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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ADVANTICA RESTAURANT GROUP, INC.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
873098 10 7
(CUSIP Number)
Stephen R. Nelson, Esq.
Moore Capital Management, Inc.
1251 Avenue of the Americas
New York, New York
10020
(212) 782-7102
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 7, 1998
(Date of Event which Requires Filing this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
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SCHEDULE 13D
CUSIP No. 873098 10 7
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Moore Capital Management, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
Not Applicable a[ ]
b[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
7. SOLE VOTING POWER
None
8. SHARED VOTING POWER
NUMBER OF
SHARES 3,164,423
BENEFICIALLY
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH
10. SHARED DISPOSITIVE POWER
3,164,423
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,164,423
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.9%
14. TYPE OF REPORTING PERSON*
CO, IA
2
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SCHEDULE 13D
CUSIP No. 873098 10 7
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Louis M. Bacon
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
Not Applicable a[ ]
b[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7. SOLE VOTING POWER
None
8. SHARED VOTING POWER
NUMBER OF
SHARES 3,859,077
BENEFICIALLY
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH
10. SHARED DISPOSITIVE POWER
3,859,077
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,859,077
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.7%
14. TYPE OF REPORTING PERSON*
IN, IA
3
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SCHEDULE 13D
CUSIP No. 873089 10 7
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Moore Global Investments, Ltd.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
Not Applicable a[ ]
b[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
7. SOLE VOTING POWER
None
8. SHARED VOTING POWER
NUMBER OF
SHARES 3,164,423
BENEFICIALLY
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH
10. SHARED DISPOSITIVE POWER
3,164,423
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,164,423
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.9%
14. TYPE OF REPORTING PERSON*
CO
4
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Item 1. Security and Issuer
This statement on Schedule 13D (the "Statement") relates to the Common
Stock, par value $.01 per share (the "Common Shares"), of Advantica Restaurant
Group, Inc. (formerly, Flagstar Companies, Inc.), a Delaware corporation (the
"Company"). The principal offices of the Company are located at 203 East Main
Street, Spartanburg, SC 29319.
On January 7, 1998 (the "Effective Date"), the Company issued
40,000,000 Common Shares, 95.5% of which Common Shares were distributed to
holders of certain claims against Flagstar Companies, Inc. ("FCI") and its
wholly-owned subsidiary, Flagstar Corporation ("Flagstar Corporation," and
together with FCI, "Flagstar"), related to senior subordinated debt of Flagstar
held by the claimants. The Common Shares were issued pursuant to an Amended
Joint Plan of Reorganization (the "Plan") of Flagstar filed pursuant to Chapter
11 of Title 11 of the United States Code in the United States Bankruptcy Court
for the District of South Carolina (the "Bankruptcy Court"). The Plan was
confirmed by the Bankruptcy Court on November 7, 1997. The Company is the
resulting entity of a merger of Flagstar Corporation with and into FCI. The
shares of common stock of FCI outstanding prior to the Effective Date, and all
obligations of FCI in respect thereof, were terminated, canceled and
extinguished.
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Item 2. Identity and Background
The Statement is being filed by (1) Moore Capital Management, Inc., a
Connecticut corporation ("MCM"), (2) Louis M. Bacon ("Mr. Bacon"), a United
States citizen, in his capacity as (a) Chairman and Chief Executive Officer,
director and controlling shareholder of MCM and (b) Chairman and Chief Executive
Officer, director and majority interest holder in Moore Capital Advisors, LLC
("MCA"), and (3) Moore Global Investments, Ltd., a British Virgin Islands
corporation ("MGI"). MCM, Mr. Bacon and MGI are sometimes collectively referred
to herein as the "Reporting Persons".
MCM, a registered commodity trading advisor and member of the National
Futures Association, serves as discretionary investment manager to MGI, a
non-U.S. investment company, and other investment funds. MCA, a registered
commodity trading advisor and commodity pool operator, serves as general partner
and discretionary investment manager to Remington Investment Strategies, L.P.
("RIS"), a U.S. partnership. The principal occupation of Mr. Bacon is the
direction of the investment activities of MCM and MCA, carried out in his
capacity of Chairman and Chief Executive Officer of such entities. In this
capacity, Mr. Bacon may be deemed to be the beneficial owner of the Common
Shares of the Company held by MGI and RIS. The principal offices of MCM are
located at 1251 Avenue of the Americas, New York, New York 10020, which is also
the business address of Mr. Bacon. The principal offices of MGI are located at
c/o Citco Fund Services (Bahamas) Ltd., The Bahamas Financial Centre,
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P.O. Box CB-13136, Nassau, Bahamas. Schedule I lists the name, business address,
citizenship, position and present principal occupation of the directors and
executive officers of each of MCM and MGI.
During the last five years, none of the Reporting Persons or, to their
knowledge, any of the persons listed on Schedule I has been: (a) convicted in a
criminal proceeding, or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws. Item
3. Sources and Amounts of Funds or Other Consideration
Immediately prior to the Effective Date, MGI and RIS collectively owned
an aggregate of $15,930,000 in principal amount of Flagstar Corporation's
11.25% Senior Subordinated Debentures due 2004 (the "11.25% Debentures"),
and $68,673,000 in principal amount of Flagstar Corporation's 11.375% Senior
Subordinated Debentures due 2003 (the "11.375% Debentures," and together with
the 11.25% Debentures, the "Senior Subordinated Debentures"). All such Senior
Subordinated Debentures were acquired by or on behalf of MGI and RIS in the
ordinary course of business for investment purposes with working capital
of the respective funds. MGI and RIS expended an aggregate of approximately
$56,312,000 (including brokerage commissions) to purchase the Senior
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Subordinated Debentures which were exchanged for Common Shares on the
Effective Date pursuant to the Plan. Pursuant to the Plan, on the Effective
Date, MGI and RIS acquired, on account of the unpaid principal amount plus
unpaid interest which accrued prior to June 11, 1997 (the date Flagstar filed
for bankruptcy), on such Senior Subordinated Debentures, 44.986 Common Shares
for each $1,000 of the 11.25% Debentures, and 45.614 Common Shares for each
$1,000 of the 11.375% Debentures held by each entity. Thus, MGI and RIS
collectively received 3,849,077 Common Shares as distributions in respect of
their claims arising out of their holdings of the Senior Subordinated
Debentures.
All obligations of the Company in respect of the Senior Subordinated
Debentures will be discharged by order of the Bankruptcy Court following
consummation of the Plan. No additional funds were expended by MGI or RIS in
connection with the distribution of the Common Shares to MGI and RIS.
In addition, prior to the Effective Date, on December 15 and
December 16, 1997, MGI and RIS collectively purchased an aggregate of 10,000
Common Shares on a when-issued basis. MGI and RIS expended an aggregate of
approximately $100,600 of working capital to purchase such Common Shares.
MGI and RIS may effect purchases of securities through margin accounts
maintained for them with brokers who extend margin credit to MGI and RIS as and
when required to open or carry positions in the margin accounts, subject to
applicable Federal margin regulations, stock exchange rules and such firms'
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credit policies. The Common Shares that may be held in these margin accounts
are pledged as collateral security for the repayment of debit balances in the
accounts.
Item 4. Purpose of Transaction
The Senior Subordinated Debentures were acquired by MGI and RIS in the
ordinary course of business with working capital of the respective funds.
Pursuant to the Plan, MGI and RIS acquired collectively on the Effective Date,
an aggregate of 3,849,077 Common Shares as their respective distributions
arising out of claims held against Flagstar as a result of their investment in
the Senior Subordinated Debentures. Such Common Shares and the 10,000 additional
Common Shares purchased by MGI and RIS are held for investment purposes only.
While no further purchases of Common Shares are contemplated at
present, each of MCM and Mr. Bacon in the future may direct further purchases of
Common Shares.
None of the Reporting Persons nor, to the best of their knowledge, the
persons listed in Schedule I hereto have any present plans or proposals that
relate to or would result in any of the actions required to be described in Item
4 of Schedule 13D. MCM or Mr. Bacon may, at any time, review or reconsider its
or his positions with respect to the Company and, to the extent advisable in
light of market conditions, trading policies or other considerations, formulate
plans or proposals with respect to any of such matters, but has no present
intention of doing so.
9
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Item 5. Interest in Securities of the Issuer.
(a)-(b) On the date of this Statement:
(i) Mr. Bacon is deemed to have beneficial ownership for purposes of
Section 13(d) of the Securities Exchange Act of 1934 ("Beneficial Ownership") of
3,859,077 Common Shares by virtue of his control of MCM and MCA. Such shares
represent 9.7% of the issued and outstanding Common Shares. Also by virtue of
his control of MCM and MCA, Mr. Bacon is deemed to share voting power and
dispositive power over the Common Shares held by MGI and RIS.
(ii) MCM is deemed to have Beneficial Ownership of 3,164,423 Common
Shares by virtue of its position as discretionary investment manager of MGI.
Such shares represent 7.9% of the issued and outstanding Common Shares. MCM is
vested with the power to direct disposition of the Common Shares held by MGI and
shares with MGI and Mr. Bacon voting power over such Common Shares.
(iii) MGI has Beneficial Ownership 3,164,423 Common Shares held by it.
Such shares represent 7.9% of the issued and outstanding Common Shares. MGI
currently does not exercise dispositive power over such Common Shares but could
obtain such power within 60 days if MGI exercised its right to terminate its
trading advisory agreement with MCM.
The percentages used herein are calculated based upon the 40,000,000
Common Shares stated by FCI in its report on Form 8-K filed November 21, 1997 to
be issued and outstanding as of the Effective Date.
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To the best knowledge of the Reporting Persons, none of the
persons named in Schedule I, other than Mr. Bacon, has or is deemed to have
Beneficial Ownership of Common Shares.
(c) On the Effective Date, MGI and RIS acquired from the Company
3,156,223 and 692,854 Common Shares, respectively, pursuant to the Plan in
respect of claims against Flagstar related to the Senior Subordinated
Debentures. On December 15 and December 16, 1997, MGI and RIS purchased at a
price per share of $10.00 an additional 8,200 and 1,800 Common Shares,
respectively, which Common Shares were delivered to MGI and RIS after the
Effective Date. Such acquisition and purchase are the only transactions effected
by the Reporting Persons with respect to Common Shares within the past 60 days.
The trade dates, the principal amounts of 11.25% Debentures purchased
or sold and the price at which such principal amounts of 11.25% Debentures were
purchased or sold (including commissions, if any) for all purchases and sales by
the Reporting Persons of 11.25% Debentures within the 60-day period prior to the
Effective Date are set forth in Schedule II hereto. No transactions were
effected in the 11.375% Debentures in such period.
(d) The shareholders of MGI and the partners of RIS have the right to
participate in the receipt of dividends from, or proceeds from the sale of, the
Common Shares acquired for the account of MGI and RIS, respectively.
(e) Not Applicable.
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Item 6. Contracts, Arrangements, Understandings, or
Relationships with Respect to Securities of the Issuer.
Prior to approval of the Plan, MCM participated on a committee
consisting of representatives of holders of the Senior Subordinated Debentures
(the "Ad Hoc Committee") for the purpose of negotiating with Flagstar the terms
of its financial restructuring. In connection with such negotiations, on March
21, 1997, MCM entered into an Agreement Concerning Voting with the Company and
other holders of Senior Subordinated Debentures (the "Consenting
Debentureholders"), whereby the Consenting Debentureholders agreed, subject to
certain conditions and the nonoccurrence of certain termination events, to vote,
and subsequently voted (or, in the case of MCM, caused MGI and RIS to vote) in
favor of the Plan. On May 21, 1997, the Company and the Consenting
Debentureholders entered into a Supplement to Agreement Concerning Voting (the
"Supplement") pursuant to which each of the Consenting Debentureholders further
agreed, subject to the same conditions contained in the Agreement Concerning
Voting, to the inclusion in Flagstar's solicitation materials sent to the
remaining Debentureholders of certain statements regarding the consenting
Debentureholders. The foregoing description of the terms of the Agreement
Concerning Voting and the Supplement is qualified in its entirety by reference
to the specific provisions of each such agreement, which are filed as Exhibit C
and Exhibit D hereto.
From time to time each of the Reporting Persons, may lend portfolio
securities to brokers, banks or other financial institutions. These loans
typically obligate the borrower to return the securities, or an equal amount of
securities of the same class, to the lender and typically provide that the
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borrower is entitled to exercise voting rights and to retain dividends during
the term of the loan. From time to time to the extent permitted by applicable
law, each Reporting Person may borrow the Common Shares for the purpose of
effecting, and may effect, short sale transactions, and may purchase securities
for the purpose of closing out short positions in such securities.
Except as set forth herein, the Reporting Persons and RIS do not have
any contracts, arrangements, understandings or relationships with respect to any
Common Shares.
Item 7. Material to be Filed as Exhibits
Exhibit A: Power of Attorney dated November 28, 1997, granted by Louis
M. Bacon in favor of M. Elaine Crocker, Kevin F. Shannon and Stephen R. Nelson
Exhibit B: Joint Filing Agreement among the Reporting Persons.
Exhibit C: Agreement Concerning Voting, dated as of March 21, 1997, by
and among Flagstar, Magten Asset Management Corporation, Loomis Sayles &
Company, L.P. and MCM.
Exhibit D: Supplement to Agreement Concerning Voting, dated as of March
21, 1997, among Flagstar, Magten Asset Management Corporation, Loomis Sayles &
Company, L.P. and MCM.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 19, 1998
MOORE CAPITAL MANAGEMENT, INC.
By: /s/ Stephen R. Nelson
--------------------------------
Name: Stephen R. Nelson
Title: Vice President
LOUIS M. BACON
/s/ Stephen R. Nelson
------------------------
Attorney-in-Fact
MOORE GLOBAL INVESTMENTS, LTD.
By:
By: /s/ Stephen R. Nelson
--------------------------
Name: Stephen R. Nelson
Title: Attorney-in-Fact
14
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Schedule I
(a) Set forth below is the name, position with Moore Capital Management, Inc.
("MCM") and present principal occupation of the directors and executive officers
of MCM. The business address of each such person is 1251 Avenue of the Americas,
New York, New York 10020. Each such person is a United States citizen.
Name and Position with MCM Present Principal Occupation
- -------------------------- -----------------------------
Louis M. Bacon, Director, Chief Executive Officer of
Chairman & Chief Executive MCM and affiliates
Officer
M. Elaine Crocker, Director President of MCM and
& President affiliates
Stanley Shopkorn, Director Managing Director of Equities Trading for
MCM and affiliates
Chris Pia, Director Managing Director of Foreign Exchange,
Futures and Fixed Income Execution for
MCM and affiliates
Richard Axilrod, Director Director of Fixed Income Trading for MCM
and affiliates
Kevin F. Shannon, Director, Chief Financial Officer of MCM
CFO and Treasurer and affiliates
Stephen R. Nelson, Director, General Counsel of MCM and
General Counsel, Vice President affiliates
and Secretary
(b) Set forth below is the name, position with Moore Global Investments
Ltd. ("MGI"), business address, citizenship or place of organization
and present principal occupation or business of the directors of MGI.
Name, Business Address and
Citizenship or Place of Position Present Principal
Organization with MGI Occupation
- ------------------------- -------- -------------------
Anthony Stocks Director Director of the
Citco Fund Services (Curacao) International Fund
N.V. Services division
Kaya Flamboyan 9 of Citco Group
P.O. Box 812 Ltd.
Willemstad, Curacao
Netherlands Antilles
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Citizenship: British
Charles Hansard Director Managing Director
BBV Latinvest Securities of Kingsfort
Limited Limited
1 Angel Court
London
England EC2R 7HJ
Citizenship: Irish
Michael J.D. Dee Director Chairman of
Europlan Financial Services Europlan
Limited Continuation
Lister House Limited
35 The Parade, St. Helier
Jersey, JEZ 3QQ Channel Islands
Citizenship: British
Robert Voges Director Executive Director
Curacao International Trust and Vice President
Company N.V. of Citco Group
De Ruyterkade 62 Limited
P.O. Box 812
Willemstad, Curacao
Netherlands, Antilles
Citizen: Curacao
*Inter Caribbean Services
(Bahamas) Ltd. Director Member of Citco
The Bahamas Financial Centre Group Ltd.
P.O. Box CB-13136 providing director
Nassau, Bahamas services to
Organized: Bahamas clients to Citco
16
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Schedule II
A. Purchases
Principal Amount of
11.25% Debentures Purchase Price of
Date Purchased 11.25% Debenture
- ----- ------------------ -------------------
11/7/97 $ 1,640,000 $ 729,800
11/7/97 360,000 160,200
12/17/97 205,000 86,100
12/17/97 45,000 18,900
B. Sold
Principal Amount of
11.25% Debentures Sale Price of 11.25%
Date Sold Debenture
- ----- ------------------ -------------------------
11/21/97 $ 6,560,000 $ 2,976,600
11/21/97 1,440,000 653,400
12/04/97 2,460,000 1,079,325
12/04/97 540,000 236,925
12/05/97 1,435,000 633,193
12/05/97 315,000 138,994
12/08/97 410,000 179,375
12/08/97 90,000 39,375
12/17/97 27,653,000 10,922,935
12/17/97 3,917,000 1,547,215
12/17/97 20,522,000 8,106,190
12/17/97 6,658,000 2,629,910
12/19/97 7,380,000 3,025,800
12/19/97 1,620,000 664,200
12/19/97 820,000 328,000
12/19/97 180,000 72,000
17
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Exhibit A
----------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Louis M. Bacon, hereby make constitute
and appoint each of M. Elaine Crocker, Kevin F. Shannon and Stephen R. Nelson,
acting individually, as my agent and attorney-in-fact for the purpose of
executing in my name (a) in my personal capacity or (b) in my capacity as
Chairman and Chief Executive Officer of each of Moore Capital Management, Inc.
and Moore Capital Advisors, LLC and their respective affiliates all documents,
certificates, instruments, statements, filing and agreements ("documents") to be
filed with or delivered to any foreign or domestic governmental or regulatory
body or required or requested by any other person or entity pursuant to any
legal or regulatory requirement relating to the acquisition, ownership,
management or disposition of securities or other investments, and any other
documents relating or ancillary thereto, including but not limited to, all
documents relating to filings with the United States Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Act") and the rules and regulations promulgated
thereunder, including: (1) all documents relating to the beneficial ownership of
securities required to be filed with the SEC pursuant to Section 13(d) or
Section 16(a) of the Act including, without limitation: (a) any acquisition
statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any
joint filing agreements pursuant to Rule 13d-1(f), and (c) any initial
statements of, or states of changes in, beneficial ownership of securities on
Form 3, From 4 or Form 5 and (2) any information statements on Form 13F required
to be filed with the SEC pursuant to Section 13(f) of the Act.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument as of the 28th day of
November, 1997.
/s/ Louis M. Bacon
--------------------------
Louis M. Bacon
<PAGE>
Exhibit B
---------
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule
13D dated January 19, 1997 with respect to the Common Stock of Advantica
Restaurant Group, Inc., is, and any amendments thereto signed by each of the
undersigned shall be, filed on behalf of each of the undersigned pursuant to and
in accordance with the provisions of Rule 13d-1(f) under the Securities Exchange
Act of 1934.
This Agreement may be executed in counterparts, each of which shall for
all purposes be deemed to be an original and all of which shall constitute one
and the same instrument.
Dated: January 19, 1998
MOORE CAPITAL MANAGEMENT, INC.
By: /s/ Stephen R. Nelson
---------------------------
Name: Stephen R. Nelson
Title: Vice President
LOUIS M. BACON
/s/ Stephen R. Nelson
-------------------------
Attorney-in-Fact
MOORE GLOBAL INVESTMENTS, LTD.
By:
By: /s/ Stephen R. Nelson
-------------------------
Name: Stephen R. Nelson
Title: Attorney-in-Fact
<PAGE>
Exhibit C
AGREEMENT CONCERNING VOTING
This Agreement Concerning Voting (as the same may be amended, modified
or supplemented from time to time in accordance with the terms hereof, this
"Agreement") is entered into by (i) Flagstar Corporation (the "Company"), (ii)
Flagstar Companies, Inc. ("FCI"; the Company and FCI are together referred to as
"Flagstar"), and (iii) the undersigned holders (in its or their capacity as an
individual holder, the "Consenting Debentureholder") of, as the case may be,
those certain 11 1/4% Senior Subordinated Debentures due November 1, 2004 (the
"11 1/4% Debentures") and/or those certain 113/8% Senior Subordinated Debentures
due September 15, 2003 (the "113/8% Debentures") issued by the Company
(collectively, the "Debentures") in connection with a proposed financial
restructuring of Flagstar (the "Financial Restructuring") which is proposed to
be accomplished by means of a prepackaged or pre-arranged Chapter 11 Plan of
Reorganization of Flagstar (the "Prepackaged Plan") pursuant to Chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code").
In consideration of the premises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Flagstar and each
Consenting Debentureholder (collectively, the "Parties"), intending to be
legally bound, agree as follows:
1. CONSENTING DEBENTUREHOLDER AGREEMENTS. The Consenting
Debentureholders represent that they are (i) the beneficial owners of no less
than 45% of the Debentures as of the date hereof (the "Relevant Debentures")
and/or the investment advisers or managers for the beneficial owners of Relevant
Debentures having the power to vote and dispose of Relevant Debentures on behalf
of such beneficial owners, and (ii) entitled (for their own account or for the
account of other persons claiming through them) to all of the rights and
economic benefits of the Relevant Debentures. The Consenting Debentureholders
agree and represent that, subject to Section 2 and Section 6 hereof and subject
to their receipt of solicitation materials in respect of the Prepackaged Plan
that are consistent with the terms of this Agreement:
(a) in connection with Flagstar's solicitation of ballots with
respect to the Prepackaged Plan, they will, as promptly as practicable,
vote (or, with respect to managed accounts, use their reasonable best
efforts to cause to be voted) the claims (the "Claims") in respect of
the Relevant Debentures in favor of the Prepackaged Plan, provided that
the terms of the Prepackaged Plan are consistent with the material
terms of the Prepackaged Plan described on Appendix 1 attached hereto
("Appendix 1"), unless revised terms have been previously agreed to in
writing by the Consenting Debentureholder, it being recognized and
agreed by the Parties that Appendix 1 does not purport to include all
of the material terms with respect to the Prepackaged Plan;
(b) so long as they are the beneficial owners of, and/or
investment advisers or managers with respect to, the Relevant
Debentures, they will not at any time prior to the termination of this
Agreement vote (or cause to be voted) in favor of, or otherwise support
or encourage, directly or indirectly, any plan of reorganization
concerning Flagstar other than the Prepackaged Plan; and
(c) they will not sell, transfer or assign any of the Relevant
Debentures or any voting interest therein during the term of this
Agreement except to a purchaser who agrees prior to such acquisition to
be bound by all the terms of this Agreement with respect to the
Relevant Debentures being acquired by such purchaser, which agreement
shall subsequently be confirmed in writing (which writing may include a
trade confirmation issued by a broker or dealer, acting as principal or
as agent for the purchaser, stating that such agreement is a term of
such transfer), in which event the Company and FCI shall be deemed to
have acknowledged that each of their respective obligations to the
Consenting Debentureholders hereunder shall be deemed to constitute
obligations in favor of such purchaser, and each of the Company and FCI
shall confirm that acknowledgement in writing.
<PAGE>
2. TERMINATION OF AGREEMENT. A Consenting Debentureholder's obligations
hereunder shall terminate upon the occurrence of any Agreement Termination
Event, unless the occurrence of such Agreement Termination Event is waived in
writing by such Consenting Debentureholder. If any Agreement Termination Event
occurs (and has not been waived) at a time when court permission shall be
required for a Consenting Debentureholder to change or withdraw (or cause to be
changed or withdrawn) its votes in favor of the Prepackaged Plan, the Company
and FCI shall not, subject to their fiduciary duties as debtors in possession,
oppose any attempt by such Consenting Debentureholder to change or withdraw (or
cause to be changed or withdrawn) such votes at such time.
For the purposes hereof an "Agreement Termination Event" shall mean any
of the following:
(a) the filing of petitions under the Bankruptcy Code in
respect of the Company and FCI and the filing of the Prepackaged Plan
in connection with such petitions shall not have occurred on or before
July 31, 1997;
(b) the effective date of the Prepackage Plan shall not have
occurred on or before October 15, 1997;
(c) either the Company or FCI terminates the solicitation in
respect of the Prepackaged Plan or withdraws the Prepackaged Plan;
(d) there occurs any material change in the terms of the
Prepackaged Plan materially affecting Debentureholders as a class not
previously consented to by the Consenting Debentureholders;
(e) to the extent the right of the Consenting Debentureholder
to vote or direct the disposition of the Relevant Debentures results
from an arrangement in existence on the date hereof under which such
Consenting Debentureholder has been engaged to perform investment
management services on behalf of a beneficial owner of the Relevant
Debentures, (i) such engagement shall be terminated by such beneficial
owner or as the result of any statutory, regulatory or BONA FIDE
business requirement or condition not related to the subject matter of
this Agreement, or (ii) such beneficial holder on its own (without any
direct of indirect influence from the Consenting Debentureholder)
directs the Consenting Debentureholder to dispose of some or all of the
Relevant Debentures
2
<PAGE>
beneficially owned by such beneficial owner; PROVIDED that, in any
case, the Agreement Termination Event shall only apply to Debentures
held by the beneficial owner as to which the engagement has been
terminated or as to which such disposal direction has been issued.
The Consenting Debentureholders shall have no liability to the
Company, FCI or each other in respect of any termination of this
Agreement in accordance with the terms hereof.
3. FURTHER ACQUISITION OF SECURITIES. This Agreement shall in no way be
construed to preclude the Consenting Debentureholders from acquiring additional
Debentures of the Company. However, any such additional Debentures so acquired
shall automatically be deemed to be Relevant Debentures and to be subject to all
of the terms of this Agreement OTHER THAN Section 1(c) hereof. This Agreement
shall in no way be construed to preclude the Consenting Debentureholders from
acquiring any other securities of the Company or FCI. However, the Consenting
Debentureholders agree that they will vote (or cause to be voted) any such
additional securities in favor of the Prepackaged Plan for so long as this
Agreement remains in effect.
4. AMENDMENTS. This Agreement may not be modified, amended or
supplemented except in writing signed by each of the Parties.
5. DISCLOSURE OF INDIVIDUAL HOLDINGS. Unless required by applicable law
or regulation (including, without limitation, the Bankruptcy Code and the U.S.
securities laws and any rules or regulations of the Securities and Exchange
Commission), which may require disclosure of the following, Flagstar may not
disclose the Consenting Debentureholders' individual holdings of Relevant
Debentures without the prior written consent of the Consenting Debentureholders;
and if such announcement or disclosure is so required by law or regulation,
Flagstar shall afford the Consenting Debentureholders the reasonable opportunity
under all the circumstances to conduct a reasonable review of, and comment upon,
such announcement or disclosure prior to making such announcement or disclosure.
The foregoing shall not prohibit the Company or FCI from disclosing the
approximate aggregate holdings of Debentures by the Consenting Debentureholders.
6. IMPACT OF APPOINTMENT TO CREDITORS COMMITTEE. Notwithstanding
anything herein to the contrary, in the event that any Consenting
Debentureholder is appointed to and serves on a committee of creditors in the
Company's Chapter 11 case, the terms of this Agreement shall not be construed so
as to limit such Consenting Debentureholder's exercise in its sole discretion of
its fiduciary duties to any person arising from its serving on that committee of
creditors, and any such exercise in the sole discretion of such Consenting
Debentureholder of such fiduciary duties arising from its serving on that
committee of creditors shall not be deemed to constitute a breach of the terms
of this Agreement (but the fact of such service on such committee shall not
otherwise affect the continuing validity or enforceability of this Agreement).
The foregoing shall not modify or limit the obligations of Consenting
Debentureholders to vote their individual holdings of Debentures and take the
other actions, as set forth in Section 1 hereof.
7. INDEMNIFICATION OBLIGATIONS. Each of the Company and FCI agrees, on
a joint and several basis, that it shall fully indemnify (i) each Consenting
Debentureholder and (ii) each and every other person by reason of the fact that
such person is or was a director, officer,
3
<PAGE>
employee, agent, shareholder, professional (including, without limitation, Hebb
& Gitlin, Houlihan Lokey Howard & Zukin, and Richards, Layton & Finger) or other
authorized representative of the Consenting Debentureholder (all the foregoing
persons, together with the Consenting Debentureholders, the "Indemnitees")
against any claims, liabilities, actions, suits, damages, fines, judgments or
expenses (including reasonable attorney's fees), brought or asserted by anyone
(other than the Company or FCI or any successor with respect to asserted
violations of this Agreement) 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 Financial Restructuring, including the Prepackaged Plan and
the transactions contemplated thereby; PROVIDED, HOWEVER, that this indemnity
shall not extend to any claims asserted by the Consenting Debentureholder
against any other Indemnitee, and PROVIDED, FURTHER, 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 the Company or FCI, the Indemnitee shall promptly
notify the Company or FCI in writing, and the Company or FCI 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 in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnitee unless (a) the Company or FCI has
agreed to pay the fees and expenses of such counsel, or (b) the Company or FCI
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 the Company or FCI, and the Indemnitee believes, in the exercise
of its business judgment and in the opinion of its legal counsel, reasonably
satisfactory to the Company or FCI, that the joint representation of the Company
or FCI and the Indemnitee will likely result in a conflict of interest (in which
case, if the Indemnitee notifies the Company or FCI in writing that it elects to
employ separate counsel at the expense of the Company or FCI, the Company or FCI
shall not have the right to assume the defense of such action or proceeding on
behalf of the Indemnitee). In addition, the Company or FCI 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 the Company or FCI,
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.
8. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the Parties hereby irrevocably and unconditionally agrees for
itself that any legal action, suit or proceeding against it with respect to any
matter under or arising out of or in connection with this Agreement or for
recognition or enforcement of any judgment rendered in any such action, suit or
proceeding, may be brought in any Federal or State court in the Borough of
Manhattan, the City of New York, but for that purpose only, and, by execution
and delivery of this Agreement, each of the Parties hereby irrevocably accepts
and submits itself to the nonexclusive jurisdiction of each such court,
generally and unconditionally, with respect to any such action, suit or
proceeding. Notwithstanding the foregoing consent to New York jurisdiction, upon
the commencement of the
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Company's Chapter 11 case, the Parties agree that the bankruptcy court hearing
such case shall have exclusive jurisdiction of all matters arising out of or in
connection with the Consenting Debentureholders' agreements pursuant to Section
1 hereof and that they shall not seek to enforce any such agreements in any
other court.
9. SPECIFIC PERFORMANCE. It is understood and agreed by the Parties
that money damages would not be a sufficient remedy for any breach of this
Agreement by any Party (other than a breach by the Company or FCI of Section 10
hereof) and each non-breaching Party shall be entitled to specific performance
and injunctive or other equitable relief as a remedy of any such breach.
10. FEES AND EXPENSES. If any Party brings an action against any other
Party based upon a breach by the other Party of its obligations under this
letter, the prevailing Party shall be entitled to all reasonable expenses
incurred, including reasonable attorneys' and financial advisers' fees.
11. SURVIVAL. Notwithstanding the sale of the Relevant Debentures in
accordance with Section 1(c) hereof or the termination of the Consenting
Debentureholders' obligations hereunder in accordance with Section 2 hereof, the
agreements and obligations of the Company and FCI in Section 5 and Sections 7-11
hereof shall survive such termination and shall continue in full force and
effect for the benefit of the Consenting Debentureholders in accordance with the
terms hereof.
12. HEADINGS. The headings of the Sections, paragraphs and subsections
of this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
13. SUCCESSORS AND ASSIGNS; JOINT AND SEVERAL OBLIGATIONS. This
Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators and
representatives. The agreements and obligations of the Company and FCI under
this Agreement are joint and several in all respects, and the invalidity or
unenforceability at any time of any provision hereof against either of them
shall not affect or diminish in any way the continuing validity and
enforceability of such agreements and obligations against the other of them. The
agreements, representations and obligations of the Consenting Debentureholders
under this Agreement are several and not joint in all respects.
14. PRIOR NEGOTIATIONS. This Agreement and Appendix 1 supersede all
prior negotiations with respect to the subject matter hereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
[Remainder of page is blank; next page is signature page]
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date set forth below.
Dated: March 21, 1997
FLAGSTAR CORPORATION
By: /s/ JAMES B. ADAMSON
___________________________________________
FLAGSTAR COMPANIES, INC.
By: /s/ JAMES B. ADAMSON
___________________________________________
MAGTEN ASSET MANAGEMENT CORPORATION
By: /s/ TALTON EMBRY
___________________________________________
LOOMIS SAYLES & COMPANY
By: /s/ FREDERICK A. VYN
___________________________________________
MOORE CAPITAL MANAGEMENT, INC.
By: /s/ GEORGE W. HAYWOOD
___________________________________________
[SIGNATURE PAGE TO AGREEMENT CONCERNING VOTING]
<PAGE>
Exhibit D
SUPPLEMENT TO AGREEMENT CONCERNING VOTING
This Supplement to Agreement Concerning Voting (this "Supplement") is
entered into as a supplement to that certain Agreement Concerning Voting dated
as of March 21, 1997 (the "Voting Agreement"). All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Voting
Agreement.
1. Pursuant to the Voting Agreement, the Consenting Debentureholders
agreed that, subject to their receipt of solicitation materials in respect of
the Prepackaged Plan and subject to certain other terms and conditions as more
particularly set forth in the Voting Agreement, they would vote (or, with
respect to managed accounts, use their reasonable best efforts to cause to be
voted) their Claims in respect of the Relevant Debentures in favor of the
Prepackaged Plan. Pursuant to this Supplement, and subject to the same
requirement of solicitation and the same terms and conditions (including the
Agreement Termination Events) set forth in the Voting Agreement, the Consenting
Debentureholders hereby also agree that they will instruct (or, with respect to
managed accounts, use their reasonable best efforts to cause instructions to be
issued to) the registered holders of their respective Relevant Debentures to
consent to amendments to the indentures in respect of the 11 1/4% Debentures
and/or the 113/8% Debentures (as the case may be) more particularly described on
Appendix 1 attached hereto.
2. The Consenting Debentureholders hereby consent to the inclusion in
Flagstar's solicitation materials of the following statement:
THE AD HOC DEBENTUREHOLDERS COMMITTEE HAS UNANIMOUSLY APPROVED
THE PLAN, AGREED TO VOTE IN FAVOR OF THE PLAN AND CONSENT TO THE
[INDENTURE AMENDMENT], AND RECOMMENDS THAT THE HOLDERS OF SENIOR
SUBORDINATED DEBENTURES VOTE TO ACCEPT THE PLAN AND CONSENT TO THE
[INDENTURE AMENDMENT].
3. The Parties hereby confirm that all of their respective agreements
and obligations under the Voting Agreement shall apply with equal force and
effect to this Supplement.
[Remainder of page is blank; next page is signature page]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Supplement to
be executed as of the date set forth below.
Dated: May 21, 1997
FLAGSTAR CORPORATION
By: /s/ RONALD B. HUTCHINSON
___________________________________________
FLAGSTAR COMPANIES, INC.
By: /s/ RONALD B. HUTCHINSON
___________________________________________
MAGTEN ASSET MANAGEMENT CORPORATION
By: /s/ TALTON EMBRY
___________________________________________
LOOMIS SAYLES & COMPANY
By: /s/ FREDERICK A. VYN
___________________________________________
MOORE CAPITAL MANAGEMENT, INC.
By: /s/ GEORGE W. HAYWOOD
___________________________________________
[SIGNATURE PAGE TO SUPPLEMENT TO AGREEMENT CONCERNING VOTING]
