homes and/or the residual interests held by Mid-
State Homes in Mid-State Trust II and Mid-State Trust III, and
(ii) any New Senior Notes.
The Consensual Plan provides that the Bondholder Proponents
shall determine and fix the amount (subject to the limitation
contained in the definition of New Senior Notes contained in the
Consensual Plan), terms and conditions of, and shall select the
underwriters, placement and/or other financing sources with
respect to, the Exit Financing, all of which shall be on
commercially reasonable terms consistent with then-
existing market conditions and be reasonably satisfactory to
Walter Industries; provided, that Lehman Brothers Inc. shall act
as lead manager for, and Merrill Lynch, National Westminster
Bank, plc and Nomura Securities shall be given the opportunity
to act as co-manager of, any Exit Financing described in clause
(i) of the definition thereof, and in each case the terms of any
such manager or co-manager arrangement shall be on commercially
reasonable terms consistent with then-existing market
conditions. Subject to the immediately following sentence,
Walter Industries shall determine and fix the amount, terms and
conditions of, and shall select the lenders and/or other
financing sources with respect to, the New Working Capital
Facility (subject to the limitation as to amount of $150 million
contained in the definition thereof in the Consensual Plan) and
the Mid-State Homes Warehouse Credit Facility (subject to the
limitation as to amount of $500 million contained in the
definition thereof in the Consensual Plan), all of which shall
be on commercially reasonable terms consistent with
then-existing market conditions and be reasonably satisfactory
to the Bondholder Proponents; provided, that Walter Industries
shall select Bank of Boston as lead agent or co-agent for the
New Working Capital Facility, and National Westminster Bank, plc
as lead agent or co-agent for the Mid-State Homes Warehouse
Credit Facility, in each case if such lenders are willing to
participate in such financings on terms no less favorable to
Walter Industries than the terms proposed by any other financial
institution previously agreed to by Walter Industries, and in
each case the terms of any such agency or co-agency shall be on
commercially reasonable terms consistent with then-existing
market conditions; provided, further, that the Debtors may incur
additional indebtedness (the "Replacement Indebtedness") in an
amount sufficient to permit them to pay (and which shall be used
to pay) either or both of the following: (i) all, but not less
than all, amounts in Cash that would otherwise be satisfied by
New Senior Notes issued as Qualified Securities on the Effective
Date, and/or (ii) all, but not less than all, amounts in Cash
that would otherwise be satisfied by New Senior Notes issued to
Holders of Series B & C Senior Note Claims on the Effective
Date, which may include additional indebtedness of up to $50
million in excess of such amount (unless the Debtors and Lehman
Brothers Inc. shall agree to an greater amount of indebtedness),
the terms and conditions of which indebtedness shall be
reasonably satisfactory to the Bondholder Proponents.
Notwithstanding the preceding sentence, if either (i) on or
prior to January 15, 1995, the Debtors shall not have obtained
fully executed and binding written commitment letters from one
or more financial institutions for each of the Mid-State Homes
Warehouse Credit Facility and the New Working Capital Facility,
which commitment letters shall have, as conditions to funding,
no conditions other than conditions customary for financings of
this size and nature, which shall be consistent with the Exit
Financing and which may include a customary material adverse
change condition, but which may not include any condition(s) or
other provision(s) that require or would require, as a condition
to funding, directly or indirectly, the Confirmation Order (as
described in Section 10.1(a) of the Consensual Plan) having
become a Final Order, whether any such condition(s) or
provision(s) relates to issuance of opinions of counsel,
officers' certificates or other certificates, any
representation, warranty or covenant, or otherwise; or (ii) on
or prior to the second Business Day prior to the commencement of
the hearing on confirmation of the Consensual Plan, the Debtors
shall not have obtained fully executed and binding definitive
documents evidencing the New Working Capital Facility and the
Mid-State Homes Warehouse Credit Facility, which agreements
shall have, as conditions to funding, no conditions other than
conditions customary for financings of this size and nature,
which shall be consistent with the Exit Financing and which may
include a customary material adverse change condition, but which
may not include any condition(s) or other provision(s) that
require or would require, as a condition to funding, directly or
indirectly, the Confirmation Order (as described in Section
10.1(a) of the Consensual Plan) having become a Final Order,
whether any such condition(s) or provision(s) relates to
issuance of opinions of counsel, officers' certificates or other
certificates, any representation, warranty or covenant, or
otherwise (collectively, such documents are referred to herein
as the "Definitive Financing Documents"), then, in each case
from and after such date, the Bondholder Proponents shall be
entitled to negotiate on behalf of and deliver to the Debtors,
and the Bondholder Proponents shall exercise responsibility with
respect to determining the terms and conditions of, the
Mid-State Homes Warehouse Credit Facility and/or the New Working
Capital Facility, as the case may be, provided that such
facilities shall be reasonably satisfactory to Walter
Industries, but need not be on the terms previously accepted by
Walter Industries or the best available terms.
H. MATTERS RELATING TO CORPORATE GOVERNANCE
1. ELIMINATION OF HIGH-VOTE CLASS OF NEW COMMON STOCK
The Creditors' Plan provided for the issuance to Classes
U-4 and U-5 of a high-vote class of New Common Stock (Class A)
that would be entitled to five votes per share. Other Classes
that were to receive New Common Stock under the Creditors' Plan
were to receive shares of Class B Common Stock having one vote
per share.
The Consensual Plan eliminates the high-vote class of stock
and provides for a single class of New Common Stock, each
carrying one vote per share.
2. DESIGNATION OF NEW BOARD OF DIRECTORS OF WALTER
INDUSTRIES
The Creditors' Plan provided for the appointment of a new
board of directors for each of the Debtors on the Confirmation
Date. Each new board was to have eleven members, consisting of
eight directors appointed by the Creditor Proponents and three
current senior officers of Walter Industries (James W. Walter,
Chairman, G. Robert Durham, President, Chief Executive Officer
and Director, and Kenneth J. Matlock, Executive Vice President,
Chief Financial Officer and Director).
The Consensual Plan provides for the appointment of a new
board of directors for Walter Industries on the Effective Date,
rather than on the Confirmation Date (the boards of directors
for the other Debtors will not be changed under the Consensual
Plan other than as determined by the applicable shareholders in
accordance with applicable nonbankruptcy law). The New Board of
Walter Industries is to initially consist of the following nine
members:
(i) Messrs. Walter, Durham and Matlock;
(ii) One director designated by KKR;
(iii) Three directors designated by Lehman Brothers
Inc., a Creditor Proponent that is the largest holder of
Subordinated Note Claims; and
(iv) two Independent Directors<F6> who shall be
independent of any Debtor, KKR, any KKR Affiliate, any KKR
Party, and any Bondholder Proponent, and who shall be
selected by current management of Walter Industries from a
list of qualified candidates provided by an independent
search firm that shall be selected by Walter Industries and
Lehman Brothers Inc. and retained by Walter Industries,
copies of which list are to be provided to the Bondholders
Committee contemporaneously with its submission to Walter
Industries. The Consensual Plan provides that the New
Board may initially consist of seven directors until the
Independent Directors are selected in accordance with the
procedures set forth above.
The initial term of office for each such director is three
years; thereafter, directors will serve one-year terms. If any
initially designated director fails for any reason to complete
his initial three year term, then substitute director(s) shall
be designated for the remainder of such three year term by the
entity (or, in the case of independent directors, by the
procedure) that initially designated the director as set forth
above, except that in the case of the three director seats
initially held by Messrs. Walter, Durham and Matlock,
substitutes shall be senior officers(s) of Walter Industries
designated by the remaining directors of Walter Industries then
in office.
- -----------------
[FN] The Consensual Plan defines "Independent Director" as
follows:
"Independent Director" means a director of Walter Industries who
is not (apart from such directorship) (i) an officer, Affiliate,
employee, Interested Stockholder, consultant or partner of any
Significant Stockholder or any Affiliate of any Significant
Stockholder or of any entity that was dependent upon any
Significant Stockholder or any Affiliate of any Significant
Stockholder for more than 5% of its revenues or earnings in its
most recent fiscal year, (ii) an officer, employee, consultant
or partner of Walter Industries or any of its Affiliates or an
officer, employee, Interested Stockholder, consultant or partner
or an entity that was dependent upon Walter Industries or any of
its Affiliates for more than 5% of its revenues or earnings in
its most recent fiscal year, or (iii) any relative or spouse of
any of the foregoing persons or a relative of a spouse of any of
the foregoing persons.
<PAGE>
Notwithstanding the foregoing, after six months following
the Effective Date, Lehman Brothers Inc. intends to relinquish
to KKR the right to appoint one of the three Board positions
initially allotted to Lehman Brothers Inc. Such decision will
be in Lehman Brothers Inc.'s sole discretion, although Lehman
Brothers Inc. intends to take into account the Debtors'
performance, adherence to their business plans, projections and
other operational and planning factors. Upon notification of
such relinquishment by Lehman Brothers Inc., KKR shall have the
right to compel the director identified by Lehman Brothers Inc.
to resign as a member of the Board and to appoint the successor
to such directorship pursuant to Section 5.2 of the Consensual
Plan. In addition, during the initial three-year term of the
New Board, (i) in the event that at any time after the Effective
Date, Lehman Brothers Inc. and its Affiliates fail to have
"beneficial" ownership, as that term is used in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended ("Beneficial
Ownership" and its correlative meaning "Beneficially Owned") of
8% or more of the outstanding common stock of Walter Industries
(or its successor by merger, consolidation or otherwise)
(without including any shares held in escrow pursuant to Section
3.26 of the Consensual Plan) (the "Outstanding Common Stock"),
then if KKR and its Affiliates have, at such time, Beneficial
Ownership of 8% or more of the Outstanding Common Stock, KKR
shall have the right to (a) compel the director identified by
Lehman Brothers Inc. (from among those designated by Lehman
Brothers Inc.) to resign his or her position as a member of the
New Board and (b) appoint the successor to such directorship
pursuant to Section 5.2 of the Consensual Plan; (ii) in the
event that at any time after the Effective Date, if two members
of the New Board are KKR designees and if KKR and its Affiliates
fail to have Beneficial Ownership of 8% or more of the
Outstanding Common Stock, and Lehman Brothers Inc. and its
Affiliates have, at such time, Beneficial Ownership of 8% or
more of the Outstanding Common Stock, then Lehman Brothers Inc.
shall have the right to (a) compel the director identified by
KKR (from among those designated by KKR) to resign his or her
position as a member of the New Board and (b) appoint the
successor to such directorship pursuant to Section 5.2 of the
Consensual Plan; and (iii) in the event that at any time after
the Effective Date either Lehman Brothers Inc. and its
Affiliates, or KKR and its Affiliates, fail to have Beneficial
Ownership of 5% or more of the Outstanding Common Stock, then
the directors appointed under this Section 5.2 by Lehman
Brothers Inc. or by KKR, respectively, shall resign and the
remaining directors of Walter Industries shall appoint their
successor(s) for the reminder of the initial three-year term;
provided, however, that notwithstanding the preceding clauses
(i)-(iii), a KKR designee shall at all times be on the New Board
(until the third anniversary of the Effective Date) if, and so
long as, the shares of New Common Stock Beneficially Owned by
KKR and its Affiliates, together with shares held in escrow
under Section 3.26(c) of the Consensual Plan that would be
distributed to KKR or its Affiliates upon release from escrow,
shall together equal 5% or more of the then outstanding common
stock of Walter Industries (or its successor by merger,
consolidation or otherwise) (including as part of the then
outstanding common stock, for purposes of this calculation only,
any shares held in escrow pursuant to Section 3.26 of the
Consensual Plan).
The person designated as a director by KKR is
Michael T. Tokarz, a current Vice President and Director of
Walter Industries and a general partner of KKR. The persons
designated as directors by Lehman Brothers Inc. are as follows:
Elliot M. Fried, 61, Managing Director of Lehman
Brothers Inc. and Co-chairman of Investment Committee.
Director of American Marketing Industries Inc., Bridgeport
Machines Inc., Energy Ventures Inc., Lear Seating
Corporation and Vernitron.
Howard L. Clark, Jr., 50, Vice Chairman of Lehman
Brothers Inc. Director of Plasti-Line Inc., Maytag
Corporation and Fund American Companies, Inc.
Kenneth A. Buckfire, 36, Senior Vice President of
Lehman Brothers Inc. Director of Great Bay Power
Corporation and Pike Advertising Services, Inc.
I. MUTUAL RELEASES BY AND AMONG APOLLO, LEHMAN BROTHERS INC.,
DEBTORS AND KKR
Section 6.3 of the Consensual Plan now includes provision
for the dismissal with prejudice of the KKR-Apollo Action, and
the exchange of mutual releases among KKR and the Debtors, on
the one hand, and Apollo and Lehman Brothers Inc., on the other
hand, which releases cover the Debtors, the KKR Parties, the
Apollo Parties and the Lehman Parties. The form of such
releases is attached as Exhibit 7 to the Consensual Plan.
J. RELEASES GRANTED BY HOLDERS OF CLAIMS AND INTERESTS TO
STOCKHOLDERS, DIRECTORS, OFFICERS, ETC. OF DEBTORS
The releases contained in Section 6.1 of the Creditors'
Plan did not cover the officers, directors or shareholders of
the Debtors, The Celotex Corporation or Old Jim Walter except to
the extent that they held Allowed Indemnity Claims against the
Debtors or timely became a signatory to the Veil Piercing
Settlement Agreement, and thereby became a Settling Equityholder
(in the case of releases regarding the Debtors) or a Celotex/JWC
Released Party (in the case of releases regarding The Celotex
Corporation or Old Jim Walter).
The Consensual Plan provides that, on the Effective Date,
Holders of Claims and Interests will be deemed to grant releases
to the Debtors, their respective present and former parents,
subsidiaries, Affiliates, officers, directors, shareholders,
partners, employees, agents, advisors, predecessors in interest
and representatives (except that no release is granted to The
Celotex Corporation and its subsidiaries, which is a former
Affiliate of the Debtors, although releases are granted to its
present and former shareholders, directors, officers, employees,
etc.).
As in the Creditors' Plan, among the shareholders receiving
releases under Section 6.1 of the Consensual Plan are "Existing
Equityholders" (defined as "Settling Equityholders" under the
Creditors' Plan). Existing Equityholders are defined in the
Second Amended and Restated Veil Piercing Settlement Agreement
(at definition "L.") to mean each record or beneficial holder of
an Old Common Stock Interest; provided, that, in the event that
the Court shall enter an order finding (i) that such Holder
acted in bad faith so as to materially breach the Second Amended
and Restated Veil Piercing Settlement Agreement or to obstruct
confirmation of the Consensual Plan by the date determined by
operation of Section 10.1(a) of the Consensual Plan or the
occurrence of the Plan Effective Date by March 31, 1995, or such
later date as may be determined by operation of Section
10.2(i) of the Consensual Plan and (ii) that denial of the
benefits afforded an Existing Equityholder under the Second
Amended and Restated Veil Piercing Settlement Agreement and the
Consensual Plan is an appropriate remedy for such misconduct,
then such Holder shall not be an Existing Equityholder. If each
of the KKR Entities and the senior management stockholders
identified in Recital (h) of the Second Amended and Restated
Veil Piercing Settlement Agreement are signatories to the Second
Amended and Restated Veil Piercing Settlement Agreement, then
each other record or beneficial Holder of Old Common Stock
Interests will be deemed to be an Existing Equityholder under
the Consensual Plan.
K. CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS OF
THE CONSENSUAL PLAN
The Consensual Plan contains the following conditions to
Confirmation:
a. The Court shall have entered the Confirmation
Order on or prior to March 3, 1995, which order shall,
among other things, include (i) the approval of the Veil
Piercing Settlement and the Second Amended and Restated
Veil Piercing Settlement Agreement and (ii) a finding that
the filing of the Consensual Plan did not constitute a
breach of the Pre-LBO Bondholders Settlement Agreement (the
March 3, 1995 date may be extended until March 31, 1995 by
either the Debtors or the Bondholder Proponents, and such
date may be further extended solely by the Bondholder
Proponents, and the finding referred to in clause
(ii) above may be waived solely by the Bondholder
Proponents); and
b. the Reorganization Documents (other than the New
Senior Note Indenture, the instrument(s) evidencing the
Qualified Securities, the New Common Stock Registration
Rights Agreement and the Qualified Securities Registration
Rights Agreement) shall have been executed (this condition
may be waived solely by the Bondholder Proponents).
These conditions differ from the conditions to Confirmation
of the Creditors' Plan in the following respects: (i) the
condition relating to the entry of the Confirmation Order
contained in the Creditors' Plan required that the Confirmation
Order be entered by December 31, 1994, with such condition
waivable solely by the Bondholders Committee (the Confirmation
Order was not required to contain the approvals or finding set
forth in condition (a) above; such approvals were contemplated
to be obtained through entry of a separate order); (ii) the
Creditors' Plan contained conditions requiring (x) that the
Allowed Amount of Federal Income Tax Claims shall have been
estimated by the Court or settled in an amount not in excess of
$40,000,000; (y) that there shall not have occurred, in the sole
determination of the Bondholders Committee, a material adverse
change in the business, results of operations, condition
(financial or otherwise), properties, Assets or prospects of the
Debtors, taken together, from the date of the Creditors' Plan to
the Confirmation Date; and (z) that the Court shall have entered
an order settling and resolving all of the LBO-Related Issues as
to the Released Parties, as provided in the Creditors' Plan
(these conditions were waivable solely by the Bondholders
Committee). In addition, the Creditors' Plan did not contain
condition (b) set forth above.
The Consensual Plan contains the following conditions to
effectiveness:
a. The Confirmation Order shall have become a Final
Order (this condition may be waived solely by the
Bondholder Proponents);
b. All conditions precedent set forth in the Second
Amended and Restated Veil Piercing Settlement Agreement and
all procedures set forth in Section 4(d)(ii)(A)-(J) of the
Second Amended and Restated Veil Piercing Settlement
Agreement shall have been complied with or waived (as
provided therein); it being understood that none of the
procedures set forth in such Section 4(d)(ii)(A)-(J) may be
waived or modified except with the written consent of the
Debtors;
c. Qualified Securities having an aggregate
principal amount of not less than the sum of: (i) $530
million; (ii) the net proceeds of the financing(s)
described in clause (i) of the definition of "Exit
Financing" contained in the Consensual Plan in excess of
$900 million, if any, up to but not in excess of $25
million, and (iii) the amount, if any, by which the
Replacement Indebtedness exceeds the amount of Cash
necessary to pay all Claims that would otherwise have been
satisfied by New Senior Notes issued as Qualified
Securities, shall be available for distribution to Classes
U-4, U-5, U-6 and U-7 under the Consensual Plan;
d. The Reorganization Documents shall have been
executed and delivered by all of the parties thereto and
the Court shall have entered a Final Order (which may be
the Confirmation Order) approving the Reorganization
Documents (this condition may be waived solely by the
Bondholder Proponents);
e. Mid-State Homes shall have obtained the Mid-State
Homes Warehouse Credit Facility and the Debtors shall have
obtained the New Working Capital Facility;
f. The Charter shall have been filed with the
Secretary of State of the State of Delaware;
g. The adversary proceeding described in
subparagraph (ii) of Section 6.3 shall have been dismissed
with prejudice, and the releases described in subparagraph
(iii) of Section 6.3 shall have been delivered;
h. The New Senior Note Indenture shall be qualified
under the Trust Indenture Act of 1939; and
i. The Effective Date shall occur not later than
March 31, 1995 (this date may be extended solely by the
Bondholder Proponents).
These conditions differ from the conditions to
effectiveness of the Creditors' Plan in the following respects:
(i) the Creditors' Plan contained a condition, waivable solely
by the Bondholders Committee, that the order approving the
settlement and resolution of all LBO-Related Issues as to
Released Parties shall have become a Final Order (the Consensual
Plan does not contain a similar condition); (ii) the Creditors'
Plan required a different amount of Qualified Securities to be
available for distribution to Creditors than that required under
the Consensual Plan, as discussed above, and permitted that
condition to be waived; (iii) the Consensual Plan requires that
the Debtors shall have obtained the New Working Capital
Facility; (iv) the Creditors' Plan did not contain conditions
(f) through (i) set forth above; and (v) the Creditors' Plan
contained conditions, not contained in the Consensual Plan,
regarding the fulfillment of all conditions to effectiveness of
each of the Reorganization Documents (except for conditions
relating to payment of money or the issuance of debt securities
or New Common Stock on the Effective Date). In addition,
certain conditions that were waivable solely by the Bondholders
Committee under the Creditors' Plan are waivable solely by the
Bondholder Proponents under the Consensual Plan.
L. MATERIAL AMENDMENTS TO AMENDED AND RESTATED VEIL PIERCING
SETTLEMENT AGREEMENT
The Amended and Restated Veil Piercing Settlement, which
became effective upon approval thereof by the Celotex Bankruptcy
Court on September 21, 1994, has been amended and is now
embodied in the Second Amended and Restated Veil Piercing
Settlement Agreement, dated as of November 22, 1994. The Second
Amended and Restated Veil Piercing Settlement Agreement is
subject to approval by the Court at a hearing scheduled to begin
on March 1, 1995, and by the Celotex Bankruptcy Court at a
hearing not yet scheduled.
The following amendments are incorporated in the Second
Amended and Restated Veil Piercing Settlement Agreement:
(a) The Allowed Claim of the Veil Piercing Claimants
is reduced from $450 million to $375 million;
(b) The number of shares of New Common Stock to be
received under the Veil Piercing Settlement Agreement will
be calculated based upon the $2.525 billion Negotiated
Enterprise Value;
(c) The Debtors and KKR agree to support the request
by Caplin and Drysdale, one of the law firms representing
the Veil Piercing Claimants, for an award from the Debtors
of $15 million in attorneys' fees on behalf of Caplin &
Drysdale and the Claimants' Attorneys. To the extent that
the Court awards less than $15 million, the settlement
distribution will include a cash payment equal to this
differential;
(d) The Debtors, their existing senior management
shareholders and KKR will become signatories to the Second
Amended and Restated Veil Piercing Settlement Agreement and
cooperate in good faith to insure that such agreement
results in finality with respect to all past, present and
future asbestos litigation, but that the Bondholder
Proponents (after consultation with the Debtors) will make
and implement all strategic decisions that relate directly
or indirectly to, among other things, finality. Section
4(d)(ii)(A)-(J) of the amended agreement describes the
procedures required to be taken in order to achieve
finality, the waiver or modification of which is not
permitted without the Debtors' written consent.
The Court has not appointed a representative of "future
asbestos claimants" in the Chapter 11 Cases, and it is not
contemplated that such a representative will be appointed in the
Chapter 11 Cases. One creditor in the Celotex Chapter 11
Proceeding, Aetna Casualty and Surety Company, has on two
occasions contended that such a "futures representative" must be
appointed in that proceeding by the Celotex Bankruptcy Court
before the Celotex Bankruptcy Court could approve and authorize
The Celotex Corporation to render performance under any veil
piercing settlement agreement approved by the Court in the
Chapter 11 Cases. In each instance, the Celotex Bankruptcy
Court denied Aetna's request, finding it to be premature in that
all creditors of The Celotex Corporation, present and future,
have identical interests in the Veil Piercing Settlement, which
provides a single fund for all Veil Piercing Claimants, present
and future; distribution of that fund among present and future
Veil Piercing Claimants will be determined at a later date by
the Celotex Bankruptcy Court. Recently, The Celotex Corporation
and an Official Celotex Committee have each requested the
appointment of a future asbestos claimants representative in the
Celotex Chapter 11 Proceeding. These motions are currently
scheduled to be heard by the Celotex Bankruptcy Court in early
1995. The Consensual Plan Proponents believe that the
appointment of a future claimants representative in the Celotex
Chapter 11 Proceeding will not affect the approval of the Second
Amended and Restated Veil Piercing Settlement Agreement by
either the Court or the Celotex Bankruptcy Court. HOWEVER, A
REPRESENTATIVE OF FUTURE ASBESTOS CLAIMANTS, IF APPOINTED IN THE
CELOTEX CHAPTER 11 PROCEEDING, MAY TAKE THE POSITION THAT FUTURE
CLAIMANTS ARE NOT BOUND BY THE SECOND AMENDED AND RESTATED VEIL
PIERCING SETTLEMENT AGREEMENT. The Consensual Plan Proponents
take the position that such future Veil Piercing Claimants will
be bound by the Second Amended and Restated Veil Piercing
Settlement Agreement and the Consensual Plan.
III. UPDATED INFORMATION CONCERNING BUSINESSES, PROPERTIES AND
OTHER INFORMATION WITH RESPECT TO THE DEBTORS
Attached hereto as Exhibit 3 are consolidated financial
statements of Walter Industries and management's discussion and
analysis of financial condition and results of operations for
the year ended May 31, 1994 (audited) and for the three months
ended August 31, 1994 (unaudited). This information was
prepared by the Debtors and supplements the financial disclosure
and analysis attached to the Creditors' Disclosure Statement,
which covered the year ended May 31, 1993 and the nine months
ended February 28, 1994.
Included in Exhibit VII to the Creditors' Disclosure
Statement (pages VII-1 through VII-6) is certain information as
to consolidated projections of operations and cash flow of
Walter Industries that is based on projections prepared by the
Debtors. As a supplement thereto, Exhibit 3.C. hereto is a
summary of Walter Industries' unaudited long range plan for the
five years ending May 31, 1995 through 1999. These projections
were prepared by the Debtors in accordance with formalized
corporate planning program guidelines and procedures.
NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THE
PROJECTED FINANCIAL INFORMATION OR THE ABILITY OF THE DEBTORS TO
ACHIEVE THE PROJECTED RESULTS. PROJECTIONS SET FORTH IN THIS
DISCLOSURE STATEMENT SUPPLEMENT REPRESENT A PREDICTION OF FUTURE
EVENTS BY THE DEBTORS BASED UPON CERTAIN ASSUMPTIONS. THESE
FUTURE EVENTS MAY OR MAY NOT OCCUR AND THE PROJECTIONS SHOULD
NOT BE RELIED UPON AS A GUARANTEE OR OTHER ASSURANCE OF THE
ACTUAL RESULTS THAT WILL OCCUR. BECAUSE OF THE NUMEROUS RISKS
AND INHERENT UNCERTAINTIES THAT AFFECT THE OPERATIONS OF THE
DEBTORS, THE ACTUAL RESULTS OF OPERATIONS UNDOUBTEDLY WILL BE
DIFFERENT FROM THOSE PROJECTED, AND SUCH DIFFERENCES MAY BE
MATERIAL AND MAY BE ADVERSE.
For the five months ended October 31, 1994, consolidated
net sales and revenues of $588.1 million were $29.8 million, or
4.8%, lower than plan, and EBIT (earnings before interest and
taxes) of $100.5 million were $25.1 million, or 20.0%, lower
than plan. The reduced EBIT was largely the result of lower
than anticipated earnings of Mid-State Homes and Jim Walter
Resources' Mining Division, coupled with higher Chapter 11
costs. Mid-State Homes' lower EBIT performance was principally
due to a decrease in time charge income reflecting lower than
projected payoffs received in advance of maturity. Jim Walter
Resources Mining Division's reduced EBIT performance resulted
from lower than anticipated shipments of coal to the Japanese
steel mills and other export customers and reduced coal mining
productivity which resulted in higher costs per ton of coal
produced, partially offset by higher coal selling prices.
Reduced coal mining productivity was the result of limited
production at Blue Creek Mine No. 5 due to the recurrence of
spontaneous combustion heatings that shut down the mine from
early April 1994 until May 16, 1994, together with various
geological problems at Blue Creek Mines No. 3 and No. 4.
Development mining for the two remaining longwall panels in the
northwest section of Mine No. 5 resumed on May 16, 1994 and the
first longwall panel will be ready for mining in January 1995.
Chapter 11 costs exceeded plan due to the filing of three
amended plans of reorganization, printing, mailing and noticing
costs associated with the Debtors' Plan and the Creditors' Plan
and litigation expenses associated with the trial of certain
preliminary issues relating to the then-pending Debtors' Plan
and the Creditors' Plan. It is Walter Industries' current
estimate that EBIT for the year ending May 31, 1995 will
probably be moderately below plan.
Included in Exhibit VII to the Creditors' Disclosure
Statement (pages VII-7 through VII-9) is a Pro Forma
Consolidated Balance Sheet of Walter Industries at December 31,
1994 on a "Fresh Start" accounting basis. At the present time
it has not been finally determined whether "Fresh Start"
accounting or a continuation of the present "Historical Cost"
accounting will be used. However, except for changes relating
to modifications in the Consensual Plan from the Creditors'
Plan, as set forth herein, such as amounts of debt securities to
be issued and other minor plan revisions, the only significant
change to such "Fresh Start" Pro Forma Consolidated Balance
Sheet if "Historical Cost" accounting is used, would be a
reduction of approximately $750 million from "Reorganization
Value in Excess of Amounts Allocable to Unidentifiable Assets"
as shown in the Pro Forma Consolidated Balance Sheet and an
equal reduction in "Total Stockholders Equity".
IV. UPDATED INFORMATION REGARDING CERTAIN
FEDERAL INCOME TAX CONSEQUENCES
The discussion of the tax treatment of the Equity Call
Option contained in Article IV of the Creditor's Disclosure
Statement is no longer relevant since the Consensual Plan does
not provide for the issuance of Equity Call Options. Holders of
Class E-1 Interests that receive New Common Stock (either
directly or through issuance to the escrow account to be
established on behalf of the Holders of the Class E-1 Interests
(the "Escrow Account") pursuant to paragraph (c) of Section 3.26
of the Consensual Plan (the "Contingent Shares")) in exchange
for the surrender (or cancellation) of shares of Old Common
Stock held by such Holder should be regarded as participating in
a tax-free exchange or recapitalization, the tax consequences of
which are described in Section IV.B.2.(b) of the Creditors'
Disclosure Statement ("Tax Treatment of Exchanging Holders by
Class"). Thus, the Class E-1 Interest Holders should not
recognize gain or loss on the exchange of their Interests for
New Common Stock (including the Contingent Shares). However, if
and to the extent that any Contingent Shares are issued to the
Holders of Class E-1 Interests or to the Escrow Account on a
date that is later than one year after the Effective Date, a
portion of the Contingent Shares received by such Holder or the
Escrow Account may be treated as ordinary interest income to the
Holder in an amount equal to the IRC-imputed interest on any
Contingent Shares issued to the Holder or the Escrow Account
more than six months after the Effective Date.
Qualified Securities to be issued under the Consensual Plan
will consist solely of cash and New Senior Notes of Walter
Industries, Inc. and/or one or more other Debtors. If such New
Senior Notes are issued by Walter Industries and if they qualify
as "tax securities," the tax consequences of the exchange to
Holders of Claims in Class U-6 will be as described in Section
IV.B.2(c) of the Creditor's Disclosure Statement ("Tax Treatment
of Exchanging Holders by Class"). Although the issue is not
free from doubt, the New Senior Notes issued as Qualified
Securities are not likely to be considered to be "tax
securities" because such Notes have features that are not
indicative of a tax security; for example, the New Senior Notes
issued as Qualified Securities will have a maturity date of five
years and may be redeemed at any time by the issuer. Thus,
Holders of Claims in Class U-6 that receive a combination of
Qualified Securities (including Cash) and New Common Stock in
exchange for their Class U-6 Claims may recognize gain (but not
loss) on the exchange but not in excess of the fair market value
of the "boot" (i.e., the Qualified Securities) received in the
exchange. Class U-6 Claim Holders that do not receive any New
Common Stock will recognize gain or loss in full on the exchange
in the manner described in Section IV.B.2(a) of the Creditor's
Disclosure Statement. The tax treatment of Holders of Claims in
Classes U-4, U-5 and U-7 is not affected by the change in the
nature of Qualified Securities and thus Section IV.B.2.(a) of
the Creditor's Disclosure Statement continues to apply to such
Holders.
If and to the extent that a Holder is deemed to receive any
shares of New Common Stock in exchange for other than such
Holder's Claim against or Interest in the Debtor, the fair
market value of such shares may represent taxable income to such
Holder.
The Consensual Plan Proponents expect that the Celotex
Settlement Fund Recipient will be a trust structured to qualify
under Code Section 524(g) (the "Trust"). For Federal income tax
purposes, the Trust may be considered to be a "Qualified
Settlement Fund" within the meaning of IRC Section 468B and
Regulations Section 1.468B (a "QSF") or, if the Trust does not
qualify as a QSF, as a "grantor trust" that is transparent for
tax purposes.
Irrespective of the classification of the Trust for tax
purposes, Walter Industries generally will not recognize gain or
loss upon the transfer of New Common Stock and Qualified
Securities to the Trust. Walter Industries should be entitled
to a deduction in an amount equal to the value of the New Common
Stock and Qualified Securities, although the timing of such
deduction depends upon whether the Trust is treated as a QSF or
a grantor trust.
In general, an accrual-basis taxpayer such as Walter
Industries may not deduct an expense until (i) all events have
occurred that determine the fact of the liability and (ii) the
amount of the liability can be estimated with reasonable
accuracy. The "all-events" test will not be considered to be
met until "economic performance" with respect to the item
occurs. If the Trust is a QSF, economic performance would be
deemed to occur as New Common Stock is transferred to the Trust
but, with respect to the Qualified Securities, would not occur
until Walter Industries (or any obligor-Debtor that is a related
party) makes principal payments on the Qualified Securities. If
the Trust is not a QSF but qualifies as a grantor trust,
economic performance should be held to occur in the year that
Walter Industries transfers New Common Stock and Qualified
Securities of an issuer other than Walter Industries to the
Trust.
If the Trust is a QSF, the Trust will be treated as a
separate taxpayer for income tax purposes. The Trust will have
a fair market value basis in the shares of New Common Stock
received pursuant to the Consensual Plan and constituting its
corpus, and any dividends paid on the New Common Stock (and
interest paid on the Qualified Securities) before such corpus is
distributed will be taxable to the Trust. The Trust will be
required to treat distributions of New Common Stock to the Veil
Piercing Claimants as a sale at fair market value on the date of
the distribution, thus recognizing taxable gain or loss on the
distribution if the New Common Stock value is greater or less
than the Trust's adjusted tax basis in such Stock on the
distribution date. Although the issue is not free from doubt,
the Trust should neither have basis in, nor recognize gain or
loss upon the distribution of, Qualified Securities (other than
Cash) since the transfer of Qualified Securities will not be
treated as a transfer of property for purpose of IRC Section
468B. The New Common Stock and Qualified Securities distributed
by the Trust, under IRC Section 104, may be excludible from the
gross income of the Veil Piercing Claimants and such New Common
Stock and Qualified Securities would have a fair market value
basis to the Claimants.
Alternatively, if the Trust does not qualify as a QSF but
instead qualifies as a grantor trust, the Trust will be
transparent for tax purposes and the beneficiaries thereof will
be treated as the owners of the Trust property. In such case,
payments by Walter Industries to the Trust would be treated as
being paid directly to the Claimants, and may be excludible from
the gross income of the Claimants pursuant to IRC Section 104.
Dividends paid on the New Common Stock and interest paid on the
Qualified Securities during the period they are held by the
Trust would be treated as received by (and would be taxable to)
the beneficiaries thereof (even if not distributed during the
same taxable period to such beneficiaries).
Dated: December 9, 1994
New York, New York
OFFICIAL BONDHOLDERS COMMITTEE OF
HILLSBOROUGH HOLDINGS CORPORATION, ET AL.
By: /s/ Daniel H. Golden
Daniel H. Golden, Esq.
OFFICIAL COMMITTEE OF GENERAL UNSECURED
CREDITORS OF HILLSBOROUGH HOLDINGS
CORPORATION, ET AL.
By: /s/ Marc S. Kirschner
Marc S. Kirschner, Esq.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
By: /s/ Robert Drain
Robert Drain
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3236
For Lehman Brothers Inc.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
By: /s/ Steven M. Pesner
Steven M. Pesner, P.C.
Ellen R. Werther
65 East 55th Street, 33rd Floor
New York, New York 10022
(212) 872-1010
For Apollo
MARCUS MONTGOMERY WOLFSON P.C.
By: /s/ Peter Wolfson
Peter Wolfson
Sara Chenetz
53 Wall Street
New York, New York 10005
(212) 858-5200
For Ad Hoc Committee of Pre-LBO
Bondholders
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
By: /s/ Andrew A. Kress
Andrew A. Kress, Esq.
425 Park Avenue
New York, New York 10022
(212) 836-8000
For: HILLSBOROUGH HOLDINGS CORPORATION,
BEST INSURORS, INC.,
BEST INSURORS OF MISSISSIPPI, INC.,
COAST TO COAST ADVERTISING, INC.,
COMPUTER HOLDINGS CORPORATION,
DIXIE BUILDING SUPPLIES, INC.,
HAMER HOLDINGS CORPORATION,
HAMER PROPERTIES, INC.,
HOMES HOLDINGS CORPORATION,
JIM WALTER COMPUTER SERVICES, INC.,
JIM WALTER HOMES, INC.,
JIM WALTER INSURANCE SERVICES, INC.,
JIM WALTER RESOURCES, INC.,
JIM WALTER WINDOW COMPONENTS, INC.,
JW ALUMINUM COMPANY,
JW RESOURCES, INC.,
JW RESOURCES HOLDINGS CORPORATION,
J.W.I. HOLDINGS CORPORATION,
J.W. WALTER, INC.,
JW WINDOW COMPONENTS, INC.,
LAND HOLDINGS CORPORATION,
MID-STATE HOMES, INC.,
MID-STATE HOLDINGS CORPORATION,
RAILROAD HOLDINGS CORPORATION,
SLOSS INDUSTRIES CORPORATION,
SOUTHERN PRECISION CORPORATION,
UNITED LAND CORPORATION,
UNITED STATES PIPE AND FOUNDRY COMPANY,
U.S. PIPE REALTY, INC.,
VESTAL MANUFACTURING COMPANY,
WALTER HOME IMPROVEMENT, INC.,
WALTER INDUSTRIES, INC., and
WALTER LAND COMPANY
JWC ASSOCIATES, L.P.
JWC ASSOCIATES II, L.P.
KKR PARTNERS II, L.P.
By: KKR Associates
By: /s/ Henry R. Kravis
Name: Henry R. Kravis
Title: General Partner
<PAGE>
EXHIBIT 1:
AMENDED JOINT PLAN OF REORGANIZATION
<PAGE>
MARKED TO SHOW CHANGES
FROM CREDITORS' PLAN
DATED AS OF AUGUST 1, 1994
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
Chapter 11
Jointly Administered
In re
HILLSBOROUGH HOLDINGS CORPORATION, Case No. 89-9715-8P1
BEST INSURORS, INC., Case No. 89-9740-8P1
BEST INSURORS OF MISSISSIPPI, INC., Case No. 89-9737-8P1
COAST TO COAST ADVERTISING, INC., Case No. 89-9727-8P1
COMPUTER HOLDINGS CORPORATION, Case No. 89-9724-8P1
DIXIE BUILDING SUPPLIES, INC., Case No. 89-9741-8P1
HAMER HOLDINGS CORPORATION, Case No. 89-9735-8P1
HAMER PROPERTIES, INC., Case No. 89-9739-8P1
HOMES HOLDINGS CORPORATION, Case No. 89-9742-8P1
JIM WALTER COMPUTER SERVICES, INC., Case No. 89-9723-8P1
JIM WALTER HOMES, INC., Case No. 89-9746-8P1
JIM WALTER INSURANCE SERVICES, INC., Case No. 89-9731-8P1
JIM WALTER RESOURCES, INC., Case No. 89-9738-8P1
JIM WALTER WINDOW COMPONENTS, INC., Case No. 89-9716-8P1
JW ALUMINUM COMPANY, Case No. 89-9718-8P1
JW RESOURCES, INC., Case No. 90-11997-8P1
JW RESOURCES HOLDINGS CORPORATION, Case No. 89-9719-8P1
J.W.I. HOLDINGS CORPORATION, Case No. 89-9721-8P1
J.W. WALTER, INC., Case No. 89-9717-8P1
JW WINDOW COMPONENTS, INC., Case No. 89-9732-8P1
LAND HOLDINGS CORPORATION, Case No. 89-9720-8P1
MID-STATE HOMES, INC., Case No. 89-9725-8P1
MID-STATE HOLDINGS CORPORATION, Case No. 89-9726-8P1
RAILROAD HOLDINGS CORPORATION, Case No. 89-9733-8P1
SLOSS INDUSTRIES CORPORATION, Case No. 89-9743-8P1
SOUTHERN PRECISION CORPORATION, Case No. 89-9729-8P1
UNITED LAND CORPORATION, Case No. 89-9730-8P1
UNITED STATES PIPE AND FOUNDRY COMPANY, Case No. 89-9744-8P1
U.S. PIPE REALTY, INC., Case No. 89-9734-8P1
VESTAL MANUFACTURING COMPANY, Case No. 89-9728-8P1
WALTER HOME IMPROVEMENT, INC., Case No. 89-9722-8P1
WALTER INDUSTRIES, INC. and Case No. 89-9745-8P1
WALTER LAND COMPANY, Case No. 89-9736-8P1
Debtors.
<PAGE>
AMENDED JOINT PLAN OF REORGANIZATION
DATED AS OF DECEMBER 9, 1994 (THE "CONSENSUAL PLAN")
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
Co-Counsel to Apollo
65 East 55th Street
33rd Floor
New York, NY 10022
(212) 872-1000
STUTMAN, TRIESTER & GLATT, P.C.
Co-Counsel to Apollo
3699 Wilshire Boulevard
Suite 900
Los Angeles, CA 90010
(213) 251-5100
JONES, DAY, REAVIS & POGUE
Counsel to Official
Committee of General
Unsecured Creditors
599 Lexington Avenue
New York, NY 10022
(212) 326-3939
PAUL, WEISS, RIFKIND, WHARTON & GARRSON
Counsel to Lehman
Brothers Inc.
1285 Avenue of the Americas
New York, NY 10019
(212) 373-3000
STROOCK & STROOCK & LAVAN
Counsel to Official
Bondholders Committee
Seven Hanover Sq.
New York, NY 10004-2594
(212) 806-5400
MARCUS MONTGOMERY WOLFSON P.C.
Counsel to Ad Hoc Committee of
Pre-LBO Bondholders
53 Wall Street
New York, NY 10005
(212) 858-5200
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
Co-Counsel to the Debtors
425 Park Avenue
New York, NY 10022
(212) 836-8000
STICHTER, RIEDEL, BLAIN & PROSSER, P.A.
Co-Counsel to the Debtors
110 East Madison St. Suite 200
Tampa, FL 33602
(813) 229-0144
CARLTON, FIELDS, WARD, EMMANUEL, SMITH & CUTLER, P.A.
Counsel to KKR
One Harbour Place
Tampa, FL 33602
(813) 223-7000
<PAGE>
(This page intentionally left blank)
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 3
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS 28
2.1 Administrative Claims 28
2.2 Federal Income Tax Claims 28
2.3 Federal Excise Tax and Reclamation Claims 28
2.4 State and Local Tax Claims 28
2.5 Class S-1 Claims: Revolving Credit Bank Claims 28
2.6 Class S-2 Claims: Working Capital Bank Claims 30
2.7 Class S-3 Claims: Grace Street Note Claims 31
2.8 Class S-4 Claims: Sloss IRB Claim 31
2.9 Class S-5 Claims: Secured Equipment Purchase Claims 31
2.10 Class S-6 Claims: Series B & C Senior Note Claims 31
2.11 Class S-7 Claims: Provident Life & Accident Insurance
Company Claims 32
2.12 Class S-8 Claims: Revolving Credit Agents Claims 32
2.13 Class S-9 Claims: Working Capital Agents Claims 33
2.14 Class S-10 Claims: Other Secured Claims 34
2.15 Class U-1 Claims: Old Walter Industries IRB Claims 36
2.16 Class U-2 Claims: Convenience Class Claims 36
2.17 Class U-3 Claims: Other Unsecured Claims 38
2.18 Class U-4 Claims: Senior Subordinated Note Claims 39
2.19 Class U-5 Claims: 17% Subordinated Note Claims 40
2.20 Class U-6 Claims: Pre-LBO Debenture Claims 40
2.21 Class U-7 Claims: Settlement Claims 40
2.22 Class I-1 Claims: Intercompany IRB Claims 42
2.23 Class I-2 Claims: Pre-Filing Date Intercompany
Notes Payable Claims 42
2.24 Class I-3 Claims: Post-Filing Date Intercompany
Notes Payable Claims 44
2.25 Class E-1 Interests: Old Common Stock Interests
in Hillsborough 46
2.26 Class E-2 Interests: Stock Acquisition Rights in
Hillsborough 46
2.27 Class SE-1 Interests: Subsidiary Common Stock Interests
in Debtors other than Hillsborough 46
2.28 Class SE-2 Interests: Subsidiary Stock Acquisition
Rights in Debtors other than Hillsborough 48
ARTICLE III TREATMENT OF ALLOWED CLAIMS AND INTERESTS UNDER
THE CONSENSUAL PLAN 50
3.1 Satisfaction of Allowed Claims and Interests 50
3.2 Administrative Claims 50
3.3 Federal Income Tax Claims 51
3.4 Federal Excise Tax and Reclamation Claims 51
3.5 State and Local Tax Claims 51
3.6 Class S-1 Claims: Revolving Credit Bank Claims 51
3.7 Class S-2 Claims: Working Capital Bank Claims 52
3.8 Class S-3 Claims: Grace Street Note Claims 52
3.9 Class S-4 Claims: Sloss IRB Claim 52
3.10 Class S-5 Claims: Secured Equipment Purchase Claims 52
3.11 Class S-6 Claims: Series B & C Senior Note Claims 52
3.12 Class S-7 Claims: Provident Life & Accident Insurance
Company Claims 53
3.13 Class S-8 Claims: Revolving Credit Agents Claims 53
3.14 Class S-9 Claims: Working Capital Agents Claims 53
3.15 Class S-10 Claims: Other Secured Claims 54
3.16 Class U-1 Claims: Old Walter Industries IRB Claims 54
3.17 Class U-2 Claims: Convenience Class Claims 54
3.18 Class U-3 Claims: Other Unsecured Claims 54
3.19 Class U-4 Claims: Senior Subordinated Note Claims 55
3.20 Class U-5 Claims: 17% Subordinated Note Claims 55
3.21 Class U-6 Claims: Pre-LBO Debenture Claims 55
3.22 Class U-7 Claims: Settlement Claims 55
3.23 Class I-1 Claims: Intercompany IRB Claims 56
3.24 Class I-2 Claims: Pre-Filing Date Intercompany Notes
Payable Claims 56
3.25 Class I-3 Claims: Post-Filing Date Intercompany Notes
Payable Claims 56
3.26 Class E-1 Interests: Old Common Stock Interests in
Hillsborough 56
3.27 Class E-2 Interests: Stock Acquisition Rights in
Hillsborough 59
3.28 Class SE-1 Interests: Subsidiary Common Stock Interests
in Debtors other than Hillsborough 59
3.29 Class SE-2 Interests: Stock Acquisition Rights in
Debtors other than Hillsborough 59
ARTICLE IV MEANS FOR IMPLEMENTATION OF THE CONSENSUAL PLAN
59
4.1 Charter; Common Stock 59
4.2 Amendments to Charter 59
4.3 Nonvoting Equity Securities 59
4.4 Surrender and Cancellation of Instruments 59
4.5 Distributions to Holders of Allowed Claims
and Interests 61
4.6 All Distributions to be Made by Walter Industries 62
4.7 Fractional Shares; New Senior Notes Less Than $1,000 62
4.8 Execution and Delivery of Reorganization Documents 63
4.9 New Capital Stock of Debtors 63
4.10 Resolution of Disputed Claims 63
4.11 Reserves for Disputed Claims 63
4.12 Investment of Reserves 63
4.13 Excess Reserves 63
4.14 Unclaimed Property 63
4.15 Non-Negotiated Checks 63
4.16 Returned Distributions 64
4.17 Claims Against Two or More Debtors 64
4.18 Direction to Parties 64
4.19 Financing Matters 64
4.20 Federal Tax Claim Matters 65
4.21 "Promptly After the Effective Date." 65
ARTICLE V MANAGEMENT OF WALTER INDUSTRIES 65
5.1 Corporate Governance; Directors and Officers 65
5.2 Reconstitution of Board of Directors of Walter
Industries 66
5.3 Management Stock; New Incentive Plans 67
5.4 Funding of Retiree Health Benefits 67
5.5 Effective Date Bonus Awards 67
ARTICLE VI RELEASES AND INDEMNIFICATION 67
6.1 Release by Holders of Claims or Interests 67
6.2 Release By Debtors 68
6.3 Dismissal of Lawsuits and Related Releases 68
6.4 Indemnification 68
ARTICLE VII ENTERPRISE VALUE 69
7.1 Enterprise Value 69
ARTICLE VIII EXECUTORY CONTRACTS 69
8.1 Assumption of Executory Contracts 69
8.2 Cure of Defaults 69
8.3 Claims for Damages 69
8.4 Classification of Claims 70
ARTICLE IX RETENTION OF JURISDICTION 70
9.1 Jurisdiction of Court 70
ARTICLE X CONDITIONS PRECEDENT TO CONFIRMATION AND
EFFECTIVENESS 71
10.1 Conditions to Confirmation 71
10.2 Conditions to Effectiveness 71
ARTICLE XI CRAM DOWN 72
11.1 Cram Down 72
ARTICLE XII EFFECTS OF PLAN CONFIRMATION; TITLE TO PROPERTY
AND DISCHARGE 72
12.1 Vesting of Property 72
12.2 Discharge 72
12.3 Injunction 72
12.4 Effectiveness and Enforcement of Settlement
Agreements 73
ARTICLE XIII MISCELLANEOUS PROVISIONS 73
13.1 Revocation 73
13.2 Amendments 73
13.3 No Consolidation 73
13.4 Provisions as to Interest 74
13.5 Exhibits 74
13.6 No Attorneys' Fees 74
13.7 Post Confirmation Effect of Evidences of Claims or
Interests 74
13.8 Official Committees 74
13.9 Construction 74
13.10 Time 74
13.11 Tax Allocation of Consideration Paid to Holders 74
13.12 Governing Law 74
13.13 Headings 74
13.14 Notice of Effectiveness 74
13.15 Notices 75
13.16 Not Admissible 76
13.17 Successors and Assigns 76
<PAGE>
EXHIBITS
1. Restated Certificate of Incorporation of Walter Industries
2. Summary of Terms for the New Senior Notes
3A. Second Amended and Restated Veil Piercing Settlement
Agreement
3B. Pre-LBO Bondholders Settlement Agreement
4. Form of New Common Stock Registration Rights Agreement
5. Form of Qualified Securities Registration Rights Agreement
6. Rejected Executory Contracts
7. Form of Mutual Releases
8. List of Record Holders of Subordinated Note Claims That
Made Subordinated Note Claim Election and Aggregate Amount
of Claim of Each Such Holder Elected to be Received in the
Form of Qualified Securities Pursuant to Subordinated Note
Claim Election
< P A G E >
AMENDED JOINT PLAN OF REORGANIZATION
DATED AS OF DECEMBER 9, 1994
The Bondholders Committee (as defined), Lehman Brothers
Inc., Apollo (as defined), the Creditors Committee (as defined),
the Ad Hoc Committee of Pre-LBO Bondholders (as defined), the
Debtors (as defined) and the KKR Proponents (as defined)
(collectively, the "Proponents") hereby propose the following
joint plan of reorganization (as defined herein, the "Consensual
Plan") pursuant to the provisions of chapter 11 of title 11 of
the United States Code, 11 U.S.C. section 101 et seq.
Capitalized terms shall have the meanings set forth in
Article I hereof.
UNCONSOLIDATED PLAN
The Debtors' Chapter 11 Cases are being jointly
administered pursuant to an order of the Court and the
Consensual Plan is being presented as a joint plan of
reorganization of the Debtors for administrative purposes only.
The Consensual Plan is not predicated upon a substantive
consolidation of the Chapter 11 Cases and nothing herein shall
be otherwise construed. Pursuant to the Consensual Plan, Claims
and/or Interests with respect to any Debtor shall be satisfied
by such Debtor or its successor, except that, as an element of
the settlements provided for in the Consensual Plan, with
respect to the distribution of New Senior Notes to Holders of
Allowed Claims in Classes S-6, U-4, U-5, U-6 and U-7, the issuer
of such securities may be a Debtor other than the Debtor against
which the Claim is asserted. Accordingly, except as noted in
the previous sentence, Claims and Interests have been classified
in Article II hereof with respect to each Debtor, and Article
III hereof provides for the treatment of such Allowed Claims
and/or Interests by the Debtor to which such Claims and/or
Interests relate.
MIRROR LIQUIDATION PLAN
Pursuant to an order of the Court dated November 5, 1990
(the "Mirror Liquidation Order"), certain of the Debtors,
including Hillsborough, Old Walter Industries, Jim Walter
Resources, JW Resources, Resources Holdings, United Land, and
Pipe Realty, completed plans of liquidation or merger, or
effected or received other distributions which had been approved
and adopted by them prior to the Filing Date as part of the
Debtors' mirror liquidation plans (the "Mirror Liquidation
Plan"). As a result of the completion of the Mirror Liquidation
Plan, certain Debtors have been completely liquidated or merged
with other Debtors and no longer exist as separate legal
entities. Pursuant to the Mirror Liquidation Order, all rights
of Creditors of Hillsborough, Old Walter Industries, Jim Walter
Resources, Resources Holdings, JW Resources, United Land, Pipe
Realty and any other Debtor affected by the Mirror Liquidation
Plan have been classified, and, except as otherwise set forth in
this paragraph, are addressed in the Consensual Plan without
giving effect to corporate changes resulting from the completion
of the Mirror Liquidation Plan. Obligations, financial and
nonfinancial, of a Debtor under the Consensual Plan shall
automatically be assumed and performed by its successor, if any,
under the Mirror Liquidation Plan. Where the Assets and
liabilities of a Debtor have been transferred to more than one
other Debtor pursuant to the Mirror Liquidation Plan, the
obligations under the Consensual Plan of the transferring Debtor
shall be assumed and performed by the successor Debtors, each
successor Debtor being responsible for satisfying Allowed Claims
of a predecessor Debtor to the extent that the liabilities of
the predecessor Debtor were expressly assumed by such successor
Debtor pursuant to the Mirror Liquidation Plan.
CROSS REFERENCES
For ease of reference in the Consensual Plan, any Allowed
Claim against any Debtor in any Class is lettered consistently
throughout all Classes, as indicated below. For example,
Allowed Claims with respect to U.S. Pipe in Class S-1 are
included in Class S-1AA, those in Class U-3 are included in
Class U-3AA, and so on. Allowed Claims and/or Interests with
respect to each Debtor are set forth in the following Classes:
A. Hillsborough--Classes S-1A, S-2A, S-6A, S-8A, S-9A,
S-10A, U-2A, U-3A, U-4A, U-5A, U-7A, I-2A, I-3A, E-1A and E-2A;
B. Best--Classes S-1B, S-8B, S-10B, U-2B, U-3B, I-2B,
U-7B, I-3B, SE-1B and SE-2B;
C. Best (Miss.)--Classes S-1C, S-8C, S-10C, U-2C, U-3C,
U-7C, I-2C, I-3C, SE-1C and SE-2C;
D. Coast to Coast--Classes S-1D, S-8D, S-10D, U-2D, U-3D,
U-7D, I-2D, I-3D, SE-1D and SE-2D;
E. Computer Holdings--Classes S-1E, S-2E, S-8E, S-9E,
S-10E, U-2E, U-3E, U-7E, I-2E, I-3E, SE-1E and SE-2E;
F. Dixie--Classes S-1F, S-8F, S-10F, U-2F, U-3F, U-7F,
I-2F, I-3F, SE-1F and SE-2F;
G. Hamer Holdings--Classes S-1G, S-2G, S-8G, S-9G, S-10G,
U-2G, U-3G, U-7G, I-2G, I-3G, SE-1G and SE-2G;
H. Hamer Properties--Classes S-1H, S-8H, S-10H, U-2H,
U-3H, U-7H, I-2H, I-3H, SE-1H and SE-2H;
I. Homes Holdings--Classes S-1I, S-2I, S-6I, S-8I, S-9I,
S-10I, U-2I, U-3I, U-4I, U-5I, U-7I, I-2I, I-3I, SE-1I and
SE-2I;
J. Computer Services--Classes S-1J, S-5J, S-8J, S-10J,
U-2J, U-3J, U-7J, I-2J, I-3J, SE-1J and SE-2J;
K. Jim Walter Homes--Classes S-1K, S-6K, S-8K, S-10K,
U-2K, U-3K, U-4K, U-5K, U-7K, I-2K, I-3K, SE-1K and SE-2K;
L. JW Insurance--Classes S-1L, S-8L, S-10L, U-2L, U-7L,
U-3L, I-3L, SE-1L and SE-2L;
M. Jim Walter Resources--Classes S-1M, S-2M, S-6M, S-8M,
S-9M, S-10M, U-2M, U-3M, U-7M, I-2M, I-3M, SE-1M and SE-2M;
N. Window Components (Wisc.)--Classes S-1N, S-8N, S-10N,
U-2N, U-3N, U-7N, I-2N, I-3N, SE-1N and SE-2N;
O. JW Aluminum--Classes S-1O, S-2O, S-5O, S-8O, S-9O,
S-10O, U-2O, U-3O, U-7O, I-2O, I-3O, SE-1O and SE-2O;
P. Resources Holdings--Classes S-1P, S-2P, S-6P, S-8P,
S-9P, S-10P, U-2P, U-3P, U-7P, I-2P, I-3P, SE-1P and SE-2P;
Q. JWI Holdings--Classes S-1Q, S-2Q, S-8Q, S-9Q, S-10Q,
U-2Q, U-3Q, U-7Q, I-2Q, I-3Q, SE-1Q and SE-2Q;
R. JW Walter -- Classes S-1R, S-8R, S-10R, U-2R, U-3R,
U-7R, I-2R, I-3R, SE-1R and SE-2R;
S. Window Components--Classes S-1S, S-2S, S-5S, S-8S,
S-9S, S-10S, U-2S, U-3S, U-7S, I-2S, I-3S, SE-1S and SE-2S;
T. Land Holdings--Classes S-1T, S-2T, S-8T, S-9T, S-10T,
U-2T, U-3T, U-7T, I-2T, I-3T, SE-1T and SE-2T;
U. Mid-State Homes--Classes S-10U, U-2U, U-3U, U-7U, I-2U,
I-3U, SE-1U and SE-2U;
V. Mid-State Holdings--Classes S-1V, S-2V, S-8V, S-9V,
S-10V, U-2V, U-3V, U-7V, I-2V, I-3V, SE-1V and SE-2V;
W. Railroad Holdings -- Classes S-1W, S-2W, S-8W, S-9W,
S-10W, U-2W, U-3W, U-7W, I-2W, I-3W, SE-1W and SE-2W;
X. Sloss--Classes S-1X, S-2X, S-4X, S-5X, S-8X, S-9X,
S-10X, U-2X, U-3X, U-7X, I-1X, I-2X, I-3X, SE-1X and SE-2X;
Y. Southern Precision--Classes S-1Y, S-2Y, S-5Y, S-8Y,
S-9Y, S-10Y, U-2Y, U-3Y, U-7Y, I-2Y, I-3Y, SE-1Y and SE-2Y;
Z. United Land--Classes S-1Z, S-2Z, S-6Z, S-8Z, S-9Z,
S-10Z, U-2Z, U-3Z, U-4Z, U-5Z, U-7Z, I-2Z, I-3Z, SE-1Z and
SE-2Z;
AA. U.S. Pipe--Classes S-1AA, S-2AA, S-5AA, S-6AA, S-8AA,
S-9AA, S-10AA, U-2AA, U-3AA, U-4AA, U-5AA, U-7AA, I-2AA, I-3AA,
SE-1AA and SE-2AA;
BB. Pipe Realty--Classes S-1BB, S-2BB, S-8BB, S-9BB,
S-10BB, U-2BB, U-3BB, U-7BB, I-2BB, I-3BB, SE-1BB and SE-2BB;
CC. Vestal--Classes S-1CC, S-2CC, S-8CC, S-9CC, S-10CC,
U-2CC, U-3CC, U-7CC, I-2CC, I-3CC, SE-1CC and SE-2CC;
DD. Home Improvement--Classes S-10DD, U-2DD, U-3DD, U-7DD,
I-2DD, I-3DD, SE-1DD and SE-2DD;
EE. Old Walter Industries--Classes S-1EE, S-2EE, S-3EE,
S-6EE, S-7EE, S-8EE, S-9EE, S-10EE, U-1EE, U-2EE, U-3EE, U-4EE,
U-5EE, U-6EE, U-7EE, I-2EE, I-3EE, SE-1EE and SE-2EE;
FF. Walter Land--Classes S-1FF, S-2FF, S-8FF, S-9FF,
S-10FF, U-2FF, U-3FF, U-7FF, I-2FF, I-3FF, SE-1FF and SE-2FF;
GG. JW Resources--Classes S-1GG, S-8GG, S-10GG, U-2GG,
U-3GG, U-7GG, I-3GG, SE-1GG and SE-2GG.
<PAGE>
ARTICLE I
DEFINITIONS
Unless otherwise provided in the Consensual Plan, all terms
used herein shall have the meanings assigned to such terms in
the Code. For purposes of the Consensual Plan, the following
terms (which appear in the Consensual Plan as capitalized terms)
shall have the meanings set forth below, and such meanings shall
be equally applicable to the singular and plural forms of the
terms defined, unless the context otherwise requires.
1.1 "10 7/8% Indenture Trustee" shall mean the trustee
under the 10% Subordinated Debenture Indenture.
1.2 "10 7/8% Subordinated Debenture Claims" shall mean all
Claims arising under the 10% Subordinated Debentures and the 10%
Subordinated Debenture Indenture, other than Claims for fees and
expenses of the 10% Indenture Trustee.
1.3 "10 7/8% Subordinated Debenture Indenture" shall mean
the Indenture dated as of May 1, 1983, as amended, between
Original Jim Walter and Mellon Bank, N.A., as trustee, as
assumed as of January 7, 1988 by Old Walter Industries.
1.4 "10 7/8% Subordinated Debentures" shall mean the 10%
Subordinated Debentures due 2008 of Old Walter Industries, as
successor to Original Jim Walter, issued pursuant to the 10%
Subordinated Debenture Indenture.
1.5 "13 1/8% Indenture Trustee" shall mean the trustee
under the 13% Subordinated Note Indenture.
1.6 "13 1/8% Subordinated Note Claims" shall mean all
Claims arising under the 13 1/8% Subordinated Notes and the 13
1/8% Subordinated Note Indenture, other than Claims for fees and
expenses of the 13 1/8% Indenture Trustee.
1.7 "13 1/8% Subordinated Note Indenture" shall mean the
Indenture dated as of February 1, 1983, as amended, between
Original Jim Walter and The Bank of New York, as successor
trustee to Irving Trust Company, as assumed as of January 7,
1988 by Old Walter Industries.
1.8 "13 1/8% Subordinated Notes" shall mean the 13 1/8%
Subordinated Notes due 1993 of Old Walter Industries, as
successor to Original Jim Walter, issued pursuant to the 13 1/8%
Subordinated Note Indenture.
1.9 "13 3/4% Indenture Trustee" shall mean the trustee
under the 13 3/4% Subordinated Debenture Indenture.
1.10 "13 3/4% Subordinated Debenture Claims" shall mean
all Claims arising under the 13 3/4% Subordinated Debentures and
the 13 3/4% Subordinated Debenture Indenture, other than Claims
for fees and expenses of the 13 3/4% Indenture Trustee.
1.11 "13 3/4% Subordinated Debenture Indenture" shall mean
the Indenture dated as of February 1, 1983, as amended, between
Original Jim Walter and The Bank of New York, as successor
trustee to Irving Trust Company, as assumed as of January 7,
1988 by Old Walter Industries.
1.12 "13 3/4% Subordinated Debentures" shall mean the 13
3/4% Subordinated Debentures due 2003 of Old Walter Industries,
as successor to Original Jim Walter, issued pursuant to the 13
3/4% Subordinated Debenture Indenture.
1.13 "17% Indenture Trustee" shall mean the trustee under
the 17% Subordinated Note Indenture.
1.14 "17% Subordinated Note Claims" shall mean all Claims
arising under the 17% Subordinated Notes and the 17%
Subordinated Note Indenture, other than Claims for fees and
expenses of the 17% Indenture Trustee.
1.15 "17% Subordinated Note Indenture" shall mean the
Indenture dated as of January 1, 1988, as amended, among Jim
Walter Homes, United Land and U.S. Pipe, as issuers,
Hillsborough, Old Walter Industries and Homes Holdings, as
guarantors, and IBJ Schroder Bank & Trust Company, as successor
trustee to Southeast Bank, N.A.
1.16 "17% Subordinated Notes" shall mean the Subordinated
Notes due 1996 of Jim Walter Homes, United Land and U.S. Pipe,
issued pursuant to the 17% Subordinated Note Indenture.
1.17 "Ad Hoc Committee of Pre-LBO Bondholders" shall mean
the unofficial committee of certain holders of 10 7/8%
Subordinated Debentures, 13 1/8% Subordinated Notes and 13 3/4%
Subordinated Debentures, the members of which consist of, as of
the date hereof, Gabriel Capital, L.P. and The Acacia Mutual
Life Insurance Company, each as voting members, and Mellon Bank,
N.A., as indenture trustee and The Bank of New York, as
indenture trustee, each as non-voting ex officio members.
1.18 "Administrative Claims" shall mean and be the
collective reference to, to the extent entitled to and allowed
priority in payment under Section 507(a)(1) of the Code or as
may be allowed by a Final Order: (a) all of the costs and
expenses of administration of the Chapter 11 Cases, including,
without limitation, the costs and expenses allowed under Section
503(b) of the Code, the actual and necessary costs and expenses
of preserving the estate of each of the Debtors and operating
the business of each of the Debtors, all Fee Claims, any
indebtedness or obligations incurred or assumed by any of the
Debtors, and any fees or charges assessed against the estate of
any of the Debtors under 28 U.S.C. section 1930; (b) Executory
Contract
Claims; (c) Indenture Trustees Claims (of which the Claims of
the Series B & C Senior Note Trustee shall be Allowed Claims
under Section 506(b) of the Code); and (d) if the Pre-LBO
Condition does not occur, all of the Proponents Expenses.
1.19 "Affiliate" of a Person means any Person that
controls, is under direct or indirect common control with, or is
controlled by, such other Person. For purposes of this
definition, "control" means the ability of one Person to direct
the management and policies of another Person, directly or
indirectly, whether through ownership of voting securities, by
contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
1.20 "Allowed Amount" shall mean:
(a) with respect to any Administrative Claim or
Priority Claim, the amount of such Claim as agreed to by
Walter Industries (subject to Section 4.20 of the
Consensual Plan with respect to Federal Income Tax Claims)
and the Holder of such Claim and approved by a Final Order
of the Court to the extent required by the Code or, failing
agreement, the amount thereof as fixed by a Final Order of
the Court, including with respect to an Executory Contract
Claim, the amount of such Claim as determined in accordance
with the procedures set forth in Section 8.2 of the
Consensual Plan;
(b) with respect to any Revolving Credit Bank Claim,
an amount equal to a Pro Rata portion of the sum of (i) the
Adjusted Revolving Loan Claim (as defined below) as of the
Effective Date, (ii) interest on the Adjusted Revolving
Loan Claim for the period from December 27, 1989 through
October 31, 1992 at the Chemical Bank Prime Rate plus 1.5%
per annum (the "Stub Period Interest," and together with
the Adjusted Revolving Loan Claim, the "Revolving Credit
Bank Claim Stub Period Amount"), (iii) interest on the
Revolving Credit Bank Claim Stub Period Amount for the
period November 1, 1992 through the earlier to occur of
(A) the date of the Initial Revolving Credit Bank Claim
Payment and (B) June 30, 1994 at the Chemical Bank Prime
Rate plus 1.5% per annum, compounded on each January 1,
April 1, July 1 and October 1 (the "Post-Stub Period
Interest"), (iv) in the event that all or any portion of
the Initial Revolving Bank Claim Payment is not made on or
prior to June 30, 1994, the sum of (A) interest on the sum
of the Stub Period Interest and the Post-Stub Period
Interest (or the unpaid portion of either thereof) for the
period from July 1, 1994 through the date on which the
Initial Revolving Credit Claim Payment is made (or such
portion is paid), at 13% per annum, and (B) interest on the
Adjusted Revolving Loan Claim for the period from July 1,
1994 through the date on which the Initial Revolving Credit
Claim Payment is made, at the Chemical Bank Prime Rate plus
1.5% per annum, in the case of each of (A) and (B),
compounded on each January 1, April 1, July 1 and
October 1, (v) interest on the Adjusted Revolving Loan
Claim from the date of the Initial Revolving Credit Bank
Claim Payment through the Effective Date at the Chemical
Bank Prime Rate plus 1.5% per annum, compounded on each
January 1, April 1, July 1 and October 1 if not paid
currently in accordance with Section 3.6(b) and
(vi) additional interest consisting of that number of
shares of New Common Stock which is the product of
multiplying the New Common Stock Residual Amount by a
fraction, the numerator of which is $28,220,625, and the
denominator of which is the New Common Stock Residual
Allocation Denominator (the term "Adjusted Revolving Loan
Claim" shall mean, as of any date commencing on
December 27, 1989, $243,666,041 as reduced from time to
time by repayments of principal thereof and interest
thereon, including payments of $5,794,016 of Beijer
Proceeds and Bank Setoff Proceeds as of October 19, 1990
and $8,248,821 of Apache Note Proceeds as of June 18,
1991);
(c) with respect to any Working Capital Bank Claim, an
amount equal to a Pro Rata portion of the sum of (i) the
Adjusted Working Capital Claim (as defined below) as of the
Effective Date, (ii) interest on the Adjusted Working
Capital Claim for the period from December 27, 1989 through
October 31, 1992 at the Chemical Bank Prime Rate plus 1.5%
per annum (the "Stub Period Interest," and together with
the Adjusted Working Capital Claim, the "Working Capital
Bank Claim Stub Period Amount"), (iii) interest on the
Working Capital Bank Claim Stub Period Amount for the
period November 1, 1992 through the earlier to occur of
(A) the date of the Initial Working Capital Bank Claim
Payment and (B) June 30, 1994 at the Chemical Bank Prime
Rate plus 1.5% per annum, compounded on each January 1,
April 1, July 1 and October 1 (the "Post-Stub Period
Interest"), (iv) in the event that all or any portion of
the Initial Working Capital Bank Claim Payment is not made
on or prior to June 30, 1994, the sum of (A) interest on
the sum of the Stub Period Interest and the Post-Stub
Period Interest (or the unpaid portion of either thereof)
for the period from July 1, 1994 through the date on which
the Initial Working Capital Bank Claim Payment is made (or
such portion is paid), at 13% per annum, and (B) interest
on the Adjusted Working Capital Claim for the period from
July 1, 1994 through the date on which the Initial Working
Capital Bank Claim Payment is made, at the Chemical Bank
Prime Rate plus 1.5% per annum, in the case of each of (A)
and (B), compounded on each January 1, April 1, July 1 and
October 1, (v) interest on the Adjusted Working Capital
Claim from the date of the Initial Working Capital Bank
Claim Payment through the Effective Date at the Chemical
Bank Prime Rate plus 1.5% per annum, compounded on each
January 1, April 1, July 1 and October 1 if not paid
currently in accordance with Section 3.7(b) and
(vi) additional interest consisting of that number of
shares of New Common Stock which is the product of
multiplying the New Common Stock Residual Amount by a
fraction, the numerator of which is $9,279,375, and the
denominator of which is the New Common Stock Residual
Allocation Denominator (the term "Adjusted Working Capital
Claim" shall mean, as of any date commencing on
December 27, 1989, $80,245,869 as (x) increased from time
to time by letter of credit draws, including draws of
$2,000,000 as of January 3, 1990 and $900,000 as of
June 11, 1990 and (y) reduced from time to time by
repayments of principal thereof and interest thereon,
including payments of $1,561,751 of Beijer Proceeds and
Bank Setoff Proceeds as of October 19, 1990 and $2,805,305
of Apache Note Proceeds as of June 18, 1991);
(d) with respect to any Revolving Credit Agents Claim
and Working Capital Agents Claim, the amount thereof
determined in accordance with the Revolving Credit
Agreement and Working Capital Agreement, respectively;
(e) with respect to any Series B & C Senior Note
Claim, an amount equal to the sum of (i) the principal
amount thereof due and owing as of the Filing Date,
(ii) interest on such principal amount accrued and unpaid
as of the Filing Date calculated at the non-default
contract rate, (iii) (a) with respect to amounts paid in
Cash under Section 3.11 of the Consensual Plan, interest on
such principal amount and interest, accrued from the Filing
Date to June 30, 1994 calculated at a rate of 13.0% per
annum, and accrued from July 1, 1994 to the Effective Date
calculated at a rate of 14 5/8% per annum; and (b) with
respect to amounts elected to be paid in New Senior Notes
under Section 3.11 of the Consensual Plan (whether or not
such Claims are satisfied by New Senior Notes or by Cash),
interest on such principal amount and interest, accrued
from the Filing Date to June 30, 1994 calculated at a rate
of 14.0% per annum, and accrued from July 1, 1994 to the
Effective Date at a rate of 14 5/8% per annum, and
(iv) additional interest consisting of such Holder's Pro
Rata portion of that number of shares of New Common Stock
which is the product of multiplying the New Common Stock
Residual Amount by a fraction, the numerator of which is
$37,500,000, and the denominator of which is the New Common
Stock Residual Allocation Denominator;
(f) with respect to any Grace Street Note Claim, an
amount equal to (i) as to a Claim for principal and
interest, the sum of (x) the principal amount thereof due
and owing as of the Filing Date, (y) interest on such
principal amount accrued and unpaid as of the Filing Date,
calculated at the non-default contract rate and
(z) interest on such principal amount accrued and unpaid
from the Filing Date to the Effective Date calculated at
the non-default contract rate, plus (ii) as to a Claim for
reasonable fees and expenses of payees under the Grace
Street Notes, (x) the amount agreed to by Walter Industries
and such payees and approved by a Final Order of the Court
or (y) the amount fixed by a Final Order of the Court,
minus in either case (iii) any amounts applied by Walter
Industries to repay any such Claim subsequent to the Filing
Date and prior to the Effective Date;
(g) with respect to any Secured Equipment Purchase
Claim, an amount equal to (i) as to a Claim for principal
and interest, the sum of (x) the principal amount thereof
due and owing as of the Filing Date, (y) interest on such
principal amount accrued and unpaid as of the Filing Date,
calculated at the non-default contract rate and
(z) interest on such principal amount accrued and unpaid
from the Filing Date to the Effective Date calculated at
the non-default contract rate, minus (ii) any amounts
applied by the applicable Debtor to repay any such Claim
subsequent to the Filing Date and prior to the Effective
Date;
(h) with respect to any IRB Claim other than the Sloss
IRB Claim, an amount equal to the sum of the principal
payments thereunder due and owing as of the Effective Date
together with interest payments thereunder accrued and
unpaid as of the Effective Date, calculated at the
non-default contract rate, which principal payments or
interest payments became due either prior to or subsequent
to the Filing Date and prior to the Effective Date in
accordance with the applicable indenture (without giving
effect to the acceleration, if any, of the obligations
underlying the applicable IRBs);
(i) with respect to the Sloss IRB Claim, an amount
equal to (i) as to a Claim for principal and interest, the
sum of (x) the principal amount thereof due and owing as of
the Filing Date, (y) interest on such principal amount
accrued and unpaid as of the Filing Date, calculated at the
non-default contract rate and (z) interest on such
principal amount accrued and unpaid from the Filing Date to
the Effective Date calculated at the non-default contract
rate, minus (ii) any amounts applied by Sloss to repay any
such Claim subsequent to the Filing Date and prior to the
Effective Date;
(j) with respect to any Provident Life & Accident
Insurance Company Claim, an amount necessary to cure all
defaults and pay all damages in respect of the agreement
underlying such Provident Life & Accident Insurance Company
Claim (without giving effect to the acceleration, if any,
of the obligations underlying such agreement) such that any
remaining amount of such Provident Life & Accident
Insurance Company Claim may be reinstated in accordance
with Section 1124(2) of the Code;
(k) with respect to any Subordinated Note Claim, an
amount equal to the unpaid principal amount of such
Subordinated Note due and owing as of the Filing Date
(less, in the case of any 10 7/8% Subordinated Debenture
Claims, the unamortized discount associated with such
10 7/8% Subordinated Debenture as of the Filing Date)
together with interest thereon accrued and unpaid as of the
Filing Date, calculated at the contract rate then in
effect;
(l) with respect to any Deficiency Claim, the amount
thereof as agreed to by Walter Industries and the Holder of
such Claim and approved by a Final Order of the Court or
the amount thereof as fixed by a Final Order of the Court;
(m) with respect to any Convenience Class Claim or
Other Unsecured Claim, the sum of
(i) (A) if the Holder of such Claim did not File a
proof of claim with respect thereto on or before the
Bar Date the amount of such Claim as listed in the
Debtors' Schedules as not disputed, contingent or
unliquidated; or (B) if the Holder of such Claim Filed
a proof of claim with respect thereto on or before the
Bar Date, the amount of such Claim as agreed to by
Walter Industries and the Holder of such Claim and
approved by a Final Order of the Court, or, in the
absence of such an agreement, (x) the amount stated in
such proof of claim if no objection to such proof of
claim was interposed within the applicable period of
time fixed by the Code, the Bankruptcy Rules or the
Court, or (y) the amount thereof as fixed by a Final
Order of the Court if an objection to such proof of
claim was interposed within the applicable period of
time fixed by the Code, the Bankruptcy Rules or the
Court ("Pre-Filing Date Unsecured Allowed Amount"),
plus
(ii) interest on the Pre-Filing Date Unsecured
Allowed Amount from the Filing Date to the Effective
Date, calculated at the General Unsecured Interest Rate
as from time to time in effect;
(n) with respect to any Other Secured Claim, (i) if a
Holder of such Claim did not File a proof of claim with
respect thereto with the Court on or before the Bar Date,
the amount of such Claim as listed in the Debtors'
Schedules as not disputed, contingent or unliquidated; or
(ii) if the Holder of such Claim did File a proof of claim
with respect thereto with the Court on or before the Bar
Date, the amount of such Claim as agreed to by Walter
Industries and the Holder of such Claim and approved by a
Final Order, or, in the absence of such agreement, (A) the
amount stated in such proof of claim if no objection to
such proof of claim was interposed within the applicable
period of time fixed by the Code, the Bankruptcy Rules or
the Court or (B) the amount thereof as fixed by a Final
Order, if an objection to such proof of claim was
interposed within the applicable period of time fixed by
the Code, the Bankruptcy Rules or the Court;
(o) with respect to all of the Settlement Claims in
the aggregate, the sum of (A) the Veil Piercing Claims
Amount, and (B) such additional amount (but not to exceed
$15 million) provided for in Section 2(a)(i) of the Second
Amended and Restated Veil Piercing Settlement Agreement, in
each case in the form of consideration set forth in Section
3.22 hereof; and
(p) with respect to any Allowed Claim not otherwise
specified in (a) through (o) above, the amount of such
Claim as agreed to by Walter Industries and the Holder of
such Claim and approved by a Final Order, or, in the
absence of such an agreement, the amount thereof as fixed
by a Final Order of the Court.
1.21 "Allowed Claim" shall mean any Claim for which an
Allowed Amount has been determined.
1.22 "Allowed Old Common Stock Interest" shall mean any
interest in the Old Common Stock, exclusive of any shares of
such stock held in treasury, which is registered as of the
Effective Date in such stock register as may be maintained by or
on behalf of Walter Industries.
1.23 "Apache Note Proceeds" shall mean Cash collections
received by Jim Walter Resources subsequent to the Filing Date
from Jasper Corp. in the amount of $10,704,000 from payments on
the non-recourse promissory note dated May 26, 1988 payable to
Jim Walter Resources in the original principal amount of
$25,000,000, together with $350,126 of interest earned thereon
prior to application thereof to amounts owed to the Revolving
Credit Banks and the Working Capital Banks, or a total of
$11,054,126.
1.24 "Apollo" shall mean AIF II, L.P., certain Affiliates
of AIF II, L.P. and certain accounts managed or controlled by
such Affiliates.
1.25 "Apollo Parties" shall mean Leon Black, Marc
J. Rowan, AIF II, L.P., Lion Advisors, L.P., Apollo Advisors,
L.P., Apollo Capital Management, Inc., Lion Capital Management,
Inc., Altus Finance, and their respective Affiliates, and any
person that is or has ever been a director, officer, partner,
stockholder, employee, agent, or representative of any of them,
and any accounts managed or controlled by any of them or any of
their Affiliates.
1.26 "Applicable Consideration" shall mean consideration,
limited exclusively to Qualified Securities and New Common
Stock, available for distribution on account of Subordinated
Note Claims, which shall be allocated to Holders of Class U-4
Allowed Claims, Class U-5 Allowed Claims and Class U-6 Allowed
Claims, as follows:
(a) To the extent elected by Holders of Class U-4
Claims pursuant to the Subordinated Note Claim Election,
the first $240,000,000 principal amount of such Qualified
Securities (to the extent available) shall be used to
satisfy the Allowed Claims of Class U-4;
(b) To the extent elected by Holders of Class U-4
Claims (other than as to Class U-4 Claims satisfied with
Qualified Securities pursuant to paragraph (a) of this
Section), Class U-5 Claims and Class U-6 Claims pursuant to
the Subordinated Note Claim Election, the remaining
principal amount of such Qualified Securities (to the
extent available), plus the principal amount, if any, of
Qualified Securities provided for in clause (a) above but
not elected by Holders of Class U-4 Claims, shall be used
to satisfy the Allowed Claims of Class U-4, U-5 and U-6, as
follows:
(i) The next $80,000,000 (plus, whether positive or
negative, 80/700 of the difference between the amount
of Qualified Securities actually available for
distribution under this paragraph (b), and the amount
of Qualified Securities that would be available under
this paragraph (b) if there were $700,000,000 principal
amount of Qualified Securities available, in the
aggregate, for distribution to Classes U-4 through U-7)
principal amount of such Qualified Securities (to the
extent available) shall be used to satisfy the Allowed
Claims of Class U-6;
(ii) the remaining principal amount of such Qualified
Securities (to the extent available) shall be used to
satisfy the remaining Class U-4 and Class U-5 Allowed
Claims, pro rata (after deducting from Class U-4 the
amount of Claims satisfied by paragraph (a) of this
Section) among Classes U-4 and U-5; and
(iii) the remaining principal amount of such Qualified
Securities (to the extent available) shall be used to
satisfy the remaining Class U-6 Claims;
(c) any of such Qualified Securities remaining after
giving effect to (a) and (b) above shall be applied to
satisfy the Allowed Claims of Classes U-4, U-5 and U-6 to
the extent not already satisfied by Qualified Securities
after giving effect to (a) and (b) above, pro rata, based
on the amount of Allowed Claims not satisfied by Qualified
Securities pursuant to (a) and (b) above, among all such
remaining Subordinated Note Claims;
provided, however, that notwithstanding the foregoing, in the
event that the Pre-LBO Condition occurs, then the Qualified
Securities that would otherwise have been distributed to Holders
of Class U-6 Claims under paragraph (b)(i) of this Section shall
instead be distributed to Holders of Class U-4 Claims until all
unsatisfied elections of Holders of Class U-4 Claims to receive
Qualified Securities pursuant to the Subordinated Note Claim
Election are satisfied, and then to Holders of Class U-5 Claims
until all unsatisfied elections of Holders of Class U-5 Claims
to receive Qualified Securities pursuant to the Subordinated
Note Claim Election are satisfied.
(d) The total number of shares of New Common Stock
available for distribution on account of Subordinated Note
Claims shall be the Subordinated Note Claims New Common
Stock Amount. Each Holder of a Subordinated Note Claim
shall receive that number of shares of New Common Stock
which is the product of multiplying the Subordinated Note
Claims New Common Stock Amount by a fraction, the numerator
of which is such Holder's Subordinated Note Claim
Deficiency Amount, and the denominator of which is the
Subordinated Note Claims Residual Amount.
(e) After giving effect to the allocations set forth
above in this Section 1.26, if any Holder of a Class U-4
Claim that had affirmatively elected to receive all or part
of its Class U-4 Claim in the form of Qualified Securities
pursuant to the Subordinated Note Claim Election (other
than Lehman Brothers Inc.) (the names of such Holders and
the amount of the part of such Holder's Class U-4 Claim
elected to be received in Qualified Securities pursuant to
the Subordinated Note Claim Election are as set forth in
Exhibit 8 attached hereto (each such Claim in such amount,
an "Eligible Class U-4 Claim")) exercises its Class U-4
Exchange Election (an "Electing Class U-4 Holder"), then
the foregoing method of allocating Qualified Securities and
New Common Stock to Electing Class U-4 Holders in respect
of their Class U-4 Claims, and to Lehman Brothers Inc. in
respect of its Class U-4 Claim, shall be modified as
follows: (i) the aggregate principal amount of Qualified
Securities to be issued to such Electing Class U-4 Holder
shall be increased (provided, that such additional amount
of Qualified Securities shall be solely in the form of New
Senior Notes, unless no New Senior Notes are issued as
Qualified Securities under the Consensual Plan, in which
case such additional amount of Qualified Securities shall
be in the form of Cash), and the New Common Stock to be
issued to such Electing Class U-4 Holder shall be decreased
by a number of shares having an aggregate New Common Stock
Value Per Share, in each case in an amount equal to the
lesser of (a) the Qualified Securities Deficiency of such
Electing Class U-4 Holder and (b) the product (rounded down
to the nearest thousand) of (I) $39.4 million (assuming
Qualified Securities available for distribution under the
Consensual Plan to Classes U-4 through U-7 of $530
million), $0 (assuming Qualified Securities available for
distribution under the Consensual Plan to Classes U-4
through U-7 of $700 million or more), or if Qualified
Securities available for distribution under the Consensual
Plan to Classes U-4 through U-7 are greater than $530
million but less than $700 million, then the proportionate
midpoint of $39.4 million and $0; and (II) a fraction, the
numerator of which is the amount of such Holder's Class U-4
Claim that such Holder requested to be satisfied by
Qualified Securities pursuant to the Subordinated Note
Claim Election, and the denominator of which is the
aggregate amount of all Class U-4 Claims (excluding Class
U-4 Claims held by Lehman Brothers Inc.) that were
requested to be satisfied by Qualified Securities pursuant
to the Subordinated Note Claim Election; and (ii) the
aggregate Qualified Securities to be issued to Lehman
Brothers Inc. shall be decreased (provided, that such
decrease in the amount of Qualified Securities shall be
solely in the form of New Senior Notes, unless no New
Senior Notes are issued as Qualified Securities under the
Consensual Plan, in which case such decrease in the amount
of Qualified Securities shall be in the form of Cash), and
the New Common Stock to be issued to Lehman Brothers Inc.
shall be increased by a number of shares having an
aggregate New Common Stock Value Per Share, in each case in
the amount required to make the additional distribution of
Qualified Securities to Electing Class U-4 Holders required
under the preceding clause (i).
(f) In the event that the Effective Date occurs after
March 31, 1995, each Holder of a Subordinated Note Claim
who receives Qualified Securities in accordance with
subparagraphs (a) - (e) above shall also receive an
additional distribution consisting of New Senior Notes of
the same series and with all of the same terms and
provisions as the New Senior Notes issued as Qualified
Securities, in a principal amount equal to the product of
multiplying the principal amount of Qualified Securities to
be received by such Holder after applying all of the
provisions, calculations and elections of subparagraphs (a)
- (e) above by the Qualified Securities Adjuster; provided,
however that if no New Senior Notes are issued as Qualified
Securities as a result of the issuance of Replacement
Indebtedness under Section 4.19 of the Consensual Plan,
such additional distribution shall be made solely in Cash.
1.27 "Assets" shall mean, collectively, all of the
property of a Debtor's estate under Section 541 of the Code,
including the assets, property, interests (including equity
interests) and effects, real and personal, tangible and
intangible, wherever situated of the applicable Debtor as of the
Confirmation Date, including, but not limited to, all rights,
claims and causes of action arising under the Code or other
applicable law, if any, including, but not limited to, claims
and causes of action under Sections 510, 544, 545, 547, 548,
549, 550 and 553 of the Code; which rights, claims and causes of
action may be pursued by the reorganized Debtors, as
appropriate, in accordance with what is in the best interests,
and for the benefit, of the reorganized Debtors.
1.28 "Associate" has the meaning set forth in Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
1.29 "Ballot Date" shall mean September 23, 1994.
1.30 "Bank Agents" shall mean, collectively, the Working
Capital Agents and the Revolving Credit Agents.
1.31 "Bank Setoff Proceeds" shall mean the Cash balances
as at the Filing Date in the aggregate amount of $1,481,772 in
accounts maintained by certain of the Debtors with the Revolving
Credit Banks and the Working Capital Banks, as the case may be,
against which Cash balances the Revolving Credit Banks and the
Working Capital Banks, as the case may be, were authorized to
exercise their respective rights of setoff pursuant to an order
of the Court.
1.32 "Bankruptcy Rules" shall mean the Federal Rules of
Bankruptcy Procedure, as amended from time to time, and the
local rules of the Court, as applicable to the Chapter 11 Cases.
1.33 "Bar Date" shall mean the last day to file a proof of
claim with the Court as fixed with respect to such claim by a
Final Order of the Court issued pursuant to Bankruptcy Rule
3003(c)(3).
1.34 "Beijer Proceeds" shall mean the net Cash proceeds
received by Old Walter Industries from the sale, pursuant to a
tender offer, of all shares of stock of Beijer Industries AB
owned by Old Walter Industries in the amount of $5,605,000,
together with $268,995 of interest earned thereon prior to
application thereof to amounts owed to the Revolving Credit
Banks and the Working Capital Banks, or a total of $5,873,995.
1.35 "Best" shall mean Best Insurors, Inc., a Debtor in
Possession in the jointly administered Chapter 11 Cases pending
in the Court under Case No. 89-9740-8P1.
1.36 "Best (Miss.)" shall mean Best Insurors of
Mississippi, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9737-8P1.
1.37 "Bondholder Proponents" shall mean and be the
collective reference to Lehman Brothers Inc. and Apollo, solely
in their individual capacity.
1.38 "Bondholder Proponents Expense Differential" shall
mean $5 million. The Bondholder Proponents will not file any
claim for reimbursement of expenses with the Court (other than
with respect to expenses incurred in their capacity as members
of the Bondholders Committee, which shall not include any
professional fees, and other than in connection with their
participation in any Exit Financing).
1.39 "Bondholders Committee" shall mean the Official
Bondholders Committee of the Debtors appointed by the United
States Trustee in the Chapter 11 Cases pursuant to Section 1102
of the Code, as such committee may be constituted from time to
time.
1.40 "Business Day" shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in the
State of Florida are authorized or required by law to close.
1.41 "Cash" shall mean lawful currency of the United
States of America, or any equivalent thereof.
1.42 "Celotex" shall mean The Celotex Corporation, and/or
any predecessor thereof or successor thereto and all of their
respective present and former parents, Affiliates and
subsidiaries.
1.43 "Celotex Bankruptcy Court" shall mean (a) the United
States Bankruptcy Court for the Middle District of Florida,
Tampa Division with jurisdiction over the reorganization case of
The Celotex Corporation (or such other court as may be
administering such cases), (b) to the extent of any withdrawal
of reference made pursuant to 28 U.S.C. section 157, the United
States
District Court for the Middle District of Florida, and (c) with
respect to any particular proceeding within any such case, any
other court which may be exercising jurisdiction over such
proceeding.
1.44 "Celotex Settlement Fund Recipient" shall mean The
Celotex Corporation for the exclusive benefit of the Veil
Piercing Claimants, or such other Person(s) designated by a
Final Order entered by the Celotex Bankruptcy Court to act in
the place and stead and on behalf of The Celotex Corporation,
including without limitation, any entity established pursuant to
a confirmed plan of reorganization for The Celotex Corporation
to hold, manage, liquidate, distribute or otherwise assume
responsibility for the consideration to be distributed in
respect of Settlement Claims under the Second Amended and
Restated Veil Piercing Settlement Agreement and/or the
Consensual Plan and any liabilities arising therefrom or in
connection therewith.
1.45 "Chapter 11 Cases" shall mean each of the
reorganization cases of the Debtors listed in the caption on the
cover page of the Consensual Plan, all of which are being
jointly administered under Case No. 89-9715-8P1.
1.46 "Charter" shall mean the Restated Certificate of
Incorporation of Walter Industries, which shall be substantially
in the form of Exhibit 1 attached hereto.
1.47 "Chemical Bank Prime Rate" shall mean the rate of
interest publicly announced by Chemical Bank in New York, New
York from time to time as its reference rate. The reference
rate is not intended to be the lowest rate of interest charged
by Chemical Bank in connection with extensions of credit.
1.48 "Claim" shall mean a claim against one or more of the
Debtors within the meaning of Section 101(5) of the Code
excluding current commercial payables incurred in the ordinary
course of business after the Filing Date.
1.49 "Class" shall mean any group of Claims or Interests,
as classified pursuant to Article II of the Consensual Plan.
1.50 "Class S-6 Fund" shall have the meaning set forth in
Section 3.11 of the Consensual Plan.
1.51 "Class U-4 Exchange Election" shall mean the
election, by a Holder of an Eligible Class U-4 Claim (other than
Lehman Brothers Inc.), made on the Class U-4 Exchange Election
Form in accordance with the instructions thereon to
affirmatively elect to receive its Qualified Securities
Deficiency in the form of additional Qualified Securities in
lieu of New Common Stock having an aggregate New Common Stock
Value Per Share equal to the principal amount of such additional
Qualified Securities in accordance with the definition of
"Applicable Consideration" contained in Section 1.26(e) of the
Consensual Plan.
1.52 "Class U-4 Exchange Election Form" shall mean the
election form, sent to each Holder of an Eligible Class U-4
Claim (other than Lehman Brothers Inc.), concurrently with the
supplement to the Disclosure Statement dated as of November 22,
1994, upon which such Holder of an Eligible Class U-4 Claim may
exercise its Class U-4 Exchange Election.
1.53 "Coast to Coast" shall mean Coast to Coast
Advertising, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9727-8P1.
1.54 "Code" shall mean title 11 of the United States Code,
11 U.S.C. sections 101 et seq., as in effect on the Filing
Date,
together with all amendments, modifications and replacements as
the same exist on any relevant date to the extent applicable to
the Chapter 11 Cases.
1.55 "Computer Holdings" shall mean Computer Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9724-8P1.
1.56 "Computer Services" shall mean Jim Walter Computer
Services, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9723-8P1.
1.57 "Confirmation" shall mean the entry by the Court of
the Confirmation Order.
1.58 "Confirmation Date" shall mean the date on which the
Court enters the Confirmation Order.
1.59 "Confirmation Order" shall mean the order of the
Court confirming the Consensual Plan and approving the
transactions and settlements contemplated therein.
1.60 "Consensual Plan" shall mean the Amended Joint Plan
of Reorganization dated as of December 9, 1994, as it may be
further amended or modified from time to time, together with all
exhibits thereto, which are incorporated herein and made a part
hereof in their entirety, including without limitation the
Second Amended and Restated Veil Piercing Settlement Agreement.
1.61 "Convenience Class Claims" shall mean (a) any
Unsecured Claim (other than an Old Walter Industries IRB Claim)
having a Pre-Filing Date Unsecured Amount equal to or less than
$1,000 and (b) any Other Unsecured Claim as to which the Holder
thereof agrees to reduce the Pre-Filing Date Unsecured Allowed
Amount to $1,000.
1.62 "Court" shall mean (a) the United States Bankruptcy
Court for the Middle District of Florida, Tampa Division with
jurisdiction over the Chapter 11 Cases (or such court as may be
administering the Chapter 11 Cases), (b) to the extent of any
withdrawal of reference made pursuant to 28 U.S.C. section
157, the
United States District Court for the Middle District of Florida,
and (c) with respect to any particular proceeding arising in or
related to a Chapter 11 Case, any other court which may be
exercising jurisdiction over such proceeding.
1.63 "Creditor" shall mean a creditor of one or more of
the Debtors within the meaning of Section 101(10) of the Code.
1.64 "Creditors Committee" shall mean the Official
Committee of General Unsecured Creditors of the Debtors
appointed by the United States Trustee in the Chapter 11 Cases
pursuant to Section 1102 of the Code, as such committee may be
constituted from time to time.
1.65 "Creditors' Plan" shall mean the Creditors' Joint
Plan of Reorganization dated as of August 1, 1994 and filed with
the Court on August 2, 1994. This Consensual Plan constitutes a
modification of the Creditors' Plan. To the extent that any
votes were cast or elections made with respect to the Creditors'
Plan, such votes or elections shall be deemed binding with
respect to this Consensual Plan, except to the extent that a
previous acceptance or rejection is changed in accordance with
Section 1127(d) of the Code and Rule 3019 of the Bankruptcy
Rules.
1.66 "Debtor in Possession" shall mean any of the Debtors,
as debtor in possession in the applicable Chapter 11 Case.
1.67 "Debtors" shall mean Hillsborough, Best, Best
(Miss.), Coast to Coast, Computer Holdings, Dixie, Hamer
Holdings, Hamer Properties, Homes Holdings, Computer Services,
Jim Walter Homes, JW Insurance, Jim Walter Resources, Window
Components (Wisc.), JW Aluminum, JW Resources, Resources
Holdings, JWI Holdings, JW Walter, Window Components, Land
Holdings, Mid-State Homes, Mid-State Holdings, Railroad
Holdings, Sloss, Southern Precision, United Land, U.S. Pipe,
Pipe Realty, Vestal, Home Improvement, Old Walter Industries and
Walter Land.
1.68 "Deficiency Claim" shall mean the unsecured portion
of any Claim determined in accordance with Section 506(a) of the
Code which is unsecured, in whole or in part, as of the
Confirmation Date.
1.69 "Definitive Financing Documentation" shall have the
meaning set forth in Section 4.19 of the Consensual Plan.
1.70 "Demand" shall mean a demand for or right to payment,
present or future, that was not a Claim during the proceedings
leading to the Confirmation of the Consensual Plan, arising out
of the same or similar conduct or events that gave rise to the
Settlement Claims.
1.71 "Director and Officer Indemnification Agreement"
shall mean the indemnification agreement to be entered into as
of the Effective Date by Walter Industries and its direct and
indirect subsidiaries and the directors and certain officers
thereof.
1.72 "Disbursing Agent" shall mean the disbursing agent,
selected by Walter Industries and the Bondholder Proponents,
whose duties shall include the disbursement of Qualified
Securities and New Common Stock to Holders of Subordinated Note
Claims pursuant to the Consensual Plan.
1.73 "Disclosure Statement" shall mean the disclosure
statement (and all exhibits and schedules annexed thereto or
referenced therein) that relate to the Creditors' Plan (which,
as modified, has become the Consensual Plan) and that was
approved pursuant to Section 1125 of the Code and an Order
entered by the Court on August 2, 1994, as such disclosure
statement may be amended, modified or supplemented.
1.74 "Disputed Claim" shall mean any Claim or any portion
thereof which is not an Allowed Claim. In the event that any
part of a Claim is disputed, such Claim in its entirety shall be
deemed a Disputed Claim for purposes of distribution under the
Consensual Plan unless Walter Industries and the Holder thereof
otherwise agree or the Court otherwise orders.
1.75 "Dixie" shall mean Dixie Building Supplies, Inc., a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9741-8P1.
1.76 "Effective Date" shall mean the first Business Day
after all conditions set forth in Section 10.2 of the Consensual
Plan have been satisfied or waived, but which shall be not less
than eleven days after the Confirmation Order is entered.
1.77 "Electing Class U-4 Holder" shall have the meaning
set forth in Section 1.26(e) of the Consensual Plan.
1.78 "Election Procedure" shall mean, for each of the
Series B & C Senior Note Claim Election and the Subordinated
Note Claim Election, the following procedure: (i) applicable
election forms shall have been mailed together with, and at the
same time as, the mailing of ballots for the purpose of
accepting or rejecting the Creditors' Plan (which, as modified,
has become the Consensual Plan); and (ii) the applicable
election form shall have been returned so as to be received on
or before the Ballot Date.
1.79 "Eligible Class U-4 Claim" shall have the meaning
assigned to that term in Section 1.26(e) of the Consensual Plan.
1.80 "Executory Contract" shall mean any unexpired
contract or lease entered into prior to the Filing Date,
including, but not limited to, any employment or severance
contract or agreement, as contemplated by Section 365 of the
Code, in effect on the Confirmation Date, between any of the
Debtors and any other Person or Persons.
1.81 "Executory Contract Claim" shall mean any Claim
arising under Section 365(b)(1)(A) and (B) of the Code with
respect to an Executory Contract heretofore or hereafter assumed
by the Debtors pursuant to Section 365(a) or Section 1123(b)(2)
of the Code. An Executory Contract Claim shall not mean or
include any Claim arising as a result of any Debtor's rejection
of an Executory Contract pursuant to Section 365(a) or Section
1123(b)(2) of the Code.
1.82 "Existing Equityholder" shall have the meaning set
forth in the Second Amended and Restated Veil Piercing
Settlement Agreement.
1.83 "Exit Financing" shall mean (i) any third party
financing to be obtained as of the Effective Date in connection
with funding distributions to be made under the Consensual Plan,
which shall be directly or indirectly secured by the
unencumbered notes and mortgages held by Mid-State Homes and/or
the residual interest held by Mid-State Homes in Mid-State Trust
II and Mid-State Trust III, and (ii) any New Senior Notes.
1.84 "Federal Excise Tax and Reclamation Claims" shall
mean, collectively, Claims of the Federal Government for the
Black Lung Excise Tax under the Black Lung Benefits Act of 1977
and of the United States Department of the Interior, Office of
Surface Mining, for reclamation fees under Title IV of the
Surface Mining Control and Reclamation Act of 1977, that are
entitled to priority in payment under Section 507(a)(7) of the
Code.
1.85 "Federal Income Tax Claims" shall mean all Claims of
the Internal Revenue Service that are entitled to priority in
payment under Section 507(a)(7) of the Code.
1.86 "Federal Income Tax Claims Differential" shall mean
the amount, if any, by which (a) $27,000,000 exceeds (b) the
aggregate Allowed Amount of Federal Income Tax Claims,
determined after all Federal Income Tax Claims have been allowed
or disallowed by Final Order; provided, however, that any amount
by which the Allowed Amount of Federal Income Tax Claims is
increased or decreased as a result of any direct or indirect
understanding or agreement prohibited by Section 4.20 of the
Consensual Plan shall not be included in the Federal Income Tax
Claims Differential; provided, further, that no part of the Veil
Piercing Settlement Tax Savings Amount shall be used to effect,
or be counted toward, a reduction in the amount of Federal
Income Tax Claims for purposes of this definition.
1.87 "Fee Applications" shall mean applications of
Professional Persons under Section 330, 331, 503(b) or
1129(a)(4) of the Code for allowance of compensation and
reimbursement of expenses in the Chapter 11 Cases.
1.88 "Fee Claim" shall mean a Claim under Section 330,
503(b) or 1129(a)(4) of the Code for allowance of final
compensation and reimbursement of expenses in the Chapter 11
Cases.
1.89 "Filed" shall mean delivered to, received by and
entered upon the legal docket of any of the Debtors by the Clerk
of the Court.
1.90 "Filing Date" shall mean with respect to each of the
Debtors, other than JW Resources, December 27, 1989, and with
respect to JW Resources, December 3, 1990.
1.91 "Final Order" shall mean an order, judgment, ruling
or decree issued and entered by the Court or by any state or
other federal court or other tribunal located in one of the
states, territories or possessions of the United States or the
District of Columbia that has not been reversed, stayed,
modified or amended and as to which the time to appeal or
petition for reargument, rehearing or certiorari has expired,
and as to which no appeal, reargument, petition for certiorari,
or rehearing is pending or as to which any right to appeal,
reargue, petition for certiorari or seek rehearing has been
waived in writing or, if an appeal, reargument, petition for
certiorari, or rehearing thereof has been denied, the time to
take any further appeal or to seek certiorari or further
reargument or rehearing has expired.
1.92 "General Unsecured Interest Rate" shall mean
(i) 6 1/2% per annum from the Filing Date until the Confirmation
Date, and (ii) thereafter, either (x) a variable rate equal to
the Chemical Bank Prime Rate as from time to time in effect, not
to exceed 10% per annum, or (y) a fixed rate equal to 6 1/2% per
annum. The option specified in clause (ii) shall be selected in
accordance with the Other Unsecured Claim Election.
1.93 "Governmental Unit" shall mean a governmental unit as
such term is defined in Section 101(27) of the Code.
1.94 "Grace Street Note Claims" shall mean all Claims
arising under the Grace Street Notes, including Claims
thereunder for fees and expenses of the payees thereof.
1.95 "Grace Street Notes" shall mean, collectively, the
two promissory notes, each dated March 19, 1971 and made by Paul
G. Goodman in the original principal amount of $50,000, one in
favor of D. Crawford Freeman and the other in favor of Fred
Halling, as assumed by Old Walter Industries.
1.96 "Hamer Holdings" shall mean Hamer Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9735-8P1.
1.97 "Hamer Properties" shall mean Hamer Properties, Inc.,
a Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9739-8P1.
1.98 "Hillsborough" shall mean Hillsborough Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9715-8P1, prior to its merger with Old Walter Industries
pursuant to the Mirror Liquidation Plan.
1.99 "Holder" shall mean the owner of any Claim or
Interest, including the Celotex Settlement Fund Recipient on
behalf of the Veil Piercing Claimants.
1.100 "Home Improvement" shall mean Walter Home
Improvement, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9722-8P1.
1.101 "Homes Holdings" shall mean Homes Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9742-8P1.
1.102 "IDB of Birmingham" shall mean the Industrial
Development Board of the City of Birmingham, Alabama.
1.103 "Indenture Trustees" shall mean, collectively, the
10 7/8% Indenture Trustee, the 13 1/8% Indenture Trustee, the 13
3/4% Indenture Trustee, the 17% Indenture Trustee, the Senior
Subordinated Indenture Trustee, the Series B & C Senior Note
Trustee, the Intercompany IRB Trustee, the Sloss IRB Trustee and
the Old Walter Industries IRB Trustees.
1.104 "Indenture Trustees Claims" shall mean all Claims
for reasonable fees and expenses of the Indenture Trustees under
the relevant indenture(s) as to which they are the trustee.
1.105 "Independent Director" means a director of Walter
Industries who is not (apart from such directorship) (i) an
officer, Affiliate, employee, Interested Stockholder, consultant
or partner of any Significant Stockholder or any Affiliate of
any Significant Stockholder or of any entity that was dependent
upon any Significant Stockholder or any Affiliate of any
Significant Stockholder for more than 5% of its revenues or
earnings in its most recent fiscal year, (ii) an officer,
employee, consultant or partner of Walter Industries or any of
its Affiliates, or an officer, employee, Interested Stockholder,
consultant or partner of an entity that was dependent upon
Walter Industries or any of its Affiliates for more than 5% of
its revenues or earnings in its most recent fiscal year or
(iii) any relative or spouse of any of the foregoing persons or
a relative of a spouse of any of the foregoing persons.
1.106 "Initial Revolving Credit Bank Claim Payment" shall
have the meaning set forth in Section 3.6(a) of the Consensual
Plan.
1.107 "Initial Working Capital Bank Claim Payment" shall
have the meaning set forth in Section 3.7(a) of the Consensual
Plan.
1.108 "Intercompany IRB" shall mean the Series A
Industrial Revenue Bonds issued under the Intercompany IRB
Indenture in the original aggregate principal amount of
$5,000,000.
1.109 "Intercompany IRB Claims" shall mean all Claims
arising under the Intercompany IRB and the Intercompany IRB
Indenture, other than Claims thereunder for fees and expenses of
the Intercompany IRB Trustee.
1.110 "Intercompany IRB Indenture" shall mean the
indenture dated as of May 1, 1983 among Sloss, the IDB of
Birmingham and AmSouth Bank N.A., as trustee.
1.111 "Intercompany IRB Trustee" shall mean the trustee
under the Intercompany IRB Indenture.
1.112 "Interest" shall mean the rights arising out of any
equity securities of any of the Debtors, including Old Common
Stock and Subsidiary Common Stock.
1.113 "Interested Stockholder" means, with respect to any
Person, any other Person that together with its Affiliates and
Associates beneficially owns (as defined in Rule 13d-3 under the
Securities Exchange Act, as amended) 5.0% or more of the equity
securities of such Person.
1.114 "IRB Claims" shall mean, collectively, the Sloss IRB
Claim, the Old Walter Industries IRB Claims and the Intercompany
IRB Claims.
1.115 "IRBs" shall mean, collectively, the Sloss IRB, the
Old Walter Industries IRBs and the Intercompany IRB.
1.116 "JW Aluminum" shall mean JW Aluminum Company, a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9718-8P1.
1.117 "JW Insurance" shall mean Jim Walter Insurance
Services, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9731-8P1.
1.118 "JW Resources" shall mean JW Resources, Inc., a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 90-11997-8P1.
1.119 "JW Walter" shall mean J.W. Walter, Inc., a Debtor
in Possession in the jointly administered Chapter 11 Cases
pending in the Court under Case No. 89-9717-8P1.
1.120 "JWI Holdings" shall mean J.W.I. Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9721-8P1.
1.121 "Jim Walter Homes" shall mean Jim Walter Homes,
Inc., a Debtor in Possession in the jointly administered Chapter
11 Cases pending in the Court under Case No. 89-9746-8P1.
1.122 "Jim Walter Resources" shall mean Jim Walter
Resources, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9738-8P1.
1.123 "KKR" shall mean Kohlberg Kravis Roberts & Co.
1.124 "KKR Affiliates" shall mean and be the collective
reference to KKR, KKR Associates and any Person that is or has
ever been a director, officer, partner, employee, agent or
representative of either of them.
1.125 "KKR Parties" shall mean KKR, KKR Associates, JWC
Associates, L.P., JWC Associates II, L.P., KKR Partners II,
L.P., all other KKR Affiliates, and any Person that is or has
ever been a director, officer, partner, employee, agent, or
representative of any of them.
1.126 "KKR Proponents" shall mean and be the collective
reference to KKR Partners II, L.P., JWC Associates, L.P. and JWC
Associates II, L.P., and any other KKR Affiliate that holds or
may in the future hold shares of Old Common Stock or Allowed Old
Common Stock Interests.
1.127 "Land Holdings" shall mean Land Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under the Case
No. 89-9720-8P1.
1.128 "LBO-Related Issues" shall mean and be the
collective reference to all theories or bases of recovery
recognizable at law, in admiralty or in equity under the laws of
any jurisdiction that are held or asserted by or that may be
held or asserted by any Debtor or any Holder of a Claim or
Interest , in respect of such Claim or Interest, directly or
indirectly based upon, arising out of or in connection with the
leveraged acquisition in 1987 of Original Jim Walter by a group
of investors led by KKR and all transactions consummated as a
part thereof or in connection therewith, including without
limitation the acquisition of the capital stock of the Debtors,
the consummation of the transactions contemplated by the
Agreement and Plan of Merger dated as of August 12, 1987, and
the financing, reorganization, asset disposition and other
transactions consummated as a part thereof or in connection
therewith, whether based upon theories of piercing the corporate
veil of any Debtor, or its predecessor and/or any of its
respective present or former parents, subsidiaries or
Affiliates, alter ego, alternate entity, agency,
instrumentality, the transfer (fraudulent or otherwise) of any
assets or property by any Debtor (or other non-Debtor that had
at any time been an Affiliate of any Debtor), preference, fraud,
conspiracy, substantive consolidation, successor liability, or
any other legal or equitable theory whatsoever, or any theory or
basis of recovery asserted in Mellon Bank, N.A. and Bank of New
York v. Kohlberg Kravis Roberts & Co., et al., Adv. Pro.
No. 94-17.
1.129 "Lehman Parties" shall mean Lehman Brothers Inc.,
any subsidiaries or Affiliates thereof, any Person that is or
has ever been a director, officer, partner, stockholder,
employee, agent, or representative of any of them, and any
accounts managed or controlled by any of them.
1.130 "Lien" shall mean, with respect to the Assets of the
Debtors, a "lien" or "judicial lien" as said terms are defined
in Sections 101(36) and 101(37) of the Code.
1.131 "Management Incentive Compensation Plan" shall mean
the management incentive compensation plan to be established by
Walter Industries pursuant to Section 5.3 of the Consensual Plan
to be effective as of the Effective Date.
1.132 "Mid-State Holdings" shall mean Mid-State Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9726-8P1.
1.133 "Mid-State Homes" shall mean Mid-State Homes, Inc.,
a Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9725-8P1.
1.134 "Mid-State Homes Warehouse Credit Facility" shall
mean a warehouse credit facility, or the equivalent thereof, in
an aggregate amount not to exceed $500 million, to be entered
into as of the Effective Date by Mid-State Homes and one or more
financial institutions.
1.135 "Mirror Liquidation Order" shall have the meaning
specified in the forepart of the Consensual Plan.
1.136 "Mirror Liquidation Plan" shall have the meaning
specified in the forepart of the Consensual Plan.
1.137 "Negotiated Enterprise Value" shall mean
$2,600,000,000, representing a good faith negotiated estimate of
the going concern enterprise value of the Debtors on a
consolidated basis, arrived at after extensive analysis and
negotiations among the Proponents and Holders of Claims in other
Classes.
1.138 "New Board" shall have the meaning set forth in
Section 5.2 of the Consensual Plan.
1.139 "New Common Stock" shall mean the Common Stock, par
value $.01 per share, of Walter Industries, to be issued on the
Effective Date.
1.140 "New Common Stock Registration Rights Agreement"
shall mean the registration rights agreement relating to the New
Common Stock issued pursuant to the Consensual Plan, to be
entered into as of the Effective Date by Walter Industries, for
the benefit of all Persons to which New Common Stock is issued
on the Effective Date, containing provisions not less favorable
to the Holders of New Common Stock as those contained in the
form of agreement attached as Exhibit 4 hereto.
1.141 "New Common Stock Residual Allocation Denominator"
shall mean the sum of (a) $225 million; plus (b) the
Subordinated Note Claims Residual Amount.
1.142 "New Common Stock Residual Amount" shall mean the
number of shares of New Common Stock which remains after
deducting the Veil Piercing New Common Stock Amount from 50
million.
1.143 "New Common Stock Value" shall mean the Negotiated
Enterprise Value less the sum of (a) $902 million and (b) the
aggregate principal amount of Qualified Securities to be
distributed under the terms of the Consensual Plan on the
Effective Date.
1.144 "New Common Stock Value Per Share" shall mean the
New Common Stock Value divided by 50 million, representing the
number of shares of New Common Stock to be issued and
outstanding on the Effective Date before considering any
additional distribution under Section 3.21 or Section
3.26(b)-(c).
1.145 "New Senior Note Indenture" shall mean the Indenture
to be dated as of the Effective Date between Walter Industries
and the trustee thereunder, governing the New Senior Notes.
1.146 "New Senior Notes" shall mean, with respect to any
Debtor, secured senior debt securities issued under one
indenture in two series or under two separate indentures (i) to
satisfy a part of the Class S-6 Claims and (ii) as Qualified
Securities to satisfy a part of the Subordinated Note Claims and
the Settlement Claims. The New Senior Notes referred to in
clause (i) above shall be (x) rated BB or higher by either
Rating Service, as of the Effective Date; provided, that Walter
Industries shall not be obligated to apply for any such rating
(and, as set forth below, if such rating is not obtained then
the Class S-6 Claims that would otherwise be satisfied by such
New Senior Notes will be paid in Cash); and (y) valued at par as
of the Effective Date (on a fully distributed basis) by Lehman
Brothers Inc. and a qualified valuation expert selected by the
Series B & C Senior Note Trustee; provided, that if Lehman
Brothers Inc. and the qualified valuation expert selected by the
Series B & C Senior Note Trustee do not agree as to whether such
securities are valued at par as of the Effective Date, the
Bondholders Committee and the Senior Note Trustee shall select a
third qualified valuation expert of national reputation, whose
determination under the Consensual Plan will be binding. The
New Senior Notes referred to in clause (ii) above shall bear
interest at a fixed rate per annum equal to the rate of interest
per annum of five year U.S. Treasury Notes on the Effective Date
plus 450 basis points if rated BB or higher, or 525 basis points
if rated lower than BB or if no application for a rating is made
by Walter Industries, but such rate shall in no event be less
than the rate selected for the New Senior Notes issued in
respect of Series B & C Senior Note Claims; provided, however,
that if neither Rating Service provides a rating of the security
proposed to be rated after proper application is made therefor,
such interest rate shall be the average of the two foregoing
rates; provided, further, that in the event of a material
adverse change in the financial or securities markets in the
United States or in political, financial or economic conditions
in the United States, or outbreak or material escalation of
hostilities such that it is inadvisable to price the New Senior
Notes issued as Qualified Securities in such manner, then Lehman
Brothers Inc. and a qualified valuation expert selected by
Apollo shall fix the rate of such New Senior Notes so that such
New Senior Notes are valued by Lehman Brothers Inc. and such
qualified valuation expert selected by Apollo at par as of the
Effective Date, and if they cannot agree on such a rate, the
Bondholders Committee shall select a third qualified valuation
expert of national reputation, whose determination of such rate
shall be binding. The aggregate principal amount of New Senior
Notes to be issued on the Effective Date under clause (i) of the
first sentence of this Section shall be equal to the Allowed
Amount (less amounts to be paid in Cash from the Class S-6 Fund
and to be satisfied by New Common Stock) on the Effective Date
of the Class S-6 Claims as to which the Series B & C Senior Note
Claim Election was timely made (estimated to be approximately
$94.9 million in the aggregate as of December 31, 1994);
provided, that in the event that neither Rating Service provides
a rating of BB or higher for such New Senior Notes, whether
because Walter Industries does not make application for such a
rating or otherwise (or if Walter Industries so elects in its
sole discretion), then the Class S-6 Claims that would otherwise
have been satisfied by such New Senior Notes shall instead be
satisfied by an amount of Cash equal to the principal amount of
such New Senior Notes that would otherwise have been issued.
The aggregate principal amount of New Senior Notes to be issued
as Qualified Securities on the Effective Date shall be equal to
the amount of Qualified Securities that do not consist of Cash;
provided, that the aggregate principal amount of New Senior
Notes to be issued as Qualified Securities, when added to the
aggregate principal amount of New Senior Notes to be issued
under the next preceding sentence of this Section, shall not
exceed $490 million, unless a greater aggregate principal amount
is agreed to by Lehman Brothers Inc.; provided, further, that
the Debtors shall use their best efforts to minimize, to the
extent consistent with obtaining a BB rating for the New Senior
Notes issued as Qualified Securities, the aggregate principal
amount of New Senior Notes required to be issued as Qualified
Securities under the Consensual Plan. It is currently
contemplated that the New Senior Notes will be issued under one
indenture in two Series, with each series having the currently
anticipated (although not required) terms summarized on Exhibit
2 attached hereto, which terms will be customary and reasonable
for securities of this type and quality under the then-existing
market conditions; provided, however, that the Maturity,
Amortization, Optional Redemption and Rate terms set forth in
Exhibit 2 shall not be altered or modified.
1.147 "New Working Capital Facility" shall mean the
working capital facility, or equivalent thereof, in an aggregate
amount not to exceed $150 million, to be entered into as of the
Effective Date by certain subsidiaries of Walter Industries and
one or more financial institutions.
1.148 "Official Committees" shall mean, collectively, the
Bondholders Committee and the Creditors Committee.
1.149 "Old Common Stock" shall mean the common stock, $.01
par value per share, of Walter Industries, as the surviving
corporation of the merger between Hillsborough and Old Walter
Industries.
1.150 "Old Walter Industries" shall mean Walter
Industries, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9745-8P1, prior to its merger with and into Hillsborough
pursuant to the Mirror Liquidation Plan.
1.151 "Old Walter Industries IRB Claims" shall mean the
Claims arising under the Old Walter Industries IRBs and the Old
Walter Industries IRB Indentures, other than Claims thereunder
for fees and expenses of the Old Walter Industries IRB Trustees.
1.152 "Old Walter Industries IRB Indentures" shall mean,
collectively, (a) the two indentures dated as of March 1, 1977
between the Industrial Development Board of the City of
Chattanooga, Tennessee and Sun Bank, as successor trustee to
American National Bank and Trust Company of Chattanooga; (b) the
indenture dated as of December 1, 1977 between Adams County,
Colorado and Norwest Bank Denver f/k/a United Bank of Denver
National Association, as trustee; (c) the indenture dated as of
August l, 1979 between Adams County, Colorado and Norwest Bank
Denver, f/k/a United Bank of Denver National Association, as
trustee; (d) the Indenture dated as of June 1, 1977 between the
New Jersey Economic Development Authority and Fidelity Union
Trust Company, as trustee; and (e) the indenture dated as of
December l, 1977 between the City of Texarkana, Arkansas and
Commercial National Bank of Little Rock, as trustee, each as
amended and all as assumed by Old Walter Industries.
1.153 "Old Walter Industries IRB Trustees" shall mean,
collectively, the trustees under the Old Walter Industries IRB
Indentures.
1.154 "Old Walter Industries IRBs" shall mean,
collectively, (a) the 6.4% Industrial Revenue Bonds and the 6.5%
Pollution Control Revenue Bonds issued by the Industrial
Development Board of the City of Chattanooga, Tennessee, (b) the
6.4% and 6.95% Industrial Revenue Bonds issued by Adams County,
Colorado, (c) the 6.4% Industrial Revenue Bonds issued by the
New Jersey Economic Development Authority and (d) the 6.4%
Industrial Development Bonds issued by the City of Texarkana,
Arkansas.
1.155 "Original Jim Walter" shall mean Jim Walter
Corporation, a Florida corporation, prior to its acquisition by
Hillsborough.
1.156 "Other Secured Claims" shall mean, collectively,
only Secured Claims not otherwise separately classified in the
Consensual Plan, including but not limited to Secured Claims of
Governmental Units with authority to tax the Debtors or their
property.
1.157 "Other Unsecured Claim Ballot" shall mean the ballot
sent to all Holders of Other Unsecured Claims for purposes of
voting to accept or reject the Creditors' Plan (which, as
modified, has become the Consensual Plan) and upon which a
Holder of an Other Unsecured Claim shall have already exercised
its Other Unsecured Claim Election.
1.158 "Other Unsecured Claim Election" shall mean the
election by a Holder of an Other Unsecured Claim made on the
Other Unsecured Claim Ballot in accordance with the instructions
provided thereon, to select the rate of interest to accrue under
the Creditors' Plan (which, as modified, has become the
Consensual Plan) on the Pre-Filing Date Unsecured Allowed Amount
of Other Unsecured Claims and Convenience Class Claims from and
after the Confirmation Date, which was to have been either (i) a
variable rate of interest equal to the Chemical Bank Prime Rate
as from time to time in effect, not to exceed 10% per annum, or
(ii) a fixed rate of interest equal to 6 1/2% per annum. The
interest rate option selected, which is the variable rate of
interest described in clause (i) of the preceding sentence, was
based upon the option selected by a majority in number of the
Holders of Other Unsecured Claims (voting for this purpose as a
single Class for all of the Debtors) who actually made the Other
Unsecured Claim Election and is binding for purposes of the
Consensual Plan.
1.159 "Other Unsecured Claims" shall mean, collectively,
the Unsecured Claims of trade and service Creditors due and
owing by the Debtors for goods provided and services rendered to
the Debtors in the ordinary course of business prior to the
Filing Date and all other Unsecured Claims not otherwise
separately classified in the Consensual Plan, including Claims
arising as a result of any rejection of an Executory Contract
pursuant to Section 365(a) or 1123(b)(2) of the Code.
1.160 "Person" shall mean a natural person, corporation,
partnership, joint-stock company, trust, association,
unincorporated association, governmental agency, instrumentality
or subdivision, or any other entity.
1.161 "Pipe Realty" shall mean U.S. Pipe Realty, Inc., a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9734-8P1.
1.162 "Post-Filing Date Intercompany Notes Payable Claims"
shall mean all Claims arising after the Filing Date held by any
Debtor against any other Debtor.
1.163 "Pre-Filing Date Intercompany Notes Payable Claims"
shall mean all Claims arising on or before the Filing Date held
by any Debtor against any other Debtor, other than the
Intercompany IRB Claims.
1.164 "Pre-Filing Date Unsecured Allowed Amount" shall
have the meaning set forth in Section 1.20(m)(i) hereof.
1.165 "Pre-LBO Bondholders Settlement Agreement" shall
mean and be the collective reference to the agreement, dated as
of March 23, 1994, attached as Exhibit 3B hereto, as the same
may be amended from time to time.
1.166 "Pre-LBO Condition" shall mean the occurrence of
either of the following events: (i) the rejection of the
Consensual Plan by Class U-6; or (ii) the failure to terminate
the Pre-LBO Bondholders Settlement Agreement prior to or as of
December 31, 1994 pursuant to Section 7C or 7D therein.
1.167 "Pre-LBO Debenture Claims" shall mean the 10 7/8%
Subordinated Debenture Claims, the 13 1/8% Subordinated Note
Claims and the 13 3/4% Subordinated Debenture Claims.
1.168 "Pre-LBO Settlement Equity Amount" shall mean the
sum of (i) $5 million in respect of the Bondholder Proponents
Expense Differential, and (ii) $6.3 million, representing the
estimated amount of the Series B & C Senior Note Interest
Differential; the total Pre-LBO Settlement Equity Amount is
$11.3 million.
1.169 "Priority Claims" shall mean, collectively, Federal
Income Tax Claims, Federal Excise Tax and Reclamation Claims and
State and Local Tax Claims.
1.170 "Pro Rata" shall mean:
(a) with respect to any Series B & C Senior Note
Claim, a fraction, the numerator of which is the Allowed
Amount of such Series B & C Senior Note Claim and the
denominator of which is the aggregate Allowed Amount of all
Series B & C Senior Note Claims;
(b) with respect to any Revolving Credit Bank Claim, a
fraction, the numerator of which is the pre-Filing Date
principal and interest component of such Revolving Credit
Bank Claim and the denominator of which is the aggregate
amount of pre-Filing Date principal and interest due under
the Revolving Credit Agreement, in each case without giving
effect to the receipt and application of the Beijer
Proceeds, the Apache Note Proceeds and the Bank Setoff
Proceeds by the Revolving Credit Banks;
(c) with respect to any Working Capital Bank Claim, a
fraction, the numerator of which is the pre-Filing Date
principal and interest component of such Working Capital
Bank Claim and the denominator of which is the aggregate
amount of pre-Filing Date principal and interest due under
the Working Capital Agreement, in each case without giving
effect to (i) receipt and application of the Beijer
Proceeds, the Apache Note Proceeds and the Bank Setoff
Proceeds by the Working Capital Banks, (ii) the Claim of
the Working Capital Agents for fees and expenses under the
Working Capital Agreement arising prior to the Filing Date
and (iii) that portion of the Working Capital Bank Claims
resulting from the post-Filing Date draw-downs on letters
of credit issued under the Working Capital Agreement prior
to the Filing Date;
(d) with respect to any Subordinated Note Claim, a
fraction, the numerator of which is the Allowed Amount of
such Subordinated Note Claim and the denominator of which
is the aggregate Allowed Amount of all Subordinated Note
Claims; and
(e) with respect to any other Allowed Claim or
Interest, the proportion that such Allowed Claim or
Interest in a particular Class bears to the aggregate
amount of Allowed Claims or Interests in such Class.
1.171 "Professional Person" shall mean any Person retained
by the Debtors or any of the Official Committees pursuant to an
order of the Court or any Person seeking compensation from the
Debtors pursuant to Section 503(b) or 1129(a)(4) of the Code,
for professional services.
1.172 "Proponents" shall have the meaning set forth in the
first paragraph hereof.
1.173 "Proponents Expenses" shall mean all of the costs
and expenses incurred by the Proponents, other than the
Bondholder Proponents (and the Affiliates of either of them),
the KKR Proponents and the KKR Affiliates, arising after the
Filing Date, not previously reimbursed by any Debtor, in
connection with (a) the formulation, drafting and negotiation of
the Consensual Plan (including settlement agreements
contemplated thereby or provided for therein), the Disclosure
Statement and the Reorganization Documents, (b) the
consideration by the Court of the Consensual Plan, the
Disclosure Statement and the Reorganization Documents, (c) the
effectuation of the Consensual Plan and the Disclosure
Statement; and (d) any and all other actions taken in connection
with the Consensual Plan, the Disclosure Statement and the
Reorganization Documents, including without limitation
litigation, contested matters, declaratory judgment actions,
appellate litigation and the like; in each case including
without limitation, attorneys' and other professionals' fees and
expenses (references in this definition to the Consensual Plan
and the Disclosure Statement shall include all prior and any
future versions, amendments and/or supplements thereto).
1.174 "Provident Life & Accident Insurance Company Claims"
shall mean Claims of Provident Life & Accident Insurance Company
arising under loans secured by the Cash surrender value of
various life insurance policies on certain present and prior key
officers of the Debtors or corporations formerly owned by the
Debtors.
1.175 "Qualified Securities" means with respect to any
Debtor, (a) Cash, or (b) New Senior Notes described in clause
(ii) of the definition thereof. The amount of Qualified
Securities that shall consist of Cash shall be no less than the
amount of Cash of the Debtors on hand as of the Effective Date
(after giving effect to the consummation of the financing(s)
described in clause (i) of the definition of Exit Financing
contained in the Consensual Plan) other than Reserved Cash,
after giving effect to Cash payments to be made (other than as
part of Qualified Securities) on or promptly after the Effective
Date under the Consensual Plan, and the remaining Qualified
Securities shall consist of New Senior Notes; provided, that at
the Debtors' option, all (but not less than all) Claims that
would otherwise be satisfied by New Senior Notes issued as
Qualified Securities may be paid in Cash on the Effective Date
from the proceeds of the Replacement Indebtedness. Each Class
receiving Qualified Securities under the Consensual Plan shall
receive the same proportion of New Senior Notes and of Cash, as
each other Class receiving Qualified Securities under the
Consensual Plan, except as modified by the Class U-4 Exchange
Election. Notwithstanding the foregoing, the term "Qualified
Securities" shall not include any Cash or New Senior Notes
distributed or to be distributed as additional consideration
under Section 1.26(f) or 3.22(b) of the Consensual Plan, and any
calculation under the Consensual Plan which includes a reference
to a principal amount of Qualified Securities or a similar
reference shall not include as part of such calculation any Cash
or New Senior Notes distributed or to be distributed under
Section 1.26(f) or 3.22(b) of the Consensual Plan.
1.176 "Qualified Securities Adjuster" shall mean the
product of multiplying the rate of interest on the New Senior
Notes to be issued as Qualified Securities (or, if no New Senior
Notes are issued as Qualified Securities, a rate equal to the
rate of interest per annum of five year U.S. Treasury Notes on
the Effective Date plus 487.5 basis points) by a fraction, the
numerator of which is the number of days after March 31, 1995 on
which the Effective Date occurs, and the denominator of which is
360.
1.177 "Qualified Securities Deficiency" shall mean, with
respect to each Electing Class U-4 Holder, the amount by which
such Holder's Eligible Class U-4 Claim exceeds the principal
amount of the Qualified Securities that such Holder would have
received under Section 1.26(a)-(c) of the Consensual Plan absent
the reallocation of Qualified Securities from Lehman Brothers
Inc. to Electing Class U-4 Holders under Section 1.26(e) of the
Consensual Plan.
1.178 "Qualified Securities Registration Rights Agreement"
shall mean the registration rights agreement relating to the
Qualified Securities distributed pursuant to the Consensual
Plan, to be entered into as of the Effective Date by Walter
Industries, for the benefit of all Persons to which Qualified
Securities are distributed on the Effective Date, containing
provisions not less favorable to the Holders of Qualified
Securities as those contained in the form of agreement attached
as Exhibit 5 hereto.
1.179 "Railroad Holdings" shall mean Railroad Holdings
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9733-8P1.
1.180 "Rating Service" shall mean Standard and Poor's
Corporation or Moody's Investor Service, Inc.
1.181 "Record Date" shall mean July 13, 1994.
1.182 "Released Parties" shall have the meaning set forth
in Section 6.1 of the Consensual Plan.
1.183 "Reorganization Documents" shall mean, collectively,
the New Senior Note Indenture, the Definitive Financing
Documentation, the Qualified Securities Registration Rights
Agreement, the New Common Stock Registration Rights Agreement,
the instrument(s) evidencing the Qualified Securities, the
Management Incentive Compensation Plan, the Director and Officer
Indemnification Agreement and the Charter.
1.184 "Replacement Indebtedness" shall have the meaning
assigned to such term in Section 4.19 of the Consensual Plan.
1.185 "Reserved Cash" shall mean (i) restricted Cash that
the Debtors have paid, segregated or identified as a deposit, as
security or otherwise reasonably reserved for a particular
purpose, and (ii) at the Debtors' option, up to $45 million of
Cash (excluding bank overdrafts) that may be reserved by the
Debtors for general corporate purposes, in each case as of the
Effective Date; provided, however, that Reserved Cash shall not
include any Cash that is to be paid (or that is reserved for the
payment of Disputed Claims) pursuant to the terms of the
Consensual Plan.
1.186 "Resources Holdings" shall mean JW Resources
Holdings Corporation, a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9719-8P1.
1.187 "Revolving Credit Agents" shall mean the co-agents
for the Revolving Credit Banks under the Revolving Credit
Agreement.
1.188 "Revolving Credit Agents Claims" shall mean all
Claims for fees and expenses of the Revolving Credit Agents
under the Revolving Credit Agreement including without
limitation the fees and expenses of attorneys, accountants and
financial advisors retained by or on behalf of the Revolving
Credit Agents in connection with the Chapter 11 Cases, and
including amounts payable to White & Case (to the extent not
included in Working Capital Agents Claims) for legal services
rendered prior to the Filing Date, in the amount previously
disclosed by the Working Capital Agents to the Bondholder
Proponents.
1.189 "Revolving Credit Agreement" shall mean the Bank
Credit Agreement dated as of September 10, 1987, as amended,
among Hillsborough, Old Walter Industries, the Debtors which are
signatory parties thereto and the Revolving Credit Banks, as
amended from time to time.
1.190 "Revolving Credit Bank Claims" shall mean the Claims
arising under the Revolving Credit Agreement, other than
Revolving Credit Agents Claims.
1.191 "Revolving Credit Bank Claim Stub Period Amount"
shall have the meaning set forth in Section 1.20(b) of the
Consensual Plan.
1.192 "Revolving Credit Banks" shall mean, as of any date,
the parties to the Revolving Credit Agreement, other than the
Debtors, excluding such parties which were not parties to such
agreement as of such date.
1.193 "Revolving Loan" shall mean the amount of loans
outstanding under the Revolving Credit Agreement from time to
time.
1.194 "Schedules" shall mean the schedules heretofore
filed by the Debtors with the Court pursuant to Bankruptcy Rule
1007 as they have been and may be amended or supplemented from
time to time in accordance with Bankruptcy Rule 1009.
1.195 "Second Amended and Restated Veil Piercing
Settlement Agreement" shall mean an agreement in substantially
the form attached as Exhibit 3A hereto (with such drafting,
technical and conforming changes as the parties thereto shall
negotiate and agree to in good faith), as the same may be
amended from time to time.
1.196 "Secured Claim" shall mean the portion of any Claim,
determined in accordance with Section 506(a) of the Code, as of
the Confirmation Date, secured by a valid and perfected Lien,
express or implied, arising by contract, operation of law, or
otherwise, including but not limited to the secured portion of
any Revolving Credit Bank Claim, Working Capital Bank Claim and
Series B & C Senior Note Claim.
1.197 "Secured Equipment Purchase Claims" shall mean any
Secured Claim held by a vendor of equipment sold to any Debtor
with respect to the purchase of such equipment, which Secured
Claim is secured by such equipment.
1.198 "Securities Act" shall mean the Securities Act of
1933, as amended.
1.199 "Senior Subordinated Indenture Trustee" shall mean
the trustee under the Senior Subordinated Note Indenture.
1.200 "Senior Subordinated Note Claims" shall mean all
Claims arising under the Senior Subordinated Notes and the
Senior Subordinated Note Indenture, other than Claims for fees
and expenses of the Senior Subordinated Indenture Trustee.
1.201 "Senior Subordinated Note Indenture" shall mean the
indenture dated as of January 1, 1988 among Jim Walter Homes,
U.S. Pipe and United Land, as issuers, and Hillsborough, Old
Walter Industries and Homes Holdings, as guarantors, and Barnett
Banks Trust Company, N.A., as trustee.
1.202 "Senior Subordinated Notes" shall mean the Senior
Subordinated Extended Reset Notes of Jim Walter Homes, U.S. Pipe
and United Land issued pursuant to the Senior Subordinated Note
Indenture.
1.203 "Series B & C Senior Note Claims" shall mean all
Claims arising under the Series B & C Senior Notes and the
Series B & C Senior Note Indenture, other than Claims thereunder
for fees and expenses of the Series B & C Senior Note Trustee.
1.204 "Series B & C Senior Note Claim Election" shall mean
the election by a Holder of a Series B & C Senior Note Claim
made on the Series B & C Senior Note Claim Election Form by a
Holder of a Series B & C Senior Note Claim in accordance with
the instructions thereon to elect to receive all of such
Holder's Series B & C Senior Note Claim in the form of New
Senior Notes, such election to have been made in accordance with
the Election Procedure, which election shall be binding for
purposes of the Consensual Plan.
1.205 "Series B & C Senior Note Claim Election Form" shall
mean the election form, sent in accordance with the Election
Procedure, to all Holders of Series B & C Senior Note Claims,
upon which a Holder of a Series B & C Senior Note Claim shall
have exercised its Series B & C Senior Note Claim Election, the
form of which election form has been approved by the Court.
1.206 "Series B & C Senior Note Indenture" shall mean the
Indenture dated as of January l, 1988, as amended, among Jim
Walter Resources, Jim Walter Homes, U.S. Pipe and United Land,
as issuers, and Hillsborough, Old Walter Industries, Homes
Holdings and Resources Holdings, as guarantors, and LaSalle
National Bank, as successor trustee to Continental Illinois
National Bank and Trust Company of Chicago.
1.207 "Series B & C Senior Note Interest Differential"
shall mean the amount, if any, by which (a) the amount which the
aggregate Allowed Amount of the Series B & C Senior Note Claims
would be as of December 31, 1994 if all Holders of a Series B &
C Senior Note Claim exercised the Series B & C Senior Note Claim
Election, exceeds (b) the actual aggregate Allowed Amount of the
Series B & C Senior Note Claims, calculated as of December 31,
1994. For purposes of the Consensual Plan, this amount shall be
fixed at $6.3 million.
1.208 "Series B & C Senior Note Trustee" shall mean the
trustee under the Series B & C Senior Note Indenture.
1.209 "Series B & C Senior Notes" shall mean,
collectively, the Series B Senior Notes and the Series C Senior
Notes which were issued pursuant to the Series B & C Senior Note
Indenture.
1.210 "Settlement Claims" shall have the meaning set forth
in the Second Amended and Restated Veil Piercing Settlement
Agreement.
1.211 "Significant Stockholder" means any stockholder of
Walter Industries that together with its Affiliates and
Associates beneficially owns (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) 5.0% or more of the
outstanding common equity interests of Walter Industries.
1.212 "Sloss" shall mean Sloss Industries Corporation, a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9743-8P1.
1.213 "Sloss IRB" shall mean the Series 1983 Industrial
Revenue Bonds issued under the Sloss IRB Indenture in the
original aggregate principal amount of $1,000,000.
1.214 "Sloss IRB Claim" shall mean the Claim arising under
the Sloss IRBs and the Sloss IRB Indenture, other than Claims
thereunder for fees and expenses of the Sloss IRB Trustee.
1.215 "Sloss IRB Indenture" shall mean the Mortgage
Indenture dated as of May 1, 1983 among Sloss, the IDB of
Birmingham and NationsBank, as successor trustee to NCNB
National Bank of Florida.
1.216 "Sloss IRB Trustee" shall mean the trustee under the
Sloss IRB Indenture.
1.217 "Southern Precision" shall mean Southern Precision
Corporation, a Debtor in Possession in the jointly administered
Chapter 11 Cases pending in the Court under Case
No. 89-9729-8P1.
1.218 "State and Local Tax Claims" shall mean Unsecured
Claims of Governmental Units, other than the Federal Government
and the Internal Revenue Service, with authority to tax the
Debtors or their property.
1.219 "Stock Acquisition Rights" shall mean any and all
rights to acquire Old Common Stock or Subsidiary Common Stock or
any other equity or similar ownership interest in any Debtor,
whether in the form of an option, warrant, purchase right,
subscription agreement or otherwise, but shall not include any
right to receive New Common Stock under the Consensual Plan.
1.220 "Subordinated Note Claim Deficiency Amount" shall
mean, with respect to each Holder of a Subordinated Note Claim,
the amount which remains after subtracting the aggregate
principal amount of the Qualified Securities to be distributed
to such Holder on account of such Holder's Subordinated Note
Claim, from the Allowed Amount of such Holder's Subordinated
Note Claim.
1.221 "Subordinated Note Claim Election" shall mean the
election by a Holder of a Subordinated Note Claim made on the
Subordinated Note Claim Election Form by a Holder of a
Subordinated Note Claim in accordance with the instructions
thereon to affirmatively select that part of such Holder's Claim
that such Holder desires to be satisfied by Qualified Securities
pursuant to the Creditors' Plan (which, as modified, has become
the Consensual Plan), which election shall be binding for
purposes of the Consensual Plan. The Holders of Subordinated
Note Claims identified in Exhibit 8 attached hereto have elected
to receive Qualified Securities in the amounts set forth therein
in accordance with the requirements applicable to the
Subordinated Note Claims Election.
1.222 "Subordinated Note Claim Election Form" shall mean
the election form, sent in accordance with the Election
Procedure, to all Holders of Subordinated Note Claims, upon
which a Holder of a Subordinated Note Claim may have exercised
its Subordinated Note Claim Election, the form of which election
form has been approved by the Court.
1.223 "Subordinated Note Claims New Common Stock Amount"
shall mean that number of shares of New Common Stock which is
the product of multiplying the New Common Stock Residual Amount
by a fraction, the numerator of which is the Subordinated Note
Claims Residual Amount, and the denominator of which is the New
Common Stock Residual Allocation Denominator.
1.224 "Subordinated Note Claims Residual Amount" shall
mean the amount which remains after subtracting the aggregate
principal amount of the Qualified Securities to be distributed
to the Holders of Subordinated Note Claims from the aggregate
Allowed Amount of the Subordinated Note Claims.
1.225 "Subordinated Note Claims" shall mean, collectively,
the Senior Subordinated Note Claims, the 17% Subordinated Note
Claims, the 10 7/8% Subordinated Debenture Claims, the 13 1/8%
Subordinated Note Claims and the 13 3/4% Subordinated Debenture
Claims.
1.226 "Subordinated Note Trustees" shall mean,
collectively, the Senior Subordinated Indenture Trustee, the 17%
Indenture Trustee, the 10 7/8% Indenture Trustee, the 13 1/8%
Indenture Trustee and the 13 3/4% Indenture Trustee.
1.227 "Subordinated Notes" shall mean, collectively, the
Senior Subordinated Notes, the 17% Subordinated Notes, the 10
7/8% Subordinated Debentures, the 13 1/8% Subordinated Notes and
the 13 3/4% Subordinated Debentures.
1.228 "Subsidiary Common Stock" shall mean the common
stock of each of the Debtors, other than Walter Industries as
the surviving corporation of the merger between Hillsborough and
Old Walter Industries, issued and outstanding as of the Filing
Date.
1.229 "Tax Oversight Committee" shall mean a committee of
the New Board consisting at all times of the two Independent
Directors and a director (or other person) designated by Lehman
Brothers Inc. (such director or other person initially
designated by Lehman Brothers Inc. shall be identified on or
before the Effective Date), which committee shall have the right
to select and retain legal and financial advisors at the expense
of Walter Industries to assist it in the fulfillment of its
duties, which duties shall consist solely of the duties set
forth in Sections 3.26 and 4.20 of the Consensual Plan.
1.230 "The Celotex Corporation" shall mean The Celotex
Corporation, as debtor and debtor-in-possession.
1.231 "United Land" shall mean United Land Corporation, a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9730-8P1.
1.232 "Unsecured Claim" shall mean a Claim other than (a)
a Secured Claim, (b) a Subordinated Note Claim, (c) a
Post-Filing Date Intercompany Notes Payable Claim, Pre-Filing
Date Intercompany Notes Payable Claim or Intercompany IRB Claim,
(d) a Priority Claim, or (e) an Administrative Claim.
1.233 "U.S. Pipe" shall mean United States Pipe and
Foundry Company, a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9744-8P1.
1.234 "Veil Piercing Claimant" shall mean Celotex and any
other Person that may have or may assert in the future a
Settlement Claim.
1.235 "Veil Piercing Claims" shall mean and be the
collective reference to all Claims and Demands, and all claims
and Demands that may be asserted in the future, whether known or
unknown, based upon, arising out of or in connection with any of
the Veil Piercing-Related Issues but shall not include any claim
based upon a valid, binding and enforceable obligation by any or
all of the Debtors to indemnify any Person.
1.236 "Veil Piercing Claims Amount" shall have the meaning
set forth in the Second Amended and Restated Veil Piercing
Settlement Agreement.
1.237 "Veil Piercing New Common Stock Amount" shall mean
that number of shares of New Common Stock having an aggregate
Veil Piercing New Common Stock Value Per Share equal to the Veil
Piercing Residual Claims Amount.
1.238 "Veil Piercing New Common Stock Value" shall mean
$2,525,000,000, less the sum of (a) $902 million and (b) the
aggregate principal amount of Qualified Securities to be
distributed under the terms of the Consensual Plan on the
Effective Date.
1.239 "Veil Piercing New Common Stock Value Per Share"
shall mean the Veil Piercing New Common Stock Value divided by
50 million, representing the number of shares of New Common
Stock to be issued and outstanding on the Effective Date before
considering any additional distribution under Section 3.21 or
Section 3.26(b)-(c).
1.240 "Veil Piercing Proceedings" shall mean and be the
collective reference to all lawsuits, actions and other judicial
and administrative proceedings that have been, or may in the
future be, instituted against any Person that directly or
indirectly seek or could seek any remedy from any or all of the
Released Parties based upon, arising out of or in connection
with any of the Veil Piercing-Related Issues and/or Settlement
Claims.
1.241 "Veil Piercing Residual Claims Amount" shall mean
the excess of $375,000,000 over the aggregate principal amount
of the Qualified Securities to be distributed on account of the
Settlement Claims under the Consensual Plan.
1.242 "Veil Piercing-Related Issues" shall mean and be the
collective reference to all theories or bases of recovery
recognizable at law, in equity or in admiralty under the laws of
any jurisdiction that are held or asserted by, or may be held or
asserted by, Celotex or any Holder of a Claim in Class U-7 or
any creditor or interest holder of Celotex, directly or
indirectly based upon, arising out of or in connection with
asbestos, any product manufactured, sold or distributed by
Celotex, any other liability or obligation of any nature of
Celotex, or any act or failure to act by Celotex or any officer,
director, employee, agent or other representative of Celotex,
whether based upon alter ego, agency, alternate entity,
instrumentality, successor liability, conspiracy,
indemnification, contribution, any theories of piercing the
corporate veil of any Debtor or its predecessor and/or any of
its respective present or former parents, subsidiaries, or
Affiliates, or the transfer (fraudulent or otherwise) of any
assets or property to or by any Debtor (or other non-Debtor that
had at any time been a parent, subsidiary or Affiliate of any
Debtor or its predecessor), whether in connection with any of
the transactions constituting or relating to the financing or
the acquisition of any of the Debtors or any of their respective
predecessors, parents, subsidiaries or Affiliates by the current
Holders of Old Common Stock, the divestiture by Celotex of any
of its assets or property at any time, or in connection with any
other transactions, events or circumstances, or otherwise;
provided, however, that the Veil Piercing-Related Issues shall
not include any of the LBO-Related Issues raised by Holders of
Claims other than Settlement Claims.
1.243 "Veil Piercing Settlement" shall mean the full and
complete settlement, satisfaction, release and discharge of all
Settlement Claims and Veil Piercing Proceedings; provided,
however, that any order or orders approving the settlement must,
either singularly or taken together, contain findings that
(i) the terms of the settlement are final and binding on all
Veil Piercing Claimants, (ii) provide for the dismissal, with
prejudice, of all pending Veil Piercing Proceedings, and
(iii) provide for the full release of all Released Parties with
respect to the Veil Piercing-Related Issues.
1.244 "Veil Piercing Settlement Tax Savings Amount" shall
mean, for any taxable year that ends after the Effective Date
(or for any taxable year ending on or before the Effective Date
for which a carryback claim is filed), the difference between
(a) the aggregate amount of federal, state, and local income tax
payable by members of the Walter Industries consolidated group
as reported on the federal, state and local income tax returns
filed by such members for the taxable year (the "WI Tax Return
Liability") and (b) the aggregate amount of federal, state and
local income tax that would have been reported on such returns
if the distribution under the Second Amended and Restated Veil
Piercing Settlement Agreement had not been made; provided,
however, that any amount by which the income tax reduction or
refund used to calculate the Veil Piercing Settlement Tax
Savings Amount would otherwise have been increased or decreased
as part of any direct or indirect understanding or agreement
prohibited by Section 4.20 of the Consensual Plan shall not be
taken into consideration in determining any Veil Piercing
Settlement Tax Savings Amount.
1.245 "Veil Piercing Settlement Tax Savings Event" shall
mean, (i) for any tax return filed by the Walter Industries
consolidated group or any member thereof for a taxable year
ending on or after May 31, 1995, the date on which the tax
return is filed with the applicable taxing authority, or
(ii) for any tax years ending prior to May 31, 1995, the date on
which a claim for refund or deduction is filed; provided that
the tax due on such return (without regard to prior payments)
was reduced, or such refund claim was increased, by a Veil
Piercing Settlement Tax Savings Amount. Walter Industries shall
claim deductions, for federal income tax purposes and for
purposes of all other relevant tax calculations, in respect of
the distribution under the Second Amended and Restated Veil
Piercing Settlement Agreement in a manner that will maximize the
Veil Piercing Settlement Tax Savings Amount, including, without
limitation, the claim of a carryback, where available, of any
net operating losses resulting from such deductions.
1.246 "Vestal" shall mean Vestal Manufacturing Company, a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9728-8P1.
1.247 "Walter Industries" shall mean Walter Industries,
Inc., the surviving corporation of the merger between
Hillsborough and Old Walter Industries.
1.248 "Walter Land" shall mean Walter Land Company, a
Debtor in Possession in the jointly administered Chapter 11
Cases pending in the Court under Case No. 89-9736-8P1.
1.249 "Window Components" shall mean JW Window Components,
Inc., a Debtor in Possession in the jointly administered Chapter
11 Cases pending in the Court under Case No. 89-9732-8P1.
1.250 "Window Components (Wisc.)" shall mean Jim Walter
Window Components, Inc., a Debtor in Possession in the jointly
administered Chapter 11 Cases pending in the Court under Case
No. 89-9716-8P1.
1.251 "WI Tax Return Liability" shall have the meaning set
forth in Section 1.244 of the Consensual Plan.
1.252 "Working Capital Agents" shall mean the co-agents
for the Working Capital Banks under the Working Capital
Agreement.
1.253 "Working Capital Agents Claims" shall mean all
Claims for fees and expenses of the Working Capital Agents under
the Working Capital Agreement, including without limitation the
fees and expenses of attorneys, accountants and financial
advisors retained by or on behalf of the Working Capital Agents
in connection with the Chapter 11 Cases, and including amounts
payable to White & Case (to the extent not included in Revolving
Credit Agents Claims) for legal services rendered prior to the
Filing Date, in the amount previously disclosed by the Working
Capital Agents to the Bondholder Proponents.
1.254 "Working Capital Agreement" shall mean the Working
Capital Credit Agreement dated as of December 29, 1987, as
amended, among Hillsborough, Old Walter Industries, the other
Debtors which are signatories thereto and the Working Capital
Banks, as amended from time to time.
1.255 "Working Capital Bank Claim Stub Period Amount"
shall have the meaning set forth in Section
1.20(c).
1.256 "Working Capital Bank Claims" shall mean all Claims
arising under the Working Capital Agreement, other than Working
Capital Agents Claims.
1.257 "Working Capital Banks" shall mean, as of any date,
the parties to the Working Capital Agreement, other than the
Debtors, excluding such parties which were not parties to such
agreement as of such date.
1.258 "Working Capital Loans" shall mean the amount of
loans outstanding under the Working Capital Agreement from time
to time.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
UNCLASSIFIED CLAIMS
In accordance with Section 1123(a)(1) of the Code,
Administrative Claims, Federal Income Tax Claims, Federal Excise
Tax and Reclamation Claims and State and Local Tax Claims are
not classified.
ADMINISTRATIVE CLAIMS
2.1 Administrative Claims. Administrative Claims apply
separately to each Debtor.
PRIORITY CLAIMS
Priority Claims include Federal Income Tax Claims, Federal
Excise Tax and Reclamation Claims and State and Local Tax
Claims.
2.2 Federal Income Tax Claims. Federal Income Tax Claims
apply separately to each Debtor.
2.3 Federal Excise Tax and Reclamation Claims. Federal
Excise Tax and Reclamation Claims apply only to Jim Walter
Resources.
2.4 State and Local Tax Claims. State and Local Tax
Claims apply separately to each Debtor, except Best, Coast to
Coast, JW Insurance, Home Improvement and JW Resources.
CLASSIFIED CLAIMS
Claims against, and Interests in, the Debtors are
classified in the Classes listed below.
SECURED CLAIMS
Secured Claims consist of Revolving Credit Bank Claims,
Working Capital Bank Claims, the Grace Street Note Claims, the
Sloss IRB Claim, Secured Equipment Purchase Claims, Series B & C
Senior Note Claims, Provident Life & Accident Insurance Company
Claims, Revolving Credit Agents Claims, Working Capital Agents
Claims and Other Secured Claims.
2.5 Class S-1 Claims: Revolving Credit Bank Claims. Class
S-1 Claims shall consist of all Revolving Credit Bank Claims.
Class S-1A Claims: Hillsborough Revolving Credit Bank
Claims. Class S-1A Claims shall consist of all Revolving
Credit Bank Claims against Hillsborough.
Class S-1B Claims: Best Revolving Credit Bank Claims.
Class S-1B Claims shall consist of all Revolving Credit
Bank Claims against Best.
Class S-1C Claims: Best (Miss.) Revolving Credit Bank
Claims. Class S-1C Claims shall consist of all Revolving
Credit Bank Claims against Best (Miss.).
Class S-1D Claims: Coast to Coast Revolving Credit
Bank Claims. Class S-1D Claims shall consist of all
Revolving Credit Bank Claims against Coast to Coast.
Class S-1E Claims: Computer Holdings Revolving Credit
Bank Claims. Class S-1E Claims shall consist of all
Revolving Credit Bank Claims against Computer Holdings.
Class S-1F Claims: Dixie Revolving Credit Bank Claims.
Class S-1F Claims shall consist of all Revolving Credit
Bank Claims against Dixie.
Class S-1G Claims: Hamer Holdings Revolving Credit
Bank Claims. Class S-1G Claims shall consist of all
Revolving Credit Bank Claims against Hamer Holdings.
Class S-1H Claims: Hamer Properties Revolving Credit
Bank Claims. Class S-1H Claims shall consist of all
Revolving Credit Bank Claims against Hamer Properties.
Class S-1I Claims: Homes Holdings Revolving Credit
Bank Claims. Class S-1I Claims shall consist of all
Revolving Credit Bank Claims against Homes Holdings.
Class S-1J Claims: Computer Services Revolving Credit
Bank Claims. Class S-1J Claims shall consist of all
Revolving Credit Bank Claims against Computer Services.
Class S-1K Claims: Jim Walter Homes Revolving Credit
Bank Claims. Class S-1K Claims shall consist of all
Revolving Credit Bank Claims against Jim Walter Homes.
Class S-1L Claims: JW Insurance Revolving Credit Bank
Claims. Class S-1L Claims shall consist of all Revolving
Credit Bank Claims against JW Insurance.
Class S-1M Claims: Jim Walter Resources Revolving
Credit Bank Claims. Class S-1M Claims shall consist of all
Revolving Credit Bank Claims against Jim Walter Resources.
Class S-1N Claims: Window Components (Wisc.) Revolving
Credit Bank Claims. Class S-1N Claims shall consist of all
Revolving Credit Bank Claims against Window Components
(Wisc.).
Class S-1O Claims: JW Aluminum Revolving Credit Bank
Claims. Class S-1O Claims shall consist of all Revolving
Credit Bank Claims against JW Aluminum.
Class S-1P Claims: Resources Holdings Revolving Credit
Bank Claims. Class S-1P Claims shall consist of all
Revolving Credit Bank Claims against Resources Holdings.
Class S-1Q Claims: JWI Holdings Revolving Credit Bank
Claims. Class S-1Q Claims shall consist of all Revolving
Credit Bank Claims against JWI Holdings.
Class S-1R Claims: JW Walter Revolving Credit Bank
Claims. Class S-1R Claims shall consist of all Revolving
Credit Bank Claims against JW Walter.
Class S-1S Claims: Window Components Revolving Credit
Bank Claims. Class S-1S Claims shall consist of all
Revolving Credit Bank Claims against Window Components.
Class S-1T Claims: Land Holdings Revolving Credit Bank
Claims. Class S-1T Claims shall consist of all Revolving
Credit Bank Claims against Land Holdings.
Class S-1V Claims: Mid-State Holdings Revolving Credit
Bank Claims. Class S-1V Claims shall consist of all
Revolving Credit Bank Claims against Mid-State Holdings.
Class S-1W Claims: Railroad Holdings Revolving Credit
Bank Claims. Class S-1W Claims shall consist of all
Revolving Credit Bank Claims against Railroad Holdings.
Class S-1X Claims: Sloss Revolving Credit Bank Claims.
Class S-1X Claims shall consist of all Revolving Credit
Bank Claims against Sloss.
Class S-1Y Claims: Southern Precision Revolving Credit
Bank Claims. Class S-1Y Claims shall consist of all
Revolving Credit Bank Claims against Southern Precision.
Class S-1Z Claims: United Land Revolving Credit Bank
Claims. Class S-1Z Claims shall consist of all Revolving
Credit Bank Claims against United Land.
Class S-1AA Claims: U.S. Pipe Revolving Credit Bank
Claims. Class S-1AA Claims shall consist of all Revolving
Credit Bank Claims against U.S. Pipe.
Class S-1BB Claims: Pipe Realty Revolving Credit Bank
Claims. Class S-1BB Claims shall consist of all Revolving
Credit Bank Claims against Pipe Realty.
Class S-1CC Claims: Vestal Revolving Credit Bank
Claims. Class S-1CC Claims shall consist of all Revolving
Credit Bank Claims against Vestal.
Class S-1EE Claims: Old Walter Industries Revolving
Credit Bank Claims. Class S-1EE Claims shall consist of
all Revolving Credit Bank Claims against Old Walter
Industries.
Class S-1FF Claims: Walter Land Revolving Credit Bank
Claims. Class S-1FF Claims shall consist of all Revolving
Credit Bank Claims against Walter Land.
Class S-1GG Claims: JW Resources Revolving Credit Bank
Claims. Class S-1GG Claims shall consist of all Revolving
Credit Bank Claims against JW Resources.
2.6 Class S-2 Claims: Working Capital Bank Claims. Class
S-2 Claims shall consist of all Working Capital Bank Claims.
Class S-2A Claims: Hillsborough Working Capital Bank
Claims. Class S-2A Claims shall consist of all Working
Capital Bank Claims against Hillsborough.
Class S-2E Claims: Computer Holdings Working Capital
Bank Claims. Class S-2E Claims shall consist of all
Working Capital Bank Claims against Computer Holdings.
Class S-2G Claims: Hamer Holdings Working Capital Bank
Claims. Class S-2G Claims shall consist of all Working
Capital Bank Claims against Hamer Holdings.
Class S-2I Claims: Homes Holdings Working Capital Bank
Claims. Class S-2I Claims shall consist of all Working
Capital Bank Claims against Homes Holdings.
Class S-2M Claims: Jim Walter Resources Working
Capital Bank Claims. Class S-2M Claims shall consist of
all Working Capital Bank Claims against Jim Walter
Resources.
Class S-2O Claims: JW Aluminum Working Capital Bank
Claims. Class S-2O Claims shall consist of all Working
Capital Bank Claims against JW Aluminum.
Class S-2P Claims: Resources Holdings Working Capital
Bank Claims. Class S-2P Claims shall consist of all
Working Capital Bank Claims against Resources Holdings.
Class S-2Q Claims: JWI Holdings Working Capital Bank
Claims. Class S-2Q Claims shall consist of all Working
Capital Bank Claims against JWI Holdings.
Class S-2S Claims: Window Components Working Capital
Bank Claims. Class S-2S Claims shall consist of all
Working Capital Bank Claims against Window Components.
Class S-2T Claims: Land Holdings Working Capital Bank
Claims. Class S-2T Claims shall consist of all Working
Capital Bank Claims against Land Holdings.
Class S-2V Claims: Mid-State Holdings Working Capital
Bank Claims. Class S-2V Claims shall consist of all
Working Capital Bank Claims against Mid-State Holdings.
Class S-2W Claims: Railroad Holdings Working Capital
Bank Claims. Class S-2W Claims shall consist of all
Working Capital Bank Claims against Railroad Holdings.
Class S-2X Claims: Sloss Working Capital Bank Claims.
Class S-2X Claims shall consist of all Working Capital Bank
Claims against Sloss.
Class S-2Y Claims: Southern Precision Working Capital
Bank Claims. Class S-2Y Claims shall consist of all
Working Capital Bank Claims against Southern Precision.
Class S-2Z Claims: United Land Working Capital Bank
Claims. Class S-2Z Claims shall consist of all Working
Capital Bank Claims against United Land.
Class S-2AA Claims: U.S. Pipe Working Capital Bank
Claims. Class S-2AA Claims shall consist of all Working
Capital Bank Claims against U.S. Pipe.
Class S-2BB Claims: Pipe Realty Working Capital Bank
Claims. Class S-2BB Claims shall consist of all Working
Capital Bank Claims against Pipe Realty.
Class S-2CC Claims: Vestal Working Capital Bank
Claims. Class S-2CC Claims shall consist of all Working
Capital Bank Claims against Vestal.
Class S-2EE Claims: Old Walter Industries Working
Capital Bank Claims. Class S-2EE Claims shall consist of
all Working Capital Bank Claims against Old Walter
Industries.
Class S-2FF Claims: Walter Land Working Capital Bank
Claims. Class S-2FF Claims shall consist of all Working
Capital Bank Claims against Walter Land.
2.7 Class S-3 Claims: Grace Street Note Claims. Class S-3
Claims shall consist of the Grace Street Note Claims.
Class S-3EE Claims: Old Walter Industries Grace Street
Note Claims. Class S-3EE Claims shall consist of the Grace
Street Note Claims against Old Walter Industries.
2.8 Class S-4 Claims: Sloss IRB Claim. Class S-4 Claims
shall consist of the Sloss IRB Claim.
Class S-4X Claims: Sloss IRB Claim. Class S-4X Claims
shall consist of the Sloss IRB Claim against Sloss.
2.9 Class S-5 Claims: Secured Equipment Purchase Claims.
Class S-5 Claims shall consist of all Secured Equipment Purchase
Claims.
Class S-5J Claims: Computer Services Secured Equipment
Purchase Claims. Class S-5J Claims shall consist of all
Secured Equipment Purchase Claims against Computer
Services.
Class S-5O Claims: JW Aluminum Secured Equipment
Purchase Claims. Class S-5O Claims shall consist of all
Secured Equipment Purchase Claims against JW Aluminum.
Class S-5S Claims: Window Components Secured Equipment
Purchase Claims. Class S-5S Claims shall consist of all
Secured Equipment Purchase Claims against Window
Components.
Class S-5X Claims: Sloss Secured Equipment Purchase
Claims. Class S-5X Claims shall consist of all Secured
Equipment Purchase Claims against Sloss.
Class S-5Y Claims: Southern Precision Secured
Equipment Purchase Claims. Class S-5Y Claims shall consist
of all Secured Equipment Purchase Claims against Southern
Precision.
Class S-5AA Claims: U.S. Pipe Secured Equipment
Purchase Claims. Class S-5AA Claims shall consist of all
Secured Equipment Purchase Claims against U.S. Pipe.
2.10 Class S-6 Claims: Series B & C Senior Note Claims.
Class S-6 Claims shall consist of all Series B & C Senior Note
Claims.
Class S-6A Claims: Hillsborough Series B & C Senior
Note Claims. Class S-6A Claims shall consist of all Series
B & C Senior Note Claims against Hillsborough.
Class S-6I Claims: Homes Holdings Series B & C Senior
Note Claims. Class S-6I Claims shall consist of all Series
B & C Senior Note Claims against Homes Holdings.
Class S-6K Claims: Jim Walter Homes Series B & C
Senior Note Claims. Class S-6K Claims shall consist of all
Series B & C Senior Note Claims against Jim Walter Homes.
Class S-6M Claims: Jim Walter Resources Series B & C
Senior Note Claims. Class S-6M Claims shall consist of all
Series B & C Senior Note Claims against Jim Walter
Resources.
Class S-6P Claims: Resources Holdings Series B & C
Senior Note Claims. Class S-6P Claims shall consist of all
Series B & C Senior Note Claims against Resources Holdings.
Class S-6Z Claims: United Land Series B & C Senior
Note Claims. Class S-6Z Claims shall consist of all Series
B & C Senior Note Claims against United Land.
Class S-6AA Claims: U.S. Pipe Series B & C Senior Note
Claims. Class S-6AA Claims shall consist of all Series B &
C Senior Note Claims against U.S. Pipe.
Class S-6EE Claims: Old Walter Industries Series B & C
Senior Note Claims. Class S-6EE Claims shall consist of
all Series B & C Senior Note Claims against Old Walter
Industries.
2.11 Class S-7 Claims: Provident Life & Accident Insurance
Company Claims. Class S-7 Claims shall consist of all Provident
Life & Accident Insurance Company Claims.
Class S-7EE Claims: Old Walter Industries Provident
Life & Accident Insurance Company Claims. Class S-7EE
Claims shall consist of all Provident Life & Accident
Insurance Company Claims against Old Walter Industries.
2.12 Class S-8 Claims: Revolving Credit Agents Claims.
Class S-8 Claims shall consist of all Revolving Credit Agents
Claims.
Class S-8A Claims: Hillsborough Revolving Credit
Agents Claims. Class S-8A Claims shall consist of all
Revolving Credit Agents Claims against Hillsborough.
Class S-8B Claims: Best Revolving Credit Agents
Claims. Class S-8B Claims shall consist of all Revolving
Credit Agents Claims against Best.
Class S-8C Claims: Best (Miss.) Revolving Credit
Agents Claims. Class S-8C Claims shall consist of all
Revolving Credit Agents Claims against Best (Miss.).
Class S-8D Claims: Coast to Coast Revolving Credit
Agents Claims. Class S-8D Claims shall consist of all
Revolving Credit Agents Claims against Coast to Coast.
Class S-8E Claims: Computer Holdings Revolving Credit
Agents Claims. Class S-8E Claims shall consist of all
Revolving Credit Agents Claims against Computer Holdings.
Class S-8F Claims: Dixie Revolving Credit Agents
Claims. Class S-8F Claims shall consist of all Revolving
Credit Agents Claims against Dixie.
Class S-8G Claims: Hamer Holdings Revolving Credit
Agents Claims. Class S-8G Claims shall consist of all
Revolving Credit Agents Claims against Hamer Holdings.
Class S-8H Claims: Hamer Properties Revolving Credit
Agents Claims. Class S-8H Claims shall consist of all
Revolving Credit Agents Claims against Hamer Properties.
Class S-8I Claims: Homes Holdings Revolving Credit
Agents Claims. Class S-8I Claims shall consist of all
Revolving Credit Agents Claims against Homes Holdings.
Class S-8J Claims: Computer Services Revolving Credit
Agents Claims. Class S-8J Claims shall consist of all
Revolving Credit Agents Claims against Computer Services.
Class S-8K Claims: Jim Walter Homes Revolving Credit
Agents Claims. Class S-8K Claims shall consist of all
Revolving Credit Agents Claims against Jim Walter Homes.
Class S-8L Claims: JW Insurance Revolving Credit
Agents Claims. Class S-8L Claims shall consist of all
Revolving Credit Agents Claims against JW Insurance.
Class S-8M Claims: Jim Walter Resources Revolving
Credit Agents Claims. Class S-8M Claims shall consist of
all Revolving Credit Agents Claims against Jim Walter
Resources.
Class S-8N Claims: Window Components (Wisc.) Revolving
Credit Agents Claims. Class S-8N Claims shall consist of
all Revolving Credit Agents Claims against Window
Components (Wisc.).
Class S-8O Claims: JW Aluminum Revolving Credit Agents
Claims. Class S-8O Claims shall consist of all Revolving
Credit Agents Claims against JW Aluminum.
Class S-8P Claims: Resources Holdings Revolving Credit
Agents Claims. Class S-8P Claims shall consist of all
Revolving Credit Agents Claims against Resources Holdings.
Class S-8Q Claims: JWI Holdings Revolving Credit
Agents Claims. Class S-8Q Claims shall consist of all
Revolving Credit Agents Claims against JWI Holdings.
Class S-8R Claims: JW Walter Revolving Credit Agents
Claims. Class S-8R Claims shall consist of all Revolving
Credit Agents Claims against JW Walter.
Class S-8S Claims: Window Components Revolving Credit
Agents Claims. Class S-8S Claims shall consist of all
Revolving Credit Agents Claims against Window Components.
Class S-8T Claims: Land Holdings Revolving Credit
Agents Claims.Class S-8T Claims shall consist of all
Revolving Credit Agents Claims against Land Holdings.
Class S-8V Claims: Mid-State Holdings Revolving Credit
Agents Claims. Class S-8V Claims shall consist of all
Revolving Credit Agents Claims against Mid-State Holdings.
Class S-8W Claims: Railroad Holdings Revolving Credit
Agents Claims. Class S-8W Claims shall consist of all
Revolving Credit Agents Claims against Railroad Holdings.
Class S-8X Claims: Sloss Revolving Credit Agents
Claims. Class S-8X Claims shall consist of all Revolving
Credit Agents Claims against Sloss.
Class S-8Y Claims: Southern Precision Revolving Credit
Agents Claims. Class S-8Y Claims shall consist of all
Revolving Credit Agents Claims against Southern Precision.
Class S-8Z Claims: United Land Revolving Credit Agent
Claims. Class S-8Z Claims shall consist of all Revolving
Credit Agents Claims against United Land.
Class S-8AA Claims: U.S. Pipe Revolving Credit Agents
Claims. Class S-8AA Claims shall consist of all Revolving
Credit Agents Claims against U.S. Pipe.
Class S-8BB Claims: Pipe Realty Revolving Credit
Agents Claims. Class S-8BB Claims shall consist of all
Revolving Credit Agents Claims against Pipe Realty.
Class S-8CC Claims: Vestal Revolving Credit Agents
Claims. Class S-8CC Claims shall consist of all Revolving
Credit Agents Claims against Vestal.
Class S-8EE Claims: Old Walter Industries Revolving
Credit Agents Claims. Class S-8EE Claims shall consist of
all Revolving Credit Agents Claims against Old Walter
Industries.
Class S-8FF Claims: Walter Land Revolving Credit
Agents Claims. Class S-8FF Claims shall consist of all
Revolving Credit Agents Claims against Walter Land.
Class S-8GG Claims: JW Resources Revolving Credit
Agents Claims. Class S-8GG Claims shall consist of all
Revolving Credit Agents Claims against JW Resources.
2.13 Class S-9 Claims: Working Capital Agents Claims.
Class S-9 Claims shall consist of all Working Capital Agents
Claims.
Class S-9A Claims: Hillsborough Working Capital Agents
Claims. Class S-9A Claims shall consist of all Working
Capital Agents Claims against Hillsborough.
Class S-9E Claims: Computer Holdings Working Capital
Agents Claims. Class S-9E Claims shall consist of all
Working Capital Agents Claims against Computer Holdings.
Class S-9G Claims: Hamer Holdings Working Capital
Agents Claims. Class S-9G Claims shall consist of all
Working Capital Agents Claims against Hamer Holdings.
Class S-9I Claims: Homes Holdings Working Capital
Agents Claims. Class S-9I Claims shall consist of all
Working Capital Agents Claims against Homes Holdings.
Class S-9M Claims: Jim Walter Resources Working
Capital Agents Claims. Class S-9M Claims shall consist of
all Working Capital Agents Claims against Jim Walter
Resources.
Class S-9O Claims: JW Aluminum Working Capital Agents
Claims. Class S-9O Claims shall consist of all Working
Capital Agents Claims against JW Aluminum.
Class S-9P Claims: Resources Holdings Working Capital
Agents Claims. Class S-9P Claims shall consist of all
Working Capital Agents Claims against Resources Holdings.
Class S-9Q Claims: JWI Holdings Working Capital Agents
Claims. Class S-9Q Claims shall consist of all Working
Capital Agents Claims against JWI Holdings.
Class S-9S Claims: Window Components Working Capital
Agents Claims. Class S-9S Claims shall consist of all
Working Capital Agents Claims against Window Components.
Class S-9T Claims: Land Holdings Working Capital
Agents Claims. Class S-9T Claims shall consist of all
Working Capital Agents Claims against Land Holdings.
Class S-9V Claims: Mid-State Holdings Working Capital
Agents Claims. Class S-9V Claims shall consist of all
Working Capital Agents Claims against Mid-State Holdings.
Class S-9W Claims: Railroad Holdings Working Capital
Agents Claims. Class S-9W Claims shall consist of all
Working Capital Agents Claims against Railroad Holdings.
Class S-9X Claims: Sloss Working Capital Agents
Claims. Class S-9X Claims shall consist of all Working
Capital Agents Claims against Sloss.
Class S-9Y Claims: Southern Precision Working Capital
Agents Claims. Class S-9Y Claims shall consist of all
Working Capital Agents Claims against Southern Precision.
Class S-9Z Claims: United Land Working Capital Bank
Claims. Class S-9Z Claims shall consist of all Working
Capital Agents Claims against United Land.
Class S-9AA Claims: U.S. Pipe Working Capital Agents
Claims. Class S-9AA Claims shall consist of all Working
Capital Agents Claims against U.S. Pipe.
Class S-9BB Claims: Pipe Realty Working Capital Agents
Claims. Class S-9BB Claims shall consist of all Working
Capital Agents Claims against Pipe Realty.
Class S-9CC Claims: Vestal Working Capital Agents
Claims. Class S-9CC Claims shall consist of all Working
Capital Agents Claims against Vestal.
Class S-9EE Claims: Old Walter Industries Working
Capital Agents Claims. Class S-9EE Claims shall consist of
all Working Capital Agents Claims against Old Walter
Industries.
Class S-9FF Claims: Walter Land Working Capital Agents
Claims. Class S-9FF Claims shall consist of all Working
Capital Agents Claims against Walter Land.
2.14 Class S-10 Claims: Other Secured Claims. Class S-10
Claims shall consist of all Other Secured Claims.
Class S-10A Claims: Hillsborough Other Secured Claims.
Class S-10A Claims shall consist of all Other Secured
Claims against Hillsborough.
Class S-10B Claims: Best Other Secured Claims. Class
S-10B Claims shall consist of all Other Secured Claims
against Best.
Class S-10C Claims: Best (Miss.) Other Secured Claims.
Class S-10C Claims shall consist of all Other Secured
Claims against Best (Miss.).
Class S-10D Claims: Coast to Coast Other Secured
Claims. Class S-10D Claims shall consist of all Other
Secured Claims against Coast to Coast.
Class S-10E Claims: Computer Holdings Other Secured
Claims. Class S-10E Claims shall consist of all Other
Secured Claims against Computer Holdings.
Class S-10F Claims: Dixie Other Secured Claims. Class
S-10F Claims shall consist of all Other Secured Claims
against Dixie.
Class S-10G Claims: Hamer Holdings Other Secured
Claims. Class S-10G Claims shall consist of all Other
Secured Claims against Hamer Holdings.
Class S-10H Claims: Hamer Properties Other Secured
Claims. Class S-10H Claims shall consist of all Other
Secured Claims against Hamer Properties.
Class S-10I Claims: Homes Holdings Other Secured
Claims. Class S-10I Claims shall consist of all Other
Secured Claims against Homes Holdings.
Class S-10J Claims: Computer Services Other Secured
Claims. Class S-10J Claims shall consist of all Other
Secured Claims against Computer Services.
Class S-10K Claims: Jim Walter Homes Other Secured
Claims. Class S-10K Claims shall consist of all Other
Secured Claims against Jim Walter Homes.
Class S-10L Claims: JW Insurance Other Secured Claims.
Class S-10L Claims shall consist of all Other Secured
Claims against JW Insurance.
Class S-10M Claims: Jim Walter Resources Other Secured
Claims. Class S-10M Claims shall consist of all Other
Secured Claims against Jim Walter Resources.
Class S-10N Claims: Window Components (Wisc.) Other
Secured Claims. Class S-10N Claims shall consist of all
Other Secured Claims against Window Components (Wisc.).
Class S-10O Claims: JW Aluminum Other Secured Claims.
Class S-10O Claims shall consist of all Other Secured
Claims against JW Aluminum.
Class S-10P Claims: Resources Holdings Other Secured
Claims. Class S-10P Claims shall consist of all Other
Secured Claims against Resources Holdings.
Class S-10Q Claims: JWI Holdings Other Secured Claims.
Class S-10Q Claims shall consist of all Other Secured
Claims against JWI Holdings.
Class S-10R Claims: JW Walter Other Secured Claims.
Class S-10R Claims shall consist of all Other Secured
Claims against JW Walter.
Class S-10S Claims: Window Components Other Secured
Claims. Class S-10S Claims shall consist of all Other
Secured Claims against Window Components.
Class S-10T Claims: Land Holdings Other Secured
Claims. Class S-10T Claims shall consist of all Other
Secured Claims against Land Holdings.
Class S-10U Claims: Mid-State Homes Other Secured
Claims. Class S-10U Claims shall consist of all Other
Secured Claims against Mid-State Homes.
Class S-10V Claims: Mid-State Holdings Other Secured
Claims. Class S-10V Claims shall consist of all Other
Secured Claims against Mid-State Holdings.
Class S-10W Claims: Railroad Holdings Other Secured
Claims. Class S-10W Claims shall consist of all Other
Secured Claims against Railroad Holdings.
Class S-10X Claims: Sloss Other Secured Claims. Class
S-10X Claims shall consist of all Other Secured Claims
against Sloss.
Class S-10Y Claims: Southern Precision Other Secured
Claims. Class S-10Y Claims shall consist of all Other
Secured Claims against Southern Precision.
Class S-10Z Claims: United Land Other Secured Claims.
Class S-10Z Claims shall consist of all Other Secured
Claims against United Land.
Class S-10AA Claims: U.S. Pipe Other Secured Claims.
Class S-10AA Claims shall consist of all Other Secured
Claims against U.S. Pipe.
Class S-10BB Claims: Pipe Realty Other Secured Claims.
Class S-10BB Claims shall consist of all Other Secured
Claims against Pipe Realty.
Class S-10CC Claims: Vestal Other Secured Claims.
Class S-10CC Claims shall consist of all Other Secured
Claims against Vestal.
Class S-10DD Claims: Home Improvement Other Secured
Claims. Class S-10DD Claims shall consist of all Other
Secured Claims against Home Improvement.
Class S-10EE Claims: Old Walter Industries Other
Secured Claims. Class S-10EE Claims shall consist of all
Other Secured Claims against Old Walter Industries.
Class S-10FF Claims: Walter Land Other Secured Claims.
Class S-10FF Claims shall consist of all Other Secured
Claims against Walter Land.
Class S-10GG Claims: JW Resources Other Secured
Claims. Class S-10GG Claims shall consist of all Other
Secured Claims against JW Resources.
UNSECURED CLAIMS
Unsecured Claims consist of Old Walter Industries IRB
Claims, Convenience Class Claims, Other Unsecured Claims, Senior
Subordinated Note Claims, 17% Subordinated Note Claims, Pre-LBO
Debenture Claims and Settlement Claims.
2.15 Class U-1 Claims: Old Walter Industries IRB Claims.
Class U-1 Claims shall consist of the Old Walter Industries IRB
Claims.
Class U-1EE: Old Walter Industries IRB Claims. Class
U-1EE Claims shall consist of the Old Walter Industries IRB
Claims against Old Walter Industries.
2.16 Class U-2 Claims: Convenience Class Claims. Class
U-2 Claims shall consist of all Convenience Class Claims.
Class U-2A Claims: Hillsborough Convenience Class
Claims. Class U-2A Claims shall consist of all Convenience
Class Claims against Hillsborough.
Class U-2B Claims: Best Convenience Class Claims.
Class U-2B Claims shall consist of all Convenience Class
Claims against Best.
Class U-2C Claims: Best (Miss.) Convenience Class
Claims. Class U-2C Claims shall consist of all Convenience
Class Claims against Best (Miss.).
Class U-2D Claims: Coast to Coast Convenience Class
Claims. Class U-2D Claims shall consist of all Convenience
Class Claims against Coast to Coast.
Class U-2E Claims: Computer Holdings Convenience Class
Claims. Class U-2E Claims shall consist of all Convenience
Class Claims against Computer Holdings.
Class U-2F Claims: Dixie Convenience Class Claims.
Class U-2F Claims shall consist of all Convenience Class
Claims against Dixie.
Class U-2G Claims: Hamer Holdings Convenience Class
Claims. Class U-2G Claims shall consist of all Convenience
Class Claims against Hamer Holdings.
Class U-2H Claims: Hamer Properties Convenience Class
Claims. Class U-2H Claims shall consist of all Convenience
Class Claims against Hamer Properties.
Class U-2I Claims: Homes Holdings Convenience Class
Claims. Class U-2I Claims shall consist of all Convenience
Class Claims against Homes Holdings.
Class U-2J Claims: Computer Services Convenience Class
Claims. Class U-2J Claims shall consist of all Convenience
Class Claims against Computer Services.
Class U-2K Claims: Jim Walter Homes Convenience Class
Claims. Class U-2K Claims shall consist of all Convenience
Class Claims against Jim Walter Homes.
Class U-2L Claims: JW Insurance Corporation
Convenience Class Claims. Class U-2L Claims shall consist
of all Convenience Class Claims against JW Insurance.
Class U-2M Claims: Jim Walter Resources Convenience
Class Claims. Class U-2M Claims shall consist of all
Convenience Class Claims against Jim Walter Resources.
Class U-2N Claims: Window Components (Wisc.)
Convenience Class Claims. Class U-2N Claims shall consist
of all Convenience Class Claims against Window Components
(Wisc.).
Class U-2O Claims: JW Aluminum Convenience Class
Claims. Class U-2O Claims shall consist of all Convenience
Class Claims against JW Aluminum.
Class U-2P Claims: Resources Holdings Convenience
Class Claims. Class U-2P Claims shall consist of all
Convenience Class Claims against Resources Holdings.
Class U-2Q Claims: JWI Holdings Convenience Class
Claims. Class U-2Q Claims shall consist of all Convenience
Class Claims against JWI Holdings.
Class U-2R Claims: JW Walter Convenience Class Claims.
Class U-2R Claims shall consist of all Convenience Class
Claims against JW Walter.
Class U-2S Claims: Window Components Convenience Class
Claims. Class U-2S Claims shall consist of all Convenience
Class Claims against Window Components.
Class U-2T Claims: Land Holdings Convenience Class
Claims. Class U-2T Claims shall consist of all Convenience
Class Claims against Land Holdings.
Class U-2U Claims: Mid-State Homes Convenience Class
Claims. Class U-2U Claims shall consist of all Convenience
Class Claims against Mid-State Homes.
Class U-2V Claims: Mid-State Holdings Convenience
Class Claims. Class U-2V Claims shall consist of all
Convenience Class Claims against Mid-State Holdings.
Class U-2W Claims: Railroad Holdings Convenience Class
Claims. Class U-2W Claims shall consist of all Convenience
Class Claims against Railroad Holdings.
Class U-2X Claims: Sloss Convenience Class Claims.
Class U-2X Claims shall consist of all Convenience Class
Claims against Sloss.
Class U-2Y Claims: Southern Precision Convenience
Class Claims. Class U-2Y Claims shall consist of all
Convenience Class Claims against Southern Precision.
Class U-2Z Claims: United Land Convenience Class
Claims. Class U-2Z Claims shall consist of all Convenience
Class Claims against United Land.
Class U-2AA Claims: U.S. Pipe Convenience Class
Claims. Class U-2AA Claims shall consist of all
Convenience Class Claims against U.S. Pipe.
Class U-2BB Claims: Pipe Realty Convenience Class
Claims. Class U-2BB Claims shall consist of all
Convenience Class Claims against Pipe Realty.
Class U-2CC Claims: Vestal Convenience Class Claims.
Class U-2CC Claims shall consist of all Convenience Class
Claims against Vestal.
Class U-2DD Claims: Home Improvement Convenience Class
Claims. Class U-2DD Claims shall consist of all
Convenience Class Claims against Home Improvement.
Class U-2EE Claims: Old Walter Industries Convenience
Class Claims. Class U-2EE Claims shall consist of all
Convenience Class Claims against Old Walter Industries.
Class U-2FF Claims: Walter Land Convenience Class
Claims. Class U-2FF Claims shall consist of all
Convenience Class Claims against Walter Land.
Class U-2GG Claims: JW Resources Convenience Class
Claims. Class U-2GG Claims shall consist of all
Convenience Class Claims against JW Resources.
2.17 Class U-3 Claims: Other Unsecured Claims. Class U-3
Claims shall consist of all Other Unsecured Claims.
Class U-3A Claims: Hillsborough Other Unsecured
Claims. Class U-3A Claims shall consist of all Other
Unsecured Claims against Hillsborough.
Class U-3B Claims: Best Other Unsecured Claims. Class
U-3B Claims shall consist of all Other Unsecured Claims
against Best.
Class U-3C Claims: Best (Miss.) Other Unsecured
Claims. Class U-3C Claims shall consist of all Other
Unsecured Claims against Best (Miss.).
Class U-3D Claims: Coast to Coast Other Unsecured
Claims. Class U-3D Claims shall consist of all Other
Unsecured Claims against Coast to Coast.
Class U-3E Claims: Computer Holdings Other Unsecured
Claims. Class U-3E Claims shall consist of all Other
Unsecured Claims against Computer Holdings.
Class U-3F Claims: Dixie Other Unsecured Claims.
Class U-3F Claims shall consist of all Other Unsecured
Claims against Dixie.
Class U-3G Claims: Hamer Holdings Other Unsecured
Claims. Class U-3G Claims shall consist of all Other
Unsecured Claims against Hamer Holdings.
Class U-3H Claims: Hamer Properties Other Unsecured
Claims. Class U-3H Claims shall consist of all Other
Unsecured Claims against Hamer Properties.
Class U-3I Claims: Homes Holdings Other Unsecured
Claims. Class U-3I Claims shall consist of all Other
Unsecured Claims against Homes Holdings.
Class U-3J Claims: Computer Services Other Unsecured
Claims. Class U-3J Claims shall consist of all Other
Unsecured Claims against Computer Services.
Class U-3K Claims: Jim Walter Homes Other Unsecured
Claims. Class U-3K Claims shall consist of all Other
Unsecured Claims against Jim Walter Homes.
Class U-3L Claims: JW Insurance Other Unsecured
Claims. Class U-3L Claims shall consist of all Other
Unsecured Claims against JW Insurance.
Class U-3M Claims: Jim Walter Resources Other
Unsecured Claims. Class U-3M Claims shall consist of all
Other Unsecured Claims against Jim Walter Resources.
Class U-3N Claims: Window Components (Wisc.) Other
Unsecured Claims. Class U-3N Claims shall consist of all
Other Unsecured Claims against Window Components (Wisc.).
Class U-3O Claims: JW Aluminum Other Unsecured Claims.
Class U-3O Claims shall consist of all Other Unsecured
Claims against JW Aluminum.
Class U-3P Claims: Resources Holdings Other Unsecured
Claims. Class U-3P Claims shall consist of all Other
Unsecured Claims against Resources Holdings.
Class U-3Q Claims: JWI Holdings Other Unsecured
Claims. Class U-3Q Claims shall consist of all Other
Unsecured Claims against JWI Holdings.
Class U-3R Claims: JW Walter Other Unsecured Claims.
Class U-3R Claims shall consist of all Other Unsecured
Claims against JW Walter.
Class U-3S Claims: Window Components Other Unsecured
Claims. Class U-3S Claims shall consist of all Other
Unsecured Claims against Window Components.
Class U-3T Claims: Land Holdings Other Unsecured Claims.Class
U-3T Claims shall consist of all Other Unsecured Claims against
Land Holdings.
Class U-3U Claims: Mid-State Homes Other Unsecured
Claims. Class U-3U Claims shall consist of all Other
Unsecured Claims against Mid-State Homes.
Class U-3V Claims: Mid-State Holdings Other Unsecured
Claims. Class U-3V Claims shall consist of all Other
Unsecured Claims against Mid-State Holdings.
Class U-3W Claims: Railroad Holdings Other Unsecured
Claims. Class U-3W Claims shall consist of all Other
Unsecured Claims against Railroad Holdings.
Class U-3X Claims: Sloss Other Unsecured Claims.
Class U-3X Claims shall consist of all Other Unsecured
Claims against Sloss.
Class U-3Y Claims: Southern Precision Other Unsecured
Claims. Class U-3Y Claims shall consist of all Other
Unsecured Claims against Southern Precision.
Class U-3Z Claims: United Land Other Unsecured Claims.
Class U-3Z Claims shall consist of all Other Unsecured
Claims against United Land.
Class U-3AA Claims: U.S. Pipe Other Unsecured Claims.
Class U-3AA Claims shall consist of all Other Unsecured
Claims against U.S. Pipe.
Class U-3BB Claims: Pipe Realty Other Unsecured
Claims. Class U-3BB Claims shall consist of all Other
Unsecured Claims against Pipe Realty.
Class U-3CC Claims: Vestal Other Unsecured Claims.
Class U-3CC Claims shall consist of all Other Unsecured
Claims against Vestal.
Class U-3DD Claims: Home Improvement Other Unsecured
Claims. Class U-3DD Claims shall consist of all Other
Unsecured Claims against Home Improvement.
Class U-3EE Claims: Old Walter Industries Other
Unsecured Claims. Class U-3EE Claims shall consist of all
Other Unsecured Claims against Old Walter Industries.
Class U-3FF Claims: Walter Land Other Unsecured
Claims. Class U-3FF Claims shall consist of all Other
Unsecured Claims against Walter Land.
Class U-3GG Claims: JW Resources Other Unsecured
Claims. Class U-3GG Claims shall consist of all Other
Unsecured Claims against JW Resources.
2.18 Class U-4 Claims: Senior Subordinated Note Claims.
Class U-4 Claims shall consist of all Senior Subordinated Note
Claims.
Class U-4A Claims: Hillsborough Senior Subordinated
Note Claims. Class U-4A Claims shall consist of all Senior
Subordinated Note Claims against Hillsborough.
Class U-4I Claims: Homes Holdings Senior Subordinated
Note Claims. Class U-4I Claims shall consist of all Senior
Subordinated Note Claims against Homes Holdings.
Class U-4K Claims: Jim Walter Homes Senior
Subordinated Note Claims. Class U-4K Claims shall consist
of all Senior Subordinated Note Claims against Jim Walter
Homes.
Class U-4Z Claims: United Land Senior Subordinated
Note Claims. Class U-4Z Claims shall consist of all Senior
Subordinated Note Claims against United Land.
Class U-4AA Claims: U.S. Pipe Senior Subordinated Note
Claims. Class U-4AA Claims shall consist of all Senior
Subordinated Note Claims against U.S. Pipe.
Class U-4EE Claims: Old Walter Industries Senior
Subordinated Note Claims. Class U-4EE Claims shall consist
of all Senior Subordinated Note Claims against Old Walter
Industries.
2.19 Class U-5 Claims: 17% Subordinated Note Claims.
Class U-5 Claims shall consist of all 17% Subordinated Note
Claims.
Class U-5A Claims: Hillsborough 17% Subordinated Note
Claims. Class U-5A Claims shall consist of all 17%
Subordinated Note Claims against Hillsborough.
Class U-5I Claims: Homes Holdings 17% Subordinated
Note Claims. Class U-5I Claims shall consist of all 17%
Subordinated Note Claims against Homes Holdings.
Class U-5K Claims: Jim Walter Homes 17% Subordinated
Note Claims. Class U-5K Claims shall consist of all 17%
Subordinated Note Claims against Jim Walter Homes.
Class U-5Z Claims: United Land 17% Subordinated Note
Claims. Class U-5Z Claims shall consist of all 17%
Subordinated Note Claims against United Land.
Class U-5AA Claims: U.S. Pipe 17% Subordinated Note
Claims.Class U-5AA Claims shall consist of all 17%
Subordinated Note Claims against U.S. Pipe.
Class U-5EE Claims: Old Walter Industries 17%
Subordinated Note Claims. Class U-5EE Claims shall consist
of all 17% Subordinated Note Claims against Old Walter
Industries.
2.20 Class U-6 Claims: Pre-LBO Debenture Claims. Class
U-6 Claims shall consist of all Pre-LBO Debenture Claims.
Class U-6EE Claims: Old Walter Industries Pre-LBO
Debenture Claims. Class U-6EE Claims shall consist of all
Pre-LBO Debenture Claims against Old Walter Industries.
2.21 Class U-7 Claims: Settlement Claims. Class U-7
Claims shall consist of Settlement Claims.
Class U-7A Claims: Hillsborough Settlement Claims.
Class U-7A Claims shall consist of all Settlement Claims
against Hillsborough.
Class U-7B Claims: Best Settlement Claims. Class U-7B
Claims shall consist of all Settlement Claims against Best.
Class U-7C Claims: Best (Miss.) Settlement Claims.
Class U-7C Claims shall consist of all Settlement Claims
against Best (Miss.).
Class U-7D Claims: Coast to Coast Settlement Claims.
Class U-7D Claims shall consist of all Settlement Claims
against Coast to Coast.
Class U-7E Claims: Computer Holdings Settlement
Claims. Class U-7E Claims shall consist of all Settlement
Claims against Computer Holdings.
Class U-7F Claims: Dixie Settlement Claims. Class
U-7F Claims shall consist of all Settlement Claims against
Dixie.
Class U-7G Claims: Hamer Holdings Settlement Claims.
Class U-7G Claims shall consist of all Settlement Claims
against Hamer Holdings.
Class U-7H Claims: Hamer Properties Settlement Claims.
Class U-7H Claims shall consist of all Settlement Claims
against Hamer Properties.
Class U-7I Claims: Homes Holdings Settlement Claims.
Class U-7I Claims shall consist of all Settlement Claims
against Homes Holdings.
Class U-7J Claims: Computer Services Settlement
Claims. Class U-7J Claims shall consist of all Settlement
Claims against Computer Services.
Class U-7K Claims: Jim Walter Homes Settlement Claims.
Class U-7K Claims shall consist of all Settlement Claims
against Jim Walter Homes.
Class U-7L Claims: JW Insurance Settlement Claims.
Class U-7L Claims shall consist of all Settlement Claims
against JW Insurance.
Class U-7M Claims: Jim Walter Resources Settlement
Claims. Class U-7M Claims shall consist of all Settlement
Claims against Jim Walter Resources.
Class U-7N Claims: Window Components (Wisc.)
Settlement Claims. Class U-7N Claims shall consist of all
Settlement Claims against Window Components (Wisc.).
Class U-7O Claims: JW Aluminum Settlement Claims.
Class U-7O Claims shall consist of all Settlement Claims
against JW Aluminum.
Class U-7P Claims: Resources Holdings Settlement
Claims. Class U-7P Claims shall consist of all Settlement
Claims against Resources Holdings.
Class U-7Q Claims: JWI Holdings Settlement Claims.
Class U-7Q Claims shall consist of all Settlement Claims
against JWI Holdings.
Class U-7R Claims: JW Walter Settlement Claims. Class
U-7R Claims shall consist of all Settlement Claims against
JW Walter.
Class U-7S Claims: Window Components Settlement
Claims. Class U-7S Claims shall consist of all Settlement
Claims against Window Components.
Class U-7T Claims: Land Holdings Settlement Claims.
Class U-7T Claims shall consist of all Settlement Claims
against Land Holdings.
Class U-7U Claims: Mid-State Homes Settlement Claims.
Class U-7U Claims shall consist of all Settlement Claims
against Mid-State Homes.
Class U-7V Claims: Mid-State Holdings Settlement
Claims. Class U-7V Claims shall consist of all Settlement
Claims against Mid-State Holdings.
Class U-7W Claims: Railroad Holdings Settlement
Claims. Class U-7W Claims shall consist of all Settlement
Claims against Railroad Holdings.
Class U-7X Claims: Sloss Settlement Claims. Class
U-7X Claims shall consist of all Settlement Claims against
Sloss.
Class U-7Y Claims: Southern Precision Settlement
Claims. Class U-7Y Claims shall consist of all Settlement
Claims against Southern Precision.
Class U-7Z Claims: United Land Settlement Claims.
Class U-7Z Claims shall consist of all Settlement Claims
against United Land.
Class U-7AA Claims: U.S. Pipe Settlement Claims.
Class U-7AA Claims shall consist of all Settlement Claims
against U.S. Pipe.
Class U-7BB Claims: Pipe Realty Settlement Claims.
Class U-7BB Claims shall consist of all Settlement Claims
against Pipe Realty.
Class U-7CC Claims: Vestal Settlement Claims. Class
U-7CC Claims shall consist of all Settlement Claims against
Vestal.
Class U-7DD Claims: Home Improvement Settlement
Claims. Class U-7DD Claims shall consist of all Settlement
Claims against Home Improvement.
Class U-7EE Claims: Old Walter Industries Settlement
Claims. Class U-7EE Claims shall consist of all Settlement
Claims against Old Walter Industries.
Class U-7FF Claims: Walter Land Settlement Claims.
Class U-7FF Claims shall consist of all Settlement Claims
against Walter Land.
Class U-7GG Claims: JW Resources Settlement Claims.
Class U-7GG Claims shall consist of all Settlement Claims
against JW Resources.
INTERCOMPANY CLAIMS
Intercompany Claims consist of Intercompany IRB Claims,
Pre-Filing Date Intercompany Notes Payable Claims and
Post-Filing Date Intercompany Notes Payable Claims.
2.22 Class I-1 Claims: Intercompany IRB Claims. Class I-1
Claims shall consist of all Intercompany IRB Claims.
Class I-1X Claims: Sloss Intercompany IRB Claims.
Class I-1X Claims shall consist of all Intercompany IRB
Claims against Sloss.
2.23 Class I-2 Claims: Pre-Filing Date Intercompany Notes
Payable Claims. Class I-2 Claims shall consist of all
Pre-Filing Date Intercompany Notes Payable Claims.
Class I-2A Claims: Hillsborough Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2A Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Hillsborough.
Class I-2B Claims: Best Pre-Filing Date Intercompany
Notes Payable Claims. Class I-2B Claims shall consist of
all Pre-Filing Date Intercompany Notes Payable Claims
against Best.
Class I-2C Claims: Best (Miss.) Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2C Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Best (Miss.).
Class I-2D Claims: Coast to Coast Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2D Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Coast to Coast.
Class I-2E Claims: Computer Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2E Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Computer Holdings.
Class I-2F Claims: Dixie Pre-Filing Date Intercompany
Notes Payable Claims. Class I-2F Claims shall consist of
all Pre-Filing Date Intercompany Notes Payable Claims
against Dixie.
Class I-2G Claims: Hamer Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2G Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Hamer Holdings.
Class I-2H Claims: Hamer Properties Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2H Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Hamer Properties.
Class I-2I Claims: Homes Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2I Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Homes Holdings.
Class I-2J Claims: Computer Services Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2J Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Computer Services.
Class I-2K Claims: Jim Walter Homes Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2K Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Jim Walter Homes.
Class I-2M Claims: Jim Walter Resources Pre-Filing
Date Intercompany Notes Payable Claims. Class I-2M Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Jim Walter Resources.
Class I-2N Claims: Window Components (Wisc.)
Pre-Filing Date Intercompany Notes Payable Claims. Class
I-2N Claims shall consist of all Pre-Filing Date
Intercompany Notes Payable Claims against Window Components
(Wisc.).
Class I-2O Claims: JW Aluminum Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2O Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against JW Aluminum.
Class I-2P Claims: Resources Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2P Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Resources Holdings.
Class I-2Q Claims: JWI Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2Q Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against JWI Holdings.
Class I-2R Claims: JW Walter Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2R Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against JW Walter.
Class I-2S Claims: Window Components Pre-Filing Date
Intercompany Notes Payable Claims. Class 1-2S Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Window Components.
Class I-2T Claims: Land Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2T Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Land Holdings.
Class I-2U Claims: Mid-State Homes Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2U Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Mid-State Homes.
Class I-2V Claims: Mid-State Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2V Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Mid-State Holdings.
Class I-2W Claims: Railroad Holdings Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2W Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Railroad Holdings.
Class I-2X Claims: Sloss Pre-Filing Date Intercompany
Notes Payable Claims. Class I-2X Claims shall consist of
all Pre-Filing Date Intercompany Notes Payable Claims
against Sloss.
Class I-2Y Claims: Southern Precision Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2Y Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against Southern Precision.
Class I-2Z Claims: United Land Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2Z Claims shall
consist of all Pre-Filing Date Intercompany Notes Payable
Claims against United Land.
Class I-2AA Claims: U.S. Pipe Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2AA Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against U.S. Pipe.
Class I-2BB Claims: Pipe Realty Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2BB Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Pipe Realty.
Class I-2CC Claims: Vestal Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2CC Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Vestal.
Class I-2DD Claims: Home Improvement Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2DD Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Home Improvement.
Class I-2EE Claims: Old Walter Industries Pre-Filing
Date Intercompany Notes Payable Claims. Class I-2EE Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Old Walter Industries.
Class I-2FF Claims: Walter Land Pre-Filing Date
Intercompany Notes Payable Claims. Class I-2FF Claims
shall consist of all Pre-Filing Date Intercompany Notes
Payable Claims against Walter Land.
2.24 Class I-3 Claims: Post-Filing Date Intercompany Notes
Payable Claims. Class I-3 Claims shall consist of all
Post-Filing Date Intercompany Notes Payable Claims.
Class I-3A Claims: Hillsborough Post-Filing Date
Intercompany Notes Payable Claims. Class 1-3A Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Hillsborough.
Class I-3B Claims: Best Post-Filing Date Intercompany
Notes Payable Claims. Class I-3B Claims shall consist of
all Post-Filing Date Intercompany Notes Payable Claims
against Best.
Class I-3C Claims: Best (Miss.) Post-Filing Date
Intercompany Notes Payable Claims. Class I-3C Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Best (Miss.).
Class I-3E Claims: Computer Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3E Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Computer Holdings.
Class I-3F Claims: Dixie Post-Filing Date Intercompany
Notes Payable Claims. Class I-3F Claims shall consist of
all Post-Filing Date Intercompany Notes Payable Claims
against Dixie.
Class I-3G Claims: Hamer Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3G Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Hamer Holdings.
Class I-3H Claims: Hamer Properties Post-Filing Date
Intercompany Notes Payable Claims. Class I-3H Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Hamer Properties.
Class I-3I Claims: Homes Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3I Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Homes Holdings.
Class I-3J Claims: Computer Services Post-Filing Date
Intercompany Notes Payable Claims. Class I-3J Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Computer Services.
Class I-3K Claims: Jim Walter Homes Post-Filing Date
Intercompany Notes Payable Claims. Class I-3K Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Jim Walter Homes.
Class I-3L Claims: JW Insurance Post-Filing Date
Intercompany Notes Payable Claims. Class I-3L Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against JW Insurance.
Class I-3M Claims: Jim Walter Resources Post-Filing
Date Intercompany Notes Payable Claims. Class I-3M Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Jim Walter Resources.
Class I-3N Claims: Window Components (Wisc.)
Post-Filing Date Intercompany Notes Payable Claims. Class
I-3N Claims shall consist of all Post-Filing Date
Intercompany Notes Payable Claims against Window Components
(Wisc.).
Class I-3O Claims: JW Aluminum Post-Filing Date
Intercompany Notes Payable Claims. Class I-3O Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against JW Aluminum.
Class I-3P Claims: Resources Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3P Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Resources Holdings.
Class I-3Q Claims: JWI Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3Q Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against JWI Holdings.
Class I-3R Claims: JW Walter Post-Filing Date
Intercompany Notes Payable Claims. Class I-3R Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against JW Walter.
Class I-3S Claims: Window Components Post-Filing Date
Intercompany Notes Payable Claims. Class I-3S Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Window Components.
Class I-3T Claims: Land Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3T Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Land Holdings.
Class I-3U Claims: Mid-State Homes Post-Filing Date
Intercompany Notes Payable Claims. Class I-3U Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Mid-State Homes.
Class I-3V Claims: Mid-State Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3V Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Mid-State Holdings.
Class I-3W Claims: Railroad Holdings Post-Filing Date
Intercompany Notes Payable Claims. Class I-3W Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Railroad Holdings.
Class I-3X Claims: Sloss Post-Filing Date Intercompany
Notes Payable Claims. Class I-3X Claims shall consist of
all Post-Filing Date Intercompany Notes Payable Claims
against Sloss.
Class I-3Y Claims: Southern Precision Post-Filing Date
Intercompany Notes Payable Claims. Class I-3Y Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against Southern Precision.
Class I-3Z Claims: United Land Post-Filing Date
Intercompany Notes Payable Claims. Class I-3Z Claims shall
consist of all Post-Filing Date Intercompany Notes Payable
Claims against United Land.
Class I-3AA Claims: U.S. Pipe Post-Filing Date
Intercompany Notes Payable Claims. Class I-3AA Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against U.S. Pipe.
Class I-3BB Claims: Pipe Realty Post-Filing Date
Intercompany Notes Payable Claims. Class I-3BB Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Pipe Realty.
Class I-3CC Claims: Vestal Post-Filing Date
Intercompany Notes Payable Claims. Class I-3CC Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Vestal.
Class I-3DD Claims: Home Improvement Post-Filing Date
Intercompany Notes Payable Claims. Class I-3DD Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Home Improvement.
Class I-3EE Claims: Old Walter Industries Post-Filing
Date Intercompany Notes Payable Claims. Class I-3EE Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Old Walter Industries.
Class I-3FF Claims: Walter Land Post-Filing Date
Intercompany Notes Payable Claims. Class I-3FF Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against Walter Land.
Class I-3GG Claims: JW Resources Post-Filing Date
Intercompany Notes Payable Claims. Class I-3GG Claims
shall consist of all Post-Filing Date Intercompany Notes
Payable Claims against JW Resources.
INTERESTS IN HILLSBOROUGH
Interests in Hillsborough consist of all Interests of
Holders of Old Common Stock and Holders of Stock Acquisition
Rights in Hillsborough.
2.25 Class E-1 Interests: Old Common Stock Interests in
Hillsborough. Class E-l Interests shall consist of all
Interests of Holders of Old Common Stock.
Class E-1A Interests: Old Common Stock Interests in
Hillsborough. Class E-1A Interests shall consist of all
Interests of Holders of Old Common Stock.
2.26 Class E-2 Interests: Stock Acquisition Rights in
Hillsborough. Class E-2 Interests shall consist of all
Interests of Holders of Stock Acquisition Rights in
Hillsborough.
Class E-2A Interests: Stock Acquisition Rights in
Hillsborough. Class E-2A Interests shall consist of all
Interests of Holders of Stock Acquisition Rights in
Hillsborough.
INTERESTS IN DEBTORS OTHER THAN HILLSBOROUGH
Interests in the Debtors other than Hillsborough consist of
all Interests of Holders of Subsidiary Common Stock and Holders
of Stock Acquisition Rights in each Debtor other than
Hillsborough.
2.27 Class SE-1 Interests: Subsidiary Common Stock
Interests in Debtors other than Hillsborough. Class SE-1
Interests shall consist of all Interests of Holders of
Subsidiary Common Stock.
Class SE-1B Interests: Subsidiary Common Stock
Interests in Best. Class SE-1B Interests shall consist of
all Interests of Holders of Subsidiary Common Stock of Best
issued and outstanding as of the Filing Date.
Class SE-1C Interests: Subsidiary Common Stock
Interests in Best (Miss.). Class SE-1C Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Best (Miss.) issued and outstanding as of the
Filing Date.
Class SE-1D Interests: Subsidiary Common Stock
Interests in Coast to Coast. Class SE-1D Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Coast to Coast issued and outstanding as of the
Filing Date.
Class SE-1E Interests: Subsidiary Common Stock
Interests in Computer Holdings. Class SE-1E Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Computer Holdings issued and outstanding as
of the Filing Date.
Class SE-1F Interests: Subsidiary Common Stock
Interests in Dixie. Class SE-1F Interests shall consist of
all Interests of Holders of Subsidiary Common Stock of
Dixie issued and outstanding as of the Filing Date.
Class SE-1G Interests: Subsidiary Common Stock
Interests in Hamer Holdings. Class SE-1G Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Hamer Holdings issued and outstanding as of the
Filing Date.
Class SE-1H Interests: Subsidiary Common Stock
Interests in Hamer Properties. Class SE-1H Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Hamer Properties issued and outstanding as of the
Filing Date.
Class SE-1I Interests: Subsidiary Common Stock
Interests in Homes Holdings. Class SE-1I Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Homes Holdings issued and outstanding as of the
Filing Date.
Class SE-1J Interests: Subsidiary Common Stock
Interests in Computer Services. Class SE-1J Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Computer Services issued and outstanding as
of the Filing Date.
Class SE-1K Interests: Subsidiary Common Stock
Interests in Jim Walter Homes. Class SE-1K Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Jim Walter Homes issued and outstanding as of the
Filing Date.
Class SE-1L Interests: Subsidiary Common Stock
Interests in JW Insurance. Class SE-1L Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of JW Insurance issued and outstanding as of the
Filing Date.
Class SE-1M Interests: Subsidiary Common Stock
Interests in Jim Walter Resources. Class SE-1M Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Jim Walter Resources issued and outstanding
as of the Filing Date.
Class SE-1N Interests: Subsidiary Common Stock
Interests in Window Components (Wisc.) Class SE-1N
Interests shall consist of all Interests of Holders of
Subsidiary Common Stock of Window Components (Wisc.) issued
and outstanding as of the Filing Date.
Class SE-1O Interests: Subsidiary Common Stock
Interests in JW Aluminum. Class SE-1O Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of JW Aluminum issued and outstanding as of the
Filing Date.
Class SE-1P Interests: Subsidiary Common Stock
Interests in Resources Holdings. Class SE-1P Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Resources Holdings issued and outstanding
as of the Filing Date.
Class SE-1Q Interests: Subsidiary Common Stock
Interests in JWI Holdings. Class SE-1Q Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of JWI Holdings issued and outstanding as of the
Filing Date.
Class SE-1R Interests: Subsidiary Common Stock
Interests in JW Walter. Class SE-1R Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of JW Walter issued and outstanding as of the Filing
Date.
Class SE-1S Interests: Subsidiary Common Stock
Interests in Window Components. Class SE-1S Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Window Components issued and outstanding as
of the Filing Date.
Class SE-1T Interests: Subsidiary Common Stock
Interests in Land Holdings. Class SE-1T Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Land Holdings issued and outstanding as of the
Filing Date.
Class SE-1U Interests: Subsidiary Common Stock
Interests in Mid-State Homes. Class SE-1U Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Mid-State Homes issued and outstanding as of the
Filing Date.
Class SE-1V Interests: Subsidiary Common Stock
Interests in Mid-State Holdings. Class SE-1V Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Mid-State Holdings issued and outstanding
as of the Filing Date.
Class SE-1W Interests: Subsidiary Common Stock
Interests in Railroad Holdings. Class SE-1W Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Railroad Holdings issued and outstanding as
of the Filing Date.
Class SE-1X Interests: Subsidiary Common Stock
Interests in Sloss. Class SE-1X Interests shall consist of
all Interests of Holders of Subsidiary Common Stock of
Sloss issued and outstanding as of the Filing Date.
Class SE-1Y Interests: Subsidiary Common Stock
Interests in Southern Precision. Class SE-1Y Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Southern Precision issued and outstanding
as of the Filing Date.
Class SE-1Z Interests: Subsidiary Common Stock
Interests in United Land. Class SE-1Z Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of United Land issued and outstanding as of the
Filing Date.
Class SE-1AA Interests: Subsidiary Common Stock
Interests in U.S. Pipe. Class SE-1AA Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of U.S. Pipe issued and outstanding as of the Filing
Date.
Class SE-1BB Interests: Subsidiary Common Stock
Interests in Pipe Realty. Class SE-1BB Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Pipe Realty issued and outstanding as of the
Filing Date.
Class SE-1CC Interests: Subsidiary Common Stock
Interests in Vestal. Class SE-1CC Interests shall consist
of all Interests of Holders of Subsidiary Common Stock of
Vestal issued and outstanding as of the Filing Date.
Class SE-1DD Interests: Subsidiary Common Stock
Interests in Home Improvement. Class SE-1DD Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Home Improvement issued and outstanding as
of the Filing Date.
Class SE-1EE Interests: Subsidiary Common Stock
Interests in Old Walter Industries. Class SE-1EE Interests
shall consist of all Interests of Holders of Subsidiary
Common Stock of Old Walter Industries issued and
outstanding as of the Filing Date.
Class SE-1FF Interests: Subsidiary Common Stock
Interests in Walter Land. Class SE-1FF Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of Walter Land issued and outstanding as of the
Filing Date.
Class SE-1GG Interests: Subsidiary Common Stock
Interests in JW Resources. Class SE-1GG Interests shall
consist of all Interests of Holders of Subsidiary Common
Stock of JW Resources issued and outstanding as of the
Filing Date.
2.28 Class SE-2 Interests: Subsidiary Stock Acquisition
Rights in Debtors other than Hillsborough. Class SE-2 Interests
shall consist of all Interests of Holders of Stock Acquisition
Rights in each Debtor other than Hillsborough.
Class SE-2B Interests: Subsidiary Stock Acquisition
Rights in Best. Class SE-2B Interests shall consist of all
Interests of Holders of Stock Acquisition Rights in Best.
Class SE-2C Interests: Subsidiary Stock Acquisition
Rights in Best (Miss.). Class SE-2C Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Best (Miss.).
Class SE-2D Interests: Subsidiary Stock Acquisition
Rights in Coast to Coast. Class SE-2D Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Coast to Coast.
Class SE-2E Interests: Subsidiary Stock Acquisition
Rights in Computer Holdings. Class SE-2E Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Computer Holdings.
Class SE-2F Interests: Subsidiary Stock Acquisition
Rights in Dixie. Class SE-2F Interests shall consist of
all Interests of Holders of Stock Acquisition Rights in
Dixie.
Class SE-2G Interests: Subsidiary Stock Acquisition
Rights in Hamer Holdings. Class SE-2G Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Hamer Holdings.
Class SE-2H Interests: Subsidiary Stock Acquisition
Rights in Hamer Properties. Class SE-2H Interests shall
consist of all Other Secured Claims against Hamer
Properties.
Class SE-2I Interests: Subsidiary Stock Acquisition
Rights in Homes Holdings. Class SE-2I Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Homes Holdings.
Class SE-2J Interests: Subsidiary Stock Acquisition
Rights in Computer Services. Class SE-2J Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Computer Services.
Class SE-2K Interests: Subsidiary Stock Acquisition
Rights in Jim Walter Homes. Class SE-2K Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Jim Walter Homes.
Class SE-2L Interests: Subsidiary Stock Acquisition
Rights in JW Insurance. Class SE-2L Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in JW Insurance.
Class SE-2M Interests: Subsidiary Stock Acquisition
Rights in Jim Walter Resources. Class SE-2M Interests
shall consist of all Interests of Holders of Stock
Acquisition Rights in Jim Walter Resources.
Class SE-2N Interests: Subsidiary Stock Acquisition
Rights in Window Components (Wisc.). Class SE-2N Interests
shall consist of all Interests of Holders of Stock
Acquisition Rights in Window Components (Wisc.).
Class SE-2O Interests: Subsidiary Stock Acquisition
Rights in JW Aluminum. Class SE-2O Interests shall consist
of all Interests of Holders of Stock Acquisition Rights in
JW Aluminum.
Class SE-2P Interests: Subsidiary Stock Acquisition
Rights in Resources Holdings. Class SE-2P Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Resources Holdings.
Class SE-2Q Interests: Subsidiary Stock Acquisition
Rights in JWI Holdings. Class SE-2Q Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in JWI Holdings.
Class SE-2R Interests: Subsidiary Stock Acquisition
Rights in JW Walter. Class SE-2R Interests shall consist
of all Interests of Holders of Stock Acquisition Rights in
JW Walter.
Class SE-2S Interests: Subsidiary Stock Acquisition
Rights in Window Components. Class SE-2S Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Window Components.
Class SE-2T Interests: Subsidiary Stock Acquisition
Rights in Land Holdings. Class SE-2T Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Land Holdings.
Class SE-2U Interests: Subsidiary Stock Acquisition
Rights in Mid-State Homes. Class SE-2U Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Mid-State Homes.
Class SE-2V Interests: Subsidiary Stock Acquisition
Rights in Mid-State Holdings. Class SE-2V Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Mid-State Holdings.
Class SE-2W Interests: Subsidiary Stock Acquisition
Rights in Railroad Holdings. Class SE-2W Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Railroad Holdings.
Class SE-2X Interests: Subsidiary Stock Acquisition
Rights in Sloss. Class SE-2X Interests shall consist of
all Interests of Holders of Stock Acquisition Rights in
Sloss.
Class SE-2Y Interests: Subsidiary Stock Acquisition
Rights in Southern Precision. Class SE-2Y Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Southern Precision.
Class SE-2Z Interests: Subsidiary Stock Acquisition
Rights in United Land. Class SE-2Z Interests shall consist
of all Interests of Holders of Stock Acquisition Rights in
United Land.
Class SE-2AA Interests: Subsidiary Stock Acquisition
Rights in U.S. Pipe. Class SE-2AA Interests shall consist
of all Interests of Holders of Stock Acquisition Rights in
U.S. Pipe.
Class SE-2BB Interests: Subsidiary Stock Acquisition
Rights in Pipe Realty. Class SE-2BB Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Pipe Realty.
Class SE-2CC Interests: Subsidiary Stock Acquisition
Rights in Vestal. Class SE-2CC Interests shall consist of
all Interests of Holders of Stock Acquisition Rights in
Vestal.
Class SE-2DD Interests: Subsidiary Stock Acquisition
Rights in Home Improvement. Class SE-2DD Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Home Improvement.
Class SE-2EE Interests: Subsidiary Stock Acquisition
Rights in Old Walter Industries. Class SE-2EE Interests
shall consist of all Interests of Holders of Stock
Acquisition Rights in Old Walter Industries.
Class SE-2FF Interests: Subsidiary Stock Acquisition
Rights in Walter Land. Class SE-2FF Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in Walter Land.
Class SE-2GG Interests: Subsidiary Stock Acquisition
Rights in JW Resources. Class SE-2GG Interests shall
consist of all Interests of Holders of Stock Acquisition
Rights in JW Resources.
ARTICLE III
TREATMENT OF ALLOWED CLAIMS AND INTERESTS UNDER THE CONSENSUAL
PLAN
3.1 Satisfaction of Allowed Claims and Interests. The
treatment of and the consideration received by Holders of
Allowed Claims or Interests pursuant to this Article III shall
be in full satisfaction, release and discharge of (i) such
Holder's respective Allowed Claims against or Interests in each
and all of the Debtors, and (ii) any other claims, Demands,
obligations, rights, causes of action and liabilities which such
Holder may be entitled to assert against any Debtor, whether
known or unknown, foreseen or unforeseen, then existing or
thereafter arising, based in whole or in part upon any act,
omission or other occurrence taking place on or prior to the
Effective Date (including without limitation, any such claims,
obligations, rights, causes of action and liabilities based upon
any of the Veil Piercing-Related Issues or the LBO-Related
Issues), except as provided in the Consensual Plan and the
Confirmation Order.
UNCLASSIFIED CLAIMS
ADMINISTRATIVE CLAIMS
3.2 Administrative Claims. Each Holder of an Allowed
Administrative Claim shall receive, in full satisfaction
thereof, (1) Cash in an amount equal to the Allowed Amount of
such Claim, without interest, on or promptly after the Effective
Date, or (2) such amount, at such other date and upon such other
terms as shall have been agreed upon between the Holder of such
Allowed Claim and the applicable Debtor and approved by a Final
Order of the Court; provided, however, that Allowed
Administrative Claims representing obligations incurred in the
ordinary course of business of a Debtor or assumed by any Debtor
subsequent to the Filing Date shall be paid or performed by such
Debtor in accordance with the terms and conditions of each
agreement relating thereto in the ordinary course of such
Debtor's business.
PRIORITY CLAIMS
3.3 Federal Income Tax Claims. The Holder of the Allowed
Federal Income Tax Claims shall receive, in full satisfaction
thereof, Cash payments in an aggregate amount equal to the
Allowed Amount of such Allowed Federal Income Tax Claim. The
Allowed Amount shall be payable in equal quarterly installments
over a six-year period from the earlier to occur of (i) the date
of the assessment by the Internal Revenue Service of such Claim,
and (ii) the date on which such Claim becomes an Allowed Claim,
with interest on unpaid amounts from the later of the Effective
Date, the date of assessment and the date on which the Claim
becomes an Allowed Claim, at an annual rate equal to the
Chemical Bank Prime Rate in effect on such date, in accordance
with the provisions of Section 1129(a) of the Code and, if
applicable, a Final Order of the Court; provided that if the
date of any assessment shall have occurred prior to the
Effective Date, then the Holder of the Federal Income Tax Claims
shall receive Cash in an amount equal to the aggregate amount of
all deferred Cash payments which were due and payable in
accordance with the foregoing on or prior to the Effective Date,
on or promptly after the Effective Date, unless such Holder and
the Debtors (subject to Section 4.20 of the Consensual Plan)
shall have agreed to a less favorable treatment of such Claim.
3.4 Federal Excise Tax and Reclamation Claims. Each
Holder of an Allowed Federal Excise Tax and Reclamation Claim
shall receive, in full satisfaction thereof, Cash in an amount
equal to the Allowed Amount of such Claim, without interest, on
or promptly after the Effective Date, unless such Holder and
Jim Walter Resources shall have agreed to a less favorable
treatment of such Claim.
3.5 State and Local Tax Claims. Each Holder of an Allowed
State and Local Tax Claim shall receive, in full satisfaction
thereof, Cash in an amount equal to the Allowed Amount of such
Claim, without interest, on or promptly after the Effective
Date, unless such Holder and the applicable Debtor shall have
agreed to a less favorable treatment of such Claim.
CLASSIFIED CLAIMS
SECURED CLAIMS
3.6 Class S-1 Claims: Revolving Credit Bank Claims. Class
S-1 Claims are impaired. Each Holder of a Class S-1 Allowed
Claim shall receive, in full satisfaction thereof, Cash and New
Common Stock as follows:
(a) Within 5 days following the Confirmation Date, or
such other date as the Court may order (but in any event
not later than the Effective Date), Cash in the amount of
the portion of such Holder's Allowed Claim described in
clauses (ii) and (iii) of Section 1.20(b) (the "Initial
Revolving Credit Bank Claim Payment"); provided, however,
that if the Initial Revolving Credit Bank Claim Payment is
not made on or prior to June 30, 1994, then the Initial
Revolving Credit Bank Claim Payment shall also include the
portion of such Holder's Allowed Claim described in clause
(iv) of Section 1.20(b);
(b) On the last Business Day of each calendar quarter
occurring between the date of the Initial Revolving Credit
Bank Claim Payment and the Effective Date, Cash in the
amount of the unpaid portion of such Holder's Allowed Claim
described in clause (v) of Section 1.20(b) which accrued
during such calendar quarter and was not paid pursuant to
Section 3.6(a); and
(c) On the Effective Date, Cash and, to the extent
set forth in Section 1.20(b)(vi), New Common Stock in the
amount of the Allowed Amount of such Holder's Allowed Claim
to the extent not theretofore paid pursuant to Section
3.6(a) and (b), unless such Holder and the Debtors shall
have agreed to a less favorable treatment of such Claim.
Upon receipt of the distribution specified in this Section
3.6, all Holders of Class S-1 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made pursuant to
the Consensual Plan to Holders of Subordinated Note Claims and
shall be permanently enjoined from enforcing, or attempting to
enforce, any such subordination rights. Accordingly,
distributions to be made pursuant to the Consensual Plan on
account of Subordinated Note Claims shall not be subject to
levy, garnishment, attachment or other legal process by any
Holder of a Class S-1 Claim by reason of any subordination
rights.
3.7 Class S-2 Claims: Working Capital Bank Claims. Class
S-2 Claims are impaired. Each Holder of a Class S-2 Allowed
Claim shall receive, in full satisfaction thereof, Cash and New
Common Stock as follows:
(a) Within 5 days following the Confirmation Date, or
such other date as the Court may order (but in any event
not later than the Effective Date), Cash in the amount of
the portion of such Holder's Allowed Claim described in
clauses (ii) and (iii) of Section 1.20(c) (the "Initial
Working Capital Bank Claim Payment"); provided, however,
that if the Initial Working Capital Bank Claim Payment is
not made on or prior to June 30, 1994, then the Initial
Working Capital Bank Claim Payment shall also include the
portion of such Holder's Allowed Claim described in clause
(iv) of Section 1.20(c);
(b) On the last Business Day of each calendar quarter
occurring between the date of the Initial Working Capital
Bank Claim Payment and the Effective Date, Cash in the
amount of the unpaid portion of such Holder's Allowed Claim
described in clause (v) of Section 1.20(c) which accrued
during such calendar quarter and was not paid pursuant to
Section 3.7(a); and
(c) On the Effective Date, Cash and, to the extent
set forth in Section 1.20(c)(vi), New Common Stock in the
amount of the Allowed Amount of such Holder's Allowed Claim
to the extent not theretofore paid pursuant to Section
3.7(a) and (b), unless such Holder and the Debtors shall
have agreed to a less favorable treatment of such Claim.
Upon receipt of the distribution specified in this Section
3.7, all Holders of Class S-2 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made pursuant to
the Consensual Plan to Holders of Subordinated Note Claims and
shall be permanently enjoined from enforcing, or attempting to
enforce, any such subordination rights. Accordingly,
distributions to be made pursuant to the Consensual Plan on
account of Subordinated Note Claims shall not be subject to
levy, garnishment, attachment or other legal process by any
Holder of a Class S-2 Claim by reason of any subordination
rights.
3.8 Class S-3 Claims: Grace Street Note Claims. The Class
S-3 Claims are not impaired. Each Holder of a Class S-3 Allowed
Claim shall receive, in full satisfaction thereof, Cash in an
amount equal to the Allowed Amount of such Claim on or promptly
after the Effective Date, unless the Holder thereof and the
Debtors shall have agreed to a less favorable treatment of such
Claim.
3.9 Class S-4 Claims: Sloss IRB Claim. Class S-4 Claims
are not impaired. The Holder of a Class S-4 Allowed Claim shall
receive, in full satisfaction thereof, Cash in an amount equal
to the Allowed Amount of such Claim, on or promptly after the
Effective Date, unless the Holder thereof and the Debtors shall
have agreed to a less favorable treatment of such Claim.
3.10 Class S-5 Claims: Secured Equipment Purchase Claims.
Class S-5 Claims are not impaired. Each Holder of a Class S-5
Allowed Claim shall receive, in full satisfaction thereof, Cash
in an amount equal to the Allowed Amount of such Claim, on or
promptly after the Effective Date, unless such Holder and the
Debtors shall have agreed to a less favorable treatment of such
Claim.
3.11 Class S-6 Claims: Series B & C Senior Note Claims.
Class S-6 Claims are impaired. Each Holder of a Class S-6
Allowed Claim shall receive, in full satisfaction thereof,
(a) Cash in an amount equal to such Holder's Pro Rata share of
the Class S-6 Fund, (b) such Holder's Pro Rata share of the New
Common Stock set forth in Section 1.20(e)(iv), and (c) with
respect to the difference between the Allowed Amount of such
Holder's Class S-6 Claim and the amount of Cash and New Common
Stock received pursuant to clauses (a) and (b), (i) if such
Holder elected to receive all of the remainder of its Series B &
C Senior Note Claim in New Senior Notes pursuant to the Series B
& C Senior Note Claim Election, an aggregate principal amount of
New Senior Notes equal to such difference (or, if Cash is used
to satisfy the Claims that would otherwise have been satisfied
by New Senior Notes, an amount of Cash equal to the principal
amount of New Senior Notes that would otherwise have been issued
in respect of such Claim), or (ii) if such Holder did not make
such election, an aggregate amount of Cash equal to such
difference, on or promptly after the Effective Date, unless such
Holder and Walter Industries shall have agreed to a less
favorable treatment of such Claim.
As used herein, the "Class S-6 Fund" means the funds held
by Chemical Bank, as successor to Manufacturers Hanover Trust
Company, in a restricted Cash account, for the benefit of the
holders of Series B & C Senior Notes, which funds represent a
portion of (a) the cash collections received by Jim Walter
Resources prior to the Filing Date from Jasper Corp. in
connection with the non-recourse promissory note dated May 26,
1988 payable to Jim Walter Resources and (b) the proceeds from
the sale of Oil Holdings Corporation by Hillsborough and other
proceeds deposited with Manufacturers Hanover Trust Company, as
predecessor to Chemical Bank, prior to the Filing Date, together
with all earnings thereon to the date of distribution.
Upon receipt of the distribution specified in this Section
3.11, all Holders of Class S-6 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made pursuant to
the Consensual Plan to Holders of Subordinated Note Claims and
shall be permanently enjoined from enforcing, or attempting to
enforce, any such subordination rights. Accordingly,
distributions to be made pursuant to the Consensual Plan on
account of Subordinated Note Claims shall not be subject to
levy, garnishment, attachment or other legal process by any
Holder of a Class S-6 Claim by reason of any subordination
rights.
3.12 Class S-7 Claims: Provident Life & Accident Insurance
Company Claims. Class S-7 Claims are not impaired. The Holder
of the Class S-7 Allowed Claims shall receive, in full
satisfaction thereof, Cash in an amount equal to the Allowed
Amount of such Claims on or promptly after the Effective Date,
unless such Holder and the Debtors shall have agreed to a less
favorable treatment of such Claim.
Upon payment in Cash of the Allowed Amount of the Provident
Life & Accident Insurance Company Claims, Walter Industries
shall assume all unsatisfied obligations with respect to the
loans underlying such Provident Life & Accident Insurance
Company Claims in accordance with their original contractual
terms. Upon the making of such payment and such assumption, any
acceleration of any obligation and/or instrument or default in
connection with the loans underlying such Provident Life &
Accident Insurance Company Claims shall be deemed to be
rescinded, waived or cured and of no force or effect, and the
terms of such obligation and/or instrument shall be reinstated
as if no such acceleration or default had occurred.
3.13 Class S-8 Claims: Revolving Credit Agents Claims.
Class S-8 Allowed Claims are not impaired. Each Holder of a
Class S-8 Allowed Claim shall receive on the Effective Date, in
full satisfaction of such Claim, Cash in an amount equal to the
Allowed Amount of such Claim. This Consensual Plan shall not
affect the obligation of any such Holder to remit any such Cash
so received to other Persons who have previously paid, or
reimbursed such Holder in respect of, fees and expenses
comprising a portion of such Claim.
Upon receipt of the distribution specified in this Section
3.13, all Holders of Class S-8 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made pursuant to
the Consensual Plan to Holders of Subordinated Note Claims and
shall be permanently enjoined from enforcing, or attempting to
enforce, any such subordination rights. Accordingly,
distributions to be made pursuant to the Consensual Plan on
account of Subordinated Note Claims shall not be subject to
levy, garnishment, attachment or other legal process by any
Holder of a Class S-8 Claim by reason of any subordination
rights.
3.14 Class S-9 Claims: Working Capital Agents Claims.
Class S-9 Claims are not impaired. Each Holder of a Class S-9
Claim shall receive on the Effective Date, in full satisfaction
of such Claim, Cash in an amount equal to the Allowed Amount of
such Claim. This Consensual Plan shall not affect the
obligation of any such Holder to remit any such Cash so received
to other Persons who have previously paid, or reimbursed such
Holder in respect of, fees and expenses comprising a portion of
such Claim.
Upon receipt of the distribution specified in this Section
3.14, all Holders of Class S-9 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made pursuant to
the Consensual Plan to Holders of Subordinated Note Claims and
shall be permanently enjoined from enforcing, or attempting to
enforce, any such subordination rights. Accordingly,
distributions to be made pursuant to the Consensual Plan on
account of Subordinated Note Claims shall not be subject to
levy, garnishment, attachment or other legal process by any
Holder of a Class S-9 Claim by reason of any subordination
rights.
3.15 Class S-10 Claims: Other Secured Claims. Class S-10
Claims are not impaired. Each Holder, if any, of a Class S-10
Allowed Claim shall, in full satisfaction thereof, receive one
of the following treatments: (i) the legal, equitable and
contractual rights to which such Claim entitles the Holder shall
be left unaltered; (ii) notwithstanding any contractual
provision or applicable law that entitles the Holder of such
Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default: (A) any such default that
occurred before or after the Filing Date (other than a default
of the kind specified in Section 365(b)(2) of the Code) shall be
cured; (B) the maturity of such Claim shall be reinstated (as
such maturity existed before such default); (C) the Holder of
such Claim shall be compensated for any damages incurred as a
result of any reasonable reliance by such Holder on such
contractual provision or such applicable law; and (D) the legal,
equitable or contractual rights to which such Claim entitles the
Holder of such Claim shall not otherwise be altered; or (iii) on
the Effective Date, the Holder of such Claim shall receive, on
account of such Claim, Cash equal to the Allowed Amount of such
Claim; in each case unless such Holder and the applicable Debtor
shall have agreed to a less favorable treatment of such Claim.
UNSECURED CLAIMS
3.16 Class U-1 Claims: Old Walter Industries IRB Claims.
Class U-1 Claims are not impaired. Each Holder of a Class U-1
Allowed Claim shall receive Cash in an amount equal to the
Allowed Amount of such Claim, on or promptly after the Effective
Date, unless the Holder thereof and Walter Industries shall have
agreed to a less favorable treatment of such Claim.
Upon payment in Cash of the Allowed Amount of the Old
Walter Industries IRB Claims, Walter Industries shall assume all
unsatisfied obligations under the Old Walter Industries IRBs in
accordance with their original contractual terms. Upon the
making of such payment and such assumption, any acceleration of
any obligation and/or instrument or default in connection with
the Old Walter Industries IRBs shall be deemed to be rescinded,
waived or cured and of no force or effect and the terms of the
Old Walter Industries IRBs shall be reinstated as if no such
acceleration or default had occurred.
3.17 Class U-2 Claims: Convenience Class Claims. Class
U-2 Claims are not impaired. Each Holder of a Class U-2 Allowed
Claim shall receive, in full satisfaction thereof, Cash in an
amount equal to the Allowed Amount of such Claim (of which the
Pre-Filing Date Unsecured Allowed Amount shall not be in excess
of $1,000), on or promptly after the Effective Date, unless such
Holder and the applicable Debtor shall have agreed to a less
favorable treatment of such Claim.
3.18 Class U-3 Claims: Other Unsecured Claims.
Class U-3 Claims are impaired. Each Holder of a Class U-3
Allowed Claim shall receive, in full satisfaction thereof, cash
in an amount equal to the Allowed Amount of such Claim payable
as follows:
(1) 75% of the Allowed Amount of such Claim, on or
promptly after the Effective Date, unless such Holder and
the applicable Debtor shall have agreed to a less favorable
treatment of such Claim; and
(2) the balance of such Allowed Amount, together with
interest accrued at the General Unsecured Interest Rate
from the Effective Date to the date of actual payment of
the 25% portion of the Pre-Filing Date Unsecured Allowed
Amount not paid pursuant to clause (1) above, within six
(6) months following the payment pursuant to clause (1)
above unless such Holder and the applicable Debtor shall
have agreed to a less favorable treatment of such Claim.
3.19 Class U-4 Claims: Senior Subordinated Note Claims.
Class U-4 Claims are impaired. Each Holder of a Class U-4
Allowed Claim shall receive, in full satisfaction thereof, the
Applicable Consideration allocated on account of such Claim, on
or promptly after the Effective Date, unless such Holder and the
applicable Debtors shall have agreed to a less favorable
treatment of such Claim.
Upon receipt of the distribution specified in this Section
3.19, all Holders of Class U-4 Claims shall be deemed to have
waived any and all subordination rights which they may otherwise
have with respect to the distributions to be made to Holders of
17% Subordinated Note Claims and Pre-LBO Debenture Claims,
pursuant to the Consensual Plan and shall be permanently
enjoined from enforcing, or attempting to enforce, any such
subordination rights. Accordingly, distributions to be made
pursuant to the Consensual Plan on account of 17% Subordinated
Note Claims and Pre-LBO Debenture Claims, shall not be subject
to levy, garnishment, attachment or other legal process by any
Holder of a Class U-4 Claim by reason of any subordination
rights. Notwithstanding the foregoing two sentences, if and only
if the Pre-LBO Condition occurs, the foregoing waiver and
injunction shall not apply to any claim or right of Holders of
Class U-4 Claims to fully enforce any and all subordination
rights as to any post-Filing Date interest claimed by or
distributed to Holders of Class U-6 Claims, and such
subordination rights shall be fully preserved.
3.20 Class U-5 Claims: 17% Subordinated Note Claims.
Class U-5 Claims are impaired. Each Holder of a Class U-5
Allowed Claim shall receive, in full satisfaction thereof, the
Applicable Consideration allocated on account of such Claim, on
or promptly after the Effective Date, unless such Holder and the
applicable Debtors shall have agreed to a less favorable
treatment of such Claim.
Upon the receipt of the distribution specified in this
Section 3.20, all Holders of Class U-5 Claims shall be deemed to
have waived any and all subordination rights which they may
otherwise have with respect to the distributions to be made
pursuant to the Consensual Plan to Holders of Pre-LBO Debenture
Claims and shall be permanently enjoined from enforcing, or
attempting to enforce, any such subordination rights.
Accordingly, distributions to be made pursuant to the Consensual
Plan on account of Pre-LBO Debenture Claims shall not be subject
to levy, garnishment, attachment or other legal process by any
Holder of a Class U-5 Claim by reason of any subordination
rights. Notwithstanding the foregoing two sentences, if and only
if the Pre-LBO Condition occurs, the foregoing waiver and
injunction shall not apply to any claim or right of Holders of
Class U-5 Claims to fully enforce any and all subordination
rights as to any post-Filing Date interest claimed by or
distributed to Holders of Class U-6 Claims, and such
subordination rights shall be fully preserved.
3.21 Class U-6 Claims: Pre-LBO Debenture Claims. Class
U-6 Claims are impaired. Each Holder of a Class U-6 Allowed
Claim shall receive, in full satisfaction thereof, (i) the
Applicable Consideration allocated on account of such Claim, and
(ii) if and only if the Pre-LBO Condition does not occur, in
consideration of the full settlement and release of all
LBO-Related Issues that have or could be asserted against
Released Parties as provided in the Consensual Plan, such
Holder's Pro Rata share of shares of New Common Stock having an
aggregate New Common Stock Value Per Share equal to the Pre-LBO
Settlement Equity Amount, on or promptly after the Effective
Date, unless such Holder and Walter Industries shall have agreed
to a less favorable treatment of such Claim.
3.22 Class U-7 Claims: Settlement Claims. Class U-7
Claims are not impaired and shall be treated as follows:
(a) On or promptly after the Effective Date, the
Celotex Settlement Fund Recipient shall receive, in full
satisfaction of all Class U-7 Claims, consideration
described herein equal to the aggregate Allowed Amount of
the Class U-7 Claims, of which (i) $375 million shall be
satisfied by a combination of Qualified Securities and New
Common Stock, in the proportion described in the following
sentence, together having an aggregate principal amount (in
the case of Qualified Securities) and Veil Piercing New
Common Stock Value Per Share (in the case of New Common
Stock) equal to $375 million, on or promptly after the
Effective Date, and (ii) such additional amount (but not to
exceed $15 million) provided for in Section 2(a)(i) of the
Second Amended and Restated Veil Piercing Settlement
Agreement shall be satisfied by Cash. The aggregate
principal amount of Qualified Securities used to satisfy a
portion of the Veil Piercing Claims Amount shall be equal
to 375/1473 times the aggregate principal amount of
Qualified Securities to be distributed to Holders of
Subordinated Note Claims and Settlement Claims under the
Consensual Plan; and the excess of $375 million over the
portion thereof satisfied by Qualified Securities (which
portion shall be equal to the principal amount of such
Qualified Securities) shall be satisfied by that number of
shares of New Common Stock which is equal to the Veil
Piercing New Common Stock Amount.
(b) In the event that the Effective Date occurs after
March 31, 1995, the Celotex Settlement Fund Recipient shall
also receive an additional distribution consisting of New
Senior Notes of the same series and with all of the same
terms and provisions as the New Senior Notes issued as
Qualified Securities, in a principal amount equal to the
product of multiplying the principal amount of Qualified
Securities to be received by the Celotex Fund Recipient
pursuant to subparagraph (a) above by the Qualified
Securities Adjuster; provided, however, that if no New
Senior Notes are issued as Qualified Securities as a result
of the issuance of Replacement Indebtedness under Section
4.19 of the Consensual Plan, such additional distribution
shall be made solely in Cash.
(c) The Second Amended and Restated Veil Piercing
Settlement Agreement and the Charter provide that all
shares of New Common Stock issued to the Celotex Settlement
Fund Recipient under the Consensual Plan will be required
to be voted by the Celotex Settlement Fund Recipient (or by
the beneficiaries of the Celotex Settlement Fund Recipient)
in the same proportion as the votes are cast by all other
shares of New Common Stock on all matters and for all
purposes.
INTERCOMPANY CLAIMS
3.23 Class I-1 Claims: Intercompany IRB Claims. Class I-1
Allowed Claims are not impaired. The Holder of the Class I-1
Allowed Claims shall receive Cash in an amount equal to the
Allowed Amount of such Claim, on or promptly after the Effective
Date, unless the Holder thereof and Sloss shall have agreed to a
less favorable treatment of such Claim.
Upon payment in Cash of the Allowed Amount of the
Intercompany IRB Claim, Sloss shall assume all unsatisfied
obligations with respect to such Intercompany IRB in accordance
with its original contractual terms. Upon the making of such
payment and such assumption, any acceleration of any obligation
and/or instrument or default in connection with such
Intercompany IRB shall be rescinded, waived or cured and of no
force or effect and the terms of such obligations and/or
instrument shall be reinstated as if no such acceleration or
default had occurred.
3.24 Class I-2 Claims: Pre-Filing Date Intercompany Notes
Payable Claims. Class I-2 Claims are not impaired. Pre-Filing
Date Intercompany Notes Payable Claims will be reinstated on the
books and records of the respective Debtors. There will be no
distributions under the Consensual Plan made in respect of any
Pre-Filing Date Intercompany Notes Payable Claims, but such
Claims may be paid after the Effective Date in the ordinary
course of business.
3.25 Class I-3 Claims: Post-Filing Date Intercompany Notes
Payable Claims. Class I-3 Claims are not impaired. Post-Filing
Date Intercompany Notes Payable Claims will be reinstated on the
books and records of the respective Debtors. There will be no
distributions under the Consensual Plan made in respect of any
Post-Filing Date Intercompany Notes Payable Claims, but such
Claims may be paid after the Effective Date in the ordinary
course of business.
INTERESTS
3.26 Class E-1 Interests: Old Common Stock Interests in
Hillsborough. Class E-1 Interests are impaired. All shares of
Old Common Stock held by Holders of Class E-1 Interests shall be
cancelled, annulled and extinguished as of the Effective Date.
If Class E-1 accepts the Consensual Plan, each Holder of a
Class E-1 Allowed Interest shall receive, in full satisfaction
thereof, on or promptly after the Effective Date (except with
respect to paragraphs (b) and (c) below), unless such Holder and
Walter Industries shall have agreed to a less favorable
treatment of such Interest:
a. Such Holder's Pro Rata share of that number of
shares of New Common Stock which is the product of
multiplying the New Common Stock Residual Amount by a
fraction, the numerator of which is $150 million, and the
denominator of which is the New Common Stock Residual
Allocation Denominator;
b. As soon as practicable after all Federal Income
Tax Claims have been allowed or disallowed by Final Order,
such Holder's Pro Rata share of shares of New Common Stock
having an aggregate New Common Stock Value Per Share equal
to the Federal Income Tax Claims Differential; provided,
however, that if shares of New Common Stock become issuable
under this paragraph (b) and at such time shares are held
in escrow pursuant to paragraph (c) below, shares issuable
under this paragraph (b) shall, first, be issued directly
to Holders of Class E-1 Interests up to a number of shares
having an aggregate New Common Stock Value Per Share equal
to the excess, if any, of (A) $88.7 million over (B) the
aggregate New Common Stock Value Per Share of all shares
theretofore issued into escrow under paragraph (c) below,
and, second, be satisfied by the release from escrow of any
remaining shares issuable under this paragraph (b); and
provided, further, that the aggregate New Common Stock
Value Per Share of the shares of New Common Stock issued to
Holders of Class E-1 Interests pursuant to this paragraph
(b) shall not exceed the amount which remains after
subtracting (i) the aggregate New Common Stock Value Per
Share of the shares of New Common Stock issued to Holders
of Class E-1 Interests (excluding any shares issued to the
Escrow Agent but not released to Holders of Class E-1
Interests) pursuant to paragraphs (a) and (c) of this
Section 3.26, from (ii) $250,000,000; and
c. As soon as practicable after the Tax Oversight
Committee shall have determined that a Veil Piercing
Settlement Tax Savings Event has occurred, Walter
Industries shall issue and deliver into escrow to an escrow
agent selected by Walter Industries and the Bondholder
Proponents (the "Escrow Agent") certificates representing
shares of New Common Stock having an aggregate New Common
Stock Value Per Share equal to the Veil Piercing Settlement
Tax Savings Amount which results from the Veil Piercing
Settlement Tax Savings Event (as such amount is determined
by the Tax Oversight Committee); provided, however, that in
the event that, on or prior to the 160th day following the
Effective Date, (i) one or more Veil Piercing Settlement
Tax Savings Events shall not have occurred in respect of
(and the Tax Oversight Committee shall not have determined)
the maximum Veil Piercing Settlement Tax Savings Amount
that could result from a good faith claim by the Walter
Industries consolidated group, of both (a) a refund with
respect to tax years prior to the tax year in which the
Effective Date occurs, and (b) a deduction with respect to
the tax year in which the Effective Date occurs
(collectively, the "Initial Claim"), or (ii) Walter
Industries shall not have issued and delivered into escrow
certificates representing shares of New Common Stock having
an aggregate New Common Stock Value Per Share equal to the
full amount of such maximum Veil Piercing Settlement Tax
Savings Amount, then not later than the 180th day after the
Effective Date, Walter Industries shall issue and deliver
into escrow certificates representing New Common Stock
having an aggregate New Common Stock Value Per Share equal
to the sum of (i) that part of the Veil Piercing Settlement
Tax Savings Amount arising from the Initial Claim in
respect of which shares of New Common Stock had not
theretofore been issued into escrow, as such Veil Piercing
Settlement Tax Savings Amount (whether or not a Veil
Piercing Settlement Tax Savings Event shall previously have
occurred) shall be estimated in good faith by the Chief
Financial Officer of Walter Industries and set forth in a
certificate delivered to the Tax Oversight Committee (and
such amount shall be the Veil Piercing Settlement Tax
Savings Amount for purposes of this sentence) and (ii) an
additional amount equal to the lesser of (A) $13 million
and (B) an amount that would cause the limit in clause (i)
of the last sentence of this paragraph to be reached. In
determining whether and in what amount deposits to the
Escrow Agent shall be made hereunder, it shall be assumed
that (1) the fair market value of the New Common Stock and
Qualified Securities transferred to the Celotex Settlement
Fund Recipient shall be equal to their aggregate New Common
Stock Value Per Share and aggregate face amount,
respectively; and (2) the transfer to the Celotex
Settlement Fund Recipient constitutes economic performance
under all relevant provisions of the Internal Revenue Code.
Notwithstanding and in addition to the foregoing, $11.3
million of New Common Stock (using the New Common Stock
Value Per Share) shall be issued directly to Holders of
Class E-1 Interests on a Pro Rata basis, at the same time
as shares are first issued into escrow. Any such shares of
New Common Stock held in escrow shall be voted Pro Rata by
the Holders of Class E-1 Interests, and any and all
dividends and other distributions made thereon shall
promptly be distributed Pro Rata to Holders of Class E-1
Interests, provided, that each such direct or indirect
recipient of any such dividend or distribution shall be
obligated to promptly return the amount of any dividends
and other distributions received by such recipient in
respect of shares of New Common Stock that were held in
escrow and subsequently cancelled prior to release from
escrow as provided below. As soon as practicable after the
Tax Oversight Committee determines that a Veil Piercing
Settlement Tax Savings Amount that had resulted from a Veil
Piercing Settlement Tax Savings Event is no longer subject
to adjustment because (i) the statutory period during which
assessments (or denial of a refund claim) can be made with
respect to such Veil Piercing Settlement Tax Savings Amount
has passed, (ii) Walter Industries and the Internal Revenue
Service or other relevant taxing authority have entered
into a closing or similar agreement governing the years or
issues in question with respect to such Veil Piercing
Settlement Tax Savings Amount, or (iii) a court decision
determining the income tax liability (or the right to such
refund) with respect to such Veil Piercing Settlement Tax
Savings Amount has been rendered and the time period for
the filing of an appeal has passed, the Tax Oversight
Committee shall give written notice instructing the Escrow
Agent to release from escrow, and to deliver to Holders of
Class E-1 Interests, their Pro Rata share of shares of New
Common Stock having an aggregate New Common Stock Value Per
Share equal to the Veil Piercing Settlement Tax Savings
Amount that had satisfied the applicable condition set
forth in (i), (ii) or (iii) of this sentence. On each date
on which the Tax Oversight Committee ascertains whether any
of the three conditions enumerated in the previous sentence
has been met, or such other date(s) as the Tax Oversight
Committee shall determine to be appropriate, the Tax
Oversight Committee shall also determine whether (i) any
maximum Veil Piercing Settlement Tax Savings Amount, taking
into account all deductions then claimed with respect to
the distribution under the Second Amended and Restated Veil
Piercing Settlement Agreement, the then current status of
any audits or challenges to such claimed deductions, and
the maximum number of shares permitted to be issued under
this paragraph (c) (taking into account shares previously
issued or released from escrow pursuant to the provisions
of paragraphs (a) and (b) above) and (ii) any maximum
amount (not in excess of $13 million) that may be payable
pursuant to paragraph (b) above, and reducing the aggregate
of (i) and (ii) by the aggregate New Common Stock Value Per
Share of all shares of New Common Stock previously released
from escrow (the "Maximum") can be calculated, and if so,
shall calculate such Maximum. At each such time as the
Maximum is less than the aggregate New Common Stock Value
Per Share of shares of New Common Stock then held in
escrow, then the Tax Oversight Committee shall give written
notice to the Escrow Agent (i) to return to Walter
Industries for cancellation, and Walter Industries shall
cause to be cancelled, shares of New Common Stock having an
aggregate New Common Stock Value Per Share equal to the
excess of the Maximum over the aggregate New Common Stock
Value Per Share of the New Common Stock then held in
escrow, and (ii) to return to Walter Industries any and all
dividends or other distributions on such shares returned
for cancellation. Notwithstanding anything else contained
in this paragraph (c), the aggregate New Common Stock Value
Per Share of the shares of New Common Stock (i) held in
escrow by the Escrow Agent shall at no time exceed $88.7
million, and (ii) issued (directly or out of escrow) to
Holders of Class E-1 Interests (together with shares then
held in escrow on their behalf) pursuant to this paragraph
(c) shall not exceed the amount which remains after
subtracting (x) the aggregate New Common Stock Value Per
Share of the shares of New Common Stock previously issued
to Holders of Class E-1 Interests pursuant to paragraphs
(a) and (b) of this Section 3.26, from (y) $250,000,000.
The Company will give KKR prompt written notice of each
determination made by the Tax Oversight Committee as required or
permitted under Section 3.26 of the Consensual Plan (which
notice shall set forth in reasonable detail the basis therefor).
If KKR reasonably believes that any such determination is not in
compliance with the terms of the Consensual Plan, including
without limitation the provisions of Section 4.20, it shall,
within forty-five days of its receipt of the applicable notice
referred to in the preceding sentence, give prompt written
notice to the Tax Oversight Committee thereof (which notice
shall set forth in reasonable detail the basis for such belief).
To the extent that the Tax Oversight Committee and KKR cannot
resolve any disputed matters within fifteen days after the Tax
Oversight Committee's receipt of KKR's notice, the remaining
previously described disputed matters shall be submitted
promptly to a nationally recognized accounting firm which shall
be jointly selected by the Tax Oversight Committee and KKR as
soon as practicable (the "Arbitrator"). Each of the Tax
Oversight Committee and KKR shall be afforded the opportunity by
the Arbitrator to present its case to the Arbitrator at its own
expense (in the case of the Tax Oversight Committee, at the
expense of Walter Industries) as soon as practicable, and the
determination of the Arbitrator on whether the disputed
determinations were made in compliance with the terms of the
Consensual Plan shall be final and binding on all parties. The
Arbitrator shall render its decision as soon as practicable, but
in no event later than sixty days after its selection. The fees
and expenses of the Arbitrator shall be borne equally by Walter
Industries, on the one hand, and the holders of Old Common Stock
Interests (on a Pro Rata basis), on the other hand.
If Class E-1 rejects the Consensual Plan, Holders of Class
E-1 Interests shall receive no distribution or consideration
under the Consensual Plan.
3.27 Class E-2 Interests: Stock Acquisition Rights in
Hillsborough. Class E-2 Interests are impaired. All Stock
Acquisition Rights in Hillsborough shall be cancelled, annulled
and extinguished as of the Effective Date. Holders of Class E-2
Interests shall receive or retain no property under the
Consensual Plan on account of their Class E-2 Interests.
3.28 Class SE-1 Interests: Subsidiary Common Stock
Interests in Debtors other than Hillsborough. Class SE-1
Interests are not impaired. Each Holder of a Class SE-1
Interest shall retain its Subsidiary Common Stock and shall not
receive any distribution under the Consensual Plan in respect of
its Class SE-1 interest.
3.29 Class SE-2 Interests: Stock Acquisition Rights in
Debtors other than Hillsborough. Class SE-2 Interests are
impaired. All Stock Acquisition Rights in Debtors other than
Hillsborough shall be cancelled, annulled and extinguished as of
the Effective Date. Holders of Class SE-2 Interests shall
receive or retain no property under the Consensual Plan on
account of their Class SE-2 Interests.
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE CONSENSUAL PLAN
4.1 Charter; Common Stock.
(a) On or prior to the Effective Date, Walter
Industries shall adopt and file the Charter with the
Secretary of State of the State of Delaware.
(b) All stock distributed pursuant to the Consensual
Plan will be New Common Stock. Except as otherwise
expressly provided in the Charter and the Consensual Plan,
all shares of New Common Stock shall enjoy the same rights,
benefits and privileges and shall not bear any restrictive
legends on the stock certificates (except for legends
prohibiting transfer other than in accordance with the
Securities Act).
4.2 Amendments to Charter. From and after the Effective
Date, amendments to the Charter shall be made in accordance with
Delaware law, the terms of the Charter and the Bylaws and the
Reorganization Documents.
4.3 Nonvoting Equity Securities. The certificates of
incorporation of Walter Industries and each of the Debtors shall
be amended, on or prior to the Effective Date, to prohibit the
issuance by each Debtor of nonvoting capital stock to the extent
required by the provisions of Section 1123(a)(6) of the Code.
4.4 Surrender and Cancellation of Instruments.
(a) As of the close of business on the Effective
Date, the transfer ledgers or registers and any other
records determining record ownership maintained by the Bank
Agents, the Indenture Trustees, Walter Industries or any
Debtor (or any other trustees, transfer agents or
registrars which may have been employed in connection
therewith) for the Revolving Loans, the Working Capital
Loans, the Series B & C Senior Notes, the Grace Street
Notes, the Sloss IRB, the Subordinated Notes and all
Interests shall be deemed to be closed, and for purposes of
the Consensual Plan, there shall be no further changes in
the record Holders of any Revolving Loans, Working Capital
Loans, Series B & C Senior Notes, Grace Street Notes, Sloss
IRB, Subordinated Notes or Interests on the books of the
Bank Agents, the Indenture Trustees, Walter Industries or
any Debtor (or any other trustees, transfer agents or
registrars which may have been employed in connection
therewith). Neither Walter Industries nor any other Debtor
shall have any obligation to recognize any transfer of
Revolving Credit Loans, Working Capital Loans, Series B & C
Senior Notes, Grace Street Notes, Sloss IRB, Subordinated
Notes or Interests occurring thereafter, but shall be
entitled instead to recognize and deal with, for all
purposes under the Consensual Plan, except as otherwise
provided herein, only those Persons who were Holders of
such loans, notes or Interests as of the close of business
on the Effective Date, as reflected on the books of the
Bank Agents, the Indenture Trustees, Walter Industries or
any Debtor (or such other trustees, transfer agents or
registrars), as the case may be.
(b) No Holder of any Revolving Loans, Working Capital
Loans, Series B & C Senior Notes, the Sloss IRB, Grace
Street Notes, Subordinated Notes or Interests shall be
entitled to any rights or distribution under the Consensual
Plan unless and until such Holder shall have first
surrendered or caused to be surrendered the relevant
instrument, if any, held by such Holder to (i) the
applicable Bank Agent, (ii) in the case of the Series B & C
Senior Notes, the Series B & C Senior Note Trustee,
(iii) in the case of the Subordinated Notes, the Disbursing
Agent, (iv) in the case of the Grace Street Notes or
Interests in the Old Common Stock, Walter Industries, or
(v) in the case of the Sloss IRB, Sloss. To the extent any
such Holder is not the holder of record of such relevant
instrument, such Holder must deliver to the Person
specified in the preceding sentence, together with the
relevant instrument, documents reasonably satisfactory to
Walter Industries evidencing succession of title from the
record holder thereof. In the event that any such
instrument has been lost, destroyed, stolen or mutilated,
the Holder thereof may instead execute and deliver an
affidavit of loss and indemnity with respect thereto in a
form customarily utilized for such purposes that is
reasonably satisfactory to Walter Industries together with,
if Walter Industries so requests, a bond in form and
substance (including, without limitation, amount)
reasonably satisfactory to Walter Industries.
(c) Promptly upon surrender of the relevant
instruments referred to in Section 4.4(b), the applicable
Bank Agent, Indenture Trustee or Walter Industries shall
cancel such instruments, and the applicable Bank Agent or
Indenture Trustee shall deliver such cancelled instruments
to Walter Industries or otherwise dispose of such
instruments in such manner as Walter Industries may
request. At the times specified in Article III of the
Consensual Plan, (i) the applicable Bank Agent, (ii) the
applicable Indenture Trustee, (iii) the Disbursing Agent,
(iv) Walter Industries or (v) Sloss, as the case may be,
shall make the distributions provided for in Sections 4.5
and 4.6 of the Consensual Plan in accordance with Article
III of the Consensual Plan.
(d) Until a Holder of record on the Effective Date or
its successor by operation of law surrenders the relevant
instruments, if any, evidencing its Revolving Loans,
Working Capital Loans, Series B & C Senior Notes, Grace
Street Notes, Sloss IRB, Subordinated Notes or Interests,
as the case may be, pursuant to Section 4.4(b) hereof, and
the debt and/or equity securities to be issued in
satisfaction thereof are issued and delivered by or on
behalf of the applicable Debtors to such Holder, the Bank
Agent, the Indenture Trustee or the Disbursing Agent for
the account of such Holder as required by Section 4.5 of
the Consensual Plan, such Holder shall have no rights under
the debt and/or equity securities to be received by such
Holder under the Consensual Plan.
(e) Notwithstanding any other provision of the
Consensual Plan, no Holder of a Secured Claim who is to
receive a distribution under the Consensual Plan in respect
of such Secured Claim shall receive such distribution until
such Holder executes and delivers or causes to be executed
and delivered any documents (in recordable form if
appropriate) and/or surrenders or causes to be surrendered
any personal property or other collateral (including shares
of capital stock) in its possession or the possession of
its agent or trustee or the applicable Bank Agent or
Indenture Trustee, necessary to release any Lien(s) and
retransfer all collateral held by it in connection with
such Secured Claim.
(f) As of the Effective Date, the Revolving Credit
Agreement, the Working Capital Agreement, the Sloss IRB
Indenture, the Series B & C Senior Note Indenture and each
Indenture with respect to the Subordinated Notes, shall be
terminated, deemed null and void and of no further force
and effect as to the Debtors. Each Bank Agent or Indenture
Trustee, on the one hand, and the Debtors, on the other
hand, shall have no further obligations to each other under
such Agreements and Indentures, except that the applicable
nBank Agent or Indenture Trustee shall be entitled to
assert any charging liens to which it may be entitled under
such Agreements or Indentures.
4.5 Distributions to Holders of Allowed Claims and
Interests. Walter Industries shall deliver or cause to be
delivered, on behalf of the applicable Debtors, at the
applicable times specified in Article III subject to compliance
with the provisions of Section 4.4 hereof:
(a) to each Holder of an Administrative Claim, a
Priority Claim and an Allowed Claim in Classes S-1, S-2,
S-3, S-4, S-5, S-7, S-8, S-9, S-10, U-1, U-2, U-3, and I-1,
Cash in accordance with Sections 3.2, 3.3, 3.4, 3.5, 3.6,
3.7, 3.8, 3.9, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17,
3.18, and 3.23 respectively, hereof;
(b) to the trustee under the New Senior Note
Indenture on behalf of the Holders of Allowed Claims in
Class S-6 as to which Claims the Series B & C Senior Note
Claim Election was made, a global certificate representing
the New Senior Notes to be delivered in accordance with
Section 3.11 hereof (unless no New Senior Notes are issued
on account of Series B & C Senior Note Claims); provided,
however, that the Series B & C Senior Note Trustee shall be
entitled to require, as a condition to issuance of New
Senior Notes (or Cash in an amount based on having made the
Series B & C Senior Note Claim Election if no New Senior
Notes are issued on account of Series B & C Senior Note
Claims) to any Holder of a Series B & C Senior Note Claim
that claims entitlement thereto based upon the making of
the Series B & C Senior Note Claim Election with respect to
such Holders' Series B & C Senior Note Claim, that such
Holder make such representations and provide such
documentary proof as the Series B & C Senior Note Trustee
may reasonably request demonstrating whether such Holder
(or a predecessor Holder, as the case may be) timely made
the Series B & C Senior Note Claim Election with respect to
such Series B & C Senior Note Claim; and in connection
therewith, the Series B & C Senior Note Trustee shall use
commercially reasonable efforts, which may include the
sending of notices and the review and updating of record
holder lists and Depository Trust Company participants
security position listings, to keep a current list of
record holders of Series B & C Senior Note Claims as to
which the Series B & C Senior Note Claim Election was
timely made, in order to identify such record holders as of
the Effective Date;
(c) to the Disbursing Agent on behalf of the Holders
of Subordinated Note Claims, instruments (which may include
Cash) representing Qualified Securities and certificates
representing New Common Stock, to be delivered in
accordance with Sections 3.19, 3.20 and 3.21 hereof;
provided, however, that the Disbursing Agent shall be
entitled to require, as a condition to issuance of
Qualified Securities and/or New Common Stock to any Holder
of a Subordinated Note Claim that claims entitlement
thereto based upon the making of or the failure to make the
Subordinated Note Claim Election (and the Class U-4
Exchange Election, if applicable) with respect to such
Holders' Subordinated Note Claim, that such Holder make
such representations and provide such documentary proof as
the Disbursing Agent may reasonably request demonstrating
whether such Holder (or a predecessor Holder, as the case
may be) timely made (or did not make) the Subordinated Note
Claim Election (and the Class U-4 Exchange Election, if
applicable) with respect to such Subordinated Note Claim;
and in connection therewith, the Disbursing Agent shall use
commercially reasonable efforts, which may include the
sending of notices and the review and updating of record
holder lists and Depository Trust Company participants
security position listings, to keep a current list of
record holders of Subordinated Note Claims as to which the
Subordinated Note Claim Election (and the Class U-4
Exchange Election, if applicable) was timely made, in order
to identify such record holders as of the Effective Date;
provided, further, that in the event that the Disbursing
Agent is not provided with evidence that would allow it to
determine in a commercially reasonable manner whether the
Subordinated Note Claim Election had been made with respect
to one or more Subordinated Note Claims (each a
"Non-Conforming Claim"), then the Disbursing Agent shall
treat each such Subordinated Note Claim as though the
Subordinated Note Claim Election (and the Class U-4
Exchange Election) had not been made with respect to such
Subordinated Note Claim; provided, further, that the amount
of Qualified Securities and New Common Stock to be
distributed to each Holder of a Subordinated Note Claim
(other than Non-Conforming Claims) and to the Celotex
Settlement Fund Recipient under the Consensual Plan shall
be determined on the assumption that the immediately
preceding proviso will not apply to any Subordinated Note
Claim, with the result that the amount of the Qualified
Securities and New Common Stock to be distributed to any
Holder of a Subordinated Note Claim (other than a
Non-Conforming Claim) and the Celotex Settlement Fund
Recipient will not be altered as a result of the fact that
one or more Subordinated Note Claims are Non-Conforming
Claims.
(d) to the Series B & C Senior Note Trustee on behalf
of the Holders of Allowed Claims in Class S-6, Cash and
certificates representing New Common Stock in accordance
with Section 3.11 hereof (it being understood that nothing
in the Consensual Plan shall in any way modify or prejudice
the right of the Series B & C Senior Note Trustee to assert
its rights under the Series B & C Senior Note Indenture,
including but not limited to Section 6.07 thereof, against
the Holders of Class S-6 Claims);
(e) to the Celotex Settlement Fund Recipient,
instruments representing Qualified Securities and
certificates representing New Common Stock and, if payable
pursuant to Section 2(a)(i) of the Second Amended and
Restated Veil Piercing Settlement Agreement, Cash, in
accordance with Section 3.22 hereof;
(f) to the Holders of Class E-1 Interests,
certificates representing New Common Stock, in accordance
with Section 3.26 hereof; and
(g) to the Holders of Revolving Credit Bank Claims
and Working Capital Bank Claims, certificates representing
New Common Stock in accordance with Sections 3.6 and 3.7
hereof.
4.6 All Distributions to be Made by Walter Industries.
(a) Walter Industries shall make all payments
required to be made by any Debtor under the Consensual Plan
on behalf of such Debtor. All Allowed Claims paid by
Walter Industries hereunder shall be allocated by Walter
Industries to the Debtor for whose benefit such Claims were
satisfied in the same manner in which Allowed Claims
incurred by the Debtors and paid by Walter Industries in
the ordinary course of business are allocated to the
Debtors. Intercompany accounts shall be established for
any amounts paid by a Debtor on behalf of any other Debtor
hereunder on the books and records of such Debtors.
(b) At the option of Walter Industries, except as
otherwise required or provided in the Consensual Plan or by
any applicable agreement, any Cash payment to be made by or
on behalf of any Debtor pursuant to the Consensual Plan may
be made by a check drawn on a United States bank mailed by
first class mail or by wire transfer.
(c) Payments in respect of all Revolving Credit Bank
Claims and Revolving Credit Agents Claims (other than to
White & Case) shall be made by wire transfer of immediately
available funds to the Revolving Credit Agents, and
payments in respect of all Working Capital Bank Claims and
Working Capital Agents Claims (other than to White & Case)
shall be made by wire transfer of immediately available
funds to the Working Capital Agents, in each case for
distribution to Holders of Allowed Revolving Credit Bank
Claims and Allowed Working Capital Bank Claims,
respectively, in accordance with the Consensual Plan. All
consideration paid or distributed by Walter Industries on
behalf of the Debtors to the Bank Agents on account of
Allowed Claims shall be for the account of each Holder of
such Allowed Claims, and any Claims filed by individual
Holders shall be disallowed as duplicative. Such
consideration shall be subject to any rights of the
applicable Bank Agent for compensation and reimbursement of
its fees and expenses (including the reasonable fees and
expenses of its counsel) asserted by such Bank Agent to the
extent that such Bank Agent does not receive payment of
such fees and expenses from the Debtors.
4.7 Fractional Shares; New Senior Notes Less Than $1,000.
Fractional shares of New Common Stock will not be issued or
distributed; instead, fractional amounts will be rounded down to
the nearest whole share, and the New Common Stock Value Per
Share of fractional shares shall be satisfied by Cash. New
Senior Notes will not be issued in denominations of less than
$1,000, and amounts less than $1,000 that would otherwise be
satisfied by New Senior Notes under the Consensual Plan shall be
satisfied by an equal amount of Cash.
4.8 Execution and Delivery of Reorganization Documents.
On or before the Effective Date, each of the Reorganization
Documents shall be executed and delivered by each of the parties
thereto.
4.9 New Capital Stock of Debtors. Except with respect to
the issuance of New Common Stock and the cancellation, annulment
and extinguishment of the Old Common Stock, in accordance with
the terms of the Consensual Plan, no change in the ownership of
the capital stock of any of the Debtors shall be required in
connection with the implementation of the Consensual Plan.
4.10 Resolution of Disputed Claims. All objections to
Disputed Claims shall be filed by the Debtors and/or the
Bondholders Committee on or before the date established in the
Confirmation Order as the last date for filing objections to
Disputed Claims. The objecting party shall serve a copy of each
such objection upon the Holder of the Disputed Claim to which it
pertains.
4.11 Reserves for Disputed Claims. On or promptly after
the Effective Date, the applicable Debtor shall reserve or cause
to be reserved, in an account, segregated in trust, for the
account of each Holder of a Disputed Claim (a) (i) that property
other than Cash which would otherwise be distributable to such
Holder on the Effective Date were such Disputed Claim an Allowed
Claim on the Effective Date (i.e., Qualified Securities other
than Cash, New Common Stock and/or New Senior Notes), or such
other property as the Holder of such Disputed Claim and Walter
Industries may agree upon, or (ii) in the case of Cash, such
amount as the Court shall order, or (b) that property specified
by a Final Order. The property so reserved for the Holder of
such Disputed Claim shall be distributed to such Holder, to the
extent such Disputed Claim is allowed, only after such Disputed
Claim becomes an Allowed Claim. To the extent interest is
earned on reserved Cash, such interest shall be held by or on
behalf of the applicable Debtor as additional reserved Cash for
the account of the Holder for whom such reserved Cash is held;
reserved Cash, net of federal and state income taxes and costs
and expenses incurred with respect thereto, shall be distributed
to the Holder of a Disputed Claim which becomes an Allowed Claim
in accordance with Sections 4.5 and 4.13 of the Consensual Plan.
4.12 Investment of Reserves. The Debtors shall deposit or
invest all Cash held from time to time in reserve consistent
with their customary investment policies giving due regard to
the Debtors' likely need for such monies to satisfy Disputed
Claims.
4.13 Excess Reserves. As each Disputed Claim becomes an
Allowed Claim, the Debtor from which the reserved property
derived shall become vested with all right, title and interest
in that property, if any, reserved for, but not distributed to,
the Holder of such Disputed Claim (including interest, if any
earned thereon) as a consequence of the Allowed Amount of such
Disputed Claim having been fixed at less than the amount stated
in such Disputed Claim.
4.14 Unclaimed Property. Subject to Section 4.16 hereof,
in accordance with Sections 347 and 1143 of the Code, any Holder
that fails to surrender the instrument, if any, evidencing its
Claim or Interest, as provided herein, within two (2) years from
and after the Effective Date shall be deemed to have forfeited
all rights and Claims and Interests and shall not participate in
any distribution on account of the Consensual Plan. Any Cash,
including interest earned thereon, that is unclaimed for two (2)
years after being held by the applicable Bank Agent or Indenture
Trustee or Walter Industries for absence of a mailing address
shall be returned to and revested in Walter Industries.
4.15 Non-Negotiated Checks. If a Holder of an Allowed
Claim fails to negotiate a check issued to such Holder pursuant
to the provisions of Article III of the Consensual Plan within
one (1) year of the date such check was issued, then the amount
of Cash attributable to such check shall be deemed to be
unclaimed property in respect of such Holder's Claims and shall
be revested in Walter Industries.
4.16 Returned Distributions. If a distribution to any
Holder of an Allowed Claim or Interest made pursuant to the
Consensual Plan is returned to the applicable Bank Agent or
Indenture Trustee or to Walter Industries or the Debtors, due to
an incorrect or incomplete address for the Holder of such
Allowed Claim, then such Bank Agent or Indenture Trustee shall
promptly so notify Walter Industries and Walter Industries, on
behalf of the Debtors, shall publish a notice once in The Wall
Street Journal (National Edition) and The New York Times
(National Edition) not later than two (2) years after the date
on which such distribution was made listing the name of such
Holder and the distribution due such Holder and stating that
unless such Holder contacts Walter Industries or the applicable
Debtor within sixty (60) days following the date such notice
appears in such newspapers and provides Walter Industries or the
applicable Debtor with an accurate address, such distribution
shall be deemed to be unclaimed property in respect of such
Holder's Allowed Claim or Interest and such Holder shall be
deemed to have no further entitlement in respect of such
distribution and shall not participate in any further
distributions under the Consensual Plan.
4.17 Claims Against Two or More Debtors. Solely for the
purpose of determining the allowed status of such Claims, to the
extent any Creditor holds Claims against two or more Debtors
arising out of a single debt or liability, whether by virtue of
joint-and-several liability, or status as co-obligors or
cross-guarantors, such Claims may be Allowed Claims against each
such Debtor, subject to all defenses and rights of each such
Debtor, but such Creditor shall not be entitled to recover, in
the aggregate, more than the amount of such single debt or
liability. This section shall not affect any rights of
contribution or reimbursement among Debtors or affect any
determination of the solvency of any Debtors under the Code.
4.18 Direction to Parties. From and after the Effective
Date, any Holder and any of the Debtors may apply to the Court
for an order directing any of the Debtors or any necessary
party, as the case may be, to execute or deliver or to join in
the execution or delivery of any instrument required to effect a
transfer of property in accordance with the Consensual Plan, and
to perform any other act, including the satisfaction of any
Lien, that is necessary for the Confirmation of the Consensual
Plan, pursuant to Section 1142(b) of the Code.
4.19 Financing Matters. Walter Industries and the
Bondholder Proponents shall consult and cooperate for purposes
of obtaining the Exit Financing and entering into the New
Working Capital Facility and the Mid-State Homes Warehouse
Credit Facility, in each case as of the Effective Date. The
Bondholder Proponents shall determine and fix the amount
(subject to the limitation contained in the definition of New
Senior Notes contained herein), terms and conditions of, and
shall select the underwriters, placement and/or other financing
sources with respect to, the Exit Financing, all of which shall
be on commercially reasonable terms consistent with
then-existent market conditions and be reasonably satisfactory
to Walter Industries; provided, that Lehman Brothers Inc. shall
act as lead manager for, and Merrill Lynch, National Westminster
Bank, plc and Nomura Securities shall be given the opportunity
to act as co-manager of, any Exit Financing described in clause
(i) of the definition thereof and in each case the terms of any
such manager or co-manager arrangement shall be on commercially
reasonable terms consistent with then-existing market
conditions. Subject to the immediately following sentence,
Walter Industries shall determine and fix the amount, terms and
conditions of, and shall select the lenders and/or other
financing sources with respect to, the New Working Capital
Facility (subject to the limitation as to amount contained in
the definition thereof contained herein) and the Mid-State Homes
Warehouse Credit Facility (subject to the limitation as to
amount contained in the definition thereof contained herein),
all of which shall be on commercially reasonable terms
consistent with then-existing market conditions and be
reasonably satisfactory to the Bondholder Proponents; provided,
that Walter Industries shall select Bank of Boston as lead agent
or co-agent for the New Working Capital Facility, and National
Westminster Bank, plc as lead agent or co-agent for the
Mid-State Homes Warehouse Credit Facility, in each case if such
lenders are willing to participate in such financings on terms
no less favorable to Walter Industries than the terms proposed
by any other financial institution and previously agreed to by
Walter Industries, and in each case the terms of any such agency
or co-agency shall be on commercially reasonable terms
consistent with then-existing market conditions; provided,
further, that the Debtors may incur additional indebtedness (the
"Replacement Indebtedness") in an amount sufficient to permit
them to pay (and which shall be used to pay) either or both of
the following: (i) all (but not less than all) amounts in Cash
that would otherwise be satisfied by New Senior Notes issued as
Qualified Securities on the Effective Date, and/or (ii) all (but
not less than all) amounts in Cash that would otherwise be
satisfied by New Senior Notes issued to Holders of Series B & C
Senior Note Claims on the Effective Date, which may include
additional indebtedness of up to $50 million in excess of such
amount (unless the Debtors and Lehman Brothers Inc. shall agree
to a greater amount of indebtedness), the terms and conditions
of which indebtedness shall be reasonably satisfactory to the
Bondholder Proponents. Notwithstanding the preceding sentence,
if either (i) on or prior to January 15, 1995, the Debtors shall
not have obtained fully executed and binding written commitment
letters from one or more financial institutions for each of the
Mid-State Homes Warehouse Credit Facility and the New Working
Capital Facility, which commitment letters shall have, as
conditions to funding, no conditions other than conditions
customary for financings of this size and nature, which shall be
consistent with the Exit Financing and which may include a
customary material adverse change condition, but which may not
include any condition(s) or other provision(s) that require or
would require, as a condition to funding, directly or
indirectly, the Confirmation Order (as described in Section
10.1(a) of the Consensual Plan) having become a Final Order,
whether any such condition(s) or provision(s) relates to
issuance of opinions of counsel, officers' certificates or other
certificates, any representation, warranty or covenant, or
otherwise; or (ii) on or prior to the second Business Day prior
to the commencement of the hearing on confirmation of the
Consensual Plan, the Debtors shall not have obtained fully
executed and binding definitive documents evidencing the New
Working Capital Facility and the Mid-State Homes Warehouse
Credit Facility, which agreements shall have, as conditions to
funding, no conditions other than conditions customary for
financings of this size and nature, which shall be consistent
with the Exit Financing and which may include a customary
material adverse change condition, but which may not include any
condition(s) or other provision(s) that require or would
require, as a condition to funding, directly or indirectly, the
Confirmation Order (as described in Section 10.1(a) of the
Consensual Plan) having become a Final Order, whether any such
condition(s) or provision(s) relates to issuance of opinions of
counsel, officers' certificates or other certificates, any
representation, warranty or covenant, or otherwise;
(collectively, such documents are referred to herein as the
"Definitive Financing Documents"), then, in each case from and
after such date, the Bondholder Proponents shall be entitled to
negotiate on behalf of and deliver to the Debtors, and the
Bondholder Proponents shall exercise responsibility with respect
to determining the terms and conditions of, the Mid-State Homes
Warehouse Credit Facility and/or the New Working Capital
Facility, as the case may be, provided that such facilities
shall be reasonably satisfactory to Walter Industries but need
not be on the terms previously accepted by Walter Industries or
the best available terms. Any provisions of this Section 4.19 to
the contrary notwithstanding, it is understood that the amount,
terms and conditions of any New Senior Notes comprising part of
the Exit Financing shall be consistent with the requirements set
forth in the definition of "New Senior Notes" in the Consensual
Plan and that such New Senior Notes may be secured by a pledge
of all of the common stock of the subsidiaries of Walter
Industries.
4.20 Federal Tax Claim Matters. The Allowed Amount of,
and any other terms of any settlement or agreement regarding,
Federal Income Tax Claims shall not be agreed to by any Debtor
without the prior consent of the Tax Oversight Committee. Any
settlement or agreement in respect of Federal Income Tax Claims
shall be wholly independent of and separate from any settlement
or understanding or agreement in respect of any deduction or
other tax benefit that may be realized by any Debtor on account
of distributions made under the Second Amended and Restated Veil
Piercing Settlement Agreement.
4.21 "Promptly After the Effective Date. "The term
"promptly after the Effective Date" as used in the Consensual
Plan shall mean as soon as practicable after the Effective Date,
but in no event later than thirty (30) days after the Effective
Date or, if later, thirty (30) days after a Claim shall have
become an Allowed Claim or thirty (30) days after compliance
with Section 4.4 of the Consensual Plan, if applicable.
ARTICLE V
MANAGEMENT OF WALTER INDUSTRIES
5.1 Corporate Governance; Directors and Officers. Except
where otherwise expressly provided in the Consensual Plan, the
corporate governance of the Debtors and the election and
appointment of the directors and officers of the Debtors shall
be carried out in accordance with the respective articles of
incorporation and bylaws of the Debtors and the laws of the
respective states in which the Debtors are incorporated.
5.2 Reconstitution of Board of Directors of Walter
Industries. On the Effective Date, the Board of Directors of
Walter Industries shall be replaced by a New Board of Directors
(the "New Board"). The full size of the New Board shall be nine
(9) Directors; provided, that, until the two Independent
Directors are selected as provided below, the New Board may
initially be composed of seven (7) directors not including the
two Independent Directors. The New Board shall consist of the
following: (i) G. Robert Durham, the present President, Chief
Executive Officer and Director of Walter Industries; (ii) James
W. Walter, the present Chairman of Walter Industries;
(iii) Kenneth J. Matlock, the present Executive Vice President,
Chief Financial Officer and Director of Walter Industries;
(iv) one director designated by KKR; (v) three directors
designated by Lehman Brothers Inc.; and (vi) two Independent
Directors who shall be selected by current management of Walter
Industries from a list of qualified candidates provided by an
independent search firm that shall be selected as promptly as
practicable by Walter Industries and Lehman Brothers Inc. and
retained by Walter Industries, copies of which list shall be
provided to the Bondholders Committee contemporaneously with its
submission to Walter Industries. If any director initially
designated pursuant to the preceding sentence fails for any
reason to complete his initial three year term, then substitute
director(s) shall be designated for the remainder of such three
year term by the entity (or, in the case of Independent
Directors, by the procedure) that initially designated the
director under this Section 5.2, except that in the case of the
three director seats initially held by Messrs. Durham, Walter
and Matlock, substitutes shall be senior officers(s) of Walter
Industries designated by the remaining directors of Walter
Industries then in office. Notwithstanding the foregoing,
during the initial three-year term of the New Board, (i) if, at
any time after six months after the Effective Date of the
Consensual Plan, Lehman Brothers Inc. notifies KKR that it has
determined to transfer to KKR the right to appoint one of the
three Directors initially to be appointed under the Consensual
Plan by Lehman Brothers Inc., KKR shall have the right to
(a) compel the director identified by Lehman Brothers Inc. (from
among those designated by Lehman Brothers Inc.) to resign his or
her position as a member of the New Board and (b) appoint the
successor to such directorship pursuant to this Section 5.2;
(ii) in the event that at any time after the Effective Date,
Lehman Brothers Inc. and its Affiliates fail to have
"beneficial" ownership, as that term is used in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended ("Beneficial
Ownership" and its correlative meaning "Beneficially Owned"), of
8% or more of the outstanding common stock of Walter Industries
(or its successor by merger, consolidation or otherwise)
(without including any shares held in escrow pursuant to Section
3.26 of the Consensual Plan) (the "Outstanding Common Stock"),
then if KKR and its Affiliates have, at such time, Beneficial
Ownership of 8% or more of the Outstanding Common Stock, KKR
shall have the right to (a) compel the director identified by
Lehman Brothers Inc. (from among those designated by Lehman
Brothers Inc.) to resign his or her position as a member of the
New Board and (b) appoint the successor to such directorship
pursuant to this Section 5.2; (iii) in the event that at any
time after the Effective Date, if two members of the New Board
are KKR designees and if KKR and its Affiliates fail to have
Beneficial Ownership of 8% or more of the Outstanding Common
Stock, and Lehman Brothers Inc. and its Affiliates have, at such
time, Beneficial Ownership of 8% or more of the Outstanding
Common Stock, then Lehman Brothers Inc. shall have the right to
(a) compel the director identified by KKR (from among those
designated by KKR) to resign his or her position as a member of
the New Board and (b) appoint the successor to such directorship
pursuant to this Section 5.2; and (iv) in the event that at any
time after the Effective Date either Lehman Brothers Inc. and
its Affiliates, or KKR and its Affiliates, fail to have
Beneficial Ownership of 5% or more of the Outstanding Common
Stock, then the directors appointed under this Section 5.2 by
Lehman Brothers Inc. or by KKR, respectively, shall resign and
the remaining directors of Walter Industries shall appoint their
successor(s) for the remainder of the initial three-year term;
provided, however, that notwithstanding the preceding clauses
(i)-(iv), a KKR designee shall at all times be on the New Board
(until the third anniversary of the Effective Date) if, and so
long as, the shares of New Common Stock Beneficially Owned by
KKR and its Affiliates, together with shares held in escrow
under Section 3.26(c) of the Consensual Plan that would be
distributed to KKR or its Affiliates upon release from escrow,
shall together equal 5% or more of the then outstanding common
stock of Walter Industries (or its successor by merger,
consolidation or otherwise) (including as part of the then
outstanding common stock, for purposes of this calculation only,
any shares held in escrow pursuant to Section 3.26 of the
Consensual Plan). The Debtors shall file with the Court the
list of proposed directors (other than Independent Directors)
not later than ten (10) days prior to the commencement of the
confirmation hearing regarding the Consensual Plan.
5.3 Management Stock; New Incentive Plans. As of the
Effective Date, a number of shares of New Common Stock equal to
6% of the New Common Stock which would be outstanding on the
Effective Date after giving effect to the issuance of shares of
New Common Stock pursuant to the Consensual Plan shall be
reserved for issuance and delivery, from time to time, in the
discretion of the New Board to the management of Walter
Industries and its subsidiaries and certain other employees of
Walter Industries and its subsidiaries upon the terms and
subject to the conditions of certain incentive agreements and/or
plans to be entered into and/or adopted, as the case may be, on
or about the Effective Date by Walter Industries in the form
agreed to by the New Board. Such incentive agreements and/or
plans may also provide for the granting of restricted stock
rights, stock appreciation rights or other incentive awards. To
the extent, if any, that Court approval is necessary under
Section 1129(a) of the Code, such approval shall be deemed to
have been granted by entry of a Confirmation Order.
5.4 Funding of Retiree Health Benefits. On the Effective
Date, Walter Industries and Computer Services shall set aside,
in trust(s), funds (not to exceed $7 million in the aggregate)
sufficient to provide reasonable assurance (on an actuarial
basis in the judgment of the Boards of Directors of Walter
Industries and Computer Services) of the continued funding of
medical benefits, under the post-retirement medical benefit
plans of Walter Industries and Computer Services from time to
time in effect, upon the retirement of current employees whose
benefits in such plan have vested and to retired employees of
Walter Industries and Computer Services following the
dissolution of Walter Industries and/or Computer Services,
divestiture of Walter Industries' operating subsidiaries or
other event which would render Walter Industries and/or Computer
Services unable to continue the current funding of such
benefits.
5.5 Effective Date Bonus Awards. No later than 20 days
prior to the commencement of the confirmation hearing on the
Consensual Plan, the Board of Directors of Walter Industries
may, in its sole discretion, prepare a schedule of Cash bonuses
(and shall transmit a copy of such schedule to the Bondholders
Committee and file the same with the Court) to be paid on or
after the Effective Date to the management of Walter Industries
and its subsidiaries who are employed by Walter Industries or
such subsidiaries on the Effective Date, provided, that the
aggregate amount of such bonuses shall not exceed $5 million.
To the extent that Court approval is necessary under Section
1129(a) of the Code, such approval shall be deemed to have been
granted by entry of a Confirmation Order.
ARTICLE VI
RELEASES AND INDEMNIFICATION
6.1 Release by Holders of Claims or Interests. As of the
Effective Date, Holders of any Claims or Interests (and all
trustees and/or agents on behalf of such Holders): (i) that
receive (or on whose behalf the Celotex Settlement Fund
Recipient receives) any property or New Common Stock to be
distributed to or for the benefit of a Holder of any Claims,
Demands or Interests pursuant to Article III of the Consensual
Plan and in consideration therefor; (ii) in a Class that accepts
or is deemed to have accepted the Consensual Plan; or (iii) that
marked a box on the ballot sent to such Holder for purposes of
voting whether to accept or reject the Creditors' Plan,
indicating such Holder's agreement to grant the release provided
in Section 6.1 of the Creditors' Plan shall be deemed to have
released, to the extent permitted by the Court, the Debtors, the
Existing Equityholders, the Proponents, the KKR Parties, the
Apollo Parties, the Lehman Parties, the other Parties (as that
term is used in the Second Amended and Restated Veil Piercing
Agreement) to the Second Amended and Restated Veil Piercing
Settlement Agreement, the Holders of Revolving Credit Bank
Claims, the Holders of Working Capital Bank Claims, the
Revolving Credit Agents, the Working Capital Agents, the Holders
of Series B & C Senior Note Claims, the Holders of Subordinated
Note Claims, the Series B & C Senior Note Trustee, the
Subordinated Note Trustees, the members of the Official
Committees, the members of the Ad Hoc Committee of Pre-LBO
Bondholders and the respective present and former parents,
subsidiaries, Affiliates, directors, officers, partners (general
and limited), shareholders (record and beneficial), employees,
agents, advisors, predecessors in interest and representatives
of all of the foregoing, in each case in any and all of such
released Person's aforementioned capacities (including, without
limitation, with respect to each of the Bondholder Proponents
and the Series B & C Senior Note Trustee, any action or inaction
related to or set forth in the definition of Qualified
Securities or New Senior Notes herein or in the description of
"Financing Matters" in Section 4.19 hereof); provided, however,
that the foregoing release shall not include The Celotex
Corporation and its subsidiaries (in any capacity), but shall
include the respective present and former shareholders (record
and beneficial), directors, officers, partners (general and
limited), employees, agents, advisors and representatives of The
Celotex Corporation and its subsidiaries (but excluding The
Celotex Corporation and its subsidiaries) (collectively, the
Persons released in this Section 6.1 are referred to herein as
the "Released Parties"), of and from any and all Claims, claims,
obligations, rights, causes of action, Demands and liabilities
(other than the right to enforce the Debtors' obligations under
the Consensual Plan) which such Holder may be entitled to
assert, whether known or unknown, foreseen or unforeseen, then
existing or thereafter arising, based in whole or in part upon
any act, omission or other occurrence taking place from the
beginning of time to and including the Effective Date in any way
relating to the Debtors, the Chapter 11 Cases or the Consensual
Plan (including, without limitation, any of the Veil
Piercing-Related Issues or LBO- Related Issues).
6.2 Release By Debtors. (a) As of the Effective Date, the
Debtors shall be deemed to have waived and released any and all
claims, obligations, rights, causes of action and liabilities,
whether known or unknown, foreseen or unforeseen, then existing
or thereafter arising, which are based in whole or in part upon
any act, omission or other occurrence taking place on or prior
to the Effective Date and which may be asserted by or on behalf
of any of the Debtors, against any of the Released Parties, in
any of their respective capacities, and (b) on the Effective
Date, the Debtors, for good and valuable consideration, the
adequacy of which is hereby confirmed, shall be deemed to have
waived and released any and all claims, obligations, rights,
causes of action and liabilities (including, without limitation,
causes of action arising under Sections 544, 547 and 548 of the
Code, but excluding any rights of the Debtors to enforce the
Consensual Plan), whether known or unknown, foreseen or
unforeseen, then existing or thereafter arising, which are based
in whole or in part upon any act, omission or other occurrence
taking place on or prior to the Effective Date and which may be
asserted by or on behalf of any of the Debtors against any
Released Party; provided, however, that the foregoing release
shall not apply to claims, obligations, rights, causes of action
and liabilities arising in the ordinary course of the Debtors'
business in connection with the conduct thereof.
6.3 Dismissal of Lawsuits and Related Releases. Without
limiting the scope or the generality of the foregoing Sections
6.1 and 6.2, and without limiting any rights against Persons
that are not Released Parties, (i) the Debtors and the other
named parties in such lawsuits shall cause to be dismissed with
prejudice, as to all Released Parties on the Effective Date,
Mellon Bank, N.A. and Bank of New York v. Kohlberg Kravis
Roberts & Co., et al, Adversary Proceeding No. 94-17 pending
before the Court; (ii) the Debtors, KKR, and all other parties
named as plaintiffs in Hillsborough Holdings Corp., et al., v.
Leon Black, et al., Adversary Proceeding No. 94-562, pending
before the Court, shall cause said adversary proceeding to be
dismissed with prejudice as to all defendants therein on the
Effective Date; and (iii) the Debtors and the KKR Parties shall
deliver to Apollo and Lehman Brothers Inc., for the benefit of
the Apollo Parties and the Lehman Parties, respectively, and
Apollo and Lehman Brothers Inc., for the Apollo Parties and the
Lehman Parties, respectively, shall deliver to Walter
Industries, for the benefit of the Debtors and the KKR Parties,
executed releases in substantially the form of Exhibit 7 hereto.
Said releases shall not apply to the right to enforce the
Debtors' obligations and those of any other person or entity
under the Consensual Plan, and shall not affect any party's
right to receive distributions under the Consensual Plan.
6.4 Indemnification. The articles of incorporation and/or
the bylaws of each of the Debtors shall provide that each of the
Debtors shall jointly and severally indemnify, hold harmless and
reimburse its present and former officers and directors and such
other natural Persons as are described therein from and against
any and all losses, claims, damages, fees, expenses, liabilities
and actions pursuant to the terms of such indemnity. All rights
of Persons indemnified pursuant to contract, corporate charter
or bylaws, or applicable law by any one or more of the Debtors
as of the Filing Date, or at any time during these Chapter 11
Cases, shall survive Confirmation of the Consensual Plan, shall
not be discharged pursuant to Section 1141 of the Code, and
shall not be subject to disallowance due to the contingent or
unliquidated nature of such right under Section 502(e)(1) of the
Code. However, any such right of indemnification shall be
enforceable only to the extent that it is valid and enforceable
under applicable nonbankruptcy law, and shall be subject to any
and all defenses available under applicable nonbankruptcy law.
The failure to object to the allowance of any such right (or
claim) for indemnity shall in no way preclude, bar or otherwise
affect any defense or other challenge to any such indemnity
under applicable nonbankruptcy law. The Debtors may confirm any
such contractual indemnification by contract, resolution or
otherwise as they may deem appropriate, in accordance with
applicable nonbankruptcy law.
ARTICLE VII
ENTERPRISE VALUE
7.1 Enterprise Value. Except as expressly provided in the
definition of New Common Stock Value and in Section 3.22 herein,
the Negotiated Enterprise Value shall be used for all purposes
of the Consensual Plan relating to the allocation or value of
New Common Stock, and shall not be increased or decreased at any
time or for any reason, including, without limitation, any
change in the business, results of operations, condition
(financial or otherwise), properties, Assets or prospects of any
Debtor.
ARTICLE VIII
EXECUTORY CONTRACTS
8.1 Assumption of Executory Contracts. All Executory
Contracts that have not been rejected before ninety (90) days
after the Effective Date shall be deemed assumed as of the
Confirmation Date; provided, however, that the Proponents
reserve the right to assume or reject after the 90th day after
the Effective Date any Executory Contract which is subject to a
motion pending as of such 90th day to assume or reject such
Executory Contract. The Executory Contracts listed on Exhibit 6
attached hereto are expressly rejected under the Consensual
Plan, without admitting that any of the items listed on Exhibit
6 is an Executory Contract, and without admitting any liability
as a result of such rejection or otherwise.
8.2 Cure of Defaults. As to any Executory Contract
assumed pursuant to this Consensual Plan, Walter Industries
and/or the applicable Debtor, as the case may be, shall,
pursuant to the provisions of Section 1123(a)(5)(G) of the Code,
cure or demonstrate the ability to cure all defaults (except
those specified in Section 365(b)(2) of the Code) existing under
and pursuant to such Executory Contract by paying or
demonstrating the ability to pay the amount, if any, of such
Executory Contract Claim. Payment of any such Executory
Contract Claim shall be in full satisfaction, release, discharge
and cure of all such defaults (including any other Claims Filed
by any such party as a result of such existing defaults);
provided, however, that if any Person Files, within thirty (30)
days of the Filing of a proof of claim with respect to any
Executory Contract Claim, an objection in writing to the amount
set forth, the Court shall determine the amount actually due and
owing in respect of the defaults or shall approve the settlement
of any such Executory Contract Claim.
8.3 Claims for Damages. Each Person that is a party to an
Executory Contract rejected pursuant to this Article VIII shall
be entitled to File, not later than thirty (30) days after the
issuance of a Final Order of the Court authorizing such
rejection, a proof of claim for damages alleged to have arisen
from the rejection of the Executory Contract to which such
Person is a party, or be forever barred. Objections to any such
proof of claim shall be Filed not later than sixty (60) days
after such proof of claim is Filed, and the Court shall
determine any such objections. Notwithstanding the foregoing,
no Person that is a party to any Executory Contract listed on
Exhibit 6 to the Consensual Plan shall have any Claim (whether
an Administrative Claim, an Other Unsecured Claim or otherwise)
or any claim for damages or any other relief against any Debtor
on account of any such Executory Contract or the rejection
thereof, and any and all such Claims or claims are forever
released by all such Persons, discharged and enjoined and no
distribution shall be made thereon; provided, that this sentence
shall not apply to Claims or claims for directors' fees or
expenses, or business expenses incurred by officers or other
employees of the Debtors.
8.4 Classification of Claims. Unsecured Claims arising
out of the rejection of Executory Contracts shall be Class U-3
Claims (Other Unsecured Claims).
ARTICLE IX
RETENTION OF JURISDICTION
9.1 Jurisdiction of Court. Notwithstanding the entry of
the Confirmation Order or the Effective Date having occurred,
the Court will retain jurisdiction of the Chapter 11 Cases for
the following purposes:
(a) To hear and determine any and all pending
applications for the rejection and disaffirmance,
assumption or assignment of Executory Contracts, any
objections to Claims resulting therefrom, and the allowance
of any Claims resulting therefrom;
(b) To hear and determine any and all applications,
adversary proceedings, contested matters and other
litigated matters pending on the Confirmation Date;
(c) To ensure that the distributions to Holders of
Allowed Claims and Interests are accomplished as provided
herein and in the Reorganization Documents;
(d) To hear and determine any objections to Claims
filed, before or after Confirmation; to allow or disallow,
in whole or in part, any Disputed Claim, and to hear and
determine other issues presented by or arising under the
Consensual Plan;
(e) To enter and implement such orders as may be
appropriate in the event implementation of the Confirmation
Order or Consensual Plan is for any reason stayed, or the
Confirmation Order is reversed, revoked, modified or
vacated;
(f) To hear and determine all applications for
compensation of professionals and reimbursement of expenses
under Sections 330, 331, 503(b) or 1129(a)(4) of the Code;
(g) To hear the Proponents' application, if any, to
modify the Consensual Plan in accordance with Section 1127
of the Code (after Confirmation, any Proponent may also, so
long as it does not adversely affect the interest of
Holders, institute proceedings in the Court to remedy any
defect or omission or reconcile any inconsistencies in the
Consensual Plan, Disclosure Statement or Confirmation
Order, in such manner as may be necessary to carry out the
purposes and effects of the Consensual Plan);
(h) To enforce and to hear and determine disputes
arising in connection with the Consensual Plan or its
implementation, including disputes among Holders and
disputes arising under the Reorganization Documents, the
Second Amended and Restated Veil Piercing Settlement
Agreement, the Pre-LBO Bondholders Settlement Agreement, or
any other agreements, documents or instruments executed in
connection with the Consensual Plan;
(i) To construe and to take any action to enforce the
Consensual Plan, Reorganization Documents and Confirmation
Order, and issue such orders as may be necessary for the
implementation, execution and consummation of the
Consensual Plan and the execution, delivery and performance
of the Reorganization Documents;
(j) To construe and to take any action to enforce the
Second Amended and Restated Veil Piercing Settlement
Agreement and the Pre-LBO Bondholders Settlement Agreement,
including without limitation, the enforcement of the
settlement injunction and the releases contained or
provided for therein, and issue such orders as may be
necessary for the implementation of the Second Amended and
Restated Veil Piercing Settlement Agreement and the Pre-LBO
Bondholders Settlement Agreement;
(k) To determine such other matters and for such
other purposes as may be provided in the Confirmation
Order;
(l) Except as provided in Section 3.26(c) herein with
respect to the Arbitrator, to hear and determine any
motions, contested matters or adversary proceedings
involving taxes, tax refunds, tax attributes and tax
benefits and similar or related matters, with respect to
the Debtors or their estates arising prior to the Effective
Date or relating to the period of administration of the
Chapter 11 Cases;
(m) To hear and determine any other matters related
hereto and not inconsistent with Chapter 11 of the Code;
and
(n) To enter a final decree closing the Chapter 11
Cases.
ARTICLE X
CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS
10.1 Conditions to Confirmation. Confirmation of this
Consensual Plan shall not occur unless and until each of the
following conditions shall have been satisfied or have been
waived by all of the Proponents (or, if specified, solely by
certain of the Proponents):
(a) The Court shall have entered the Confirmation
Order on or prior to March 3, 1995, which order shall,
among other things, include (i) the approval of the Veil
Piercing Settlement and the Second Amended and Restated
Veil Piercing Settlement Agreement and (ii) a finding that
the filing of the Consensual Plan did not constitute a
breach of the Pre-LBO Bondholders Settlement Agreement (the
March 3, 1995 date may be extended to March 31, 1995 by
either the Debtors or the Bondholder Proponents, and such
date may be further extended solely by the Bondholder
Proponents, and the finding referred to in clause (ii)
above may be waived solely by the Bondholder Proponents);
and
(b) the Reorganization Documents (other than the New
Senior Note Indenture, the instrument(s) evidencing the
Qualified Securities, the New Common Stock Registration
Rights Agreement and the Qualified Securities Registration
Rights Agreement) shall have been executed (this condition
may be waived solely by the Bondholder Proponents).
10.2 Conditions to Effectiveness. Notwithstanding any
other provision of the Consensual Plan or the Confirmation
Order, the Effective Date of the Consensual Plan shall not occur
unless and until each of the following conditions shall have
been satisfied or have been waived by all of the Proponents (or,
if specified, solely by certain of the Proponents):
(a) The Confirmation Order shall have become a Final
Order (this condition may be waived solely by the
Bondholder Proponents);
(b) All conditions precedent set forth in the Second
Amended and Restated Veil Piercing Settlement Agreement and
all procedures set forth in Section 4(d)(ii)(A)-(J) of the
Second Amended and Restated Veil Piercing Settlement
Agreement shall have been complied with or waived (as
provided therein); it being understood that none of the
procedures set forth in such Section 4(d)(ii)(A)-(J) may be
waived or modified except with the written consent of the
Debtors;
(c) Qualified Securities having an aggregate
principal amount of not less than the sum of: (i) $530
million; (ii) the net proceeds of the financing(s)
described in clause (i) of the definition of "Exit
Financing" contained in the Consensual Plan in excess of
$900 million, if any, up to but not in excess of $25
million, and (iii) the amount, if any, by which the
Replacement Indebtedness exceeds the amount of Cash
necessary to pay all Claims that would otherwise have been
satisfied by New Senior Notes issued as Qualified
Securities, shall be available for distribution to Classes
U-4, U-5, U-6 and U-7 under the Consensual Plan;
(d) The Reorganization Documents shall have been
executed and delivered by all of the parties thereto and
the Court shall have entered a Final Order (which may be
the Confirmation Order) approving the Reorganization
Documents (this condition may be waived solely by the
Bondholder Proponents);
(e) Mid-State Homes shall have obtained the Mid-State
Homes Warehouse Credit Facility and the Debtors shall have
obtained the New Working Capital Facility;
(f) The Charter shall have been filed with the
Secretary of State of the State of Delaware;
(g) The adversary proceeding described in
subparagraph (ii) of Section 6.3 shall have been dismissed
with prejudice, and the releases described in subparagraph
(iii) of Section 6.3 shall have been delivered;
(h) The New Senior Note Indenture shall be qualified
under the Trust Indenture Act of 1939; and
(i) The Effective Date shall occur not later than
March 31, 1995 (this date may be extended solely by the
Bondholder Proponents).
ARTICLE XI
CRAM DOWN
11.1 Cram Down. If all of the applicable requirements for
Confirmation of the Consensual Plan are met as set forth in
Sections 1129(a)(l) through (13) of the Code except
subsection (8) thereof, the Proponents hereby request that the
Court confirm the Consensual Plan pursuant to Section 1129(b) of
the Code, notwithstanding the requirements of subsection (8)
thereof, on the basis that, among other things, the Consensual
Plan is fair and equitable, and does not discriminate unfairly,
with respect to each nonaccepting impaired Class.
ARTICLE XII
EFFECTS OF PLAN CONFIRMATION; TITLE TO PROPERTY AND DISCHARGE
12.1 Vesting of Property. Except as otherwise provided in
the Consensual Plan or the Confirmation Order, on the Effective
Date, all Assets of the estates of each of the Debtors
(including, without limitation, any and all claims and causes of
action against Persons that are not Released Parties) shall vest
in such Debtors, and subsequently will be retained by such
entities subject to the provisions of the Consensual Plan, the
Confirmation Order and the Reorganization Documents and shall be
free and clear of all Claims and Interests of all Holders,
except the obligations to perform according to the Consensual
Plan, the Confirmation Order, the Reorganization Documents and
the Liens and security interests granted pursuant to the
Consensual Plan or any of the Reorganization Documents. Except
as otherwise provided in the Consensual Plan or the Confirmation
Order, on the Effective Date and thereafter, each of the Debtors
may operate its business free of any restrictions imposed by the
Code.
12.2 Discharge. The issuance of the Confirmation Order
shall (a) operate as a discharge, pursuant to Section 1141(d)(1)
of the Code, effective as of the Effective Date, of any and all
debts (as such term is defined in Section 101(12) of the Code)
of or Claims against one or more of the Debtors that arose at
any time before the Effective Date, including, but not limited
to, all principal and all interest, whether accrued before, on
or after the Filing Date. Without limiting the generality of
the foregoing, on the Effective Date, the Debtors shall be
discharged from any debt that arose before the Effective Date,
and any debt of a kind specified in Section 502(g), 502(h) or
502(i) of the Code, to the full extent permitted by Section
1141(d)(1)(A) of the Code. Nothing in the Consensual Plan shall
be deemed to waive, limit or restrict in any way the discharge
granted upon Confirmation of the Consensual Plan pursuant to
Section 1141 of the Code and effective as of the Effective Date.
12.3 Injunction. In order to preserve and promote the
settlements contemplated by and provided for in the Consensual
Plan, effective on the Effective Date, all Persons who have
held, hold or may hold a Demand, debt or Claim, or who have
held, hold or may hold Interests, shall be permanently enjoined,
to the fullest extent permitted by law, from taking any of the
following actions against or affecting the Released Parties or
the Assets (or assets or other property) of the Released Parties
with respect to such Claims, Demands or Interests (other than
actions brought to enforce any rights or obligations under the
Consensual Plan or any of the Reorganization Documents or
appeals, if any, from the Confirmation Order): (i) commencing,
conducting or continuing in any manner, directly or indirectly,
any suit, action or other proceeding of any kind against the
Released Parties or the Assets (or assets or other property) of
the Released Parties or any direct or indirect successor in
interest to any of the Released Parties, or any Assets (or
assets or other property) of any such successor; (ii) enforcing,
levying, attaching, collecting or otherwise recovering by any
manner or means whether directly or indirectly any judgment,
award, decree or order against the Released Parties or the
Assets (or assets or other property) of the Released Parties or
any direct or indirect successor in interest to any of the
Released Parties or any Assets (or assets or other property) of
any such transferee or successor; (iii) creating, perfecting or
otherwise enforcing in any manner, directly or indirectly, any
encumbrance of any kind against the Released Parties or the
Assets (or assets or other property) of the Released Parties or
any direct or indirect successor in interest to any of the
Released Parties, or any Assets (or assets or other property) of
any such transferee or successor other than as contemplated by
the Consensual Plan or any of the Reorganization Documents;
(iv) asserting any set-off, right of subrogation or recoupment
of any kind, directly or indirectly against any obligation due
the Released Parties or the Assets (or assets or other property)
of the Released Parties, or any direct or indirect transferee of
any Assets (or assets or other property) of, or successor in
interest to, any of the Released Parties; and (v) proceeding in
any manner in any place whatsoever that does not conform to or
comply with the provisions of the Consensual Plan or any of the
Reorganization Documents.
12.4 Effectiveness and Enforcement of Settlement
Agreements. The terms of the Second Amended and Restated Veil
Piercing Settlement Agreement and the settlements contained in
the Consensual Plan with respect to the LBO-Related Issues, the
Other Unsecured Claims, the Series B & C Senior Note Claims, the
Working Capital Bank Claims and the Revolving Credit Bank Claims
shall be incorporated by reference in
and made an inextricable and essential part of the Consensual
Plan in their entirety, and shall be binding and enforceable by
the Court against the Debtors, all of the respective parties
thereto and all Holders of Settlement Claims.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Revocation. The Proponents reserve the right, all of
them acting jointly, to revoke and withdraw the Consensual Plan
prior to the Confirmation Date. If the Proponents revoke or
withdraw the Consensual Plan, then the Consensual Plan shall be
null and void and, in such event, nothing contained herein shall
be deemed to constitute a waiver or release of any Claims by or
against the Proponents or any other Person or to prejudice in
any manner the rights of any of the Proponents or any Person in
any further proceedings involving the Proponents.
13.2 Amendments. This Consensual Plan may be amended,
modified or supplemented by (a) all of the Proponents acting
jointly or (b) the Bondholder Proponents and the Debtors or (c)
in the event that the Court declines to confirm the Consensual
Plan, any one or more of the Proponents other than as provided
in the preceding clauses (a) and (b) (provided that, in the case
of this clause (c), such amendment shall bind only the
Proponent(s) filing such amendment, modification or supplement),
in each case before or after the Confirmation Date, and by the
Bondholder Proponents and the Debtors (all of them acting
jointly) after the Effective Date, in each case in the manner
provided for by Section 1127 of the Code or as otherwise
permitted by law. Notwithstanding the foregoing or any other
provision hereof, nothing in this Consensual Plan shall in any
way prohibit or restrict any Proponent from filing a plan of
reorganization on its own behalf.
13.3 No Consolidation. The Chapter 11 Cases shall not be
substantively consolidated and (i) the legal, equitable, and
contractual rights relating to intercompany Claims between the
Debtors shall be unaltered; (ii) the Assets and liabilities of
the Debtors will not be merged or treated as though they were
merged; (iii) any obligation of any Debtor will be deemed to be
an obligation of such Debtor only and any Claim which is Filed
in connection with any such obligation will be an Allowed Claim
only against the Debtor against which such Claim has been Filed;
(iv) each and every Claim which is Filed in the Chapter 11 Case
of any Debtor will be deemed Filed only against the Debtor with
respect to which such Claim has been Filed; and (v) for purposes
of determining the availability of the right of recoupment or
set-off under Section 553 of the Code, the Debtors shall not be
treated as one entity so that, subject to the other provisions
of Section 553 of the Code, debts due to any of the Debtors may
not be recouped or set-off against the debts of any of the other
Debtors. Notwithstanding the foregoing, on the Effective Date,
and in accordance with the terms of the Consensual Plan, all
Allowed Claims based upon guarantees of collection, payment or
performance made by any of the Debtors with respect to the
obligations of another Debtor shall be discharged and released.
13.4 Provisions as to Interest. Except as expressly
stated in this Consensual Plan, no interest, penalty or late
charge is to be allowed on any Claim subsequent to the Filing
Date; and except as expressly stated in this Consensual Plan,
post-Filing Date interest allowed on any Claim shall be simple
interest and not compounded for any period.
13.5 Exhibits. The Exhibits attached to the Consensual
Plan are incorporated by reference in and made an inextricable
and essential part of the Consensual Plan in their entirety.
13.6 No Attorneys' Fees. No attorneys' fees will be paid
by any Debtor with respect to any Claim except as specified
herein, in any of the Reorganization Documents or as allowed by
a Final Order of the Court.
13.7 Post Confirmation Effect of Evidences of Claims or
Interests. Except as otherwise provided in the Consensual Plan,
effective upon the Effective Date, all evidences of Claims or
Interests shall represent only the right to participate in the
distributions, if any, contemplated by the Consensual Plan.
13.8 Official Committees. The Official Committees shall
continue in existence until the commencement of distributions to
Holders of Subordinated Note Claims under the Consensual Plan,
for the principal purpose of overseeing the implementation of
the Consensual Plan. The members of the Official Committees
shall serve without compensation, but shall be reimbursed for
all expenses incurred in their capacity as members of the
Official Committees.
13.9 Construction. The rules of construction set forth in
Section 102 of the Code shall apply to the construction of the
Consensual Plan.
13.10 Time. In computing any period of time prescribed or
allowed by this Consensual Plan, the day of the act, event, or
default from which the designated period of time begins to run
shall not be included. The last day of the period so computed
shall be included, unless it is not a Business Day or, when the
act to be done is the Filing of a paper in court, a day on which
weather or other conditions have made the clerk's office
inaccessible, in which event the period runs until the end of
the next day which is not one of the aforementioned days.
13.11 Tax Allocation of Consideration Paid to Holders. In
the case of Holders of Allowed Claims who receive consideration
in respect of the Allowed Amount of such Claims, other than, or
in addition to, Cash, the consideration received shall be
allocated and applied to such Claims in the following order: any
New Common Stock, any New Senior Notes or Qualified Securities
(other than Cash), and any Cash shall, in that order, be applied
to reduce, satisfy and discharge first the principal amount of
the Allowed Claim, then any pre-Filing Date interest included in
such Allowed Claim and last any post-Filing Date interest
included in such Claim.
13.12 Governing Law. Except to the extent the Code or
Bankruptcy Rules are applicable, the rights and obligations
arising under this Consensual Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State
of New York, without giving effect to the principles of
conflicts of law thereof.
13.13 Headings. The headings of the Articles, paragraphs,
and sections of this Consensual Plan are inserted for
convenience only and shall not affect the interpretation hereof.
13.14 Notice of Effectiveness. Upon the satisfaction of
all of the conditions to the Effectiveness of the Consensual
Plan, Walter Industries shall give notice thereof to (a) the
Holders of Revolving Credit Bank Claims, c/o Chemical Bank, 270
Park Avenue, New York, New York 10017, Attention: Elizabeth
Kelley, (b) the Holders of Working Capital Bank Claims, c/o
Bankers Trust Company, 280 Park Avenue, 19 West, New York, New
York 10017, Attention: Susan Forst, (c) the Holders of Series B
& C Senior Note Claims, c/o LaSalle National Bank, 135 South
LaSalle Street, Chicago, Illinois 60603, Attention: Lars
Anderson, (d) the Creditors' Committee, c/o Jones, Day, Reavis &
Pogue, 599 Lexington Avenue, New York, New York 10016,
Attention: Marc Kirschner, Esq. and (e) the Bondholders
Committee c/o Stroock & Stroock & Lavan, 7 Hanover Square, New
York, New York 10004, Attention: Daniel Golden, Esq., and shall
publish notice thereof once in The Wall Street Journal (National
Edition) and The New York Times (National Edition).
13.15 Notices. All notices, requests or demands in
connection with this Consensual Plan shall be in writing and
shall be mailed by registered or certified mail, return receipt
requested to:
Bondholders Committee
c/o Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
Attention: Daniel H. Golden, Esq.
and
Official Committee of
General Unsecured Creditors
c/o Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Marc S. Kirschner, Esq.
and
Lehman Brothers Inc.
American Express Tower
World Financial Center
18th Floor
New York, New York 10285-0018
Attention: Mr. Kenneth A. Buckfire
and
Lion Advisors, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: Mr. Marc J. Rowan
Mr. Robert H. Falk
and
Ad Hoc Committee of Pre-LBO Bondholders
c/o Marcus Montgomery Wolfson P.C.
53 Wall Street
New York, New York 10005
Attention: Peter D. Wolfson, Esq.
Sara L. Chenetz, Esq.
and
Walter Industries, Inc.
1500 N. Dale Mabry Hwy.
Tampa, Florida 33607
Attention: Chief Financial Officer
and
Kohlberg Kravis Roberts & Co.
9 West 57th Street, 42nd Floor
New York, New York 10019
With copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert D. Drain, Esq.
and
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
65 East 55th Street, 33rd Floor
New York, New York 10022
Attention: Ellen R. Werther, Esq.
Steven M. Pesner, P.C.
and
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Andrew A. Kress, Esq.
and
Stichter, Riedel, Blain & Prosser, P.A.
110 East Madison Street - Suite 200
Tampa, Florida 33602
Attention: Don M. Stichter, Esq.
and
Carlton, Fields, Ward, Emmanuel, Smith
& Cutler, P.A.
One Harbour Place
Tampa, Florida 33602
Attention: Leonard H. Gilbert, Esq.
13.16 Not Admissible. This Consensual Plan shall not be
admissible in any cases or proceedings involving the Proponents
or any of them for any purpose (other than for enforcing its
terms), nor shall it be deemed as an admission or waiver of any
Proponent for any purpose.
13.17 Successors and Assigns. The rights, benefits and
obligations of any Person named or referred to in the Consensual
Plan will be binding upon, and will inure to the benefit of, the
heir, executor, administrator, representative, successor or
assign of such Person.
Dated: December 9, 1994
New York, New York
OFFICIAL BONDHOLDERS COMMITTEE OF
HILLSBOROUGH HOLDINGS CORPORATION, ET AL.
By: /s/ Daniel H. Golden
Daniel H. Golden, Esq.
OFFICIAL COMMITTEE OF GENERAL UNSECURED
CREDITORS OF HILLSBOROUGH HOLDINGS
CORPORATION, ET AL.
By: /s/ Marc S. Kirschner
Marc S. Kirschner, Esq.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
By: /s/ Robert Drain
Robert Drain
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3236
For Lehman Brothers Inc.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
By: /s/ Steven M. Pesner
Steven M. Pesner, P.C.
Ellen R. Werther
65 East 55th Street, 33rd Floor
New York, New York 10022
(212) 872-1010
For Apollo
MARCUS MONTGOMERY WOLFSON P.C.
By: /s/ Peter Wolfson
Peter Wolfson
Sara Chenetz
53 Wall Street
New York, New York 10005
(212) 858-5200
For Ad Hoc Committee of Pre-LBO Bondholders
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
By: /s/ Andrew A. Kress
Andrew A. Kress
425 Park Avenue
New York, New York 10022
(212) 836-8000
For: HILLSBOROUGH HOLDINGS CORPORATION,
BEST INSURORS, INC.,
BEST INSURORS OF MISSISSIPPI, INC.,
COAST TO COAST ADVERTISING, INC.,
COMPUTER HOLDINGS CORPORATION,
DIXIE BUILDING SUPPLIES, INC.,
HAMER HOLDINGS CORPORATION,
HAMER PROPERTIES, INC.,
HOMES HOLDINGS CORPORATION,
JIM WALTER COMPUTER SERVICES, INC.,
JIM WALTER HOMES, INC.,
JIM WALTER INSURANCE SERVICES, INC.,
JIM WALTER RESOURCES, INC.,
JIM WALTER WINDOW COMPONENTS, INC.,
JW ALUMINUM COMPANY,
JW RESOURCES, INC.,
JW RESOURCES HOLDINGS CORPORATION,
J.W.I. HOLDINGS CORPORATION,
J.W. WALTER, INC.,
JW WINDOW COMPONENTS, INC.,
LAND HOLDINGS CORPORATION,
MID-STATE HOMES, INC.,
MID-STATE HOLDINGS CORPORATION,
RAILROAD HOLDINGS CORPORATION,
SLOSS INDUSTRIES CORPORATION,
SOUTHERN PRECISION CORPORATION,
UNITED LAND CORPORATION,
UNITED STATES PIPE AND FOUNDRY COMPANY,
U.S. PIPE REALTY, INC.,
VESTAL MANUFACTURING COMPANY,
WALTER HOME IMPROVEMENT, INC.,
WALTER INDUSTRIES, INC., and
WALTER LAND COMPANY
JWC ASSOCIATES, L.P.
JWC ASSOCIATES II, L.P.
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES
By: /s/ Henry R. Kravis
Name: Henry R. Kravis
Title: General Partner
<PAGE>
EXHIBIT 1:
RESTATED CERTIFICATE OF INCORPORATION OF WALTER INDUSTRIES
<PAGE>
EXHIBIT 1
RESTATED
CERTIFICATE OF INCORPORATION
OF
WALTER INDUSTRIES, INC.
WALTER INDUSTRIES, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware (hereinafter called the "Corporation"),
DOES HEREBY CERTIFY THAT:
FIRST: The name of the Corporation is WALTER INDUSTRIES,
Inc. The Corporation was originally incorporated under the name
"HILLSBOROUGH HOLDINGS CORPORATION" and the date of filing of
the Corporation's original Certificate of Incorporation with the
Secretary of State of Delaware was September 8, 1987.
SECOND: Pursuant to Section 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of
Incorporation restates and integrates and further amends the
provisions of the Certificate of Incorporation of the
Corporation.
THIRD: The text of the Restated Certificate of
Incorporation as heretofore amended or supplemented is hereby
restated and further amended to read in its entirety as follows:
1. The name of the Corporation is WALTER INDUSTRIES,
INC.
2. The registered office and registered agent of the
Corporation is The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
3. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock that the
Corporation is authorized to issue is Two Hundred Million
(200,000,000) shares of Common Stock, par value $.01
each.<F1>
5. The following provisions are inserted for the
management of the business and for the conduct of the
affairs of the Corporation and for the purpose of creating,
defining, limiting and regulating powers of the Corporation
and its directors and stockholders:
(a) The Board of directors of the Corporation,
acting by majority vote, may alter, amend or repeal
the bylaws of the Corporation.
(b) Elections of directors need not be by
written ballot unless the bylaws of the Corporation
shall so provide.
6. Except as otherwise provided by the Delaware
General Corporation Law as the same exists or may hereafter
be amended, no director of the Corporation shall be
personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a
director. Any repeal or modification of this Article 6 by
the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
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[FN] The Corporation will also be authorized to issue a second
class of Common Stock that would be exchanged for the stock
held by the Celotex Settlement Fund Recipient immediately
prior to the distribution by the Celotex Settlement Fund
Recipient of Common Stock to its beneficiaries. The second
class of Common Stock would be identical to the original
class except that shares of the second class (i) would be
deemed to be voted in the same proportions as the original
Common Stock on all matters except matters that only
affected adversely the second class, in which case the
second class would have a class vote, and (ii) would be
converted into an equal number of shares of the original
class upon transfer to a person not affiliated with a
beneficiary of the Celotex Settlement Fund Recipient.
7. To the fullest extent permitted by applicable law,
the Corporation shall indemnify (including the advancement
of defense expenses as incurred) any current or former
director, officer, employee or agent of the Corporation,
and such director's, officer's, employee's or agent's
heirs, executors and administrators, against all expenses,
judgments, fines and amounts paid in settlement actually
and reasonably incurred by such indemnified party in
connection with any threatened, pending or completed
action, suit or proceeding brought by or in the right of
the Corporation, or otherwise, to which such indemnified
party was or is a party or is threatened to be made a party
by reason of such indemnified party's current or former
position with the Corporation or by reason of the fact that
such indemnified party is or was serving, at the request of
the Corporation, as a director, officer, partner, trustee,
employee or agent of another corporation, partnership,
joint venture, trust or the enterprise.
8. The number of directors constituting the full
board of directors shall be nine (9), and the initial term
of the directors (and their successors) designated pursuant
to the Amended Joint Plan of Reorganization, dated as of
November 22, 1994, as the same may be amended or
supplemented from time to time (the "Consensual Plan"),
shall be three(3) years; thereafter, the term of each
director shall be one (1) year.
9. Shares of Common Stock issued to the Celotex
Settlement Fund Recipient under the Consensual Plan and not
yet transferred to persons other than Veil Piercing
Claimants shall be voted only in the same percentages of
votes as the other shares of Common Stock are voted on the
matter in question.
IN WITNESS WHEREOF, WALTER INDUSTRIES, Inc. has caused this
Restated Certificate of Incorporation to be signed by , its
President, and attested by , its secretary, this day of , 19.
ATTEST: WALTER INDUSTRIES, INC.
By:
Name: Name:
Title: Secretary Title: President
<PAGE>
EXHIBIT 2:
SUMMARY OF TERMS FOR THE NEW SENIOR NOTES
<PAGE>
EXHIBIT 2
SUMMARY OF TERMS FOR NEW SENIOR NOTES
Issuer Walter Industries, Inc. and/or one
or more other Debtors (each the
"Company" or the "Issuer").
Issue
New Senior Notes. To be issued in two series--Series A and
Series B.
Principal Amount Series A--Will be equal to the
Allowed Amount on the Effective
Date (less Cash to be paid from
the Class S-6 Fund and the part of
such Claim to be satisfied by New
Common Stock) in respect of the
approximately $58 million of
principal amount of Series B & C
Senior Notes as to which the
Series B & C Senior Note Claim
Election was made (such Allowed
Amount, which includes
pre-petition and post-petition
interest, will be approximately
$94.9 million as of December 31,
1994). No Series A New Senior
Notes will be issued if such notes
are not rated BB or higher by
either Rating Service or if Walter
Industries so elects in its sole
discretion, in which case all
Class S-6 Claims that would
otherwise have been satisfied by
Series A New Senior Notes will
instead be satisfied by an amount
of Cash equal to the principal
amount of such Series A New Senior
Notes that would otherwise have
been issued.
Series B--The difference between
the aggregate amount of Qualified
Securities and the part of
Qualified Securities consisting of
Cash; not greater than $490
million without consent of Lehman
Brothers Inc. No Series B New
Senior Notes will be issued if on
the Effective Date all but not
less than all claims that would
have otherwise been satisfied by
Series B New Senior Notes are paid
in Cash, whether from the proceeds
of a financing (the "Replacement
Indebtedness") or otherwise.
Exchange Election Holders of Series B & C Senior
Notes who receive Series A New
Senior Notes may, at any time
within 90 days after the Effective
Date, exchange all of such
Holder's Series A New Senior Notes
for an equal principal amount of
Series B New Senior Notes.
Maturity 5 years.
Rate To be determined in accordance
with the procedures set forth in
the definition of "New Senior
Notes" in the Consensual Plan.
Security The Series A and Series B New
Senior Notes will be secured on a
pari passu basis by all collateral
presently securing the Series B &
C Senior Notes, consisting of all
of the stock of Jim Walter
Resources, U.S. Pipe, Jim Walter
Homes and United Land, or by other
collateral of equal or greater
value (provided, that any such
method of valuation shall be
reasonably acceptable to the
Series B & C Senior Note Trustee).
If no Series B New Senior Notes
are issued, the Replacement
Indebtedness may be secured on a
pari passu basis with the Series A
New Senior Notes.
Interest Payment Dates Semi-annually, interest paid in
cash in arrears, on August 15 and
February 15 of each year,
commencing August 15, 1995.
Optional Redemption The Series A New Senior Notes are
not redeemable prior to four years
after original issuance thereof,
and may be redeemed thereafter in
whole or in part at the option of
the Company upon prior notice at
101% of the outstanding principal
amount plus accrued and unpaid
interest to the redemption date;
provided that, if at the time of
issuance of the Series A New
Senior Notes, market conditions
and the equivalent terms of
similar debt instruments commonly
issued and carrying a BB rating
contain a shorter no-call period,
then the no-call period may be
shortened, but in any event not to
less than 18 months after
issuance, and/or the redemption
premium shall be increased, but in
any event the redemption premium
shall not be less than 103% of the
outstanding principal amount in
the case of an 18 month no-call
period.
The Series B New Senior Notes may
be redeemed at any time in whole
or in part (but in the case of
partial redemptions, only if the
unredeemed principal amount of the
Series B New Senior Notes is at
least $150 million) at the option
of the Company upon prior notice
at 101% of the outstanding
principal amount plus accrued and
unpaid interest to the redemption
date.
Amortization All of the outstanding principal
amount and accrued but unpaid
interest thereon shall be due and
payable at maturity.
Covenants Covenants shall include but not be
limited to: (i) limitations on
indebtedness, (ii) limitations on
the creation of liens, (iii)
limitations on restricted
payments, (iv) limitation on
dividends, (v) limitations on
transactions with affiliates and
(vi) limitations on asset sales,
mergers and consolidations;
provided, that such covenants
shall expressly permit the Issuer
and its subsidiaries to make asset
sales out of the ordinary course
of business and to enter into
other non-ordinary course
transactions (including the sale
of collateral securing the New
Senior Notes, free and clear of
any liens, claims and
encumbrances, provided that the
net proceeds thereof are used to
redeem, pari passu, Series A and
Series B New Senior Notes at par
plus accrued interest); provided,
further, that such covenants,
consistent with the foregoing,
shall be reasonably acceptable to
the Series B & C Senior Note
Trustee.
Ranking The New Senior Notes will be
senior Indebtedness of the Company
and will rank senior in right of
payment to certain other
Indebtedness of the Issuer and
rank pari passu with certain other
Indebtedness of the Issuer.
Events of Default and
Remedies Events of Default shall include
but not be limited to (a) default
in the payment of principal on any
New Senior Notes when the same
becomes due and payable; (b)
default in the payment of interest
on any New Senior Notes when the
same becomes due and payable, and
such default continues for a
period of five (5) days, (c) the
Company defaults in the
performance of or breaches any
other material covenant or
material agreement of the Company
under the New Senior Notes and
such default or breach continues
for a period of 30 consecutive
days after written notice by the
Trustee or the Holders of 25% or
more in aggregate principal amount
of the New Senior Notes then
outstanding; (d) failure by the
Company or any of its Significant
Subsidiaries to make any payments
when due (after giving effect to
any applicable grace period and
whether by reason of maturity,
acceleration or otherwise) under
any issue or issues of
indebtedness of the Company and/or
one or more of its Significant
Subsidiaries having an outstanding
principal amount of $25 million or
more individually or $50 million
or more in the aggregate for all
such issues of all such persons;
(e) any final judgment or order
(not covered by insurance) for the
payment of money in excess of
$25 million individually or
$50 million in the aggregate for
all such final judgments or orders
against all such persons shall be
rendered against the Company or
any of its Significant
Subsidiaries and shall not be paid
or discharged; and (f) with
respect to the Company and its
Significant Subsidiaries, the
occurrence of certain acts of
bankruptcy or insolvency or
failure to pay debts generally as
they come due.
If an Event of Default (other than
an Event of Default specified in
clause (f) above) occurs and is
continuing under the Indenture,
the Trustee or the Holders of at
least 25% in aggregate principal
amount of the New Senior Notes
then outstanding, by written
notice to the Company (and to the
Trustee if such notice is given by
the Holders), may, and the Trustee
at the request of the Holders
shall, declare the entire unpaid
principal of and accrued interest
on the New Senior Notes shall be
immediately due and payable. Upon
a declaration of acceleration,
such principal of and accrued
interest on the New Senior Notes
to be immediately due and payable.
In the event a declaration of
acceleration because an Event of
Default set forth in clause (d)
above has occurred and is
continuing, such declaration of
acceleration shall be
automatically rescinded and
annulled if the event of default
triggering such Event of Default
pursuant to clause (d) shall be
remedied, cured by the Company or
waived by the holders of the
relevant indebtedness within 60
days after the declaration of
acceleration with respect thereto.
If an Event of Default specified
in clause (f) above occurs, all
unpaid principal of and accrued
interest on the New Senior Notes
then outstanding shall ipso facto
become and be immediately due and
payable without any declaration or
other act on the part of the
Trustee or any Holder. The
Holders of at least a majority in
principal amount of the
outstanding New Senior Notes, by
written notice to the Company and
the Trustee, may waive all past
defaults and rescind and annul a
declaration of acceleration and
its consequences if (i) all
existing Events of Default, other
than the nonpayment of the
principal of and interest on the
New Senior Notes that have become
due solely by such declaration of
acceleration, have been cured or
waived and (ii) the rescission
would not conflict with any
judgment or decree of a court of
competent jurisdiction.
Documentation The Series B & C Senior Note
Trustee shall have the right to
reasonably approve all documents
under the Consensual Plan
regarding the treatment of Series
B & C Senior Note Claims.
<PAGE>
EXHIBIT 3A:
SECOND AMENDED AND RESTATED VEIL PIERCING SETTLEMENT AGREEMENT
<PAGE>
EXHIBIT 3A
SECOND AMENDED AND RESTATED
VEIL PIERCING SETTLEMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED VEIL PIERCING SETTLEMENT
AGREEMENT (as the same may be amended, modified or supplemented
from time to time, the "Agreement")
amends and restates that certain Amended and Restated Veil
Piercing Settlement Agreement (the "Amended Agreement") made and
entered into as of the 1st day of August, 1994, which amended
and restated that certain Veil Piercing Settlement Agreement
(the "Original Agreement") made and entered into as of the 18th
day of April, 1994, and is made and entered into as of the 22nd
day of November, 1994, by and among:
(a) Certain asbestos victim defendants (the "AVDs")
named as defendants in Adversary Proceeding No. 90-0003
and Adversary Proceeding No. 90-0004 (collectively, the
"Adversary Proceedings"), and represented in the Adversary
Proceedings by Caplin & Drysdale, Chartered ("Caplin &
Drysdale"), commenced in the United States Bankruptcy Court
for the Middle District of Florida, Tampa Division (the
"Court"), in the Chapter 11 cases of Hillsborough Holdings
Corporation ("Hillsborough") and the other Debtors (as
defined herein) in their administratively consolidated Case
Nos. 89-9715-8P1 through 89-9746-8P1, and 90-11997-8P1;
(b) Caplin & Drysdale, Baron & Budd, Greitzer and
Locks, Ness Motley Loadholt Richardson & Poole ("Ness
Motley"), each on behalf of itself, its individual lawyers
and its clients that may be Veil Piercing Claimants (as
defined herein) (Baron & Budd, Greitzer and Locks, and Ness
Motley are collectively referred to herein as the
"Claimants' Attorneys", and Caplin & Drysdale and the
Claimants' Attorneys are collectively referred to herein as
the "Veil Piercing Claimants' Representatives");
(c) The Celotex Corporation, a defendant in the
Adversary Proceedings and a debtor and debtor-in-possession
in a Chapter 11 case ("The Celotex Corporation") pending in
the United States Bankruptcy Court for the Middle District
of Florida, Tampa Division (the "Celotex Bankruptcy
Court"), Case No. 90-10016-8B1 (the "Celotex Chapter 11
Case"), the Celotex Committee of Unsecured Creditors, the
Celotex Asbestos Property Damage Claimants Committee and
the Celotex Asbestos Bodily Injury Claimants Committee (the
Celotex Committee of Unsecured Creditors, the Celotex
Asbestos Property Damage Claimants Committee and the
Celotex Asbestos Bodily Injury Claimants Committee are
collectively referred to herein as the "Official Celotex
Committees");
(d) Jim Walter Corporation, a defendant in the
Adversary Proceedings ("JWC"), on behalf of itself and its
subsidiaries other than The Celotex Corporation and its
subsidiaries, (collectively referred to without The Celotex
Corporation and its subsidiaries as the "JWC Companies");
(e) the HHC Bondholders Committee (as defined
herein), the HHC Creditors Committee (as defined herein)
(the HHC Bondholders Committee and the HHC Creditors
Committee are collectively referred to herein as the "HHC
Official Committees"), Lehman Brothers Inc., Apollo (as
defined herein) (together, Lehman Brothers Inc. and Apollo
are referred to herein, solely in their capacity as
creditors in the Chapter 11 Cases (as defined herein) and
in no other capacity, as the "Bondholder Proponents");
(f) Hillsborough (n/k/a Walter Industries, Inc.),
Best Insurors, Inc., Best Insurors of Mississippi, Inc.,
Coast to Coast Advertising, Inc., Computer Holdings
Corporation, Dixie Building Supplies, Inc., Hamer Holdings
Corporation, Hamer Properties, Inc., Homes Holdings
Corporation, Jim Walter Computer Services, Inc., Jim Walter
Homes, Inc., Jim Walter Insurance Services, Inc., Jim
Walter Resources, Inc., Jim Walter Window Components, Inc.,
JW Aluminum Company, JW Resources, Inc., JW Resources
Holdings Corporation, J.W.I. Holdings Corporation, J.W.
Walter, Inc., JW Window Components, Inc., Land Holdings
Corporation, Mid-State Homes, Inc., Mid-State Holdings
Corporation, Railroad Holdings Corporation, Sloss
Industries Corporation, Southern Precision Corporation,
United Land Corporation, United States Pipe and Foundry
Company, U.S. Pipe Realty, Inc., Vestal Manufacturing
Company, Walter Home Improvement, Inc., Walter Industries,
Inc. and Walter Land Company, debtors and
debtors-in-possession in the Chapter 11 Cases
(collectively, the "Debtors");
(g) JWC Associates L.P., JWC Associates II L.P. and
KKR Partners II L.P., on behalf of themselves and their
general and limited partners (the "KKR Entities"); and
(h) James W. Walter, Kenneth J. Matlock, William
H. Weldon, Gilberto Aleman, W. Kendall Baker, William Carr,
Joseph F. Hegerich, Wayne Hornsby, Kenneth E. Hyatt, Donald
M. Kurucz, Robert W. Michael, Timothy M. Pariso, Michael
Roberts, Dennis M. Ross, Sam J. Salario, James M. Sims,
William N. Temple and David L. Townsend (the "Signing
Management").
(All of the foregoing (a) through (h) are referred to
herein collectively as the "Parties" and individually as a
"Party").
W I T N E S S E T H:
WHEREAS, the Debtors initiated the Adversary Proceedings
seeking (a) a final declaration and adjudication that the
corporate veil between JWC and The Celotex Corporation may not
be pierced; (b) a final declaration and adjudication that the
leveraged buy-out of JWC (the "LBO") was not a fraudulent
conveyance, nor were any subsequent transactions entered into as
a part of the LBO fraudulent transfers; (c) a final declaration
and adjudication that neither the Debtors nor any of their
subsidiaries or affiliates is the successor-in-interest to the
asbestos-related liabilities of either JWC or The Celotex
Corporation; (d) a final declaration and adjudication that
neither the Debtors nor any of their subsidiaries or affiliates
is liable for the asbestos-related liabilities of either JWC or
The Celotex Corporation; and (e) such injunctive relief as may
be necessary and appropriate to effectuate the declaratory
relief sought by the Debtors; and
WHEREAS, the AVDs have defended and opposed the relief
sought by the Debtors in the Adversary Proceedings and have
asserted Settlement Claims (as defined herein) against the
Debtors and JWC in various forums; and
WHEREAS, The Celotex Corporation participated as a
defendant in the Adversary Proceedings; and
WHEREAS, The Celotex Corporation has asserted that (a) it
has the exclusive right and standing to assert the Settlement
Claims against the Debtors and JWC for the benefit of its estate
and its creditors because such claims are asserted by it to be
the property of its bankruptcy estate and (b) bankruptcy policy
is furthered by ensuring that all similarly situated creditors
are treated fairly; and
WHEREAS, the Veil Piercing Claimants' Representatives have
asserted that each of the Veil Piercing Claimants has the right
and standing to assert his/her/its Veil Piercing Claim (as
defined herein) and/or claims based upon LBO-Related Issues (as
defined herein) against the Debtors and JWC for his/her/its own
benefit; and
WHEREAS, the Claimants' Attorneys are authorized to act as
the negotiating group for the law firms which have assented and
will in the future assent to this Agreement by executing Exhibit
A attached hereto, all of which represent persons and entities
that have asserted or may assert Settlement Claims; and
WHEREAS, the Celotex Committee of Unsecured Creditors, the
Celotex Asbestos Property Damage Claimants Committee and the
Celotex Asbestos Bodily Injury Claimants Committee are
officially authorized by the Code (as defined herein) to
represent the interests of persons or entities having general
unsecured and trade claims, asbestos property damage claims and
present asbestos bodily injury claims, respectively, against The
Celotex Corporation in the Celotex Chapter 11 Case; and
WHEREAS, on December 9, 1993, the Veil Piercing Claimants'
Representatives and the Bondholder Proponents entered into a
Term Sheet for Settlement of Veil Piercing Claims Pursuant to
Chapter 11 Plan (the "Term Sheet"), which Term Sheet embodied
certain agreements in principle and contemplated the prompt
preparation and execution of a definitive agreement that would
embody the terms of and supersede the Term Sheet; and
WHEREAS, on December 16, 1993, the Original Plan Proponents
(as defined herein) filed with the Court a Joint Plan of
Reorganization of Debtors Proposed by Certain Creditor
Proponents (the "Original Creditor Plan"), which incorporated,
inter alia, the terms of the Term Sheet and which contemplated
the prompt preparation and execution of a definitive agreement
that would embody the terms of and supersede the Term Sheet; and
WHEREAS, the Term Sheet contemplated, and the Original
Creditor Plan embodied, a settlement under which distributions
of New Common Stock (as defined herein) and Qualified Securities
(as defined herein) would be made in full and complete
settlement, satisfaction, release and discharge of all
Settlement Claims on the basis of (a) a negotiated enterprise
value of $2,525,000,000 and (b) the fractions set forth in
Section 2(a) of the Original Agreement; it being understood that
$2,525,000,000 represented a good faith estimate at that time of
the going concern enterprise value of the Debtors on a
consolidated basis arrived at after extensive analysis by
Original Plan Proponents, and taking into account the
possibility of delay between the Confirmation Date (as defined
herein) and the Plan Effective Date (as defined herein), and the
potential increase in the value of the Debtors over time; and
WHEREAS, the time for The Celotex Corporation to file a
proof of claim in the Chapter 11 Cases on behalf of itself
and/or its creditors who are Veil Piercing Claimants has not yet
expired, and The Celotex Corporation has demonstrated its
intention to timely file such proof of claim, including, without
limitation, the Celotex Proof of Claim (as defined herein); and
WHEREAS, the time for Veil Piercing Claimants to file their
respective proofs of claim in the Chapter 11 Cases has not yet
expired, and the Veil Piercing Claimants' Representatives have
demonstrated their intention to timely file such proof(s) of
claims, or to support the timely filing of such proof(s) of
claim, on a representative class basis on behalf of all Veil
Piercing Claimants pursuant to the Veil Piercing Proof of Claim
(as defined herein); and
WHEREAS, the Parties are mutually desirous of settling with
Finality (as defined herein) and compromising, satisfying,
releasing and discharging, any and all Settlement Claims,
specifically including, without limitation, the Veil Piercing
Claims including, without limitation, those which are the
subject of the Adversary Proceedings; and
WHEREAS, it is the specific intention and desire of the
Parties that the Settlement Fund (as defined herein) be paid to
the Celotex Settlement Fund Recipient (as defined herein) for
the exclusive benefit of the Veil Piercing Claimants, and that,
inter alia, all Settlement Claims, including, without
limitation, all Veil Piercing Claims, shall channel, transfer
and attach to the Settlement Fund which shall be administered
by, and, together with the Celotex Settlement Fund Recipient
shall be subject to the jurisdiction of, the Celotex Bankruptcy
Court and which shall be utilized in a Chapter 11 plan in the
Celotex Chapter 11 Case so that all Released Parties (as defined
herein) shall have the full protections accorded by Section
524(g) of the Code (as defined herein); and
WHEREAS, a trial on the issues raised in the Adversary
Proceedings took place before the Court from December 13, 1993
through December 17, 1993; and
WHEREAS, on April 18, 1994, the Court issued its opinion on
the issues raised in the trial of the Adversary Proceedings,
ruling in favor of the Debtors (the "April 18 Order"); and
WHEREAS, the Original Agreement, embodying the Term Sheet,
was executed and delivered by the
parties thereto as of April 18, 1994; and
WHEREAS, on June 16, 1994, the Celotex Bankruptcy Court
entered an order authorizing and directing The Celotex
Corporation to enter into and to perform its obligations under
the Original Agreement; and
WHEREAS, the Veil Piercing Claimants' Representatives filed
a timely notice of appeal of the April 18 Order to the United
States District Court for the Middle District of Florida, Tampa
Division (the "District Court"); and
WHEREAS, amendments to the Original Creditor Plan were
filed with the Court on April 20, 1994, May 11, 1994, May 17,
1994 , June 9, 1994 and August 2, 1994 (the amendment filed on
August 2, 1994 is referred to herein as the "Creditors' Plan");
and
WHEREAS, on August 2, 1994 the proponents of the Creditors'
Plan, with the assent of the Veil Piercing Claimants'
Representatives and in response to the Debtors' Fifth Amended
Joint Plan of Reorganization dated July 25, 1994 (the "Debtors'
Fifth Amended Plan"), which increased the allowed amount
thereunder of each of (a) the Class S-1 and Class S-2 Claims,
and (b) the Class S-6 Claims, filed the Creditors' Plan and
entered into the Amended Agreement to increase the allowed
amount of Class S-1, Class S-2 and Class S-6 Claims, by
providing that the $75 million of Class B Common Stock (as
defined in the Amended Agreement) that was to have been
distributed to the Celotex Settlement Fund Recipient (as defined
herein) under Section 2(a)(i)(A) of the Original Agreement (and
that was to have been subject to assignment to Settling
Equityholders (as defined in the Amended Agreement), if any,
under the Original Agreement), instead be distributed in the
manner specified in the Creditors' Plan and to provide that 100%
of the Senior Claim Differential (as defined in the Amended
Agreement), if any, be distributed to the Celotex Settlement
Fund Recipient; and
WHEREAS, on September 21, 1994 the Celotex Bankruptcy Court
entered an order authorizing and directing The Celotex
Corporation to enter into and to perform its obligations under
the Amended Agreement; and
WHEREAS, on October 13, 1994, the District Court
(Nimmons, J.) issued an order affirming the April 18 Order (the
"District Court's Order"); and
WHEREAS, the Veil Piercing Claimants' Representatives have
timely filed an appeal from, inter alia, the District Court's
Order; and
WHEREAS, the Court commenced hearings on October 17, 1994
to consider certain preliminary issues related to the
confirmation of the Creditors' Plan and the Debtors' Fifth
Amended Plan, including (a) the unsecured creditors' entitlement
to post-petition interest before any retention of property by
the holders of Old Common Stock Interests (as defined herein)
under a Chapter 11 plan, (b) the motion by the proponents of the
Creditors' Plan seeking approval of the Amended Agreement and
the Debtors' motion to void the Amended Agreement and
(c) challenges to ballots cast on the Creditors' Plan and the
Debtors' Fifth Amended Plan (the "October 17 Hearings"); and
WHEREAS, after substantial discovery and two and one-half
days of trial in the October 17th Hearings, the Original Plan
Proponents, the Veil Piercing Claimants' Representatives, the
Debtors, the KKR Entities and the Signing Management deemed it
advisable to amend the Creditors' Plan and to amend and restate
the Amended Agreement so as to provide for, inter alia, the
Debtors and the KKR Entities to become co-
proponents with the Original Plan Proponents and perhaps others
of the Creditors' Plan as amended in the form of Exhibit B
attached hereto as amended from time to time in accordance with
the terms thereof (the "Consensual Plan") and to set forth the
terms of the compromise and settlement contained herein; and
WHEREAS, the parties to the Amended Agreement desire to
amend and restate it to facilitate the confirmation and
consummation of the Consensual Plan or a Plan (as defined
herein) and to incorporate the understandings between such
entities and the Debtors, the Signing Management and the KKR
Entities, all on the terms and subject to the conditions set
forth herein; and
WHEREAS, the HHC Official Committees and the Bondholder
Proponents have contended that it is not likely that the Veil
Piercing Claimants in such capacity have any valid Settlement
Claims against any or all of the Debtors, any or all of the
Signing Management (in their respective capacities as present or
former officers, directors, employees or shareholders of any or
all of the Debtors), and any or all of the holders of Old Common
Stock Interests of Hillsborough in such capacity; and
WHEREAS, the HHC Official Committees and the Bondholder
Proponents have contended that general unsecured creditors of
the Debtors are entitled to receive post-petition interest on
the amounts owed to them as of the date of the filing of the
Chapter 11 Cases (the "Post-Petition Interest") pursuant to the
law as applied to the facts of the Chapter 11 Cases; and
WHEREAS, the HHC Official Committees and the Bondholder
Proponents have contended that the general unsecured creditors
of the Debtors are entitled to Post-Petition Interest in the
amount of approximately $160,000,000 per year, for approximately
5 years to date aggregating in excess of $800,000,000; and
WHEREAS, as a result of the payment of the Settlement Fund
to be made to the Celotex Settlement Fund Recipient, the general
unsecured creditors of the Debtors, including, without
limitation, Lehman Brothers Inc., and Apollo (as defined
herein), will receive at least $390,000,000 less in
Post-Petition Interest than they have contended they otherwise
would be entitled to receive; and
WHEREAS, the Debtors, the KKR Entities and the Signing
Management have contended that the Veil Piercing Claimants have
no valid Settlement Claims against any or all of the Debtors,
any or all of the Signing Management (in their respective
capacities as present or former officers, directors, employees
or shareholders of any or all of the Debtors), and any or all of
the holders of Old Common Stock Interests in such capacity; and
WHEREAS, the KKR Entities and the Signing Management, on
behalf of themselves and all other holders of Old Common Stock
Interests have contended that the general unsecured creditors of
the Debtors are not entitled to any Post-Petition Interest
pursuant to the law as applied to the facts of the Chapter 11
Cases and that the value to be retained by holders of Old Common
Stock Interests under a Chapter 11 plan would include any
amounts claimed by general unsecured creditors of the Debtors to
be payable as Post-Petition Interest; and
WHEREAS, pursuant to this Agreement, each of the Debtors,
each of the Signing Management and each of the KKR Entities
withdraws any and all objections each and all of them had or has
to the Amended Agreement, including, without limitation, the
payment of the Settlement Fund, the creation of the Celotex
Settlement Fund Recipient and the settlements provided for in
the Agreement; and
WHEREAS, as a result of the payment of the Settlement Fund,
the KKR Entities and the Signing Management believe that all of
the holders of Old Common Stock Interests, including, without
limitation, themselves, will receive at least $390,000,000 less
in value than they have contended they otherwise would be
entitled to receive; and
WHEREAS, the allocation of value under the Consensual Plan
and this Agreement among the Celotex Settlement Fund Recipient,
the holders of Old Common Stock Interests and the Debtors'
general unsecured creditors is a result of the compromise of,
inter alia, the foregoing competing claims to such value by the
Parties; and
WHEREAS, the resolution of the Settlement Claims is the
critical issue in the Chapter 11 Cases and no plan of
reorganization could be confirmed for the Debtors without an
effective resolution of the Settlement Claims; and
WHEREAS, this Agreement is inextricably intertwined with
the Consensual Plan, of which it is an integral and essential
component; and
WHEREAS, all of the mutual promises, releases, conditions
and other terms and provisions of this Agreement are understood
and intended by the Parties to be interdependent, non-severable
and reciprocal parts of the overall settlement embodied herein
and by the Consensual Plan;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
1. Defined Terms. Capitalized terms not defined in the
body of this Agreement or in the Consensual Plan shall have the
meanings ascribed to them in Appendix A attached hereto.
2. Settlement of Veil Piercing Claims Pursuant to Plan of
Reorganization.
(a) All Settlement Claims (i.e. all Veil
Piercing Claims and all claims and causes of action
held or assertable by the Veil Piercing Claimants
based upon LBO-Related Issues) shall be fully and
completely settled, satisfied, released and discharged
in exchange for an aggregate amount of consideration
(as calculated below), to be paid and satisfied
through the distribution of Qualified Securities, New
Common Stock and possibly additional cash under the
Plan (the "Settlement Fund") to the Celotex Settlement
Fund Recipient, as follows:
(i) Allowed Amount of the Settlement Claims.
The allowed amount of all of the Settlement Claims in
the aggregate shall be equal to the sum of (A) the
Veil Piercing Claims Amount (which shall be $375
million), plus (B) the Attorneys' Fees Differential,
if any.
(ii) Consideration Used to Satisfy the
Settlement Claims. The Veil Piercing Claims Amount
shall be paid by the distribution of a combination of
Qualified Securities and New Common Stock to the
Celotex Settlement Fund Recipient. The amount of
Qualified Securities to be so distributed under the
Plan in respect of the Veil Piercing Claims Amount
shall be calculated as follows:
$375 million
$1098 million + $375 million
multiplied by the aggregate principal amount of
Qualified Securities available for distribution to
holders of Subordinated Note Claims and the Celotex
Settlement Fund Recipient under the Plan.
The amount of Settlement Claims that is deemed to
be paid, and settled, satisfied, released and
discharged, by Qualified Securities shall be equal to
the aggregate principal amount of Qualified Securities
issued in respect of the Veil Piercing Claims Amount.
The excess of the Veil Piercing Claims Amount over the
part thereof paid, and settled, satisfied, released
and discharged, by Qualified Securities shall be paid,
and settled, satisfied, released and discharged, by
that number of shares of New Common Stock having a
value which is equal to the Veil Piercing New Common
Stock Amount. The amount of Settlement Claims that is
to be paid, and settled, satisfied, released and
discharged, by the Attorneys' Fees Differential shall
be paid in cash.
(iii) Example. The following example is
provided solely for the purpose of illustrating the
operation of clauses (i) and (ii) above. Assuming
that the actual amount of distributions made under the
Plan in respect of Subordinated Note Claims is equal
to $1098 million, then (a) the aggregate allowed
amount of the Settlement Claims would consist of
(i) the Veil Piercing Claims Amount (that is, $375
million) plus (ii) the Attorneys' Fees Differential,
if any, and (b) such allowed amount would be settled,
satisfied, released and discharged by the distribution
of 375/1473 of the aggregate principal amount of
Qualified Securities available for distribution to
holders of Subordinated Note Claims and the Celotex
Settlement Fund Recipient (for example, if $700
million of Qualified Securities were so available,
375/1473 of such total, or $178,207,680, would be paid
in Qualified Securities in respect of Veil Piercing
Claims), and the distribution, in respect of the
remainder of the Veil Piercing Claims Amount, of
shares of New Common Stock equal to the Veil Piercing
New Common Stock Amount (following the preceding
example $196,792,320). The amount of the Attorneys'
Fees Differential, if any, would be paid in cash.
(b) "Plan" Defined. (i) The term "Plan", as used in
this Agreement, shall mean the Consensual Plan or any other
plan(s) of reorganization filed in the Chapter 11 Cases as
to which the Bondholder Proponents and the Debtors are
proponents and that does not contravene the terms and
conditions of this Agreement (subject to Sections
2(b)(ii) and 2(c) herein).
(ii) The term "Plan" shall not include a plan of
reorganization (other than the Consensual Plan) or an
amendment to or modification of a plan of
reorganization unless (A) a notice specifying the
intended date of filing of the plan of reorganization,
amendment or modification, together with a copy of
such plan of reorganization, amendment or
modification, in substantially final form, are sent to
the Bondholder Proponents, the Debtors, the Veil
Piercing Claimants' Representatives, The Celotex
Corporation, the Celotex Asbestos Property Damage
Claimants Committee and the Celotex Asbestos Bodily
Injury Claimants Committee not less than three (3)
business days prior to filing thereof with the Court
and (B) in the event that such plan of reorganization,
amendment or modification materially contravenes the
terms and conditions of this Agreement as they relate
to The Celotex Corporation, the Bondholder Proponents,
the Debtors, the KKR Entities, the Management, or the
persons or entities represented by the Veil Piercing
Claimants' Representatives, the Celotex Asbestos
Property Damage Claimants Committee or the Celotex
Asbestos Bodily Injury Committee, it being understood
that an adverse modification of the anti-dilution
protection relating to the increase in the Negotiated
Enterprise Value to $2.6 billion as set forth in the
Consensual Plan in the calculation of the Veil
Piercing New Common Stock Value Per Share shall
constitute a contravention of this Agreement, such
plan of reorganization, amendment or modification is
consented to by each such Party (or, in the case of
the Veil Piercing Claimants represented by the Veil
Piercing Claimants' Representatives, the Celotex
Asbestos Property Damage Claimants Committee and/or
the Celotex Asbestos Bodily Injury Claimants
Committee, such Parties) that is adversely affected by
such proposed contravention; it being further
understood that such plan of reorganization, amendment
or modification shall not constitute a Plan unless the
Bondholder Proponents shall be a proponent of the plan
of reorganization so filed, amended or modified, after
giving effect to such amendment or modification.
(iii) Neither the confirmation nor the
effectiveness of the Consensual Plan or any other Plan
shall be conditioned upon the confirmation or
effectiveness of a plan of reorganization in any
proceedings pursuant to the Code other than in the
Chapter 11 Cases.
(c) Nothing in this Agreement shall impair in any way
the ability of the Parties or any of them to file, modify
or amend a plan of reorganization in any respect; provided,
that no such modification or amendment contravenes the
terms and conditions of this Agreement, unless consented to
pursuant to Section 2(b)(ii) herein.
(d) The Plan shall provide for a registration rights
agreement substantially in the form of Exhibit C attached
hereto, which shall provide, among other things, for the
registration of all of the Qualified Securities and the New
Common Stock for sale promptly after the Plan Effective
Date pursuant to a registration statement or statements
under the Securities Act of 1933, as amended. Nothing in
this Agreement shall impair in any way the ability of the
Bondholder Proponents and the Debtors to modify or amend
the registration rights agreement; provided, that such
modification or amendment shall not delay the timing of the
initial shelf registrations or adversely affect the number
and timing of demand or piggy-back registrations available
to the Celotex Settlement Fund Recipient or the right of
the Celotex Settlement Fund Recipient to participate in any
such registrations.
(e) Lehman Brothers Inc., Apollo and the Celotex
Settlement Fund Recipient shall enter into an agreement as
of the Plan Effective Date, substantially in the form of
Exhibit D attached hereto, which shall provide, among other
things, that if any of Lehman Brothers Inc., Apollo or the
Celotex Settlement Fund Recipient (in the case of the
Celotex Settlement Fund Recipient, only with the consent of
the Veil Piercing Claimants' Representatives) determines to
transfer shares of New Common Stock to a non-Affiliate
other than (i) as an exchange under the Plan, (ii) on a
national securities exchange or (iii) through a registered
broker-dealer, then the other parties to such agreement
shall have the "tag-along" rights specified in the
agreement attached hereto as Exhibit D to participate in
such transfer on a pro rata basis.
(f) (i) In the event that the Plan provides for a
call option or other right of purchase to be granted
pursuant to the Plan with respect to all shares of New
Common Stock otherwise to be issued to holders of
Subordinated Note Claims pursuant to the Plan, and such
call option or other right of purchase provides for the
purchase of such New Common Stock at any time not later
than five (5) business days after the Plan Effective Date,
for a cash purchase price per share not less than the New
Common Stock Value Per Share, then the Celotex Settlement
Fund Recipient shall grant an identical call option or
other right of purchase with respect to all shares of New
Common Stock otherwise to be issued to the Celotex
Settlement Fund Recipient pursuant to the Plan and (ii) in
the event that the Bondholder Proponents grant, other than
pursuant to the Plan with respect to all shares of New
Common Stock otherwise issued to holders of Subordinated
Note Claims, a call option or other right of purchase with
respect to any shares of New Common Stock otherwise to be
issued to the Bondholder Proponents under the Plan, and
such call option or other right of purchase provides for
the purchase of such New Common Stock at any time not later
than five (5) business days after the Plan Effective Date,
for a cash purchase price per share not less than the New
Common Stock Value Per Share, then the Celotex Settlement
Fund Recipient shall have the option to grant an identical
call option or other right of purchase with respect to a
proportional amount of shares of New Common Stock otherwise
to be issued to the Celotex Settlement Fund Recipient
pursuant to the Plan, such option to be exercisable in
writing not later than the earlier to occur of (A) thirty
(30) days after written notice of the grant, or proposed
grant, of a call option or other purchase right by the
Bondholder Proponents pursuant to this Section
2(f)(ii) herein is given to the Veil Piercing Claimants'
Representatives and the Celotex Settlement Fund Recipient,
which notice shall specify the principal terms of such call
option or other purchase right, including the identity of
the grantee(s), the timing and method of exercise, and the
form, amount and timing of payment of the exercise price,
and (B) such other period of time required by the terms of
the call option or other right of purchase, which shall in
no event be less than ten (10) days after notice thereof is
given to the Veil Piercing Claimants' Representatives and
the Celotex Settlement Fund Recipient.
3. Conditions to Effectiveness of the Settlement.
In order to provide for the full and complete settlement,
satisfaction, release and discharge of all Settlement Claims,
this Agreement and the settlement contained herein shall be
conditioned on the satisfaction (or the written waiver or
modification as specified below in each subsection) of all of
the following conditions:
(a) Entry by the Court of the Confirmation Order,
which Order shall (unless this requirement, or any part
thereof, is waived or modified by the Bondholder Proponents
and the Debtors):
(i) achieve Finality (as defined in Section 3(c)
herein) with respect to the full and complete
settlement, satisfaction, release and discharge of all
Settlement Claims against any and all of the Released
Parties, in each case to the fullest extent permitted
in the Confirmation Order and without, inter alia, any
waiver or limitation or restriction in any way on the
discharge granted upon confirmation of the Plan
pursuant to Section 1141 of the Code and effective on
the Plan Effective Date;
(ii) include an injunction providing that all
Settlement Claims shall channel, transfer and attach
to the Settlement Fund and permanently enjoining to
the fullest extent permitted in the Confirmation Order
the taking of any action against the Released Parties
or their assets or other property to pursue or
enforce, directly or indirectly, any Settlement
Claims;
(iii) retain continuing jurisdiction by the Court
to enforce the provisions of the Confirmation Order
and this Agreement, including exclusive jurisdiction
over any challenges to the scope of the releases,
discharges and injunctions contained in the
Confirmation Order and the releases contained in this
Agreement;
(iv) find that Class U-7 received full and
adequate disclosure as required by statute of the Plan
and the Agreement in connection with voting on the
Plan;
(v) find that Class U-7 received notice of the
Class U-7 Bar Date (as defined in Section 4(d)(ii)(A)
herein) and the hearings to consider confirmation of
the Plan and approval of the Agreement as required by
statute and the standards of constitutional due
process;
(vi) include a provision certifying a class for
settlement purposes only comprising all Veil Piercing
Claimants (the "Settlement Class") pursuant to Fed.
R. Civ. P. 23(b) and approving the settlement of the
Settlement Claims as provided in this Agreement, and
finding that all requirements of Fed. R. Civ.
P. 23(a) have been satisfied and that notice to the
Settlement Class was provided as required by statute
and the standards of constitutional due process;
(vii) allow the Veil Piercing Proof of Claim
filed on behalf of the Settlement Class, together with
the Celotex Proof of Claim, but only to the extent of
the allowed amount of the Settlement Claims as
provided in Section 2(a) herein and only to the extent
that all Settlement Claims represented by such Veil
Piercing Proof of Claim and Celotex Proof of Claim
will be paid by distribution of the Settlement Fund to
the Celotex Settlement Fund Recipient (the validity
and amount of claims to or Demands against the
Settlement Fund to be determined by the Celotex
Bankruptcy Court) and shall have no other claim to or
against the Debtors or their estates;
(viii) approve the indemnification provisions
contained in the Plan and in any exhibits thereto for
the Existing Equityholders and past and present
officers and directors of the Debtors;
(ix) provide that the Settlement Fund shall be
administered by, and be subject to the jurisdiction
of, the Celotex Bankruptcy Court; and
(x) enjoin any use of the record of the Adversary
Proceedings, including the transcript of the trial and
all depositions taken in such Proceedings, against any
or all of the Released Parties (but specifically
permitting the use of such record by the Court, the
Celotex Bankruptcy Court and any appellate court of
competent jurisdiction for the sole purpose of such
court's review and/or enforcement of the settlement
embodied in this Agreement and the Confirmation
Order);
(b) The Confirmation Order shall have become a Final
Order (unless this requirement is waived or modified by the
Bondholder Proponents);
(c) "Finality" shall have been achieved with respect
to the full and complete settlement, satisfaction, release
and discharge of all Settlement Claims when all of the
following conditions shall have been satisfied (unless this
requirement, or any part thereof, is waived or modified by
the Bondholder Proponents and the Debtors):
(i) The Confirmation Order and the Plan shall
provide for the full and complete settlement,
satisfaction, discharge and release of, and an
injunction prohibiting the commencement or
continuation of, any claim or cause of action or
Demand based upon a Veil Piercing-Related Issue
against, in each case to the fullest extent permitted
in the Confirmation Order, any and all of the Released
Parties of and from any and all claims, obligations,
rights, causes of action, Demands and liabilities
(other than the right to enforce obligations under
this Agreement and the Plan) which any person or
entity may be entitled to assert, whether known or
unknown, foreseen or unforeseen, then existing or
thereafter arising, directly or indirectly, based in
whole or in part upon any act, omission or other
occurrence taking place on or prior to the Plan
Effective Date in any way relating to the Debtors, the
Chapter 11 Cases, the Plan or The Celotex Corporation
and its subsidiaries (including, without limitation,
any of the Settlement Claims);
(ii) The Confirmation Order and the Plan shall
provide for the full and complete settlement,
satisfaction, discharge and release of, and an
injunction prohibiting the commencement or
continuation of, any claim or cause of action or
Demand based upon a LBO-Related Issue raised or
assertable by the Veil Piercing Claimants against any
and all of the Released Parties, in each case to the
fullest extent permitted in the Confirmation Order,
including, without limitation, all claims, indemnities
and causes of action that any or all of the Debtors,
or any person(s) or entity(ies) claiming through any
or all of them, have in connection with the LBO,
action taken in contemplation of the LBO, or any
contemporaneous or subsequent transaction(s) entered
into as part of, arising out of or relating to the LBO
or any or all of the LBO transaction(s) or
transfer(s), including, without limitation, any and
all obligations of any nature contemplated by, arising
out of or related to the Stock Purchase Agreement
between Hillsborough Holdings Corporation and Jasper
Corp. dated as of April 21, 1988, as amended pursuant
to amendments dated May 26, 1988 and January 25, 1989,
and the related Undertaking of Jasper Corp.
(including, without limitation, any of the Settlement
Claims);
(iii) The Confirmation Order shall provide that
the settlement of the Settlement Claims under this
Agreement is fair, equitable and reasonable and in
good faith;
(iv) The Celotex Bankruptcy Court shall have
entered an order approving this Agreement and
authorizing and directing The Celotex Corporation to
render performance in accordance with the terms and
conditions hereof;
(v) Class U-7 shall have voted to accept the
Plan in accordance with the Code or the Court shall
have determined that Class U-7 is unimpaired under the
Consensual Plan and under Section 1124 of the Code;
and
(vi) The Confirmation Order shall provide that
the Settlement Class shall be deemed to have provided
the Mutual Release set forth in Section 4(b) herein;
and
(d) In the event that any of the conditions set forth
in Sections 3(b) and/or (c) herein is not fully satisfied,
the Bondholder Proponents (in consultation with the
Debtors) may request, consistent with Section 4(d) herein,
that the Celotex Settlement Fund Recipient and any and all
Parties to this Agreement take such actions as the
Bondholder Proponents may reasonably request, which actions
are reasonably believed by the Bondholder Proponents to be
necessary to the realization of Finality.
4. Agreements.
(a) The Parties shall seek the prompt confirmation and
consummation of the Consensual Plan or any other Plan, including
the prompt approval by the Court of this Agreement in connection
with the confirmation of the Plan.
(b) Mutual Releases. As of the Plan Effective Date,
(i) (A) each of the Veil Piercing Claimants' Representatives, on
its own behalf and on behalf of all Veil Piercing Claimants whom
it represents or whom it has the authority to bind by virtue of
its standing as attorney for such persons and entities, whether
in their individual capacity(ies) or as representative(s) of the
Settlement Class, (B) The Celotex Corporation, acting on behalf
of its estate and all Veil Piercing Claimants, and (C) the
Settlement Class, and (ii) each of the other Parties, hereby
fully and freely RELEASE the Debtors, the Existing
Equityholders, the KKR Entities and every other Released Party
solely from any and all Settlement Claims and/or any claims and
causes of action arising from the assertion of any or all of the
Settlement Claims; provided, that there shall not be released
any claims against The Celotex Corporation and its subsidiaries
or any other manufacturer, seller or distributor of asbestos or
an asbestos-containing product; provided, further, that nothing
contained herein shall limit in any way the rights of
indemnification from the Debtors of any present or former
officer, director, employee or shareholder of the Debtors or any
other person, to the extent such rights of indemnification have
been preserved under Section 6.4 of the Plan or the Charter (as
defined in the Consensual Plan). Each individual or entity
granting a release ("Releasor") to any Released Party pursuant
to this Agreement agrees as follows:
(1) THE RELEASOR EXPRESSLY UNDERSTANDS THAT Section
1542 of the Civil Code of the State of California provides
as follows:
"A general release does not extend to claims
which the creditor does not know or suspect to exist
in his favor at the time of executing the release,
which if known by him must have materially affected
his settlement with the debtors."
(2) To the extent that, notwithstanding paragraph
9(d) hereof, California or other law may be applicable, THE
RELEASOR HEREBY AGREES THAT THE PROVISIONS OF SECTION 1542
of the Civil Code of the State of California and all
similar federal or state laws, rights, rules, or legal
principles of any other jurisdiction which may be
applicable hereto, to the extent they apply to any of the
matters released herein, ARE HEREBY KNOWINGLY AND
VOLUNTARILY WAIVED AND RELINQUISHED BY THE RELEASOR, in
each and every capacity, to the full extent that such
rights and benefits pertaining to the matters released
herein may be waived, and the Releasor hereby agrees and
acknowledges that this waiver is an essential term of this
release, without which the consideration provided to it
would not have been given.
(3) In connection with such waiver and
relinquishment, the Releasor acknowledges that it is aware
that it may hereafter discover claims presently unknown or
unsuspected, or facts in addition to or different from
those which it now knows or believes to be true, with
respect to the matters released herein. Nevertheless, it
is its intent in executing this release fully, finally, and
forever to settle and release all such matters, and all
claims relative thereto, which exist, may exist or might
have existed (whether or not previously or currently
asserted in any action).
(c) Dismissal of Lawsuits. (i) The HHC Official
Committees (as may be necessary respecting the Adversary
Proceedings only), the Debtors, the Veil Piercing Claimants'
Representatives, The Celotex Corporation, the JWC Companies and
the Official Celotex Committees shall use their respective
reasonable efforts to bring about the prompt dismissal, with
prejudice, as soon as practicable after the Plan Effective Date,
of all known pending suits, appeals, proceedings and other
actions, including the Adversary Proceedings, against each and
all of the Released Parties solely to the extent such suits,
appeals, proceedings or other actions are based upon, arise out
of or are in connection with the Settlement Claims as to the
Released Parties covered by the mutual release specified in
Section 4(b) herein. Upon request therefor, any Party shall
provide the Bondholder Proponents and the Debtors with a
certificate of a responsible person of such Party, in form and
substance reasonably acceptable to the Bondholder Proponents and
the Debtors, to the effect that such Party has fully complied
with this Section 4(c).
(ii) Promptly after the execution of this Agreement
by the Parties (subject to Section 7(b) herein), the
Parties who are parties to the Adversary Proceedings shall
jointly seek an order from the Court of Appeals for the
Eleventh Circuit ("Court of Appeals") (A) staying the
appeal (the "Appeal") of the District Court's Order pending
the Plan Effective Date or (B) dismissing the Appeal in
light of the proposed settlement, but with the express
proviso that in the event of the termination of this
Agreement prior to the Plan Effective Date, the Appeal
shall automatically be reinstated upon 15 days' notice to
the Court of Appeals and all counsel to the parties to the
Appeal.
(iii) In the event the Appeal of the District Court's
Order has been dismissed pursuant to this Agreement, after
the Plan Effective Date the Parties who are parties to the
Adversary Proceedings, upon demand by the Debtors, shall
stipulate to the entry of an order of final judgment (the
"Preclusive Order") in the District Court, the Court or
other appropriate court, for the purpose of giving full
preclusive effect to the April 18 Order and the District
Court's Order in favor of the Released Parties to the
fullest extent permitted by law, consistent with this
Agreement and the Consensual Plan.
(d) Process Toward Realization of Finality. (i) The
Parties acknowledge that the prompt realization of Finality will
require considerable strategic planning and the cooperation of
all of the Parties. In view of these considerations, the
Parties intend that the Bondholder Proponents (after
consultation with the Debtors) shall make and implement all
strategic decisions (including, without limitation, decisions as
to the content and timing of any and all applications, filings
or other documents filed with or otherwise submitted to (or
statements made before) the Court, or releases or statements to
the press (or that are reasonably calculated to be made publicly
available through the press) that relate directly or indirectly
to the Plan, the Agreement, the settlement contained herein or
to Finality, in each case in consultation with the other Parties
to the extent appropriate and/or practicable under the
circumstances; and the other Parties agree to use their
respective best efforts to assist and cooperate with the
Bondholder Proponents and the Debtors in implementing such
decisions and in promptly realizing Finality, (including,
without limitation, to consult with the Bondholder Proponents
respecting the content and timing of any and all applications,
filings or other documents to be filed with or otherwise
submitted to (or statements to be made before) the Celotex
Bankruptcy Court prior to making any such submission or
statement), in all cases consistent with this Agreement.
(ii) In furtherance of Section 4(d)(i) herein, the
following procedures and efforts shall be utilized to obtain
Finality and cannot be materially modified by the Bondholder
Proponents without the Debtors' written consent:
(A) The HHC Official Committees, the Bondholder
Proponents, the Debtors and the KKR Entities shall promptly
seek an order from the Court establishing a bar date for
filing proofs of claim in the Chapter 11 Cases in respect
of the Settlement Claims, which shall require that such
proofs of claim must be filed no later than 60 days from
the date of first giving of the Notice of such bar date
(the "Class U-7 Bar Date") or be forever barred from
asserting such Settlement Claims;
(B) The HHC Official Committees, the Bondholder
Proponents, the Debtors and the KKR Entities shall promptly
seek an order from the Court, for settlement purposes only,
(1) deeming Hillsborough's schedules to be amended by the
addition thereto of each of the Veil Piercing Claimants
with a claim in the provisionally allowed amount, only for
purposes of voting on the Plan, of $1 each, (2) finding
that, because of the Celotex Proof of Claim and the Veil
Piercing Proof of Claim, individual Veil Piercing Claimants
that do not "opt out" of the Settlement Class need not file
a proof of claim in the Chapter 11 Cases in order to assert
a claim against the Settlement Fund and (3) determining
that in the event the Plan is confirmed and following the
Plan Effective Date, the right of any individual Veil
Piercing Claimant to share in any of the Settlement Fund
will be determined in accordance with the rulings and
procedures set forth by the Celotex Bankruptcy Court in the
Celotex Chapter 11 Case;
(C) The Celotex Corporation will file the Celotex
Proof of Claim;
(D) Such individual(s) and/or entity(ies) (other than
AVDs) as shall be acceptable to the Bondholder Proponents
after consultation with the Debtors, shall file the Veil
Piercing Proof of Claim and shall promptly seek an order
from the Court requesting, for settlement purposes only,
(1) the certification of a class of all Veil Piercing
Claimants (the "Settlement Class") pursuant to, at a
minimum, Rule 23(b) of the Federal Rules of Civil Procedure
and Rule 7023 of the Federal Rules of Bankruptcy Procedure,
which Settlement Class shall provide members thereof with
the right to "opt out"; (2) the appointment of the Veil
Piercing Claimant(s) who filed the Veil Piercing Proof of
Claim as a class representative(s) for the Veil Piercing
Proof of Claim and the Settlement Class (which
representative(s) shall comprise, at a minimum, one of an
asbestos personal injury claimant, an asbestos property
damage claimant or a general unsecured trade creditor of
The Celotex Corporation); and (3) the appointment of
counsel for the Settlement Class (to serve without
compensation except as may be awarded pursuant to Section
4(i) herein and/or by the Celotex Bankruptcy Court in the
Celotex Chapter 11 Case). The Parties shall cooperate, and
use their best efforts, to achieve the entry of the
aforementioned order;
(E) The Debtors shall promptly object to the Celotex
Proof of Claim and the Veil Piercing Proof of Claim, (such
objections, the "Contested Matters");
(F) The Parties shall seek the Court's authorization
to compromise and settle the Contested Matters pursuant to,
inter alia, Rules 9019 and 7023 of the Federal Rules of
Bankruptcy Procedure as provided in this Agreement,
including, without limitation, under the Consensual Plan
and in the amount and under the treatment provided in
Section 2(a) herein;
(G) The HHC Official Committees, the Bondholder
Proponents, the Debtors and the KKR Entities shall permit
the Veil Piercing Claimants to vote in favor of or to
reject the Consensual Plan (as Class U-7 creditors);
provided that such Parties' individual and collective right
to assert that the Veil Piercing Claimants (as Class U-7
creditors) are unimpaired under the Consensual Plan and
under Section 1124 of the Code is not thereby waived and is
preserved;
(H) Notice of this Agreement, the Consensual Plan,
the proposed certification of the Settlement Class, the
Class U-7 Bar Date and the Confirmation Hearing, in the
form(s) approved by the Court (the "Notice"), shall be
given to the Veil Piercing Claimants pursuant to an order
of the Court in accordance with at least the following:
(1) where possible, the mailing of the Notice to
each of the Veil Piercing Claimants at his/her/its
address listed in the proofs of claim or schedules of
liabilities filed in the Celotex Chapter 11 Case and
in the Chapter 11 Cases, and in the case of each
person or entity who commenced a legal action against
The Celotex Corporation or the Debtors, to each such
person's or entity's counsel of record in such action;
(2) the publication of the Notice as directed by
the Court; and
(3) the mailing in the manner provided in
Section 4(d)(ii)(H)(1) herein of a disclosure
statement approved pursuant to Section 1125 of the
Code;
(I) The Parties shall recommend to the Court that
with respect to those Veil Piercing Claimants referred to
in Section 4(d)(ii)(H)(1) herein that one package be mailed
to each of them which shall contain, inter alia:
(1) notice of the time, date and place of the
confirmation hearing on the Plan, and the right and
last date to object to confirmation of the Plan;
(2) the Class U-7 ballot and voting
instructions;
(3) the disclosure statement referred to in
Section 4(d)(ii)(H)(3) herein;
(4) notice of the filing of the Veil Piercing
Proof of Claim and the Celotex Proof of Claim;
(5) notice of the certification of the
Settlement Class, for settlement purposes only, the
appointment of the representative(s) of the Settlement
Class and the appointment of counsel for the
Settlement Class;
(6) notice of the right to "opt out" of the
Settlement Class and the consequence thereof;
(7) notice of the time, date and place of the
hearing to approve the Agreement and the settlement
contained therein (the "Fairness Hearing");
(8) notice of the right to object to the
Agreement, the certification of the Settlement Class,
the appointment of the representative(s) of the
Settlement Class, the appointment of counsel for the
Settlement Class and the granting of the releases to
the Released Parties; and
(9) notice of the Class U-7 Bar Date;
(J) The Parties shall recommend to the Court that the
Fairness Hearing and the hearing on final certification of
the Settlement Class be held simultaneously with or prior
to the confirmation hearing on the Plan and that the relief
sought therein be granted in one order; and
(K) Without limiting the provisions of Section 4(e)
herein, each of the Parties states to the other Parties,
after careful consideration, that each believes:
(1) each and all of the Released Parties are
among the type of third parties who may receive the
benefit of an injunction of the type provided for by
Section 524(g) of the Code in the Celotex Chapter 11
Case;
(2) the Settlement Claims that are settled,
satisfied, released and discharged pursuant to this
Agreement and the Plan are among the type of claims
that may be dealt with by an injunction of the type
provided for by Section 524(g) of the Code in the
Celotex Chapter 11 Case; and
(3) the Settlement Fund is among the type of
contributions contemplated under Section 524(g) of the
Code.
(e) Covenants. The Celotex Corporation, JWC, the Official
Celotex Committees and the Veil Piercing Claimants'
Representatives each agrees to propose and use its respective
best efforts to obtain confirmation of a Chapter 11 plan in the
Celotex Chapter 11 Case that includes a provision for an
injunction pursuant to Section 524(g) of the Code that shall
apply to, cover, protect and benefit, inter alia, each and all
of the Released Parties in his/her/its respective capacity as a
Released Party or an injunction acceptable to the Released
Parties that provides for the same protections afforded by
Section 524(g) to the Released Parties. Without limiting the
foregoing, such Chapter 11 plan in the Celotex Case shall
include:
(i) an injunction pursuant to Section 524(g) of the
Code that channels all claims being settled herein to a
trust contemplated by Section 524(g) of the Code and
applies to and covers all of the Released Parties or an
injunction acceptable to the Released Parties that provides
for the same protections afforded by Section 524(g) to the
Released Parties;
(ii) the appointment in the Celotex Chapter 11 Case
of a legal representative of the type contemplated by
Section 524(g)(5);
(iii) a contribution of the Settlement Fund (together
with all earnings and accretions thereto), or such part of
the Settlement Fund as found to be fair and equitable by
the Celotex Court, to a trust fund established under, or as
a result of, a Chapter 11 plan for The Celotex Corporation
in the Celotex Chapter 11 Case pursuant to Section 524(g)
of the Code or a contribution to a trust which results in
the same protections for the Released Parties as those
afforded by Section 524(g) of the Code;
(iv) a proposed confirmation order that establishes
that the contribution referred to in Section
4(e)(iii) herein shall be found to be a benefit contributed
on behalf of each and all of the Released Parties;
(v) a proposed confirmation order that establishes
that each and all of the Released Parties comes within the
scope of and is covered, protected and benefitted by the
injunction referred to in Section 4(e) herein; and
(vi) an injunction pursuant to Section 524(g) of the
Code which injunction shall apply to and protect each and
all of the Released Parties or an injunction acceptable to
the Released Parties that provides for the same protections
afforded by Section 524(g) to the Released Parties.
(f) Announcement. The Parties shall jointly announce the
existence and the terms of this Agreement as soon as possible
after this Agreement shall have become effective pursuant to
Section 7 herein.
(g) Use of Evidence From Trial. The Parties shall support
the use by the Court and by the Celotex Bankruptcy Court of the
evidence presented during the trial held in the Adversary
Proceedings that commenced on December 13, 1993 and the October
17 Hearings in determining that the settlement of the Settlement
Claims set forth in this Agreement and in the Plan (i) is fair,
equitable and reasonable, and in good faith and constitutes the
full and complete settlement, satisfaction, release and
discharge of all Settlement Claims, and (ii) to the extent
applicable, should be approved as part of confirmation of the
Plan.
(h) Support of Plan. The Parties shall support the Plan
and shall not support, directly or indirectly or through one or
more intermediaries, any other proposed plan in respect of any
or all of the Debtors or any other settlement of any of the
Settlement Claims.
(i) Attorneys' Fees. The Parties shall support an
application in the Chapter 11 Cases by Caplin & Drysdale, on
behalf of itself and the Claimants' Attorneys, for an award of
reasonable attorneys' fees and costs in an amount equal to $15
million pursuant to Code Sections 503(b) and/or 1129(a)(4), or
otherwise, based on factors including the contingent nature of
the representation, the favorable results achieved, the
difficulty of the issues presented and the fact that counsel
were representing clients brought involuntarily into the Chapter
11 Cases through the Adversary Proceedings.
(j) Confidentiality. From and after the Plan Effective
Date, the Veil Piercing Claimants' Representatives shall keep
confidential, and shall not use in any manner inconsistent with
this Agreement, all files and memoranda relating to cases
against any or all of the Released Parties based upon, arising
out of or relating to the Settlement Claims.
(k) The Celotex Corporation shall (i) promptly seek
appropriate approval from the Celotex Bankruptcy Court for
authority to be bound by this Agreement, for the support of the
Plan by The Celotex Corporation, and for the authorization and
direction by the Celotex Bankruptcy Court for The Celotex
Corporation to render performance in accordance with the terms
and conditions of this Agreement, (ii) request that the Celotex
Bankruptcy Court promptly issue an injunction directing that all
claims of the type being settled by this Agreement shall attach
solely to the Settlement Fund and enjoining and restraining all
persons and entities from commencing and/or continuing any suit,
arbitration or other proceeding of any type against any and all
of the Released Parties arising out of any such claims;
(iii) shall provide notice of such motion for approval to the
same persons and entities, and in the same manner, but not
necessarily in the same package, as the Notice referred to in
Section 4(d)(ii)(H)(1) herein, (iv) at the request of the
Bondholder Proponents, promptly file the Celotex Proof of Claim
against the Debtors for the benefit of the Veil Piercing
Claimants and its estate, (v) accept treatment under the Plan of
its Settlement Claims against the Debtors pursuant to this
Agreement and (vi) if it is the Celotex Settlement Fund
Recipient, and consistent with Sections 4(d)(ii)(K) and 4(e) of
this Agreement, receive and hold the Settlement Fund for the
exclusive benefit of the Veil Piercing Claimants except to the
extent a confirmed plan of reorganization in the Celotex Chapter
11 Case shall direct otherwise, and manage the Settlement Fund
in accordance with this Agreement and all applicable orders of
the Celotex Bankruptcy Court, and distribute the Settlement Fund
pursuant to its confirmed plan of reorganization or an order(s)
of the Celotex Bankruptcy Court.
(l) The Parties shall support The Celotex Corporation in
its efforts to obtain the approvals from the Celotex Bankruptcy
Court that are specified in Section 4(k) of this Agreement.
5. Representations.
(a) Apollo represents and warrants that it owns or
controls debt obligations of the Debtors in the approximate
aggregate principal amount of $160 million.
(b) Lehman Brothers Inc. represents and warrants that it
owns or controls debt obligations of the Debtors in the
approximate aggregate principal amount of $271 million.
(c) Each of the Veil Piercing Claimants' Representatives
represents and warrants that it is authorized to enter into this
Agreement on behalf of all of its clients or principals that are
or may be Veil Piercing Claimants.
(d) Each of the Debtors represents and warrants that it is
authorized to enter into and render performance in accordance
with this Agreement, subject only to approval by the Court.
(e) Each of the KKR Entities represents and warrants that
it is authorized to enter into and render performance in
accordance with this Agreement.
(f) Each of the Management represents and warrants that he
is authorized to enter into and render performance in accordance
with this Agreement.
(g) The Celotex Corporation represents and warrants that
it is authorized to enter into and render performance in
accordance with this Agreement, subject only to approval by the
Celotex Bankruptcy Court.
(h) The KKR Entities represent and warrant that
collectively they own approximately 91% of the issued and
outstanding Old Common Stock.
(i) The members of the Signing Management severally but
not jointly represent that they each own the number of shares of
Old Common Stock set forth opposite their respective names on
Exhibit E hereto.
6. [INTENTIONALLY OMITTED]
7. Effectiveness of this Agreement.
(a) The Amended Agreement became effective by its terms
(without the execution thereof by any Existing Equityholder or
by JWC). The Amended Agreement shall be amended and restated
and become effective as set forth in this Agreement only upon
the satisfaction of the following conditions on or prior to the
Plan Effective Date:
(i) This Agreement shall have been executed by all of
the Parties; and
(ii) The Celotex Bankruptcy Court shall have entered
an order (A) approving this Agreement and (B) authorizing
and directing The Celotex Corporation to render performance
in accordance with the terms and conditions of this
Agreement.
(b) The Bondholder Proponents, in their sole and exclusive
discretion prior to the Plan Effective Date, may waive any or
all of the provisions contained in Section 7(a)(i) herein.
(c) Prior to the satisfaction of all of the foregoing
conditions, the Amended Agreement shall remain in full force and
effect in accordance with its terms.
8. Termination.
This Agreement shall terminate upon the earlier to occur of
the following:
(a) Upon the giving of a notice by (i) the Bondholder
Proponents, (ii) the Debtors or (iii) the Veil Piercing
Claimants' Representatives and The Celotex Corporation, to
the others at any time after an order shall have been
entered which shall have become a Final Order that
(x) disapproves this Agreement or the Plan substantially in
its entirety provided that such disapproval shall not be
based on the failure of any or all of the conditions
contained in Section 10.1(a) or 10.1(b) of the Consensual
Plan, (y) confirms a plan of reorganization in any or all
of the Chapter 11 Cases other than the Plan or (z) finds or
declares that the Veil Piercing Claims are without merit or
grants substantially the relief requested in Adversary
Proceeding No. 90-0003 and/or 90-0004, except that, the
stay, withdrawal or dismissal of any appeal from the
Adversary Proceedings pursuant to Section 4(c)(ii) or
(iii) herein or otherwise shall not cause either the April
18 Order or the District Court's Order to become a Final
Order for the purposes of Section 8(a) herein;
(b) On or after March 31, 1995, provided the Court
has not entered the Confirmation Order, upon the giving of
a notice by the Bondholder Proponents to the other Parties;
(c) The Bondholder Proponents, the Debtors, The
Celotex Corporation and the Veil Piercing Claimants'
Representatives shall mutually agree in writing to
terminate this Agreement;
(d) In the event of a termination of this Agreement
by the Debtors pursuant to Section 8(a) above, the Amended
Agreement shall again become valid, binding and enforceable
in accordance with its terms with respect to the parties
thereto; and
(e) In the event of a termination of this Agreement
by the Bondholder Proponents pursuant to Section 8(b)
above, the Amended Agreement shall again become valid,
binding and enforceable in accordance with its terms with
respect to the parties thereto.
9. Miscellaneous.
(a) Fiduciary Duty. Notwithstanding any other provision
contained herein, in the event the Consensual Plan is amended or
modified without the consent required by this Agreement, no such
Party shall be required to fulfill any of its agreements,
rights, duties or obligations hereunder to the extent that such
Party has reasonably determined, on advice of counsel, that the
fulfillment of such agreement or duty in connection with any
amendment to or modification of the Consensual Plan would
violate such Party's fiduciary duty arising out of such Party's
status as an official committee or a debtor-in-possession in the
Chapter 11 Cases or in The Celotex Chapter 11 Case.
(b) Further Assurances. Without limiting Section 4 of
this Agreement, each Party, as applicable, shall promptly
execute and deliver such agreements, certificates, receipts,
instruments, acknowledgements and other documents, including,
without limitation, the Celotex Proof of Claim and the Veil
Piercing Proof of Claim, and to promptly take such actions or
cause to be taken such actions, as may be reasonably requested
by the Bondholder Proponents (in consultation with the Debtors)
to fully and promptly effect Finality and the agreements and
other provisions contained herein.
(c) Amendments. This Agreement may not be amended except
in a writing signed by the Party against which such amendment is
sought to be enforced.
(d) Governing Law. Except to the extent the Code or
Bankruptcy Rules are applicable, the rights and obligations
arising under this Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New
York, without giving effect to the principles of conflicts of
law thereof.
(e) Headings. The headings of the Sections, paragraphs
and subsections of this Agreement are inserted for convenience
only and shall not affect the interpretation hereof.
(f) Notices. All notices, requests or demands under or in
connection with this Agreement shall be in writing and shall be
delivered by hand, sent by recognized overnight courier or sent
by telecopier, telex or similar electronic means to the address
or telecopier number of the Party as set forth under its
signature hereto, or to such other address or telecopier number
as such Party shall provide to all Parties hereto in writing,
and shall be deemed sent or given hereunder, in the case of
delivery by recognized overnight courier, on the date of actual
delivery, in the cases of transmission by telecopier, telex or
similar electronic means on the date of actual transmission, and
in the case of personal delivery, on the date of actual
delivery.
(g) No Admissions. No part of this Agreement shall be
deemed as an admission of any Party for any purpose, whether in
any of the Veil Piercing Proceedings or otherwise.
(h) No Waiver. The Parties hereto do not waive or release
any rights, claims, defenses or remedies until all conditions of
this Agreement and the Plan have been satisfied or waived.
Without limiting the foregoing, nothing herein shall constitute
an admission or waiver with respect to the Chapter 11 Cases, any
Veil Piercing Proceedings or the Celotex Chapter 11 Case.
(i) No Solicitation. Notwithstanding any other provision
in this Agreement, nothing in this Agreement is intended to be
or constitute, and shall not be deemed to be or constitute, a
solicitation of any vote or an agreement to vote for or against
the Consensual Plan or any other plan of reorganization, and
nothing in this Agreement shall impair the right or the ability
of any Party to vote for or against, or abstain or refrain from
voting with respect to, the Consensual Plan or any other plan of
reorganization.
(j) Extraterritoriality. It is the intention of the
Parties that the settlements and other agreements contained in
this Agreement be given application both to claims, causes of
action and suits within and without the jurisdiction of the
United States of America.
(k) Successors and Assigns. This Agreement is intended to
bind and inure to the benefit of the Parties and the other
signatories, if any, hereof and their respective successors,
assigns, heirs, executors, administrators and representatives.
(l) Complete Agreement. This document, including the
appendix and exhibits hereto, embodies the complete agreement
and understanding between the Parties and the other signatories,
if any, with respect to the subject matter hereof and, subject
to Sections 7(c) and 8(d) and (e) hereof, supersedes and
preempts any prior agreement, understanding or representation
made by and between any or all of such Parties and the other
signatories, if any, whether written or oral, which may have
related to the subject matter hereof in any way whatsoever.
(m) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same Agreement.
CAPLIN & DRYSDALE, Chartered
By:/s/ Elihu Inselbuch
Elihu Inselbuch
399 Park Avenue
New York, Ny 10022
(212) 319-7125
(212) 644-6755 (telecopier)
For Itself and the AVDs
BARON & BUDD
By:/s/ Fred Baron
Fred Baron
3102 Oak Lawn Avenue
Suite 1100
Dallas, TX 75219-4281
(214) 521-3605
(214) 520-1181 (telecopier)
NESS MOTLEY LOADHOLT
RICHARDSON & POOLE
By:/s/ Joseph Rice
Joseph Rice
P.O. Box 365
Barnwell, SC 29812
(803) 259-9900
(803) 577-7513 (telecopier)
GREITZER AND LOCKS
By:/s/ Gene Locks
Gene Locks
1500 Walnut Street
Philadelphia, PA 19102
(215) 893-0100
(215) 985-2960 (telecopier)
AKIN, GUMP, STRAUSS,
HAUER & FELD, L.L.P.
By:/s/ Steven M. Pesner
Steven M. Pesner, P.C.
65 East 55th Street, 33rd Flr.
New York, NY 10022
(212) 872-1070
(212) 872-1003 (telecopier)
For Apollo
PAUL, WEISS, RIFKIND,
WHARTON & GARRISON
By:/s/ ROBERT DRAIN
Robert Drain
1285 Avenue of the Americas
New York, NY 10019-6064
(212) 373-3236
(212) 373-2366 (telecopier)
For Lehman Brothers Inc.
BUSH ROSS GARDNER WARREN
& RUDY, P.A.
By:/s/ JEFFREY W. WARREN
Jeffrey W. Warren
220 South Franklin Street
Tampa, FL 33602
(813) 224-9255
(813) 223-9620 (telecopier)
For The Celotex Corporation
HOYT, COLGAN & ANDREU, P.A.
By:/s/ MICHAEL B. COLGAN
Michael B. Colgan
2900 Barnett Plaza
101 E. Kennedy Blvd.
Tampa, FL 33602
(813) 229-6688
(813) 229-3331 (telecopier)
For Jim Walter Corporation, on behalf of
itself and the JWC Companies, G.N.
Drummond, Sr., E.A. Drummond, Drummond
Company, Inc., Jasper Corp. and its
shareholders, William B. Long and
Walter F. Johnsey
STROOCK & STROOCK & LAVAN
By:/s/ Daniel H. Golden
Daniel H. Golden
Seven Hanover Square
New York, NY 10004-2594
(212) 806-5423
(212) 806-6606 (telecopier)
For HHC Bondholders Committee
JONES, DAY, REAVIS & POGUE
By:/s/ Marc S. Kirschner
Marc. S. Kirschner
599 Lexington Avenue
New York, NY 10025
(212) 326-3939
(212) 755-7306 (telecopier)
For HHC Creditors Committee
JOHNSON, BLAKELY, POPE, BOKOR,
RUPPEL & BURNS, P.A.
By:/s/ Charles M. Tatelbaum
Charles M. Tatelbaum
911 Chestnut Street
Clearwater, FL 33616
(813) 461-1818
(813) 441-8617 (telecopier)
For Celotex Unsecured Trade Creditors
Committee
KOZYAK TROPIN & THROCKMORTON, P.A.
By:/s/ John W. Kozyak
John W. Kozyak
200 S. Biscayne Boulevard
Suite 2850
Miami, FL 33131-2335
(305) 372-1800
(305) 372-3508 (telecopier)
For Celotex Asbestos Property Damage
Claimants Committee
HONIGMAN MILLER SCHWARTZ
& COHN
By:/s/ Sheldon S. Toll
Sheldon S. Toll
2290 First National Building
Detroit, MI 48226
For Celotex Asbestos Bodily Injury
Claimants Committee
(313) 256-7800
(313) 962-0176 (telecopier)
HILLSBOROUGH HOLDINGS CORPORATION,
BEST INSURORS, INC.,
BEST INSURORS OF MISSISSIPPI, INC.,
COAST TO COAST ADVERTISING, INC.,
COMPUTER HOLDINGS CORPORATION,
DIXIE BUILDING SUPPLIES,
HAMER HOLDINGS CORPORATION,
HAMER PROPERTIES, INC.,
HOMES HOLDINGS CORPORATION,
JIM WALTER COMPUTER SERVICES, INC.,
JIM WALTER HOMES, INC.,
JIM WALTER INSURANCE SERVICES, INC.,
JIM WALTER RESOURCES, INC.,
JIM WALTER WINDOW COMPONENTS, INC.,
JW ALUMINUM COMPANY,
JW RESOURCES, INC.,
JW RESOURCES HOLDINGS CORPORATION,
J.W.I. HOLDINGS CORPORATION,
J.W. WALTER, INC.,
JW WINDOW COMPONENTS, INC.,
LAND HOLDINGS CORPORATION,
MID-STATE HOMES, INC.,
MID-STATE HOLDINGS CORPORATION,
RAILROAD HOLDINGS CORPORATION,
SLOSS INDUSTRIES CORPORATION,
SOUTHERN PRECISION CORPORATION,
UNITED LAND CORPORATION,
UNITED STATES PIPE AND FOUNDRY COMPANY,
U.S. PIPE REALTY, INC.,
VESTAL MANUFACTURING COMPANY,
WALTER HOME IMPROVEMENT, INC.
WALTER INDUSTRIES, Inc. and
WALTER LAND COMPANY
By:/s/ Kenneth J. Matlock
Name: Kenneth J. Matlock
Title: Vice President
JWC ASSOCIATES, L.P.
JWC ASSOCIATES II, L.P.
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, L.P., a general
partner
By:/s/ Michael T. Tokarz
Name: Michael T. Tokarz
Title: A general partner
SIGNING MANAGEMENT
/s/ James W. Walter
James W. Walter
/s/ Kenneth J. Matlock
Kenneth J. Matlock
/s/ William H. Weldon
William H. Weldon
/s/ Gilberto Aleman
Gilberto Aleman
/s/ W. Kendall Baker
W. Kendall Baker
/s/ William Carr
William Carr
/s/ Joseph F. Hegerich
Joseph F. Hegerich
/s/ Wayne Hornsby
Wayne Hornsby
/s/ Kenneth E. Hyatt
Kenneth E. Hyatt
/s/ Donald M. Kurucz
Donald M. Kurucz
/s/ Robert W. Michael
Robert W. Michael
/s/ Timothy M. Pariso
Timothy M. Pariso
/s/ Michael Roberts
Michael Roberts
/s/ Dennis M. Ross
Dennis M. Ross
/s/ Sam J. Salario
Sam J. Salario
/s/ James M. Sims
James M. Sims
/s/ William N. Temple
William N. Temple
/s/ David L. Townsend
David L. Townsend
<PAGE>
APPENDIX A
A. "Affiliate" shall have the meaning set forth in Rule
501, promulgated under the Securities Act of 1933, as amended.
B. "Apollo" shall mean AIF II, L.P., certain affiliates
(as defined in the Plan) of AIF II, L.P. and certain accounts
managed or controlled by such affiliates.
C. "Attorneys' Fees Differential" shall mean the amount
equal to the difference between $15 Million and the actual
amount of attorneys' fees and costs awarded by the Court in the
Chapter 11 Cases to Caplin & Drysdale on behalf of itself and
the Claimants' Attorneys (as referred to in Section
4(i) herein).
D. "Celotex" shall mean The Celotex Corporation and/or any
predecessor thereof or successor thereto and all of their
respective present and former parents, Affiliates and
subsidiaries, other than JWC and any and all of the JWC
Companies.
E. "Celotex Proof of Claim" shall mean, consistent with
Section 4 hereof, a proof(s) of claim(s) filed in the Chapter 11
Cases asserting that any or all of the Debtors are or may be
liable for any or all claims or Demands which Celotex holds or
which may be asserted against Celotex in the future, direct,
indirect or derivative, caused by products manufactured, sold or
distributed by Celotex, or otherwise (i) based on any of the
Veil Piercing-Related Issues and/or (ii) based on the
LBO-Related Issues, such proof(s) of claim(s) to be in form and
substance reasonably acceptable to the Bondholder Proponents and
settled, satisfied, released and discharged by distribution of
the Settlement Fund to the Celotex Settlement Fund Recipient.
The liability of the Debtors described in the Celotex Proof
of Claim shall include (i) claims in the nature of or sounding
in piercing the corporate veil, alter ego, alternate entity,
successor liability, conspiracy, instrumentality, agency and any
other theory of law, equity or admiralty that seeks to hold the
stockholder of a corporation liable for all or part of any
claims against that corporation; (ii) claims resulting from or
arising out of or relating to the LBO, actions taken in
contemplation of the LBO or any contemporaneous or subsequent
transaction(s) entered into as a part of, arising out of, or
relating to the LBO or any or all of the LBO transaction(s) or
transfer(s); and (iii) claims resulting or arising from the
transfer of assets of Celotex for less than reasonably
equivalent value to the extent available remedies exist in favor
of Celotex as to such transfers, including, without limitation,
the Settlement Claims.
F. "Celotex Settlement Fund Recipient" shall mean The
Celotex Corporation for the exclusive benefit of the Veil
Piercing Claimants, or such other person(s) or entity(ies)
designated by an order entered by the Celotex Bankruptcy Court
which becomes a Final Order to act in the place and stead and on
behalf of The Celotex Corporation, including, without
limitation, any entity established pursuant to a confirmed plan
of reorganization for The Celotex Corporation to hold, manage,
liquidate, distribute or otherwise assume responsibility for and
the liabilities of the Settlement Fund and any liabilities
arising therefrom or in connection therewith.
G. "Chapter 11 Cases" shall mean each of the
reorganization cases of the Debtors listed in the caption on the
cover page of the Consensual Plan, all of which are being
jointly administered under Case No. 89-9715-8P1.
H. "Code" shall mean Title 11 of the United States Code,
11 U.S.C. sections 101 et seq., together with all amendments,
modifications and replacements as the same exist on any relevant
date to the extent applicable to the Chapter 11 Cases.
I. "Confirmation Date" shall mean the date on which the
Court enters the Confirmation Order.
J. "Confirmation Order" shall mean the order(s) of the
Court confirming the Plan and approving the transactions and
settlements contemplated therein.
K. "Demand" shall mean a demand for or right to payment,
present or future, that was not a claim during the proceedings
leading to confirmation of the Plan, arising out of the same or
similar conduct or events that gave rise to the Settlement
Claims.
L. "Existing Equityholder" shall mean each holder (record
or beneficial) of an Old Common Stock Interest; provided, that,
in the event that the Court shall enter an order finding
(i) that such holder acted in bad faith so as to materially
breach this Agreement or to obstruct confirmation of the
Consensual Plan by the date determined by operation of Section
10.1(a) of the Consensual Plan or the occurrence of the Plan
Effective Date by March 31, 1995, or such later date as may be
determined by operation of Section 10.2(i) of the Consensual
Plan and (ii) that denial of the benefits afforded an Existing
Equityholder under this Agreement and the Consensual Plan is an
appropriate remedy for such misconduct, then such Holder shall
not be an Existing Equityholder. If each of the KKR Entities
and the Signing Management are signatories to this Agreement,
then all other holders (record or beneficial) of the Old Common
Stock shall be deemed to be a beneficiary of this Agreement as
an Existing Equityholder.
K. "Final Order" shall mean an order, judgment, ruling or
decree issued and entered by the Court or by any state or other
federal court or other tribunal located in one of the states,
territories or possessions of the United States of America or
the District of Columbia that has not been reversed, stayed,
modified or amended and as to which the time to appeal or
petition for reargument, rehearing or certiorari has expired,
and as to which no appeal, reargument, petition for certiorari
or rehearing is pending or as to which any right to appeal,
reargue, petition for certiorari or seek rehearing has been
waived in writing or, if an appeal, reargument, petition for
certiorari or rehearing thereof has been denied, the time to
take any further appeal or to seek certiorari or further
reargument or rehearing has expired; provided that, the stay,
withdrawal or dismissal of any appeal from the Adversary
Proceedings pursuant to Section 4(c)(ii) or (iii) herein or
otherwise shall not cause either the April 18 Order or the
District Court's Order to become a Final Order for the purposes
of Section 8(a) herein.
M. "HHC Bondholders Committee" shall mean the Official
Bondholders Committee of the Debtors appointed by the United
States Trustee in the Chapter 11 Cases pursuant to Section 1102
of the Code, as such Committee may be constituted from time to
time.
N. "HHC Creditors Committee" shall mean the Official
Committee of General Unsecured Creditors of the Debtors
appointed by the United States Trustee in the Chapter 11 Cases
pursuant to Section 1102 of the Code, as such Committee may be
constituted from time to time.
O. "LBO-Related Issues" shall mean and be the collective
reference to all theories or bases of recovery recognizable at
law, in equity or in admiralty under the laws of any
jurisdiction that are held or asserted by or that may be held or
asserted by any of the Debtors or any holder of a claim or
interest in the Chapter 11 Cases, in respect of such claim or
interest, directly or indirectly based upon, arising out of or
in connection with the LBO or any of the LBO transactions or
transfers consummated in contemplation of or as a part thereof
or in connection therewith, including, without limitation, the
acquisition of the capital stock of any of the Debtors, the
consummation of the transactions contemplated by the Agreement
and Plan of Merger dated as of August 12, 1987, and the
financing, reorganization, asset disposition and other
transactions consummated as a part thereof or in connection
therewith, whether based upon theories of piercing the corporate
veil of any Debtor or its predecessor and/or any of its
respective present or former parents, subsidiaries or
Affiliates, alter ego, alternate entity, agency,
instrumentality, the transfer (fraudulent or otherwise) of any
assets or property by any Debtor (or other non-Debtor that had
at any time been an Affiliate of any Debtor), preference, fraud,
conspiracy, substantive consolidation, successor liability, or
any other legal or equitable theory whatsoever.
P. "New Common Stock" shall mean the common stock, par
value $.01 per share, of Walter Industries, Inc. to be issued on
the Plan Effective Date. The New Common Stock held by the
Celotex Settlement Fund Recipient or by any creditor of The
Celotex Corporation, in its capacity as such, shall be voted in
the same percentage as the shares of the other New Common Stock,
taken together, is voted (based upon the number of votes cast).
Q. [INTENTIONALLY OMITTED]
R. "New Common Stock Value Per Share" shall mean the New
Common Stock Value divided by 50 million, representing the
number of shares of New Common Stock to be issued and
outstanding on the Plan Effective Date before considering any
additional distribution under either Section 3.21 or Section
3.26(b)-(c) of the Consensual Plan.
S. "Old Common Stock" shall mean the outstanding common
stock, $0.01 par value per share, of Walter Industries, Inc., as
the surviving corporation of the merger between Hillsborough and
the Old Walter Industries.
T. "Old Common Stock Interest" shall mean all interests in
the Old Common Stock exclusive of any shares of such stock held
in treasury, which is registered as of the Plan Effective Date
in such stock register as may be maintained by or on behalf of
Walter Industries.
U. "Original Plan Proponents" shall mean Apollo, Lehman
Brothers, Inc., the HHC Bondholders Committee and the HHC
Creditors Committee.
V. "Plan Effective Date" shall mean the first business day
all conditions set forth in Section 10.2 of the Consensual Plan
have been satisfied or waived but which shall not be less than
eleven days after the date on which the Confirmation Order is
entered.
W. "Qualified Securities" shall have the meaning assigned
to that term (or another term serving the same or a similar
function) under the Plan.
X. "Released Parties" shall mean each and every Party and
each and all of its present and former parents, subsidiaries,
shareholders (record or beneficial), partners (general and
limited), officers, directors, employees, agents, advisors,
Affiliates and representatives in each case in such person's or
entity's capacity as a holder of a claim or interest in the
Chapter 11 Cases, as a Plan proponent, if applicable, as an
Existing Equityholder or in any other capacity, including,
without limitation, Kohlberg Kravis Roberts & Co., KKR
Associates, Henry R. Kravis, George R. Roberts, Paul E. Raether,
Michael T. Tokarz, Perry Golkin, G.N. Drummond, Sr., E.A.
Drummond, Drummond Company, Inc., Jasper Corp. and its
shareholders, William B. Long and Walter F. Johnsey (it being
understood that (i) The Celotex Corporation and its subsidiaries
are not included in any capacity, but that each and all of the
respective present and former shareholders (record and
beneficial), partners (general and limited), officers,
directors, employees, agents, advisors, Affiliates and
representatives of The Celotex Corporation and its subsidiaries
which are not The Celotex Corporation or its subsidiaries are
specifically included and (ii) the JWC Companies, G.N.
Drummond, Sr., E.A. Drummond, Drummond Company, Inc., Jasper
Corp. and its shareholders, William B. Long and Walter
F. Johnsey are not Released Parties regarding any of their
respective conduct arising out of a transaction(s) or an act(s)
occurring after May 26, 1988).
Y. "Settlement Claims" shall mean and be the collective
reference to all Veil Piercing Claims and all claims and causes
of action held or assertable by the Veil Piercing Claimants
based upon LBO-Related Issues.
Z. "Subordinated Note Claims" shall mean, collectively,
the Senior Subordinated Note Claims, the 17% Subordinated Note
Claims, the 10% Subordinated Debenture Claims, the 13%
Subordinated Note Claims and the 13 Subordinated Debenture
Claims (as each of such terms is defined in the Consensual
Plan).
AA. "Veil Piercing Claimants" shall mean The Celotex
Corporation and any other person or entity who may have or may
assert in the future a Veil Piercing Claim.
AB. "Veil Piercing Claims" shall mean and be the
collective reference to all existing claims and Demands and all
claims and Demands that may be asserted in the future, whether
known or unknown, against any or all of the Debtors or any other
Released Party based upon, arising out of or in connection with
any of the Veil Piercing-Related Issues, but shall not include
any claim based upon a valid, binding and enforceable obligation
by any or all of the Debtors to indemnify any person or entity.
AC. "Veil Piercing New Common Stock Amount" shall mean
that number of shares of New Common Stock having an aggregate
Veil Piercing New Common Stock Value Per Share equal to the Veil
Piercing Residual Claims Amount.
AD. "Veil Piercing New Common Stock Value" shall mean
$2,525,000,000, less the sum of (a) $902 million and (b) the
aggregate principal amount of Qualified Securities to be
distributed under the terms of the Consensual Plan on the Plan
Effective Date.
AE. "Veil Piercing New Common Stock Value Per Share" shall
mean the Veil Piercing New Common Stock Value divided by 50
million, representing the number of shares of New Common Stock
to be issued and outstanding on the Effective Date before
considering any additional distribution under either Section
3.21 or Section 3.26(b)-(c) of the Consensual Plan.
AF. "Veil Piercing Proceedings" shall mean and be the
collective reference to all lawsuits, actions and other judicial
and administrative proceedings that have been, or may in the
future be, instituted against any person or entity that directly
or indirectly seek or could seek any remedy from any or all of
the Released Parties based upon, arising out of or in connection
with any of the Veil Piercing-Related Issues and/or Settlement
Claims.
AG. "Veil Piercing Proof of Claim" shall mean, consistent
with Section 4 hereof, a proof(s) of claim(s) filed in the
Chapter 11 Cases by such individual(s) and/or entity(ies) (other
than AVDs) as shall be acceptable to the Bondholder Proponents
(after consultation with the Debtors) on behalf of the
Settlement Class asserting that any or all of the Debtors are or
may be liable for the Settlement Claims, to be filed upon the
request of the Bondholder Proponents and solely in connection
with and for the purpose of the confirmation of the Plan, the
approval of this Agreement and the realization of Finality,
which proof(s) of claim(s) shall be in form and substance
reasonably acceptable to the Bondholder Proponents (in
consultation with the Debtors) and which proof(s) of claim(s)
will be settled, satisfied, released and discharged by
distribution of the Settlement Fund to the Celotex Settlement
Fund Recipient.
AH. "Veil Piercing-Related Issues" shall mean and be the
collective reference to all theories or bases of liability or
recovery recognizable at law, in equity or in admiralty, under
the laws of any jurisdiction, directly or indirectly based upon,
arising out of or in connection with asbestos, any product
manufactured, sold or distributed by Celotex, any other
liability or obligation of any nature of Celotex, or any act or
failure to act by Celotex or any officer, director, employee,
agent or other representative of Celotex, whether based upon
alter ego, agency, alternate entity, instrumentality, successor
liability, conspiracy, indemnification, contribution, any
theories of piercing the corporate veil of any Debtor or its
predecessor and/or any and all of its respective present or
former parents, subsidiaries or Affiliates, or the transfer
(fraudulent or otherwise) of any assets or property to or by any
Debtor (or other non-Debtor that had at any time been a parent,
subsidiary or Affiliate of any Debtor or its predecessor),
whether in connection with any of the transactions constituting
or relating to the financing or the acquisition of any of the
Debtors or any of their respective predecessors, parents,
subsidiaries or Affiliates by the current holders of Old Common
Stock, the divestiture by Celotex of any of its assets or
property at any time, or in connection with any other
transactions, events or circumstances, or otherwise; provided,
however, that the Veil Piercing-Related Issues shall not include
any of the LBO-Related Issues.
AI. "Veil Piercing Residual Claims Amount" shall mean the
excess of $375,000,000 over the aggregate principal amount of
the Qualified Securities to be distributed on account of the
Settlement Claims under the Plan.
AJ. "Veil Piercing Settlement" shall mean the full and
complete settlement, satisfaction, release and discharge of all
Settlement Claims and Veil Piercing Proceedings as provided in
this Agreement and the Plan.
<PAGE>
EXHIBIT A
, 1994
Re: Hillsborough Holdings Corporation, et al.
The undersigned law firm: (1) represents one or more
persons or entities with Veil Piercing Claims [as defined in the
Second Amended and Restated Veil Piercing Settlement Agreement
dated as of November 22, 1994 ("VPSA")]; (2) hereby agrees on
behalf of itself, each of its lawyers, and each of its clients
who have such claims, irrevocably to comply with, assent to and
support the VPSA and the Plan (as defined in the VPSA) and (3)
to promptly become a signatory to the VPSA upon the request of
the Bondholder Proponents (as defined in the VPSA).
Very truly yours,
[LAW FIRM]
By:
A Member of the Firm
<PAGE>
EXHIBIT B
[CONSENSUAL PLAN]
ATTACHED AS EXHIBIT 1
TO THE SUPPLEMENT TO DISCLOSURE STATEMENT
<PAGE>
EXHIBIT C
[REGISTRATION RIGHTS AGREEMENT]
ATTACHED AS EXHIBITS 4 AND 5
TO THE CONSENSUAL PLAN
<PAGE>
EXHIBIT D
[TAG-ALONG RIGHTS AGREEMENT]
<PAGE>
TAG-ALONG
AND
VOTING AGREEMENT
BY AND AMONG
THE STOCKHOLDERS
NAMED HEREIN
DATED AS OF , 1995
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
1. Definitions 1
2. Tag-along Rights 2
3. Voting of Common Stock Owned by the Celotex Entity 3
4. Representations and Warranties of the Parties 4
4.1 Authority 4
4.2 Binding Obligation 4
4.3 No Conflicts/Approvals 4
5. Legends 4
6. Other Securities 4
7. Further Assurances 4
8. Headings 4
9. Remedies 4
10. Entire Agreement 5
11. Notices 5
12. Governing Law 5
13. Severability 5
14. Assignment 5
15. Amendments; Waivers 5
16. Termination 5
17. Counterparts 5
</TABLE>
SCHEDULES:
Schedule 1--Common Stock
Schedule 2--Notices
TAG-ALONG AND VOTING AGREEMENT
TAG-ALONG AND VOTING AGREEMENT dated as of , 1995 by and
among the stockholders listed on the signature pages hereof (in
the case of The Celotex Corporation, on behalf of the Celotex
Entity (as defined herein)) (each a "party" and together, the
"parties"; together with their respective Restricted Transferees
(as defined in Section 2(h)), heirs and successors, the
"Stockholders").
This Agreement is being entered into in connection with
the Second Amended and Restated Veil Piercing Settlement
Agreement, dated as of November 22, 1994, by and among, inter
alia, the Debtors (as defined therein), the KKR Entities (as
defined therein), the Signing Management (as defined therein),
the HHC Bondholders Committee (as defined therein), the HHC
Creditors Committee (as defined therein), Lehman Brothers Inc.,
a corporation ("Lehman Brothers"), AIF II, L.P. a limited
partnership ("AIF"), certain Affiliates of AIF and certain
accounts managed or controlled by such Affiliates ("AIF
Affiliates" and, together with AIF, "Apollo"), The Celotex
Corporation, a corporation ("Celotex"), Jim Walter Corporation,
certain attorneys and agents signatory thereto and/or listed on
Exhibit C attached thereto representing persons and entities
that hold Settlement Claims (as defined therein), the Celotex
Committee of Unsecured Creditors, the Celotex Asbestos Property
Damage Claimants Committee and the Celotex Asbestos Bodily
Injury Claimants Committee (the "Settlement Agreement"), and is
attached as an exhibit thereto. All capitalized terms not
otherwise defined herein have the meaning ascribed to them in
the Settlement Agreement.
Each Stockholder will acquire that number of shares of New
Common Stock, par value $.01 per share of Walter Industries,
Inc., a Delaware corporation (the "Company") specified with
respect to such Stockholder in Schedule 1 hereto pursuant to the
Amended Joint Plan of Reorganization for the Debtors dated as of
December 9, 1994 (the "Consensual Plan").
In consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
1. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
"Affiliate" of a Person means any Person that
controls, is under common control with, or is controlled
by, such other Person. For purposes of this definition,
"control" means the ability of one Person to direct the
management and policies of another Person.
"Bankruptcy Court" means (i) the United States
Bankruptcy Court for the Middle District of Florida, Tampa
Division with jurisdiction over the Chapter 11 Cases (as
defined in the Consensual Plan) (or such other court as
may be administering the Chapter 11 Cases), (ii) to the
extent of any withdrawal of the reference made pursuant to
28 U.S.C. Section 157, the United States District Court for
the Middle District of Florida, and (iii) with respect to
any particular proceeding within a Chapter 11 Case, any
other court which may be exercising jurisdiction over such
proceeding.
"Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City
are required or authorized by law to be closed.
"Celotex Entity" means the Celotex Settlement Fund
Recipient as defined in the Settlement Agreement.
"Commission" means the U.S. Securities and Exchange
Commission.
"Effective Date" means the Effective Date of the
Consensual Plan, as defined therein.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations
thereunder, or any similar or successor statute.
"Exempt Transaction" means a Transfer (i) of
Restricted Common Stock effected on a national securities
exchange or the National Association of Securities
Dealers, Inc. Automated Quotation System or through a
registered broker-dealer; (ii) made by a Stockholder to an
Affiliate of that Stockholder; (iii) made pursuant to a
Public Offering; (iv) in the case of the Celotex Entity
only, made to any other Celotex Entity or made from the
Celotex Entity to holders of Settlement Claims; or
(v) made pursuant to a call option or other purchase right
described in Section 2(f) of the Settlement Agreement.
"Person" means any individual, corporation,
partnership, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental
or regulatory body or subdivision thereof or other entity.
"Public Offering" means a public offering and sale of
Common Stock pursuant to an effective registration
statement under the Securities Act.
"Restricted Common Stock" means the shares of New
Common Stock issued to the Stockholders on the Effective
Date; provided, that any share of New Common Stock shall
cease to be Restricted Common Stock upon a Transfer of
such Common Stock (i) in an Exempt Transaction or (ii) in
compliance with the provisions of Sections 2(a) through
2(g) hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any
similar or successor statute.
"Transfer" means any transfer, sale, assignment, or
other disposition. "Transferor" and "Transferee" have
correlative meanings.
2. Tag-along Rights. (a) In the event that a
Stockholder (the "Selling Stockholder") proposes to enter
into a transaction to Transfer any of its Restricted
Common Stock to a third party (the "Third Party
Transferee"), other than pursuant to an Exempt
Transaction, the Selling Stockholder shall offer to
include in such transaction (the "Tag-along Transaction")
the number of shares of Restricted Common Stock owned by
each of the other Stockholders determined in accordance
with this Section 2. In connection with any proposed
Tag-along Transaction, the Selling Stockholder will send
written notice (the "Selling Stockholder Notice") to each
of the other Stockholders setting forth in reasonable
detail the terms of the Tag-along Transaction, including,
without limitation, (i) the identity of the Selling
Stockholder, (ii) the name and address of the Third Party
Transferee, (iii) the total number of shares that the
Third Party Transferee proposes to purchase, (iv) the
amount and form of consideration, (v) the date on which
the Tag-along Transaction is expected to close and
(vi) the conditions, if any, to which the Tag-along
Transaction is subject. At any time within 15 days after
the receipt of the Selling Stockholder Notice, each of the
other Stockholders may, subject to Section 2(g) below, in
its sole discretion, elect to participate in the Tag-along
Transaction by sending to the Selling Stockholder written
notice (the "Other Stockholder Notice") stating that such
other Stockholder has elected to participate and setting
forth (i) the number of shares of Restricted Common Stock
held by such other Stockholder and (ii) the maximum number
of shares that such other Stockholder desires to include
in the Tag-along Transaction. Subject to the provisions
of this Section 2, if the Selling Stockholder shall
receive an Other Stockholder Notice from one or more of
the other Stockholders within the time specified in the
sentence above, the Selling Stockholder shall cause the
maximum number of shares of Restricted Common Stock
specified in such Other Stockholder Notice or Notices to
be included in the Tag-along Transaction; provided that if
the total number of shares of Restricted Common Stock of
all Stockholders electing to participate in the Tag-along
Transaction, including the Selling Stockholder (each a
"Participating Stockholder"), shall exceed the number of
shares that the Third Party Transferee proposes to
purchase, then each Participating Stockholder shall be
entitled to include in the Tag-along Transaction up to the
number of shares determined pursuant to subsection 2(c)
below. Notwithstanding the foregoing, nothing herein
shall obligate the Selling Stockholder to consummate any
proposed Tag-along Transaction, and, in the event that the
Selling Stockholder determines not to consummate any
Tag-along Transaction, the other Stockholders will not
have any rights to participate therein, regardless of
whether any of other Stockholders has given an Other
Stockholder Notice with respect thereto.
(b) If within 15 days after the receipt of the
Selling Stockholder Notice any of the other Stockholders
has not given the Other Stockholder Notice, such other
Stockholder shall be deemed to have waived any and all
rights with respect to the sale or other disposition of
shares in the Tag-along Transaction described in the
Selling Stockholder Notice. The failure by any other
Stockholder to give an Other Stockholder Notice shall not
constitute a waiver of any rights hereunder with respect
to any Tag-along Transaction other than that described in
the Selling Stockholder Notice.
(c) Each Participating Stockholder shall have a right
to sell a number of shares equal to the product of (i) the
total number shares that the Third Party Transferee has
offered to acquire, as set forth in the Selling
Stockholder Notice, multiplied by (ii) a fraction, the
numerator of which is the Percentage Interest of such
Participating Stockholder and the denominator of which is
the aggregate Percentage Interests of all Participating
Stockholders. As used herein, the term "Percentage
Interest" shall mean, with respect to any Participating
Stockholder, the percentage (expressed as a decimal
rounded to the nearest one hundredth) then held by such
Participating Stockholder of all outstanding Restricted
Common Stock.
(d) The Transfer by each of the other Stockholders
pursuant to this Section 2 shall be on the same terms and
conditions, including the per share price and the date of
Transfer, as the Transfer by the Selling Stockholder and
as stated in the Selling Stockholder Notice provided to
the other Stockholders.
(e) The Selling Stockholder shall notify the other
Stockholders who have exercised their tag-along rights
pursuant to this Section 2 within five days of the end of
the 15-day period referred to in subsection 2(a), of the
number of shares of Restricted Common Stock each
Stockholder has been allocated to sell. Each other
Stockholder, within five days of receipt of such notice,
shall deliver to the Selling Stockholder the certificate
or certificates representing the shares to be sold in the
Tag-along Transaction by such other Stockholder, together
with a limited power-of-attorney authorizing the Selling
Stockholder to sell or otherwise dispose of the shares to
be sold pursuant to the terms of the Selling Stockholder
Notice. If any other Stockholder fails to deliver stock
certificates within the time specified in the immediately
preceding sentence, such other Stockholder shall be deemed
to have waived any and all rights with respect to the sale
or other disposition of the shares in the Tag-along
Transaction described in the Selling Stockholder Notice.
(f) Simultaneously with the consummation of Transfer
of the shares of the Selling Stockholder and the shares of
the other Stockholders who have exercised their tag-along
rights pursuant to this Section 2, the Selling Stockholder
shall notify the other Stockholders who have exercised
their tag-along rights pursuant to Section 2 that the
consummation of such Tag-along Transaction has occurred
and shall promptly, but in any event not later than 3
Business Days thereafter, remit to such other Stockholders
the total sales price of the shares of such other
Stockholders sold pursuant thereto, net of such other
Stockholder's pro rata share of all out-of-pocket fees,
expenses and costs incidental to such sale and shall
furnish such other evidence of the completion and time of
completion of such Transfer and the terms thereof as may
be reasonably requested by such other Stockholders.
(g) Notwithstanding any other provision of this
Section 2, if the Selling Stockholder is Lehman Brothers
or Apollo, neither Lehman Brothers nor Apollo shall have
any tag-along rights pursuant to this Section 2 with
respect to such Transfer.
(h) In the case of any Exempt Transfer described in
clause (ii) or (iv) of the definition of Exempt Transfer
herein, the Transferee of any shares of Restricted Common
Stock pursuant to such Exempt Transfer (a "Restricted
Transferee") shall, prior to such Transfer, execute an
instrument agreeing to be bound by all of the terms and
provisions of this Agreement as if such Restricted
Transferee had been an original signatory hereto,
whereupon such Restricted Transferee thereafter shall have
all of the rights and obligations of the transferring
Stockholder under this Agreement.
3. Voting of Common Stock Owned by the Celotex
Entity. In any vote or action by written consent by the
holders of New Common Stock voting or taking action by
written consent, the Celotex Entity will, and will cause
each of its Affiliates, if any, to vote or execute written
consents with respect to their shares of New Common Stock,
in proportion to the votes cast or consents executed and
delivered by the other holders of New Common Stock.<F1>
- ----------------
[FN] Appropriate modifications to be made to rights and
obligations of the Celotex Entity if a second class of
Common Stock is authorized, as contemplated by footnote 1
to the form of Restated Certificate of Incorporation
attached to the Consensual Plan.
<PAGE>
4. Representations and Warranties of the Parties.
Each Stockholder represents and warrants, subject to
obtaining any necessary approvals of the Bankruptcy Court
and the Celotex Bankruptcy Court with respect to the
Settlement Agreement and the Consensual Plan, to each
other that:
4.1 Authority. The execution, delivery and
performance of this Agreement has been duly authorized
by all necessary action of such Stockholder.
4.2 Binding Obligation. It has duly and validly
executed and delivered this Agreement and this
Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with
its terms.
4.3 No Conflicts/Approvals. The execution,
delivery and performance of this Agreement will not
conflict with or result in the breach or violation of
any of the terms or conditions of, or constitute (or
with notice or lapse of time or both, would
constitute) a default under, (i) its constituting
documents; (ii) any instrument, contract or other
agreement by or to which it is a party or its assets
are bound or subject; (iii) any statute or regulation,
order, judgment or decree of any court or governmental
or regulatory body; or (iv) any license, permit, order
or approval of any governmental or regulatory body
respecting its business. No approval or consent of
any foreign, Federal, state, county, local or other
governmental or regulatory body or court and no
approval or consent of any other Person is required in
connection with the execution, delivery or performance
of this Agreement by it.
5. Legends. Except as otherwise permitted by this
Section 5, the parties hereto shall cause the Company to
legend each certificate evidencing outstanding shares of
the New Common Stock issued to any Stockholder with the
following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF THE STOCKHOLDERS
AGREEMENT DATED AS OF , 1994 BY AND AMONG THE
HOLDER AND THE OTHER STOCKHOLDERS NAMED THEREIN, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE ISSUER.
If any shares of New Common Stock issued to any
Stockholder cease to be Restricted Common Stock, the
parties hereto shall cause the Company, upon the
written request of the holder thereof, to issue to
such holder a new certificate evidencing such shares
without the legend above endorsed thereon.
6. Other Securities. The terms "New Common Stock"
and "Restricted Common Stock" include any securities of
the Company issued or issuable with respect to any shares
of the foregoing by way of a dividend or stock split or in
connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or
otherwise.
7. Further Assurances. Each of the parties hereto
shall execute such documents and other papers and perform
such further acts as may be reasonably required or
desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby.
8. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or
affect the meaning or construction of any provisions
hereof.
9. Remedies. Each Stockholder, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
10. Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and
there are no restrictions, promises, representations,
warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set
forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
11. Notices. Any notices or other communications to
be given hereunder by any party to another party shall be
in writing, shall be delivered personally, by telecopy, by
certified or registered mail, postage prepaid, return
receipt requested, or by Federal Express or other
comparable delivery service, to the address of the party
set forth on Schedule 2 hereto or to such other address as
the party to whom notice is to be given may provide in a
written notice to the other parties hereto, a copy of
which shall be on file with the Secretary of the Company.
Receipt of notice shall be effective when delivered if
given personally, when receipt is acknowledged if
telecopied, three days after mailing if given by
registered or certified mail as described above and, one
business day after deposit if given by Federal Express or
comparable delivery service. Notwithstanding the
foregoing, none of Lehman Brothers, Apollo or any of their
respective Restricted Transferees shall be obligated to
give any notice to the holders of Settlement Claims other
than the Celotex Entity, and any notice given to the
Celotex Entity by Lehman Brothers, Apollo or any of their
respective Restricted Transferees shall, for all purposes
hereof, be deemed to constitute effective notice to all
Restricted Transferees of the Celotex Entity, including
all holders of Settlement Claims.
12. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State
of New York applicable to agreements made to be performed
entirely in such State.
13. Severability. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability
of any other provision of this Agreement in such
jurisdiction or the validity, legality or enforceability
of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable
to the fullest extent permitted by law.
14. Assignment. The provisions of this Agreement
shall be binding upon and accrue to the benefit of the
parties hereto and their respective heirs, successors and
permitted assigns. Except as provided in Section 2(d),
neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall
be assignable by any of the parties hereto without the
prior written consent of the other parties hereto.
15. Amendments; Waivers. No amendment to this
Agreement or any waiver or discharge of any provision
hereof shall be made without the prior written consent of
each party hereto. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver
of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver.
16. Termination. This Agreement shall terminate and
be of no further force and effect on the earlier of
(i) the date that the Celotex Entity shall have
Transferred or otherwise distributed to the individual
holders of Settlement Claims, or to any holders of claims
against Celotex, 50% or more of the New Common Stock held
by the Celotex Entity, in the aggregate, on the Effective
Date, or the proceeds thereof (ii) the tenth anniversary
of this Agreement, and (iii) the termination of the
Settlement Agreement pursuant to Section 8 thereof.
17. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the
same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AIF II, L.P.
By________________________
Name:
Title:
[other AIF Affiliates]
LEHMAN BROTHERS INC.
By________________________
Name:
Title:
THE CELOTEX CORPORATION
On Behalf of the Celotex
Entity
By________________________
Name:
Title:
<PAGE>
SCHEDULE 1
COMMON STOCK
STOCKHOLDER NUMBER OF SHARES OWNED
----------- ----------------------
AIF II, L.P. (and/or other of its Affiliates)
Lehman Brothers Inc.
The Celotex Entity
<PAGE>
SCHEDULE 2
NOTICES
If to AIF II, L.P., to: If to the Celotex Entity
to:
AIF II, L.P. THE CELOTEX CORPORATION
Attention: Attention:
Tel: Tel:
Fax: Fax:
with a copy to: with a copy to:
Attention: Attention:
Tel: Tel:
Fax: Fax:
If to LEHMAN BROTHERS, Inc. to: and a copy to:
LEHMAN BROTHERS, INC.
Attention: Attention:
Tel: Tel:
Fax: Fax:
with a copy to:
Attention:
Tel:
Fax:
<PAGE>
EXHIBIT E TO SECOND AMENDED AND RESTATED VEIL PIERCING
SETTLEMENT
AGREEMENT--SHARES HELD BY SIGNING MANAGEMENT
NAME NUMBER OF SHARES
- ---- ----------------
Gilberto Aleman 20,000
W. Kendall Baker 20,000
William Carr 35,000
Joseph F. Hegerich 20,000
Wayne Hornsby 10,000
Kenneth E. Hyatt 50,000
Donald M. Kurucz 12,000
Kenneth J. Matlock 25,000
Robert W. Michael 35,000
Timothy M. Pariso 10,000
Michael Roberts 10,000
Dennis M. Ross 15,000
Sam J. Salario 25,000
James M. Sims 10,000
William N. Temple 10,000
David L. Townsend 8,000
James W. Walter 190,000
William H. Weldon 20,000
<PAGE>
EXHIBIT 3B: PRE-LBO BONDHOLDERS SETTLEMENT AGREEMENT
<PAGE>
AGREEMENT FOR SETTLEMENT OF PRE-LBO ISSUES
AND TREATMENT OF SUBORDINATED NOTES
PURSUANT TO CHAPTER 11 PLAN
This Agreement (as the same may be amended, modified or
supplemented from time to time, the "Agreement") is entered into
by the parties set forth below (each a "party") to set forth the
terms of a settlement respecting alleged fraudulent transfer and
related claims, including all claims asserted against Released
Parties in Mellon Bank, N.A. and Bank of New York v. Kohlberg
Kravis Roberts & Co., et al., Adv. Pro. No. 94-17 (the
"Adversary Proceeding"), and the related treatment of holders of
Subordinated Note Claims, all pursuant to an amendment (the
"Amended Plan") to the Joint Plan of Reorganization of Debtors
Proposed by Certain Creditor Proponents, dated as of
December 16, 1993 (the "Original Plan"), for Hillsborough
Holdings Corporation and its subsidiaries and affiliates (the
"Debtors").
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. Defined Terms. Unless otherwise indicated, all
capitalized terms shall have the meanings ascribed to them
in the Original Plan.
2. Support of Amended Plan. The parties will
support, and, in the case of The Acacia Group, Gabriel
Capital L.P. (as members of the ad hoc committee of the
pre-LBO bondholders), Apollo and Lehman Brothers, become
co-proponents of, the Amended Plan (which, except as set
forth in sections 3.B., 6 and 7 below, will be in
substantially the form of the Original Plan). The parties
shall support any plan as to which the Bondholder
Proponents are proponents so long as the relative
treatment set forth herein is maintained for them.
3. Treatment of Subordinated Note Claims.
A. Pro Rata Treatment of Subordinated Note
Claims. If the actual amount of distributions under
the Amended Plan in respect of all Allowed
Subordinated Note Claims is different than the
aggregate Allowed Amount of all Subordinated Note
Claims, then the aggregate amount of distributions in
respect of Allowed Subordinated Note Claims in Classes
U-4, U-5 and U-6 shall be calculated as follows:
Actual amount of distributions in
respect of all Allowed Subordinated
Note Claims
Aggregate amount of all Allowed
Subordinated Note Claims X Aggregate Amount of all
Allowed Class U-4 Claims
(or Class U-5 Claims or
Class U-6 Claims, as the
case may be)
For the purposes of the fraction used in this
subparagraph A., the actual amount of distributions
shall be valued at the aggregate principal amount in
the case of Qualified Securities, and at the aggregate
New Common Stock Value Per Share in the case of the
New Common Stock.
B. Allocation of Qualified Securities Available
for Distribution. Qualified Securities available for
distribution (i.e., after allocation to Class U-7)
shall be allocated to Classes U-4, U-5 and U-6 as
follows:
i. Class U-4 shall have the right to elect
distribution of the first $240 million in
principal amount of Qualified Securities
available for distribution in satisfaction of the
same amount of Allowed Class U-4 Claims;
thereafter
ii. Classes U-4, U-5 and U-6 shall have
the right to make the election to receive the
remaining Qualified Securities available for
distribution on the pro rata basis described in
3.A., above, subject to the following sentence
(the Allowed Amount of Class U-4 Claims shall
have been reduced for purposes of this
calculation by the aggregate principal amount of
Qualified Securities previously elected under
subsection 3.B.i.). The foregoing pro rata
calculation shall be modified as follows: (a) if
there are $700 million of Qualified Securities
available for distribution to Classes U-4, U-5,
U-6 and U-7, Class U-6 shall have the right to
elect $80 million of Qualified Securities
available for distribution to Classes U-4, U-5
and U-6 in the aggregate (after allocation to
Class U-7 and after allocation pursuant to
3.B.i.), (b) if either less or more than $700
million of Qualified Securities are available for
distribution to Classes U-4, U-5, U-6 and U-7,
Class U-6 shall have the right to elect
$80 million of the Qualified Securities available
for distribution to Classes U-4, U-5 and U-6 in
the aggregate (after allocation to Class U-7 and
after allocation pursuant to 3.B.i.), minus or
plus, as the case may be, 80/700 of the
difference between (x) the Qualified Securities
available for distribution to Classes U-4, U-5
and U-6 in the aggregate (after allocation to
Class U-7 and after allocation pursuant to
3.B.i.) and (y) the Qualified Securities
available for distribution to Classes U-4, U-5
and U-6 in the aggregate (after allocation to
Class U-7 and after allocation pursuant to
3.B.i.) if there were $700 million of Qualified
Securities available for distribution to Classes
U-4, U-5, U-6 and U-7, and (c) the right to elect
Qualified Securities by Classes U-4 and U-5 shall
be correspondingly adjusted to reflect the
disproportionate right of election of Class U-6
pursuant to this sentence.
Examples, assuming Allowed Claims as follows:
U-4: $480
U-5: 390
U-6: 240
$1.10 billion
$487.5 divided by (1,098+487.5)=30% of Qualified
Securities to U-7; 70% of Qualified Securities to
U-4 through U-6
<TABLE>
<CAPTION>
QUALIFIED SECURITIES<F1>
<S> <C> <C> <C>
$700 $900 $600
U-7: 210 270 180
---- --- ----
490 630 420
U-4: 240 240 240
---- --- ----
250 390 180
U-6: 80 80+(80/700x140)=96 80-(80/700x70)=72
U-5: 105 182 67
U-4: 65+240=305 112+240=35 241+240=281
- ----------------
<FN> For purposes of the examples, calculations are rounded to
nearest $.5 million.
</TABLE>
C. Allocation of Qualified Securities Among
Persons Making Election. If Holders of Class U-4
Subordinated Notes elect to receive Qualified
Securities in respect of Class U-4 Subordinated Notes
in an aggregate principal amount in excess of $240
million or Holders of Class U-6 Subordinated Notes
elect to receive Qualified Securities in respect of
Class U-6 Subordinated Notes in an aggregate principal
amount in excess of $80 million, pursuant to sections
3.B.i. and 3.B.ii., respectively, the Qualified
Securities so elected shall be allocated among such
electing Holders pro rata, based upon the aggregate
principal amount of Subordinated Notes elected by each
such Holder to be applied to such Qualified Securities
over the aggregate principal amount of Subordinated
Notes elected by all such Holders to be applied to
such Qualified Securities times $240 million or $80
million, as the case may be.
4. Effectiveness of this Agreement. This Agreement
shall become effective when executed by the parties
designated "Original Parties" on the signature page hereof
(the "Original Parties") and additional holders of
Subordinated Notes in Class U-6 whose Subordinated Notes,
together with the Subordinated Notes owned or controlled
by The Acacia Group and Gabriel Capital L.P. or for which
such parties are authorized to execute this Agreement,
represent not less than two-thirds in principal amount of
all Subordinated Notes in Class U-6; provided that such
Additional Parties shall have executed this Agreement no
later than April 15, 1994, unless such date shall be
extended by written notice given by the Bondholder
Proponents to The Acacia Group and Gabriel Capital L.P.
Each of The Acacia Group, Gabriel Capital L.P. and each
of the other holders of Subordinated Notes in Class U-6
which becomes a party to this Agreement represents that it
owns, controls or is authorized to execute this Agreement
on behalf of such party, the principal amount of
Subordinated Notes in Class U-6 set forth under its name
on the signature page hereof (which amounts shall not be
publicly disclosed except as may be required by applicable
law).
5. Effective Settlement.
A. Unless otherwise agreed by the Bondholder
Proponents, and except as provided in section 9
hereof, the Class U-6 parties hereto will not support
any proposed plan for any or all of the Debtors or
settlement of the LBO-Related Issues (the definition
of LBO-Related Issues in the Plan shall be amended by
adding the words "except claims and causes of action
against persons who are not Released Parties") other
than the Amended Plan, or as contained in the Amended
Plan as amended from time to time with the consent of
the Bondholder Proponents, so long as such Amended
Plan provides for relative treatment of the Class U-6
Claims that is at least as favorable as the relative
treatment provided herein.
B. Binding on Transferees. Each of the
Class U-6 parties hereto agrees not to sell or
otherwise transfer the Subordinated Notes in Class U-6
owned or controlled by such party unless either
(i) such Subordinated Notes shall be legended as
follows or effective arrangements shall first have
been made pursuant to an escrow or trust certificate
agreement to cause the certificate(s) evidencing such
Subordinated Notes in Class U-6 to be legended as
follows:
"The obligations evidenced hereby are subject to
the Agreement For Settlement of Pre-LBO Issues
and Treatment of Subordinated Notes Pursuant to
Chapter 11 Plan dated as of March 23, 1994, and
may not be transferred except in compliance
therewith. A copy of such Agreement is on file
at the offices of The Bank of New York, as escrow
agent and trustee,
or (ii) such holder's buyer or transferee confirms in
writing to such holder as follows:
"[Buyer or Transferee] agrees to comply with the
Pre-LBO Agreement dated as of March 23, 1994 to
which (Seller or Transferor) is a party. All
parties to such Agreement are third-party
beneficiaries of this Agreement."
Within five (5) business days of such holder's
receipt of such confirmation, such holder shall
furnish a copy of the confirmation to The Bank of New
York at 101 Barclay Street, 21st Floor, NY, NY 10286,
Attn: David G. Sampson. Upon the written request of
the Bondholder Proponents, acting in good faith to
monitor compliance with the Agreement. The Bank of
New York shall provide a copy of such confirmation to
the Bondholder Proponents. The sole function of The
Bank of New York shall be to hold copies of
confirmations actually delivered to it by the holders
and to provide copies of such confirmations as set
forth herein. If such sale is conducted through a
broker-dealer, such agreement may be set forth on the
"confirmation" of the sale or transfer of such
Subordinated Note.
C. Fraudulent Transfer Litigation. The parties
acknowledge that the indenture trustees for the
Class U-6 parties have commenced the Adversary
Proceeding for the stated purpose of preserving
LBO-Related Issues; however, such parties agree that,
so long as this Agreement shall remain in effect, they
will not actively pursue any litigation of the
LBO-Related Issues against any or all of the Released
Parties, and that such LBO-Related Issues shall be
settled to the extent and as provided herein and in
the Amended Plan upon the Effective Date of the
Amended Plan. The Amended Plan shall provide for a
clear reservation of rights against any and all
non-Released Parties.
6. Other Plan and Disclosure Statement Amendments.
The Original Plan shall, in addition, be amended as
follows:
A. The Certificate of Incorporation for
reorganized WII shall be amended as provided in
Exhibit 1 hereto.
B. "Proponents and Trustee Expenses" shall
include reasonable fees and expenses of all Proponents
and the trustees for the Pre-LBO Debentures, not
previously reimbursed by the Debtors, which in the
Disclosure Statement for the Amended Plan shall be set
forth for each Proponent and trustee in an estimated,
lump-sum amount and which the Proponents and trustees
shall support.
C. Any postponement of the date by which the
condition to confirmation set forth in section 10.1(a)
of the Original Plan after December 31, 1994 must be
agreed to by all Plan Proponents.
D. The parties shall agree on technical
amendments to be reflected in the Amended Plan and the
disclosure statement therefor to implement and
describe the terms of this Agreement.
7. Termination. This Agreement shall terminate upon
the earlier of the following:
A. Either (i) any of the Class U-6 parties
hereto shall breach any of its obligations hereunder
and such breach shall not be cured within twenty (20)
calendar days after written notice of such breach
shall have been given by the Bondholder Proponents to
the indenture trustees for the Pre-LBO Debentures and
The Acacia Group and Gabriel Capital L.P.; or (ii) any
of the Bondholder Proponents shall breach any of its
obligations hereunder and such breach shall not be
cured within twenty (20) calendar days after written
notice of such breach shall have been given by the
indenture trustees for the Pre-LBO Debentures and The
Acacia Group and Gabriel Capital L.P. to the
Bondholder Proponents.
B. Any holder of Class U-6 Claims is permitted
by the Court to pursue, and actively pursues,
litigation in respect of the LBO-Related issues
against any of the Debtors or any other Released Party
and such holder shall not cease to actively pursue
such litigation (and shall not cause any motions or
other legal process filed in connection with such
active pursuit to be withdrawn) within ten (10)
calendar days after written notice shall have been
given by the Bondholder Proponents to The Acacia Group
and Gabriel Capital L.P.
C. On December 31, 1994, at the election of the
Bondholder Proponents or The Acacia Group and Gabriel
Capital L.P., provided that the Court has not
previously entered the Confirmation Order.
D. All the parties hereto shall mutually agree
in writing to terminate this Agreement.
8. Amendments. This Agreement may not be amended
except in a writing signed by the parties hereto.
9. No Solicitation. Notwithstanding any other
provision of this Agreement, nothing in this Agreement is
intended to be or constitute, and shall not be deemed to
be or constitute, a solicitation of any vote or any
agreement to vote for or against any plan of
reorganization, and nothing in this Agreement shall impair
the right or the ability of any party to vote for or
against, or abstain from voting with respect to, any plan
of reorganization.
10. No Admissions or Waivers. No part of this
Agreement shall be deemed as an admission of any party for
any purpose. The parties hereto do not waive or release
any rights, claims, defenses or remedies, including in
respect of any "cram down" under section 1129(b) of the
Bankruptcy Code, until all conditions to the effectiveness
of the Amended Plan have been satisfied or waived.
11. Announcement. The Original Parties shall
coordinate the announcement of their entry into this
Agreement promptly after its execution by them.
12. Governing Law. Except to the extent the Code or
Bankruptcy Rules are applicable, the rights and
obligations arising under this Agreement shall be governed
by, and construed and enforced in accordance with, the
laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
13. Headings. The headings of the Sections,
paragraphs, and subsections of this Agreement are inserted
for convenience only and shall not affect the
interpretation hereof.
14. Notices. All notices, requests or demands under
or in connection with this Agreement shall be in writing
and shall be delivered by hand, sent by recognized
overnight courier or sent by telecopier, telex or similar
electronic means to the party as set forth under its
signature hereto, or to such other address or telecopier
number as such party shall provide to all parties hereto
in writing, and shall be deemed sent or given hereunder,
in the case of delivery by recognized overnight courier,
on the date of actual delivery, in the cases of
transmission by telecopier, telex or similar electronic
means on the date of actual transmission, and in the case
of personal delivery, on the date of actual delivery.
15. Extraterritoriality. It is the intention of the
parties that the settlements and other agreements
contained in this Agreement be given application both to
suits within and without the jurisdiction of the United
States.
16. Successors and Assigns. This Agreement is
intended to bind and inure to the benefit of the parties
hereof and their respective successors, assigns, heirs,
executors, administrators and representatives.
17. Complete Agreement. This document, including the
exhibit hereto, embodies the complete agreement and
understanding between the parties with respect to the
subject matter hereof and supersedes and preempts any
prior agreement, understanding or representation made by
and between any or all of such parties, whether written or
oral, which may have related to the subject matter hereof
in any way whatsoever, including without limitation the
Term Sheet.
18. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original and all of which shall constitute one and the
same Agreement.
Dated: As of March 23, 1994
ORIGINAL PARTIES
Institution:
LEHMAN BROTHERS, INC.,
in its individual capacity
By:/s/
Institution:
APOLLO ADVISORS, L.P.,
in its individual capacity
By:/s/
Institution:
GABRIEL CAPITAL L.P.
Principal Amount of
Subordinated
Notes in Class U-6:
By:/s/
Institution:
THE ACACIA GROUP.
in its individual capacity
Principal Amount of
Subordinated
Notes in Class U-6:
By:/s/
Institution:
MELLON BANK, N.A., as
Indenture Trustee
By:/s/
Institution:
THE BANK OF NEW YORK, as
Indenture Trustee
By:/s/
ADDITIONAL PARTIES
Institution:
Principal Amount of
Subordinated Notes in
Class U-6:
By:
Institution:
Principal Amount of
Subordinated Notes in
Class U-6:
By:
Institution:
Principal Amount of
Subordinated Notes in
Class U-6:
By:
Institution:
Principal Amount of
Subordinated Notes in
Class U-6:
By:
Institution:
Principal Amount of
Subordinated Notes in
Class U-6:
By:
<PAGE>
EXHIBIT 4:
NEW COMMON STOCK REGISTRATION RIGHTS AGREEMENT
<PAGE>
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
WALTER INDUSTRIES, INC.
AND
THE HOLDERS NAMED HEREIN
DATED AS OF , 1994
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions 1
2. Initial Registration Under the Securities Act 2
(a) Shelf Registration 2
(b) Effective Registration Statement 3
3. Securities Act Registration on Request 3
(a) Request 3
(b) Registration of Other Securities 4
(c) Registration Statement Form 4
(d) Effective Registration Statement 4
(e) Selection of Underwriters 4
(f) Priority in Requested Registration 5
(g) Shelf Registrations 5
4. Piggyback Registration 5
5. Expenses 6
6. Registration Procedures 6
7. Underwritten Offerings 9
(a) Requested Underwritten Offerings 9
(b) Piggyback Underwritten Offerings; Priority 9
(c) Holders of Registrable Common Stock to be
Parties to Underwriting Agreement 9
(d) Selection of Underwriters for Piggyback
Underwritten Offering 9
(e) Holdback Agreements 10
8. Preparation; Reasonable Investigation 10
(a) Registration Statements 10
(b) Confidentiality 10
9. Postponements 10
10. Indemnification 11
(a) Indemnification by the Company 11
(b) Indemnification by the Offerors and Sellers 12
(c) Notices of Losses, etc. 12
(d) Contribution 13
(e) Other Indemnification 13
(f) Indemnification Payments 13
11. Registration Rights to Others 13
12. Adjustments Affecting Registrable Common Stock 13
13. Rule 144 and Rule 144A 13
14. Amendments and Waivers 14
15. Nominees for Beneficial Owners 14
16. Assignment 14
17. Calculation of Percentage or Number of Shares of
Registrable Common Stock 14
18. Miscellaneous 14
(a) Further Assurances 14
(b) Headings 14
(c) No Inconsistent Agreements 15
(d) Remedies 15
(e) Entire Agreement 15
(f) Notices 15
(g) Governing Law 15
(h) Severability 15
(i) Counterparts 15
Schedules:
Schedule A--Holders of Registrable Common Stock
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of , 1994 (this
"Agreement"), by and among Walter Industries, Inc., a Delaware
corporation (the "Company"), and the holders of Registrable
Common Stock (as hereinafter defined) who are signatories to
this Agreement (the "Holders").<F1>
This Agreement is being entered into in connection with
the acquisition of Common Stock (as hereinafter defined) on the
date hereof by certain holders (the "Original Holders") pursuant
to the Plan (as hereinafter defined). Upon the issuance of the
Common Stock, each Original Holder will own the number of shares
of Common Stock specified with respect to such Original Holder
in Schedule A hereto.
To induce the holders of Registrable Common Stock (as
hereinafter defined) to vote in favor of the Plan and to accept
the issuance of the Common Stock by the Company under the Plan,
the Company has undertaken to register Registrable Common Stock
under the Securities Act (as hereinafter defined) and to take
certain other actions with respect to the Registrable Common
Stock. This Agreement sets forth the terms and conditions of
such undertaking.
In consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein,
capitalized terms used herein and in the recitals above shall
have the following meanings:
"Affiliate" of a Person means any Person that controls, is
under common control with, or is controlled by, such other
Person. For purposes of this definition, "control" means the
ability of one Person to direct the management and policies of
another Person.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to be closed.
"Commission" means the U.S. Securities and Exchange
Commission.
"Common Stock" means the shares of common stock, $.01 par
value per share, of the Company, as adjusted to reflect any
merger, consolidation, recapitalization, reclassification,
split-up, stock dividend, rights offering or reverse stock split
made, declared or effected with respect to the Common Stock.
"Effective Date" means the effective date of the Plan
pursuant to the terms thereof.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, or any
similar or successor statute.
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[FN] The signatories shall include each holder of Registrable
Common Stock which on the Effective Date is an Affiliate of KKR
Associates or is an officer or director of the Company.
<PAGE>
"Expenses" means, except as set forth in Section 5 hereof,
all expenses incident to the Company's performance of or
compliance with its obligations under this Agreement, including,
without limitation, all registration, filing, listing, stock
exchange and NASD fees, all fees and expenses of complying with
state securities or blue sky laws (including fees, disbursements
and other charges of counsel for the underwriters in connection
with blue sky filings), all word processing, duplicating and
printing expenses, messenger and delivery expenses, all rating
agency fees, the fees, disbursements and other charges of
counsel for the Company and of its independent public
accountants, including the expenses incurred in connection with
"cold comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of
securities and the reasonable fees, disbursements and other
charges of one firm of counsel (per registration prepared) to
the holders of Registrable Common Stock making a request
pursuant to Section 3(a) hereof (selected by the Holders holding
a majority of the shares of Registrable Common Stock covered by
such registration), but excluding underwriting discounts and
commissions and applicable transfer taxes, if any, which
discounts, commissions and transfer taxes shall be borne by the
seller or sellers of Registrable Common Stock in all cases;
provided, that, in the event the Company shall, in accordance
with Section 4 or Section 9 hereof, not register any securities
with respect to which it had given written notice of its
intention to register to holders of Registrable Common Stock,
notwithstanding anything to the contrary in the foregoing, all
of the reasonable out-of-pocket costs incurred by Requesting
Holders in connection with such registration (other than counsel
fees, disbursements and other charges not referred to above)
shall be deemed to be Expenses.
"Initiating Holders" has the meaning set forth in Section
3(a) hereof.
"NASD" means the National Association of Securities
Dealers, Inc.
"NASDAQ" means the National Association of Securities
Dealers, Inc. Automated Quotation System.
"Note Registration Rights Agreement" means the
Registration Rights Agreement, dated as of the date hereof,
among the Company and the holders of Registrable Notes (as
defined therein) who are signatories or are deemed to be
signatories thereto.
"Notes" means $[] in aggregate principal amount of []<F2>
issued on the date hereof, and includes any securities of the
Company issued or issuable with respect to such securities by
way of a recapitalization, merger, consolidation or other
reorganization or otherwise.
"Person" means any individual, corporation, partnership,
firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental or regulatory body or
subdivision thereof or other entity.
"Plan" means the Amended Joint Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code for Walter
Industries, Inc., as the same may be amended, modified or
supplemented from time to time in accordance with the terms
thereof.
"Public Offering" means a public offering and sale of
Common Stock pursuant to an effective registration statement
under the Securities Act.
"Registrable Common Stock" means any of the Common Stock
held by the Holders from time to time as to which registration
pursuant to the Securities Act is required for public sale.
"Requesting Holders" has the meaning set forth in Section
4 hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any
similar or successor statute.
"Selling Holders" means the holders of Registrable Common
Stock requested to be registered pursuant to Section 3(a)
hereof.
"Transfer" means any transfer, sale, assignment, pledge,
hypothecation or other disposition of any interest.
"Transferor" and "Transferee" have correlative meanings.
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[FN] Insert principal amount and title of Notes issued by the
Company.
<PAGE>
2. Initial Registration Under the Securities Act.
(a) Shelf Registration. The Company shall (i) cause
to be filed not later than 45 days after the Effective
Date a shelf registration statement pursuant to Rule 415
promulgated under the Securities Act (a "Shelf
Registration") providing for the sale by the Holders of
all of the Registrable Common Stock and (ii) use its
reasonable best efforts to have such Shelf Registration
thereafter declared effective by the Commission not later
than 90 days after the Effective Date. Subject to Section
9(b), the Company agrees to use its reasonable best
efforts to keep the Shelf Registration continuously
effective until the first anniversary of the date such
Shelf Registration is declared effective by the Commission
or such shorter period which will terminate when all of
the Registrable Common Stock covered by the Shelf
Registration have been sold pursuant to the Shelf
Registration. The Company further agrees, if necessary,
to supplement or amend the Shelf Registration, if required
by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf
Registration or by the Securities Act or by any other
rules and regulations thereunder for shelf registration,
and the Company agrees to furnish to the Holders copies of
any such supplement or amendment promptly after its being
issued or filed with the Commission.
(b) Effective Registration Statement. A Shelf
Registration pursuant to Section 2(a) hereof shall not be
deemed to have been effected
(i) unless a registration statement with respect
thereto has been declared effective by the Commission
and remains effective in compliance with the
provisions of the Securities Act and the laws of any
state or other jurisdiction applicable to the
disposition of all Registrable Common Stock covered by
such registration statement until such time as all of
such Registrable Common Stock have been disposed of in
accordance with such registration statement (provided
that such period need not exceed one year), or,
(ii) if, after it has become effective, such
registration is interfered with by any stop order,
injunction or other order or requirement of the
Commission or other governmental or regulatory agency
or court for any reason other than a violation of
applicable law solely by the Holders and has not
thereafter become effective.
3. Securities Act Registration on Request.
(a) Request. At any time and from time to time after
the expiration of the Shelf Registration filed by the
Company pursuant to Section 2(a) hereof (the "Initial
Shelf"), one or more Holders (the "Initiating Holders")
may make a written request (the "Initiating Request") to
the Company for the registration with the Commission under
the Securities Act of all or part of such Initiating
Holders' Registrable Common Stock; provided, however, that
such request shall be made by one or more Holders of at
least 5% of the outstanding shares of Registrable Common
Stock, which request shall specify the number of shares to
be disposed of and the proposed plan of distribution
therefor. Upon the receipt of any Initiating Request for
registration pursuant to this paragraph, the Company
promptly shall notify in writing all other Holders of the
receipt of such request and will use its best efforts to
effect, at the earliest possible date (taking into account
any delay that may result from any special audit required
by applicable law), such registration under the Securities
Act, including a Shelf Registration, of
(i) the Registrable Common Stock which the
Company has been so requested to register by such
Initiating Holder, and
(ii) all other Registrable Common Stock which
the Company has been requested to register by any
other Holders by written request given to the Company
within 30 days after the giving of written notice by
the Company to such other Holders of the Initiating
Request,
all to the extent necessary to permit the disposition (in
accordance with Section 3(c) hereof) of the Registrable Common
Stock so to be registered; provided, that,
(A) the Company shall not be required to
effect more than a total of two registrations
pursuant to this Section 3(a),
(B) if the intended method of distribution
is an underwritten public offering, the Company
shall not be required to effect such registration
pursuant to this Section 3(a) unless such
underwriting shall be conducted on a "firm
commitment" basis,
(C) if the Company shall have previously
effected a registration pursuant to this
Section 3(a) or shall have previously effected a
registration of which notice has been given to
the Holders pursuant to Section 4 hereof, a
Holder shall not request and the Company shall
not be required to effect any registration
pursuant to this Section 3(a) or Section 4 hereof
until a period of 180 days shall have elapsed
from the date on which such registration ceased
to be effective,
(D) subject to the last sentence of
Section 5(a) hereof, any Holder whose Registrable
Common Stock was to be included in any such
registration, by written notice to the Company,
may withdraw such request and, on receipt of such
notice of the withdrawal of such request from
Holders holding a percentage of Common Stock,
such that the Holders that have not elected to
withdraw do not hold, in the aggregate, the
requisite percentage of the Common Stock to
initiate a request under this Section 3(a), the
Company shall not effect such registration, and
(E) the Company shall not be required to
effect any registration to be effected pursuant
to this Section 3(a) unless at least 5% of the
shares of Registrable Common Stock outstanding at
the time of such request is to be included in
such registration.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to
Section 3(a) hereof, no securities other than
(i) Registrable Common Stock and (ii) subject to
Section 3(f), Common Stock to be sold by the Company for
its own account shall be included among the securities
covered by such registration unless the Selling Holders
holding not less than a majority of the shares of
Registrable Common Stock to be covered by such
registration shall have consented in writing to the
inclusion of such other securities.
(c) Registration Statement Form. Registrations under
Section 3(a) hereof shall be on such appropriate
registration form prescribed by the Commission under the
Securities Act as shall be selected by the Company and as
shall permit the disposition of the Registrable Common
Stock pursuant to an underwritten offering unless the
Selling Holders holding at least a majority of the shares
of Registrable Common Stock requested to be included in
such registration statement determine otherwise, in which
case pursuant to the method of disposition determined by
such Selling Holders. The Company agrees to include in
any such registration statement filed pursuant to
Section 3(a) hereof all information which any Selling
Holder, upon advice of counsel, shall reasonably request.
The Company may, if permitted by law, effect any
registration requested under this Section 3 by the filing
of a registration statement on Form S-3 (or any successor
or similar short form registration statement).
(d) Effective Registration Statement. A registration
requested pursuant to Section 3(a) hereof shall not be
deemed to have been effected
(i) unless a registration statement with respect
thereto has been declared effective by the Commission
and remains effective in compliance with the
provisions of the Securities Act and the laws of any
state or other jurisdiction applicable to the
disposition of all Registrable Common Stock covered by
such registration statement until such time as all of
such Registrable Common Stock have been disposed of in
accordance with such registration statement, provided,
that, except with respect to any Shelf Registration,
such period need not exceed 90 days, and, provided,
further, that with respect to any Shelf Registration,
such period need not extend beyond the period provided
for in Section 3(g) hereof,
(ii) if, after it has become effective, such
registration is interfered with by any stop order,
injunction or other order or requirement of the
Commission or other governmental or regulatory agency
or court for any reason other than a violation of
applicable law solely by the Selling Holders and has
not thereafter become effective or
(iii) if, in the case of an underwritten
offering, the conditions to closing specified in an
underwriting agreement to which the Company is a party
are not satisfied other than by reason of any breach
or failure by the Selling Holders, or are not
otherwise waived.
The holders of Registrable Common Stock to be included
in a registration statement may at any time terminate a
request for registration made pursuant to Section 3(a) in
accordance with Section 3(a)(ii)(D). Expenses incurred in
connection with a request for registration terminated
pursuant to this paragraph shall be paid in accordance
with the last sentence of Section 5(a) hereof.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering, if any, of the
Registrable Common Stock to be registered pursuant to
Section 3(a) hereof (i) shall be a nationally recognized
underwriter (or underwriters), (ii) shall be selected by
the Selling Holders owning at least a majority of the
shares of Registrable Common Stock to be registered and
(iii) shall be reasonably acceptable to the Company.
(f) Priority in Requested Registration. If a
registration under Section 3 hereof involves an
underwritten public offering, and the managing underwriter
of such underwritten offering shall advise the Company in
writing (with a copy to each Holder requesting that
Registrable Common Stock be included in such registration
statement) that, in its opinion, the number of shares of
Registrable Common Stock requested to be included in such
registration exceeds the number of such securities that
can be sold in such offering within a price range stated
to such managing underwriter by Selling Holders owning at
least a majority of the shares of Registrable Common Stock
requested to be included in such registration to be
acceptable to such Selling Holders, the Company shall
include in such registration, to the extent of the number
and type of securities which the Company is advised can be
sold in such offering, all Registrable Common Stock
requested to be registered pursuant to Section 3(a)
hereof, pro rata among the Selling Holders on the basis of
the number of shares of Registrable Common Stock requested
to be registered by all such holders, and no other shares
of Common Stock, whether to be sold by the Company or any
other Person.
(g) Shelf Registrations. If the first demand made
pursuant to Section 3(a) hereof is for a Shelf
Registration, the period for which such Shelf Registration
must remain effective need not extend beyond one year from
the date on which such Shelf Registration is declared
effective by the Commission and the period for which any
subsequent Shelf Registration must remain effective need
not extend beyond nine months from the date on which such
Shelf Registration is declared effective by the
Commission.
4. Piggyback Registration. If the Company at any time
after the termination of the Initial Shelf, proposes to register
any of its securities (other than any registration of
Registrable Notes pursuant to the Note Registration Rights
Agreement) under the Securities Act by registration on any forms
other than Form S-4 or S-8 (or any successor or similar forms),
whether or not pursuant to registration rights granted to other
holders of its securities and whether or not for sale for its
own account, it shall give prompt written notice to all of the
Holders of its intention to do so and of such Holders' rights
(if any) under this Section 4, which notice, in any event, shall
be given at least 30 days prior to such proposed registration.
Upon the written request of any Holder receiving notice of such
proposed registration that is a holder of Registrable Common
Stock (a "Requesting Holder") made within 20 days after the
receipt of any such notice (10 days if the Company states in
such written notice or gives telephonic notice to the relevant
securityholders, with written confirmation to follow promptly
thereafter, stating that (i) such registration will be on Form
S-3 and (ii) such shorter period of time is required because of
a planned filing date), which request shall specify the
Registrable Common Stock intended to be disposed of by such
Requesting Holder and the minimum offering price per share at
which the Holder is willing to sell its Registrable Common
Stock, the Company shall, subject to Section 7(b) hereof, effect
the registration under the Securities Act of all Registrable
Common Stock which the Company has been so requested to register
by the Requesting Holders thereof; provided, that,
(A) prior to the effective date of the
registration statement filed in connection with such
registration, promptly following receipt of
notification by the Company from the managing
underwriter of the price at which such securities are
to be sold, the Company shall so advise each
Requesting Holder of such price, and if such price is
below the minimum price which any Requesting Holder
shall have indicated to be acceptable to such
Requesting Holder, such Requesting Holder shall then
have the right irrevocably to withdraw its request to
have its Registrable Common Stock included in such
registration statement, by delivery of written notice
of such withdrawal to the Company within five business
days of its being advised of such price, without
prejudice to the rights of any holder or holders of
Registrable Common Stock to include Registrable Common
Stock in any future registration (or registrations)
pursuant to this Section 4 or to cause such
registration to be effected as a registration under
Section 3(a) hereof, as the case may be;
(B) if at any time after giving written notice
of its intention to register any securities and prior
to the effective date of the registration statement
filed in connection with such registration, the
Company shall determine for any reason not to register
or to delay registration of such securities, the
Company may, at its election, give written notice of
such determination to each Requesting Holder and
(i) in the case of a determination not to register,
shall be relieved of its obligation to register any
Registrable Common Stock in connection with such
registration (but not from any obligation of the
Company to pay the Expenses in connection therewith),
without prejudice, however, to the rights of any
Holder to include Registrable Common Stock in any
future registration (or registrations) pursuant to
this Section 4 or to cause such registration to be
effected as a registration under Section 3(a) hereof,
as the case may be, and (ii) in the case of a
determination to delay registering, shall be permitted
to delay registering any Registrable Common Stock, for
the same period as the delay in registering such other
securities; and
(C) if such registration involves an
underwritten offering, each Requesting Holder shall
sell its Registrable Securities on the same terms and
conditions as those that apply to the Company.
No registration effected under this Section 4 shall
relieve the Company of its obligation to effect any registration
upon request under Section 3(a) hereof and no registration
effected pursuant to this Section 4 shall be deemed to have been
effected pursuant to Section 3(a) hereof.
5. Expenses. The Company shall pay all Expenses in
connection with any registration initiated pursuant to
Section 2(a), 3(a) or 4 hereof, whether or not such registration
shall become effective and whether or not all or any portion of
the Registrable Common Stock originally requested to be included
in such registration are ultimately included in such
registration. Notwithstanding the foregoing, if any request for
registration made pursuant to Section 3(a) hereof is withdrawn
or terminated by the Selling Holders prior to the registration
becoming effective, the Expenses incurred in connection with
such request shall be borne by the Selling Holders pro rata on
the basis of the number of shares of Registrable Common Stock
requested to be registered pursuant to such demand by each
Selling Holder; provided, however, that, in the case of an
underwritten Public Offering, if such request for registration
is withdrawn or terminated by the Selling Holders prior to the
registration becoming effective because the offering price of
the Registrable Common Stock requested to be registered would,
in the opinion of the managing underwriter of such offering, be
less than 90% of the estimated offering price of the Common
Stock as indicated in writing by the managing underwriter prior
to the initial filing of such registration statement with the
Commission, the Company shall pay 50% of the Expenses in
connection with such registration and the Selling Holders shall
pay the remaining 50% on a pro rata basis.
6. Registration Procedures. If and whenever the Company
is required to effect any registration under the Securities Act
as provided in Sections 2(a), 3(a) and 4 hereof, the Company
shall, as expeditiously as possible:
(a) prepare and file with the Commission (promptly
and, in the case of any registration pursuant to
Section 3(a), in any event on or before the date that is
(i) 90 days after the end of the period within which
requests for registration may be given to the Company or
(ii) if, as of such ninetieth day, the Company does not
have the audited financial statements required to be
included in the registration statement, 30 days after the
receipt by the Company from its independent public
accountants of such audited financial statements, which
the Company shall use its reasonable best efforts to
obtain as promptly as practicable) the requisite
registration statement to effect such registration and
thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided,
however, that the Company may discontinue any registration
of its securities that are not shares of Registrable
Common Stock (and, under the circumstances specified in
Sections 4 and 9(b) hereof, its securities that are shares
of Registrable Common Stock) at any time prior to the
effective date of the registration statement relating
thereto;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective
and to comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of
all Registrable Common Stock covered by such registration
statement until such time as all of such Registrable
Common Stock has been disposed of in accordance with the
method of disposition set forth in such registration
statement; provided, that, except with respect to any
Shelf Registration, such period need not extend beyond
90 days after the effective date of the registration
statement; and provided, further, that with respect to the
Initial Shelf, such period need not extend beyond one year
after the effective date of such registration statement
and, with respect to any Shelf Registration other than the
Initial Shelf, such period need not exceed the applicable
period provided for in Section 3(g) hereof;
(c) furnish to each seller of Registrable Common
Stock covered by such registration statement such number
of copies of such drafts and final conformed versions of
such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits
and any documents incorporated by reference), such number
of copies of such drafts and final versions of the
prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the
requirements of the Securities Act, and such other
documents, as such seller may reasonably request in
writing;
(d) use its reasonable best efforts (i) to register
or qualify all Registrable Common Stock and other
securities covered by such registration statement under
such other securities or blue sky laws of such states or
other jurisdictions of the United States of America as the
sellers of Registrable Common Stock covered by such
registration statement shall reasonably request in
writing, (ii) to keep such registration or qualification
in effect for so long as such registration statement
remains in effect and (iii) to take any other action that
may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such
jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such
purpose be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subsection (d) be
obligated to be so qualified, to subject itself to
taxation in such jurisdiction or to consent to general
service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable
Common Stock and other securities covered by such
registration statement to be registered with or approved
by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel
to the Company and counsel to the seller or sellers of
Registrable Common Stock to enable the seller or sellers
thereof to consummate the disposition of such Registrable
Common Stock;
(f) use its best efforts to obtain and, if obtained,
furnish to each seller of Registrable Common Stock, and
each such seller's underwriters, if any, a signed
(i) opinion of counsel for the Company, dated
the effective date of such registration statement
(and, if such registration involves an underwritten
offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(ii) "comfort" letter, dated the effective date
of such registration statement (and, if such
registration involves an underwritten offering, dated
the date of the closing under the underwriting
agreement) and signed by the independent public
accountants who have certified the Company's financial
statements included or incorporated by reference in
such registration statement, reasonably satisfactory
in form and substance to such seller,
in each case, covering substantially the same matters
with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events
subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered
to underwriters in underwritten Public Offerings of
securities and, in the case of the accountants'
comfort letter, such other financial matters, and, in
the case of the legal opinion, such other legal
matters, as the sellers of the Registrable Common
Stock covered by such registration statement or the
underwriters, if any, may reasonably request;
(g) notify each seller of Registrable Common Stock
and other securities covered by such registration
statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a
result of which, the prospectus included in such
registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading in the light
of the circumstances under which they were made, and, at
the request of any such seller of Registrable Common
Stock, promptly prepare and furnish to it a reasonable
number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such
prospectus, as supplemented or amended, shall not include
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading in the light
of the circumstances under which they were made;
(h) otherwise comply with all applicable rules and
regulations of the Commission and any other governmental
agency or authority having jurisdiction over the offering,
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar
month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and furnish to each seller of
Registrable Common Stock at least ten days prior to the
filing thereof a copy of any amendment or supplement to
such registration statement or prospectus;
(i) upon a request of the Holders of a majority of
the shares of Registrable Common Stock requested to be
included in a registration pursuant to Section 3(a) or 4
hereof, made at any time on and after the first
anniversary of the date hereof, use its best efforts to
cause all such Registrable Common Stock covered by such
registration statement (i) to be listed on a national
securities exchange on which similar securities issued by
the Company are then listed, if the listing of such
Registrable Common Stock is then permitted under the rules
of such exchange or (ii) if the Company is not required
pursuant to clause (i) above to list such securities
covered by such registration statement on a national
securities exchange, use its best efforts to secure
designation of all Registrable Common Stock covered by
such registration statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 of the
Commission or, failing that, to secure NASDAQ
authorization for such Registrable Common Stock and,
without limiting the generality of the foregoing, to
arrange for at least two market makers to register with
the NASD as such with respect to such Registrable Common
Stock;
(j) provide a transfer agent and registrar for such
Registrable Common Stock covered by such Registration
Statement no later than the effective date thereof; and
(k) enter into such agreements and take such other
actions as any Holder or Holders of Registrable Common
Stock covered by such registration statement shall
reasonably request in order to expedite or facilitate the
disposition of such Registrable Common Stock.
The Company may require each seller of Registrable Common
Stock as to which any registration is being effected to furnish
the Company such information regarding such seller and the
distribution of the securities covered by such registration
statement as the Company may from time to time reasonably
request in writing and as is required by applicable laws and
regulations.
Each Holder agrees that as of the date that a final
prospectus is made available to it for distribution to
prospective purchasers of Registrable Common Stock it shall
cease to distribute copies of any preliminary prospectus
prepared in connection with the offer and sale of such
Registrable Common Stock. Each Holder further agrees that, upon
receipt of any notice from the Company of the happening of any
event of the kind described in subsection (g) of this Section 6,
such Holder shall forthwith discontinue such Holder's
disposition of Registrable Common Stock pursuant to the
registration statement relating to such Registrable Common Stock
until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subsection (g) of this
Section 6 and, if so directed by the Company, shall deliver to
the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the
prospectus relating to such Registrable Common Stock current at
the time of receipt of such notice. If any event of the kind
described in subsection (g) of this Section 6 occurs and such
event is the fault solely of a Holder (or Holders), such Holder
(or Holders) shall pay all Expenses attributable to the
preparation, filing and delivery of any supplemented or amended
prospectus contemplated by subsection (g) of this Section 6.
7. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested
by the underwriters in connection with a request for a
registration under Section 3 hereof, the Company shall
enter into a firm commitment underwriting agreement with
such underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to the
Company and a majority of the Selling Holders whose
Registered Common Stock is included in such registration,
and the underwriters and to contain such representations
and warranties by the Company and such other terms as are
generally prevailing in agreements of that type,
including, without limitation, indemnification and
contribution to the effect and to the extent provided in
Section 10 hereof.
(b) Piggyback Underwritten Offerings; Priority. If
the Company proposes to register any of its securities
under the Securities Act as contemplated by Section 4
hereof and such securities are to be distributed by or
through one or more underwriters, the Company shall, if
requested by any Requesting Holders, use its best efforts
to arrange for such underwriters to include all of the
Registrable Common Stock to be offered and sold by such
Requesting Holders among the securities of the Company to
be distributed by such underwriters; provided, that, if
the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the
Requesting Holders) that if all the Registrable Common
Stock requested to be included in such registration were
so included, in its opinion, the number and type of
securities proposed to be included in such registration
would exceed the number and type of securities which could
be sold in such offering within a price range acceptable
to the Company (such writing to state the basis of such
opinion and the approximate number and type of securities
which may be included in such offering without such
effect), then the Company shall include in such
registration, to the extent of the number and type of
securities which the Company is so advised can be sold in
such offering, (i) first, securities that the Company
proposes to issue and sell for its own account and
(ii) second, Registrable Common Stock requested to be
registered by Requesting Holders pursuant to Section 4
hereof, pro rata among the Requesting Holders on the basis
of the number of shares of Registrable Common Stock
requested to be registered by all such Requesting Holders.
Any Requesting Holder may withdraw its request to have
all or any portion of its Registrable Common Stock
included in any such offering by notice to the Company
within 10 Business Days after receipt of a copy of a
notice from the managing underwriter pursuant to this
Section 7(b).
(c) Holders of Registrable Common Stock to be Parties
to Underwriting Agreement. The holders of Registrable
Common Stock to be distributed by underwriters in an
underwritten offering contemplated by subsections (a) or
(b) of this Section 7 shall be parties to the underwriting
agreement between the Company and such underwriters and
any such Holder, at its option, may require that any or
all of the representations and warranties by, and the
other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and
for the benefit of such Holders and that any or all of the
conditions precedent to the obligations of such
underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders.
No such Holder shall be required to make any
representations or warranties to or agreements with the
Company or the underwriters other than representations,
warranties or agreements regarding such holder, such
Holder's Registrable Common Stock and such Holder's
intended method of distribution.
(d) Selection of Underwriters for Piggyback
Underwritten Offering. The underwriter or underwriters of
each piggyback underwritten offering pursuant to this
Section 7 shall be a nationally recognized underwriter (or
underwriters) selected by the Company.
(e) Holdback Agreements. Each Holder agrees, if so
required by the managing underwriter for any underwritten
offering pursuant to this Agreement, not to effect any
sale or distribution of any equity securities of the
Company or securities convertible into or exchangeable or
exercisable for equity securities of the Company issued
after the date hereof, including any sale under Rule 144
under the Securities Act, during the 10 days prior to the
date on which an underwritten registration of Registrable
Common Stock pursuant to Section 2(a), 3 or 4 hereof has
become effective and until 120 days after the effective
date of such underwritten registration, except as part of
such underwritten registration or to the extent that such
Holder is prohibited by applicable law from agreeing to
withhold securities from sale or is acting in its capacity
as a fiduciary or an investment adviser. Without limiting
the scope of the term "fiduciary," a holder shall be
deemed to be acting as a fiduciary or an investment
adviser if its actions or the securities proposed to be
sold are subject to the Employee Retirement Income
Security Act of 1974, as amended, the Investment Company
Act of 1940, as amended, or the Investment Advisers Act of
1940, as amended, or if such securities are held in a
separate account under applicable insurance law or
regulation.
The Company agrees (i) not to effect any Public
Offering or distribution of any equity securities of the
Company or securities convertible into or exchangeable or
exercisable for equity securities of the Company, during
the 10 days prior to the date on which any underwritten
registration pursuant to Section 2(a), 3 or 4 hereof has
become effective and until 120 days after the effective
date of such underwritten registration, except as part of
such underwritten registration, and (ii) to cause each
holder of any equity securities, or securities convertible
into or exchangeable or exercisable for equity securities,
in each case, acquired from the Company at any time on or
after the date of this Agreement (other than in a Public
Offering), to agree not to effect any Public Offering or
distribution of such securities, during such period.
8. Preparation; Reasonable Investigation.
(a) Registration Statements. In connection with the
preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the
Company shall give each holder of Registrable Common Stock
registered under such registration statement, the
underwriters, if any, and its respective counsel and
accountants the reasonable opportunity to participate in
the preparation of such registration statement, each
prospectus included therein or filed with the Commission,
and each amendment thereof or supplement thereto, and
shall give each of them such reasonable access to its
books and records and such reasonable opportunities to
discuss the business of the Company with its officers and
the independent public accountants who have certified its
financial statements as shall be necessary, in the
reasonable opinion of any such Holders' and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
(b) Confidentiality. Each Holder of Registrable
Common Stock shall maintain the confidentiality of any
confidential information received from or otherwise made
available by the Company to such Holder of Registrable
Common Stock and identified in writing by the Company as
confidential. Information that (i) is or becomes
available to a Holder of Registrable Common Stock from a
public source, (ii) is disclosed to a Holder of
Registrable Common Stock by a third-party source who the
Holder of Registrable Common Stock reasonably believes has
the right to disclose such information or (iii) is or
becomes required to be disclosed by a holder of
Registrable Common Stock by law, including by court order,
shall not be deemed to be confidential information for
purposes of this Agreement. The Holders of Registrable
Common Stock shall not grant access, and the Company shall
not be required to grant access, to information under this
Section 8 to any Person who will not agree to maintain the
confidentiality (to the same extent a Holder is required
to maintain confidentiality) of any confidential
information received from or otherwise made available to
it by the Company or the holders of Registrable Common
Stock under this Agreement and identified in writing by
the Company as confidential.
9. Postponements.
(a) If the Company shall fail to file any
registration statement to be filed pursuant to a request
for registration under Section 3(a) hereof, the Holders
requesting such registration shall have the right to
withdraw the request for registration if such withdrawal
shall be made by holders of Common Stock holding an amount
of Common Stock such that the Holders that have not
elected to withdraw do not hold the requisite percentage
of shares of Common Stock to initiate a request under
Section 3. Any such withdrawal shall be made by giving
written notice to the Company within 20 days after, in the
case of a request pursuant to Section 3(a) hereof, the
date on which a registration statement would otherwise
have been required to have been filed with the Commission
under clause (i) of Section 6(a) hereof (i.e., 20 days
after the date that is 90 days after the conclusion of the
period within which requests for registration may be given
to the Company, or, if, as of such ninetieth day, the
Company does not have the audited financial statements
required to be included in the registration statement,
30 days after the receipt by the Company from its
independent public accountants of such audited financial
statements). In the event of such withdrawal, the request
for registration shall not be counted for purposes of
determining the number of registrations to which Holders
are entitled pursuant to Section 3 hereof. The Company
shall pay all Expenses incurred in connection with a
request for registration withdrawn pursuant to this
paragraph.
(b) The Company shall not be obligated to file any
registration statement other than the Initial Shelf, or
file any amendment or supplement to any registration
statement other than the Initial Shelf, and may suspend
any seller's rights to make sales pursuant to any
effective registration statement (provided that it may not
suspend any Holder's rights to make sales pursuant to the
Initial Shelf prior to the nineteenth day following the
date on which the Initial Shelf is initially declared
effective), at any time when the Company, in the good
faith judgment of its Board of Directors, reasonably
believes that the filing thereof at the time requested, or
the offering of securities pursuant thereto, would
adversely affect a pending or proposed public offering of
the Company's securities, a material financing, or a
material acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction, or
negotiations, discussions or pending proposals with
respect thereto. The filing of a registration statement,
or any amendment or supplement thereto, by the Company
cannot be deferred, and the sellers' rights to make sales
pursuant to an effective registration statement cannot be
suspended, pursuant to the provisions of the preceding
sentence for more than ten days after the abandonment or
consummation of any of the foregoing proposals or
transactions or for more than 60 days after the date of
the Board's determination referenced in the preceding
sentence. If the Company suspends the sellers' rights to
make sales pursuant hereto, the applicable registration
period shall be extended by the number of days of such
suspension.
10. Indemnification.
(a) Indemnification by the Company. In connection
with any registration statement filed by the Company
pursuant to Section 2(a), 3(a) or 4 hereof, the Company
shall, and hereby agrees to, indemnify and hold harmless,
each Holder and seller of any Registrable Common Stock
covered by such registration statement and each other
Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any,
who controls such Holder or seller or any such
underwriter, and their respective directors, officers,
partners, agents and Affiliates (each, a "Company
Indemnitee" for purposes of this Section 10(a)), against
any losses, claims, damages, liabilities (or actions or
proceedings, whether commenced or threatened, in respect
thereof and whether or not such Indemnified Party is a
party thereto), joint or several, and expenses, including,
without limitation, the reasonable fees, disbursements and
other charges of legal counsel and reasonable costs of
investigation, to which such Company Indemnitee may become
subject under the Securities Act or otherwise
(collectively, a "Loss" or "Losses"), insofar as such
Losses arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained
in any registration statement under which such securities
were registered or otherwise offered or sold under the
Securities Act or otherwise, any preliminary prospectus,
final prospectus or summary prospectus contained therein,
or any amendment or supplement thereto (collectively,
"Offering Documents"), or any omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein in the
light of the circumstances in which they were made not
misleading; provided, that, the Company shall not be
liable in any such case to the extent that any such Loss
arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in such Offering Documents in reliance upon and in
conformity with written information furnished to the
Company through an instrument duly executed by or on
behalf of such Company Indemnitee specifically stating
that it is expressly for use therein; and provided,
further, that the Company shall not be liable to any
Person who participates as an underwriter in the offering
or sale of Registrable Common Stock or any other Person,
if any, who controls such underwriter, in any such case to
the extent that any such Loss arises out of such Person's
failure to send or give a copy of the final prospectus
(including any documents incorporated by reference
therein), as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of
Registrable Common Stock to such Person if such statement
or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Company
Indemnitee and shall survive the transfer of such
securities by such Company Indemnitee.
(b) Indemnification by the Offerors and Sellers. In
connection with any registration statement filed by the
Company pursuant to Section 2(a), 3(a) or 4 hereof in
which a Holder has registered for sale Registrable Common
Stock, each such Holder or seller of Registrable Common
Stock shall, and hereby agrees to, indemnify and hold
harmless the Company and each of its directors, officers,
employees and agents, each other Person, if any, who
controls the Company and each other seller and such
seller's directors, officers, stockholders, partners,
employees, agents and affiliates (each, a "Holder
Indemnitee" for purposes of this Section 10(b)), against
all Losses insofar as such Losses arise out of or are
based upon any untrue statement or alleged untrue
statement of a material fact contained in any Offering
Documents (or any document incorporated by reference
therein) or any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein in the light of
circumstances in which they were made not misleading, if
such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the
Company through an instrument duly executed by such Holder
or seller of Registrable Common Stock specifically stating
that it is expressly for use therein; provided, however,
that the liability of such indemnifying party under this
Section 10(b) shall be limited to the amount of the net
proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity
shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Holder
Indemnitee and shall survive the transfer of such
securities by such Holder.
(c) Notices of Losses, etc. Promptly after receipt
by an indemnified party of notice of the commencement of
any action or proceeding involving a Loss referred to in
the preceding subsections of this Section 10, such
indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written
notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified
party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the
preceding subsections of this Section 10, except to the
extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action
is brought against an indemnified party, the indemnifying
party shall be entitled to participate in and, unless in
such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties
may exist in respect of such Loss, to assume and control
the defense thereof, in each case at its own expense,
jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and
after its assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently
incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No
indemnifying party shall be liable for any settlement of
any such action or proceeding effected without its written
consent, which shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect of such Loss or which requires action
on the part of such indemnified party or otherwise
subjects the indemnified party to any obligation or
restriction to which it would not otherwise be subject.
(d) Contribution. If the indemnification provided
for in this Section 10 shall for any reason be unavailable
to an indemnified party under subsection (a) or (b) of
this Section 10 in respect of any Loss, then, in lieu of
the amount paid or payable under subsection (a) or (b) of
this Section 10, the indemnified party and the
indemnifying party under subsection (a) or (b) of this
Section 10 shall contribute to the aggregate Losses
(including legal or other expenses reasonably incurred in
connection with investigating the same) (i) in such
proportion as is appropriate to reflect the relative fault
of the Company and the prospective sellers of Registrable
Common Stock covered by the registration statement which
resulted in such Loss or action in respect thereof, with
respect to the statements, omissions or action which
resulted in such Loss or action in respect thereof, as
well as any other relevant equitable considerations, or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall
be appropriate to reflect the relative benefits received
by the Company, on the one hand, and such prospective
sellers, on the other hand, from their sale of Registrable
Common Stock; provided, that, for purposes of this clause
(ii), the relative benefits received by the prospective
sellers shall be deemed not to exceed the amount received
by such sellers. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent
misrepresentation. The obligations, if any, of the
selling holders of Registrable Common Stock to contribute
as provided in this subsection (d) are several in
proportion to the relative value of their respective
Registrable Common Stock covered by such registration
statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment
for any settlement of any action or Loss effected without
such Person's consent.
(e) Other Indemnification. The Company and, in
connection with any registration statement filed by the
Company pursuant to Section 2(a) each Holder shall, and,
in connection with any registration statement filed by the
Company pursuant to Section 3(a) or 4, each Holder who has
registered for sale Registrable Common Stock, shall, with
respect to any required registration or other
qualification of securities under any Federal or state law
or regulation of any governmental authority other than the
Securities Act, indemnify Holder Indemnitees and Company
Indemnitees, respectively, against Losses, or, to the
extent that indemnification shall be unavailable to a
Holder Indemnitee or Company Indemnitee, contribute to the
aggregate Losses of such Holder Indemnitee or Company
Indemnitee in a manner similar to that specified in the
preceding subsections of this Section 10 (with appropriate
modifications).
(f) Indemnification Payments. The indemnification
and contribution required by this Section 10 shall be made
by periodic payments of the amount thereof during the
course of any investigation or defense, as and when bills
are received or any Loss is incurred.
11. Registration Rights to Others.
If the Company shall at any time hereafter, other than
pursuant to the Note Registration Rights Agreement, provide to
any holder of any securities of the Company rights with respect
to the registration of such securities under the Securities Act
or the Exchange Act, such rights shall not be in conflict with
or adversely affect any of the rights provided in this Agreement
to the holders of Registrable Common Stock.
12. Adjustments Affecting Registrable Common Stock.
The Company shall not effect or permit to occur any
combination, subdivision or reclassification of Registrable
Common Stock that would materially adversely affect the ability
of the Holders to include such Registrable Common Stock in any
registration of its securities under the Securities Act
contemplated by this Agreement or the marketability of such
Registrable Common Stock under any such registration or other
offering.
13. Rule 144 and Rule 144A.
The Company shall take all actions reasonably necessary to
enable Holders to sell Registrable Common Stock without
registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, (b) Rule
144A under the Securities Act, as such Rule may be amended from
time to time, or (c) any similar rules or regulations hereafter
adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all
reports required to be filed under the Exchange Act. Upon the
request of any Holder, the Company shall deliver to such Holder
a written statement as to whether it has complied with such
requirements.
14. Amendments and Waivers.
Any provision of this Agreement may be amended, modified
or waived if, but only if, the written consent to such
amendment, modification or waiver has been obtained from
(i) except as provided in clause (ii) below, the Holder or
Holders of at least 66 2/3% of the shares of Registrable Common
Stock affected by such amendment, modification or waiver and
(ii) in the case of any amendment, modification or waiver of any
provision of Section 5 or 9 hereof or this Section 14 or any
provisions as to the number of requests for registration to
which holders of Registrable Common Stock are entitled under
Section 3 or 4 hereof, or as to the percentages of Holders
required for any amendment, modification or waiver, or any
amendment, modification or waiver which adversely affects any
right and/or obligation under this Agreement of any Holder, the
written consent of each Holder so affected.
15. Nominees for Beneficial Owners.
In the event that any Registrable Common Stock is held by
a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election in writing delivered to the
Company, be treated as the Holder of such Registrable Common
Stock for purposes of any request or other action by any Holder
or Holders pursuant to this Agreement or any determination of
the number or percentage of shares of Registrable Common Stock
held by any Holder or Holders contemplated by this Agreement.
If the beneficial owner of any Registrable Common Stock so
elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such
Registrable Common Stock.
16. Assignment.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. Any Holder may assign
to any permitted Transferee (as permitted under applicable law)
of its Registrable Common Stock its rights and obligations under
this Agreement, provided that such Transferee shall agree in
writing with the parties hereto prior to the assignment to be
bound by this Agreement as if it were an original party hereto,
whereupon such assignee shall for all purposes be deemed to be a
Holder under this Agreement. Except as provided above or
otherwise permitted by this Agreement, neither this Agreement
nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by any Holder without
the prior written consent of the other parties hereto. The
Company may not assign this Agreement or any right, remedy,
obligation or liability arising hereunder or by reason hereof.
17. Calculation of Percentage or Number of Shares of
Registrable Common Stock.
For purposes of this Agreement, all references to a
percentage or number of shares of Registrable Common Stock or
Common Stock shall be calculated based upon the number of shares
of Registrable Common Stock or Common Stock, as the case may be,
outstanding at the time such calculation is made and shall
exclude any Registrable Common Stock or Common Stock, as the
case may be, owned by the Company or any subsidiary of the
Company.
18. Miscellaneous.
(a) Further Assurances. Each of the parties hereto
shall execute such documents and other papers and perform
such further acts as may be reasonably required or
desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby.
(b) Headings. The headings in this Agreement are for
convenience of reference only and shall not control or
affect the meaning or construction of any provisions
hereof.
(c) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement which is inconsistent
with the rights granted to the Holders in this Agreement.
(d) Remedies. Each Holder, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and the Company
hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be
adequate.
(e) Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and
there are no restrictions, promises, representations,
warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set
forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
(f) Notices. Any notices or other communications to
be given hereunder by any party to another party shall be
in writing, shall be delivered personally, by telecopy, by
certified or registered mail, postage prepaid, return
receipt requested, or by Federal Express or other
comparable delivery service, to the address of the party
set forth on Schedule B hereto or to such other address as
the party to whom notice is to be given may provide in a
written notice to the other parties hereto, a copy of
which shall be on file with the Secretary of the Company.
Notice shall be effective when delivered if given
personally, when receipt is acknowledged if telecopied,
three days after mailing if given by registered or
certified mail as described above, and one business day
after deposit if given by Federal Express or comparable
delivery service.
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State
of New York applicable to agreements made to be performed
entirely in such State.
(h) Severability. Notwithstanding any provision of
this Agreement, neither the Company nor any other party
hereto shall be required to take any action which would be
in violation of any applicable Federal or state securities
law. The invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of any other
provision of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction,
it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest
extent permitted by law.
(i) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the
same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WALTER INDUSTRIES, INC.
By
Name:
Title:
HOLDERS:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
<PAGE>
SCHEDULE A
HOLDERS OF REGISTRABLE COMMON STOCK
NUMBER AND
TYPE OF
HOLDER SHARES OWNED
- ------ -------------
<PAGE>
SCHEDULE B
NOTICES
If to the Company, to:
[ ]
Attention:
Tel:
Fax:
with a copy to:
Attention:
Tel:
Fax:
If to the Holders, to:
with a copy to:
<PAGE>
EXHIBIT 5:
QUALIFIED SECURITIES REGISTRATION RIGHTS AGREEMENT
<PAGE>
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
WALTER INDUSTRIES, INC.
AND
THE HOLDERS NAMED HEREIN
DATED AS OF , 1994
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions 1
2. Initial Registration Under the Securities Act 2
(a) Shelf Registration 2
(b) Exchange Registration 3
(c) 3
(d) Effective Registration Statement 4
3. Securities Act Registration on Request 4
(a) Request 4
(b) Registration of Other Securities 5
(c) Registration Statement Form 5
(d) Effective Registration Statement 5
(e) Selection of Underwriters 6
(f) Priority in Requested Registration 6
(g) Shelf Registrations 6
4. Piggyback Registration 6
5. Expenses 7
6. Registration Procedures 7
7. Underwritten Offerings 10
(a) Requested Underwritten Offerings 10
(b) Piggyback Underwritten Offerings; Priority 10
(c) Holders of Registrable Notes to be
Parties to Underwriting Agreement 10
(d) Selection of Underwriters for Piggyback
Underwritten Offering 11
(e) Holdback Agreements 11
8. Preparation; Reasonable Investigation 11
(a) Registration Statements 11
(b) Confidentiality 11
9. Postponements 12
10. Indemnification 12
(a) Indemnification by the Company 12
(b) Indemnification by the Offerors and Sellers 13
(c) Notices of Losses, etc. 13
(d) Contribution 14
(e) Other Indemnification 14
(f) Indemnification Payments 14
11. Registration Rights to Others 14
12. Adjustments Affecting Registrable Notes 14
13. Rule 144 and Rule 144A 15
14. Amendments and Waivers 15
15. Nominees for Beneficial Owners 15
16. Assignment 15
17. Calculation of Percentage of Principal Amount
of Registrable Notes 15
18. Miscellaneous 15
(a) Further Assurances 15
(b) Headings 16
(c) No Inconsistent Agreements 16
(d) Remedies 16
(e) Entire Agreement 16
(f) Notices 16
(g) Governing Law 16
(h) Severability 16
(i) Counterparts 16
Schedules:
Schedule A--Holders of Registrable Notes
Schedule B--Notices
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of , 1994 (this
"Agreement"), by and among Walter Industries, Inc., a Delaware
corporation (the "Company"), and the holders of Registrable
Notes (as hereinafter defined) who are signatories to this
Agreement (the "Holders").
This Agreement is being entered into in connection with
the acquisition of Notes (as hereinafter defined) on the date
hereof by certain holders (the "Original Holders") pursuant to
the Plan (as hereinafter defined). Upon the issuance of the
Notes, each Original Holder will own the aggregate principal
amount of Notes specified with respect to such Original Holder
in Schedule A hereto.
To induce the holders of Registrable Notes (as hereinafter
defined) to vote in favor of the Plan and to accept the issuance
of the Notes by the Company under the Plan, the Company has
undertaken to register Registrable Notes under the Securities
Act (as hereinafter defined) and to take certain other actions
with respect to the Registrable Notes. This Agreement sets
forth the terms and conditions of such undertaking.
In consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein,
capitalized terms used herein and in the recitals above shall
have the following meanings:
"Affiliate" of a Person means any Person that controls, is
under common control with, or is controlled by, such other
Person. For purposes of this definition, "control" means the
ability of one Person to direct the management and policies of
another Person.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to be closed.
"Commission" means the U.S. Securities and Exchange
Commission.
"Common Stock" means the shares of common stock, $.01 par
value per share, of the Company, as adjusted to reflect any
merger, consolidation, recapitalization, reclassification,
split-up, stock dividend, rights offering or reverse stock split
made, declared or effected with respect to the Common Stock.
"Common Stock Registration Rights Agreement" means the
Registration Rights Agreement, dated as of the date hereof,
among the Company and the holders of Registrable Common Stock
(as defined therein) who are signatories or are deemed to be
signatories thereto.
"Effective Date" means the effective date of the Plan
pursuant to the terms thereof.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, or any
similar or successor statute.
"Exchange Offer" shall mean the exchange offer by the
Company of Exchange Securities for Registrable Notes pursuant to
Section 2(b) hereof.
"Exchange Securities" means securities issued by the
Company containing terms substantially identical to the
Registrable Notes, to be offered to holders of Registrable Notes
in exchange for Registrable Notes pursuant to the Exchange
Offer.
"Expenses" means, except as set forth in Section 5 hereof,
all expenses incident to the Company's performance of or
compliance with its obligations under this Agreement, including,
without limitation, all registration, filing, listing, stock
exchange and NASD fees, all fees and expenses of complying with
state securities or blue sky laws (including fees, disbursements
and other charges of counsel for the underwriters in connection
with blue sky filings), all word processing, duplicating and
printing expenses, messenger and delivery expenses, all rating
agency fees, the fees, disbursements and other charges of
counsel for the Company and of its independent public
accountants, including the expenses incurred in connection with
"cold comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of
securities and the reasonable fees, disbursements and
other charges of one firm of counsel (per registration prepared)
to the holders of Registrable Notes making a request pursuant to
Section 3(a) hereof (selected by the Holders holding a majority
of the aggregate principal amount of Registrable Notes covered
by such registration), but excluding underwriting discounts and
commissions and applicable transfer taxes, if any, which
discounts, commissions and transfer taxes shall be borne by the
seller or sellers of Registrable Notes in all cases; provided,
that, in the event the Company shall, in accordance with
Section 4 or Section 9 hereof, not register any securities with
respect to which it had given written notice of its intention to
register to holders of Registrable Notes, notwithstanding
anything to the contrary in the foregoing, all of the reasonable
out-of-pocket costs incurred by Requesting Holders in connection
with such registration (other than counsel fees, disbursements
and other charges not referred to above) shall be deemed to be
Expenses.
"Indenture" means the Indenture between the Company and ,
as trustee (the "Trustee"), dated , 1994, as amended from time
to time, relating to the Notes.
"Initiating Holders" has the meaning set forth in Section
3(a) hereof.
"NASD" means the National Association of Securities
Dealers, Inc.
"NASDAQ" means the National Association of Securities
Dealers, Inc. Automated Quotation System.
"Notes" means $[] in aggregate principal amount of []<F1>
issued on the date hereof, and includes any securities of the
Company issued or issuable with respect to such securities by
way of a recapitalization, merger, consolidation or other
reorganization or otherwise.
"Person" means any individual, corporation, partnership,
firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental or regulatory body or
subdivision thereof or other entity.
"Plan" means the Amended Joint Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code for Walter
Industries, Inc., as the same may be amended, modified or
supplemented from time to time in accordance with the terms
thereof.
"Public Offering" means a public offering and sale of
Common Stock pursuant to an effective registration statement
under the Securities Act.
"Registrable Notes" means any of the Notes held by the
Holders from time to time as to which registration pursuant to
the Securities Act is required for a public sale.
"Requesting Holders" has the meaning set forth in Section
4 hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any
similar or successor statute.
"Selling Holders" means the holders of Registrable Notes
requested to be registered pursuant to Section 3(a) hereof.
"Transfer" means any transfer, sale, assignment, pledge,
hypothecation or other disposition of any interest.
"Transferor" and "Transferee" have correlative meanings.
2. Initial Registration Under the Securities Act.
(a) Shelf Registration. The Company shall (i) cause
to be filed not later than 45 days after the Effective
Date a shelf registration statement pursuant to Rule 415
promulgated under the Securities Act (a "Shelf
Registration") providing for the sale by the Holders of
all of the Registrable Notes and (ii) use its reasonable
best efforts to have such Shelf Registration thereafter
declared effective by the Commission not later than 90
days after the Effective Date. Subject to Section 9(b),
the Company agrees to use its reasonable best efforts to
keep the Shelf Registration continuously effective until
the first anniversary of the date such Shelf Registration
is declared effective by the Commission or such shorter
period which will terminate when all of the Registrable
Notes covered by the Shelf Registration have been sold
pursuant to the Shelf Registration. The Company further
agrees, if necessary, to supplement or amend the Shelf
Registration, if required by the rules, regulations or
instructions applicable to the registration form used by
the Company for such Shelf Registration or by the
Securities Act or by any other rules and regulations
thereunder for shelf registration, and the Company agrees
to furnish to the Holders copies of any such supplement or
amendment promptly after its being issued or filed with
the Commission.
- ----------------
[FN] Insert principal amount and title of Notes issued by the
Company.
<PAGE>
(b) Exchange Registration. Notwithstanding the
provisions of Section 2(a), if the Company receives within
the time period referred to in Section 2(c) the notice
described therein, the Company shall, in lieu of causing a
Shelf Registration with respect to the Registrable Notes
to be filed and declared effective, cause to be filed with
the Commission, and use its reasonable best efforts to
have declared effective, not later than 45 days and
90 days, respectively, after receipt of such notice, a
registration statement on an appropriate form (the
"Exchange Registration") for the registration of the
Exchange Securities to be offered in exchange for the
Registrable Notes. The Company shall commence the
Exchange Offer promptly after the Exchange Registration
has been declared effective by the Commission by mailing
the related exchange offer prospectus and accompanying
documents to each Holder stating, in addition to such
other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made
pursuant to this Agreement and that any and all
Registrable Notes validly tendered will be accepted
for exchange;
(ii) the date of acceptance for exchange (which
shall be not less than 20 Business Days and not more
than 30 Business Days from the date such notice is
mailed, unless otherwise required by applicable
law)(the "Exchange Date");
(iii) that Holders electing to have a
Registrable Note exchanged pursuant to the Exchange
Offer will be required to surrender such Registrable
Note, together with the enclosed letters of
transmittal, to the institution and at the address
(located in the Borough of Manhattan, The City of New
York) specified in the notice prior to the close of
business on the Exchange Date; and
(iv) that Holders will be entitled to withdraw
their election, not later than the close of business
on the Exchange Date, by sending to the institution
and at the address (located in the Borough of
Manhattan, The City of New York) specified in the
notice a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the
principal amount of Registrable Notes delivered for
exchange and a statement that such Holder is
withdrawing its election to have such Notes exchanged.
As soon as practicable after the Exchange Date, the
Company shall:
(i) accept for exchange Registrable Notes or
portions thereof tendered and not validly withdrawn
pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the
Trustee for cancellation all Registrable Notes or
portions thereof so accepted for exchange by the
Company and issue, and cause the Trustee under the
Indenture to promptly authenticate and mail to each
Holder, a new Exchange Security, equal in principal
amount to the principal amount of the Registrable
Notes surrendered by such Holder.
The Company shall complete the Exchange Offer as provided
above and shall comply with the applicable requirements of
the Securities Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer.
(c) The Company shall effect an Exchange Registration
pursuant to Section 2(b) if, not later than the close of
business on the 30th calendar day next succeeding the
Effective Date of the Plan, the Company receives a notice
from any Holder requesting the Company to effect the
Exchange Registration and accompanied by a letter from
legal counsel to such Holder to the effect that the
operative facts surrounding such Exchange Registration are
not materially different than the operative facts
described in the interpretive letters of the Commission
referred to in clause (i) below. In connection with the
Exchange Registration, the Company (i) will provide a
letter to the staff of the Commission that contains
statements and representations substantially in the form
set forth in Mary Kay Cosmetics, Inc. (no-action letter
available June 5, 1991), Morgan Stanley & Co. Incorporated
(no-action letter available June 5, 1991), Warnaco, Inc.
(no-action letter available October 11, 1991), Epic
Properties, Inc. (no-action letter October 21, 1991) and
no-action letters to similar effect and (ii) will not seek
a "no-action" or interpretive position from the Commission
with respect to the Exchange Registration without the
consent of the Holders of a majority of the outstanding
aggregate principal amount of Registrable Notes.
(d) Effective Registration Statement. A Shelf
Registration pursuant to Section 2(a) or an Exchange
Registration pursuant to Section 2(b) hereof shall not be
deemed to have been effected
(i) unless a registration statement with respect
thereto has been declared effective by the Commission
and remains effective in compliance with the
provisions of the Securities Act and the laws of any
state or other jurisdiction applicable to the
disposition of all Registrable Notes covered by such
registration statement, in the case of a Shelf
Registration pursuant to Section 2(a) hereto, until
such time as all of such Registrable Notes have been
disposed of in accordance with such registration
statement (provided that such period need not exceed
one year) and, in the case of an Exchange Offer
Registration pursuant to Section 2(b) hereof, until
the closing of the Exchange Offer, or,
(ii) if, after it has become effective, such
registration is interfered with by any stop order,
injunction or other order or requirement of the
Commission or other governmental or regulatory agency
or court for any reason other than a violation of
applicable law solely by the Holders and has not
thereafter become effective.
3. Securities Act Registration on Request.
(a) Request. At any time and from time to time after
the completion of the Exchange Offer or the expiration of
the Shelf Registration filed by the Company pursuant to
Section 2(a) hereof (the "Initial Shelf"), one or more
Holders (the "Initiating Holders") may make a written
request (the "Initiating Request") to the Company for the
registration with the Commission under the Securities Act
of all or part of such Initiating Holders' Registrable
Notes; provided, however, that such request shall be made
by one or more Holders of at least 20% of the outstanding
aggregate principal amount of Registrable Notes, which
request shall specify the aggregate principal amount of
Registrable Notes to be disposed of and the proposed plan
of distribution therefor. Upon the receipt of any
Initiating Request for registration pursuant to this
paragraph, the Company promptly shall notify in writing
all other Holders of the receipt of such request and will
use its best efforts to effect, at the earliest possible
date (taking into account any delay that may result from
any special audit required by applicable law), such
registration under the Securities Act, including a Shelf
Registration, of
(i) the Registrable Notes which the Company has
been so requested to register by such Initiating
Holder, and
(ii) all other Registrable Notes which the
Company has been requested to register by any other
Holders by written request given to the Company within
30 days after the giving of written notice by the
Company to such other Holders of the Initiating
Request,
all to the extent necessary to permit the disposition (in
accordance with Section 3(c) hereof) of the Registrable
Notes so to be registered; provided, that,
(A) the Company shall not be required to
effect more than a total of two registrations
pursuant to this Section 3(a),
(B) if the intended method of distribution
is an underwritten public offering, the Company
shall not be required to effect such registration
pursuant to this Section 3(a) unless such
underwriting shall be conducted on a "firm
commitment" basis,
(C) if the Company shall have previously
effected a registration pursuant to this
Section 3(a) or shall have previously effected a
registration of which notice has been given to
the Holders pursuant to Section 4 hereof, a
Holder shall not request and the Company shall
not be required to effect any registration
pursuant to this Section 3(a) or Section 4 hereof
until a period of 180 days shall have elapsed
from the date on which such registration ceased
to be effective,
(D) subject to the last sentence of
Section 5(a) hereof, any Holder whose Registrable
Notes was to be included in any such
registration, by written notice to the Company,
may withdraw such request and, on receipt of such
notice of the withdrawal of such request from
Holders holding a percentage of Registrable
Notes, such that the Holders that have not
elected to withdraw do not hold, in the
aggregate, the requisite percentage of the
Registrable Notes to initiate a request under
this Section 3(a), the Company shall not effect
such registration, and
(E) the Company shall not be required to
effect any registration to be effected pursuant
to this Section 3(a) unless at least 20% of the
principal amount of Registrable Notes outstanding
at the time of such request is to be included in
such registration.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to
Section 3(a) hereof, no securities other than Registrable
Notes shall be included among the securities covered by
such registration unless the Selling Holders holding not
less than a majority of the aggregate principal amount of
Registrable Notes to be covered by such registration shall
have consented in writing to the inclusion of such other
securities.
(c) Registration Statement Form. Registrations under
Section 3(a) hereof shall be on such appropriate
registration form prescribed by the Commission under the
Securities Act as shall be selected by the Company and as
shall permit the disposition of the Registrable Notes
pursuant to an underwritten offering unless the Selling
Holders holding at least a majority of the aggregate
principal amount of Registrable Notes requested to be
included in such registration statement determine
otherwise, in which case pursuant to the method of
disposition determined by such Selling Holders. The
Company agrees to include in any such registration
statement filed pursuant to Section 3(a) hereof all
information which any Selling Holder, upon advice of
counsel, shall reasonably request. The Company may, if
permitted by law, effect any registration requested under
this Section 3 by the filing of a registration statement
on Form S-3 (or any successor or similar short form
registration statement).
(d) Effective Registration Statement. A registration
requested pursuant to Section 3(a) hereof shall not be
deemed to have been effected
(i) unless a registration statement with respect
thereto has been declared effective by the Commission
and remains effective in compliance with the
provisions of the Securities Act and the laws of any
state or other jurisdiction applicable to the
disposition of all Registrable Notes covered by such
registration statement until such time as all of such
Registrable Notes have been disposed of in accordance
with such registration statement, provided, that,
except with respect to any Shelf Registration, such
period need not exceed 90 days, and, provided,
further, that with respect to any Shelf Registration,
such period need not extend beyond the period provided
for in Section 3(g) hereof,
(ii) if, after it has become effective, such
registration is interfered with by any stop order,
injunction or other order or requirement of the
Commission or other governmental or regulatory agency
or court for any reason other than a violation of
applicable law solely by the Selling Holders and has
not thereafter become effective or
(iii) if, in the case of an underwritten
offering, the conditions to closing specified in an
underwriting agreement to which the Company is a party
are not satisfied other than by reason of any breach
or failure by the Selling Holders, or are not
otherwise waived.
The holders of Registrable Notes to be included in a
registration statement may at any time terminate a request
for registration made pursuant to Section 3(a) in
accordance with Section 3(a)(ii)(D). Expenses incurred in
connection with a request for registration terminated
pursuant to this paragraph shall be paid in accordance
with the last sentence of Section 5(a) hereof.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering, if any, of the
Registrable Notes to be registered pursuant to
Section 3(a) hereof (i) shall be a nationally recognized
underwriter (or underwriters), (ii) shall be selected by
the Selling Holders owning at least a majority of the
aggregate outstanding principal amount of Registrable
Notes to be registered and (iii) shall be reasonably
acceptable to the Company.
(f) Priority in Requested Registration. If a
registration under Section 3 hereof involves an
underwritten public offering, and the managing underwriter
of such underwritten offering shall advise the Company in
writing (with a copy to each Holder requesting that
Registrable Notes be included in such registration
statement) that, in its opinion, the aggregate principal
amount of Registrable Notes requested to be included in
such registration exceeds the aggregate principal amount
of such securities that can be sold in such offering
within a price range stated to such managing underwriter
by Selling Holders owning at least a majority of the
aggregate principal amount of Registrable Notes requested
to be included in such registration to be acceptable to
such Selling Holders, the Company shall include in such
registration, to the extent of the number and type of
securities which the Company is advised can be sold in
such offering, (i) all Registrable Notes requested to be
registered pursuant to Section 3(a) hereof, pro rata among
the Selling Holders on the basis of the aggregate
principal amount of Registrable Notes requested to be
registered by all such holders, and no other Notes,
whether to be sold by the Company or any other Person.
(g) Shelf Registrations. If the first demand made
pursuant to Section 3(a) hereof is for a Shelf
Registration, the period for which such Shelf Registration
must remain effective need not extend beyond one year from
the date on which such Shelf Registration is declared
effective by the Commission and the period for which any
subsequent Shelf Registration must remain effective need
not extend beyond nine months from the date on which such
Shelf Registration is declared effective by the
Commission.
4. Piggyback Registration. If the Company at any time
after the completion of the Exchange Offer or the termination of
the Initial Shelf, as the case may be, proposes to register any
of its securities (other than any registration of Registrable
Common Stock pursuant to the Common Stock Registration Rights
Agreement) under the Securities Act by registration on any forms
other than Form S-4 or S-8 (or any successor or similar
forms(s)), whether or not pursuant to registration rights
granted to other holders of its securities and whether or not
for sale for its own account, it shall give prompt written
notice to all of the Holders of its intention to do so and of
such Holders' rights (if any) under this Section 4, which
notice, in any event, shall be given at least 30 days prior to
such proposed registration. Upon the written request of any
Holder receiving notice of such proposed registration that is a
holder of Registrable Notes (a "Requesting Holder") made within
20 days after the receipt of any such notice (10 days if the
Company states in such written notice or gives telephonic notice
to the relevant securityholders, with written confirmation to
follow promptly thereafter, stating that (i) such registration
will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date), which request shall
specify the Registrable Notes intended to be disposed of by such
Requesting Holder and the minimum offering price per $1,000
principal amount of Note at which the Holder is willing to sell
its Registrable Notes, the Company shall, subject to
Section 7(b) hereof, effect the registration under the
Securities Act of all Registrable Notes which the Company has
been so requested to register by the Requesting Holders thereof;
provided, that,
(A) prior to the effective date of the
registration statement filed in connection with such
registration, promptly following receipt of
notification by the Company from the managing
underwriter of the price at which such securities are
to be sold, the Company shall so advise each
Requesting Holder of such price, and if such price is
below the minimum price which any Requesting Holder
shall have indicated to be acceptable to such
Requesting Holder, such Requesting Holder shall then
have the right irrevocably to withdraw its request to
have its Registrable Notes included in such
registration statement, by delivery of written notice
of such withdrawal to the Company within five business
days of its being advised of such price, without
prejudice to the rights of any holder or holders of
Registrable Notes to include Registrable Notes in any
future registration (or registrations) pursuant to
this Section 4 or to cause such registration to be
effected as a registration under Section 3(a) hereof,
as the case may be;
(B) if at any time after giving written notice
of its intention to register any securities and prior
to the effective date of the registration statement
filed in connection with such registration, the
Company shall determine for any reason not to register
or to delay registration of such securities, the
Company may, at its election, give written notice of
such determination to each Requesting Holder and
(i) in the case of a determination not to register,
shall be relieved of its obligation to register any
Registrable Notes in connection with such registration
(but not from any obligation of the Company to pay the
Expenses in connection therewith), without prejudice,
however, to the rights of any Holder to include
Registrable Notes in any future registration (or
registrations) pursuant to this Section 4 or to cause
such registration to be effected as a registration
under Section 3(a) hereof, as the case may be, and
(ii) in the case of a determination to delay
registering, shall be permitted to delay registering
any Registrable Notes, for the same period as the
delay in registering such other securities; and
(C) if such registration involves an
underwritten offering, each Requesting Holder shall
sell its Registrable Securities on the same terms and
conditions as those that apply to the Company.
No registration effected under this Section 4 shall
relieve the Company of its obligation to effect any registration
upon request under Section 3(a) hereof and no registration
effected pursuant to this Section 4 shall be deemed to have been
effected pursuant to Section 3(a) hereof.
5. Expenses. The Company shall pay all Expenses in
connection with any registration initiated pursuant to
Section 2(a), 2(b), 3(a) or 4 hereof, whether or not such
registration shall become effective and whether or not all or
any portion of the Registrable Notes originally requested to be
included in such registration are ultimately included in such
registration. Notwithstanding the foregoing, if any request for
registration made pursuant to Section 3(a) hereof is withdrawn
or terminated by the Selling Holders prior to the registration
becoming effective, the Expenses incurred in connection with
such request shall be borne by the Selling Holders pro rata on
the basis of the aggregate principal amount of Registrable Notes
requested to be registered pursuant to such demand by each
Selling Holder; provided, however, that, in the case of an
underwritten Public Offering, if such request for registration
is withdrawn or terminated by the Selling Holders prior to the
registration becoming effective because the offering price of
the Registrable Notes requested to be registered would, in the
opinion of the managing underwriter of such offering, be less
than 90% of the estimated offering price of the Notes as
indicated in writing by the managing underwriter prior to the
initial filing of such registration statement with the
Commission, the Company shall pay 50% of the Expenses in
connection with such registration, and the Selling Holders shall
pay the remaining 50% on a pro rata basis.
6. Registration Procedures.If and whenever the Company is
required to effect any registration under the Securities Act as
provided in Sections 2(a), 2(b), 3(a) and 4 hereof, the Company
shall, as expeditiously as possible:
(a) prepare and file with the Commission (promptly
and, in the case of any registration pursuant to
Section 3(a), in any event on or before the date that is
(i) 90 days after the end of the period within which
requests for registration may be given to the Company or
(ii) if, as of such ninetieth day, the Company does not
have the audited financial statements required to be
included in the registration statement, 30 days after the
receipt by the Company from its independent public
accountants of such audited financial statements, which
the Company shall use its reasonable best efforts to
obtain as promptly as practicable) the requisite
registration statement to effect such registration and
thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided,
however, that the Company may discontinue any registration
of its securities that are not Registrable Notes (and,
under the circumstances specified in Sections 4 and 9(b)
hereof, its securities that are Registrable Notes) at any
time prior to the effective date of the registration
statement relating thereto;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective
and to comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of
all Registrable Notes covered by such registration
statement until such time as all of such Registrable Notes
has been disposed of in accordance with the method of
disposition set forth in such registration statement;
provided, that, except with respect to any Shelf
Registration, such period need not extend beyond 90 days
after the effective date of the registration statement;
and provided, further, that with respect to the Initial
Shelf, such period need not extend beyond one year after
the effective date of such registration statement and,
with respect to any Shelf Registration other than the
Initial Shelf, such period need not exceed the applicable
period provided for in Section 3(g) hereof;
(c) in the case of a registration pursuant to Section
2(a), 3(a) or 4 hereof, furnish to each seller of
Registrable Notes covered by such registration statement
such number of copies of such drafts and final conformed
versions of such registration statement and of each such
amendment and supplement thereto (in each case including
all exhibits and any documents incorporated by reference),
such number of copies of such drafts and final versions of
the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the
requirements of the Securities Act, and such other
documents, as such seller may reasonably request in
writing;
(d) use its reasonable best efforts (i) to register
or qualify all Registrable Notes and other securities
covered by such registration statement under such other
securities or blue sky laws of such states or other
jurisdictions of the United States of America as the
sellers of Registrable Notes covered by such registration
statement shall reasonably request in writing, (ii) to
keep such registration or qualification in effect for so
long as such registration statement remains in effect and
(iii) to take any other action that may be reasonably
necessary or advisable to enable such sellers to
consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that the
Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so
qualified, to subject itself to taxation in such
jurisdiction or to consent to general service of process
in any such jurisdiction;
(e) use its best efforts to cause all Registrable
Notes and other securities covered by such registration
statement to be registered with or approved by such other
federal or state governmental agencies or authorities as
may be necessary in the opinion of counsel to the Company
and counsel to the seller or sellers of Registrable Notes
to enable the seller or sellers thereof to consummate the
disposition of such Registrable Notes;
(f) use its best efforts to obtain and, if obtained,
furnish to each seller of Registrable Notes, and each such
seller's underwriters, if any, a signed
(i) opinion of counsel for the Company, dated
the effective date of such registration statement
(and, if such registration involves an underwritten
offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(ii) "comfort" letter, dated the effective date
of such registration statement (and, if such
registration involves an underwritten offering, dated
the date of the closing under the underwriting
agreement) and signed by the independent public
accountants who have certified the Company's financial
statements included or incorporated by reference in
such registration statement, reasonably satisfactory
in form and substance to such seller,
in each case, covering substantially the same matters
with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events
subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered
to underwriters in underwritten Public Offerings of
securities and, in the case of the accountants'
comfort letter, such other financial matters, and, in
the case of the legal opinion, such other legal
matters, as the sellers of the Registrable Notes
covered by such registration statement or the
underwriters, if any, may reasonably request;
(g) notify each seller of Registrable Notes and other
securities covered by such registration statement at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that,
or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under
which they were made, and, at the request of any such
seller of Registrable Notes, promptly prepare and furnish
to it a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
securities, such prospectus, as supplemented or amended,
shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which
they were made;
(h) otherwise comply with all applicable rules and
regulations of the Commission and any other governmental
agency or authority having jurisdiction over the offering,
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar
month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and furnish to each seller of
Registrable Notes at least ten days prior to the filing
thereof a copy of any amendment or supplement to such
registration statement or prospectus;
(i) upon a request of the Holders of a majority of
the aggregate principal amount of Registrable Notes
requested to be included in a registration pursuant to
Section 3(a) or 4 hereof, made at any time on and after
the first anniversary of the date hereof, use its best
efforts to cause all such Registrable Notes covered by
such registration statement (i) to be listed on a national
securities exchange on which similar securities issued by
the Company are then listed, if the listing of such
Registrable Notes is then permitted under the rules of
such exchange or (ii) if the Company is not required
pursuant to clause (i) above to list such securities
covered by such registration statement on a national
securities exchange, use its best efforts to secure
designation of all Registrable Notes covered by such
registration statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the
Commission or, failing that, to secure NASDAQ
authorization for such Registrable Notes and, without
limiting the generality of the foregoing, to arrange for
at least two market makers to register with the NASD as
such with respect to such Registrable Notes;
(j) obtain a CUSIP number for all Exchange Securities
or Registrable Notes, as the case may be, not later than
the effective date of the registration statement with
respect to such Exchange Securities or Registrable Notes,
as the case may be;
(k) use its best efforts to cause the Indenture to be
qualified under the Trust Indenture Act of 1939, as
amended (the "TIA"), in connection with the registration
of the Exchange Securities or Registrable Notes, as the
case may be, and cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute and use
its best efforts to cause the Trustee to execute all
documents as may be required to effect such changes and
all other forms and documents required to be filed with
the Commission to enable the Indenture to be so qualified
in a timely manner; and
(l) enter into such agreements and take such other
actions as any Holder or Holders of Registrable Notes
covered by such registration statement shall reasonably
request in order to expedite or facilitate the disposition
of such Registrable Notes.
The Company may require each seller of Registrable Notes
as to which any registration is being effected to furnish the
Company such information regarding such seller and the
distribution of the securities covered by such registration
statement as the Company may from time to time reasonably
request in writing and as is required by applicable laws and
regulations.
In the case of a registration pursuant to Section 2(a),
3(a) or 4 hereof, each Holder agrees that as of the date that a
final prospectus is made available to it for distribution to
prospective purchasers of Registrable Notes it shall cease to
distribute copies of any preliminary prospectus prepared in
connection with the offer and sale of such Registrable Notes.
Each Holder further agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described
in subsection (g) of this Section 6, such Holder shall forthwith
discontinue such Holder's disposition of Registrable Notes
pursuant to the registration statement relating to such
Registrable Notes until such Holder's receipt of the copies of
the supplemented or amended prospectus contemplated by
subsection (g) of this Section 6 and, if so directed by the
Company, shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such
Holder's possession of the prospectus relating to such
Registrable Notes current at the time of receipt of such notice.
If any event of the kind described in subsection (g) of this
Section 6 occurs and such event is the fault solely of a Holder
(or Holders), such Holder (or Holders) shall pay all Expenses
attributable to the preparation, filing and delivery of any
supplemented or amended prospectus contemplated by subsection
(g) of this Section 6.
7. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested
by the underwriters in connection with a request for a
registration under Section 3 hereof, the Company shall
enter into a firm commitment underwriting agreement with
such underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to the
Company and a majority of the Selling Holders whose
Registrable Notes are included in such registration, and
the underwriters and to contain such representations and
warranties by the Company and such other terms as are
generally prevailing in agreements of that type,
including, without limitation, indemnification and
contribution to the effect and to the extent provided in
Section 10 hereof.
(b) Piggyback Underwritten Offerings; Priority. If
the Company proposes to register any of its securities
under the Securities Act as contemplated by Section 4
hereof and such securities are to be distributed by or
through one or more underwriters, the Company shall, if
requested by any Requesting Holders, use its best efforts
to arrange for such underwriters to include all of the
Registrable Notes to be offered and sold by such
Requesting Holders among the securities of the Company to
be distributed by such underwriters; provided, that, if
the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the
Requesting Holders) that if all the Registrable Notes
requested to be included in such registration were so
included, in its opinion, the number and type of
securities proposed to be included in such registration
would exceed the number and type of securities which could
be sold in such offering within a price range acceptable
to the Company (such writing to state the basis of such
opinion and the approximate number and type of securities
which may be included in such offering without such
effect), then the Company shall include in such
registration, to the extent of the number and type of
securities which the Company is so advised can be sold in
such offering, (i) first, securities that the Company
proposes to issue and sell for its own account and
(ii) second, Registrable Notes requested to be registered
by Requesting Holders pursuant to Section 4 hereof, pro
rata among the Requesting Holders on the basis of the
aggregate principal amount of Registrable Notes requested
to be registered by all such Requesting Holders.
Any Requesting Holder may withdraw its request to have
all or any portion of its Registrable Notes included in
any such offering by notice to the Company within 10
Business Days after receipt of a copy of a notice from the
managing underwriter pursuant to this Section 7(b).
(c) Holders of Registrable Notes to be Parties to
Underwriting Agreement. The holders of Registrable Notes
to be distributed by underwriters in an underwritten
offering contemplated by subsections (a) or (b) of this
Section 7 shall be parties to the underwriting agreement
between the Company and such underwriters and any such
Holder, at its option, may require that any or all of the
representations and warranties by, and the other
agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for
the benefit of such Holders and that any or all of the
conditions precedent to the obligations of such
underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders.
No such Holder shall be required to make any
representations or warranties to or agreements with the
Company or the underwriters other than representations,
warranties or agreements regarding such holder, such
Holder's Registrable Notes and such Holder's intended
method of distribution.
(d) Selection of Underwriters for Piggyback
Underwritten Offering. The underwriter or underwriters of
each piggyback underwritten offering pursuant to this
Section 7 shall be a nationally recognized underwriter (or
underwriters) selected by the Company.
(e) Holdback Agreements. Each Holder agrees, if so
required by the managing underwriter for any underwritten
offering pursuant to this Agreement, not to effect any
sale or distribution of any debt securities of the Company
issued after the date hereof during the 10 days prior to
the date on which an underwritten registration of
Registrable Notes pursuant to Section 2(a), 3 or 4 hereof
has become effective and until 120 days after the
effective date of such underwritten registration, except
as part of such underwritten registration or to the extent
that such Holder is prohibited by applicable law from
agreeing to withhold securities from sale or is acting in
its capacity as a fiduciary or an investment adviser.
Without limiting the scope of the term "fiduciary," a
holder shall be deemed to be acting as a fiduciary or an
investment adviser if its actions or the securities
proposed to be sold are subject to the Employee Retirement
Income Security Act of 1974, as amended, the Investment
Company Act of 1940, as amended, or the Investment
Advisers Act of 1940, as amended, or if such securities
are held in a separate account under applicable insurance
law or regulation.
The Company agrees (i) not to effect any Public Offering
or distribution of any debt securities of the Company during the
10 days prior to the date on which any underwritten registration
pursuant to Section 2(a), 3 or 4 hereof has become effective and
until 120 days after the effective date of such underwritten
registration, except as part of such underwritten registration,
and (ii) to cause each holder of any debt securities acquired
from the Company at any time on or after the date of this
Agreement (other than in a Public Offering), to agree not to
effect any Public Offering or distribution of such securities,
during such period.
8. Preparation; Reasonable Investigation.
(a) Registration Statements. In connection with the
preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the
Company shall give each holder of Registrable Notes
registered under such registration statement, the
underwriters, if any, and its respective counsel and
accountants the reasonable opportunity to participate in
the preparation of such registration statement, each
prospectus included therein or filed with the Commission,
and each amendment thereof or supplement thereto, and
shall give each of them such reasonable access to its
books and records and such reasonable opportunities to
discuss the business of the Company with its officers and
the independent public accountants who have certified its
financial statements as shall be necessary, in the
reasonable opinion of any such Holders' and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
(b) Confidentiality. Each Holder of Registrable
Notes shall maintain the confidentiality of any
confidential information received from or otherwise made
available by the Company to such Holder of Registrable
Notes and identified in writing by the Company as
confidential. Information that (i) is or becomes
available to a Holder of Registrable Notes from a public
source, (ii) is disclosed to a Holder of Registrable Notes
by a third-party source who the Holder of Registrable
Notes reasonably believes has the right to disclose such
information or (iii) is or becomes required to be
disclosed by a holder of Registrable Notes by law,
including by court order, shall not be deemed to be
confidential information for purposes of this Agreement.
The Holders of Registrable Notes shall not grant access,
and the Company shall not be required to grant access, to
information under this Section 8 to any Person who will
not agree to maintain the confidentiality (to the same
extent a Holder is required to maintain confidentiality)
of any confidential information received from or otherwise
made available to it by the Company or the holders of
Registrable Notes under this Agreement and identified in
writing by the Company as confidential.
9. Postponements.
(a) If the Company shall fail to file any
registration statement to be filed pursuant to a request
for registration under Section 3(a) hereof, the Holders
requesting such registration shall have the right to
withdraw the request for registration if such withdrawal
shall be made by holders of Notes holding an aggregate
principal amount of Notes such that the Holders that have
not elected to withdraw do not hold the requisite
percentage of Notes to initiate a request under Section 3.
Any such withdrawal shall be made by giving written notice
to the Company within 20 days after, in the case of a
request pursuant to Section 3(a) hereof, the date on which
a registration statement would otherwise have been
required to have been filed with the Commission under
clause (i) of Section 6(a) hereof (i.e., 20 days after the
date that is 90 days after the conclusion of the period
within which requests for registration may be given to the
Company, or, if, as of such ninetieth day, the Company
does not have the audited financial statements required to
be included in the registration statement, 30 days after
the receipt by the Company from its independent public
accountants of such audited financial statements). In the
event of such withdrawal, the request for registration
shall not be counted for purposes of determining the
number of registrations to which Holders are entitled
pursuant to Section 3 hereof. The Company shall pay all
Expenses incurred in connection with a request for
registration withdrawn pursuant to this paragraph.
(b) The Company shall not be obligated to file any
registration statement other than the Initial Shelf or the
Exchange Registration, or file any amendment or supplement
to any registration statement other than the Initial Shelf
or the Exchange Registration, and may suspend any seller's
rights to make sales pursuant to any effective
registration statement (provided that it may not suspend
the Company's or any Holder's rights to make exchanges or
sales pursuant to the Exchange Registration or the Initial
Shelf, respectively, prior to the ninetieth day following
the date on which the Exchange Registration or the Initial
Shelf initially is declared effective), at any time when
the Company, in the good faith judgment of its Board of
Directors, reasonably believes that the filing thereof at
the time requested, or the offering of securities pursuant
thereto, would adversely affect a pending or proposed
public offering of the Company's securities, a material
financing, or a material acquisition, merger,
recapitalization, consolidation, reorganization or similar
transaction, or negotiations, discussions or pending
proposals with respect thereto. The filing of a
registration statement, or any amendment or supplement
thereto, by the Company cannot be deferred, and the
sellers' rights to make sales pursuant to an effective
registration statement cannot be suspended, pursuant to
the provisions of the preceding sentence for more than ten
days after the abandonment or consummation of any of the
foregoing proposals or transactions or for more than
60 days after the date of the Board's determination
referenced in the preceding sentence. If the Company
suspends the sellers' rights to make sales pursuant
hereto, the applicable registration period shall be
extended by the number of days of such suspension.
10. Indemnification.
(a) Indemnification by the Company. In connection
with any registration statement filed by the Company
pursuant to Section 2(a), 3(a) or 4 hereof, the Company
shall, and hereby agrees to, indemnify and hold harmless,
each Holder and seller of any Registrable Notes covered by
such registration statement and each other Person who
participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who
controls such Holder or seller or any such underwriter,
and their respective directors, officers, partners, agents
and Affiliates (each, a "Company Indemnitee" for purposes
of this Section 10(a)), against any losses, claims,
damages, liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof and whether or
not such Indemnified Party is a party thereto), joint or
several, and expenses, including, without limitation, the
reasonable fees, disbursements and other charges of legal
counsel and reasonable costs of investigation, to which
such Company Indemnitee may become subject under the
Securities Act or otherwise (collectively, a "Loss" or
"Losses"), insofar as such Losses arise out of or are
based upon any untrue statement or alleged untrue
statement of any material fact contained in any
registration statement under which such securities were
registered or otherwise offered or sold under the
Securities Act or otherwise, any preliminary prospectus,
final prospectus or summary prospectus contained therein,
or any amendment or supplement thereto (collectively,
"Offering Documents"), or any omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein in the
light of the circumstances in which they were made not
misleading; provided, that, the Company shall not be
liable in any such case to the extent that any such Loss
arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in such Offering Documents in reliance upon and in
conformity with written information furnished to the
Company through an instrument duly executed by or on
behalf of such Company Indemnitee specifically stating
that it is expressly for use therein; and provided,
further, that the Company shall not be liable to any
Person who participates as an underwriter in the offering
or sale of Registrable Notes or any other Person, if any,
who controls such underwriter, in any such case to the
extent that any such Loss arises out of such Person's
failure to send or give a copy of the final prospectus
(including any documents incorporated by reference
therein), as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of
Registrable Notes to such Person if such statement or
omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Company
Indemnitee and shall survive the transfer of such
securities by such Company Indemnitee.
(b) Indemnification by the Offerors and Sellers. In
connection with any registration statement filed by the
Company pursuant to Section 2(a), 3(a) or 4 hereof in
which a Holder has registered for sale Registrable Notes,
each such Holder or seller of Registrable Notes shall, and
hereby agrees to, indemnify and hold harmless the Company
and each of its directors, officers, employees and agents,
each other Person, if any, who controls the Company and
each other seller and such seller's directors, officers,
stockholders, partners, employees, agents and affiliates
(each, a "Holder Indemnitee" for purposes of this Section
10(b)), against all Losses insofar as such Losses arise
out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any
Offering Documents (or any document incorporated by
reference therein) or any omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein in the
light of circumstances in which they were made not
misleading, if such untrue statement or alleged untrue
statement or omission or alleged omission was made in
reliance upon and in conformity with written information
furnished to the Company through an instrument duly
executed by such Holder or seller of Registrable Notes
specifically stating that it is expressly for use therein;
provided, however, that the liability of such indemnifying
party under this Section 10(b) shall be limited to the
amount of the net proceeds received by such indemnifying
party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of
the Holder Indemnitee and shall survive the transfer of
such securities by such Holder.
(c) Notices of Losses, etc. Promptly after receipt
by an indemnified party of notice of the commencement of
any action or proceeding involving a Loss referred to in
the preceding subsections of this Section 10, such
indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written
notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified
party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the
preceding subsections of this Section 10, except to the
extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action
is brought against an indemnified party, the indemnifying
party shall be entitled to participate in and, unless in
such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties
may exist in respect of such Loss, to assume and control
the defense thereof, in each case at its own expense,
jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and
after its assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently
incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No
indemnifying party shall be liable for any settlement of
any such action or proceeding effected without its written
consent, which shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect of such Loss or which requires action
on the part of such indemnified party or otherwise
subjects the indemnified party to any obligation or
restriction to which it would not otherwise be subject.
(d) Contribution. If the indemnification provided
for in this Section 10 shall for any reason be unavailable
to an indemnified party under subsection (a) or (b) of
this Section 10 in respect of any Loss, then, in lieu of
the amount paid or payable under subsection (a) or (b) of
this Section 10, the indemnified party and the
indemnifying party under subsection (a) or (b) of this
Section 10 shall contribute to the aggregate Losses
(including legal or other expenses reasonably incurred in
connection with investigating the same) (i) in such
proportion as is appropriate to reflect the relative fault
of the Company and the prospective sellers of Registrable
Notes covered by the registration statement which resulted
in such Loss or action in respect thereof, with respect to
the statements, omissions or action which resulted in such
Loss or action in respect thereof, as well as any other
relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received by
the Company, on the one hand, and such prospective
sellers, on the other hand, from their sale of Registrable
Notes; provided, that, for purposes of this clause (ii),
the relative benefits received by the prospective sellers
shall be deemed not to exceed the amount received by such
sellers. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. The
obligations, if any, of the selling holders of Registrable
Notes to contribute as provided in this subsection (d) are
several in proportion to the relative value of their
respective Registrable Notes covered by such registration
statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment
for any settlement of any action or Loss effected without
such Person's consent.
(e) Other Indemnification. The Company and, in
connection with any registration statement filed by the
Company pursuant to Section 2(a), each Holder shall, and,
in connection with any registration statement filed by the
Company pursuant to Section 3(a) or 4, each Holder who has
registered for sale Registrable Notes, shall, with respect
to any required registration or other qualification of
securities under any Federal or state law or regulation of
any governmental authority other than the Securities Act,
indemnify Holder Indemnitees and Company Indemnitees,
respectively, against Losses, or, to the extent that
indemnification shall be unavailable to a Holder
Indemnitee or Company Indemnitee, contribute to the
aggregate Losses of such Holder Indemnitee or Company
Indemnitee in a manner similar to that specified in the
preceding subsections of this Section 10 (with appropriate
modifications).
(f) Indemnification Payments. The indemnification
and contribution required by this Section 10 shall be made
by periodic payments of the amount thereof during the
course of any investigation or defense, as and when bills
are received or any Loss is incurred.
11. Registration Rights to Others.
If the Company shall at any time hereafter, other than
pursuant to the Common Stock Registration Rights Agreement,
provide to any holder of any securities of the Company rights
with respect to the registration of such securities under the
Securities Act or the Exchange Act, such rights shall not be in
conflict with or adversely affect any of the rights provided in
this Agreement to the holders of Registrable Notes.
12. Adjustments Affecting Registrable Notes.
The Company shall not effect or permit to occur any
combination, subdivision or reclassification of Registrable
Notes that would materially adversely affect the ability of the
Holders to include such Registrable Notes in any registration of
its securities under the Securities Act contemplated by this
Agreement or the marketability of such Registrable Notes under
any such registration or other offering.
13. Rule 144 and Rule 144A.
The Company shall take all actions reasonably necessary to
enable Holders to sell Registrable Notes without registration
under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, (b) Rule 144A under the
Securities Act, as such Rule may be amended from time to time,
or (c) any similar rules or regulations hereafter adopted by the
Commission, including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be
filed under the Exchange Act. Upon the request of any Holder,
the Company shall deliver to such Holder a written statement as
to whether it has complied with such requirements.
14. Amendments and Waivers.
Any provision of this Agreement may be amended, modified
or waived if, but only if, the written consent to such
amendment, modification or waiver has been obtained from
(i) except as provided in clause (ii) below, the Holder or
Holders of at least 66 2/3% of the aggregate principal amount of
Registrable Notes affected by such amendment, modification or
waiver and (ii) in the case of any amendment, modification or
waiver of any provision of Section 5 or 9 hereof or this Section
14 or any provisions as to the number of requests for
registration to which holders of Registrable Notes are entitled
under Section 3 or 4 hereof, or as to the percentages of Holders
required for any amendment, modification or waiver, or any
amendment, modification or waiver which adversely affects any
right and/or obligation under this Agreement of any Holder, the
written consent of each Holder so affected.
15. Nominees for Beneficial Owners.
In the event that any Registrable Note is held by a
nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election in writing delivered to the
Company, be treated as the Holder of such Registrable Note for
purposes of any request or other action by any Holder or Holders
pursuant to this Agreement or any determination of the number or
percentage of principal amount of Registrable Notes held by any
Holder or Holders contemplated by this Agreement. If the
beneficial owner of any Registrable Notes so elects, the Company
may require assurances reasonably satisfactory to it of such
owner's beneficial ownership of such Registrable Notes.
16. Assignment.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. Any Holder may assign
to any permitted Transferee (as permitted under applicable law)
of its Registrable Notes its rights and obligations under this
Agreement, provided that such Transferee shall agree in writing
with the parties hereto prior to the assignment to be bound by
this Agreement as if it were an original party hereto, whereupon
such assignee shall for all purposes be deemed to be a Holder
under this Agreement. Except as provided above or otherwise
permitted by this Agreement, neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by any Holder without the
prior written consent of the other parties hereto. The Company
may not assign this Agreement or any right, remedy, obligation
or liability arising hereunder or by reason hereof.
17. Calculation of Percentage of Principal Amount of
Registrable Notes.
For purposes of this Agreement, all references to an
aggregate principal amount of Registrable Notes or a percentage
thereof shall be calculated based upon the aggregate principal
amount of Registrable Notes outstanding at the time such
calculation is made and shall exclude any Registrable Notes or
Notes, as the case may be, owned by the Company or any
subsidiary of the Company.
18. Miscellaneous.
(a) Further Assurances. Each of the parties hereto
shall execute such documents and other papers and perform
such further acts as may be reasonably required or
desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby.
(b) Headings. The headings in this Agreement are for
convenience of reference only and shall not control or
affect the meaning or construction of any provisions
hereof.
(c) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement which is inconsistent
with the rights granted to the Holders in this Agreement.
(d) Remedies. Each Holder, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and the Company
hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be
adequate.
(e) Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and
there are no restrictions, promises, representations,
warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set
forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
(f) Notices. Any notices or other communications to
be given hereunder by any party to another party shall be
in writing, shall be delivered personally, by telecopy, by
certified or registered mail, postage prepaid, return
receipt requested, or by Federal Express or other
comparable delivery service, to the address of the party
set forth on Schedule B hereto or to such other address as
the party to whom notice is to be given may provide in a
written notice to the other parties hereto, a copy of
which shall be on file with the Secretary of the Company.
Notice shall be effective when delivered if given
personally, when receipt is acknowledged if telecopied,
three days after mailing if given by registered or
certified mail as described above, and one business day
after deposit if given by Federal Express or comparable
delivery service.
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State
of New York applicable to agreements made to be performed
entirely in such State.
(h) Severability. Notwithstanding any provision of
this Agreement, neither the Company nor any other party
hereto shall be required to take any action which would be
in violation of any applicable Federal or state securities
law. The invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of any other
provision of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction,
it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest
extent permitted by law.
(i) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the
same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WALTER INDUSTRIES, INC.
By
Name:
Title:
HOLDERS:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
[ ]
By
Name:
Title:
<PAGE>
SCHEDULE A
HOLDERS OF REGISTRABLE NOTES
AGGREGATE
PRINCIPAL
HOLDER AMOUNT
- ------ ---------
<PAGE>
SCHEDULE B
NOTICES
If to the Company, to:
[ ]
Attention:
Tel:
Fax:
with a copy to:
Attention:
Tel:
Fax:
If to the Holders, to:
with a copy to:
<PAGE>
EXHIBIT 6:
REJECTED EXECUTORY CONTRACTS
<PAGE>
REJECTED EXECUTORY CONTRACTS
1. The agreement (or agreements) under which KKR provides
financial, financial advisory, consulting and/or any other
services to Hillsborough and/or any other Debtor or
Affiliate thereof[CAD 252].
2. Letter Agreement (as defined in the Disclosure Statement),
dated September 18, 1987, between the KKR Investors and the
Drexel Burnham Lambert Group and the related agreement with
purchasers of Securities.
3. All Management Common Stock Subscription Agreements (as
defined in the Disclosure Statement).
4. The Registration Rights Agreement (as defined in the
Disclosure Statement).
5. All agreements containing or evidencing Stock Acquisition
Rights, including without limitation all options granted
under the Stock Option Plan for Key Employees of Walter
Industries and its Subsidiaries approved in October 1987;
such plan; and all Old Option Agreements (as defined in the
Disclosure Statement).
<PAGE>
EXHIBIT 7:
FORM OF MUTUAL RELEASES
<PAGE>
RELEASE
(Lehman Brothers Inc.--Releasor)
WHEREAS, the following entities (collectively, the
"Debtors") are Debtors in the consolidated bankruptcy cases
captioned "In re Hillsborough Holdings Corporation, et al.,
Bankr. M.D. Fla., Case Nos. 89-9715-8P1 through 89-9746-8P1,
and 90-11997-8P1" ("In re Hillsborough Holdings"):
Hillsborough Holdings Corporation
Best Insurors, Inc.
Best Insurors of Mississippi, Inc.
Coast to Coast Advertising, Inc.
Computer Holdings Corporation
Dixie Building Supplies, Inc.
Hamer Holdings Corporation
Hamer Properties, Inc.
Homes Holdings Corporation
Jim Walter Computer Services, Inc.
Jim Walter Homes, Inc.
Jim Walter Insurance Services, Inc.
Jim Walter Resources, Inc.
Jim Walter Window Components, Inc.
JW Aluminum Company
JW Resources, Inc.
JW Resources Holdings Corporation
J.W.I. Holdings Corporation
J.W. Walter, Inc.
JW Windows Components, Inc.
Land Holdings Corporation
Mid-State Homes, Inc.
Mid-State Holdings Corporation
Railroad Holdings Corporation
Sloss Industries Corporation
Southern Precision Corporation
United Land Corporation
United States Pipe and Foundry Company
U.S. Pipe Realty, Inc.
Vestal Manufacturing Company
Walter Home Improvement, Inc.
Walter Industries, Inc.
Walter Land Company;
WHEREAS, Lehman Brothers Inc. (the "Releasor") is a
substantial creditor of the Debtors and has actively
participated in the Debtors' chapter 11 cases, including in
respect of plan negotiations and formulation;
WHEREAS, the Debtors and Kohlberg Kravis Roberts & Co., KKR
Associates, JWC Associates, L.P., JWC Associates II, L.P. and
KKR Partners II, L.P. (collectively with the Debtors listed
above, the "Releasees") have actively participated in the
Debtors' chapter 11 cases, including in respect of plan
negotiations and formulation;
WHEREAS, the Releasor and the Releasees have settled all
claims related to the Debtors under the terms of the Amended
Joint Plan of Reorganization, dated as of November 22, 1994,
filed in In re Hillsborough Holdings, et al. (the "Consensual
Plan");
WHEREAS, the Releasor is executing this Release pursuant to
the terms of the Consensual Plan and for good and valuable
consideration, the adequacy, receipt and sufficiency of which
are hereby acknowledged;
NOW, THEREFORE, intending to be legally bound hereby, the
Releasor agrees as follows:
1. Consensual Plan and Defined Terms. All terms shall
have the meanings specified herein or (if not specified herein)
in the Consensual Plan.
2. Effective Date. This Release shall be effective and
binding as of the Effective Date provided for under the terms of
the Consensual Plan and covers activities occurring prior to and
including the Effective Date.
3. Release. The Releasor, being duly authorized, hereby
fully and forever irrevocably releases, relieves, quitclaims and
discharges each and all of the Releasees and each of their
respective subsidiaries and Affiliates and each of their present
or former directors, officers, partners, stockholders,
employees, agents, representatives, successors and assigns
(collectively, the "Related Parties"), from any and all claims,
causes of action, remedies and rights of any kind whatsoever, at
common law, equity, by statute or otherwise, whether they may be
asserted directly or indirectly, whether known or unknown,
concealed or hidden, and whether suspected or unsuspected, which
the Releasor ever had, currently has or hereafter may have
against each and all of the Releasees and their Related Parties
which in any way relate to any present or prior relationship
with any and all of the Releasees and any and all of their
Related Parties with respect to any or all of the Debtors, which
otherwise in any way relate to any or all of the Debtors or
which in any way relate to any of the matters, facts or
transactions alleged by the Releasor as serving as the basis for
a claim, cause of action, remedy [CAD 252]or right against any
or all of the Releasees or any or all of their Related Parties
with respect to any or all of the Debtors, provided, however,
that nothing in this Release shall release or otherwise affect
any (a) rights, debts, liabilities, obligations or promises
created by or arising under or out of the Consensual Plan; and
(b) preexisting rights, debts, obligations, liabilities or
promises unrelated to any or all of the Debtors.
4. Waiver Under Section 1542 of the California Civil Code
and Similar Provisions.
(a) THE RELEASOR EXPRESSLY UNDERSTANDS THAT Section
1542 of the Civil Code of the State of California provides
as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtors."
(b) To the extent that, notwithstanding paragraph 7
hereof, the laws of California or the laws of any other
jurisdiction may be applicable, THE RELEASOR HEREBY AGREES
THAT THE PROVISIONS OF SECTION 1542 of the Civil Code of
the State of California and all similar federal or state
laws, rights, rules or legal principles which may be
applicable hereto, to the extent they apply to any of the
matters released herein, ARE HEREBY KNOWINGLY AND
VOLUNTARILY WAIVED AND RELINQUISHED BY THE RELEASOR, in
each and every capacity, to the full extent that such
rights and benefits pertaining to the matters released
herein may be waived, and the Releasor hereby agrees and
acknowledges that this waiver is an essential term of this
Release, without which the consideration provided to it
would not have been given.
(c) In connection with such waiver and
relinquishment, the Releasor acknowledges that it is aware
that it may hereafter discover claims presently unknown or
unsuspected, or facts in addition to or different from
those which it now knows or believes to be true, with
respect to the matters released herein. Nevertheless, it
is its intent in executing this Release fully, finally and
forever to settle, release and discharge all such matters,
and all claims, causes of actions, remedies and rights
relative thereto, which the Releasor ever had, currently
has or hereafter may have (whether or not previously or
currently asserted in any action or proceeding).
5. Nonassignment of Claims. The Releasor hereby
represents and warrants that every claim, cause of action,
remedy and right released herein has not heretofore been
assigned, transferred or encumbered. The Releasor agrees to
indemnify each and all of the Releasees and each and all of
their Related Parties, and hold each and all of them harmless,
from and against any and all claims, causes of action, remedies
or rights released hereby based upon or arising in connection
with any such prior assignment, transfer or encumbrance.
6. Litigation Relating to this Release. In the event it
becomes necessary for any person or entity for whose benefit
this Release is executed to initiate or respond to any action or
proceeding to enforce the terms of this Release, the prevailing
party in any such action or proceeding shall be entitled, in
addition to any other relief awarded by the court or other
tribunal, to costs and expenses, including attorneys' fees,
actually incurred in any such action or proceeding by such
person or entity.
7. Governing Law. This Release and the obligations
arising hereunder shall be governed in all respects including
all matters of construction, validity and performance by, and
construed and enforced in accordance with, the laws of the State
of New York without regard to the principles thereof regarding
choice of law.
IN WITNESS WHEREOF, this Release has been executed this
day of , 1995.
LEHMAN BROTHERS INC.
By:____________________
Name:
Title:
<PAGE>
RELEASE
(KKR and Debtors--Releasors)
WHEREAS, the following entities (collectively, the
"Debtors") are Debtors in the consolidated bankruptcy cases
captioned "In re Hillsborough Holdings Corporation, et al.,
Bankr. M.D. Fla., Case Nos. 89-9715-8P1 through 89-9746-8P1,
and 90-11997-8P1" ("In re Hillsborough Holdings"):
Hillsborough Holdings Corporation
Best Insurors, Inc.
Best Insurors of Mississippi, Inc.
Coast to Coast Advertising, Inc.
Computer Holdings Corporation
Dixie Building Supplies, Inc.
Hamer Holdings Corporation
Hamer Properties, Inc.
Homes Holdings Corporation
Jim Walter Computer Services, Inc.
Jim Walter Homes, Inc.
Jim Walter Insurance Services, Inc.
Jim Walter Resources, Inc.
Jim Walter Window Components, Inc.
JW Aluminum Company
JW Resources, Inc.
JW Resources Holdings Corporation
J.W.I. Holdings Corporation
J.W. Walter, Inc.
JW Windows Components, Inc.
Land Holdings Corporation
Mid-State Homes, Inc.
Mid-State Holdings Corporation
Railroad Holdings Corporation
Sloss Industries Corporation
Southern Precision Corporation
United Land Corporation
United States Pipe and Foundry Company
U.S. Pipe Realty, Inc.
Vestal Manufacturing Company
Walter Home Improvement, Inc.
Walter Industries, Inc.
Walter Land Company;
WHEREAS, the Debtors and Kohlberg Kravis Roberts & Co., KKR
Associates, JWC Associates, L.P., JWC Associates II, L.P. and
KKR Partners II, L.P. (collectively with the Debtors listed
above, the "Releasors") have actively participated in the
Debtors' chapter 11 cases, including in respect of plan
negotiations and formulation;
WHEREAS, Lehman Brothers Inc. (the "Releasee") is a
substantial creditor of the Debtors and has actively
participated in the Debtors' chapter 11 cases, including in
respect of plan negotiations and formulation;
WHEREAS, the Releasors and the Releasee have settled all
claims related to the Debtors under the terms of the Amended
Joint Plan of Reorganization, dated as of November 22, 1994,
filed in In re Hillsborough Holdings, et al. (the "Consensual
Plan");
WHEREAS, the Releasors are executing this Release pursuant
to the terms of the Consensual Plan and for good and valuable
consideration, the adequacy, receipt and sufficiency of which
are hereby acknowledged;
NOW, THEREFORE, intending to be legally bound hereby, the
undersigned Releasors agree as follows:
1. Consensual Plan and Defined Terms. All terms shall
have the meanings specified herein or (if not specified herein)
in the Consensual Plan.
2. Effective Date. This Release shall be effective and
binding as of the Effective Date provided for under the terms of
the Consensual Plan and covers activities occurring prior to and
including the Effective Date.
3. Release. All of the Releasors and each of them, being
duly authorized, hereby fully and forever irrevocably release,
relieve, quitclaim and discharge the Releasee and its respective
subsidiaries and Affiliates and each of their present and former
directors, officers, partners, stockholders, employees, agents,
representatives, successors and assigns and any accounts managed
or controlled by any of them (collectively, the "Related
Parties"), from any and all claims, causes of action, remedies
and rights of any kind whatsoever, at common law, equity, by
statute or otherwise, whether they may be asserted directly or
indirectly, whether known or unknown, concealed or hidden, and
whether suspected or unsuspected, which each and all of the
Releasors or any of them ever had, currently have or hereafter
may have against any of the Releasee and any and all of its
Related Parties which in any way relate to any present or prior
relationship with any of the Releasee and any and all of its
Related Parties with respect to any or all of the Debtors, which
otherwise in any way relate to any or all of the Debtors or
which in any way relate to any of the matters, facts or
transactions alleged by any and all of the Releasors as serving
as the basis for a claim, cause of action, remedy or right
against any of the Releasee or any and all of its Related
Parties with respect to any or all of the Debtors, provided,
however, that nothing in this Release shall release or otherwise
affect any (a) rights, debts, liabilities, obligations or
promises created by or arising under or out of the Consensual
Plan; and (b) preexisting rights, debts, obligations,
liabilities or promises unrelated to any or all of the Debtors.
4. WAIVER UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE
AND SIMILAR PROVISIONS.
(a) THE RELEASORS EXPRESSLY UNDERSTAND THAT
Section 1542 of the Civil Code of the State of California
provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtors."
(b) To the extent that, notwithstanding paragraph 7
hereof, the laws of California or the laws of any other
jurisdiction may be applicable, THE RELEASORS HEREBY AGREE
THAT THE PROVISIONS OF SECTION 1542 of the Civil Code of
the State of California and all similar federal or state
laws, rights, rules or legal principles which may be
applicable hereto, to the extent they apply to any of the
matters released herein, ARE HEREBY KNOWINGLY AND
VOLUNTARILY WAIVED AND RELINQUISHED BY THE RELEASORS, in
each and every capacity, to the full extent that such
rights and benefits pertaining to the matters released
herein may be waived, and the Releasors hereby agree and
acknowledge that this waiver is an essential term of this
Release, without which the consideration provided to term
would not have been given.
(c) In connection with such waiver and relinquishment,
all of the Releasors and each of them acknowledge that they
are aware that they may hereafter discover claims presently
unknown or unsuspected, or facts in addition to or
different from those which they now know or believe to be
true, with respect to the matters released herein.
Nevertheless, it is their intent in executing this Release
fully, finally and forever to settle, release and discharge
all such matters, and all claims, causes of action,
remedies and rights relative thereto, which any and all of
the Releasors ever had, currently has or hereafter may have
(whether or not previously or currently asserted in any
action or proceeding).
5. Nonassignment of Claims. The Releasors hereby
represent and warrant that every claim, cause of action, remedy
and right released herein has not heretofore been assigned,
transferred or encumbered. The Releasors agree to indemnify any
of the Releasee and any and all of its Related Parties, and hold
each and all of them harmless, from and against any and all
claims, causes of action, remedies and rights released hereby
based upon or arising in connection with any such prior
assignment, transfer or encumbrance.
6. Litigation Relating to this Release. In the event it
becomes necessary for any person or entity for whose benefit
this Release is executed to initiate or respond to any action or
proceeding to enforce the terms of this Release, the prevailing
party in any such action or proceeding shall be entitled, in
addition to any other relief awarded by the court or other
tribunal, to costs and expenses, including attorneys' fees,
actually incurred in any such action or proceeding by such
person or entity.
7. Governing Law. This Release and the obligations
arising hereunder shall be governed in all respects including
all matters of construction, validity and performance by, and
construed and enforced in accordance with, the laws of the State
of New York without regard to the principles thereof regarding
choice of law.
8. Counterparts. This Release may be executed in multiple
counterparts, each of which shall be deemed to be an original as
to the Releasor on whose behalf it is executed.
IN WITNESS WHEREOF, this Release has been executed this
day of , 1995.
HILLSBOROUGH HOLDINGS CORPORATION,
BEST INSURORS, INC.,
BEST INSURORS OF MISSISSIPPI, INC.,
COAST TO COAST ADVERTISING, INC.,
COMPUTER HOLDINGS CORPORATION,
DIXIE BUILDING SUPPLIES, INC.,
HAMER HOLDINGS CORPORATION,
HAMER PROPERTIES, INC.,
HOMES HOLDINGS CORPORATION,
JIM WALTER COMPUTER SERVICES, INC.,
JIM WALTER HOMES, INC.
JIM WALTER INSURANCE SERVICES, INC.,
JIM WALTER RESOURCES, INC.,
JIM WALTER WINDOW COMPONENTS, INC.,
JW ALUMINUM COMPANY,
JW RESOURCES, INC.,
JW RESOURCES HOLDINGS CORPORATION,
J.W.I. HOLDINGS CORPORATION
J.W. WALTER, INC.
JW WINDOW COMPONENTS, INC.,
LAND HOLDINGS CORPORATION,
MID-STATE HOMES, INC.,
MID-STATE HOLDINGS CORPORATION,
RAILROAD HOLDINGS CORPORATION,
SLOSS INDUSTRIES CORPORATION,
SOUTHERN PRECISION CORPORATION,
UNITED LAND CORPORATION,
UNITED STATES PIPE AND FOUNDRY COMPANY,
U.S. PIPE REALTY, INC.,
VESTAL MANUFACTURING COMPANY,
WALTER HOME IMPROVEMENT, INC., and
WALTER LAND COMPANY
By:
Name: Kenneth J. Matlock
Title:
Vice President
KOHLBERG KRAVIS ROBERTS & CO.
KKR ASSOCIATES
JWC ASSOCIATES, L.P.
JWC ASSOCIATES II, L.P.
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES
By:__________________
Name:
Title:
[Additional Forms of Release to be filed at a later date]
<PAGE>
EXHIBIT 8:
RECORD HOLDERS OF SUBORDINATED NOTE
CLAIMS THAT MADE THE SUBORDINATED NOTE
CLAIM ELECTION AND AGGREGATE AMOUNT OF
CLAIM OF EACH SUCH HOLDER ELECTED TO BE
RECEIVED IN THE FORM OF QUALIFIED
SECURITIES PURSUANT TO SUBORDINATED NOTE
CLAIM ELECTION
<PAGE>
EXHIBIT 8
SUBORDINATED NOTE CLAIM ELECTION
CLASS U-4
AGGREGATE PRINCIPAL
AMOUNT OF ALLOWED
SUBORDINATED NOTE
CLAIMS ELECTED TO BE
RECORD HOLDERS OF SATISFIED BY
SUBORDINATED NOTE CLAIMS QUALIFIED SECURITIES
- ------------------------ --------------------
GOLDMAN SACHS & CO $ 3,008,000.00
LEWCO SECURITIES CORP 4,925,000.00
BEAR STEARNS SEC CORP 1,700,000.00
BEAR STEARNS SEC CORP 54,454.00
SMITH BARNEY SHEARSON INC 158,790,466.00
SMITH BARNEY SHEARSON INC 3,525,000.00
OPPENHEIMER & CO INC 1,000,000.00
SPEAR LEEDS & KELLOG 2,300,000.00
BOSTON SAFE DEPOSIT & TR CO 271,657.00
MORGAN STANLEY & CO INC 20,810,000.00
ATWELL & CO 60,222,859.00
BOOTH & CO 2,400,000.00
CATAMARAN & CO 630,000.00
TRUST OF GE RETIRE TRUST 18,991,161.00
HUDD & CO 7,550,000.00
MAC & CO 997,790.00
MAC & CO 13,245,580.00
MOMINT 2,104,000.00
SMOG & CO 2,000,000.00
TES & CO 7,000,000.00
UMBWAD & CO 5,275,000.00
HARE & CO 60,222,859.00
---------------
TOTAL $377,023,826.00
---------------
<PAGE>
CLASS U-5
AGGREGATE PRINCIPAL
AMOUNT OF ALLOWED
SUBORDINATED NOTE
CLAIMS ELECTED TO BE
RECORD HOLDERS OF SATISFIED BY
SUBORDINATED NOTE CLAIMS QUALIFIED SECURITIES
- ------------------------ --------------------
GOLDMAN SACHS & CO $ 6,540,000.00
GOLDMAN SACHS & CO 2,000,000.00
MORGAN STANLEY & CO INC 13,734,000.00
KIDDER PEABODY & CO INC 2,050,000.00
NEUBERGER & BERMAN 4,860,000.00
BEAR STEARNS SEC CORP 1,146,000.00
SMITH BARNEY SHEARSON INC 111,948,000.00
SMITH BARNEY SHEARSON INC 1,540,000.00
OPPENHEIMER & CO INC 17,000.00
BROWN ALEX & SONS INC 40,000.00
OCONNOR & ASSOCIATES 2,677,000.00
BANK OF NEW YORK 7,685,000.00
UNITED STATES TRUST CO NY 14,000,000.00
BOSTON SAFE DEPOSIT & TR CO 1,510,000.00
FIRST NATIONAL BANK OF BOSTON 600,000.00
SSB CUSTODIAN 5,000,000.00
SSB CUSTODIAN 5,000,000.00
SSB CUSTODIAN 600,000.00
BANK OF AMERICA NATL TR & SAV 1,250,000.00
BANK OF AMERICA NT & SA FRANKLIN 1,000,000.00
UNITED MISSOURI BANK NA 27,045,000.00
HARRIS TRUST & SAVINGS BANK 1,300,000.00
NATWEST SECURITIES CORP 3 2,745,000.00
BANKERS TRUST COMPANY 3,550,000.00
CRAIG, LINDA E. CUST MILES ERICSON 10,000.00
CRAIG, LINDA E. CUST SAMUEL CALVIN 30,000.00
ML LEE ACQUISITION FUND 12,000,000.00
PITT & CO 500,000.00
PITT & CO 17,200,000.00
HARE & CO 12,500,000.00
---------------
TOTAL $260,077,000.00
---------------
<PAGE>
CLASS U-6
AGGREGATE PRINCIPAL
AMOUNT OF ALLOWED
SUBORDINATED NOTE
CLAIMS ELECTED TO BE
RECORD HOLDERS OF SATISFIED BY
SUBORDINATED NOTE CLAIMS QUALIFIED SECURITIES
- ------------------------ --------------------
MORGAN STANLEY & CO INC $ 28,520,000.00
GOLDMAN SACHS & CO 6,570,000.00
MORGAN STANLEY & CO INC 6,250,000.00
BANKERS TRUST COMPANY 11,200,000.00
CITICORP SECURITIES INC 630,000.00
BT SECURITIES CORP 3,140,000.00
BANK OF AMERICA NT & SA 3,000,000.00
FIRST TRUST NATL ASSOC 500,000.00
SSB CUSTODIAN 600,000.00
BOSTON SAFE DEPOSIT & TR CO 730,000.00
SMITH BARNEY SHEARSON INC 1,325,000.00
FIRST BOSTON CORP 150,000.00
BEAR STEARNS SEC CORP 45,000.00
NEUBERGER & BERMAN 300,000.00
BROWN ALEX & SONS INC 5,000.00
BANKERS TRUST COMPANY 2,925,00.00
MERRILL LYNCH PIERCE FENNER 15,000.00
NORTHERN TRUST CO TRUST 250,000.00
FIRST NATIONAL BANK OF BOSTON 420,000.00
BOSTON SAFE DEPOSIT & TR CO 545,000.00
UNITED STATES TRUST CO NY 1,000,000.00
GOLDMAN SACHS & CO 3,605,000.00
GOLDMAN SACHS & CO 850,000.00
MORGAN STANLEY & CO INC 19,919,000.00
NEUBERGER & BERMAN 1,400,000.00
SCHWAB CHARLES & CO INC 30,000.00
BEAR STEARNS SEC CORP 3,567,000.00
SMITH BARNEY SHEARSON INC 200,000.00
FAHNESTOCK & CO INC 146,000.00
BANKERS TRUST COMPANY 7,600,000.00
UNITED STATES TRUST CO NY 6,187,000.00
BOSTON SAFE DEPOSIT & TR CO 750,000.00
FIRST NATIONAL BANK OF BOSTON 450,000.00
SSB CUSTODIAN 1,240,000.00
MERRILL LYNCH-DEBT SECURITIES 1,000.00
BT SECURITIES CORP 5,000,000.00
MORGAN STANLEY & CO INC 24,248,000.00
SCHWAB CHARLES & CO INC 3,000.00
LAZARD FRERES & CO 20,000.00
BEAR STEARNS SEC CORP 4,275,000.00
SMITH BARNEY SHEARSON INC 400,000.00
FAHNESTOCK & CO INC 418,000.00
OCONNOR & ASSOCIATES 3,000,000.00
CHASE MANHATTAN BANK NA 10,000,000.00
SAGE MARTIN L & GLORIA W. SAGE JT TEN 10,000.00
COLLINS, RUSSELL C. 10,000.00
GREENBERG, VIVIAN P. 30,000.00
MCHATTON, PATRICK E. 10,000.00
PETERSEN CONSULTANTS LTD. DEFINED 25,000.00
HARE & CO 6,188,000.00
---------------
TOTAL $167,702,000.00
---------------
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF TREATMENT AND CLASSES
($000'S)
ADMINISTRATIVE & PRIORITY
CLAIMS SUMMARY
CLASS A-1 CLASS P-1 CLASS P-2 CLASS P-3
FEDERAL EXCISE TAX AND STATE AND LOCAL
ADMINISTRATIVE CLAIMS FEDERAL INCOME TAX CLAIMS RECLAMATION CLAIMS TAX CLAIMS
<S> <C> <C> <C> <C>
TREATMENT OF Payment of cash in an amount
ALLOWED equal to the Allowed Amount
CLAIMS UNDER of the claim without interest.
PLAN
Payment of Allowed Amounts in
equal quarterly installments over
a 6 year period from earlier to
occur of (i) date of the
Assessment by the IRS of such
Claim and (ii) the date on which
such Claim becomes an Allowed
Claim with interest on unpaid
amounts from the later of the
Effective Date, the date of
Assessment and the date on which
the Claim becomes an Allowed Claim
equal to the Prime Lending Rate.
Payment of cash in an
amount of the claim
without interest.
Payment of cash
in an amount
equal to the
Allowed Amount of
the claim without
interest.
ESTIMATE OF $32,000 $14,000-$40,000 $756 $8,384
ALLOWED AMOUNT
AS OF DECEMBER
31, 1994
</TABLE>
<TABLE>
<CAPTION>
EXACT
CLASS AMOUNTS
<S> <C> <C>
ENTITY:
Best
Best (Miss.) Class P-3C 1
Coast to Coast
Computer Holdings Class P-3E 0
Computer Services Class P-3J 0
Dixie Class P-3F 123
Hamer Holdings Class P-3G 0
Hamer Properties Class P-3H 1
Hillsborough Class P-3A 31
Home Improvement
Homes Holdings Class P-3I 0
Jim Warrior Railroad
Jim Walter Homes Class P-3K 214
Jim Walter Resources, Inc. Class P-3M 4,099
JW Aluminum Class P-3O 192
JW Insurance
JW Resources
JW Walter Class P-3R 11
Window Components Class P-3S 18
Window Components (Wisc.) Class P-3N 2
JWI Holdings Class P-3Q 0
Land Holdings Class P-3T 0
Mid-State Holdings Class P-3V 0
Mid-State Homes Class P-3U 7
Old Walter Industries Class P-3EE 7
Pipe Realty Class P-3BB 0
Railroad Holdings Class P-3W 0
Resources Holdings Class P-3P 0
Sloss Class P-3X 611
Southern Precision Class P-3Y 42
U.S. Pipe Class P-3AA 2,113
United Land Class P-3Z 846
Vestal Class P-3CC 64
Walter Industries/Other
Walter Land Class P-3FF 0
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF TREATMENT AND CLASSES
($000'S)
SECURED CLAIMS SUMMARY
CLASS S-1 CLASS S-2 CLASS S-3 CLASS S-4
REVOLVING CREDIT WORKING CAPITAL GRACE STREET
BANK CLAIMS BANK CLAIMS NOTE CLAIMS SLOSS IRB CLAIMS
<S> <C> <C> <C> <C>
TREATMENT OF ALLOWED
CLAIMS UNDER PLAN Payment of Allowed Amounts
in full in cash except for
$28,221 to be paid in
Common Stock. Payment of Allowed
Amounts in full in
cash less any amounts
applied by the Debtors
to repay any such claim
subsequent to the Stub
Period and prior to the
Effective Date except for
$9,279 to be paid in
Common Stock. Payment of Allowed
Amounts in full in
cash. Payment of Allowed
Amounts in full in
cash.
</TABLE>
<TABLE>
<CAPTION>
ESTIMATE OF ALLOWED AMOUNT
AS OF DECEMBER 31, 1994
$382,248 $130,622 $5 $715
<F1> <F2>
CLASS STATUS CLASS STATUS CLASS CLASS
<S> <C> <C> <C> <C> <C> <C>
ENTITY:
Best Class S-1B Borrower
Best (Misc.) Class S-1C Borrower
Coast to Coast Class S-1D Borrower
Computer Holdings Class S-1E Guarantor Class S-2E Guarantor
Computer Services Class S-1J Borrower
Dixie Class S-1F Borrower
Hamer Holdings Class S-1G Guarantor Class S-2G Guarantor
Hamer Properties Class S-1H Borrower
Hillsborough Class S-1A Borrower Class S-2A Guarantor
Home Improvement
Homes Holdings Class S-1I Guarantor Class S-2I Guarantor
Jefferson Warrior Railroad
Jim Walter Homes Class S-1K Borrower
Jim Walter Resources, Inc. Class S-1M Borrower Class S-2M Borrower
JW Aluminum Co. Class S-1O Borrower Class S-2O Guarantor
JW Insurance Class S-1L Borrower
JW Resources Class S-1GG Guarantor
JW Walter Class S-1R Borrower
JW Window Components, Inc. Class S-1S Borrower Class S-2S Guarantor
JW Window Components (Wisc.) Class S-1N Borrower
JWI Holdings Class S-1Q Borrower Class S-2Q Guarantor
Land Holdings Class S-1T Guarantor Class S-2T Guarantor
Mid-State Holdings Class S-1V Guarantor Class S-2V Guarantor
Mid-State Homes, Inc.
Old Walter Industries Class S-1EE Borrower Class S-2EE Guarantor Class S-JEE
Pipe Realty Class S-1BB Borrower Class S-2BB Guarantor
Railroad Holdings Class S-1W Guarantor Class S-2W Guarantor
Resources Holdings Class S-1P Guarantor Class S-2P Guarantor
Sloss Industries Corp. Class S-1X Borrower Class S-2X Guarantor Class S-4X
Southern Precision Corp. Class S-1Y Borrower Class S-2Y Guarantor
U.S. Pipe and Foundry Co. Class S-1AA Borrower Class S-2AA Borrower
United Land Corp. Class S-1Z Borrower
Vestal Manufacturing Co. Class S-1CC Borrower Class S-2CC Guarantor
Walter Industries/Other
Walter Land Class S-1FF Borrower Class S-2FF Borrower
</TABLE>
- ----------------
[FN] Includes Accrued Interest from 12/28/89 to 12/31/94
totaling $152.6 million.[CAD 252]
[FN] Includes Accrued Interest from 12/28/89 to 12/31/94
totaling $51.9 million.[CAD 252]
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF TREATMENT AND CLASSES
($000'S)
SECURED CLAIMS SUMMARY
CLASS S-5 CLASS S-6 CLASS S-7 CLASS S-8 CLASS S-9
SECURED SERIES B & C PROVIDENT LIFEW & ACCIDENT
REVOLVING CREDIT WORKING CAPITAL
EQUIPMENT PURCHASE SENIOR NOTE CLAIMS ISSURANCE COMPANY CLAIMSAGENTS CLAIMS AGENTS CLAIMS
<S> <C> <C> <C> <C> <C>
TREATMENT OF
ALLOWED CLAIMS
UNDER PLAN Payment of Allowed
Amounts in full in
cash. Payment of Allowed
Amounts in cash in
an amount equal to
such Holder's Pro
Rata Share of
Class S-6 Fund
and a principal
amount of New Senior
Notes equal to the
difference between
the Allowed Amount
of such Holder's
Sereis B & C Note
Claim and the amount of
cash received except for
$37,500 to be paid in
Common Stock. Payment of Allowed
Amounts in cash and
balance of Allowed
Claims reinstated. Payment of Allowed
Amounts in full in
cash. Payment of Allowed
Amounts in full in
cash.
</TABLE>
<TABLE>
<CAPTION>
ESTIMATE OF ALLOWED AMOUNT
AS OF DECEMBER 31, 1994
$48 $359,729-$368,474 $7,494
<F1> <F2> <F2>
EXACT
CLASS AMOUNTS CLASS STATUS CLASS CLASS CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
ENTITY:
Best Class S-8B Class S-8B
Best (Miss.) Class S-8C
Coast to Coast Class S-8D
Computer Holdings Class S-8E Class S-9E
Computer Services Class S-5J 29 Class S-8J
Dixie Class S-8F
Hamer Holdings Class S-8G Class S-9G
Hamer Properties Class S-8H
Hillsborough Class S-6A Guarantor Class S-8A Class S-9A
Home Improvement
Homes Holdings Class S-6I Guarantor Class S-8I Class S-9I
Jefferson Warrior Railroad
Jim Walter Homes Class S-6K Issuer Class S-6K
Jim Walter Resources, Inc. Class S-6M Issuer Class S-8M Class S-9M
JW Aluminum Co. Class S-5O 11 Class S-8O Class S-9O
JW Insurance Class S-8L
JW Resources Class S-6GG
JW Walter Class S-8R
JW Window Components, Inc. Class S-58 0 Class S-8S
JW Window Components (Wisc.) Class S-8N
JWI Holdings Class S-8Q Class S-9Q
Land Holdings Class S-8T Class S-9T
Mid-State Holdings Class S-8V Class S-9V
Mid-State Homes, Inc.
Old Walter Industries Class S-6EE Guarantor Class S-7EE Class S-8EE Class S-9EE
Pipe Realty Class S-6BB Class S-9BB
Railroad Holdings Class S-8W Class S-9W
Resources Holdings Class S-6P Guarantor Class S-8P Class S-9P
Sloss Industries Corp. Class S-5X 1 Class S-8X Class S-9X
Southern Precision Corp. Class S-5Y 3 Class S-8Y Class S-9Y
U.S. Pipe and Foundry Co. Class S-5AA 5 Class S-6AA Issuer Class S-8AA Class S-9AA
United Land Corp. Class S-6Z Issuer Class S-8Z Class S-9Z
Vestal Manufacturing Co. Class S-8CC Class S-9CC
Walter Industries/Other
Walter Land Class S-8FF Class S-9FF
</TABLE>
- ----------------
[FN] Includes Accrued Interest from 12/28/89 to 12/31/94
totaling $165.4 million-[CAD 252]$174.1 million.[CAD 252]
[FN] The Holders of Class S-8 and S-9 Claims have not provided
the amount of fees and expenses incurred since the Filing Date.
As a result, there is insufficient information upon which to
estimate Class S-8 and S-9 Claims.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF TREATMENT AND CLASSES
($000'S)
UNSECURED CLAIMS SUMMARY
CLASS U-1 CLASS U-2 CLASS U-3
OLD WALTER INDUSTRIES CONVENIENCE OTHER
IRB CLAIMS CLASS CLAIMS UNSECURED CLAIMS
<S> <C> <C> <C>
TREATMENT OF ALLOWED
CLAIMS UNDER PLAN Payment of Allowed Amounts
in cash and balance of
Allowed Claims reinstated. Payment of Pre-Filing Date
Unsecured Allowed Amounts
plus Post-Filing Date interest
from the Filing Date to the
Effective Date at the General
Unsecured Interest Rate in full
in cash. Payment of 75% of Pre-Filing Date
Unsecured Allowed Amounts on or
promptly after the Effective Date,
payment within six months thereafter of
the balance of the Pre-Filing Date
Unsecured Allowed Amounts plus
Post-Filing Date interest on the
Pre-Filing Date Unsecured Allowed
Amounts from the Filing Date
to the Effective Date at the
General Unsecured Interest Rate
together with Post-Filing Date
interest on the remaining 25% of
Pre-Filing Date Unsecured Allowed
Amounts from the Effective Date
to the Payment Date at the
General Unsecured Interest rate in full
in cash.
</TABLE>
<TABLE>
<CAPTION>
ESTIMATE OF ALLOWED AMOUNT
AS OF DECEMBER 31, 1994 $8,792 $1,704 $93,775<F1>
EXACT EXACT
CLASS CLASS AMOUNTS CLASS AMOUNTS
<S> <C> <C> <C> <C> <C>
ENTITY:
Best Class U-2B 6 Class U-3B 15
Best (Miss.) Class U-3C 0
Coast to Coast Class U-2D 159 Class U-3D 281
Computer Holdings Class U-3E 0
Computer Services Class U-2J 4 Class U-3J 34
Dixie Class U-2F 7 Class U-3F 913
Hamer Holdings Class U-3G 0
Hamer Proportion Class U-3H 0
Hillsborough Class U-3A 2,550
Home Improvement Class U-2DD 9 Class U-2DD 32
Homes Holdings Class U-3I 0
Jefferson Warrior Railroad 0
Jim Walter Homes Class U-2K 250 Class U-3K 7,223
Jim Walter Resources, Inc. Class U-2M 87 Class U-3M 19,061
JW Aluminum Co. Class U-2O 72 Class U-3O 6,413
JW Insurance Class U-2L 5 Class U-3L 6
JW Resources Class U-3GG 0
JW Walter Class U-3R 0
JW Window Components, Inc. Class U-2S 64 Class U-3S 2,221
JW Window Components (Wisc.) Class U-2N 8 Class U-3N 123
JWI Holdings Class U-3Q 0
Land Holdings Class U-3T 0
Mid-State Holdings Class U-3V 0
Mid-State Homes, Inc. Class U-2U 21 Class U-3U 121
Old Walter Industries Class U-1EE Class U-2EE 439 Class U-3EE 14,385
Pipe Realty Class U-3BB 0
Railroad Holdings Class U3W 0
Resources Holdings Class U-3P 0
Sloss Industries Corp. Class U-2X 103 Class U-3X 5,614
Southern Precision Corp. Class U-2Y 27 Class U-3Y 381
U.S. Pipe and Foundry Co. Class U-2AA 370 Class U-3AA 30,783
United Land Corp. Class U-2Z 4 Class U-3Z 1
Vestal Manufacturing Co. Class U-2CC 35 Class U-3CC 754
Walter Industries/Other 0
Walter Land Class U-2FF 2 Class U-3FF 32
</TABLE>
- ----------------
[FN] Includes Accrued Interest from 12/28/89 to 12/31/94
totaling $23.0 million which has been allocated pro rata across
each Entity in Class U-3.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF TREATMENT AND CLASSES
($000'S)
UNSECURED CLAIMS AND OLD COMMON
STOCK INTERESTS SUMMARY
CLASS U-4 CLASS U-5 CLASS U-6 CLASS U-7 CLASS E-1
SENIOR SUBORDINATED 17% SUBORDINATED PRO IBO VEIL PIERCING OLD COMMON
RESET NOTES NOTES DEBENTURE CLAIMS CLAIMS STOCK INTERVALS
<S> <C> <C> <C> <C> <C>
TREATMENT OF
ALLOWED CLAIMS
UNDER PLAN Payments of Allowed Amount
in Full in combination of
Qualified Securities and
Common Stock Payments of Allowed Amount
in Full in combination of
Qualified Securities and
Common Stock Payments of Allowed
Amount in Full in
combination of
Qualified Securities
and Common Stock Payment of Allowed
Amounts in full in a
combination of
Qualified Securities
and Common Stock
to the Veil
Piercing Claims Trust
on behalf of Holders
of Class U-7 Claims Payment of
Common Stock
</TABLE>
<TABLE>
<CAPTION>
ESTIMATE OF ALLOWED AMOUNT AS
OF DECEMBER 31, 1994
$479,261 $379,254 $239,472 $375,000<F1> $150,000<F2>
CLASS STATUS CLASS STATUS CLASS STATUS
<S> <C> <C> <C> <C> <C> <C>
ENTITY
Best
Best (Miss)
Coast to Coast
Computer Holdings
Computer Services
Dixie
Hamer Holdings
Hamer Properties
Hillsborough Class U-4A Guarantor Class U-5A Guarantor
Home Improvement
Homes Holdings Class U-4I Guarantor Class U-5I Guarantor
Jefferson Warrior Railroad
Jim Walter Homes Class U-4K Issuer Class U-5K Issuer
Jim Walter Resources, Inc.
JW Aluminum Co.
JW Insurance
JW Resources
JW Walter
JW Window Components, Inc.
JW Window Components (Wisc.)
JWI Holdings
Land Holdings
Mid-State Holdings
Mid-State Homes, Inc.
Old Walter Industries Class U-4EE Guarantor Class U-SEE Guarantor Class U-6EE Issuer
Pipe Realty
Railroad Holdings
Resources Holdings
Sloss Industries Corp.
Southern Precision Corp.
U.S. Pipe and Foundry Co. Class U-4AA Issuer Class U-5AA Issuer
United Land Corp. Class U-4Z Issuer Class U-SZ Issuer
Vestal Manufacturing Co.
Walter Industries/Other
Walter Land
</TABLE>
- ----------------
[FN] This represents the aggregate of Allowed Amounts against
all Debtors.
[FN] Old Common Stock [CAD 252]Interests may receive up to an
additional $100,000 according to the terms set forth in Section
II A.3 of the Supplement.
<PAGE>
<TABLE>
<CAPTION>
Summary of Treatment and Classes
($000's)
Secured Intercompany Claims Summary
CLASS I-1CLASS I-2CLASS I-3
<S> <C> <C> <C>
TREATMENT OF ALLOWED
CLAIMS UNDER PLAN Payment of cash in an
amount equal to the
Allowed Amount of the
claim without interest. Class I-2 Claims will be
reinstated on the books
and records of the
respective Debtors. Pre-
Filing Date Intercompany
Notes Payable may be paid
after the Effective Date
in the ordinary course of
business. Class I-3 Claims will be reinstated on the
books and records of the respective
Debtors. Pre-Filing Date Intercompany
Notes Payable may be paid after the
Effective Date in the ordinary course of
business.
</TABLE>
<TABLE>
<CAPTION>
ESTIMATE OF ALLOWED AMOUNT
AS OF DECEMBER 31, 1994 $7,350 $1,248,631 $2,006,003
EXACT EXACT
CLASS AMOUNTS CLASS AMOUNTS
<S> <C> <C> <C> <C> <C>
ENTITY:
Best Class I-2B 1,018 Class I-3B 2,389
Best (Miss.) Class I-2C 64 Class I-3C 24
Coast to Coast Class I-2D 135 Class I-3D 72
Computer Holdings Class I-2E 6 Class I-3E 2
Computer Services Class I-2J 1,164
Dixie Class I-2F 232 Class I-3F 220
Hamer Holdings Class I-2G 6 Class I-3G 2
Hamer Proportion Class I-2H 204 Class I-3H 5
Hillsborough Class I-2A 100,653 Class I-3A 130,988
Home Improvement Class I-2DD 1,923 Class I-3DD 2,852
Homes Holdings Class I-2I 6
Jefferson Warrior Railroad
Jim Walter Homes Class I-2K 194,401 Class I-3K 191,971
Jim Walter Resources, Inc. Class I-2M 127,199 Class I-3M 7,838
JW Aluminum Co. Class I-2O 24,464 Class I-3O 7,066
JW Insurance
JW Resources
JW Walter Class I-2R 198
Window Components Class I-2S 49,712 Class I-3S 14,400
Window Components (Wisc.) Class I-2N 1,165 Class I-3N 1,734
JWI Holdings Class I-2Q 677
Land Holdings Class I-2T 6 Class I-3T 2
Mid-State Holdings Class I-2V 6
Mid-State Homes Class I-2U 106,061 Class I-3U 744,944
Old Walter Industries Class I-2EE 466,913 Class I-3EE 481,734
Pipe Realty Class I-2BB 126 Class I-3BB 24
Railroad Holdings Class I-2W 6 Class I-3W 1
Resources Holdings Class I-2P 23 Class I-3P 1
Sloss Class I-2X 27,768 Class I-3X 8,399
Southern Precision Class I-2Y 21,895 Class I-3Y 12,760
U.S. Pipe Class I-2AA 35,357 Class I-3AA 175,968
United Land Class I-2Z 63,636 Class I-3Z 17,424
Vestal Class I-2CC 12,053 Class I-3CC 3,385
Walter Industries/Other
Walter Land Class I-2FF 11,555 Class I-3FF 1,799
</TABLE>
<PAGE> EXHIBIT 3.A.1.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1994
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGES
Walter Industries, Inc. and Subsidiaries
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheet--May 31, 1994 and 1993 F-3
Consolidated Statement of Operations and Retained
Earnings (Deficit) for the Three Years Ended
May 31, 1994 F-4
Consolidated Statement of Cash Flows for the
Three Years Ended May 31, 1994 F-5
Notes To Financial Statements F-6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Walter Industries, Inc.
In our opinion, the accompanying consolidated balance sheet
and the related consolidated statements of operations and
retained earnings (deficit) and of cash flows present fairly, in
all material respects, the financial position of Walter
Industries, Inc. and its subsidiaries at May 31, 1994 and 1993,
and the results of their operations and their cash flows for
each of the three years in the period ended May 31, 1994 in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
The accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a going
concern. As discussed in Notes 2 and 10 to the financial
statements, on December 27, 1989, Walter Industries, Inc. and
substantially all of its subsidiaries each filed a voluntary
petition for reorganization under Chapter 11 of Title 11 of the
United States Code, thereby raising substantial doubt about
their ability to continue as a going concern. The Company filed
a fourth amended joint plan of reorganization and a related
disclosure statement with the Bankruptcy Court on June 22, 1994
and June 29, 1994, respectively. The accompanying consolidated
financial statements do not include any adjustments that might
result from the outcome of the petitions for reorganization.
As discussed in Note 11 to the Consolidated Financial
Statements, the Company changed its method of accounting for
postretirement benefits other than pensions in fiscal year 1993.
PRICE WATERHOUSE
Tampa, Florida
July 8, 1994
<PAGE>
<TABLE>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
MAY 31,
-------------------------------
1994 1993
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash (includes short-term investments of
$177,040,000 and $172,553,000) (Note 5) $ 203,303 $ 190,370
Short-term investments, restricted (Note 3) 107,552 105,620
Instalment notes receivable (Notes 3, 5 and 6) 4,176,040 4,187,316
Less-- Provision for possible losses (26,301) (26,579)
Unearned time charges (2,790,560) (2,773,878)
----------- ------------
Net 1,359,179 1,386,859
Trade receivables 135,431 143,259
Less--Provision for possible losses (7,392) (7,324)
----------- ------------
Net 128,039 135,935
Other notes and accounts receivable 10,774 15,625
Inventories, at lower of cost (first in, first out
or average) or market:
Finished goods 95,270 94,360
Goods in process 27,090 23,421
Raw materials and supplies 48,533 47,153
Houses held for resale 1,686 1,705
----------- ------------
Total inventories 172,579 166,639
Prepaid expenses 11,335 7,902
Property, plant and equipment, at cost (Note 4) 1,123,939 1,075,068
Less--Accumulated depreciation, depletion and
amortization (466,076) (412,028)
----------- ------------
Net 657,863 663,040
Investments 5,753 5,568
Unamortized debt expense 31,656 46,622
Other assets 39,936 37,616
Excess of purchase price over net assets acquired (Note 1) 412,923
461,438
$ 3,140,892 $ 3,223,234
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Bank overdrafts (Note 5) $ 29,879 $ 17,921
Accounts payable (Note 2) 59,468 52,696
Accrued expenses (Note 2) 122,665 116,238
Income taxes payable (Notes 2 and 6) 21,543 19,135
Deferred income taxes (Note 6) 73,152 85,833
Long-term senior debt (Notes 2 and 5) 871,970 1,046,971
Accrued postpetition interest on secured obligations
(Notes 2 and 5) 258,032 210,199
Accumulated postretirement health benefits obligation
(Note 11) 209,962 189,905
Other long-term liabilities 48,890 46,442
Liabilities subject to Chapter 11 proceedings
(Notes 2, 3 and 5) 1,727,684 1,725,631
Stockholders' equity (deficit) (Notes 1, 5, 7 and 8):
Common stock, $.01 par value per share:
Authorized--50,000,000 shares
Issued--31,120,773 shares 311 311
Capital in excess of par value 155,293 155,293
Retained earnings (deficit), per accompanying statement (434,520) (441,695)
Excess of additional pension liability over unrecognized
prior years service cost (3,437) (1,646)
----------- ------------
Total stockholders' equity (deficit) (282,353) (287,737)
----------- ------------
$ 3,140,892 $ 3,223,234
=========== ============
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEARS ENDED MAY 31,
----------------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
Sales and revenues:
Net sales $1,068,387 $1,072,615 $1,139,048
Time charges (Note 3) 238,097 218,696 195,001
Miscellaneous 17,383 23,160 28,172
Interest income from Chapter 11
proceedings (Note 2) 4,657 4,515 4,360
----------- ----------- -----------
1,328,524 1,318,986 1,366,581
----------- ----------- -----------
Cost and expenses:
Cost of sales 845,061 804,411 891,882
Depreciation, depletion and amortization
(Note 4) 71,035 70,483 82,801
Selling, general and administrative 127,901 124,616 129,372
Postretirement health benefits (Note 11) 25,585 23,474 --
Provision for possible losses 4,611 4,236 5,787
Chapter 11 costs (Note 2) 14,254 9,802 5,172
Interest and amortization of debt discount
and expense (Interest on unsecured debt
obligations not accrued since
December 27, 1989--$163,685,000 in each
year) (Notes 2, 4 and 5) 155,470 171,581 177,060
Amortization of excess of purchase price
over net assets acquired (Note 1) 48,515 39,461 39,702
----------- ----------- -----------
1,292,432 1,248,064 1,331,776
----------- ----------- -----------
36,092 70,922 34,805
Provision for income taxes (Note 6):
Current (41,598) (48,141) (35,957)
Deferred 12,681 23,813 23,494
----------- ----------- -----------
Income from operations before cumulative
effect of accounting change 7,175 46,594 22,342
Cumulative effect of change in accounting
principle--postretirement benefits other
than pensions (net of income tax benefit
of $61,823,000) (Note 11) -- (104,608) --
Net income (loss) 7,175 (58,014) 22,342
Retained earnings (deficit) at beginning
of year (441,695) (383,681) (406,023)
=========== =========== ===========
Retained earnings (deficit) at end of year $ (434,520) $ (441,695) $ (383,681)
=========== =========== ===========
</TABLE>
<TABLE>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED MAY 31,
----------------------------------------
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATIONS
Net income (loss) $ 7,175 $ (58,014) $ 22,342
Charges to income not affecting cash:
Depreciation, depletion and amortization 71,035 70,483 82,801
Provision for deferred income taxes (12,681) (23,813) (23,494)
Accumulated postretirement health benefits
obligation (Note 11) 20,057 189,905 --
Adjustment to deferred taxes for accounting
change (Note 11) -- (61,823) --
Provision for other long-term liabilities 280 (781) 6,782
Amortization of excess of purchase price
over net assets acquired (Note 1) 48,515 39,461 39,702
Amortization of debt discount and expense 17,597 22,148 19,715
--------- --------- ---------
151,978 177,566 147,848
Decrease (increase) in:
Short-term investments, restricted (1,932) 1,334 4,374
Instalment notes receivable, net<F1> 27,680 (23,607) (47,835)
Trade and other receivables, net 12,747 1,429 (457)
Inventories (5,940) 627 12,118
Prepaid expenses (3,433) 236 1,404
Increase (decrease) in:
Bank overdrafts (Note 5) 11,958 (9,758) 7,906
Accounts payable 6,772 (1,692) 425
Accrued expenses 6,427 (1,682) 15,663
Income taxes payable 2,408 9,111 (18,036)
Accrued postpetition interest on secured
obligations 47,833 32,605 47,868
Liabilities subject to Chapter 11
proceedings (Note 2):
Accounts payable 1,438 811 714
Accrued expense (152) 4 (136)
Income taxes payable -- -- 1,429
Other long-term liabilities -- -- (244)
--------- --------- ---------
Cash flows from operations 257,784 186,984 173,041
--------- --------- ---------
FINANCING ACTIVITIES
Issuance of long-term senior debt 2,000 256,128 --
Addition to unamortized debt expense -- (4,794) --
Retirement of long-term senior debt (Note 5)(178,865) (161,959) (127,258)
Decrease in liabilities subject to
Chapter 11 proceedings (Notes 2 and 5):
Short-term notes payable -- -- (2,805)
Long-term senior debt -- (121,217) (37,958)
--------- --------- ---------
Cash flows from financing activities (176,865) (31,842) (168,021)
--------- --------- ---------
INVESTING ACTIVITIES
Additions to property, plant and
equipment, net of normal retirements (65,858) (68,901) (63,646)
Decrease (increase) in investments (185) (128) 1,137
(Increase) in other assets (1,943) (1,617) (5,485)
--------- --------- ---------
Cash flows from investing activities (67,986) (70,646) (67,994)
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents 12,933 84,496 (62,974)
Cash and cash equivalents at beginning
of year 190,370 105,874 168,848
--------- --------- ---------
Cash and cash equivalents at end of year
(Note 5) $ 203,303 $ 190,370 $ 105,874
========= ========= =========
</TABLE>
- ----------------
[FN] Consists of sales and resales, net of repossessions and
provision for possible losses, of $197,472,000, $207,340,000,
and $207,648,000 and cash collections on account and payouts in
advance of maturity of $225,152,000, $183,733,000, and
$159,813,000 for the years ended May 31, 1994, 1993 and 1992,
respectively.
<PAGE>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND ACQUISITION
Walter Industries, Inc. (formerly Hillsborough Holdings
Corporation) (the "Company") was organized in August 1987 by a
group of investors led by Kohlberg Kravis Roberts & Co. ("KKR")
for the purpose of acquiring Jim Walter Corporation, a Florida
corporation ("Original Jim Walter"). Following its
organization, the Company organized and acquired all of the
outstanding capital stock of a group of direct wholly-owned
subsidiaries (the "First Tier Subsidiaries"). The First Tier
Subsidiaries (except JWC Holdings Corporation) and the Company
organized and acquired all of the outstanding capital stock of
Walter Industries, Inc. ("Old Walter Industries"). JWC Holdings
Corporation, a Florida corporation and a First Tier Subsidiary
("JWC Holdings"), organized and acquired all of the outstanding
shares of J-II Acquisition Corporation, a Florida corporation
("J-II"). Old Walter Industries and J-II, in turn, organized
and acquired all of the outstanding capital stock of
Hillsborough Acquisition Corporation ("HAC").
On September 18, 1987, HAC acquired approximately 95% of
the outstanding common stock of Original Jim Walter at a price
of $60 per share in cash, pursuant to an Agreement and Plan of
Merger dated as of August 12, 1987 (the "Acquisition"). On
January 7, 1988, the Company caused Original Jim Walter to be
merged (the "Merger") into HAC (which changed its name to "Jim
Walter Corporation") and the remaining 5% of its common stock
was converted into the right to receive $60 in cash for each
share. On that same date: (i) HAC distributed substantially all
of its assets (principally excluding the stock of certain
subsidiaries of Original Jim Walter engaged in building
materials businesses) to Old Walter Industries in redemption of
all of its shares of capital stock owned by Old Walter
Industries; (ii) HAC merged into J-II; and (iii) J-II changed
its name to "Jim Walter Corporation". On April 1, 1991, Old
Walter Industries merged into Hillsborough Holdings Corporation
thereby completing its previously adopted plan of liquidation.
The Company changed its name to Walter Industries, Inc. in
connection with such merger. Prior to September 18, 1987, the
Company had no significant assets or liabilities and did not
engage in any activities other than those related to the
Acquisition. The purchase price of the shares of Original Jim
Walter was approximately $2,425,000,000, plus expenses of the
Acquisition and assumption of certain outstanding indebtedness.
For financial statement purposes, the Acquisition has been
accounted for as a purchase as of September 1, 1987 and,
accordingly, the purchase price has been allocated based upon
the fair value of assets acquired and liabilities assumed. The
excess of purchase price over net assets acquired in connection
with the Acquisition is being amortized over periods ranging up
to twenty years.
The consolidated financial statements include the accounts
of the Company and all of its subsidiaries. All significant
intercompany balances have been eliminated.
NOTE 2--REORGANIZATION PROCEEDINGS
On December 27, 1989, the Company and 31 of its
subsidiaries (including the subsidiary in the next sentence, the
"Debtors") each filed a voluntary petition for reorganization
under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court (the
"Bankruptcy Court") for the Middle District of Florida, Tampa
Division (the "Reorganization Proceedings"). On December 3,
1990, one additional small subsidiary filed a voluntary petition
for reorganization under the Bankruptcy Code. Two other small
subsidiaries did not file petitions for reorganization.
The Debtors' Chapter 11 cases resulted from a sequence of
events stemming primarily from an inability of the Company's
interest reset advisors to reset interest rates on approximately
$624 million of outstanding Senior Extendible Reset Notes and
Senior Subordinated Extendible Reset Notes on which interest
rates were scheduled to be reset effective January 2, 1990. The
inability to reset the interest rates was primarily attributable
to pending asbestos-related litigation which prevented the
Debtors from completing a refinancing or from selling assets to
reduce their debt which, together with turmoil in the high yield
bond markets, depressed the bid value of such notes.
The consolidated financial statements of the Company have
been prepared on a "going-concern" basis which contemplates the
realization of assets and the liquidation of liabilities in the
ordinary course of business; however, as a result of the Chapter
11 filings, such realization of assets and liquidation of
liabilities are subject to a significant number of
uncertainties. These financial statements include adjustments
and reclassifications that have been made to reflect the
liabilities which have been deferred under the Reorganization
Proceedings. Interest in the amount of $724,306,000
($163,685,000 in the current fiscal year) on unsecured debt
obligations has not been accrued in the consolidated financial
statements since the date of the filing of petitions for
reorganization. This estimate is based on the balances of the
unsecured debt obligations and their interest rates as of the
petition date. Such interest rates do not necessarily presently
govern the respective rights of the Company, its subsidiaries
and the various lenders. Instead, the rights of the parties
will be determined in connection with the Reorganization
Proceedings.
The discussion below sets forth various aspects of the
Reorganization Proceedings, but is not intended to be an
exhaustive summary. For additional information regarding the
effect on the Debtors of the Reorganization Proceedings,
reference should be made to the Bankruptcy Code, the rules and
regulations promulgated pursuant to the Bankruptcy Code and the
case law thereunder. Each creditor should consult with its own
counsel regarding the impact of the Reorganization Proceedings
on such creditor's claims.
Pursuant to provisions of the Bankruptcy Code and an order
of the Bankruptcy Court dated December 28, 1989, the Debtors
were authorized to continue to operate their businesses and own
and manage their properties and assets as debtors in possession.
The Bankruptcy Code authorizes the Debtors to enter into
transactions, including the sale or lease of property of their
estates and to use property of their estates, in the ordinary
course of their businesses without prior approval of the
Bankruptcy Court. The sale or lease of property of the estates
other than in the ordinary course of business and certain other
transactions (for example, secured financing), whether or not in
the ordinary course of business, are subject to prior approval
by the Bankruptcy Court.
As a result of the filing of petitions for reorganization,
the maturity of all unpaid principal of, and interest on, the
senior and subordinated indebtedness of the Debtors became
immediately due and payable in accordance with the terms of the
instruments governing such indebtedness. The Debtors will not
be able to borrow additional funds under any of their
prepetition credit arrangements. Pursuant to the applicable
provisions of the Bankruptcy Code, all pending legal proceedings
against the Debtors were automatically stayed upon the filing of
such petitions.
Under the Chapter 11 filings, a significant portion of
claims in existence at the filing date ("prepetition") are
stayed ("deferred") while the Company continues to manage the
business. The Bankruptcy Code defines "claim" to include a
right to payment whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured. Claims which were contingent or unliquidated at the
commencement of the Reorganization Proceedings constitute claims
under the Bankruptcy Code. Such claims, including, without
limitation, those that may arise in connection with rejection of
executory contracts, including leases, as well as those that
might arise in connection with environmental and pension-related
matters, could be significant. It is not possible to quantify
the amount of such claims at this time. Under the Bankruptcy
Code, a creditor's claim is treated as secured only to the
extent of the value of such creditor's collateral, and the
balance of such creditor's claim is treated as unsecured.
Depending upon the outcome of the Reorganization Proceedings and
the value of a secured creditor's collateral, if any, secured
creditors may not be entitled to claim interest on their claims
for the period after December 27, 1989. Generally, unsecured
debt does not accrue interest after the filing.
Only holders of "allowed claims" may vote on and
participate in distributions under any plan or plans of
reorganization that may be proposed. A claim is allowed to the
extent (i) the claim is not listed as contingent, disputed or
unliquidated on the Debtors bankruptcy schedules filed in
January 1990, as amended, or (ii) a proof of claim is filed and
not successfully objected to by a party in interest.
Additional prepetition claims and liabilities may arise,
some of which may be significant, subsequent to the filing date
for various reasons. To the extent a creditor must file a proof
of claim, such proof must be filed by a date fixed by the
Bankruptcy Court as the last day to file proofs of claim (the
"Bar Date"). At a hearing on July 23, 1992, the Bankruptcy
Court set a Bar Date of October 30, 1992 in the Reorganization
Proceedings for all claims other than any potential claims
related to asbestos personal injury or property damage. At a
hearing on December 16, 1992, the Bankruptcy Court set a second
Bar Date of March 1, 1993 in the Reorganization Proceedings for
new creditors added by amended schedules filed by certain of the
Debtors on November 23, 1992. On August 31, 1993, the
Bankruptcy Court set a third Bar Date of November 30, 1993 for
creditors added by amended schedules filed by the Debtors on
July 12, 1993. No provision has been included in the
accompanying financial statements for any prepetition claims and
additional liabilities that may arise from resolution of any
claims filed.
The amount included as liabilities subject to Chapter 11
proceedings reflected on the Company's consolidated balance
sheet consists of the following:
MAY 31,
1994 1993
-------- -------
(IN THOUSANDS)
Short-term notes payable $ 78,033 $ 78,033
Accounts payable 64,338 62,900
Accrued expenses 95,847 95,999
Income taxes payable 47,066 47,066
Long-term senior debt (Notes 3 and 5) 416,629 416,629
Long-term subordinated debt (Note 5) 1,025,533 1,024,766
Other long-term liabilities 238 238
$1,727,684 $1,725,631
As debtors in possession, the Debtors have the right,
subject to Bankruptcy Court approval and certain other
limitations, to assume or reject certain executory contracts,
including unexpired leases. In this context, "assumption" means
that the Debtors agree to perform their obligations and cure
certain existing defaults under the contract or lease, and
"rejection" means that the Debtors are relieved from their
obligations to perform further under the contract or lease and
are subject only to a claim for damages for the breach thereof.
Any claim for damages resulting from the rejection of an
executory contract or an unexpired lease is treated as a general
unsecured claim in the Reorganization Proceedings.
Unless the Bankruptcy Court, upon request of a non-Debtor
party and after notice and a hearing, fixes a date by when the
Debtors must elect to assume or reject an executory contract,
the Debtors may assume or reject such contracts in a plan or
plans of reorganization. With respect to unexpired
non-residential real property leases, including mineral leases
and interests, the Bankruptcy Code provides that a Debtor has 60
days after the commencement of a Chapter 11 case in which to
assume or reject such leases unless the Bankruptcy Court, for
cause shown, extends such 60 day period. Pursuant to an order
of the Bankruptcy Court dated August 31, 1993, the time within
which the Debtors must assume or reject their non-residential
real property leases was extended through and including
October 31, 1993. The Debtors filed a motion to extend, until
confirmation of a plan of reorganization, the time for
assumption or rejection of their non-residential real property
leases. On March 4, 1994, the Bankruptcy Court entered an order
approving the Debtors motion. On February 25, 1991, the Debtors
received Bankruptcy Court approval to assume substantially all
of their mineral leases and interests.
The Bankruptcy Code permits the Bankruptcy Court to appoint
a trustee on request of a party in interest (including a
creditor, equity security holder, committee or indenture
trustee) or the United States Trustee. In order for a trustee
to be appointed, a requesting party, after notice and a hearing,
must show cause, such as gross mismanagement by current
management, or demonstrate that such appointment is in the best
interest of creditors, equity security holders and other
interests of the estates.
In addition, the Bankruptcy Code permits the Bankruptcy
Court to appoint an examiner on request of a party in interest
(including a creditor, equity security holder, committee or
indenture trustee) or the United States Trustee, if the
Bankruptcy Court does not order the appointment of a trustee, to
conduct such investigation of a debtor as is appropriate.
For 120 days after the date of the filing of a voluntary
Chapter 11 petition, a debtor has the exclusive right to file a
plan of reorganization with the Bankruptcy Court (the
"Exclusivity Period"). If a debtor files a plan of
reorganization during the 120-day Exclusivity Period, no other
party may file a plan of reorganization until 180 days after the
date of filing of the Chapter 11 petition. Until the end of
this 180-day period (the "Acceptance Period") the debtor has the
exclusive right to solicit acceptances of the plan. The
Bankruptcy Court may shorten or extend the 120- and 180-day
periods for cause shown. If a debtor fails to file a plan
during the Exclusivity Period or, if such plan has been filed,
fails to obtain acceptance of such plan from impaired classes of
its creditors and equity security holders during the Acceptance
Period, any party in interest, including a creditor, an equity
security holder, a committee of creditors or equity security
holders or an indenture trustee may file a plan. Additionally,
if the Bankruptcy Court were to appoint a trustee, the
Exclusivity Period, if not previously terminated, would
terminate.
The initial Exclusivity Period for each of the Debtors
would have expired on April 26, 1990 and the initial Acceptance
Period would have expired on June 26, 1990. The Debtors filed
various motions to extend the Exclusivity Period which were
granted. Pursuant to an order of the Bankruptcy Court dated
April 15, 1992, the Exclusivity Period expired June 15, 1992 and
the Acceptance Period was to expire on August 14, 1992.
On June 15, 1992, the Debtors filed with the Bankruptcy
Court and presented to the creditor constituencies a joint plan
of reorganization and related disclosure statement prior to the
expiration of the Exclusivity Period. Subsequent to August
1992, the Debtors were granted various extensions of the
Acceptance Period and adjournments of the hearing for approval
of the disclosure statement dated June 15, 1992, while
negotiations continued with the various creditor constituencies
toward a consensual plan of reorganization. Pursuant to an
order of the Bankruptcy Court dated July 7, 1993, the Bankruptcy
Court extended the Acceptance Period until August 2, 1993,
ruling that no further extensions would be granted beyond
August 2, 1993. On July 14, 1993, the Bankruptcy Court entered
an order fixing January 1, 1994 as the last date when a plan of
reorganization and disclosure statement could be filed by a
party in interest and that all plans of reorganization and
disclosure statements filed by such date would be heard on a
date and time to be fixed by future order of the Bankruptcy
Court.
On September 22, 1993, the Debtors filed with the
Bankruptcy Court and presented to the creditor constituencies
their first amended joint plan of reorganization (the "Debtors
First Amended Plan") and first amended related disclosure
statement. The Debtors First Amended Plan provided for payment
in full of all allowed claims (plus post-petition interest at
varying rates) using cash, issuance of new indebtedness,
issuance of common stock equal to approximately a 46% ownership
interest (subject to Debtors option to substitute additional
debt securities in lieu of common stock proposed to be issued
under the Debtors First Amended Plan), or a combination thereof.
In addition, the Debtors First Amended Plan provided that
holders of subordinated debt claims would additionally share in
a portion of any increase in the Debtors unencumbered instalment
notes receivable portfolio after May 31, 1993 through issuance
of additional debt securities ("Value Sharing").
Such Value Sharing was designed to provide compensation to
holders of subordinated debt claims during the delay in
consummation of the Debtors First Amended Plan required in order
to resolve the asbestos-related litigation. Under the Debtors
First Amended Plan certain claims and the equity interest in the
Company were impaired; therefore the Debtors First Amended Plan
was subject to acceptance by vote of the holders of each such
class of impaired claims and the holders of the Company's common
stock. Confirmation and consummation of the Debtors First
Amended Plan were subject to the satisfaction of various
conditions including dismissal with prejudice of any and all
claims and actions against the Debtors or any assets of the
Debtors relating to or in connection with the asbestos-related
litigation (see Note 10).
On December 16, 1993, AIF II, L.P., certain affiliates of
AIF II, L.P. and certain accounts managed or controlled by such
affiliates; Lehman Brothers Inc.; the Official Bondholders
Committee and the Official Committee of General Unsecured
Creditors (collectively, the "Bondholders Plan Proponents")
filed a Joint Plan of Reorganization of Debtors Proposed by
Certain Creditor Proponents dated as of December 16, 1993 (the
"Bondholders Plan"). The Bondholders Plan was predicated upon a
settlement of the Veil Piercing Litigation which contemplated a
distribution of debt and equity securities having a value equal
to $525 million, subject to reduction in the event the
shareholders of the Company supported the Bondholders Plan and
executed the Veil Piercing Settlement Agreement (as said term
was defined in the Bondholders Plan) by a date certain, to the
Veil Piercing Claims Trust (as said term was defined in the
Bondholders Plan). The Bondholders Plan was premised upon a
negotiated estimate of the going concern enterprise value of the
Debtors on a consolidated basis in an amount equal to $2.525
billion. The Bondholders Plan provided for payment in full of
all allowed claims (plus post-petition interest at varying rates
with respect to certain secured and unsecured claims) using
cash, issuance of new indebtedness, issuance of common stock, or
a combination thereof. The Bondholders Plan provided for no
recovery by the shareholders of the Company unless the
shareholders supported the Bondholders Plan and executed the
Veil Piercing Settlement Agreement by a date certain.
Confirmation and effectiveness of the Bondholders Plan were
subject to the satisfaction of various conditions including the
final resolution and settlement, approved by final orders, of
all asserted and unasserted claims arising out of or relating to
the asbestos-related litigation and all LBO-Related Issues (as
said term was defined in the Bondholders Plan).
On December 28, 1993, Chemical Bank and Bankers Trust
Company (collectively, the "Bank Agents"), as agents under the
Bank Credit Agreement dated as of September 10, 1987, as
amended, and the Working Capital Credit Agreement dated as of
December 29, 1987, as amended, filed the Bank Agents' Joint Plan
of Reorganization dated as of December 28, 1993 (the "Bank
Agents Plan"). The Bank Agents Plan is predicated upon a
settlement of the asbestos-related litigation which contemplates
a distribution of common stock having a value equal to the
allowed amount of the "Celotex Disputed Claims" (as said term is
defined in the Bank Agents Plan). The Bank Agents Plan
contemplates that the allowed amount of the Celotex Disputed
Claims shall be determined by: (a) agreement between the holders
of such claims and the Bank Agents, (b) a final order of the
Bankruptcy Court or (c) an order of the Bankruptcy Court
estimating the allowed amount of such claims. The Bank Agents
Plan provides for payment in full in cash of all secured allowed
claims (including post-filing date interest at varying rates of
interest) and the distribution of common stock to holders of
unsecured allowed claims (including trade creditors and
subordinated bondholders) in full satisfaction of unsecured
allowed claims (including post-filing date interest at rates to
be agreed to by the Bank Agents or, if no agreement, rates to be
determined by the Bankruptcy Court). The Bank Agents Plan
provides for a recovery by the shareholders of the Company only
to the extent shares of common stock are available after payment
in full of unsecured allowed claims. Effectiveness of the Bank
Agents Plan is subject to various conditions including the
Company's ability to obtain third party financing in an amount
sufficient to enable the Debtors to make the cash payments
required under the Bank Agents Plan and to meet the Debtors
contemplated working capital and letter of credit needs.
On December 30, 1993, LaSalle National Bank (the "Senior
Note Trustee"), as the successor trustee under the indenture
dated as of January 1, 1988, as amended, filed the Series B & C
Senior Note Trustee's Joint Plan of Reorganization of Debtors
dated as of December 30, 1993 (the "Senior Note Trustee Plan").
While the Senior Note Trustee Plan was not predicated upon a
settlement of the asbestos-related litigation, the plan provided
for the issuance of "New Notes" (as said term was defined in the
Senior Note Trustee Plan) to fund any settlement which might be
approved by the Debtors and the Series B & C Senior Note
Trustee. The Senior Note Trustee Plan was premised upon an
"Equity Value" (as said term was defined in the Senior Note
Trustee Plan) of $783.8 million. The Senior Note Trustee Plan
provided for payment in full in cash of all secured allowed
claims (including post-filing date interest at varying rates)
and payment in full of unsecured allowed claims (including
post-filing date interest at varying rates) by using cash,
issuance of new indebtedness, issuance of common stock (subject
to dilution in the event a settlement of the asbestos-related
litigation was achieved), or a combination thereof. In
addition, the Senior Note Trustee Plan provided that the
shareholders of the Company would retain their common stock
interests, subject to dilution in the event a settlement of the
asbestos-related litigation was reached. Effectiveness of the
Senior Note Trustee Plan was subject to various conditions which
were similar to the conditions set forth in the Debtors First
Amended Plan.
By order dated February 25, 1994, the Bankruptcy Court
(i) fixed April 20, 1994 as the last date to file any further
amendments or supplements to the Plan, the Bondholders Plan, the
Bank Agents Plan or the Senior Note Trustee Plan, (ii) allowed
one additional party to file, by April 20, 1994, a plan of
reorganization and related disclosure statement on behalf of his
clients, (iii) fixed April 20, 1994 as the last date for
requesting a copy of a plan and disclosure statement filed by
the above noted parties, (iv) fixed May 6, 1994 as the last date
for any party in interest to file objections to the disclosure
statements and (v) scheduled a hearing for May 19, 1994 and
continuing, if necessary, through May 20, 1994 to consider
approval of disclosure statements.
On April 20, 1994, the Debtors, the Senior Note Trustee and
the Bondholders Plan Proponents each filed an amended plan of
reorganization and an amended disclosure statement. The Bank
Agents did not file any further amendment or supplement to the
Bank Agents Plan. The one additional party did not file a plan
of reorganization and disclosure statement on behalf of his
clients.
The Debtors Second Amended Joint Plan of Reorganization
dated as of April 19, 1994 (the "Debtors Second Amended Plan")
modified the Debtors First Amended Plan in four significant
ways. First, the Debtors Second Amended Plan amended the
formula for calculating post-filing date interest with respect
to the secured claims of the Revolving Credit Banks (as defined
in the Debtors Second Amended Plan) and the Working Capital
Banks (as defined in the Debtors Second Amended Plan). The
Debtors Second Amended Plan provided for interest on the
adjusted pre-filing date principal claims of the Revolving
Credit Banks and the Working Capital Banks to accrue at the
Chemical Bank Prime Rate (as defined in the Debtors Second
Amended Plan) in effect from time to time plus 1 1/2% per annum,
compounded on each of January 1, April 1, July 1 and October 1
commencing April 1, 1990.
Second, with respect to pre-filing date unsecured claims,
other than Subordinated Note Claims (as defined in the Debtor's
Second Amended Plan), the Debtors Second Amended Plan no longer
provided for the payment of post-filing date interest.
Third, with respect to Subordinated Note Claims, the
Debtors Second Amended Plan did not provide for the payment of
post-filing date interest nor for Value Sharing.
Finally, the Debtors Second Amended Plan provided for the
shareholders of the Company to retain approximately 75% interest
in the Company (subject to the Debtors option to substitute
additional debt securities in lieu of common stock presently
proposed to be issued under the Debtors Second Amended Plan).
The Senior Note Trustee's First Amended Joint Plan of
Reorganization of Debtors dated as of April 20, 1994 (the
"Senior Note Trustee Amended Plan") did not in any material way
amend the provisions of the Senior Note Trustee Plan.
The First Amended Joint Plan of Reorganization of Debtors
Proposed by Certain Creditor Proponents dated as of April 20,
1994 (the "Bondholders Amended Plan") amended the Bondholders
Plan in three significant ways. First, the Bondholders Amended
Plan annexed to it a Veil Piercing Settlement Agreement dated as
of April 18, 1994.
Second, the treatment of Subordinated Note Claims was
amended to reflect an Agreement for Settlement of Pre-LBO Issues
and Treatment of Subordinated Notes Pursuant to Chapter 11 Plan
dated as of March 23, 1994.
Finally, the Bondholders Amended Plan amended the
definition of "Qualified Securities" (debt instruments to be
issued under the Bondholders Amended Plan to holders of
Subordinated Note Claims and as part of the consideration to be
paid under the Veil Piercing Settlement Agreement) to provide
for subordinated unsecured notes to be issued by the Company.
On April 25, 1994, the Bank Agents filed a motion to defer
the Bankruptcy Court's consideration of the Bank Agents Plan and
the related disclosure statement until the earlier of
December 31, 1994, and the date on which the Bankruptcy Court
denies approval of the Bondholders Plan Proponents disclosure
statement. The Bank Agents motion was granted by the Bankruptcy
Court on May 18, 1994.
On May 6, 1994, objections to the Company's disclosure
statement were filed by the Bondholders Plan Proponents, the
California Department of Toxic Substances Control and California
Regional Water Quality Control Board (the "California EPA"),
Mississippi State Tax Commission, Raul Delgado, et al, (the
"Texas Homeowners"), the Senior Note Trustee and Purnie Melcher,
Mary Melcher, Richard Melcher and Curtis Melcher. Objections to
the Bondholders Plan Proponents disclosure statement were filed
by the Company, the California EPA, the Senior Note Trustee and
the Texas Homeowners. Objections to the Senior Note Trustee's
disclosure statement were filed by the Company, the Bondholders
Plan Proponents, the California EPA and the Texas Homeowners.
On May 11, 1994, the Bondholders Plan Proponents filed with
the Bankruptcy Court their (i) Second Amended Joint Plan of
Reorganization of Debtors Proposed by Certain Creditor
Proponents dated as of May 11, 1994; (ii) Second Amended
Disclosure Statement for Creditor Proponents' Settlement Plan;
and (iii) Supplement to Second Amended Disclosure Statement for
Creditor Proponents' Settlement Plan (collectively, the
"Bondholders Plan Proponents Second Amended Plan Documents") and
on May 17, 1994, the Bondholders Plan Proponents filed with the
Bankruptcy Court their (i) Third Amended Joint Plan of
Reorganization of Debtors Proposed by Certain Creditor
Proponents dated as of May 17, 1994; (ii) Third Amended
Disclosure Statement for Creditor Proponents' Settlement Plan;
and (iii) Supplement to Third Amended Disclosure Settlement for
Creditor Proponents' Settlement Plan (collectively, the
"Bondholders Plan Proponents Third Amended Plan Documents").
By motion dated May 13, 1994, the Company sought the entry
of an order striking the Bondholders Plan Proponents Second
Amended Plan Documents on the basis that the filing of such
documents was in violation of the Bankruptcy Court's
February 25, 1994 order.
At the hearing held on May 18, 1994, the Bankruptcy Court
denied the Company's motion to strike but determined that the
Bankruptcy Court would not consider the Bondholders Plan
Proponents Second Amended Plan Documents or the Bondholders Plan
Proponents Third Amended Plan Documents at the May 19, 1994
disclosure statement hearing.
On May 18, 1994, the Senior Note Trustee filed a motion to
defer the Bankruptcy Court's consideration of the Senior Note
Trustee Amended Plan and related disclosure statement, which
motion was granted on May 19, 1994.
On May 19, 1994, the Bankruptcy Court held a hearing to
consider approval of the disclosure statements filed on
April 20, 1994, by the Company and the Bondholders Plan
Proponents. At the conclusion of the hearing, the Bankruptcy
Court fixed June 9, 1994 as the last day to file any further
amendments to the Debtors Second Amended Plan and related
disclosure statement and the Bondholders Amended Plan and
related disclosure statement and fixed June 17, 1994 as the date
by when objections to the Company's and the Bondholders Plan
Proponents amended disclosure statements could be filed. In
addition, the Bankruptcy Court scheduled a status conference for
June 15, 1994 to consider further procedures with respect to the
Company's and Bondholders Plan Proponents amended plans of
reorganization and disclosure statements.
On June 9, 1994, the Debtors filed the Debtors Third
Amended Joint Plan for Reorganization dated as of June 9, 1994
(the "Debtors Third Amended Plan") and the Third Amended
Disclosure Statement dated June 9, 1994. The Debtors Third
Amended Plan modified the Debtors Second Amended Plan in two
significant ways. First, the Debtors Third Amended Plan
modified the formula for calculating post-petition interest with
respect to the secured claims of the Revolving Credit Banks and
the Working Capital Banks. The Debtors Third Amended Plan
provides for interest on the adjusted pre-filing date principal
claims of the Revolving Credit Banks and the Working Capital
Banks to accrue at the (i) Chemical Bank Prime Rate in effect
from time to time plus 2 1/2% per annum, compounded on each of
January 1, April 1, July 1 and October 1 commencing on April 1,
1990 for the period from the Filing Date to December 31, 1994
and (ii) rate of 13% per annum, compounded on each of January 1,
April 1, July 1 and October 1 commencing April 1, 1995 for the
period from January 1, 1995 to the Effective Date.
In addition, the Debtors Third Amended Plan modified the
formula for calculating post-petition interest with respect to
and treatment of Series B & C Senior Note Claims. If the
Holders of Series B & C Senior Note Claims accept the Debtors
Third Amended Plan, interest on the principal amount accrued and
unpaid from the Filing Date to the Effective Date will accrue at
the rate of either (i) 14 5/8% per annum for the Series B Senior
Extendible Reset Notes and 14 1/2% per annum for the Series C
Senior Extendible Reset Notes if the holders of such notes
receive a combination of cash and debt securities on account of
their Allowed Claims or (ii) 13 5/8% per annum for the Series B
Senior Extendible Reset Notes and 13 1/2% per annum for the
Series C Senior Extendible Reset Notes if the holders of such
notes receive all cash on account of their Allowed Claims. In
the event holders of Series B & C Senior Note Claims do not
accept the Debtors Third Amended Plan, then post-filing date
interest will accrue at the rate of 9% per annum.
On June 9, 1994, the Bondholders Plan Proponents filed
their Second Amended Joint Plan of Reorganization of Debtors
Proposed by Certain Creditor Proponents (the "Bondholders Second
Amended Plan") and their Second Amended Disclosure Statement for
Creditor Proponents' Settlement Plan. The Bondholders Second
Amended Plan modified the Bondholders Amended Plan in two
significant ways. First, post-filing date interest on Series B
& C Senior Note Claims (principal amount due and owing on the
Filing Date together with interest on such principal amount
accrued and unpaid as of the Filing Date) will accrue (i) with
respect to the amount of such Claims paid in cash, at the rate
of 13% per annum for the period from the Filing Date to June 30,
1994 and 14 5/8% per annum from July 1, 1994 to the Effective
Date or (ii) with respect to the amount of such claims paid in
debt securities, at the rate of 14% per annum for the period
from the Filing Date to June 30, 1994 and 14 5/8% per annum for
the period from July 1, 1994 to the Effective Date.
In addition, the Bondholders Second Amended Plan provides
that the shareholders of the Company may purchase their pro rata
share of the shares of the Class B Common Stock that would
otherwise be distributable to holders of Subordinated Note
Claims or distributable under the Veil Piercing Settlement
Agreement at a cash exercise price equal to the "New Common
Stock Value Per Share."
On June 15, 1994, the Bankruptcy Court held a status
conference with respect to the disclosure statements filed by
the Debtors and the Bondholders Plan Proponents on June 9, 1994.
At the status conference, the Debtors and the Bondholders Plan
Proponents suggested the following procedures and the fixing of
the following dates in connection with the disclosure statement
approval process: (i) June 21, 1994 was fixed as the last date
by which the Debtors and the Bondholders Plan Proponents could
serve amended and restated plans of reorganization, which
amended and restated plans of reorganization were to be filed
with the Bankruptcy Court on June 22, 1994; (ii) June 28, 1994
was fixed as the last date by which the Debtors and the
Bondholders Plan Proponents could serve amended and restated
disclosure statements, which amended and restated disclosure
statements were to be filed with the Bankruptcy Court on
June 29, 1994; (iii) July 6, 1994 was fixed as the last date by
which parties in interest, other than the clients of Allen
Potter, Esq., could serve written objections to the amended and
restated disclosure statements filed by the Debtors and the
Bondholders Plan Proponents on June 29, 1994, which objections
are to be filed with the Bankruptcy Court no later than July 7,
1994; (iv) July 8, 1994 was fixed as the last date by which the
clients of Allen Potter, Esq. could serve and file written
objections to amended and restated disclosure statements filed
by the Debtors and the Bondholders Plan Proponents; (v) during
the period July 7 through July 11, 1994, the Debtors and the
Bondholders Plan Proponents are to confer and attempt in good
faith to resolve any objections to the amended and restated
disclosure statements; (vi) prior to July 7, 1994, the Debtors
and the Bondholders Plan Proponents are to attempt to resolve
technical balloting and solicitation issues and serve and file,
either jointly or separately, a motion regarding such issues and
procedures which motion is scheduled to be heard on July 13,
1994; (vii) on July 12, 1994, the Debtors and the Bondholders
Plan Proponents shall each file with the Bankruptcy Court a
pleading setting forth, without legal argument, unresolved
objections to the amended and restated disclosure statements
filed by the Debtors and the Bondholders Plan Proponents; and
(viii) a hearing is scheduled for July 13, 1994 at which the
Bankruptcy Court will hear argument concerning any unresolved
objections to the amended and restated disclosure statements
filed by the Debtors and the Bondholders Plan Proponents. On
June 28, 1994, the Bankruptcy Court entered an order confirming
the aforementioned procedures and dates.
On June 22, 1994, the Debtors filed their Fourth Amended
Joint Plan of Reorganization dated as of June 21, 1994 (the
"Debtors Fourth Amended Plan"). The Debtors Fourth Amended Plan
did not materially modify the Debtors Third Amended Plan. The
Bondholder Plan Proponents did not file a further amended plan
of reorganization.
On June 29, 1994, the Debtors and the Bondholders Plan
Proponents each filed an amended disclosure statement.
The process pursuant to which the Debtors Fourth Amended
Plan or any further amended plan of reorganization filed by the
Debtors and the Bondholders Second Amended Plan or any further
amended plan of reorganization filed by the Bondholders Plan
Proponents may be confirmed necessarily will be complex and may
be delayed pending further developments in the asbestos-related
litigation involving the Company (see Note 10). Accordingly,
the timing of such confirmation necessarily cannot be predicted.
The Debtors Fourth Amended Plan and/or the Bondholders
Second Amended Plan will be sent, along with a disclosure
statement approved by the Bankruptcy Court to all members of
classes of impaired creditors and equity security holders for
acceptance or rejection. In general, the Bankruptcy Code
provides that a claim or interest is impaired under a plan
unless such plan proposes to pay such claim or interest in full
or leave it unaltered. In order to be accepted, at least
two-thirds in amount and a majority in number of holders of
allowed claims or interests in each class that is impaired who
actually vote, must accept the plan. Following acceptance or
rejection of any plan by impaired classes of creditors and
equity security holders, the Bankruptcy Court at a noticed
hearing would consider whether to confirm the plan. Among other
things, for confirmation the Bankruptcy Court at a noticed
hearing is required to find that (i) each holder of a claim or
interests in each impaired class of creditors and equity
security holders will, pursuant to the plan, receive at least as
much as the class would have received in a liquidation under
Chapter 7 of the Bankruptcy Code, (ii) each impaired class of
creditors and equity security holders has accepted the plan by
the requisite vote and (iii) confirmation of the plan is not
likely to be followed by the liquidation or need for further
financial reorganization of the debtor or any successor unless
the plan proposes such liquidation or reorganization.
If any impaired class of creditors or equity security
holders does not accept a plan, and assuming that all of the
other requirements of the Bankruptcy Code are met, the proponent
of the plan may invoke the so-called "cram down" provisions of
the Bankruptcy Code. Under these provisions, the Bankruptcy
Court may confirm a plan notwithstanding the nonacceptance of
the plan by an impaired class of creditors or equity security
holders if certain requirements of the Bankruptcy Code are met
including but not limited to finding that the proposed plan and
any settlement contemplated therein (i.e. the Veil Piercing
Settlement Agreement) is fair and equitable. These requirements
may necessitate provision in full for senior classes of
creditors and/or equity security holders before provision for a
junior class could be made.
The Company cannot now predict whether, or at what time,
the Debtors Fourth Amended Plan, the Bondholders Second Amended
Plan or any further amended plans by either party may be
confirmed or the ultimate terms thereof.
NOTE 3--INSTALMENT NOTES RECEIVABLE
The instalment notes receivable arise from sales of
partially-finished homes to customers for time payments
primarily over periods of twelve to thirty years and are secured
by first mortgages or similar security instruments. Revenue and
income from the sale of homes is included in income upon
completion of construction and legal transfer to the customer.
The buyer's ownership of the land and the improvements necessary
to complete the home constitute a significant equity investment
which the Company has access to should the buyer default on
payment of the instalment note obligation. Of the gross amount
of $4,176,040,000 an amount of $3,870,826,000 is due after one
year. Instalment payments estimated to be receivable within
each of the five years from May 31, 1994 are $305,214,000,
$295,254,000, $287,645,000, $281,172,000 and $274,592,000,
respectively, and $2,732,163,000 after five years. Time charges
are included in equal parts in each monthly payment and are
taken into income as collected. This method approximates the
interest method since a much larger provision for loan losses
and other expenses would be required if time charge income were
accelerated. The aggregate amount of instalment notes
receivable having at least one payment ninety or more days
delinquent was 3.23% and 3.12% of total instalment notes
receivable at May 31, 1994 and 1993, respectively.
Mid-State Homes, Inc. ("Mid-State"), an indirect
wholly-owned subsidiary of the Company, is the settlor and sole
beneficiary of two business trusts established under the laws of
Delaware, Mid-State Trust II ("Trust II") and Mid-State Trust
III ("Trust III"). The Trusts were organized for the purpose of
purchasing instalment notes receivable from Mid-State from the
net proceeds from the issuance of the Mortgage-Backed Notes and
the Asset Backed Notes described in Note 5. Assets of Trust II
and Trust III, including the instalment notes receivable, are
not available to satisfy claims of general creditors of the
Company and its subsidiaries. Of the gross amount of instalment
notes receivable at May 31, 1994 of $4,176,040,000 with an
economic balance of $2,051,261,000, receivables owned by Trust
II had a gross book value of $1,631,212,000 and an economic
balance of $972,093,000 and receivables owned by Trust III had a
gross book value of $523,048,000 and an economic balance of
$256,904,000.
Restricted short-term investments include (i) temporary
investment of reserve funds and collections on instalment notes
receivable owned by Trust II which are available only to pay
expenses of Trust II and principal and interest on the
Mortgage-Backed Notes ($73,000,000), (ii) temporary investment
of reserve funds and collections on instalment notes receivable
owned by Trust III which are available only to pay expenses of
Trust III and principal and interest on the Asset Backed Notes
($12,971,000), (iii) cash securing letters of credit
($3,037,000) and (iv) miscellaneous other segregated accounts
restricted to specific uses ($18,544,000), including $6,271,000
from proceeds of sale of assets set aside to offer to purchase
Series B and Series C Senior Extendible Reset Notes.
NOTE 4--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows
(see Note 1 regarding purchase accounting):
MAY 31,
1994 1993
(IN THOUSANDS)
Land and mine $ 200,337 $ 200,000
Land improvements 18,941 17,349
Buildings and leasehold improvements 104,999 99,597
Mine development costs 123,761 116,576
Machinery and equipment 663,898 617,987
Construction in progress 12,003 23,559
Total $1,123,939 $1,075,068
The Company provides depreciation for financial reporting
purposes principally on the straight line method over the useful
lives of the assets. Assets (primarily mine development costs)
extending for the full life of a coal mine are depreciated on
the unit of production basis. For federal income tax
purposes accelerated methods are used for substantially all
eligible properties. Depletion of minerals is provided based
on estimated recoverable quantities.
The Company has capitalized interest on qualifying
properties in accordance with Financial Accounting Standards
Board Statement No. 34. Interest capitalized for the years
ended May 31, 1994, 1993 and 1992 was immaterial. Interest paid
in cash for the years ended May 31, 1994, 1993 and 1992 was
$91,293,000, $117,853,000 and $109,477,000, respectively.
NOTE 5--DEBT
The Company's cash management system provides for the
reimbursement of all major bank disbursement accounts on a daily
basis. Checks issued but not yet presented to the banks for
payment are classified as bank overdrafts.
As a result of the Reorganization Proceedings, the maturity
of all unpaid principal of, and interest on, substantially all
of the indebtedness of the Debtors became immediately due and
payable in accordance with the terms of the instruments
governing such indebtedness.
While the Reorganization Proceedings are pending, the
Debtors are prohibited from making any payments of obligations
owing as of the petition date, except as permitted by the
Bankruptcy Court. Furthermore, the Debtors will not be able to
borrow additional funds under any of their prepetition credit
arrangements.
At the date of the filing of the Reorganization Proceedings
the Company and various of its subsidiaries were borrowing under
a Working Capital Agreement which also provided for the issuance
of letters of credit. An aggregate of $78,033,000 of borrowings
and $17,549,000 of letters of credit are outstanding under this
agreement at May 31, 1994. Under the terms of the Working
Capital Agreement, overdue principal and, to the extent
permitted by law, overdue interest bear interest at a rate equal
to 3 1/2% per annum in excess of the reference rate of Chemical
Bank (the "Reference Rate") in effect from time to time,
provided that no loan will bear interest after maturity at a
rate per annum less than 1% in excess of the rate of interest
applicable thereto at maturity.
Since the beginning of the Reorganization Proceedings
certain of the Debtors have consummated an agreement, as
amended, with two commercial banks with respect to a $25 million
letter of credit facility. Pursuant to the terms of such "New
Letter of Credit Agreement", upon issuance of a letter of
credit, the applicable Debtors will deposit with the issuing
bank an amount of cash equal to the stated amount of the letter
of credit. At May 31, 1994, $3,037,000 of letters of credit
were outstanding under this agreement. Since the beginning of
the Reorganization Proceedings certain of the Debtors have also
consummated an agreement with the lenders pursuant to which the
lenders agree to renew letters of credit issued under the
Working Capital Agreement that were outstanding at the time of
filing of the petitions for reorganization (the "Replacement
Letter of Credit Agreement"). To the extent that the letters of
credit under the Replacement Letter of Agreement are renewed
during the Reorganization Proceedings, these Debtors have agreed
to reimburse the issuing bank for any draws under such letters
of credit, which obligation shall be entitled to an
administrative expense claim under the Bankruptcy Code. In
addition, the obligations of the Debtors under such Replacement
Letter of Credit Agreement shall continue to be secured by the
collateral which secures the Debtors' obligations under the Bank
Credit Agreement and the Working Capital Agreement. The
Bankruptcy Court approved the Debtors' entering into the New
Letter of Credit Agreement in May 1990. The New Letter of
Credit Agreement currently terminates on June 30, 1995.
Long-term debt, in accordance with its contractual terms,
consisted of the following at each year end:
<TABLE>
<CAPTION>
MAY 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Senior debt:
Mortgage-Backed Notes (less unamortized discount
of $1,864,000 in 1993) $ 671,000 $ 811,122
Asset Backed Notes 200,970 229,585
Revolving Credit Agreement 228,249 228,249
Series B Senior Extendible Reset Notes 176,300 176,300
Series C Senior Extendible Reset Notes 5,000 5,000
Other 7,080 13,344
Total senior debt 1,288,599 1,463,600
Subordinated debt:
Senior Subordinated Extendible Reset Notes 443,046 443,046
Subordinated Notes 350,000 350,000
13-1/8% Subordinated Notes 50,000 50,000
13-3/4% Subordinated Debentures 100,000 100,000
10-7/8% Subordinated Debentures (less unamortized
discount of $7,513,000 and $8,280,000) 82,487 81,720
Total subordinated debt 1,025,533 1,024,766
Less: Amount included as liabilities subject to
Chapter 11 proceedings (Note 2) (1,442,162) (1,441,395)
Total consolidated long-term debt $ 871,970 $ 1,046,971
</TABLE>
The Mortgage-Backed Notes (see Note 3) were issued by Trust
II (which did not file a petition for reorganization) in five
classes in varying principal amounts. Three of the classes have
been fully repaid. The two remaining classes A3 and A4 bear
interest at the rates of 9.35% and 9.625%, respectively.
Interest on each class of notes is payable quarterly on each
January 1, April 1, July 1 and October 1 (each a "Payment
Date"). On each Payment Date, regular scheduled principal
payments will be made on the Class A3 and Class A4 Notes in
order of maturity. Maturities of the balance of these
Mortgage-Backed Notes range from April 1, 1998 for the Class A3
Notes to April 1, 2003 for the Class A4 Notes. The Class A3 and
Class A4 Notes are subject to special principal payments and the
Class A4 Notes may be subject to optional redemption under
specified circumstances. The scheduled principal amount of
notes maturing in each of the five years from May 31, 1994 is
$87,000,000, $87,000,000, $87,000,000, $87,000,000 and
$64,600,000, respectively.
The Asset Backed Notes (see Note 3) issued by Trust III,
bear interest at 7 5/8%, constitute a single class and have a
final maturity date of April 1, 2022. Payments are made
quarterly on January 1, April 1, July 1 and October 1, based on
collections on the underlying collateral less amounts paid for
interest on the notes and Trust III expenses.
Set forth in the following paragraphs is a description of
the terms of the Company's various senior, senior subordinated
and subordinated debt agreements as in effect on the petition
date. Such provisions do not necessarily presently govern the
respective rights of the Company, its subsidiaries and the
various lenders. Instead, the rights of the parties will be
determined in connection with the Reorganization Proceedings.
The Company, Old Walter Industries and certain operating
subsidiaries of the Company (the "Revolving Loan Borrowers"), on
a joint and several basis, were initially permitted to borrow up
to an aggregate of $800,000,000 under the terms of a credit
agreement dated as of September 10, 1987, as amended, with
various banks (the "Revolving Credit Agreement"), of which
$700,000,000 was a term loan and $100,000,000 was a revolving
loan. The commitment under the Revolving Credit Agreement had
been reduced to $242,292,000 at the petition date and was
scheduled to be fully repaid by quarterly payments through
June 30, 1991. Additionally, the commitment would have been
reduced by the proceeds of certain asset sales. Interest, at
the option of the Revolving Loan Borrowers, was at (i) the
Reference Rate plus 1 1/2%, (ii) a LIBOR rate plus 2 1/4% or
(iii) a certificate of deposit rate plus 2 1/2%. A commitment
fee of 1/2 of 1% per annum was required based on the daily
average unutilized commitment. In fiscal 1991, pursuant to an
order of the Bankruptcy Court, $7,356,000 of proceeds from the
sale of an asset held as security for the Revolving Credit
Agreement and setoff of bank accounts were turned over to the
lenders with reservation of rights as to application of such
payment. The Company has applied such payment to a reduction of
principal ($5,794,000 to the Revolving Credit Agreement and
$1,562,000 to the Working Capital Agreement). In June 1991,
pursuant to an order of the Bankruptcy Court, $10,704,000 of
proceeds from the prepayment of the promissory note received in
connection with the sale of Apache Building Products Company in
1988, plus $350,000 of interest earned thereon, held in a
segregated escrow account were applied as a reduction of
principal ($8,249,000 to the Revolving Credit Agreement and
$2,805,000 to the Working Capital Agreement). Bankers Trust
Company and Chemical Bank, as agents for the various bank
lenders under the Revolving Credit Agreement (the "Revolving
Credit Banks"), appealed the Bankruptcy Court's order,
permitting the application of proceeds to the principal of the
indebtedness only, to the District Court (as defined in Note
10). On April 29, 1992, the District Court reversed the
Bankruptcy Court's order and remanded the case to the Bankruptcy
Court for further proceedings and determinations on the issues
of whether the Revolving Credit Banks are oversecured creditors,
the reasonable, relevant, applicable interest rate and whether
the Debtors will ultimately prove to be solvent. At May 31,
1994, $228,249,000 principal amount of loans were outstanding.
Under the terms of the Revolving Credit Agreement, overdue
principal and, to the extent permitted by law, overdue interest
bear interest at a rate equal to 3 1/2% per annum in excess of
the Reference Rate in effect from time to time, provided that no
loan will bear interest after maturity at a rate per annum less
than 1% in excess of the rate of interest applicable thereto at
maturity.
The Series B Senior Extendible Reset Notes and Series C
Senior Extendible Notes were bearing interest at rates of 14
5/8% and 14 1/2%, respectively, on the petition date, payable
semi-annually, in cash, on January 1 and July 1 and were to
mature on January 1, 1990 unless the Senior Note Issuers (three
subsidiaries of the Company) elected to extend the notes for one
or more additional one-year periods. In the event the maturity
was extended, the interest rate would be reset to the interest
rate per annum these notes should bear in order to have a bid
value of 101% of the principal amount as of the reset date. In
no event, however, would the interest rate be reset below the
interest rate then in effect.
The Senior Note Issuers are the following principal
operating subsidiaries: Jim Walter Homes, Inc., Jim Walter
Resources, Inc. ("Jim Walter Resources") and United States Pipe
and Foundry Company ("U.S. Pipe"). See Note 14 for Summarized
Financial Information of the Senior Note Issuers.
The Senior Subordinated Extendible Reset Notes were bearing
interest at a rate of 16 5/8% per annum on the petition date
until reset as described herein, payable semi-annually on
January 1 and July 1, in cash or, at the option of the
Subordinated Note Issuers (two subsidiaries of the Company who
are also the issuers of the Subordinated Notes) on or before
January 1, 1993, by delivering additional Senior Subordinated
Extendible Reset Notes (valued at their principal amount). The
Senior Subordinated Extendible Reset Notes were to mature on
January 1, 1990, unless the Subordinated Note Issuers elected to
extend the notes for one or more additional one-year periods.
In the event the maturity was extended, the interest rate would
be reset to the interest rate per annum these notes should bear
in order to have a bid value of 101% of the principal amount as
of the reset date. In no event, however, would the interest
rate be reset below the interest rate then in effect.
The Subordinated Notes were bearing interest at a rate of
17% per annum on the petition date payable semi-annually, in
cash, on January 1 and July 1.
The Subordinated Note Issuers are the following principal
operating subsidiaries: Jim Walter Homes, Inc. and U.S. Pipe.
See Note 14 for Summarized Financial Information of the
Subordinated Note Issuers.
Subordinated debt assumed by Old Walter Industries from
Original Jim Walter in connection with the Acquisition includes
the (i) 13% Subordinated Notes, (ii) 13% Subordinated Debentures
and (iii) 10% Subordinated Debentures (which were sold at a
discount to yield 12% to maturity).
The Company's various debt agreements had covenants which,
among other things, restricted incurrence of additional
indebtedness, dividend payments, mergers, consolidations and
sales of assets by the Company and its subsidiaries, and
required the Company to maintain certain financial ratios.
However, as a result of the automatic stay resulting from the
filing of the Reorganization Proceedings, neither the indenture
trustees nor the holders of the Company's debt may enforce any
rights, exercise any remedies or realize on any claims in the
event the Company or any of its subsidiaries fails to comply
with any of the covenants contained in the various debt
agreements.
NOTE 6--INCOME TAXES
Income tax expense (benefit) is made up of the following
components:
<TABLE>
<CAPTION>
MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
United States $38,712 $(11,716) $44,093 $(22,682) $34,349 $(23,494)
State and local 2,886 (965) 4,048 (1,131) 1,608 --
Total $41,598 $(12,681) $48,141 $(23,813) $35,957 $(23,494)
</TABLE>
Federal income tax paid for fiscal 1994, 1993 and 1992 was
approximately $37.1 million, $35.9 million, and $52.7 million.
State income tax payments approximated the amounts provided
above.
The Company adopted Statement of Financial Accounting
Standards No. 109 ("FAS 109"), "Accounting for Income Taxes" in
1993. FAS 109 is an asset and liability approach that requires
the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events which have been
recognized in the Company's financial statements or tax returns.
FAS 109 generally considers all expected future events other
than changes in tax law or rates. Previously, the Company used
the FAS 96 asset and liability method that gave no recognition
to future events other than the recovery of assets against
liabilities which reversed in the same time period. The change
to FAS 109 did not require any change to the financial
statements.
Deferred income taxes result from timing differences in the
recognition of revenue and expense for tax and financial
reporting purposes. The tax effect of such timing differences
is summarized as follows:
<TABLE>
<CAPTION>
MAY 31,
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
Effect of tax loss and tax credit carryforwards $ -- $ -- $ 4,779
Revenues recognized on the instalment sales
method for tax purposes and on the accrual
basis for financial reporting (11,899) (11,271) (13,123)
Excess of book over tax depreciation (3,197) (6,149) (10,850)
Postretirement benefit obligation (6,690) (7,594) --
Amortization of investment tax credit -- (219) (384)
Mine development expense 1,936 913 573
Timing differences relating to accrued expenses 5,156 2,364 (3,542)
Enacted tax rate change 2,833 -- --
Other, net 145 (726) (947)
Total $(11,716) $(22,682) $(23,494)
Statutory tax rate 35.0% 34.0% 34.0%
Effect of:
Adjustment to deferred taxes 5.3 -- --
State and local income tax 3.3 2.7 3.0
Percentage depletion (1.7) (8.3) (13.8)
Enacted tax rate change 9.4 -- --
Amortization of net investment tax credit -- (.3) (1.1)
Nonconventional source fuel credit (10.8) (7.7) (15.2)
MAY 31,
1994 1993 1992
(IN THOUSANDS)
Amortization of excess of purchase price
over net assets acquired 47.1 19.0 38.9
Benefit of capital loss carryforward (8.5) (4.7) (10.2)
Other, net 1.0 (.4) .2
Effective tax rate 80.1% 34.3% 35.8%
</TABLE>
On August 10, 1993, the Omnibus Budget Reconciliation Act
of 1993 was signed into law raising the federal
corporate income tax rate to 35% from 34%, retroactive to
January 1, 1993. FAS 109 requires that deferred tax liabilities
and assets be adjusted in the period of enactment for the effect
of an enacted change in the tax laws or rates. The effect of
the change was $2,833,000 and such amount is included in the
provision for deferred income taxes for the year ended May 31,
1994. Deferred
tax liabilities (assets) are comprised of the following:
<TABLE>
<CAPTION>
MAY 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Instalment sales method for instalment notes receivable
in prior years $ 52,549 $ 62,608
Depreciation 117,053 93,701
Difference in basis of assets under purchase accounting 27,269 28,119
Capital loss carryforward (12,600) (15,800)
Accrued expenses (43,716) (28,044)
Postretirement benefits other than pensions (80,003) (70,551)
Valuation allowance 12,600 15,800
Total deferred tax liability $ 73,152 $ 85,833
</TABLE>
The Revenue Act of 1987 eliminated the instalment sales
method of tax reporting for instalment sales after December 31,
1987.
For book purposes the Company recognized a long-term
capital loss of approximately $75.0 million in fiscal 1989.
This loss was recognized for tax purposes in fiscal 1992 and is
deductible to the extent of capital gains of approximately $8.8
million, $9.9 million and $10.4 million in years ended May 31,
1994, 1993 and 1992, respectively. The remaining capital loss
is available as a carryback to fiscal 1991 to be offset against
capital gains of approximately $8.3 million and as a
carryforward to the succeeding three years. The Company has
established a valuation allowance of $12.6 million to offset the
deferred tax asset related to the carryforward since the Company
cannot predict whether capital gains sufficient to offset the
carryforward will be realized in the three year carryforward
period. If certain substantial changes in the Company's
ownership should occur, there would be an annual limitation on
the amount of such loss carryforward which could be utilized.
The Company allocates federal income tax expense (benefit) to
its subsidiaries based on their separate taxable income (loss).
A substantial controversy exists with regard to federal
income taxes allegedly owed by the Company. Proofs of claim
have been filed by the Internal Revenue Service in the amounts
of $110,560,883 with respect to fiscal years ended August 31,
1980 and August 31, 1983 through August 31, 1987, $31,468,189
with respect to fiscal years ended May 31, 1988 (nine months)
and May 31, 1989 and $44,837,693 with respect to fiscal years
ended May 31, 1990 and May 31, 1991. Objections to the proofs
of claim have been filed by the Company and the various issues
are being litigated in the Bankruptcy Court. The Company
believes that such proofs of claim are substantially without
merit and intends to defend such claims against the Company
vigorously.
NOTE 7--STOCKHOLDERS' EQUITY
KKR Associates, a New York limited partnership, is the sole
general partner of three partnerships which own a total of
28,500,000 shares of the outstanding common stock of the
Company.
The Company entered into common stock subscription
agreements, dated as of December 1, 1987 (the "Management Common
Stock Subscription Agreements"), with certain individuals who
are former or current members of management (the "Management
Investors") under which an aggregate of 893,500 shares of common
stock remain outstanding. The Management Common Stock
Subscription Agreements generally provide the Company with a
right of first refusal with respect to any bona fide offer from
a third party to purchase any or all of such Management
Investor's shares of common stock commencing after January 7,
1993; provided that such transfer restrictions and right of
first refusal will terminate in the event of a public offering
of the Company's common stock.
NOTE 8--STOCK OPTIONS
Under stock option plans approved by stockholders in
October 1987, an aggregate of 3,318,182 shares of the Company's
common stock have been reserved for the grant and issuance of
incentive and non-qualified stock options (the "Options").
Options for 1,618,568 shares, all of which are exercisable, were
outstanding at May 31, 1994. The exercise price of each Option
granted is $5.00 per share, the fair market value at date of
grant. During 1994, 1993 and 1992 options for 59,727, 384,909
and 16,591 shares were cancelled.
NOTE 9--RELATED PARTY TRANSACTIONS
Following its incorporation, the Company retained KKR to
provide financial, financial advisory and consulting services to
the Company in connection with the Acquisition and the Merger,
for which the Company paid to KKR a fee of $35 million. KKR has
agreed to provide management consulting and financial services
to the Company and its subsidiaries on an annually renewable
basis. Effective with the commencement of the Reorganization
Proceedings, current payment of these consulting fees was
suspended. The annual rate at such time was $550,000.
NOTE 10--LITIGATION AND OTHER MATTERS
Note 1 contains a description of the organization of the
Company and the acquisition of Original Jim Walter. On April
21, 1988, the Company sold all of the outstanding capital stock
of JWC Holdings, the parent corporation of Jim Walter
Corporation (formerly J-II) and its subsidiaries, including The
Celotex Corporation ("Celotex") and its subsidiaries. Celotex
is a co-defendant with other miners, manufacturers and
distributors of asbestos-containing products in a very large
number of lawsuits filed throughout the United States alleging
injuries to the health of persons exposed to asbestos-containing
products. Original Jim Walter had been named as a defendant in
certain asbestos-related lawsuits from time to time and the
Company understands that Original Jim Walter's corporate
successor, Jim Walter Corporation, currently is a co-defendant
in a number of the asbestos-related lawsuits filed against
Celotex. As discussed below, the Company and certain of its
subsidiaries and other affiliates have been served with process
as a co-defendant in a number of these lawsuits. The Company
understands that prior to the Tender Offer Celotex ceased to be
engaged in the mining, manufacturing and distribution of the
asbestos-containing products that have given rise to the
aforementioned asbestos-related lawsuits against Celotex.
Because Jim Walter Corporation, Celotex and their respective
affiliates are not affiliates of the Company, neither the
Company, Old Walter Industries nor any of their respective
affiliates can make any representation as to the status of the
asbestos-related litigation pending against Jim Walter
Corporation, Celotex and their respective affiliates, the amount
of the alleged damages sought from Jim Walter Corporation,
Celotex and their respective affiliates in those lawsuits, the
insurance coverage available to them to satisfy asbestos-related
claims, or any other matter related to such litigation.
The Company understands that the extent of the alleged
injuries in the asbestos-related lawsuits filed against Celotex
varies from case to case, many of the complaints against Celotex
request punitive damages in addition to the compensatory damages
and the aggregate damages sought in these cases is very
substantial. In addition to these personal injury cases, a
substantial number of actions, some of which are styled as class
actions, have been filed against Celotex and numerous
co-defendants seeking very substantial aggregate damages for the
cost of detecting, analyzing, repairing and/or removing
asbestos-containing materials in buildings owned or operated by
the plaintiffs. The Company understands that the number of
asbestos-related lawsuits filed against Celotex has continued to
grow in recent years and the magnitude of the additional claims
that are expected to be asserted against Celotex in the future
cannot be accurately predicted at this time. The Company
understands that the cost to Celotex to date of settling or
otherwise disposing of asbestos-related lawsuits has been very
substantial and that a substantial portion of such cost has been
borne by insurance carriers pursuant to their insurance policies
or settlement agreements with Celotex. The Company believes,
however, that (i) most of Celotex' available insurance coverage
prior to late 1977 has been exhausted, (ii) since late 1977,
most of Celotex' insurance policies have excluded coverage for
asbestosis, which is the basis for most of the personal injury
claims pending against Celotex, (iii) beginning in late 1977, an
increasing number of Celotex' policies have excluded coverage
for other asbestos-related diseases and Celotex and its insurers
dispute the scope of most of those exclusions, (iv) since late
1984, coverage for asbestos-related personal injury and property
damage claims generally have been excluded from Celotex
policies, (v) Celotex' insurers dispute whether any of Celotex'
policies cover any asbestos-related property damage claims and
(vi) no insurance is available for punitive damages in many
jurisdictions. The insurance coverage disputes referred to
above are the subject of litigation. The uncertain outcome and
possible adverse consequences of the insurance coverage disputes
referred to above, the continued growth in the number of
asbestos-related lawsuits filed against Celotex and the very
substantial aggregate damages alleged therein and the
possibility that future disposition costs could exceed those
experienced to date by Celotex, could impair the ability of
Celotex to continue to satisfy asbestos-related claims. On
October 12, 1990, Celotex and its wholly-owned subsidiary, Carey
Canada, Inc. each filed a petition for reorganization under
Chapter 11 of the Bankruptcy Code with the United States
Bankruptcy Court for the Middle District of Florida, Tampa
Division. The Chapter 11 cases were assigned to the Honorable
Thomas E. Baynes, Jr. As a result thereof and pursuant to the
automatic stay provisions contained in section 362 of the
Bankruptcy
Code, all actions (other than those actions set forth in section
362(b)
and, as discussed below, other than, for certain limited
purposes, the Declaratory Judgment Proceeding commenced by the
Debtors) commenced against Celotex prior to October 12, 1990
were stayed pending any future modification of the automatic
stay under the Bankruptcy Code. On May 8, 1991, the Debtors
filed a motion in the Celotex Chapter 11 case seeking to have
the automatic stay lifted so as to allow the Debtors to continue
to prosecute the Declaratory Judgment Proceeding against Celotex
and others. On June 4, 1991, Judge Baynes granted the Debtors
motion for the limited purpose of permitting them to file and
proceed with a motion for summary judgment and to prosecute or
defend any appeals arising from or related to such motion.
A substantial number of the asbestos-related lawsuits filed
against Celotex relate to the asbestos-related operations of a
predecessor corporation of Rapid-American Corporation, a
Delaware corporation ("Rapid-American"), which subsequently were
transferred by Rapid-American to a corporation which was merged
into Celotex in 1972. According to Rapid-American's Annual
Report on Form 10-K for the fiscal year ended January 31, 1989,
Rapid-American is a co-defendant in a number of personal injury
and property damage cases. Each of Celotex and its predecessor
corporation had indemnified RapidAmerican and its predecessor
corporation against all liabilities relating to those operations
for a limited time period. The extent of the indemnification is
currently a matter of dispute.
As stated above, the Company and certain of its
subsidiaries and other affiliates have been served with process
as a codefendant in a number of the asbestos-related lawsuits
described above. One of these lawsuits is a class action filed
in federal court in Beaumont, Texas that involves approximately
3,000 plaintiffs alleging asbestos-related personal injuries.
Plaintiffs in the class action added Old Walter Industries as a
defendant alleging, among other things, that (i) Original Jim
Walter and its successors, including Jim Walter Corporation and
HAC, are liable for all damages caused by the products
manufactured, sold and distributed by Celotex by reason, among
other things, of operating Celotex as a division, and conspiring
with Celotex and other co-defendants to market harmful products;
(ii) the distribution by HAC of substantially all of its assets
to Old Walter Industries constituted a fraudulent conveyance;
and (iii) Old Walter Industries is a successor to the
liabilities of HAC and is thus liable to the plaintiffs for
injuries caused by Celotex and certain named subsidiaries and/or
predecessor companies of Celotex, and Original Jim Walter and
its successors, including HAC and Jim Walter Corporation.
Another asbestos-related lawsuit is a purported class
action filed on July 13, 1989 in state court in Beaumont, Texas
against the Company, Old Walter Industries, KKR, KKR Associates,
Jim Walter Corporation, HAC, Celotex, Drexel Burnham Lambert
Incorporated ("Drexel Burnham"), Drexel Burnham Lambert Group,
Inc. ("Drexel Burnham Group"), and certain directors and
executive officers of the Company, Old Walter Industries and
Original Jim Walter (i.e., John B. Carter, Jr., Perry Golkin,
Henry R. Kravis, Paul E. Raether, George R. Roberts, Michael
T. Tokarz and Gene M. Woodfin) that purports to involve all
persons pursuing unsatisfied personal injury or wrongful death
claims against Celotex or Jim Walter Corporation based upon
exposure to asbestos. The action originally named as
defendants, in addition to those individuals and entities named
above, James O. Alston, Joe B. Cordell and James W. Walter,
directors and executive officers of the Company, Old Walter
Industries and Original Jim Walter. Subsequently, plaintiffs
voluntarily dismissed their claims against Messrs. Alston,
Cordell and Walter. On December 26, 1989, plaintiffs filed
their Second Amended Original Petition and Application for
Temporary Injunction. Plaintiffs allege, among other things,
that (i) Original Jim Walter and its successors, including Jim
Walter Corporation and HAC, are liable for all damages caused by
the products manufactured, sold and distributed by Celotex by
reason, among other things, of operating Celotex as a division;
(ii) the distribution by HAC of substantially all of its assets
to Old Walter Industries constituted a fraudulent conveyance;
(iii) Old Walter Industries is a successor to the liabilities of
HAC and the corporate separateness of Old Walter Industries and
HAC should be disregarded, and thus Old Walter Industries is
liable to the plaintiffs for injuries caused by Celotex and its
predecessors and Original Jim Walter and its successors,
including HAC and Jim Walter Corporation; (iv) the corporate
separateness of the Company and Old Walter Industries should be
disregarded; (v) the sales and transfers of assets by Old Walter
Industries are fraudulent; and (vi) the individual defendants,
KKR, KKR Associates, Drexel Burnham, Drexel Burnham Group and
the Company conspired to effect the allegedly fraudulent
transfers of assets from and to Old Walter Industries. The
relief requested by the plaintiffs includes, among other things,
(i) enjoining each defendant from transferring any assets
formerly owned by Original Jim Walter (and any proceeds from the
disposition thereof); (ii) requiring each defendant to account
for all transfers of such assets or proceeds; (iii) requiring
each defendant to transfer such assets and proceeds to Celotex
to be held in trust for the benefit of the plaintiffs;
(iv) appointing a receiver to take charge of such assets and
proceeds or of any other property of any defendant; (v) holding
the defendants jointly and severally liable for damages equal to
the fair market value of any assets formerly owned by Original
Jim Walter which have been sold and cannot be recovered; and
(vi) punitive damages, interest and costs. Plaintiffs also
requested the Beaumont state court to issue a temporary
injunction enjoining the Company from selling or otherwise
transferring or encumbering its stock in any corporation that
owns assets formerly owned by Original Jim Walter or Old Walter
Industries. The Company agreed to give the plaintiffs 15 days
prior notice of any closing of any disposition of stock of a
corporation which owns assets formerly owned by Original Jim
Walter or its subsidiaries. On September 12 through 15, 1989,
the Beaumont state court held a hearing on the defendants'
motions to dismiss the action for lack of personal jurisdiction.
These motions were denied. On October 11, 1989, plaintiffs
filed a motion for class certification. On October 16, 1989,
defendants KKR, KKR Associates, and Messrs. Kravis, Roberts,
Raether, Tokarz and Golkin filed a motion for a change of venue.
Discovery was conducted with respect to the class certification
and venue motions. The Beaumont state court did not hold a
hearing on either the motion for Class Certification or the
motion to change venue.
Some of the other asbestos-related lawsuits pending against
the Company and its subsidiaries involve claims against the
Company and its subsidiaries and request relief from the Company
and its subsidiaries similar to one or more of the claims
involved and remedies requested in the lawsuits pending against
the Company and its subsidiaries in Beaumont, Texas. On
December 27, 1989, the Debtors commenced the Reorganization
Proceedings. As a result of the automatic stay provisions of
the Bankruptcy Code, all pending litigation against the Debtors
was automatically stayed. On December 29, 1989, plaintiffs
moved before the Beaumont state court to sever the claims
against the Company and Old Walter Industries from their claims
against the remaining defendants. On January 2, 1990, the
Beaumont state court action was removed to the United States
Bankruptcy Court for the Eastern District of Texas, Beaumont
Division. On January 5, 1990, certain defendants in that action
moved to transfer the lawsuit to the United States District
Court for the Middle District of Florida, Tampa Division (the
"District Court"). The plaintiffs in that action moved to
remand that action to state court. All proceedings in that
action have been stayed by agreement of the parties and order of
the District Court pending resolution of the abstention issues
in the Reorganization Proceedings in the Bankruptcy Court.
Other asbestos-related lawsuits pending against the Company and
its subsidiaries allege personal injuries arising out of
exposure to asbestos and further allege, among other things,
that (i) each named defendant has been or is now engaged,
directly or indirectly, in the manufacture, supply, sale or
otherwise placing into the stream of commerce, asbestos or
asbestos-containing products and (ii) defendants should be held
liable on the theories of strict products liability and
negligence for plaintiffs' injuries. None of the complaints
filed in such latter actions contain, at this time, corporate
veil-piercing or fraudulent conveyance claims. The relief
requested by the plaintiffs in these actions includes, among
other things, general damages, punitive damages and special
damages in amounts to be proven at the time of trial. There can
be no assurance that the Company, its subsidiaries or other
affiliates will not, in the future, be named as co-defendants in
other asbestos-related lawsuits, whether currently pending or
subsequently commenced, or that temporary or preliminary
injunctive relief against the sale by the Company of any of its
assets will not be granted in any such pending or future lawsuit
prior to judgment. Based on the advice of outside counsel, the
Company believes that it and its affiliates have and would have
a variety of meritorious procedural and substantive defenses to
the claims made or any claims which may be made against them in
pending or future asbestos-related lawsuits. Accordingly, the
Company believes that such claims are and would be without
foundation or merit and intends to defend such cases vigorously.
Plaintiffs have not specified the amount of compensatory and
punitive damages they seek from the Company and its affiliates
in the lawsuits pending in Beaumont, Texas and most of the other
asbestos-related lawsuits against the Company and its affiliates
referred to above. Such alleged damages are expected to be very
substantial and, accordingly, if judgments against the Company
and its subsidiaries are rendered in such lawsuits, the Company
and its subsidiaries could be materially adversely affected.
On January 2, 1990, the Debtors commenced the Declaratory
Judgment Proceeding against Jim Walter Corporation, Celotex and
all known individuals who had filed suit against the Debtors
seeking to hold them liable for asbestos-related liabilities of
Celotex. The Declaratory Judgment Proceeding requested the
Bankruptcy Court to declare and adjudicate that (i) the
corporate veil between Jim Walter Corporation and Celotex may
not be pierced, (ii) the leveraged buyout of Original Jim Walter
was not a fraudulent conveyance, nor were any subsequent
transactions entered into as a part of that leveraged buyout
fraudulent transfers, (iii) neither the Company, Old Walter
Industries nor any of their subsidiaries or affiliates is the
successor in interest to the asbestos-related liabilities of
either Jim Walter Corporation or Celotex and (iv) neither the
Company, Old Walter Industries nor any of their subsidiaries or
affiliates is liable for the asbestos-related liabilities of
either Jim Walter Corporation or Celotex.
On January 2, 1990, the Debtors also commenced another
proceeding by filing in the Bankruptcy Court a Complaint to
Extend the Automatic Stay (the "Injunction Proceeding") wherein
the Debtors sought to enjoin all actions against Jim Walter
Corporation and all other non-debtors on corporate veil piercing
or related theories, and further seeking a permanent injunction
staying all such actions, including the previously disclosed
proposed class-action lawsuit filed in state court in Beaumont,
Texas. That action was removed to the United States Bankruptcy
Court for the Eastern District of Texas, Beaumont Division by
certain of the defendants after the Debtors commenced the
Reorganization Proceedings. A motion to transfer said action to
the Bankruptcy Court is now pending, as well as a motion filed
by the plaintiffs to remand said action to the state court in
Beaumont.
On January 9, 1990, the Debtors filed their Motion for
Preliminary Injunction in the Injunction Proceeding seeking a
preliminary injunction extending the automatic stay under
section 362
of the Bankruptcy Code to enjoin the prosecution of any action
in which plaintiffs seek to hold Jim Walter Corporation and
other non-Debtors responsible for the asbestos-related
liabilities of Jim Walter Corporation's subsidiary, Celotex, on
a piercing the corporate veil or similar legal theory.
On January 19, 1990, an asbestos claimant filed a motion in
the Bankruptcy Court requesting the Bankruptcy Court to dismiss
and abstain from deciding or, in the alternative, to stay the
Declaratory Judgment Proceeding. The asbestos claimant also
opposed the Debtors' motion for a preliminary injunction. A
hearing on the pending motions was held on January 22, 1990.
Subsequently, the asbestos claimant, joined by four additional
claimants, also moved to dismiss the Injunction Proceeding.
On April 13, 1990, and as amended, the Bankruptcy Court
issued its proposed findings of fact, conclusions of law and
recommendation pursuant to Bankruptcy Rule 9011 which
recommended, among other things, that the District Court deny
the asbestos claimants' motion to abstain from deciding, or to
stay, the Declaratory Judgment Proceeding as to the Debtors.
The asbestos claimants subsequently filed objections to the
proposed findings of fact, conclusions of law and
recommendations with the District Court. On April 20, 1990, the
Bankruptcy Court entered orders (i) deferring a ruling on the
asbestos claimants' motion to dismiss the Injunction Proceeding
until the District Court decided whether or not to adopt the
Bankruptcy Court's recommendation and (ii) preliminarily
enjoining all asbestos-related personal injury and property
damage claimants and their attorneys and agents and all other
persons acting on their behalf from commencing or continuing any
civil action in any United States federal or state court in
which such persons are attempting to assert claims against
non-Debtors that are based on the right to pierce the corporate
veil between Celotex and Jim Walter Corporation or that relate
to or are connected with claims that attempt to impose liability
on the Debtors for asbestos-related claims. The asbestos
claimants filed an appeal of the preliminary injunction with the
District Court. On February 5, 1991, the District Court entered
an order denying the asbestos claimants' action for leave to
appeal an interlocutory order, thus letting stand the
preliminary injunction of the Bankruptcy Court entered on
April 20, 1990 enjoining all asbestos-related personal injury
and property damage claimants and their attorneys and agents and
all other persons acting on their behalf from commencing or
continuing any civil action in any United States federal or
state court in which such persons are attempting to assert
claims against non-Debtors that are based on the right to pierce
the corporate veil between Celotex and Jim Walter Corporation or
that relate to or are connected with claims that attempt to
impose liability on the Debtors for asbestos-related claims.
On May 17, and May 22, 1990, the asbestos claimants filed
motions in the Bankruptcy Court and in the District Court,
respectively, each seeking stay of the Declaratory Judgment
Proceeding, each of which was denied by those courts on May 17
and June 5, 1990, respectively. Also on May 17, 1990, certain
asbestos defendants filed a motion in District Court for
withdrawal of reference as to the Declaratory Judgment
Proceeding from the Bankruptcy Court. On July 11, 1990, the
District Court issued an order dated June 29, 1990 which
declined to rule on the asbestos claimants' motion for
withdrawal of reference until after the Bankruptcy Court ruled
on any motion for summary judgment.
On September 2, 1992, the asbestos claimants filed a
renewed request to withdraw the reference in the District Court.
On September 14, 1992, the Debtors filed a memorandum of law
responsive to the asbestos claimants' renewal request. On
September 15, 1992, the District Court entered an order denying
the asbestos claimants' motion to withdraw the reference. The
District Court held that while the asbestos claimants could have
their claims heard by a jury, they were not entitled to a jury
trial on the claims of piercing the corporate veil and
fraudulent conveyance because those claims are equitable in
nature. On September 22, 1992, the asbestos claimants filed a
motion for reconsideration and, pleading in the alternative,
requested the District Court to certify the order for
interlocutory review in the United States Circuit Court of
Appeals for the Eleventh Circuit ("Court of Appeals"). On
October 5, 1992, the Debtors filed their Memorandum of Law in
opposition to the asbestos claimants' motion for reconsideration.
On February 23, 1993, the District Court entered an order
denying the motion for reconsideration and request for
certification of interlocutory appeal. On March 3,
1993, the asbestos claimants filed a petition for a writ of
mandamus with the Court of Appeals. On April 13, 1993, the
Debtors filed their response to the writ of mandamus. On
April 19, 1993, the Court of Appeals denied the asbestos
claimants' petition for such writ of mandamus.
On July 11, 1990, the District Court adopted the Bankruptcy
Court's proposed findings of fact, conclusions of law and
recommendation pursuant to Bankruptcy Rule 9011, and denied the
asbestos claimants' motion to abstain from deciding, or to stay,
the Declaratory Judgment Proceeding. As a result of the
District Court's decisions, absent any reversal on
reconsideration or appeal, the Bankruptcy Court was empowered to
rule on a motion for summary judgment in the Declaratory
Judgment Proceeding.
On July 17, 1990, the asbestos claimants filed a motion in
the District Court seeking reconsideration of the July 11, 1990
order denying the motion for abstention, and, in the
alternative, seeking certification of that order for
interlocutory appeal to the Court of Appeals pursuant to 28
U.S.C. section 1292. The asbestos claimants also sought a
stay
pending determination of their motion. On July 30, 1990, the
Debtors opposed the July 17, 1990 motion.
On December 6, 1990, the District Court entered an order
(a) denying the asbestos claimants' motion to reconsider the
District Court's decision of July 11, 1990 which adopted the
Bankruptcy Court's recommendation to deny the asbestos
defendants' motion to require the Bankruptcy Court to abstain
from considering the Declaratory Judgment Proceeding commenced
by the Debtors against the asbestos defendants; (b) giving the
asbestos claimants ten (10) days from the date of the order to
seek interlocutory appeal to the Court of Appeals and
(c) granting the asbestos claimants' motion to stay further
prosecution of the Declaratory Judgment Proceeding pending the
outcome of the interlocutory appeal. On December 17, 1990, the
asbestos claimants filed their Petition for Permission to Appeal
with the Court of Appeals. On February 5, 1991, the Court of
Appeals denied the asbestos claimants' Petition for Permission
to Appeal. By so ruling, the Court of Appeals let stand the
District Court's ruling of December 6, 1990 denying the asbestos
claimants' motion to reconsider the District Court's decision of
July 11, 1990, which adopted the Bankruptcy Court's
recommendation to deny the asbestos claimants' motion to abstain
in such proceeding. On March 19, 1991, the asbestos claimants
filed with the District Court a Renewed Motion for
Reconsideration of their Motion to Abstain, which also sought to
continue the stay in the Bankruptcy Court. On April 16, 1991,
the District Court entered an order confirming that its stay of
proceedings in the Bankruptcy Court had expired. In addition,
the District Court denied the asbestos claimants' Renewed Motion
for Reconsideration of their Motion to Abstain. Because the
District Court's stay was lifted, the Declaratory Judgment
Proceeding went forward in the Bankruptcy Court under schedules
that were set by the Bankruptcy Court.
Discovery in the Declaratory Judgment Proceeding was to
have been concluded on July 6, 1990 pursuant to a Bankruptcy
Court order. Subsequent to issuance of that order, certain
discovery disputes arose between Jim Walter Corporation and the
asbestos claimants centered upon issues relating to whether or
not certain documentation was subject to various privileges and
thus protected. After protracted litigation wherein various
issues were appealed to the District Court and the Court of
Appeals, on June 15, 1992 Jim Walter Corporation and the
asbestos claimants entered into a stipulation regarding the
resolution of all their then pending discovery disputes, without
either party waiving their right for further review, if
necessary.
Following a hearing on January 8, 1992, the Bankruptcy
Court ordered that any motions for summary judgment in the
Declaratory Judgment Proceeding be filed by March 1, 1992 and
set oral arguments for April 16, 1992. On February 28, 1992,
the Debtors filed their Motion for Summary Judgment and
supporting affidavits. On April 9, 1992, the asbestos claimants
filed their Response to Debtors' Motion for Summary Judgment,
and on May 7, 1992, filed a Supplemental Response to the
Debtors' Motion for Summary Judgment. On April 16, 1992, oral
arguments were heard by the Bankruptcy Court on the Debtors'
Motion for Summary Judgment. On May 29, 1992, the Debtors filed
their Statement of Undisputed Facts and Memorandum of Law in
Support of their Motion for Summary Judgment. On May 29, 1992,
asbestos claimants filed their Brief in Opposition to Debtors'
Motion for Summary Judgment.
On August 25, 1992, the Bankruptcy Court entered an order
denying the Debtors' Motion for Summary Judgment. On
September 3, 1992, the Debtors filed a motion to reopen the
record to make additional findings of fact pursuant to Rule
43(e) of the Federal Rules of Civil Procedure. On September 18,
1992, the asbestos claimants filed their opposition to the
Debtors' motion. On October 8, 1992, the Bankruptcy Court
denied the Debtors' motion to reopen the record to make
additional findings of fact.
On September 14, 1992, the Debtors filed a motion to strike
the asbestos claimants' demand for a jury trial and on
September 21, 1992, the Debtors filed a motion for a pre-hearing
conference to resolve all motions pending before the Bankruptcy
Court. On October 7, 1992, the Bankruptcy Court entered an
order granting the Debtors' motion to strike the asbestos
claimants demand for jury trial.
On July 29, 1992, the asbestos claimants served discovery
requests upon the Debtors, Celotex, Jim Walter Corporation and
other parties not defendants to the Declaratory Judgment
Proceeding. Upon a motion for protective order by one of the
non-party witnesses, which was granted by order dated October 7,
1992, the Bankruptcy Court suspended all discovery in the
adversary proceeding, and indicated that it would enter, without
a hearing, an order on the issue of additional permitted
discovery, if any, on the veil piercing question and, if
appropriate, describe the scope of any production of documents.
On October 5, 1992, the asbestos claimants filed a motion
for pre-trial conference to address a number of issues,
including but not limited to the nature and scope of discovery.
On October 30, 1992, the Bankruptcy Court entered orders denying
all pending motions for pre-trial conference stating that the
parties had not obtained further relief from the automatic stay
in the Celotex bankruptcy case.
On October 30, 1992, Celotex filed Proofs of Claim in each
of the Debtor's bankruptcy cases claiming that each Debtor is
liable for all claims which Celotex may hold (1) predicated upon
a piercing the corporate veil, alter ego, instrumentality,
agency, conspiracy and any related theory of law, equity or
admiralty; (2) arising out of the leveraged buyout of Original
Jim Walter which resulted in the January 7, 1988 transfer by
Hillsborough Acquisition Corporation of substantially all of its
assets to the Company; (3) arising out of the transfer of
Celotex assets for less than reasonably equivalent value; and
(4) arising out of that certain Stock Purchase Agreement dated
April 21, 1988 and amendments thereto. The total amount of the
Proofs of Claim included all scheduled and filed claims against
Celotex in their bankruptcy proceedings, all unfiled present
asbestos-related personal injury and property damage claims and
all future asbestos-related personal injury claims against
Celotex. On November 6, 1992, the Debtors filed their
objections to the claims of Celotex. On November 25, 1992, the
Bankruptcy Court sustained the Debtors objections to the Proofs
of Claim filed by Celotex without prejudice to the right to file
Proofs of Claim, if appropriate, at the conclusion of the veil
piercing litigation.
On November 13, 1992, the Debtors filed a motion in the
Celotex bankruptcy case for limited relief from the automatic
stay for the sole purpose of permitting a trial on the veil
piercing claims in the Declaratory Judgment Proceeding and the
prosecution or defense of any appeals arising from or relating
to the decision in such trial. On December 4, 1992, the
asbestos claimants filed a cross-motion for relief from the
automatic stay requesting that the automatic stay be lifted to
permit Celotex to participate in all aspects of the Declaratory
Judgment Proceeding. On December 9, 1992, Judge Baynes granted
relief from the automatic stay, permitting Celotex to
participate in all aspects of the Declaratory Judgment
Proceeding up through final judgment.
On December 15, 1992, the Debtors, asbestos claimants,
Celotex and Jim Walter Corporation filed a Joint Motion for
Pre-Trial Conference which the Bankruptcy Court granted.
On January 13, 1993, a pre-trial conference was held. As a
result of the pre-trial conference, the Bankruptcy Court entered
two orders on February 3, 1993. One order identified five
discrete issues to be tried. The other order set forth a
detailed schedule for any discovery which remained. On
February 16, 1993, the Debtors filed a Motion for
Reconsideration in the Bankruptcy Court seeking a
reconsideration of the discovery schedule which the Debtors
believe to be unnecessarily long. In the motion for
reconsideration, the Debtors proposed a more condensed discovery
schedule which would lead to a trial of the remaining issues by
July 1993. The Bankruptcy Court granted the motion for
reconsideration and held a hearing on March 17, 1993, wherein
the Bankruptcy Court agreed to review the issue and enter an
order accordingly. At a hearing held on April 22, 1993, the
Bankruptcy Court stated that the trial on the remaining issues
would commence December 13, 1993.
On February 18, 1993, the Debtors served upon the asbestos
claimants discovery requests in the form of interrogatories and
requests for production of documents. On February 18, 1993, the
asbestos claimants served upon the Debtors (i) discovery
requests in the form of interrogatories and requests for
production of documents and (ii) deposition notices which
included document production requests on certain parties not
defendants to the Declaratory Judgment Proceeding. The Debtors,
Jim Walter Corporation, the asbestos claimants, and other
non-party defendants filed responses and motions for protective
orders regarding certain discovery requests which motions were
heard on March 17, 1993. The Bankruptcy Court entered an order
from the bench both granting and denying particular subject
matters contained in the motions for protective orders. The
Bankruptcy Court gave all parties until April 10, 1993 to comply
with the discovery requests in accordance with the Bankruptcy
Court's guidance. The Debtors produced additional documents in
accordance with the Bankruptcy Court's order and answered
additional interrogatories.
On April 15, 1993, the asbestos claimants filed motions to
compel the Debtors, Jim Walter Corporation and Celotex to
respond to their discovery requests with more detailed financial
documents. At a hearing on April 22, 1993, the Bankruptcy Court
denied in almost its entirety the asbestos claimants motion to
compel filed against the Debtors. The motions to compel filed
against Jim Walter Corporation and Celotex were continued to
allow the parties to comply by April 30, 1993. On April 21,
1993, the asbestos claimants served Request for Admissions on
the Debtors, Jim Walter Corporation and Celotex. On May 21,
1993, all parties served their responses to said Request for
Admissions.
On June 14, 1993, the Debtors filed a pre-conference
statement requesting the Bankruptcy Court to set definite dates
for discovery and all other pretrial matters. Prior to the
June 16, 1993 status conference, the Debtors, asbestos claimants
and other interested parties agreed to stipulate to certain
dates contained within the Debtor's proposal.
On June 21, 1993, the asbestos claimants served additional
discovery on the Debtors, Celotex and Jim Walter corporation.
The Debtors served responses thereto on July 1, 1993. On
July 7, 1993, the Debtors filed a motion for protective order
striking certain of the asbestos claimants' discovery requests.
On July 14, 1993, the Debtors, Jim Walter Corporation,
Celotex and the asbestos claimants entered into a stipulation
that modified the previously agreed upon discovery dates in the
Declaratory Judgment Proceeding and set a firm pre-trial
schedule leading to a December 13, 1993 trial date, which the
Bankruptcy Court approved by order dated August 17, 1993.
On July 16, 1993, the asbestos claimants filed a Petition
for Writ of Certiorari with the United States Supreme Court,
seeking review of the decision of the Court of Appeals for the
Eleventh Circuit denying the asbestos claimants' Writ of
Mandamus on the issue of their right to a jury trial on veil
piercing issues. On August 18, 1993, the Company filed its
brief in opposition to the asbestos claimants Petition for Writ
of Certiorari. On August 25, 1993, the asbestos claimants filed
a reply brief. On October 4, 1993, the United States Supreme
Court denied the petition for certiorari.
On August 12, 1993, the Bankruptcy Court entered an order
which denied the asbestos claimants motions to compel discovery
against one non-party which, in effect, upheld the
accountant-client privilege.
On October 5, 1993, the Debtors filed a motion in the
Bankruptcy Court which sought to limit the trial on the veil
piercing claims in the Declaratory Judgment Proceeding to six
days which was denied by the Bankruptcy Court at a hearing held
November 3, 1993.
On October 18, 1993, the Debtors, Jim Walter Corporation
and the asbestos claimants filed their designation of testifying
experts. On October 22, 1993, the Company filed a motion
seeking to preclude the testimony of certain of the asbestos
claimants designated experts. On November 16, 1993, the
Bankruptcy Court entered an order that precluded the testimony
of three of the asbestos claimants designated experts and
limited the testimony of two of the other asbestos claimants
designated experts.
On October 21, 1993, the Bankruptcy Court entered an order
which directed that, in order to assure the trial in the veil
piercing adversary proceeding not be unduly prolonged, all
parties must file all mutually agreed upon exhibits, premarked
and accompanied by a log identifying each, no later than
November 15, 1993. The parties thereafter entered into a
stipulation which extended the time to file exhibits to
December 7, 1993. A hearing to decide the admissibility of
those exhibits in dispute was held November 29, 1993. The
Bankruptcy Court ruled on the appropriate submission of certain
grouped documents and limited by date the admissibility of other
exhibits. The Bankruptcy Court scheduled a hearing for
December 6, 1993 to consider any other motions which had been
filed and to consider the admissibility of any other exhibits
not decided at the November 29, 1993 hearing. On December 13,
1993, the Bankruptcy Court entered an order disposing of all
outstanding motions relating to testimony by experts.
On October 25, 1993, the asbestos claimants filed certain
motions to compel production of documents and compliance with
subpoena from third parties which were not parties to the
adversary proceeding. At a hearing held November 3, 1993, the
Bankruptcy Court allowed production of certain documents which
were withheld under attorney-client privilege. By order dated
November 5, 1993, the Bankruptcy Court denied the asbestos
claimants motion to compel production of certain accountant's
workpapers, holding that the accountant-client privilege was
applicable.
On November 24, 1993, the Bankruptcy Court entered an order
denying the asbestos claimants motion to reschedule the pretrial
conference scheduled for November 29, 1993 and the final
evidentiary hearing scheduled to commence December 13, 1993. On
December 6, 1993, the asbestos claimants filed a renewed motion
for continuance which sought to continue the final evidentiary
hearing until January 1994. On December 8, 1993, the Bankruptcy
Court entered an order denying the renewed motion to reschedule
the final evidentiary hearing. On December 8,1993, the asbestos
claimants filed an Emergency Petition for Writ of Mandamus in
the District Court which sought to have the District Court enter
an order continuing the final evidentiary hearing. At a hearing
held on December 9, 1993, the District Court denied the asbestos
claimants' Emergency Petition for Writ of Mandamus.
On December 13, 1993, the final evidentiary hearing
commenced in the Bankruptcy Court and concluded on December 17,
1993. Post-trial briefs were submitted by the Company, Jim
Walter Corporation and the asbestos claimants on March 16, 1994.
On April 18, 1994, the Bankruptcy Court issued its Findings
of Fact, Conclusions of Law and Memorandum Decision (the "Veil
Piercing Decision"). In the Veil Piercing Decision, the
Bankruptcy Court found that there was no basis for piercing the
corporate veil, finding for the Debtors on every contested
factual issue. In every case, the Bankruptcy Court found that
Original Jim Walter's actions were motivated by sound business
judgment and were consistent with sound business practices as
recognized in the corporate business world. The Veil Piercing
Decision addressed six specific factual issues:
* Cash Management. Original Jim Walter had maintained a cash
management system for all subsidiaries, including Celotex.
The Bankruptcy Court found that the cash management system
was totally consistent with sound business practices widely
recognized in the corporate business world.
* Corporate Assessment. Original Jim Walter recovered
certain costs, including interest costs, through a
corporate assessment charged to all subsidiaries, including
Celotex. The Bankruptcy Court found nothing inherently
improper in the assessment by a parent of charges incurred
on behalf of the subsidiary. The Bankruptcy Court further
stated that forcing the subsidiary to seek services from
third parties would not have been either an efficient or
economic manner to conduct its business.
* Line of Business Reporting. Original Jim Walter and its
subsidiaries reported results according to lines of
business. The Bankruptcy Court found this to be a proper
manner for a parent to oversee the operation of its
subsidiaries.
* Decision Making Process. The Bankruptcy Court rejected
claims that Original Jim Walter management was improperly
involved in the decision making processes of its
subsidiaries, including capital acquisition and disposition
decisions, instead finding that the involvement by Original
Jim Walter in these areas was proper within the accepted
standards of the corporate business world.
* Motivation to Sell Assets. The Bankruptcy Court found that
the asbestos claimants failed to prove that Original Jim
Walter took any actions intended to evade any possible
liability resulting from the asbestos litigation. The
Bankruptcy Court found that the liquidation process was a
result of sound proper business judgment and not motivated
by any desire to injure the Asbestos Claimants or denude
Celotex of its assets.
* Repayment of Intercompany Payables. The Bankruptcy Court
rejected the claim that it was improper for Celotex to have
repaid intercompany payables owing to Original Jim Walter.
The Bankruptcy Court found that those Original Jim Walter
receivables were debts of Celotex. The Bankruptcy Court
explicitly rejected the argument that there was an
obligation to leave funds in Celotex, rather than repay
valid debts to Original Jim Walter, because of Celotex'
asbestos liabilities.
A Final Judgment was also entered on April 18, 1994 holding
that the corporate veil between Celotex and Jim Walter
Corporation shall not be pierced.
On April 26, 1994, the asbestos claimants filed a Notice of
Appeal with the District Court appealing the Final Judgment
entered by the Bankruptcy Court on April 18, 1994. On May 7,
1994, the asbestos claimants filed their statement of issues and
designated those items which were to be included in the record
on appeal. On May 19, 1994, the Debtors filed their counter
designation of items to be included in the record on appeal.
On June 3, 1994, the asbestos claimants filed emergency
motions in the District Court to modify the briefing schedule
and to modify page limits in the filing of briefs. On June 6,
1994, the District Court granted the asbestos claimants'
emergency motion to modify the briefing schedule. On June 21,
1994, the Debtors filed an emergency motion on consent to
expedite ruling on the asbestos claimants motion to modify page
limits. On June 23, 1994, the District Court denied the
asbestos claimants' motion to modify the page limits in the
filing of briefs and ordered that the asbestos claimants serve
and file their principal brief on or before July 18, 1994 and
the Debtors file and serve their brief within 15 days
thereafter. The asbestos claimants may then serve and file a
reply brief within 10 days of the Debtors' service of their
brief.
On April 28, 1994, the Debtors commenced an adversary
proceeding in the Celotex Chapter 11 Proceeding seeking the
entry of a judgment declaring that under applicable law, an
action to pierce the corporate veil between Celotex and Original
Jim Walter is property of Celotex' Chapter 11 estate and
therefore Celotex, as a debtor in possession, has the exclusive
right to assert a corporate veil piercing action against
Original Jim Walter on behalf of all Celotex creditors. The
adversary proceeding seeks the entry of judgment declaring that
all creditors of Celotex are therefore bound by the Veil
Piercing Decision. Contemporaneous with the adversary
proceeding, the Debtors filed a motion for summary judgment with
respect to its complaint. On May 18, 1994, Celotex filed a
motion to strike the Debtors' motion for summary judgment as
being untimely filed.
On June 17, 1994, Celotex and Carey Canada filed motions to
dismiss Count (iii) of the complaint for failure to state an
actual case or controversy with any named defendant, or, in the
alternative, require the complaint to be amended. Further,
Celotex and Carey Canada state that the adversary proceeding is
properly stayed, and therefore their time to answer or otherwise
respond should be deferred.
While the Bankruptcy Court has granted the Debtors the
relief sought, there can be no assurance that its ruling will be
affirmed upon appeal. Moreover, the Debtors necessarily cannot
predict the timing of any appellate proceedings. If the
asbestos health and/or asbestos property damage claimants
ultimately prevail on their allegations that the Debtors may be
liable for claims asserted against Celotex, it is not possible
at this time: (i) to quantify the amount of these claims,
although the Debtors believe these claims will be substantial;
(ii) to predict how these claims will be treated in any plan or
plans of reorganization; (iii) to determine the impact of these
claims on the operations of the Debtors; or (iv) to predict
their ability to confirm a plan or plans of reorganization.
JWC Holdings, Jim Walter Corporation, Celotex and the other
subsidiaries of JWC Holdings have indemnified the Company and
its affiliates against any liability or expense incurred as a
result of any asbestos-related lawsuit. However, there can be
no assurance that the Company and its affiliates will be
reimbursed by Jim Walter Corporation and its subsidiaries
pursuant to the aforementioned indemnity for any liability or
expense resulting therefrom.
The Company is a party to a number of other lawsuits
arising in the ordinary course of its business. While the
results of litigation cannot be predicted with certainty, the
Company believes that the final outcome of such other litigation
will not have a materially adverse effect on the Company's
consolidated financial condition.
NOTE 11--PENSION AND OTHER EMPLOYEE BENEFITS
The Company has various pension and profit sharing plans
covering substantially all employees. In addition to its own
pension plans, the Company contributes to certain multi-employer
plans. Total pension expense for the years ended May 31, 1994,
1993 and 1992, was $9.7 million, $16.5 million and $20.1
million, respectively. The decrease in pension expense in
fiscal 1994 from the prior year is due principally to no
contributions being required to be made to the United Mine
Workers of America 1950 Pension Plan Trust as such trust had no
unfunded vested benefits. The funding of retirement and
employee benefit plans is in accordance with the requirements of
the plans and, where applicable, in sufficient amounts to
satisfy the "Minimum Funding Standards" of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The plans
provide benefits based on years of service and compensation or
at stated amounts for each year of service.
The net pension costs for Company administered plans are as
follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31,
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 5,334$ 5,233 $ 4,849
Interest cost on projected benefit obligation 16,333 15,634 14,695
Actual return on assets (19,352) (18,131) (25,212)
Net amortization and deferral 3,145 3,174 11,954
Net pension costs $ 5,460 $ 5,910 $ 6,286
</TABLE>
The following table sets forth the funded status of Company
administered plans:
<TABLE>
MAY 31, 1994 MAY 31, 1993
PLANS IN WHICH PLANS IN WHICH
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
benefit obligations:
Vested benefits $133,348 $ 41,353 $115,915 $ 37,492
Non-vested benefits 5,599 1,604 4,639 1,626
$138,947 $ 42,957 $120,554 $ 39,118
Plan assets at fair value, primarily
stocks and bonds $187,443 $ 27,012 $176,551 $ 24,926
Projected benefit obligations 166,386 42,957 149,258 39,118
Plan assets in excess of (less
than) projected benefit obligations 21,057 (15,945) 27,293 (14,192)
Unamortized portion of transition
(asset) obligation at June 1, 1986 (11,281) 5,002 (12,546) 5,709
Unrecognized net loss (gain) from
actual experience different from
that assumed 808 2,903 (5,318) 79
Prior service cost not recognized 836 2,487 985 2,540
Contribution to plans after
measurement date 879 819 1,369 771
Prepaid (accrued) pension cost 12,299 (4,734) 11,783 (5,093)
Additional liability -- (10,393) -- (8,224)
Prepaid pension cost (pension
liability) recognized in the
balance sheet $ 12,299 $(15,127) $ 11,783 $(13,317)
</TABLE>
The projected benefit obligations were determined using an
assumed discount rate of 8.0% in fiscal 1994 and 9.0% in fiscal
1993 and, where applicable, an assumed rate of increase in
future compensation levels of 5% in fiscal 1994 and 6% in fiscal
1993. The assumed long-term rate of return on plan assets is
8%.
Under the labor contract with the United Mine Workers of
America, Jim Walter Resources makes payments into multi-employer
pension plan trusts established for union employees. Under
ERISA, as amended by the Multiemployer Pension Plan Amendments
Act of 1980, an employer is liable for a proportionate part of
the plans' unfunded vested benefits liabilities. The Company
estimates that its allocated portion of the unfunded vested
benefits liabilities of these plans amounted to approximately
$43.0 million at May 31, 1994. However, although the net
liability can be estimated, its components, the relative
position of each employer with respect to actuarial present
value of accumulated benefits and net assets available for
benefits, are not available to the Company.
The Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" in fiscal 1993. Upon adoption,
the Company elected to record the transition obligation of
$166.4 million pre-tax ($104.6 million after tax) as a one-time
charge against earnings, rather than amortize it over a longer
period. This obligation is primarily related to the health
benefits for eligible retirees. Post-retirement benefit costs
were $25.6 million in 1994 and $23.5 million in 1993. Amounts
paid for postretirement benefits were $5.5 million in 1994, $6.5
million in 1993 and $3.9 million in 1992.
The net periodic postretirement benefit cost includes the
following components:
FOR THE YEARS ENDED
MAY 31,
1994 1993
(IN THOUSANDS)
Service cost $ 9,302 $ 8,495
Interest cost 16,283 14,979
Net periodic postretirement
benefit cost $25,585 $23,474
The accumulated postretirement benefits obligation at
May 31, 1994 and 1993 are as follows:
MAY 31,
1994 1993
(IN THOUSANDS)
Retirees $ 72,779 $ 70,220
Fully eligible, active participants 26,234 23,493
Other active participants 122,228 96,192
Accumulated postretirement benefit obligation 221,241 189,905
Unrecognized net loss (11,279) --
Postretirement benefit liability recognized
in the balance sheet $209,962 $189,905
The principal assumptions used to measure the accumulated
postretirement benefit obligation include a discount rate of 8%
in fiscal 1994 and 9% in fiscal 1993 and a health care cost
trend rate of 13% declining to 6.0% over a twelve year period
and remaining level thereafter in fiscal 1994 and a health care
cost trend rate of 14% declining to 6.5% in fiscal 1993. The
change in the assumptions used to calculate the accumulated
postretirement benefits obligation resulted in an unrecognized
net loss of $11.3 million. A one percent increase in the health
care cost component would increase the accumulated
postretirement benefit obligation by approximately $35.1 million
and increase net periodic postretirement benefit cost for 1994
by approximately $5.1 million.
Certain subsidiaries of the Company maintain profit sharing
plans. The total cost of these plans for the years ended
May 31, 1994, 1993 and 1992 was $3.1 million, $3.0 million and
$2.7 million, respectively.
NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" ("FAS
107") requires disclosure of estimated fair values for all
financial instruments for which it is practicable to estimate
fair value. Considerable judgment is necessary in developing
estimates of fair value and a variety of valuation techniques
are allowed under FAS 107. The derived fair value estimates
resulting from the judgments and valuation techniques applied
cannot be substantiated by comparison to independent materials
or to disclosures by other companies with similar financial
instruments. Furthermore, FAS 107 fair value disclosures do not
purport to be the amount which could be attained in immediate
settlement of the financial instrument. Fair value estimates
are not necessarily more relevant than historical cost values
and have limited usefulness in evaluating long-term assets and
liabilities held in the ordinary course of business.
Accordingly, management believes that the disclosures required
by FAS 107 have limited relevance to the Company and its
operations. In addition, because of the Company's petition for
reorganization (see Note 2) and the asbestos-related litigation
(see Note 10) estimates are either not practicable or are
subject to a much wider degree of uncertainty than would
normally be the case.
The following methods and assumptions were used to estimate
fair value disclosures:
Cash (including short-term investments) and short-term
investments-restricted--The carrying amount reported in the
balance sheet approximates fair value.
Instalment notes receivable--In connection with the
Reorganization Proceedings, the Debtors financial advisor
made a valuation of the mortgage portfolio at May 31, 1993,
which has been adjusted to reflect the estimated increase
in value resulting from the addition of net new mortgage
notes during fiscal 1994. This estimated value ranges from
$1.065 billion to $1.104 billion as compared to a net
carrying value of $487.2 million (net of indebtedness of
$872 million secured by certain of the instalment notes
receivable). Value of mortgage-backed instruments such as
instalment notes receivable are very sensitive to changes
in interest rates.
Debt--Due to the uncertainties arising from the
Debtors' petitions for reorganization, the asbestos-related
litigation and the preliminary status of plan of
reorganization negotiations there are no reliable market
quotations or other valid market comparisons and
accordingly, it is impracticable to estimate a fair value
of the Company's various outstanding debt instruments.
NOTE 13--SEGMENT INFORMATION
Information relating to the Company's business segments is
set forth on pages F-37 and F-38.
NOTE 14--SUMMARIZED FINANCIAL INFORMATION
The consolidated financial statements presented
herein are of the Company, which is a guarantor of the
obligations of the Senior Note Issuers and the Subordinated Note
Issuers (see Note 5). Summarized financial information for the
Senior Note Issuers and the Subordinated Note Issuers is set
forth below:
<TABLE>
<CAPTION>
SENIOR NOTES ISSUERS SUBORDINATED NOTE ISSUERS
FOR THE YEARS ENDED FOR THE YEARS ENDED
MAY 31, MAY 31,
1994 1993 1992 1994 1993 1992
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME DATA
Net sales and revenues $839,146 $858,560 $932,056 $524,840 $510,944 $516,368
Cost of sales (exclusive
of depreciation,
depletion and amortization) 661,748 630,917 730,655 404,761 390,550 384,346
Other operating expenses 103,187 103,257 119,224 77,242 74,221 77,013
Postretirement health
benefits (Note 11) 20,931 19,307 -- 6,281 5,870 --
Chapter 11 costs 7,048 4,845 3,000 4,350 2,933 1,664
Interest and amortization
of debt expense 42,803 43,092 45,990 28,304 28,625 30,226
Amortization of excess
purchase price 21,436 21,498 21,431 23,182 23,244 23,181
(18,007) 35,644 11,756 (19,280) (14,499) (62)
Provision for income
taxes (Note 6) 396 (14,785) 392 (3,215) (3,469) (8,000)
Income (loss) from
operations before
cumulative effect of
accounting change (17,611) 20,859 12,148 (22,495) (17,968) (8,062)
Cumulative effect of
change in accounting
principle--postretirement
benefits other than
pensions (net of
income tax benefit)
(Note 11) -- (82,513) -- -- (26,725) --
Net income (loss) $(17,611) $(61,654) $ 12,148 $(22,495) $(44,693) $ (8,062)
</TABLE>
<TABLE>
<CAPTION>
SENIOR NOTES ISSUERS SUBORDINATED NOTE ISSUERS
MAY 31, MAY 31,
1994 1993 1992 1994 1993 1992
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash (includes short-term
investments) $ 22,673 $ 23,753 $ 21,531 $ 22,638 $ 23,714 $ 21,479
Short-term investments,
restricted 6,927 8,652 10,986 3,910 5,699 8,195
Trade and other
receivables, net 100,490 114,169 112,877 82,197 72,582 70,436
Inventories 132,850 128,647 129,848 102,986 93,384 90,534
Prepaid expenses 8,177 4,921 5,531 3,610 3,300 3,938
Intercompany receivables 1,914,257 1,723,343 1,545,659 1,419,685 1,264,689 1,153,071
Property, plant and
equipment, net 522,070 525,779 523,763 169,186 172,962 173,930
Unamortized debt expense
and other assets 27,269 33,563 39,520 18,171 25,671 32,433
Excess of purchase price
over net assets
acquired 284,238 305,673 327,171 307,386 330,568 353,812
$3,018,951 $2,868,500 $2,716,886 $2,129,769 $1,992,569 $1,907,828
LIABILITIES AND
STOCKHOLDER'S EQUITY
(DEFICIT)
Bank overdrafts $ 21,752 $ 13,590 $ 21,347 $ 12,184 $ 9,758 $ 14,108
Accounts payable and
accrued expenses 113,235 115,162 123,105 60,285 57,694 61,878
Income taxes payable
(Note 6) 7,548 7,209 6,557 5,600 5,036 4,853
Deferred income taxes
(Note 6) 56,282 63,514 128,401 34,146 40,812 66,433
Intercompany payables 693,786 578,132 483,491 698,066 570,337 483,369
Long-term senior debt -- 6,264 -- -- -- --
Accrued postpetition
interest on secured
obligations 194,621 152,633 110,821 132,683 104,665 76,741
Accumulated
postretirement
health benefits
obligation (Note 11) 166,631 150,904 -- 53,009 48,492 --
Other long-term
liabilities 37,368 36,178 37,404 7,543 6,949 7,598
Liabilities subject
to Chapter 11
proceedings 1,733,187 1,731,865 1,731,406 1,445,394 1,444,575 1,444,253
Stockholder's equity
(deficit) (5,459) 13,049 74,354 (319,141) (295,749) (251,405)
$3,018,951 $2,868,500 $2,716,886 $2,129,769 $1,992,569 $1,907,828
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
FOR THE YEARS ENDED MAY 31,
1994 1993 1992
(IN THOUSANDS)
<S> <C> <C> <C>
Sales and Revenues:
Homebuilding and related financing $ 424,530 $ 419,378 $ 409,071
Building materials 56,111 51,539 46,887
Industrial products 180,615 171,541 165,007
Water and waste water transmission products 345,136 320,740 324,400
Natural resources(e) 319,410 351,017 419,274
Corporate 2,722 4,771 1,942
Consolidated sales and revenues(a)(f) $1,328,524 $1,318,986 $1,366,581
Contributions to Operating Income:
Homebuilding and related financing $ 101,954 $ 88,902 $ 82,718
Building materials 2,074 2,354 2,343
Industrial products 11,873 9,997 11,226
Water and waste water transmission products 25,545 14,990 24,492
Natural resources (1,175) 50,807 16,020
140,271 167,050 136,799
Less-Unallocated corporate interest
and other expense(b) (104,179) (96,128) (101,994)
Income taxes (28,917) (24,328) (12,463)
Income from operations(c) $ 7,175 $ 46,594 $ 22,342
Depreciation, Depletion and Amortization:
Homebuilding and related financing $ 3,093 $ 3,113 $ 3,059
Building materials 1,570 1,421 1,103
Industrial products 8,915 8,654 9,118
Water and waste water transmission products 15,399 15,079 14,492
Natural resources 40,326 40,714 53,556
Corporate 1,732 1,502 1,473
Total $ 71,035 $ 70,483 $ 82,801
Gross Capital Expenditures:
Homebuilding and related financing $ 3,210 $ 6,284 $ 6,357
Building materials 1,115 998 709
Industrial products 9,752 8,344 7,284
Water and waste water transmission products 13,613 12,084 16,379
Natural resources 40,224 42,941 36,993
Corporate 1,917 1,057 627
Total $ 69,831 $ 71,708 $ 68,349
Identifiable Assets:
Homebuilding and related financing $1,832,919 $1,907,199 $1,899,737
Building materials 55,568 57,343 57,564
Industrial products 132,685 129,392 129,723
Water and waste water transmission products 475,369 478,234 496,890
Natural resources 450,468 475,533 477,150
Corporate(d) 193,883 175,533 110,202
Total $3,140,892 $3,223,234 $3,171,266
</TABLE>
(a) Inter-segment sales (made primarily at prevailing
market prices) are deducted from sales of the selling segment and
are insignificant in amount with the exception of
the sales of the Industrial Products Group to the Water and Waste
Water Transmission Products Group of
$19,359,000, $18,667,000 and $16,661,000 and sales of the
Natural Resources Group to the Industrial Products Group of
$5,650,000, $7,121,000 and $9,552,000 in 1994, 1993 and
1992, respectively.
(b) Excludes interest expense incurred by the
Homebuilding and Related Financing Group of $128,828,000,
$137,945,000 and $136,955,000 in 1994, 1993 and 1992,
respectively. The balance of unallocated expenses is
attributable to all groups and cannot be reasonably allocated to
specific groups.
(c) Includes postretirement health benefits of
$25,585,000 and $23,474,000 in 1994 and 1993. A breakdown by
segment is as follows:
FOR THE YEARS ENDED
MAY, 31,
1994 1993
(IN THOUSANDS)
Homebuilding and related financing $ 2,170 $ 1,991
Building materials 504 463
Industrial products 3,158 2,821
Water and waste water
transmission products 4,391 4,136
Natural resources 14,681 13,437
Corporate 681 626
$25,585 $23,474
(d) Primarily cash and corporate headquarters
buildings and equipment.
(e) Includes sales of coal of $289,279,000,
$321,834,000 and $392,674,000 in 1994, 1993 and 1992,
respectively.
(f) Export sales, primarily coal, were
$155,966,000, $183,188,000 and $206,546,000 in 1994, 1993
and 1992, respectively. Export sales to any single
geographic area do not exceed 10% of consolidated net sales and
revenues.
<PAGE>
EXHIBIT A.2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction
with the consolidated financial statements and notes thereto
of Walter Industries, Inc. and subsidiaries (see Index
to Financial Statements on Page F-1), particularly the
"Segment Information" on pages F-37 and F-38 which presents
sales and operating income by operating group.
The "Segment Information" is prepared on the
basis of product markets rather than legal corporate structures
and thus does not reflect separate data for the issuers and
guarantors of certain of the Company's outstanding indebtedness.
However, see Note 14 of Notes to Financial Statements
as to combined financial data for such issuers. The guarantors
are holding companies and neither one currently, with
the exception of Walter Industries, Inc., which provides certain
corporate staff functions and owns a twin-tower, eight
story office building located on a plot of land in excess of 13
acres in Tampa, Florida, has any substantial
properties or engages in any substantial business other than
through subsidiaries.
RESULTS OF OPERATIONS:
YEARS ENDED MAY 31, 1994 AND 1993
Net sales and revenues for the year ended May 31,
1994 were $9.5 million, or .7%, greater than the prior year. The
improved performance was the result of increased
pricing and/or product mix as sales volumes were level with the
prior year. The increase in net sales and revenues resulted
from improved sales and revenues in the Homebuilding and Related
Financing, Building Materials, Industrial Products
and Water and Waste Water Transmission Products Groups,
partially offset by lower sales and revenues in the Natural
Resources Group.
Homebuilding and Related Financing Group sales
and revenues were $5.2 million, or 1.2%, greater than the
prior year. This performance reflects a 3.5% increase in
the average selling price per home sold from $37,000 in 1993
to $38,300 in 1994, which was more than offset by a 9.5%
decrease in the number of homes sold, from 4,784 units in 1993
to 4,331 units in 1994. The higher average selling
price in 1994 reflects a price increase instituted April 1,
1993 to compensate for higher lumber costs and a greater
percentage of "90% complete" homes sold this year versus last
year.
The decrease in unit sales reflects continuing strong
competition in virtually every Jim Walter Homes sales region.
Jim Walter Homes' backlog at May 31, 1994 was 2,065 units
(all of which are expected to be completed prior to the end of
fiscal 1995) compared to 1,831 units at May 31,
1993. Time charge income (revenues received from Mid-State
Home's instalment note portfolio) increased from $218.7
million in 1993 to $238.1 million in 1994. The increase in time
charge income is attributable to increased payoffs received
in advance of maturity and to an increase in the average balance
per account in the portfolio. The Group's operating
income of $102.0 million exceeded the prior year period by $13.1
million. This improvement resulted from the increase
in the average selling price per home sold, the higher time
charge income and lower interest expense in 1994 ($128.8
million) compared to that incurred in 1993 ($137.9 million),
partially offset by the lower number of homes sold, reduced
homebuilding gross profit margins and higher selling, general
and administrative expenses. The lower gross profit
margins were the result of higher average lumber prices, the
effect of discounts relating to sales promotions on certain
models instituted during the period February 1994 through May
1994 and the decision in October 1992 to reduce gross profit
margins on five smaller basic shelter homes to generate
additional sales.
Building Materials Group sales and revenues were
$4.6 million, or 8.9%, greater than the prior year. The increase
principally resulted from improved sales prices and
volumes for window components and greater metal building and
foundry products sales volumes. The Group's operating income
of $2.1 million was $280,000 below the prior year. The lower
performance was the result of the increased
manufacturing costs in the window components and metal building
and foundry businesses, partially offset by the increased sales.
Industrial Products Group sales and revenues were
$9.1 million, or 5.3%, ahead of the prior year. Increased sales
volumes of aluminum foil, foundry coke, castings,
resin coated sand and chemicals and higher selling prices for
furnace coke were partially offset by lower sales volumes of
mineral wool and patterns and tooling and lower selling prices
for aluminum foil and sheet. The Group's operating income
of $11.9 million was $1.9 million greater than the prior year.
The improved performance resulted from the sales
increase and higher gross profit margins for furnace coke and
mineral wool, partially offset by reduced margins for
chemicals, foundry coke, castings, resin coated sand and
patterns and tooling.
Water and Waste Water Transmission Products
Group sales and revenues were $24.4 million, or 7.6%, ahead of
the prior year. The increase was the result of higher
selling prices and volumes for ductile iron pressure pipe and
valves and hydrants and increased selling prices for fittings,
partially offset by lower fittings volume. The order backlog of
pressure pipe at May 31, 1994 was 111,907 tons,
which represents approximately three months shipments, compared
to 121,173 tons at May 31, 1993. Operating income of
$25.5 million exceeded the prior year period by $10.6 million.
The improved performance resulted from the increased
sales prices and volumes, partially offset by higher raw
material costs, especially scrap, a major raw material
component.
Natural Resources Group sales and revenues were
$31.6 million, or 9.0%, below the prior year. The decrease
resulted from lower sales volumes and prices for
coal and reduced methane gas selling prices, partially offset
by increased methane gas sales volume and an increase in
outside gas and timber royalty income. A total of 6.56 million
tons of coal was sold in 1994 versus 7.18 million tons
in 1993. The decrease in tonnage sold was the result of lower
shipments to Alabama Power Company ("Alabama Power")
and Japanese steel mills. Reduced shipments to Alabama Power
were the result of an agreement reached with Alabama Power
to ship only the Reduced Base Tonnage Coal (2 million tons per
year) and Period 2 Tonnage Coal (500,000 tons) for the
contract year ending June 30, 1994 (see Financial Condition for
further discussion). The average price per ton of
coal decreased 1.6%, from $44.84 in 1993 to $44.13 in 1994 due
to lower prices realized on shipments to Japanese steel
mills and other export customers. Blue Creek Mine No. 5
("Mine No. 5") was shut down from November 17, 1993 through
December 16, 1993 as a precautionary measure as a result of air
monitoring tests detecting evidence of spontaneous
combustion heatings in a section of the mine. Mine No. 5 was
shut down for a substantial portion of the period from
July 9, 1990 through September 16, 1990 when a similar
problem occurred. The heatings were a result of pyritic
sulfur concentrations occurring in the coal seam being exposed to
air.
Representatives of Jim Walter Resources, the Mine
Safety and Health Administration ("MSHA"), Alabama State Mine
Inspectors and the United Mine Workers of America
("UMWA") investigated the problem. Since the area of the
suspected heatings was inaccessible, a decision was made to
drill vertical holes from the surface and flood the area
with combinations of water, carbon dioxide, foam and
cementitious mixtures to neutralize the spontaneous combustion
heatings.
MSHA approved the resumption of operations at the
mine on December 17, 1993. In early April 1994 the
spontaneous heatings recurred and the mine was shut down.
Representatives of Jim Walter Resources, MSHA, Alabama State
Mine Inspectors and the UMWA agreed that the longwall coal
panel being mined at the time the spontaneous heatings recurred
would be abandoned and sealed off. Development mining
for the two remaining longwall coal panels in this section of the
mine resumed May 16, 1994 and the first panel will be
ready for mining approximately January 1, 1995. Production will
be adversely impacted until January 1, 1995; however a
portion of the costs will be recovered from business interruption
insurance. The Group incurred an operating loss of
$1.2 million in 1994 compared to operating income of $50.8
million in 1993. The lower performance reflects the decrease
in sales volumes and prices for coal, lower methane gas selling
prices, reduced coal mining productivity as a result of
various geological problems in all mines during portions for the
year which resulted in higher costs per ton of coal
produced and idle plant costs of $5.7 million associated with
the Mine No. 5 shut downs which more than offset the
effect of increased methane gas sales volumes and the greater
outside gas and timber royalty income.
Cost of sales, exclusive of depreciation, of
$845.1 million was 79.1% of net sales versus $804.4 million and
75.0% in 1993. The cost of sales percentage increase was
primarily the result of lower gross profit margins on home
sales, coal, chemicals, foundry coke, industrial castings,
resin coated sand, patterns and tooling, window
components and metal building and foundry products,
partially offset by improved margins on furnace coke, mineral
wool and pipe products.
Selling, general and administrative expenses
(exclusive of postretirement health benefits) of $127.9 million
were 9.6% of net sales and revenues in 1994 versus $124.6
million and 9.4% in 1993.
The Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("FAS 106") in
1993 (see Note 11 of Notes to Financial Statements). Upon
adoption the Company elected to record the transition obligation
of $166.4 million pre-tax ($104.6 million after tax) as a one
time charge against earnings rather than amortize it over
a longer period. The annual accrual for postretirement health
benefit costs in 1994 was $25.6 million versus $23.5
million in 1993.
Interest and amortization of debt discount and
expense decreased $16.1 million. The decrease was principally
the result of reductions in the outstanding debt balances
on the Mortgage-Backed Notes and Asset Backed Notes (see Note 5
of Notes to Financial Statements) and lower amortization
of debt discount and expense, partially offset by higher
interest rates. Interest in the amount of $724.3 million
($163.7 million in the current year) on unsecured obligations
has not been accrued in the consolidated financial statements
since the date of the filing of petitions for reorganization.
This amount is based on the balances of the unsecured
debt obligations and their interest rates as of December 27,
1989 and does not consider fluctuations in the level of
short-term debt and interest rates and the issuance of
commercial paper that would have occurred to meet the working
capital requirements of the Homebuilding and Related Financing
Group (see Notes 2, 3 and 5 of Notes to Financial
Statements). Such interest rates do not presently govern the
respective rights of the Company, its subsidiaries and the
various lenders. Instead the rights of the parties will be
determined in connection with the Reorganization Proceedings.
Amortization of excess of purchase price over net
assets acquired (goodwill) increased $9.1 million. The increase
resulted from adjustments to amortization of the
goodwill due to greater payoffs received in advance of maturity
on the instalment note portfolio (see Note 1 of Notes to
Financial Statements).
The Omnibus Budget Reconciliation Act of 1993
increased the federal corporate tax rate to 35% from 34%.
Also, Statement of Financial Accounting Standards No. 109
requires that deferred tax liabilities and assets be adjusted
whenever there is a rate change. The effect of the
rate change resulted in a $2.8 million charge to deferred tax
expense. The rate change effect combined with reduced
percentage depletion and increased amortization of goodwill (both
permanent book/tax differences) resulted in an
effective tax rate of 80.1% in 1994 versus an effective tax rate
of 34.3% in 1993.
The net income for 1994 and the net loss 1993
reflects all of the previously mentioned factors as well as the
$4.5 million increase in Chapter 11 costs, partially offset
by slightly higher interest income from Chapter 11 proceedings.
The increase in Chapter 11 costs was due to the
veil piercing litigation and the filing of two amended plans
of reorganization (see Notes 2 and 10 of Notes to
Financial Statements).
YEARS ENDED MAY 31, 1993 AND 1992
As previously mentioned, the Company adopted FAS
106 in 1993. Accordingly, operating income presented in the
"Segment Information" includes postretirement health
benefits of $23.5 million in 1993. However, for purposes of
the following discussion of results of operations for
the years ended May 31, 1993 and 1992, the fiscal 1993
operating income referred to in each business segment excludes
such postretirement health benefits expense (hereinafter
referred to as "1993 adjusted operating income").
Net sales and revenues for the year ended May 31,
1993 decreased $47.6 million, or 3.5%. A 5.9% decrease in volume
was partially offset by a 2.4% increase in price
and/or product mix. The decrease in net sales and revenues
resulted from lower sales and revenues in the Water and Waste
Water Transmission Products and Natural Resources Groups,
partially offset by improved sales in the Homebuilding and
Related Financing, Building Materials and Industrial Products
Groups.
Water and Waste Water Transmission Products Group
sales and revenues were $3.7 million, or 1.1%, below the prior
year. The decrease was basically the result of lower
ductile iron pressure pipe sales volume due to continued weak
construction activity and rehabilitation work,
partially offset by improved selling prices. The order
backlog of pressure pipe at May 31, 1993 was 121,173 tons
compared to 121,956 tons at May 31, 1992. The 1993 adjusted
operating income of $19.1 million was $5.4 million below the
prior year. The effect of lower ductile iron pressure pipe
sales volume on this highly capital intensive product group
was the primary reason for the decline in operating profit which
was partially offset by lower scrap costs, a major raw
material component, improved selling prices and reduced selling,
general and administrative expenses (due principally
to legal and settlement costs in 1992 associated with a lawsuit
filed by the City of Atlanta).
Natural Resources Group sales and revenues were
$68.3 million, or 16.3%, below the prior year. The decrease
was the result of lower coal shipments and a decrease in
outside coal royalties, partially offset by higher average
selling prices for coal and methane gas and greater methane gas
sales volume. A total of 7.18 million tons of coal was sold in
1993 versus 9.18 million tons in 1992, a 22% decrease.
On June 17, 1992 a major production hoist accident occurred at
Blue Creek Mine No. 3 ("Mine No. 3") causing
extensive damage. The mine did not resume production until
August 31, 1992. The hoist accident resulted in a mutually
agreed postponement of shipments of 400,000 tons to Alabama Power
from the period July through September 1992 to the period
January through June 1993. Fiscal 1992 tonnage shipments to
Alabama Power were favorably impacted by a separate
lower selling price short-term contract for 964,000 tons.
Shipments to the Japanese steel mills and other export customers
were also below the prior year due to the hoist accident and an
April 1992 workforce reduction which reduced
production tonnage available for sale. The average price per
ton of coal sold increased 4.9%, from $42.76 in 1992 to $44.84 in
1993. The higher price realization in 1993 was the result of
coal shipped to Alabama Power in 1992 under the
previously mentioned separate lower selling price short-term
contract, partially offset by lower selling prices to the
Japanese and other export customers in 1993. The Group's 1993
adjusted operating income of $64.2 million exceeded the prior
year by $48.2 million. The improved performance resulted from
the increased coal and methane gas average selling
prices, higher methane gas sales volume, lower selling,
general and administrative expenses and improved mining
productivity, including the effect of the April 1992 workforce
reduction, which resulted in lower costs per ton of coal
produced, partially offset by the reduced coal sales volume
and the decrease in outside coal royalties. Prior year
results were also adversely impacted by severance, vacation pay
and ongoing medical benefits associated with the April
1992 workforce reduction ($6.2 million), accelerated depreciation
on the remaining assets at a previously closed small coal
mine ($5.6 million) and idle plant costs associated with a three
week shutdown of Blue Creek Mine No. 4 ("Mine No.
4") due to an accident which damaged the production hoist ($4.4
million) and wildcat strikes by the UMWA ($2.4 million)
in August 1991.
Homebuilding and Related Financing Group sales
and revenues were $10.3 million, or 2.5%, greater than 1992.
This performance reflects a 6.9% increase in the average
selling price per home sold, from $34,600 in 1992 to $37,000
in 1993, which was more than offset by a 9.8% decrease in
the number of homes sold, from 5,305 units in 1992 to 4,784 units
in 1993. The increase in average selling price in
1993 was attributable to higher average prices realized on both
the standard line and the larger sized Regency homes
combined with a greater percentage of Regency homes sold. The
decrease in unit sales reflected strong competition in
virtually every Jim Walter Homes sales region and 1993 having a
one week shorter sales period than 1992. Jim Walter Homes'
backlog at May 31, 1993 was 1,831 units compared to 1,637 units
at May 31, 1992. Time charge income (revenues received
from Mid-State's instalment note portfolio) increased from
$195.0 million in 1992 to $218.7 million in 1993. The
increase in time charge income was attributable to the growth
of the mortgage portfolio, increased payoffs received in
advance of maturity and new mortgages having a higher yield than
the older mortgages paying out. The Group's 1993 adjusted
operating income of $90.9 million exceeded the prior year by $8.2
million. This improvement resulted from the increase
in average selling price per home sold, the higher time charge
income and lower selling, general and administrative
expenses, partially offset by the lower number of homes sold,
reduced homebuilding gross profit margins (due
principally to the sales of the larger sized, lower margin
Regency homes and increased lumber prices) and slightly higher
interest expense in 1993 ($137.9 million) as compared to that
incurred in 1992 ($137.0 million). Lumber prices rose from $259
per thousand board feet in June 1992 to a high of $506 in March
1993 and ended the year at $325. A price increase
was instituted effective April 1, 1993 to compensate for these
increased costs.
Building Materials Group sales and revenues were
$4.7 million, or 9.9%, ahead of the prior year. The increase
resulted from improved window components and metal
building and foundry products sales volumes, partially offset
by lower overall sales prices and/or mix. The Group's
1993 adjusted operating income of $2.8 million was $500,000
greater than the prior year as the increased sales volumes and
improved operating efficiencies in the metal building and foundry
business more than offset the lower selling prices and
increased manufacturing costs in the window components business.
Industrial Products Group sales and revenues were
$6.5 million, or 4.0%, greater than the prior year. Increased
sales volumes of foundry coke, chemicals, castings and
aluminum foil were partially offset by lower sales volumes of
aluminum sheet, resin coated sand, patterns and
tooling, furnace coke and mineral wool and lower selling
prices for aluminum foil and sheet, furnace coke, resin coated
sand and patterns and tooling. The Group's 1993 adjusted
operating income of $12.8 million exceeded the prior year by
$1.6 million. The improved performance was the result of the
increased sales volumes and improved gross profit
margins for castings, partially offset by lower margins for
chemicals, resin coated sand and patterns and tooling.
Cost of sales, exclusive of depreciation, of
$804.4 million was 75.0% of net sales versus $891.9 million and
78.3% in 1992. The cost of sales percentage decrease was
primarily the result of improved gross profit margins on coal,
metal building and foundry products and industrial
castings, partially offset by lower margins on home sales,
ductile iron pressure pipe, chemicals, resin coated sand and
patterns and tooling. Results in 1992 were adversely affected
by the impact of charges resulting from the previously
mentioned Jim Walter Resources mining operations workforce
reduction and idle plant costs associated with the wildcat
strikes by the UMWA.
Selling, general and administrative expenses of
$124.6 million were 9.4% of net sales and revenues in 1993 as
compared to $129.4 million and 9.5% in 1992.
Expenses in 1992 were adversely impacted by legal and
settlement costs associated with a lawsuit filed by the City of
Atlanta.
As previously mentioned, the Company adopted FAS
106 in 1993. Upon adoption, the Company elected to record the
transition obligation of $166.4 million pre-tax ($104.6
million after tax) as a one time charge against earnings rather
than amortize it over a longer period. The annual
accrual under the new accounting method amounted to $23.5 million
in the year ended May 31, 1993. See Note 11 of the Notes
to Financial Statements.
Interest and amortization of debt discount and
expense decreased $5.5 million. The decrease was the result
of lower outstanding debt balances on secured obligations
(see Notes 2, 3 and 5 of Notes to Financial Statements) and lower
interest rates, partially offset by greater
amortization of debt discount and expense. Interest in the
amount of $560.6 million ($163.7 million in 1993) on unsecured
obligations has not been accrued in the consolidated financial
statements since the date of the filing of petitions for
reorganization. This amount is based on the balances of the
unsecured debt obligations and their interest rates as of
December 27, 1989 and does not consider fluctuations in the
level of short term debt and interest rates and the issuance
of commercial paper that would have occurred to meet the
working capital requirements of the Homebuilding and Related
Financing Group (see Notes 2, 3 and 5 of Notes to Financial
Statements). Such interest rates do not presently
govern the respective rights of the Company, its subsidiaries and
the various lenders. Instead the rights of the
parties will be determined in connection with the
Reorganization Proceedings.
The net loss for 1993 and the net income for 1992
reflects all of the previously mentioned factors as well as the
impact of a slightly lower effective income tax rate
(see Note 6 of Notes to Financial Statements) and slightly
higher interest income from Chapter 11 proceedings, partially
offset by a $4.6 million increase in Chapter 11 costs.
YEARS ENDED MAY 31, 1992 AND 1991
Net sales and revenues for the year ended May 31,
1992 increased $40.2 million, or 3.0%. A 4.8% increase in volume
was partially offset by a 1.8% decrease in price
and/or product mix. The increase in net sales and revenues
resulted from improved sales and revenues in the Homebuilding
and Related Financing, Building Materials, Industrial Products
and Water and Waste Water Transmission Products Groups,
partially offset by lower sales in the Natural Resources Group
and lower Corporate revenues (basically lower interest
income from Chapter 11 proceedings). There is no identifiable
reason for the increase in volume of the many different
product lines of the Company's subsidiaries other than
improved activity in the markets for these products.
Homebuilding and Related Financing Group net
sales and revenues were $19.9 million, or 5.1%, greater than
1991. The improved performance includes a 3.6% increase in
the average price per home sold, from $33,400 in 1991 to $34,600
in 1992 and a 1.5% increase in the number of homes sold,
from 5,229 units in 1991 to 5,305 units in 1992. The increase
in average selling price in 1992 is primarily attributable
to an improved sales mix resulting from the sale of larger sized
homes. Jim Walter Homes' backlog at May 31, 1992 was
1,637 units compared to 1,588 units at May 31, 1991. Time
charge income (revenues received from Mid-State's mortgage
portfolio) increased from $180.3 million in 1991 to $195.0
million in 1992. The increase in time charge income is
attributable to the growth of the mortgage portfolio and to
new mortgages having a higher yield than the older
mortgages paying out. The Group's operating income of $82.7
million exceeded the prior year by $15.7 million. This
improvement reflects the increases in average selling price and
number of homes sold, the higher time charge income and
lower interest expense in 1992 ($137.0 million) compared to
that incurred in 1991 ($140.6 million), partially offset
by reduced gross profit margins (due principally to the sale
of larger sized, but lower margin Regency homes and
increased lumber prices).
Building Materials Group sales and revenues were
$2.9 million, or 6.6%, ahead of the prior year. The increase
resulted from improved window components sales
(increased volume, partially offset by lower selling prices) and
greater foundry products sales volume. Operating income of
$2.3 million was $1.2 million greater than the prior year
reflecting the increased sales, improved efficiencies in the
metal building and foundry business due to the increased sales
volume and reduced aluminum costs, a major raw material used
in the window components business.
Industrial Products Group sales and revenues
were $12.0 million, or 7.8%, greater than the prior year.
The increase was the result of higher sales volumes of
aluminum foil and sheet products, furnace and foundry coke,
mineral wool, chemicals, resin coated sand and tooling,
partially offset by lower selling prices for aluminum foil and
sheet and furnace coke. Operating income of $11.2 million
exceeded the prior year by $2.3 million. The improved
performance resulted from the increased volume and increased
operating margins for mineral wool and chemicals, partially
offset by lower margins for aluminum foil and sheet, furnace
coke, resin coated sand and tooling. Fiscal 1991 results
were adversely impacted by reduced operating efficiencies at
the Charleston, South Carolina aluminum rolling mill due to roof
failures over the melting furnaces which were a
delayed effect of Hurricane Hugo in September 1989; a 102 day
strike at the Sloss Industries manufacturing facilities in
Birmingham, Alabama, during which period salaried personnel
operated the facilities; and an abnormal $1.6 million bad debt
expense in the aluminum operation.
Water and Waste Water Transmission Products
Group sales and revenues were $18.9 million, or 6.2%, ahead of
the prior year, due to improved sales volumes, partially
offset by slightly lower pricing. The order backlog of
pressure pipe at May 31, 1992 was 121,956 tons compared to
136,807 tons at May 31, 1991. Operating income of $24.5 million
was level with the prior year. Increased sales volumes
and lower scrap costs, a major raw material component, were
offset by the lower selling prices and higher selling,
general and administrative expenses due principally to legal
and settlement costs associated with a lawsuit filed by the
City of Atlanta.
Natural Resources Group sales and revenues were
$4.6 million, or 1.1%, below the prior year. The decrease was
the result of lower selling prices for coal and methane
gas and a decrease in outside coal royalty income, partially
offset by greater coal shipments and increased methane gas
sales volume. A total of 9.18 million tons of coal was sold in
1992 versus 8.89 million tons in 1991, a 3.3% increase.
The average price per ton of coal sold decreased 2.8%, from
$43.99 in 1991 to $42.76 in 1992, due to coal shipped to
Alabama Power in fiscal 1992 under a separate short-term contract
and to lower prices to the Japanese and other export
customers. Shipments in the prior year were adversely
affected by reduced availability from Mine No. 5. Mine No. 5
was shut down for a substantial portion of the period from July
9, 1990 through September 16, 1990 as a result of safety
concerns arising from spontaneous combustion heatings which were
a result of pyritic sulfur concentrations occurring in
the coal seam in the southern part of the mine being exposed to
air by the mining process. The exposure of the sulfur
deposits and its reaction with oxygen contained in the
ventilation air currents caused the heatings to occur.
Throughout this period, Jim Walter Resources was engaged in
discussions with the MSHA regarding a new ventilating
arrangement,
designed to reduce the contact between oxygen and sulfur, for
the longwall faces at Mine No. 5. Although MSHA approved
the resumption of operations at the mine on September 15, 1990,
providing for a modified conventional ventilation
system, productivity was poor and costs were therefore high.
In February 1991, Mine No. 5's one longwall unit was
moved from the southern part of the mine to a longwall coal
panel in the northern area and productivity improved. The
southwestern area of the mine was subsequently abandoned and
sealed off as efforts to design a ventilation arrangement
acceptable to MSHA which properly controlled the spontaneous
combustion heatings and provided acceptable
productivity and costs of operations were not successful. The
Group's operating income of $16.0 million was $45.1 million
below the prior year. The lower performance reflected the
decrease in coal and methane gas selling prices, reduced outside
coal royalty income, lower productivity which resulted in higher
costs per ton of coal produced, severance, vacation
pay and ongoing medical benefits associated with the workforce
reduction described in the following paragraph ($6.2
million), accelerated depreciation on the remaining assets at
a previously closed small coal mine ($5.6 million) and
slightly higher idle plant costs associated with the three week
shutdown of Mine No. 4 due to an accident which
damaged the production hoist ($4.4 million) and wildcat strikes
by the UMWA ($2.4 million) in 1992 versus the previously
mentioned Mine No. 5 problem in 1991 ($6.5 million), partially
offset by the improved coal and methane gas sales volumes.
On April 10, 1992, Jim Walter Resources announced
that it was reducing its workforce by approximately 720 hourly
and salaried employees (approximately 25%) in a major
cost reduction move to increase mine productivity and strengthen
its competitiveness in worldwide coal markets. The
cutback, effective April 13, 1992, applied to all four mines as
well as above ground support functions.
Cost of sales, exclusive of depreciation, of
$891.9 million was 78.3% of net sales in 1992 versus $826.5
million and 75.3% in 1991. The cost of sales percentage
increase was primarily the result of lower margins on coal,
homes, aluminum foil and sheet, furnace coke, resin coated
sand and tooling, combined with the impact of charges resulting
from the previously mentioned Jim Walter Resources
mining operations workforce cutback, and higher idle plant
costs associated with the Mine No. 4 production hoist
problem and the UMWA wildcat strikes in 1992 versus the Mine
No. 5 spontaneous combustion heatings problem in 1991.
These increases were partially offset by improved margins for
window components, metal building and foundry products,
mineral wool and chemicals.
Selling, general and administrative expenses of
$129.4 million were 9.5% of net sales and revenues in 1992
versus $122.9 million and 9.3% in 1991. Expenses in 1992 were
adversely impacted by legal and settlement costs associated with
a lawsuit filed by the City of Atlanta.
Interest and amortization of debt discount and
expense decreased $32.5 million. The decrease is the result of
a reduction in the amounts outstanding under the
Mid-State credit facility (see Financial Condition) and
the Mortgage-Backed Notes (see Note 5 of Notes to Financial
Statements) and lower amortization of debt discount and expense.
Interest in the amount of $396.9 million ($163.7
million in 1992) on unsecured debt obligations has not been
accrued in the consolidated financial statement since the date of
the filing of petitions for reorganization. This amount is based
on the balances of the unsecured debt obligations and
their interest rates as of December 27, 1989 and does not
consider fluctuations in the level of short-term debt and
interest rates and the issuance of commercial paper that would
have occurred to meet the working capital requirements of
the Homebuilding and Related Financing Group (see Notes 2, 3 and
5 of Notes to Financial Statements). Such interest rates
do not necessarily presently govern the respective rights of the
Company, its subsidiaries and the various lenders.
Instead, the rights of the parties will be determined in
connection with the Reorganization Proceedings.
The net income for 1992 and 1991 reflects all of
the previously mentioned factors as well as the impact of a
lower effective income tax rate (see Note 6 of Notes to
Financial Statements) and the effect of discontinued operations
(in 1991), partially offset by decreased interest income
from Chapter 11 proceedings ($8.9 million) due to lower funds
available for investment and lower interest rates.
FINANCIAL CONDITION
On December 27, 1989, the Debtors each filed a
voluntary petition for reorganization under Chapter 11 of Title
11 of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court (the "Bankruptcy Court") for
the Middle District of Florida, Tampa Division (the
"Reorganization Proceedings"). On December 3, 1990, one
additional small subsidiary filed a voluntary petition for
reorganization under the Bankruptcy Code. Two other small
subsidiaries have not filed petitions for reorganization.
Pursuant to the applicable provisions of the Bankruptcy Code,
all pending legal proceedings and collection of outstanding
claims against the Debtors were automatically stayed upon filing
of the Chapter 11 petitions while the Debtors continue
business operations as debtors in possession (see Note 2 of
Notes to Financial Statements).
The Debtors' Chapter 11 petitions resulted from a
sequence of events stemming primarily from an inability of the
Company's interest reset advisors to reset interest
rates on approximately $624 million of outstanding Senior
Extendible Reset Notes and Senior Subordinated Extendible Reset
Notes (collectively, the "Old Notes") on which interest rates
were scheduled to be reset effective January 2, 1990. The
Company believes that the reset advisors' inability to reset the
interest rates was primarily attributable to pending
asbestos-related litigation which prevented the Debtors from
completing a refinancing or from selling assets to
reduce their debt which, together with turmoil in the high yield
bond markets, depressed the bid value of such notes. This
created the potential for a sharply higher reset rate that, in
turn, would have caused interest expense to rise
above the Debtors' ability to pay. To mitigate these factors,
the Company, on November 7, 1989, offered to exchange the
Old Notes for a combination of cash and new Senior Extendible
Reset Notes and new Senior Subordinated Reset Notes.
The interest reset advisors, Drexel Burnham and
Merrill Lynch, advised the Company in early December 1989 that,
in their opinion, there was no interest rate at which
the Old Notes could be reset to have a bid value of 101% as
called for in the terms of the Old Notes. Trustees for the
Old Notes, citing the inability of the interest reset advisors
to establish a new rate, subsequently advised the
Company that the failure to reset the Old Notes not tendered
in the exchange offers would likely constitute non-compliance
under the indentures for the Old Notes. Later, the exchange
offer was supplemented to strengthen certain
covenants of the new Senior Extendible Reset Notes and new
Senior Subordinated Reset Notes and, in addition, an offer of
10% equity in the Company was made to the holders of old Senior
Subordinated Extendible Reset Notes.
The Company received less than the percentages of
each of the outstanding classes of Old Notes required under terms
of the exchange offers, which expired at 7:00 p.m. New
York City time on December 27, 1989. As a result, the exchange
offers were terminated and all tendered Old Notes were
returned.
As a result of the Reorganization Proceedings, the
maturity of all unpaid principal of, and interest on, the senior
and subordinated indebtedness of the Debtors became
immediately due and payable in accordance with the terms of
the instruments governing such indebtedness. The
amount of indebtedness that was accelerated on the petition
date aggregated approximately $1.7 billion. The Debtors
are currently accruing, but not paying, interest on senior
secured indebtedness and not accruing interest on unsecured
indebtedness. At May 31, 1994, interest in the amount of
$724.3 million ($163.7 million in the current fiscal
year) had not been accrued on unsecured obligations. These
amounts are based on the balances of the unsecured debt
obligations and their interest rates as of the petition date.
Such interest rates do not necessarily govern the respective
rights of the Company, its subsidiaries and the various lenders.
Instead, the rights of the parties will be determined
in connection with the Reorganization Proceedings.
While the Reorganization Proceedings are
pending, the Debtors are prohibited from making any
payments of prepetition obligations owing as of the petition
date, except as permitted by the Bankruptcy Court.
Furthermore, the Debtors will not be able to borrow additional
funds under any of their prepetition credit arrangements.
Since the beginning of the Reorganization
Proceedings certain of the Debtors have consummated an
agreement, as amended, with two commercial banks with respect to
a $25 million letter of credit facility. Pursuant to the terms
of such "New Letter of Credit Agreement", upon issuance of
a letter of credit, the applicable Debtors will deposit with the
issuing bank an amount of cash equal to the stated
amount of the letter of credit. At May 31, 1994, $3,037,000
of letters of credit were outstanding under this
agreement. Since the beginning of the Reorganization Proceedings
certain of the Debtors have also consummated an agreement with
the lenders pursuant to which the lenders agree to renew letters
of credit issued under the Working Capital Agreement
that were outstanding at the time of filing of the petitions for
reorganization (the "Replacement Letter of Agreement").
To the extent that the letters of credit under the Replacement
Letter of Agreement ($17,549,000 outstanding at May
31, 1994) are renewed during the Reorganization Proceedings,
these Debtors have agreed to reimburse the issuing bank for
any draws under such letters of credit, which obligation shall be
entitled to an administrative expense claim under the
Bankruptcy Code. In addition, the obligations of the Debtors
under such Replacement Letter of Credit Agreement
shall continue to be secured by the collateral which secures
the Debtors' obligations under the Bank Credit Agreement
and the Working Capital Agreement. The Bankruptcy Court
approved the Debtors' entering into the New Letter of Credit
Agreement in May 1990. The New Letter of Credit Agreement
currently terminates on June 30, 1995. See Note 5 of Notes to
Financial Statements.
For a discussion of the plans of reorganization
which have been filed in the Reorganization Proceedings see Note
2 of Notes to Financial Statements.
On May 10, 1994, Jim Walter Resources and Alabama
Power signed a new agreement for the sale and purchase of coal
replacing the 1979 contract and the 1988 amendment
thereto (the "New Contract"). The New Contract resolves the
various legal disputes between Jim Walter Resources and
Alabama Power reported in previous years. On May 23, 1994,
the Bankruptcy Court issued an order approving the New
Contract, and such order became final on June 3, 1994. Under the
New Contract, Alabama Power will purchase 4.0 million tons
of coal per year from Jim Walter Resources during the period July
1, 1994 through August 31, 1999. In addition, Jim
Walter Resources will have the option to extend the New
Contract through August 31, 2004, subject to mutual agreement
on the market pricing mechanism and other terms and conditions
of such extension. The New Contract will have a fixed
price subject to an escalation based on the Consumer Price Index
and adjustments for governmental impositions and quality.
The New Contract includes modifications of specifications and
shipping deviations and changes in transportation
arrangements. The New Contract provides for the dismissal of
Jim Walter Resources' declaratory judgment action and
Alabama Power's dismissal of its appeal regarding Jim Walter
Resources' assumption of the 1979 contract. In
accordance with the New Contract, a joint motion has been filed
by Jim Walter Resources and Alabama Power with the District
Court seeking the entry of an order dismissing Alabama Power's
appeal from the March 4, 1991 order; and a joint
motion was filed by Jim Walter Resources and Alabama Power with
the Bankruptcy Court seeking the entry of an order
dismissing Jim Walter Resources' declaratory judgment action.
By order dated June 24, 1994, the Bankruptcy Court granted the
joint motion of Jim Walter Resources and Alabama Power to dismiss
Jim Walter Resources' declaratory judgment action.
The long-term contracts with the six (6) Japanese
steel mills for 2.75 to 3.0 million tons annually, depending on
the level of steel production in Japan, expired on
March 31, 1994. The pricing mechanisms in such contracts were
market driven and reflected changes in the prices of four (4)
specific coal indices. The composite change in market prices of
these coal indices from the base point was then
reflected in the billing price to the steel mills. Tentative
agreements have been reached with some of the Japanese steel
mills as to one-year contracts for shipment of approximately
1.2 million tons of coal at a current market price.
In addition, approximately 800,000 tons of coal not previously
shipped under terms of the long-term contracts will
be shipped from April 1994 through March 1996 at the
long-term contract price, which is substantially higher than the
current market price.
A substantial controversy exists with regard to
federal income taxes allegedly owed by the Company. Proofs of
claim have been filed by the Internal Revenue Service
in the amounts of $110,560,883 with respect to fiscal years ended
August 31, 1980 and August 31, 1983 through August 31,
1987, $31,468,189 with respect to fiscal years ended May 31, 1988
(nine months) and May 31, 1989 and $44,837,693 with
respect to fiscal years ended May 31, 1990 and May 31, 1991.
Objections to the proofs of claim have been filed by
the Company and the various issues are being litigated in the
Bankruptcy Court. The Company believes that such
proofs of claim are substantially without merit and intends to
defend such claims against the Company vigorously.
LIQUIDITY
The Debtors did not commence the Reorganization
Proceedings as a result of their inability to fund normal
operating liabilities either on a short-term or long-term
basis; therefore, the following discussion of liquidity
presents a somewhat unusual position compared to that normally
associated with many bankruptcy filings.
The Company normally uses its cash flows for
three principal purposes: (1) for working capital requirements
(including the financing of home sales); (2) for
capital expenditures for business expansion, productivity
improvement, cost reduction and replacements necessary to
maintain the business; and (3) to provide a return to
lenders and shareholders.
Working capital is required to fund adequate
levels of inventories and accounts receivable, including
instalment notes receivable arising from the homebuilding
business. At May 31, 1994, the Company had free cash
balances and short-term investments of approximately $125 million
available for operations. On July 1, 1992, pursuant to approval
by the Bankruptcy Court, instalment notes receivable
having a gross amount of $638,078,000 were sold by Mid-State
to Mid-State Trust III ("Trust III"), a business trust
established under the laws of Delaware, in exchange for the
net proceeds from the public issuance of $249,864,000 of
Asset Backed Notes by Trust III which bear an interest rate of
7-5/8%. Net proceeds were utilized to repay in
full all outstanding indebtedness due under the Mid-State
credit facility with the excess cash to be used to fund the
ongoing operations of the Debtors. Under the Mid-State Trust
II ("Trust II") indenture for the Mortgage-Backed Notes,
if certain criteria as to performance of the pledged instalment
notes are met, Trust II is allowed to make
distributions of cash to Mid-State Homes, its sole beneficial
owner, to the extent that cash collections on such instalment
notes exceed Trust II's cash expenditures for its operating
expenses, interest expense and mandatory debt payments on the
Mortgage-Backed Notes. In addition to the performance based
distribution, the indenture permits distribution of
additional excess funds, if any, provided such distributions
are consented to by the guarantor of the Mortgage-Backed
Notes. The guarantor approved an additional distribution of
approximately $20.6 million for the July 1, 1994
distribution. During the period from formation of Trust II
through July 1, 1994 such distributions amounted to $81.2
million.
At the present time, 97% of all home sales made by
Jim Walter Homes are for credit. Jim Walter Homes obtains funds
necessary to operate its home construction business
primarily using cash flow from operations of the Company. The
Company believes that, under present operating
conditions, sufficient cash flow will be generated, together
with some use of free cash balances, to finance home sales,to
make planned capital expenditures and to meet all operating
needs, including any cash deposits to collateralize
letters of credit. There are no material commitments for
capital expenditures; however, the Debtors' business plans for
1995 include capital expenditures of approximately $96 million.
The Reorganization Proceedings have had no adverse
impact on capital expenditures.
Greater cash flow from operations in future years
is dependent upon the Company's ability to grow and to improve
its profitability. The effects that the
Reorganization Proceedings will have on the levels of cash flow
generated by future operations are unknown at this time.
EXHIBIT 3.B.1.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF
OPERATIONS AND RETAINED EARNINGS (DEFICIT)
<TABLE>
<CAPTION>
FOR THE MONTHS ENDED
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Sales and revenues
Net sales $ 95,187 $ 100,582
Time charges 19,135 19,420
Miscellaneous 1,161 2,341
Interest income from Chapter 11
proceedings (Note 2) 475 430
115,958 122,773
Costs and expenses:
Cost of sales 74,744 77,970
Depreciation, depletion and amortization 5,874 5,893
Selling, general and administrative 10,838 10,644
Postretirement health benefits 2,315 2,133
Provision for possible losses 559 395
Chapter 11 costs (Note 2) 2,367 963
Interest and amortization of debt discount and
expense
(Interest on unsecured obligations not accrued--
$13,640,000 in 1994 and 1993) (Note 2) 12,137 13,306
Amortization of excess of purchase price over net
assets acquired (Note 1) 3,538 3,355
112,372 114,659
3,586 8,114
Provision for income taxes (Note 7):
Current (4,545) (6,247)
Deferred 1,931 (532)
Net income 972 1,335
Retained earnings (deficit) at
beginning of period (434,059) (441,638)
Retained earnings (deficit) at end of period$(433,087) $(440,303)
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF
OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE THREE MONTHS ENDED
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Sales and revenues
Net sales $ 277,152 $ 268,676
Time charges 56,749 58,112
Miscellaneous 5,321 5,789
Interest income from Chapter 11 proceedings (Note 2) 1,418 1,193
340,640 333,770
Costs and expenses:
Cost of sales 224,119 212,716
Depreciation, depletion and amortization 16,757 16,386
Selling, general and administrative 32,350 31,989
Postretirement health benefits 6,647 6,396
Provision for possible losses 1,297 1,530
Chapter 11 costs (Note 2) 4,149 2,923
Interest and amortization of debt discount and expense
(Interest on unsecured obligations not accrued--
$40,921,000 in 1994 and 1993) (Note 2) 36,463 40,112
Amortization of excess of purchase price over net
assets acquired (Note 1) 10,568 9,936
332,350 321,988
8,290 11,782
Provision for income taxes (Note 7):
Current (12,895) (13,373)
Deferred 6,038 2,983
Net income 1,433 1,392
Retained earnings (deficit) at beginning of period (434,520) (441,695)
Retained earnings (deficit) at end of period $(433,087) $(440,303)
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AUGUST 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash (includes short-term investments of $183,996,000
and $203,741,000) (Note 3) $ 209,557 $ 220,199
Short-term investments restricted (Note 4) 98,665 104,553
Instalment notes receivable (Note 4) 4,187,486 4,209,674
Less--Provision for possible losses (26,316) (26,663)
Unearned time charges (2,804,523) (2,795,466)
Trade receivables, less $7,701,000 and $7,691,000
provision for possible losses 127,973 123,072
Other notes and accounts receivable 16,950 15,696
Inventories at lower of cost (first in, first out or
average) or market:
Finished goods 82,448 74,663
Goods in process 27,267 23,143
Raw materials and supplies 48,327 44,838
Houses held for resale 1,737 1,967
Prepaid expenses 9,109 6,397
Property, plant and equipment, at cost 1,130,185 1,085,395
Less--Accumulated depreciation, depletion and
amortization (477,799) (426,305)
Investments 5,852 5,590
Unamortized debt expense 28,533 42,609
Other assets 39,853 37,424
Excess of purchase price over net assets acquired
(Note 1) 402,355 451,502
$ 3,107,659 $ 3,198,288
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Bank overdrafts (Note 3) $ 17,946 $ 12,452
Accounts payable (Note 2) 57,993 54,743
Accrued expenses (Note 2) 112,632 109,412
Income taxes payable (Notes 2 and 7) 28,367 31,453
Deferred income taxes (Note 7) 67,114 82,850
Long-term senior debt (Notes 2, 4 and 5) 841,254 1,003,240
Accrued postpetition interest on secured obligations
(Note 2) 270,657 221,638
Accumulated postretirement health benefits obligation 216,161 196,301
Other long-term liabilities (Note 2) 48,566 46,592
Liabilities subject to Chapter 11 proceedings
(Notes 2, 4 and 5) 1,727,889 1,725,952
Stockholders' equity (deficit)(Note 1):
Common stock, $.01 par value per share:
Authorized--50,000,000 shares
Issued--31,120,773 shares 311 311
Capital in excess of par value 155,293 155,293
Retained earnings (deficit), per accompanying statement (433,087) (440,303)
Excess of additional pension liability over
unrecognized prior years service cost (3,437) (1,646)
Total stockholders' equity (deficit) (280,920) (286,345)
$ 3,107,659 $3,198,288
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE MONTH ENDED
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
OPERATIONS
Net income $ 972 $ 1,335
Charges to income not affecting cash:
Depreciation, depletion and amortization 5,874 5,893
Provision for deferred income taxes (Note 7) (1,931) 532
Accumulated postretirement health benefits obligation 2,157 2,133
Provision for other long-term liabilities (93) 45
Amortization of excess of purchase price over net
assets acquired (Note 1) 3,538 3,355
Amortization of debt discount and expense 1,107 1,558
11,624 14,851
Decrease (increase) in:
Short-term investments, restricted (Note 4) (21,797) (23,990)
Instalment notes receivable, net 679 1,010
Trade and other receivables, net (1,547) (11,672)
Inventories (6,682) 5,614
Prepaid expenses 1,123 609
Increase (decrease) in:
Bank overdrafts (Note 3) (3,523) (734)
Accounts payable 5,398 5,700
Accrued expenses (3,534) (242)
Income taxes payable (Note 7) (1,482) 5,197
Accrued postpetition interest on secured obligations 11,007 11,726
Liabilities subject to Chapter 11 proceedings (Note 2):
Accounts payable 11 4
Cash flows from operations (8,723) 8,073
FINANCING ACTIVITIES
Retirement of long-term senior debt -- (1,000)
Cash flows from financing activities -- (1,000)
INVESTING ACTIVITIES
Additions to property, plant and equipment, net of
normal retirements (5,749) (3,768)
(Increase) in investments (18) (19)
Decrease (increase) in other assets (22) 88
Cash flows from investing activities (5,789) (3,699)
Net increase (decrease) in cash and cash equivalents (14,512) 3,374
Cash and cash equivalents at beginning of period 224,069 216,825
Cash and cash equivalents at end of period (Note 3) $209,557 $220,199
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS
ENDED AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
OPERATIONS
Net income $ 1,433 $ 1,392
Charges to income not affecting cash:
Depreciation, depletion and amortization 16,757 16,386
Provision for deferred income taxes (Note 7) (6,038) (2,983)
Accumulated postretirement health benefits obligation 6,199 6,396
Provision for other long-term liabilities (324) 150
Amortization of excess of purchase price over net
assets acquired (Note 1) 10,568 9,936
Amortization of debt discount and expense 3,318 4,667
31,913 35,944
Decrease (increase) in:
Short-term investments, restricted (Note 4) 8,887 1,067
Instalment notes receivable, net 2,532 (686)
Trade and other receivables, net (6,110) 12,792
Inventories 12,800 22,028
Prepaid expenses 2,226 1,505
Increase (decrease) in:
Bank overdrafts (Note 3) (11,933) (5,469)
Accounts payable (1,475) 2,047
Accrued expenses (10,033) (6,826)
Income taxes payable (Note 7) 6,824 12,318
Accrued postpetition interest on secured obligations 12,625 11,439
Liabilities subject to Chapter 11 proceedings (Note 2):
Accounts payable 10 139
Cash flows from operations 48,266 86,298
FINANCING ACTIVITIES
Issuance of long-term senior debt -- 2,000
Retirement of long-term senior debt (30,716) (46,203)
Cash flows from financing activities (30,716) (44,203)
INVESTING ACTIVITIES
Additions to property, plant and equipment, net of
normal retirements (11,280) (12,436)
(Increase) in investments (99) (22)
Decrease in other assets 83 192
Cash flows from investing activities (11,296) (12,266)
Net increase in cash and cash equivalents 6,254 29,829
Cash and cash equivalents at beginning of period 203,303 190,370
Cash and cash equivalents at end of period (Note 3) $209,557 $220,199
</TABLE>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994
NOTE 1--ORGANIZATION
Walter Industries, Inc. (formerly Hillsborough
Holdings Corporation) (the "Company") was organized in August
1987 by a group of investors led by Kohlberg Kravis
Roberts & Co. ("KKR") for the purpose of acquiring Jim
Walter Corporation, a Florida corporation ("Original Jim
Walter") through a tender offer and a subsequent merger,
consummated on January 7, 1988 (the "Merger"). On April 1,
1991, Walter Industries, Inc., a subsidiary of the Company,
merged into the Company thereby completing its previously
adopted plan of reorganization. The Company changed its name
to Walter Industries, Inc. in connection with such merger. The
consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All
significant intercompany balances have been eliminated. The
Company's financial statements reflect the allocation of the
purchase price of Original Jim Walter based upon fair market
value of the assets acquired and liabilities assumed.
NOTE 2--REORGANIZATION PROCEEDINGS
On December 27, 1989, the Company and 31 of its
subsidiaries (including the subsidiary in the next sentence, the
"Debtors") each filed a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court (the "Bankruptcy Court") for the Middle
District of Florida, Tampa Division (the "Reorganization
Proceedings"). On December 3, 1990, one additional small
subsidiary filed a voluntary petition for reorganization under
the Bankruptcy Code. Two other small subsidiaries did not file
petitions for reorganization.
The Debtors' Chapter 11 cases resulted from a
sequence of events stemming primarily from an inability of
the Company's interest reset advisors to reset interest
rates on approximately $624 million of outstanding Senior
Extendible Reset Notes and Senior Subordinated Extendible Reset
Notes on which interest rates were scheduled to be reset
effective January 2, 1990. The inability to reset the
interest rates was primarily attributable to pending
asbestos-related litigation which prevented the Debtors from
completing a refinancing or from selling assets to reduce their
debt which, together with turmoil in the high yield bond markets,
depressed the bid value of such notes.
The consolidated financial statements of the
Company have been prepared on a "going-concern" basis which
contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business;
however, as a result of the Chapter 11 filings, such
realization of assets and liquidation of liabilities are
subject to a significant number of uncertainties. These
financial statements include adjustments and reclassifications
that have been made to reflect the liabilities which have been
deferred under the Reorganization Proceedings. Interest in the
amount of $765,227,000 at August 31, 1994 and
$601,542,000 at August 31, 1993 ($40,921,000 for the three
months ended August 31, 1994 and 1993) on unsecured debt
obligations has not been accrued in the consolidated financial
statements since the date of the filing of petitions for
reorganization. This estimate is based on the balances of the
unsecured debt obligations and their interest rates as of the
petition date. Such interest rates do not necessarily
presently govern the respective rights of the Company, its
subsidiaries and the various lenders. Instead, the rights of
the parties will be determined in connection with the
Reorganization Proceedings.
The discussion below sets forth various aspects
of the Reorganization Proceedings, but is not intended to be an
exhaustive summary. For additional information
regarding the effect on the Debtors of the Reorganization
Proceedings, reference should be made to the Bankruptcy Code,
the rules and regulations promulgated pursuant to the Bankruptcy
Code and the case law thereunder. Each creditor
should consult with its own counsel regarding the impact
of the Reorganization Proceedings on such creditor's claims.
Pursuant to provisions of the Bankruptcy Code
and an order of the Bankruptcy Court dated December 28, 1989,
the Debtors were authorized to continue to operate their
businesses and own and manage their properties and assets as
debtors in possession. The Bankruptcy Code
authorizes the Debtors to enter into transactions, including the
sale or lease of property of their estates and to use
property of their estates, in the ordinary course of their
businesses without prior approval of the Bankruptcy Court. The
sale or lease of property of the estates other than in the
ordinary course of business and certain other transactions
(for example, secured financing), whether or not in the
ordinary course of business, are subject to prior approval by
the Bankruptcy Court.
As a result of the filing of petitions for
reorganization, the maturity of all unpaid principal of, and
interest on, the senior and subordinated indebtedness of the
Debtors became immediately due and payable in accordance with
the terms of the instruments governing such indebtedness.
The Debtors will not be able to borrow additional funds under any
of their prepetition credit arrangements. Pursuant
to the applicable provisions of the Bankruptcy Code, all
pending legal proceedings against the Debtors were
automatically stayed upon the filing of such petitions.
Under the Chapter 11 filings, a significant
portion of claims in existence at the filing date
("prepetition") are stayed ("deferred") while the Company
continues to manage the business. The Bankruptcy Code defines
"claim" to include a right to payment whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured. Claims which were contingent
or unliquidated at the commencement of the Reorganization
Proceedings constitute claims under the Bankruptcy Code. Such
claims, including, without limitation, those that
may arise in connection with rejection of executory
contracts, including leases, as well as those that might arise in
connection with environmental and pension-related matters, could
be significant. It is not possible to quantify the
amount of such claims at this time. Under the Bankruptcy Code,
a creditor's claim is treated as secured only to the
extent of the value of such creditor's collateral, and the
balance of such creditor's claim is treated as unsecured.
Depending upon the outcome of the Reorganization Proceedings and
the value of a secured creditor's collateral, if any,
secured creditors may not be entitled to claim interest on
their claims for the period after December 27, 1989.
Generally, unsecured debt does not accrue interest after the
filing.
Only holders of "allowed claims" may vote on
and participate in distributions under any plan or plans of
reorganization that may be proposed. A claim is
allowed to the extent (i) the claim is not listed as
contingent, disputed or unliquidated on the Debtors bankruptcy
schedules filed in January 1990, as amended, or (ii) a proof of
claim is filed and not successfully objected to by a party in
interest.
Additional prepetition claims and liabilities may
arise, some of which may be significant, subsequent to the filing
date for various reasons. To the extent a creditor
must file a proof of claim, such proof must be filed by a date
fixed by the Bankruptcy Court as the last day to file
proofs of claim (the "Bar Date"). At a hearing on July 23,
1992, the Bankruptcy Court set a Bar Date of October 30, 1992
in the Reorganization Proceedings for all claims other than
any potential claims related to asbestos personal injury
or property damage. At a hearing on December 16, 1992, the
Bankruptcy Court set a second Bar Date of March 1,
1993 in the Reorganization Proceedings for new creditors added
by amended schedules filed by certain of the Debtors on
November 23, 1992. On August 31, 1993, the Bankruptcy Court set
a third Bar Date of November 30, 1993 for creditors
added by amended schedules filed by the Debtors on July 12, 1993.
No provision has been included in the accompanying
financial statements for any prepetition claims and
additional liabilities that may arise from resolution of any
claims filed.
The amount included as liabilities subject to
Chapter 11 proceedings reflected on the Company's consolidated
balance sheet consists of the following:
AUGUST 31,
1994 1993
(IN THOUSANDS)
Short-term notes payable $ 78,033 $ 78,033
ccounts payable 64,348 63,039
ccrued expenses 95,847 95,999
ncome taxes payable 47,066 47,066
Long-term senior debt (Note 5) 416,629 416,629
Long-term subordinated debt 1,025,728 1,024,948
Other long-term liabilities 238 238
$1,727,889 $1,725,952
As debtors in possession, the Debtors have the
right, subject to Bankruptcy Court approval and certain other
limitations, to assume or reject certain executory
contracts, including unexpired leases. In this context,
"assumption" means that the Debtors agree to perform their
obligations and cure certain existing defaults under the
contract or lease, and "rejection" means that the Debtors are
relieved from their obligations to perform further under the
contract or lease and are subject only to a claim for damages
for the breach thereof. Any claim for damages resulting from
the rejection of an executory contract or an unexpired
lease is treated as a general unsecured claim in the
Reorganization Proceedings.
Unless the Bankruptcy Court, upon request of a
non-Debtor party and after notice and a hearing, fixes a date
by when the Debtors must elect to assume or reject an
executory contract, the Debtors may assume or reject such
contracts in a plan or plans of reorganization. With respect to
unexpired non-residential real property leases, including mineral
leases and interests, the Bankruptcy Code provides that
a Debtor has 60 days after the commencement of a Chapter 11 case
in which to assume or reject such leases unless the
Bankruptcy Court, for cause shown, extends such 60 day period.
Pursuant to an order of the Bankruptcy Court dated
August 31, 1993, the time within which the Debtors must assume
or reject their nonresidential real property leases was
extended through and including October 31, 1993. The Debtors
filed a motion to extend, until confirmation of a plan of
reorganization, the time for assumption or rejection of their
non-residential real property leases. On March 4,
1994, the Bankruptcy Court entered an order approving the
Debtors motion. On February 25, 1991, the Debtors received
Bankruptcy Court approval to assume substantially all of their
mineral leases and interests.
For 120 days after the date of the filing of a
voluntary Chapter 11 petition, a debtor has the exclusive right
to file a plan of reorganization with the Bankruptcy
Court (the "Exclusivity Period"). If a debtor files a plan
of reorganization during the 120-day Exclusivity Period,
no other party may file a plan of reorganization until 180 days
after the date of filing of the Chapter 11 petition.
Until the end of this 180-day period (the "Acceptance Period")
the debtor has the exclusive right to solicit acceptances
of the plan. The Bankruptcy Court may shorten or extend the 120-
and 180-day periods for cause shown. If a debtor
fails to file a plan during the Exclusivity Period or, if such
plan has been filed, fails to obtain acceptance of such
plan from impaired classes of its creditors and equity
security holders during the Acceptance Period, any party in
interest, including a creditor, an equity security holder, a
committee of creditors or equity security holders or
an indenture trustee may file a plan. Additionally, if the
Bankruptcy Court were to appoint a trustee, the
Exclusivity Period, if not previously terminated, would
terminate.
The initial Exclusivity Period for each of the
Debtors would have expired on April 26, 1990 and the initial
Acceptance Period would have expired on June 26,
1990. The Debtors filed various motions to extend the
Exclusivity Period which were granted. Pursuant to an order of
the Bankruptcy Court dated April 15, 1992, the Exclusivity
Period expired June 15, 1992 and the Acceptance Period was to
expire on August 14, 1992.
For information concerning (a) the plans of
reorganization filed by the Debtors on June 15, 1992, September
22, 1993, April 20, 1994, June 9, 1994 and June 22,
1994 (the "Debtors Fourth Amended Plan"), (b) the plans
of reorganization filed by LaSalle National Bank (as the
successor trustee under the indenture dated as of January 1,
1988, as amended for the Series B & C Senior Notes) on
December 30, 1993 and April 20, 1994, (c) the plan of
reorganization filed by Chemical Bank and Bankers Trust Company
(as agents under the Bank Credit Agreement dated as of
September 10, 1987, as amended, and the Working Capital Credit
Agreement dated as of December 29, 1987, as amended) on
December 28, 1993, (d) the plans of reorganization filed by AIF
II, L.P., certain affiliates of AIF II, L.P. and certain
accounts managed or controlled by such affiliates, Lehman
Brothers Inc., the Official Bondholders Committee and the
Official Committee of General Unsecured Creditors
(collectively, the "Bondholders Plan Proponents") on December
16, 1993, April 20, 1994, May 11, 1994, May 17, 1994 and June 9,
1994 (the "Bondholders Second Amended Plan"), and (e) hearings to
consider approval of the disclosure statements filed
by the Debtors and the Bondholders Plan Proponents in
connection with such plans that were held on May 19, 1994 and
June 15, 1994, reference is made to Note 2 of Notes to
Financial Statements for the year ended May 31, 1994.
The Debtors are pursuing confirmation of the
Debtors' Fifth Amended Joint Plan of Reorganization Dated As Of
July 25, 1994 (the "Debtors' Fifth Amended Plan") and
the Bondholders Plan Proponents are pursuing confirmation of
the Creditors' Joint Plan of Reorganization Dated As Of
August 1, 1994 (the "Bondholders Third Amended Plan").
Information concerning the Debtors' Fifth Amended Plan and the
Bondholders Third Amended Plan, is included below.
On July 7, 1994, the Debtors and the Pension
Benefit Guaranty Corporation filed objections to the Bondholders
Plan Proponents amended disclosure statement for the
Bondholders Second Amended Plan. In addition, on July 7,
1994, the Bondholders Plan Proponents and the Pension
Benefit Guaranty Corporation filed objections to the Debtors
amended disclosure statement for the Debtors Fourth Amended
Plan. On July 8, 1994, the Texas Homeowners filed objections
to such Debtors amended disclosure statement and such
Bondholders Plan Proponents amended disclosure statement.
Prior to the July 13, 1994 hearing, the Debtors
and the Bondholders Plan Proponents each resolved with the
Pension Benefit Guaranty Corporation the objections filed to
their respective disclosure statements.
At the hearing held on July 13, 1994 the
Bankruptcy Court, inter alia,: (i) overruled the objections filed
by the Texas Homeowners to the Debtors amended disclosure
statement and the Bondholders Plan Proponents amended
disclosure statement; (ii) sustained in part and overruled in
part the objections filed by the Debtors to the Bondholders
Plan Proponents' amended disclosure statement and the
objections filed by the Bondholders Plan Proponents to the
Debtors amended disclosure statement; (iii) fixed voting and
solicitation procedures, which procedures were to be set forth
in the Confirmation Hearing Notice; (iv) fixed September
23, 1994 as the last date for voting on the Debtors Fourth
Amended Plan and the Bondholders Second Amended Plan; (v) fixed
October 7, 1994 as the last date to challenge individual ballots
cast for accepting or rejecting the Debtors Fourth
Amended Plan or the Bondholders Second Amended Plan; (vi)
scheduled hearings to commence October 17, 1994 to hear and
determine: (a) the declaratory judgment action commenced by
the Debtors for a determination that unsecured creditors
are not entitled to post-petition interest under the facts of
these Chapter 11 cases, (b) whether the Veil Piercing
Settlement is fair and equitable and (c) any challenge to
whether a class of claims has accepted or rejected the
Debtors Fourth Amended Plan or the Bondholders Second Amended
Plan; (vii) fixed November 10, 1994 as the last date to
file objections to Confirmation of the Debtors Fourth Amended
Plan and/or the Bondholders Second Amended Plan; (viii)
scheduled an initial Confirmation Hearing for November 16, 1994
at which time the Bankruptcy Court will fix a date when
the Confirmation Hearing will commence; and (ix) approved such
disclosure statements, as supplemented, consistent
with the Bankruptcy Court's rulings made at the July 13,
1994 hearing.
On July 25, 1994, the Debtors filed an emergency
motion seeking authorization to file the Debtors Fifth Amended
Plan and the Debtors Fifth Amended Disclosure
Statement Dated As Of July 25, 1994 Pursuant to Section 1125
of the Bankruptcy Code (the "Debtors Fifth Amended Disclosure
Statement"). On July 28, 1994, the Bankruptcy Court: (i) granted
the Debtors emergency motion; (ii) directed the Debtors
to serve the Debtors Fifth Amended Plan on August 1, 1994 and to
file said plan with the Bankruptcy Court by August
2, 1994; (iii) directed the Debtors to serve the Debtors Fifth
Amended Disclosure Statement by August 2, 1994 and
to file said disclosure statement with the Bankruptcy Court
by August 3, 1994; (iv) permitted the Bondholder Plan
Proponents to further amend the Bondholders Second Amended Plan
and related disclosure statement provided such amended
plan and disclosure statement must be served by August 1, 1994
and filed with the Bankruptcy Court on August 2, 1994;
and (v) prohibited the filing of any further amended plans of
reorganization until September 26, 1994.
On August 1, 1994, the Debtors served the Debtors
Fifth Amended Plan and filed said plan with the Bankruptcy Court
on August 2, 1994. On August 2, 1994, the Debtors
served the Debtors Fifth Amended Disclosure Statement and filed
said disclosure statement with the Bankruptcy Court on
August 3, 1994.
The Debtors Fifth Amended Plan modified the
Debtors Fourth Amended Plan in two respects. First, the Debtors
Fifth Amended Plan modifies the Allowed Amount (as said term
is defined in the Debtors Fifth Amended Plan) of the Series B & C
Senior Note Claims by including post-filing date
interest on interest accrued and unpaid as of the Filing Date,
plus providing for additional interest in an amount equal to
5% of the Net Enterprise Value (as said term is defined in the
Debtors Fifth Amended Plan). Payment of the additional
interest will be in the form of shares of Common Stock having an
aggregate value equal to 5% of the Net Enterprise
Value.
In addition, the Allowed Amount of the Working
Capital Bank Claims and Revolving Credit Bank Claims has been
modified to include post-filing date interest on
interest accrued and unpaid as of the Filing Date and
additional interest in an amount equal to 3.726% of the Net
Enterprise Value with respect to the Revolving Credit Bank
Claims and 1.274% of the Net Enterprise Value with respect to the
Working Capital Bank Claims. Payment of such additional interest
will be in the form of shares of Common Stock having an
aggregate value equal to 5% of the Net Enterprise Value.
As a result of said modifications, the current
shareholders' interest in the reorganized Debtors will decline
from approximately 75% to 68%.
On August 1, 1994, the Bondholders Plan
Proponents served the Bondholders Third Amended Plan and the
Disclosure Statement For Creditors' Plan Dated As Of August
1, 1994 (the "Bondholders Amended Disclosure Statement"),
which documents were filed with the Bankruptcy Court on
August 2, 1994.
The Bondholders Third Amended Plan modified the
Bondholders Second Amended Plan in four respects. First, the
Bondholders Plan Proponents have agreed in principle
with certain alleged asbestos claimants and the official
committees appointed in the Chapter 11 case of The Celotex
Corporation ("Celotex") to an Amended and Restated Veil
Piercing Settlement Agreement dated as of August 1, 1994 (the
"Restated Veil Piercing Settlement Agreement") pursuant to
which the shares of "Class B Common Stock" having an
aggregate value of $75 million which was to have been distributed
to the alleged asbestos claimants subject to the rights of any
"settling equity holders" will instead be distributed to Holders
of Revolving Credit Bank Claims ($28,220,625),
Working Capital Bank Claims ($9,279,375) and Series B & C
Senior Note Claims ($37,500,000). The Restated Veil Piercing
Settlement Agreement will become effective upon (i) execution of
the agreement by the parties thereto and (ii) approval by
the Bankruptcy Court in the Celotex Chapter 11 case. At a
hearing on September 1, 1994, by the Bankruptcy Court in the
Celotex Chapter 11 case, approval was given to the Restated Veil
Piercing Settlement Agreement.
Second, the provisions with respect to the
Allowed Amount and treatment of Revolving Credit Bank Claims
have been modified to include as additional interest such
amount of $28,220,625 which shall be satisfied by shares of
"Class B Common Stock".
Third, the provisions with respect to the
Allowed Amount and treatment of Working Capital Bank Claims
have been modified to include as additional interest such
amount of $9,279,375 which shall be satisfied by shares of
"Class B Common Stock".
Finally, the provisions with respect to the
Allowed Amount and treatment of Series B & C Senior Note Claims
have been modified to include as additional interest such
amount of $37,500,000 which shall be satisfied by shares of
"Class B Common Stock".
On August 2, 1994, the Bankruptcy Court entered an
order approving the Debtors Fifth Amended Disclosure Statement
and the Bondholders Amended Disclosure Statement.
The process pursuant to which the Debtors Fifth
Amended Plan or any further amended plan of reorganization filed
by the Debtors and the Bondholders Third Amended Plan
or any further amended plan of reorganization filed by the
Bondholders Plan Proponents may be confirmed
necessarily will be complex and may be delayed pending further
developments in the asbestos-related litigation involving the
Company. Accordingly, the timing of such confirmation
necessarily cannot be predicted.
The Debtors Fifth Amended Plan and/or the
Bondholders Third Amended Plan were sent, along with the
disclosure statements approved by the Bankruptcy Court, to all
members of classes of impaired creditors and equity security
holders for acceptance or rejection. In general, the
Bankruptcy Code provides that a claim or interest is impaired
under a plan unless such plan proposes to pay such claim or
interest in full or leave it unaltered. In order to be
accepted, at least two-thirds in amount and a majority in
number of holders of allowed claims or interests in each class
that is impaired who actually vote, must accept the plan.
Following acceptance or rejection of any plan by impaired classes
of creditors and equity security holders, the Bankruptcy
Court at a noticed hearing would consider whether to confirm the
plan. Among other things, for confirmation the
Bankruptcy Court at a noticed hearing is required to find that
(i) each holder of a claim or interests in each impaired class
of creditors and equity security holders will, pursuant to the
plan, receive at least as much as the class would have
received in a liquidation under Chapter 7 of the Bankruptcy Code,
(ii) each impaired class of creditors and equity
security holders has accepted the plan by the requisite vote
and (iii) confirmation of the plan is not likely to be
followed by the liquidation or need for further financial
reorganization of the debtor or any successor unless
the plan proposes such liquidation or reorganization.
If any impaired class of creditors or equity
security holders does not accept a plan, and assuming that all of
the other requirements of the Bankruptcy Code are met,
the proponent of the plan may invoke the so-called "cram
down" provisions of the Bankruptcy Code. Under these
provisions, the Bankruptcy Court may confirm a plan
notwithstanding the nonacceptance of the plan by an impaired
class of creditors or equity security holders if certain
requirements of the Bankruptcy Code are met, including but not
limited to finding that the proposed plan and any settlement
contemplated therein (i.e. the Restated Veil Piercing
Settlement Agreement) is fair and equitable. These
requirements may necessitate provision in full for senior
classes of
creditors and/or equity security holders before provision for
a junior class could be made.
Donlin, Recano & Company, Inc., the ballot
agent, filed with the Bankruptcy Court the Declaration of
Carole G. Donlin Certifying the Ballots Accepting and
Rejecting the Creditors' Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code and the Declaration of Carol
G. Donlin Certifying the Ballots Accepting and Rejecting the
Debtor's Fifth Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code which indicated that: (a)
each impaired class of creditors voted to accept the
Bondholders Third Amended Plan and (b) no impaired class of
creditors voted to accept the Debtors' Fifth Amended Plan.
In addition to challenging the unsecured
creditors' alleged entitlement to post-petition interest in the
Debtors' Chapter 11 cases and the fairness of the Restated Veil
Piercing Settlement Agreement, the Debtors have filed objections
to certain individual ballots and a motion to
disallow all ballots cast and voiding the entire solicitation
process.
The objections to individual ballots and the motion to
disallow all ballots cast and to void the solicitation process
are scheduled to be heard during the week of October
17, 1994.
The Company cannot now predict whether, or at
what time, the Debtors Fifth Amended Plan, the Bondholders
Third Amended Plan or any further amended plans by either
party may be confirmed or the ultimate terms thereof.
NOTE 3--CLASSIFICATION OF CASH
The Company's cash management system provides for
the reimbursement of all major bank disbursement accounts on a
daily basis. Checks issued but not yet presented to
the banks for payment are classified as bank overdrafts.
NOTE 4--INSTALMENT NOTES RECEIVABLE AND RESTRICTED
INVESTMENTS
The net change in instalment notes receivable
consists of sales and resales, net of repossessions and provision
for possible losses, of $38,792,000 and $42,059,000 and
cash collections on account and payouts in advance of maturity
of $41,324,000 and $41,373,000 for the three months ended
August 31, 1994 and 1993, respectively.
Mid-State Homes, Inc. ("Mid-State"), an indirect
wholly-owned subsidiary of the Company, is the settlor and sole
beneficiary of two business trusts established under
the laws of Delaware, Mid-State Trust II ("Trust II") and
Mid-State Trust III ("Trust III"). Trust II and Trust III
were organized for the purpose of purchasing instalment
notes receivable from Mid-State from the net proceeds
from, respectively, the issuance of the Mortgage-Backed
Notes ($649,250,000 outstanding at August 31, 1994) and the
Asset Backed Notes ($192,004,000 outstanding at August 31, 1994).
Assets of Trust II and Trust III, including the
instalment notes receivable, are not available to satisfy
claims of general creditors of the Company and its subsidiaries.
Of the gross amount of instalment notes receivable at August 31,
1994 of $4,187,486,000, receivables owned by Trust II
had a gross book value of $1,566,688,000 and an economic balance
of $937,245,000 and receivables owned by Trust III
had a gross book value of $508,295,000 and an economic balance
of $251,440,000.
Restricted short-term investments include (i)
temporary investment of reserve funds and collections on
instalment notes receivable owned by Trust II which are
available only to pay expenses of Trust II and principal and
interest on the Mortgage-Backed Notes ($65,597,000), (ii)
temporary investment of reserve funds and collections on
instalment notes receivable owned by Trust III which are only
available to pay expenses of Trust III and principal and
interest on the Asset Backed Notes ($10,783,000), (iii) cash
securing letters of credit $2,985,000 and (iv) miscellaneous
other segregated accounts restricted to specific uses
($19,300,000, including $6,332,000 from proceeds of sale of
assets set aside to offer to purchase Series B and Series C
Senior Extendible Reset Notes).
NOTE 5--DEBT
In June 1991, pursuant to an order of the
Bankruptcy Court, $10,704,000 of proceeds from the prepayment
of the promissory note received in connection with the sale
of Apache Building Products Company ("Apache") in 1988, plus
$350,000 of interest earned thereon, held in a
segregated escrow account, were applied as a reduction of
principal ($8,249,000 to the Revolving Credit Agreement and
$2,805,000 to the Working Capital Agreement). The Bank Agents
for the Revolving Credit and Working Capital Banks appealed
the Bankruptcy Court's order permitting the application of
proceeds to the principal of the indebtedness only, to the
United States District Court for the Middle District of Florida,
Tampa Division (the "District Court"). On April 29, 1992,
the District Court reversed the Bankruptcy Court's order and
remanded the case to the Bankruptcy Court for
further proceedings and determinations on the issues of
whether the Revolving Credit and Working Capital Banks are
oversecured creditors, the reasonable, relevant, applicable
interest rate and whether the Debtors will ultimately prove to be
solvent.
During fiscal 1991, pursuant to an order of the
Bankruptcy Court, $7,356,000 of proceeds from the sale of an
asset, held as security for the Revolving Credit Agreement
and the Working Capital Agreement, and setoff of bank accounts
were turned over to the Revolving Credit and Working
Capital Banks with reservation of rights as to application of
such payment. The Company has applied such payment to a
reduction of principal ($5,794,000 to the Revolving Credit
Agreement and $1,562,000 to the Working Capital Agreement).
NOTE 6--LITIGATION AND OTHER MATTERS
The Company has previously discussed in Note 10
of Notes to Financial Statements for the year ended May 31,
1994, the background and status of the Declaratory Judgment
Proceeding which the Company filed on January 2, 1990 in the
Bankruptcy Court against Jim Walter Corporation,
Celotex and certain known individuals who had filed suit
against the Company and/or certain of its subsidiaries seeking to
hold them liable for asbestos-related liabilities of Celotex.
On July 18, 1994, the asbestos claimants filed
their brief in the District Court. On August 2, 1994, the
Debtors filed their Brief in Opposition to the appeal of the
asbestos claimants in the District Court. On August 2, 1994,
Jim Walter Corporation also filed their Brief in
Opposition to the appeal of the asbestos claimants. On August
12, 1994, the asbestos claimants filed their reply brief.
On August 11, 1994, the Debtors filed an Emergency
Motion to Expedite Appeal, to which the asbestos claimants filed
a response on August 18, 1994. On August 19, 1994,
the District Court ordered that oral arguments would be heard
on September 13, 1994. On August 22, 1994, the
Bondholders Plan Proponents filed a motion and memorandum
seeking to intervene for sole purpose of clarifying and
correcting the record on the Debtors Emergency Motion to
Expedite Appeal or, alternatively, to file as an Amicus Curiae.
On September 9, 1994, the District Court denied the Debtors
emergency motion as moot. On September 9, 1994, the District
Court also denied the Bondholders Plan Proponents motion to
intervene. On September 13, 1994, the District Court
heard oral arguments of the parties.
On October 13, 1994, the District Court issued
its opinion affirming the Bankruptcy Court's April 18, 1994
"Veil Piercing Decision" in which the Bankruptcy Court found
that there was no basis of piercing the corporate veil, finding
for the Debtors on every contested factual issue.
The Company is a party to a number of other
lawsuits arising in the ordinary course of its business. While
the results of litigation cannot be predicted with
certainty, the Company believes that the final outcome of such
other litigation will not have a materially adverse effect on
the Company's consolidated financial condition.
NOTE 7--INCOME TAXES
On August 10, 1993, the Omnibus Budget
Reconciliation Act of 1993 was signed into law raising the
federal corporate income tax rate to 35% from 34%, retroactive to
January 1, 1993. The provision for income taxes for the month of
August 1993 included federal income tax at the 35% statutory
rate for the month and three months ended August 31, 1993. In
addition, Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" requires that deferred
tax liabilities and assets be adjusted in the period of
enactment for the effect of an enacted change in tax laws or
rates.
The Company estimated that such one-time charge was
approximately $2.5 million and such amount was included in the
provision for deferred income taxes for the month and
three months ended August 31, 1993.
NOTE 8--SUMMARIZED FINANCIAL INFORMATION
The consolidated financial statements presented
herein are of the Company, which is a guarantor of the
obligations of the Senior Note Issuers (the principal
operating subsidiaries consisting of Jim Walter Homes, Inc.
["Jim Walter Homes"], Jim Walter Resources, Inc. and United
States Pipe and Foundry Company ["U.S. Pipe"]) and the
Subordinated Note Issuers (Jim Walter Homes and U.S. Pipe).
Summarized unaudited financial information of the Senior Note
Issuers and the Subordinated Note Issuers is set forth as
follows:
<TABLE>
<CAPTION>
SENIOR NOTE ISSUERS SUBORDINATED NOTES ISSUERS
THREE MONTHS ENDED THREE MONTHS ENDED
AUGUST 31, AUGUST 31,
1994 1993 1994 1993
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATIONS DATA
Net sales and revenues $216,145 $215,250 $147,594 $136,432
Cost of sales (exclusive of
depreciation, depletion and
amortization) 171,442 167,939 114,813 103,097
Other operating expenses 20,940(a) 25,739(a) 17,621(b) 20,456(b)
Postretirement health benefits 5,488 5,235 1,596 1,574
Chapter 11 costs 17 (15) 11 (21)
Interest and amortization of
debt expense 11,121 10,840 7,287 7,170
Amortization of excess
purchase price 5,402 5,402 5,842 5,842
1,735 110 424 (1,686)
Provision for income taxes
(Note 7) (2,656) (4,182) (2,389) (2,881)
Net loss $ (921) $ (4,072) $ (1,965) $ (4,567)
(a) Net of $10,608 and $7,735 intercompany income, respectively.
(b) Net of $3,268 and $2,097 intercompany income, respectively.
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA
SENIOR NOTE ISSUERS SUBORDINATED NOTE ISSUERS
AUGUST 31, MAY 31, AUGUST 31, MAY 31,
1994 1994 1994 1994
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash $ 3,339 $ 22,673 $ 3,303 $ 22,638
Short-term investments, restricted 7,221 6,927 3,740 3,910
Trade and other receivables, net 108,530 100,490 81,748 82,197
Inventories 119,147 132,850 94,789 102,986
Prepaid expenses 6,202 8,177 2,618 3,610
Intercompany receivables 1,977,481 1,914,257 1,483,435 1,419,685
Property, plant and
equipment, net 513,370 522,070 167,524 169,186
Unamortized debt expense and
other assets 25,671 27,269 16,546 18,171
Excess of purchase price over
net assets acquired 278,836 284,238 301,544 307,386
$3,039,797 $3,018,951 $ 2,155,247 $ 2,129,769
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIT)
Bank overdrafts $ 12,878 $ 21,752 $ 12,068 $ 12,184
Accounts payable and accrued
expenses 105,581 113,235 60,118 60,285
Income taxes payable (Note 7) 14,033 7,548 10,278 5,600
Deferred income taxes (Note 7) 52,490 56,282 31,895 34,146
Intercompany payables 713,366 693,786 714,633 698,066
Accrued postpetition interest
on secured obligations 205,769 194,621 140,040 132,683
Accumulated postretirement
health benefits obligation 171,839 166,631 54,513 53,009
Other long-term liabilities 37,024 37,368 7,404 7,543
Liabilities subject to
Chapter 11 proceedings 1,733,196 1,733,187 1,445,403 1,445,394
Stockholder's equity (deficit) (6,379) (5,459) (321,105) (319,141)
$3,039,797 $3,018,951 $2,155,247 $2,129,769
</TABLE>
<TABLE>
<CAPTION>
NOTE 9--SEGMENT INFORMATION
Information relating to the Company's business segments is set forth as follows:
THREE MONTHS ENDED
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Sales and Revenues:
Homebuilding and related financing $103,082 $109,246
Building materials 16,519 14,556
Industrial products 48,566 41,286
Water and waste water transmission products 102,200 86,798
Natural resources(e) 68,612 80,399
Corporate 1,661 1,485
Consolidated sales and revenues(a) $340,640 $333,770
Contributions to Operating Income(b):
Homebuilding and related financing $ 19,889 $ 24,177
Building materials 46 465
Industrial products 2,536 1,614
Water and waste water transmission products 10,257 7,385
Natural resources (2,459) 801
30,269 34,442
Less--Unallocated corporate interest and other
expense(c) (21,979) (22,660)
Income taxes (6,857) (10,390)
Net income $ 1,433 $ 1,392
Depreciation, Depletion and Amortization:
Homebuilding and related financing $ 836 $ 824
Building materials 436 383
Industrial products 2,310 2,175
Water and waste water transmission products 3,574 3,814
Natural resources 9,126 8,798
Corporate 475 392
Total $ 16,757 $ 16,386
Gross Capital Expenditures:
Homebuilding and related financing $ 1,024 $ 1,003
Building materials 2,513 167
Industrial products 4,447 1,116
Water and waste water transmission products 2,508 2,657
Natural resources 4,138 8,307
Corporate 34 429
Total $ 14,664 $ 13,679
</TABLE>
<TABLE>
<CAPTION>
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Identifiable Assets:
Homebuilding and related financing $1,790,301 $1,877,904
Building materials 59,076 56,746
Industrial products 131,093 122,932
Water and waste water transmission products 461,184 462,513
Natural resources 445,704 452,377
Corporate(d) 220,301 225,816
Total $3,107,659 $3,198,288
</TABLE>
(a) Inter-segment sales (made primarily at prevailing
market prices) are deducted from sales of the selling segment and
are insignificant in amount with the exception of
the sales of the Industrial Products Group to the Water and Waste
Water Transmission Products Group of $5,146,000
and $3,960,000 and sales of the Natural Resources Group to
the Industrial Products Group of $1,375,000 and
$1,111,000 in the three months ended August 31, 1994 and
1993, respectively.
(b) Includes postretirement health benefits of
$6,647,000 and $6,396,000 for the three months ended August 31,
1994 and 1993, respectively. A breakdown by segment is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST, 31,
1994 1993
(IN THOUSANDS)
<S> <C> <C>
Homebuilding and related financing $ 573 $ 542
Building materials 129 126
Industrial products 775 790
Water and waste water transmission products 1,091 1,098
Natural resources 3,901 3,670
Corporate 178 170
$6,647 $6,639
</TABLE>
(c) Excludes interest expense incurred by the
Homebuilding and Related Financing Group of $31,120,000 and
$32,573,000 in the three months ended August 31, 1994 and
1993, respectively.
(d) Primarily cash and corporate headquarters
buildings and equipment.
(e) Includes sales of coal of $61,890,000, and
$72,554,000 in the three months ended August 31, 1994 and
1993, respectively.
EXHIBIT 3.B.2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction
with the consolidated financial statements and notes thereto
of Walter Industries, Inc. and subsidiaries for the
three months ended August 31, 1994, particularly Note
9--Segment Information which presents sales and operating income
by operating group.
RESULTS OF OPERATIONS
Three months ended August 31, 1994 and 1993
Net sales and revenues for the three months ended
August 31, 1994 increased $6.9 million, or 2.1%, over the prior
year period, with a 1.5% increase in volume and a .6%
increase in pricing and/or mix. The increase in net sales and
revenues was the result of improved sales and
revenues in the Building Materials, Industrial Products and
Water and Waste Water Transmission Products Groups, partially
offset by lower sales and revenues in the Homebuilding and
Related Financing and Natural Resources Groups.
Building Materials Group sales and revenues were
$2.0 million, or 13.5%, greater than the prior year period.
The increase resulted from improved sales volumes and
prices for window components and metal building and foundry
products. The Group's operating income performance, however, of
$46,000 was $419,000 below the 1993 period. This performance
was largely the result of higher manufacturing costs in
the window components business due to increased raw material
costs, especially aluminum, a major raw material component,
and costs associated with the consolidation and relocation of
the Hialeah, Florida and Columbus, Ohio operations to
Elizabethton, Tennessee which is expected to be completed by the
end of calendar 1994. Increased manufacturing costs for
metal building products, which resulted in slightly lower
operating income, were the result of higher raw material
costs, primarily scrap metal, and reduced efficiencies
reflecting start-up problems associated with the relocation of
the steel fabrication operation in May 1994.
Industrial Products Group sales and revenues
were $7.3 million, or 17.6%, ahead of the prior year
period. Increased sales volumes of aluminum foil and sheet
products, foundry coke, chemicals, industrial castings, patterns
and tooling and resin coated sand and higher selling
prices for aluminum foil and sheet products and furnace coke
were partially offset by lower sales volumes of furnace coke
and mineral wool. The Group's operating income of $2.5 million
was $922,000 greater than the prior year period. The
improved performance resulted from the sales increase and higher
gross profit margins for furnace coke, chemicals and
patterns and tooling, partially offset by reduced margins for
foundry coke, mineral wool, industrial castings and
resin coated sand.
Water and Waste Water Transmission Products Group
sales and revenues were $15.4 million, or 17.7%, ahead of the
prior year period. The increase was the result of
higher sales prices and volumes for ductile iron pressure
pipe, fittings and valves and hydrants. The order backlog
for pressure pipe at August 31, 1994 was 127,885 tons, which
represents approximately three months shipments,
compared to 129,108 tons at August 31, 1993. Operating income of
$10.3 million exceeded the prior year period by $2.9
million. The improved performance resulted from the increased
sales prices and volumes, partially offset by higher raw
material costs, especially scrap, a major raw material component.
Homebuilding and Related Financing Group sales
and revenues were $6.2 million, or 5.6%, below the prior
year period. This performance reflects a 12.8% decrease in
the number of homes sold, from 1,218 units in 1993 to 1,062 units
in 1994, partially offset by an increase in the
average selling price per home sold from $37,600 in 1993 to
$39,400 in 1994. The decrease in unit sales reflects
continuing strong competition in virtually every Jim Walter
Homes sales region. The higher average selling price in 1994
reflects a greater percentage of "90% complete" homes sold and
a smaller percentage of the lower priced Affordable
Line homes sold. Jim Walter Homes' backlog at August 31, 1994
was 2,019 units compared to 1,830 units at August 31,
1993. Time charge income (revenues received from Mid-State
Homes' instalment note portfolio) decreased from $58.1 million
in 1993 to $56.7 million in 1994. The decrease in time charge
income is attributable to a reduction in the total
number of accounts, partially offset by an increase in the
average balance per account in the portfolio. The Group's
operating income of $19.9 million was $4.3 million below the
prior year period. This decrease resulted from the lower
number of homes sold, reduced homebuilding gross profit margins
and the decrease in time charge income, partially offset
by the increase in average selling price per home sold and
lower interest expense in 1994 ($31.1 million) as compared
to that incurred in 1993 ($32.6 million). The lower gross
profit margins reflect higher lumber prices and the effect of
discounts related to sales promotions on certain models.
Natural Resources Group sales and revenues were
$11.8 million, or 14.7%, below the 1993 period. The decrease
resulted from lower sales volumes and prices for coal,
reduced methane gas selling prices and decreases in outside coal,
gas and timber royalty income, partially offset by
greater methane gas sales volume. A total of 1.403 million tons
of coal was sold in the 1994 period versus 1.539
million tons in the 1993 period, an 8.8% decrease. The
decrease in tonnage sold was the result of lower shipments to
Japanese steel mills and other export customers, partially
offset by greater shipments to Alabama Power Company ("Alabama
Power"). Increased shipments to Alabama Power were the result of
a new agreement signed May 10, 1994 for the sales and
purchase of coal replacing the 1979 contract and the 1988
amendment thereto. On May 23, 1994, the United States
Bankruptcy Court for the Middle District of Florida, Tampa
Division (the "Bankruptcy Court") issued an order approving the
new contract, such order becoming final on June 3, 1994. Under
the new contract, Alabama Power will purchase 4.0 million
tons of coal per year from Jim Walter Resources during the
period July 1, 1994 through August 31, 1999. In addition, Jim
Walter Resources will have the option to extend the new contract
through August 31, 2004, subject to mutual agreement
on the market pricing mechanism and certain other terms and
conditions of such extension. The new contract has a
fixed price subject to an escalation based on the Consumer Price
Index or another appropriate published index and
adjustments for government impositions and quality. The new
contract includes modifications of specifications, shipping
deviations and changes in transportation arrangements. The
new contract provides for the dismissal of Jim Walter
Resources' declaratory judgment action and Alabama Power's
dismissal of its appeal regarding Jim Walter Resources'
assumption of the 1979 contract. A joint motion was filed by
Jim Walter Resources and Alabama Power with the District Court
seeking the entry of an order dismissing Alabama Power's appeal
from the March 4, 1991 order; and a joint motion was filed
by Jim Walter Resources and Alabama Power with the Bankruptcy
Court seeking the entry of an order dismissing Jim
Walter Resources' declaratory judgment action. By order dated
June 23, 1994, the District Court granted the motion
to dismiss Alabama Power's appeal. By order dated June 24,
1994, the Bankruptcy Court granted the joint motion to
dismiss the declaratory judgment action. The average price per
ton of coal decreased 6.4%. from $47.13 in the 1993 period
to $44.11 in the 1994 period due to lower prices realized on
shipments to Alabama Power, Japanese steel mills and
other export customers. The Group incurred an operating loss
of $2.5 million in the 1994 period compared to operating
income of $801,000 in the 1993 period. The lower performance
reflects the decreases in sales volumes and prices
for coal, lower methane gas selling prices, reduced coal
mining productivity which resulted in higher costs per ton
of coal produced and lower outside coal, gas and timber royalty
income, partially offset by greater methane gas sales
volume. Reduced coal mining productivity was principally the
result of limited production at Blue Creek Mine No.
5 due to the recurrence of spontaneous combustion heatings that
shut down the mine from early April 1994 until May
16, 1994, together with geological problems at Mine No. 4.
Representatives of Jim Walter Resources, the Mine
Safety and Health Administration, Alabama State Mine Inspectors
and the United Mine Workers of America agreed that the
longwall coal panel being mined in Mine No. 5 at the time
the spontaneous heating recurred would be abandoned and
sealed off. Development mining for the two remaining longwall
coal panels in this section of the mine resumed May 16, 1994
and the first longwall panel will be ready for mining in January
1995. Production will be adversely impacted until
such date; however, a portion of the increased costs will be
recovered from business interruption insurance.
Cost of sales, exclusive of depreciation, of
$224.1 million was 80.9% of net sales versus $212.7 million and
79.2% in the 1993 period. The cost of sales percentage
increase was primarily the result of lower gross profit margins
on home sales, coal, foundry coke, mineral wool,
industrial castings, resin coated sand, window components and
metal building products, partially offset by improved margins
for furnace coke, chemicals and patterns and tooling.
Selling, general and administrative expenses
(exclusive of postretirement health benefits) of $32.3 million
were 9.5% of net sales and revenues in the 1994 period
versus $32.0 million and 9.6% in 1993.
Chapter 11 costs of $4.1 million were $1.2
million greater than the prior year period due to the filing of
three amended plans of reorganization and printing, mailing
and noticing costs associated with the Debtors Fifth Amended
Plan and the Bondholders Third Amended Plan, along with the
disclosure statements approved by the Bankruptcy Court, that were
sent to all members of classes of impaired creditors
and equity security holders for acceptance or rejection (see Note
2 of Notes to Consolidated Financial Statements).
Interest and amortization of debt discount and
expense decreased $3.6 million. The decrease was principally
the result of reductions in the outstanding debt balance
on the Mortgage-Backed Notes and Asset Backed Notes and lower
amortization of debt discount and expense, partially
offset by higher interest rates. Interest in the amount of
$765.2 million ($40.9 million in the three months ended
August 31, 1994) on unsecured obligations has not be accrued in
the consolidated financial statements since the date of the
filing of petitions for reorganization. This amount is based on
the balances of the unsecured debt obligations and
their interest rates as of December 27, 1989 and does not
consider fluctuations in the level of short-term debt and
interest rates and the issuance of commercial paper that would
have occurred to meet the working capital requirements of
the Homebuilding and Related Financing Group (see Notes 2 and 4
of the Notes to Consolidated Financial Statements). Such
interest rates do not presently govern the respective rights of
the Company, its subsidiaries and the various
lenders. Instead the rights of the parties will be
determined in connection with the Reorganization Proceedings.
On August 10, 1993, the Omnibus Budget
Reconciliation Act of 1993 was signed into law raising the
federal corporate income tax rate to 35% from 34%, retroactive
to January 1, 1993. The provision for income taxes for the
1993 period included federal income taxes at the 35% statutory
rate. In addition, Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" requires that
deferred tax liabilities and assets be adjusted in the period
of enactment for the effect of an enacted change in tax
laws or rates. The Company estimated that such one-time charge
was $2.5 million and such amount was included in the
provision for deferred income taxes in the 1993 period.
The net income for the three months ended August
31, 1994 was $1.433 million as compared to $1.392 million in the
1993 period reflecting all of the previously mentioned
factors as well as the impact of lower miscellaneous income and
slightly higher postretirement health benefits,
partially offset by greater Chapter 11 interest income.
FINANCIAL CONDITION
On December 27, 1989, the Debtors each filed a
voluntary petition for reorganization under Chapter 11 of Title
11 of the United States Code (the "Bankruptcy Code")
in the Bankruptcy Court (the "Reorganization Proceedings").
On December 3, 1990, one additional small subsidiary
filed a voluntary petition for reorganization under the
Bankruptcy Code. Two other small subsidiaries have not filed
petitions for reorganization. Pursuant to the applicable
provisions of the Bankruptcy Code, all pending legal
proceedings and collection of outstanding claims against the
Debtors were automatically stayed upon filing of the Chapter 11
petitions while the Debtors continue business operations as
debtors in possession (see Note 2 of Notes to Consolidated
Financial Statements).
The Debtors' Chapter 11 petitions resulted from a
sequence of events stemming primarily from an inability of the
Company's interest reset advisors to reset interest
rates on approximately $624 million of outstanding Senior
Extendible Reset Notes and Senior Subordinated Extendible Reset
Notes (collectively, the "Old Notes") on which interest rates
were scheduled to be reset effective January 2, 1990. The
Company believes that the reset advisors' inability to reset the
interest rates was primarily attributable to pending
asbestos-related litigation which prevented the Debtors from
completing a refinancing or from selling assets to
reduce their debt which, together with turmoil in the high yield
bond markets, depressed the bid value of such notes. This
created the potential for a sharply higher reset rate that, in
turn, would have caused interest expense to rise
above the Debtors' ability to pay. To mitigate these factors,
the Company, on November 7, 1989, offered to exchange the
Old Notes for a combination of cash and new Senior Extendible
Reset Notes and new Senior Subordinated Reset Notes.
The interest reset advisors, Drexel Burnham and
Merrill Lynch, advised the Company in early December 1989 that,
in their opinion, there was no interest rate at which
the Old Notes could be reset to have a bid value of 101% as
called for in the terms of the Old Notes. Trustees for the
Old Notes, citing the inability of the interest reset advisors to
establish a new rate, subsequently advised the
Company that the failure to reset the Old Notes not tendered
in the exchange offers would likely constitute
non-compliance under the indentures for the Old Notes. Later,
the exchange offer was supplemented to strengthen certain
covenants of the new Senior Extendible Reset Notes and new
Senior Subordinated Reset Notes and, in addition, an offer of
10% equity in the Company was made to the holders of old Senior
Subordinated Extendible Reset Notes.
The Company received less than the percentages of
each of the outstanding classes of Old Notes required under terms
of the exchange offers, which expired at 7:00 p.m. New
York City time on December 27, 1989. As a result, the exchange
offers were terminated and all tendered Old Notes were
returned.
As a result of the Reorganization Proceedings, the
maturity of all unpaid principal of, and interest on, the senior
and subordinated indebtedness of the Debtors became
immediately due and payable in accordance with the terms of
the instruments governing such indebtedness. The
amount of indebtedness that was accelerated on the petition
date aggregated approximately $1.7 billion. The Debtors
are currently accruing, but not paying, interest on senior
secured indebtedness and not accruing interest on unsecured
indebtedness. At August 31, 1994, interest in the amount of
$765.2 million ($40.9 million in the three months ended
August 31, 1994) had not been accrued on unsecured obligations.
These amounts are based on the balances of the unsecured
debt obligations and their interest rates as of the petition
date. Such interest rates do not necessarily govern the
respective rights of the Company, its subsidiaries and the
various lenders. Instead, the rights of the parties will be
determined in connection with the Reorganization Proceedings.
While the Reorganization Proceedings are
pending, the Debtors are prohibited from making any
payments of prepetition obligations owing as of the petition
date, except as permitted by the Bankruptcy Court.
Furthermore, the Debtors will not be able to borrow additional
funds under any of their prepetition credit arrangements.
Since the beginning of the Reorganization
Proceedings certain of the Debtors have consummated an
agreement, as amended, with two commercial banks with respect
to a $25 million letter of credit facility. Pursuant to the
terms of such "New Letter of Credit Agreement," upon issuance of
a letter of credit, the applicable Debtors will deposit with the
issuing bank an amount of cash equal to the stated
amount of the letter of credit. At August 31, 1994, $2,985,000
of letters of credit were outstanding under this
agreement. Since the beginning of the Reorganization
Proceedings certain of the Debtors have also consummated an
agreement with the lenders pursuant to which the lenders agree
to renew letters of credit issued under the Working Capital
Agreement that were outstanding at the time of filing of the
petitions for reorganization (the "Replacement Letter of
Agreement"). To the extent that the letters of credit under the
Replacement Letter of Agreement ($17,549,000 outstanding at
August 31, 1994) are renewed during the Reorganization
Proceedings, these Debtors have agreed to reimburse the issuing
bank for any draws under such letters of credit, which
obligation shall be entitled to an administrative expense claim
under the Bankruptcy Code. In addition, the obligations of
the Debtors under such Replacement Letter of Credit
Agreement shall continue to be secured by the collateral which
secures the Debtors' obligations under the Bank Credit
Agreement and the Working Capital Agreement. The Bankruptcy
Court approved the Debtors' entering into the New Letter of
Credit Agreement in May 1990. The New Letter of Credit Agreement
currently terminates on June 30, 1995.
For further discussion on the background and
status of the Reorganization Proceedings see Note 2 of Notes
to Consolidated Financial Statements.
A substantial controversy exists with regard to
federal income taxes allegedly owed by the Company. Proofs of
claim have been filed by the Internal Revenue Service
in the amounts of $110,560,883 with respect to fiscal years
ended August 31, 1980 and August 31, 1983 through August 31,
1987, $31,468,189 with respect to fiscal years ended May 31, 1988
(nine months) and May 31, 1989 and $44,837,693 with
respect to fiscal years ended May 31, 1990 and May 31, 1991.
Objections to the proofs of claim have been filed by
the Company and the various issues are being litigated in the
Bankruptcy Court. The Company believes that such
proofs of claim are substantially without merit and intends to
defend such claims against the Company vigorously.
LIQUIDITY
The Debtors did not commence the Reorganization
Proceedings as a result of their inability to fund normal
operating liabilities either on a short-term or long-term
basis; therefore, the following discussion of liquidity
presents a somewhat unusual position compared to that normally
associated with many bankruptcy filings.
The Company normally uses its cash flows for
three principal purposes: (1) for working capital requirements
(including the financing of home sales); (2) for
capital expenditures for business expansion, productivity
improvement, cost reduction and replacements necessary to
maintain the business; and (3) to provide a return to
lenders and shareholders.
Working capital is required to fund adequate
levels of inventories and accounts receivable, including
instalment notes receivable arising from the homebuilding
business. At August 31, 1994, the Company had free cash
balances and short-term investments of approximately $143 million
available for operations. On July 1, 1992, pursuant to approval
by the Bankruptcy Court, instalment notes receivable
having a gross amount of $638,078,000 were sold by Mid-State
to Mid-State Trust III ("Trust III"), a business trust
established under the laws of Delaware, in exchange for the
net proceeds from the public issuance of $249,864,000 of
Asset Backed Notes by Trust III which bear an interest rate of
7 5/8%. Net proceeds were utilized to repay in full all
outstanding indebtedness due under the Mid-State credit facility
with the excess cash to be used to fund the
ongoing operations of the Debtors. Under the Mid-State
Trust II ("Trust II") indenture for the Mortgage-Backed Notes,
if certain criteria as to performance of the pledged instalment
notes are met, Trust II is allowed to make
distributions of cash to Mid-State Homes, its sole beneficial
owner, to the extent that cash collections on such instalment
notes exceed Trust II's cash expenditures for its operating
expenses, interest expense and mandatory debt payments on the
Mortgage-Backed Notes. In addition to the performance based
distribution, the indenture permits distribution of
additional excess funds, if any, provided such distributions
are consented to by the guarantor of the
Mortgage-Backed Notes. The guarantor approved additional
distributions of approximately $20.6 million on July 1, 1994 and
$13.9 million for the October 1, 1994 distribution. During the
period from formation of Trust II through October 1, 1994 such
distributions amounted to $98.8 million.
At the present time, 97% of all home sales made by
Jim Walter Homes are for credit. Jim Walter Homes obtains funds
necessary to operate its home construction business
primarily using cash flow from operations of the Company. The
Company believes that, under present operating
conditions, sufficient cash flow will be generated, together
with some use of free cash balances, to finance home sales,to
make planned capital expenditures and to meet all operating
needs, including any cash deposits to collateralize
letters of credit. There are no material commitments for
capital expenditures; however, the Debtors' business plans for
1995 include capital expenditures of approximately $72 million
for the balance of the fiscal year ending May 31,
1995. The Reorganization Proceedings have had no adverse
impact on capital expenditures.
Greater cash flow from operations in future
years is dependent upon the Company's ability to grow and to
improve its profitability. The effects that the
Reorganization Proceedings will have on the levels of cash flow
generated by future operations are unknown at this time.
<TABLE>
<CAPTION>
EXHIBIT 3.C.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
1994 PROJECTED FOR THE YEARS ENDING MAY 31,
ACTUAL 1995 1996 1997 1998 1999
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Sales and Revenues:
Homebuilding and
related financing $ 424,530 $ 457,704 $473,346 $ 494,099 $ 519,296 546,071
Building materials 56,111 60,840 66,073 66,986 67,943 68,486
Industrial products 180,615 203,876 221,858 243,353 255,004 272,462
Water and waste water transmission
products 345,136 375,839 401,662 429,137 452,935 476,799
Natural resources 319,410 364,882 382,404 399,370 410,179 405,589
Corporate 2,722 5,461 5,511 6,814 9,236 12,833
Total $1,328,524 $1,468,602 $1,550,854 $1,639,759 $1,714,593 $1,782,240
Earnings Before Interest and Taxes (EBIT):
Homebuilding and related financing $ 230,782 $ 237,349 $246,110 $ 257,208 $ 266,696 $ 277,728
Building materials 2,074 2,660 5,451 5,808 6,526 7,294
Industrial products 11,873 13,064 19,806 24,080 29,117 31,239
Water and waste water transmission
products 25,545 30,636 38,987 47,335 51,381 55,280
Natural resources (1,175) 36,841 46,579 58,649 63,922 68,232
Corporate (24,233) (22,634) (22,349) (20,719) (15,970) (12,549)
Total $ 244,866 $ 297,916 $ 334,584 $ 372,361 $ 401,672 $ 427,224
</TABLE>
<TABLE>
<CAPTION>
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
1994 PROJECTED FOR THE YEARS ENDING MAY 31,
ACTUAL 1995 1996 1997 1998 1999
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Depreciation, Depletion and Amortization(a):
Homebuilding and related financing$ 3,380 $ 3,420 $ 3,520 $ 3,620 $ 3,720 $ 3,820
Building materials 1,035 1,234 1,467 1,518 1,610 1,643
Industrial products 8,205 9,060 10,228 11,230 12,082 12,900
Water and waste water transmission products 12,878 13,317 14,690 15,442 16,43717,731
Natural resources 42,433 44,880 46,987 47,183 48,305 47,085
Corporate 1,025 1,215 1,247 1,304 1,321 1,353
Total $68,956 $73,126 $78,139 $80,297 $83,475 $84,532
Capital Expenditures:
Homebuilding and related financing$ 3,210 $ 6,156 $ 5,000 $ 5,000 $ 5,000 $ 5,000
Building materials 1,115 2,310 1,540 929 807 520
Industrial products 9,752 19,670 15,697 13,526 11,456 13,240
Water and waste water transmission products 13,613 19,340 19,170 19,777 20,60021,775
Natural resources 40,224 47,197 46,159 53,731 28,597 33,176
Corporate 1,917 1,730 905 580 420 355
Total $69,831 $96,403 $88,471 $93,543 $66,880 $74,066
(a) Excludes Excess of Purchase Price
Depreciation of: $ 2,079 $ 4,049 $ 4,368 $ 4,498 $ 4,439 $ 4,889
</TABLE>
<PAGE>
Exhibit T3E3
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
<TABLE>
<S> <C>
Chapter 11
In re Jointly Administered
HILLSBOROUGH HOLDINGS
CORPORATION, Case No. 89-9715-8P1
BEST INSURORS, INC., Case No. 89-9740-8P1
BEST INSURORS OF MISSISSIPPI, INC., Case No. 89-9737-8P1
COAST TO COAST ADVERTISING, INC., Case No. 89-9727-8P1
COMPUTER HOLDINGS CORPORATION, Case No. 89-9724-8P1
DIXIE BUILDING SUPPLIES, INC., Case No. 89-9741-8P1
HAMER HOLDINGS CORPORATION, Case No. 89-9735-8P1
HAMER PROPERTIES, INC., Case No. 89-9739-8P1
HOMES HOLDINGS CORPORATION, Case No. 89-9742-8P1
JIM WALTER COMPUTER SERVICES, INC., Case No. 89-9723 8P1
JIM WALTER HOMES, INC., Case No. 89-9746-8P1
JIM WALTER INSURANCE SERVICES, Case No. 89-9731-8P1
INC., Case No. 89-9738-8P1
JIM WALTER RESOURCES, INC.,
JIM WALTER WINDOW COMPONENTS,
INC., Case No. 89-9716-8P1
JW ALUMINUM COMPANY, Case No. 89-9718-8P1
JW RESOURCES, INC., Case No. 90-11997-8P1
JW RESOURCES HOLDINGS
CORPORATION, Case No. 89-9719-8P1
J.W.I. HOLDINGS CORPORATION, Case No. 89-9721-8P1
J.W. WALTER, INC., Case No. 89-9717-8P1
JW WINDOW COMPONENTS, INC., Case No. 89-9732-8P1
LAND HOLDINGS CORPORATION, Case No. 89-9720-8P1
MID-STATE HOMES, INC., Case No. 89-9725-8P1
MID-STATE HOLDINGS CORPORATION, Case No. 89-9726-8P1
RAILROAD HOLDINGS CORPORATION, Case No. 89-9733-8P1
SLOSS INDUSTRIES CORPORATION, Case No. 89-9743-8P1
SOUTHERN PRECISION CORPORATION, Case No. 89-9729-8P1
UNITED LAND CORPORATION, Case No. 89-9730-8P1
UNITED STATES PIPE AND FOUNDRY
COMPANY, Case No. 89-9744-8P1
U.S. PIPE REALTY, INC., Case No. 89-9734-8P1
VESTAL MANUFACTURING COMPANY, Case No. 89-9728-8P1
WALTER HOME IMPROVEMENT, INC., Case No. 89-9722-8P1
WALTER INDUSTRIES, INC. and Case No. 89-9745-8P1
WALTER LAND COMPANY Case No. 89-9736-8P1
Debtors.
</TABLE>
NOTICE OF ORDER (A) APPROVING DEBTORS' DISCLOSURE STATEMENT AND
CREDITORS' DISCLOSURE STATEMENT, (B) ESTABLISHING PROCEDURES AND
DEADLINES FOR VOTING ON AND OBJECTING TO THE DEBTORS' JOINT PLAN
OF REORGANIZATION AND THE CREDITORS' JOINT PLAN OF
REORGANIZATION, (C) FIXING THE DATE OF THE INITIAL CONFIRMATION
HEARING AND OF THE SCHEDULING OF RELATED HEARINGS, AND (D)
APPROVING RELATED RELIEF
TO ALL CREDITORS, EQUITY SECURITY HOLDERS AND PARTIES-IN-
INTEREST:
PLEASE TAKE NOTICE that the United States Bankruptcy Court
for the Middle District of Florida (Tampa Division) (the
"Bankruptcy Court") has approved the Debtors' Fifth Amended
Disclosure Statement dated as of July 25, 1994 (the "Debtors'
Disclosure Statement") relating to the Debtors' Fifth Amended
Joint Plan of Reorganization dated as of July 25, 1994 (the
"Debtors' Plan"), and the Disclosure Statement for Creditors'
Plan dated as of August 1, 1994 (the "Creditors' Disclosure
Statement") relating to the Creditors' Joint Plan of
Reorganization dated as of August 1, 1994 (the "Creditors'
Plan"), as containing adequate information within the meaning of
Section 1125 of Title 11 of the United States Code (the
"Bankruptcy Code").
PLEASE TAKE FURTHER NOTICE that separate ballots for the
purpose of voting to accept or reject the Debtors' Plan and/or
the Creditors' Plan will be transmitted to those holders of
claims and interests entitled to vote thereon. Creditors and
equity security holders whose votes are solicited with respect
to either Plan may vote to accept both Plans, may vote to reject
both Plans, or may vote to accept one Plan and reject the other
Plan.
PLEASE TAKE FURTHER NOTICE that each ballot with respect to
either the Debtors' Plan or the Creditors' Plan will allow the
voter to indicate its preference as between the Debtors' Plan
and the Creditors' Plan. You may indicate a preference between
Plans even if you vote in favor of both Plans.
PLEASE TAKE FURTHER NOTICE that each ballot cast to accept
or reject the Debtors' Plan, and each ballot cast to accept or
reject the Creditors' Plan, by the beneficial owner of a claim
against or interest in any Debtor which is also the record
holder of such claim or interest must be properly completed,
executed, and mailed or delivered to the Balloting Agent at the
address indicated in the voting instructions accompanying such
ballot so that the ballot is actually received no later than
5:00 p.m. Eastern Time, on September 23, 1994 (the "Voting
Deadline"). If you are the beneficial owner of a claim against
or interest in any Debtor which is held of record by a bank,
broker or other record nominee, you must properly complete and
execute each separate ballot transmitted to you, and mail or
deliver such ballot to your record holder nominee at the address
indicated in the voting instructions accompanying such ballot,
so that the ballot is actually received by your record holder
nominee no later than 5:00 p.m. Eastern Time, on September 19,
1994 (the "Beneficial Owners Voting Deadline"). If any ballot
either is not properly completed or is not actually received by
the Voting Deadline or the Beneficial Owners Voting Deadline, as
may be applicable, such untimely ballot will not be counted as a
vote to accept or reject the Plan to which such ballot relates,
nor will any preference for one Plan over the other Plan that is
indicated on such ballot be counted.
PLEASE TAKE FURTHER NOTICE that the holders of Series B & C
Senior Note Claims (Class S-6) under the Debtors' Plan, and the
holders of Other Unsecured Claims (Class U-3), Series B & C
Senior Note Claims (Class S-6), Subordinated Note Claims
(Classes U-4, U-5 and U-6) and Old Common Stock Interests
(Class E-1) under the Creditors' Plan may exercise certain
elections. These elections are located on the ballots
transmitted to such creditors and equity security holders to
accept or reject the Debtors' Plan or the Creditors' Plan, as is
applicable. If the applicable election is not properly completed
on the ballot, it will be treated as if the election had not
been made.
PLEASE TAKE FURTHER NOTICE that any objection or challenge
to the vote cast by any holder of a claim or interest on the
Debtors' Plan or the Creditors' Plan (a "Voting Objection") must
be in writing and (a) state the name and address of the
objecting party and the amount of its claim or the nature of its
interest in the Debtors' Chapter 11 cases, (b) state with
particularity the basis and nature of the objection or challenge
and (c) be filed with the Clerk of the Bankruptcy Court,
4921 Memorial Highway, Tampa, Florida 33634, together with proof
of service, and served on the following parties (the "Notice
Parties") at the following addresses, so as to be actually
received by each of them on or before 5:00 p.m. Eastern Time on
October 7, 1994 (the "Voting Objection Deadline"):
<TABLE>
<S> <C>
Counsel for the Official Counsel for Lehman
Brothers
Bondholders' Committee Inc.
Stroock & Stroock & Lavan Paul, Weiss, Rifkind,
Seven Hanover Square Wharton &
New York, New York 10004-2696 Garrison
Attn: Daniel H. Golden, Esq. 1285 Avenue of the
Americas
New York, New York
10019-6064
Counsel for the Official Attn: Robert D. Drain,
Esq.
Committee
of General Unsecured Creditors and
Jones, Day, Reavis & Pogue
599 Lexington Avenue Hill, Ward & Henderson
New York, New York 10016 Suite 3700 Barnett Plaza
Attn: Marc S. Kirschner, Esq. 101 East Kennedy Boulevard
Tampa, Florida 33602
Counsel for Apollo Advisors, L.P. Attn: Douglas McClurg,
Esq.
Akin, Gump, Strauss, Hauer &
Feld, Counsel for the Debtors
L.L.P. Kaye, Scholer, Fierman,
Hays
65 East 55th Street & Handler
33rd Floor 425 Park Avenue
New York, New York 10022 New York, New York 10022
Attn: Ellen R. Werther, Esq. Attn: Andrew A. Kress,
Esq.
Steven M. Pesner, P.C.
and
and
Stichter, Riedel, Blain &
Stutman, Treister & Glatt Prosser, P.A.
3699 Wilshire Boulevard 110 East Madison Street
Suite 900 Suite 200
Los Angeles, CA 90010 Tampa, Florida 33602
Attn: Kenneth Klee, Esq. Attn: Don M. Stichter,
Esq.
Isaac Pachulski, Esq.
Counsel for Kohlberg
Kravis
Counsel for the Ad Hoc Committee Roberts & Co.
of Carlton, Fields, Ward,
Pre-LBO Bondholders Emmanuel, Smith &
Cutler,
Marcus Montgomery Wolfson P.C. P.A.
53 Wall Street One Harbour Place
New York, New York 10005 P.O. Box 3239
Attn: Peter D. Wolfson, Esq. Tampa, Florida 33601
Sara L. Chenetz, Esq. Attn: Leonard Gilbert,
Esq.
Office of the United States
Trustee
Assistant U.S. Trustee
Suite 110
4919 Memorial Highway
Tampa, Florida 33634
Attn: Cynthia P. Burnette, Esq.
</TABLE>
Any Voting Objection not filed and served as set forth above
shall be deemed waived and shall not be considered by the
Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE that commencing on October
17, 1994, and continuing day to day until concluded, hearings
shall be held before the Honorable Alexander L. Paskay, Chief
Bankruptcy Judge at 9:00 a.m. at the United States Bankruptcy
Court, 4921 Memorial Highway, Tampa, Florida 33634 to
consider the following confirmation-related matters:
a. the issues raised by the Debtors in Adversary
Proceeding No. 94-278, which action the Court has ruled
should be deemed to be a contested matter governed by
Bankruptcy Rule 9014, and the issues raised in any
response and/or motion filed by any of the defendants
thereto;
b. the application by the Proponents of the
Creditors' Plan seeking approval of the Veil Piercing
Settlement Agreement annexed as Exhibit 3A or 3C, as
applicable, to the Creditors' Plan, which, among other
things, provides for the settlement of all Veil Piercing
Claims, as defined therein, including, inter alia, all
claims asserted in Adversary Proceeding Numbers 90-0003 and
90-0004 in the Debtors' Chapter 11 cases, and any related
application or response filed by any party-in-interest
thereto; and
c. any Voting Objection properly filed on or before the
Voting Objection Deadline.
PLEASE TAKE FURTHER NOTICE that pursuant to Rule
3020(b) of the Federal Rules of Bankruptcy Procedure (the
"Bankruptcy Rules"), November 10, 1994 is fixed as the last
day for filing and serving written objections to
confirmation of the Debtors' Plan and/or the Creditors' Plan
(a "Confirmation Objection"). Any Confirmation Objection
must be in writing and (a) state the name and address of the
objecting party and the amount of its claim or the nature of
its interest in the Debtors' Chapter 11 cases, (b) state
with particularity the basis and nature of the objection
and (c) be filed with the Clerk of the Bankruptcy Court, together
with proof of service, and served on the Notice Parties, so as to
be actually received by each of them on or before 5:00 p.m.
Eastern Time on November 10, 1994. Any Confirmation Objection not
filed and served as set forth above shall be deemed waived and
shall not be considered by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE that the initial hearing to
consider confirmation of the Debtors' Plan and the Creditors'
Plan will be held before the Honorable Alexander L. Paskay, Chief
Bankruptcy Judge, on November 16, 1994 at 1:30 p.m. at the United
States Bankruptcy Court, 4921 Memorial Highway, Tampa, Florida
33634 (the "Initial Confirmation Hearing") at which time the
Court will conduct only a status conference to schedule the date
on which the hearing on the confirmation of the Debtors' Plan and
the Creditors' Plan will continue, and to consider other issues
appropriate for consideration at such status conference. The
Initial Confirmation Hearing may be adjourned from time to time
without further notice other than an announcement made at the
Initial Confirmation Hearing or at any adjourned hearing thereon,
and the continued confirmation hearing will be held without any
further notice other than as provided at the Initial Confirmation
Hearing.
PLEASE TAKE FURTHER NOTICE that if you are the holder of a
Disputed Claim (as set forth below) you will not be allowed to
vote to accept or reject either the Debtors' Plan or the
Creditors' Plan. However, if you wish to vote on the Debtors'
Plan and/or the Creditors' Plan, you must file a motion pursuant
to Bankruptcy Rule 3018(a) (the "Allowance Motion") with the
Bankruptcy Court requesting that the Bankruptcy Court temporarily
allow your claim for the purpose of voting to accept or reject
such Plans. If your claim (a) is listed on the Proof of Claim
Register maintained by the Clerk of the Court without a dollar
amount (reflecting that the claim filed specified no dollar
amount) or in a zero dollar amount (reflecting that the claim was
filed as contingent, disputed or unliquidated), or (b) has been
objected to by any or all of the Debtors, your claim is a
Disputed Claim. If your claim is a Disputed Claim on or prior to
July 13, 1994, the Allowance Motion must be filed with the Clerk
of the Bankruptcy Court, 4921 Memorial Highway, Tampa, Florida
33634, together with proof of service, and served on the Notice
Parties so as to be received by each of them on or before
September 14, 1994. If the Debtors file an objection to your
claim after July 13, 1994 but prior to the Voting Deadline, your
Allowance Motion must be filed and served on the Notice Parties
not later than 30 days after service of the Debtors' objection.
Dated: at Tampa, Florida on August 2, 1994.
BY THE COURT
Clerk, U.S. Bankruptcy Court
4921 Memorial Highway
Suite 200
Tampa, FL 33634
<PAGE>
Exhibit T3E4
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
In re In Proceedings For
A Reorganization
Under Chapter 11
Hillsborough Holdings Corporation No. 89-9715-8P1
Best Insurors, Inc. No. 89-9740-8P1
Best Insurors Of Mississippi, Inc. No. 89-9737-8P1
Coast To Coast Advertising, Inc. No. 89-9727-8P1
Computer Holdings Corporation No. 89-9724-8P1
Dixie Building Supplies, Inc. No. 89-9741-8P1
Hamer Holdings Corporation No. 89-9735-8P1
Hamer Properties, Inc. No. 89-9739-8P1
Homes Holding Corporation No. 89-9742-8P1
Jim Walter Computer Services, Inc. No. 89-9723-8P1
Jim Walter Homes, Inc. No. 89-9746-8P1
Jim Walter Insurance Services, Inc. No. 89-9731-8P1
Jim Walter Resources, Inc. No. 89-9738-8P1
Jim Walter Window Components, Inc. No. 89-9716-8P1
JW Aluminum Company No. 89-9718-8P1
JW Resources, Inc. No. 90-11997-8P1
JW Resources Holdings Corporation No. 89-9719-8P1
J.W.I. Holdings Corporation No. 89-9721-8P1
J.W. Walter, Inc. No. 89-9717-8P1
JW Window Components, Inc. No. 89-9732-8P1
Land Holdings Corporation No. 89-9720-8P1
Mid-State Homes, Inc. No. 89-9725-8P1
Mid-State Holdings Corporation No. 89-9726-8P1
Railroad Holdings Corporation No. 89-9733-8P1
Sloss Industries Corporation No. 89-9743-8P1
Southern Precision Corporation No. 89-9729-8P1
United Land Corporation No. 89-9730-8P1
United States Pipe And Foundry CompanyNo. 89-9744-8P1
U.S. Pipe Realty, Inc. No. 89-9734-8P1
Vestal Manufacturing Company No. 89-9728-8P1
Walter Home Improvement, Inc. No. 89-9722-8P1
Walter Industries, Inc. No. 89-9745-8P1
Walter Land Company, No. 89-9736-8P1
(Jointly Administered)
Debtors.
NOTICE OF ORDER (A) APPROVING DISCLOSURE STATEMENT SUPPLEMENT
RESPECTING CONSENSUAL PLAN, (B) ESTABLISHING PROCEDURES AND
DEADLINES REGARDING ACCEPTANCES AND REJECTIONS OF, AND OBJECTIONS
TO, THE CONSENSUAL PLAN AND OBJECTIONS TO THE VEIL PIERCING
SETTLEMENT, (C) FIXING THE DATE OF THE HEARING ON CONFIRMATION OF
THE CONSENSUAL PLAN AND ON THE VEIL PIERCING SETTLEMENT AND (D)
APPROVING RELATED RELIEF
TO: ALL CREDITORS, EQUITY SECURITY HOLDERS AND PARTIES IN
INTEREST:
PLEASE TAKE NOTICE that the United States Bankruptcy Court
for the Middle District of Florida, Tampa Division (the
"Bankruptcy Court") has approved the "Supplement to Disclosure
Statement for Amended Joint Plan of Reorganization Dated As Of
December 9, 1994" (the "Disclosure Statement Supplement")
relating to the Amended Joint Plan of Reorganization Dated As Of
December 9, 1994 (the "Consensual Plan"), as containing adequate
information within the meaning of Section 1125 of Title 11 of the
United States Code (the "Bankruptcy Code"). The Consensual Plan
is a modification of the "Creditors' Joint Plan of Reorganization
Dated As Of August 1, 1994" (the "Creditors' Plan"). Acceptances
and rejections of the Creditors' Plan were previously solicited
pursuant to prior order of the Bankruptcy Court, which approved
the "Disclosure Statement for Creditors' Plan Dated As Of
August 1, 1994" (the "Creditors' Disclosure Statement").
PLEASE TAKE FURTHER NOTICE that by Order dated December 15,
1994 (the "Resolicitation Order"), the Bankruptcy Court has
ordered that (i) each holder of a claim against or interest in
any Debtor as of July 13, 1994, the record date previously
established by the Bankruptcy Court with respect to voting on the
Creditors' Plan (a "Record Date Holder") in Classes S-1
(Revolving Credit Bank Claims)<F1>, S-2 (Working Capital Bank
Claims), S-6 (Series B & C Senior Note Claims), U-3A, U-3DD,
U-3U, U-3Z, U-3FF, U-3EE, U-3K (the foregoing U-3 Classes
consisting of Other Unsecured Claims against certain Debtors),
U-4 (Senior Subordinated Note Claims), U-5 (17% Subordinated Note
Claims), U-6 (Pre-LBO Debenture Claims) and E-1 (Old Common Stock
Interests in Hillsborough) (collectively, the "Resolicitation
Classes"), that timely voted to accept or to reject the
Creditors' Plan (a "Qualified Resolicitation Holder") shall have
the opportunity to change the vote such Holder cast on the
Creditors' Plan, and to have the revised vote applied in respect
of the Consensual Plan; (ii) each Qualified Resolicitation Holder
which voted to accept or reject the Creditors' Plan which does
not complete, execute and return a vote change certification
prior to the deadline which is set forth later in this Notice
shall be deemed to have voted to accept or reject the Consensual
Plan in the same way as it previously voted to accept or reject
the Creditors' Plan; (iii) each Record Date Holder of a claim or
interest in any of the Resolicitation Classes which was entitled
to but did not cast a timely vote to either accept or reject the
Creditors' Plan shall not be provided with the opportunity to
vote on the Consensual Plan; (iv) each holder of a claim or
interest in any of the Resolicitation Classes who was not a
holder of such claim or interest as of July 13, 1994 shall not be
entitled to vote with respect to the Consensual Plan; and
(v) each Record Date Holder of a claim in any of the U-3 Classes,
other than those U-3 Classes which are included within the
Resolicitation Classes, which previously voted to accept or
reject the Creditors' Plan, is not entitled to change its prior
vote, and the vote as previously cast will be deemed to have been
cast on the Consensual Plan in the same manner as cast on the
Creditors' Plan. Separate forms of Vote Change Certification for
the purpose of enabling Qualified Resolicitation Holders to
change their prior acceptances or rejections of the Creditors'
Plan with respect to the modification of the Creditors' Plan
contained in the Consensual Plan, are being transmitted to
Qualified Resolicitation Holders. The foregoing is without
prejudice to the right of any party in interest to contend that
the effect on Classes S-1, S-2 and S-6 of the modification of the
Creditors' Plan contained in the Consensual Plan is sufficiently
de minimus that, having accepted the Creditors' Plan, those three
classes should be deemed to have accepted the Consensual Plan.
[FN]
<F1>Capitalized terms not otherwise defined herein have the
meanings set forth in the Consensual Plan.
PLEASE TAKE FURTHER NOTICE that holders of claims in Class
U-7 (Veil Piercing Claimants)<F2>, who were not previously given
an
opportunity to vote to accept or reject the Creditors' Plan, are
being given an opportunity to vote to accept or reject the
Consensual Plan. Ballots on which Class U-7 Holders (as defined
below) may vote to accept or reject the Consensual Plan are being
transmitted to such Holders. The foregoing is without prejudice
to the right of any party in interest to contend that Class U-7
is not impaired under, and is therefore deemed to have accepted,
the Consensual Plan, and that there is no need to solicit the
vote of Class U-7 on the Consensual Plan.
[FN]
<F2> The term "Veil Piercing Claimant" has the meaning set forth
in the Second Amended and Restated Veil Piercing Settlement
Agreement (the "Amended Veil Piercing Settlement Agreement")
dated as of November 22, 1994 and refers generally to The Celotex
Corporation and to any other person or entity who may have
asserted or may assert a claim against any Debtor based upon
various theories of liability for claims against The Celotex
Corporation, including theories of piercing the corporate veil
between The Celotex Corporation and any Debtor or its
predecessor.
PLEASE TAKE FURTHER NOTICE that if you are the holder of a
claim in Class U-7 (i.e., a Veil Piercing Claimant), you should
have received two additional notices with this notice: (a) notice
of the bar date for filing proofs of Class U-7 claims against the
Debtors and (b) notice of the proposed settlement of a class
proof of claim filed against the Debtors on behalf of all of the
Veil Piercing Claimants.
PLEASE TAKE FURTHER NOTICE that pursuant to the
Resolicitation Order, each Holder of a claim in Class U-7 (Veil
Piercing Claimants) (a "Class U-7 Holder") is deemed to have, for
purposes of voting on the Consensual Plan only, a provisionally
allowed claim against each Debtor in the amount of one dollar,
with the result that each Class U-7 Holder may cast a vote to
accept or reject the Consensual Plan in the amount of one dollar
per Holder. The foregoing temporary allowance is without
prejudice to the amount of any distribution which any Class U-7
Holder may ultimately be entitled to receive out of the
settlement fund that will be created under the Amended Veil
Piercing Settlement Agreement, if the Consensual Plan and that
Agreement become effective.
PLEASE TAKE FURTHER NOTICE that, except for (i) the
opportunity accorded to each Qualified Resolicitation Holder to
change its prior acceptance or rejection of the Creditors' Plan
and have such changed vote count for purposes of accepting or
rejecting the Consensual Plan and (ii) voting on the Consensual
Plan by Class U-7 Holders, no holder of any claim or interest is
entitled to change a prior vote or to cast a new ballot with
respect to the Consensual Plan, which is a modification of the
Creditors' Plan. Accordingly, Vote Change Certification forms are
being transmitted only to Qualified Resolicitation Holders, and
ballots for voting to accept or reject the Consensual Plan are
being transmitted only to holders of claims in Class U-7.
PLEASE TAKE FURTHER NOTICE that each holder of a Senior
Subordinated Note Claim (Class U-4) who previously elected on the
Subordinated Note Claim Election Form to receive Qualified
Securities under the Creditors' Plan may exercise an additional
election under the Consensual Plan with respect to the form of
the distribution to be received by such holder under the
Consensual Plan (the "Additional Election"). An Additional
Election may be exercised only by a Class U-4 creditor who
exercised the prior Subordinated Note Claim Election, which is a
predicate for making the Additional Election ("Qualified U-4
Holder"), and only by timely completing, executing and returning
the Class U-4 Exchange Election form (the "Additional Election
Form") which is being transmitted to Qualified U-4 Holders. Each
Additional Election Form must contain a certification that the
signatory or the holder for whom it acts is a Qualified U-4
Holder. Under the Consensual Plan, any election previously
exercised by a Class U-4 claim holder under the Creditors' Plan
will remain effective whether or not such claim holder exercises
an Additional Election.
PLEASE TAKE FURTHER NOTICE that each Vote Change
Certification to change a prior vote to accept or reject the
Creditors' Plan for purposes of the Consensual Plan, and each
Additional Election Form to exercise an Additional Election, by
the beneficial owner of a claim against or interest in any Debtor
which is also the record holder of such claim or interest, must
be properly completed, executed, mailed and delivered to Donlin,
Recano & Company, Inc. (the "Balloting Agent") at the address
indicated in the instructions accompanying such Vote Change
Certification or the Additional Election Form, so that the Vote
Change Certification and/or the Additional Election Form is
actually received no later than 5:00 p.m., Eastern Time, on
January 24, 1995 (the "Vote Change/Additional Election
Deadline"). If you are the beneficial owner of a claim against or
interest in any Debtor which is held of record by a bank, broker
or other record nominee (a "Record Holder Nominee"), then in
order to have a Vote Change Certification or an Additional
Election Form be counted, you must properly complete and execute
each separate Vote Change Certification and/or each Additional
Election Form transmitted to you, as may be applicable, and mail
and deliver such Vote Change Certification and/or Additional
Election Form to your Record Holder Nominee at the address
indicated in the instructions accompanying such Vote Change
Certification and/or Additional Election Form, so that the Vote
Change Certification and/or Additional Election Form is actually
received by your Record Holder Nominee no later than 5:00 p.m.,
Eastern Time, on January 19, 1995 (the "Beneficial Owner Vote
Change/Additional Election Deadline"). If any Vote Change
Certification either is not properly completed or is not actually
received by the Vote Change/Additional Election Deadline or the
Beneficial Owner Vote Change/Additional Election Deadline, as may
be applicable, such Vote Change Certification will not be counted
as a change of a prior vote to accept or reject the Creditors'
Plan, and the holder of a claim or interest who submitted such
untimely Vote Change Certification shall be deemed to have voted
to accept or reject the Consensual Plan in the same way as it
previously voted to accept or reject the Creditors' Plan. If any
Additional Election Form either is not properly completed or is
not actually received by the Vote Change/Additional Election
Deadline or the Beneficial Owner Vote Change/Additional Election
Deadline, as may be applicable, such Additional Election Form
will not be counted as making an Additional Election, and the
claim of the applicable holder will be treated under the
Consensual Plan as if such Additional Election had not been made.
PLEASE TAKE FURTHER NOTICE that each Class U-7 ballot cast
to accept or reject the Consensual Plan must be properly
completed, executed, mailed and delivered to the Balloting Agent
at the address indicated in the voting instructions accompanying
such ballot so that the ballot is actually received no later than
5:00 p.m., Eastern Time, on February 22, 1995 (the "Class U-7
Voting Deadline"). If any ballot either is not properly completed
or is not actually received by the Class U-7 Voting Deadline,
such untimely ballot will not be counted as a vote to accept or
reject the Consensual Plan.
PLEASE TAKE FURTHER NOTICE that the proponents of the
Consensual Plan ("Consensual Plan Proponents") have filed a
motion (the "Veil Piercing Settlement Motion") which seeks
approval of the Amended Veil Piercing Settlement Agreement, which
is annexed as Exhibit "3A" to the Consensual Plan. This proposed
settlement (the "Veil Piercing Settlement") pertains to present
and future claims by asbestos victims and others who assert
claims against The Celotex Corporation ("Celotex"), a
manufacturer of home building materials which is a former
affiliate of the Debtors and is itself a debtor in its own
chapter 11 case (the "Celotex Chapter 11 Case"), and which seek
to pierce the corporate veil between Celotex and its former
parent, Jim Walter Corporation ("JWC"). After a leveraged buyout
of JWC in 1987 (the "LBO"), Hillsborough Holdings Corporation
("HHC") emerged as the parent company of all of the former
subsidiaries of JWC, with the exception of Celotex, which HHC did
not retain. Veil Piercing Claimants have sought to assert
fraudulent conveyance claims against the Debtors and others based
on the LBO. By the Veil Piercing Settlement, the Consensual Plan
Proponents seek to settle the "Settlement Claims", which are
defined in the Amended Veil Piercing Settlement Agreement to
include all Veil Piercing Claims (present and future) and all
claims and demands (present or future) held or assertable by the
Veil Piercing Claimants based upon the LBO-Related Issues (each
as defined in the Amended Veil Piercing Settlement Agreement).
PLEASE TAKE FURTHER NOTICE that under the Amended Veil
Piercing Settlement Agreement and the Veil Piercing Settlement,
all Settlement Claims against the Debtors and the other Released
Parties (defined in the Amended Veil Piercing Settlement
Agreement) will be settled, satisfied, released and discharged in
exchange for the allowance of a claim against the Debtors in the
"Settlement Amount" (defined as $375 million plus, under certain
conditions, an additional amount of up to $15 million, as
calculated in the Amended Veil Piercing Settlement Agreement),
the satisfaction of $375 million of that allowed claim by a
combination of cash, New Senior Notes and New Common Stock, and,
to the extent that the Settlement Amount exceeds $375 million,
cash in the amount of such excess (not to exceed an additional
$15 million), all under the terms and conditions set forth in the
Amended Veil Piercing Settlement Agreement. All of the
consideration to be distributed on account of the Settlement
Claims will be distributed to the "Celotex Settlement Fund
Recipient", which is defined as an entity designated by order of
the Bankruptcy Court in the Celotex Chapter 11 Case (the "Celotex
Bankruptcy Court"), for the benefit of all Veil Piercing
Claimants. The Celotex Bankruptcy Court (not the Bankruptcy Court
presiding over the Hillsborough Debtors' chapter 11 cases) will
determine how, the amount, when and to whom the consideration
distributed on account of the Settlement Amount will be
distributed. The Amended Veil Piercing Settlement Agreement also
contains numerous provisions addressing other aspects of the
proposed settlement, including, among other things, the
registration, voting and transfer of New Common Stock distributed
to the Celotex Settlement Fund Recipient and the granting of
broad releases to the Released Parties (as defined therein). The
Consensual Plan provides for a broad release and injunction
protecting the Debtors, the other Released Parties and other
specified third parties from the Settlement Claims and other
claims related to the Debtors or their chapter 11 cases.
PLEASE TAKE FURTHER NOTICE that the foregoing is only a
brief summary of the terms of the Amended Veil Piercing
Settlement Agreement and is qualified in its entirety by the
terms of that Agreement, which shall control in the event that it
is approved by the Bankruptcy Court, and the Consensual Plan and
that Agreement become effective. A copy of the Veil Piercing
Settlement Motion, which more fully describes the proposed
settlement and the reasons why the Consensual Plan Proponents
believe that the proposed settlement is fair, equitable and
reasonable, is available for inspection during normal business
hours at the Office of the Clerk of the Bankruptcy Court, United
States Bankruptcy Court for the Middle District of Florida, Tampa
Division, 4921 Memorial Highway, Tampa, Florida 33634, and may be
obtained by sending a written request therefor to Walter
Industries, Inc. c/o Legal Department, 1500 N. Dale Mabry
Highway, Tampa, Florida 33607.
PLEASE TAKE FURTHER NOTICE that the Consensual Plan
Proponents will seek the entry of a single order both confirming
the Consensual Plan and approving the Amended Veil Piercing
Settlement Agreement at the hearing described later in this
Notice.
PLEASE TAKE FURTHER NOTICE that the Bankruptcy Court has
fixed the last day for filing and serving written objections to
confirmation of the Consensual Plan (a "Confirmation Objection")
and written objections to approval of the Amended Veil Piercing
Settlement Agreement (a "Veil Piercing Settlement Objection") as
follows:
1. Any Confirmation Objection and any Veil Piercing
Settlement Objection by any holder of a claim or interest
against any Debtor and any other party in interest, other
than the holder of a Class U-7 (Veil Piercing Claimants)
Claim (in its capacity as a Class U-7 Holder), must be filed
with the Clerk of the Bankruptcy Court, United States
Bankruptcy Court for the Middle District of Florida, Tampa
Division, 4921 Memorial Highway, Tampa, Florida 33634,
together with proof of service, and served on the parties
identified below (the "Notice Parties"), so as to be
actually received by each of them on or before 5:00 p.m.,
Eastern Time, on January 24, 1995.
<TABLE>
<CAPTION>
The Notice Parties on whom any Confirmation Objection and
any Veil Piercing Settlement Objection must be served are as
follows:
<S> <C>
Counsel for the Official Bondholders' Committee Counsel for
Apollo
Stroock & Stroock & Lavan Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
Seven Hanover Square 65 East 55th
Street, 33rd Floor
New York, New York 10004-2696 New York, New
York 10022
Attn: Daniel H. Golden, Esq. Attn: Steven
M. Pesner, P.C.
Counsel for the Official Committee of General and
Unsecured Creditors
Jones, Day, Reavis & Pogue Stutman,
Treister & Glatt
599 Lexington Avenue Professional
Corporation
New York, New York 10016 3699 Wilshire
Boulevard
Attn: Marc S. Kirschner, Esq. Suite 900
Los Angeles,
California 90010
Counsel for Lehman Brothers Inc. Attn: Kenneth
N. Klee, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison Isaac M.
Pachulski, Esq.
1285 Avenue of the Americas
New York, New York 10022 Counsel for
the Ad Hoc
Attn: Robert D. Drain, Esq. Committee of
Pre-LBO Bondholders
Marcus
Montgomery Wolfson P.C.
53 Wall Street
New York, New
York 10005
Attn: Peter D.
Wolfson, Esq.
Sara L.
Chenetz, Esq.
Counsel for the Debtors Counsel for
the KKR Proponents
Kaye, Scholer, Fierman, Hays & Handler Carlton,
Fields, Ward, Emmanuel,
425 Park Avenue Smith &
Cutler, P.A.
New York, New York 10022 One Harbour
Place
Attn:Michael J. Crames, Esq. P.O. Box 3239
Andrew A. Kress, Esq. Tampa, Florida
33602
Attn: Leonard
H. Gilbert, Esq.
and
Office of the
U.S. Trustee
Stichter, Riedel, Blain & Prosser, P.A. Assistant U.S.
Trustee
110 East Madison Street 4919 Memorial
Highway
Suite 200 Suite 110
Tampa, Florida 33602 Tampa, Florida
33634
Attn: Don M. Stichter, Esq. Attn: Sara L.
Kistler, Esq.
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York
Attn: Charles Koob, Esq.
</TABLE>
2. Any Confirmation Objection and any Veil Piercing
Settlement Objection by the Holder of a Class U-7 (Veil
Piercing Claimants) Claim (in its capacity as such) must be
filed with the Clerk of the Bankruptcy Court, United States
Bankruptcy Court for the Middle District of Florida, Tampa
Division, 4921 Memorial Highway, Tampa, Florida 33634,
together with proof of service, and served on the Notice
Parties, so as to be actually received by each of them on or
before 5:00 p.m., Eastern Time, on February 22, 1995.
Each Confirmation Objection and each Veil Piercing Settlement
Objection must be in writing and (a) state the name and address
of the objecting party and the amount of its claim or the nature
of its interest in the Debtors' chapter 11 cases and (b) state
with particularity the basis and nature of the objection. Any
Confirmation Objection and any Veil Piercing Settlement Objection
which is not filed and served in the time and manner set forth
above shall be deemed waived and shall not be considered by the
Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE that the hearing to consider
confirmation of the Consensual Plan and approval of the Amended
Veil Piercing Settlement Agreement will be held before the
Honorable Alexander L. Paskay, Chief Bankruptcy Judge, and shall
commence on March 1, 1995, at 9:00 a.m., and, if not completed on
that date, shall continue, on March 1 and March 2, 1995 until
completed, at the United States Bankruptcy Court, 4921 Memorial
Highway, Tampa, Florida 33634, Courtroom "C" (the
"Confirmation/Veil Piercing Settlement Hearing"). The
Confirmation/Veil Piercing Settlement Hearing may be adjourned
from time to time without further notice other than an
announcement made at the Confirmation/Veil Piercing Settlement
Hearing or at any adjourned hearing thereon, and any continued
Confirmation/Veil Piercing Settlement Hearing will be held
without any further notice other than as provided at the
Confirmation/Veil Piercing Settlement Hearing.
DATED: at Tampa, Florida, on December 15, 1994.
BY THE COURT
Clerk, United States Bankruptcy Court
4921 Memorial Highway
Suite 200
Tampa, FL 33634
<PAGE>
Exhibit T3E13
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
INDIVIDUAL VOTE CHANGE CERTIFICATION
FOR CLASS U-4 (SENIOR SUBORDINATED NOTE) CLAIMS
(BENEFICIAL OWNERS)
PLEASE READ THE FOLLOWING CAREFULLY. IF YOU WANT TO CHANGE
THE VOTE YOU PREVIOUSLY CAST ON THE CREDITORS' JOINT PLAN OF
REORGANIZATION FOR PURPOSES OF THE VOTE ON THE AMENDED JOINT
PLAN
OF REORGANIZATION DATED AS OF DECEMBER 9, 1994 (THE "CONSENSUAL
PLAN") PLEASE COMPLETE, SIGN, AND DATE THIS CERTIFICATION AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF
YOUR
CERTIFICATION HAS NOT BEEN RECEIVED BY DONLIN, RECANO & COMPANY,
INC. (THE "BALLOTING AGENT") BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 24, 1995, OR, IF YOU ARE NOT THE RECORD HOLDER,
BY
YOUR BROKER, BANK OR NOMINEE BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 19, 1995, IT WILL NOT BE COUNTED. IF YOU DO NOT
WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS' PLAN FOR
PURPOSES OF THE VOTE ON THE CONSENSUAL PLAN, YOU NEED DO
NOTHING.
The records of the Balloting Agent reflect that you
previously cast a timely ballot to either accept or reject the
"Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994" (the "Creditors' Plan") proposed by the statutorily
appointed Bondholders' Committee and Creditors' Committee,
Lehman
Brothers Inc., Apollo and the Ad Hoc Committee of Pre-LBO
Bondholders (collectively, the "Creditor Proponents").
The Creditor Proponents, the Debtors, and Kohlberg Kravis
Roberts & Co. ("KKR") have now settled their disputes and
reached
agreement on the terms of a joint plan of reorganization for the
Debtors which is based on a modification of the Creditors' Plan.
The terms of the settlement are embodied in the Amended Joint
Plan of Reorganization Dated As Of December 9, 1994 and exhibits
thereto (the "Consensual Plan"), which is jointly proposed by
the
Creditor Proponents, the Debtors and the KKR Proponents (as
defined in the Consensual Plan).
The Consensual Plan represents a modification of the
Creditors' Plan. The changes made to the Creditors' Plan which
are embodied in the Consensual Plan are reflected in the black-
lined version of the Consensual Plan which has been transmitted
to you and are further described in the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As Of
December 9, 1994 (the "Disclosure Statement Supplement"). On
December 15, 1994, the United States Bankruptcy Court for the
Middle District of Florida (Tampa Division) entered an order
approving the Disclosure Statement Supplement as containing
adequate information.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization,
is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
court.
IF YOU WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS'
PLAN, AND THEREFORE HAVE A DIFFERENT VOTE CAST WITH RESPECT TO
THE CONSENSUAL PLAN PLEASE CHECK THE APPROPRIATE BOX BELOW:
Item 1. Principal Amount of Senior Subordinated Notes As
To
Which Votes Were Cast and Vote Change Applies. This
Certification
is cast by or on behalf of the Beneficial Owner of the aggregate
principal amount of the Senior Subordinated Notes indicated
immediately below. The undersigned hereby certifies that the
undersigned was the beneficial holder of such Senior
Subordinated
Notes as of July 13, 1994 (the "Beneficial Owner"), and voted
the
claim represented thereby to accept or reject the Creditors'
Plan. Please fill out the following as may be appropriate:
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your Senior Subordinated Notes through an
account or accounts, $ in aggregate principal amount.
Item 2. Class U-4 (Senior Subordinated Note Claims)
ORIGINAL VOTE. The Beneficial Owner of the aggregate principal
amount of Senior Subordinated Notes set forth in Item 1
originally voted to (please check one box below):
Accept the Creditors' Plan / /
Reject the Creditors' Plan / /
Item 3. Class U-4 (Senior Subordinated Note Claims) VOTE
CHANGE. The Beneficial Owner of the aggregate principal amount
of
Senior Subordinated Notes set forth in Item 1 does not want the
vote it cast on or before September 23, 1994 on the Creditors'
Plan to be applied to the Consensual Plan, and wishes instead to
have the following vote applied to the Consensual Plan (please
check the appropriate box):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
Item 4. By signing this Certification, the undersigned
certifies that (i) the Beneficial Owner of the Senior
Subordinated Notes set forth in Item 1 has full power and
authority to vote to accept or reject the Consensual Plan,
(ii) such Beneficial Owner has voted to accept or reject the
Consensual Plan as set forth in Item 3 above, (iii) the vote
cast
by such Beneficial Owner in Item 3 above reflects a change from
the vote that was previously cast by the Beneficial Owner on the
Creditors' Plan, and (iv) this Certification has been executed
on
behalf of a single Beneficial Owner. The undersigned also
acknowledges that (i) the Beneficial Owner has been provided
with
a copy of the Disclosure Statement Supplement, including all
Exhibits thereto, and (ii) this Certification shall be counted
as
the undersigned's changed vote with respect to all Debtors
against which the undersigned has an Allowed Class U-4 Claim.
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
<PAGE>
INSTRUCTIONS FOR COMPLETING THE INDIVIDUAL VOTE CHANGE
CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for
the Beneficial Owner to indicate that it wishes to change from a
rejection to an acceptance, or an acceptance to a rejection, as
may be applicable, the vote such claimholder cast on the
Creditors' Plan, with the result that the changed vote shall be
utilized in respect of determining whether the Consensual Plan
has been accepted by the requisite amount and number of claims.
Accordingly, holders should not surrender certificates
representing their securities in connection with this
Certification, and the Balloting Agent will not accept delivery
of any such certificates tendered together with this
Certification.
Only a holder of Senior Subordinated Notes in whose name
such notes are held on the books of the Senior Subordinated
Indenture Trustee on July 13, 1994, the record date previously
established by the Bankruptcy Court, or any person who has
obtained a properly completed proxy from such person, and who
timely cast a vote to either accept or reject the Creditors'
Plan
has the opportunity to change the vote it originally cast on the
Creditors' Plan.
The Consensual Plan may be confirmed by the Bankruptcy
Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code.
If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of Senior Subordinated Notes and any and all other
holders of claims against and equity interests in the Debtors
(including those who abstain or reject such plan or are not
entitled to vote thereon) will be bound by the confirmed plan
and
the transactions contemplated thereby. If you do not want the
vote you cast on the Creditors' Plan to be deemed to have been
cast on the Consensual Plan, you must complete, sign and return
this Certification in the enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have your vote change count, you must complete, sign and
return this Certification so that it is received either (i) by
the Balloting Agent not later than 5:00 p.m., Eastern Time, on
January 24, 1995, or (ii) if you are not also the record holder,
by your broker, bank or nominee not later than 5:00 p.m.,
Eastern
Time, on January 19, 1995. Your original signature is required
on
the Certification in order for your vote change to count.
All capitalized terms used herein shall have the meanings
ascribed to them in the Consensual Plan.
To properly complete the Certification, you must follow the
procedures described below:
(a) make sure that the information required in Item 1
has been inserted; if you do not know the amount of your
claim, please contact either the Balloting Agent, or, if
you
are not the record holder, your broker, your bank, or your
nominee;
(b) indicate whether you had voted to accept or reject
the Creditors' Plan by checking the proper box in Item 2;
if
you do not remember how you voted, please contact either
the
Balloting Agent, or, if you are not the record holder, your
broker, bank or your nominee;
(c) indicate your changed vote to accept or reject the
Consensual Plan by checking the appropriate box in Item 3;
(d) if you are completing this Certification on behalf
of another entity, indicate your relationship with such
entity and the capacity in which you are signing;
(e) please use additional Certifications (available
from the Balloting Agent) if additional space is required
to
respond to any item on the Certification or use additional
sheets of papers clearly marked to indicate the applicable
item of the Certification (if you elect to use additional
Certifications because additional space is required, you
must complete and sign each such Certification);
(f) return your Certification using the enclosed
return
envelope. If you received a return envelope addressed
directly to the Balloting Agent, please mail or deliver
your
Certification so that it will be received by January 24,
1995. If you received a return envelope addressed to a
broker, bank or nominee, you must return your Certification
to such entity by January 19, 1995. Please allow additional
time; and
(g) if you hold claims or interests in more than one
class, and you previously cast a ballot to either accept or
reject the Creditors' Plan in more than one of those
classes, you may receive more than one Certification,
labeled for different classes of claims or interests. Your
changed vote will be counted in determining acceptance or
rejection of the Consensual Plan by a particular class only
if you fill out and return the Certification labeled for
that class in accordance with the instructions on that
Certification.
IF YOU WANT THE VOTE YOU ORIGINALLY CAST TO ACCEPT OR
REJECT
THE CREDITORS' PLAN TO BE COUNTED AS CAST IN DETERMINING
ACCEPTANCE OR REJECTION OF THE CONSENSUAL PLAN, YOU NEED NOT DO
ANYTHING.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR
CERTIFICATION, OR YOU DID NOT RECEIVE A COPY OF THE DISCLOSURE
STATEMENT SUPPLEMENT OR CONSENSUAL PLAN, OR IF YOU BELIEVE THAT
YOU HAVE NOT RECEIVED THE CORRECT CERTIFICATION, CONTACT DONLIN,
RECANO & COMPANY, INC. AT 1 (800) 489-7444 OR YOUR BANK, BROKER
OR NOMINEE.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CERTIFICATION
PLEASE CALL 1 (800) 489-7444.
<PAGE>
Exhibit T3E14
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
MASTER VOTE CHANGE CERTIFICATION
FOR USE BY RECORD HOLDERS OF CLASS U-4 (SENIOR SUBORDINATED
NOTE) CLAIMS
PLEASE READ THE FOLLOWING CAREFULLY. IF ANY BENEFICIAL OWNER
OF THE SENIOR SUBORDINATED NOTES FOR WHICH YOU WERE THE RECORD
HOLDER AS OF JULY 13, 1994 WANTS TO CHANGE THE VOTE IT CAST ON
THE CREDITORS' JOINT PLAN OF REORGANIZATION FOR PURPOSES OF THE
VOTE ON THE AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF
DECEMBER 9, 1994 (THE "CONSENSUAL PLAN"), PLEASE COMPLETE, SIGN
AND DATE THIS MASTER CERTIFICATION AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY TO DONLIN, RECANO & COMPANY, INC.
(THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME, ON OR BEFORE
JANUARY 24, 1995 OR IT WILL NOT BE COUNTED. IF NONE OF THE
BENEFICIAL OWNERS FOR WHICH YOU WERE THE RECORD HOLDER WANTS TO
CHANGE THE VOTE IT CAST ON THE CREDITORS' PLAN FOR PURPOSES OF
THE VOTE ON THE CONSENSUAL PLAN, YOU NEED NOT TRANSMIT THIS
MASTER CERTIFICATION TO THE BALLOTING AGENT.
The records of the Balloting Agent reflect that you
previously cast a timely master ballot on which was recorded,
among other items, acceptances and/or rejections of the
Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994 (the "Creditors' Plan") cast by the beneficial owners as of
July 13, 1994, of the Senior Subordinated Notes for which you are
the recordholder.
The proponents of the Creditors' Plan comprised of the
statutorily appointed Bondholders' Committee and Creditors'
Committee, Lehman Brothers Inc., Apollo and the Ad Hoc Committee
of Pre-LBO Bondholders (collectively, the "Creditor Proponents"),
the Debtors and Kohlberg Kravis Roberts & Co. ("KKR") have now
settled their disputes and reached agreement on the terms of a
joint plan of reorganization for the Debtors which is based on a
modification of the Creditors' Plan. The terms of the settlement
are embodied in the Amended Joint Plan of Reorganization Dated As
Of December 9, 1994 and exhibits thereto (the "Consensual Plan"),
which is jointly proposed by the Creditor Proponents, the Debtors
and the KKR Proponents (as defined in the Consensual Plan). The
Consensual Plan represents a modification of the Creditors' Plan.
Item 1. Principal Amount of Senior Subordinated Notes as to
Which Votes Were Cast and Vote Change Opportunity Applies. The
undersigned hereby certifies that the undersigned was the
registered recordholder of Senior Subordinated Notes as of
July 13, 1994 and transmitted to the Balloting Agent a schedule
of the following votes cast to accept or reject the Creditors'
Plan by the beneficial owners of such Senior Subordinated Notes
as of July 13, 1994. Please complete the schedule immediately
below.
Principal Principal
Amount of Amount of
$ $
Name Accepted Rejected
(Optional) Account No. Creditors'Plan Creditors' Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 2. Principal Amount of Senior Subordinated Notes as to
Which There Has Been A VOTE CHANGE. The undersigned hereby
certifies that the schedule set forth immediately below is a true
and accurate schedule of each of the beneficial owners of the
Senior Subordinated Notes set forth in Item 1 (a "Beneficial
Owner") which does not want the vote it previously cast on the
Creditors' Plan to be applied to the Consensual Plan, and wishes
instead to have the following vote applied to the Consensual
Plan. Please complete the following as may be appropriate.
Principal Principal
Amount of Amount of
$ $
Name Accepts the Rejects the
(Optional) Account No. Consensual Plan Consensual Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 3. By signing this Master Certification, the
undersigned certifies that each Beneficial Owner of the Senior
Subordinated Notes described above whose votes are being
transmitted along with this Master Certification has been
provided with a black-lined copy of the Consensual Plan inclusive
of all exhibits thereto and of the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As of
December 9, 1994 (the "Disclosure Statement Supplement").
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE MASTER VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for a
record holder of Senior Subordinated Notes as of July 13, 1994,
holding on behalf of another, to record such Beneficial Owner's
instruction to change from a rejection to an acceptance, or an
acceptance to a rejection, as may be applicable, the vote such
Beneficial Owner cast on the Creditors' Plan, with the result
that the changed vote shall be utilized in respect of determining
whether the Consensual Plan has been accepted by the requisite
amount and number of claims. Accordingly, holders should not
surrender certificates representing their securities in
connection with this Certification, and the Balloting Agent will
not accept delivery of any such certificates tendered together
with this Certification.
The Consensual Plan may be confirmed by the Bankruptcy Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of Section 1129(b) of the
Code. If the Consensual Plan is confirmed by the Bankruptcy
Court, all holders of Senior Subordinated Note Claims and any and
all other holders of claims against and equity interests in the
Debtors (including those who abstain or reject such plan or are
not entitled to vote thereon) will be bound by the confirmed plan
and the transactions contemplated thereby.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization, is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
Court.
Only a holder of Senior Subordinated Notes in whose name
such notes are held on the books of the Senior Subordinated
Indenture Trustee on July 13, 1994, the record date previously
established by the Bankruptcy Court, or any person who has
obtained a properly completed proxy from such person, and who
timely cast a vote to either accept or reject the Creditors' Plan
has the opportunity to change the vote it originally cast on the
Creditors' Plan.
This Master Certification is to be used by brokerage firms,
banks, or nominees for summarizing those Individual Vote Change
Certifications received from the Beneficial Owners of Senior
Subordinated Notes for which you were the record holder as of
July 13, 1994, and who previously timely transmitted Individual
Ballots to you on the Creditors' Plan. Only Individual Vote
Change Certifications received by you by 5:00 p.m., Eastern Time,
on January 19, 1995 are to be counted by you. Individual Vote
Change Certifications received after such time must not be
counted.
Please retain all executed Individual Vote Change
Certifications for one year.
Please forward this Master Vote Change Certification in the
enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
TO HAVE THE INDIVIDUAL VOTE CHANGE CERTIFICATIONS
TRANSMITTED TO YOU BY YOUR BENEFICIAL OWNERS, IF ANY, COUNT, YOU
MUST COMPLETE, SIGN AND RETURN THIS MASTER CERTIFICATION SO THAT
IT IS RECEIVED BY THE BALLOTING AGENT NOT LATER THAN 5:00 P.M.,
EASTERN TIME, ON JANUARY 24, 1995.
YOU NEED NOT TRANSMIT THIS MASTER CERTIFICATION TO THE
BALLOTING AGENT IF YOU DO NOT RECEIVE ANY INDIVIDUAL VOTE CHANGE
CERTIFICATIONS FROM YOUR BENEFICIAL OWNERS.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR MASTER
VOTE CHANGE CERTIFICATION, CONTACT DONLIN, RECANO & COMPANY, INC.
AT 1 (800) 489-7444.
IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER VOTE CHANGE
CERTIFICATION OR THE VOTE CHANGE PROCEDURES, PLEASE CALL 1 (800)
489-7444.
<PAGE>
Exhibit T3E15
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
INDIVIDUAL VOTE CHANGE CERTIFICATION
FOR CLASS U-5 (17% SUBORDINATED NOTE) CLAIMS
(BENEFICIAL OWNERS)
PLEASE READ THE FOLLOWING CAREFULLY. IF YOU WANT TO CHANGE
THE VOTE YOU PREVIOUSLY CAST ON THE CREDITORS' JOINT PLAN OF
REORGANIZATION FOR PURPOSES OF THE VOTE ON THE AMENDED JOINT PLAN
OF REORGANIZATION DATED AS OF DECEMBER 9, 1994 (THE "CONSENSUAL
PLAN") PLEASE COMPLETE, SIGN, AND DATE THIS CERTIFICATION AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF YOUR
CERTIFICATION HAS NOT BEEN RECEIVED BY DONLIN, RECANO & COMPANY,
INC. (THE "BALLOTING AGENT") BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 24, 1995, OR, IF YOU ARE NOT THE RECORD HOLDER, BY
YOUR BROKER, BANK OR NOMINEE BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 19, 1995, IT WILL NOT BE COUNTED. IF YOU DO NOT
WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS' PLAN FOR
PURPOSES OF THE VOTE ON THE CONSENSUAL PLAN, YOU NEED DO NOTHING.
The records of the Balloting Agent reflect that you
previously cast a timely ballot to either accept or reject the
"Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994" (the "Creditors' Plan") proposed by the statutorily
appointed Bondholders' Committee and Creditors' Committee, Lehman
Brothers Inc., Apollo and the Ad Hoc Committee of Pre-LBO
Bondholders (collectively, the "Creditor Proponents").
The Creditor Proponents, the Debtors, and Kohlberg Kravis
Roberts & Co. ("KKR") have now settled their disputes and reached
agreement on the terms of a joint plan of reorganization for the
Debtors which is based on a modification of the Creditors' Plan.
The terms of the settlement are embodied in the Amended Joint
Plan of Reorganization Dated As Of December 9, 1994 and exhibits
thereto (the "Consensual Plan"), which is jointly proposed by the
Creditor Proponents, the Debtors and the KKR Proponents (as
defined in the Consensual Plan).
The Consensual Plan represents a modification of the
Creditors' Plan. The changes made to the Creditors' Plan which
are embodied in the Consensual Plan are reflected in the black-
lined version of the Consensual Plan which has been transmitted
to you and are further described in the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As Of
December 9, 1994 (the "Disclosure Statement Supplement"). On
December 15, 1994, the United States Bankruptcy Court for the
Middle District of Florida (Tampa Division) entered an order
approving the Disclosure Statement Supplement as containing
adequate information.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization, is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
court.
IF YOU WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS'
PLAN, AND THEREFORE HAVE A DIFFERENT VOTE CAST WITH RESPECT TO
THE CONSENSUAL PLAN PLEASE CHECK THE APPROPRIATE BOX BELOW:
Item 1. Principal Amount of 17% Subordinated Notes As To
Which Votes Were Cast and Vote Change Applies. This Certification
is cast by or on behalf of the Beneficial Owner of the aggregate
principal amount of the 17% Subordinated Notes indicated
immediately below. The undersigned hereby certifies that the
undersigned was the beneficial holder of such 17% Subordinated
Notes as of July 13, 1994 (the "Beneficial Owner"), and voted the
claim represented thereby to accept or reject the Creditors'
Plan. Please fill out the following as may be appropriate:
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your 17% Subordinated Notes through an
account or accounts, $ in aggregate principal amount.
Item 2. Class U-5 (17% Subordinated Note Claims) ORIGINAL
VOTE. The Beneficial Owner of the aggregate principal amount of
17% Subordinated Notes set forth in Item 1 originally voted to
(please check one box below):
Accept the Creditors' Plan / /
Reject the Creditors' Plan / /
Item 3. Class U-5 (17% Subordinated Note Claims) VOTE
CHANGE. The Beneficial Owner of the aggregate principal amount of
17% Subordinated Notes set forth in Item 1 does not want the vote
it cast on or before September 23, 1994 on the Creditors' Plan to
be applied to the Consensual Plan, and wishes instead to have the
following vote applied to the Consensual Plan (please check the
appropriate box):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
Item 4. By signing this Certification, the undersigned
certifies that (i) the Beneficial Owner of the 17% Subordinated
Notes set forth in Item 1 has full power and authority to vote to
accept or reject the Consensual Plan, (ii) such Beneficial Owner
has voted to accept or reject the Consensual Plan as set forth in
Item 3 above, (iii) the vote cast by such Beneficial Owner in
Item 3 above reflects a change from the vote that was previously
cast by the Beneficial Owner on the Creditors' Plan, and
(iv) this Certification has been executed on behalf of a single
Beneficial Owner. The undersigned also acknowledges that (i) the
Beneficial Owner has been provided with a copy of the Disclosure
Statement Supplement, including all Exhibits thereto, and
(ii) this Certification shall be counted as the undersigned's
changed vote with respect to all Debtors against which the
undersigned has an Allowed Class U-5 Claim.
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
<PAGE>
INSTRUCTIONS FOR COMPLETING THE INDIVIDUAL
VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for
the Beneficial Owner to indicate that it wishes to change from a
rejection to an acceptance, or an acceptance to a rejection, as
may be applicable, the vote such claimholder cast on the
Creditors' Plan, with the result that the changed vote shall be
utilized in respect of determining whether the Consensual Plan
has been accepted by the requisite amount and number of claims.
Accordingly, holders should not surrender certificates
representing their securities in connection with this
Certification, and the Balloting Agent will not accept delivery
of any such certificates tendered together with this
Certification.
Only holders of 17% Subordinated Notes in whose name such
notes are held on the books of the 17% Indenture Trustee on
July 13, 1994, the record date previously established by the
Bankruptcy Court, or any person who has obtained a properly
completed proxy from such person, and who timely cast a vote to
either accept or reject the Creditors' Plan has the opportunity
to change the vote it originally cast on the Creditors' Plan.
The Consensual Plan may be confirmed by the Bankruptcy Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of 17% Subordinated Notes and any and all other holders
of claims against and equity interests in the Debtors (including
those who abstain or reject such plan or are not entitled to vote
thereon) will be bound by the confirmed plan and the transactions
contemplated thereby. If you do not want the vote you cast on the
Creditors' Plan to be deemed to have been cast on the Consensual
Plan, you must complete, sign and return this Certification in
the enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have your vote change count, you must complete, sign and
return this Certification so that it is received either (i) by
the Balloting Agent not later than 5:00 p.m., Eastern Time, on
January 24, 1995, or (ii) if you are not also the record holder,
by your broker, bank or nominee not later than 5:00 p.m., Eastern
Time, on January 19, 1995. Your original signature is required on
the Certification in order for your vote change to count.
All capitalized terms used herein shall have the meanings
ascribed to them in the Consensual Plan.
To properly complete the Certification, you must follow the
procedures described below:
(a) make sure that the information required in Item 1
has been inserted; if you do not know the amount of your
claim, please contact either the Balloting Agent, or, if you
are not the record holder, your broker, your bank, or your
nominee;
(b) indicate whether you had voted to accept or reject
the Creditors' Plan by checking the proper box in Item 2; if
you do not remember how you voted, please contact either the
Balloting Agent, or, if you are not the record holder, your
broker, bank or your nominee;
(c) indicate your changed vote to accept or reject the
Consensual Plan by checking the appropriate box in Item 3;
(d) if you are completing this Certification on behalf
of another entity, indicate your relationship with such
entity and the capacity in which you are signing;
(e) please use additional Certifications (available
from the Balloting Agent) if additional space is required to
respond to any item on the Certification or use additional
sheets of papers clearly marked to indicate the applicable
item of the Certification (if you elect to use additional
Certifications because additional space is required, you
must complete and sign each such Certification);
(f) return your Certification using the enclosed return
envelope. If you received a return envelope addressed
directly to the Balloting Agent, please mail or deliver your
Certification so that it will be received by January 24,
1995. If you received a return envelope addressed to a
broker, bank or nominee, you must return your Certification
to such entity by January 19, 1995. Please allow additional
time; and
(g) if you hold claims or interests in more than one
class, and you previously cast a ballot to either accept or
reject the Creditors' Plan in more than one of those
classes, you may receive more than one Certification,
labeled for different classes of claims or interests. Your
changed vote will be counted in determining acceptance or
rejection of the Consensual Plan by a particular class only
if you fill out and return the Certification labeled for
that class in accordance with the instructions on that
Certification.
IF YOU WANT THE VOTE YOU ORIGINALLY CAST TO ACCEPT OR REJECT
THE CREDITORS' PLAN TO BE COUNTED AS CAST IN DETERMINING
ACCEPTANCE OR REJECTION OF THE CONSENSUAL PLAN, YOU NEED NOT DO
ANYTHING.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR
CERTIFICATION, OR YOU DID NOT RECEIVE A COPY OF THE DISCLOSURE
STATEMENT SUPPLEMENT OR CONSENSUAL PLAN, OR IF YOU BELIEVE THAT
YOU HAVE NOT RECEIVED THE CORRECT CERTIFICATION, CONTACT DONLIN,
RECANO & COMPANY, INC. AT 1 (800) 489-7444 OR YOUR BANK, BROKER
OR NOMINEE.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CERTIFICATION
PLEASE CALL 1 (800) 489-7444.
<PAGE>
Exhibit T3E16
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
MASTER VOTE CHANGE CERTIFICATION
FOR USE BY RECORD HOLDERS OF CLASS U-5 (17% SUBORDINATED
NOTE) CLAIMS
PLEASE READ THE FOLLOWING CAREFULLY. IF ANY BENEFICIAL OWNER
OF THE 17% SUBORDINATED NOTES FOR WHICH YOU WERE THE RECORD
HOLDER AS OF JULY 13, 1994 WANTS TO CHANGE THE VOTE IT CAST ON
THE CREDITORS' JOINT PLAN OF REORGANIZATION FOR PURPOSES OF THE
VOTE ON THE AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF
DECEMBER 9, 1994 (THE "CONSENSUAL PLAN"), PLEASE COMPLETE, SIGN
AND DATE THIS MASTER CERTIFICATION AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY TO DONLIN, RECANO & COMPANY, INC.
(THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME, ON OR BEFORE
JANUARY 24, 1995 OR IT WILL NOT BE COUNTED. IF NONE OF THE
BENEFICIAL OWNERS FOR WHICH YOU WERE THE RECORD HOLDER WANTS TO
CHANGE THE VOTE IT CAST ON THE CREDITORS' PLAN FOR PURPOSES OF
THE VOTE ON THE CONSENSUAL PLAN, YOU NEED NOT TRANSMIT THIS
MASTER CERTIFICATION TO THE BALLOTING AGENT.
The records of the Balloting Agent reflect that you
previously cast a timely master ballot on which was recorded,
among other items, acceptances and/or rejections of the
Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994 (the "Creditors' Plan") cast by the beneficial owners as of
July 13, 1994, of the 17% Subordinated Notes for which you are
the recordholder.
The proponents of the Creditors' Plan comprised of the
statutorily appointed Bondholders' Committee and Creditors'
Committee, Lehman Brothers Inc., Apollo and the Ad Hoc Committee
of Pre-LBO Bondholders (collectively, the "Creditor Proponents"),
the Debtors and Kohlberg Kravis Roberts & Co. ("KKR") have now
settled their disputes and reached agreement on the terms of a
joint plan of reorganization for the Debtors which is based on a
modification of the Creditors' Plan. The terms of the settlement
are embodied in the Amended Joint Plan of Reorganization Dated As
Of December 9, 1994 and exhibits thereto (the "Consensual Plan"),
which is jointly proposed by the Creditor Proponents, the Debtors
and the KKR Proponents (as defined in the Consensual Plan). The
Consensual Plan represents a modification of the Creditors' Plan.
Item 1. Principal Amount of 17% Subordinated Notes As To
Which Votes Were Cast and Vote Change Opportunity Applies. The
undersigned hereby certifies that the undersigned was the
registered recordholder of 17% Subordinated Notes as of July 13,
1994 and transmitted to the Balloting Agent a schedule of the
following votes cast to accept or reject the Creditors' Plan by
the beneficial owners of such 17% Subordinated Notes as of
July 13, 1994. Please complete the schedule immediately below.
Principal Principal
Amount of Amount of
$ $
Name Accepted Rejected
(Optional) Account No. Creditors'Plan Creditors' Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 2. Principal Amount of 17% Subordinated Notes As To
Which There Has Been A VOTE CHANGE. The undersigned hereby
certifies that the schedule set forth immediately below is a true
and accurate schedule of each of the beneficial owners of the 17%
Subordinated Notes set forth in Item 1 (a "Beneficial Owner")
which does not want the vote it previously cast on the Creditors'
Plan to be applied to the Consensual Plan, and wishes instead to
have the following vote applied to the Consensual Plan. Please
complete the following as may be appropriate.
Principal Principal
Amount of Amount of
$ $
Name Accepts the Rejects the
(Optional) Account No. Consensual Plan Consensual Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 3. By signing this Master Certification, the
undersigned certifies that each Beneficial Owner of the 17%
Subordinated Notes described above whose votes are being
transmitted along with this Master Certification has been
provided with a black-lined copy of the Consensual Plan inclusive
of all exhibits thereto and of the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As of
December 9, 1994 (the "Disclosure Statement Supplement").
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE MASTER VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for a
record holder of 17% Subordinated Notes as of July 13, 1994,
holding on behalf of another, to record such Beneficial Owner's
instruction to change from a rejection to an acceptance, or an
acceptance to a rejection, as may be applicable, the vote such
Beneficial Owner cast on the Creditors' Plan, with the result
that the changed vote shall be utilized in respect of determining
whether the Consensual Plan has been accepted by the requisite
amount and number of claims. Accordingly, holders should not
surrender certificates representing their securities in
connection with this Certification, and the Balloting Agent will
not accept delivery of any such certificates tendered together
with this Certification.
The Consensual Plan may be confirmed by the Bankruptcy Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of 17% Subordinated Note Claims and any and all other
holders of claims against and equity interests in the Debtors
(including those who abstain or reject such plan or are not
entitled to vote thereon) will be bound by the confirmed plan and
the transactions contemplated thereby.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization, is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
Court.
Only a holder of 17% Subordinated Notes in whose name such
notes are held on the books of the 17% Indenture Trustee on
July 13, 1994, the record date previously established by the
Bankruptcy Court, or any person who has obtained a properly
completed proxy from such person, and who timely cast a vote to
either accept or reject the Creditors' Plan has the opportunity
to change the vote it originally cast on the Creditors' Plan.
This Master Certification is to be used by brokerage firms,
banks, or nominees for summarizing those Individual Vote Change
Certifications received from the Beneficial Owners of 17%
Subordinated Notes for which you were the record holder as of
July 13, 1994, and who previously timely transmitted Individual
Ballots to you on the Creditors' Plan. Only Individual Vote
Change Certifications received by you by 5:00 p.m., Eastern Time,
on January 19, 1995 are to be counted by you. Individual Vote
Change Certifications received after such time must not be
counted.
Please retain all executed Individual Vote Change
Certifications for one year.
Please forward this Master Vote Change Certification in the
enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have the Individual Vote Change Certifications
transmitted to you by your Beneficial Owners, if any, count, you
must complete, sign and return this Master Certification so that
it is received by the Balloting Agent not later than 5:00 p.m.,
Eastern Time, on January 24, 1995.
You need not transmit this Master Certification to the
Balloting Agent if you do not receive any Individual Vote Change
Certifications from your Beneficial Owners.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR MASTER
VOTE CHANGE CERTIFICATION, CONTACT DONLIN, RECANO & COMPANY, INC.
AT 1 (800) 489-7444.
IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER VOTE CHANGE
CERTIFICATION OR THE VOTE CHANGE PROCEDURES, PLEASE CALL
1 (800) 489-7444.
<PAGE>
Exhibit T3E17
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
INDIVIDUAL VOTE CHANGE CERTIFICATION
FOR CLASS U-6 (PRE-LBO DEBENTURE) CLAIMS
(BENEFICIAL OWNERS)
PLEASE READ THE FOLLOWING CAREFULLY. IF YOU WANT TO CHANGE
THE VOTE YOU PREVIOUSLY CAST ON THE CREDITORS' JOINT PLAN OF
REORGANIZATION FOR PURPOSES OF THE VOTE ON THE AMENDED JOINT
PLAN
OF REORGANIZATION DATED AS OF DECEMBER 9, 1994 (THE "CONSENSUAL
PLAN") PLEASE COMPLETE, SIGN, AND DATE THIS CERTIFICATION AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF
YOUR
CERTIFICATION HAS NOT BEEN RECEIVED BY DONLIN, RECANO & COMPANY,
INC. (THE "BALLOTING AGENT") BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 24, 1995, OR, IF YOU ARE NOT THE RECORD HOLDER, BY
YOUR BROKER, BANK OR NOMINEE BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 19, 1995, IT WILL NOT BE COUNTED. IF YOU DO NOT
WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS' PLAN FOR
PURPOSES OF THE VOTE ON THE CONSENSUAL PLAN, YOU NEED DO
NOTHING.
The records of the Balloting Agent reflect that you
previously cast a timely ballot to either accept or reject the
"Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994" (the "Creditors' Plan") proposed by the statutorily
appointed Bondholders' Committee and Creditors' Committee,
Lehman
Brothers Inc., Apollo and the Ad Hoc Committee of Pre-LBO
Bondholders (collectively, the "Creditor Proponents").
The Creditor Proponents, the Debtors, and Kohlberg Kravis
Roberts & Co. ("KKR") have now settled their disputes and
reached
agreement on the terms of a joint plan of reorganization for the
Debtors which is based on a modification of the Creditors' Plan.
The terms of the settlement are embodied in the Amended Joint
Plan of Reorganization Dated As Of December 9, 1994 and exhibits
thereto (the "Consensual Plan"), which is jointly proposed by
the
Creditor Proponents, the Debtors and the KKR Proponents (as
defined in the Consensual Plan).
The Consensual Plan represents a modification of the
Creditors' Plan. The changes made to the Creditors' Plan which
are embodied in the Consensual Plan are reflected in the black-
lined version of the Consensual Plan which has been transmitted
to you and are further described in the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As Of
December 9, 1994 (the "Disclosure Statement Supplement"). On
December 15, 1994, the United States Bankruptcy Court for the
Middle District of Florida (Tampa Division) entered an order
approving the Disclosure Statement Supplement as containing
adequate information.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization,
is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
court.
IF YOU WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS'
PLAN, AND THEREFORE HAVE A DIFFERENT VOTE CAST WITH RESPECT TO
THE CONSENSUAL PLAN PLEASE CHECK THE APPROPRIATE BOX BELOW:
Item 1. Principal Amount of 10 7/8% Subordinated
Debentures, 13 1/8% Subordinated Notes and 13 3/4% Subordinated
Debentures As To
Which Votes Were Cast and Vote Change Applies. This
Certification
is cast by or on behalf of the Beneficial Owner of the aggregate
principal amount of the 10 7/8% Subordinated Debentures, 13 1/8%
Subordinated Notes and 13 3/4% Subordinated Debentures indicated
immediately below. The undersigned hereby certifies that the
undersigned was the beneficial holder of such Subordinated
Debentures and/or Subordinated Notes as of July 13, 1994 (the
"Beneficial Owner"), and voted the claim represented thereby to
accept or reject the Creditors' Plan. Please fill out the
following as may be appropriate:
(a) 10 7/8% Subordinated Debentures.
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your 10 7/8% Subordinated Debentures
through an account or accounts, $ in aggregate principal
amount.
(b) 13 1/8% Subordinated Notes.
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your 13 1/8% Subordinated Notes through
an
account or accounts, $ in aggregate principal amount.
(c) 13 3/4% Subordinated Debentures.
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your 13 3/4% Subordinated Debentures
through
an account or accounts, $ in aggregate principal amount.
Grand Total Aggregate Principal Amount = $ .
Item 2. Class U-6 (Pre-LBO Debenture Claims) ORIGINAL
VOTE.
The Beneficial Owner of the aggregate principal amount of
Subordinated Debentures and/or Subordinated Notes set forth in
Item 1 originally voted to (please check one box below):
The Beneficial Owner of the aggregate principal amount of
10 7/8% Subordinated Debentures set forth in Item 1 originally
voted to (please check one box below):
Accept the Creditors' Plan / /
Reject the Creditors' Plan / /
The Beneficial Owner of the aggregate principal amount of
13 1/8% Subordinated Notes set forth in Item 1 originally voted
to
(please check one box below):
Accept the Creditor's Plan / /
Reject the Creditor's Plan / /
The Beneficial Owner of the aggregate principal amount of
13 3/4% Subordinated Debentures set forth in Item 1 originally
voted
to (please check one box below):
Accept the Creditors' Plan / /
Reject the Creditors' Plan / /
Item 3. Class U-6 (Pre-LBO Debenture Claims) VOTE CHANGE.
The Beneficial Owner of the aggregate principal amount of 10
7/8%
Subordinated Debentures, 13 1/8% Subordinated Notes and/or 13
3/4%
Subordinated Debentures set forth in Item 1 does not want the
vote it cast on or before September 23, 1994 on the Creditors'
Plan to be applied to the Consensual Plan, and wishes instead to
have the following vote applied to the Consensual Plan (please
check the appropriate box):
The Beneficial Owner of the aggregate principal amount of
10 7/8% Subordinated Debentures set forth in Item 1 votes to
(please
check one box below):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
The Beneficial Owner of the aggregate principal amount of
13 1/8% Subordinated Notes set forth in Item 1 votes to (please
check one box below):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
The Beneficial Owner of the aggregate principal amount of
13 3/4% Subordinated Debentures set forth in Item 1 votes to
(please
check one box below):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
Item 4. By signing this Certification, the undersigned
certifies that (i) the Beneficial Owner of the Subordinated
Debentures and/or Subordinated Notes set forth in Item 1 has
full
power and authority to vote to accept or reject the Consensual
Plan, (ii) such Beneficial Owner has voted to accept or reject
the Consensual Plan as set forth in Item 3 above, (iii) the vote
cast by such Beneficial Owner in Item 3 above reflects a change
from the vote that was previously cast by the Beneficial Owner
on
the Creditors' Plan, and (iv) this Certification has been
executed on behalf of a single Beneficial Owner. The undersigned
also acknowledges that (i) the Beneficial Owner has been
provided
with a copy of the Disclosure Statement Supplement, including
all
Exhibits thereto, and (ii) this Certification shall be counted as
the undersigned's changed vote with respect to all Debtors
against which the undersigned has an Allowed Class U-6 Claim.
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
<PAGE>
INSTRUCTIONS FOR COMPLETING THE INDIVIDUAL
VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for
the Beneficial Owner to indicate that it wishes to change from a
rejection to an acceptance, or an acceptance to a rejection, as
may be applicable, the vote such claimholder cast on the
Creditors' Plan, with the result that the changed vote shall be
utilized in respect of determining whether the Consensual Plan
has been accepted by the requisite amount and number of claims.
Accordingly, holders should not surrender certificates
representing their securities in connection with this
Certification, and the Balloting Agent will not accept delivery
of any such certificates tendered together with this
Certification.
Only a holder of 10 7/8% Subordinated Debentures, 13 1/8%
Subordinated Notes and/or 13 3/4% Subordinated Debentures, in
whose
name such notes are held on the books of the 10 7/8% Indenture
Trustee, the 13 1/8% Indenture Trustee and/or the 13 3/4%
Indenture
Trustee, as applicable, on July 13, 1994, the record date
previously established by the Bankruptcy Court, or any person
who
has obtained a properly completed proxy from such person, and
who
timely cast a vote to either accept or reject the Creditors'
Plan
has the opportunity to change the vote it originally cast on the
Creditors' Plan.
The Consensual Plan may be confirmed by the Bankruptcy
Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of Pre-LBO Debenture Claims and any and all other
holders
of claims against and equity interests in the Debtors (including
those who abstain or reject such plan or are not entitled to
vote
thereon) will be bound by the confirmed plan and the
transactions
contemplated thereby. If you do not want the vote you cast on
the
Creditors' Plan to be deemed to have been cast on the Consensual
Plan, you must complete, sign and return this Certification in
the enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have your vote change count, you must complete, sign and
return this Certification so that it is received either (i) by
the Balloting Agent not later than 5:00 p.m., Eastern Time, on
January 24, 1995, or (ii) if you are not also the record holder,
by your broker, bank or nominee not later than 5:00 p.m., Eastern
Time, on January 19, 1995. Your original signature is required
on
the Certification in order for your vote change to count.
All capitalized terms used herein shall have the meanings
ascribed to them in the Consensual Plan.
To properly complete the Certification, you must follow the
procedures described below:
(a) make sure that the information required in Item 1
has been inserted; if you do not know the amount of your
claim, please contact either the Balloting Agent, or, if
you
are not the record holder, your broker, your bank, or your
nominee;
(b) indicate whether you had voted to accept or reject
the Creditors' Plan by checking the proper box in Item 2;
if
you do not remember how you voted, please contact either
the
Balloting Agent, or, if you are not the record holder, your
broker, bank or your nominee;
(c) indicate your changed vote to accept or reject the
Consensual Plan by checking the appropriate box in Item 3;
(d) if you are completing this Certification on behalf
of another entity, indicate your relationship with such
entity and the capacity in which you are signing;
(e) please use additional Certifications (available
from the Balloting Agent) if additional space is required
to
respond to any item on the Certification or use additional
sheets of papers clearly marked to indicate the applicable
item of the Certification (if you elect to use additional
Certifications because additional space is required, you
must complete and sign each such Certification);
(f) return your Certification using the enclosed
return
envelope. If you received a return envelope addressed
directly to the Balloting Agent, please mail or deliver
your
Certification so that it will be received by January 24,
1995. If you received a return envelope addressed to a
broker, bank or nominee, you must return your Certification
to such entity by January 19, 1995. Please allow additional
time; and
(g) if you hold claims or interests in more than one
class, and you previously cast a ballot to either accept or
reject the Creditors' Plan in more than one of those
classes, you may receive more than one Certification,
labeled for different classes of claims or interests. Your
changed vote will be counted in determining acceptance or
rejection of the Consensual Plan by a particular class only
if you fill out and return the Certification labeled for
that class in accordance with the instructions on that
Certification.
IF YOU WANT THE VOTE YOU ORIGINALLY CAST TO ACCEPT OR
REJECT
THE CREDITORS' PLAN TO BE COUNTED AS CAST IN DETERMINING
ACCEPTANCE OR REJECTION OF THE CONSENSUAL PLAN, YOU NEED NOT DO
ANYTHING.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR
CERTIFICATION, OR YOU DID NOT RECEIVE A COPY OF THE DISCLOSURE
STATEMENT SUPPLEMENT OR CONSENSUAL PLAN, OR IF YOU BELIEVE THAT
YOU HAVE NOT RECEIVED THE CORRECT CERTIFICATION, CONTACT DONLIN,
RECANO & COMPANY, INC. AT 1 (800) 489-7444 OR YOUR BANK, BROKER
OR NOMINEE.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CERTIFICATION
PLEASE CALL 1 (800) 489-7444.
<PAGE>
Exhibit T3E18
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
MASTER VOTE CHANGE CERTIFICATION
FOR USE BY RECORD HOLDERS OF CLASS U-6 (PRE-LBO DEBENTURE)
CLAIMS
PLEASE READ THE FOLLOWING CAREFULLY. IF ANY BENEFICIAL
OWNER
OF THE PRE-LBO DEBENTURE CLAIMS FOR WHICH YOU WERE THE RECORD
HOLDER AS OF JULY 13, 1994 WANTS TO CHANGE THE VOTE IT CAST ON
THE CREDITORS' JOINT PLAN OF REORGANIZATION FOR PURPOSES OF THE
VOTE ON THE AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF
DECEMBER 9, 1994 (THE "CONSENSUAL PLAN"), PLEASE COMPLETE, SIGN
AND DATE THIS MASTER CERTIFICATION AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY TO DONLIN, RECANO & COMPANY, INC.
(THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME, ON OR BEFORE
JANUARY 24, 1995 OR IT WILL NOT BE COUNTED. IF NONE OF THE
BENEFICIAL OWNERS FOR WHICH YOU WERE THE RECORD HOLDER WANTS TO
CHANGE THE VOTE IT CAST ON THE CREDITORS' PLAN FOR PURPOSES OF
THE VOTE ON THE CONSENSUAL PLAN, YOU NEED NOT TRANSMIT THIS
MASTER CERTIFICATION TO THE BALLOTING AGENT.
The records of the Balloting Agent reflect that you
previously cast a timely master ballot on which was recorded,
among other items, acceptances and/or rejections of the
Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994 (the "Creditors' Plan") cast by the beneficial owners as of
July 13, 1994, of the Pre-LBO Debenture Claims for which you are
the recordholder.
The proponents of the Creditors' Plan comprised of the
statutorily appointed Bondholders' Committee and Creditors'
Committee, Lehman Brothers Inc., Apollo and the Ad Hoc Committee
of Pre-LBO Bondholders (collectively, the "Creditor
Proponents"),
the Debtors and Kohlberg Kravis Roberts & Co. ("KKR") have now
settled their disputes and reached agreement on the terms of a
joint plan of reorganization for the Debtors which is based on a
modification of the Creditors' Plan. The terms of the settlement
are embodied in the Amended Joint Plan of Reorganization Dated
As
Of December 9, 1994 and exhibits thereto (the "Consensual
Plan"),
which is jointly proposed by the Creditor Proponents, the
Debtors
and the KKR Proponents (as defined in the Consensual Plan). The
Consensual Plan represents a modification of the Creditors'
Plan.
Item 1. Principal Amount of Pre-LBO Debenture Claims As To
Which Votes Were Cast and Vote Change Opportunity Applies. The
undersigned hereby certifies that the undersigned was the
registered recordholder of 10% Subordinated Debentures, 13 1/8%
Subordinated Notes and/or 13 3/4 Subordinated Debentures as of
July 13, 1994 and transmitted to the Balloting Agent a schedule
of the following votes cast to accept or reject the Creditors'
Plan by the beneficial owners of such Pre-LBO Debenture Claims
as
of July 13, 1994. Please complete the schedule immediately
below.
a. 10 7/8 Subordinated Debentures
Principal Principal
Amount of Amount of
$ $
Name Accepted Rejected
(Optional) Account No. Creditors' Plan Creditors'
Plan
1
2
3
4
5
6
7
Total = N/A
b. 13 1/8 Subordinated Notes
Principal Principal
Amount of Amount of
$ $
Name Accepted Rejected
(Optional) Account No. Creditors' Plan Creditors' Plan
1
2
3
4
5
6
7
Total = N/A
c. 13 3/4 Subordinated Debentures
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepted Rejected
Creditors' Plan Creditors'
Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 2. Principal Amount of Pre-LBO Debenture Claims As To
Which There Has Been A VOTE CHANGE. The undersigned hereby
certifies that the schedule set forth immediately below is a
true
and accurate schedule of each of the beneficial owners of the
Pre-LBO Debenture Claims set forth in Item 1 (a "Beneficial
Owner") which does not want the vote it previously cast on the
Creditors' Plan to be applied to the Consensual Plan, and wishes
instead to have the following vote applied to the Consensual
Plan. Please complete the following as may be appropriate.
a. 10 7/8 Subordinated Debentures
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepts the Rejects the
Consensual Plan Consensual Plan
1
2
3
4
5
6
7
Total = N/A
b. 13 3/4 Subordinated Notes
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepts the Rejects the
Consensual Plan Consensual
Plan
1
2
3
4
5
6
7
Total = N/A
c. 13 3/4 Subordinated Debentures
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepts the Rejects the
Consensual Plan Consensual Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 3. By signing this Master Certification, the
undersigned certifies that each Beneficial Owner of the Pre-LBO
Debenture Claims described above whose votes are being
transmitted along with this Master Certification has been
provided with a black-lined copy of the Consensual Plan
inclusive
of all exhibits thereto and of the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As of
December 9, 1994 (the "Disclosure Statement Supplement").
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE MASTER VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for a
record holder of 10 7/8% Subordinated Debentures, 13 1/8%
Subordinated
Notes and/or 13 3/4% Subordinated Debentures as of July 13,
1994,
holding on behalf of another, to record such Beneficial Owners
instruction to change from a rejection to an acceptance, or an
acceptance to a rejection, as may be applicable, the vote such
Beneficial Owner cast on the Creditors' Plan, with the result
that the changed vote shall be utilized in respect of
determining
whether the Consensual Plan has been accepted by the requisite
amount and number of claims. Accordingly, holders should not
surrender certificates representing their securities in
connection with this Certification, and the Balloting Agent will
not accept delivery of any such certificates tendered together
with this Certification.
The Consensual Plan may be confirmed by the Bankruptcy
Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of Pre-LBO Debenture Claims and any and all other
holders
of claims against and equity interests in the Debtors (including
those who abstain or reject such plan or are not entitled to
vote
thereon) will be bound by the confirmed plan and the
transactions
contemplated thereby.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization,
is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
Court.
Only a holder of 10 7/8% Subordinated Debentures, 13 1/8%
Subordinated Notes and/or 13 3/4% Subordinated Debentures in
whose
name such notes are held on the books of the 10 7/8% Indenture
Trustee, 13 1/8% Indenture Trustee or 13 3/4% Indenture Trustee,
as
applicable, on July 13, 1994, the record date previously
established by the Bankruptcy Court, or any person who has
obtained a properly completed proxy from such person, and who
timely cast a vote to either accept or reject the Creditors'
Plan
has the opportunity to change the vote it originally cast on the
Creditors' Plan.
This Master Certification is to be used by brokerage firms,
banks, or nominees for summarizing those Individual Vote Change
Certifications received from the Beneficial Owners of 10 7/8%
Subordinated Debentures, 13 1/8% Subordinated Notes and/or 13
3/4%
Subordinated Debentures for which you were the record holder as
of July 13, 1994, and who previously timely transmitted
Individual Ballots to you on the Creditors' Plan. Only
Individual
Vote Change Certifications received by you by 5:00 p.m., Eastern
Time, on January 19, 1995 are to be counted by you. Individual
Vote Change Certifications received after such time must not be
counted.
Please retain all executed Individual Vote Change
Certifications for one year.
Please forward this Master Vote Change Certification in the
enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have the Individual Vote Change Certifications
transmitted to you by your Beneficial Owners, if any, count, you
must complete, sign and return this Master Certification so that
it is received by the Balloting Agent not later than 5:00 p.m.,
Eastern Time, on January 24, 1995.
You need not transmit this Master Certification to the
Balloting Agent if you do not receive any Individual Vote Change
Certifications from your Beneficial Owners.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR MASTER
VOTE CHANGE CERTIFICATION, CONTACT DONLIN, RECANO & COMPANY,
INC.
AT 1 (800) 489-7444.
IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER VOTE CHANGE
CERTIFICATION OR THE VOTE CHANGE PROCEDURES, PLEASE CALL
1 (800) 489-7444.
<PAGE>
Exhibit T3E20
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
INDIVIDUAL VOTE CHANGE CERTIFICATION
FOR CLASS S-6 (SERIES B & C SENIOR NOTE) CLAIMS
(BENEFICIAL OWNERS)
PLEASE READ THE FOLLOWING CAREFULLY. IF YOU WANT TO CHANGE
THE VOTE YOU PREVIOUSLY CAST ON THE CREDITORS' JOINT PLAN OF
REORGANIZATION FOR PURPOSES OF THE VOTE ON THE AMENDED JOINT PLAN
OF REORGANIZATION DATED AS OF DECEMBER 9, 1994 (THE "CONSENSUAL
PLAN") PLEASE COMPLETE, SIGN, AND DATE THIS CERTIFICATION AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF YOUR
CERTIFICATION HAS NOT BEEN RECEIVED BY DONLIN, RECANO & COMPANY,
INC. (THE "BALLOTING AGENT") BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 24, 1995, OR, IF YOU ARE NOT THE RECORD HOLDER, BY
YOUR BROKER, BANK OR NOMINEE BY 5:00 P.M., EASTERN TIME, ON OR
BEFORE JANUARY 19, 1995, IT WILL NOT BE COUNTED. IF YOU DO NOT
WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS' PLAN FOR
PURPOSES OF THE VOTE ON THE CONSENSUAL PLAN, YOU NEED DO NOTHING.
The records of the Balloting Agent reflect that you
previously cast a timely ballot to either accept or reject the
"Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994" (the "Creditors' Plan") proposed by the statutorily
appointed Bondholders' Committee and Creditors' Committee, Lehman
Brothers Inc., Apollo and the Ad Hoc Committee of Pre-LBO
Bondholders (collectively, the "Creditor Proponents").
The Creditor Proponents, the Debtors, and Kohlberg Kravis
Roberts & Co. ("KKR") have now settled their disputes and reached
agreement on the terms of a joint plan of reorganization for the
Debtors which is based on a modification of the Creditors' Plan.
The terms of the settlement are embodied in the Amended Joint
Plan of Reorganization Dated As Of December 9, 1994 and exhibits
thereto (the "Consensual Plan"), which is jointly proposed by the
Creditor Proponents, the Debtors and the KKR Proponents (as
defined in the Consensual Plan).
The Consensual Plan represents a modification of the
Creditors' Plan. The changes made to the Creditors' Plan which
are embodied in the Consensual Plan are reflected in the black-
lined version of the Consensual Plan which has been transmitted
to you and are further described in the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As Of
December 9, 1994 (the "Disclosure Statement Supplement"). On
December 15, 1994, the United States Bankruptcy Court for the
Middle District of Florida (Tampa Division) entered an order
approving the Disclosure Statement Supplement as containing
adequate information.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization, is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
court.
IF YOU WANT TO CHANGE THE VOTE YOU CAST ON THE CREDITORS'
PLAN, AND THEREFORE HAVE A DIFFERENT VOTE CAST WITH RESPECT TO
THE CONSENSUAL PLAN PLEASE CHECK THE APPROPRIATE BOX BELOW:
Item 1. Principal Amount of Series B & C Senior Notes As To
Which Votes Were Cast and Vote Change Applies. This Certification
is cast by or on behalf of the Beneficial Owner of the aggregate
principal amount of the Series B & C Senior Notes indicated
immediately below. The undersigned hereby certifies that the
undersigned was the beneficial holder of such Series B & C Senior
Notes as of July 13, 1994 (the "Beneficial Owner"), and voted the
claim represented thereby to accept or reject the Creditors'
Plan. Please fill out the following as may be appropriate:
Account Number (if known) Aggregate Principal Amount
Total = $
Or, if you do not hold your Series B & C Senior Notes through an
account or accounts, $ in aggregate principal amount.
Item 2. Class S-6 (Series B & C Senior Note Claims)
ORIGINAL VOTE. The Beneficial Owner of the aggregate principal
amount of Series B & C Senior Notes set forth in Item 1
originally voted to (please check one box below):
Accept the Creditors' Plan / /
Reject the Creditors' Plan / /
Item 3. Class S-6 (Series B & C Senior Note Claims) VOTE
CHANGE. The Beneficial Owner of the aggregate principal amount of
Series B & C Senior Notes set forth in Item 1 does not want the
vote it cast on or before September 23, 1994 on the Creditors'
Plan to be applied to the Consensual Plan, and wishes instead to
have the following vote applied to the Consensual Plan (please
check the appropriate box):
Accept the Consensual Plan / /
Reject the Consensual Plan / /
Item 4. By signing this Certification, the undersigned
certifies that (i) the Beneficial Owner of the Series B & C
Senior Notes set forth in Item 1 has full power and authority to
vote to accept or reject the Consensual Plan, (ii) such
Beneficial Owner has voted to accept or reject the Consensual
Plan as set forth in Item 3 above, (iii) the vote cast by such
Beneficial Owner in Item 3 above reflects a change from the vote
that was previously cast by the Beneficial Owner on the
Creditors' Plan, and (iv) this Certification has been executed on
behalf of a single Beneficial Owner. The undersigned also
acknowledges that (i) the Beneficial Owner has been provided with
a copy of the Disclosure Statement Supplement, including all
Exhibits thereto, and (ii) this Certification shall be counted as
the undersigned's changed vote with respect to all Debtors
against which the undersigned has an Allowed Class S-6 Claim.
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE INDIVIDUAL
VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for
the Beneficial Owner to indicate that it wishes to change from a
rejection to an acceptance, or an acceptance to a rejection, as
may be applicable, the vote such claimholder cast on the
Creditors' Plan, with the result that the changed vote shall be
utilized in respect of determining whether the Consensual Plan
has been accepted by the requisite amount and number of claims.
Accordingly, holders should not surrender certificates
representing their securities in connection with this
Certification, and the Balloting Agent will not accept delivery
of any such certificates tendered together with this
Certification.
Only a holder of Series B & C Senior Notes in whose name
such notes are held on the books of the Series B & C Senior Note
Trustee on July 13, 1994, the record date previously established
by the Bankruptcy Court, or any person who has obtained a
properly completed proxy from such person, and who timely cast a
vote to either accept or reject the Creditors' Plan has the
opportunity to change the vote it originally cast on the
Creditors' Plan.
The Consensual Plan may be confirmed by the Bankruptcy Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of Series B & C Senior Notes and any and all other
holders of claims against and equity interests in the Debtors
(including those who abstain or reject such plan or are not
entitled to vote thereon) will be bound by the confirmed plan and
the transactions contemplated thereby. If you do not want the
vote you cast on the Creditors' Plan to be deemed to have been
cast on the Consensual Plan, you must complete, sign and return
this Certification in the enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company,
Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have your vote change count, you must complete, sign and
return this Certification so that it is received either (i) by
the Balloting Agent not later than 5:00 p.m., Eastern Time, on
January 24, 1995, or (ii) if you are not also the record holder,
by your broker, bank or nominee not later than 5:00 p.m., Eastern
Time, on January 19, 1995. Your original signature is required on
the Certification in order for your vote change to count.
All capitalized terms used herein shall have the meanings
ascribed to them in the Consensual Plan.
To properly complete the Certification, you must follow the
procedures described below:
(a) make sure that the information required in Item 1
has been inserted; if you do not know the amount of your
claim, please contact either the Balloting Agent, or, if you
are not the record holder, your broker, your bank, or your
nominee;
(b) indicate whether you had voted to accept or reject
the Creditors' Plan by checking the proper box in Item 2; if
you do not remember how you voted, please contact either the
Balloting Agent, or, if you are not the record holder, your
broker, bank or your nominee;
(c) indicate your changed vote to accept or reject the
Consensual Plan by checking the appropriate box in Item 3;
(d) if you are completing this Certification on behalf
of another entity, indicate your relationship with such
entity and the capacity in which you are signing;
(e) please use additional Certifications (available
from the Balloting Agent) if additional space is required to
respond to any item on the Certification or use additional
sheets of papers clearly marked to indicate the applicable
item of the Certification (if you elect to use additional
Certifications because additional space is required, you
must complete and sign each such Certification);
(f) return your Certification using the enclosed return
envelope. If you received a return envelope addressed
directly to the Balloting Agent, please mail or deliver your
Certification so that it will be received by January 24,
1995. If you received a return envelope addressed to a
broker, bank or nominee, you must return your Certification
to such entity by January 19, 1995. Please allow additional
time; and
(g) if you hold claims or interests in more than one
class, and you previously cast a ballot to either accept or
reject the Creditors' Plan in more than one of those
classes, you may receive more than one Certification,
labeled for different classes of claims or interests. Your
changed vote will be counted in determining acceptance or
rejection of the Consensual Plan by a particular class only
if you fill out and return the Certification labeled for
that class in accordance with the instructions on that
Certification.
IF YOU WANT THE VOTE YOU ORIGINALLY CAST TO ACCEPT OR REJECT
THE CREDITORS' PLAN TO BE COUNTED AS CAST IN DETERMINING
ACCEPTANCE OR REJECTION OF THE CONSENSUAL PLAN, YOU NEED NOT DO
ANYTHING.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR
CERTIFICATION, OR YOU DID NOT RECEIVE A COPY OF THE DISCLOSURE
STATEMENT SUPPLEMENT OR CONSENSUAL PLAN, OR IF YOU BELIEVE THAT
YOU HAVE NOT RECEIVED THE CORRECT CERTIFICATION, CONTACT DONLIN,
RECANO & COMPANY, INC. AT 1 (800) 489-7444 OR YOUR BANK, BROKER
OR NOMINEE.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CERTIFICATION
PLEASE CALL 1 (800) 489-7444.
<PAGE>
Exhibit T3E21
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
MASTER VOTE CHANGE CERTIFICATION
FOR USE BY RECORD HOLDERS OF CLASS S-6 (SERIES B & C
SENIOR NOTE) CLAIMS
PLEASE READ THE FOLLOWING CAREFULLY. IF ANY BENEFICIAL OWNER
OF THE SERIES B & C SENIOR NOTES FOR WHICH YOU WERE THE RECORD
HOLDER AS OF JULY 13, 1994 WANTS TO CHANGE THE VOTE IT CAST ON
THE CREDITORS' JOINT PLAN OF REORGANIZATION FOR PURPOSES OF THE
VOTE ON THE AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF
DECEMBER 9, 1994 (THE "CONSENSUAL PLAN"), PLEASE COMPLETE, SIGN
AND DATE THIS MASTER CERTIFICATION AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY TO DONLIN, RECANO & COMPANY, INC.
(THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME, ON OR BEFORE
JANUARY 24, 1995 OR IT WILL NOT BE COUNTED. IF NONE OF THE
BENEFICIAL OWNERS FOR WHICH YOU WERE THE RECORD HOLDER WANTS TO
CHANGE THE VOTE IT CAST ON THE CREDITORS' PLAN FOR PURPOSES OF
THE VOTE ON THE CONSENSUAL PLAN, YOU NEED NOT TRANSMIT THIS
MASTER CERTIFICATION TO THE BALLOTING AGENT.
The records of the Balloting Agent reflect that you
previously cast a timely master ballot on which was recorded,
among other items, acceptances and/or rejections of the
Creditors' Joint Plan of Reorganization Dated As Of August 1,
1994 (the "Creditors' Plan") cast by the beneficial owners as of
July 13, 1994, of the Series B & C Senior Notes for which you are
the recordholder.
The proponents of the Creditors' Plan comprised of the
statutorily appointed Bondholders' Committee and Creditors'
Committee, Lehman Brothers Inc., Apollo and the Ad Hoc Committee
of Pre-LBO Bondholders (collectively, the "Creditor Proponents"),
the Debtors and Kohlberg Kravis Roberts & Co. ("KKR") have now
settled their disputes and reached agreement on the terms of a
joint plan of reorganization for the Debtors which is based on a
modification of the Creditors' Plan. The terms of the settlement
are embodied in the Amended Joint Plan of Reorganization Dated As
Of December 9, 1994 and exhibits thereto (the "Consensual Plan"),
which is jointly proposed by the Creditor Proponents, the Debtors
and the KKR Proponents (as defined in the Consensual Plan). The
Consensual Plan represents a modification of the Creditors' Plan.
Item 1. Principal Amount of Series B & C Senior Notes As To
Which Votes Were Cast and Vote Change Opportunity Applies. The
undersigned hereby certifies that the undersigned was the
registered recordholder of Series B & C Senior Notes as of
July 13, 1994 and transmitted to the Balloting Agent a schedule
of the following votes cast to accept or reject the Creditors'
Plan by the beneficial owners of such Series B & C Senior Notes
as of July 13, 1994. Please complete the schedule immediately
below.
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepted Rejected
Creditors' Creditors' Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 2. Principal Amount of Series B & C Senior Notes As To
Which There Has Been A VOTE CHANGE. The undersigned hereby
certifies that the schedule set forth immediately below is a true
and accurate schedule of each of the beneficial owners of the
Series B & C Senior Notes set forth in Item 1 (a "Beneficial
Owner") which does not want the vote it previously cast on the
Creditors' Plan to be applied to the Consensual Plan, and wishes
instead to have the following vote applied to the Consensual
Plan. Please complete the following as may be appropriate.
Principal Principal
Amount of Amount of
$ $
Name
(Optional) Account No. Accepts the Rejects the
Consensual Plan Consensual Plan
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 3. By signing this Master Certification, the
undersigned certifies that each Beneficial Owner of the Series B
& C Senior Notes described above whose votes are being
transmitted along with this Master Certification has been
provided with a black-lined copy of the Consensual Plan inclusive
of all exhibits thereto and of the Supplement To Disclosure
Statement For Amended Joint Plan of Reorganization Dated As of
December 9, 1994 (the "Disclosure Statement Supplement").
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
<PAGE>
INSTRUCTIONS FOR COMPLETING THE MASTER VOTE CHANGE CERTIFICATION
The Certification on the reverse side is not a letter of
transmittal and may not be used for any purpose other than for a
record holder of Series B & C Senior Notes as of July 13, 1994,
holding on behalf of another, to record such Beneficial Owner's
instruction to change from a rejection to an acceptance, or an
acceptance to a rejection, as may be applicable, the vote such
Beneficial Owner cast on the Creditors' Plan, with the result
that the changed vote shall be utilized in respect of determining
whether the Consensual Plan has been accepted by the requisite
amount and number of claims. Accordingly, holders should not
surrender certificates representing their securities in
connection with this Certification, and the Balloting Agent will
not accept delivery of any such certificates tendered together
with this Certification.
The Consensual Plan may be confirmed by the Bankruptcy Court
and thereby made binding on you if it is accepted by the holders
of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of
equity security interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the
Bankruptcy Court may nevertheless confirm the Consensual Plan if
the Bankruptcy Court finds that such plan accords fair and
equitable treatment to the class or classes rejecting it and
otherwise satisfies the requirements of section 1129(b) of the
Code. If
the Consensual Plan is confirmed by the Bankruptcy Court, all
holders of Series B & C Senior Notes and any and all other
holders of claims against and equity interests in the Debtors
(including those who abstain or reject such plan or are not
entitled to vote thereon) will be bound by the confirmed plan and
the transactions contemplated thereby.
Under the Bankruptcy Code, a holder of a claim or interest
that cast a vote to accept or reject a plan of reorganization, is
deemed to have accepted or rejected, as may be applicable, such
plan as modified, unless such holder who voted to accept or
reject such plan changes that vote within the time fixed by the
Court.
Only a holder of Series B & C Senior Notes in whose name
such notes are held on the books of the Series B & C Senior Note
Trustee on July 13, 1994, the record date previously established
by the Bankruptcy Court, or any person who has obtained a
properly completed proxy from such person, and who timely cast a
vote to either accept or reject the Creditors' Plan has the
opportunity to change the vote it originally cast on the
Creditors' Plan.
This Master Certification is to be used by brokerage firms,
banks, or nominees for summarizing those Individual Vote Change
Certifications received from the Beneficial Owners of Series B &
C Senior Notes for which you were the record holder as of
July 13, 1994, and who previously timely transmitted Individual
Ballots to you on the Creditors' Plan. Only Individual Vote
Change Certifications received by you by 5:00 p.m., Eastern Time,
on January 19, 1995 are to be counted by you. Individual Vote
Change Certifications received after such time must not be
counted.
Please retain all executed Individual Vote Change
Certifications for one year.
Please forward this Master Vote Change Certification in the
enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have the Individual Vote Change Certifications
transmitted to you by your Beneficial Owners, if any, count, you
must complete, sign and return this Master Certification so that
it is received by the Balloting Agent not later than 5:00 p.m.,
Eastern Time, on January 24, 1995.
You need not transmit this Master Certification to the
Balloting Agent if you do not receive any Individual Vote Change
Certifications from your Beneficial Owners.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR MASTER
VOTE CHANGE CERTIFICATION, CONTACT DONLIN, RECANO & COMPANY, INC.
AT 1 (800) 489-7444.
IF YOU HAVE ANY QUESTIONS REGARDING THIS MASTER VOTE CHANGE
CERTIFICATION OR THE VOTE CHANGE PROCEDURES, PLEASE CALL 1 (800)
489-7444.
<PAGE>
Exhibit T3E22
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
CLASS U-4 EXCHANGE ELECTION FORM FOR THE CONSENSUAL PLAN
FOR USE BY BENEFICIAL OWNERS AS OF JULY 13, 1994
WHO PREVIOUSLY ELECTED TO BE DISTRIBUTED QUALIFIED
SECURITIES IN CLASS U-4
(SENIOR SUBORDINATED NOTES)
PLEASE READ THE FOLLOWING CAREFULLY. IF YOU WANT TO ELECT TO
EXERCISE THE CLASS U-4 EXCHANGE ELECTION (HAVING PREVIOUSLY
ELECTED TO RECEIVE QUALIFIED SECURITIES UNDER THE CREDITORS'
PLAN) AND RECEIVE A PROPORTIONATELY INCREASED AGGREGATE PRINCIPAL
AMOUNT OF QUALIFIED SECURITIES UNDER THE TERMS OF THE AMENDED
JOINT PLAN OF REORGANIZATION DATED AS OF DECEMBER 9, 1994 (THE
"CONSENSUAL PLAN") INSTEAD OF NEW COMMON STOCK HAVING AN
IDENTICAL AGGREGATE NEW COMMON STOCK VALUE PER SHARE THAT YOU
WOULD OTHERWISE RECEIVE UNDER THE CONSENSUAL PLAN, PLEASE
COMPLETE, SIGN, AND DATE THIS CLASS U-4 EXCHANGE ELECTION AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF YOUR
EXCHANGE ELECTION FORM HAS NOT BEEN RECEIVED BY DONLIN, RECANO &
COMPANY, INC. (THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME,
ON OR BEFORE JANUARY 24, 1995, OR IF YOU ARE NOT THE RECORD
HOLDER, BY YOUR BROKER, BANK OR NOMINEE BY 5:00 P.M. EASTERN
TIME, ON OR BEFORE JANUARY 19, 1995, IT WILL NOT BE COUNTED.
Item 1. Principal Amount of Senior Subordinated Notes As to
Which A Prior Subordinated Note Claim Election Was Made. This
Class U-4 Exchange Election is being exercised by or on behalf of
the Beneficial Owner of the aggregate principal amount of the
Senior Subordinated Notes indicated below. The undersigned hereby
certifies that the undersigned was the beneficial owner of such
Senior Subordinated Notes as of July 13, 1994 (the "Beneficial
Owner") and previously elected to have the aggregate principal
amount of its Allowed Senior Subordinated Note Claim indicated
immediately below satisfied by Qualified Securities. Please fill
out the following as may be appropriate:
Account Number Aggregate Principal
(if known) Amount $ Elected to Receive Qualified
Securities in $
Principal Amount
Total = $
Or, if you do not hold your Senior Subordinated Notes through an
account or accounts; $ in aggregate principal amount and
elected to receive Qualified Securities in respect of $
principal amount of its Allowed Class U-4 Claim.
Item 2. Class U-4 Exchange Election. Pursuant to Section
1.26(e) of the Consensual Plan, each holder of a Class U-4 Claim
that had affirmatively elected to receive all or part of its
Class U-4 Claim in the form of Qualified Securities pursuant to
the Subordinated Note Claim Election (other than Lehman Brothers
Inc.) (a holder of an "Eligible Class U-4 Claim") may elect to
modify the allocation of Qualified Securities and New Common
Stock that would otherwise be issued to such holder of an
Eligible Class U-4 Claim under the Consensual Plan, so as to
increase the aggregate amount of Qualified Securities and
decrease by an identical aggregate New Common Stock Value Per
Share the New Common Stock to be issued to such holder, to the
extent set forth in Section 1.26(e) of the Consensual Plan. Such
additional amount of Qualified Securities shall be solely in the
form of New Senior Notes, unless no New Senior Notes are issued
as Qualified Securities under the Consensual Plan, in which case
such additional amount of Qualified Securities shall be in the
form of Cash.
I wish to exercise the Class U-4 Exchange Election / /
The Subordinated Note Claim Election that you previously
exercised remains effective whether or not you elect to exercise
the Class U-4 Exchange Election.
Item 3. By signing this Class U-4 Exchange Election Form,
the undersigned certifies that (i) the Beneficial Owner of the
Senior Subordinated Note Claim set forth in Item 1 as, or on
behalf of, the holder of an Eligible Class U-4 Claim has full
power and authority to execute this Exchange Election Form,
(ii) the amounts and other information listed herein about such
Eligible Class U-4 Claims are accurate, and (iii) this Exchange
Election Form has been executed on behalf of a single Beneficial
Owner. The undersigned also acknowledges that the Beneficial
Owner has been provided with a copy of the Disclosure Statement
Supplement, the Consensual Plan and all Exhibits thereto.
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE CLASS U-4 EXCHANGE ELECTION FORM
The Class U-4 Exchange Election on the reverse side is not a
letter of transmittal and may not be used for any purpose other
than for the Beneficial Owner of an Eligible Class U-4 Claim to
indicate that it wishes to exercise the Class U-4 Exchange
Election provided for under the Consensual Plan. Accordingly,
holders should not surrender certificates representing their
securities in connection with this Class U-4 Exchange Election
and the Balloting Agent will not accept delivery of any such
certificates tendered together with this Class U-4 Exchange
Election.
Only a holder of Senior Subordinated Notes (other than
Lehman Brothers Inc.) (a) in whose name such notes were held on
the books of the Senior Subordinated Indenture Trustee on
July 13, 1994, the record date previously established by the
Bankruptcy Court, or any person who has obtained a properly
completed proxy from such person, and (b) who previously elected
on or before September 23, 1994 to receive all or any part of its
Allowed Claim in Qualified Securities (a "Beneficial Owner of an
Eligible Class U-4 Claim") has the opportunity to exercise the
Class U-4 Exchange Election under the Consensual Plan.
To have your Class U-4 Exchange Election count, you must
complete, sign and return this Class U-4 Exchange Election so
that it is received either (i) by the Balloting Agent not later
than 5:00 p.m., Eastern Time, on January 24, 1995, or (ii) if you
are not also the record holder, by your broker, bank or nominee
not later than 5:00 p.m., Eastern Time, on January 19, 1995. Your
original signature is required on the Class U-4 Exchange Election
in order for your election to count. If you are both the
Beneficial Owner and record holder, the Class U-4 Exchange
Election is to be returned to the Balloting Agent, as follows:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc.Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701New York, New York 10016
All capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Consensual Plan.
To properly complete the Class U-4 Exchange Election, you
must follow the procedures described below:
(a) make sure that the information required in Item 1
has been inserted; if you do not know the principal amount
of your claim and/or the portion of that amount which you
previously elected to have satisfied by Qualified
Securities, please contact either the Balloting Agent, or,
if you are not the record holder, your broker, your bank, or
your nominee;
(b) indicate whether you wish to exercise the Class U-4
Exchange Election by checking the appropriate box in Item 2;
(c) if you are completing this Class U-4 Exchange
Election on behalf of another entity, indicate your
relationship with such entity and the capacity in which you
are signing;
(d) please use additional Class U-4 Exchange Elections
(available from the Balloting Agent) if additional space is
required to respond to any item on the Class U-4 Exchange
Election or use additional sheets of paper clearly marked to
indicate the applicable item of the Class U-4 Exchange
Election (if you elect to use additional Class U-4 Exchange
Elections because additional space is required, you must
complete and sign each such Class U-4 Exchange Election);
and
(e) return your Class U-4 Exchange Election using the
enclosed postage-paid return envelope. If you received a
return envelope addressed directly to the Balloting Agent,
please mail or deliver your Class U-4 Exchange Election so
that it will be received by January 24, 1995. If you
received a return envelope addressed to a broker, bank or
nominee, you must return your Class U-4 Exchange Election to
such entity by January 19, 1995. Please allow additional
time.
IF YOU DO NOT WANT TO MODIFY THE ALLOCATION OF QUALIFIED
SECURITIES AND NEW COMMON STOCK THAT WOULD OTHERWISE BE ISSUED TO
YOU UNDER THE CONSENSUAL PLAN, YOU NEED NOT DO ANYTHING.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR CLASS U-4
EXCHANGE ELECTION, OR YOU DID NOT RECEIVE A COPY OF THE
DISCLOSURE STATEMENT SUPPLEMENT OR CONSENSUAL PLAN, CONTACT
DONLIN, RECANO & COMPANY, INC. AT 1 (800) 489-7444 OR YOUR BANK,
BROKER OR NOMINEE.
<PAGE>
Exhibit T3E23
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________
In re
Chapter 11
Hillsborough Holdings Jointly Administered
Corporation, et al., Case Nos. 89-9715-8P1
to 89-9746-8P1 and
Debtors. 90-11997-8P1 Inclusive
____________________________
MASTER CLASS U-4 EXCHANGE ELECTION FORM FOR THE CONSENSUAL PLAN
FOR USE BY RECORD HOLDERS OF CLASS U-4 (SENIOR SUBORDINATED
NOTE) CLAIMS
PLEASE READ THE FOLLOWING CAREFULLY. IF ANY BENEFICIAL OWNER
OF THE SENIOR SUBORDINATED NOTES FOR WHICH YOU WERE THE RECORD
HOLDER AS OF JULY 13, 1994 HAS PROPERLY INSTRUCTED YOU TO
EXERCISE THE CLASS U-4 EXCHANGE ELECTION AND MODIFY THE AGGREGATE
PRINCIPAL AMOUNT OF QUALIFIED SECURITIES AND NEW COMMON STOCK
THAT SUCH HOLDER WOULD OTHERWISE RECEIVE UNDER THE TERMS OF THE
AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF DECEMBER 9, 1994
(THE "CONSENSUAL PLAN"), PLEASE COMPLETE, SIGN AND DATE THIS
MASTER CLASS U-4 EXCHANGE ELECTION FORM AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY TO DONLIN, RECANO &
COMPANY, INC. (THE "BALLOTING AGENT") BY 5:00 P.M. EASTERN TIME,
ON OR BEFORE JANUARY 24, 1995. IF THIS MASTER EXCHANGE FORM HAS
NOT BEEN RECEIVED BY THE BALLOTING AGENT BY SUCH DEADLINE, IT
WILL NOT BE COUNTED. IF NONE OF THE BENEFICIAL OWNERS FOR WHICH
YOU WERE THE RECORD HOLDER HAS PROPERLY INSTRUCTED YOU TO
EXERCISE THE CLASS U-4 EXCHANGE ELECTION, YOU NEED NOT TRANSMIT
THIS MASTER CLASS U-4 EXCHANGE ELECTION FORM TO THE BALLOTING
AGENT.
The records of the Balloting Agent reflect that you
previously cast a timely master ballot on which was recorded,
among other items, the Subordinated Note Claim Elections
exercised by the beneficial owners as of July 13, 1994, of the
Senior Subordinated Notes for which you were the record holder,
in connection with the Creditors' Joint Plan of Reorganization
Dated As Of August 1, 1994 (the "Creditors' Plan").
The proponents of the Creditors' Plan comprised of the
statutorily appointed Bondholders' Committee and Creditors'
Committee, Lehman Brothers Inc., Apollo and the Ad Hoc Committee
of Pre-LBO Bondholders (collectively, the "Creditor Proponents"),
the Debtors and Kohlberg Kravis Roberts & Co. have now settled
their disputes and reached agreement on the terms of a joint plan
of reorganization for the Debtors which is based on a
modification of the Creditors' Plan. The terms of the settlement
are embodied in the Amended Joint Plan of Reorganization Dated As
Of December 9, 1994 and exhibits thereto (the "Consensual Plan"),
which is jointly proposed by the Creditor Proponents, the Debtors
and the KKR Proponents (as defined in the Consensual Plan). The
Consensual Plan is a modification of the Creditors' Plan.
Item 1. Principal Amount of Senior Subordinated Notes As To
Which A Prior Subordinated Note Claim Election Was Made To
Receive Qualified Securities. The undersigned hereby certifies
that the undersigned was the registered record holder of Senior
Subordinated Notes as of July 13, 1994 and transmitted to the
Balloting Agent a schedule of the following Subordinated Note
Claim Elections made to receive Qualified Securities by the
beneficial owners of such Senior Subordinated Notes as of
July 13, 1994. Please complete the schedule immediately below.
Name Elected to Receive
(Optional) Account No. Principal Amount Qualified Securites
$ in $ Principal
Amount
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 2. Principal Amount of Senior Subordinated Notes Which
Have Exercised the Class U-4 Exchange Election. The undersigned
hereby certifies that the schedule set forth immediately below is
a true and accurate schedule of each of the beneficial owners of
the Senior Subordinated Notes set forth in Item 1 (other than
Lehman Brothers Inc.) (each an "Eligible Class U-4 Beneficial
Owner") which has elected under the Consensual Plan to modify the
allocation of Qualified Securities and New Common Stock that
would otherwise be issued to such Eligible Class U-4 Beneficial
Owner. Please complete the following as may be appropriate.
Name Exercised Class U-4
(Optional) Account No. Principal Amount Exchange Election
of $
1
2
3
4
5
6
7
Total = N/A
(ATTACH ADDITIONAL PAGES IF NECESSARY)
Item 3. By signing this Master Exchange Election, the
undersigned certifies that each Beneficial Owner of the Senior
Subordinated Notes described above whose Class U-4 Exchange
Elections are being transmitted along with this Master Class U-4
Exchange Election Form has been provided with a black-lined copy
of the Consensual Plan inclusive of all exhibits thereto and a
copy of the Supplement To Disclosure Statement For Amended Joint
Plan of Reorganization Dated As of December 9, 1994 (the
"Disclosure Statement Supplement").
Name:________________________________
(Print or Type)
________________________________
Federal Tax I.D. No.
Signature:___________________________
By:__________________________________
(If Appropriate)
Title:_______________________________
(If Appropriate)
Address:_____________________________
Street
_____________________________
City, State and Zip Code
Telephone Number: ( )_____________
Date Completed: _____________________
INSTRUCTIONS FOR COMPLETING THE MASTER CLASS U-4
EXCHANGE ELECTION FORM
The Class U-4 Exchange Election on the reverse side is not a
letter of transmittal and may not be used for any purpose other
than for a record holder of Senior Subordinated Notes as of
July 13, 1994, holding on behalf of another who had previously
elected to received Qualified Securities under the Consensual
Plan, to record such Beneficial Owner's instruction to exercise
the Class U-4 Exchange Election provided for under the Consensual
Plan. Accordingly, holders should not surrender certificates
representing their securities in connection with this Class U-4
Exchange Election, and the Balloting Agent will not accept
delivery of any such certificates tendered together with this
Class U-4 Exchange Election.
Only a holder of Senior Subordinated Notes (other than
Lehman Brothers Inc.) (a) in whose name such notes were held on
the books of the Senior Subordinated Indenture Trustee on
July 13, 1994, the record date previously established by the
Bankruptcy Court, or any person who has obtained a properly
completed proxy from such person, and (b) who elected to receive
all or any part of its Allowed Claim in Qualified Securities on
or before September 23, 1994, has the opportunity to exercise the
Class U-4 Exchange Election under the Consensual Plan.
This Master Class U-4 Exchange Election Form is to be used
by brokerage firms, banks, or nominees for summarizing those
Class U-4 Exchange Election Forms received from (a) the Eligible
Class U-4 Beneficial Owners of Senior Subordinated Notes for
which you were the record holder as of July 13, 1994, and (b) who
previously timely transmitted Individual Ballots to you on the
Creditors' Plan on which elections to receive Qualified
Securities were made. Only Class U-4 Exchange Election Forms
received by you by 5:00 p.m., Eastern Time, on January 19, 1995
are to be counted by you and reflected on the Master Class U-4
Exchange Election Form. Class U-4 Exchange Election Forms
received after such time must not be counted.
Please retain all executed Class U-4 Exchange Election Forms
for one year.
Please forward this completed and executed Master Class U-4
Exchange Election Form in the enclosed return envelope to:
If By Mail If By Courier or Hand
Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc.
P.O. Box 2022 419 Park Avenue South
Murray Hill Station Suite 1206
New York, New York 10156-0701 New York, New York 10016
To have the Class U-4 Exchange Election Forms transmitted to
you by your Beneficial Owners, if any, count, you must complete,
sign and return this Master Class U-4 Exchange Election Form so
that it is received by the Balloting Agent not later than 5:00
p.m., Eastern Time, on January 24, 1995.
You need not transmit this Master Class U-4 Exchange
Election Form to the Balloting Agent if you do not receive any
Class U-4 Exchange Election Forms from your Beneficial Owners.
IF YOU DID NOT RECEIVE A RETURN ENVELOPE WITH YOUR MASTER
CLASS U-4 EXCHANGE ELECTION FORM, CONTACT DONLIN, RECANO &
COMPANY, INC. AT 1 (800) 489-7444.
