SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): NOVEMBER 12, 1997
Commission File No. 0-18051
FLAGSTAR COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3487402
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(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
203 EAST MAIN STREET
SPARTANBURG, SOUTH CAROLINA 29319-9966 (Zip Code)
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(Address of principal executive offices)
(864) 597-8000
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(Registrant's Telephone Number, including area code)
(N/A)
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(Former name or former address, if changed since last report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(b) On July 11, 1997 (the "Petition Date"), Flagstar Companies, Inc., a
Delaware corporation ("FCI"), and its wholly-owned subsidiary Flagstar
Corporation, a Delaware corporation, ("Flagstar"), filed their joint prepackaged
plan of reorganization (the "Plan") pursuant to Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of South Carolina (the "Bankruptcy Court").
On November 12, 1997, subject to notice to creditors and other
interested parties, the Bankruptcy Court entered an order confirming an Amended
Joint Plan of Reorganization of FCI and Flagstar (the "Amended Plan"), which is
attached to this Form 8-K as Exhibit 2.1. Material features of the Amended Plan
are as follows:
(i) as of the Amended Plan's effective date (the "Effective Date")
Flagstar will merge with and into FCI which will be the
surviving corporation in the merger ("Reorganized Flagstar");
(ii) general unsecured claims will be unimpaired;
(iii) each holder of Flagstar's 10 7/8% Senior Notes due 2002 and
10 3/4% Senior Notes due 2001, (together, the "Old Senior
Notes"), will be entitled to receive such holder's pro rata
portion of 100% of the 11 1/4% Senior Notes due 2007 of
Reorganized Flagstar in exchange for 100% of the principal
amount of Old Senior Notes and accrued interest through the
Effective Date (subject to the right of Reorganized Flagstar
to pay accrued interest in cash);
(iv) each holder of Flagstar's 11.25% Senior Subordinated
Debentures due 2004 and 11 3/8% Senior Subordinated Debentures
due 2003 (together, the "Senior Subordinated Debentures")
will be entitled to receive on account of the unpaid
principal amount of its Senior Subordinated Debentures plus
all unpaid interest which accrued thereon prior to the
Petition Date, such holder's pro rata portion of shares
of $0.01 par value common stock of Reorganized Flagstar
(the "New Common Stock") equivalent to 95.5% of the New
Common Stock to be outstanding upon the Effective Date;
(v) each holder of Flagstar's 1O% Convertible Junior Subordinated
Debentures due 2014 (the "1O% Convertible Debentures"), will
be entitled to receive on account of the unpaid principal
amount of its 10% Convertible Debentures plus all unpaid
interest which accrued thereon prior to the Petition Date,
such holder's pro rata portion of shares of New Common Stock
equivalent to 4.5% of the New Common Stock and certain
warrants (the "New Warrants") to be outstanding on the
Effective Date; and
(vi) the remaining junior impaired classes under the Plan (FCI's
$2.25 Series A Cumulative Convertible Exchangeable Preferred
Stock and FCI's $.50 par value Common Stock (the "Old FCI
Common Stock")) will receive or retain no property
under the Amended Plan.
As of November 12, 1997, 42,434,668 shares of Old FCI Common Stock were
outstanding. As of the Effective Date, Reorganized Flagstar will have
100,000,000 authorized shares of New Common Stock and 25,000,000 authorized
shares of preferred stock. Approximately 40,000,000 shares of New Common Stock
will be issued in connection with the Amended Plan. As set forth in the Amended
Plan, ten percent (1O%) of the New Common Stock, on a fully diluted basis, will
be reserved for a new management stock option program, in addition to 4,000,000
shares of New Common Stock, which will be reserved for issuance upon the
exercise of the New Warrants.
The following condensed balance sheets of FCI and Flagstar (which have
been prepared using the equity method of accounting for reporting the results of
all wholly-owned subsidiaries of FCI that are not parties to such Chapter 11
proceedings) set forth the assets and liabilities of FCI and Flagstar as of
October 1, 1997:
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Flagstar Companies, Inc. and Flagstar Corporation
(Debtors-in-Possession)
Condensed Balance Sheet
(Unaudited)
October 1, 1997
---------------
(In thousands)
Assets
Current Assets $ 3,273
Investment in operating subsidiaries, net (9,303)
Property owned, net 2,791
Property held under capital leases, net 2,220
Other assets:
Deferred financing costs 15,886
Receivable from operating subsidiaries 341,329
Other 19,693
----------
Total assets $ 375,889
==========
Liabilities
Liabilities not subject to compromise
Current liabilities $ 49,461
Long-term liabilities 58,182
---------
Total liabilities not subject to compromise 107,643
Liabilities subject to compromise 1,597,531
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Total liabilities 1,705,174
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Shareholders' deficit (1,329,285)
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Total liabilities and shareholders' deficit $ 375,889
==========
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
EXHIBIT NO. DESCRIPTION
2.1 Amended Joint Plan of Reorganization of Flagstar
Companies, Inc. and Flagstar Corporation as confirmed
by order of the United States Bankruptcy Court for the
District of South Carolina filed November 12, 1997,
such cases jointly administered under Case No.
97-05431-B.
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.
FLAGSTAR COMPANIES, INC.
By: /s/ Rhonda J. Parish
---------------------------------------
Name: Rhonda J. Parish,
Title: Senior Vice President, General
Counsel and Secretary
Date: November 21, 1997.
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF SOUTH CAROLINA
In re ) Chapter 11
)
FLAGSTAR COMPANIES, INC., ) Case No. 97-05795-B
FLAGSTAR CORPORATION, ) Case No. 97-05796-B
FLAGSTAR HOLDINGS, INC., ) Case No. 97-05431-B
)
Debtors. )
)
)
FLAGSTAR COMPANIES, INC. AND FLAGSTAR CORPORATION'S
AMENDED JOINT PLAN OF REORGANIZATION
DATED AS OF JULY 11, 1997 (AMENDED NOVEMBER 7, 1997)
Robert A. Klyman
Gregory O. Lunt
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
(213) 485-1234
Martin N. Flics
Rachael Fink
LATHAM & WATKINS
885 Third Avenue, Suite 1000
New York, New York 10022
(212) 906-1200
COUNSEL FOR
FLAGSTAR COMPANIES, INC.
AND FLAGSTAR CORPORATION
Martin J. Bienenstock
WEIL, GOTSHAL & MANGES L.L.P.
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
COUNSEL FOR
FLAGSTAR COMPANIES, INC.
AND FLAGSTAR CORPORATION
Michael M. Beal
Linda K. Barr-Efird
MCNAIR LAW FIRM, P.A.
NationsBank Tower
1301 Gervais Street, 17th Floor
P.O. Box 11390
Columbia, South Carolina 29211
(803) 799-9800
COUNSEL FOR
FLAGSTAR COMPANIES, INC.
AND FLAGSTAR CORPORATION
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TABLE OF CONTENTS
I. INTRODUCTION........................................................... 5
II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION.................. 6
A. Definitions......................................................... 6
B. Interpretation and Computation of Time.............................. 12
1. Defined Terms................................................. 12
2. Rules of Interpretation....................................... 12
3. Time Periods.................................................. 12
III. DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS......................... 13
A. Secured Claims...................................................... 13
B. Unsecured Claims.................................................... 13
C. Interests and Claims Relating to Interests.......................... 13
IV. GENERAL PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS............... 13
A. Unclassified Claims................................................. 13
1. Administrative Claims......................................... 13
a. General............................................................. 13
b. Payment of Statutory Fees........................................... 14
c. Treatment of Priority Tax Claims.................................... 14
d. Bar Date for Administrative Claims.................................. 14
(1) General Provisions................................................. 14
(2) Professionals...................................................... 14
(3) Ordinary Course Liabilities........................................ 14
(4) Tax Claims......................................................... 15
B. Treatment of Secured Claims......................................... 15
1. Class 1 (Bank Claims)......................................... 15
2. Class 2a et seq. (Other Secured Claims)....................... 15
C. Treatment of Unsecured Claims....................................... 15
1. Class 3 (Priority Claims)..................................... 15
2. Class 4 (Senior Unsecured Claims)............................. 15
3. Class 5 (Senior Subordinated Claims).......................... 16
4. Class 6 (10% Convertible Claims).............................. 16
5. Classes 7A and 7B (General Unsecured Claims).................. 16
D. Interests........................................................... 16
1. Class 8 (Interests of Holders of Old FCI Preferred Stock)..... 16
2. Class 9 (Interests of Holders of Old FCI Common Stock)........ 17
3. Class 10 (Interests of Holders of Old Stock Rights
and all Claims Arising out of Such Old Stock Rights).......... 17
4. Class 11 (Securities Claims).................................. 17
5. Class 12 (FCI'S 100% Ownership Interest in Flagstar).......... 17
E. Treatment of Trade Creditors and Employees Under the Plan........... 17
1. Treatment of Trade Claims..................................... 17
2. Treatment of Employee Claims.................................. 17
F. Modification of Treatment of Claims................................. 18
G. Registration of New Common Stock.................................... 18
H. Listing of New Common Stock......................................... 18
V. DISTRIBUTIONS UNDER THE PLAN........................................... 18
A. Disbursing Agent.................................................... 18
B. Timing of Distributions............................................. 18
C. Methods of Distributions............................................ 18
1. Cash Payments................................................. 18
2. Transfers of New Common Stock................................. 19
3. Compliance with Tax Requirements.............................. 19
D. Pro Rata Distribution. ............................................. 19
E. Distribution Record Date............................................ 19
F. Surrender of Cancelled Debt Instruments or Securities............... 19
1. Special Procedures for Lost, Stolen, Mutilated
or Destroyed Instruments...................................... 19
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2. Failure to Surrender Cancelled Instrument..................... 20
G. Undeliverable or Unclaimed Distributions............................ 20
H. Objections to Claims and Authority to Prosecute Objections;
Claims Resolution................................................... 20
1. Generally..................................................... 20
2. Professionals, Administration Claims, Trade Claims
and Employee Claims........................................... 20
I. Disputed Claims; Reserve and Estimations............................ 21
1. Treatment of Disputed Claims.................................. 21
2. Distributions on Account of Disputed Claims Once
They are Allowed.............................................. 21
J. Setoffs............................................................. 21
K. Termination of Subordination........................................ 21
VI. INDIVIDUAL HOLDER PROOFS OF INTEREST................................... 22
VII. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................. 22
A. Assumptions......................................................... 22
B. Cure of Defaults in Connection with Assumption...................... 22
C. Rejections.......................................................... 22
D. Bar Date for Rejection Damages...................................... 22
VIII. ACCEPTANCE OR REJECTION OF THIS PLAN................................... 23
A. Voting Classes...................................................... 23
B. Presumed Acceptance of Plan......................................... 23
C. Presumed Rejections of Plan.
D. Voting Instructions................................................. 23
E. Voting Deadline and Extensions...................................... 23
F. Confirmability of Plan and Cramdown................................. 23
IX. MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN..................... 24
A. Merger.............................................................. 24
B. Corporate Action.................................................... 24
1. Cancellation of Old Securities and Related Agreements......... 24
2. Certificate of Incorporation and Bylaw Amendments............. 24
3. Management of Reorganized Flagstar............................ 24
C. New Credit Agreement................................................ 24
D. Implementation...................................................... 24
E. Other Documents and Actions......................................... 24
F. Payment of Statutory Fees........................................... 25
G. Term of Injunctions or Stays........................................ 25
H. No Interest......................................................... 25
I. Retiree Benefits.................................................... 25
J. Issuance of New Securities.......................................... 25
X. CONFIRMATION AND EFFECTIVE DATE CONDITIONS............................. 25
A. Conditions to Confirmation.......................................... 25
B. Conditions to Effective Date........................................ 25
C. Waiver of Conditions to Confirmation and Effective Date............. 26
XI. EFFECTS OF PLAN CONFIRMATION........................................... 26
A. Discharge of Debtors and Injunction................................. 26
B. Limitation of Liability............................................. 27
C. Releases............................................................ 27
D. Indemnification..................................................... 27
E. Vesting of Assets................................................... 28
F. Preservation of Causes of Action.................................... 28
G. Retention of Bankruptcy Court Jurisdiction.......................... 28
H. Failure of Bankruptcy Court to Exercise Jurisdiction................ 29
I. Committees.......................................................... 29
XII. MISCELLANEOUS PROVISIONS............................................... 29
A. Final Order......................................................... 29
B. Modification of the Plan............................................ 29
C. Revocation of the Plan.............................................. 30
D. Severability of Plan Provisions..................................... 30
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E. Successors and Assigns.............................................. 30
F. Saturday, Sunday or Legal Holiday................................... 30
G. Post-Effective Date Effect of Evidences of Claims or Interests...... 30
H. Headings............................................................ 30
I. Governing Law....................................................... 31
J. No Liability for Solicitation or Participation...................... 31
K. No Admissions or Waiver of Objections............................... 31
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I.
INTRODUCTION
Flagstar Companies, Inc. (defined herein as FCI) and its wholly-owned subsidiary
Flagstar Corporation (defined herein as FLAGSTAR, and collectively with FCI as
Debtors) hereby propose the following Plan of Reorganization (defined herein as
the PLAN) for the resolution of the Debtors' outstanding creditor claims and
equity interests and request Confirmation of the Plan pursuant to Section 1129
of the Bankruptcy Code.
All Holders of Claims and Interests are encouraged to read the Plan and the
accompanying solicitation materials in their entirety. No materials, other than
the accompanying solicitation materials and any exhibits and schedules attached
thereto or referenced therein, have been approved by the Debtors for use in
soliciting acceptances or rejections of the Plan.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL STATEMENTS IN THIS PLAN AND
THE ACCOMPANYING SOLICITATION MATERIALS CONCERNING THE HISTORY OF THE DEBTORS'
BUSINESSES, THE PAST OR PRESENT FINANCIAL CONDITION OF THE DEBTORS, TRANSACTIONS
TO WHICH THE DEBTORS WERE OR ARE PARTY, OR THE EFFECT OF CONFIRMATION OF THE
PLAN ON SECURED CREDITORS, UNSECURED CREDITORS OR EQUITY SECURITY HOLDERS ARE
ATTRIBUTABLE EXCLUSIVELY TO THE DEBTORS AND NOT TO ANY OTHER PARTY.
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II.
DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION
A. DEFINITIONS.
In addition to such other terms as are defined in other sections of the Plan,
the following terms (which appear in the Plan as capitalized terms) have the
following meanings as used in the Plan:
1. "10 3/4% SENIOR NOTES" means the $270 million of 10 3/4% Senior Notes due on
September 15, 2001 issued by Flagstar in September 1993.
2. "10 7/8% SENIOR NOTES" means the $280 million of 10 7/8% Senior Notes due on
December 1, 2002 issued by Flagstar in November 1992.
3. "11.25% DEBENTURES means the $722.4 million of 11.25% Senior Subordinated
Debentures due on November 1, 2004 issued by Flagstar in November 1992.
4. "11 3/8% DEBENTURES" means the $125 million of 11.375% Senior Subordinated
Debentures due on September 15, 2003 issued by Flagstar in September 1993.
5. "AD HOC DEBENTUREHOLDERS COMMITTEE" means Loomis Sayles & Company, Inc. (as
investment manager for certain discretionary accounts), Magten Asset Management
Corporation (as investment manager for certain discretionary accounts), Moore
Capital Management, Inc., Morgan Stanley & Co., Inc. or such other
representatives of the Senior Subordinated Claims as may be designated from time
to time.
6. "ADMINISTRATIVE CLAIM" means a Claim for payment of an administrative expense
of a kind specified in section 503(b) of the Bankruptcy Code and referred to in
Section 507(a)(1) of the Bankruptcy Code, including, without limitation, the
actual and necessary costs and expenses incurred after the commencement of a
Chapter 11 case of preserving the estate or operating the business of the
Company (including wages, salaries and commissions for services), loans and
advances to the Company made after the Petition Date, compensation for legal and
other services and reimbursement of expenses awarded or allowed under Section
330(a) or 331 of the Bankruptcy Code, certain retiree benefits, certain
reclamation claims, and all fees and charges against the estate under chapter
123 of Title 28, United States Code.
7. "ALLOWED CLAIM" or "ALLOWED INTEREST" means a Claim against or Interest in
the Debtors to the extent that
a. a proof of such Claim or Interest
(1) was timely Filed and served upon the Debtors and no objection
to the Claim or Interest is Filed within the time fixed by the
Bankruptcy Court for such objections; or
(2) is deemed Filed under applicable law or pursuant to a Final
Order of the Bankruptcy Court and no objection to the Claim or
Interest is Filed within the time fixed by the Bankruptcy Court for
such objections; or
(3) is Allowed pursuant to subparagraph b of this paragraph 7.
b. If the Debtors File an objection to a proof of Claim or Interest within a
time fixed by the Bankruptcy Court, the Claim or Interest shall be Allowed to
the extent of
(1) any amount of such Claim or Interest to which the Debtors did
not object;
(2) any amount otherwise authorized by Final Order or the Plan; or
(3) any amount temporarily allowed by an Order for purposes of
voting on the Plan.
"ALLOWED ADMINISTRATIVE CLAIM," "ALLOWED PRIORITY TAX CLAIM," "ALLOWED SECURED
CLAIM" and "ALLOWED UNSECURED CLAIM" have correlative meanings.
6
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8. "ALLOWED CLASS ... CLAIM" means an Allowed Claim in the particular Class
described.
9. "ALLOWED CLASS ... INTEREST" means an Allowed Interest in the particular
Class described
10. "BANK CLAIMS" means obligations of Flagstar, if any, under its secured
guarantee of the obligations under the Second Amended and Restated Credit
Agreement, dated as of April 10, 1996, among TWS Funding, Inc., as borrower,
Flagstar, certain lenders and co-administrative agents named therein, and
Citibank, N.A., as funding agent.
11. "BANKRUPTCY CODE" means title 11 of the United States Code, as now in effect
or hereafter amended if such amendments are made applicable to the
Reorganization Cases.
12. "BANKRUPTCY COURT" means the United States Bankruptcy Court for the District
of South Carolina, or if such Court ceases to exercise jurisdiction over the
Reorganization Cases, such court or adjunct thereof that exercises jurisdiction
over the Reorganization Cases in lieu of the United States Bankruptcy Court for
such District.
13. "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure, as
applicable from time to time in the Reorganization Cases.
14. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a "LEGAL
HOLIDAY" (as defined in Bankruptcy Rule 9006(a)).
15. "CASH" means currency, a certified check, a cashier's check or a wire
transfer of good funds from any source, or a check drawn on a domestic bank from
Reorganized Flagstar or other Person making any distribution under the Plan.
16. "CLAIM" means a claim against either of the Debtors, whether or not asserted
or allowed, as defined in section 101(5) of the Bankruptcy Code.
17. "CLASS" means a class of Claims or Interests designated pursuant to the
Plan.
18. "CLERK" means the Clerk of the Bankruptcy Court.
19. "COMMITTEE" means any statutory committee of creditors or equity interest
Holders of the Debtors appointed by the United States Trustee pursuant to
Section 1102 of the Bankruptcy Code.
20. "COMPANY" means Flagstar and FCI, collectively and individually as
appropriate from the context, as Debtors.
21. "CONFIRMATION" means the entry by the Bankruptcy Court of the Confirmation
Order.
22. "CONFIRMATION DATE" means the date on which the Clerk enters the
Confirmation Order on the Docket.
23. "CONFIRMATION HEARING" means the hearing on confirmation of the Plan, as the
Plan may be modified hereafter.
24. "CONFIRMATION ORDER" means the Order of the Bankruptcy Court confirming the
Plan under section 1129 of the Bankruptcy Code.
25. "CREDITORS COMMITTEE" means the Official Committee of 10% Convertible
Debentureholders appointed by the United States Trustee pursuant to Section 1102
of the Bankruptcy Code.
26. "DEBTORS" means, collectively, FCI and Flagstar, as debtors and Debtors In
Possession.
27. "DEBTORS IN POSSESSION" means the Debtors, when acting in the capacity of
representatives of the Estates in the Reorganization Cases.
28. "DESIGNATED PROFESSIONAL" means Latham & Watkins; Parker, Poe, Adams &
Bernstein L.L.P.; Weil, Gotshal & Manges, LLP; McNair Law Firm, P.A.; Hebb &
Gitlin, a Professional Corporation; Nexsen Pruet Jacobs & Pollard; Skadden,
Arps, Slate, Meagher & Flom; Donaldson, Lufkin & Jenrette Securities
Corporation; Houlihan Lokey Howard & Zukin; Stroock & Stroock & Lavan; Levy &
Goodwin; Chanin & Company; Andrews & Kurth LLP; Jefferies & Company; Arthur
Andersen LLP; and Rogers, Townsend & Thomas PC.
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29. "DIP FACILITY" means the debtor in possession credit agreement dated as of
July 11 , 1997 between the Debtors and the DIP Lender.
30. "DIP LENDER" means, collectively, The Chase Manhattan Bank and any other
lenders participating in the DIP Facility.
31. "DISBURSING AGENT" means the Person responsible for making distribution
under the Plan. Reorganized Flagstar, or such Person(s) as the Debtors may
employ in their sole discretion, will serve as Disbursing Agent.
32. "DISCLOSURE STATEMENT" means the Disclosure Statement Pursuant to Section
1125 or Section 1126(b) of the Bankruptcy Code with Respect to Plan of
Reorganization of Flagstar Companies, Inc. and Flagstar Corporation Under
Chapter 11 of the Bankruptcy Code (and all exhibits and schedules annexed
thereto or referred to therein), as it may be amended or supplemented from time
to time.
33. "DISPUTED CLAIM" means a Claim, not otherwise Allowed or paid pursuant to
the Plan, as to which (i) a proof of claim has been Filed or deemed Filed and
(ii) an objection has been Filed timely or deemed Filed timely and which
objection has not been withdrawn on or before any date fixed for Filing such
objections by the Plan or Order of the Bankruptcy Court and (if not withdrawn)
has not been overruled or denied by a Final Order. A Claim shall be considered a
Disputed Claim to the extent of any Filed or deemed Filed objection.
34. "DISPUTED INTEREST" means an Interest as to which an objection has been or
may be timely Filed or deemed timely Filed and which objection has not been
withdrawn on or before any date fixed for Filing such objections by the Plan or
Order of the Bankruptcy Court and (if not withdrawn) has not been overruled or
denied by a Final Order. An Interest shall be considered a Disputed Interest to
the extent of any Filed or deemed Filed objection.
35. "DISTRIBUTION RECORD DATE" means the date or dates fixed by the Bankruptcy
Court as the record date for determining the Holders of 10 3/4% Senior Notes, 10
7/8% Senior Notes, 11.25% Debentures, 11 3/8% Debentures, 10% Convertible
Claims, Old FCI Preferred Stock and Old FCI Common Stock, respectively, who are
entitled to receive distributions under this Plan.
36. "DOCKET" means the docket in the Reorganization Cases maintained by the
Clerk.
37. "EFFECTIVE DATE" means a Business Day, as determined by the Debtors in
consultation with the Ad Hoc Debentureholders Committee and the Creditors'
Committee, and on which all conditions to the Effective Date set forth herein
have been satisfied or, if permitted, waived by the Debtors, and on which no
stay of the Confirmation Order is in effect; provided that, upon request of the
Debtors or Reorganized Flagstar, the Bankruptcy Court may extend the deadline
for the Effective Date to occur following notice and a hearing; provided
however, that the Effective Date shall occur no later than March 15, 1998
without the consent of the Ad Hoc Debentureholders' Committee, the Creditors'
Committee and the Informal Committee of Holders of Senior Notes.
38. "EMPLOYEE CLAIMS" means Claims which are asserted by employees of the
Debtors in connection with their employment including, without limitation,
Claims arising from or relating to salaries or wages, accrued paid vacation,
health related benefits, severance benefits, field management and
executive/administrative management incentive plans and similar employee
benefits.
39. "ESTATES" means the estates created in the Debtors' Reorganization Cases
under section 541 of the Bankruptcy Code.
40. "FILE" or "FILED" means filed with the Bankruptcy Court in the
Reorganization Cases.
41. "FINAL ORDER" means an order or judgment of the Bankruptcy Court, as entered
on the Docket in the Reorganization Cases, which has not been reversed, stayed,
modified or amended, and as to which (a) the time to appeal or seek certiorari
has expired and no appeal or petition for certiorari has been timely filed, or
(b) any appeal that has been or may be taken or any petition for certiorari that
has been or may be filed has been resolved by the highest court to which the
order or judgment was appealed or from which certiorari was sought.
42. "FCI" means Flagstar Companies, Inc.
43. "FLAGSTAR" means Flagstar Corporation, a wholly-owned subsidiary of FCI.
44. "HOLDER" means a Person who holds a Claim or Interest. Where the identity of
the Holder of a Claim or Interest is set forth on a register or other record
maintained by or at the direction of the Debtors, the Holder of such Claim or
Interest shall be deemed
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to be the holder as identified on such register or record unless the Debtors are
otherwise notified in a writing authorized by such Holder.
45. "IMPAIRED" shall have the definition given to it in Section 1124 of the
Bankruptcy Code. Section 1124 states:
"[A] class of claims or interests is impaired under a plan unless, with respect
to each claim or interest of such class, the plan --
(1) leaves unaltered the legal, equitable, and contractual rights to which
such claim or interest entitles the Holder of such claim or interest; or
(2) notwithstanding any contractual provision or applicable law that
entitles the Holder of such claim or interest to demand or receive accelerated
payment of such claim or interest after the occurrence of a default --
(A) cures any such default that occurred before of after the
commencement of the case under this title, other than a default of
a kind specified in section 365(b)(2) of this title;
(B) reinstates the maturity of such claim or interest as such
maturity existed before such default;
(C) compensates the Holder of such claim or interest for any
damages incurred as a result of any reasonable reliance by such
Holder on such contractual provision or such applicable law; and
(D) does not otherwise alter the legal, equitable, or contractual
rights to which such claim or interest entitles the Holder of such
claim or interest."
An Impaired Class is entitled to vote on the Plan; PROVIDED, HOWEVER, that
Classes of Claims and Interests that do not receive or retain any property under
the Plan on account of such Claims and Interests are deemed to have rejected the
Plan and are not entitled to vote.
46. "INDENTURE TRUSTEES" means First Trust National Association, The Bank of New
York, and United States Trust Company of New York, as indenture trustees for the
10 3/4% Senior Notes and the 10 7/8% Senior Notes, the 11.25% Debentures and the
11 3/8% Debentures and the 10% Convertible Debentures, respectively.
47. "INDENTURE TRUSTEE EXPENSES" means any unpaid Indenture Trustee's fees, and
reasonable unpaid out-of-pocket costs or expenses incurred through the Effective
Date by an Indenture Trustee, including, without limitation, reasonable
out-of-pocket costs and expenses and reasonable fees of legal counsel to the
Indenture Trustee, which are secured or which are entitled to be secured under
the Indenture by a lien or other priority in payment against distributions to be
made to Holders of Claims under the respective Indenture.
47A. "INFORMAL COMMITTEE OF HOLDERS OF SENIOR NOTES" means certain holders of
Old Senior Notes as may be designated from time to time.
48. "INSTRUMENT" means any share of stock, security, promissory note or other
"INSTRUMENT," within the meaning of that term, as defined in section 9-105(1)
(i) of the UCC.
49. "INTERCOMPANY CLAIMS" means any and all claims and causes of action which
either of the Debtors holds against any Subsidiary or which any Subsidiary holds
against either of the Debtors.
50. "INTEREST" means the interest of any equity security Holder of the Debtors,
whether or not asserted, as defined in section 101(17) of the Bankruptcy Code.
51. "10% CONVERTIBLE CLAIMS" means the Claims arising from the 10% Convertible
Debentures.
52. "10% CONVERTIBLE DEBENTURES" means the $99.3 million of 10% Convertible
Junior Subordinated Debentures due on November 1, 2014 issued by Flagstar.
53. "LOCAL BANKRUPTCY RULES" means the local rules of the Bankruptcy Court, as
applicable from time to time in the Reorganization Cases.
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54. "NEW CREDIT FACILITY" means the post-Confirmation working capital and letter
of credit facility to be entered into between Reorganized Flagstar and lenders
to be determined.
55. "NEW COMMON STOCK" means common stock of Reorganized Flagstar, par value
$.01 per share, which may be issued by Reorganized Flagstar on and after the
Effective Date pursuant to the Plan or otherwise.
56. "NEW SENIOR NOTES" means the 11 1/4% Senior Notes due 2007, to be issued
under an Indenture (the "Indenture"), between Reorganized Flagstar and First
Trust National Association, as trustee (the "Trustee"), to holders of the Old
Senior Notes in an aggregate principal amount as determined pursuant to Section
IVC.2 of the Plan.
57. "NEW WARRANTS" means the warrants to purchase 4,000,000 Shares of New Common
Stock at an exercise price of $14.60 per share expiring on the 7th anniversary
of the Effective Date pursuant to a warrant agreement to be approved by the
Creditors' Committee.
58. "OLD DEBT" means, collectively, the Old Senior Notes, Senior Subordinated
Debentures and the 10% Convertible Debentures.
59. "OLD FCI COMMON STOCK" means the common stock of FCI, par value $.50 per
share, issued and outstanding as of the Petition Date.
60. "OLD FCI PREFERRED STOCK" means the $2.25 Series A Cumulative Convertible
Exchangeable Preferred Stock of FCI, par value $.10 per share, issued and
outstanding as of the Petition Date.
61. "OLD SECURITIES" means, collectively, the Old Debt, the Old FCI Common Stock
and the Old FCI Preferred Stock.
62. "OLD SENIOR NOTES" means the 10 3/4% Senior Notes and the 10 7/8% Senior
Notes.
63. "OLD STOCK RIGHTS" means, collectively, any Old Warrants, and any other
rights or options, to purchase or otherwise acquire Old Securities, and any
stock appreciation or similar rights relating to Old Securities, existing prior
to the Effective Date. "Old Stock Rights" do not include any rights arising out
of the ownership of Old Securities.
64. "OLD WARRANTS" means warrants to purchase 15,000,000 shares of Old FCI
Common Stock issued pursuant to a Stock and Warrant Purchase Agreement dated as
of August 11, 1992.
65. "ORDER" means an order or judgment of the Bankruptcy Court as entered on the
Docket.
66. "ORDINARY COURSE PROFESSIONALS' ORDER" means the order which, if entered by
the Clerk, will authorize the Debtors to (a) employ various professionals who
are not directly working to implement the Reorganization Cases and (b) pay such
professionals without need for application, hearing and Final Order.
67. "OTHER SECURED CLAIM" means any Allowed Secured Claim not classified in
Class 1. Other Secured Claims are classified in Class 2A et seq.
68. "PERSON" means any individual, corporation, general partnership, limited
partnership, limited liability partnership, limited liability company,
association, joint stock company, joint venture, government or political
subdivision, official committee appointed by the United States Trustee,
unofficial committee of creditors or equity Holders, or other entity (as defined
in the Bankruptcy Code).
69. "PETITION DATE" means July 11, 1997, the date on which the Reorganization
Cases were Filed.
70. "PLAN" means this plan of reorganization for the Debtors in the
Reorganization Cases and all exhibits and schedules annexed hereto or referred
to herein, as such may be amended, modified or supplemented from time to time.
This plan of reorganization modifies the Debtors' Joint Plan of Reorganization
filed with the Court on July 11, 1997.
71. "POST-PETITION TAX CLAIMS" means Administrative Claims and other Claims by a
governmental unit for taxes (and for interest and/or penalties related to such
taxes) for any tax year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through and including the
Effective Date.
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72. "PREPETITION CREDIT FACILITY" means the Second Amended and Restated Credit
Agreement, dated as of April 10, 1996, and amended through March 7, 1997, among
TWS Funding, Inc., as borrower, Flagstar, certain lenders and co-administrative
agents named therein and Citibank, N.A., as funding agent.
73. "PRIORITY CLAIM" means an Allowed Claim entitled to priority under sections
507(a)(3) through 507(a)(7) of the Bankruptcy Code, but excludes Priority Tax
Claims.
74. "PRIORITY TAX CLAIM" means an Allowed Claim for an amount entitled to
priority under section 507(a)(8) of the Bankruptcy Code.
75. "PRO RATA" means proportionately so that, with respect to any Class, the
ratio of (a) the amount of consideration distributed on account of a particular
Allowed Claim or Allowed Interest to (b) the amount of the Allowed Claim or
Allowed Interest, is the same as the ratio of (x) the amount of consideration
distributed on account of all Allowed Claims or Allowed Interests of the Class
in which the particular Allowed Claim or Allowed Interest is included to (y) the
aggregate amount of all Allowed Claims or Allowed Interests of that Class.
76. "PROSPECTUS" means the Disclosure Statement used to solicit prepetition
votes on the Plan.
77. "REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement between Reorganized Flagstar and all holders of 10% or more of the New
Common Stock substantially in the form of Exhibit 4.39 to the Registration
Statement on Form S-4 of FCI of which the Prospectus is a part.
78. "REINSTATED," means, with respect to any Allowed Claim or Allowed Interest,
that such Claim or Interest shall be treated as Unimpaired on or prior to the
Effective Date.
79. "REORGANIZATION CASES" means the Debtors' cases under chapter 11 of the
Bankruptcy Code.
80. "REORGANIZED FLAGSTAR" means the corporation having such name as shall be
determined prior to the Confirmation Date by the Board of Directors of FCI, a
Delaware corporation, as the surviving corporation in the merger of Flagstar
with and into FCI as of the Effective Date.
81. "REORGANIZED FLAGSTAR BYLAWS" means the amended and restated bylaws of
Reorganized Flagstar that will be effective on the Effective Date, in the form
which will be Filed at or prior to the Confirmation Hearing, which bylaws shall
be prepared in consultation with the Ad Hoc Debentureholders Committee.
82. "REORGANIZED FLAGSTAR CERTIFICATE OF INCORPORATION" means the amended and
restated certificate of incorporation that will be effective on the Effective
Date, in the form which will be Filed at or prior to the Confirmation Hearing,
which certificate of incorporation shall be prepared in consultation with the Ad
Hoc Debentureholders Committee.
83. "SECURED CLAIM" means any Claim that is secured by a lien on property in
which the Estates have an interest or that is subject to setoff under section
553 of the Bankruptcy Code, to the extent of the value of the Claim Holder's
interest in the Estates' interest in such property or to the extent of the
amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy Code.
84. "SECURITIES CLAIM" means (a) any Claim arising from rescission of a purchase
or sale of Old FCI Common Stock or for damages arising from the purchase or sale
of Old FCI Common Stock, or (b) any Claim for indemnity, reimbursement, or
contribution on account of any such Claim.
85. "SENIOR SUBORDINATED CLAIMS" means Claims arising from the Senior
Subordinated Debentures.
86. "SENIOR SUBORDINATED DEBENTURES" means, collectively, the 11.25% Debentures
and the 11 3/8% Debentures.
87. "SENIOR UNSECURED CLAIMS" means Claims arising from the Old Senior Notes.
88. "SUBSIDIARY" means any directly or indirectly wholly-owned subsidiary of
either of the Debtors.
89. "TRADE CLAIMS" means any unsecured Claim against the Company arising from
(i) the delivery of goods or services in the ordinary course of business (ii)
any claim of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") arising
under the Letter
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Agreement, dated as of January 16, 1997, among FCI, Flagstar, and DLJ or (iii)
insurance-related service (including insurance premiums). "Trade Claim" excludes
Claims (i) arising under Sections 502(e) and 502(g) of the Bankruptcy Code, (ii)
of the type described in Section 726(a)(4) of the Bankruptcy Code, or (iii)
arising in tort for personal injury or property loss.
90. "UCC" means the Delaware Uniform Commercial Code, as in effect at any
relevant time.
91. "UNIMPAIRED" means, with reference to a Class of Claims or Interests, that
the Class is not Impaired. An Unimpaired Class is not entitled to vote on the
Plan.
92. "UNSECURED CLAIM" means any Claim that is not an Administrative Claim,
Priority Claim, Priority Tax Claim or Secured Claim.
93. "VOTING DEADLINE" means the date on which Ballots must be received by the
Debtors at their address set forth on the applicable Ballot. For purposes of the
Plan, the Voting Deadline is 12:00 Midnight, Eastern Time, on Monday, July 7,
1997, or, if the Debtors extend the Voting Deadline pursuant to Section VIII.E
below, the latest date on which a Ballot will be accepted.
B. INTERPRETATION AND COMPUTATION OF TIME.
1. Defined Terms.
Any term used in the Plan that is not defined in the Plan, either in Article II
(Definitions) or elsewhere, but that is used in the Bankruptcy Code, the
Bankruptcy Rules or the Local Bankruptcy Rules, has the meaning assigned to that
term in the Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy Rules,
as the case may be.
2. Rules of Interpretation.
For purposes of the Plan: (a) whenever it appears appropriate from the context,
each term, whether stated in the singular or the plural, shall include both the
singular and the plural; (b) any reference in the Plan to a contract,
instrument, release or other agreement or document being in a particular form or
on particular terms and conditions means that such document shall be
substantially in such form or substantially on such terms and conditions;
provided, however, that any change to such form, terms, or conditions which is
material to a party to such document shall not be made without such party's
consent; (c) any reference in the Plan to an existing document or exhibit Filed
or to be Filed means such document or exhibit, as it may have been or (to the
extent otherwise permitted, hereafter) may be amended, modified or supplemented
from time to time; (d) unless otherwise specified in a particular reference, all
references in the Plan to paragraphs, sections, articles and Exhibits are
references to paragraphs, sections, articles and Exhibits of or to the Plan; (e)
the words "herein," "hereof," "hereto," "hereunder" and others of similar import
refer to the Plan in its entirety rather than to only a particular portion of
the Plan; (f) captions and headings to Articles and paragraphs are inserted for
convenience of reference only and are not intended to be a part of or to affect
the interpretations of the Plan; (g) the rules of construction set forth in
section 102 of the Bankruptcy Code shall apply; and (h) all exhibits to the Plan
are incorporated into the Plan, and shall be deemed to be included in the Plan,
provided that they are Filed no later than the Confirmation Hearing.
3. Time Periods.
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.
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III.
DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS
The following is a designation of the Classes of Claims and Interests under the
Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Priority Tax Claims have not been classified and are
excluded from the following Classes. A Claim or Interest is classified in a
particular Class only to the extent that the Claim or Interest qualifies within
the description of that Class, and is classified in another Class or Classes to
the extent that any remainder of the Claim or Interest qualifies within the
description of such other Class or Classes. A Claim or Interest is classified in
a particular Class only to the extent that the Claim or Interest is an Allowed
Claim or Allowed Interest in that Class and has not been paid, released or
otherwise satisfied before the Effective Date; a Claim or Interest which is not
an Allowed Claim or Allowed Interest is not in any Class. A Disputed Claim or
Disputed Interest, to the extent that it subsequently becomes an Allowed Claim
or Allowed Interest, shall be included in the Class for which it would have
qualified had it not been disputed. Notwithstanding anything to the contrary
contained in the Plan, no distribution shall be made on account of any Claim or
Interest which is not an Allowed Claim or an Allowed Interest.
A. Secured Claims.
CLASS 1: Bank Claims.
CLASS 2A
ET SEQ.: Other Secured Claims.
B. Unsecured Claims.
CLASS 3: Priority Claims. CLASS 4: Senior Unsecured Claims. CLASS 5:
Senior Subordinated Claims. CLASS 6: 10% Convertible Claims. CLASS 7A:
General Unsecured Claims against Flagstar. CLASS 7B: General Unsecured
Claims against FCI.
C. Interests And Claims Relating To Interests.
CLASS 8: Allowed Interests of Holders of Old FCI Preferred Stock.
CLASS 9: Allowed Interests of Holders of Old FCI Common Stock.
CLASS 10: Allowed Interests of Holders of Old Stock Rights and all
Allowed Claims arising out of any such Old Stock Rights, including,
without limitation, all Claims arising out of the rejection of Old
Stock Rights. CLASS 11: Securities Claims. CLASS 12: FCI's Interest
in Flagstar.
IV.
GENERAL PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims.
1. Administrative Claims.
a. General.
Subject to certain additional requirements for professionals and certain other
entities set forth below, Reorganized Flagstar shall pay to each Holder of an
Allowed Administrative Claim, on account of its Administrative Claim and in full
satisfaction thereof, Cash equal to the amount of such Allowed Administrative
Claim, unless the Holder and the Debtors or Reorganized Flagstar agree or shall
have agreed to other treatment of such Claim, or an order of the Bankruptcy
Court provides for other terms; provided that if incurred in the ordinary course
of business or otherwise assumed by the Debtors pursuant to the Plan (including
Administrative Claims of governmental units for taxes), an Allowed
Administrative Claim will be assumed on the Effective Date and paid, performed
or settled by Reorganized Flagstar when due in accordance with the terms and
conditions of the particular agreement(s) governing the obligation in the
absence of the Reorganization Cases.
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b. Payment of Statutory Fees.
On or before the Effective Date, all fees payable pursuant to 28 U.S.C. Section
1930, as determined by the Bankruptcy Court at the Confirmation Hearing, shall
be paid in Cash equal to the amount of such Administrative Claim.
c. Treatment of Priority Tax Claims.
Unless otherwise agreed to by the Debtors and a Holder of a Priority Tax Claim,
each Holder of an Allowed Priority Tax Claim shall receive (i) Cash equal to the
unpaid portion of such Allowed Priority Tax Claim on the later of (a) the
Effective Date and (b) the date on which such Claim becomes an Allowed Priority
Tax Claim; or (ii) payment at such time as specified under applicable laws. The
Holders of Allowed Priority Tax Claims are not entitled to vote on the Plan.
Pursuant to Section 1123(a)(1) of the Bankruptcy Code, Priority Tax Claims are
not designated a Class of Claims for purposes of the Plan.
d. Bar Date For Administrative Claims.
(1) General Provisions.
Except as provided below for (i) non-tax liabilities incurred in the ordinary
course of business by the Debtors in Possession and (ii) Post-petition Tax
Claims, requests for payment of Administrative Claims must be Filed and served
on counsel for the Debtors and Reorganized Flagstar no later than (x) sixty (60)
days after the Effective Date, or (y) such later date, if any, as the Bankruptcy
Court shall order upon application made prior to the end of such 60-day period.
Holders of Administrative Claims (including, without limitation, professionals
requesting compensation or reimbursement of expenses and the Holders of any
Claims for federal, state or local taxes) that are required to File a request
for payment of such Claims and that do not File such requests by the applicable
bar date shall be forever barred from asserting such Claims against the Debtors
or Reorganized Flagstar, or any of their respective properties.
(2) Professionals.
All professionals or other Persons requesting compensation or reimbursement of
expenses pursuant to any of sections 327, 328, 330, 331, 503(b) and 1103 of the
Bankruptcy Code for services rendered on or before the Effective Date
(including, without limitation, any compensation requested by any professional
or any other Person for making a substantial contribution in the Reorganization
Cases) shall File and serve on Reorganized Flagstar and counsel for Reorganized
Flagstar an application for final allowance of compensation and reimbursement of
expenses no later than (i) sixty (60) days after the Effective Date, or (ii)
such later date, if any, as the Bankruptcy Court shall order upon application
made prior to the end of such 60-day period; PROVIDED, HOWEVER, that any
Professional who may receive compensation or reimbursement of expenses pursuant
to the Ordinary Course Professionals' Order without having filed an application
may continue to receive compensation or reimbursement for services rendered
before the Effective Date without further Bankruptcy Court review or approval
pursuant to the Ordinary Course Professionals' Order.
Hebb & Gitlin and Houlihan, Lokey, Howard & Zukin ("HLHZ") will remain as
advisors to the Ad Hoc Debentureholder Committee during the pendency of the
Reorganization Cases. The Debtors will assume Hebb & Gitlin's and HLHZ's
pre-petition retainer agreements for fees and expenses. Under such agreements,
Flagstar or HLHZ or Hebb & Gitlin may terminate Hebb & Gitlin's and HLHZ's
engagement on 5 days' written notice. The agreement will automatically terminate
upon the consummation of the Reorganization Cases.
Reorganized Flagstar shall pay the contractual claims of the Indenture Trustees
for their fees and expenses including their reasonable attorneys' fees. To the
extent, after being furnished with normal supporting documents for such fees and
expenses, Reorganized Flagstar does not agree on what fees and expenses are
reasonable, the dispute shall be resolved by the Bankruptcy Court. The Indenture
Trustees shall not attach or set off any of their fees and expenses against
distributions to debenture holders.
(3) Ordinary Course Liabilities.
Holders of Administrative Claims based on liabilities incurred in the ordinary
course of the Debtors' businesses (other than Claims of governmental units for
taxes or Claims and/or penalties related to such taxes) shall not be required to
File any request for payment of such Claims. Such Administrative Claims shall be
assumed and paid by Reorganized Flagstar pursuant to the terms and conditions of
the particular transaction giving rise to such Administrative Claim, without any
further action by the Holders of such Claims.
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(4) Tax Claims.
All requests for payment of Post-petition Tax Claims, for which no bar date has
otherwise been previously established, must be Filed on or before the later of
(i) sixty (60) days following the Effective Date; and (ii) 120 days following
the filing of the tax return for such taxes for such tax year or period with the
applicable governmental unit. Any Holder of any Post-petition Tax Claim that is
required to File a request for payment of such taxes and that does not File such
a Claim by the applicable bar date shall be forever barred from asserting any
such Post-petition Tax Claim against any of the Debtors, Reorganized Flagstar,
or any of their respective properties, whether any such Post-petition Tax Claim
is deemed to arise prior to, on, or subsequent to, the Effective Date.
B. Treatment Of Secured Claims.
1. Class 1 (Bank Claims).
CLASS 1 consists of all Claims, if any, of the Banks against the Debtors arising
from the Prepetition Credit Facility including all Claims arising pursuant to
any guarantee thereof and any pledge of assets as security therefor. Class 1 is
Unimpaired and, accordingly, is not entitled to vote on the Plan. On the
Effective Date, the Prepetition Credit Facility and, to the extent provided, the
related guarantees and pledges (collectively, the "GUARANTEES") by the Company,
will be Reinstated with Reorganized Flagstar as the guarantor under the
Guarantees.
2. Class 2a et seq. (Other Secured Claims).
CLASS 2A ET SEQ. All Secured Claims that are not included in Class 1 (defined in
the Plan as the "Other Secured Claims") shall be classified in Classes 2A et
seq.). These Classes will be further divided into subclasses designated by
letters of the alphabet (CLASS 2A, CLASS 2B, and so on), so that each Holder of
any Other Secured Claim is in a Class by itself, except to the extent that there
are Other Secured Claims that are substantially similar to each other and may be
included within a single Class. The Debtors shall File a schedule of each Other
Secured Claim on or before ten (10) days prior to the commencement of the
Confirmation Hearing. Each Allowed Other Secured Claim will be treated as
follows: Either (a) the Plan shall leave unaltered the legal, equitable and
contractual rights to which such Claim entitles the Holder; (b) (i) the Debtors
shall cure any default with respect to such Claim that occurred before or after
the relevant Petition Date, (ii) the maturity of such Claim shall be reinstated
as such maturity existed before any such default, (iii) the Holder of such Claim
shall be compensated for any damages incurred as a result of any reasonable
reliance by the Holder on any right to accelerate its Claim, and (iv) the legal,
equitable, and contractual rights of such Holder will not otherwise be altered;
or (c) such Claim shall receive such other treatment to which the Holder shall
consent. The Holder of each Allowed Other Secured Claim which is treated as set
forth in clause (a), (b) or (c) of this paragraph will be Unimpaired and will
not be entitled to vote for or against the Plan.
C. Treatment of Unsecured Claims.
1. Class 3 (Priority Claims).
CLASS 3 consists of the Allowed Priority Claims. Class 3 Claims are Unimpaired
and, accordingly, Holders of Allowed Class 3 Claims are not entitled to vote on
the Plan. Each Holder of an Allowed Class 3 Claim shall be entitled to receive
Cash equal to the amount of such Claim, unless the Holder of such Claim and
Reorganized Flagstar agree to a different treatment, on the latest of (a) the
Effective Date or as soon as practicable thereafter, (b) the date such Claim
becomes an Allowed Priority Claim, and (c) the date that such Claim would be
paid in accordance with any terms and conditions of any agreements or
understandings relating thereto between the Debtors and the Holder of such
Claim.
2. Class 4 (Senior Unsecured Claims).
CLASS 4 consists of the Allowed Unsecured Claims of Holders of Old Senior Notes.
Class 4 is Impaired and, accordingly, is entitled to vote on the Plan. Each
Holder will receive a Pro Rata portion of the New Senior Notes representing 100%
of the principal amount of the Old Senior Notes currently outstanding and
accrued interest thereon through the Effective Date (subject to the right of
Reorganized Flagstar to pay cash for interest accrued through the Effective
Date); provided, however, that if the Class of Holders of Old Senior Notes does
not consent to the Plan, the Old Senior Notes shall either be, in the sole
discretion of Reorganized Flagstar, unimpaired (with no change to the interest
rates, maturity dates or other terms or provisions of the Old Senior Notes) or
exchanged for New Senior Notes which will bear interest at a rate which the
Bankruptcy Court finds appropriate under the cramdown provisions of 11 U.S.C.
Section 1129(b) (with a maturity date and having other terms and provisions set
forth herein for the New Senior Notes). Class 4 will consist of Claims in
respect of the Old Senior Notes, including an aggregate principal amount of $550
million and aggregate
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accrued and unpaid interest of $16 million through, but not including, the
Petition Date (assuming the Petition Date occurs on July 31, 1997).
3. Class 5 (Senior Subordinated Claims).
CLASS 5 consists of Allowed Unsecured Claims of Holders of Senior Subordinated
Debentures. Class 5 is Impaired and, accordingly, is entitled to vote on the
Plan. On the Effective Date or as soon as practicable thereafter, each Holder of
an Allowed Class 5 Claim will receive on account of the unpaid principal amount
plus unpaid interest which accrued prior to the Petition Date on its Senior
Subordinated Debentures, 44.986 shares of New Common Stock for each $1,000 of
11.25% Debentures and 45.614 shares of New Common Stock for each $1,000 of 11
3/8% Senior Debentures which it holds. Holders of Allowed Senior Subordinated
Claims will receive in the aggregate, on a Pro Rata basis, 95.5% of the New
Common Stock to be issued and outstanding on the Effective Date.
4. Class 6 (10% Convertible Claims)
CLASS 6 consists of Allowed Unsecured Claims of Holders of 10% Convertible
Debentures. Class 6 is Impaired and, accordingly, is entitled to vote on the
Plan. On the Effective Date or as soon as practicable thereafter each Holder of
an Allowed Class 6 Claim will receive on account of the unpaid principal amount
plus all unpaid interest which accrued prior to the Petition Date on its 10%
Convertible Debentures, (x) 18.134 shares of New Common Stock and (y) its Pro
Rata share of New Warrants for each $1,000 of 10% Convertible Debentures which
it holds. Holders of Allowed 10% Convertible Claims will receive in the
aggregate, on a Pro Rata basis, (i) 4.50% of the New Common Stock to be issued
and outstanding on the Effective Date and (ii) the New Warrants.
In the event that Class 6 does not accept the Plan, then no Holder of any Claim
or Interest junior to the Allowed Class 6 Claims shall receive or retain any
interest or property under the Plan.
5. Classes 7A and 7B (General Unsecured Claims).
Classes 7A and 7B (collectively, "Class 7") are Unimpaired. Class 7A consists of
all Claims against Flagstar and Class 7B consists of all Claims against FCI,
except Administrative Claims, Priority Tax Claims and Claims in Classes 1
through 6, and including, but not limited to, Claims resulting from the
rejection of leases or executory contracts.
Unless otherwise agreed to by the parties, the legal, equitable and contractual
rights of each Holder of an Allowed Claim in Class 7 will either (a) not be
altered by this Plan or (b) at the option of the Debtors, receive such other
treatment that will result in such Allowed Claim being deemed Unimpaired.
Class 7 also includes Trade Claims. As set forth in IV.E.1 below, the Debtors
intend to seek Bankruptcy Court approval to pay in the ordinary course of
business all outstanding Trade Claims to trade creditors who continue to provide
normal trade credit terms to or have reinstated normal trade credit terms for
the Company or who have previously agreed to compromise their Claims in a manner
acceptable to the Debtor. In any event, all Allowed Claims in Class 7 that have
become due and owing on or before the Effective Date (unless previously paid
during the Reorganization Cases) will be paid in full, in Cash (with interest,
to the extent permitted by the Bankruptcy Court), on, or as soon as practicable
after the Effective Date, or at such other time as is mutually agreed upon by
the Debtors and the Holder of such Claim, or if not due and owing on the
Effective Date, such Trade Claims shall be Reinstated and paid in full in
accordance with their respective terms or otherwise rendered Unimpaired.
Allowed Claims in Class 7 are not Impaired and will be deemed to have accepted
the Plan. Holders of Claims in Class 7 are not required to file proofs of claim
with the Bankruptcy Court and no bar date will be enforced as to such Claims.
D. Interests.
1. Class 8 (Interests of Holders of Old FCI Preferred Stock).
CLASS 8 consists of the Allowed Interests of Holders of Old FCI Preferred Stock.
No Holder of any Claim or Interest in this Class 8 shall receive or retain any
interest or property under the Plan. Class 8 is Impaired and therefore is deemed
to have rejected the Plan.
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2. Class 9 (Interests of Holders of Old FCI Common Stock).
CLASS 9 consists of the Allowed Interests of Holders of Old FCI Common Stock. No
holder of any Claim or Interest in Class 9 shall receive or retain any interest
or property under the Plan. Class 9 is Impaired and therefore is deemed to have
rejected the Plan.
3. Class 10 (Interests of Holders of Old Stock Rights and all Claims
Arising out of Such Old Stock Rights).
CLASS 10 consists of Interests of Holders of Old Stock Rights and all Claims
arising out of any such Old Stock Rights, including, without limitation, all
Claims arising out of the rejection of Old Stock Rights. The Holders of Allowed
Class 10 Interests, if any, shall not receive any interests or property on
account of their Interests. Class 10 is Impaired and is deemed to have rejected
the Plan. Accordingly, Class 10 is not entitled to vote on the Plan.
4. Class 11 (Securities Claims).
CLASS 11 consists of Securities Claims (if any exist). Although Class 11 is
Impaired under the Plan, the votes of Holders of Class 11 Claims (if any) are
not being solicited: if there are any such claims, the Debtors intend to seek to
cram down Class 11 pursuant to Section 1129(b) of the Bankruptcy Code. Any
Allowed Securities Claims arising from Old FCI Common Stock shall be treated
with the same priority as the Old FCI Common Stock pursuant to Section 510(b) of
the Bankruptcy Code. Accordingly, Holders of such Claims shall not receive or
retain any interest or property under the Plan. Class 11 is impaired and
therefore is deemed to have rejected the Plan. The Debtors are currently unaware
of any Securities Claims.
5. Class 12 (FCI's 100% Ownership Interest in Flagstar).
CLASS 12 consists of Interests of FCI arising from its 100% ownership interest
in Flagstar. Because FCI and Flagstar will be merged pursuant to this Plan,
Class 12 is Impaired.
E. Treatment of Trade Creditors and Employees Under the Plan.
1. Treatment of Trade Claims.
Trade Claims are Unimpaired and will be paid in full under the Plan.
Notwithstanding provisions of the Bankruptcy Code that may defer payment of the
Trade Claims until the effectiveness of the Plan, the Debtors have sought or
will seek simultaneously with the Filing of this Plan authority from the
Bankruptcy Court to immediately pay Holders of Trade Claims arising in the
ordinary course who, following commencement of the Reorganization Cases, agree
to continue to provide the Company with customary trade terms or to reinstate
customary trade terms or who have previously agreed to compromise their Claims
in a manner acceptable to the Debtors.
Holders of Trade Claims will not be required to file proofs of claim with the
Bankruptcy Court and no bar date will be enforced as to such Trade Claims. On
and after the Effective Date, all undisputed, noncontingent and liquidated Trade
Claims not already paid will be paid in full or in the ordinary course of
business of Reorganized Flagstar. If the Company or Reorganized Flagstar
disputes any Trade Claim, such dispute will be determined, resolved or
adjudicated, as the case may be, in the manner in which such dispute would have
been determined, resolved or adjudicated if the Reorganization Cases had not
been commenced, and will survive the Effective Date and the consummation of the
Plan as if the Reorganization Cases had not been commenced.
Any Claim arising from the rejection of an executory contract or unexpired lease
under the Plan shall not be treated as a Trade Claim, will be determined in
accordance with the procedures set forth in Section VII.D. hereof, and will be
paid as a Class 7 Claim when and to the extent such Claim is Allowed by the
Bankruptcy Court.
2. Treatment of Employee Claims.
Employee Claims that accrue pre-petition will receive Unimpaired treatment under
the terms of the Plan. To ensure the continuity of the Debtors' work force and
to further accommodate the Unimpaired treatment of Employee Claims, the Debtors
have sought or simultaneous with the Filing of this Plan will seek immediate
authorization from the Bankruptcy Court to honor payroll checks outstanding as
of the Petition Date (or to issue replacement checks), to permit employees to
utilize paid vacation time accrued prior to the Petition Date (so long as they
remain employees of the Debtors or Reorganized Flagstar) and to continue paying
medical and other benefits under all applicable insurance plans. Employee Claims
and benefits not paid or honored prior to the Effective Date will be paid or
honored upon the Effective Date or as soon thereafter as such payment or other
obligation becomes due or performable. Employees will not be required to file
proofs of claim on account of Employee Claims. If the Company or Reorganized
Flagstar
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disputes any Employee Claim, such dispute will be determined, resolved or
adjudicated, as the case may be, in the manner in which such dispute would have
been determined, resolved or adjudicated if the Reorganization Cases had not
been commenced, and will survive the Effective Date and the consummation of the
Plan as if the Reorganization Cases had not been commenced.
F. Modification of Treatment of Claims.
The Debtors reserve the right to modify the treatment of any Allowed Claim or
Interest in any manner adverse only to the Holder of such Claim or Interest at
any time after the Effective Date upon the consent of the creditor or interest
holder whose Allowed Claim or Interest, as applicable, is being adversely
affected.
G. Registration of New Common Stock.
Each person or entity receiving a distribution of New Common Stock or New
Warrants as of the Effective Date representing at least 10% of the fully diluted
equity interests in Reorganized Flagstar shall have the right to become a party
to the Registration Rights Agreement. The Registration Rights Agreement shall
include, without limitation, the terms and conditions to be negotiated.
H. Listing of New Common Stock.
Reorganized Flagstar shall use its best efforts to cause the shares of New
Common Stock and New Warrants to be listed on the New York Stock Exchange or the
NASDAQ National Market.
V.
DISTRIBUTIONS UNDER THE PLAN
A. Disbursing Agent.
Reorganized Flagstar, or such Person(s) as the Debtors may employ in their sole
discretion, will act as Disbursing Agent under the Plan. The Disbursing Agent
will make all distributions of Cash, New Senior Notes, New Common Stock and New
Warrants required to be distributed under the applicable provisions of the Plan.
Any Disbursing Agent may employ or contract with other entities to assist in or
make the distributions required by the Plan. Each Disbursing Agent will serve
without bond, and each Disbursing Agent, other than Reorganized Flagstar, will
receive, without further Bankruptcy Court approval, reasonable compensation for
distribution services rendered pursuant to the Plan and reimbursement of
reasonable out-of-pocket expenses incurred in connection with such services from
Reorganized Flagstar on terms acceptable to Reorganized Flagstar.
B. Timing of Distributions.
Property to be distributed hereunder on account of Allowed Claims and Allowed
Interests in an Impaired Class (a) shall be distributed on the Effective Date or
as soon as practicable thereafter to each Holder of an Allowed Claim or an
Allowed Interest in that Class that is an Allowed Claim or an Allowed Interest
as of the Effective Date, and (b) shall be distributed to each Holder of an
Allowed Claim or an Allowed Interest of that Class that becomes an Allowed Claim
or Allowed Interest after the Effective Date, as soon as practicable after the
order of the Bankruptcy Court allowing such Claim or Interest becomes a Final
Order. Property to be distributed under the Plan on account of Claims in a Class
that are not Impaired or on account of an Administrative Claim shall be
distributed on the later of (i) the Effective Date or as soon as practicable
thereafter, or if any Claim is not an Allowed Claim, on the date the order
allowing such Claim becomes a Final Order and (ii) the date on which the
distribution to the Holder of the Claim would have been due and payable in the
ordinary course of business or under the terms of the Claim if the
Reorganization Cases had not been commenced.
C. Methods of Distributions.
1. Cash Payments.
Cash payments made pursuant to the Plan will be in U.S. dollars. Cash payments
of $1,000,000 or more to be made pursuant to the Plan will, to the extent
requested in writing no later than five days after the Confirmation Date, be
made by wire transfer from a domestic bank. Cash payments to foreign creditors
may be made, at the option of the Debtors or Reorganized Flagstar, in such funds
and by such means as are necessary or customary in a particular foreign
jurisdiction. Cash payments made pursuant to the Plan in the form of checks
issued by Reorganized Flagstar shall be null and void if not cashed within 90
days of the date of the issuance thereof. Requests for reissuance of any check
shall be made directly to the Disbursing Agent as set forth in Section V.G
below.
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2. Transfers of New Common Stock.
Notwithstanding any other provision of the Plan, only whole numbers of shares of
New Common Stock will be issued or transferred, as the case may be, pursuant to
the Plan. When any distribution on account of an Allowed Claim or Interest
pursuant to the Plan would otherwise result in the issuance or transfer of a
number of shares of New Common Stock that is not a whole number, the actual
distribution of shares of such New Common Stock, will be rounded to the next
higher or lower whole number as follows: (a) fractions of 1/2 or greater will be
rounded to the next higher whole number and (b) fractions of less than 1/2 will
be rounded to the next lower whole number. The total number of shares of New
Common Stock to be distributed to a Class of Claims or Interests, will be
adjusted as necessary to account for the rounding provided for in this Section.
No consideration will be provided in lieu of fractional shares that are rounded
down.
3. Compliance with Tax Requirements.
In connection with the distributions set forth herein, to the extent applicable,
the Disbursing Agent shall comply with all tax withholding and reporting
requirements imposed on it by any governmental unit, and all distributions
pursuant to this Plan will be subject to such withholding and reporting
requirements. The Disbursing Agent will be authorized to take any and all
actions that may be necessary or appropriate to comply with such withholding and
reporting requirements.
Notwithstanding any other provision contained herein: (i) each Holder of an
Allowed Claim or Interest that is to receive a distribution of Cash, New Common
Stock or New Warrants pursuant to the Plan will have sole and exclusive
responsibility for the satisfaction and payment of any tax obligations imposed
by any governmental unit, including income, withholding and other tax
obligations, on account of such distribution; and (ii) no distribution will be
made to or on behalf of such Holder pursuant to the Plan unless and until such
Holder has made arrangements satisfactory to the Disbursing Agent for the
payment and satisfaction of such tax obligations. Any Cash, New Common Stock or
New Warrants to be distributed pursuant to the Plan will, pending the
implementation of such arrangements, be treated as an undeliverable distribution
pursuant to Section V.G of the Plan.
D. Pro Rata Distribution.
Where the Plan provides for Pro Rata distribution, the property to be
distributed under this Plan shall be divided Pro Rata among the Holders of
Allowed Claims or Allowed Interests of the relevant Class.
E. Distribution Record Date.
As of the close of business on the Distribution Record Date, the transfer
registers for the Old Securities maintained by the Debtors, or their respective
agents, will be closed. The Disbursing Agent and its respective agents will have
no obligation to recognize the transfer of any Old Securities occurring after
the Distribution Record Date, and will be entitled for all purposes relating to
this Plan to recognize and deal only with those Holders of record as of the
close of business on the Distribution Record Date.
F. Surrender of Cancelled Debt Instruments or Securities.
As a condition precedent to receiving any distribution pursuant to this Plan on
account of an Allowed Claim or Allowed Interest evidenced by the instruments,
securities or other documentation ("Instruments") cancelled pursuant to Section
IX.B.1, below hereof, the Holder of such Claim or Interest shall tender the
applicable Instruments evidencing such Claim or Interest to the Disbursing Agent
pursuant to a letter of transmittal furnished by the Disbursing Agent. Any Cash,
New Common Stock or New Warrants to be distributed pursuant to this Plan on
account of any such Claim or Interest will, pending such surrender, be treated
as an undeliverable distribution pursuant to Section V.G below.
1. Special Procedures for Lost, Stolen, Mutilated or Destroyed
Instruments.
In addition to any requirements under the Debtors' pre-petition Certificates of
Incorporation or Bylaws, any Holder of a Claim or an Interest evidenced by an
Instrument that has been lost, stolen, mutilated or destroyed will, in lieu of
surrendering such Instrument, deliver to the Disbursing Agent: (a) evidence
satisfactory to the Disbursing Agent of the loss, theft, mutilation or
destruction; and (b) such security or indemnity as may be required by the
Disbursing Agent to hold the Disbursing Agent harmless from any damages,
liabilities or costs incurred in treating such individual as a Holder of an
Instrument. Upon compliance with this Section, the Holder of a Claim or Interest
evidenced by any such lost, stolen, mutilated or destroyed Instrument will, for
all purposes under the Plan, be deemed to have surrendered such Instrument.
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2. Failure to Surrender Cancelled Instrument.
Any Holder of an Instrument that fails to surrender or be deemed to have
surrendered such Instrument within two years after the Effective Date will have
its claim for a distribution pursuant to the Plan on account of such Instrument
discharged and shall be forever barred from asserting any such claim against
Reorganized Flagstar or its property. In such cases, any Cash, New Common Stock
or New Warrants held for distribution on account of such claim will be disposed
of pursuant to the provisions of Section V.G hereof.
G. Undeliverable or Unclaimed Distributions.
Any Person that is entitled to receive a Cash distribution under this Plan but
that fails to cash a check within 90 days of its issuance shall be entitled to
receive a reissued check from Reorganized Flagstar for the amount of the
original check, without any interest, if such person requests the Disbursing
Agent to reissue such check and provides the Disbursing Agent with such
documentation as the Disbursing Agent requests to verify that such Person is
entitled to such check, prior to the second anniversary of the Effective Date.
If a Person fails to cash a check within 90 days of its issuance and fails to
request reissuance of such check prior to the second anniversary of the
Effective Date, such Person shall not be entitled to receive any distribution
under this Plan. If the distribution to any Holder of an Allowed Claim or
Allowed Interest is returned to a Disbursing Agent as undeliverable, no further
distributions will be made to such Holder unless and until the applicable
Disbursing Agent is notified in writing of such Holder's then-current address.
Undeliverable distributions will remain in the possession of the applicable
Disbursing Agent pursuant to Section V.A. of the Plan until such time as a
distribution becomes deliverable. Undeliverable Cash will be held in trust in
segregated bank accounts in the name of the applicable Disbursing Agent for the
benefit of the potential claimants of such funds, and will be accounted for
separately. Any Disbursing Agent holding undeliverable Cash shall invest such
Cash in a manner consistent with the Debtors' investment and deposit guidelines.
Undeliverable New Common Stock and New Warrants will be held in trust for the
benefit of the potential claimants of such securities by the applicable
Disbursing Agent in principal amounts or number of shares sufficient to fund the
unclaimed amounts of such securities and shall be accounted for separately.
Pending the distribution of any New Common Stock, pursuant to the Plan, the
Disbursing Agent will cause the New Common Stock held by it in its capacity as
Disbursing Agent to be: (A) represented in person or by proxy at each meeting of
the stockholders of Reorganized Flagstar; and (B) voted with respect to any
matter of Reorganized Flagstar, proportionally with the votes cast by other
stockholders of Reorganized Flagstar.
H. Objections to Claims and Authority to Prosecute Objections; Claims
Resolution.
1. Generally.
Except as otherwise provided in paragraph H.2 below and except as otherwise
ordered by the Bankruptcy Court after notice and a hearing, objections to
Claims, including without limitation Administrative Claims, shall be Filed and
served upon the Holder of such Claim or Administrative Claim no later than the
later of (a) 60 days after the Effective Date, and (b) 60 days after a proof of
claim or request for payment of such Claim is Filed, unless this period is
extended by the Bankruptcy Court; such extension may be granted on an ex parte
basis without notice or hearing. After the Confirmation Date, only the Debtors
and Reorganized Flagstar will have the authority to File objections, settle,
compromise, withdraw or litigate to judgment objections to Claims and Interests.
From and after the Confirmation Date, the Debtors and Reorganized Flagstar may
settle or compromise any Disputed Claim or Disputed Interest without approval of
the Bankruptcy Court.
2. Professionals, Administration Claims, Trade Claims and Employee
Claims.
Except as otherwise ordered by the Bankruptcy Court, objections to claims of
professionals shall be governed by the provisions of section IV.A.1.d(2) hereof.
Objections to Administrative Claims based upon ordinary course liabilities,
Trade Claims and Employee Claims shall be governed by applicable law as if the
Reorganization Cases had not been commenced.
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I. Disputed Claims; Reserve and Estimations.
1. Treatment of Disputed Claims.
Notwithstanding any other provisions of this Plan, no payments or distributions
will be made on account of a Disputed Claim or a Disputed Interest until such
Claim or Interest becomes an Allowed Claim or Allowed Interest. Prior to the
Petition Date, the Debtors will deliver Stipulations of Amount and Nature of
Claim to the Holders of Bank Claims and the Indenture Trustees. Such
Stipulations, once executed and to the extent unpaid, will be treated as Allowed
Claims as of the Petition Date in the amounts set forth in such Stipulation of
Amount and Nature of Claim and will not be treated as Disputed Claims. The
Debtors or Reorganized Flagstar may, at any time, request that the Bankruptcy
Court estimate any contingent or unliquidated Claim pursuant to section 502(c)
of the Bankruptcy Code, irrespective of whether the Debtors or Reorganized
Flagstar has previously objected to such Claim or whether the Bankruptcy Court
has ruled on any such objection unless such ruling has become a final order. The
Bankruptcy Court will retain jurisdiction to estimate any contingent or
unliquidated Claim at any time during litigation concerning any objection to the
Claim, including during the pendency of any appeal relating to any such
objection. If the Bankruptcy Court estimates any contingent or unliquidated
Claim, that estimated amount will constitute either the amount of such Allowed
Claim or a maximum limitation on such Claim, as determined by the Bankruptcy
Court. If the estimated amount constitutes a maximum limitation on such Claim,
the Debtors or Reorganized Flagstar may elect to pursue any supplemental
proceedings to object to any ultimate payment on account of such Claim. All of
these Claims objection, estimation and resolution procedures are cumulative and
not necessarily exclusive of one another. In addition to seeking estimation of
Claims as provided in this Section, the Debtors or Reorganized Flagstar may
resolve or adjudicate certain Disputed Claims of Holders in Unimpaired Classes
in the manner in which the amount of such Claim and the rights of the Holder of
such Claim would have been resolved or adjudicated if the Reorganization Cases
had not been commenced, provided, however, that the amount of such claim and the
remedies available shall not be limited by the discharge and other applicable
bankruptcy law. Claims may be subsequently compromised, settled, withdrawn or
resolved by the Debtors or Reorganized Flagstar pursuant to Section H hereof.
2. Distributions on Account of Disputed Claims Once They are Allowed.
Within 30 days after the end of each calendar quarter following the Effective
Date, the applicable Disbursing Agent will make all distributions on account of
any Disputed Claim or Disputed Interest that has become an Allowed Claim or
Allowed Interest during the preceding calendar quarter. Such distributions will
be made pursuant to the provisions of the Plan governing the applicable Class.
Holders of Disputed Claims or Disputed Interests that are ultimately allowed
will also be entitled to receive, on the basis of the amount ultimately allowed:
(i) matured and payable interest, if any, at the rate provided for the Class to
which such Claim belongs; and (ii) any dividends or other payments made on
account of New Common Stock held pending distribution.
J. Setoffs.
Except with respect to claims of the Debtors or Reorganized Flagstar released
pursuant to the Plan or any contract, instrument, release, indenture or other
agreement or document created in connection with the Plan, the Debtors or
Reorganized Flagstar may, pursuant to section 553 of the Bankruptcy Code or
applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of such Claim (before
any distribution is made on account of such Claim), the claims, rights and
causes of action of any nature that the Debtors or Reorganized Flagstar may hold
against the Holder of such Allowed Claim; provided, however, that neither the
failure to effect such a setoff nor the Allowance of any Claim hereunder will
constitute a waiver or release by the Debtors or Reorganized Flagstar of any
such claims, rights and causes of action that the Debtors or Reorganized
Flagstar may possess against such Holder. Furthermore, the Claims in Classes 4,
5 and 6 of the Plan shall not be subject to offset, counterclaim,
reconsideration or recoupment.
K. Termination of Subordination.
The classification and manner of satisfying all Claims and Interests under the
Plan take into consideration all contractual, legal and equitable subordination
rights, whether arising under general principles of equitable subordination,
section 510(c) of the Bankruptcy Code or otherwise, that a Holder of a Claim or
Interest may have against other Claim or Interest Holders with respect to any
distribution made pursuant to this Plan. On the Confirmation Date, all
contractual, legal or equitable subordination rights that a Holder of a Claim or
Interest may have with respect to any distribution to be made pursuant to this
Plan will be discharged and terminated, and all actions related to the
enforcement of such subordination rights will be permanently enjoined.
Accordingly, distributions pursuant to the Plan to Holders of Allowed Claims and
Allowed Interests shall not be subject to payment to a beneficiary of such
terminated subordination rights, or to levy, garnishment, attachment or other
legal process by any beneficiary of such terminated subordination rights.
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VI.
INDIVIDUAL HOLDER PROOFS OF INTEREST
Individual Holders of Interests in Classes 8 and 9 are not required to File
proofs of Interests unless they disagree with the number of shares set forth on
the Debtors' stock register.
VII.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. Assumptions.
Except as otherwise provided herein, or in any contract, instrument, release,
indenture or other agreement or document entered into in connection with this
Plan, on the Effective Date, pursuant to section 365 of the Bankruptcy Code, the
Debtors will assume each executory contract and unexpired lease entered into by
the Debtors prior to the Petition Date that has not previously (a) expired or
terminated pursuant to its own terms or (b) been assumed or rejected pursuant to
section 365 of the Bankruptcy Code. The Confirmation Order will constitute an
Order of the Bankruptcy Court approving the assumptions described in this
Section, pursuant to section 365 of the Bankruptcy Code, as of the Effective
Date.
B. Cure of Defaults in Connection with Assumption.
Any monetary amounts by which each executory contract and unexpired lease to be
assumed pursuant to the Plan is in default will be satisfied, pursuant to
section 365(b)(1) of the Bankruptcy Code, at the option of the Debtors or
Reorganized Flagstar: (a) by payment of the default amount in Cash on the
Effective Date or as soon as practicable thereafter or (b) on such other terms
as are agreed to by the parties to such executory contract or unexpired lease.
If there is a dispute regarding:
(i) the amount of any cure payments; (ii) the ability of Reorganized Flagstar to
provide "adequate assurance of future performance" (within the meaning of
section 365 of the Bankruptcy Code) under the contract or lease to be assumed;
or (iii) any other matter pertaining to assumption, the cure payments required
by section 365(b)(1) of the Bankruptcy Code will be made following the entry of
a Final Order resolving the dispute and approving the assumption.
C. Rejections.
Except as otherwise provided herein or in any contract, instrument, release,
indenture or other agreement or document entered into in connection with the
Plan, on the Effective Date, pursuant to section 365 of the Bankruptcy Code, the
Debtors will reject each of the executory contracts and unexpired leases listed
on a schedule to be filed prior to the Confirmation Hearing (the "Schedule")
hereto; provided, however, that the Debtors reserve the right, at any time prior
to the Effective Date, to amend such schedule to delete any executory contract
or unexpired lease listed therein, thus providing for its assumption pursuant to
Sections VII A and B above. Each contract and lease listed on the Schedule will
be rejected only to the extent that any such contract or lease constitutes an
executory contract or unexpired lease. Listing a contract or lease on the
Schedule does not constitute an admission by the Debtors or Reorganized Flagstar
that such contract or lease is an executory contract or unexpired lease or that
the Debtors or Reorganized Flagstar has any liability thereunder. The
Confirmation Order shall constitute an Order of the Bankruptcy Court approving
such rejections, pursuant to section 365 of the Bankruptcy Code, as of the
Effective Date.
D. Bar Date for Rejection Damages.
If the rejection of an executory contract or unexpired lease pursuant to the
preceding Section gives rise to a Claim by the other party or parties to such
contract or lease, such Claim shall be forever barred and shall not be
enforceable against the Debtors, Reorganized Flagstar, their successors or
properties unless (a) a Stipulation of Amount and Nature of Claim has been
entered into with respect to the rejection of such executory contract or
unexpired lease or (b) a proof of Claim is Filed and served on Reorganized
Flagstar and counsel for Reorganized Flagstar within 30 days after the Effective
Date or such earlier date as established by the Bankruptcy Court.
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VIII.
ACCEPTANCE OR REJECTION OF THIS PLAN
A. Voting Classes.
The Holders of Allowed Claims in Classes 4, 5 and 6 are Impaired and shall be
entitled to vote to accept or reject the Plan.
B. Presumed Acceptance of Plan.
The Holders of Allowed Claims and Interests in Classes 1, 2, 3 and 7 are not
Impaired under the Plan, and therefore are conclusively presumed to accept the
Plan.
C. Presumed Rejections of Plan.
(a) Because Class 6 voted to reject the Debtors' Joint Plan of
Reorganization filed with the Court on July 11, 1997 (the "Original
Plan") Holders of Claims and Interests in Classes 8, 9, 10, 11 and 12
were not entitled to receive or retain any property under the Original
Plan. Because such rejection of the Original Plan constitutes a
rejection of this Plan, Holders of Claims and Interests in Classes 8,
9, 10, 11 and 12 are not entitled to receive or retain any property
under the Plan.
(b) Classes 8, 9, 10, 11 and 12 will not be entitled to receive or
retain any property under this Plan, and pursuant to Section 1126(g) of
the Bankruptcy Code, are deemed not to have accepted this Plan.
D. Voting Instructions.
Each Holder of an Allowed Claim or an Allowed Interest entitled to vote on the
Plan will receive a Ballot. The Ballot will contain two boxes, one indicating
acceptance of the Plan and the other indicating rejection of the Plan. Holders
of Allowed Claims or Allowed Interests who elect to vote on the Plan must mark
one or the other box pursuant to the instructions contained on the Ballot. Any
executed Ballot that does not indicate acceptance or rejection of the Plan will
be considered a non-vote and will not be counted as an acceptance or rejection
of the Plan.
E. Voting Deadline And Extensions.
THE VOTING DEADLINE IS MONDAY, JULY 7, 1997, 12:00 MIDNIGHT, EASTERN TIME.
Ballots must be received by the Debtors at their address set forth on the
applicable Ballot. To be counted for purposes of voting on the Plan, all of the
information requested on the applicable Ballot must be provided. The Debtors
reserve the right, in their sole discretion (after consultation with the Ad Hoc
Debentureholders Committee), to extend the Voting Deadline, in which case the
term "Voting Deadline" shall mean the latest date on which a Ballot will be
accepted. To extend the Voting Deadline, the Debtors will make an announcement
thereof (via a press release), prior to 9:00 a.m., Eastern Daylight Time, not
later than the next business day immediately preceding the previously scheduled
Voting Deadline. Such announcement may state that the Debtors are extending the
Voting Deadline for a specified period of time or on a daily basis until 5:00
p.m., Eastern Daylight Time, on the date on which sufficient acceptances
required to obtain Confirmation of the Plan have been received.
F. Confirmability of Plan and Cramdown.
In the event at least one Impaired Class of Claims votes to accept the Plan (and
at least one Impaired Class either votes to reject the Plan or is deemed to have
rejected the Plan), the Debtors reserve the right to request the Bankruptcy
Court to confirm the Plan under the cramdown provisions of the Bankruptcy Code.
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IX.
MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN
A. Merger.
On the Effective Date, Flagstar will merge with and into FCI, with the surviving
corporation having the name of "Flagstar Corporation."
B. Corporate Action.
1. Cancellation of Old Securities and Related Agreements.
On the Effective Date, the Old Securities and the Old Stock Rights, and all
obligations of the Debtors under all of the foregoing, shall be terminated,
canceled and extinguished.
2. Certificate of Incorporation and Bylaw Amendments.
On the Effective Date, Reorganized Flagstar shall adopt the Reorganized Flagstar
Certificate of Incorporation and the Reorganized Flagstar Bylaws pursuant to
applicable non-bankruptcy law and section 1123(a)(5)(I) of the Bankruptcy Code.
The Reorganized Flagstar Certificate of Incorporation and the Reorganized
Flagstar Bylaws will, among other provisions: (i) authorize the issuance of the
New Common Stock; and (ii) prohibit the issuance of nonvoting equity securities
to the extent required by section 1123(a)(6) of the Bankruptcy Code. The
Reorganized Flagstar Certificate of Incorporation and the Reorganized Flagstar
Bylaws will become effective upon the last to occur of the following: (1)
Confirmation of the Plan, (2) the occurrence of the Effective Date and (3) the
filing with the Delaware Secretary of State of the Reorganized Flagstar
Certificate of Incorporation.
3. Management of Reorganized Flagstar.
As of the Effective Date, the Persons identified on the Exhibit filed with the
Bankruptcy Court on or prior to the Confirmation Date will serve as the initial
members of the Board of Directors of Reorganized Flagstar. Such Persons shall be
deemed elected to the Board of Directors, and such elections shall be deemed
effective as of the Effective Date, without any requirement of further action by
stockholders of the Debtors or Reorganized Flagstar. The Persons identified as
such in the Disclosure Statement will serve as the initial officers of
Reorganized Flagstar as of the Effective Date. Subject to any requirement of
Bankruptcy Court approval under Section 1129(a)(5) of the Bankruptcy Code, those
persons designated as directors and officers of Reorganized Flagstar in the
Disclosure Statement and an Exhibit to be filed with the Bankruptcy Court on or
prior to the Confirmation Date shall assume their offices as of the Effective
Date and shall continue to serve in such capacities thereafter, pending further
action of the Board of Directors or stockholders of Reorganized Flagstar in
accordance with the Reorganized Flagstar Bylaws, Reorganized Flagstar
Certificate and applicable state law.
C. New Credit Agreement.
The Debtors anticipate entering into a bank facility from and after the
Effective Date.
D. Implementation.
The Debtors shall be authorized to take all necessary steps, and perform all
necessary acts, to consummate the terms and conditions of the Plan. On or before
the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
or further evidence the terms and conditions of this Plan and the other
agreements referred to herein.
E. Other Documents and Actions.
The Debtors and Reorganized Flagstar may, and shall, execute such documents and
take such other actions as are necessary to effectuate the transactions provided
for in the Plan.
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F. Payment of Statutory Fees.
All fees payable pursuant to 28 U.S.C. Section 1930 (U.S. Trustee Fees) as
determined by the Bankruptcy Court at the Confirmation Hearing shall be paid by
the Debtors on or before the Effective Date.
G. Term of Injunctions or Stays.
Unless otherwise provided, all injunctions or stays imposed in the
Reorganization Cases pursuant to Sections 105 and 362 of the Bankruptcy Code or
otherwise and in effect on the Confirmation Date shall remain in full force and
effect until the Effective Date.
H. No Interest.
Except as expressly provided herein, no Holder of an Allowed Class or Allowed
Interest shall receive interest on the distribution to which such Holder is
entitled hereunder, regardless of whether such distribution is made on the
Effective Date or thereafter.
I. Retiree Benefits.
On and after the Effective Date, to the extent required by section 1129(a)(13)
of the Bankruptcy Code, Reorganized Flagstar shall continue to pay all retiree
benefits (if any), as the term "retiree benefits" is defined in section 1114(a)
of the Bankruptcy Code, maintained or established by the Debtors prior to the
Confirmation Date.
J. Issuance of New Securities.
The issuance of the following securities by Reorganized Flagstar is hereby
authorized and directed without further act or action under applicable law,
regulation, order or rule:
(a) 100,000,000 shares of New Common Stock, of which approximately
40,000,000 shares shall be issued and distributed pursuant to the
Plan;
(b) the New Warrants; and
(c) the New Senior Notes.
X.
CONFIRMATION AND EFFECTIVE DATE CONDITIONS
A. Conditions to Confirmation.
Confirmation of this Plan cannot occur until all of the substantive confirmation
requirements under the Bankruptcy Code have been satisfied pursuant to section
1129 of the Bankruptcy Code. In addition, the Bankruptcy Court will not enter
the Confirmation Order unless the Confirmation Order is acceptable in form and
substance to the Debtors (after consultation with the Ad Hoc Debentureholders
Committee), and the Confirmation Order expressly authorizes and directs the
Debtors and Reorganized Flagstar to perform those actions specified herein.
Finally, it shall be a condition to Confirmation that each of the events and
actions required by the Plan to occur or to be taken prior to Confirmation shall
have occurred or be taken, or the Debtors (after consultation with the Ad Hoc
Debentureholders Committee), or the party whose obligations are conditioned by
such occurrences or actions, as applicable, shall have waived such occurrences
or action and the Bankruptcy Court shall confirm the Plan without such
occurrence or action.
B. Conditions to Effective Date.
The Effective Date will not occur and the Plan will not be consummated unless
and until each of the following conditions has been satisfied or waived by the
Debtors (after consultation with the Ad Hoc Debentureholders Committee and the
Creditors' Committee):
(i) The Confirmation Order shall authorize and direct that the Debtors
and Reorganized Flagstar take all actions necessary or appropriate to
enter into, implement and consummate the contracts, instruments,
releases, leases, indentures and other agreements or documents created
in connection with the Plan, including those actions contemplated by
the provisions of this Plan set forth in Section XI hereof.
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(ii) The Confirmation Order shall have become a Final Order.
(iii) The lenders under the New Credit Facility shall be obligated to
fund the New Credit Facility on terms acceptable to the Debtors.
(iv) The statutory fees owing the U.S. Trustee shall have been paid
in full.
(v) All other actions and documents necessary to implement the
provisions of the Plan shall have been effected or executed or, if
waivable, waived by the Person or Persons entitled to the benefit
thereof.
C. Waiver of Conditions to Confirmation and Effective Date.
Each of the conditions to Confirmation and the Effective Date, other than the
conditions set forth in Section X.B.iv of the Plan, may be waived in whole or in
part by the Debtors at any time (after consultation with the Ad Hoc
Debentureholders Committee and the Creditors' Committee), without notice or an
Order of the Bankruptcy Court. The failure to satisfy or to waive any condition
may be asserted by the Debtors regardless of the circumstances giving rise to
failure of such condition to be satisfied (including any action or inaction by
the Debtors). The failure of the Debtors to exercise any of the foregoing rights
will not be deemed a waiver of any other rights and each such right will be
deemed an ongoing right that may be asserted at any time.
If each condition to the Effective Date has not been satisfied or duly waived
within 90 days after the Confirmation Date, then (unless the period for
satisfaction or waiver of conditions has been extended at the option of the
Debtors after consultation with the Ad Hoc Debentureholders Committee for a
period not exceeding 120 days) upon motion by any party in interest, made before
the time that each of the conditions has been satisfied or duly waived and upon
notice to such parties in interest as the Bankruptcy Court may direct, the
Confirmation Order will be vacated by the Bankruptcy Court; provided, however
that notwithstanding the Filing of such motion, the Confirmation Order may not
be vacated if each of the conditions to the Effective Date is either satisfied
or duly waived before the Clerk enters a Final Order granting such motion. If
the Confirmation Order is vacated pursuant to this Section, the Plan shall be
deemed null and void in all respects, including without limitation the discharge
of Claims and termination of Interests pursuant to section 1141 of the
Bankruptcy Code and the assumptions or rejections of executory contracts and
unexpired leases provided for herein, and nothing contained herein shall (1)
constitute a waiver or release of any claims by or against, or any interests in,
the Debtors or (2) prejudice in any manner the rights of the Debtors.
XI.
EFFECTS OF PLAN CONFIRMATION
A. Discharge of Debtors and Injunction.
Except as otherwise provided in the Plan or the Confirmation Order: (i) on the
Effective Date, the Debtors shall be deemed discharged and released to the
fullest extent permitted by section 1141 of the Bankruptcy Code from all Claims
and Interests, including, but not limited to, demands, liabilities, Claims and
Interests that arose before the Confirmation Date and all debts of the kind
specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether
or not: (A) a proof of Claim or proof of Interest based on such debt or Interest
is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code, (B) a
Claim or Interest based on such debt or Interest is allowed pursuant to section
502 of the Bankruptcy Code or (C) the Holder of a Claim or Interest based on
such debt or Interest has accepted the Plan; and (ii) all Persons shall be
precluded from asserting against Reorganized Flagstar, its successors, or its
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 Confirmation Date. Except as otherwise provided in the Plan or the
Confirmation Order, the Confirmation Order shall act as a discharge of any and
all Claims against and all debts and liabilities of the Debtors, as provided in
sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void any
judgment against the Debtors at any time obtained to the extent that it relates
to a Claim discharged.
Except as otherwise provided in the Plan or the Confirmation Order, on and after
the Effective Date, all Persons who have held, currently hold or may hold a
debt, Claim or Interest discharged pursuant to the terms of the Plan are
permanently enjoined from taking any of the following actions on account of any
such discharged debt, Claim or Interest: (i) commencing or continuing in any
manner any action or other proceeding against the Debtors or Reorganized
Flagstar or their successors or their respective properties; (ii) enforcing,
attaching, collecting or recovering in any manner any judgment, award, decree or
order against the Debtors or Reorganized Flagstar, or their successors or their
respective properties; (iii) creating, perfecting or enforcing any lien or
encumbrance against the Debtors or Reorganized Flagstar, or their successors or
their respective properties; and (iv) commencing or continuing any action, in
any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan or the Confirmation Order. Any
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Person injured by any willful violation of such injunction shall recover actual
damages, including costs and attorneys' fees, and, in appropriate circumstances,
may recover punitive damages, from the willful violator.
B. Limitation of Liability.
Neither the Debtors nor Reorganized Flagstar, the Ad Hoc Debentureholders
Committee, the Informal Committee of Senior Noteholders, and the Creditors'
Committee nor any of their respective post-Petition Date employees, officers,
directors, agents, or representatives, or any professional persons employed by
any of them (including without limitation their respective Designated
Professionals), shall have any responsibility, or have or incur any liability,
to any Person whatsoever, (i) for any matter expressly approved or directed by
the Confirmation Order or (ii) under any theory of liability (except for any
claim based upon wilful misconduct or gross negligence), for any act taken or
omission made in good faith directly related to formulating, implementing,
confirming, or consummating the Plan, the Disclosure Statement, or any contract,
instrument, release, or other agreement or document created in connection with
the Plan, provided that nothing in this paragraph shall limit the liability of
any Person for breach of any express obligation it has under the terms of this
Plan or under any agreement or other document entered into by such Person either
post-petition or in accordance with the terms of this Plan (except to the extent
expressly provided in the Confirmation Order) or for any breach of a duty of
care owed to any other Person occurring after the Effective Date.
C. Releases.
On the Effective Date, the Company will release unconditionally, and hereby is
deemed to release unconditionally (i) each of the Company's officers, directors,
shareholders, employees, consultants, attorneys, accountants, financial advisors
and other representatives (including without limitation their respective
Designated Professionals), (ii) the Creditors' Committee and, solely in their
capacity as members or representatives of the Creditors' Committee, each member,
consultant, attorney, accountant or other representative of the Creditors'
Committee (including without limitation their respective Designated
Professionals), (iii) the Ad Hoc Debentureholders Committee and, solely in their
capacity as members or representatives of the Ad Hoc Debentureholders Committee,
each member, consultant, attorney, accountant or other representative of the Ad
Hoc Debentureholders Committee (including without limitation their respective
Designated Professionals), (iv) the Informal Committee of Holders of Senior
Notes and, solely in their respective capacity as members or representatives of
the Informal Committee of Holders of Senior Notes, each member, consultant,
attorney, accountant or other representative of the Informal Committee of
Holders of Senior Notes (including without limitation their respective
Designated Professionals) and (v) the Indenture Trustees, in their respective
capacity as Indenture Trustee (the entities specified in clauses (i), (ii),
(iii), (iv) and (v) are referred to collectively as the "Releasees"), from any
and all claims, obligations, suits, judgments, damages, rights, causes of action
and liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, based on whole or in
part upon any act or omission, transaction, event or other occurrence taking
place on or prior to the Effective Date in any way relating to the Releasees,
the Company, its trust indentures, the Reorganization Cases or the Plan.
On the Effective Date, each holder of a Claim or Interest shall be deemed to
have unconditionally released the Releasees, from any and all rights, claims,
causes of action, obligations, suits, judgments, damages and liabilities
whatsoever which any such holder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or before the Effective Date in any
way relating to the Company, its trust indentures, the Reorganization Cases or
the Plan.
D. Indemnification.
The obligations of the Debtors as of the Petition Date to indemnify their
present, and any individuals who formerly were, directors or officers,
respectively, against any obligations pursuant to the Debtors' certificates of
incorporation, by-laws, applicable state law or specific agreement, or any
combination of the foregoing, shall survive confirmation of the Plan, remain
unaffected thereby, be assumed by Reorganized Flagstar and not be discharged.
The Debtors shall fully indemnify and Reorganized Flagstar shall assume the
Debtors' obligations to indemnify any person by reason of the fact that he or
she is or was a director, officer, employee or agent, Designated Professional,
member of other authorized representative of either of the Debtors, the
Creditors Committee, the Ad Hoc Debentureholders Committee, the Informal
Committee of Holders of Senior Notes or the Indenture Trustees (the
"Indemnitees") against any claims, liabilities, actions, suits, damages, fines,
judgments or expenses (including reasonable attorney's fees), arising during the
course of, or otherwise in connection with or in any way related to, the
negotiation, preparation, formulation, solicitation, dissemination,
implementation, confirmation and consummation of the Plan and the transactions
contemplated thereby; provided, however, that the foregoing indemnification
shall not apply to any liabilities arising from the gross negligence or wilful
misconduct of any Indemnitee. If any claim, action or proceeding is brought or
asserted against an Indemnitee in respect of which indemnity may be sought from
Reorganized Flagstar, the Indemnitee shall promptly notify Reorganized Flagstar
in writing and Reorganized Flagstar shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnitee, and the
payment of all expenses. The Indemnitee shall have the right to employ separate
counsel in any such claim, action or proceeding and to participate
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in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnitee unless (a) Reorganized Flagstar has agreed to pay
the fees and expenses of such counsel, or (b) Reorganized Flagstar shall have
failed promptly to assume the defense of such claim, action or proceeding and
employ counsel reasonably satisfactory to the Indemnitee in any such claim,
action or proceeding, or (c) the named parties to any such claim, action or
proceeding (including any impleaded parties) include both the Indemnitee and
Reorganized Flagstar, and the Indemnitee believes, in the exercise of its
business judgment and in the opinion of its legal counsel, reasonably
satisfactory to Reorganized Flagstar, that the joint representation of
Reorganized Flagstar and the Indemnitee will likely result in a conflict of
interest (in which case, if the Indemnitee notifies Reorganized Flagstar in
writing that it elects to employ separate counsel at the expense of Reorganized
Flagstar, Reorganized Flagstar shall not the right to assume the defense of such
action or proceeding on behalf of the Indemnitee). In addition, Reorganized
Flagstar shall not effect any settlement or release from liability in connection
with any matter for which the Indemnitee would have the right to indemnification
from Reorganized Flagstar, unless such settlement contains a full and
unconditional release of the Indemnitee, or a release of the Indemnitee
reasonably satisfactory in form and substance to the Indemnitee.
E. Vesting of Assets.
Except as otherwise provided in any provision of the Plan, on the Effective
Date, all property of the Estates shall vest in Reorganized Flagstar, all free
and clear of all Claims, liens, encumbrances and Interests of Holders of Claims
and Holders of Old Securities and Old Stock Rights. From and after the Effective
Date, Reorganized Flagstar may operate its business and use, acquire, and
dispose of property and settle and compromise claims or interests arising
post-Confirmation without supervision by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code, the Bankruptcy Rules or the Local
Bankruptcy Rules, other than those restrictions expressly imposed by the Plan
and the Confirmation Order.
F. Preservation of Causes of Action.
Except as otherwise provided herein, or in any contract, instrument, release, or
other agreement entered into in connection with the Plan, in accordance with
section 1123(b) of the Bankruptcy Code, Reorganized Flagstar shall retain (and
may enforce) any claims, rights and causes of action that the Debtors or the
Estates may hold against any Person, including, inter alia, any claims, rights
or causes of action under sections 544 through 550 of the Bankruptcy Code or any
similar provisions of state law, or any other statute or legal theory.
G. Retention of Bankruptcy Court Jurisdiction.
Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, the Bankruptcy Court will retain such jurisdiction over the
Reorganization Cases after the Effective Date, including, without limitation,
jurisdiction to:
(i) Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim or
Interest, including the resolution of any request for payment of any
Administrative Claim, the resolution of any objections to the allowance
or priority of Claims or Interests and the resolution of any dispute as
to the treatment necessary to Reinstate a Claim pursuant to the Plan;
(ii) Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or
the Plan, for periods ending before the Effective Date;
(iii) Resolve any matters related to the assumption or rejection of any
executory contract or unexpired lease to which the either of the Debtors
is a party or with respect to which either of the Debtors may be liable,
and to hear, determine and, if necessary, liquidate any Claims arising
therefrom;
(iv) Ensure that distributions to Holders of Allowed Claims or Allowed
Interests are accomplished pursuant to the provisions of the Plan;
(v) Decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any
applications involving the Debtors or Reorganized Flagstar that may be
pending on the Effective Date;
(vi) Enter such Orders as may be necessary or appropriate to implement or
consummate the provisions of the Plan and all contracts, instruments,
releases, indentures and other agreements or documents created in
connection with the Plan, the Disclosure Statement or the Confirmation
Order, except as otherwise provided herein;
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(vii) Resolve any cases, controversies, suits or disputes that may arise
in connection with the consummation, interpretation or enforcement of the
Plan or the Confirmation Order, including the release and injunction
provisions set forth in and contemplated by the Plan and the Confirmation
Order, or any entity's rights arising under or obligations incurred in
connection with this Plan or the Confirmation Order;
(viii) Subject to any restrictions on modifications provided in any
contract, instrument, release, indenture or other agreement or document
created in connection with the Plan, modify this Plan before or after the
Effective Date pursuant to section 1127 of the Bankruptcy Code or modify
the Disclosure Statement, the Confirmation Order or any contract,
instrument, release, indenture or other agreement or document created in
connection with the Plan, the Disclosure Statement or the Confirmation
Order; or remedy any defect or omission or reconcile any inconsistency in
any Bankruptcy Court Order, this Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order, in such manner as may be
necessary or appropriate to consummate this Plan, to the extent
authorized by the Bankruptcy Code;
(ix) Issue injunctions, enter and implement other Orders or take such
other actions as may be necessary or appropriate to restrain interference
by any entity with consummation, implementation or enforcement of the
Plan or the Confirmation Order;
(x) Enter and implement such Orders as are necessary or appropriate if
the Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;
(xi) Determine any other matters that may arise in connection with or
relating to the Plan, the Disclosure Statement, the Confirmation Order or
any contract, instrument, release, indenture or other agreement or
document created in connection with this Plan, the Disclosure Statement
or the Confirmation Order, except as otherwise provided in this Plan; and
(xii) Enter an Order Closing the Reorganization Cases.
H. Failure of Bankruptcy Court to Exercise Jurisdiction.
If the Bankruptcy Court abstains from exercising or declines to exercise
jurisdiction, or is otherwise without jurisdiction over any matter arising out
of the Reorganization Cases, including the matters set forth in Section XI.G
above, Section IX.G shall not prohibit or limit the exercise of jurisdiction by
any other court having competent jurisdiction with respect to such matter.
I. Committees.
On the Effective Date, all Committees, if any, shall be dissolved and the
members of such Committees and their professionals shall be released and
discharged from all further rights and duties arising from or related to the
Reorganization Cases. The professionals retained by such Committees and the
members thereof shall not be entitled to compensation or reimbursement of
expenses incurred for services rendered after the Effective Date other than for
services rendered pursuant to the Plan or in connection with other activities
reserved to such Committees or such professionals under the Plan or the
Confirmation Order or in connection with any application for allowance of
compensation and reimbursement of expenses pending as of, or Filed after, the
Effective Date.
XII.
MISCELLANEOUS PROVISIONS
A. Final Order.
Any requirement in this Plan that an Order be a Final Order may be waived by the
Debtors, provided that nothing contained herein or elsewhere in this Plan shall
prejudice the right of any party in interest to seek a stay pending appeal with
respect to such order.
B. Modification of the Plan.
The Debtors reserve the right to amend or modify the Plan at any time prior to
the Confirmation Date in the manner provided for by Section 1127 of the
Bankruptcy Code or as otherwise permitted by law without additional disclosure
pursuant to Section 1125 of the Bankruptcy Code, except as the Bankruptcy Court
may otherwise order. If any of the terms of the Plan are amended in a manner
determined by the Debtors to constitute a material adverse change, the Debtors
will promptly disclose any such amendment in a manner reasonably calculated to
inform the Holders of Old Securities of such amendment and the Debtors will
extend the solicitation period for acceptances of this Plan for a period which
the Debtors, in their sole discretion, deem appropriate, depending upon the
significance
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of the amendment and the manner of disclosure to Holders of the Old Securities,
if the solicitation period would otherwise expire during such period.
The Debtors reserve the right to amend the terms of the Plan or waive any
conditions thereto if and to the extent the Debtors determine, after
consultation with the Creditors' Committee and the Ad Hoc Debentureholders
Committee, that such amendments or waivers are necessary or desirable in order
to consummate the Plan. The Debtors will give all Holders of Claims and
Interests notice of such amendments or waivers as may be required by applicable
law and the Bankruptcy Court. If, after receiving sufficient acceptances but
prior to Confirmation of the Plan, the Debtors seek to modify the Plan, the
Debtors can only use such previously solicited acceptances to the extent
permitted by applicable law. The Debtors reserve the right to use acceptances of
the Plan received during its pre-petition solicitation of acceptances under any
other circumstances, including the filing of an involuntary petition, subject to
approval of the Bankruptcy Court.
C. Revocation of the Plan.
The Debtors reserve the right to revoke or withdraw the Plan prior to the
Confirmation Date. If the Debtors revoke or withdraw the Plan, or if
Confirmation does not occur, then the Plan shall be null and void, and nothing
contained in the Plan shall: (i) constitute a waiver or release of any Claims by
or against, or any Interests in, the Debtors; or (ii) prejudice in any manner
the rights of the Debtors in any further proceedings involving the Debtors.
D. Severability of Plan Provisions.
If, prior to Confirmation, any term or provision of the Plan is held by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will
have the power, upon the request of the Debtors, to alter and interpret such
term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision will then be
applicable as altered or interpreted. To the extent such request seeks to
negatively impact distributions to Class 5 or Class 6 or modify the terms of the
New Common Stock and the New Warrants, the Debtors shall consult with the Ad Hoc
Debentureholders Committee and the Creditors' Committee prior to making such
request. Notwithstanding any such holding, alteration or interpretation, the
remainder of the terms and provisions of this Plan will remain in full force and
effect and will in no way be affected, impaired or invalidated by such holding,
alteration or interpretation. The Confirmation Order will constitute a judicial
determination and will provide that each term and provision of this Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
E. Successors and Assigns.
The rights, benefits and obligations of any Person named or referred to in the
Plan shall be binding on, and shall inure to the benefit of, any heir, executor,
trustee, administrator, successor or assign of such Person.
F. Saturday, Sunday or Legal Holiday.
If any payment or act under the Plan is required to be made or performed on a
date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day,
but shall be deemed to have been completed as of the required date.
G. Post-effective Date Effect of Evidences of Claims or Interests.
Notes, bonds, stock certificates and other evidences of Claims against or
Interests in the Debtors, and all Instruments of the Debtors (in either case,
other than those executed and delivered as contemplated hereby in connection
with the consummation of the Plan), shall, effective upon the Effective Date,
represent only the right to participate in the distributions contemplated by the
Plan.
H. Headings.
The headings used in the Plan are inserted for convenience only and neither
constitute a portion of the Plan nor in any manner affect the provisions of the
Plan.
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I. Governing Law.
Unless a rule of law or procedure is supplied by (i) federal law (including the
Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy Rules), (ii) an
express choice of law provision in any agreement, contract, instrument, or
document provided for, or executed in connection with, the Plan, or (iii)
applicable non-bankruptcy law, the rights and obligations arising under the Plan
and any agreements, contracts, documents, and instruments executed in connection
with the Plan shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflict of laws thereof.
J. No Liability for Solicitation or Participation.
As specified in section 1125(e) of the Bankruptcy Code, Persons that solicit
acceptances or rejections of the Plan and/or that participate in the offer,
issuance, sale, or purchase of securities offered or sold under the Plan, in
good faith and in compliance with the applicable provisions of the Bankruptcy
Code, shall not be liable, on account of such solicitation or participation, for
violation of any applicable law, rule, or regulation governing the solicitation
of acceptances or rejections of the Plan or the offer, issuance, sale, or
purchase of securities.
K. No Admissions or Waiver of Objections.
Notwithstanding anything herein to the contrary, nothing contained in the Plan
shall be deemed as an admission by the Debtors or any other party with respect
to any matter set forth herein including, without limitation, liability on any
Claim or the propriety of any Claims classification. The Debtors are not bound
by any statements herein or in the Disclosure Statement as judicial admissions.
DATED: November 7, 1997
FLAGSTAR COMPANIES, INC.
a Delaware corporation
By /s/ Ronald B. Hutchison
---------------------------------------
Ronald B. Hutchison
Vice President and Treasurer
FLAGSTAR CORPORATION,
a Delaware corporation
By /s/ Ronald B. Hutchison
---------------------------------------
Ronald B. Hutchison
Vice President and Treasurer
(Signatures continued on next page)
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Presented by:
Robert A. Klyman
Gregory O. Lunt
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
(213) 485-1234
Martin N. Flics
Rachael Fink
LATHAM & WATKINS
885 Third Avenue, Suite 1000
New York, New York 10022
(212) 906-1200
and
Martin J. Bienenstock
WEIL, GOTSHAL & MANGES L.L.P.
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
and
Michael M. Beal
Linda K. Barr-Efird
MCNAIR LAW FIRM, P.A.
NationsBank Tower
1301 Gervais Street, 17th Floor
P.O. Box 11390
Columbia, South Carolina 29211
(803) 799-9800
COUNSEL FOR FLAGSTAR COMPANIES, INC.
AND FLAGSTAR CORPORATION
By /s/ Michael M. Beal
--------------------------------
MICHAEL M. BEAL
COUNSEL FOR FLAGSTAR COMPANIES, INC.
AND FLAGSTAR CORPORATION
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