FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 1994
(August 1, 1994)
ROSE'S STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-631 56-0382475
(Commission File Number) (IRS Employer Identification No.)
218 S. Garnett Street
Henderson, North Carolina
27536
(Address of principal executive offices) (Zip Code)
(919) 430-2600
(Registrant's telephone number, including area code)<PAGE>
Item 5. Other Events
On September 5, 1993 the Registrant filed a voluntary Petition
for Relief under Chapter 11, Title 11 of the United States Code
(the "Bankruptcy Code") with the United States Bankruptcy Court for
the Eastern District of North Carolina, Raleigh Division (the
"Court"). The Registrant is in possession of its property and is
maintaining and operating its property as a debtor-in-possession
pursuant to the provisions of Sections 1107 and 1108 of the
Bankruptcy Code.
The Registrant has periodically reported material events
related to the bankruptcy proceedings in its Form 10-K, 10-Qs and
8-Ks.
On August 1, 1994 the Registrant filed with the Court a
proposed Joint Plan of Reorganization (the "Plan") with the consent
of the official unsecured creditors committee, the pre-petition
secured senior noteholders, and the official equity committee. A
copy of the Plan is attached as Exhibit 10.1 hereto. Capitalized
terms used herein shall have the meanings set forth in the Plan.
Various ancillary agreements required to effectuate the Plan are
expected to be negotiated with the official unsecured creditors
committee, the Pre-Petition Lenders, the official equity committee
and any Plan/exit funder, and filed at a later date.
While the Registrant anticipates seeking Court approval of the
Plan prior to November 30, 1994, it is anticipated that the Plan's
"Effective Date", or the consummation of the Plan, will only occur
if certain conditions are met. First, the Court must have
confirmed the Plan and entered a Confirmation Order in accordance
with the provisions of the Bankruptcy Code. Second, the Registrant
must have entered into an acceptable Plan/exit financing facility.
The Registrant is presently engaged in discussions with potential
Plan/exit funders and has a commitment from GE Capital. Third, the
Registrant must be able to effectuate all cash distributions
required to be made under the Plan, which will require that the
Registrant's cash on hand, together with the exit financing and
other financial resources, be sufficient to make all cash payments
required to be made on the Effective Date. Fourth, all ancillary
agreements and documents otherwise required to effectuate the Plan
must be finalized. It is anticipated that during the period prior
to Disclosure Statement approval various agreements will be drafted
and subject to negotiation with the Plan/exit funder, the Pre-
Petition Lenders, the official committees, GE Capital and perhaps
the secured creditors. The Effective Date of the Plan is presently
anticipated to occur during the first quarter of 1995, but there
can be no assurance of that.<PAGE>
Item 7. Financial Statements and Exhibits
The following exhibits are part of this report:
Exhibit 10.1 Proposed Joint Plan of Reorganization dated
August 1, 1994.
Exhibit 99.1 Press Release dated August 1, 1994 from Rose's
Stores, Inc. regarding Joint Plan of
Reorganization and Exit Financing Commitment.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ROSE'S STORES, INC.
Date: August 10, 1994 By: /s/ R. Edward Anderson
R. Edward Anderson
Executive Vice President
Chief Financial Officer
<PAGE>
Exhibit Index
Exhibit No. Description Page No.
Exhibit 10.1 Proposed Joint Plan of
Reorganization dated August 1,
1994. 6
Exhibit 99.1 Press Release dated August 2, 1994
from Rose's Stores, Inc. regarding
Joint Plan of Reorganization and
Exit Financing Commitment. 147
<PAGE>
Exhibit 10.1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO. 93-01365-5-ATS
ROSE'S STORES, INC.,
(TAX ID #56-0382475), CHAPTER 11
Debtor.
JOINT PLAN OF REORGANIZATION
OF
ROSE'S STORES, INC.
August 1, 1994<PAGE>
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO. 93-01365-5-ATS
ROSE'S STORES, INC.,
(TAX ID #56-0382475), CHAPTER 11
Debtor.
JOINT PLAN OF REORGANIZATION
Rose's Stores, Inc., debtor and debtor-in-possession,
Nationwide Life Insurance Company, Wausau Preferred Health
Insurance Company, Equitable Variable Life Insurance Company, The
Equitable Life Assurance Society of the United States, Jefferson-
Pilot Life Insurance Company, The Franklin Life Insurance Company,
The Franklin United Life Insurance Company, Great-West Life &
Annuity Insurance Company, American Family Life Insurance Company,
State Mutual Life Assurance Company of America, SMA Life Assurance
Company, Merrill Lynch Life Insurance Company, ML Life Insurance
Company of New York, Woodmen of the World Life Insurance Society,
Knights of Columbus, Washington National Insurance Company, The
Stonehill Investment Corp., Central Life Assurance Company, Lazard
Freres & Co., or their successors and assigns as the case may be,
the Bank of Tokyo, Ltd., the Official Committee of Unsecured
Creditors and the Official Committee of Equity Security Holders
jointly propose the following Joint Plan of Reorganization pursuant
to Section 1121(a) of the Bankruptcy Code:
<PAGE>
ARTICLE i
DEFINITIONS
For purposes of this Plan of Reorganization, the
following terms shall have the meanings herein set forth. Unless
otherwise indicated, the singular shall include the plural and the
plural shall include the singular. Capitalized terms shall at all
times refer to the terms as defined in this Article. To the extent
that terms are used and not otherwise defined in this Plan, they
shall have the meanings ascribed to them in the Bankruptcy Code.
i.1 "Actual EBITDA" shall mean the EBITDA of the Debtor
calculated as of December 31, 1994 for the first 11 fiscal months
ending on such date and measured on January 20, 1995.
i.2 "Administrative Claim" shall mean a Claim that is
allowed under Section 503(b) of the Bankruptcy Code and entitled
to priority under Section 507(a)(1) of the Bankruptcy Code,
including, without limitation, fees and expenses of Professionals
retained or to be compensated pursuant to the Bankruptcy Code, and
all fees and charges assessed against the Debtor's Estate pursuant
to 28 U.S.C. Statute 1930.
i.3 "ADR Procedure" shall mean the three-step alternative
dispute resolution procedure pursuant to which the Debtor and a
holder of a Damages Claims may seek to reach a determination of
the amount of a Damages Claim for purposes of allowance, and Cash
payment only where a Damages Claim is determined to be an Allowed
Claim in an amount equal to or less than $500, pursuant to and as
instituted by that certain order of the Bankruptcy Court dated
April 26, 1994 entitled, "Order Approving Alternative Dispute
Resolution Procedure," and such other orders of the Bankruptcy
Court entered in connection therewith.
i.4 "Allowed Claim" shall mean a Claim that: (a) has been
scheduled by the Debtor pursuant to Section 521(1) of the
Bankruptcy Code and Bankruptcy Rule 1007, is not scheduled as
disputed, contingent or unliquidated, and is not a Claim as to
which a proof of Claim has been filed; (b) is a Claim as to which
a proof of Claim has been timely-filed as of the applicable Bar
Date and no objection thereto, or application to equitably
subordinate or otherwise limit recovery, has been made as of a
given date, and on or before any applicable deadline; (c) has been
allowed by a Final Order of the Bankruptcy Court, or (d) in the
case of the claims of the Pre-Petition Lenders, the Pre-Petition
Lenders' Allowed Secured Claims. Allowed Claim shall include any
portion of a Claim that is not disputed, contingent or
unliquidated. "Allowed Claim" shall not include interest on the
amount of any Claim except with respect to an Allowed Secured Claim
as permitted by Section 506(b) of the Bankruptcy Code or as
otherwise allowed by the Bankruptcy Court. Under no circumstances
shall "Allowed Claim" include Claims arising from the rejection of
any agreement pursuant to which Pre-Petition Warrants or Pre-
Petition Stock Options may be, or have been, issued or exercised.
i.5 "Allowed Non-Tax Priority Claim" shall mean that
portion of an Allowed Claim entitled to priority treatment under
Section 507(a) of the Bankruptcy Code, exclusive of Allowed Tax
Claims and Administrative Claims.
i.6 "Allowed Secured Claim" shall mean that portion of an
Allowed Claim equal to the value, as determined by Final Order of
the Bankruptcy Court pursuant to Section 506(a) of the Bankruptcy
Code and Bankruptcy Rule 3012, of the interest of the holder of
the Allowed Secured Claim in the property of the Estate which
secures such Allowed Secured Claim by a valid and enforceable lien,
security interest and/or pledge. In the case of the claims of the
Pre-Petition Lenders, Allowed Secured Claim shall mean the Pre-
Petition Lenders' Allowed Secured Claims.
i.7 "Allowed Tax Claim" shall mean that portion of an
Allowed Claim entitled to priority under Section 507(a)(7) of the
Bankruptcy Code.
i.8 "Allowed Unsecured Claim" shall mean any Allowed Claim
that is not an Administrative Claim, an Allowed Non-Tax Priority
Claim, an Allowed Secured Claim, an Allowed Tax Claim or a Claim
classified as an Interest in Classes 5, 6, and 7.
i.9 "Alternative Treatment Account" shall mean a
segregated account established by the Debtor on the Effective Date
in the event the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of this Plan to maintain such Cash
constituting the Debtor's Cash or Disposition Proceeds in such
amount as determined by the Debtor, initially, pursuant to the
budget prepared by the Debtor in accordance with the Second
Supplemental Adequate Protection Consent Order, and, after the
Effective Date, with the consent of the Post-Effective Date Trade
Committee or pursuant to order of the Bankruptcy Court, to be
necessary and appropriate to pay, all costs and expenses incurred
in connection with the implementation of the Alternative Treatment
Provisions, including, without limitation, customary closing costs,
fees and commissions, reasonable overhead and general
administrative expenses of the Debtor, all Cash required to be paid
by the Debtor in connection with any compromises or settlements
entered into after the Effective Date, and the reasonable fees and
expenses of professionals and other agents retained by the Debtor
or the Post-Effective Date Trade Committee.
i.10 "Alternative Treatment Date" shall mean, with respect
to such conditions set forth in Section 8.1 of this Plan which
occur and are not waived, any of the following dates: for
condition 8.1(a), two Business Days after entry of an order for
specific performance of an Additional Adequate Protection Payment
if the Debtor fails to comply therewith; for condition 8.1(b),
December 31, 1994; for condition 8.1(c), January 20, 1995; for
condition 8.1(d), December 31, 1994; for condition 8.1(e), January
20, 1995; for condition 8.1(f), April 30, 1995; for condition
8.1(g), January 20, 1995; and, for condition 8.1(h), on the
Effective Date of the Plan.
i.11 "Alternative Treatment Implementation Orders" shall
mean such orders of the Bankruptcy Court as have been or may be
entered subsequent to an Alternative Treatment Date which authorize
the Debtor to take such actions as are necessary and appropriate
in connection with the cessation of the Debtor's discount retail
business and the sale and disposition of all assets of the Estate
in connection therewith, including, without limitation, the Second
Supplemental Adequate Protection Consent Order.
i.12 "Alternative Treatment Provisions" shall mean,
collectively, Sections 5.8, 5.8.1, 5.8.2, 5.8.3, 5.8.4, 6.2.7 and
7.16 of the Plan.
i.13 "Assumed Contracts and Leases" shall mean those
executory contracts and unexpired, non-residential real or personal
property leases which the Debtor has assumed, or will assume, as
of the Effective Date, pursuant to Section 365 of the Bankruptcy
Code by Final Order(s) of the Bankruptcy Court.
i.14 "Available Cash" shall mean all Cash of the Debtor as
of the Effective Date and all Cash constituting Disposition
Proceeds not maintained in the Alternative Treatment Account.
i.15 "Avoiding Power Actions" shall mean all claims, rights
and causes of action of the Estate against any Person under
Sections 544 to 550, inclusive, of the Bankruptcy Code.
i.16 "Bankruptcy Code" shall mean the Title 11, United
States Code, 11 U.S.C. Statutes 101 et seq. as in effect on the
Filing Date, as the same thereafter has been, and may be, amended.
i.17 "Bankruptcy Court" shall mean the United States
Bankruptcy Court for the Eastern District of North Carolina,
Raleigh Division, or such other court as may hereafter be granted
primary jurisdiction over the Chapter 11 Case.
i.18 "Bankruptcy Rules" shall mean the Federal Rules of
Bankruptcy Procedure, effective August 1, 1991 in accordance with
the provisions of 28 U.S.C. Statute 2075 as the same thereafter
has been, and may be, amended.
i.19 "Bank Group" shall mean, collectively, NationsBank of
North Carolina, N.A., Branch Banking & Trust Company, Crestar Bank,
The Bank of New York, Credit Lyonnais New York Branch, Credit
Lyonnais Cayman Island Branch, Central Carolina Bank and Wachovia
Bank of North Carolina, N.A., and their successors, assigns and
participants.
i.20 "Bank of Tokyo" shall mean Bank of Tokyo, Ltd.
i.21 "Bar Date" shall mean any date fixed by order of the
Bankruptcy Court as the last date on which a particular Claim
against the Debtor must be filed.
i.22 "Board of Directors" shall mean the board of directors
of Rose's as of the date immediately preceding the Effective Date.
i.23 "Business Day" shall mean any day other than a
Saturday, Sunday or legal holiday as such term is defined in
Bankruptcy Rule 9006(a).
i.24 "Cash" shall mean cash, cash equivalents (including
personal checks drawn on a bank insured by the Federal Deposit
Insurance Corporation, certified checks and money orders) and other
readily marketable direct obligations of the United States of
America and certificates of deposit issued by banks.
i.25 "Chapter 11 Case" shall mean the Debtor's case
pursuant to Chapter 11 of the Bankruptcy Code administered in the
Bankruptcy Court under case number 93-01365-5-ATS.
i.26 "Claim" shall mean a Claim against the Debtor as
defined in Sections 101(5) and 102(2) of the Bankruptcy Code.
i.27 "Class" shall mean a category of holders of Claims or
Interests which are substantially similar in nature to the Claims
or Interests of the other holders in such Class respectively, as
classified pursuant to this Plan.
i.28 "Class 3 Common Stock Designation" shall mean all
shares of New Rose's Common Stock issued and outstanding as of the
Effective Date which are not included in the Class 5 Subscription
Stock Designation, if any, or the New Rose's Common Stock Secondary
Distribution, if any.
i.29 "Class 5 Rights Notice" shall mean the notice sent to
all holders of Common Stock Interests in Class 5 within 5 days of
the Equity Record Date advising them of their rights under the
Class 5 Subscription, including a return notification form which
a Class 5 Subscriber must use to indicate participation in the
Class 5 Subscription. The Class 5 Rights Notice shall effectuate
the Class 5 Subscription pursuant to Section 7.10 of this Plan and
shall be substantially in a form as negotiated among the Debtor or
Reorganized Rose's and the Committees to their satisfaction and
filed with the Bankruptcy Court prior to entry of an order of the
Bankruptcy Court approving the Disclosure Statement or such later
date as consented to by the Committees and fixed by the Bankruptcy
Court, as such document may be modified or amended by consent of
the foregoing parties and effective as of the Effective Date.
i.30 "Class 5 Subscription Stock Designation" shall mean
all shares of New Rose's Common Stock purchased by and issued to
Class 5 Subscribers pursuant to Section 7.10 of this Plan and the
Class 5 Rights Notice.
i.31 "Class 5 Subscriber" shall mean a holder of Common
Stock Interests in Class 5 who has irrevocably elected to acquire
shares of New Rose's Common Stock pursuant to Section 7.10 of this
Plan and the Class 5 Rights Notice.
i.32 "Class 5 Subscription" shall mean the procedure by
which a holder of Common Stock Interests in Class 5 may elect to
pay Cash to acquire shares of New Rose's Common Stock, pursuant to
Section 7.10 of this Plan and the Class 5 Rights Notice.
i.33 "Class 5 Subscription Price" shall mean the price per
share of New Rose's Common Stock payable by a Class 5 Subscriber
pursuant to the Class 5 Rights Notice, which shall be equal to 1/2
of the Full Recovery Target Amount divided by the number of shares
of New Rose's Common Stock to be issued pursuant to Sections 6.2.2
and 6.2.4 of this Plan.
i.34 "Collateral Agent" shall mean NationsBank of North
Carolina, N.A. (successor-in-interest to NCNB National Bank of
North Carolina) in its capacity as the collateral agent for the
Pre-Petition Lenders, or any successor thereto, pursuant to the
Intercreditor Agreements.
i.35 "Committees" shall mean, collectively, the Unsecured
Committee and the Equity Committee.
i.36 "Common Stock Interest" shall mean any equity interest
in the Voting Common Stock and Non-Voting Class B Stock registered
on the applicable Record Date in such stock register as may be
maintained by or on behalf of the Debtor. "Common Stock Interest"
excludes any Pre-Petition Warrants or Pre-Petition Stock Options.
i.37 "Confirmation" shall mean entry of an order of the
Bankruptcy Court confirming this Plan pursuant to Section 1129 of
the Bankruptcy Code.
i.38 "Confirmation Date" shall mean the date upon which
the Confirmation Order is entered by the Bankruptcy Court.
i.39 "Confirmation Order" shall mean the Final Order of
the Bankruptcy Court confirming this Plan pursuant to Section 1129
of the Bankruptcy Code, in a form acceptable to all Plan Proponents
and GE Capital.
i.40 "Consolidated Net Cash Flow" shall mean for any
period, as to the Debtor or Reorganized Rose's, as the case may
be, the actual increase or decrease in Cash for such period
determined in a manner consistent with the calculation of
"(Decreases) Increases in Cash" as set forth in the "Projected
Changes in Cash" projections (which shall include cash equivalents)
annexed to and made a part of Exhibit 5.1 hereto ("Projections"),
provided that the same shall be in accordance with generally
accepted accounting principles in the United States of America as
in effect from time to time ("GAAP"), less the aggregate amount of
all advances under the Post-Effective Date Financing Facility
during such period, plus (i) the aggregate amount of all principal
repayments under the Post-Effective Date Financing Facility during
such period, (ii) the amount by which actual capital expenditures
(designated "Purchases of P&E" in the Projections) for such period
exceeded 110% of the amount of capital expenditures projected for
such period in the Projections for that period, (iii) the amount
of all unscheduled payments of capital lease obligations during
such period, and (iv) the amount of all amortization payments in
respect of the New Rose's Secured Notes during such period.
i.41 "Consummation Certificate" shall mean a certification
of the chief financial officer of Reorganized Rose's stating that
the Effective Date has occurred as of the calendar date thereof.
i.42 "Consummation Date" shall mean the date on which the
Bankruptcy Court enters the Final Decree.
i.43 "Contingent Claim" shall mean any Claim for which a
proof of claim has been timely filed with the Bankruptcy Court as
of the applicable Bar Date but was not filed in a sum certain and
which Claim has not been disallowed or fixed by the Bankruptcy
Court at a sum certain.
i.44 "Core Stores" shall mean, collectively, the 113
discount retail stores operated by the Debtor in the ordinary
course of business and not pursuant to any going-out-of-business
sales as of August 1, 1994.
i.45 "Damages Claims" shall have the meaning of such term
set forth in the order of the Bankruptcy Court dated April 26, 1994
entitled, "Order Approving Alternative Dispute Resolution
Procedure."
i.46 "Debtor" shall mean Rose's Stores, Inc., a Delaware
corporation, as debtor and debtor-in-possession during the pendency
of the Chapter 11 case, and, in the event that the Alternative
Treatment Provisions are effective pursuant to Section 8.1 of the
Plan, as said corporation shall continue on and after the Effective
Date until its dissolution.
i.47 "Determination Date" shall mean that date which is 90
days following the Effective Date or the first Business Day
thereafter.
i.48 "DIP Facility" shall mean, collectively, the DIP
Financing Documents and the DIP Financing Orders, as amended.
i.49 "DIP Financing Documents" shall mean that certain
"Debtor-in-Possession Loan Agreement" dated as of September 20,
1993, together with all agreements, documents and amendments
entered into by the Debtor and GE Capital in connection therewith.
i.50 "DIP Financing Orders" shall mean the "Final Order
Authorizing Debtor-In-Possession to Borrow Funds With Priority Over
Administrative Expenses and Secured by Liens on Property of the
Estate" dated October 14, 1993, as such order has been, and may be,
amended and modified from time to time during the Chapter 11 Case
by further orders of the Bankruptcy Court.
i.51 "Disclosure Statement" shall mean the disclosure
statement respecting this Plan filed by the Debtor and approved by
order of the Bankruptcy Court as containing adequate information
in accordance with Section 1125 of the Bankruptcy Code.
i.52 "Disposition Proceeds" shall mean all of the proceeds
realized from the sale or other disposition of the assets of the
Estate pursuant to the Alternative Treatment Provisions and the
Alternative Treatment Implementation Orders.
i.53 "Disputed Claim" shall mean (i) that portion of any
Claim as to which an objection to the allowance thereof has been
interposed, or an application to equitably subordinate or otherwise
limit recovery has been made, as of the Effective Date or any other
date fixed by order of the Bankruptcy Court and which objection or
application has not been determined by a Final Order, or (ii) a
Contingent Claim. Under no circumstances may any of the Pre-
Petition Lenders' Allowed Secured Claims constitute a Disputed
Claim.
i.54 "Distribution Agent" shall mean an entity which is
authorized to make distributions required to be made under this
Plan in accordance with Section 6.1 of this Plan.
i.55 "Distribution Date" shall mean any date on which a
distribution is required to be made under this Plan.
i.56 "EBITDA" shall mean for any period, as to the Debtor
or Reorganized Rose's, without duplication, the sum of the
consolidated net income of the Debtor or Reorganized Rose's for
such period plus consolidated interest charges of the Debtor or
Reorganized Rose's for such period plus consolidated taxes of the
Debtor or Reorganized Rose's for such period deducted in arriving
at consolidated net income of the Debtor or Reorganized Rose's for
such period plus consolidated non-cash charges (including
depreciation, amortization and Last-in-First-Out (LIFO) reserve
charges) of the Debtor or Reorganized Rose's for such period less
any consolidated non-cash income (including LIFO reserve credits)
of the Debtor or Reorganized Rose's for such period plus
extraordinary cash losses (including without limitation
reorganization expenses and otherwise calculated in accordance with
GAAP in a manner consistent with the Projections) of the Debtor or
Reorganized Rose's for such period less extraordinary cash gains
of the Debtor or Reorganized Rose's for such period calculated in
accordance with GAAP in a manner consistent with the Projections
(the terms GAAP and Projections having the respective meanings
ascribed to such terms in Section 1.40 of this Plan).
i.57 "EBITDA Target" shall mean $34 million, as such amount
may be reduced on a dollar for dollar basis by the amount by which
the aggregate amount of all payments made by the Debtor to the
Collateral Agent pursuant to the Supplemental Adequate Protection
Orders on account of the Net GOB2 Proceeds exceeds $52 million;
provided that in no event shall the EBITDA Target be less than $25
million.
i.58 "Effective Date" shall mean the first Business Day,
or as soon as practicable thereafter, upon which all the conditions
set forth in Section 8.2 of this Plan have been satisfied or
waived. In the event any of the Alternative Treatment Provisions
are effective, the Effective Date shall not occur unless and until
the GE Obligations and the Pre-Petition Lenders' Allowed Secured
Claims have been satisfied in full.
i.59 "Employee Stock Options" shall mean those certain Pre-
Petition Stock Options granted prior to the Filing Date to
employees of the Debtor.
i.60 "Equity Committee" shall mean the Official Committee
of Equity Security Holders appointed by the Office of the
Bankruptcy Administrator for the Eastern District of North Carolina
to serve in the Chapter 11 Case, as the same may be constituted
from time to time.
i.61 "Equity Record Date" shall mean the Record Date for
purposes of making distributions under this Plan to holders of
Common Stock Interests, which date shall be February 7, 1995.
i.62 "Estate" shall mean the estate created in the Chapter
11 Case by operation of Section 541 of the Bankruptcy Code.
i.63 "Event of Default" shall mean the occurrence of any
of the events specified in Section IV of Exhibit 5.1 annexed
hereto.
i.64 "Filing Date" shall mean September 5, 1993.
i.65 "Final Decree" shall mean the final decree entered by
the Bankruptcy Court on the Consummation Date pursuant to
Bankruptcy Rule 3022.
i.66 "Final GOB Sales" shall mean any "going-out-of-
business," "closing out," "distress" or "bankruptcy liquidation"
sales implemented with respect to all Inventory and other assets
of the Estate or Reorganized Rose's, as the case may be, located
at any of the Core Stores pursuant to (i) this Plan or (ii) the
Alternative Treatment Implementation Orders.
i.67 "Final Order" shall mean an order or judgment of the
Bankruptcy Court which has not been reversed, stayed, modified or
amended and as to which (i) the time to appeal or seek review,
rehearing, reargument or certiorari has expired, and (ii) as to
which no appeal or petition for review, rehearing, reargument, stay
or certiorari proceeding is pending or as to which any right to
appeal or to seek review, rehearing, reargument or certiorari has
been waived.
i.68 "Full Recovery Target Amount" shall mean, on any
applicable date, the amount of Allowed Claims in Class 3 plus the
total Reserve Amount as of such date, if any, determined pursuant
to Section 7.12 of this Plan for all Disputed Claims in Class 3.
i.69 "GAAP" shall have the meaning ascribed to such term
in Section 1.40 of this Plan.
i.70 "GE Capital" shall mean General Electric Capital
Corporation, a New York corporation.
i.71 "GE Obligations" shall mean all obligations of the
Debtor to GE Capital and certain individual and corporate
affiliates under and pursuant to the DIP Facility.
i.72 "Intercompany Claims" shall mean any and all Claims
held by RSI against the Debtor or by the Debtor against RSI arising
out of intercompany receivables or other claims arising from the
interrelationship of the Debtor and its subsidiary.
i.73 "Intercreditor Agreements" shall mean, collectively,
those agreements by and among the Pre-Petition Lenders providing,
as among themselves, the terms and conditions by which, among other
things, they maintain and may enforce their respective security
interests and liens in or on certain property of the Estate.
i.74 "Interests" shall mean collectively, all Common Stock
Interests, all Pre-Petition Warrants and all Pre-Petition Stock
Options.
i.75 "Inventory" shall mean any "inventory," as such term
is defined in the Uniform Commercial Code, now or hereafter owned
or acquired by the Debtor or Reorganized Roses's, wherever located,
and, in any event, including goods in transit in which the Debtor
or Reorganized Rose's has an interest, all inventory, merchandise,
goods and other personal property which are held by or on behalf
of the Debtor or Reorganized Rose's for sale or lease or are
furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process, or materials used
or consumed or to be used or consumed in the business of the Debtor
or Reorganized Rose's, or in the processing, packaging,
advertising, promotion, delivery or shipping of the same, and all
finished goods. The value of Inventory for all purposes under this
Plan shall be its cost, determined on a First-In-First-Out basis.
i.76 "Management Incentive and Retention Program" shall
mean that certain incentive and retention program covering periods
both prior and subsequent to the Effective Date, authorized after
the Filing Date and provided to certain of the Debtor's management
employees pursuant to Final Order of the Bankruptcy Court.
i.77 "Net GOB2 Proceeds" shall mean, collectively, the Net
Covered GOB2 Sale Proceeds and the Net Noncovered GOB2 Proceeds as
such terms are defined in the Supplemental Adequate Protection
Orders.
i.78 "New Rose's Bank of Tokyo Secured Note" shall mean
the secured note to be issued by Reorganized Rose's to the
Collateral Agent for distribution to Bank of Tokyo pursuant to
Sections 5.1, 6.2.1 and 7.7.3 of this Plan and the New Rose's
Secured Note Documents and shall be deemed one of the New Rose's
Secured Notes as defined in Section 1.84 below.
i.79 "New Rose's Charter" shall mean the restated
certificate of incorporation of Reorganized Rose's, in
substantially the form to be filed with the Bankruptcy Court prior
to Confirmation, or such later date as consented to by the
Committees and fixed by the Bankruptcy Court, as modified or
amended by consent of the foregoing parties and effective as of
the Effective Date.
i.80 "New Rose's Common Stock" shall mean the shares of
$____ par value common stock of Reorganized Rose's.
i.81 "New Rose's Common Stock Secondary Distribution" shall
mean any and all shares of New Rose's Common Stock remaining in the
New Rose's Common Stock Trust as of the Determination Date for
distribution to holders of Common Stock Interests in Class 5, after
distribution of shares of New Rose's Common Stock pursuant to
Section 6.2.2.
i.82 "New Rose's Common Stock Trust" shall mean the trust
established pursuant to the New Rose's Common Stock Trust
Agreement, into which shares of New Rose's Common Stock issued and
outstanding as of the Effective Date shall be deposited in
accordance with Sections 6.2.2 (a) and 6.2.4 of this Plan.
i.83 "New Rose's Common Stock Trust Agreement" shall mean
the trust agreement between Reorganized Rose's and the trustee
named therein which sets forth the terms and conditions
establishing the New Rose's Common Stock Trust, which agreement
shall be substantially in the form as negotiated among the Debtor
and the Committees to their satisfaction and filed with the
Bankruptcy Court prior to entry of an order of the Bankruptcy Court
approving the Disclosure Statement or such later date as consented
to by the Committees and fixed by the Bankruptcy Court, as such
document may be modified or amended by consent of the foregoing
parties and effective as of the Effective Date.
i.84 "New Rose's Secured Notes" shall mean the secured
notes to be issued by Reorganized Rose's to the Collateral Agent
for distribution to the Pre-Petition Lenders pursuant to Sections
5.1, 6.2.1 and 7.7.3 of this Plan and the New Rose's Secured Notes
Documents.
i.85 "New Rose's Secured Notes Documents" shall mean such
documents and agreements between Reorganized Rose's, the Collateral
Agent and the Pre-Petition Lenders which set forth the terms and
conditions governing the New Rose's Secured Notes, which are
substantially equivalent to the terms and conditions are set forth
in Section 5.1 of this Plan, as determined to the reasonable
satisfaction of the Collateral Agent, the Pre-Petition Lenders and
the Post-Effective Date Lender, and filed with the Bankruptcy Court
prior to Confirmation or such later date as consented to by the
foregoing applicable parties and fixed by the Bankruptcy Court, as
such documents and agreements may be modified or amended by the
foregoing applicable parties and effective as of the Effective
Date.
i.86 "New Rose's Secured Notes Original Principal Amount"
shall mean the lesser of (i) $40 million or (ii) the amount of the
Allowed Secured Claims of the Pre-Petition Lenders as reduced by
all payments required to be made to the Pre-Petition Lenders
through the Effective Date pursuant to the Supplemental Adequate
Protection Orders, Section 5.1 of this Plan, and any other order
of the Bankruptcy Court entered prior to the Effective Date
authorizing payment to the Pre-Petition Lenders, which other orders
shall only be entered with the consent of the Plan Proponents and
GE Capital.
i.87 "New Rose's Warrant Agreement" shall mean the warrant
agreement between Reorganized Rose's and the warrant agent named
therein which sets forth the terms and conditions respecting
exercise and issuance of the New Rose's Warrants, which agreement
shall be substantially in a form as negotiated among the Debtor
and the Committees to their satisfaction and filed with the
Bankruptcy Court prior to entry of an Order of the Bankruptcy Court
approving the Disclosure Statement or such later date as consented
to by the Committees and fixed by the Bankruptcy Court, as such
document may be modified or amended by consent of the foregoing
parties and effective as of the Effective Date.
i.88 "New Rose's Warrants" shall mean all warrants issued
to holders of Common Stock Interests in Class 5 in accordance with
Section 6.2.5 of this Plan and the New Rose's Warrant Agreement to
purchase up to 30% of the then issued and outstanding shares of
New Rose's Common Stock on a fully diluted basis.
i.89 "Non-Voting Class B Stock" shall mean the Non-Voting
Class B Stock of the Debtor, no par value, exclusive of any shares
of Non-Voting Class B Stock held in treasury.
i.90 "Perfection Instruments" shall have the meaning
ascribed to such term in Section 5.1.3 of this Plan.
i.91 "Permitted Encumbrance Collateral" shall mean any
asset of Reorganized Rose's with respect to which the Post-
Effective Date Lender, with the consent of the Pre-Petition Lenders
(which consent shall not be unreasonably withheld) has agreed may
be encumbered by a security interest, lien or other encumbrance
which is not junior and subordinate to the liens and security
interests granted to (i) the Post-Effective Date Lender pursuant
to the Post-Effective Date Financing Facility, and (ii) to the Pre-
Petition Lenders pursuant to Section 5.1 of this Plan.
i.92 "Person" shall mean any individual, corporation,
partnership, joint venture, trust, estate, unincorporated
association, or organization, governmental entity or political
subdivision thereof, or any other entity.
i.93 "Plan" shall mean this Chapter 11 joint plan of
reorganization inclusive of any exhibits hereto and any documents
incorporated herein by reference, as it may from time to time be
amended, as and to the extent permitted herein or by the Bankruptcy
Code.
i.94 "Plan Proponents" shall mean, collectively, the
Debtor, each of the Pre-Petition Secured Noteholders, the Bank of
Tokyo, and each of the Committees, as proponents of the Plan.
i.95 "Post-Effective Date Collateral" shall mean as of the
Effective Date all presently owned or thereafter acquired assets
of every type of Reorganized Rose's.
i.96 "Post-Effective Date Financing Facility" shall mean
that financing facility, effective as of the Effective Date, that
shall be provided pursuant to an agreement entered into by
Reorganized Rose's and the financing institution named therein, as
approved prior to the Effective Date by order of the Bankruptcy
Court, on appropriate notice and hearing, on terms not materially
inconsistent with the terms of any financing commitment of the
Post-Effective Date Lender approved by the Bankruptcy Court.
i.97 "Post-Effective Date Lender" shall mean the financing
institution named in the Post-Effective Date Financing Facility.
i.98 "Pre-Petition Lenders" shall mean collectively, the
Bank Group, the Pre-Petition Secured Noteholders and the Bank of
Tokyo.
i.99 "Pre-Petition Lenders' Allowed Secured Claims" shall
have the meaning set forth in the Second Supplemental Adequate
Protection Consent Order, and the Pre-Petition Lenders' Allowed
Secured Claims as of the Effective Date shall equal the amounts
that shall be set forth in a schedule annexed to the Confirmation
Order.
i.100 "Pre-Petition Secured Noteholders" shall mean the
holders of the Pre-Petition Secured Notes, to wit: Nationwide Life
Insurance Company, Wausau Preferred Health Insurance Company,
Equitable Variable Life Insurance Company, The Equitable Life
Assurance Society of the United States, Jefferson-Pilot Life
Insurance Company, The Franklin Life Insurance Company, The
Franklin United Life Insurance Company, Great-West Life & Annuity
Insurance Company, American Family Life Insurance Company, State
Mutual Life Assurance Company of America, SMA Life Assurance
Company, Merrill Lynch Life Insurance Company, ML Life Insurance
Company of New York, Woodmen of the World Life Insurance Society,
Knights of Columbus, Washington National Insurance Company, The
Stonehill Investment Corp., Central Life Assurance Company, and
Lazard Freres & Co., or their successors and assigns, as of the
Record Date.
i.101 "Pre-Petition Secured Noteholder Warrant Agreement"
shall mean that certain agreement executed in connection with the
pre-petition refinancing of the Debtor pursuant to which Pre-
Petition Secured Noteholder Warrants were issued and which
agreement further provided for the future issuance of additional
such warrants.
i.102 "Pre-Petition Secured Noteholder Warrants" shall
mean those certain Pre-Petition Warrants held by Pre-Petition
Secured Noteholders and any rights to receive future warrants
pursuant to the Pre-Petition Secured Noteholder Warrant Agreement
which were not exercised prior to the Filing Date.
i.103 "Pre-Petition Secured Notes" shall mean the 11%
Senior Secured Notes due December 31, 1998, issued by the Debtor
pursuant to the terms of that certain "Combined, Amended and
Restated Note Agreement" dated May 29, 1992.
i.104 "Pre-Petition Stock Option" shall mean any option
to purchase an equity interest in the Debtor's Common Stock,
including, without limitation, Employee Stock Options, and any
Claims arising thereunder, subject to subordination pursuant to
Section 510(b) of the Bankruptcy Code, arising from rescission of
a purchase or sale of a Pre-Petition Stock Option or for damages
arising from such purchase and sale or for reimbursement of
contribution or occurrence of such Claim.
i.105 "Pre-Petition Warrant" shall mean any warrant issued
pre-petition to purchase an equity interest in the Debtor,
including, without limitation, Pre-Petition Secured Noteholder
Warrants, and any Claims subject to subordination pursuant to
Section 510(b) of the Bankruptcy Code, arising from rescission of
the purchase or sale of a Pre-Petition Warrant or for damages
arising from such purchase or sale or reimbursement of contribution
or occurrence of such Claim.
i.106 "Professional" shall mean any Person (i) retained
pursuant to an order of the Bankruptcy Court in accordance with
Sections 327 and 1103 of the Bankruptcy Code and to be compensated
for services pursuant to Sections 327, 328, 329, 330 and 331 of
the Bankruptcy Code, or (ii) for which compensation and
reimbursement has been allowed by the Bankruptcy Court pursuant to
Section 503(b)(4) of the Bankruptcy Code.
i.107 "Professional Fees" shall mean compensation for
services rendered and reimbursement of expenses in connection with
the Chapter 11 case allowed to Professionals by order of the
Bankruptcy Court pursuant to Sections 330, 331, 1103 or 503(b) of
the Bankruptcy Code. Professional Fees as defined herein shall
not include the fees of the professionals of the Pre-Petition
Lenders, which shall be paid in accordance with the provisions of
the Second Supplemental Adequate Protection Consent Order.
i.108 "Projections" shall have the meaning ascribed to
such term in Section 1.40 of this Plan.
i.109 "Pro-Rata" shall mean the ratio of an Allowed Claim,
Reserve Amount or Interest in or respecting a particular Class to
the aggregate amount of all Allowed Claims plus Reserve Amounts or
Interests in or respecting that Class.
i.110 "Reconstituted Board of Directors" shall mean the
board of directors of Reorganized Rose's as of and after the
Effective Date, appointed pursuant to Sections 7.5 and 7.6 of this
Plan and as set forth in the Disclosure Statement.
i.111 "Record Date" shall mean (a) for the purpose of
voting on this Plan, the date of entry of the order approving the
Disclosure Statement, (b) for the purposes of any distribution and
payments under and pursuant to this Plan other than to holders of
Common Stock Interests, the Effective Date, or (c) for the purpose
of any distributions to the holders of Common Stock Interests, the
Equity Record Date.
i.112 "Released Parties" shall mean, collectively, all
past and present officers, directors, agents, employees, and
Professionals of the Debtor and all members, agents and
Professionals of the Committees, each of the Pre-Petition Lenders
and their officers, directors, agents, employees and professionals
and GE Capital, GE Capital Corporate Finance Group, Inc. and GE
Capital Commercial Finance, Inc., and their respective officers,
directors, agents, employees and professionals.
i.113 "Reorganized Rose's" shall mean Rose's Stores, Inc.,
a Delaware corporation, operating and conducting business pursuant
to the New Rose's Charter, as of the Effective Date.
i.114 "Reserve" shall mean any interest-bearing account
established to hold distributions on account of Disputed Claims,
pursuant to Section 7.12 of this Plan. The amount of the Reserve
shall include interest and dividends accrued thereon.
i.115 "Reserve Amount" shall mean the dollar value of a
Disputed Claim for purposes of determining the aggregate
distribution to be reserved for a Disputed Claim pursuant to
Section 7.12 of this Plan.
i.116 "Retiree Claim" shall mean a Claim arising from or
relating to retiree benefits, if any, as defined in Section 1114(a)
of the Bankruptcy Code, which is allowed under Section 1114(e)(2)
of the Bankruptcy Code.
i.117 "RSI" shall mean RSI Trading, Inc., a Delaware
corporation.
i.118 "Second Supplemental Adequate Protection Consent
Order" shall mean the "Second Supplemental Consensual Adequate
Protection Order In Connection with Payment Of Net Proceeds From
"GOB2" Sales And The Filing Of The Joint Plan Of Reorganization Of
Rose's Stores, Inc." signed by the Plan Proponents and GE Capital
and entered by the Bankruptcy Court.
i.119 "Subscription Proceeds Escrow" shall mean the escrow
account established pursuant to Section 7.10 of this Plan and the
Class 5 Rights Notice in connection with the Class 5 Subscription
into which Subscription Proceeds shall be deposited and from which
the Subscription Proceeds shall be distributed to holders of
Allowed Unsecured Claims in Class 3 or otherwise in accordance with
Section 6.2.3 of this Plan.
i.120 "Subscription Proceeds" shall mean the aggregate
amount of Cash tendered by the Class 5 Subscribers to acquire
shares constituting the Class 5 Subscription Stock Designation
pursuant to Section 7.10 of this Plan and the Class 5 Rights
Notice, and maintained in the Subscription Proceeds Escrow in
accordance with the Class 5 Rights Notice pending distribution
pursuant to Section 6.2.3 of this Plan.
i.121 "Subordinated Claims" shall mean all Claims subject
to subordination pursuant to Section 510(b) of the Bankruptcy Code
arising from rescission of a purchase or sale of Voting Common
Stock and Non-Voting Class B Stock, or for damages arising from
such purchase or sale, or for reimbursement, contribution or
indemnification on occurrence of such Claim.
i.122 "Supplemental Adequate Protection Orders" shall
mean, collectively, the "Supplemental Consensual Adequate
Protection Order In Connection with Debtor's Motion For Order
Authorizing Debtor To Conduct Additional Going Out Of Business
Sales And Other Relief" signed by the Bankruptcy Court on May 17,
1994, and the Second Supplemental Adequate Protection Consent
Order.
i.123 "Unsecured Committee" shall mean the Official
Committee of Unsecured Creditors appointed by the Office of the
Bankruptcy Administrator for the Eastern District of North Carolina
to serve in the Chapter 11 Case, as the same may be constituted
from time to time.
i.124 "Voting Common Stock" shall mean the Voting Common
Stock of the Debtor, no par value, exclusive of any shares of
Voting Common Stock held in treasury, registered as of the Record
Date in such stock register as may be maintained by or on behalf
of the Debtor.
ARTICLE ii
CLASSIFICATION OF CLAIMS AND INTERESTS
ii.1 Criterion of Class. A Claim or Interest is in a
particular Class only to the extent that the Claim or Interest
qualifies within the description of that Class and is in a
different Class to the extent that the remainder of the Claim or
Interest qualifies within the description of the different Class.
The Debtor reserves the right to re-classify any Claim or Interest
as appropriate and to the extent permitted by the Bankruptcy Court.
In particular, a Claim filed as a Non-Tax Priority Claim but which
does not comport with provisions of Section 507(a) of the
Bankruptcy Code shall be treated by the Debtor as a Claim not
entitled to priority or an Interest, as appropriate, and the Debtor
will ascribe a vote cast in connection with this Plan by a holder
of such Claim to the proper Class, to the extent permitted by the
Bankruptcy Court.
ii.2 Claims and Interests. All Allowed Claims and
Interests are divided into the following Classes pursuant to
Sections 1122 and 1123(a)(1) of the Bankruptcy Code, which Classes
shall be mutually exclusive:
(a)Class 1 (Non-Tax Priority Claims). Class 1
consists of all Allowed Non-Tax Priority Claims.
(b)Class 2 (Secured Claims). Class 2 consists of all
Allowed Secured Claims. Class 2 Claims are classified further into
two subclasses:
(i)Class 2A (General Secured Claims). Class
2A consists of all Allowed Secured Claims, other than those
asserted by the Pre-Petition Lenders, the collateral for which
constitutes an asset which is property of the Estate, and which
property secures such Allowed Secured Claims by a valid and
enforceable lien, security interest and/or pledge; and
(ii)Class 2B (Pre-Petition Lenders Secured
Claims). Class 2B consists of the Pre-Petition Lenders' Allowed
Secured Claims.
(c)Class 3 (Unsecured Claims). Class 3 consists
of all Allowed Unsecured Claims.
(d)Class 4 (Intercompany Claims). Class 4 consists
of all Intercompany Claims.
(e)Class 5 (Common Stock Interests). Class 5
consists of all Common Stock Interests.
(f)Class 6 (Pre-Petition Warrants). Class 6
consists of all Interests arising from Pre-Petition Warrants.
(g)Class 7 (Pre-Petition Stock Options). Class 7
consists of all Interests arising from Pre-Petition Stock Options.
(h)Class 8 (Subordinated Claims). Class 8 consists
of all Subordinated Claims.
ARTICLE iii
PAYMENT OF ADMINISTRATIVE CLAIMS
ALLOWED TAX CLAIMS, PROFESSIONAL FEES, AND
RETIREE CLAIMS, AND TREATMENT OF GE CAPITAL
iii.1 Administrative Claims. All Administrative
Claims, other than Professional Fees, shall be paid by the Debtor
in full, in Cash, (a) in such amounts as are incurred by the Debtor
in the ordinary course of its business, or (b) in such amounts as
such Administrative Claims are allowed by Final Order of the
Bankruptcy Court (i) upon the later of the Effective Date or the
date upon which the Bankruptcy Court enters a Final Order allowing
such Administrative Claim, or (ii) upon such other terms as may
exist due to the ordinary course of the Debtor's business, or (iii)
as may be agreed upon between the holders of such Administrative
Claims and the Debtor. All Administrative Claims shall stop
accruing after the Effective Date.
iii.2 Allowed Tax Claims. Allowed Tax Claims shall
be paid by the Debtor in full, in Cash, on the later of the
Effective Date or the date upon which the Bankruptcy Court enters
a Final Order allowing such Allowed Tax Claim, or upon such other
terms as may be agreed to between the Debtor and any holder of an
Allowed Tax Claim; provided, however, that (i) the Debtor may make,
at its option, in lieu of payment in full of the Allowed Tax Claims
on the Effective Date, deferred Cash payments respecting Allowed
Tax Claims to the extent permitted by Section 1129(a)(9) of the
Bankruptcy Code and, in such event, interest shall be paid on the
unpaid portion of such Allowed Tax Claim at a rate to be agreed to
by the Debtor and the appropriate governmental unit or, if they are
unable to agree, to be determined by the Bankruptcy Court; and (ii)
if such Allowed Tax Claim is for a tax assessed against property
of the Estate, the amount of such Allowed Tax Claim does not exceed
the value of the Estate's interest in such property, and (iii) in
the event an Allowed Tax Claim may also be classified as a Secured
Claim, the Debtor may, at its option, elect to treat such Allowed
Tax Claim as an Allowed Secured Claim. All Allowed Tax Claims that
by their terms become due and payable after the Confirmation Date
shall be paid when due.
iii.3 Professional Fees. Professionals shall
continue to file applications for Professional Fees for services
rendered through the Confirmation Date in accordance with all
orders of the Bankruptcy Court governing the submission of
applications for Professional Fees and payment thereon. Awards of
Professional Fees for all periods through the Confirmation Date
shall be paid (i) first, from those trusts or escrows established
by prior order of the Bankruptcy Court, on account of Professional
Fees for which payment was requested but not authorized by the
Bankruptcy Court prior to the Confirmation Date, and, (ii)
thereafter, by the Debtor in Cash pursuant to order of the
Bankruptcy Court. During the period from the Confirmation Date
through and including the Effective Date, Professionals employed
by the Debtor or the Committees may be paid compensation and
reimbursement of expenses monthly in arrears in full in Cash upon
the submission of invoices to the Debtor. All final applications
relating to Professional Fees for the period through the
Confirmation Date shall be filed within sixty (60) days after the
Confirmation Date. All Professional Fees for services rendered
after the Effective Date in connection with the Debtor or
Reorganized Rose's, as the case may be, the Chapter 11 Case and/or
this Plan shall be paid by the Debtor or Reorganized Rose's, as
the case may be, upon such terms as agreed to by the Debtor or
Reorganized Rose's, as the case may be, and the particular
Professional without further Bankruptcy Court review or
authorization. In all circumstances, the fees of the professionals
of the Pre-Petition Lenders shall be paid in accordance with the
Second Supplemental Adequate Protection Consent Order.
iii.4 Retiree Claims and Benefits Under Section 1114
of the Bankruptcy. CodeExcept in the event that the Alternative
Treatment Provisions are effective pursuant to Section 8.1 of this
Plan, on and after the Effective Date, all Retiree Claims arising
during the pendency of the Chapter 11 Case shall be treated as
administrative claims, paid in full, and all retiree benefits, as
such term is defined in Section 1114(a) of the Bankruptcy Code,
shall continue, at the level established or modified pursuant to
Section 1114 of the Bankruptcy Code, solely to the extent, and for
the period, that the Debtor and Reorganized Rose's is, or may be,
contractually or legally obligated to provide such benefits. In
the event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of this Plan, all Retiree Claims arising
during the pendency of the Chapter 11 Case shall be treated as
Administrative Claims pursuant to Section 3.1 of this Plan, and
all other Allowed Claims for retiree benefits shall be treated
pursuant to the order of the Bankruptcy Court entered in accordance
with Section 1114 of the Bankruptcy Code.
iii.5 Treatment of GE Capital. On or prior to the
Effective Date, all of the GE Obligations shall be fully and
finally satisfied. Until all GE Obligations are fully satisfied,
all liens, claims, interests, rights, remedies and protections
granted to GE Capital pursuant to the DIP Facility shall remain in
full force and effect with priority over all liens, claims and
interests except for those specifically set forth in the DIP
Facility. The termination of the DIP Facility shall be done in
accordance with any and all applicable provisions of (i) all DIP
Financing Orders, DIP Financing Documents, and all documents
authorized thereunder, and entered into in connection therewith,
to effectuate the DIP Facility, (ii) the Supplemental Adequate
Protection Orders, or, if stayed or overturned, pursuant to Section
7.16 of this Plan, (iii) the Confirmation Order, (iv) this Plan and
(v) if applicable, the Alternative Treatment Implementation Orders.
Notwithstanding anything to the contrary set forth herein, on and
after the Effective Date, Reorganized Rose's shall be deemed to
have assumed, without any action or the execution of any document,
any and all GE Obligations which remain outstanding and unsatisfied
as of the Effective Date, including, without limitation, any
indemnification obligations of the Debtor under or pursuant to the
DIP Facility provided however, that such assumption for any purpose
shall not constitute or be deemed to constitute a satisfaction of
the GE Obligations.
ARTICLE iv
CLAIMS NOT IMPAIRED UNDER THE PLAN
iv.1 Non-Impairment. Claims in Class 1 and Class 2A
are not impaired under this Plan. In the event of a controversy
as to whether any holders of Claims or Interests are impaired, the
Bankruptcy Court shall, after appropriate notice and hearing,
determine such controversy. The Debtor reserves the right to re-
classify Claims or Interests as appropriate and to the extent
permitted by the Bankruptcy Court. In particular, a Claim filed
as a Non-Tax Priority Claim but which does not comport with
provisions of Section 507(a) of the Bankruptcy Code shall be
treated by the Debtor as a Claim not entitled to priority or an
Interest, as appropriate, and the Debtor will ascribe a vote cast
in connection with this Plan by a holder of such Claim to the
proper Class, to the extent permitted by the Bankruptcy Court.
iv.2 Class 1 (Non-Tax Priority Claims). The Allowed
Non-Tax Priority Claims shall be paid in full, in Cash, on the
later of the Effective Date or the date of a Final Order allowing
any such Claim in this Class 1, or upon such other terms as may be
agreed to between the Debtor and any holder of an Allowed Claim in
this Class 1.
iv.3 Class 2A (General Secured Claims). The Allowed
Secured Claims in Class 2A shall be treated as follows at the
Debtor's option:
(a)(i)any default, other than of the kind specified
in Section 365(b)(2) of the Bankruptcy Code, shall be cured,
provided that accrued and unpaid interest, if any, which the Debtor
may be obligated to pay with respect to such default shall be
simple interest at the contract rate and not at any default rate
of interest;
(ii)the maturity of the Allowed Secured Claim
shall be reinstated as the maturity existed before any default;
(iii)the holder of the Allowed Secured Claim
shall be compensated for any damage incurred as a result of any
reasonable reliance by the holder on any provision that entitled
the holder to accelerate maturity of the Allowed Secured Claim;
and
(iv)the other legal, equitable, or contractual
rights to which the Allowed Secured Claim entitles the holder shall
not otherwise be altered; provided, however, that as to any Allowed
Secured Claim which is a nonrecourse claim and exceeds the value
of the collateral securing such Allowed Secured Claim, the
collateral may be sold at a sale at which the holder of such
Allowed Secured Claim has an opportunity to bid; or
(b)on the Effective Date, or on such other date thereafter as may
be agreed to by the Debtor and the holder of such Allowed Secured
Claim, the Debtor shall abandon the collateral securing such
Allowed Secured Claim to the holder thereof in full satisfaction
and release of such Allowed Secured Claim; or
(c)on the Effective Date or as soon as practicable thereafter, the
holder of such Allowed Secured Claim shall receive, on account of
such Allowed Secured Claim, Cash equal to its Allowed Secured
Claim, or such lesser amount to which the holder of such Allowed
Secured Claim shall agree, in full satisfaction and release of such
Allowed Secured Claim; or
(d)the holder of such Allowed Secured Claim shall receive, on
account of such Allowed Secured Claim, deferred Cash payments,
pursuant to Section 1129(b)(2)(A)(i)(II) of the Bankruptcy Code,
totalling at least the amount of such Allowed Secured Claim which,
calculated as of the Effective Date, equals at least the value of
the lesser of such holder's interest or the Debtor's interest in
such property.
ARTICLE v
CLAIMS AND INTERESTS IMPAIRED UNDER THE PLAN
v.1Class 2B (Pre-Petition Lenders' Allowed Secured
Claims).
v.1.1 Each Pre-Petition Lender shall have a Class
2B Allowed Secured Claim in the amount set forth in Schedule 5.1
annexed hereto and made a part hereof.
v.1.2 Except to the extent that an Alternative
Treatment Event (as defined in the Second Supplemental Adequate
Protection Consent Order) shall be effective and GE Capital or the
Pre-Petition Lenders shall be entitled to exercise their rights
and remedies pursuant to the Second Supplemental Adequate
Protection Consent Order (in which event all distributions shall
be made in accordance with the provisions of the Supplemental
Adequate Protection Orders) and the DIP Facility, in the event that
the Alternative Treatment Provisions are effective pursuant to
Section 8.1 of this Plan, on the Effective Date, each holder of an
Allowed Secured Claim in Class 2B shall receive, in respect of its
Allowed Secured Claim and in accordance with the Intercreditor
Agreements, its share of:
(a)Cash equal to the aggregate amount of all
unpaid fees, charges and expenses due and payable to the Collateral
Agent and the Pre-Petition Lenders as of the Effective Date; and
(b)New Rose's Secured Notes having an aggregate
face amount equal to the New Rose's Secured Notes Original
Principal Amount. The primary terms and conditions in respect of
the New Rose's Secured Notes are set forth in Exhibit 5.1 annexed
hereto and made a part hereof and are incorporated by reference as
terms and conditions in this Plan.
v.1.3 Except to the extent that an Alternative
Treatment Event (as defined in the Second Supplemental Adequate
Protection Consent Order) shall be effective and GE Capital or the
Pre-Petition Lenders shall be entitled to exercise their rights
and remedies pursuant to the Second Supplemental Adequate
Protection Consent Order (in which event all distributions shall
be made in accordance with the provisions of the Supplemental
Adequate Protection Orders) and the DIP Facility, and except in
the event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of the Plan, on the Effective Date,
Reorganized Rose's shall grant to the Collateral Agent liens on
and security interests in all of the Post-Effective Date Collateral
for the purpose of securing all obligations and liabilities of
Reorganized Rose's under the New Rose's Secured Notes, which
security interests and liens shall be junior in right and priority
only to the security interests and liens granted to the Post-
Effective Date Lender, pursuant to this Plan and such orders of the
Bankruptcy Court authorizing or otherwise relating to the Post-
Effective Date Financing Facility, and otherwise shall be superior
to and with priority over all other security interests and liens
whether consensual or nonconsensual, statutory or otherwise, and
whether existing now or in the future, provided, however, that, as
to the Permitted Encumbrance Collateral, the Pre-Petition Lenders'
security interests and liens shall be subordinate to (i) the
security interests and liens of the Post-Effective Date Lender in
the Permitted Encumbrance Collateral, and (ii) all valid, perfected
and unavoidable liens and security interests existing on the
Permitted Encumbrance Collateral as of the Effective Date that are
not released or discharged pursuant to this Plan. Reorganized
Rose's shall take such action, at its own expense, as is reasonably
necessary and appropriate and requested by the Collateral Agent
regarding the filing of financing statements, mortgages, deeds of
trust, notices of lien, certificates of title or any other
instruments (collectively, but respectively, "Perfection
Instruments") in any jurisdiction or take any other action in order
to validate or perfect the liens and security interests granted to
the Pre-Petition Lenders pursuant to this Plan, in the event that
the Pre-Petition Lenders or any of their agents, may, at their sole
discretion, choose to file such Perfection Instruments or otherwise
confirm perfection of such liens and security interests, and all
such Perfection Instruments shall be deemed to have been filed or
recorded at the time and on the date of such filing or recording
unless permitted under applicable law to relate back to the
Effective Date. In lieu of filing such Perfection Instruments, the
Confirmation Order shall provide that the Pre-Petition Lenders or
any of their agents, may, at their sole discretion, choose to file
certified copies of this Plan, the Confirmation Order and the
Consummation Certificate in any place at which such Perfection
Instruments would or could otherwise be filed, together with such
description of Post-Effective Date Collateral located within the
geographic area covered by such place of filing as the Pre-
Petition Lenders may determine, and such filing shall have the same
effect as if all such Perfection Instruments had been filed or
recorded at the time and on the date of such filing or recording
unless permitted under applicable law to relate back to the
Effective Date. The Pre-Petition Lenders acknowledge that should
they elect to file Perfection Instruments or otherwise confirm
perfection of the security interests granted herein as authorized
by the provisions of this paragraph, said filing or other
confirmation of the security interest granted herein the Pre-
Petition Lenders shall in no manner whatsoever vitiate, reduce or
abrogate in any manner the first priority security interests in
respect of the Post-Effective Date Collateral granted to the Post-
Effective Date Lender, irrespective of the sequence of any such
filings as between the Post-Effective Date Lender and the Pre-
Petition Lenders.
v.1.4 In the event that (i) all or any of the
Pre-Petition Lenders are authorized by order of the Bankruptcy
Court to exercise collateral realization remedies in accordance
with Section VI of Exhibit 5.1 hereto, and/or (ii) the Post-
Effective Date Lender is authorized to exercise collateral
realization remedies in accordance with the Post-Effective Date
Financing Facility and elects to do so, Reorganized Rose's shall
be, and hereby is, authorized, empowered and directed to take the
following actions:
(a)Reorganized Rose's shall generally cease the ordering of
merchandise and promptly terminate non-essential personnel related
thereto;
(b)Reorganized Rose's shall promptly terminate all other personnel
not essential for conducting the Final Sale (as defined below) and
the Remaining Asset Sales (as defined below) or winding up the
administration of the Plan (the expenses associated with the
winding up of the administration of the Plan being the "Wind-Up
Expenses");
(c)Reorganized Rose's shall conduct going-out-of-business sales or
auctions of any remaining Inventory (including Inventory in transit
and Inventory located in Reorganized Rose's' distribution center)
(the "Distribution Center"), fixtures and other assets located at
all of its remaining stores (such sales being the "Final Sales"),
in the manner of a sale pursuant to Section 363(f) of the
Bankruptcy Code free and clear of any lien or interest with such
lien or interest to attach to the proceeds of such sales or
auctions (all such proceeds from the Final Sales being the "Final
Proceeds").
(d)Reorganized Rose's shall promptly seek Bankruptcy Court approval
of the specific procedures for conducting the Final Sales, but such
specific procedures shall in any event (i) include solicitation of
bids from nationally known liquidators to conduct the Final Sales
on such basis designed to maximize net sale proceeds; (ii) result
in Reorganized Rose's' employment on sound business terms of a
nationally known liquidator to conduct the Final Sales; (iii)
distribute Inventory among some or all of Reorganized Rose's'
Remaining Stores in a manner designed to maximize net sale
proceeds; (iv) with respect to the manner and method of such Final
Sales at some or all of Reorganized Rose's' Remaining stores, be
substantially similar to those procedures contained in the GOB2
Methodology Order solely to the extent that such procedures relate
to the conduct of the sale and other disposition of assets and the
appointment of a liquidator entity to conduct such sales and other
dispositions but not to the extent such procedures distinguish
between "Covered Stores" and "Noncovered Stores" or the Inventory
or assets related thereto; and (v) provide for the completion of
the Final Sales and the distribution of all of the Final Proceeds
within 120 days of Bankruptcy Court approval of such specific
procedures (the "Final Sale Approval Date").
(e)Reorganized Rose's shall distribute the "Net Final Proceeds"
(as defined below), promptly upon their receipt, in the following
order and with the following priority: (i) first, toward full
satisfaction of the outstanding obligations of Reorganized Rose's
to the Post-Effective Date Lender in accordance with the provisions
of the Post-Effective Date Financing Facility and Section 5.1.4(i)
of this Plan; (ii) second, after the outstanding obligations of
Reorganized Rose's to the Post-Effective Date Lender shall have
been fully satisfied in accordance with the provisions of the Post-
Effective Date Financing Facility, toward full satisfaction of the
New Rose's Secured Notes, together with any unpaid interest, costs
and other charges (including attorneys' fees) accrued thereon; and
(iii) third, after satisfaction of the obligations of Reorganized
Rose's to the Post-Effective Date Lender in accordance with the
provisions of the Post-Effective Date Financing Facility and
satisfaction of the New Rose's Secured Notes, together with any
unpaid interest, costs and other charges (including attorneys'
fees) accrued thereon, the then remaining portion of the Net Final
Proceeds (the "Remaining Portion"), if any, shall be distributed
in accordance with the provisions of this Plan, or as otherwise
determined by the Reconstituted Board of Directors, or pursuant to
further order of the Bankruptcy Court, as necessary. The "Net
Final Proceeds" shall mean the Final Proceeds less, with respect
to store locations at which the Final Sales are being conducted,
(i) actual occupancy costs, (ii) actual utility costs,
(iii) allocated insurance costs, and (iv) reasonable sale expenses
and agent fees (as may be agreed upon among Reorganized Rose's, the
Post-Effective Date Trade Committee, the Post-Effective Date
Lender, the Pre-Petition Lenders and any auctioneer or liquidator
retained to conduct the Final Sale) attributable to the Final Sales
and (v) such other expenses proposed by Reorganized Rose's from
time to time during and relating to the 180 day period following
the Final Sale Approval Date to fund the Final Sales and Wind-up
Expenses during such 180 day period in a manner consistent with the
cessation of business and sale of assets as contemplated herein,
set forth in a detailed budget subject to approval by the Post-
Effective Date Lender and the Pre-Petition Lenders in their
reasonable discretion if any of their claims against Reorganized
Rose's are then unpaid, or, if and when such claims are paid in
full, as the Post-Effective Date Trade Committee may reasonably
approve.
(f)In the event the New Rose's Secured Notes, together with any
unpaid interest, fees, costs and other charges (including
attorneys' fees) accrued thereon, and all outstanding obligations
of Reorganized Rose's to Post-Effective Date Lender under the Post-
Effective Date Financing Facility, shall not have been satisfied
in full within 120 days of the Final Sale Approval Date,
Reorganized Rose's shall immediately thereafter commence the
liquidation of all of its remaining assets other than the assets
which are the subject of the Final Sales (each such remaining asset
being a "Remaining Asset," and such sales of the Remaining Assets
being the "Remaining Asset Sales"), in the manner of a sale
pursuant to Section 363(f) of the Bankruptcy Code, free and clear
of any lien or interest with such lien or interest to attach to
the proceeds of such sales or auctions (such gross proceeds from
the Remaining Asset Sales being the "Remaining Asset Proceeds").
(g)Subject to the initial proviso set forth in subparagraph (f)
above, within 140 days of the Final Sale Approval Date, Reorganized
Rose's shall seek Bankruptcy Court approval of the specific
procedures for conducting the Remaining Asset Sales, but the
specific procedures shall in any event (i) be subject to the
approval of the Post-Effective Date Lender or the Pre-Petition
Lenders if such entities have outstanding obligations at the time
of sale of the assets to be sold secured by a lien on the specific
asset to be sold, and (b) provide for the completion of the
Remaining Asset Sales within 60 days of Bankruptcy Court approval
of such specific procedures.
(h)Reorganized Rose's shall distribute the Net Remaining Asset
Proceeds (as defined below), promptly upon their receipt in the
following order and with the following priority: (i) first, toward
full satisfaction of the outstanding secured claims of any entity
or entities holding the most senior lien on each such Remaining
Asset sold; (ii) second, after the secured claims of the holders
of the most senior lien have been satisfied in full, in full
satisfaction of the outstanding secured claims of the holders of
any junior liens on such Remaining Asset being sold in accordance
with their relative priorities; and (iii) third, after the
outstanding secured claims of the holders of any junior liens have
been satisfied in full, the remaining portion of the Net Remaining
Asset Proceeds, if any, shall be distributed in accordance with
the provisions of this Plan, or as otherwise determined by the
Reconstituted Board of Directors or pursuant to further order of
the Bankruptcy Court. The "Net Remaining Asset Proceeds" shall
mean the Remaining Asset Proceeds less (i) actual occupancy cost,
(ii) actual utility costs, (iii) allocated insurance cost, and (iv)
reasonable sale expenses attributable to the sale and agent fees
(as may be agreed upon among Reorganized Rose's, the Post-
Effective Date Trade Committee, the Post-Effective Date Lender,
the Pre-Petition Lenders and any auctioneer or liquidator retained
to conduct the Remaining Asset Sales) attributable to the sale of
such Remaining Assets and (v) such other expenses proposed by
Reorganized Rose's from time to time during and relating to the
180 day period following the Final Sale Approval Date to fund the
Remaining Asset Sales and Wind-up Expenses during such 180 day
period in a manner consistent with the cessation of business and
sale of assets as contemplated herein, set forth in a detailed
budget subject to approval by the Post-Effective Date Lender and
the Pre-Petition Lenders in their reasonable discretion if any of
their claims against Reorganized Rose's are then unpaid, or, if
and when such claims are paid in full, as the Post-Effective Date
Trade Committee may reasonably approve.
(i) The actions by Reorganized Rose's pursuant to
this Section 5.1.4 shall be without prejudice to the Post-
Effective Date Lender's rights under the Post-Effective Date
Financing Facility, and applicable law, including, without
limitation, to make protective or other advances under the Post-
Effective Date Financing Facility. Pursuant to the Post-Effective
Date Financing Facility, Reorganized Rose's shall use the proceeds
realized from the sale and other disposition of Reorganized Rose's'
assets on which the Post-Effective Date Lender has a lien to fully
and finally satisfy its outstanding obligations to the Post-
Effective Date Lender (as defined in the Post-Effective Date
Financing Facility) prior to any distribution of such proceeds from
such assets on which the Post-Effective Date Lender has a lien
senior to the Pre-Petition Lenders. Notwithstanding the foregoing,
in order to preserve the intercreditor relationships between the
Pre-Petition Secured Noteholders and the Bank of Tokyo under the
Intercreditor Agreements, Reorganized Rose's shall account for and
deposit all proceeds received from the sale of Inventory in the BOT
Stores (as defined in the Second Supplemental Adequate Protection
Consent Order) separately from the proceeds of Inventory in the
remaining stores of Reorganized Rose's. Reorganized Rose's shall
first use the net proceeds realized from the sale of Inventory in
the stores other than the BOT Stores to satisfy its outstanding
obligations to the Post-Effective Date Lender and shall thereafter
use proceeds from the sale of Inventory in the BOT Stores to the
extent necessary to satisfy, fully or partially, Reorganized
Rose's' obligations to the Post-Effective Date Lender.
v.1.5 Except to the extent that an Alternative
Treatment Event (as defined in the Second Supplemental Adequate
Protection Consent Order) shall be effective and GE Capital or the
Pre-Petition Lenders shall be entitled to exercise their rights
and remedies pursuant to the Second Supplemental Adequate
Protection Consent Order (in which event all distributions shall
be made in accordance with the provisions of the Supplemental
Adequate Protection Orders) and the DIP Facility, and except in
the event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of the Plan, on the Effective Date, the
Collateral Agent and the Pre-Petition Lenders on the one hand, and
the Debtor and/or Reorganized Rose's, on the other, shall take any
and all action reasonably necessary and appropriate to effectuate
and implement the provisions of this Section 5.1, including the
execution of any and all New Rose's Secured Notes Documents. As
of the Effective Date, all agreements entered into by and between
the Debtor and the Pre-Petition Lenders prior to the Effective Date
relating to, or underlying, the Debtor's pre-petition obligations
to, and the Allowed Secured Claims of, the Pre-Petition Lenders
shall be deemed superseded, and all obligations of any party under
such agreements shall be released and no further force or effect,
except that such agreements and documents shall not be null and
void to the extent necessary to allow the continuous perfection of
liens and encumbrances pursuant to Section 12.5 below. The
foregoing aggregate distributions to the holders of Allowed Secured
Claims in Class 2B pursuant to this Section 5.1 shall be deemed to
constitute the indubitable equivalent of such Allowed Secured
Claims.
v.2Class 3 (Unsecured Claims). Except in the event
that the Alternative Treatment Provisions are effective pursuant
to Section 8.1 of this Plan, and except with respect to those
holders of Class 3 Allowed Unsecured Claims which are Damage Claims
entitled to receive a Cash payment in accordance with the ADR
Procedure as ratified and incorporated into this Plan pursuant to
Section 7.16 of this Plan, each holder of an Allowed Unsecured
Claim in Class 3 shall receive in exchange for such claim its Pro-
Rata share of (i) the Class 3 Common Stock Designation, on such
Distribution Dates specified by, and otherwise in accordance with,
Section 6.2.2 of this Plan, and (ii) the Subscription Proceeds, if
any, not returnable to the Class 5 Subscribers pursuant to the
Class 5 Rights Notice, on such Distribution Dates specified by,
and otherwise in accordance with, Section 6.2.3 of this Plan.
v.3Class 4 (Intercompany Claims). Unless an
Alternative Treatment Event is effective and not waived, on the
Effective Date, or as soon thereafter as RSI is merged into
Reorganized Rose's pursuant to Section 7.11 herein, all
Intercompany Claims shall be deemed canceled, annulled and
extinguished, and no holder of an Intercompany Claim shall receive
any distribution whatsoever under this Plan or otherwise on account
of such Intercompany Claim.
v.4Class 5 (Common Stock Interests). Except in the
event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of this Plan, each holder of a Common Stock
Interest in Class 5 shall receive in exchange for such interest (i)
its Pro-Rata share of the New Rose's Warrants, on such Distribution
Dates as set forth in Section 6.2.5 of this Plan, (ii) its Pro-
Rata share of the New Rose's Common Stock Secondary Distribution,
if any, on such Distribution Dates as set forth in Section 6.2.4
of this Plan, and (iii) the non-transferrable right to pay Cash to
acquire shares of New Rose's Common Stock in accordance with the
Class 5 Subscription pursuant to Section 7.10 of this Plan and the
Class 5 Rights Notice.
v.5Class 6 (Pre-Petition Warrants). Holders of
Interests in Class 6 shall not receive any distribution whatsoever
on account of such Interests, and as of the Effective Date, all
Interests in any Pre-Petition Warrants, including, without
limitation, Pre-Petition Secured Noteholder Warrants, shall be
deemed canceled, annulled and extinguished. In addition, all
agreements, including, without limitation, the Pre-Petition Secured
Noteholder Warrant Agreement, providing for the issuance of Pre-
Petition Warrants to any Persons shall be deemed rejected, provided
that any and all Allowed Claims arising therefrom shall be deemed
subject to the subordination provisions of Section 510(b) of the
Bankruptcy Code, and such holders shall receive no distribution on
account of any such Allowed Claims.
v.6Class 7 (Pre-Petition Stock Options). Holders of
Interests in Class 7 shall not receive any distribution whatsoever
on account of such Interests, and as of the Effective Date, all
Interests in any Pre-Petition Stock Options, including, without
limitation, Employee Stock Options, shall be deemed canceled,
annulled and extinguished. In addition, all agreements providing
for the issuance of Pre-Petition Stock Options, including, without
limitation, the Employee Stock Option Plans, to any Persons shall
be deemed rejected, provided that any and all Allowed Claims
arising therefrom shall be deemed subject to the subordination
provisions of Section 510(b) of the Bankruptcy Code, and such
holders shall receive no distribution on account of any such
Allowed Claims.
v.7Class 8 (Subordinated Claims). Holders of
Subordinated Claims in Class 8 shall not receive any distribution
whatsoever on account of such Claims, and as of the Effective Date,
all Subordinated Claims shall be deemed canceled, annulled and
extinguished.
v.8Alternative Treatment Provisions. In the event
that the Alternative Treatment Provisions of the Plan are effective
pursuant to Section 8.1 of this Plan and are not waived by all Plan
Proponents, Sections 5.1, 5.2 and 5.4 of this Plan shall not be
operative and shall be null and void and of no force and effect.
Rather, Classes 2B, 3 and 5 shall be treated in accordance with
Sections 5.8.1, 5.8.2 and 5.8.3, respectively, of this Plan, the
other Alternative Treatment Provisions, and pursuant to such other
provisions as, and only to the extent, specified in Section 5.8.4
of this Plan.
v.8.1Alternative Treatment of Class 2B. Except to
the extent that an Alternative Treatment Event (as defined in the
Second Supplemental Adequate Protection Consent Order) shall be
effective and GE Capital or the Pre-Petition Lenders shall be
entitled to exercise their rights and remedies pursuant to the
Second Supplemental Adequate Protection Consent Order (in which
event all distributions shall be made in accordance with the
provisions of the Supplemental Adequate Protection Orders) and the
DIP Facility, in the event that the Alternative Treatment
Provisions shall be effective, on any Distribution Date after full
satisfaction of all of the GE Obligations, each holder of an
Allowed Secured Claim in Class 2B shall receive Cash pursuant to
this Plan, and/or the Alternative Treatment Implementation Orders
until it receives an aggregate amount of Cash equal to its Allowed
Secured Claim in full in accordance with the Intercreditor
Agreements. In the event the Second Supplemental Adequate
Protection Consent Order shall be either (a) overturned on appeal
or (b) the subject of a stay pending appeal and such stay shall be
continuing in a manner that materially impairs either the payment
of the Additional Adequate Protection Payments as set forth and
defined in the Second Supplemental Adequate Protection Consent
Order or the remedies granted therein to the Pre-Petition Lenders,
the following rules apply:
(a)The Additional Adequate Protection Payments which
would have been made to the Pre-Petition Lenders thereunder but
for the overturning on appeal or the stay will be made pursuant to
this Plan and, where applicable, in accordance with the terms of
Section 7.16 of this Plan, provided however, that if the stay of
the Second Supplemental Adequate Protection Consent Order shall be
dissolved and any such Adequate Protection Payments may be made
pursuant to the terms of the Second Supplemental Adequate
Protection Consent Order, then such Additional Adequate Protection
Payments shall be made pursuant to the terms of such order.
(b)The remedies granted to the Pre-Petition Lenders
pursuant to the provisions of the Second Supplemental Adequate
Protection Consent Order regarding the liquidation of the Debtor's
assets shall be exercisable by the Pre-Petition Lenders pursuant
to Section 7.16 of this Plan, provided however, that if the stay
of the Second Supplemental Adequate Protection Consent Order shall
be dissolved and such remedies may be exercisable in accordance
with the provisions of the Second Supplemental Adequate Protection
Consent Order, then such remedies shall be exercisable pursuant to
the terms of such order.
v.8.2Alternative Treatment of Class 3. On any
Distribution Date commencing on the Effective Date, after full
satisfaction of all of the GE Obligations pursuant to and in
accordance with Section 3.5 of this Plan, and after payment in full
in Cash of the Pre-Petition Lenders' Allowed Secured Claims, all
Administrative Claims, all Allowed Tax Claims, and all Allowed Non-
Tax Priority Claims, each holder of a Class 3 Allowed Claim shall
receive its Pro-Rata share of any remaining Available Cash;
provided, that in no event shall the holder of a Class 3 Allowed
Claim receive Cash aggregating more than the full amount of such
Allowed Claim.
v.8.3Alternative Treatment of Class 5. As of the
Effective Date, all Class 5 Common Stock Interests then
outstanding, and all certificates representing such Common Stock
Interests, shall remain outstanding pending entry of the Final
Decree. On any Distribution Date commencing on the Effective Date,
after full satisfaction of all of the GE Obligations pursuant to
and in accordance with Section 3.5 of this Plan, and after payment
in full in Cash of the Pre-Petition Lenders' Allowed Secured
Claims, all Administrative Claims, all Allowed Tax Claims, all
Allowed Non-Tax Priority Claims, and all Class 3 Allowed Claims,
each holder of Voting Common Stock and Non-Voting Class B Common
Stock shall receive its pro-rata share of any remaining Available
Cash and all other residual property of the Estate. Upon the entry
of the Final Decree, all Common Stock Interests shall be deemed
canceled, annulled and extinguished; provided however, that the
right to receive distributions pursuant to this Section 5.8.3 shall
survive such cancellations, annulment and extinguishment.
v.8.4 Other Plan Provisions Operative In Conjunction
With the Alternative Treatment Provisions. In the event that the
Alternative Treatment Provisions of the Plan are effective pursuant
to Section 8.1 of this Plan, only the following additional
provisions of the Plan also shall be effective and operative, and
then only to the extent the effectiveness and operation of such
provisions is consistent with the Alternative Treatment Provisions
and the Alternative Treatment Implementation Orders: Articles I,
II, III, IV, VIII, IX, X, XI and XII in their entirety; and,
Sections 5.8, 5.9, 6.1, 6.2, 6.2.6, 6.3, 6.5.1, 6.5.2, 6.5.3, 6.6,
6.7, 6.8, 7.1, 7.4, 7.10(c) and 7.15.
v.9Effect of Bar Dates. As of the Effective Date,
any Claim arising solely on account of a proof of claim filed after
an applicable Bar Date shall be deemed disallowed and expunged, and
the holder of such Claim shall be forever barred from asserting
such Claim against the Debtor or its property, and from voting on
this Plan and/or sharing in any distribution hereunder in respect
of such Claim unless otherwise provided pursuant to further order
of the Bankruptcy Court. All Claims scheduled by the Debtor as
contingent, unliquidated or disputed on its voluntary petition
under Chapter 11, or on its Lists, Schedules and Statements filed
pursuant to Section 521(1) of the Bankruptcy Code and Bankruptcy
Rule 1007, shall be deemed extinguished if the respective proofs
of claim in connection with such Claims were not filed by the
applicable Bar Dates, unless otherwise provided pursuant to further
order of the Bankruptcy Court.
v.10 Non-consensual Confirmation. In the event that
any impaired Class of Claims or Interests shall not accept this
Plan in accordance with Section 1129(a) of the Bankruptcy Code,
the Plan Proponents, with the exception of (a) the Unsecured
Committee if Class 3 does not accept this Plan, or (b) the Equity
Committee if Class 5 does not accept this Plan, reserve the right
to (i) request that the Bankruptcy Court confirm this Plan in
accordance with Section 1129(b) of the Bankruptcy Code, or (ii)
amend this Plan in accordance with Section 12.7 of this Plan.
ARTICLE vi
PROVISIONS GOVERNING DISTRIBUTIONS
vi.1 Distributions by Reorganized Rose's or the
Debtor, or Other Distribution Agent. With the approval of the
Board of Directors and the Bankruptcy Court, and subject to the
terms and provisions of the New Rose's Common Stock Trust, the
Class 5 Rights Notice and the New Rose's Warrant Agreement to the
extent applicable, either Reorganized Rose's or the Debtor, as
applicable, or its designee, as Distribution Agent, shall make all
distributions required to be made under this Plan on the Effective
Date or such other Distribution Date as is specified in this Plan
or the Supplemental Adequate Protection Orders. Any entity
designated by either Reorganized Rose's or the Debtor, as
applicable, or authorized by other agreement to be a Distribution
Agent and to make such distributions may employ or contract with
other entities to assist in or make the distributions required by
this Plan to the extent agreed by Reorganized Rose's or the Debtor,
as applicable. The Distribution Agent shall serve without bond,
and to the extent that the Distribution Agent is not Reorganized
Rose's or the Debtor, as applicable, the Distribution Agent shall
receive from Reorganized Rose's or the Debtor, as applicable,
without further Bankruptcy Court approval, reasonable compensation
and reimbursement of reasonable out-of-pocket expenses on terms
acceptable to Reorganized Rose's or the Debtor, as applicable.
vi.2 Distributions to Impaired Classes. The
following shall constitute the means of distributions to the
holders of Allowed Claims and Interests in their respective
Classes:
vi.2.1Distributions of New Rose's Secured Notes.
The New Rose's Secured Notes shall be delivered to the Collateral
Agent, or its designee, on the Effective Date. The Collateral
Agent shall thereafter distribute the New Rose's Secured Notes to
the individual holders of Pre-Petition Lenders' Allowed Secured
Claims and to the Reserve in accordance with Section 7.12 of this
Plan, pursuant to the Intercreditor Agreements and Section 5.1
hereof.
vi.2.2Distributions of New Rose's Common Stock.
amount of shares, if any, equal to 70% of all shares of New Rose's
Common Stock issued and outstanding as of the Effective Date which
are not included in the Class 5 Subscription Stock Designation
shall be distributed on a Pro-Rata basis among all holders of
Allowed Claims in Class 3 and the Reserves established on account
of Disputed Claims in Class 3 in accordance with Section 7.12 of
this Plan, (ii) an amount of shares equal to 100% of the Class 5
Subscription Stock Designation shall be distributed among all Class
5 Subscribers in the manner specified in Section 7.10 of this Plan
and the Class 5 Rights Notice, and (iii) the remaining shares, if
any, of New Rose's Common Stock issued and outstanding as of the
Effective Date which are not distributed pursuant to subparagraphs
(i) and (ii) above shall be deposited into the New Rose's Common
Stock Trust pursuant to the New Rose's Common Stock Trust
Agreement.
(b)Within thirty days after the Determination Date,
the Distribution Agent which is the trustee of the New Rose's
Common Stock Trust shall distribute on a Pro-Rata basis among all
holders of Allowed Claims in Class 3 and the Reserves established
on account of Disputed Claims in Class 3 in accordance with Section
7.12 of this Plan, the lesser of (i) all of the shares of New
Rose's Common Stock maintained in the New Rose's Common Stock
Trust, or (ii) such number of shares of New Rose's Common Stock
having an aggregate value, as determined in accordance with
subparagraph (c) below, when added to (x) the aggregate value, also
as determined in accordance with subparagraph (c) below, of that
portion of Class 3 Common Stock Designation distributed or
deposited in accordance with subparagraph (a)(i) above and (y) two
(2) times the Subscription Proceeds payable to all holders of
Allowed Claims in Class 3 and the Reserves established on account
of Disputed Claims in Class 3 as specified in Section 6.2.3 of this
Plan, equal to the Full Recovery Target Amount.
(c)The determination of value for purposes of
distributions of shares of New Rose's Common Stock maintained in
the New Rose's Common Stock Trust pursuant to subparagraph (b)
above shall be the average trading price of the New Rose's Common
Stock for the fifteen trading days prior to the Determination
Date.
(d) The shares of New Rose's Common Stock issued
pursuant to Sections 6.2.2 and 6.2.4 of this Plan shall be subject
to dilution arising from the issuance of shares by Reorganized
Rose's of New Rose's Common Stock as may be authorized or required,
from time to time, (i) pursuant to the Management Incentive and
Retention Program, and (ii) by operation or exercise of the New
Rose's Warrants.
vi.2.3Distribution of Subscription Proceeds.
(a)In the event that the Subscription Proceeds total
$25 million or greater, the Subscription Proceeds in the
Subscription Proceeds Escrow, after the return of any Subscription
Proceeds, including interest thereon, to the Class 5 Subscribers
if required by the Class 5 Rights Notice, shall be distributed Pro-
Rata among all holders of Allowed Claims in Class 3 and the
Reserves established on account of Disputed Claims in Class 3
pursuant to Section 7.12 of this Plan. Upon the resolution of all
Disputed Claims in Class 3 in accordance with Section 7.12 of this
Plan, any Cash remaining in the Subscription Proceeds Escrow,
including interest thereon that has not been distributed, to
holders of Disputed Claims in Class 3 which became Allowed Claims
in Class 3 shall be distributed pro-rata among the Class 5
Subscribers in accordance with the allocations set forth in Section
7.10(a) of this Plan and the Class 5 Rights Notice. Prior to the
resolution of all Disputed Claims in Class 3, if at any time or
times the Subscription Proceeds Escrow contains more than enough
Subscription Proceeds to pay in full all of the remaining Disputed
Claims in Class 3, such excess Subscription Proceeds may be
distributed from time to time among the Class 5 Subscribers as
provided in the preceding sentence.
(b)In the event that the Subscription Proceeds total
less than $25 million, the Subscription Proceeds, together with
accrued interest thereon, shall be returned to the Class 5
Subscribers pursuant to the Class 5 Rights Notice.
vi.2.4Distribution of New Rose's Common Stock
Secondary Distribution. Within thirty days of the Determination
Date, shares of New Rose's Common Stock constituting the New Rose's
Common Stock Secondary Distribution, if any, shall be distributed
Pro-Rata to all holders of Common Stock Interests in Class 5 in
accordance with the New Rose's Common Stock Trust Agreement.
vi.2.5Distribution of New Rose's Warrants. Within
thirty days of the Effective Date, the New Rose's Warrants shall
be distributed by Reorganized Rose's to the warrant agent under
the New Rose's Warrant Agreement, who, as a Distribution Agent,
shall distribute the Warrants on a Pro-Rata basis to all holders
of Common Stock Interests in Class 5 pursuant to the New Rose's
Warrant Agreement. Each New Rose's Warrant shall entitle the
holder thereof to purchase one share of New Rose's Common Stock
from the date the New Rose's Warrants are issued until the seventh
anniversary of the Effective Date at the per share price equal,
subject to adjustment as provided in the New Rose's Warrant
Agreement, to (i) on the Effective Date, and as adjusted on each
of the first three anniversaries of the Effective Date, the Full
Recovery Target Amount divided by the number of shares of New
Rose's Common Stock to be issued pursuant to this Plan and the
Warrant Agreement and (ii) as adjusted on the fourth, fifth, and
sixth anniversaries of the Effective Date, 105%, 110% and 115%,
respectively, of the Full Recovery Target Amount divided by the
number of shares of New Rose's Common Stock to be issued pursuant
to this Plan and the Warrant Agreement.
vi.2.6Listing of Common Stock and Warrants.The
Debtor intends to apply for listing of the New Rose's Common Stock
and the Warrants on a national securities exchange or quotation on
the National Association of Securities Dealers Automated Quotation
National Marked System.
vi.2.7Distributions of Cash Under Alternative
Treatment Provisions. Except to the extent that an Alternative
Treatment Event (as defined in the Second Supplemental Adequate
Protection Consent Order) shall be effective and the Pre-Petition
Lenders shall be entitled to exercise their rights and remedies
pursuant to the Second Supplemental Adequate Protection Consent
Order (in which event all distributions shall be made in accordance
with the provisions of the Adequate Protection Orders), in the
event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of this Plan, on any Distribution Date, the
Debtor shall distribute all Cash available for payment or reserve
in accordance with Sections 7.12 and 7.16 of this Plan, as follows:
first, satisfaction in full to GE Capital of all of the GE
Obligations; second, payment in full to the Collateral Agent for
distribution to the Pre-Petition Lenders pursuant to the
Intercreditor Agreements of each of the Pre-Petition Lenders'
Allowed Secured Claims; third, payment in full to each holder of
an Administrative Claim, Allowed Tax Claim and Allowed Non-Tax
Priority Claim, or into a Reserve established for a Disputed Claim
which if allowed would be an Administrative Claim, an Allowed Tax
Claim or an Allowed Non-Tax Priority Claim; fourth, payment in full
to each holder of a Class 3 Allowed Claim or into a Reserve
established for a Class 3 Disputed Claim; and fifth, payment on a
pro-rata basis to each holder of Voting Common Stock and Non-
Voting Class B Common Stock; provided, however, that Cash from
Disposition Proceeds that are derived from assets in which GE
Capital does not have a lien, but in which the Pre-Petition Lenders
do have a lien, shall be distributed first toward payment in full
to the Collateral Agent for distribution to the Pre-Petition
Lenders, and, thereafter, to other Claims, and, after satisfaction
in full of all Claims, to Common Stock Interests, in the order as
set forth above. All distributions of Available Cash required to
be made pursuant to this Section 6.2.7 shall be made on the
following dates (each date constituting a "Distribution Date")
first, on any date required to be made pursuant to the provisions
of this Plan or the Supplemental Adequate Protection Orders,
second, on the Effective Date, and thereafter, on the earlier of
(i) such date as there exists at least $5,000,000 of Available
Cash, (ii) ten (10) Business Days following the last day of each
calendar quarter upon which there is at least $2,500,000 of
Available Cash, (iii) ten (10) Business Days following the last
day of each calendar year upon which there is at least $1,000,000
of Available Cash, (iv) ten (10) Business Days following the entry
of the Final Decree, to the extent of any Available Cash and Cash
maintained in the Alternative Treatment Account, or (v) as
otherwise required to GE Capital and to the Collateral Agent
pursuant to the Supplemental Adequate Protection Orders and the
Alternative Treatment Implementation Orders.
vi.3 Timing of Distributions. Except as otherwise
provided in this Article 6, or as may be ordered by the Bankruptcy
Court, all distributions shall be made on the respective
Distribution Dates as specified in this Plan, or as soon as
practicable thereafter, and all distributions shall be deemed
timely made if made on such respective Distribution Dates or as
soon as practicable thereafter.
vi.4 Disputed Payments. Except as otherwise
provided in the Supplemental Adequate Protection Consent Orders,
in the event of any dispute between and among the holders of Claims
or Interests as to the right of any Person to receive or retain any
payment or distribution to be made to such Person under this Plan,
the Distribution Agent may, in lieu of making such payment or
distribution to such Person, instead hold such payment or
distribution until the disposition thereof shall be determined by
the Bankruptcy Court.
vi.5 Delivery of Distributions and Undeliverable or
Unclaimed Distributions.
vi.5.1Delivery of Distributions in General. Except
as provided in the Class 5 Rights Notice, the New Rose's Warrant
Agreement or New Rose's Common Stock Trust Agreement, distributions
to holders of Allowed Claims or Common Stock Interests shall be
made: (a) at the addresses set forth in the proofs of Claim filed
by such holders; (b) at the addresses set forth in any written
notices of address change delivered to the Debtor and transmitted
to the Distribution Agent after the date on which any related proof
of Claim was filed; or if the information described in clauses (a)
or (b) is not available, (c) at the addresses reflected in the
Debtor's schedules of liabilities or the applicable stock register
as maintained by or on behalf of the Debtor on the applicable
Record Date.
vi.5.2Distributions Held by Distribution Agent.
If the distribution to any holder of an Allowed Claim or Common
Stock Interests is returned to a Distribution Agent as
undeliverable, no further distributions shall be made to such
holder, but shall be held by the Distribution Agent, unless and
until the applicable Distribution Agent is notified in writing of
such holder's then-current address, at which time all previously
missed distributions shall be mailed to such holder. Undeliverable
distributions shall remain in the possession of the applicable
Distribution Agent until such time as a distribution becomes
deliverable. Undeliverable Cash shall be held in trust in
segregated bank accounts in the name of the applicable Distribution
Agent for the benefit of the potential claimants of such funds, and
shall be accounted for separately. Any Distribution Agent holding
undeliverable Cash shall invest such Cash in a manner consistent
with Reorganized Rose's or the Debtor, as applicable, investment
and deposit guidelines and the requirements of Section 345 of the
Bankruptcy Code. Undeliverable shares of New Rose's Common Stock
or New Rose's Warrants shall be held in trust for the benefit of
the potential claimants of such shares by the applicable
Distribution Agent in numbers of shares sufficient to fund the
unclaimed amounts of such New Rose's Common Stock and shall be
accounted for separately.
vi.5.3Failure to Claim Undeliverable Distributions.
Any holder of an Allowed Claim or Common Stock Interest that does
not assert a right to receive a distribution of Cash or shares of
New Rose's Common Stock pursuant to this Plan with respect to an
undeliverable distribution within one year after the Effective Date
shall have its right to receive such undeliverable distribution
discharged and shall be forever barred from asserting any such
right for an undeliverable distribution against the applicable
Distribution Agent and Reorganized Rose's or the Debtor, as
applicable, or its property. In such cases: (i) any Cash held for
distribution on account of such Allowed Claims for undeliverable
distributions (including Cash interest and maturities on
undeliverable dividends and other distributions on undeliverable
shares of New Rose's Common Stock) shall be property of Reorganized
Rose's or shall be maintained by the Debtor in the Alternative
Treatment Account, as applicable, free of any restrictions thereon;
and (ii) any shares of New Rose's Common Stock held for issuance
on account of such Claims or Common Stock Interest for
undeliverable distributions shall either be canceled or held as
treasury shares as Reorganized Rose's may determine is appropriate.
To the extent that such undeliverable Cash or shares of New Rose's
Common Stock is held by a Distribution Agent, such Distribution
Agent shall return such Cash or shares or other instruments
evidencing such New Rose's Common Stock to Reorganized Rose's or
the Debtor, as applicable. Checks issued by a Distribution Agent
in respect of distributions to the holders of Allowed Claims or
Common Stock Interest shall be null and void if not cashed within
120 days of the date of issuance thereof. Any amount paid by
Reorganized Rose's or the Debtor, as applicable, to a Distribution
Agent in respect of such a check shall be promptly returned to
Reorganized Rose's or the Debtor, as applicable, by such
Distribution Agent. Requests for the reissuance of any check shall
be made directly to the applicable Distribution Agent by the holder
of the Allowed Claim or Common Stock Interest with respect to which
such check was originally issued. Any Claim in respect of such a
check voided pursuant to this Section shall be made on or before
the later of the first anniversary of the Effective Date and 90
days after the issuance of such check. After such date, all claims
in respect of a check voided pursuant to this Section shall be
discharged and forever barred. Nothing contained in this Plan
shall require the Debtor, Reorganized Rose's, or any Distribution
Agent to attempt to locate any holder of an Allowed Claim or Common
Stock Interest.
vi.6 Fractional Distributions and Fractional Cents;
Round Lots. Any other provision of this Plan notwithstanding, no
fractional shares of New Rose's Common Stock shall be issued or
distributed in connection with this Plan. Whenever the issuance
of a fractional share of New Rose's Common Stock would otherwise
be called for, the actual issuance shall reflect a rounding down
of such fraction to the nearest whole share, provided that no
Person entitled to receive a distribution of New Rose's Common
Stock shall receive less than one share thereof. Whenever any
payment of a fraction of a cent would otherwise be called for, the
actual payment shall reflect a rounding down of such fraction to
the nearest, lowest whole cent.
vi.7 Full and Final Satisfaction. Except as
otherwise expressly provided herein, full and complete performance
by the Debtor and Reorganized Rose's hereunder shall be in full
and final satisfaction, settlement, release and discharge of all
Claims and Interests.
vi.8 Allocation of Distributions to Holders of
Allowed Secured Claims. Except where not consistent with Section
5.1 of this Plan, all payments made hereunder to a holder of an
Allowed Secured Claim with respect to which there is accrued but
unpaid interest as of the Effective Date shall be allocated first
to the principal amount of the Allowed Secured Claim and then to
such accrued but unpaid interest to the extent that the amount of
the payments made under this Plan to such a holder exceeds the
principal amount of such claim.
ARTICLE vii
MEANS OF EXECUTION
In addition to the provisions set forth elsewhere in
this Plan regarding the means of execution, the following shall
constitute the means of execution of this Plan. Upon the
implementation of the provisions of Section 7.16 of this Plan, the
provisions of Article VII of this Plan, only Sections 7.1, 7.4,
7.10(c), 7.12, 7.13, 7.15 and 7.16 shall be operative and all
remaining provisions of this Article VII shall not be operative
and shall be void and of no force and effect.
vii.1 Funds for Distribution. The funds utilized to
make the Cash payments hereunder have been and will continue to be
generated by, among other things, from the operation of the
Debtor's businesses, asset dispositions and any Post-Effective Date
Financing Facility, or, in the case of distributions to be made
pursuant to the Alternative Treatment Provisions, from Cash
constituting the net proceeds of the sale or disposition of
substantially all assets of the Estate pursuant to the Supplemental
Adequate Protection Orders, the Alternative Treatment
Implementation Orders, and/or Section 7.16 of this Plan. On any
Distribution Date, Reorganized Rose's shall cause to be available
for distribution shares of New Rose's Common Stock, the New Rose's
Secured Notes and the New Rose's Warrants.
vii.2 Post-Effective Date Financing Facility. All
loans, advances, debts, guarantees, liabilities and obligations
for monetary amounts (whether or not such amounts are liquidated
or determinable) owing by Reorganized Rose's to the Post-Effective
Date Lender, and all covenants and duties regarding such amounts,
of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under any of
the Post-Effective Date Financing Facility, including, without
limitation, all interest, fees, charges, expenses, attorneys' fees
and any other sum chargeable to Reorganized Rose's under any of
the documents and agreements memorializing the Post-Effective Date
Financing Facility, shall be secured by valid and enforceable liens
on, and security interests in, the Post-Effective Date Collateral.
The documents and agreements memorializing the Post-Effective Date
Financing Facility shall contain terms and provisions consistent
with those portions of Section 5.1 of this Plan which are expressly
applicable to the Post-Effective Date Financing Facility. On the
Effective Date, Reorganized Rose's shall grant, and shall be hereby
deemed to grant, to the Post-Effective Date Lender liens and
security interests in all of the Post-Effective Date Collateral for
the purpose of securing all obligations and liabilities of
Reorganized Rose's under the Post-Effective Date Financing
Facility, which security interests and liens shall constitute valid
and perfected first-priority security interests in and liens upon
all Post-Effective Date Collateral, superior to and with priority
over all other security interests and liens whether consensual or
non-consensual, statutory or otherwise, and whether existing now
or in the future, (including, without limitation, any liens and
security interests granted to the Pre-Petition Lenders pursuant to
Section 5.1 of this Plan) except as to that portion of the Post-
Effective Date Collateral which is subject to any Permitted
Encumbrance Collateral, as to which Permitted Encumbrance
Collateral the Post-Effective Date Lender shall have valid and
perfected security interests and liens subordinate only to, or pari
passu with, as the case may be, all valid, perfected and
unavoidable liens and security interests existing thereon as of the
Effective Date and described in the Post-Effective Date Financing
Facility. The terms of the Post-Effective Date Financing Facility
shall be subject to the approval of the Bankruptcy Court by entry
of its order prior to the Effective Date in form satisfactory to
the Plan Proponents, and the Post-Effective Date Lender. The liens
and security interests granted in favor of the Post-Effective Date
Lender shall be effective and shall be deemed created and fully
perfected immediately upon the Effective Date and without the
necessity of the execution by the Debtor or Reorganized Rose's of
financing statements, mortgages, security agreements or any other
documents. The Post-Effective Date Lender shall not be required
to file financing statements, mortgages, deeds of trust, notices
of lien, certificates of title or any other instruments
(collectively, "Instruments") in any jurisdiction or take any other
action in order to validate or perfect the liens and security
interests granted to the Post-Effective Date Lender and the entry
of the Confirmation Order and the occurrence of the Effective Date
shall constitute immediate and full perfection of the liens and
security interests granted to the Post-Effective Date Lender,
notwithstanding any failure of the Post-Effective Date Lender to
file or otherwise perfect said security interests through such
Instruments or otherwise in accordance with any state or other
applicable law. Notwithstanding the foregoing, the Post-Effective
Date Lender or any of its agents may, at its sole discretion,
choose to file such Instruments or otherwise confirm perfection of
such liens and security interests and all such Instruments shall
be deemed to have been filed or recorded at the time and on the
date of the Effective Date. In lieu of filing such Instruments,
the Post-Effective Date Lender or any of its agents may, at its
sole discretion, choose to file a certified copy of the
Confirmation Order in any place at which such Instruments would or
could otherwise be filed, together with such description of
collateral located within the geographic area covered by such place
of filing as the Post-Effective Date Lender may determine, and such
filing shall have the same effect as if all such Instruments had
been filed or recorded at the time and on the date the Effective
Date. Should the Post-Effective Date Lender so choose to attempt
to file such Instruments or a certified copy of the Confirmation
Order, or otherwise attempt to confirm perfection of any or all
such liens and security interests, no defect or failure in
connection with such attempt shall in any way limit, waive or alter
the fact that such liens and security interests are effective and
fully perfected immediately upon and forever after the Effective
Date. The Pre-Petition Lenders acknowledge that should they elect
to file Instruments or otherwise confirm perfection of the security
interests granted as authorized by this Plan, said filing or other
confirmation of the security interests granted as authorized by the
Plan shall in no manner whatsoever vitiate, reduce or abrogate in
any manner the first priority security interests in respect of the
collateral granted to the Post-Effective Date Lender in accordance
with the provisions of this Plan and the Post-Effective Date
Financing Documents, whether or not the Post-Effective Date Lender
ever chooses to file Instruments or otherwise confirm the
respective liens and security interests in the collateral granted
to the Post-Effective Date Lender as authorized (but not required)
by this paragraph and irrespective of the sequence of any such
filings as between the Post-Effective Date Lender and the Pre-
Petition Lenders. In addition, if GE Capital is the Post-Effective
Date Lender, then, notwithstanding any termination of the DIP
Facility or the satisfaction of the GE Obligations or the
provisions of any other section of this Plan (including without
limitation Section 9.1 hereunder), the documents, instruments,
agreements and orders comprising all or a portion of the DIP
Facility shall nonetheless remain in force and effect to the extent
necessary or desirable, in the sole discretion of GE Capital to
allow the continuous perfection of liens and encumbrances pursuant
to Section 12.5 below. The rights and remedies set forth in
Section 5.1.4 of the Plan may and shall be exercised with respect
to realization on Post-Effective Date Collateral under the Post-
Effective Date Financing Facility after the occurrence of an event
of default thereunder to the extent and so long as (i) such rights
and remedies are actually enforced by the Bankruptcy Court, and
(ii) any obligations remain outstanding under the New Rose's
Secured Notes, provided however, that (A) nothing shall limit any
rights and remedies of the Post-Effective Date Lender except with
respect to realization on Post-Effective Date Collateral and (B)
if for any reason the Bankruptcy Court fails to enforce said rights
and remedies, the Post-Effective Date Lender shall not be limited
in any way with respect to the exercise of such rights and
remedies.
vii.3 Corporate Action. Pursuant to this Plan and
Section 303 of the Delaware General Corporation Law, the following
shall be deemed to have occurred and be effective as provided
herein, and shall be authorized and approved in all respects,
without any requirement of further action by the stockholders or
directors of the Debtor or Reorganized Rose's, and with like effect
as if such actions had been taken by unanimous action of the stock-
holders and directors of the Debtor or Reorganized Rose's, as
applicable: the adoption of the certificate of incorporation of
Reorganized Rose's and the by-laws of Reorganized Rose's, con-
stituting the New Rose's Charter, and the initial selection of
directors and officers of Reorganized Rose's; the distribution of
Cash and the issuance and distribution of the New Rose's Common
Stock, New Rose's Secured Notes, New Rose's Warrants and
implementation of the terms and provisions of the Class 5
Subscription, and all agreements thereunder; the implementation of
the Alternative Treatment Implementation Orders and the Alternative
Treatment Provisions, if applicable; and the implementation of the
other matters provided for under this Plan involving the corporate
structure of Reorganized Rose's or the Debtor, as applicable,
including the merger into Reorganized Rose's of RSI, or corporate
action to be taken by or required of Reorganized Rose's or the
Debtor, as applicable, and all agreements and transactions provided
for, or contemplated, in this Plan.
vii.4 Cancellation of Common Stock, Pre-Petition
Warrants, Pre-Petition Stock Options and Pre-Petition Secured Notes
and Surrender of Common Stock, Pre-Petition Warrants and Pre-
Petition Secured Notes. All Common Stock Interests, Pre-Petition
Warrants, Pre-Petition Stock Options and all promissory notes under
all agreements with the Pre-Petition Lenders including, without
limitation, Pre-Petition Secured Notes, shall be canceled, annulled
and extinguished as of the Effective Date; provided however, that
the right to receive distributions pursuant to Section 6.2 of this
Plan shall survive such cancellation, annulment and extinguishment.
As of the close of business on the Effective Date (or, with respect
to Common Stock Interests, the Equity Record Date), the transfer
ledgers or registers and any other records determining record
ownership of the Debtor's equity and debt instruments maintained
by the Debtor or the Collateral Agent in the ordinary course shall
be closed and there shall be no further changes in the record
holders of Interests and promissory notes held by the Pre-Petition
Lenders including, without limitation, the Pre-Petition Secured
Notes, on the books of the Debtor. The Debtor shall have no
obligation to recognize any thereafter occurring transfers of
Interests or notes of any kind held by the Pre-Petition Lenders,
but shall be entitled instead to recognize only those Persons who
were Pre-Petition Lenders or holders of such Interests as of the
close of business on the Effective Date (or the Equity Record Date,
as applicable), as reflected on the transfer ledgers or registers
and any other records maintained by the Debtor or the Collateral
Agent in the ordinary course. Each such holder shall surrender or
cause to be surrendered the relevant instrument, if any, to
Reorganized Rose's for cancellation (or if such instrument has been
stolen, lost, or destroyed, in lieu thereof (x) a lost security
affidavit and (y) a bond the terms of which are reasonably required
by Reorganized Rose's). Until a holder of record on the Effective
Date surrenders or causes to be surrendered the relevant
instrument, such holder shall have no rights with respect to any
distribution under this Plan.
vii.5 New Rose's Charter. On the Effective Date, the
New Rose's Charter will become effective. The New Rose's Charter
shall, together with the provisions of this Plan, provide for,
among other things, the authorization and issuance of New Rose's
Common Stock, New Rose's Secured Notes, New Rose's Warrants, the
constitution of the Reconstituted Board of Directors, and such
other provisions that are necessary to facilitate consummation of
this Plan and the requirements of the Bankruptcy Code, including
a prohibition against the issuance of nonvoting equity securities
in accordance with Section 1123(a)(6) of the Bankruptcy Code. The
Reconstituted Board of Directors shall have no less than seven and
no more than thirteen directors. The Unsecured Committee in its
sole discretion shall have the right to select all but one director
to serve on the Reconstituted Board of Directors. The Equity
Committee in its sole discretion shall have the right to select one
director to serve on the Reconstituted Board of Directors. In the
event the Subscription Proceeds total $25 million or more, within
180 days of the Effective Date, either the New Rose's Charter shall
provide a mechanism for appointing certain members of the board of
directors to be designated by the stockholders, or Reorganized
Rose's shall hold a special meeting of the stockholders for the
purpose of electing a new board of directors. To the extent
permitted under Delaware General Corporate Law, the New Rose's
Charter shall also provide that, until such time as the Pre-
Petition Lenders' Allowed Secured Claims shall be satisfied in
full, neither the Debtor nor Reorganized Rose's on its own behalf,
nor any director, officer, agent, or professional thereof on behalf
of the Debtor or Reorganized Rose's, shall have the power or
authority to cause the Debtor or Reorganized Rose's to be subject
to or to seek or obtain relief or file or commence any proceeding
under any chapter of the Bankruptcy Code other than in Case No. 93-
01365-5 (ATS)in the Bankruptcy Court for the Eastern District of
North Carolina to effectuate the provisions of the Plan on and
after the Effective Date, pursuant to which Reorganized Rose's was
created.
vii.6 Voting Powers. The certificate of
incorporation of Reorganized Rose's will provide that the holders
of such of the New Rose's Common Stock as may, from time to time,
be issued and outstanding, may elect, using non-cumulative voting,
all directors of Reorganized Rose's subsequent to the initial
installation of the Reconstituted Board of Directors pursuant to
Section 7.6 of this Plan.
vii.7 Authorization and Issuance of Equity and Debt
Instruments of Reorganized Rose's.
vii.7.1New Rose's Common Stock. Pursuant to the
New Rose's Charter, among other things, Reorganized Rose's will be
authorized to issue up to _________ shares of New Rose's Common
Stock. On the Effective Date, Reorganized Rose's will issue
________________ shares of New Rose's Common Stock pursuant to this
Plan and shall reserve for issuance ______________ shares of New
Rose's Common Stock to effectuate the New Rose's Warrant Agreement
and the Management Incentive and Retention Program. All shares of
the New Rose's Common Stock to be issued pursuant to this Plan will
be, upon issuance, fully paid and non-assessable and shall be
subject to dilution as set forth in Section 6.2.2 (d) of this Plan,
and the holders thereof will have no preemptive or other rights to
subscribe for additional shares.
vii.7.2New Rose's Warrants. Reorganized Rose's
shall be authorized to issue New Rose's Warrants, as provided in
Sections 5.4 and 6.2.5 of this Plan and in the New Rose's Warrant
Agreement, for the purchase of New Rose's Common Stock reserved
for issuance pursuant to this Plan.
vii.7.3New Rose's Secured Notes. Pursuant to the
New Rose's Charter, among other things, Reorganized Rose's will be
authorized and directed to issue New Rose's Secured Notes to the
Pre-Petition Lenders. All New Rose's Secured Notes will enjoy the
same rights, benefits and privileges.
vii.8 New Rose's Common Stock Allocable to Management
of Reorganized Rose's. Pursuant to the Management Incentive and
Retention Program, as and if approved by the Committees and the
Bankruptcy Court, and similar corporate policies that may be
implemented and administered by Reorganized Rose's on and after
the Effective Date, on the Determination Date the employees
identified in accordance therewith shall receive such shares, if
any, of New Rose's Common Stock, as may be approved. Any shares
of New Rose's Common Stock distributed pursuant to the Management
Incentive and Retention Program will cause dilution in the
percentage interests provided to holders of Allowed Claims and
Common Stock Interests receiving distributions of New Rose's Common
Stock pursuant to the terms of this Plan.
vii.9Applicability of Sections 1125 and 1145 of the
Bankruptcy Code to the New Rose's Common Stock Issued under the
Plan. The protection afforded by Section 1125 of the Bankruptcy
Code with regard to the solicitation of acceptances or rejections
of this Plan, and with regard to the offer, issuance, sale or
purchase of the New Rose's Secured Notes, New Rose's Common Stock,
the New Rose's Warrants and the rights to participate in the Class
5 Subscription issued to and distributed pursuant to this Plan,
shall apply to the full extent provided by law, and the entry of
the Confirmation Order shall constitute the determination by the
Bankruptcy Court that the Plan Proponents and Reorganized Rose's
(and if applicable, GE Capital, GE Capital Corporate Finance Group,
Inc. and GE Capital Commercial Finance, Inc.) and each of their
respective officers, directors, partners, employees, members or
agents, and each Professional, attorney, accountant, or other
professional employed by any of them, shall have acted in good
faith and in compliance with the applicable provisions of the
Bankruptcy Code pursuant to Section 1125 of the Bankruptcy Code.
In addition, the entry of the Confirmation Order shall provide that
the exemption from the requirements of Section 5 of the Securities
Act of 1933, 15 U.S.C. Statute 77e, and any state or local law
requiring registration for the offer or sale of a security provided
for in Section 1145 of the Bankruptcy Code shall apply to the New
Rose's Secured Notes, New Rose's Common Stock, the New Rose's
Warrants and the rights to participate in the Class 5 Subscription
issued under this Plan.
vii.10 Class 5 Subscription.
(a) As a Class, the holders of Common Stock
Interests in Class 5 shall collectively have rights to elect to
receive distributions of up to 100% of New Rose's Common Stock
otherwise allocable and distributable to Allowed Claims in Class
3 and the Reserves established for Disputed Claims in Class 3 for
Cash payment equal to 50% of the aggregate value of such Allowed
Claims and Reserve Amounts, provided that the aggregate amount of
Subscription Proceeds equals at least $25 million, all in
accordance with the terms and provisions of the Class 5 Rights
Notice. To effectuate the Class 5 Subscription and elections
thereunder, Reorganized Rose's shall, within 5 days of the Equity
Record Date, send the Class 5 Rights Notice to each holder of a
Common Stock Interest in Class 5 as of the Equity Record Date.
The Class 5 Rights Notice shall notify such holders of their
respective rights to acquire New Rose's Common Stock by tender and
payment of Cash, in an amount equal to the number of shares of New
Rose's Common Stock sought to be acquired multiplied by the Class
5 Subscription Price. Such Cash shall be payable to the
Distribution Agent for deposit into the Subscription Proceeds
Escrow, which shall be held and maintained by the Distribution
Agent designated therein. In the event that the Subscription
Proceeds in the Subscription Proceeds Escrow as of March 31, 1995
do not equal or exceed $25 million, the Distribution Agent shall
return to each Class 5 Subscriber the subscription payment made by
such Class 5 Subscriber, together with accrued interest thereon.
Upon tender of the fully executed Class 5 Rights Notice and, upon
the aggregate deposit of at least $25 million of Subscription
Proceeds into the Subscription Proceeds Escrow, all of which having
occurred prior to March 31, 1995, each Class 5 Subscriber shall
have the irrevocable right to receive distributions of shares of
New Rose's Common Stock constituting the Class 5 Subscription Stock
Designation pursuant to the following allocations: each Class 5
Subscriber shall be allocated initially the lesser of (i) the
number of shares for which it has subscribed and tendered payment
pursuant to the Class 5 Rights Notice, or (ii) its Pro-Rata share
of 100% of the New Rose's Common Stock issued and outstanding on
the Effective Date. Any shares of the New Rose's Common Stock
remaining unallocated after the immediately foregoing allocation
shall be allocated to each Class 5 Subscriber who subscribed for
more than its Pro-Rata share of New Rose's Common Stock in the
amount of such over-subscription. If a sufficient number of shares
of New Rose's Common Stock is not available to satisfy all such
over-subscriptions, the available shares will be allocated among
the Class 5 Subscribers who have over-subscribed based on each such
Class 5 Subscriber's Pro-Rata share of Common Stock Interests as
of the Equity Record Date for the Class 5 Subscription. The
allocation process may involve a series of allocations to ensure
that the total number of shares available for over-subscription is
distributed on the pro-rata basis described immediately above.
(b) The Class 5 Subscription shall terminate on
March 31, 1995 or such other date as agreed to by the Debtor and
the Committees. For not more than three consecutive Business Days
beginning on March 24, 1995, the Debtor will issue a press release
and cause to be published in the Wall Street Journal, at a cost of
no more than $40,000, notice of the Class 5 Subscription Price as
adjusted as of March 24, 1995.
(c) In the event that the Alternative Treatment
Provisions are effective pursuant to Section 8.1 of this Plan, any
Cash including interest thereon in the Subscription Proceeds Escrow
shall be returned to the Class 5 Subscribers as provided in the
Class 5 Rights Notice.
vii.11 Merger or Liquidation of RSI and Cancellation
of RSI Common Stock. Unless occurring the earlier of the Effective
Date, RSI shall be merged into Reorganized Rose's, in accordance
with Delaware General Corporation Law and further orders of the
Bankruptcy Court. Upon merger, all common stock of RSI shall
deemed canceled, annulled and extinguished. Any and all claims
asserted against RSI shall be deemed Administrative Claims of
Reorganized Rose's. Reorganized Rose's shall assume, to the
fullest extent permitted by law and only if such obligations have
not been previously rescinded, canceled, terminated, or rejected
prior to the Effective Date, all obligations relating to
indemnification and exculpation of RSI's directors, officers,
employees, fiduciaries, agents or controlling persons as of the
Effective Date as arise under applicable laws or as provided in
any of (i) the RSI's certificate of incorporation in effect prior
to or as of the date hereof, (ii) the RSI's by-laws in effect prior
to or as of the date hereof, or (iii) any agreement with the RSI,
in each of these cases (i)-(iii) with respect to matters occurring
on or prior to the Effective Date.
vii.12 Reserve Provisions for Disputed Claims.
(a) All Cash, New Rose's Common Stock, or
Available Cash, (as applicable), to which a Disputed Claim
otherwise would be entitled as an Allowed Claim in a particular
class as of a Distribution Date, shall not be distributed, but, if
necessary, at the option of the Debtor which shall be determined
on or before the date of the hearing to approve the Disclosure
Statement, either be reserved for issuance or be deposited on the
applicable Distribution Date by the Debtor into a Reserve
established on account of such Disputed Claim, in such amount as
would have been distributed if the holder thereof had an Allowed
Claim in the full amount of its Disputed Claim; provided, however,
that if a holder of a Contingent Claim is not receiving a
distribution under this Plan and such Contingent Claim is not being
discharged by this Plan, or is assumed by Reorganized Rose's, the
Debtor shall not be required to reserve any Cash, New Rose's Common
Stock or Available Cash (as applicable), with respect thereto.
(b) For the purposes of effectuating the
provisions of this Section 7.12 and the distributions to holders
of Allowed Claims and Common Stock Interests, the Bankruptcy Court
may fix or liquidate the Reserve Amount on account of a particular
Disputed Claim pursuant to Section 502(c) of the Bankruptcy Code,
in which event the amount so fixed or liquidated shall be deemed
the amount of the Disputed Claim pursuant to Section 502(c) of the
Bankruptcy Code for purposes of distribution under this Plan. In
lieu of fixing or liquidating the amount of any Disputed Claim,
the Bankruptcy Court may determine the Reserve Amount for such
Disputed Claim, or such Reserve Amount may be fixed by agreement
in writing by and between the Debtor and the holder thereof. Each
of the Debtor, the Unsecured Committee and the Equity Committee
shall have standing to (i) move for an order of the Bankruptcy
Court, pursuant to Section 502(c) of the Bankruptcy Court, fixing
or liquidating the Reserve Amount for any and all Disputed Claims
in Class 3 to be deposited into a Reserve, and (ii) object to any
Disputed Claim or any Reserve Amount fixed on account of any
Disputed Claim. In the event that any Disputed Claim has not been
fixed or liquidated pursuant to this Section 7.12(b), the Reserve
Amount with respect to such Disputed Claim shall be equal to the
face amount of the Disputed Claim.
(c) No holder of a Disputed Claim shall have any
Claim against the Cash and/or New Rose's Common Stock, or Available
Cash (as applicable), reserved with respect to such Claim until
such Disputed Claim shall become an Allowed Claim. In no event
shall any holder of any Disputed Claim or unliquidated Claim be
entitled to receive (under this Plan or otherwise) from the Debtor,
Reorganized Rose's or the Reserve, any payment, in Cash and New
Rose's Common Stock or other property, or Available Cash (as
applicable), which is greater than the Reserve Amount deposited
into a Reserve for such Claim pursuant to this Section 7.12 plus
any interest, if applicable, earned thereon, net of Pro-Rata
assessment for expenses and fees incurred in administering the
Reserve. In no event shall the Debtor or Reorganized Rose's have
any responsibility or liability for any loss to or of any amount
reserved under this Plan.
(d) When a Disputed Claim becomes an Allowed
Claim, distribution on account thereof shall be made as soon as
practicable after the date of subsequent allowance of such Disputed
Claim as provided in Article 6 of this Plan, by means determined
by Reorganized Rose's; provided, further, to the extent that any
such distributions include Cash, then such distributions shall also
include interest accrued from the Effective Date (net of Pro-Rata
assessment for reasonable fees and expenses incurred in
administering the Reserve).
(e) To the extent a Disputed Claim ultimately
becomes an Allowed Claim in an amount less than the amount reserved
for such Disputed Claim, then the resulting surplus of Cash, and
New Rose's Common Stock, or Available Cash (as applicable)
(together with any interest, if applicable, thereon), shall be
retained by Reorganized Rose's or held in the treasury of
Reorganized Rose's, as applicable; provided, however, that any cash
remaining in the Subscription Proceeds Escrow including accrued
interest thereon, after distributions to Disputed Claims in Class
3 that become Allowed Claims in Class 3, shall be distributed as
set forth in Section 6.2.3 of this Plan.
(f) As of the Equity Record Date, Reserve Amounts
shall have been fixed pursuant to Section 7.12(b) of this Plan for
all Disputed Claims in Class 3. Upon resolution of a Disputed
Claim in Class 3, any Reserve Amount which was previously fixed for
such Disputed Claim shall be set to zero, the total Reserve Amount
for Disputed Claims in Class 3 shall be reduced accordingly, and
any Cash deposited in a Reserve on account of such Disputed Claim
together with accrued interest thereon shall be distributed to the
holder of such Disputed Claim to the extent that such Disputed
Claim has become an Allowed Claim, and shall otherwise be deposited
into the Subscription Proceeds Escrow.
vii.13 Voting of Undistributed New Rose's Common
Stock. Shares of New Rose's Common Stock to be distributed to
holders of Allowed Claims and Common Stock Interests shall not be
issued and outstanding until actually distributed to the holders
of such Allowed Claims and Common Stock Interests entitled thereto.
The shares of New Rose's Common Stock reserved for issuance under
this Plan shall not be voted in any election of directors of
Reorganized Rose's, or any other matter requiring the vote of
shareholders, until such time as the New Rose's Common Stock has
actually been distributed to the holder of the Allowed Claim or
Common Stock Interest, or to the employee of Reorganized Rose's
entitled to receive shares of New Rose's Common Stock pursuant to
the Management Incentive and Retention Program. In addition, a
holder of a Disputed Claim shall not be entitled to vote in any
election of directors of Reorganized Rose's, or any other matter
requiring the vote of shareholders until such time as the Disputed
Claim has become an Allowed Claim, and the holder of such Allowed
Claim has received its distribution and become a shareholder of
record of Reorganized Rose's.
vii.14 Preservation or Waiver of Rights of Action
of the Estate. Except as expressly provided to the contrary in
this Plan, the Supplemental Adequate Protection Consent Orders,
the DIP Facility, or any other contract, instrument, release,
indenture or other agreement entered into in connection with this
Plan, in accordance with Section 1123(b) of the Bankruptcy Code,
Reorganized Rose's shall retain and may enforce any claims, rights
and causes of action that the Estate may hold against any Person.
Reorganized Rose's or its successors may pursue such retained
claims, rights or causes of action, as appropriate, in accordance
with the best interests of Reorganized Rose's. Upon the Effective
Date, all preference and other avoidance power actions that the
Debtor or Reorganized Rose's have commenced or could have commenced
pursuant to Sections 544, 545, 547, 548, 550 and 553 of the
Bankruptcy Code, and all rights to withhold any distribution on
account of the receipt of any payment that is recoverable under
such Bankruptcy Code sections shall be deemed waived irrevocably.
Unless waived or released pursuant to order of the Bankruptcy
Court, in the event that the Alternative Treatment Provisions of
this Plan are invoked, there shall be no waiver of preference
claims or other avoidance power actions.
vii.15 Use of ADR Procedure Regarding Determination
and Allowance of Damage Claims. Notwithstanding anything contained
in this Plan to the contrary, the ADR Procedure shall govern all
matters relating to the determination and allowance of Damage
Claims, and the payment of Cash only to Damage Claims which become
Allowed Claims in an amount less than $500 in lieu of the treatment
set forth in this Plan for Claims in Class 3. Reorganized Rose's
shall be authorized and empowered to take all action reasonably
necessary and appropriate to effectuate the ADR Procedure.
vii.16 Implementation of Alternative Treatment
Provisions. Except to the extent that an Alternative Treatment
Event (as defined in the Second Supplemental Adequate Protection
Consent Order) shall be effective and GE Capital or the Pre-
Petition Lenders shall be entitled to exercise their rights and
remedies pursuant to the Second Supplemental Adequate Protection
Consent Order (in which event all distributions shall be made in
accordance with the provisions of the Supplemental Adequate
Protection Orders), and the DIP Facility, and except as provided
in Section 5.8.1(a) and (b) of this Plan, in the event that the
Alternative Treatment Provisions are effective pursuant to Sections
8.1 and 8.2 of this Plan, the provisions of this Section 7.16,
together with Sections 7.1, 7.4, 7.10(c) and 7.15 of this Plan,
shall constitute the means of execution of this Plan and shall be
the only operative provisions of this Article VII. Prior to the
Effective Date, the Debtor shall have obtained entry of certain of
the Alternative Treatment Implementation Orders, and pursuant
thereto and this Plan, as necessary, the Debtor shall have
effectuated the Final GOB Sales, which shall occur not prior to
January 1, 1995, and shall have satisfied in full the GE
Obligations and the Pre-Petition Lenders' Allowed Secured Claims
as required pursuant to Section 5.8.1 of this Plan, as the case
may be, and in accordance with all provisions of Section 5.1.4 of
this Plan provided that the following terms used in Section 5.1.4
shall be substituted for in such event as follows: "Section VI of
Exhibit 5.1" by "Section 7.16 of this Plan"; "Reorganized Rose's"
by "the Debtor"; "Post-Effective Date Lender" by "GE Capital";
"Post-Effective Date Financing Facility" by "DIP Facility"; "New
Rose's Secured Notes" by "Pre-Petition Lenders' Allowed Secured
Claims"; "estate" by "Plan"; "Reconstituted Board of Directors" by
"Unanimous Consent of the Debtor, the Pre-Petition Lenders, the
Unsecured Committee and GE Capital"; and "Post-Effective Date Trade
Committee" by "Unsecured Committee". From and after the Effective
Date, the Debtor shall continue in existence for the limited
purposes of (i) the continuation until completion of sales or other
disposition of all assets of the Estate, (ii) the resolution of all
Disputed Claims and the oversight of all Reserves established in
connection therewith, (iii) the prosecution, compromise or
abandonment of all Avoiding Power Actions, (iv) the investment,
maintenance and distribution of the Disposition Proceeds, Available
Cash, all Unclaimed Property, the Reserves and the Alternative
Treatment Account, (v) winding up all business affairs and the
corporate existence of the Debtor, (vi) taking any and all action
necessary and appropriate to implement the Alternative Treatment
Implementation Orders and the Alternative Treatment Provisions of
the Plan, and (vii) consummating this Plan as a plan of
liquidation. Without limiting the generality of the foregoing, on
and after the Effective Date:
(a) After satisfaction in full of (i) the GE
Obligations and (ii) the Pre-Petition Lenders' Allowed Secured
Claims, the Debtor shall establish the Alternative Treatment
Account as of the Effective Date with such amount of Cash as
determined pursuant to the Alternative Treatment Implementation
Orders. From and after the Effective Date through the Consummation
Date, all costs and expenses of the Debtor shall be paid by it from
Cash in the Alternative Treatment Account in accordance with
ordinary business terms. In the event that the Debtor determines
that additional Cash is required in the Alternative Treatment
Account, the Debtor may deposit additional Disposition Proceeds
into the Alternative Treatment Account upon the approval of the
Post-Effective Date Trade Committee. Prior to the entry of the
Final Decree, all Cash maintained in the Alternative Treatment
Account shall be converted into Available Cash except for such
amount determined by order of the Bankruptcy Court to be necessary
to fund any and all work and acts associated with the winding up
of all business affairs of the Debtor and the dissolution of its
corporate existence.
(b) Except as expressly provided in the
Alternative Treatment Implementation Orders or the Alternative
Treatment Provisions or as determined by order of this Court, the
Debtor shall retain and may enforce any claims, rights and causes
of action that the Debtors or its Estate may hold against any
person, including, without limitation, all Avoiding Power Actions.
(c) Notwithstanding anything to the contrary in
the Alternative Treatment Provisions, the ADR Procedure shall
govern all matters relating to the determination and allowance of
Damage Claims, provided, that no Cash shall be paid to the holders
of Damage Claims which become Allowed Claims after the Alternative
Treatment Date in an amount less than $500 unless and until
Distributions are made to holders of Allowed Claims in Class 3
pursuant to Section 6.2.7 of this Plan, and, then, only to the
extent of such holder's Pro-Rata share of such Available Cash as
is so distributed.
(d) The Debtor, subject to the consent of the
Post-Effective Date Trade Committee, may retain the services of
attorneys, accountants and other agents necessary to assist and
advise the Debtor in the performance of its duties. The fees and
expenses of such professionals shall be subject to the review of
the Post-Effective Date Trade Committee for reasonableness and paid
without further order of the Bankruptcy Court upon the monthly
submission of such invoices in accordance with the following
procedure. Invoices for such fees and expenses shall be submitted
to the Post-Effective Date Trade Committee simultaneously with or
prior to the submission of such invoices to the Debtor. Ten (10)
days after the Debtor's receipt of any such invoice, the Debtor
shall be authorized to pay such invoice without further order of
the Bankruptcy Court unless the Debtor and/or the Person seeking
payment has received a written objection to the payment thereof
from the Post-Effective Date Trade Committee within such period.
In the event fees and expenses of any professional retained by the
Debtor are objected to by either the Debtor or the Post-Effective
Date Trade Committee, such fees and expenses shall be subject to
and payable only upon Bankruptcy Court approval.
(e) Such officers of the Debtor who are necessary
to effectuate the Alternative Treatment Provisions of this Plan
shall receive compensation for services and shall be reimbursed for
reasonable expenses incurred in connection with the administration
of the Debtor in accordance with the terms of such agreement
entered into by the Debtor and such officer with the consent of the
Unsecured Committee. Neither the officer of the Debtor nor the
Debtor, nor any designees, counsel or accountants or any duly
designated agent or representative thereof, shall be liable for
anything other than willful misconduct, gross negligence or fraud.
The officer and the Debtor may, in connection with the performance
of their functions, and in their sole and absolute discretion,
consult with counsel, accountants and their agents, and shall not
be liable for anything done or omitted or suffered to be done in
accordance with such advice or opinions. If the officer or the
Debtor determines not to consult with counsel, accountants or their
agents, such determination shall not be deemed to impose any
liability on the officer or the Debtor and/or their designees. The
officer shall be indemnified by the Debtor for all acts performed
in his capacity as officer, which acts shall include, but not be
limited to, the administration of the Debtor, and performance of
such other services required by the Plan in accordance with the
terms and provisions of such agreement entered into by the Debtor
and such officer with the consent of the Post-Effective Date Trade
Committee. Pursuant to the terms of the Plan, the officer's and
the Debtor's designees, counsel, accountants, representatives and
duly designated agents shall be indemnified for all acts performed
hereunder.
ARTICLE viii
CONDITIONS PRECEDENT TO
EFFECTIVENESS OF THE PLAN
viii.1Conditions to the Implementation of the
Alternative Treatment Provisions. Except to the extent that an
Alternative Treatment Event (as defined in the Second Supplemental
Adequate Protection Consent Order) shall be effective and GE
Capital or the Pre-Petition Lenders shall be entitled to exercise
their rights and remedies pursuant to the Second Supplemental
Adequate Protection Consent Order (in which event all distributions
shall be made in accordance with the provisions of the Supplemental
Adequate Protection Orders) and the DIP Facility, and except in the
event that the Alternative Treatment Provisions are effective
pursuant to Section 8.1 of the Plan, on the Effective Date, in the
event that any of the following conditions have occurred on or as
of the applicable Alternative Treatment Date and have not been
waived by GE Capital and all Plan Proponents, the Alternative
Treatment Provisions shall be effective, and all other provisions
of this Plan shall not be operative, and shall be null and void,
and of no force and effect except as, and only to the extent,
specified in Section 5.8.4 of this Plan:
(a) The Debtor shall not have made an Additional
Adequate Protection Payment, as defined in the Second Supplemental
Adequate Protection Consent Order, notwithstanding the occurrence,
satisfaction or waiver of the Additional Adequate Protection
Payment Conditions, (as defined in the Second Supplemental Adequate
Protection Consent Order) as applicable.
(b)The Debtor shall not, by December 31, 1994,
have made payments to the Collateral Agent for the benefit of the
Pre-Petition Lenders pursuant to the Supplemental Adequate
Protection Orders (excluding payments with respect to any
Supplemental Payment as defined in the Second Supplemental Adequate
Protection Consent Order) aggregating at least $52 million.
(c)The Debtor shall not have made the full amount
of the Final Payment (as defined in the Second Supplemental
Adequate Protection Consent Order) to the Collateral Agent, by a
single payment or installments, in full, by January 20, 1995.
(d)The Joint Plan shall not have been confirmed
by this Court pursuant to Section 1129 of the Bankruptcy Code by
December 31, 1994.
(e)The Actual EBITDA is less than $25 million.
(f)The Effective Date shall not have occurred by
April 30, 1995, or such later date as the Plan Proponents shall
have agreed upon in writing.
(g)The Debtor (i) as of January 20, 1995, has not
paid post-petition trade payables pursuant to invoice terms which
are due and payable by January 15, 1995 which are not the subject
of a bona fide dispute, (ii) has failed to issue and deliver to
the Unsecured Committee and the Pre-Petition Lenders the
Certification provided for in paragraph 8 of the Second
Supplemental Adequate Protection Consent Order or (iii) has failed
to make available to the financial advisors of the Unsecured
Committee such financial data of the Debtor necessary to verify
the statements contained in the Certification.
(h)On the date that would otherwise be the
Effective Date, after taking into account the effect of making all
cash payments required to be made under this Plan by the Effective
Date, the actual DIP Cushion (as defined in the Second Supplemental
Adequate Protection Consent Order) is (or would be) more than $8
million less than the budgeted DIP Cushion amount set forth on the
chart annexed to and made a part of the Second Supplemental
Adequate Protection Consent Order.
In the event that (i) none of the foregoing conditions
shall have occurred on or as of the applicable Alternative
Treatment Date, or (ii) all of the foregoing conditions which
occurred on or as of the applicable Alternative Treatment Date have
been waived in writing by all Plan Proponents and GE Capital, the
Alternative Treatment Provisions and any other provisions of this
Plan effective only in conjunction with the Alternative Treatment
Provisions shall not be operative, and shall be null and void, and
of no force and effect.
viii.2Conditions to the Effective Date. The
following conditions must occur and be satisfied for this Plan to
be effective and for the Effective Date to occur:
(a)Confirmation must have occurred pursuant to
the Confirmation Order provided however, that if any Alternative
Treatment Provision (as defined in this Plan) or any Alternative
Treatment Event (as defined in the Second Supplemental Adequate
Protection Consent Order) shall be effective, then the Pre-
Petition Lenders' Allowed Secured Claims and GE Obligations must
first be satisfied in full before the Effective Date can occur.
(b)The Debtor shall (i) have entered into a
Post-Effective Date Financing Facility sufficient for the
operations of Reorganized Rose's, or, (ii) in the event any
Alternative Treatment Provisions are effective, have effectuated
the Final GOB Sales and, unless the Second Supplemental Adequate
Protection Consent Order is stayed, fully satisfied all GE
Obligations and the Pre-Petition Lenders' Allowed Secured Claims,
respectively, pursuant to the Second Supplemental Adequate
Protection Consent Order, or if such order is stayed, this Plan
and/or any Alternative Treatment Implementation Orders.
(c)All documents and agreements contemplated to
be executed or implemented in connection with this Plan including,
without limitation, those documents and agreements which are
expressly identified herein or in the Disclosure Statement, shall
be filed with the Bankruptcy Court substantially in executed form.
(d)The Debtor shall be able to effectuate all Cash
distributions required to be made on the Effective Date under this
Plan.
(e)The Effective Date shall not occur before March
31, 1995.
viii.3Waiver of Conditions to the Effective Date.
The condition precedent set forth in Sections 8.2(c) and (e) of
this Plan with respect to those documents requiring negotiations
between or among any of the Debtor, GE Capital, the Pre-Petition
Lenders, the Equity Committee, and the Unsecured Committee may be
waived with the consent of the respective applicable parties.
Otherwise, none of the conditions precedent set forth in Sections
8.2(a), (b), or (d) of this Plan may be waived except upon the
express written agreement of all Plan Proponents.
ARTICLE ix
DISCHARGE, RELEASES, INJUNCTIONS AND RELATED PROVISIONS
ix.1 Discharge. Except as otherwise expressly
provided in Section 1141 of the Bankruptcy Code or this Plan, and
except in the event the Alternative Treatment Provisions are
effective pursuant to Section 8.1 of the Plan, the distributions
made pursuant to and in accordance with the applicable terms and
conditions of this Plan will be in full and final satisfaction,
settlement, release and discharge as against the Debtor, of 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 Bankruptcy
Code and all Claims and Interests of any nature, including without
limitation any interest accrued thereon from and after the Filing
Date whether or not (i) a proof of Claim or Interest based on such
debt, obligation or interest is filed or deemed filed under Section
501 of the Bankruptcy Code, (ii) such Claim or Interest is allowed
under Section 502 of the Bankruptcy Code or (iii) the holder of
such Allowed Claim or Interest has accepted this Plan. Therefore,
upon the Effective Date, except as otherwise provided in this Plan,
all Persons which are or could have been holders of Claims against,
or Interests in, the Debtor shall be precluded from asserting
against the Debtor or Reorganized Rose's, or any of their assets
or properties, any other or further Claims or Interests based upon
any act or omission, transaction or other activity of any kind or
nature that occurred prior to the Effective Date, and the
Confirmation Order shall permanently enjoin said holders of Claims
or Interests, their successors and assigns, from enforcing or
seeking to enforce any such Claims or Interests.
ix.2 Releases of Released Parties. On the Effective
Date, in consideration for past and future services, and other
valuable consideration, the Released Parties shall be deemed
discharged and released from any and all claims asserted or
ascertainable by any Person arising in any way out of such Person's
relationship with or work performed for the Debtor on or prior to
the Effective Date; provided, however, that the foregoing discharge
and release provision (i) shall not apply to a Released Party's
gross negligence or willful misconduct, and (ii) shall not apply
to (a) any individuals or entities other than those released
pursuant to the Second Supplemental Adequate Protection Consent
Order, if any, which have been released prior to the Effective
Date, by order of the Bankruptcy Court and as to such individuals
or entities, the terms of their respective releases shall govern,
(b) any individuals or entities which are the subject of a
proceeding to recover property or money commenced by the Debtor
prior to the Effective Date, or (c) any claims asserted or
ascertainable by or against any of the Debtor's present or former
officers or directors in the litigations pending as of the
Effective Date.
ix.3 Releases by the Debtor and Reorganized Rose's.
Except as expressly provided in this Plan, as of the Effective
Date, the Debtor and Reorganized Rose's shall be deemed to forever
release, waive and discharge all known and unknown claims of any
nature that the Debtor, its Estate, or Reorganized Rose's has, had
or may have against any Released Party for all acts and omissions
through the Effective Date, other than claims that arise under or
in connection with this Plan or that do not arise from a lending
relationship of a Released Party to the Debtor or Reorganized
Rose's. Except in the event the Alternative Treatment Provisions
are effective pursuant to Section 8.1 of the Plan, as of the
Effective Date, the Debtor and Reorganized Rose's shall also be
deemed to forever release, waive and discharge all Avoiding Power
Actions.
ix.4 Releases by Recipients of New Rose's Common
Stock, New Rose's Secured Notes, New Rose's Warrants and Cash, or
Available Cash (as applicable), and by All Other Persons. Except
as, and only to the extent otherwise provided in this Plan, each
Person receiving Cash, New Rose's Secured Notes, New Rose's
Warrants, the rights to participate in the Class 5 Subscription
and/or New Rose's Common Stock, or Available Cash (as applicable),
pursuant to this Plan on account of its Allowed Claim or Common
Stock Interest shall be deemed to forever release, waive and
discharge all known and unknown claims of any nature, except for
claims based on gross negligence or willful misconduct, that such
Person has, had or may have against the Released Parties and their
respective present and former stockholders, members, directors,
officers, employees, agents, attorneys, accountants, financial
advisors and other representatives, but solely to the extent such
claims arose out of such Released Parties' respective capacities
with respect to which they acted or failed to act regarding the
Debtor, the Committees or the Chapter 11 Case, or Claims otherwise
treated and discharged under this Plan. The Debtor and Reorganized
Rose's (if applicable), their present and former stockholders,
directors, officers, employees, agents, attorneys, accountants and
any other third parties shall be deemed to release all related
Claims that such Persons may have filed or may file against the
Debtor for contribution and/or indemnification, unless expressly
assumed by Reorganized Rose's pursuant to Section 10.2 of this
Plan. The Confirmation Order shall enjoin the prosecution, whether
directly, derivatively or otherwise, of any claim, debt, right,
cause of action or liability released or to be released pursuant
to this Section 9.4.
ix.5 Limitations on Amounts to be Distributed to
Holders of Allowed Claims Which Are Insured. Notwithstanding any
provision in this Plan to the contrary, no property shall be
distributed to or retained by the holders of Allowed Claims whose
Claims may be satisfied solely pursuant to the terms of the
Debtor's applicable insurance policies. Except as otherwise
provided for in this Plan, nothing in this Section 9.5 shall
constitute a waiver of any claim, debt, right, cause of action or
liability that any Person may hold against any other entity,
including any of the Debtor's insurance carriers.
ix.6 General Release of Liens. Except as otherwise
provided in this Plan, the New Rose's Secured Notes or the Post-
Effective Date Financing Facility, or in any contract, instrument,
indenture or other agreement or document created in connection with
this Plan or the implementation hereof, on the Effective Date, all
mortgages, deeds of trust, liens or other security interest against
property of the Estate will be released, and all the right, title
and interest of any holder of such mortgages, deeds of trust, liens
or other security interests shall revert to Reorganized Rose's or
the Debtor, as applicable, and the successors and assigns thereof.
ix.7 Injunctions.
ix.7.1 Injunction Related to Claims Released by
the Debtor and Reorganized Rose's (if applicable), Recipients of
Cash, New Rose's Common Stock, New Rose's Secured Notes and New
Rose's Warrants, or Available Cash (if applicable), and All Other
Persons. As of the Effective Date, all Persons that have held,
currently hold or may have asserted a Claim or other debt, or
liability or an interest or other right of a holder of Interest,
or other that is released or terminated pursuant to Sections 9.1
(if applicable), 9.2, 9.3, 9.4 or 9.6 above are, except as provided
with respect to the New Rose's Secured Notes, the New Rose's Common
Stock and the New Rose's Warrants, permanently enjoined from taking
any of the following actions on account of such released Claims,
debts or liabilities or Interests or other: (i) commencing or
continuing, in any manner or in any place, any action or other
proceeding; (ii) enforcing, attaching, collecting or recovering in
any manner any judgment, award, decree or order; (iii) creating,
perfecting or enforcing any lien or encumbrance; (iv) asserting a
set-off, right or subrogation or recoupment of any kind against any
debt, liability or obligation due to any such releasing Person; and
(v) commencing or continuing any action, in any manner or in any
place, that does not comply with or is inconsistent with the
provisions of this Plan.
ix.7.2 Injunction Relating to the Plan. As of
the Effective Date, except as otherwise provided in Section 9.7.4
of this Plan, all Persons are permanently enjoined from commencing
or continuing, in any manner or in any place, any action or other
proceeding, whether directly, derivatively or otherwise against
any or all of the Released Parties, on account of or respecting
any claims, debts, rights, causes of action or liabilities released
or discharged pursuant to this Plan, so long as each of the
Released Parties continues to comply with and perform its
obligations under this Plan.
ix.7to Entry of Injunctive Relief. Without limitation to
the scope, extent, validity or enforceability of the injunctive relief set
forth in this Section 9.7 and in the Confirmation Order, by
accepting distributions pursuant to this Plan, each holder of an
Allowed Claim or Interest receiving distributions pursuant to this
Plan shall be deemed to have specifically consented to the releases
and injunctions set forth in this Article IX.
9.7.4 Injunction Against Subsequent Bankruptcy
Proceedings
Pursuant to Sections 105 and 1141 of the Bankruptcy
Code, until such time as (i) the New Rose's Secured Notes, (ii)
the GE Obligations and (iii) the Pre-Petition Lenders' Allowed
Secured Claims shall be satisfied in full, all creditors (including
creditors holding claims entitled to administrative priority), all
equity security holders, the Debtor, Reorganized Rose's, and any
officer, director, professional or agent of the Debtor or
Reorganized Rose's, together with their respective successors and
assigns, are hereby enjoined from (i) causing the Debtor or
Reorganized Rose's to be subject to or to seek or obtain relief
under any chapter of the Bankruptcy Code or (ii) in connection with
an Event of Default or event of default under the Post-Effective
Date Financing Facility, taking any action (including seeking the
appointment of a trustee or an examiner or seeking conversion of
this case to any other case under the Bankruptcy Code) inconsistent
with or that would delay, hinder or interfere with the rights and
remedies of the Pre-Petition Lenders and the Post-Effective Date
Lender with respect to an Event of Default or an event of default
under the Post-Effective Date Financing Facility as set forth in
Section 5.1.4 and other provisions of this Plan. The foregoing
shall not be construed as limiting the ability of any party-in-
interest from seeking to enforce any provision of this Plan or any
Order of the Bankruptcy Court related thereto or the DIP Facility,
the Plan Support Consent Order (as defined in the Second
Supplemental Adequate Protection Consent Order), the Second
Supplemental Adequate Protection Consent Order or the Post-
Effective Date Financing Facility, to the Debtor or Reorganized
Rose's in the Bankruptcy Court or other appropriate forum.
ARTICLE x
EXECUTORY CONTRACTS, INDEMNIFICATION OBLIGATIONS,
POST-CONFIRMATION TRADE CLAIMS, CONTINUED
APPLICABILITY OF BANKRUPTCY CODE
x.1 Executory Contracts and Unexpired Leases. Unless
specifically rejected by Order of the Bankruptcy Court, on the
Effective Date, all executory contracts and unexpired leases shall
be deemed assumed by the Debtor or Reorganized Rose's as of the
Effective Date. Notwithstanding the foregoing, (i) in the event
the Alternative Treatment Provisions become effective, all
executory contracts and unexpired leases except for Assumed
Contracts and Leases shall be deemed rejected by the Debtor or
Reorganized Rose's, and (ii) the Debtor expressly rejects the
Employee Stock Option Plan and the Pre-Petition Secured Noteholder
Warrant Agreement, and Claims arising from the rejection of these
and other executory contracts or unexpired leases shall be treated
in accordance with the terms of this Plan. With respect to the
Assumed Contracts and Leases, in accordance with Section
1123(a)(5)(G) of the Bankruptcy Code, by the Effective Date the
Debtor or Reorganized Rose's shall cure all defaults thereunder by
(i) making a Cash payment of only those amounts set forth in proofs
of claim or where no such claim has been filed, as determined by
the Debtor or Reorganized Rose's or (ii) on such terms as agreed
to in writing between such claimants and the Debtor or Reorganized
Rose's; unless an objection is filed with the Bankruptcy Court and
served on counsel to the Debtor on or prior to the date set by the
Bankruptcy Court for filing objections to Confirmation of this Plan
and the Court after notice and hearing determines that Debtor is
obligated to pay a different amount as cure under Section 365 of
the Bankruptcy Code. All non-Debtor parties to executory contracts
or unexpired leases rejected by order of the Bankruptcy Court or,
by operation of this Section 10.1 shall be required to file a proof
of claim with respect to any and all Claims arising from or
relating to such rejection no later than 30 days following the
Effective Date. Failure to so file timely such a proof of claim
shall be a waiver of such Claim, and shall have such effect and
consequences as provided for in Section 5.9 of this Plan regarding
the failure to file as proof of claim by an applicable Bar Date.
x.2 Indemnification and Contribution Obligations.
Reorganized Rose's shall assume, to the fullest extent permitted
by law and only if such obligations have not been rejected prior
to the Effective Date, all obligations relating to indemnification
and exculpation of the Debtor and all Persons who as of the
Effective Date were the Debtor's directors, officers, employees,
fiduciaries, agents or controlling persons as arise under
applicable laws or as provided in any of (i) the Debtor's
certificate of incorporation in effect prior to or as of the date
hereof, (ii) the Debtor's by-laws in effect prior to or as of the
date hereof, or (iii) any agreement with the Debtor, in each of
these cases (i)-(iii) with respect to matters occurring on or prior
to the Effective Date. All Claims based upon contractual,
statutory or common law indemnification obligations other than
those described in this paragraph shall not survive confirmation
of this Plan and shall be discharged pursuant to Section 1141 of
the Bankruptcy Code.
x.3 Post-Confirmation Claims. Claims assertable
against the Debtor or Reorganized Rose's arising from goods,
inventory and services provided, or credit extended with respect
to goods, inventory and services provided, to the Debtor or
Reorganized Rose's during the period after the Confirmation Date
and prior to the Effective Date, shall be deemed Administrative
Claims and be entitled to treatment pursuant to Section 3.1 of this
Plan without the need for notice and hearing pursuant to Section
503(b) of the Bankruptcy Code or further order of the Bankruptcy
Court. In addition, in accordance with Section 365(d)(3) of the
Bankruptcy Code, the Debtor shall perform all its obligations
arising from and after the Filing Date under any unexpired lease
of nonresidential real property until such lease is assumed or
rejected.
x.4 Continued Applicability of the Bankruptcy Code.
Upon Confirmation and through the Effective Date, the operations
of the Debtor shall be subject to the terms and provisions of the
Bankruptcy Code notwithstanding that Confirmation has occurred,
unless otherwise expressly provided for in this Plan.
ARTICLE xi
RETENTION OF JURISDICTION
xi.1Jurisdiction From Confirmation Through the
Effective Date. Upon Confirmation and through the Effective Date,
the Bankruptcy Court shall retain full jurisdiction over the
Chapter 11 Case notwithstanding that Confirmation has occurred.
xi.2Jurisdiction From and After the Effective Date.
From and after the Effective Date and until such time as all
payments and distributions required to be made, all events required
to have occurred under this Plan have occurred, and all other
obligations required to be performed under this Plan have been made
and performed by the Debtor or Reorganized Rose's, the Bankruptcy
Court shall retain such jurisdiction as is legally permissible,
including, but not limited to, the following:
(a) To hear and determine any and all objections
to the allowance of a Claim or Interest or any controversy as to
the classification of Claims or Interests or Reserves, provided
that only the Debtor or Reorganized Rose's, and the Unsecured
Committee and the Equity Committee may file objections to Claims;
(b) To hear and determine any and all
applications by Professionals for compensation and reimbursement
of expenses;
(c) To hear and determine any and all pending
applications for the rejection and disaffirmance of executory
contracts and unexpired leases and fix and allow any Claims
resulting therefrom;
(d) To enable the Debtor, or Reorganized Rose's
to prosecute any and all proceedings which have been or may be
brought prior to the Effective Date, to set aside liens or
encumbrances and to recover any transfers, assets, properties or
damages to which the Debtor or Reorganized Rose's may be entitled
under applicable provisions of the Bankruptcy Code or any other
federal, state or local laws except as may be waived pursuant to
this Plan;
(e) To liquidate any disputed, contingent or
unliquidated Claims or Interests;
(f) To enforce the provisions of this Plan and
the injunction and releases provided for in Article IX of this
Plan;
(g) To correct any defect, cure any omission, or
reconcile any inconsistency in this Plan or in the Confirmation
Order as may be necessary to carry out its purpose and the intent
of this Plan;
(h) To hear and determine any and all Avoiding
Power Actions;
(i) To determine any Tax Claim which the Debtor
or Reorganized Rose's, as applicable, may incur as a result of the
transactions contemplated herein;
(j) To determine such other matters as may be
provided for in the Confirmation Order confirming this Plan or as
may be authorized under the provisions of the Bankruptcy Code;
(k) To resolve any and all disputes that may
arise under this Plan;
(l) To hear and determine any and all
administrative matters that may arise in closing the Chapter 11
Case, including the entry of the Final Decree;
(m) To resolve and adjudicate any and all issues
arising under the New Rose's Secured Notes, and to the extent any
obligations remain outstanding under the New Rose's Secured Notes,
the Post-Effective Date Financing Facility, including any rights
or remedies of the Collateral Agent, any Pre-Petition Lender or
the Post-Effective Date Lender upon an Event of Default or an event
of default under the Post-Effective Date Financing Facility
(including issues relating to Section 5.1.4 of this Plan); and
(n) all other matters with respect to which the
Bankruptcy Court's retention of jurisdiction over the Chapter 11
Case as is legally permissible, including without limitation,
jurisdiction as is necessary to ensure that the purpose and intent
of this Plan are implemented.
ARTICLE xii
MISCELLANEOUS
xii.1 The Committees and the Post-Effective Date
Trade Committee.
xii.1.1 Dissolution of Committees. On the
Effective Date, the Unsecured Committee shall be deemed disbanded
and the duties of the Unsecured Committee, and the retention of
its counsel and other retained Professionals, shall automatically
terminate. On the later to occur of the Determination Date or the
date upon which all distributions pursuant to this plan have been
made to holders of Common Stock Interests or Class 5 Subscribers,
the Equity Committee shall be deemed disbanded and the duties of
the Equity Committee, and the retention of its counsel and other
retained Professionals, shall automatically terminate except with
respect to any pending appeal to which the Equity Committee is a
party. Until the duties of the Equity Committee terminate pursuant
to this Section 12.1.1, the Equity Committee shall have the right
to continue to retain its counsel and other retained Professionals,
and the reasonable fees and expenses of such Professionals shall
to be treated as set forth in Section 3.3 of this Plan.
xii.1.2Creation of Post-Effective Date Trade
Committee. From and after the Effective Date, a committee shall
be formed and constituted and shall consist of three (3) members
who have previously served on the Unsecured Committee (the "Post-
Effective Date Trade Committee"). The Post-Effective Date Trade
Committee shall continue in existence solely with respect to (i)
any appeal of the Confirmation Order, (ii) applications for
Professional Fees, (iii) claims resolution (other than Damage
Claims), until the aggregate amount of Disputed Claims in Class 3
is less than $6,500,000, (iv) in the event that the Alternative
Treatment Provisions are effective pursuant to Section 8.1 of this
Plan, the effectuation of the Alternative Treatment Provisions and
the Alternative Treatment Implementation Orders, through the
Consummation Date, and (5) such other matters as may be approved
by the Debtor, the Reconstituted Board of Directors, or as
otherwise provided by a Final Order of the Bankruptcy Court.
xii.1.3Post-Effective Date Trade Committee
Procedures. A majority of the Post-Effective Date Trade Committee
shall constitute a quorum. One member of the Post-Effective Date
Trade Committee shall be designated by the majority of its members
as its chairperson ("Chairperson"). Meetings of the Post-
Effective Date Trade Committee shall be called by the Chairperson
upon such notice and in such manner as its Chairperson may deem
advisable. The Post-Effective Date Trade Committee shall function
by decisions made by a majority of its members in attendance at
any meeting. The Post-Effective Date Trade Committee shall adopt
by-laws which shall otherwise control its functions.
xii.1.4Post-Effective Date Trade Committee
Compensation. The members of the Post-Effective Date Trade
Committee shall serve without compensation. Reasonable expenses
of the members of the Post-Effective Trade Committee shall be
reimbursed and paid by Reorganized Rose's upon submission of bills
to Reorganized Rose's or upon Final Order of the Bankruptcy Court.
xii.1.5Retention of Professionals. The Post-
Effective Date Trade Committee shall have the right to retain the
services of attorneys and accountants which are necessary to assist
the Post-Effective Date Trade Committee in the performance of its
duties. The reasonable fees and expenses of such professionals
shall be paid by Reorganized Rose's upon the monthly submission of
bills to Reorganized Rose's as agreed to by Reorganized Rose's or
upon Final Order of the Bankruptcy Court.
xii.1.6Liability. Neither the Post-Effective
Date Trade Committee nor any of its members, designees, counsel or
accountants or any duly designated agent or representative of the
Post-Effective Date Trade Committee shall be liable for the act,
default or misconduct of any other member of the Post-Effective
Date Trade Committee, nor shall any member be liable for anything
other than such member's gross negligence, willful misconduct or
fraud. None of the Post-Effective Date Trade Committee's members,
designees, agents or representatives or their respective employees,
shall incur or be under any liability or obligation by reason of
any act done or omitted to be done, by any member of the Post-
Effective Date Trade Committee, designee, agent or representative.
The Post-Effective Date Trade Committee may, in connection with the
performance of its functions, and in its sole and absolute
discretion, consult with counsel, accountants and its agents, and
shall not be liable for anything done or omitted or suffered to be
done in accordance with such advice or opinions. If the Post-
Effective Date Trade Committee determines not to consult with
counsel, accountants or its agents, such determination shall not
be deemed to impose any liability on the Post-Effective Date Trade
Committee, or its members and/or its designees.
xii.2 Means of Cash Payments. Cash payments made
pursuant to this Plan shall be in United States dollars by checks
drawn on a domestic bank selected by the Debtor or Reorganized
Rose's, as applicable, or by wire transfer from a domestic bank.
xii.3 Set-Offs. Nothing contained in this Plan
shall constitute a waiver or release by the Debtor of any right of
set-off the Debtor may have, or which may be assertable by
Reorganized Rose's or the Debtor, as applicable, against any holder
of a Claim or an Interest.
xii.4 Withholding Taxes. The Debtor, Reorganized
Rose's, (if applicable), or any agent making distributions under
this Plan shall be entitled to deduct any federal, state or local
withholding taxes from any Cash payments made with respect to
Allowed Claims or interest thereon and Interests. If distributions
of New Rose's Common Stock are subject to any tax withholding, the
Debtor, Reorganized Rose's or the agent shall be permitted, but not
required, to withhold from any Cash otherwise to be distributed to
the holder or to sell the appropriate amount of New Rose's Common
Stock otherwise to be issued to the holder and to apply the
proceeds of such sale to satisfy all or a portion of the tax
withholding obligation.
xii.5 Revesting. Except as otherwise provided by
this Plan or the Second Supplemental Adequate Protection Consent
Order, upon the Effective Date, title to all properties and assets
provided for in this Plan shall pass to Reorganized Rose's or the
Debtor, as applicable, free and clear of all Claims and Interests,
including liens or other encumbrances, of creditors and of equity
security holders, and the Confirmation Order shall be a judicial
determination of discharge of all of the Debtor's liabilities
except as provided in this Plan; provided, however, that liens and
encumbrances granted pursuant to the Plan that are granted in
satisfaction, exchange, release and discharge of existing liens
(including, without limitation, in favor of GE Capital, if GE
Capital is the Post-Effective Date Lender, as part of the process,
inter alia, of satisfying the GE Obligations), shall be deemed to
have attached and to have become perfected at the time of the
attachment and perfection of those existing liens so that
attachment and perfection shall be deemed to have been continuous
notwithstanding this paragraph, the revesting of property in the
Debtor and the granting of new liens and encumbrances.
xii.6 Headings. Headings are utilized in this Plan
for the convenience of reference only, and shall not constitute a
part of this Plan for any other purpose.
xii.7 Defects, Omissions and Amendments. The Plan
Proponents may, with the approval of the Bankruptcy Court and
without notice to and consent of all holders of Claims and
Interests, but after notice to GE Capital and consent by GE
Capital, which consent shall not be unreasonably withheld, insofar
as they do not materially and adversely affect the interests of
holders of Claims and Interests, correct any defect, omission or
inconsistency in this Plan in such manner and to such extent as
may be necessary to expedite the execution of this Plan. This Plan
may be altered or amended before or after Confirmation as provided
in Section 1127 of the Bankruptcy Code if, in the opinion of the
Bankruptcy Court, the modification does not materially and
adversely affect the interests of holders of Claims and Interests,
provided however, that any such altered or amended plan shall not
be binding on GE Capital without the consent of GE Capital. This
Plan may be altered or amended before or after the Confirmation
Date in a manner which, in the opinion of the Bankruptcy Court,
materially and adversely affects holders of Claims and Interests,
only on consent of all Plan Proponents and GE Capital after a
further hearing and acceptance of this Plan as so altered or
modified as provided in Section 1126 of the Bankruptcy Code.
xii.8 Governing Law. Except to the extent that
the Bankruptcy Code is applicable, the rights and obligations
arising under this Plan shall be governed by and construed and
enforced in accordance with the internal laws of the State of North
Carolina.
xii.9 Conflicts. In the event of any conflict
between the provisions of any of the Second Supplemental Adequate
Protection Order and this Plan, the Confirmation Order, or any
other order which may be entered in this Chapter 11 case after
entry of the Second Supplemental Adequate Protection Order or any
succeeding case or proceeding, the provisions of the Second
Supplemental Adequate Protection Order shall govern with regard to
the matters addressed therein, unless otherwise agreed in writing
by each of the Plan Proponents and GE Capital.
xii.10 Agreement Among the Plan Proponents. The
terms, provisions and conditions of this Plan constitute a mutual
agreement reached among each of the Plan Proponents in conjunction
with their agreement regarding the terms, provisions and conditions
of the Supplemental Adequate Protection Orders and the Plan Support
Consent Order. In the event that the Second Supplemental Adequate
Protection Consent Order, or the Plan Support Consent Order, shall
be either (a) overturned on appeal or (b)the subject of a stay
pending appeal and such stay shall be continuing in a manner which
materially impairs either the payment of the Adequate Protection
Payments set forth in the Second Supplemental Adequate Protection
Consent Order or the remedies granted therein to the Pre-Petition
Lenders, or, in the event that this Plan is either (x) abandoned
or (y) fails to become effective, the Plan Proponents agree as
follows:
a. The Plan Proponents will endeavor to preserve for
the benefit of the Pre-Petition Lenders the rights and remedies
afforded the Pre-Petition Lenders in the Supplemental Adequate
Protection Orders.
b. Under no circumstances will any of the Plan
Proponents support any plan of reorganization which treats the
claims of the Pre-Petition Lenders in a manner materially worse
than the treatment afforded such claims pursuant to this Plan.
The foregoing agreement shall survive notwithstanding
the abandonment of this Plan or the failure of the Plan to become
effective.
xii.11 Notices. All notices, requests or demands
for payments provided for in this Plan shall be in writing and
shall be deemed to have been given when personally delivered by
hand, delivered by courier or deposited in any general or branch
post office of the United States Postal Service or received by
telex or telecopier. Notices, requests and demands for payments
shall be addressed and sent, postage prepaid, or delivered, to:
(a) Rose's Stores, Inc.: P.O. Box Drawer 947,
Henderson, North Carolina 27536, Attn: Chief Financial Officer,
with a copy to Proskauer Rose Goetz & Mendelsohn, 1585 Broadway,
New York, New York 10036, Attn: Alan B. Hyman, Esq., and Smith
Debnam Hibbert & Pahl, P.O. Box 26268, Raleigh, North Carolina
27611, Attn: J. Larkin Pahl, Esq.;
(b) General Electric Capital Corporation: 3379
Peachtree Rd NE, Suite 600, Atlanta, GA 30326, Attn: Region
Operations Manager, with a copy to Long, Aldridge & Norman, One
Peachtree Center, Suite 5300, 303 Peachtree Street, Atlanta,
Georgia 30308, Attn: Bruce W. Moorhead, Jr., Esq.;
(c) the Pre-Petition Secured Noteholders: at
their addresses as set forth on documents relating to the New
Rose's Secured Notes, or in the event the Alternative Treatment
Provisions are implemented, at the addresses listed on their proofs
of claim filed by the Pre-Petition Secured Noteholders with the
Bankruptcy Court in the Debtor's Chapter 11 case, or such other
address as has been provided by any Pre-Petition Secured Noteholder
to the Debtor, with a copy to Hebb & Gitlin, One State Street,
Hartford, Connecticut 06103-3178, Attn: Michael J. Reilly, Esq.,
and Merriman, Nicholls & Crampton, P.A., 100 Saint Albans Drive,
Suite 200, P.O. Box 18237, Raleigh, North Carolina 27619, Attn:
Gregory B. Crampton, Esq.;
(d) Bank of Tokyo: 1251 Avenue of the Americas,
14th Floor, New York, New York 10116-3138, Attn: Mr. John Blasi,
with a copy to Anderson Kill Olick & Oshinsky, P.C., 666 Third
Avenue, New York, New York 10017, Attn: Jeffrey L. Glatzer, Esq.
and Ragsdale, Liggett & Foley, CrossPointe Plaza,
2840 Plaza Place, Raleigh, North Carolina 27612, Attn: William A.
Mann, Esq.;
(e) the Unsecured Committee: Mattel Toys, Attn:
Ms. Dorothy Fee, Director Customer Relations, 333 Continental
Boulevard, El Seguendo, California 90245; with a copy to
Otterbourg, Steindler, Houston & Rosen, P.C., 230 Park Avenue, New
York, New York 10956, Attn: Scott Hazan, Esq and Glenn B. Rice,
Esq. and Durham Wyche Story Whitley & Henderson, Post Office Drawer
1389, Raleigh, North Carolina 27602-1389, Attn: N. Hunter Wyche,
Jr.;
(f) the Equity Committee: J. David Rosenberg,
Esq., c/o Keating, Muething & Klekamp, 1800 Provident Tower, One
East Fourth Street, P.O. Box 1800, Cincinnati, Ohio 45202 with a
copy to Lord Bissell & Brook, 115 South LaSalle, Chicago, Illinois
60603, Attn: Benjamin Waisbren, Esq. and Burns, Day & Presnell,
P.A., 2626 Glenwood Avenue, Suite 560, P.O. Box 10867, Raleigh,
North Carolina 27608, Attn: Lacy M. Presnell, III;
and/or
(g) at any other address designated by a Plan
Proponent by notice to each holder of an Allowed Claim or Interest,
and, in the case of notices to holders of Allowed Claims and
Interests, at the last known address according to the Debtor's
books and records or at any other address designated by a holder
of an Allowed Claim on its proof of claim (or by a holder of an
Interest on its proof of interest, if any) or filed with the
Bankruptcy Court, provided that any notice of change of address
shall be effective only upon receipt.
xii.12 Severability. Should any provision in this
Plan be determined to be unenforceable, such determination shall
in no way limit or affect the enforceability and operative effect
of any or all other provisions of this Plan.
xii.13 Revocation and Withdrawal. The Plan
Proponents may revoke and withdraw this Plan at any time on or
before the Effective Date only by the unanimous written consent of
all Plan Proponents.
xii.14 Effect of Withdrawal or Revocation. If the
Plan Proponents unanimously revoke or withdraw this Plan pursuant
to Section 12.13 above, or if Confirmation or the Effective Date
do not occur or cannot occur as agreed in writing by all Plan
Proponents, then this Plan shall be deemed null and void, and in
such event nothing contained herein shall be deemed to constitute
a waiver or release of any Claims or Interests by or against any
Plan Proponent or any other Person or to prejudice in any manner
the rights of any Plan Proponent or any Person in any further
proceedings involving the Debtor.
xii.15 Ratification in Confirmation Order. The
Confirmation Order shall ratify all transactions effected by the
Debtor and/or any successors to, or designees of, the Debtor,
including Reorganized Rose's (if applicable), by operation of an
order of the Bankruptcy Court, during the period commencing on the
Filing Date and ending on the Confirmation Date.
xii.16 Post-Effective Date Effectuation of the
Plan's Terms. From and after the Effective Date, the Chairman of
the Board, President, any Executive Vice President, Senior Vice
President or Vice President of Reorganized Rose's or the Debtor,
as applicable, shall be authorized to execute, deliver, file or
record such contracts, instruments, releases, indentures and other
agreements or documents and take such actions as may be necessary
or appropriate to effectuate and further evidence the terms and
conditions of this Plan. The Secretary or any Assistant Secretary
of the Debtor or Reorganized Rose's, as applicable, shall be
authorized to certify or attest to any of the foregoing actions.
Pursuant to Section 1146(c) of the Bankruptcy Code, none of the
following executed in connection with any transactions consummated
pursuant to this Plan shall be subject to any stamp tax, real
estate transfer tax or similar tax: (i) the issuance, transfer or
exchange of New Rose's Common Stock, New Rose's Warrants or New
Rose's Secured Notes, (ii) the creation of any mortgage, deed of
trust or other security interest, (iii) the making or assignment
of any lease or sublease, or (iv) the making or delivery of any
deed or other instrument of transfer under, in furtherance of, or
in connection with, this Plan, including any merger agreements or
agreements of consolidation, deeds, bills of sale or assignments.
xii.17 Execution. Each of the parties receiving
distributions under this Plan shall take all steps, and execute
all documents, including appropriate releases, necessary to
effectuate the foregoing.
<PAGE>
Dated: Raleigh, North Carolina
August 1, 1994
ROSE'S STORES, INC.,
Debtor and Debtor-in-Possession
By:
George L. Jones
President and Chief
Executive Officer
<PAGE>
SMITH DEBNAM HIBBERT & PAHL
Counsel to the Debtor and
Debtor-in-Possession
By:
J. Larkin Pahl
N.C. State Bar No. 3311
Terri L. Gardner
N.C. State Bar No. 9809
4700 New Bern Avenue
P.O. Box 26268
Raleigh, NC 27611
(919) 250-2000
PROSKAUER ROSE GOETZ &
MENDELSOHN
Special Bankruptcy Counsel
to the Debtor and
Debtor-in-Possession
By:
Alan B. Hyman
Michael E. Foreman
Members of the Firm
1585 Broadway
New York, New York 10036
(212) 969-3000
HEBB & GITLIN
A Professional Corporation
Counsel to the Pre-Petition
Secured Noteholders
By:
Michael J. Reilly
G. Eric Brunstad, Jr.
Thomas H. Day
Renu Nanda
One State Street
Hartford, CT 06103-3178
(203) 240-7000
MERRIMAN, NICHOLLS & CRAMPTON,
P.A.
Counsel to the Pre-Petition
Secured Noteholders
By:
Gregory B. Crampton
N.C. State Bar No. 991
Stephani W. Humrickhouse
N.C. State Bar No. 9528
100 St. Albans Dr.
P.O. Box 18237
Raleigh, NC 27619
(919) 781-1311
<PAGE>
ANDERSON KILL OLICK &
OSHINSKY, P.C.
Counsel to Bank of Tokyo, Ltd.
By:
Jeffrey L. Glatzer
Linda Gerstel
666 Third Avenue
New York, New York 10017
(212) 850-0700
RAGSDALE, LIGGETT & FOLEY
Counsel to Bank of Tokyo, Ltd.
N.C. State Bar No.
By:
William A. Mann
N.C. State Bar No. _____
CrossPointe Plaza
2840 Plaza Place
Raleigh, NC 27612
(919) 787-5200
OTTERBOURG, STEINDLER,
HOUSTON & ROSEN, P.C.
Counsel to the Official
Committee of Unsecured
Creditors
By:
Scott L. Hazan
Glenn B. Rice
230 Park Avenue
New York, New York 10169
(212) 661-9100
DURHAM WYCHE STORY WHITLEY
& HENDERSON
Counsel to the Official
Committee of Unsecured
Creditors
By:
N. Hunter Wyche, Jr.
N.C. State Bar No. 9533
Post Office Drawer 1389
Raleigh, NC 27602-1389
(919) 821-7700
LORD BISSELL & BROOK
Counsel to the Official
Committee of Equity
Security Holders
By:
Benjamin Waisbren
Michael Yetnikoff
115 South LaSalle Street
Chicago, Illinois 60603
(312) 443-0700
BURNS, DAY & PRESNELL, P.A.
Counsel to the Official
Committee of Equity
Security Holders
By:
Lacy M. Presnell, III
N.C. State Bar No.
2626 Glenwood Avenue
Suite 560
P.O. Box 10867
Raleigh, NC 27608
(919) 782-1441
<PAGE>
RSI Trading, Inc.
By:_________________________
Authorized Officer
1105 North Market Street
Suite 1300
Wilmington, DE 19801<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . 2
1.1 "Actual EBITDA" . . . . . . . . . . . . . . . 2
1.2 "Administrative Claim". . . . . . . . . . . . 2
1.3 "ADR Procedure" . . . . . . . . . . . . . . . 2
1.4 "Allowed Claim" . . . . . . . . . . . . . . . 3
1.5 "Allowed Non-Tax Priority Claim". . . . . . . 3
1.6 "Allowed Secured Claim. . . . . . . . . . . . 4
1.7 "Allowed Tax Claim" . . . . . . . . . . . . . 4
1.8 "Allowed Unsecured Claim" . . . . . . . . . . 4
1.9 "Alternative Treatment Account" . . . . . . . 4
1.10 "Alternative Treatment Date". . . . . . . . . 5
1.11 "Alternative Treatment
Implementation Orders". . . . . . . . . . . . 5
1.12 "Alternative Treatment Provisions". . . . . . 5
1.13 "Assumed Contracts and Leases". . . . . . . . 6
1.14 "Available Cash". . . . . . . . . . . . . . . 6
1.15 "Avoiding Power Actions". . . . . . . . . . . 6
1.16 "Bankruptcy Code" . . . . . . . . . . . . . . 6
1.17 "Bankruptcy Court". . . . . . . . . . . . . . 6
1.18 "Bankruptcy Rules". . . . . . . . . . . . . . 6
1.19 "Bank Group". . . . . . . . . . . . . . . . . 7
1.20 "Bank of Tokyo" . . . . . . . . . . . . . . . 7
1.21 "Bar Date". . . . . . . . . . . . . . . . . . 7
1.22 "Board of Directors". . . . . . . . . . . . . 7
1.23 "Business Day". . . . . . . . . . . . . . . . 7
1.24 "Cash". . . . . . . . . . . . . . . . . . . . 7
1.25 "Chapter 11 Case" . . . . . . . . . . . . . . 7
1.26 "Claim" . . . . . . . . . . . . . . . . . . . 8
1.27 "Class" . . . . . . . . . . . . . . . . . . . 8
1.28 "Class 3 Common Stock Designation". . . . . . 8
1.29 "Class 5 Rights Notice" . . . . . . . . . . . 8
1.30 "Class 5 Subscription Stock
Designation". . . . . . . . . . . . . . . . . 9
1.31 "Class 5 Subscriber". . . . . . . . . . . . . 9
1.32 "Class 5 Subscription". . . . . . . . . . . . 9
1.33 "Class 5 Subscription Price". . . . . . . . . 9
1.34 "Collateral Agent". . . . . . . . . . . . . . 9
1.35 "Committees". . . . . . . . . . . . . . . . . 9
1.36 "Common Stock Interest" . . . . . . . . . . . 10
1.37 "Confirmation". . . . . . . . . . . . . . . . 10
1.38 "Confirmation Date" . . . . . . . . . . . . . 10
1.39 "Confirmation Order". . . . . . . . . . . . . 10
1.40 "Consolidated Net Cash Flow". . . . . . . . . 10
1.41 "Consummation Certificate". . . . . . . . . . 11
1.42 "Consummation Date" . . . . . . . . . . . . . 11
1.43 "Contingent Claim". . . . . . . . . . . . . . 11
1.44 "Core Stores" . . . . . . . . . . . . . . . . 11
1.45 "Damages Claims". . . . . . . . . . . . . . . 11
1.46 "Debtor". . . . . . . . . . . . . . . . . . . 12
1.47 "Determination Date". . . . . . . . . . . . . 12
1.48 "DIP Facility". . . . . . . . . . . . . . . . 12
1.49 "DIP Financing Documents" . . . . . . . . . . 12
1.50 "DIP Financing Orders". . . . . . . . . . . . 12
1.51 "Disclosure Statement". . . . . . . . . . . . 12
1.52 "Disposition Proceeds". . . . . . . . . . . . 13
1.53 "Disputed Claim". . . . . . . . . . . . . . . 13
1.54 "Distribution Agent". . . . . . . . . . . . . 13
1.55 "Distribution Date" . . . . . . . . . . . . . 13
1.56 "EBITDA". . . . . . . . . . . . . . . . . . . 13
1.57 "EBITDA Target" . . . . . . . . . . . . . . . 14
1.58 "Effective Date". . . . . . . . . . . . . . . 14
1.59 "Employee Stock Options". . . . . . . . . . . 14
1.60 "Equity Committee". . . . . . . . . . . . . . 15
1.61 "Equity Record Date". . . . . . . . . . . . . 15
1.62 "Estate". . . . . . . . . . . . . . . . . . . 15
1.63 "Event of Default". . . . . . . . . . . . . . 15
1.64 "Filing Date" . . . . . . . . . . . . . . . . 15
1.65 "Final Decree". . . . . . . . . . . . . . . . 15
1.66 "Final GOB Sales" . . . . . . . . . . . . . . 15
1.67 "Final Order" . . . . . . . . . . . . . . . . 16
1.68 "Full Recovery Target Amount" . . . . . . . . 16
1.69 "GAAP". . . . . . . . . . . . . . . . . . . . 16
1.70 "GE Capital". . . . . . . . . . . . . . . . . 16
1.71 "GE Obligations". . . . . . . . . . . . . . . 16
1.72 "Intercompany Claims" . . . . . . . . . . . . 16
1.73 "Intercreditor Agreements". . . . . . . . . . 16
1.74 "Interests" . . . . . . . . . . . . . . . . . 17
1.75 "Inventory" . . . . . . . . . . . . . . . . . 17
1.76 "Management Incentive and Retention
Program". . . . . . . . . . . . . . . . . . . 17
1.77 "Net GOB2 Proceeds" . . . . . . . . . . . . . 18
1.78 "New Rose's Bank of Tokyo Secured
Note" . . . . . . . . . . . . . . . . . . . . 18
1.79 "New Rose's Charter". . . . . . . . . . . . . 18
1.80 "New Rose's Common Stock" . . . . . . . . . . 18
1.81 "New Rose's Common Stock Secondary
Distribution" . . . . . . . . . . . . . . . . 18
1.82 "New Rose's Common Stock Trust" . . . . . . . 19
1.83 "New Rose's Common Stock Trust
Agreement". . . . . . . . . . . . . . . . . . 19
1.84 "New Rose's Secured Notes" . . . . . . . . . 19
1.85 "New Rose's Secured Notes Documents". . . . . 19
1.86 "New Rose's Secured Notes Original
Principal Amount" . . . . . . . . . . . . . . 20
1.87 "New Rose's Warrant Agreement". . . . . . . . 20
1.88 "New Rose's Warrants" . . . . . . . . . . . . 21
1.89 "Non-Voting Class B Stock". . . . . . . . . . 21
1.90 "Perfection Instruments". . . . . . . . . . . 21
1.91 "Permitted Encumbrance Collateral". . . . . . 21
1.92 "Person". . . . . . . . . . . . . . . . . . . 21
1.93 "Plan". . . . . . . . . . . . . . . . . . . . 22
1.94 "Plan Proponents" . . . . . . . . . . . . . . 22
1.95 "Post-Effective Date Collateral". . . . . . . 22
1.96 "Post-Effective Date Financing
Facility" . . . . . . . . . . . . . . . . . . 22
1.97 "Post-Effective Date Lender". . . . . . . . . 22
1.98 "Pre-Petition Lenders". . . . . . . . . . . . 22
1.99 "Pre-Petition Lenders' Allowed
Secured Claims" . . . . . . . . . . . . . . . 22
1.100 "Pre-Petition Secured Noteholders". . . . . . 23
1.101 "Pre-Petition Secured Noteholder
Warrant Agreement". . . . . . . . . . . . . . 23
1.102 "Pre-Petition Secured Noteholder Warrants". . 23
1.103 "Pre-Petition Secured Notes". . . . . . . . . 24
1.104 "Pre-Petition Stock Option" . . . . . . . . . 24
1.105 "Pre-Petition Warrant" . . . . . . . . 24
1.106 "Professional" . . . . . . . . . . . . 24
1.107 "Professional Fees" . . . . . . . . . . . . . 25
1.108 "Projections". . . . . . . . . . . . . 25
1.109 "Pro-Rata" . . . . . . . . . . . . . . 25
1.110 "Reconstituted Board of
Directors" . . . . . . . . . . . . . . 25
1.111 "Record Date". . . . . . . . . . . . . 25
1.112 "Released Parties" . . . . . . . . . . 26
1.113 "Reorganized Rose's" . . . . . . . . . 26
1.114 "Reserve". . . . . . . . . . . . . . . 26
1.115 "Reserve Amount" . . . . . . . . . . . 26
1.116 "Retiree Claim". . . . . . . . . . . . 26
1.117 "RSI". . . . . . . . . . . . . . . . . 26
1.118 "Second Supplemental Adequate
Protection Consent Order". . . . . . . 27
1.119 "Subscription Proceeds Escrow". . . . . . . . 27
1.120 "Subscription Proceeds". . . . . . . . 27
1.121 "Subordinated Claims". . . . . . . . . 27
1.122 "Supplemental Adequate
Protection Orders" . . . . . . . . . . 28
1.123 "Unsecured Committee". . . . . . . . . 28
1.124 "Voting Common Stock". . . . . . . . . 28
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS. . . . 28
2.1 Criterion of Class. . . . . . . . . . . . . . 28
2.2 Claims and Interests. . . . . . . . . . . . . 29
ARTICLE III
PAYMENT OF ADMINISTRATIVE CLAIMS
ALLOWED TAX CLAIMS, PROFESSIONAL FEES, AND
RETIREE CLAIMS, AND TREATMENT OF GE CAPITAL . 30
3.1 Administrative Claims . . . . . . . . . . . . 30
3.2 Allowed Tax Claims. . . . . . . . . . . . . . 31
3.3 Professional Fees . . . . . . . . . . . . . . 31
3.4 Retiree Claims and Benefits Under
Section 1114 of the Bankruptcy. Code. . . . . 32
3.5 Treatment of GE Capital . . . . . . . . . . . 33
ARTICLE IV
CLAIMS NOT IMPAIRED UNDER THE PLAN. . . . . . 34
4.1 Non-Impairment. . . . . . . . . . . . . . . . 34
4.2 Class 1 (Non-Tax Priority Claims) . . . . . . 34
4.3 Class 2A (General Secured Claims) . . . . . . 35
ARTICLE V
CLAIMS AND INTERESTS IMPAIRED UNDER THE PLAN. 36
5.1 Class 2B (Pre-Petition Lenders'
Allowed Secured Claims) . . . . . . . . . . . 36
5.2 Class 3 (Unsecured Claims). . . . . . . . . . 46
5.3 Class 4 (Intercompany Claims) . . . . . . . . 47
5.4 Class 5 (Common Stock Interests). . . . . . . 47
5.5 Class 6 (Pre-Petition Warrants) . . . . . . . 47
5.6 Class 7 (Pre-Petition Stock Options). . . . . 48
5.7 Class 8 (Subordinated Claims) . . . . . . . . 48
5.8 Alternative Treatment Provisions. . . . . . . 48
5.8.1 Alternative Treatment of
Class 2B . . . . . . . . . . . . . . . 49
5.8.2 Alternative Treatment of
Class 3. . . . . . . . . . . . . . . . 50
5.8.3 Alternative Treatment of
Class 5. . . . . . . . . . . . . . . . 51
5.8.4 Other Plan Provisions
Operative In Conjunction With
the Alternative Treatment
Provisions . . . . . . . . . . . . . . 51
5.9 Effect of Bar Dates . . . . . . . . . . . . . 52
5.10 Non-consensual Confirmation . . . . . . . . . 52
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS. . . . . . 53
6.1 Distributions by Reorganized Rose's
or the Debtor, or Other Distribution
Agent . . . . . . . . . . . . . . . . . . . . 53
6.2 Distributions to Impaired Classes . . . . . . 53
6.2.1 Distributions of New Rose's
Secured Notes. . . . . . . . . . . . . 54
6.2.2 Distributions of New Rose's
Common Stock . . . . . . . . . . . . . 54
6.2.3 Distribution of Subscription
Proceeds . . . . . . . . . . . . . . . 56
6.2.4 Distribution of New Rose's
Common Stock Secondary
Distribution . . . . . . . . . . . . . 56
6.2.5 Distribution of New
Rose's Warrants. . . . . . . . . . . . 57
6.2.6 Listing of Common Stock and
Warrants . . . . . . . . . . . . . . . 57
6.2.7 Distributions of Cash Under
Alternative Treatment
Provisions . . . . . . . . . . . . . . 58
6.3 Timing of Distributions . . . . . . . . . . . 59
6.4 Disputed Payments . . . . . . . . . . . . . . 59
6.5 Delivery of Distributions and
Undeliverable or Unclaimed
Distributions . . . . . . . . . . . . . . . . 60
6.5.1 Delivery of Distributions in
General. . . . . . . . . . . . . . . . 60
6.5.2 Distributions Held by
Distribution Agent . . . . . . . . . . 60
6.5.3 Failure to Claim
Undeliverable Distributions. . . . . . 61
6.6 Fractional Distributions and
Fractional Cents; Round Lots. . . . . . . . . 62
6.7 Full and Final Satisfaction . . . . . . . . . 63
6.8 Allocation of Distributions to
Holders of Allowed Secured Claims . . . . . . 63
ARTICLE VII
MEANS OF EXECUTION. . . . . . . . . . . . . . 63
7.1 Funds for Distribution. . . . . . . . . . . . 64
7.2 Post-Effective Date Financing
Facility. . . . . . . . . . . . . . . . . . . 64
7.3 Corporate Action. . . . . . . . . . . . . . . 68
7.4 Cancellation of Common Stock, Pre-
Petition Warrants, Pre-Petition
Stock Options and Pre-Petition
Secured Notes and Surrender of
Common Stock, Pre-Petition Warrants
and Pre-Petition Secured Notes. . . . . . . . 69
7.5 New Rose's Charter. . . . . . . . . . . . . . 70
7.6 Voting Powers . . . . . . . . . . . . . . . . 71
7.7 Authorization and Issuance of Equity
and Debt Instruments of Reorganized
Rose's. . . . . . . . . . . . . . . . . . . . 71
7.7.1 New Rose's Common Stock. . . . . . . . 71
7.7.2 New Rose's Warrants. . . . . . . . . . 72
7.7.3 New Rose's Secured Notes . . . . . . . 72
7.8 New Rose's Common Stock Allocable to
Management of Reorganized Rose's. . . . . . . 72
7.9 Applicability of Sections 1125 and
1145 of the Bankruptcy Code to the
New Rose's Common Stock Issued under
the Plan. . . . . . . . . . . . . . . . . . . 73
7.10 Class 5 Subscription. . . . . . . . . . . . . 73
7.11 Merger or Liquidation of RSI and
Cancellation of RSI Common Stock. . . . . . . 76
7.12 Reserve Provisions for Disputed
Claims. . . . . . . . . . . . . . . . . . . . 76
7.13 Voting of Undistributed New Rose's
Common Stock. . . . . . . . . . . . . . . . . 79
7.14 Preservation or Waiver of Rights of
Action of the Estate. . . . . . . . . . . . 80
7.15 Use of ADR Procedure Regarding
Determination and Allowance of
Damage Claims . . . . . . . . . . . . . . . . 80
7.16 Implementation of Alternative
Treatment Provisions. . . . . . . . . . . . . 81
ARTICLE VIII
CONDITIONS PRECEDENT TO
EFFECTIVENESS OF THE PLAN . . . . . . . . . . 86
8.1 Conditions to the Implementation of
the Alternative Treatment Provisions. . . . . 86
8.2 Conditions to the Effective Date. . . . . . . 88
8.3 Waiver of Conditions to the
Effective Date. . . . . . . . . . . . . . . . 89
ARTICLE IX
DISCHARGE, RELEASES, INJUNCTIONS AND RELATED
PROVISIONS. . . . . . . . . . . . . . . . . . 90
9.1 Discharge . . . . . . . . . . . . . . . . . . 90
9.2 Releases of Released Parties. . . . . . . . . 91
9.3 Releases by the Debtor and
Reorganized Rose's. . . . . . . . . . . . . . 91
9.4 Releases by Recipients of New Rose's
Common Stock, New Rose's Secured
Notes, New Rose's Warrants and Cash,
or Available Cash (as applicable),
and by All Other Persons. . . . . . . . . . . 92
9.5 Limitations on Amounts to be
Distributed to Holders of Allowed
Claims Which Are Insured. . . . . . . . . . . 93
9.6 General Release of Liens. . . . . . . . . . . 93
9.7 Injunctions . . . . . . . . . . . . . . . . . 94
9.7.1 Injunction Related to Claims
Released by the Debtor and
Reorganized Rose's (if
applicable), Recipients of
Cash, New Rose's Common
Stock, New Rose's Secured
Notes and New Rose's
Warrants, or Available Cash
(if applicable), and All
Other Persons. . . . . . . . . . . . . 94
9.7.2 Injunction Relating to the
Plan . . . . . . . . . . . . . . . . . 94
9.7.3 Consent By Holders of Claims
and Interests to Entry of
Injunctive Relief. . . . . . . . . . . 95
9.7.4 Injunction Against Subsequent
Bankruptcy Proceedings . . . . . . . . 95
ARTICLE X
EXECUTORY CONTRACTS, INDEMNIFICATION
OBLIGATIONS, POST-CONFIRMATION TRADE CLAIMS,
CONTINUED APPLICABILITY OF BANKRUPTCY CODE. . 96
10.1 Executory Contracts and Unexpired
Leases. . . . . . . . . . . . . . . . . . . . 96
10.2 Indemnification and Contribution
Obligations . . . . . . . . . . . . . . . . . 97
10.3 Post-Confirmation Claims. . . . . . . . . . . 98
10.4 Continued Applicability of the
Bankruptcy Code . . . . . . . . . . . . . . . 98
ARTICLE XI
RETENTION OF JURISDICTION . . . . . . . . . . 99
11.1 Jurisdiction From Confirmation
Through the Effective Date. . . . . . . . . . 99
11.2 Jurisdiction From and After the
Effective Date. . . . . . . . . . . . . . . . 99
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . .101
12.1 The Committees and the Post-
Effective Date Trade Committee. . . . . . . .101
12.1.1 Dissolution of Committees. . . . . . .101
12.1.2 Creation of Post-Effective
Date Trade Committee . . . . . . . . .102
12.1.3 Post-Effective Date Trade
Committee Procedures.. . . . . . . . .102
12.1.4 Post-Effective Date Trade
Committee Compensation . . . . . . . .103
12.1.5 Retention of Professionals . . . . . .103
12.1.6 Liability. . . . . . . . . . . . . . .103
12.2 Means of Cash Payments. . . . . . . . . . . .104
12.3 Set-Offs. . . . . . . . . . . . . . . . . . .104
12.4 Withholding Taxes . . . . . . . . . . . . . .105
12.5 Revesting . . . . . . . . . . . . . . . . . .105
12.6 Headings. . . . . . . . . . . . . . . . . . .106
12.7 Defects, Omissions and Amendments . . . . . .106
12.8 Governing Law . . . . . . . . . . . . . . . .107
12.9 Conflicts . . . . . . . . . . . . . . . . . .107
12.10 Agreement Among the Plan Proponents . . . . .107
12.11 Notices . . . . . . . . . . . . . . . . . . .108
12.12 Severability. . . . . . . . . . . . . . . . .110
12.13 Revocation and Withdrawal . . . . . . . . . .111
12.14 Effect of Withdrawal or Revocation. . . . . .111
12.15 Ratification in Confirmation Order. . . . . .111
12.16 Post-Effective Date Effectuation of
the Plan's Terms. . . . . . . . . . . . . . .111
12.17 Execution . . . . . . . . . . . . . . . . . .112
<PAGE>
Exhibit 5.1 to Plan
OUTLINE OF PRIMARY TERMS OF NEW ROSE'S
SECURED NOTES UNDER PLAN
This Exhibit 5.1 is attached to, made a part of, and
incorporated by reference into the Plan pursuant to Section 5.1
of the Plan. All terms not defined herein shall have the
meanings ascribed to them in the Plan and the Second Supplemental
Adequate Protection Consent Order.
I. Initial Principal Amount:
The original issue face amount of the New Rose's
Secured Notes is set forth in the definition of "New
Rose's Secured Notes Original Principal Amount" in the
Plan.
II. Payment Terms
A. Term/Amortization:
- Final maturity at January 20, 1999 with
scheduled amortization as follows:
(1)1/20/96: $5 million;
(2)On or before
4/30/96: excess (if any) of Cash
Sweep Amount for the fiscal
year of Reorganized Rose's
then most recently ended,
over aggregate principal
amount previously paid
pursuant to clause (1)
above;
(3)1/20/97: $7.5 million;
(4)On or before
4/30/97: excess (if any) of Cash
Sweep Amount for the fiscal
year of Reorganized Rose's
then most recently ended,
over aggregate principal
amount previously paid
pursuant to clause (3)
above;
(5)1/20/98: 50% of the remaining
principal balance
outstanding on such payment
date;
<PAGE>
(6)On or before
4/30/98: excess (if any) of Cash
Sweep Amount for the fiscal
year of Reorganized Rose's
then most recently ended,
over aggregate principal
amount previously paid
pursuant to clause (5); and
(7)1/20/99: entire then remaining
principal balance.
- "Cash Sweep Amount" -- means, as of any
payment date, an amount equal to 80% of
Consolidated Net Cash Flow for the
fiscal year of Reorganized Rose's then
most recently ended. As of any payment
date, the Cash Sweep Amount shall be
calculated based upon audited financial
results, as specified above with respect
to such payment date. Cash Sweep Amount
payment due date shall be the earlier of
(i) 3 business days after issuance to
the Debtor by its auditors of the year-
end audited financial statements or (ii)
April 30 of each year.
- Subject to the agreement between the
Post-Effective Date Lender and the
holders of the New Rose's Secured Notes
concerning the allocation of proceeds in
event of any asset disposition outside
the ordinary course of business, the
portion of any proceeds of all such
asset dispositions allocable to the New
Rose's Secured Notes will be applied to
prepay the maturity date principal
balance of the New Rose's Secured Notes
without reduction of the minimum
payments due 1/20/96 or 1/20/97.
- Each of the above payments shall be made
to each of the holders of the New Rose's
Secured Notes pro rata based on the then
outstanding principal balances.
B. Interest:
- Fixed rate of 11% per annum, default
rate 3% over the non-default rate. In
lieu of such fixed rate, members of the
Bank Group may elect on or before the
closing to receive a floating rate note
for their portion of the New Rose's
Secured Notes at the same non-default
base rate and spread, and the same
default rate, as their prepetition
notes.
- Payable monthly in arrears on the first
business day of each calendar month and
at maturity.
- Computed on the basis of a 360-day year
of twelve 30-day months.
III. Covenants:
A. Financial Performance Tests:
- As of the last day of each fiscal month
on a cumulative basis for the 12 fiscal
months then ended:
(1) EBITDA shall not be less
than $18 million (the
"EBITDA Test");
(2) Consolidated Net Cash Flow
shall not be less than $15
million below the amounts
projected on the line
entitled "(Dec.) Inc. in
Cash" in the Debtor's
financial projections dated
"7/25/94 Version" and
attached hereto and made a
part hereof or such other
versions agreed to by the
Plan Proponents and GE
Capital (the "Net Cash Flow
Test"); and
(3) The ratio of (a) Earnings
Available for Fixed Charges
(defined as EBITDA less
capital expenditures) to (b)
Fixed Charges (defined as
scheduled minimum principal
payments plus interest
expense including imputed
interest on capitalized
leases) for such period of
12 consecutive fiscal months
shall not be less than .8 to
1 (the "Fixed Charge Test").
B. Collateral:
- maintain grant, attachment and
perfection at all times of blanket lien
on all presently owned or after acquired
assets of every type (subject only to
senior lien of Post-Effective Date
Financing Facility not to exceed $80
million principal amount of advances and
face amount of letters of credit plus
related interest, fees and expenses, and
reasonable discretionary advances after
acceleration to facilitate a collateral
liquidation, and having a maturity of no
sooner than two years from closing; the
"Permitted Senior Working Capital
Lien").
- for any period of 21 consecutive days,
the average total secured debt (advances
and letters of credit outstanding under
Post-Effective Date Financing Facility,
and outstanding principal on Secured
Notes) shall not exceed, at any time,
60% of the average value of inventory at
lower of fair market value or FIFO cost
provided, that on no day in such 21 day
period shall the daily secured debt
exceed 65% of the daily value of
inventory at lower of fair market value
or FIFO cost. In the event that, and
for so long as, the Debtor shall not be
in compliance with the Net Cash Flow
Test or the Fixed Charge Test, the
foregoing collateral coverage
percentages shall be 57% and 60% instead
of 60% and 65%, respectively.
- tested on each draw date and each
borrowing base compliance date under
Post-Effective Date Financing Facility,
and in no event less than weekly.
C. Negative/Affirmative Covenants:
- Dividends/Restricted Payments: none
permitted.
- Asset Sales or Other Dispositions
Outside Ordinary Course:
- no sale, transfer or
disposition permitted out of
ordinary course (other than
an annual fiscal year
permitted basket of asset
dispositions having a value
of less than $100,000 in the
aggregate for such year)
without consent of holders
of 51% principal amount of
the New Rose's Secured Notes
(provided notwithstanding
the above, the separate and
independent consent of Bank
of Tokyo shall be required
for a BOT Store, and the
separate and independent
consent of the holders of
51% principal amount of the
New Rose's Secured Notes
other than Bank of Tokyo and
the Bank Group shall be
required for the
Distribution Center).
- Post-Effective Date Lender
may have similar (or more
restrictive) asset
disposition prohibition.
- disposition of sale proceeds
will be determined by the
mutual agreement of the
Post-Effective Date Lender
and the holders of the New
Rose's Secured Notes in
connection with any asset
disposition consent
requested by the Debtor.
- Merger/Consolidation, etc.: none
permitted.
<PAGE>
- Incurrence of Debt for Borrowed Money:
none permitted (excluding capital lease
obligations and purchase money
obligations with limited dollar amount
baskets to be discussed and to be
reasonably determined).
- Liens: none permitted, other than liens
in favor of the New Rose's Secured Notes
and the Permitted Senior Working Capital
Lien.
- customary exceptions with
limited dollar amount
baskets for capitalized
leases, purchase money
liens, and involuntary or
statutory liens (mechanics
liens, deposits, etc.) to be
discussed and reasonably
determined.
- Line of Business:
- no material change in the
general nature of the
Debtor's line of business
(discount department
retailer).
- Restricted Investments:
- as defined in the DIP
Financing Documents.
- customary permissions for
"cash equivalents".
- no subsidiaries allowed.
- Debtor to merge in its sole
subsidiary "RSI" (whose sole
asset is the "Rose's" name)
as a condition to
confirmation of Plan, but in
no event later than
12/31/94, or such other
arrangements satisfactory to
the holders of the New
Rose's Secured Notes and the
Post-Effective Date Lender
to assure the availability
of the Rose's name in the
event of the exercise of
remedies.
- Customary Miscellaneous Covenants
(substantially similar in scope to the
Combined Amended and Restated Note
Agreement dated as of May 29, 1992,
between the Debtor and the Pre-Petition
Secured Noteholders and the Amended and
Restated Loan Agreement dated as of May
29, 1992 between the Debtor and the Bank
of Tokyo (collectively referred to as
the "Pre-Petition Agreements"), except
where noted)
- payment of taxes and claims
- ERISA compliance
- maintenance of properties
and corporate existence
(including corporate charter
limitations described in
Plan on subsequent
bankruptcy relief other than
liquidation as per Plan)
- compliance with law
- transactions with affiliates
- no sale or discount of
receivables
- Financial Information and Compliance
Certificates
- delivery of monthly,
quarterly, and annual
financial information and
other reasonably requested
information
- on the 30th day of each
fiscal month (except for the
90th in respect of January
and the 45th day in respect
of February), compliance
certificate calculated as of
the last day of the previous
fiscal month covering
Financial Performance Tests,
Negative/Affirmative
Covenant Compliance, and no
other defaults. Similar
annual compliance
certificate due within 90
days of fiscal year end
based on audited financial
statements.
IV. Events of Default:
A. Payment Defaults:
- interest (5 days grace)
- scheduled minimum principal payments (no
grace).
- Cash Sweep Amount payments (10 days
grace if good faith dispute on
calculation).
- reasonable fees/expenses, including
attorneys' fees and financial advisor
fees (due 45 days after invoice, and 10
days grace after demand if failure to
pay within terms).
B. Cross Defaults:
- Post-Effective Date Lender declares an
"Event of Default" (as defined in the
Post-Effective Date Financing Facility),
terminates lending commitment or
accelerates debt, unless waived or
reinstated by the Post-Effective Date
Lender prior to Court order commencing
liquidation remedies under the Plan.
- Judgment creditor greater than $5
million levies execution on collateral
unless within 30 days such judgment is
satisfied (without creating any other
default), stayed or fully bonded.
- Landlords exercise remedies to terminate
leases having aggregate rentals due in
the succeeding 12 months in excess of
$3.5 million in annual rentals, or more
than 12 stores (with 90 days grace for
pending contested good faith disputes).
C. EBITDA Test Default: 14 days grace if good
faith dispute on calculation.
D. Collateral Defaults (Para. III.B.): 14 days
grace if good faith dispute on calculation.
E. Negative/Affirmative Covenant Default (Para.
III.C. other than Customary Miscellaneous
covenants): 14 days grace.
F. Failure to Deliver Monthly Compliance
Certificate: 7 days grace.
G. Any Other Failure to Perform: 30 days grace
after notice provided, however, the failure to
comply with the Net Cash Flow Test or the Fixed
Charge Test shall result only in a lowering of
the percentages in the collateral coverage test
as provided herein, and shall not constitute
independent Events of Default.
V. Miscellaneous:
- References to the Debtor's financial
projections or business plan shall mean
the 5-year financial projections
contained in the Disclosure Statement.
- Customary representations, warranties,
closing opinions and closing
certificates (substantially similar in
scope and substance as Pre-Petition
Secured Note Agreement and Post-
Effective Date Financing Facility).
- New Rose's Secured Notes pre-payable at
any time without penalty or premium.
- Customary miscellaneous private
placement note issuance provisions
substantially similar to the Pre-
Petition Secured Note Agreements (i.e.
private placement number, private
registry for notes, delivery expenses
and issue taxes, direct wire transfer
payment provisions for each noteholder,
etc.).
- Customary miscellaneous bank lending
provisions substantially similar to pre-
petition agreements (i.e. including, but
not limited to compensation fees,
regulatory change costs, etc.).
- New York governing law.
- Other miscellaneous loan agreement
provisions reasonably required by Pre-
Petition Lenders and substantially
similar in scope and substance as Pre-
Petition Agreements.
- No debt, lien or collateral realization
remedies, subordination provisions or
intercreditor provisions regarding the
Post-Effective Date Financing Facility
not consistent with the Plan (lien
subordination, remedies and allocation
of collateral proceeds are covered in,
and governed by, the Plan).
- Pre-petition intercreditor relationships
and agreements among Pre-Petition
Lenders to remain in place, with such
amendments as are necessary to (i)
allocate pro rata the new collateral
received upon the Plan Effective Date
(e.g. formerly Non-Covered Stores and
"Rose's" name etc.); and (ii) reflect
the provisions of the Plan, including
this Outline of Primary Terms.
- Amendments and Waivers:
- unanimous for monetary
provisions, Financial
Performance Tests and
Collateral Coverage Test;
- all other require consent of
holders of 51% of principal
amount of New Rose's Secured
Notes.
VI. Remedies:
- Neither the New Rose's Secured Notes nor
the Post-Effective Date Facility will
have only independent or customary
collateral realization remedies of a
private contractual lending arrangement.
Instead, as provided in the Plan, upon
the occurrence of an Event of Default
(after the expiration of grace periods,
if applicable) the holders of 51% of the
outstanding principal amount of the New
Rose's Secured Notes (or any holder in
the event of a payment default) can,
upon motion to the Bankruptcy Court on 7
days notice, initiate a Court-supervised
liquidation of Reorganized Rose's in
accordance with the terms and conditions
of the Plan. To the extent and so long
as such remedy is actually enforced by
the Bankruptcy Court, the Post-Effective
Date Lender shall utilize the same (and
no other) collateral realization
remedies upon an Event of Default under
the Post-Effective Date Financing
Facility. Disputes as to whether an
Event of Default exists shall be as
determined by the Bankruptcy Court at
any such hearing.
VII. Closing Conditions:
- All conditions precedent to the
occurrence of the "Effective Date" shall
have occurred, other than the issuance
of the New Rose's Secured Notes.
- No event or condition shall exist on the
closing date that constitutes, or with
the passage of time or the giving of
notice (or both) would constitute, an
Event of Default.
- All documentation relating to the Post-
Effective Date Secured Notes and
proceedings regarding the closing shall
be in accord with this Outline of
Primary Terms as determined to the
reasonable satisfaction of the Pre-
Petition Secured Lenders, the Post-
Effective Date Lender and their
respective counsel.<PAGE>
ROSE'S STORES, INC.
SUMMARY OF PROJECTED FINANCIAL INFORMATION
1994 - 1998
1994
Business
($ in thousands) Plan 1995 1996 1997 1998
Net Sales -
Owned $775,425 814,198 838,626 872,172 915,782
Leased Sales $ 27,261 28,588 29,446 30,623 32,157
FIFO Gross
Margin - % Net
Sales 23.71% 23.74% 23.90% 23.90% 23.89%
Expense - % of
Net Sales 21.09% 20.13% 20.33% 20.43% 20.54%
Operating Cash
Flow (EBITDA) $ 25,019 34,345 34,877 35,374 36,065
Operating
Profit $ 7,106 16,082 18,196 20,604 23,126
Capital
Expenditures $ 7,000 6,000 6,000 6,000 6,000
Subordinated
Secured Term
Debt(1) $ 31,778 26,778 19,278 6,576 0
Revolver-Direct
Borrowings $ 0 0 0 0 0
Net Working
Capital(1),(2) $117,753 116,395 131,838 144,681 166,373
(1) 1994 per Joint Plan of Reorganization
(2) Current Assets (Inventory at FIFO) less Current
Liabilities (excluding Subordinated Secured Term Debt)
The accompanying Principal Assumptions-Long Term Forecasts should
be read in conjunction with this table.
<PAGE>
ROSE'S STORES, INC.
SUMMARY OF PROJECTED FINANCIAL INFORMATION
QUARTERLY 1995
First Second Third Fourth
($ in thousands) Quarter Quarter Quarter Quarter
Net Sales - Owned $177,220 185,907 191,984 259,087
Leased Sales $ 5,794 7,798 7,164 7,832
FIFO Gross Margin -
% Net Sales 24.89% 24.31% 25.91% 20.96%
Expense - % of Net Sales 21.31% 21.83% 21.42% 17.14%
Operating Cash Flow
(EBITDA) $ 7,466 5,729 9,754 11,396
Operating Profit $ 3,058 1,133 4,972 6,919
Capital Expenditures $ 1,500 1,500 1,500 1,500
Subordinated Secured
Term Debt $ 31,778 31,778 31,778 26,778
Revolver-Direct
Borrowings $ 33,558 19,731 39,014 0
Net Working Capital(1) $107,339 108,722 113,990 116,395
(1) Current Assets (Inventory at FIFO) less Current
Liabilities (excluding Subordinated Secured Term Debt)
The accompanying Principal Assumptions-Long Term Forecasts should
be read in conjunction with this table.<PAGE>
Rose's Stores, Inc.
Principal Assumptions - Long Term Forecasts
1994 - 1998
The Debtor believes that the Plan meets the Bankruptcy Code's
feasibility requirement that plan confirmation is not likely to
be followed by a liquidation, or the need for further financial
reorganization of the Debtor or successors of the Debtor under
the Plan unless such liquidation is proposed in the Plan. In
connection with the development of the Plan, and for purposes of
determining whether the Plan satisfies this feasibility standard,
the Debtor analyzed its ability to satisfy its financial
obligations while maintaining sufficient liquidity and capital
resources. In this regard, the management of the Debtor
developed and periodically refined the Debtor's business plan and
prepared financial projections (the "Projections") for fiscal
1994 and for the four year period from fiscal 1995 through 1998.
The Projections are summarized in the accompanying Rose's Stores,
Inc. Summary of Projected Financial Information, 1994-1998 and
the Summary of Projected Financial Information, Quarterly 1995
(collectively, the "Forecasts") and certain of the underlying
assumptions are summarized below. The Debtor assumes no
responsibility to update the Forecasts.
ALTHOUGH EVERY EFFORT WAS MADE TO BE ACCURATE, THE FORECASTS WERE
NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS, THE FINANCIAL ACCOUNTING STANDARDS BOARD, OR THE
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION
REGARDING PROJECTIONS. FURTHERMORE, THE FORECASTS HAVE NOT BEEN
AUDITED OR REVIEWED BY ROSE'S STORES, INC. INDEPENDENT CERTIFIED
ACCOUNTANTS. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THE
FORECASTS ARE BASED UPON A VARIETY OF ASSUMPTIONS, WHICH MAY NOT
BE REALIZED, AND ARE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES WHICH ARE BEYOND
THE CONTROL OF THE COMPANY. CONSEQUENTLY, THE FORECASTS SHOULD
NOT BE REGARDED AS A REPRESENTATION OR WARRANTY BY ROSE'S STORES,
INC., OR ANY OTHER PERSONS, THAT THE FORECASTS WILL BE REALIZED.
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE PRESENTED IN THE
FORECASTS. HOLDERS OF CLAIMS AND INTERESTS MUST MAKE THEIR OWN
DETERMINATIONS AS TO THE REASONABLENESS OF SUCH ASSUMPTIONS AND
THE RELIABILITY OF THE FORECASTS IN REACHING THEIR DETERMINATIONS
AS TO WHETHER TO ACCEPT OR REJECT THE PLAN.
Principal Assumptions:
- Reorganized Roses will operate 113 discount
department stores in the Southeastern region of
the United States.
- Net Sales - Owned will increase over prior
years by 5%, 3%, 4% and 5% for 1995, 1996, 1997
and 1998, respectively, primarily as a result
of inflation.
- FIFO Gross Margin % is expected to be
relatively flat (reflecting the pass through of
merchandise price increases). A slight
increase is expected in 1996 due to improved
shrink results.
- Leased Sales and Leased Department Income are
expected to increase at the same rate as Net
Sales-Owned.
- Expenses (rent, salaries, wages, insurance,
supplies, etc.) increase at the same rate as
Net Sales - Owned.
- Cash generated from operations and availability
under a Revolving Credit Facility similar to
that contemplated in the Plan are sufficient to
fund operations and debt amortization.
- Inventory turnover rates are expected to
increase from 1994 Business Plan rate of 3.45
annual turns to 3.61 annual turns by 1998.
- Subordinated Secured Term Debt is assumed to
amortize at the guaranteed rate, with annual
payments made each January. In addition,
excess cash flow sweeps of approximately $6,125
and $6,576 are expected in April, 1997 and
1998, respectively, fully amortizing the
Subordinated Secured Term Debt.
- No equity transactions will occur during the
forecast period.
- No significant asset dispositions or new long-
term financing arrangements (other than those
incorporated in the Plan) will occur other than
nominal equipment leasing activity.
- Tax net operating loss carryforwards are
expected to be available (subject to certain
limitations) to reduce federal taxable income.
<PAGE>
Exhibit 99.1
For Immediate Release
ROSE'S FILES JOINT PLAN OF REORGANIZATION
AND ANNOUNCES EXIT FINANCING COMMITMENT
Henderson, North Carolina - - Rose's Stores, Inc. today announced
that on August 1, 1994, the Company and the major constituencies
in its Chapter 11 proceeding filed a joint plan of reorganization
in the United States Bankruptcy Court for the Eastern District of
North Carolina. The plan was co-sponsored by the Company's
significant secured creditors and its unsecured creditors' and
equity committees, and was consented to by GE Capital, Rose's
debtor-in-possession lender. The Company expects the plan to be
confirmed in November and anticipates emerging from Chapter 11 no
later than April 30, 1995.
Commenting on the plan, George L. Jones, President and Chief
Executive Officer stated, "We are extremely pleased to have the
support of our creditors, particularly our vendors. This support
shows confidence in our operational strategies and the Company's
management team. We firmly believe the reorganization plan
represents a fair resolution for all involved parties and
positions the Company as a viable, profitable entity."
According to the terms of the plan of reorganization after
certain conditions are met:
- - - Secured creditors, primarily senior secured noteholders, will
receive payments reducing their debt from $108 million at the
time of filing to less than $40 million. The plan also
contemplates a four year amortizing note on the remaining debt
balance.
- - - Unsecured creditors, mainly merchandise vendors, will receive
100% of the shares of common stock of the reorganized company, or
such portion of the stock which will provide total realization of
the group's approved claims.
- - - Existing stockholders will receive warrants for the purchase of
up to 30% of the reorganized company's stock on a fully diluted
basis. In addition, existing shareholders will be entitled to
purchase rights to receive all or a portion of the new common
stock which would otherwise be distributed to the unsecured
creditors. All currently outstanding shares of stock, warrants
and options will be canceled.
Jones continued, "We have made the tough decisions and taken the
necessary steps to successfully emerge from Chapter 11 as a
strong company capable of competing and prospering in the
marketplace. We look forward to plan confirmation and exiting
from Chapter 11 so that we may focus entirely on the operational
aspects of our business."
The Company also announced that it has secured a post
confirmation exit financing commitment from GE Capital. GE
Capital's commitment is for a three year revolving credit
agreement which would, subject to the satisfaction of the terms
and conditions contained therein, allow Rose's to borrow up to
$80 million.
Jones added, "Obtaining exit financing is one of the major
hurdles necessary for our Company to successfully emerge from
Chapter 11. We believe GE Capital's financing commitment
represents a strong vote of confidence in our Company and is a
key element for the confirmation of our plan of reorganization."
Rose's Stores, Inc. filed for reorganization under Chapter 11 on
September 5, 1993. The Company currently employs approximately
11,000 associates in 113 discount stores located in North
Carolina, South Carolina, Virginia, Maryland, Delaware, West
Virginia, Kentucky, Tennessee, Georgia and Mississippi. The
Company stock is traded on the Over-the-Counter market under the
NASDAQ symbols of "RSTOQ" for the Voting Common Stock and "RSTBQ"
for the Non-Voting Class B Stock.
August 2, 1994 Company Contacts: Ed Anderson
(919) 430-2124
Bill Triplett
(919) 430-2589<PAGE>
