<PAGE> 1
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): June 24, 1998
----------------
Fruehauf Trailer Corporation
----------------------------------
(Exact name ofregistrant as specified in its charter)
Delaware 1-10772 38-2863240
- ------------- ----------- --------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1111 Bayside Drive, Suite 160, Corona Del Mar, CA 92625
-------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714)644-9665
---------------
<PAGE> 2
Item 5. Other Events.
- ----------------------
Fruehauf Trailer Corporation, a Delaware corporation (the
"Corporation"), and certain of its subsidiaries filed a
voluntary petition with the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") under Chapter
11 of the United States Bankruptcy Code (the "Code"), Case
Number 96-1563 (PJW), on October 7, 1996.
The First Amended Disclosure Statement, included herein as
Exhibit 99.1, has been prepared by Fruehauf Trailer Coporation,
Maryland Shipbuilding & Drydock Company, F.G.R., Inc.,
Jacksonville Shipyards, Inc., Fruehauf International Limited,
Fruehauf Corporation, the Mercer Co., Deutsche-Fruehauf Holding
Corporation, MJ Holdings, Inc. and E.L. Devices, Inc.
(collectively, the "Debtors," or, together with their
non-debtor affiliates, the "Company") and describes the terms
and provisions of the Debtors' First Amended Joint Plan of
Reorganization dated June 24, 1998 (the "Plan"), included herein
as Exhibit 99.2. Any term used in this Disclosure Statement
that is not defined herein has the meaning ascribed to that term
in the Plan.
This Proposed Disclosure Statement has not been approved by
the Bankruptcy Court for use in the solicitation of acceptances
of the Plan disclosed pursuant to Section 1125(b) of the
Bankruptcy Code. Accordingly, the filing and dissemination of
this proposed Disclosure Statement is not intended, nor should
it be construed, as such a solicitation, nor should the
information contained herein be relied upon for any purpose
prior to a determination by the Bankruptcy Court that the
Proposed Disclosure Statement contains adequate information.
Dissemination of this Prosposed Disclosure Statement is
controlled by Bankruptcy Rule 3017.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
-----------------------------------------
( c ) Exhibits.
99.1 First Amended Disclosure Statement pursuant to Section
1125 of the Bankruptcy Code with respect to the Debtors'
First Amended Joint Plan of Reorganization dated June 24,
1998.
99.2 Debtors' First Amended Plan of Reorganization dated
June 24, 1998.
99.3 Liquidating Trust Agreement dated as of June 24, 1998.
<PAGE> 3
SIGNATURE
---------
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.
FRUEHAUF TRAILER CORPORATION
Date: June 24, 1998 By: /s/ James Wong
--------------- -------------------
James Wong
Chief Financial Officer
(Duly Authorized Officer)
<PAGE> 4
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE:
FRUEHAUF TRAILER CORPORATION,
a Delaware corporation,
MARYLAND SHIPBUILDING &
DRYDOCK COMPANY,
a Maryland corporation,
F.G.R., INC.,
a Michigan corporation,
JACKSONVILLE SHIPYARDS, INC.,
a Florida corporation, Jointly
Administered
FRUEHAUF INTERNATIONAL, LIMITED, CASE NO. 96-1563 (PJW)
a Delaware corporation,
FRUEHAUF CORPORATION, Chapter 11
a Delaware corporation
THE MERCER CO.,
DEUTSCHE-FRUEHAUF HOLDING CORPORATION,
a Delaware corporation,
MJ HOLDINGS, INC.,
an Ohio corporation, and
E. L. DEVICES, INC.,
a Florida corporation,
Debtors.
- -------------------------------------------------------------------
FIRST AMENDED DISCLOSURE STATEMENT PURSUANT TO SECTION 1125 OF
THE BANKRUPTCY CODE WITH RESPECT TO DEBTORS' FIRST AMENDED JOINT
PLAN OF REORGANIZATION DATED JUNE 24, 1998
<PAGE> 2
THIS FIRST AMENDED DISCLOSURE STATEMENT HAS BEEN PREPARED
BY FRUEHAUF TRAILER CORPORATION, MARYLAND SHIPBUILDING &
DRYDOCK COMPANY, F.G.R., INC., JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL LIMITED, FRUEHAUF CORPORATION, THE
MERCER CO., DEUTSCHE-FRUEHAUF HOLDING CORPORATION, MJ
HOLDINGS, INC., AND E.L. DEVICES, INC. (COLLECTIVELY, THE
"DEBTORS," OR, TOGETHER WITH THEIR NON-DEBTOR AFFILIATES,
THE "COMPANY") AND DESCRIBES THE TERMS AND PROVISIONS OF THE
DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION DATED JUNE
24, 1998 (THE "PLAN"). ANY TERM USED IN THIS DISCLOSURE
STATEMENT THAT IS NOT DEFINED HEREIN HAS THE MEANING ASCRIBED
TO THAT TERM IN THE PLAN.
THIS PROPOSED DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY
THE BANKRUPTCY COURT FOR USE IN THE SOLICITATION OF
ACCEPTANCES OF THE PLAN DISCLOSED PURSUANT TO SECTION 1125(b)
OF THE BANKRUPTCY CODE. ACCORDINGLY, THE FILING AND
DISSEMINATION OF THIS PROPOSED DISCLOSURE STATEMENT IS NOT
INTENDED, NOR SHOULD IT BE CONSTRUED, AS SUCH A SOLICITATION,
NOR SHOULD THE INFORMATION CONTAINED HEREIN BE RELIED UPON FOR
ANY PURPOSE PRIOR TO A DETERMINATION BY THE BANKRUPTCY COURT
THAT THE PROPOSED DISCLOSURE STATEMENT CONTAINS ADEQUATE
INFORMATION. DISSEMINATION OF THIS PROPOSED DISCLOSURE
STATEMENT IS CONTROLLED BY BANKRUPTCY RULE 3017.
DATED: June 24, 1998
CAMHY KARLINSKY & STEIN LLP MORRIS, NICHOLS, ARSHT & TUNNELL
David Neier William H. Sudell, Jr.(No. 463)
1740 Broadway, 16th Floor Robert J. Dehney (No. 3578)
New York, New York 10019-4315 1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
ATTORNEYS FOR THE DEBTORS
<PAGE> i
TABLE OF CONTENTS
Page
I. INTRODUCTION 1
II. GENERAL INFORMATION CONCERNING THE DEBTORS AND
CERTAIN EVENTS PRECEDING THE DEBTORS' CHAPTER 11 FILING 2
A. General Description of the Debtors' Businesses Pre-petition 2
1. Background. 2
2. Marketing and Distribution 3
3. International Operations 4
4. Employees 4
5. Assumption Agreement 4
6. The Maritime Business 4
7. 1995 Recapitalization 5
8. The K-H Letter Agreement 6
9. Airlie Note 6
10. Sale of Foreign Assets 6
B. Financial Condition of the Debtors; Events
Necessitating Chapter 11 Protection 6
III. THE CHAPTER 11 CASE 7
A. Commencement of the Cases 7
B. First Day Relief 7
C. Formation of Unsecured Creditors' Committee and
Bondholders' Committee 8
D. First Asset Sales 8
E. Retention of Alvarez & Marsal Services 9
F. Key Employee Retention Program 9
G. Significant Events During the Case 9
1. Sale of Delphos Axle Plant to Holland Hitch 9
2. Sale of Debtors' U.S. Manufacturing and Sales and
Distribution Businesses to Wabash 10
3. Rejection of Collective Bargaining Agreements and
Termination of Retiree Benefits 11
a. Termination of Retiree Benefits 11
b. Collective Bargaining Agreements 11
4. Receipt of $6.5 Million Senior Mortgage on Certain
Jacksonville Property 12
5. Replacement of the Madeleine Facility with the BOA
Facility 12
6. Litigation with Alvarez & Marsal and Thomas E. Ireland 13
7. Relocation of Offices to California 13
8. Sales of Wabash Stock 13
H. Current Management of the Debtors and Disclosure of
Compensation 14
I. Assets and Liabilities of the Debtors 16
1. Debtors' Major Assets 16
a. Unrestricted Cash and Short Term Investments 16
b. Stock of Wabash National Corporation 16
c. Fruehauf de Mexico 16
d. Jacksonville Riverfront Development Note Receivable 18
e. Kearny Branch Note Receivable 18
f. Sindorf 18
g. Miscellaneous Real Estate 19
<PAGE> ii
h. Miscellaneous Receivables and Escrows 19
i. Causes of action 19
2. Liabilities 20
IV. SUMMARY OF PLAN 21
A. Overview 21
B. Designation of Claims and Interests 21
1. Summary 21
C. Treatment of Unclassified Claims 22
1. Administrative Claims 22
2. Treatment of Pre-Petition Tax Claims 24
D. Classification and Treatment of Classified Claims and
Interests 24
1. Class 1 - Priority Claims 24
2. Class 2 - Secured Claims of Holders of Senior Notes 24
3. Class 3 - Secured Claims Other Than Claims of Holders
of Senior Notes 25
4. Class 4 - General Unsecured Claims 25
5. Class 5 - Old Common Stock 25
6. Class 6 - Old Warrants 25
7. Class 7 - Securities Claims 25
E. Acceptance or Rejection of the Plan 26
1. Voting Classes 26
2. Presumed Acceptance of Plan 26
3. Presumed Rejection of Plan 26
F. Means for Execution and Implementation of the Plan 26
1. Funding of the Distribution Fund 26
2. Transfer of Wabash Securities to Indenture Trustee 26
3. Change of Plan Sponsorship for the Management and
Union Plans 26
4. Transfer of Hogan's Creek Property and Picketville
Property 26
5. Foreclosure by Holders of Senior Notes 26
6. Transfer by Debtors of Assets to the Liquidating Trust 27
7. Ratification of Liquidating Trust Agreement 27
a. Powers and Duties 27
b. Compensation of Trustee 27
c. Limitation of Liability 27
d. Indemnity 27
e. Right to Hire Professionals 27
f. Treatment of Distribution Fund Surplus 27
g. Limitation on the Trustee 28
h. Distribution of Trust Certificates 28
i. Tax Treatment of the Liquidating Trust 28
j. Termination of Liquidating Trust 28
8. Dissolution of Corporate Entities 28
9. Cancellation of Old Securities 29
10. Registration Exemption for Debtors' Wabash Securities
and Beneficial Interests in the Liquidating Trust 29
11. Transferability of the Trust Certificates;
Applicability of Federal Securities Laws to the
Liquidating Trust 30
12. Corporate Action 31
13. Preservation of Rights of Action 31
14. Objections to Claims 31
<PAGE> iii
15. Exemption from Stamp and Similar Taxes 31
G. Funding and Methods of Distribution and Provisions for
Treatment of Disputed Claims 31
1. Funding of Distributions Under the Plan 31
2. Distributions to Holders of Allowed Claims that are
Administrative Expense Claims, Pre-Petition Tax Claims
and Class 1 Priority Claims 31
3. Distributions to Holders of Allowed Class 2 Claims 32
4. Disputed Claims 32
5. Delivery of Distributions and Undeliverable or
Unclaimed Distributions; Failure to Negotiate Checks 32
6. Distributions on Account of Unsecured Class 4 Claims 32
7. De Minimis Distributions 32
8. Compliance with Tax Requirements 32
9. Setoffs 32
10. Fractional Interests 33
H. Treatment of Executory Contracts and Unexpired Leases 33
I. Effects of Plan Confirmation 33
1. Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors 33
2. No Liability for Solicitation or Participation 33
3. Limitation of Liability 33
4. Other Documents and Actions 34
5. Term of Injunctions or Stays 34
J. Confirmability of Plan and Cramdown 34
K. Retention of Jurisdiction 34
L. Post Confirmation Management of the Liquidating Trust 34
V. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN 37
A. Federal Income Tax Consequences to Fruehauf 38
B. Federal Income Tax Consequences to Holders of Claims 38
1. Holders of Claims 38
VI. VOTING PROCEDURES AND CONFIRMATION REQUIREMENTS 40
A. Confirmation of the Plan 40
1. Confirmation Hearing 40
2. Requirements for Confirmation of the Plan 40
a. Acceptance 40
b. Best Interests Test/Liquidation Analysis 41
c. Feasibility 41
d. Classification 41
B. Non-Consensual Confirmation 42
1. Fair and Equitable Standard 42
2. The Plan Must Not Discriminate Unfairly 42
C. Voting Procedures and Requirements 42
1. Voting Requirements - Generally 42
2. Ballot and Information Agent 43
3. Voting Procedures 43
4. Voting Deadline 44
<PAGE> iv
INDEX TO APPENDIX
Exhibit A: Debtors' First Amended Joint Plan of Reorganization
Dated June 24, 1998
<PAGE> 1
I.
INTRODUCTION
This First Amended Disclosure Statement Pursuant to
Section 1125 of the Bankruptcy Code With Respect to the
Debtors' First Amended Joint Plan of Reorganization of
Fruehauf Trailer Corporation and Related Debtors (the
"Disclosure Statement") approved by Order of the United States
Bankruptcy Court for the District of Delaware on __________,
1998, relates to the Debtors' First Amended Plan of
Reorganization dated June 24, 1998 (the "Plan"), a copy of
which is annexed hereto as Exhibit "A". The Plan is supported
by and the Unofficial Committee of Holders of Senior Secured
Notes (the "Bondholders'' Committee") [and the Official
Committee of Unsecured Creditors].
THE DEBTORS BELIEVE THAT THE PLAN IS IN THE BEST
INTERESTS OF CREDITORS AND INTEREST HOLDERS, AND URGE ALL
CREDITORS TO VOTE IN FAVOR OF THE PLAN. CREDITORS ARE
ENCOURAGED TO READ AND CONSIDER CAREFULLY THIS ENTIRE
DISCLOSURE STATEMENT, INCLUDING THE PLAN OF REORGANIZATION
ATTACHED HERETO.
VOTING INSTRUCTIONS ARE CONTAINED ON YOUR BALLOT AND ARE
SET FORTH IN THIS DISCLOSURE STATEMENT IN SECTION ____.
TO BE COUNTED, YOUR BALLOT MUST BE DULY COMPLETED,
EXECUTED AND ACTUALLY RECEIVED BY THE BALLOT AGENT NO LATER
THAN 5:00 P.M., EASTERN TIME ON _______________, 1998.
THE CONFIRMATION HEARING HAS BEEN SCHEDULED TO COMMENCE
ON ___________________, 1998 AT ____.M. BEFORE THE HONORABLE
PETER J. WALSH, AT THE UNITED STATES BANKRUPTCY COURT (THE
"COURT"), 824 MARKET STREET, WILMINGTON, DELAWARE 19801. THE
CONFIRMATION HEARING MAY BE ADJOURNED WITHOUT FURTHER NOTICE
TO PARTIES-ININTEREST EXCEPT FOR AN ANNOUNCEMENT OF THE
ADJOURNED DATE MADE AT THE HEARING. OBJECTIONS TO CONFIRMATION
OF THE PLAN MUST BE IN WRITING, STATE THE NATURE AND AMOUNT OF
CLAIMS OR INTERESTS HELD OR ASSERTED BY THE OBJECTOR
AGAINST THE DEBTORS' ESTATE OR PROPERTY, THE BASIS FOR THE
OBJECTION, AND THE SPECIFIC GROUNDS THEREFOR, AND SHALL BE
FILED WITH THE COURT AND SERVED UPON THE DEBTORS, THEIR
COUNSEL, COUNSEL TO CREDITORS' COMMITTEE AND BONDHOLDERS'
COMMITTEE, AND THE COMMITTEE IN THE MANNER SET FORTH IN THE
CONFIRMATION NOTICE SO AS TO BE RECEIVED NO LATER THAN 4:00
P.M. EASTERN TIME ON ____________, 1998.
NO PERSON IS AUTHORIZED BY THE DEBTORS TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THE PLAN OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN OTHER
THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT AND THE
ATTACHMENTS HERETO. THE DELIVERY OF THIS DISCLOSURE STATEMENT
WILL NOT UNDER ANY CIRCUMSTANCES IMPLY THAT ALL OF THE
INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
INFORMATION CONTAINED HEREIN REGARDING THE DEBTORS,
THEIR BUSINESSES, ASSETS AND LIABILITIES HAVE BEEN PROVIDED
BY THE DEBTORS. WHERE STATED, THE DEBTORS HAVE RELIED ON
INFORMATION PROVIDED BY THEIR ADVISORS. THE DEBTORS DISCLAIM
ANY RESPONSI BILITY FOR THE ACCURACY OF THAT INFORMATION.
THE DEBTORS AND THEIR ADVISORS ARE UNAWARE OF ANY FALSE OR
MISLEADING STATEMENT THAT WOULD MATERIALLY AFFECT A
HYPOTHETICAL INFORMED INVESTOR'S DETERMINATION ON HOW TO VOTE ON
THE PLAN.
<PAGE> 2
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED HEREIN.
II.
GENERAL INFORMATION CONCERNING THE DEBTORS AND
CERTAIN EVENTS PRECEDING THE DEBTORS' CHAPTER 11 FILING
A. General Description of the Debtors' Businesses Pre-petition.
1. Background.
----------------
On October 7, 1996 (the "Petition Date"), the
following entities filed petitions for relief in the
United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") under Chapter 11 of the United
States Bankruptcy Code (the "Code"): FRUEHAUF TRAILER
CORPORATION, a Delaware corporation, JACKSONVILLE SHIPYARDS,
INC., a Florida corporation, MARYLAND SHIPBUILDING & DRYDOCK
COMPANY, INC., a Maryland corporation, FRUEHAUF
INTERNATIONAL LIMITED, a Delaware corporation, FRUEHAUF
CORPORATION, a Delaware corporation, FGR, INC., a Michigan
corporation, DEUTSCHE-FRUEHAUF HOLDING CORPORATION, a
Delaware corporation, E.L. DEVICES, INC., a Florida
corporation, M.J. HOLDINGS INC., an Ohio corporation,
(collectively referred to as the "Debtors").
Debtor Fruehauf Trailer Corporation ("Fruehauf") is
the direct or indirect parent company of all of the other
Debtors. Fruehauf was organized in 1989 to acquire certain
assets and assume certain liabilities related to the trailer
and maritime businesses (the "Maritime Business") of
Fruehauf Corporation ("Old Fruehauf"). In July 1989,
Fruehauf consummated this acquisition and assumption (the
"Fruehauf Acquisition").
Directly or indirectly, Fruehauf owns 100% of
the outstanding voting equity of all other Debtors. As of
the Petition Date, Fruehauf was in the business of
designing, manufacturing, selling and servicing truck trailers
and related parts and accessories. Fruehauf's products were
sold and used throughout the United States and in numerous
foreign countries. Debtor Fruehauf International Limited
("FIL") owns a 99.99% equity interest in a foreign trailer
manufacturer in Mexico, Fruehauf de Mexico, S.A. de C.V.
("Fruehauf de Mexico"). The other Debtors are either
inoperative or engaged in trailer transportation businesses
similar to Fruehauf.
As of the Petition Date, the Debtors had over
20,000 creditors and approximately 2,000 full-time and
part-time employees. Fruehauf was a public company that
operated approximately 40 manufacturing, distribution, sales and
servicing facilities throughout the United States and was a
leader in domestic used trailer sales. Fruehauf trailers
had been manufactured since 1914. Fruehauf trailers were
noted for their quality and durability and, therefore,
commanded a premium price.
<PAGE> 3
Fruehauf owned manufacturing facilities, in Fort
Madison, Iowa ("Fort Madison"), Delphos, Ohio ("Delphos") and,
through a subsidiary, in Coacalco, Mexico, and Fruehauf
leased a manufacturing facility in Huntsville, Scott
County, Tennessee ("Scott County"). Fruehauf also leased
its wholesale parts distribution center in Grove City, Ohio.
Fruehauf had an extensive distribution system,
which management believed at the Petition Date was the largest
in the industry, consisting of 31 branches (the largest
company-owned national sales network), six of which were
leased. The branch facilities consisted of office, warehouse
and service space and generally ranged in size from
20,000-35,000 square feet per facility. Fruehauf's
distribution system also included 79 "fullline" and 123
"parts-only" independent dealerships as of December 31, 1995.
As of the Petition Date, Fruehauf manufactured or marketed
several truck trailer models, including dry freight vans,
platform trailers, dump trailers and liquid and bulk hauler tank
trailers. Dry freight vans represented the largest selling
product in the industry and historically accounted for more
than two-thirds of Fruehauf's unit sales of new trailers.
Fruehauf's axle manufacturing facility located in
Delphos, Ohio, supplied most of the trailer axles required in
Fruehauf's business. Most of the axles manufactured at the
Delphos plant were unique in their square beam configuration.
All other major domestic truck trailer manufacturers utilize
round beam axles in their trailers.
Fruehauf manufactured dry freight vans at the Fort
Madison manufacturing facility and dump and platform trailers
at the Scott County manufacturing facility. In May 1994,
Fruehauf entered into a series of agreements with LBT, Inc.
("LBT") that included, among others, a private label
manufacturing agreement whereby LBT manufactured liquid and
bulk hauler tank trailers designed to Fruehauf's
specifications and marketed the tank trailers through
Fruehauf's distribution network. New trailer sales of LBT
produced product totaled approximately $13.7 million for the
year ended December 31, 1995.
Used trailer sales represented another source of
revenue. Used trailer sales were generally somewhat less
cyclical than new trailer sales. The sale of accessories and
replacement parts produced the highest gross margins of any of
the Debtors' product lines. All of Fruehauf's branches
carried a large range of replacement parts, many of which
could be used on trailers manufactured by competitors.
Fruehauf also sold replacement parts to its independent
dealers on a wholesale basis.
2. Marketing and Distribution.
--------------------------------
Fruehauf maintained a distribution network of 233 points
of distribution dedicated to servicing the trucking and
transport industry. Fruehauf's large distribution network
afforded Fruehauf the ability to generate sales to smaller
independent operators. In addition, this branch system enabled
Fruehauf to provide maintenance and other services to
customers on a nationwide basis and to take in large
quantities of trade-ins, which are common with large new
trailer deals with fleet customers.
In addition to the 31 Debtor-owned branches, Fruehauf
also sold its products through a nationwide network of
approximately 79 "full-line" and 123 "parts-only"
independent dealerships, which generally served the trucking
and transport industries. Although these dealers carried the
products of a variety of manufacturers, each dealer
generally carried only one manufacturer's "brand" of
each type of product. Fruehauf maintained a Dealer Sales
Organization to service these dealers. The 79 "full-line"
independent dealerships maintained various levels of new
trailer stock inventory.
<PAGE> 4
3. International Operations.
------------------------------
At the Petition Date, the Debtors' international
operations principally included a Mexican subsidiary and an
export operation principally for trailer components and
parts. As mentioned, Fruehauf's wholly-owned subsidiary FIL
currently holds a 99.99% equity interest in Fruehauf de
Mexico, a foreign trailer manufacturing company that
operates in Mexico. Shortly before the Petition Date, as
described more fully below, FIL completed a transaction to
sell certain of its interests in other foreign trailer
manufacturers.
Export sales from the Debtors' domestic operations were
$9.8 million, $9.4 million and $8.1 million in 1995, 1994 and
1993, respectively.
4. Employees.
---------------
As of September 15, 1996, the Debtors had
approximately 2,000 employees. Approximately 52% of such
employees were represented by labor unions, which had
entered into various separate collective bargaining agreements
with the Debtors. The Debtors currently employ approximately
6 full time employees. Approximately 417 people are employed
by Fruehauf de Mexico.
5. Assumption Agreement.
--------------------------
Old Fruehauf and Terex Trailer Corporation (formerly
FRH Acquisition Corporation and now known as Fruehauf) entered
into an Assumption Agreement dated as of July 13, 1989
whereby Fruehauf assumed certain liabilities. Fruehauf
assumed substantially all of the liabilities relating to certain
trailer subsidiaries, and the Maritime Business (as defined
below), including environmental liabilities, and liabilities
relating to employees and former employees of these
businesses (such as pension, retiree medical, and workers
compensation benefits). As described below, Maryland had
already ceased operations at the time of the Fruehauf
Acquisition, Jacksonville ceased operations in 1992 and
substantially all of CEMCO's assets were sold in December,
1991. The Fruehauf Acquisition left Fruehauf with
substantial liabilities which took years to fully
materialize. These substantial "trailing liabilities" relating
to the closed businesses were a significant factor in Fruehauf
and the other Debtors' financial difficulties which resulted
in these Chapter 11 cases.
6. The Maritime Business.
---------------------------
The Maritime Business acquired by Fruehauf in the
Fruehauf Acquisition consisted of (a) 80% of the capital stock
of Coast Engineering and Manufacturing Company ("CEMCO"), (b)
all of the capital stock of Jacksonville Shipyards, Inc.
("Jacksonville") and (c) all of the capital stock of Maryland
Shipbuilding and Drydock Company ("Maryland"). CEMCO was
engaged in the design and manufacture of heavy-duty equipment
used in dockside loading and unloading. Jacksonville was a
major ship repair facility located in Jacksonville, Florida
that ceased operations in 1992. Maryland was a shipbuilding
facility located in Baltimore, Maryland that ceased
operations in 1984.
At the time of the Fruehauf Acquisition, Fruehauf
announced its intention to divest the Maritime Business. In
December 1991, substantially all of the operating assets of
CEMCO were sold. During 1992, Jacksonville's operations
ceased, and a program was implemented to liquidate its
remaining assets, consisting primarily of real estate and
receivables. On February 10, 1995, Jacksonville completed
the sale of substantially all of its remaining real estate
in three separate transactions. As a consequence of
these transactions, all of Jacksonville's liabilities
associated with these properties, including certain vendor,
real and personal property tax and on-site environmental
liabilities, were assumed by the purchasers of the
respective properties or otherwise satisfied.
<PAGE> 5
As part of these transactions, Jacksonville received a
promissory note in the principal amount of $3,777,100.00
secured by a mortgage encumbering property owned by
Jacksonville Riverfront Development, Ltd. ("JRD"). The property
securing the mortgage was the site of Jacksonville's
operations and consists of approximately 50 acres of
riverfront property, 27.47 acres of uplands and 16.88 acres of
submerged land, located near Alltel Stadium in downtown
Jacksonville, Duval County, Florida, on the St. Johns River.
The property is divided into two parcels. The western parcel
includes approximately ten acres of land and contains four
piers that are roughly six hundred feet long. The eastern
panel includes approximately eighteen acres of uplands and
four acres of submerged land and contains one pier that is
about six hundred feet long.
At the Petition Date (and currently), CEMCO,
Jacksonville and Maryland had (have) substantial liabilities
relating to various matters, including (a) workers
compensation and retiree medical benefits in the case of
Jacksonville and Maryland, (b) off-site environmental claims
in the case of Jacksonville and (c) products liability claims in
the case of CEMCO. Such liabilities far exceeded (and
exceed) the value of the respective salable assets of these
entities. As a consequence, Fruehauf had in certain
circumstances funded these liabilities. Due in part to these
liabilities, on February 10, 1995, CEMCO filed a petition for
relief under chapter 7 of the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware.
7. 1995 Recapitalization.
--------------------------
On May 3, 1995, Fruehauf completed a recapitalization
(the "1995 Recapitalization") consisting of the
following transactions: (a) the issuance by Fruehauf pursuant to
the terms of an indenture (the "Indenture") of certain senior
secured notes (the "Senior Notes") to Fruehauf's lenders
under its then existing bank credit facility (the "Bank Credit
Facility") as a result of an amendment and restatement of
the Bank Credit Facility; (b) the issuance by Fruehauf of
detachable warrants (the "Restructuring Warrants") to purchase
2,791,907 shares of Fruehauf's common stock, par value $.01
per share (the "Common Stock"), pro rata to the holders of
the Senior Notes; (c) an amendment to Fruehauf's then
existing revolving credit facility (the "Revolving Credit
Facility"), pursuant to which, among other things, (i) Congress
Financial Corporation (Central) ("Congress") assumed the
obligations of the banks under the Bank Credit Facility in
respect of approximately $7.4 million of letters of credit
issued by such banks for the benefit of Fruehauf through the
issuance of replacement letters of credit and (ii) Fruehauf's
line of credit under the Revolving Credit Facility was
increased to $45 million less the amount of letter of credit
obligations; and (d) the issuance by Fruehauf of an aggregate
of 8,136,500 shares of Common Stock in a private placement
transaction in which Fruehauf received cash proceeds, net of
placement agent fees and other equity placement costs, of
approximately $20.7 million. The Trustee under the Indenture
is IBJ Schroder Bank & Trust Company, and the lender under the
Revolving Credit Facility was Congress.
The Senior Notes (a) were issued in an aggregate
principal amount of $74.1 million, which represents $66.6
million of then outstanding indebtedness under the Bank
Credit Facility, $4.1 million of previously accrued
amendment fees and approximately $3.4 million in fees
associated with the Senior Notes; (b) bear interest at a
rate of 14.75% per annum; (c) do not have any mandatory
sinking fund; (d) have no scheduled payments of principal
until April 30, 2002; and (e) were secured by
substantially all of the assets of Fruehauf subject to a
first priority lien on accounts receivable and inventories
held by Congress to secure Fruehauf's obligations under the
Revolving Credit Facility and the right of Congress to look to
other assets of Fruehauf under certain circumstances.
Pursuant to a registration statement filed with the
Securities and Exchange Commission, Fruehauf exchanged the
Senior Notes for debt securities with substantially
identical terms to the Senior Notes and which were publicly
tradeable securities (hereinafter also referred to as "Senior
Notes"). Interest on the Senior Notes is payable semiannually
on May l and November l of each year. As of the Petition Date,
approximately $54.5 million principal balance of the Senior
Notes remained outstanding.
<PAGE> 6
8. The K-H Letter Agreement.
------------------------------
On April 19, 1996, Fruehauf entered into a letter
agreement (the "K-H Letter Agreement") with K-H
Corporation ("K-H"), pursuant to which, among other things, K-H
purchased an aggregate $6.5 million interest in the Revolving
Credit Facility (the "Working Capital Term Note"). As part of
the Letter Agreement, KH received five-year warrants to
purchase 2,000,000 shares of common stock for an exercise
price of $2.50 per share.
On June 21, 1996, also pursuant to the K-H Letter
Agreement, Fruehauf and K-H entered into a loan agreement (the
"Subordinated Revolving Note") under which K-H agreed to lend
at least $3.5 million to Fruehauf (and additional amounts
in K-H's sole discretion) to fund trailing liabilities for
which K-H may have contingent liability. The Subordinated
Revolving Note bears interest at the rate of prime plus
2.5%. The debt owing under the Subordinated Revolving Note is
(a) fully subordinate to the debt evidenced by the Revolving
Credit Facility and the Indenture and (b) secured by a lien
on collateral subordinate to the security interests of
Congress and the trustee and collateral agent under the
Indenture.
9. Airlie Note.
-----------------
The Airlie Group, L.P. was issued a Second Amended
Restated Subordinated Promissory Note (the "Airlie Note") by
Fruehauf, dated August 26, 1994, in the original principal
amount of $8,607,312.33 issued pursuant to an Exchange
Agreement dated June 28, 1991. The Airlie Note is subordinate
to certain other debt of Fruehauf, has a maturity date of
October, 1998 and accrues interest at the rate of 15% per
annum. On June 30, 1996, Fruehauf failed to make an
interest payment due on the Airlie Note.
10. Sale of Foreign Assets.
----------------------------
On June 21, 1996, Fruehauf completed the sale of certain
of its foreign assets (the "Foreign Sale") to FIL Partners, Ltd.
as follows: (a) (i) a 15% interest in Nippon Fruehauf Company,
Ltd., which operates in Japan; (ii) a 5% interest in Henred
Fruehauf (Pty) Ltd., which operates in South Africa; and
(iii) an approximate 23% interest (9% giving consideration
to certain dilutive securities) in Societe Europeenne de
Semi-Remorques S.A. ("SESR"), which, in turn, holds equity
interests in trailer manufacturing concerns in France, the
United Kingdom and the Netherlands; (b) certain trademark
and technology licensing agreements currently operative
outside North America (including all rights to any fees payable
under any such existing agreements and any renewals thereof that
may be made in the future); (c) the trademark "Fruehauf"
outside of North America; and (d) certain excess machinery
and equipment and the rights to collect certain export trade
receivables. Proceeds to Fruehauf from the Foreign Sale, net
of transaction costs and $1 million held in escrow, totaled
approximately $18.3 million.
B. Financial Condition of the Debtors; Events Necessitating Chapter 11
Protection.
- -----------------------------------------------------------------------
Fruehauf experienced reduced bookings levels during the
second half of 1995 and the first half of 1996 as well as an
increase in the level of cancellations. Although new trailer
sales for 1995 were higher than the comparable 1994 period,
new trailer sales and gross margins during the third and
fourth quarters of 1995 were less than anticipated due to
production problems at the Fort Madison and Scott County
trailer assembly plants. As a result, both plants
experienced spot shortages in raw materials and component
parts, with corresponding difficulties in optimizing
production schedules. New trailer sales, gross margin
percentages and operating cash flows were negatively
affected by these events. The Debtors continued to
experience cancellations subsequent to December 31, 1995,
with the backlog of customer orders totaling approximately $43
million as of August 31, 1996. In addition, Fruehauf de
Mexico's revenue sources continued to be adversely affected by
the poor economic conditions in the Republic of Mexico. The
reduction in near-term production levels had a drastically
adverse effect on sales and operating profitability and on
cash flows.
<PAGE> 7
Fruehauf incurred massive losses prior to the filing of
the Chapter 11 petition which resulted in an insufficiency of
cash to sustain its operations and meet its obligations.
As of September 23, 1996, the Debtors'
manufacturing facility in Fort Madison, Iowa was idled due to
cash constraints. As of the Petition Date, Scott County had
been idled due to cash constraints.
Effective as of September 13, 1996, Thomas B. Roller,
the former President and CEO of Fruehauf, resigned from the
company to become the President and CEO of Wolverine Tube,
Inc. In addition, also effective as of September 13, 1996,
Timothy J. Wiggins, the former Executive Vice President and
Chief Financial Officer of Fruehauf, resigned from the company.
Fruehauf's Board appointed Derek L. Nagle President to
replace Mr. Roller. Formerly, Mr. Nagle was the Senior
Vice President -- North American Sales and Distribution for
Fruehauf.
III.
THE CHAPTER 11 CASE
A. Commencement of the Cases.
- -------------------------------
The Debtors commenced these cases under Chapter 11 of
the Bankruptcy Code on October 7, 1996 (the "Petition Date").
The Debtors continue to operate as debtors-in-possession,
managing their properties and estates in accordance with
Sections 1107 and 1108 of the Bankruptcy Code.
B. First Day Relief.
- ----------------------
At a hearing held on the Petition Date, the Debtors sought
a variety of forms of relief, typically referred to as "First
Day" relief. Initially, the Debtors sought and the Court
approved the retention of Jones, Day, Reavis & Pogue as
bankruptcy counsel, Morris, Nichols, Arsht & Tunnell as
co-counsel, Carson, Fischer, PLC as special counsel, Price
Waterhouse LLP as independent auditors, accountants, and tax
and financial advisors, and Logan & Company, Inc. as claims and
noticing agent.
In addition, the Debtors received the Court's approval of
a variety of routine motions allowing them, among other things,
to (1) continue to use their existing centralized cash
management system and bank accounts, (2) pay certain
pre-petition employee wages, salaries and related items, (3)
honor certain pre-petition obligations to customers, and (4) pay
certain pre-petition trust fund taxes.
Additionally, the Debtors sought interim approval of
first priority secured post-petition debtor-in-possession
financing (the "Madeleine Facility") in an interim amount not to
exceed $35 million from Madeleine, LLC ("Madeleine"), an
affiliate of Cerberus Partners, L.P.
The Madeleine Facility provided the Debtors with a line
of credit with two components: a $35 million borrowing
base facility and an over-advance facility of $20 million.
On the Petition Date, the Court approved the DIP Facility on an
interim basis pending a hearing with respect to a final order.
As part of the Interim Order approving the DIP Facility, the
Debtors were authorized to use proceeds from the DIP
Facility to pay $6,739,006.12 to K-H for amounts due
under the pre-petition working capital facility and
$6,656,425.85 to Congress Financial Corporation ("Congress") to
cash collateralize undrawn letters of credit issued by
Congress and other indemnity obligations and $7,871,561.19 to
Congress for amounts due under the pre-petition working capital
facility. Under the payoff letters with K-H and Congress, the
Debtors remained obligated to continue to indemnify K-H and
Congress for any indemnification and reimbursement
obligations under the loan documents as administrative
expenses. Additionally, Congress retained $312,448.85 as cash
collateral for any of the indemnification and reimbursement
obligations due to Congress under the loan documents.
<PAGE> 8
The Court entered a final order approving the
Madeleine Facility on November 5, 1996.
C. Formation of Unsecured Creditors' Committee and Bondholders' Committee.
- --------------------------------------------------------------------------
On October 21, 1996, the United States Trustee for the
District of Delaware appointed an Official Committee of
Unsecured Creditors for the Debtors' jointly administered
cases. The following entities were appointed as members of
the Unsecured Creditors' Committee:
a. The Airlie Group, L.P.;
b. Southern Fabricators, Inc.;
c. Decatur Aluminum Corp.;
d. Aluminum Co. of America (Alcoa);
e. Goodyear Tire and Rubber Co.;
f. Ruan Transport Corporation; and
g. Leclerc Inc.
The Unsecured Creditors' Committee retained Stroock & Stroock
& Lavan, L.L.P. as its counsel, and Saul, Ewing, Remick & Saul
as its local counsel. The Committee also retained Ernst &
Young, L.L.P. as its accountants. The Unsecured Creditors'
Committee currently consists of four members: Southern
Fabricators, Inc.; Decatur Aluminum Corp.; Aluminum Co. of
America (Alcoa); and Goodyear Tire and Rubber Co.
The Court also recognized the Unofficial Committee of
Senior Secured Noteholders (the "Bondholders' Committee") as
parties in interest. The Bondholders' Committee consists of
(a) Herzog, Heine & Geldue; (b) Lehman Brothers; (c) Bartlett &
Co.; (d) M.H. Davidson & Co.; (e) Foster & Motley, Inc.;
(f); OTA Limited Partnership; (g) Everen Securities; (h)
Baker Nye Advisors; (i) Miller Tabak Hirsch & Co.; (j)
Kennedy, Cabot & Co.; (k) Credit Research & Trading LLC; (l)
Aisel & Co., L.L.C.; (m) Yamaichi International (America); (n)
Mariner Investment Group, Inc.; (o) Paloma Partners; (p)
Societe Generale Securities Corp.; and (q) CoMac Partners,
L.P. The Bondholders' Committee retained Haynes and Boone,
L.L.P. and Young, Conaway Stargatt and Taylor as counsel.
D. First Asset Sales.
- -----------------------
On December 3, 1996, Debtor Fruehauf Trailer
Corporation sought the Court's approval of its sale of certain
real property located in Philadelphia, Pennsylvania free and
clear of all liens, claims and encumbrances pursuant to
Section 363 of the Bankruptcy Code. Again, the net proceeds
of the sale were to be paid to Madeline in accordance with
the terms of the final DIP order. By the motion, Fruehauf
sought the Court's approval of a post-petition agreement
entered according to terms as to which there had been
substantial agreement pre-petition, in September 1996. Those
terms called for the sale of the Philadelphia property to
Navistar free and clear of all liens and interest therein for
$850,000.00. The Court approved the sale of the Philadelphia
property by order dated December 23, 1996.
<PAGE> 9
E. Retention of Alvarez & Marsal Services.
- --------------------------------------------
The Debtors retained Alvarez & Marsal, Inc. ("A&M")
as crisis managers, with the Court's approval, on or about
October 9, 1996, as required by the Madeleine Facility. On
December 10, 1996, the Debtors moved the Court for an order
expanding the scope of A&M's employment to include
financial advisory and investment banking services. In
connection with the Debtors' exploration of a variety of
reorganization scenarios, the Debtors determined that the sale
of some or all of their businesses might be the appropriate
method by which to maximize the value of their estates for the
benefit of creditors. The Court approved the expanded scope of
A&M's employment on December 23, 1996.
F. Key Employee Retention Program.
- ------------------------------------
On December 9, 1996, the Debtors sought Court approval
of their assumption and performance of a two-part
pre-petition employee retention program. The first part of the
plan provided for certain retention payments consisting of a
percentage of an employee's annual salary payable over time to
encourage the key employees to remain with the Debtors.
The second program, consisting of key employees and
top-level management roles, provided similar benefits albeit
at a higher payment rate and accelerated schedule. The total
amount of the retention payments was estimated at approximately
$1.3 million. The Court approved the Key Employee Retention
Program by Order dated December 23, 1996. The Program was
not extended after it expired in March 1997.
G. Significant Events During the Case.
- ----------------------------------------
1. Sale of Delphos Axle Plant to Holland Hitch.
-------------------------------------------------
On January 22, 1997, Fruehauf and Holland Hitch
Company ("Holland Hitch") entered into a purchase agreement for
the sale of Delphos Axle unit. The agreement provided that
Holland Hitch would purchase the Delphos assets as a going
concern and take assignments of the Delphos sales contracts in
exchange for cash in the amount of $13 million, plus the
agreed value at closing of the Delphos Axle unit's inventory
and the assumption of certain liabilities.
By motion dated January 22, 1997, Fruehauf sought
Court approval for a procedure to sell the Delphos assets
free and clear of liens, claims and other encumbrances. The
procedure generally provided for a Solicitation for Bids
to Purchase Fruehauf Trailer Corporation's Delphos Axle
Business and Assets and Terms and Conditions of Auction (the
"Solicitation") to be sent to all parties either known by
Fruehauf to have an interest in the Delphos assets or
identified by Fruehauf as having a potential interest in
the assets. The Solicitation identified the procedures to
be followed by each potential bidder. The procedures required
the submission of initial written bids by no later than
February 14, 1997, accompanied by bid deposits and certain
information relating to the financial wherewithal of the
bidder. The procedures contemplated an auction being held
on February 18, 1997, and further contemplated certain
minimum bidding requirements, including minimum bidding
increments. The procedures also required that offers be in
cash and not subject to further due diligence financing or
other contingencies except those contingencies provided for
in the Delphos purchase agreement with Holland Hitch.
<PAGE> 10
In conjunction with seeking approval of the asset
sale procedures, Fruehauf also sought approval of an
expense reimbursement agreement with Holland Hitch. The
expense reimbursement agreement required Fruehauf to pay to
Holland Hitch a topping fee of $460,000 and to reimburse
certain of Holland Hitch's reasonable out-of-pocket expenses
in the event that the Bankruptcy Court approved a sale to a
party other than Holland Hitch or that Fruehauf failed to
close a sale with Holland Hitch after the Court had approved
such sale. The Court approved the asset sale procedures and
the expense reimbursement agreement.
Holland Hitch modified its offer to eliminate
an environmental escrow and reduced its bid to $12,250,000 plus
the agreed value of the inventory. Wabash National
Corporation timely submitted a bid in the amount of
$13,250,000 plus the agreed value of the inventory. On
February 18, 1997, as contemplated by the asset sale
procedures, the Debtors conducted an auction of the Delphos
assets where Holland Hitch was the successful bidder with a
bid of $14,390,000 plus the value of the inventory. Thus, as a
result of the auction, the purchase price for the Delphos
assets increased $2,140,000. The Bankruptcy Court approved
the sale of the assets to Holland Hitch.
2. Sale of Debtors' U.S. Manufacturing and Sales and
Distribution Businesses to Wabash.
-------------------------------------------------
On February 15, 1997, Fruehauf Trailer Corporation
and Fruehauf International, Ltd. sought the entry of an Order:
(i) establishing bidding and asset sale procedures for
substantially all of the Debtors' businesses and assets as going
concerns, (ii) authorizing the sale of the assets free and
clear of liens, claims and other encumbrances, and (iii)
authorizing assumption and assignment of related leases
and executory contracts. Essentially, the motion sought to
establish the procedure for an auction of Fruehauf's domestic
trailer manufacturing and domestic sales and distribution
businesses. The Debtors proposed and the Court approved a
solicitation requiring the submission of initial bids by March
14, 1997, with an auction to be held on March 18, 1997. The
procedures required bid deposits, information relating to the
financial ability of each bidder to perform and
contemplated minimum bidding increments and the submission
of bids with substantially identical terms and conditions
as established by a form purchase agreement.
On March 14, 1997, the day that bids for the Debtors'
assets were due, the Debtors appeared before the Court with
an offer from Wabash National Corporation ("Wabash"). The
Debtors sought approval of a topping fee and expense
reimbursement agreement with Wabash. The agreement, which
was approved by the Court, provided for the Debtors'
reimbursement of Wabash's expenses up to $250,000 and
payment to Wabash of a topping fee of $1.5 million. The
topping fee was not to be payable to Wabash if the Debtor
determined that the assets to be sold to Wabash should be
reorganized rather than sold. The topping fee was payable if
the Debtor accepted a higher offer for the same assets or if
the Debtor operated outside the ordinary course of its business
in a manner which lead to a material adverse change.
Wabash was the sole bidder at the March 17 auction.
In connection with the auction, Wabash altered the terms of
its prior purchase agreement with the Debtors to include the
purchase of the Debtors' Fort Madison plant and the
purchase price increased approximately $4 million as a result.
The Wabash consideration consisted of $19 million in
cash, 1,000,000 shares of Wabash common stock, and $17,600,000
of par value of Wabash preferred stock. Although
the total consideration was insufficient to pay both the
secured DIP lender and the claims of the senior secured
noteholders in full, the Court concluded that the sale was in
the best interests of the Debtors and its creditors since
it appeared to represent the market value of the assets.
Madeleine, the DIP lender, objected to the Wabash sale on the
grounds that the cash portion of the proceeds was
insufficient to pay off the Madeleine loan. The Debtors
addressed the objection by seeking the Court's authority to pay
to Bank of America certain due diligence and commitment fees as
a first step to finding a replacement DIP lender and the sale
to Wabash was approved by the Court.
<PAGE> 11
3. Rejection of Collective Bargaining Agreements
and Termination of Retiree Benefits.
-----------------------------------------------
a. Termination of Retiree Benefits.
-------------------------------------
The Debtors had approximately 1,800 retirees
and dependents of retirees (collectively the "Retirees") all of
whom at some time had been entitled to medical and related
benefits from the Debtors (the "Benefits"). Historically,
the Debtors were self insured for all of the Benefits.
The Debtors continued uninterrupted payment of
Benefits from the Petition Date through April 15, 1997, the day
prior to the closing of the Wabash sale. Payment of the
post-petition amounts required certain financial accommodations
from Fruehauf's predecessor, K-H Corporation ("K-H"). Nearly
90% of the Debtors' Retirees were employees of K-H who retired
prior to Fruehauf's acquisition of K-H's trailer and maritime
businesses.
As a result of its decision to dispose of its
domestic operations through a going concern sale, the Debtors
sent notices to Retirees on January 31, 1997, indicating that
Benefits would terminate on April 15, 1997. Section 1114 of
the Bankruptcy Code provides a process for the modification or
termination of retiree benefits. Consistent with the required
process, on April 16, 1997, the Debtors made a proposal to
the Paperworkers Union to terminate Benefits to the
Paperworkers Retirees and filed a motion for interim and
final orders terminating these Benefits pursuant to Sections
1114(g) and (h) of the Bankruptcy Code. On April 18, 1997,
the Court entered an Agreed Order among the Debtors, the
Paperworkers Union and the Bondholders' Committee immediately
terminating the Paperworkers Benefits on an interim basis.
The Debtors then requested that the Paperworkers Union be
designated as the representative of the Retirees with respect
to the Debtors proposed termination of the Benefits. The
Court granted this request. The Debtors made a proposal
to the Paperworkers Union that Retiree Benefits be terminated
because (i) the Debtors had no unencumbered assets from which
to pay the Benefits on a going forward basis (in fact, the
secured creditors were not likely to be paid in full); and (ii)
termination of the Benefits was necessary to maximize the
value of the Debtors' estate and provide the Debtors with an
opportunity to propose a plan of reorganization that would
maximize recoveries to all creditors. Further, the Debtors
pointed out that many of the retiree benefit plans at issue
were subject to termination or modification pursuant to their
terms. On May 29, 1997, the Court entered a Final Order
Authorizing Debtors to Modify Certain Retiree Benefits,
Pursuant to Section 1114 of the Bankruptcy Code in which all
Retiree Benefits were terminated. Continuing benefits may
be available to some retirees from Fruehauf predecessors
who may be co-obligors on Retiree Benefits.
b. Collective Bargaining Agreements.
--------------------------------------
The Debtors were parties to approximately 40 current
or former collective bargaining agreements (collectively,
the "CBAs") with various labor organizations (collectively,
the "Unions") representing certain former employees of the
Debtors (collectively, the "Employees"). Upon the sale of the
Delphos Axle plant and the sale of the domestic manufacturing
and sales and distribution operations to Wabash, virtually all
of Debtors' Employees were terminated. Although Holland Hitch
and Wabash agreed to hire many of the Employees, it did not
agree to the assignment of the CBAs in connection with the
purchases. By motion dated April 22, 1997, the Debtors
sought authority to terminate and reject their CBAs pursuant
to Section 1113 of the Bankruptcy Code. At the same time,
the Debtors sent notice to the Unions that it proposed to
terminate and reject all CBAs and agreed to meet with the
Unions to discuss the proposed termination and rejection,
all as required by Section 1113 of the Bankruptcy Code. In
their motion, the Debtors pointed to the sale of their
assets and the termination of their Employees as grounds for
termination and rejection of the CBAs. The Debtors also
pointed out that they had no unencumbered assets with which to
pay any obligations that might arise under the CBAs. The
Debtors did not waive their right to assert that the CBAs
had already been terminated pursuant to their terms.
Following negotiations with the Unions and a hearing on
notice, the Bankruptcy Court approved termination of the
Debtors' CBAs on May 29, 1997.
<PAGE> 12
4. Receipt of $6.5 Million Senior Mortgage on Certain Jacksonville Property.
- ----------------------------------------------------------------------------
As noted above, Jacksonville held a promissory note in
the principal amount of $3,777,100.00 secured by a
mortgage encumbering property, a 50 acre parcel of land in
Duval County, Florida which is owned by JRD. On December
3, 1996, Debtor Jacksonville sought Court approval of an
agreement to sell the promissory note and purchase money
mortgage pursuant to Section 363(b) of the Bankruptcy Code.
Under the agreement, Jacksonville agreed to sell the note and
mortgage to JRD for $2.745 million, which, less certain fees,
costs and expenses related to the sale, would be paid to the
Debtor's DIP lender in accordance with the terms of the final
DIP order entered on November 5, 1996. In a hearing on
December 23, 1996, the Court approved the Debtor's motion
authorizing it to sell the note and mortgage. However, the
sale never closed. JRD defaulted on its obligations to pay the
note and Jacksonville instituted foreclosure proceedings.
Subsequently, JRD filed chapter 11 in Jacksonville, Florida
to stay the foreclosure, and Jacksonville pursued its rights in
that bankruptcy case.
On May 22, 1998, JRD's plan of reorganization was
confirmed. With respect to JRD's default on the promissory
note in the principal amount of $3,777,100.00 secured by
a mortgage, Jacksonville received an allowed secured claim
against JRD in the amount of $5,140,000 (the "Claim"). In
addition, under JRD's plan, Jacksonville loaned JRD
$1,342,046 (the "Tax Loan") to redeem certain tax
certificates that endangered Jacksonville's recovery on its
claim against JRD. To ensure repayment of both the Tax Loan
and the Claim, Jacksonville has received a consolidated
five year note in the amount of $6,502,583.00 (the "Note")
secured by a first mortgage on the property. The Note accrues
interest at 12.5% per annum and is repayable in monthly
payments based on a 20 year amortization. JRD's monthly
payments to Jacksonville on the Note will also include payment
of 12% of the interest owed, and an additional 0.5% in interest
will accrue and be due on the sale of Jacksonville's
collateral, on refinancing or in 5 years, when the Note
matures. In addition, JRD is required to (i) fund a tax
escrow account maintained by Debtors' counsel to ensure
payment of all property taxes; (ii) adequately insure the
property, and (iii) comply with any orders issued by the
Florida Department of Environmental Protection (including an
existing consent order) relating to environmental concerns with
respect to the property.
5. Replacement of the Madeleine Facility with the BOA Facility.
- ----------------------------------------------------------------------
In conjunction with the Debtors' efforts to close the
sale to Wabash, the Debtors sought court authority to enter
into a debtor-in-possession financing agreement (the "BOA
Facility") with Bank of America NT&SA. As described above,
the Debtors' original DIP lender was Madeleine. Under the
terms of the Madeleine Facility, Madeleine had the authority
to disapprove a sale of the Debtors' assets. Madeleine had
opposed the sale to Wabash on the limited basis that the
sale would not produce sufficient cash to retire the
Madeleine Facility. Through the BOA Facility, the Debtors
sought sufficient financing to pay off the Madeleine Facility
with a combination of the cash proceeds from the Wabash sale
and a draw on the BOA Facility. The BOA Facility was needed
to finance the wind down of the estates.
<PAGE> 13
The BOA Facility allowed the Debtors to borrow up to
$12.5 million. The BOA Facility was secured by a first
priority lien and security interest in all property of the
Debtor's estate, including the Wabash stock that Debtors
would receive in conjunction with the Wabash sale. BOA was
also granted a super priority administrative expense claim to
secure repayment of the BOA Facility.
The BOA Facility was approved by the Bankruptcy Court
and the Madeleine Facility was retired at the closing of the
Wabash sale. In August 1997, the Debtors sold sufficient
shares of Wabash common stock in a private placement to pay
off the BOA Facility and to provide the Debtors with
sufficient ongoing working capital.
6. Litigation with Alvarez & Marsal and Thomas E. Ireland.
------------------------------------------------------------
Fruehauf and the Unofficial Committee objected to the
fee application of A&M, the crisis managers and investment
bankers for Fruehauf. A&M was employed as the crisis
manager (with Thomas E. Ireland serving as Chief Executive
Officer of Fruehauf) shortly after the case was filed. The
engagement was expanded to include investment banking services
effective November 21, 1996. While A&M was employed in both
roles, Fruehauf sold substantially all of its assets,
including an axle manufacturing plant in Delphos Ohio to
Holland Hitch. In addition, Wabash purchased Fruehauf's sales
and distribution network and its Scott County and Fort Madison
trailer manufacturing plants.
A&M requested approval of crisis management fees
of $708,333.33 and investment banking fees of $1,010,104.05 and
also filed an unliquidated administrative expense claim
for indemnification by Fruehauf for the litigation
expenses. Oppenheimer & Co., which had served as the Debtors'
investment bankers before the bankruptcy filing, filed an
administrative claim asserting a right to a fee for its
pre-petition investment banking work. Fruehauf and the
Bondholders' Committee objected to Oppenheimer's
administrative claim and that dispute was consolidated with
the A&M application. After extensive discovery and litigation,
the dispute was settled. The settlement, which was approved
by the Bankruptcy Court, included A&M reducing its investment
banking fee by $550,000, and returning the balance of its
retainer after paying the balance owed on its crisis
management fees. Oppenheimer received $100,000 in cash and
an allowed unsecured claim of approximately $1.6 million. From
the litigation, Fruehauf received approximately $535,000, net
the payment to Oppenheimer. The parties exchanged mutual
releases and a joint press release was issued by Fruehauf
and A&M announcing the settlement.
7. Relocation of Offices to California.
-----------------------------------------
After the sale of the remaining domestic manufacturing
and Sales and Distribution system to Wabash, the Debtors
had no ongoing need for their corporate headquarters to remain
in its leased space in Indianapolis. The headquarters
lease was rejected on June 1, 1997, and the remaining books,
records and headquarters were relocated to California to
office space near the Debtors' Chairman and President and its
employees. The move, which did not include relocating any
employees, saved the Debtors' money by reducing leasehold
expenses and travel costs associated with the Indianapolis
headquarters.
8. Sales of Wabash Stock.
---------------------------
Fruehauf sold 800,000 of the 1,000,000 shares
of unregistered and restricted Wabash National Corporation stock
it received in April 1997. On August 15, 1997, Fruehauf
sold 600,000 of its shares of Wabash Common Stock to Merrill
Lynch, Pierce Fenner & Smith Incorporated ("Merrill
Lynch") which realized cash proceeds of $15,641,361.81. The
sale to Merrill Lynch was done to enable Fruehauf to pay, in
full, the sum of $8,274,115.97 to Bank of America, Fruehauf's
debtor in possession lender, and to obtain working capital.
On November 7, 1997, Fruehauf sold an additional 200,000 of
its shares of Wabash Common Stock to Merrill Lynch which
realized cash proceeds of $5,591,625.00. This sale was done
to obtain additional working capital. The sales were
accomplished in private placements since the stock had not been
registered and was restricted when it was sold.
<PAGE> 14
H. Current Management of the Debtors and Disclosure of Compensation.
- ----------------------------------------------------------------------------
The Debtors' Boards of Directors each have two members
Chriss W. Street and Worth W. Frederick. From October
1996 through April 16, 1997, Fruehauf's Board also included
Jonathan Gallen and Robert Incorvaia who had been
designated by the initial DIP lender and who resigned when
that debt was paid.
The Debtors' current officers and their annual
compensation is as follows:
Chriss W. Street, Chair, President and CEO $270,000
James Wong, CFO and Treasurer $78,000
Worth W. Frederick, Vice President $90,000
Courtney Watson, Secretary $65,000
Chriss W. Street
----------------
In 1996, Street was elected to the Board of Directors
of Fruehauf Trailer Corporation and became its Chairman in
October of 1996. After the resignation of Mr. Ireland as CEO
in April, 1997, Street became Fruehauf's CEO. Street was
instrumental in negotiating the sale of Fruehauf's sales and
distributions and manufacturing assets to Wabash. Street was
also instrumental in obtaining and negotiating the replacement
DIP loan from Bank of America.
After the Effective Date, Street will serve as
Liquidating Trustee of the Liquidating Trust. In addition to
his positions with Fruehauf, Street is a principal in Chriss
Street & Company and the Chairman and CEO of Comprehensive
Care Corporation. Street is an investment banker and
corporate workout specialist with a proven background in
assessing and maximizing the value in troubled companies and
their assets. A former officer of Dean Witter Reynolds &
Company and Kitter Peabody & Co.; and a managing director
of Sidler Amdec Securities, Street formed his own company,
Chriss Street & Company in 1992, and he currently serves as
President. The firm specializes in the securities of troubled
companies.
Worth W. Frederick
------------------
Worth W. Frederick currently serves as Vice President and
a Director of Fruehauf Trailer Corporation and is the
acting President and managing director of Fruehauf de Mexico.
Under his leadership, the Mexican operations have tripled
production and obtained profitability.
Mr. Frederick has extensive hands-on experience
in management consulting services. He has helped a number
of companies analyze their business problems, increase
productivity and profitability, assessing manufacturing
operations and improve project planning, scheduling and quality
control. He has served as an interim Chief Executive
Officer, Chief Operating Officer and in other senior
management positions. Prior to becoming a consultant, Mr.
Frederick had extensive experience in the manufacturing
area, including serving as an executive officer of Teledyne
Systems and of Ford Aerospace Corporation. Mr. Frederick
also served as the President and CEO of Asco Aerospace Products.
In these capacities, Mr. Frederick has directed all aspects
of manufacturing, including project planning, product
assurance, engineering, and materiel and logistics organization.
<PAGE> 15
Mr. Frederick holds an M.S. in Industrial
Management (comparable to an M.B.A.) and a B.S. in electrical
engineering from Purdue University.
James Wong
----------
James Wong serves as the Chief Financial Officer,
Treasurer and Vice President of Fruehauf Trailer Corporation.
He also shares responsibility with Mr. Frederick for
oversight of the operations of Fruehauf de Mexico. Mr. Wong
managed the wind down and transition of Fruehauf after the sale
to Wabash. Mr. Wong has also worked extensively on
evaluating Fruehauf's remaining assets and in trying to sell
the remaining property, much of which has environmental issues.
From 1994 through 1997, Mr. Wong served as Vice President
of Chriss Street & Company and as Senior Financial Analyst
for Comprehensive Care Corporation. Mr. Wong was instrumental
in the financial restructuring of Comprehensive Care
Corporation, which is listed on the New York Stock Exchange.
In these capacities, Mr. Wong analyzed a number of distressed
companies as well as certain debt and equity securities in a
number of industries, including the health care
industry, and the ground transportation, computer disk
drive and soft line retail industries. As Financial
Analyst for Comprehensive Care Corporation, Mr. Wong
performed numerous standard corporate accounting functions,
analyzed merger and acquisition targets, engaged in due
diligence and performed company valuations and deal
structuring. Prior to joining Chriss Street & Company, Mr.
Wong served as a financial analyst with Merrill Lynch.
Courtney Watson
---------------
Courtney Watson currently serves as corporate secretary
of Fruehauf Trailer Corporation. In that capacity, she
maintains corporate records and administers a number of
employee relations functions as part of the winding down of
Fruehauf's operations. Ms. Watson has also attempted to create
order from the remaining financial records of Fruehauf and to
assure payment of postpetition obligations of the Debtor.
Ms. Watson also serves as the corporate secretary
for Comprehensive Care Corporation and is the Chief Financial
Officer of Chriss Street & Company where she is
responsible for accounting transactions, securities
transactions and securities compliance. She has securities
License Series 7, Series 63 and Series 28. Before joining
Chriss Street & Company, Ms. Watson operated a business that
offered a wide range of accounting services needed by small
businesses and individuals. From 1980 through 1989, Ms.
Watson was a project manager at Ford Aerospace and
Communications Corporation where she managed contracts and
presented cost versus budget performance using cost
schedule status reporting.
The officers will receive the following bonuses on
the Effective Date of the Plan:
Chriss W. Street $350,000
Worth W. Frederick $100,000
James Wong $50,000
Courtney Watson $50,000
These bonuses reward the officers for the significant
results they achieved in liquidating the Debtors' assets
and the substantial work performed before becoming
employees of the Debtors as well as after assuming these
positions.
<PAGE> 16
I. Assets and Liabilities of the Debtors.
-------------------------------------------
1. Debtors' Major Assets (1)
-----------------------------
a. Unrestricted Cash and Short Term Investments
-------------------------------------------------
Debtor had $8,637,000 in cash and short
term investments as of April 30, 1998.
b. Stock of Wabash National Corporation
-----------------------------------------
(1) 200,000 shares of Common Stock of Wabash
National Corporation
(2) 352,000 shares of $50 Preferred Stock
of Wabash National Corporation convertible into shares of
common stock of Wabash National Corporation at a price of
$21.375 per share. The Preferred Stock includes a coupon rate
of 6% on the face value of $17,600,000 and is redeemable by
Wabash under certain circumstances.
c. Fruehauf de Mexico
-----------------------
(1) Operations
Fruehauf de Mexico owns and operates a
trailer manufacturing plant located approximately 45 minutes
north of the Mexico City, Mexico airport. In January,
1998, the plant manufactured 198 trailers, primarily for sale
in Mexico. The main plant covers 108,000 square feet (70 x
171 meters) and has the capacity to manufacture 1920
trailers per year (using a single shift at current
efficiency without overtime or weekend work by employees).
Worth Frederick, Vice President, is responsible for
overseeing the plant and its operations. Fruehauf de
Mexico has shown a small operating profit (EBITDA) on a monthly
basis since June, 1997.
(2) Assets and Liabilities
As of February 28, 1997, Fruehauf de
Mexico's primary assets and liabilities and their related book
value in U.S. dollars were:
Assets
-------
Property, Plant, Equipment (2) $ 6,010,000
Inventory 3,821,000
Accounts/receivable 4,204,000
Cash (242,000)
----------
Total $13,793,000
(1) This discussion does not indicate the specific Debtor owns
each asset. All of the Debtors' assets are subject to the liens
of the holders of the Senior Notes. Since the value of the
assets does not exceed the amount owed to the holders of the
Senior Notes, the ownership of specific assets is irrevelant to
unsecured creditors. Distributions under the Plan to
administrative, priority and unsecured creditors are only being
made because the Senior Noteholders have agreed to allow such
distributions from their collateral.
(2) This value represents approved fair market value of the
property, plant and equipment as of January 8, 1998.
<PAGE> 17
Liabilities
------------
Trade Payables $2,893,000
Note Payable FIC 1,285,000
Short Term Debt 521,000
Customer Advances 1,115,000
Other Current Liabilities 970,000
----------
Total $6,784, 000
Customarily, Fruehauf de Mexico's customers pay
substantial deposits with their order for trailers.
(3) Labor situation
Fruehauf de Mexico employs approximately 417
full time employees. The employees are represented by
CTM for collective bargaining purposes. Fruehauf de
Mexico is not experiencing any labor problems at this time.
(4) Competition
Fruehauf de Mexico's market share (in Mexico)
is approximately 35%. Its primary competitors, and their
respective market shares, are Ramirez, 20%; Caytressa, 15%;
and Gonzales, Rocsa, Retessa, Wabash, and others, each with
approximately 5%.
Fruehauf de Mexico currently manufactures
the following types of trailers: dry freight vans, reefers,
bottom hoppers, end dumps, rock dumps, liquid tankers and
platforms.
(5) Intercompany obligation
As of December 31, 1997, Fruehauf de Mexico
owed Fruehauf $955,000 on open account.
(6) Financing
Fruehauf de Mexico entered into a one year,
$1 million (US) line-of-credit financing agreement with
Mercedes Benz Financing. Draws accrue interest at LIBOR plus
6.5%.
(7) Management
Worth Frederick is the managing director of
Fruehauf de Mexico. Mr. Frederick has many years of
experience in the manufacturing industry and has been a member
of Fruehauf's Board since 1996. James Wong, who has worked
with Chriss Street in corporate restructurings for the last
four years, assists Mr. Frederick in overseeing Fruehauf
de Mexico's operations. Marcelino Carmona, who has been with
the Company for thirty (30) years, will continue as Director
of Plant Operations. Eliseo Flores, who has worked in trailer
sales for over 15 years and for the last six years in Mexico,
will continue as Director of Sales.
<PAGE> 18
(8) Ownership
Fruehauf International Corporation is the
majority owner of Fruehauf de Mexico.
d.Jacksonville Riverfront Development Note Receivable
-----------------------------------------------------
As noted above, Jacksonville holds a five
year promissory note in the amount of $6,502,583.00 (the
"Note") secured by a first mortgage on approximately 50
acres of riverfront property located in downtown
Jacksonville, Duval County, Florida. The Note accrues
interest at 12.5% per annum and is repayable in monthly
payments based on a 20 year amortization. JRD's monthly
payments to Jacksonville on the Note will also include payment
of 12% of the interest owed, and an additional 0.5% interest
will accrue and be due on the sale of Jacksonville's
collateral, on refinancing or in 5 years, when the Note
matures. In addition, JRD is required to (i) fund a tax
escrow account maintained by Debtors' counsel to ensure
payment of all property taxes; (ii) adequately insure the
property; and (iii) comply with any orders issued by the
Florida Department of Environmental Protection (including an
existing consent order) relating to environmental concerns
with respect to the property.
e.Kearny Branch Note Receivable
-------------------------------
The Debtor sold its branch in Kearny, New Jersey to
15 Hackensack Avenue Corp. before these cases were filed.
The purchase price included a 60 month promissory note
with an original face amount of $2,400,000 and requiring
monthly payments of $10,000 in principal plus an additional
amount for interest, all of which is secured by the property.
The note balloons on February 1, 2001. As of March 31, 1998,
the balance owed the Debtor was approximately $1,734,000.
The note has been in default since February of 1997,
although the borrower has continued to pay $25,000 a
month. Fruehauf is instituting foreclosure proceedings
against 15 Hackensack Avenue Corp.
This property has environmental damages which need to
be remediated. The note calls for these costs to be split
evenly between the purchaser of the property and FTC, with a
maximum exposure to FTC of $500,000. The costs associated
with this clean-up are estimated at approximately $1,000,000
and therefore the value of the note has been reduced by
$500,000. No such costs have yet been incurred, and the
$500,000 claim against Fruehauf with respect to this
contingent liability has been disallowed by the bankruptcy
court.
f. Sindorf
-----------------
The Debtors believe that Fruehauf International
Limited ("FIL"), through various entities, has an interest or
interests in property located in Sindorf, Germany, an
industrial municipality near Cologne. The Debtors believe
that FIL owns Deutsche-Fruehauf Holdings Corporation and
Deutsche-Fruehauf Beteiligungs GmbH, which owns
Deutsche-Fruehauf Holdings Corporation, which owns 98% and
2%, respectively, of the partnership interests in Fruehauf
Corp. & Co. CLG, a German partnership which the Debtors
believe has an interest in 54,581 square meters of real
property in Sindorf. At the present time, despite
investigation, it remains unclear what interest, if any, FIL
has in the Sindorf property. In addition, the German Pension
Protection Agency (PSVaG) has a claim against Fruehauf
for DM 6.01 million with respect to the Sindorf property.
Fruehauf also has other liabilities associated with the
Sindorf property that are approximately DM 0.2 million.
<PAGE> 19
g. Miscellaneous Real Estate
-----------------------------------
The Debtors own various tracts of real estate throughout
the U.S. The Debtors own eight home lots in Lexington
Township, Davidson County, North Carolina, that do not meet
certain city ordinances governing home lots and thus have
little, if any, value. The Debtors own two additional sites
in Jacksonville, the Hogan's Creek property and the
Pickettsville dump site and Mayport. These sites have
values that are very difficult to determine. The Hogan's
Creek property cannot be sold at this time because it may
be taken by eminent domain (the property adjoins a highway).
The Pickettsville dump site may contain hazardous waste and
an environmental study will have to be undertaken to
determine the future best use of this property. The Mayport
property consists of three lots of undeveloped light industrial
commercial real estate. Management has estimated the value of
this property at $300,000. Finally, Fruehauf owns 7.89 acres
with a building in Harrisburg, Pennsylvania that has been
appraised for $350,000.
h. Miscellaneous Receivables and Escrows
-----------------------------------------------
The primary receivables and escrows, excluding
the receivable from Fruehauf de Mexico discussed above, arise
from refunds of insurance premiums and state sales tax payments.
The largest is from the Debtors' workers compensation carrier,
AIG, in the amount of approximately $2 million. The AIG escrow
will be released when the claims against the policies
have been resolved. There can be no assurance that any
of these receivables or escrows will have any value.
i. Causes of action
--------------------------
(1) Miscellaneous Receivables and Escrows
The primary receivables and escrows, excluding
the receivable from Fruehauf de Mexico discussed above, arise
from refunds of insurance premiums and state sales tax
payments. Other escrows are held by the Debtors' former
DIP lender, Madeleine and various present and former
professionals. The largest escrow is from the Debtors' workers
compensation carriers and providers of financial
responsibility bonds for Fruehauf prior to the Petition Date,
American International Group and its related insurance
companies ("AIG"), in the amount of approximately
$4..5 million. The AIG escrows will be released when the
claims against the policies have been resolved or through
litigation with AIG. There can be no assurance that any of
these receivables or escrows will have any value.
(2) Causes of action
The Debtors are currently investigating possible causes
of action they might have against various parties. The
bankruptcy related causes of action include preferential and
other avoidable transfers. The Debtors have yet to identify a
precise amount that it would seek from the recipients of these
transfers.
With respect to preferences, any entity or person
who received a payment or other property from the Debtors within
the 90 days before the Petition Date (or one year before the
Petition Date if the entity or person is an insider, as defined
in section 547(b)(4)(B) of the Bankruptcy Code) is a potential
target by the Debtors for a preference action under
section 547 of the Bankruptcy Code. The Debtors'
efforts to investigate preferences has been hampered by
the lack of certain records which should have been kept and
maintained in the ordinary course of business by the Company.
To date, the following entries or individuals are being
investigated by the Debtors to determine whether they
received a preferential transfer: Preferred Fabricators,
Inc. ($177,000), West Michigan Trailer Sales, Inc. ($67,000),
Shiloh Corporation ($24,000).
<PAGE> 20
The Debtors are also investigating possible causes of
action against Terex Corporation and K-H Corporation related
to their prior ownership of the Fruehauf business and their
transactions in that regard. It is also investigating
possible causes of action against officers and directors .
Efforts are being made to try to realize upon what
the Debtors believe are over-funded pension plans (on a
consolidated basis) presently maintained by the Debtors. In
addition, the Debtors have commenced an action with respect to
Fruehauf Trailer Corporation Retirement Plan No. 3 under
section 548 of the Bankruptcy Code with respect to an
increase in pension benefits approved for certain non-union,
long-time employees of Fruehauf just three weeks before the
Debtors filed their chapter 11 petitions , alleging that
such increase was a fraudulent transfer which should be voided.
The Debtors presently intend to contest the various
claims of AIG, including the amount of the escrowed funds
presently held by AIG.
The Debtors are also evaluating a number of secured
claims, including priority and secured tax claims, and may
object to these claims either before or after confirmation.
All causes of action of the Debtors, whether arising under
the Bankruptcy Code or otherwise, are reserved and retained by
the Debtors and will be transferred to the Liquidating Trustee.
2. Liabilities
----------------
All of the Debtors' assets are encumbered by liens in
favor of the holders of the Senior Notes. The outstanding
principal and accrued interest amount of the Senior Notes on
the filing date was $57,988,778. To the extent that the
value of the Debtors' assets exceeds the principal amount owed
to the holders of the Senior Notes, the Senior Notes
accrue post-petition interest. The estimated values of the
Debtors' assets, as described above, total less than the
principal amount owed to the holders of the Senior Notes.
Pursuant to the terms of the Plan, the Senior
Noteholders have agreed to the creation of a Distribution Fund
from which the Administrative and Priority Claims of the Debtors
shall be paid. The Debtors currently estimate that
Administrative Claims, excluding unpaid professional fees,
will be approximately $450,000. As of April 30, 1998,
unpaid professional fees were approximately $1,474,900.
Priority claims, including Priority Tax Claims, could be as
much as $1,250,000. The Debtors believe they have meritorious
defenses to a number of the Priority Claims and that the total
amount of Priority Claims will be materially less than this
amount.
In addition to the claims of the Senior Noteholders,
other creditors, whose claims may total as much as $385,000,
assert liens or security interests in the Debtors' assets.
These creditors are treated as Class 3 creditors under the Plan.
Many of these claims are contingent and disputed.
Over $936 million of Unsecured Claims have been
asserted against the Debtors. The Debtors have not attempted
to estimate the amount of Unsecured Claims that will ultimately
be allowed. The Debtors scheduled $49 million in Unsecured
Claims, but unliquidated, Disputed Claims that are ultimately
allowed may increase the total unsecured debt above the
scheduled amount.
<PAGE> 21
IV.
SUMMARY OF PLAN
A. Overview
- -------------
Although the holders of the Senior Notes could
foreclose their liens in all of Debtors' assets leaving nothing
for other creditors, the holders of the Senior Notes have
agreed to this Plan which provides for the payment of
Allowed Administrative, Priority and Pre-Petition Tax
Claims and for a potential distribution to general
unsecured creditors. The Wabash Securities will be
conveyed to the Indenture Trustee to be distributed to the
holders of the Senior Notes. The Debtors remaining assets
will be foreclosed and/or transferred to the Liquidating
Trust. The holders of Allowed Administrative, Priority
and Pre-Petition Tax Claims will receive Class B
beneficial interests in the Liquidating Trust's
Distribution Fund. The Senior Noteholders have also agreed
that if Class 4 (unsecured creditors) accepts the Plan,
holders of Allowed unsecured Claims will receive 5.5% of the
Class A Beneficial Interests in the Liquidating Trust.
Ownership of the Class A Beneficial Interests in the
Liquidating Trust will be evidenced by Trust Certificates.
Chriss W. Street, the current Chair and CEO of the
Debtors will serve as Trustee of the Liquidating Trust. A Trust
Advisory Committee of two (2) holders of Senior Notes will also
be created to assist in the decision-making process.
THIS SECTION PROVIDES A SUMMARY OF THE CLASSIFICATION
AND TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN, AND THE
MEANS FOR IMPLEMENTATION OF THE PLAN, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE PLAN, WHICH IS ATTACHED TO THIS
DISCLOSURE STATEMENT AS EXHIBIT A, AND TO THE OTHER
EXHIBITS ATTACHED THERETO. ALL CAPITALIZED TERMS USED BUT
NOT DEFINED IN THIS SECTION HAVE THE MEANINGS ASCRIBED TO
SUCH TERMS IN THE PLAN.
B. Designation of Claims and Interests.
- -----------------------------------------
1. Summary.
-------------
The following is a designation of the classes of Claims
and Interests under this Plan. In accordance with section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and
Tax Claims described in Article 3 of this Plan 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 Interest is not in any Class. Notwithstanding
anything to the contrary contained in this Plan, no
distribution shall be made on account of any Claim or Interest
which is not an Allowed Claim or Allowed Interest.
<PAGE> 22
Class Status
----- ---------
A. Secured Claims
- -------------------
Class 2: Secured Claims of holders Impaired entitled to vote
of Senior Notes
Class 3: Secured Claims other than Impaired entitled to vote
Senior Note Claims
B. Unsecured Claims
- ---------------------
Class 1: Priority Claims Unimpaired-no right to vote
Class 4: All Unsecured Claims Against Impaired entitled to vote
the Debtors
C. Interests
--------------
Class 5: Old Common Stock Impaired deemed to have rejected
Class 6: Old Warrants Impaired deemed to have rejected
Class 7: Securities Claims Impaired deemed to have rejected
C. Treatment of Unclassified Claims
-------------------------------------
1. Administrative Claims.
---------------------------
a. General. Subject to the bar date
provisions herein, unless otherwise agreed to by the parties,
each holder of an Allowed Administrative Claim shall receive
Cash equal to the unpaid portion of such Allowed Administrative
Claim on the later of (a) the Effective Date or as soon as
practicable thereafter, (b) the date on which such
Claim becomes an Allowed Administrative Claim and (c)
such other date as is mutually agreed upon by the Debtors
and the holder of such Claim. All holders of Allowed
Administrative Claims shall have a beneficial interest in the
Liquidating Trust's Distribution Fund, and the Distribution
Fund shall be the sole source of payment of such Claims.
b. Payment of Statutory Fees. All fees
payable pursuant to 28 U.S.C. 1930 shall be paid in Cash equal
to the amount of such Administrative Claim when due.
c. Bar Date for Administrative Claims.
(i) General Provisions. Subject to
the exceptions provided in sections 3.1(c)(ii) and (iii), by
Order dated August 13, 1997, the Court established October 6,
1997 as the date by which certain holders of
Administrative Claims arising prior to August 13, 1997 must
have filed Proofs of Claim in lieu of requests for payment
of Administrative Claims. Holders of Administrative Claims
that have not filed such Proofs of Claim by the applicable
Administrative Claim bar date shall be forever barred from
asserting such Claims against the Debtors, the Liquidating
Trust or any of the Debtors' property.
<PAGE> 23
(ii) Professionals. All professionals or
other entities requesting compensation or reimbursement of
expenses pursuant to sections 327, 328, 330, 331, 503(b) and
1103 of the Bankruptcy Code for services rendered before the
Effective Date (including, without limitation, any compensation
requested by any professional or any other entity for
making a substantial contribution in the Reorganization Case)
shall File and serve on the Liquidating Trustee at 1111
Bayside Drive, Suite 100, Corona del Mar, California
92625-1755; Haynes and Boone, L.L.P., (Attn: Robin Phelan, Esq.)
901 Main Street, Dallas, Texas 75202-3789, as counsel to the
Bondholders' Committee; Camhy Karlinsky & Stein LLP (Attn:
David Neier, Esq.), 1740 Broadway, New York, NY 10019;
Morris, Nichols, Arsht & Tunnell (Attn: William H.
Sudell, Jr., Esq.), 1201 North Market Street,
Wilmington, Delaware 19801; and The Honorable Patricia A.
Staiano, United States Trustee, The Curtis Center, 601 Walnut
Street, Suite 950W, Philadelphia, PA 19106; an application for
final allowance of compensation and reimbursement of expenses
no later than fortyfive (45) days after the Effective
Date. Objections to applications of professionals for
compensation or reimbursement of expenses must be Filed and
served on the Liquidating Trustee and the professionals to
whose application the objections are addressed no later than
seventy (70) days after the Effective Date. Any
professional fees and reimbursements or expenses incurred
by the Liquidating Trust subsequent to the Effective Date may
be paid by the Liquidating Trust without application to the
Bankruptcy Court. The Liquidating Trustee shall pay the
reasonable fees and expenses of the professionals of
the Bondholders' Committee incurred prior to the Effective Date
and the fees and expenses of the Indenture Trustee incurred
prior to the Effective Date as determined by the Court.
d. Tax Claims. All requests for payment
of 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
("Post-petition Tax Claims") and for which no bar date has
otherwise been previously established, must be Filed on or
before the later of (i) 45 days following the Effective Date;
and (ii) 90 days following the filing with the applicable
governmental unit of the tax return for such taxes for such
tax year or period. Any holder of any Post-petition Tax
Claim that is required to File a request for payment of such
taxes and 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, the
Liquidating Trust or their respective properties, whether
any such Post-petition Tax Claim is deemed to arise prior to,
on, or subsequent to the Effective Date. To the extent that
the holder of a Tax Claim holds a lien to secure its Claim
under applicable state or federal law that survives the deemed
foreclosure by the holders of the Senior Notes, the surviving
lien shall attach to the Distribution Fund and remain in
effect until the Tax Claim has been paid in full. To the
extent that a Tax Claim is a Disputed Claim, any lien
securing such Disputed Claim under applicable state or
federal law shall attach to the Distribution Fund for such
Disputed Claim. Upon disallowance of a Disputed Tax Claim or
allowance and payment of such claim, such lien shall be
released. Failure by the Liquidating Trustee to make a payment
on an Allowed Tax Claim pursuant to the terms of the Plan
shall be an event of default. If the Liquidating Trustee fails
to cure an event of default as to an Allowed Tax Claim within
twenty (20) days after service of written notice of default
from the holder of such Allowed Tax Claim, then the holder of
such Allowed Tax Claim may enforce the entire amount of its
Claim, plus interest as provided under this Plan, against the
Liquidating Trust in accordance with applicable state or
federal law remedies. At the option of the Liquidating Trustee
and as an alternative to the treatment provided above, the
Liquidating Trustee may surrender the property securing the
post-petition Tax Claim and allow the holder to foreclose upon
the property. Surrendering the property will satisfy the Tax
Claim in full.
<PAGE> 24
2. Treatment of Pre-Petition Tax Claims. Each holder
of an Allowed Pre-Petition Tax Claim shall have a
beneficial interest in the Liquidating Trust's Distribution Fund
and be paid in Cash from the Distribution Fund on the latest
of: (i) the first practicable date after the Effective Date,
(ii) 30 calendar days after the date on which an Order allowing
such Claim becomes a Final Order, (iii) the last day the taxes
may be paid under applicable law without incurring penalties
or interest, and (iv) such other time or times as may be
agreed by the holder of such Claim and the Trustee. To the
extent that the holder of a Tax Claim holds a lien to secure
its Claim under applicable state law following the deemed
foreclosure by the holders of the Senior Notes, the surviving
lien shall attach to the Distribution Fund and remain in
effect until such Allowed Pre-petition Tax Claim has been
paid. To the extent that a Tax Claim is a Disputed Claim,
any lien securing such Disputed Claim under applicable state
law shall either remain in effect or attach to the
Distribution Fund reserve for such Disputed Claim.
Upon disallowance of a Disputed Tax Claim or allowance and
payment of such claim, such lien shall be released.
Subject to the limitations of 11 U.S.C. 506(b), Allowed
Pre-Petition Tax Claims that are secured by liens under
applicable state or federal law shall accrue interest, but
not penalties, at the rates provided under applicable state
or federal law up to the Effective Date, and thereafter, to
the extent the liens have survived the deemed foreclosure
by the holders of the Senior Notes, shall accrue interest
at the rate of 7% per annum. Failure by the Liquidating
Trustee to make a payment on an Allowed Tax Claim pursuant
to the terms of the Plan shall be an event of default. If
the Liquidating Trust fails to cure an event of default as
to an Allowed Tax Claim within twenty (20) days after service
of written notice of default from the holder of such Allowed
Tax Claim, then the holder of such Allowed Tax Claim may
enforce the entire amount of its Claim, plus interest as
provided under this Plan, against the Liquidating Trust in
accordance with applicable state or federal law remedies. At
the option of the Liquidating Trustee and as an alternative to
the treatment provided above, the Liquidating Trustee may
surrender the property securing the Pre-petition Tax Claim and
allow the holder to foreclose upon the property. Surrendering
the property will satisfy the Tax Claim in full.
D. Classification and Treatment of Classified Claims and Interests
- -------------------------------------------------------------------------
1. Class 1 - Priority Claims.
-------------------------------
a. Classification: Class 1 consists of all non-tax Priority Claims.
--------------
b. Treatment: Class 1 is unimpaired and, accordingly, the
----------
Members of Class 1 are not entitled to vote on the Plan.
Unless otherwise agreed to by the parties, each holder of an
Allowed Claim in Class 1 will receive a beneficial interest in
the Liquidating Trust's Distribution Fund and will be paid the
Allowed amount of such Claim in full in Cash by the
Liquidating Trust from the Distribution Fund on or before
the later of (a) the first practicable date after the
Effective Date, (b) the date such Claim becomes an Allowed
Claim, and (c) such other date as is mutually agreed upon by
the Debtor and the holder of such Claim.
2. Class 2 - Secured Claims of Holders of Senior Notes
--------------------------------------------------------
a. Classification: Class 2 consists of the Allowed Secured Claims of
--------------- the holders of the Senior Notes.
b. Treatment: Class 2 is impaired and, accordingly, members of Class 2
---------
are entitled to vote on the Plan. Each holder of an Allowed
Claim in Class 2 will receive (1) its Pro Rata share of the
Wabash Securities free and clear of liens, claims and interests
and, (2), either (a) its Pro Rata share of 100% of the Class A
Beneficial Interests in the Liquidating Trust, or (b) if Class
4 accepts the Plan, its Pro Rata share of 94.5% of the Class A
Beneficial Interests in the Liquidating Trust.
<PAGE> 25
3. Class 3 - Secured Claims Other Than Claims of Holders of Senior Notes.
----------------------------------------------------------------------
a. Classification: Class 3 consists of all Allowed Secured Claims
-------------- other than the Claims of holders of Senior
Notes.
b. Treatment: Class 3 is impaired, and the holders of Allowed
--------- Claims
in such Class are entitled to vote on the Plan. At the
Debtors' option, on the Effective Date (a) the Plan may leave
unaltered the legal, equitable, and contractual rights of the
holder of an Allowed Secured Claim, or (b) the Debtors may
assume and assign the contract or agreement governing an
Allowed Secured Claim pursuant to section 365(b) of the
Bankruptcy Code, or (c) the Debtors may pay an Allowed
Secured Claim in such manner as may be agreed to between the
Debtors and the holder of such Claim, or (d) the Debtors may
(i) pay an Allowed Secured Claim in full, in cash, or (ii) the
Debtors may surrender to the holder of an Allowed Secured
Claim the property securing such Claim, in all of such events,
the value of such holder's interest in such property shall be
determined (A) by agreement of the Debtors or the Liquidating
Trustee and the holder of such Allowed Secured Claim or (B)
if they do not agree, by the Bankruptcy Court.
4. Class 4 - General Unsecured Claims
---------------------------------------
a. Classification: Class 4 consists of all Allowed Unsecured
-------------- Claims
against any of the Debtors, including trade Claims, Claims
arising out of the Warrant Notes, the Rejection Claims, any
indemnification Claims, and any products liability or personal
injury Claims.
b. Treatment: If Class 4 accepts the Plan (i.e. of those holders of
---------
Allowed Claims in Class 4 that vote on the Plan, the holders
of at least two-thirds (2/3) in amount and more than one-half
(1/2) in number of Allowed Claims in Class 4 vote in favor of
the Plan), each holder of an Allowed Class 4 Claim will receive
its Pro Rata share of 5.5% of the Class A Beneficial
Interests in the Liquidating Trust. If Class 4 rejects the
Plan, the holders of Allowed Claims will receive no
distribution under the Plan.
5. Class 5 - Old Common Stock.
---------------------------------
a. Classification: Class 5 consists of all Interests in Old Common
-------------- Stock.
b. Treatment: Holders of Interests in Class 5 will receive no
--------- distribution under the Plan and the Old Common
Stock will be canceled.
6. Class 6 - Old Warrants
---------------------------
a. Classification: Class 6 consists of all Interests of holders of
-------------- Old Warrants.
b. Treatment: Holders of Old Warrants will receive no distribution
-------- under the Plan and all Old Warrants shall be canceled.
7. Class 7 - Securities Claims
--------------------------------
a. Classification: Class 7 consists of Securities Claims (if any
--------------- exist).
b. Treatment: Any Allowed Securities Claims shall be treated
----------
respectively with the same priorities as the Old Common Stock
and the Old Warrants pursuant to section 510(b) of the
Bankruptcy Code, and the holders of such Allowed
Securities Claims shall receive no distribution under the Plan.
<PAGE> 26
E. Acceptance or Rejection of the Plan
----------------------------------------
1. Voting Classes. The holders of Claims in Classes 2,
3 and 4 are impaired and shall be entitled to vote to accept
or reject the Plan.
2. Presumed Acceptance of Plan. Class 1 is
unimpaired under the Plan, and therefore, is conclusively
presumed to accept the Plan.
3. Presumed Rejection of Plan. The holders of
Interests in Classes 5, 6 and 7 are not being solicited to
accept or reject the Plan and will be deemed to have rejected
the Plan.
F. Means for Execution and Implementation of the Plan
- -------------------------------------------------------
1. Funding of the Distribution Fund. On the
Effective Date, the Debtors shall first fund the Distribution
Fund which shall be transferred to the Liquidating Trust on
behalf of and for the benefit of the holders of Allowed
Administrative, Priority and Pre-Petition Tax Claims.
2. Transfer of Wabash Securities to Indenture Trustee.
On the Effective Date, the Debtors shall then transfer the
Wabash Securities to the Indenture Trustee for distribution
to the holders of the Senior Notes in accordance with the terms
of this Plan.
3. Change of Plan Sponsorship for the Management and
Union Plans. Prior to or on the Effective Date, the Debtors
shall transfer sponsorship of the current Management Plan and
Union Plan to Pension Corp. The current sponsors are Fruehauf
Trailer Corporation for the Management Plan and Jacksonville
Shipyards, Inc. for the Union Plan. The Board of
Directors of the respective sponsors shall approve the change
in sponsorship. The administrative provisions of the Management
Plan and Union Plan allow for a change in plan sponsorship.
The appropriate notices and governmental filings to comply
with federal law shall be provided in a timely manner to the
appropriate parties. Once the change in sponsorship has been
completed, Pension Corp. may elect to merge the Management
Plan and Union Plan to form a single plan.
The Pension Benefit Guaranty Corporation ("PBGC")
filed three (3) claims relating to the Union Plan and the
Management Plan in each of the In re Fruehauf Corp., et al.
bankruptcies (Case Nos. 1563-1572). The PBGC is a wholly-owned
United States government corporation created by Title IV of
the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. 1301-1461 ("ERISA"), to administer the
mandatory pension plan termination insurance program
established under Title IV of ERISA. The PBGC guarantees
the payment of certain pension benefits upon termination of
a pension plan covered by Title IV of ERISA. According to
PBGC, if the transfer of sponsorship of the pension plans
occurs and the pension plans remain on-going after
confirmation of the Plan, PBGC will withdraw its claims.
Nothing in the Plan, therefore, shall be construed as
releasing or in any way discharging PBGC's claims.
4. Transfer of Hogan's Creek Property and
Picketville Property. On the Effective Date, Jacksonville
Shipyards, Inc. shall next transfer the Hogan's Creek
Property and Picketville Property to JSI Property Corp.
5. Foreclosure by Holders of Senior Notes. On
the Effective Date, the Indenture Trustee will be deemed to
have foreclosed the liens of the holders of the Senior Notes
on the Foreclosed Assets and to have transferred the
Foreclosed Assets to the Liquidating Trust. The
Foreclosed Assets shall be transferred to the Liquidating
Trust on behalf of and for the benefit of the holders of
Class A Beneficial Interests in the Liquidating Trust.
<PAGE> 27
6. Transfer by Debtors of Assets to the Liquidating
Trust. On the Effective Date, the Debtors shall convey all
of their remaining assets to the Liquidating Trust free and
clear of all liens, claims and encumbrances on behalf of and
for the benefit of the creditors who will receive a
beneficial interest in the Liquidating Trust.
7. Ratification of Liquidating Trust Agreement. On
the Effective Date, each holder of each Claim will be deemed to
have ratified and become bound by the terms of the Liquidating
Trust Agreement. The Liquidating Trustee is empowered to
execute the Liquidating Trust Agreement on behalf of each
holder of a Claim.
a. Powers and Duties. The Liquidating Trustee
shall have the powers, duties and obligations specified in
this Plan and the Liquidating Trust Agreement.
b. Compensation of Trustee. The Liquidating
Trustee shall be entitled to receive from the Trust Estate
compensation for his services as Trustee substantially in
accordance with the description at Section IV.F.7.b. of this
Disclosure Statement which compensation shall be approved
by the Court at the Confirmation Hearing. The Liquidating
Trustee shall also be reimbursed by the Trust Estate for
all reasonable out-of-pocket expenses incurred by the Trustee
in the performance of his duties.
c. Limitation of Liability. The Liquidating
Trustee shall use reasonable discretion in exercising each of
the powers herein granted. No Liquidating Trustee or any
attorney, agent, or servant of the Liquidating Trustee shall
be personally liable in any case whatsoever arising in
connection with the performance of obligations under this Plan,
whether for their acts or their failure to act unless they
shall have been guilty of willful fraud or gross negligence.
The Liquidating Trustee may consult with
attorneys, accountants, and agents, and the opinions of the
same shall be full protection and justification to the
Liquidating Trustee and his employees for anything done or
admitted or omitted or suffered to be done in accordance
with said opinions. The Liquidating Trustee shall not be
required to give any bond for the faithful performance of his
duties hereunder.
d. Indemnity. The Liquidating Trustee and
his employees and agents will be indemnified by the Liquidating
Trust against claims arising from the good faith performance of
duties under the Bankruptcy Code or this Plan.
e. Right to Hire Professionals. The
Liquidating Trustee shall have the right to reasonably utilize
the services of attorneys or any other professionals which, in
the discretion of the Liquidating Trustee, are necessary to
perform the duties of the Liquidating Trustee. Reasonable
fees and expenses incurred by the attorneys, accountants or
other agents of the Liquidating Trustee shall be paid by the
Liquidating Trust.
f. Treatment of Distribution Fund Surplus. After
the payment of the Allowed Administrative Expense Claims,
Priority Claims and Pre-Petition Tax Claims of the Class B
Beneficial Interestholders, any remaining funds in the
Distribution Fund shall be available for distribution to the
holders of the Class A Beneficial Interests in the Liquidating
Trust.
<PAGE> 28
g. Limitation on the Trustee. Two holders of
Senior Notes will serve as the Trust Advisory Committee.
Either Bankruptcy Court approval or unanimity among the Trust
Advisory Committee members and Trustee is required before the
Trustee can:
(1) borrow money in excess of $500,000 or grant liens on any
part of the Trust Estate in excess of $500,000;
(2) sell assets of the Trust Estate with a value in excess of
$500,000;
(3) modify the Plan;
(4) initiate and prosecute litigation, including but not
limited to claim objections with expected fees and
costs in excess of $250,000;
(5) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of
$500,000; and
(6) forego making the annual distribution to Certificate Holders
required by Section 6.2 of the Liquidating Trust.
If unanimity does not exist regarding the
proposed action and Bankruptcy Court approval is
requested, the Liquidating Trust shall pay the attorneys fees
incurred by the objecting Committee member, up to $25,000 per
member during the term of the Liquidating Trust.
The Liquidating Trust Agreement may be modified
only with the written approval of the Class A
Beneficial Interestholders holding over 50% of the Class A
Beneficial Interests.
h. Distribution of Trust Certificates.
The Liquidating Trust shall distribute Trust Certificates to
the holders of the Class A Beneficial interests in the
Liquidating Trust which shall reflect each holders' proportional
interest in the Liquidating Trust, subject to the interests of
the holders of Class B Beneficial Interests in the Distribution
Fund.
i. Tax Treatment of the Liquidating Trust. It
is intended that the Liquidating Trust will be treated
as a "liquidating trust" within the meaning of Treasury
Regulations Section 301.7701-4(d). Accordingly, for federal
income tax purposes, the transfer and assignment of the
Debtors' assets shall be treated as a deemed transfer and
assignment of such assets to the holders of Claims followed by
a deemed transfer and assignment by such holders to the
Liquidating Trust. The Liquidating Trust shall provide the
holders of Claims with a valuation of the assets transferred
to the Liquidating Trust and such valuation shall be used
consistently for all federal income tax purposes. All items of
income, deduction, credit or loss of the Liquidating Trust
shall be allocated for federal, state and local income tax
purposes among the holders of Claims as set forth in the
Liquidating Trust agreement; provided, however, that to the
extent that any item of income cannot be allocated in the
taxable year in which it arises, the Liquidating Trust shall
pay the federal, state and local taxes attributable to such
income (net of related deductions) and the amount of such taxes
shall be treated as having been received by, and paid on behalf
of, the holders of Claims receiving such allocations
when such allocations are ultimately made.
j. Termination of Liquidating Trust. The
duties, powers and responsibilities of the Liquidating
Trustee shall terminate upon the liquidation and distribution
to Beneficial Interestholders of all proceeds in the
Liquidating Trust estate in accordance with this Plan.
8. Dissolution of Corporate Entities. Following
the creation of the Distribution Fund, the transfer of the
Wabash Securities to the Indenture Trustee, the deemed
foreclosure of the Foreclosed Assets by the Indenture Trustee,
and the transfer of any remaining assets to the Liquidating
Trust on behalf of and for the benefit of the Beneficial
Interestholders, the Debtors shall be dissolved or liquidated.
<PAGE> 29
9. Cancellation of Old Securities. On the Effective Date,
all Old Securities shall be terminated and canceled, and
the indentures or statements of resolution governing such
Old Securities shall be rendered void. Notwithstanding
the foregoing, such termination will not impair the rights and
duties under any indenture as between the Indenture Trustee
and the beneficiaries of the trust created thereby (the
holders of the Senior Notes) including, but not limited to,
the rights of the Indenture Trustee to receive payment of its
fees and expenses, to the extent not paid by the Company, from
amounts distributable to holders of Senior Notes.
10. Registration Exemption for Debtors' Wabash
Securities and Beneficial Interests in the Liquidating
Trust. The Confirmation Order shall provide that (a) the
distribution of the Wabash Securities to holders of Allowed
Class 2 Claims, (b) the transfer to the Liquidating Trust of
the stock of Pension Corp. and JSI Property Corp., and (c)
the issuance and transfer pursuant to the Plan of the
beneficial interests in the Liquidating Trust and the Trust
Certificates and any resale of such property shall be exempt
from any and all federal, state and local laws requiring the
registration of such security, to the fullest extent provided
by section 1145 of the Bankruptcy Code.
The Debtors believe that the exemption under Bankruptcy
Code Section 1145(a)(1) from the application of the
registration provisions of the Securities Act of 1933, as
amended (the "Securities Act"), is available for each of (a),
(b) and (c) for the following reasons:
(i) The distribution, transfer and/or issuance of
each of the securities referred to in (a), (b) and (c) is being
made wholly in exchange for claims made against the Debtors.
(ii) The Wabash Securities constitute securities of
a successor to the Debtors (withing the meaning of Bankruptcy
Code Section 1145(a)), since Wabash, by virtue of its
purchase in April 1997 from Fruehauf Trailer of the United
States trailer manufacturing and sales and distribution
businesses of Fruehauf, became a successor to Fruehauf
Trailer as of the date of such purchase.
(iii) The stock of Pension Corp., JSI
Property Corp. and Fruehauf de Mexico constitute stock of
"affiliates" of the Debtors who are participating in the Plan
with the Debtors.
(iv) The Trust Certificates constitute securities of
a "successor" to the Debtors, since the Liquidating Trust will
be a successor to the assets of the Debtors as they exist
on the Effective Date of the Plan.
With respect to the distribution of the Wabash
Securities, in addition to the exemption which the Debtors
believe is available under Bankruptcy Code Section 1145,
Wabash has filed with the Securities and Exchange
Commission ("SEC") a registration statement with respect to
the disposition of the Wabash Securities currently held by
Fruehauf Trailer Corporation. This registration statement was
declared effective by the SEC in April 1998. Moreover,
Wabash has agreed, assuming that the Bankruptcy Code
Section 1145 exemption is available for the distribution of
the Wabash Securities pursuant to the Plan, to supplement the
existing effective registration statement to enable the
holders of Allowed Class 2 Claims who may be deemed
"underwriters" (within the meaning of the Securities Act
and Section 1145) with respect to the Wabash Securities they
receive pursuant to the Plan to utilize the registration
statement as "selling stockholders" for their disposition
of the Wabash Securities. Wabash has further agreed, if
the Section 1145 exemption is not deemed available for the
distribution of the Wabash Securities pursuant to the
Plan, to file a new registration statement with the SEC,
within five business days following confirmation of the Plan,
to enable holders of Allowed Class 2 Claims who may be deemed
"underwriters" to dispose of their Wabash Securities, and to
use its best efforts to have such registration statement
declared effective by the SEC by the date of distribution of
the Wabash Securities pursuant to the Plan. Accordingly, based
on the foregoing, the Debtors anticipate that the Wabash
Securities will be eligible for immediate resale by the
holders of Allowed Class 2 Claims upon distribution pursuant to
the Plan, although there can be no assurance that a delay in
the registration process or other circumstance will not
prevent such holders from effecting an immediate resale of
the Wabash Securities.
<PAGE> 30
11. Transferability of the Trust
Certificates; Applicability of Federal Securities Laws to
the Liquidating Trust. The Trust Certificates
constituting the beneficial interests in the Liquidating
Trust will be transferable. However, the Trust
Certificates will not be listed on any national securities
exchange or on the Nasdaq Stock Market, and the Liquidating
Trust will not facilitate the development of an active trading
market or encourage others to do so, will not place any
advertisement in the media promoting an investment in the
Trust Certificates and will not collect or publish
information about prices at which the Trust Certificates may
be transferred, except to the extent required to comply
with disclosure requirements under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
Furthermore, the Liquidating Trust will not be obligated, nor
is it anticipated that the Liquidating Trust would cooperate
in any attempt to, facilitate quotations for the Trust
Certificates pursuant to Rule 15c2-11 of the Exchange Act.
Although it is possible that some trading will occur in the
Trust Certificates, the Debtors believe that it is unlikely
that such trading will be active or that a significant market
will develop beyond the initial recipients of the Trust
Certificates.
The Liquidating Trust intends to register under
Section 12(g) of the Exchange Act and keep such registration
in effect until there are either (i) less than 300
holders of Trust Certificates or (ii) there are less than
500 holders of Trust Certificates and the assets of the
Liquidating Trust have not exceeded $10 million on the
last day of the each of the Liquidating Trust's
immediately preceding three fiscal years. As an entity
registered under the Exchange Act, the Liquidating Trust
will be required to file certain annual, quarterly and other
reports with the SEC. The Liquidating Trust will also
distribute to holders of Trust Certificates audited
annual financial statements of the Liquidating Trust as of the
end of each fiscal year of the Liquidating Trust.
The Debtors do not believe that the Liquidating Trust
is required to register as an investment company under
the Investment Company Act of 1940, as amended (the
"Investment Company Act"), since the Liquidating Trust (i)
exists solely to liquidate the assets to be transferred to the
Liquidating Trust by the Debtors pursuant to the Plan, (ii)
will not conduct a trade or business (other than maintaining
Fruehauf de Mexico as a going concern pending sale or
liquidation thereof) and will not make any investments, except
for temporary investments in money market instruments,
government short-term securities or other investment grade
short-term debt securities pending distribution of liquidation
proceeds to the Liquidating Trust beneficiaries, (iii) will not
hold itself out as an investment company, but only as a
liquidating entity and (iv) will have a limited life span
(i.e., a period of three years from the Effective Date,
subject to renewal for one or more one-year periods in the
event any assets of the Liquidating Trust have not been fully
liquidated and the proceeds thereof distributed to the
beneficiaries by the end of the then current term). The
Debtor's conclusion is also based on the fact that the
Liquidating Trust will refrain from taking any action to
facilitate a trading market in the Trust Certificates (as
described in the first paragraph of this section) and
will be registering under the Exchange Act. However, the
Debtors do not intend to request a "no-action" letter from
the SEC with respect to the application of the registration
provisions of the Investment Company Act to the Liquidating
Trust, and there is no assurance that the SEC would not take
the position that the Liquidating Trust would have to register
under the Investment Company Act. If so, the Debtors would
propose certain changes to the Liquidating Trust, including but
not limited to limiting the transferability of the Trust
Certificates, so as to avoid having to register the
Liquidating Trust as an investment company under the Investment
Company Act.
<PAGE> 31
12. Corporate Action. Upon entry of the
Confirmation Order, the dissolutions contemplated by Section
6.8 shall be deemed authorized and approved in all
respects pursuant to applicable state laws without any
requirement of further action by the stockholders or
directors of the Debtors. On the Effective Date, the
Indenture Trustee and the Liquidating Trustee shall be
authorized and directed to take all necessary and
appropriate actions to effectuate the transactions
contemplated by the Plan and Disclosure Statement.
13. Preservation of Rights of Action. Except as
otherwise provided in the Plan, 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, the Liquidating Trust, as ultimate successor
to the Debtors, shall retain and may enforce any claims,
rights and causes of action that the Debtors or the Estates
may hold against any entity, including, without limitation,
any claims, rights or causes of action arising under sections
544 through 551 or other sections of the Bankruptcy Code or any
similar provisions of state law, or any other statute or legal
theory. The Liquidating Trust or any successor to or
designee thereof may pursue those rights of action, as
appropriate, in accordance with what is in the best interests
of the Liquidating Trust and those holding interests in the
Liquidating Trust.
14. Objections to Claims. Except as otherwise provided
for with respect to applications of professionals for
compensation and reimbursement of expenses under Article 3, or
as otherwise ordered by the Bankruptcy Court after notice
and a hearing, objections to Claims, including Administrative
Claims, shall be Filed and served upon the holder of such
Claim or Administrative Claim not later than the later of (a)
one hundred twenty (120) days after the Effective Date, and
(b) one hundred twenty (120) days after a proof of claim or
request for payment of such Administrative Claim is Filed,
unless this period is extended by the Court. Such extension
may occur ex parte. After the Effective Date, the
Liquidating Trust shall have the exclusive right to object to
Claims.
15. Exemption from Stamp and Similar Taxes. The
issuance and transfer of the Wabash Securities, the
issuance and distribution of the Pension Corp. and JSI
Property Corp. Stock, and the transfer and ultimate sale of
the Foreclosed Assets as provided in this Plan shall not be
taxed under any law imposing a stamp tax or similar tax in
accordance with 11 U.S.C. 1146(c).
G.Funding and Methods of Distribution and Provisions for Treatment of Disputed
Claims
- ----------------------------------------------------------------------------
1. Funding of Distributions Under the Plan. The
Debtors have liquidated 800,000 shares of the Wabash Common
Stock. The Debtors will fund the Distribution Fund from Cash
on hand. The Debtors may seek one or more orders of the
Bankruptcy Court estimating or limiting the amount of property
to be deposited in the Distribution Fund. The Distribution
Fund shall be the sole source of funds for the payment of
Allowed Administrative Claims, Pre-Petition Tax Claims and
Priority Claims.
2. Distributions to Holders of Allowed Claims that
are Administrative Expense Claims, Pre-Petition Tax Claims and
Class 1 Priority Claims. Commencing on the Effective
Date, the Liquidating Trustee shall, in accordance with Article
3 of the Plan, distribute to each holder of a then
unpaid Allowed Administrative Expense Claim, Allowed
Pre-Petition Tax Claim, or Allowed Priority Claim Cash in
the Allowed amount of such holder's Claim. The
Distribution Fund shall be distributed to the holders of
Disputed Administrative Expense Claims, PrePetition Tax
Claims and other Priority Claims pursuant to Article 3 of the
Plan if and to the extent that the balance, if any, of such
Claims is Allowed by Final Order. The Liquidating Trust must
hold the Distribution Fund in a segregated account for the
benefit of the holders of Allowed Administrative, Priority
and Pre-Petition Tax Claims until all Disputed Claims that
are alleged to be Administrative, Pre-Petition Tax or Priority
Claims have been Allowed or disallowed.
<PAGE> 32
3. Distributions to Holders of Allowed Class 2
Claims. The Debtors shall deliver all of the Wabash Securities
and the Trust Certificates representing the Requisite
Percentage of Class A Beneficial Interests to the Indenture
Trustee. The Indenture Trustee shall make the Pro Rata
distribution required by Section 4.2 of the Plan to the
holders of the Senior Notes. The Liquidating Trust shall
pay all reasonable fees and expenses of the Indenture Trustee
in acting as distribution agent as and when such fees and
expenses become due without further order of the Bankruptcy
Court. The Plan provides for distributions to be made only to
record holders as of the Ballot Record Date unless the
Indenture Trustee is provided evidence of a transfer that
is satisfactory to the Indenture Trustee, in its sole
discretion. Holders of Senior Notes must surrender their notes
or have been deemed to have surrendered their notes (see Plan
section 7.5(c)) to receive a distribution. Any holder of a
Senior Note that has not surrendered or been deemed to have
surrendered its Senior Notes prior to the time that the
Indenture Trustee distributes the Wabash Securities and Trust
Certificates or the Liquidating Trustee makes a distribution to
holders of Trust Certificates may have its distribution
reduced by any taxes that the Indenture Trustee or
Liquidating Trustee has paid on account of such
distribution. The Plan also provides for the cancellation of
the Senior Notes.
4. Disputed Claims. Notwithstanding any other
provisions of the Plan, no payments or distributions shall
be made on account of any Disputed Claim until such Claim
becomes an Allowed Claim, and then only to the extent that it
becomes an Allowed Claim.
5. Delivery of Distributions and Undeliverable
or Unclaimed Distributions; Failure to Negotiate Checks. The
Plan established procedures for the delivery of distributions
and for the disposition of undeliverable distributions and
checks that are not timely negotiated.
6. Distributions on Account of Unsecured Class 4
Claims. If Class 4 accepts the Plan, Trust Certificates
representing 5.5% of the Class A Beneficial Interests in the
Liquidating Trust shall be distributed, Pro Rata, to holders
of Allowed Claims in Class 4. The Liquidating Trust shall
not be required to make distributions of Trust Certificates to
holders of Allowed Claims in Class 4 until the
Liquidating Trust has resolved its objections to Disputed
Claims in Class 4, a process which shall be completed no later
than the first anniversary of the Effective Date. Any
distributions of Cash to which the holders of Trust
Certificates become entitled during this claims resolution
period shall be distributed to the holders of Allowed Claims in
Class 4, Pro Rata, with any accrued interest thereon at the time
the Trust Certificates are distributed; provided, however,
that such distribution shall be reduced by any taxes
paid by the Liquidating Trust on account of interest or
other income earned thereon.
7. De Minimis Distributions. No Cash payment of less
than twenty dollars ($20.00) shall be made to any holder on
account of an Allowed Claim unless a request therefor is made
in writing to the Liquidating Trust.
8. Compliance with Tax Requirements. In connection
with the Plan, to the extent applicable, the Liquidating Trust
shall comply with all withholding and reporting requirements
imposed on it by any governmental unit, and all distributions
pursuant to the Plan shall be subject to such withholding
and reporting requirements.
9. Setoffs. Unless otherwise provided in a Final Order
or in this Plan, the Liquidating Trust may, but shall not
be required to, set off against any Claim and the payments to
be made pursuant to the Plan in respect of such Claim, any
claims of any nature whatsoever the Debtors may have against
the holder thereof or its predecessor, but neither the failure
to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by any Debtor or the Liquidating
Trust of any such Claims the Debtors or the Liquidating Trust
may have against such holder or its predecessor.
<PAGE> 33
10. Fractional Interests. The calculation of
the percentage distribution of Wabash Securities to be made
to holders of certain Allowed Claims as provided elsewhere in
this Plan may mathematically entitle the holder of such an
Allowed Claim to a fractional interest in such Stock. The
number of shares of Wabash Securities to be received by a
holder of an Allowed Claim shall be rounded to the next lower
whole number of shares. The total number of shares of Wabash
Securities to be distributed to a class of Claims shall be
adjusted as necessary to account for the rounding provided
for in this section. Any fractional shares that are rounded
down and not issued to holders of Senior Notes shall be
contributed to the Liquidating Trust.
H. Treatment of Executory Contracts and Unexpired Leases
- ----------------------------------------------------------
The Plan constitutes and incorporates a motion by
the Debtors to reject, as of the Effective Date, all
pre-petition executory contracts and unexpired leases to which
the Debtors are a party, except for any executory contract or
unexpired lease that (i) has been assumed or rejected pursuant
to a Final Order, or (ii) is the subject of a pending motion
for authority to assume the contract or lease Filed by the
Debtors prior to the Confirmation Date. The Plan establishes
a bar date for filing Rejection Claims not already barred.
I. Effects of Plan Confirmation
- ----------------------------------
1. Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors. As a result of the foreclosure and
sale of the Debtors' assets contemplated by Articles 6.5 and
6.6 of this Plan, the assets transferred to the Liquidating
Trust on behalf of and for the benefit of the holders of
Allowed Claims shall be held by the Liquidating Trust free
and clear of all liens, claims or interests in such property
that arose before the Confirmation Date.
2. 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, are not 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.
3. Limitation of Liability. None of the
Unsecured Creditors' Committee and its members and the
professional Persons employed by the Unsecured Creditors'
Committee; the Indenture Trustee and any professional
Persons retained by him; the Bondholders' Committee and its
members and professional Persons employed by the Bondholders'
Committee; the Liquidating Trust and any professional Persons
retained by it; the Liquidating Trustee; Morris, Nichols, Arsht
& Tunnell; Camhy Karlinsky & Stein; Price Waterhouse; Haynes
and Boone, L.L.P.; Alvarez & Marsal, Inc.; and Oppenheimer &
Co., Inc.; any of their affiliates nor any of their officers,
directors, partners, associates, employees, members or agents
(collectively the "Exculpated Persons"), shall have or incur
any liability to any Person for any act taken or omission made
in good faith in connection with or related to the
Bankruptcy Cases or actions taken therein, including
negotiating, formulating, implementing, confirming or
consummating the Plan, the Disclosure Statement, or any
contract, instrument, or other agreement or document created
in connection with the Plan. The Exculpated Persons shall
have no liability to any Creditors or Equity Security
Holders for actions taken under the Plan, in connection
therewith or with respect thereto in good faith, including,
without limitation, failure to obtain Confirmation of the Plan
or to satisfy any condition or conditions, or refusal to waive
any condition or conditions, precedent to Confirmation or to
the occurrence of the Effective Date. Further, the Exculpated
Persons will not have or incur any liability to any holder of
a Claim, holder of an Interest, or party-in-interest herein or
any other Person for any act or omission in connection
with or arising out of their administration of the Plan or the
property to be distributed under the Plan, except for gross
negligence or willful misconduct as finally determined by the
Bankruptcy Court, and in all respects such persons will be
entitled to rely upon the advice of counsel with respect
to their duties and responsibilities under the Plan.
<PAGE> 34
4. Other Documents and Actions. The Debtors, the
DebtorsIn-Possession, the Indenture Trustee and Liquidating
Trustee may execute such documents and take such other action
as is necessary to effectuate the transactions provided for in
the Plan.
5. Term of Injunctions or Stays. Unless
otherwise provided, all injunctions or stays provided for
in the Reorganization Case pursuant to sections 105 or
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.
J. Confirmability of Plan and Cramdown
- ----------------------------------------
The Debtors request Confirmation under section 1129(b)
of the Bankruptcy Code if any impaired class does not accept
the Plan pursuant to section 1126 of the Bankruptcy Code. In
that event, the Debtor reserves the right to modify the Plan
to the extent, if any, that Confirmation of the Plan under
section 1129(b) of the Bankruptcy Code requires modification.
K. Retention of Jurisdiction.
- ----------------------------------
The Plan provides for the Bankruptcy Court to retain
the broadest jurisdiction over the reorganization case as is
legally permissible so that the Bankruptcy Court can hear
all matters related to the consummation of the Plan, the
claims resolution process, and the administration of the
Liquidating Trust.
L. Post Confirmation Management of the Liquidating Trust
- ----------------------------------------------------------
The Debtors contemplate that, from and after the
Effective Date of the Plan, Chriss Street will serve as the
Trustee of the Liquidating Trust and will continue to serve as
Chairman of the Board and Chief Executive Officer of Fruehauf
de Mexico. It is also anticipated that Worth Frederick and
James Wong will share operational oversight responsibility for
Fruehauf de Mexico. Mr. Worth will be paid an annual salary
of $100,000 by Fruehauf de Mexico, and will also receive an
annual salary fee of $20,000 from the Liquidating Trust for
services which he is expected to perform on behalf of the
Liquidating Trust. Mr. Wong will be paid an annual salary of
$75,000 by Fruehauf de Mexico, and will also be eligible to
receive an annual bonus of up to $10,000 from Fruehauf de
Mexico. Courtney Watson will also provide services to the
Liquidating Trust in liquidating assets, making
distributions, and maintaining proper records. Ms. Watson
will be paid $65,000 a year by the Liquidating Trust.
It is anticipated that Mr. Street, on or before
the Effective Date of the Plan, will enter into (i) an
employment agreement with the Liquidating Trust which will
provide for his employment as Trustee, and (ii) an
employment agreement with Fruehauf de Mexico, which will
provide for his employment as Chairman of the Board and Chief
Executive Officer of Fruehauf de Mexico. The terms and
conditions of the agreements as currently contemplated are
described below. These terms and conditions are subject to
change and may be amended prior to the hearing on approval of
this Disclosure Statement.
1. Employment Agreement with Liquidating Trust
------------------------------------------------
Mr. Street will be employed as trustee for a term of
three years, which term will be automatically renewable for
additional one year periods (or until such earlier time as the
Liquidating Trust may be dissolved) unless the Trust Advisory
Committee shall advise Mr. Street, not less than 90 days prior
to the end of the initial three year term, that it desires
to terminate his services as trustee at the end of the term.
No co-trustee may be appointed without Mr. Street's prior
written consent. Subject to such other and further terms and
conditions that may be mutually agreed upon as between the
holders of the Senior Notes and Mr. Street, for serving as
trustee, Mr. Street will be entitled to the following
compensation described below:
<PAGE> 35
(1) An annual salary of $200,000 per year, payable in
semimonthly installments (hereinafter referred to as the
"Annual Fee").
(2) A percentage of the cumulative amount distributed
to the holders of Senior Notes from the Liquidating Trust
or otherwise pursuant to the Plan, in excess of the
aggregate principal amount of the Senior Notes outstanding on
the Effective Date of the Plan (the "Par Amount"), which
percentage shall be 12.5% unless the amount distributed to the
holders of the Senior Notes prior to the first anniversary of
the Effective Date equals or exceeds the Par Amount, in which
event the percentage shall be 15%. Amounts payable to Mr.
Street pursuant to this arrangement (the "Percentage Fee"), if
any, shall be made on a quarterly basis within 30 days
following each calendar quarter in which any distribution in
excess of the Par Amount is made to the holders of the Senior
Notes. For purposes of determining the cumulative amount
distributed to the holders of the Senior Notes, the
following will apply:
(a) The value of the shares of Common Stock of
Wabash distributed to the holders of the Senior Notes will be
equal to the higher of (i) the average of the closing sale
prices of the Common Stock as reported by the New York Stock
Exchange for the 10 consecutive trading days commencing
on the date (the "Distribution Date") on which such shares
are distributed to the holders of the Senior Notes; and (ii)
the average of the daily closing sale prices of the Common
Stock as reported by the New York Stock Exchange for the
period of three months following the Distribution Date (the
higher of (i) or (ii) being referred to as the "Average Price").
No other change in the market price of the Common Stock will be
given any effect in calculating the amount distributed to the
holders of the Senior Notes.
(b) The value of the shares of Series B 6%
Cumulative Convertible Exchangeable Preferred Stock (the
"Preferred Stock") of Wabash distributed to the holders of the
Senior Notes will be equal to the product of (i) and (ii),
where (i) is the result obtained by dividing the sum of
$17,600,000 plus the amount of any accrued dividends on
the Preferred Stock as of the Distribution Date by the
conversion price of the Preferred Stock (i.e. $21.375, subject
to anti-dilution adjustments) and (ii) is the Average Price
(as defined above). No other change in the market price of
the Common Stock will be given any effect in calculating the
amount distributed to the holders of the Senior Notes.
(c) The value of all other assets distributed to
the holders of the Senior Notes shall be fair market value of
such assets on the respective dates of distribution, which fair
market value shall be determined by mutual agreement of Mr.
Street and the Advisory Committee, except if no such agreement
is reached, fair market value shall be determined by an
independent appraiser whose selection will be mutually agreed
upon by Mr. Street and the Advisory Committee.
In the event Mr. Street ceases to serve as trustee
during the initial or any renewal term for any reason other
than death, Cause (as defined), Permanent Disability (as
defined), or voluntary resignation, Mr. Street shall continue
to receive the Annual Fee for the remainder of the
applicable term. In addition, Mr. Street shall continue to
receive the Percentage Fee in accordance with the following
terms: (i) if the amount distributed to the holders of the
Senior Notes prior to the date of termination has equaled or
exceeded the Par Amount, Mr. Street will continue to receive
the Percentage Fee (if any) for a period of two years
following the date on which he ceases to serve as trustee;
(ii) if, as of the date on which Mr. Street ceases to serve
as trustee, an amount equal to or greater than 90% but less
than 100% of the Par Amount has been distributed to the
holders of the Senior Notes, and within one year following
such date the cumulative amount distributed to the
holders exceeds 100% of the Par Amount, Mr. Street will
receive the Percentage Fee on amounts distributed to the
holders in excess of the Par Amount within 18 months after the
date he ceases to serve as Trustee; and (iii) if Mr. Street is
terminated as trustee at any time prior to the first
anniversary of the Effective Date other than for Cause, Mr.
Street will be entitled to receive the Percentage Fee (if
any) until the third anniversary of the Effective Date
irrespective of the cumulative amount which has been
distributed to the holders of the Senior Notes on the date of
termination.
<PAGE> 36
Upon Mr. Street's death or termination as trustee as
a result of a Permanent Disability during the initial or
any renewal term, Mr. Street (or his heirs, as the case may be)
shall be entitled to receive the Annual Fee and Percentage Fee
(if any) for a period of one year following the date on which he
ceases to serve as Trustee. The Liquidating Trust shall be
authorized to obtain insurance to cover the amounts owed to
Mr. Street in the event of death or termination as a result of
Permanent Disability and Mr. Street shall submit to a physical
or such other tests as may be required to obtain such insurance.
If Mr Street is terminated as trustee either for Cause
or ceases to serve as Trustee as a result of a
voluntary resignation, Mr. Street shall be entitled to the
Annual Fee and Percentage Fee (if any) through the date of
termination.
"Cause" for purposes of the agreement (as well as
the employment agreement with Fruehauf de Mexico) shall mean
Mr. Street having either (i) been engaged in an act of
fraud or dishonesty against the Liquidating Trust (or Fruehauf
de Mexico, as the case may be), (ii) been convicted of, or
entered a plea of nolo contendre to, a felony or a
misdemeanor involving moral turpitude under the laws of the
United States or any state thereof, (iii) admitted or been
found by a court of law to have been involved in either the
distribution, possession or use of illegal drugs, or (iv)
knowingly violated in a material way any policy maintained by
the Liquidating Trust (or Fruehauf de Mexico, as the case
may be). "Permanent Disability" for purposes of this
Agreement (as well as the employment agreement with Fruehauf
de Mexico) shall mean that Mr. Street, as a result of an
incapacity due to physical or mental illness, has been unable
to perform the duties of trustee (or Chairman and Chief
Executive Officer of Fruehauf de Mexico, as the case may be)
for a period of not less than 90 consecutive days and,
within 30 days of notice of termination being sent to Mr.
Street based on such incapacity, shall have failed to return
to the performance of his duties.
2. Employment Agreement with Fruehauf de Mexico.
--------------------------------------------------
Under the agreement with Fruehauf de Mexico, Mr. Street
will be employed as Chairman of the Board and Chief Executive
Officer and will be entitled to serve in such capacity so long
as he is trustee of the Liquidating Trust and the Liquidating
Trust owns, directly or indirectly, a majority of the
voting stock of Fruehauf de Mexico. He may not be removed
as a officer or director of Fruehauf de Mexico unless he
ceases to serve as trustee. For serving as Chairman and
Chief Executive Officer of Fruehauf de Mexico, Mr. Street shall
receive an annual salary of $50,000 per year, payable in
semi-monthly installments. He will also be provided with all
fringe benefits and perquisites that are provided to senior
executives of Fruehauf de Mexico, and will also be entitled to
participate in all employee benefit plans, programs and
arrangements, now or hereafter in effect, that are applicable
to employees of Fruehauf de Mexico generally or its senior
executives. During the term of the agreement, Mr. Street will
be entitled to designate those persons who Fruehauf de
Mexico will nominate for election as directors.
In the event that Mr. Street ceases to serve as Chairman
and Chief Executive Officer of Fruehauf de Mexico as a result of
the sale or other disposition of the capital stock or
assets of Fruehauf de Mexico, Mr. Street will receive, upon
such sale or other disposition, a lump sum payment equal to
the aggregate amount that would have been paid to him as
Chairman and Chief Executive Officer for the remainder of the
then applicable term of the agreement. In addition, in the
event that Mr. Street ceases to serve as trustee of the
Liquidating Trust and is entitled to receive the Annual Fee
as trustee for any period thereafter under the employment
agreement with the Liquidating Trust, he shall also receive
payment of his annual salary under the employment agreement
with Fruehauf de Mexico for the same period.
<PAGE> 37
Under both employment agreements, Mr. Street will only
be required to devote as much of his business time as he, in
his sole discretion, reasonably deems necessary to perform his
duties as trustee and as Chairman of the Board and Chief
Executive Officer of Fruehauf de Mexico, respectively (and
both entities will acknowledge that he will be employed by, or
perform services for, unrelated entities during the terms of
the agreements). Under both agreements, Mr. Street will be
entitled to procure such office space, facilities and
secretarial and other support services as he deems reasonably
necessary for the performance of services under each agreement,
with the cost thereof to be borne by the Liquidating Trust or
Fruehauf de Mexico, as applicable. He shall also be reimbursed
for all costs and expenses which he incurs in the performance
of services under each agreement. In addition, Mr. Street will
be indemnified for liabilities incurred by him in the
performance of services under the agreements, except for
liabilities arising from his intentional misconduct.
V.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following discussion is a summary of certain
federal income tax aspects of the Plan and is for general
information only. This discussion is based upon existing
provisions of the Internal Revenue Code of 1986, as amended
("IRC"), existing regulations thereunder, and current
administrative rulings and court decisions. No assurance can
be given that legislative or administrative changes or court
decisions may not be forthcoming which would require
significant modification of the statements expressed in this
section. The discussion does not address foreign, state or
local tax consequences of the Plan, nor does it purport to
address the federal tax consequences of the Plan to special
classes of taxpayers (such as foreign companies,
nonresident alien individuals, S corporations, mutual
funds, insurance companies, financial institutions, small
business investment companies, regulated investment
companies, brokerdealers and tax-exempt organizations).
Accordingly, it should not be relied upon for purposes of
determining the specific tax consequences of the Plan with
respect to a particular holder of a Claim or Interest.
Due to the complexity of the transactions to be
consummated pursuant to the Plan, some of which are discussed
below; the lack of applicable legal precedent and the
possibility of changes in law; differences in the nature of
various Claims; differences in individual Claim holders'
methods of accounting; and the potential for disputes
as to legal and factual matters, the federal income tax
consequences described herein are subject to significant
uncertainties.
NO RULING HAS BEEN SOUGHT OR OBTAINED FROM THE IRS
WITH RESPECT TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO
OPINION OF COUNSEL HAS BEEN OBTAINED BY DEBTORS WITH RESPECT
THERETO. NO REPRESENTATIONS OR ASSURANCES ARE BEING MADE WITH
RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES AS DESCRIBED
HEREIN. CERTAIN TYPES OF CLAIMANTS AND INTEREST HOLDERS MAY BE
SUBJECT TO SPECIAL RULES NOT ADDRESSED IN THIS SUMMARY OF
FEDERAL INCOME TAX CONSEQUENCES. THERE ALSO MAY BE STATE,
LOCAL, OR FOREIGN TAX CONSIDERATIONS APPLICABLE TO A HOLDER OF
A CLAIM OR INTEREST THAT ARE NOT ADDRESSED HEREIN. EACH
HOLDER OF A CLAIM OR INTEREST AFFECTED BY THE PLAN MUST
CONSULT, AND RELY UPON, HIS OR HER OWN TAX ADVISOR REGARDING
THE SPECIFIC TAX CONSEQUENCES OF THE PLAN WITH RESPECT TO
THAT HOLDER'S CLAIM OR INTEREST. THIS INFORMATION MAY
NOT BE USED OR QUOTED IN WHOLE OR IN PART IN CONNECTION WITH
THE OFFERING FOR SALE OF SECURITIES.
<PAGE> 38
A. Federal Income Tax Consequences to Fruehauf.
- -------------------------------------------------
Under the Plan, the Debtors are transferring
substantially all of their assets to the Senior
Noteholders and to the Liquidating Trust. These transfers of
assets will result in the recognition by the Debtors of
gain or loss based on the difference between the fair
market value and tax basis of the assets being so
transferred. To the extent that the Debtors recognize a net
gain from the transfer of these assets, such gain will be offset
by Debtors' net operating loss and/or capital loss
carryforwards. The Debtors may, however, recognize
some alternative minimum tax as a result of the transfer of
these assets. Any resulting tax will be paid by the Debtors
to the Internal Revenue Service. The Plan also provides
that the Debtors will be liquidated and dissolved. As a result
there will be no net operating loss or capital loss
carryforwards available to the Debtors or the Liquidating
Trust following the Effective Date after giving effect to the
transactions contemplated by the Plan.
B. Federal Income Tax Consequences to Holders of Claims.
- ----------------------------------------------------------
1. Holders of Claims
----------------------
Holders of Claims will recognize gain or loss equal to
their respective amounts realized (if any) under the Plan in
respect of their Claims less their respective tax bases in
their Claims. The amounts realized for this purpose generally
will equal the sum of the cash and the fair market
value of any other consideration received under the Plan in
respect of their Claims, including the fair market value of a
holder's proportionate share of the assets transferred to the
Liquidating Trust on behalf and for the benefit of such holder.
The recognition of gain or loss by a holder of Claims may
also be affected by the holder's accounting method and other
factors and circumstances particular to such holder.
The transfer of assets to the Liquidating Trust by
the Debtors will be treated as a transfer of such assets to
the holders of Allowed Class 2 and possibly Allowed Class 4
Claims, to the extent they are beneficiaries, followed by
a deemed transfer of such assets by such beneficiaries to the
Liquidating Trust. As a result of such treatment, holders of
such Allowed Claims will have to take into account the fair
market value of their Pro Rata share, if any, of the assets
transferred on their behalf to the Liquidating Trust in
determining the amount of gain realized and required to be
recognized upon consummation of the Plan. In addition, since
a holder's share of the assets held in the Liquidating Trust
may change depending upon the resolution of Disputed Claims, the
holder may be prevented from recognizing any loss in connection
with consummation of the Plan until the time that all such
Disputed Claims have been resolved. The Trustee will provide
the holders of Allowed Claims with valuations of the assets
transferred to the Liquidating Trust and such valuations should
be used consistently by the Liquidating Trust and such
holders for all federal income tax purposes.
Any gain or loss recognized by the Holders of Claims in
the exchange will be capital or ordinary depending on the
status of the Claim in the holder's hands. The holder's
aggregate tax basis for any consideration received under
the Plan will generally equal the amount realized in the
exchange (less any amount allocable to interest as described
in the next paragraph). The holding period for any
consideration received under the Plan will generally begin on
the day following the receipt of such consideration.
<PAGE> 39
Holders of Claims not previously required to include
in their taxable income any accrued but unpaid interest on a
Claim may be treated as receiving taxable interest, to the
extent any consideration they receive under the Plan is
allocable to such accrued but unpaid interest. Holders
previously required to include in their taxable income any
accrued but unpaid interest on a Claim may be entitled to
recognize a deductible loss, to the extent that such accrued
but unpaid interest is not satisfied under the Plan.
C. Liquidating Trust
- ----------------------
The Plan provides, and this discussion has assumed, that
the Liquidating Trust will be treated for federal income tax
purposes as a "liquidating trust." As a liquidating
trust, the Liquidating Trust itself generally will not be
subject to tax; rather, holders of Allowed Claims will
be taxed on their allocable share of the taxable income
earned and gain recognized by the Liquidating Trust in each
taxable year without regard to whether the Liquidating Trust
makes any distributions to such holders in that taxable
year. The Liquidating Trust, however, will pay federal,
state and local tax on the taxable income allocable to
unidentified holders and, when such holders are ultimately
identified, they will receive distributions from the
Liquidating Trust net of taxes which the Liquidating Trust
has previously paid on their behalf.
Although the Liquidating Trust will be formed in
accordance with established guidelines for the formation of
liquidating trusts, there is no assurance that the Liquidating
Trust will be treated as a liquidating trust for federal
income tax purposes. If the Liquidating Trust is determined
by the Internal Revenue Service to be taxable not as a
liquidating trust, the taxation of the Liquidating Trust and
the transfer of assets by the Debtors to the Liquidating
Trust may be materially different than is described herein
and may have a material adverse effect on the holders of
Allowed Class 2 and possibly Allowed Class 4 Claims.
D. Backup Withholding and Information Reporting
- -------------------------------------------------
Payors of interest, dividends, and certain other
reportable payments are generally required to withhold
thirty-one percent (31%) of such payments if the payee fails to
furnish such payee's correct taxpayer identification number
(social security number or employer identification number), to
the payor. The Liquidating Trust may be required to withhold a
portion of any payments made to a holder of an Allowed
Claim which does not provide its taxpayer identification
number.
E. Importance of Obtaining Professional Tax Assistance
- --------------------------------------------------------
THE FOREGOING IS INTENDED AS A SUMMARY ONLY, AND IS NOT
A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL.
THE FEDERAL, STATE AND LOCAL INCOME AND OTHER TAX CONSEQUENCES
OF THE PLAN ARE COMPLEX AND, IN SOME CASES, UNCERTAIN.
SUCH CONSEQUENCES MAY ALSO VARY BASED ON THE PARTICULAR
CIRCUMSTANCES OF EACH CLAIM HOLDER. ACCORDINGLY, EACH CLAIM
AND INTEREST HOLDER IS STRONGLY URGED TO CONSULT WITH HIS, HER
OR ITS OWN TAX ADVISOR REGARDING THE FEDERAL, STATE AND LOCAL
INCOME AND OTHER TAX CONSEQUENCES UNDER THE PLAN.
<PAGE> 40
VI.
VOTING PROCEDURES AND CONFIRMATION REQUIREMENTS.
A. Confirmation of the Plan.
- ------------------------------
1. Confirmation Hearing.
--------------------------
Section 1128 of the Bankruptcy Code requires the
Court, after notice, to hold a hearing on whether the Plan
and its proponents have fulfilled the confirmation
requirements of section 1129 of the Bankruptcy Code.
A hearing (the "Confirmation Hearing") to consider
confirmation of the Plan has been scheduled for
________________________, 1998 at _______ ____.m. before the
Honorable Peter J. Walsh, at the United States Bankruptcy Court
for the District of Delaware, Marine Midland Plaza, 824
Market Street, 6th Floor, Wilmington, Delaware 19801. The
Confirmation Hearing may be adjourned from time to time by the
Court without further notice except for the announcement of the
adjourned date at the Confirmation Hearing.
Any objection to confirmation must be made in writing
and must specify in detail the name and the address of the
Person objecting, the grounds for the objection and the
nature and amount of the Claim or Interest held by the
objector. Any such objection must be filed with the Court
and served upon the parties designated in the notice of the
confirmation hearing (the "Confirmation Notice") on or before
, 1998 at p.m., Wilmington,
Delaware time. Unless an objection to confirmation is
timely served and filed, it will not be considered by the Court.
2. Requirements for Confirmation of the Plan.
-----------------------------------------------
In order to confirm the Plan, the Bankruptcy Code
requires that the Court make a series of findings concerning the
Plan and the Debtors, including that: (a) Claims and
Interests are classified in the Plan in a permissible manner;
(b) the Plan complies with the applicable provisions of the
Bankruptcy Code; (c) the Debtors have complied with applicable
provisions of the Bankruptcy Code; (d) the Debtors have
proposed the Plan in good faith and not by any means
forbidden by law; (e) the disclosure required by section 1125
of the Bankruptcy Code has been made; (f) the Plan has been
accepted by the requisite majorities of holders of Claims and
Interests in each impaired Class of Claims or Interests, or, if
accepted by at least one but not all of such Classes, is "fair
and equitable", and does not discriminate unfairly as to
any non-accepting class, as required by the "cramdown"
provisions of section 1129(b) of the Bankruptcy Code; (g) the
Plan is feasible; (h) the Plan is in the "best interests" of
all holders of Claims and Interests in an impaired class by
providing to such holders property of a value, as of
the Effective Date, that is not less than the amount that such
holder would receive or retain in a chapter 7 liquidation,
unless each holder of a Claim or Interest in such Class has
accepted the Plan; and (i) all bankruptcy fees payable to the
Clerk of the Court and the U.S. Trustee under 28 U.S.C. 1930
have been paid, or the Plan provides for the payment of
such fees on the Effective Date.
a. Acceptance.
----------------
Pursuant to Section 1126 of the Bankruptcy Code,
the Plan is accepted by an impaired Class of Claims if holders
of twothirds in dollar amount and a majority in number of
Claims of that Class vote to accept the Plan. Only the
votes of those holders of Claims who actually vote (and are
entitled to vote) to accept or reject the Plan count in this
tabulation. The Plan will be accepted by an impaired Class of
Interests if holders of two-thirds of the amount of outstanding
shares in such class vote to accept the Plan (and only
those voting count in the tabulation). Pursuant to Section
1129(a)(8), all the impaired Classes of Claims and Interests
must vote to accept the Plan in order for the Plan to be
confirmed on a consensual basis (and at least one such
Impaired Class must accept the Plan without including the
acceptance by an insider). However, under the cramdown
provisions of Section 1129(b), only one impaired Class of
Claims (determined without including the acceptance by an
insider) needs to accept the Plan if the other conditions
to cramdown are met.
<PAGE> 41
The Plan has three Classes of Claims which are
Impaired and are entitled to vote on the Plan (Classes 2, 3,
and 4). The Plan provides for three Classes of Interests
(Classes 5, 6 and 7) which are impaired and which are deemed
to have rejected the Plan.
b. Best Interests Test/Liquidation Analysis.
----------------------------------------------
Notwithstanding the acceptance of the Plan by
each Impaired Class, section 1129(a)(7) of the Bankruptcy
Code requires that the Bankruptcy Court determine that the Plan
is in the best interests of each holder of a Claim or Interest
in an Impaired Class if any holder in that Class has voted
against the Plan. Accordingly, if an Impaired Class under the
Plan does not unanimously accept that Plan, the "best
interests" test requires that the Bankruptcy Court find that
the Plan provides to each member of such Impaired Class a
recovery on account of the member's Claim or Interest that
has a value, as of the Effective Date, that is not less than
the value of the distribution that each such member would
receive or retain if Debtors were liquidated under Chapter
7 of the Bankruptcy Code commencing on the Effective Date.
To determine what members of the each impaired Class
of Claims would receive if the Debtors were liquidated under
Chapter 7, the Court must consider the values that would be
generated from a liquidation of the Debtors' assets and
properties in the context of a hypothetical liquidation under
Chapter 7. Because the Debtors' assets are all encumbered by
liens in favor of the holders of the Senior Notes and the value
of the Debtors' assets in an orderly liquidation is less than
the principal amount of the Senior Noteholders' debt,
unsecured creditors, including holders of Administrative and
Priority Claims, would receive nothing in a Chapter 7
liquidation of Debtors. Thus, the Plan, which provides for
the payment of Administrative and Priority Claims and
which potentially provides a distribution of beneficial
interests in the Liquidating Trust to general unsecured
creditors, provides the unsecured creditors with a greater
distribution than they would receive in Chapter 7.
Further, the Plan is designed to maximize the value of
the Debtors' assets for the benefit of Creditors. The
Liquidating Trustee will have the flexibility in liquidating
the assets to assure the highest recovery. The Liquidating
Trustee may hold assets or improve them or take whatever
action is necessary to secure the maximum value.
c. Feasibility.
-----------------
Section 1129(a)(11) of the Bankruptcy Code requires
a finding that Confirmation of the Plan is not likely to
be followed by the liquidation, or the need for further
financial reorganization, of the Debtors or any successor in
interest, unless as here, liquidation is expressly
contemplated by the Plan. Since the Plan is a liquidating
plan in which the cash and securities representing the sale
proceeds and the proceeds of all other assets of the Debtors
are distributed to a trust for the benefit of creditors, the
Debtors believe that they will be able to perform their
obligations under the Plan and that therefore the Plan is
feasible within the meaning of section 1129(a)(11) of the
Bankruptcy Code.
d. Classification.
--------------------
Section 1122 of the Bankruptcy Code sets forth
the requirements relating to classification of claims.
Section 1122(a) provides that claims or interest may be
placed in a particular class only if they are substantially
similar to the other claims or interest in that class. The
Debtors believe that all Classes under the Plan satisfy the
requirements of section 1122(a). The Debtors believe that
the classification of Claims set forth in the Plan is
appropriate in classifying substantially similar Claims
together, and does not discriminate unfairly in the treatment
of those Classes. The Debtors believe that the Plan adheres
to the absolute priority rule and treats holders of Claims
and Interests in accordance with their contractual
entitlement and applicable law.
<PAGE> 42
B. Non-Consensual Confirmation.
- ---------------------------------
The Bankruptcy Code provides for confirmation of the
Plan even if it is not accepted by all impaired Classes, as long
as at least one impaired Class of Claims has accepted it
(without counting the acceptances of insiders). These
so-called "cramdown" provision are set forth in section
1129(b) of the Bankruptcy Code. The Plan may be confirmed
under the cramdown provisions if, in addition to satisfying
the other requirements of section 1129 of the Bankruptcy
Code, it (i) is "fair and equitable" and (ii) "does not
discriminate unfairly" with respect to each Class of Claims or
Interests that is impaired under, and has not accepted, such
Plan.
1. Fair and Equitable Standard.
---------------------------------
With respect to a dissenting Class of unsecured
creditors, the "fair and equitable" standard requires, among
other things, that the Plan contain one of two elements.
It must provide either that each unsecured creditor in the
Class receive or retain property having a value, as of the
Effective Date, equal to the Allowed amount of its Claim, or
that no holder of Allowed Claims or Interests in any junior
Class may receive or retain any property on account of such
Claims or Interest. The strict requirements as to the
allocation of full value to dissenting Classes before junior
Classes can receive a distribution is known as the "absolute
priority rule." In addition, the "fair and equitable"
standard has also been interpreted to prohibit any class
senior to a dissenting class from receiving under a plan more
than one hundred percent of its Allowed Claims.
2. The Plan Must Not Discriminate Unfairly.
---------------------------------------------
As a further condition to approving a cramdown,
the Bankruptcy Court must find that the Plan does not
"discriminate unfairly" in its treatment of dissenting
Classes. A Plan of Reorganization does not "discriminate
unfairly" if (a) the Plan does not treat any dissenting
impaired Class of Claims or Interests in a manner that is
materially less favorable than the treatment afforded to
another Class with similar legal Claims against or Interests
in the Debtors and (b) no Class receives payments in excess
of that which it is legally entitled to receive for its
Claims or Interests. The Debtors believe that the Plan does
not discriminate unfairly as to any impaired Class of Claims or
Interests.
If any impaired Class votes to reject the Plan, the
Debtors intend to seek to confirm the Plan pursuant to the
cramdown provisions, and, if the Court were to determine
it to be necessary, modify the Plan in order to comply with
such cramdown requirements.
C. Voting Procedures and Requirements.
- ----------------------------------------
1. Voting Requirements - Generally.
------------------------------------
Pursuant to the Bankruptcy Code, only holders of
Claims against or Interests in Debtors that are Allowed
pursuant to Section 502 of the Bankruptcy Code and that are
impaired under the terms and provisions of the Plan are
entitled to vote to accept or reject that Plan. Pursuant to
the Plan, the Beneficial Holders of Claims in Classes as of
the Voting Record Date are entitled to vote to accept or
reject the Plan.
<PAGE> 43
All creditors who filed proofs of claim in an
amount different from the amount set forth in the Debtors'
Schedules or whose claim was not included in the Debtors'
Schedules is treated as the holder of a Disputed Claim under
the Plan. However, all creditors whose Claims are impaired
under the Plan will be treated as holders of Allowed
Claims for voting purposes only. The Debtors' agreement to
allow such creditors to vote on the Plan shall not waive the
Debtors' right to treat such Claims as Disputed Claims for all
other purposes.
Pursuant to the Bankruptcy Code a class of claims
or interests is "impaired" if the legal, equitable, or
contractual rights attaching to the claims or interests of
that class are altered, other than by curing defaults and
reinstating maturity.
Classes of Claims and Interests that are not impaired
are not entitled to vote on the Plan, are presumed to have
accepted the Plan and will not receive a Ballot. As set forth
above, the Claims in Class 1 are not impaired, and such Class
of Claims is not entitled to vote on the plan and is presumed
to have accepted the Plan pursuant to Section 1126(f) of the
Bankruptcy Code. The Claims in Classes 2, 3 and 4 are
impaired and are entitled to vote on the Plan. The Interests
in Classes 5, 6 and 7 will not receive any distribution or
retain any property under the Plan and are deemed to have
rejected the Plan pursuant to Section 1129(g) of the
Bankruptcy Code. The classification of Claims and Interests
and their designation as impaired or not impaired is
summarized above in Section V, (A) entitled "Classification
and Treatment of Claims and Interests".
2. Ballot and Information Agent.
----------------------------------
___________________________________ will act as the
Ballot and Information Agent (the "Balloting Agent") in
connection with the solicitation. All deliveries,
correspondence and questions should be directed to the
Balloting Agent, at the following address or telephone
number: . The Balloting Agent will
provide holders with information regarding the solicitation,
assist holders in obtaining copies of this Disclosure
Statement, Ballots and Master Ballots and respond to questions
with respect to any of the foregoing.
3. Voting Procedures.
-----------------------
A Ballot, or in some cases, a Master Ballot, for voting
to accept or reject the Plan is enclosed with each copy of
the Disclosure Statement. In most cases, the Ballot enclosed
with this Disclosure Statement is printed with the amount of
your Claim for voting purposes. Such amount is based either on
your proof of claim, the Debtors' Schedules, or an order of the
Court. All votes to accept or reject the Plan must be cast by
using the Ballot enclosed with is Disclosure Statement.
IF YOU HAVE A CLAIM THAT IS IMPAIRED UNDER THE
PLAN ENTITLING YOU TO VOTE AND YOU DID NOT RECEIVE A BALLOT,
RECEIVED A DAMAGED BALLOT, OR LOST YOUR BALLOT, PLEASE
CONTACT , THE BALLOTING
AGENT, AT . IF YOU HOLD CLAIMS
IN MORE THAN ONE CLASS, YOU MAY RECEIVE MORE THAN ONE
BALLOT. YOU SHOULD COMPLETE, SIGN AND RETURN EACH BALLOT YOU
RECEIVE.
Consistent with the provisions of Bankruptcy Rule 3018,
the Court has fixed the close of business
on as the record date for
the determining the holders of Claims who are entitled to
receive a copy of this Disclosure Statement and to vote to
accept or reject the Plan (the "Voting Record Date").
Entities that acquire Claims after the Voting Record Date will
not be entitled to vote on the Plan.
<PAGE> 44
Copies of this Disclosure Statement and appropriate
Ballots have been sent to all holders of Impaired Claims as of
the Voting Record Date entitled to vote on the Plan,
including all registered holders. Registered holders may
include brokerage firms, commercial banks, trust companies,
or other nominees ("Intermediaries"). If such Intermediaries
do not hold for their own account, they must provide
copies of this Disclosure Statement and appropriate Ballots
to their customers and to beneficial owners. Any beneficial
owner who does not receive a ballot should contact the
appropriate Intermediary or the Balloting Agent.
Any beneficial owner holding _____________________________
in "street name" can vote only by following these instructions:
a. fill out the appropriate information on the Ballot;
b. sign the Ballot unless already signed by the Intermediary;
and
c. return the completed Ballot to the Intermediary in the self-addressed,
stamped envelope enclosed with the Ballot NO LATER THAN ________ P.M.
EASTERN TIME ON ______________. If no envelope was enclosed, contact
the Balloting Agent or your Intermediary for instructions.
The Intermediary will be responsible for completing a
Master Ballot reflecting its vote and the votes of other
beneficial owners for which the Intermediary acts as
nominee, and for delivering the Master Ballot in a timely
manner to the Balloting Agent. Any Ballot submitted to an
Intermediary will not be counted unless such Intermediary
timely delivers the Ballot to the Balloting Agent.
Any beneficial owner who is also the registered holder
can vote by completing and signing the enclosed Ballot and
returning it directly to the Balloting Agent (using the
enclosed, selfaddressed stamped envelope).
Under the Bankruptcy Code, for purposes of
determining whether the requisite acceptances have been
received, only those holders that vote to accept or reject the
Plan will be counted. Votes cannot be transmitted orally or by
facsimile transmission. Accordingly, it is important that you
return your signed and completed Ballot(s) promptly.
Failure by any holder to send a duly executed Ballot with an
original signature will be deemed an abstention by such holder
with respect to a vote on the Plan and will not be counted as
vote for or against the Plan. To accept Plan, the holder must
check the box entitled "accept the Plan" on the appropriate
Ballot. Any Ballot cast that does not indicate whether the
holder of the Claim or Interest is voting to accept or reject
the Plan will not be counted as either an acceptance or
rejection of the Plan. A vote may be disregarded if
the Bankruptcy Court determines, after and a hearing, that
such acceptances or rejection was not solicited or procured in
good faith or other in accordance with the provision of the
Bankruptcy Code or if a Claim was voted in bad faith.
4. Voting Deadline.
---------------------
Voting on the Plan by each holder of a Claim in an
Impaired Class is important. After carefully reviewing the Plan
and this Disclosure Statement, please indicate your vote on
each enclosed Ballot and return it in the pre-addressed
envelope provided for this purpose.
IN ORDER TO BE COUNTED, BALLOTS MUST BE SIGNED AND
RETURNED SO THAT THEY ARE RECEIVED EITHER BY THE BALLOTING
AGENT NO LATER THAN ___________P.M. EASTERN TIME ON ___________
(THE "VOTING DEADLINE"), OR (ii) IF YOU ARE NOT THE RECORD
HOLDER, BY OUR BROKER, BANK OR NOMINEE NO LATER THAN
______________ P.M. NEW YORK TIME ON ______________ (THE
"BENEFICIAL OWNERS DEADLINE").
<PAGE> 45
TO HAVE YOUR VOTE COUNT, YOU MUST COMPLETE, SIGN AND
RETURN THE BALLOT TO:
[Address]
PLEASE FOLLOW THE DIRECTIONS CONTAINED ON THE
ENCLOSED BALLOT CAREFULLY. BALLOTS THAT ARE RECEIVED AFTER
THE VOTING DEADLINE WILL NOT BE ACCEPTED OR USED BY THE
DEBTORS IN SEEKING CONFIRMATION OF THE PLAN. IT IS OF THE
UTMOST IMPORTANCE TO DEBTORS THAT YOU VOTE PROMPTLY TO ACCEPT
THE PLAN.
<PAGE> 46
DATED: June 24, 1998
MORRIS, NICHOLS, ARSHT & TUNNELL
________________________________
William H. Sudell, Jr. (No. 463)
Robert J. Dehney (No. 3578)
Derek C. Abbott (No. 3376)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
and
CAMHY KARLINSKY & STEIN LLP
David Neier (DN 5391)
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attorneys for Debtors
<PAGE>
EXHIBIT "A"
DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION
DATED JUNE 24, 1998
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: Chapter 11
FRUEHAUF TRAILER CASE NO. 96-1563 (PJW)
CORPORATION,
MARYLAND SHIPBUILDING &
DRYDOCK COMPANY, F.G.R., INC.,
JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL, Jointly Administered
LIMITED, FRUEHAUF CORPORATION,
THE MERCER CO., DEUTSCHE
FRUEHAUF HOLDING CORPORATION,
MJ HOLDINGS, INC., and
E. L. DEVICES, INC.,
Debtors.
---------------------------------------
DEBTORS' FIRST AMENDED JOINT PLAN OF
REORGANIZATION DATED JUNE 24, 1998
---------------------------------------
<PAGE> i
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS 2
Rules of Interpretation 2
ARTICLE 2
DESIGNATION OF CLAIMS AND INTERESTS 7
2.1 Summary 8
ARTICLE 3
TREATMENT OF UNCLASSIFIED CLAIMS 8
3.1 Administrative Claims 8
(a) General 8
(b) Payment of Statutory Fees 9
(c) Bar Date for Administrative Claims 9
(i) General Provisions 9
(ii) Professionals 9
(iii)Tax Claims 9
3.2 Treatment of Pre-Petition Tax Claims 10
ARTICLE 4
CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS 10
4.1 Class 1 - Priority Claims 10
4.2 Class 2 - Secured Claims of Holders of Senior Notes 11
4.3 Class 3 - Secured Claims Other Than Claims of Holders
of Senior Notes 11
4.4 Class 4 - General Unsecured Claims 11
4.5 Class 5 - Old Common Stock 11
4.6 Class 6 - Old Warrants 12
4.7 Class 7 - Securities Claims 12
ARTICLE 5
ACCEPTANCE OR REJECTION OF THE PLAN 12
5.1 Voting Classes 12
5.2 Presumed Acceptance of Plan 12
5.3 Presumed Rejection of Plan 12
ARTICLE 6
MEANS FOR EXECUTION AND IMPLEMENTATIONOF THE PLAN 12
6.1 Funding of the Distribution Fund 12
6.2 Transfer of Wabash Securities to Indenture Trustee 12
6.3 Change of Plan Sponsorship for the Management and Union
Plans 12
6.4 Transfer of Hogan's Creek Property and Picketville Property 13
<PAGE> ii
6.5 Foreclosure by Holders of Senior Notes 13
6.6 Transfer by Debtors of Assets to the Liquidating Trust 13
6.7 Ratification of Liquidating Trust Agreement 13
(a) Powers and Duties 13
(b) Compensation of Trustee 13
(c) Limitation of Liability 13
(d) Indemnity 13
(e) Right to Hire Professionals 14
(f) Right to Pursue all Causes of Action of the Debtors 14
(g) Treatment of Distribution Fund Surplus 14
(h) Limitation on the Trustee 14
(i) Distribution of Trust Certificates 14
(j) Tax Treatment of the Liquidating Trust 14
(k) Termination of Liquidating Trust 15
6.8 Dissolution of Corporate Entities 15
6.9 Cancellation of Old Securities 15
6.10 Registration Exemption for Debtors' Wabash Securities and
Beneficial Interests in the Liquidating Trust 15
6.11 Corporate Action 15
6.12 Preservation of Rights of Action 15
6.13 Objections to Claims 16
6.14 Exemption from Stamp and Similar Taxes 16
ARTICLE 7
FUNDING AND METHODS OF DISTRIBUTION ANDPROVISIONS FOR
TREATMENT OF DISPUTED CLAIMS 16
7.1 Funding of Distributions Under the Plan 16
7.2 Cash Distributions 16
7.3 Distribution Procedures 16
7.4 Distributions to Holders of Allowed Administrative
Expense Claims, Pre-Petition Tax Claims and Class 1
Priority Claims 16
7.5 (a) Distributions to Holders of Allowed Class 2 Claims 17
(b) Certification of Claims by Indenture Trustee 17
(c) Surrender and Cancellation of Old Securities 17
(d) Ballot Record Date; Distributions to Holders of
Senior Notes 17
7.6 Disputed Claims 18
7.7 Delivery of Distributions and Undeliverable or
Unclaimed Distributions 18
(a) Delivery of Distributions in General 18
(b) Undeliverable Distributions 18
(i) Holding and Investment of Undeliverable Property 18
(ii) Distribution of Undeliverable Property After
it Becomes Deliverable and Failure to Claim
Undeliverable Property 18
7.8 Distributions on Account of Unsecured Class 4 Claims 18
7.9 De Minimis Distributions 19
7.10 Failure to Negotiate Checks 19
7.11 Compliance with Tax Requirements 19
7.12 Setoffs 19
7.13 Fractional Interests 19
<PAGE> iii
ARTICLE 8
TREATMENT OF EXECUTORY CONTRACTSAND UNEXPIRED LEASES 19
8.1 Rejection of All Executory Contracts and Leases Not Assumed19
8.2 Bar Date for Filing of Rejection Claims 19
ARTICLE 9
EFFECTS OF PLAN CONFIRMATION 20
9.1 Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors 20
9.2 No Liability for Solicitation or Participation 20
9.3 Limitation of Liability 20
9.4 Other Documents and Actions 20
9.5 Post-Consummation Effect of Evidences of Claims or Interests 20
9.6 Term of Injunctions or Stays 21
ARTICLE 10
CONFIRMABILITY OF PLAN AND CRAMDOWN 21
ARTICLE 11
RETENTION OF JURISDICTION 21
ARTICLE 12
MISCELLANEOUS PROVISIONS 22
12.1 Fractional Dollars 22
12.2 Modification of Plan 22
12.3 Withdrawal of Plan 22
12.4 Governing Law 23
12.5 Time 23
12.6 Payment Dates 23
12.7 Headings 23
12.8 Successors and Assigns 23
12.9 Severability of Plan Provisions 23
12.10 No Admissions 23
12.11 Dissolution of Unsecured Creditors' Committee 23
12.12 Notices 23
<PAGE> 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: Chapter 11
FRUEHAUF TRAILER CASE NO. 96-1563 (PJW)
CORPORATION, MARYLAND SHIPBUILDING
& DRYDOCK COMPANY, F.G.R., INC.,
JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL, Jointly Administered
LIMITED, FRUEHAUF CORPORATION,
THE MERCER CO., DEUTSCHE
FRUEHAUF HOLDING CORPORATION,
MJ HOLDINGS, INC., and
E. L. DEVICES, INC.,
Debtors.
DEBTORS' FIRST AMENDED JOINT PLAN OF
REORGANIZATION DATED JUNE 24, 1998
Fruehauf Trailer Corporation, Maryland Shipbuilding &
Drydock Company, F.G.R., Inc., Jacksonville Shipyards, Inc.,
Fruehauf International Limited, Fruehauf Corporation, The Mercer
Co., Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc.,
and E.L. Devices, Inc. (collectively, the "Debtors"), as debtors
and debtors-in-possession, propose this First Amended Joint Plan
of Reorganization dated June 24, 1998 (the "Plan") pursuant to
section 1121(a) of Title 11 of the United States Code for the
resolution of the Debtors' outstanding creditor claims and equity
interests. Reference is made to the Debtors' Disclosure
Statement (the "Disclosure Statement") for a discussion of the
Debtors' history, business, properties and results of operations,
and for a summary of this Plan and certain related matters.
All holders of Claims and Interests are encouraged to read
the Plan and the Disclosure Statement in their entirety before
voting to accept or reject this Plan. No materials, other than
the Disclosure Statement and any exhibits and schedules attached
thereto or referenced therein, have been approved by the Debtors
for use in soliciting acceptances or rejections of this Plan.
<PAGE> 2
ARTICLE 1
DEFINITIONS
Rules of Interpretation. As used herein, the
following terms have the respective meanings specified below,
and such meanings shall be equally applicable to both the
singular and plural, and masculine and feminine, forms of the
terms defined. The words "herein," "hereof," "hereto,"
"hereunder" and others of similar import, refer to the Plan as
a whole and not to any particular section, subsection or
clause contained in the Plan. Captions and headings to
articles, sections and exhibits are inserted for convenience
of reference only and are not intended to be part of or to
affect the interpretation of the Plan. The rules of
construction set forth in section 102 of the Bankruptcy Code
shall apply. In computing any period of time prescribed or
allowed by the Plan, the provisions of Bankruptcy Rule
9006(a) shall apply. Any capitalized term used but not
defined herein shall have the meaning ascribed to such term
in the Bankruptcy Code. In addition to such other terms as
are defined in other sections of the Plan, the following
capitalized terms have the following meanings when used in the
Plan.
1.1 "Administrative Claim" means a Claim for costs
and expenses of administration allowed under section 503(b) of
the Bankruptcy Code and referred to in section 507(a)(1) of
the Bankruptcy Code.
1.2 "Affiliate" means (a) an entity that directly
or indirectly owns, controls or holds with power to vote,
twenty percent or more of the outstanding voting securities of a
Debtor, other than an entity that holds such securities
(i) in a fiduciary or agency capacity without sole
discretionary power to vote such securities or (ii) solely to
secure a debt, if such entity has not in fact exercised such
power to vote, or (b) a corporation twenty percent or more
of whose outstanding voting securities are directly or
indirectly owned, controlled or held with power to vote, by a
Debtor, or by an entity that directly or indirectly owns,
controls or holds with power to vote, twenty percent or more
of the outstanding voting securities of a Debtor, other than
an entity that holds such securities (i) in a fiduciary
or agency capacity without sole discretionary power to vote
such securities or (ii) solely to secure a debt, if such
entity has not in fact exercised such power to vote.
1.3 "Allowed Claim" means a Claim that is (1) not
a Disputed Claim or (b) a Claim that has been allowed by a
Final Order.
1.4 "Ballots" means the written Ballots for acceptance
or rejection of the Plan.
1.5 "Ballot Record Date" means , 1998.
1.6 "Ballot Return Date" means 5:00 p.m. Eastern
Daylight Time on , 1998, unless and to the
extent such date is extended by the Debtors in accordance with
the Disclosure Statement.
1.7 "Bankruptcy Code" or "Code" means Title 11 of
the United States Code as now in effect or hereafter amended.
1.8 "Bankruptcy Court" means the United States
Bankruptcy Court for the District of Delaware, which presides
over this proceeding, or if necessary, the United States
District Court for said District having original jurisdiction
over this case.
1.9 "Bankruptcy Rules" means, collectively (a) the
Federal Rules of Bankruptcy Procedure, and (b) the local rules
of the Bankruptcy Court, as applicable from time to time
in the Reorganization Case.
<PAGE> 3
1.10 "Beneficial Interestholders" shall mean the holders
of the Class A Beneficial Interests and the holders of the
Class B Beneficial Interests.
1.11 "Bondholders' Committee" means the Unofficial
Committee of Senior Secured Noteholders.
1.12 "Business Day" means any day, other than a
Saturday, Sunday or "legal holiday" (as defined in
Bankruptcy Rule 9006(a)).
1.13 "Cash" means cash, wire transfer, certified check,
cash equivalents and other readily marketable
securities or instruments, including, without limitation,
readily marketable direct obligations of the United States of
America, certificates of deposit issued by banks, and
commercial paper of any Person, including interests accrued or
earned thereon, or a check from the Liquidating Trust.
1.14 "Claim" means any right to payment from the
Debtors arising before the Confirmation Date, whether or not
such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured,
contested, uncontested, legal, equitable, secured, or
unsecured; or any right to an equitable remedy for breach of
performance if such breach gives rise to a right of payment
from the Debtors prior to the Confirmation Date, whether or
not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, contested,
uncontested, secured or unsecured.
1.15 "Class" means one of the classes of Claims or
Interests defined in Article III hereof.
1.16 "Class A Beneficial Interest" means the
respective rights and interests of the holders of Allowed
Class 2 Claims and, if Class 4 accepts the Plan, the holders
of Allowed Class 4 Claims in the Liquidating Trust, subject to
the interest of the holders of Allowed Administrative, Priority
and Pre-Petition Tax Claims in the Distribution Fund.
1.17 "Class B Beneficial Interest" means the
respective rights and interests of the holders of Allowed
Administrative, Priority and Pre-Petition Tax Claims in the
Liquidating Trust's Distribution Fund.
1.18 "Company" means Fruehauf Trailer Corporation,
a Delaware Corporation, and its Affiliates.
1.19 "Confirmation" means the entry of a Confirmation
Order confirming this Plan at or after a hearing pursuant to
section 1129 of the Bankruptcy Code.
1.20 "Confirmation Date" means the date the
Confirmation Order is entered on the docket of the Bankruptcy
Court.
1.21 "Confirmation Order" means the order entered by
the Bankruptcy Court confirming the Plan pursuant to section
1129 of the Bankruptcy Code.
1.22 "Debtors" means Fruehauf Trailer Corporation,
Maryland Shipbuilding & Drydock Company, F.G.R., Inc.,
Jacksonville Shipyards, Inc., Fruehauf International
Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc.
1.23 "Disclosure Statement" means the Disclosure
Statement filed by the Debtors as approved by the Bankruptcy
Court for submission to the Creditors, Interest
holders, and parties-in-interest of the Debtors, as it may
have been amended or supplemented from time to time.
<PAGE> 4
1.24 "Disputed Claim" means a Claim as to which a proof
of claim has been Filed or deemed Filed under applicable law, as
to which an objection has been or may be timely Filed and
which objection, if timely Filed, has not been withdrawn on or
before any date fixed for Filing such objections by the Plan or
Order of the Bankruptcy Court and has not been overruled or
denied by a Final Order. Prior to the time that an objection
has been or may be timely Filed, for the purposes of this Plan,
a Claim shall be considered a Disputed Claim to the extent that:
(i) the amount of the Claim specified in the proof of claim
exceeds the amount of any corresponding Claim listed by the
Debtors in their respective Schedules to the extent of such
excess; (ii) any corresponding Claim listed by the Debtors in
their respective Schedules has been scheduled as
disputed, contingent, or unliquidated, irrespective of the
amount scheduled; or (iii) no corresponding Claim has been
listed by the Debtors in their respective Schedules.
Disputed Claims also includes Claims subject to a pending
action for equitable subordination of such Claims.
1.25 "Distribution Fund" means the portion of the
Debtors' Cash on the Effective Date which shall be
transferred to the Liquidating Trust, on behalf of and for
the benefit of the holders of Allowed Administrative,
Priority and Pre-Petition Tax Claims. The amount of Cash in
the Distribution Fund shall equal the aggregate of (a) the
allowed amount of all Administrative Claims, Pre-Petition Tax
Claims and Priority Claims; and (b) the asserted amount or
court-estimated amount of Disputed or undetermined (i)
Administrative Expense Claims, (ii) Pre-Petition Tax Claims,
and (iii) Priority Claims. With respect to
Administrative Claims for compensation and reimbursement
of expenses of professionals or other persons pursuant to
sections 328, 330, 331 and 503(b) of the Bankruptcy Code, the
amount of Cash to be deposited shall be the amount sought or
the maximum amount estimated to be sought for such compensation
and expenses. The Distribution Fund shall not include interest
earned on the Distribution Fund after the Effective Date.
1.26 "Distribution Fund Surplus" shall be the amount
of Cash, if any, remaining in the Distribution Fund after
the payment of all Allowed Administrative Expense Claims,
Allowed Priority Claims and Allowed Pre-petition Tax Claims.
1.27 "Distributions" means the properties or interests
in property to be paid or distributed hereunder to the holders
of Allowed Claims.
1.28 "Docket" means the docket in the Reorganization
Case maintained by the Clerk.
1.29 "Effective Date" means the date selected by the
Debtors which is between the first (1st) and forty fifth (45th)
business days on which no stay of the Confirmation Order is and
remains in effect. The Effective Date may be specified in the
Confirmation Order or in a separate document filed with the
Bankruptcy Court. If no designation is made, it shall be the
first day of that period.
1.30 "Estates" means the estates created in
the Reorganization Case under section 541 of the Bankruptcy Code.
1.31 "Executory Contract" means any unexpired lease
and/or executory contract as set forth in section 365 of the
Code. 1.32 "File" or "Filed" means filed with the
Bankruptcy Court in the Reorganization Case.
1.33 "Final Order" means an order or judgment of
the Bankruptcy Court, or other court of competent
jurisdiction, as entered on the Docket in the Reorganization
Case, which has not been reversed, stayed, modified or amended.
<PAGE> 5
1.34 "Foreclosed Assets" means the Debtors' assets on
which the Indenture Trustee shall be deemed to have
foreclosed the liens of the holders of the Senior Notes
pursuant to Section 6.5 of this Plan. The Foreclosed Assets
shall include all assets of the Debtors, including, but not
limited to, the stock of JSI Property Corp., Pension Corp.
and Fruehauf de Mexico and all rights to receive tax
refunds, but excluding the Distribution Fund and the Wabash
Securities.
1.35 "Hogan's Creek Property" means the 3.43 acres of
real property located in Duval County, Florida, owned by
Jacksonville Shipyards, Inc.
1.36 "Impaired" as to a Class means the Plan alters
the legal, equitable or contractual rights of a Claim or
Interest holder within the meaning of 11 U.S.C. 1124.
1.37 "Indenture" means the Indenture, dated as of May
1, 1995 between Fruehauf Trailer Corporation and IBJ Schroder
Bank & Trust Company, as Trustee, as amended, relating to the
Senior Notes.
1.38 "Indenture Trustee" means IBJ Schroder Bank &
Trust Company, as trustee under the Indenture.
1.39 "Interest" means the rights of the owners
and/or holders of outstanding share or shares of the Company's
Class A Common Stock and Class B Common Stock with respect
of such Interest as of the date immediately preceding the
Petition Date.
1.40 "JSI Property Corp." means a newly-created
Delaware corporation to which the Hogan's Creek Property
and the Picketville Property shall be transferred by
Jacksonville Shipyards, Inc.
1.41 "Liquidating Trust" or "Trust" means that certain
trust substantially in the form of Exhibit "A" attached to the
Plan.
1.42 "Liquidating Trust Account" means the
segregated account created by the Liquidating Trustee for
the initial deposit of all funds received by the Liquidating
Trust.
1.43 "Liquidating Trust Proceeds" shall be the net
proceeds of all assets held by the Liquidating Trust,
excluding the Distribution Fund.
1.44 "Liquidating Trustee" or "Trustee" means Chriss
Street or his successor selected in accordance with the
Liquidating Trust Agreement, as trustee for the Liquidating
Trust.
1.45 "Management Plan" means the Fruehauf
Trailer Corporation Retirement Plan sponsored by Fruehauf
Trailer Corporation.
1.46 "Old Common Stock" means the Common Stock of
Fruehauf Trailer Corporation.
1.47 "Old Securities" means the Senior Notes, the Old
Common Stock and the Old Warrants.
1.48 "Old Warrants" means the Company's common
stock warrants issued May 3, 1995 and any other Company
warrants outstanding on the Effective Date.
1.49 "Order" means an order or judgment of the
Bankruptcy Court as entered on the Docket.
<PAGE> 6
1.50 "Pension Corp." means a newly-created
Delaware corporation which will be owned by Fruehauf Trailer
Corporation, will become sponsor of the Pension Plans and will
be foreclosed by the holders of the Senior Notes and
conveyed to the Liquidating Trust.
1.51 "Pension Plans" means the Management Plan and the
Union Plan.
1.52 "Person" means any individual, corporation,
general partnership, limited partnership, association,
joint stock company, joint venture, estate, trust,
indenture trustee, government or any political subdivision,
governmental unit (as defined in the Bankruptcy Code),
official committee appointed by the United States Trustee,
unofficial committee of creditors or equity holders or other
entity.
1.53 "Petition Date" means October 7, 1996, the date
on which Debtors filed their voluntary Chapter 11 petitions.
1.54 "Picketville Property" means the 6.16 acre
landfill located in Duval County, Florida, owned by
Jacksonville Shipyards, Inc.
1.55 "Plan" means this Joint Plan of Reorganization in
its present form, or as it may be amended, modified,
and/or supplemented from time to time in accordance with the
Bankruptcy Code, or by agreement of all affected parties, or by
order of the Bankruptcy Court, as the case may be.
1.56 "Pre-Petition Tax Claim" means a Tax Claim that
arises prior to the Petition Date.
1.57 "Priority Claim" means all Claims entitled to
priority under 11 U.S.C. 507(a) of the Bankruptcy Code, other
than an Administrative Claim or a Tax Claim.
1.58 "Pro Rata" means proportionately, based on
the percentage of the distribution made on account of a
particular Allowed Claim bears to the distributions made on
account of all Allowed Claims of the Class in which the
Allowed Claim is included.
1.59 "Rejection Claim" means a Claim resulting from
the rejection of a lease or executory contract by a Debtor.
1.60 "Reorganization Case" means, collectively, the
Debtors' cases under Chapter 11 of the Bankruptcy Code that were
commenced on the Petition Date.
1.61 "Requisite Percentage of Class A Beneficial
Interests" shall mean the percentage of Class A Beneficial
Interests to which holders of Allowed Class 2 Claims are
entitled to share Pro Rata, such percentage being 100% if Class
4 rejects the Plan and 94.5% if Class 4 accepts the Plan.
1.62 "Schedules" means the Schedules of Assets
and Liabilities, Statement of Financial Affairs and
Statement of Executory Contracts that may be filed by the
Debtors with the Bankruptcy Court, as amended or supplemented
on or before the Confirmation Date, listing the liabilities
and assets of the Debtors.
1.63 "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.
<PAGE> 7
1.64 "Securities Claims" means (i) any Claim arising
from rescission of a purchase or sale of Old Common Stock
or for damages arising from the purchase or sale of Old Common
Stock, or (ii) any Claim for indemnity, reimbursement, or
contribution on account of any such Claim.
1.65 "Security Agreement" means the documentation
under which a lien against property is reflected.
1.66 "Senior Notes" means the 14.75% Senior Secured
Notes due 2002.
1.67 "Tax Claim" means either (a) an Unsecured Allowed
Claim of a governmental entity as provided by section 507(a)(8)
of the Code, or (b) an Allowed Claim of a governmental entity
secured by a lien on property of the Debtors under applicable
state law.
1.68 "Trust Certificates" means the written
instruments evidencing the Class A Beneficial Interest in the
Liquidating Trust of a holder of an Allowed Claim in Class 2
and if Class 4 accepts the Plan, an Allowed Claim in Class 4.
1.69 "Union Plan" means the Pension Plan for Hourly
Rated (Union) Employees of Jacksonville Shipyards, Inc.
sponsored by Jacksonville Shipyards, Inc.
1.70 "Unsecured Claim" means any Claim that is not
an Administrative Claim, Priority Claim, Pre-Petition Tax Claim
or Secured Claim.
1.71 "Unsecured Creditors' Committee" means the
Official Committee of Unsecured Creditors appointed in the
Reorganization Case by the United States Trustee pursuant to
section 1102 of the Bankruptcy Code, as constituted by the
addition or removal of members from time to time.
1.72 "Wabash" means Wabash National Corporation.
1.73 "Wabash Securities" means the Wabash Common
and Preferred Stock owned by Debtor on the Effective Date.
1.74 "Warrant Notes" means the Company's
unsecured promissory notes in the approximate amount of $8.5
million due October, 1998.
ARTICLE 2
DESIGNATION OF CLAIMS AND INTERESTS
This Plan substantively consolidates the Claims against
the Debtors and their treatment. Substantive consolidation for
Plan purposes is appropriate in this case because all of the
Debtors' assets are encumbered by liens in favor of the holders
of Senior Notes and without their agreement to the
distributions provided by the Plan, unsecured creditors,
including holders of Administrative and Priority Claims,
would receive nothing on their Claims. This Plan shall serve
as a request by the Debtors, in lieu of a separate motion, to
the Bankruptcy Court, that it grant substantive
consolidation of the Debtors' estates. Substantive
consolidation will result in extinguishment of
intercompany claims between the various Debtors' estates.
<PAGE> 8
2.1 Summary. The following is a designation of the
classes of Claims and Interests under this Plan. In
accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Tax Claims described in Article 3 of
this Plan 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. Notwithstanding anything to the contrary
contained in this Plan, no distribution shall be made on
account of any Claim or Interest which is not an Allowed
Claim or Allowed Interest.
Class Status
------ --------
A. Secured Claims
- -------------------
Class 2: Secured Claims of holders Impaired entitled to vote
of Senior Notes
Class 3: Secured Claims other than Impaired entitled to vote
Senior Note Claims
B. Unsecured Claims
- ---------------------
Class 1: Priority Claims Unimpaired - no right to vote
Class 4: All Unsecured Claims Against Impaired-entitled to vote
the Debtors
C. Interests
- --------------
Class 5: Old Common Stock Impaired deemed to have rejected
Class 6: Old Warrants Impaired deemed to have rejected
Class 7: Securities Claims Impaired deemed to have rejected
ARTICLE 3
TREATMENT OF UNCLASSIFIED CLAIMS
3.1 Administrative Claims.
(a) General. Subject to the bar date
provisions herein, unless otherwise agreed to by the parties,
each holder of an Allowed Administrative Claim shall receive
Cash equal to the unpaid portion of such Allowed Administrative
Claim or such other amount as agreed between the Debtors and the
holder of such Claim on the later of (a) the Effective Date or
as soon as practicable thereafter, (b) the date on which such
Claim becomes an Allowed Administrative Claim and (c) such
other date as is mutually agreed upon by the Debtors and
the holder of such Claim. All holders of Allowed
Administrative Claims shall have a beneficial interest in the
Liquidating Trust's Distribution Fund, and the Distribution
Fund shall be the sole source of payment of such Claims.
<PAGE> 9
(b) Payment of Statutory Fees. All fees
payable pursuant to 28 U.S.C. 1930 shall be paid in Cash equal
to the amount of such Administrative Claim when due.
(c) Bar Date for Administrative Claims.
(i) General Provisions. Subject to
the exceptions provided in sections 3.1(c)(ii) and (iii), by
Order dated August 13, 1997, the Court established October 6,
1997 as the date by which certain holders of
Administrative Claims arising prior to August 13, 1997 must
have filed Administrative Proofs of Claim in lieu of requests
for payment of Administrative Claims. Holders of
Administrative Claims that have not filed such Proofs of
Claim by the applicable Administrative Claim bar date shall be
forever barred from asserting such Claims against the Debtors,
the Liquidating Trust or any of the Debtors' property.
(ii) Professionals. All professionals or
other entities requesting compensation or reimbursement of
expenses pursuant to sections 327, 328, 330, 331, 503(b) and
1103 of the Bankruptcy Code for services rendered before the
Effective Date (including, without limitation, any compensation
requested by any professional or any other entity for
making a substantial contribution in the Reorganization Case)
shall File and serve on the Liquidating Trustee at 1111
Bayside Drive, Suite 100, Corona del Mar, California
92625-1755; Haynes and Boone, L.L.P. (Attn.: Robin Phelan),
901 Main Street, Dallas, Texas 75202-3789, as counsel to the
Bondholders' Committee; Camhy Karlinsky & Stein LLP (Attn:
David Neier), 1740 Broadway, New York, NY 10019; Morris,
Nichols, Arsht & Tunnell (Attn: William H. Sudell, Jr.), 1201
North Market Street, Wilmington, Delaware 19801; and The
Honorable Patricia A. Staiano, United States Trustee
(Attn.: Daniel K. Astin), The Curtis Center, 601 Walnut
Street, Suite 950W, Philadelphia, PA 19106; an application for
final allowance of compensation and reimbursement of expenses no
later than fortyfive (45) days after the Effective Date.
Objections to applications of professionals for compensation
or reimbursement of expenses must be Filed and served on the
Liquidating Trustee and the professionals to whose
application the objections are addressed no later than
seventy (70) days after the Effective Date. Any
professional fees and reimbursements or expenses incurred
by the Liquidating Trust subsequent to the Effective Date may
be paid by the Liquidating Trust without application to the
Bankruptcy Court. The Liquidating Trustee shall pay the
reasonable fees and expenses of the professionals of
the Bondholders' Committee incurred prior to the Effective Date
and the fees and expenses of the Indenture Trustee incurred
prior to the Effective Date as determined by the Court.
(iii) Tax Claims. All requests for payment
of 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
("Post-petition Tax Claims") and for which no bar date has
otherwise been previously established, must be Filed on or
before the later of (i) 45 days following the Effective Date;
and (ii) 90 days following the filing with the applicable
governmental unit of the tax return for such taxes for such
tax year or period. Any holder of any Post-petition Tax
Claim that is required to File a request for payment of such
taxes and 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, the
Liquidating Trust or their respective properties, whether
any such Post-petition Tax Claim is deemed to arise prior to,
on, or subsequent to the Effective Date. To the extent that
the holder of a Tax Claim holds a lien to secure its Claim
under applicable state or federal law that survives the deemed
foreclosure by the holders of the Senior Notes, the surviving
lien shall attach to the Distribution Fund and remain in
effect until the Tax Claim has been paid in full. To the
extent that a Tax Claim is a Disputed Claim, any lien
securing such Disputed Claim under applicable state or
federal law shall attach to the Distribution Fund for such
Disputed Claim. Upon disallowance of a Disputed Tax Claim or
allowance and payment of such claim, such lien shall be
released. Failure by the Liquidating Trustee to make a
payment on an Allowed Tax Claim pursuant to the terms of the
Plan shall be an event of default. If the Liquidating Trustee
fails to cure an event of default as to an Allowed Tax Claim
within twenty (20) days after service of written notice of
default from the holder of such Allowed Tax Claim, then the
holder of such Allowed Tax Claim may enforce the entire
amount of its Claim, plus interest as provided under
this Plan, against the Liquidating Trust in accordance with
applicable state or federal law remedies. At the option of the
Liquidating Trustee and as an alternative to the treatment
provided above, the Liquidating Trustee may surrender the
property securing the post-petition Tax Claim and allow the
holder to foreclose upon the property. Surrendering the
property will satisfy the Tax Claim in full.
<PAGE> 10
3.2 Treatment of Pre-Petition Tax Claims. Each holder
of an Allowed Pre-Petition Tax Claim shall have a
beneficial interest in the Liquidating Trust's Distribution Fund
and be paid in Cash from the Distribution Fund on the latest
of: (i) the first practicable date after the Effective Date,
(ii) 30 calendar days after the date on which an Order allowing
such Claim becomes a Final Order, (iii) the last day the taxes
may be paid under applicable law without incurring penalties
or interest, and (iv) such other time or times as may be
agreed by the holder of such Claim and the Trustee. To the
extent that the holder of a Tax Claim holds a lien to secure
its Claim under applicable state law following the deemed
foreclosure by the holders of the Senior Notes, the surviving
lien shall attach to the Distribution Fund and remain in
effect until such Allowed Pre-petition Tax Claim has been
paid. To the extent that a Tax Claim is a Disputed Claim,
any lien securing such Disputed Claim under applicable state
law shall either remain in effect or attach to the
Distribution Fund reserve for such Disputed Claim.
Upon disallowance of a Disputed Tax Claim or allowance and
payment of such claim, such lien shall be released.
Subject to the limitations of 11 U.S.C. 506(b), Allowed
Pre-Petition Tax Claims that are secured by liens under
applicable state or federal law shall accrue interest, but
not penalties, at the rates provided under applicable state
or federal law up to the Effective Date, and thereafter, to
the extent the liens have survived the deemed foreclosure
by the holders of the Senior Notes, shall accrue interest
at the rate of 7% per annum. Failure by the Liquidating
Trustee to make a payment on an Allowed Tax Claim pursuant
to the terms of the Plan shall be an event of default. If
the Liquidating Trust fails to cure an event of default as
to an Allowed Tax Claim within twenty (20) days after service
of written notice of default from the holder of such Allowed
Tax Claim, then the holder of such Allowed Tax Claim may
enforce the entire amount of its Claim, plus interest as
provided under this Plan, against the Liquidating Trust in
accordance with applicable state or federal law remedies. At
the option of the Liquidating Trustee and as an alternative to
the treatment provided above, the Liquidating Trustee may
abandon the property securing the Pre-petition Tax Claim and
allow the holder to foreclose upon the property. Abandoning
the property will satisfy the Tax Claim in full.
ARTICLE 4
CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
4.1 Class 1 - Priority Claims.
(a) Classification: Class 1 consists of all non-tax Priority Claims.
--------------
(b) Treatment:
---------- Class 1 is unimpaired
and, accordingly, the members of Class 1 are not entitled to
vote on the Plan. Unless otherwise agreed to by the parties,
each holder of an Allowed Claim in Class 1 will receive a
beneficial interest in the Liquidating Trust's Distribution Fund
and will be paid the Allowed amount of such Claim in full in
Cash by the Liquidating Trust from the Distribution Fund on
or before the later of (a) the first practicable date after
the Effective Date, (b) the date such Claim becomes an Allowed
Claim, and (c) such other date as is mutually agreed upon by
the Debtor and the holder of such Claim.
<PAGE> 11
4.2 Class 2 - Secured Claims of Holders of Senior Notes
(a) Classification: Class 2 consists of the Allowed Secured Claims
-------------- of the holders of the Senior Notes.
(b) Treatment: Class 2 is impaired and,accordingly, members of
---------- Class 2 are entitled to vote on the Plan.
Each holder of an Allowed Claim in Class 2 will receive (1)
its Pro Rata share of the Wabash Securities free and clear
of liens, claims and interests and, (2), either (a) its Pro
Rata share of 100% of the Class A Beneficial Interests in the
Liquidating Trust, or (b) if Class 4 accepts the Plan, its Pro
Rata share of 94.5% of the Class A Beneficial Interests in the
Liquidating Trust.
4.3 Class 3 - Secured Claims Other Than Claims of Holders of Senior Notes.
(a) Classification: Class 3 consists of all Allowed Secured Claims
------------- other than the Claims of holders of Senior Notes.
(b) Treatment: Class 3 is impaired, and the holders of Allowed Claims
---------- in such Class are entitled to vote
on the Plan. At the Debtors' option, on the Effective Date (a)
the Plan may leave unaltered the legal, equitable, and
contractual rights of the holder of an Allowed Secured Claim,
or (b) the Debtors may assume and assign the contract or
agreement governing an Allowed Secured Claim pursuant to section
365(b) of the Bankruptcy Code, or (c) the Debtors may pay an
Allowed Secured Claim in such manner as may be agreed to
between the Debtors and the holder of such Claim, or (d) the
Debtors may (i) pay an Allowed Secured Claim in full, in cash,
or (ii) the Debtors may surrender to the holder of an
Allowed Secured Claim the property securing such Claim, in all
of such events, the value of such holder's interest in such
property shall be determined (A) by agreement of the Debtors
or the Liquidating Trustee and the holder of such Allowed
Secured Claim or (B) if they do not agree, by the
Bankruptcy Court.
4.4 Class 4 - General Unsecured Claims
(a) Classification: Class 4 consists of all Allowed Unsecured Claims
-------------- against any of the Debtors,
including trade Claims, Claims arising out of the Warrant
Notes, the Rejection Claims, any indemnification Claims, and
any products liability or personal injury Claims.
(b) Treatment: If Class 4 accepts the Plan (i.e. of those holders of
---------- Allowed Claims in Class 4 that vote
on the Plan, the holders of at least two-thirds (2/3) in amount
and more than one-half (1/2) in number of Allowed Claims in
Class 4 vote in favor of the Plan), each holder of an Allowed
Class 4 Claim will receive its Pro Rata share of 5.5% of the
Class A Beneficial Interests in the Liquidating Trust. If
Class 4 rejects the Plan, the holders of Allowed Claims will
receive no distribution under the Plan.
4.5 Class 5 - Old Common Stock.
(a) Classification: Class 5 consists of all Interests in Old Common
--------------- Stock.
<PAGE> 12
(b) Treatment: Holders of Interests in Class 5 will receive no
--------- distribution under the Plan and the Old Common
Stock will be canceled.
4.6 Class 6 - Old Warrants
(a) Classification: Class 6 consists of all Interests of holders of
-------------- Old Warrants.
(b) Treatment: Holders of Old Warrants will receive no distribution
--------- under the Plan and all Old Warrants shall be
canceled.
4.7 Class 7 - Securities Claims
(a) Classification: Class 7 consists of Securities Claims (if any
-------------- exist).
(b) Treatment: Any Allowed Securities Claims shall be treated
---------- respectively with the same priorities
as the Old Common Stock and the Old Warrants pursuant to
section 510(b) of the Bankruptcy Code, and the holders of
such Allowed Securities Claims shall receive no distribution
under the Plan.
ARTICLE 5
ACCEPTANCE OR REJECTION OF THE PLAN
5.1 Voting Classes. The holders of Claims in Classes 2,
3 and 4 are impaired and shall be entitled to vote to accept
or reject the Plan.
5.2 Presumed Acceptance of Plan. Class 1 is
unimpaired under the Plan, and therefore, is conclusively
presumed to accept the Plan.
5.3 Presumed Rejection of Plan. The holders of
Interests in Classes 5, 6 and 7 are not being solicited to
accept or reject the Plan and will be deemed to have rejected
the Plan.
ARTICLE 6
MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN
6.1 Funding of the Distribution Fund. On the
Effective Date, the Debtors shall first fund the Distribution
Fund which shall be transferred to the Liquidating Trust on
behalf of and for the benefit of the holders of Allowed
Administrative, Priority and Pre-Petition Tax Claims.
6.2 Transfer of Wabash Securities to Indenture Trustee.
On the Effective Date, the Debtors shall then transfer the
Wabash Securities to the Indenture Trustee for distribution
to the holders of the Senior Notes in accordance with the terms
of this Plan.
6.3 Change of Plan Sponsorship for the Management and
Union Plans. Prior to or on the Effective Date, the Debtors
shall transfer sponsorship of the current Management Plan and
Union Plan to Pension Corp. The current sponsors are Fruehauf
Trailer Corporation for the Management Plan and Jacksonville
Shipyards, Inc. for the Union Plan. The Board of
Directors of the respective sponsors shall approve the change
in sponsorship. The administrative provisions of the Management
Plan and Union Plan allow for a change in plan sponsorship.
The appropriate notices and governmental filings to comply
with federal law shall be provided in a timely manner to the
appropriate parties. Once the change in sponsorship has been
completed, Pension Corp. may elect to merge the Management
Plan and Union Plan to form a single plan.
<PAGE> 13
6.4 Transfer of Hogan's Creek Property and
Picketville Property. On the Effective Date, Jacksonville
Shipyards, Inc. shall next transfer the Hogan's Creek
Property and Picketville Property to JSI Property Corp.
6.5 Foreclosure by Holders of Senior Notes. On
the Effective Date, the Indenture Trustee will be deemed to
have foreclosed the liens of the holders of the Senior Notes
on the Foreclosed Assets and to have transferred the
Foreclosed Assets to the Liquidating Trust. The
Foreclosed Assets shall be transferred to the Liquidating
Trust on behalf of and for the benefit of the holders of
Class A Beneficial Interests in the Liquidating Trust.
6.6 Transfer by Debtors of Assets to the Liquidating
Trust. On the Effective Date, the Debtors shall convey all
of their remaining assets to the Liquidating Trust free and
clear of all liens, claims and encumbrances on behalf of and
for the benefit of the creditors who will receive a
beneficial interest in the Liquidating Trust.
6.7 Ratification of Liquidating Trust Agreement. On
the Effective Date, each holder of each Claim will be deemed to
have ratified and become bound by the terms of the Liquidating
Trust Agreement. The Liquidating Trustee is empowered to
execute the Liquidating Trust Agreement on behalf of each
holder of a Claim.
(a) Powers and Duties. The Liquidating Trustee
shall have the powers, duties and obligations specified in
this Plan and the Liquidating Trust Agreement.
(b) Compensation of Trustee. The Liquidating
Trustee shall be entitled to receive from the Trust Estate
compensation for his services as Trustee substantially in
accordance with the description at section IV.F.7.b. of the
Disclosure Statement which compensation shall be approved
by the Court at the Confirmation Hearing. The Liquidating
Trustee shall also be reimbursed by the Trust Estate for
all reasonable out-of-pocket expenses incurred by the Trustee
in the performance of his duties.
(c) Limitation of Liability. The Liquidating
Trustee shall use reasonable discretion in exercising each of
the powers herein granted. No Liquidating Trustee or any
attorney, agent, or servant of the Liquidating Trustee shall
be personally liable in any case whatsoever arising in
connection with the performance of obligations under this Plan,
whether for their acts or their failure to act unless they
shall have been guilty of willful fraud or gross negligence.
The Liquidating Trustee may consult with
attorneys, accountants, and agents, and the opinions of the
same shall be full protection and justification to the
Liquidating Trustee and his employees for anything done or
admitted or omitted or suffered to be done in accordance
with said opinions. The Liquidating Trustee shall not be
required to give any bond for the faithful performance of his
duties hereunder.
(d) Indemnity. The Liquidating Trustee and
his employees and agents will be indemnified by the Liquidating
Trust against claims arising from the good faith performance of
duties under the Bankruptcy Code or this Plan.
<PAGE> 14
(e) Right to Hire Professionals. The
Liquidating Trustee shall have the right to reasonably utilize
the services of attorneys or any other professionals which, in
the discretion of the Liquidating Trustee, are necessary to
perform the duties of the Liquidating Trustee. Reasonable
fees and expenses incurred by the attorneys, accountants or
other agents of the Liquidating Trustee shall be paid by the
Liquidating Trust.
(f) Right to Pursue all Causes of Action of
the Debtors. After the transfers contemplated by Sections 6.5
and 6.6 of this Plan, the Liquidating Trust shall own all
causes of action, including preference claims previously
owned by the Debtors, and shall be authorized to pursue any
causes of action for the benefit of the Liquidating Trust and
the holders of the Class A Beneficial Interests.
(g) Treatment of Distribution Fund Surplus. After
the payment of the Allowed Administrative Expense Claims,
Priority Claims and Pre-petition Tax Claims of the Class B
Beneficial Interestholders, any remaining funds in the
Distribution Fund shall be available for distribution to the
holders of the Class A Beneficial Interests in the Liquidating
Trust.
(h) Limitation on the Trustee. Two holders of
Senior Notes will serve as the Trust Advisory Committee.
Either Bankruptcy Court approval or unanimity among the Trust
Advisory Committee members and Trustee is required before the
Trustee can:
(1) borrow money in excess of $500,000 or grant liens on any
part of the Trust Estate in excess of $500,000;
(2) sell assets of the Trust Estate with a value in excess of
$500,000;
(3) modify the Plan;
(4) initiate and prosecute litigation, including but not limited
to claim objections with expected fees and costs in excess
of $250,000;
(5) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of
$500,000; and
(6) forego making the annual distribution to Certificate
Holders required by Section 6.2 of the Liquidating Trust.
If unanimity does not exist regarding the
proposed action and Bankruptcy Court approval is
requested, the Liquidating Trust shall pay the attorneys fees
incurred by the objecting Committee member, up to $25,000 per
member during the term of the Liquidating Trust.
The Liquidating Trust Agreement may be modified
only with the written approval of the Class A
Beneficial Interestholders holding over 50% of the Class A
Beneficial Interests.
(i) Distribution of Trust Certificates.
The Liquidating Trust shall distribute Trust Certificates to
the holders of the Class A Beneficial Interests in the
Liquidating Trust which shall reflect each holder's proportional
interest in the Liquidating Trust, subject to the interest of
the holders of Class B Beneficial Interests in the Distribution
Fund.
(j) Tax Treatment of the Liquidating Trust. It
is intended that the Liquidating Trust will be treated
as a "liquidating trust" within the meaning of Treasury
Regulations Section 301.7701-4(d). Accordingly, for federal
income tax purposes, the transfer and assignment of the
Debtors' assets shall be treated as a deemed transfer and
assignment of such assets to the holders of Claims followed by
a deemed transfer and assignment by such holders to the
Liquidating Trust. The Liquidating Trust shall provide the
holders of Claims with a valuation of the assets transferred
to the Liquidating Trust and such valuation shall be used
consistently for all federal income tax purposes. All items of
income, deduction, credit or loss of the Liquidating Trust
shall be allocated for federal, state and local income tax
purposes among the holders of Claims as set forth in the
Liquidating Trust agreement; provided, however, that to the
extent that any item of income cannot be allocated in the
taxable year in which it arises, the Liquidating Trust shall
pay the federal, state and local taxes attributable to such
income (net of related deductions) and the amount of such taxes
shall be treated as having been received by, and paid on behalf
of, the holders of Claims receiving such allocations
when such allocations are ultimately made.
<PAGE> 15
(k) Termination of Liquidating Trust. The
duties, powers and responsibilities of the Liquidating
Trustee shall terminate upon the liquidation and distribution
to Beneficial Interestholders of all proceeds in the
Liquidating Trust estate in accordance with this Plan.
6.8 Dissolution of Corporate Entities. Following
the creation of the Distribution Fund, the transfer of the
Wabash Securities to the Indenture Trustee, the deemed
foreclosure of the Foreclosed Assets by the Indenture Trustee,
and the transfer of any remaining assets to the Liquidating
Trust on behalf of and for the benefit of the Beneficial
Interestholders, the Debtors shall be dissolved or liquidated.
6.9 Cancellation of Old Securities. On the Effective
Date, all Old Securities shall be terminated and canceled,
and the indentures or statements of resolution governing
such Old Securities shall be rendered void.
Notwithstanding the foregoing, such termination will not
impair the rights and duties under any indenture as between
the Indenture Trustee and the beneficiaries of the trust
created thereby (the holders of the Senior Notes) including,
but not limited to, the rights of the Indenture Trustee to
receive payment of its fees and expenses, to the extent not paid
by the Company, from amounts distributable to holders of Senior
Notes.
6.10 Registration Exemption for Debtors' Wabash
Securities and Beneficial Interests in the Liquidating
Trust. The Confirmation Order shall provide that (a) the
distribution of the Wabash Securities to holders of Allowed
Class 2 Claims, (b) the transfer to the Liquidating Trust of
the stock of Pension Corp. and JSI Property Corp., and (c)
the issuance and transfer pursuant to the Plan of the
beneficial interests in the Liquidating Trust and the Trust
Certificates and any resale of such property shall be exempt
from any and all federal, state and local laws requiring the
registration of such security, to the fullest extent provided
by section 1145 of the Bankruptcy Code.
6.11 Corporate Action. Upon entry of the
Confirmation Order, the dissolutions contemplated by Section
6.8 shall be deemed authorized and approved in all
respects and on the Effective Date, such corporate
dissolutions shall be deemed to have occurred and shall be in
effect from and after the Effective Date pursuant to applicable
state laws without any requirement of further action by the
stockholders or directors of the Debtors. On the Effective
Date, the Indenture Trustee and the Liquidating Trustee shall
be authorized and directed to take all necessary and
appropriate actions to effectuate the transactions
contemplated by the Plan and Disclosure Statement.
6.12 Preservation of Rights of Action. Except as
otherwise provided in the Plan, 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, the Liquidating Trust, as ultimate successor
to the Debtors, shall retain and may enforce any claims,
rights and causes of action that the Debtors or the Estates
may hold against any entity, including, without limitation,
any claims, rights or causes of action arising under sections
544 through 551 or other sections of the Bankruptcy Code or any
similar provisions of state law, or any other statute or legal
theory. The Liquidating Trust or any successor to or
designee thereof may pursue those rights of action, as
appropriate, in accordance with what is in the best interests
of the Liquidating Trust and those holding interests in the
Liquidating Trust.
<PAGE> 16
6.13 Objections to Claims. Except as otherwise provided
for with respect to applications of professionals for
compensation and reimbursement of expenses under Article 3, or
as otherwise ordered by the Bankruptcy Court after notice
and a hearing, objections to Claims, including Administrative
Claims, shall be Filed and served upon the holder of such
Claim or Administrative Claim not later than the later of (a)
one hundred twenty (120) days after the Effective Date, and
(b) one hundred twenty (120) days after a proof of claim or
request for payment of such Administrative Claim is Filed,
unless this period is extended by the Court. Such extension
may occur ex parte. After the Effective Date, the
Liquidating Trust shall have the exclusive right to object to
Claims.
6.14 Exemption from Stamp and Similar Taxes. The
issuance and transfer of the Wabash Securities, the
issuance and distribution of the Pension Corp. and JSI
Property Corp. Stock, and the transfer and ultimate sale of
the Foreclosed Assets as provided in this Plan shall not be
taxed under any law imposing a stamp tax or similar tax in
accordance with 11 U.S.C. 1146(c).
<PAGE> 16
ARTICLE 7
FUNDING AND METHODS OF DISTRIBUTION AND
PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS
7.1 Funding of Distributions Under the Plan. The
Debtors have liquidated 800,000 shares of the Wabash Common
Stock. A portion of the sale proceeds was used to pay
the Debtors' obligations to Bank of America as
Debtor-In-Possession lender. From the remaining proceeds and
other cash on hand, the Debtors will fund the Distribution
Fund. The Debtors may seek one or more orders of the
Bankruptcy Court estimating or limiting the amount of property
to be deposited in the Distribution Fund. The Distribution
Fund shall be the sole source of funds for the payment of
Allowed Administrative Claims, Pre-petition Tax Claims and
Priority Claims.
7.2 Cash Distributions. All Cash distributions
made pursuant to the Plan shall be made by the Liquidating
Trustee from the Liquidating Trust estate. Any such payments
may be made either by check or wire transfer, at the option of
the payor.
7.3 Distribution Procedures. Except as otherwise
provided in the Plan, all distributions of Cash and other
property shall be made by the Liquidating Trustee on the later
of the Effective Date or the date on which such Claim is
Allowed, or as soon thereafter as practicable. Distributions
required to be made on a particular date shall be deemed to
have been made on such date if actually made on such date
or as soon thereafter as practicable. No payments or
other distributions of property shall be made on account of
any Claim or portion thereof unless and until such Claim or
portion thereof is Allowed.
7.4 Distributions to Holders of Allowed
Administrative Expense Claims, Pre-Petition Tax Claims and
Class 1 Priority Claims. Commencing on the Effective
Date, the Liquidating Trustee shall, in accordance with
Article 3 of the Plan, distribute to each holder of a then
unpaid Allowed Administrative Expense Claim, Allowed
Pre-Petition Tax Claim, or Allowed Priority Claim Cash in
the Allowed amount of such holder's Claim. The Distribution
Fund shall be distributed to the holders of Disputed
Administrative Expense Claims, Pre-Petition Tax Claims and
other Priority Claims pursuant to Article 3 of the Plan if and
to the extent that the balance, if any, of such Claims is
Allowed by Final Order. The Liquidating Trust must hold
the Distribution Fund in a segregated account for the benefit of
the holders of Allowed Administrative, Priority and Pre-Petition
Tax Claims until all Disputed Claims that are alleged to
be Administrative, Pre-Petition Tax or Priority Claims have
been Allowed or disallowed.
<PAGE> 17
7.5 (a) Distributions to Holders of Allowed Class
2 Claims. The Debtors shall deliver all of the Wabash
Securities and Trust Certificates representing the Requisite
Percentage of Class A Beneficial Interests to the Indenture
Trustee. The Indenture Trustee shall make the Pro Rata
distribution required by Section 4.2 of the Plan to the
holders of the Senior Notes. The Liquidating Trust shall pay
all reasonable fees and expenses of the Indenture Trustee in
acting as distribution agent as and when such fees and
expenses become due without further order of the Bankruptcy
Court.
(b) Certification of Claims by Indenture Trustee.
The Indenture Trustee shall certify to the Liquidating Trustee a
list of the registered holders of the Senior Notes as of the
Ballot Record Date, designating the name, address,
taxpayer identification number (if known), certificate number,
and the amount of unpaid principal and accrued interest owed
to each holder on their respective securities.
(c) Surrender and Cancellation of Old Securities.
As a condition to receiving the Wabash Securities and
Trust Certificates distributable under the Plan, the holders of
Senior Notes shall surrender their Senior Notes to the Indenture
Trustee for the holders of Senior Notes. When a holder
surrenders its Senior Notes to the Indenture Trustee, the
Indenture Trustee shall hold the instrument in "book entry
only" until such instruments are canceled. Any holder of
Senior Notes whose instrument has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such
instrument, deliver to the Indenture Trustee: (a) evidence
satisfactory to the Indenture Trustee of the loss, theft,
mutilation or destruction of such instrument, and (b) such
security or indemnity that may be reasonably required by
the Indenture Trustee to hold the Indenture Trustee harmless
with respect to any such representation of the holder. Upon
compliance with the preceding sentence, such holder shall, for
all purposes under the Plan, be deemed to have surrendered
such instrument. Any holder of a Senior Note which has
not surrendered or been deemed to have surrendered its Senior
Notes prior to the time that the Indenture Trustee
distributes the Wabash Securities and Trust Certificates or
the Trustee makes a distribution to holders of Trust
Certificates may have its distribution reduced by any taxes
that the Indenture Trustee or Liquidating Trustee has paid
on account of such distribution. Any holder of a Senior Note
which has not surrendered or been deemed to have
surrendered its Senior Notes within two years after the
Effective Date, shall have its Claim as a holder of Senior
Notes disallowed, shall receive no distribution on account of
its Claim as a holder of Senior Notes, and shall be forever
barred from asserting any Claim on account of its Senior
Notes. Any Wabash Securities and Trust Certificates
held for distribution by the Indenture Trustee on
account of such disallowed claims of holders of Senior Notes
shall be distributed Pro Rata to the remaining holders of
Allowed Class 2 claims if the value of such Wabash
Securities and Trust Certificates appears, in the sole
discretion of the Indenture Trustee, to have a value justifying
the cost of such distribution. In all other cases, the
Indenture Trustee shall deliver such Wabash Securities and Trust
Certificates to the Liquidating Trust.
As of the Effective Date, all Senior Notes
shall represent only the right to participate in the
distributions provided in the Plan on account of such Senior
Notes.
(d) Ballot Record Date; Distributions to Holders
of Senior Notes. The Indenture Trustee shall distribute
all distributions of property to be made by the Indenture
Trustee pursuant to the Plan to the record holders of Senior
Notes, as of the Ballot Record Date, unless, at least five (5)
business days prior to a distribution, the holder of any such
Claim furnishes (or causes its transferee to furnish) the
Indenture Trustee, or its agent, with sufficient evidence (in
the Indenture Trustee's or its agent's sole and absolute
discretion) of the transfer of such Claim, in which event
the Indenture Trustee shall distribute, or cause to be
distributed, all such distributions of property to such
transferee. Following the conveyance of the Foreclosed
Assets and Debtors' Assets to the Liquidating Trust, all
distributions to the holders of Senior Notes shall be made by
the Liquidating Trustee.
<PAGE> 18
7.6 Disputed Claims. Notwithstanding any other
provisions of the Plan, no payments or distributions shall
be made on account of any Disputed Claim until such Claim
becomes an Allowed Claim, and then only to the extent that it
becomes an Allowed Claim.
7.7 Delivery of Distributions and Undeliverable
or Unclaimed Distributions.
(a) Delivery of Distributions in General. Except
as provided below in section 7.7(b)(ii) for holders of
undeliverable distributions, distributions to holders of Allowed
Claims shall be distributed by mail as follows: (a) except in
the case of the holders of Senior Notes, (1) at the addresses
set forth on the respective proofs of claim filed by such
holders; (2) at the addresses set forth in any written
notices of address changes delivered to the Debtors or the
Liquidating Trustee after the date of any related proof of
claim; or (3) at the address reflected on the Schedule of
Assets and Liabilities Filed by the Debtors if no proof of
claim or proof of interest is Filed and the Debtors have not
received a written notice of a change of address; and (b) in
the case of the holder of Senior Notes (1) to the latest
mailing address maintained of record by the Indenture Trustee
on the Ballot Record Date; or (2) at the addresses set forth
in any written notices of address change delivered to the
Indenture Trustee or the Liquidating Trustee at least five
(5) business days prior to the applicable distribution.
(b) Undeliverable Distributions.
(i)Holding and Investment of
Undeliverable Property. If the distribution to the holder of
any Claim is returned to the Liquidating Trust or the
Indenture Trustee as undeliverable, no further distribution
shall be made to such holder unless and until the
Liquidating Trust is notified in writing of such holder's
then current address. Subject to Section 7.7(b)(ii),
undeliverable distributions shall remain in the possession of
the Liquidating Trust pursuant to this section until such times
as a distribution becomes deliverable.
Unclaimed Cash shall be held in trust in
a segregated bank account in the name of the Liquidating Trust,
for the benefit of the potential claimants of such funds, and
shall be accounted for separately. Undeliverable securities
shall be held in trust for the benefit of the potential
claimants of such securities by the Liquidating Trust or, in the
case of a holder of an Allowed Class 2 Claim, by the
Indenture Trustee, in a number of shares sufficient to
provide for the unclaimed amounts of such securities, and shall
be accounted for separately.
(ii) Distribution of Undeliverable
Property After it Becomes Deliverable and Failure to Claim
Undeliverable Property. Any holder of an Allowed Claim who does
not assert a claim for an undeliverable distribution held by
the Liquidating Trust within two (2) years after the Effective
Date shall no longer have any claim to or interest in
such undeliverable distribution, and shall be forever barred
from receiving any distributions under this Plan. In such
cases, any cash or securities held for distribution on
account of such Claims shall become property of the Liquidating
Trust.
7.8 Distributions on Account of Unsecured Class 4
Claims. If Class 4 accepts the Plan, Trust Certificates
representing 5.5% of the Class A Beneficial Interests in the
Liquidating Trust shall be distributed, Pro Rata, to holders
of Allowed Claims in Class 4. The Liquidating Trust shall
not be required to make distributions of Trust Certificates to
holders of Allowed Claims in Class 4 until the
Liquidating Trust has resolved its objections to Disputed
Claims in Class 4, a process which shall be completed no later
than the first anniversary of the Effective Date. Any
distributions of Cash to which the holders of Trust
Certificates become entitled during this claims resolution
period shall be distributed to the holders of Allowed Claims in
Class 4, Pro Rata, with any accrued interest thereon at the time
the Trust Certificates are distributed; provided, however,
that such distribution shall be reduced by any taxes
paid by the Liquidating Trust on account of interest or
other income earned thereon.
<PAGE> 19
7.9 De Minimis Distributions. No Cash payment of less
than twenty dollars ($20.00) to holders of Allowed Claims
shall be made to any holder on account of an Allowed Claim
unless a request therefor is made in writing to the Liquidating
Trust.
7.10 Failure to Negotiate Checks. Checks issued in
respect of distributions to holders of Allowed Administrative
Claims and Allowed Priority Claims (including Allowed
Pre-Petition Tax Claims) under the Plan shall be null and void
if not negotiated within 60 days after the date of issuance.
Any amounts returned to the Liquidating Trust in respect of
such checks shall be held in the Distribution Fund by the
Liquidating Trust. Requests for reissuance of any such
check may be made directly to the Liquidating Trust by the
holder of the Allowed Claim with respect to which such check
originally was issued. Any claim in respect of such voided
check is required to be made within six months of the original
issuance date of the check. Thereafter, all amounts represented
by any voided check shall become unrestricted funds of the
Liquidating Trust. All Claims in respect of void checks and
the underlying distributions shall be discharged and forever
barred from assertion against the Liquidating Trust and
its property.
7.11 Compliance with Tax Requirements. In connection
with the Plan, to the extent applicable, the Liquidating Trust
shall comply with all withholding and reporting requirements
imposed on it by any governmental unit, and all distributions
pursuant to the Plan shall be subject to such withholding
and reporting requirements.
7.12 Setoffs. Unless otherwise provided in a Final Order
or in this Plan, the Liquidating Trust may, but shall not
be required to, set off against any Claim and the payments to
be made pursuant to the Plan in respect of such Claim, any
claims of any nature whatsoever the Debtors may have against
the holder thereof or its predecessor, but neither the failure
to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by any Debtor or the Liquidating
Trust of any such Claims the Debtors or the Liquidating Trust
may have against such holder or its predecessor.
7.13 Fractional Interests. The calculation of
the percentage distribution of Wabash Securities to be
made to holders of certain Allowed Claims as provided
elsewhere in this Plan may mathematically entitle the holder
of such an Allowed Claim to a fractional interest in such
Stock. The number of shares of Wabash Securities to be
received by a holder of an Allowed Claim shall be rounded to
the next lower whole number of shares. The total number of
shares of Wabash Securities to be distributed to a class of
Claims shall be adjusted as necessary to account for the
rounding provided for in this section. Any fractional shares
that are rounded down and not issued to holders of Senior Notes
shall be contributed to the Liquidating Trust.
ARTICLE 8
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
8.1 Rejection of All Executory Contracts and Leases
Not Assumed. The Plan constitutes and incorporates a motion by
the Debtors to reject, as of the Effective Date, all
pre-petition executory contracts and unexpired leases to which
the Debtors are a party, except for any executory contract or
unexpired lease that (i) has been assumed or rejected pursuant
to a Final Order, or (ii) is the subject of a pending motion
for authority to assume the contract or lease Filed by the
Debtors prior to the Confirmation Date.
<PAGE> 20
8.2 Bar Date for Filing of Rejection Claims. Any Claim
for damages arising from the rejection under this Plan
of an executory contract or unexpired lease that was not
subject to an earlier bar date must be Filed within thirty (30)
days after the mailing of notice of Confirmation or be
forever barred and unenforceable against the Debtors, the
Estates, any of their affiliates and their properties and
barred from receiving any distribution under this Plan.
ARTICLE 9
EFFECTS OF PLAN CONFIRMATION
9.1 Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors. As a result of the foreclosure and
sale of the Debtors' assets contemplated by Articles 6.5 and
6.6 of this Plan, the assets transferred to the Liquidating
Trust on behalf of and for the benefit of the holders of
Allowed Claims shall be held by the Liquidating Trust free
and clear of all liens, claims or interests in such property
that arose before the Confirmation Date.
9.2 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, are not 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.
9.3 Limitation of Liability. None of the
Unsecured Creditors' Committee and its members and the
professional Persons employed by the Unsecured Creditors'
Committee; the Indenture Trustee and any professional
Persons retained by it; the Bondholders' Committee and its
members and professional Persons employed by the Bondholders'
Committee; the Liquidating Trust and any professional Persons
retained by it; the Liquidating Trustee; Morris, Nichols, Arsht
& Tunnell; Camhy Karlinsky & Stein; Price Waterhouse; Haynes
and Boone, L.L.P.; Alvarez & Marsal, Inc.; and Oppenheimer &
Co., Inc.; any of their affiliates nor any of their officers,
directors, partners, associates, employees, members or agents
(collectively the "Exculpated Persons"), shall have or incur
any liability to any Person for any act taken or omission made
in good faith in connection with or related to the
Bankruptcy Cases or actions taken therein, including
negotiating, formulating, implementing, confirming or
consummating the Plan, the Disclosure Statement, or any
contract, instrument, or other agreement or document created
in connection with the Plan. The Exculpated Persons shall
have no liability to any Creditors or Equity Security
Holders for actions taken under the Plan, in connection
therewith or with respect thereto in good faith, including,
without limitation, failure to obtain Confirmation of the Plan
or to satisfy any condition or conditions, or refusal to waive
any condition or conditions, precedent to Confirmation or to
the occurrence of the Effective Date. Further, the Exculpated
Persons will not have or incur any liability to any holder of
a Claim, holder of an Interest, or party-in-interest herein or
any other Person for any act or omission in connection
with or arising out of their administration of the Plan or the
property to be distributed under the Plan, except for gross
negligence or willful misconduct as finally determined by the
Bankruptcy Court, and in all respects such persons will be
entitled to rely upon the advice of counsel with respect
to their duties and responsibilities under the Plan.
9.4 Other Documents and Actions. The Debtors, the
DebtorsIn-Possession, the Indenture Trustee and Liquidating
Trustee may execute such documents and take such other action
as is necessary to effectuate the transactions provided for in
the Plan.
<PAGE> 21
9.5 Post-Consummation Effect of Evidences of Claims
or Interests. Senior Notes, Old Common Stock certificates,
Old Warrants and other evidences of Claims against or
Interests in the Debtors shall, effective upon the Effective
Date, represent only the right to participate in the
distributions contemplated by the Plan. Holders of Old
Common Stock, Old Warrants, and Securities Claims will receive
no distribution.
9.6 Term of Injunctions or Stays. Unless
otherwise provided, all injunctions or stays provided for
in the Reorganization Case pursuant to sections 105 or
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.
ARTICLE 10
CONFIRMABILITY OF PLAN AND CRAMDOWN
The Debtors request Confirmation under section 1129(b)
of the Bankruptcy Code if any impaired class does not accept
the Plan pursuant to section 1126 of the Bankruptcy Code. In
that event, the Debtor reserves the right to modify the Plan
to the extent, if any, that Confirmation of the Plan under
section 1129(b) of the Bankruptcy Code requires modification.
ARTICLE 11
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order or
the occurrence of the Effective Date, the Bankruptcy Court
shall retain such jurisdiction over the Reorganization Case
after the Effective Date as is legally permissible,
including, without limitation, jurisdiction to:
1. Allow, disallow, determine, liquidate, classify
or establish the priority or secured or unsecured status of
or estimate any Claim or Interest, including, without
limitation, the resolution of any request for payment of any
Administrative Claim or Indenture Trustee expenses and the
resolution of any and all objections to the allowance or
priority of Claims or Interests;
2. Grant or deny any and all applications
for allowance of compensation or reimbursement of expenses
authorized pursuant to the Bankruptcy Code or the Plan, for
periods ending on or before the Effective Date;
3. Resolve any motions pending on the Effective
Date to assume, assume and assign or reject any executory
contract or unexpired lease to which the Debtors are parties or
with respect to which the Debtors may be liable and to hear,
determine and, if necessary, liquidate, any and all Claims
arising therefrom;
4. Ensure that distributions to holders of
Allowed Claims and Allowed Interests are accomplished pursuant
to the provisions of the Plan;
5. Decide or resolve any and all
applications, motions, adversary proceedings, contested or
litigated matters and any other matters or grant or deny any
applications involving the Debtors that may be pending on the
Effective Date;
<PAGE> 22
6. Enter such Orders as may be necessary
or appropriate to implement or consummate the provisions of the
Plan and all contracts, instruments, releases, and other
agreements or documents created in connection with the Plan or
the Disclosure Statement;
7. Resolve any and all controversies, suits or
issues that may arise in connection with the
consummation, interpretation or enforcement of the Plan or
any entity's obligations incurred in connection with the Plan,
including the provisions of Article 9 hereof;
8. Modify the Plan before or after the Effective
Date pursuant to section 1127 of the Bankruptcy Code, or to
modify the Disclosure Statement or any contract, instrument,
release, or other agreement or document created in connection
with the Plan or the Disclosure Statement; or remedy any
defect or omission or reconcile any inconsistency in any
Bankruptcy Court Order, the Plan, the Disclosure Statement
or any contract, instrument, release, or other agreement or
document created in connection with the Plan or the Disclosure
Statement, in such manner as may be necessary or appropriate to
consummate the Plan, to the extent authorized by the Bankruptcy
Code;
9. 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 or enforcement of the Plan;
10. Enter and implement such orders as are
necessary or appropriate if the Confirmation Order is for
any reason modified, stayed, reversed, revoked or vacated;
11. Determine any other matters that may arise
in connection with or relate to the Plan, the Disclosure
Statement, the Confirmation Order or any contract, instrument,
release, or other agreement or document created in connection
with the Plan or the Disclosure Statement; and
12. Enter an order concluding the Reorganization Case.
If the Bankruptcy Court abstains from exercising jurisdiction
or is otherwise without jurisdiction over any matter arising
out of the Reorganization Case, including, without
limitation, the matters set forth in this Article, this
Article shall have no effect upon and shall not control,
prohibit, or limit the exercise of jurisdiction by any
other court having competent jurisdiction with respect to
such matter.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Fractional Dollars. Any other provision of the
Plan notwithstanding, no payments of fractions of dollars will
be made to any holder of an Allowed Claim. Whenever any
payment of a fraction of a dollar to any holder of an
Allowed Claim would otherwise be called for, the actual
payment made will reflect a rounding of such fraction to the
nearest whole dollar (up or down).
12.2 Modification of Plan. The Debtors reserve the
right, in accordance with the Bankruptcy Code, to amend or
modify the Plan prior to the entry of the Confirmation Order.
After the entry of the Confirmation Order, the Debtors and,
after the liquidation of the Debtors, the Liquidating
Trustee may, upon order of the Bankruptcy Court, amend or
modify the Plan in accordance with section 1127(b) of the
Bankruptcy Code, or remedy any defect or omission or reconcile
any inconsistency in the Plan in such manner as may be
necessary to carry out the purpose and intent of the Plan.
<PAGE> 23
12.3 Withdrawal of Plan. The Debtors reserve the right,
at any time prior to entry of the Confirmation Order, to revoke
or withdraw the Plan. If the Debtors revoke or withdraw the
Plan under this section 12.3 or if the Effective Date does not
occur, then the Plan shall be deemed null and void. In that
event, nothing contained in the Plan shall be deemed to
constitute a waiver or release of any Claims by or against the
Debtors or any other person, or to prejudice in any manner
the rights of the Debtors or any other person in any further
proceedings involving the Debtors.
12.4 Governing Law. Except to the extent the
Bankruptcy Code, the Bankruptcy Rules or the Delaware General
Corporation Law are applicable, the rights and obligations
arising under 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 conflicts
of law thereof.
12.5 Time. In computing any period of time prescribed
or allowed by this Plan, the day of the act, event, or default
from which the designated period of time begins to run shall
not be included. The last day of the period so computed
shall be included, unless it is not a Business Day or, when the
act to be done is the filing of a paper in court, a day on
which weather or other conditions have made the clerk's office
inaccessible, in which event the period runs until the end of
the next day which is not one of the aforementioned days.
When the period of time prescribed or allowed is less than
eight days, intermediate days that are not Business Days shall
be excluded in the computation.
12.6 Payment Dates. Whenever any payment to be made
under the Plan is due on a day other than a Business Day, such
payment will instead be made, without interest, on the next
Business Day.
12.7 Headings. The headings used in this Plan are
inserted for convenience only and neither constitute a portion
of the Plan nor in any manner affect the provisions of the Plan.
12.8 Successors and Assigns. The rights, benefits
and obligations of any entity named or referred to in the Plan
shall be binding on, and shall inure to the benefit of, any
heir, executor, administrator, successor or assign of such
entity.
12.9 Severability of Plan Provisions. If prior
to Confirmation any term or provision of the Plan, which does
not govern the treatment of Claims or Interests or the
conditions of the Effective Date, is held by the
Bankruptcy Court to be invalid, void, or unenforceable, the
Bankruptcy Court shall have the power 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 shall then be
applicable as altered or interpreted. Notwithstanding any
such holding, alteration or interpretation, the remainder of
the terms and provisions of the 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 shall constitute
a judicial determination and shall provide that each term
and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
12.10 No Admissions. Notwithstanding anything herein
to the contrary, nothing contained in the Plan shall be deemed
as an admission by the Debtors with respect to any matter set
forth herein, including, without limitation, liability on any
Claim or the propriety of any Claims classification.
12.11 Dissolution of Unsecured Creditors'
Committee. The Unsecured Creditors' Committee will be dissolved
on the day after the Effective Date, and the members
thereof shall be released and discharged of and from further
authority, duties, responsibilities, liabilities and
objections related to and arising from the Reorganization
Case.
<PAGE> 24
12.12 Notices. Notices to be provided under this Plan
shall be transmitted as follows:
LIQUIDATING TRUSTEE
Chriss Street, Liquidating Trustee
Chriss Street & Company
1111 Bayside Drive, Suite 100
Corona del Mar, CA 92625-1755
with a copy to:
MORRIS, NICHOLS, ARSHT & TUNNELL
William H. Sudell, Jr. (No. 463)
Robert J. Dehney (No. 3578)
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
CAMHY KARLINSKY & STEIN LLP
David Neier
Elaine M. Laflamme (EL 7200)
Christina Chiaramonte (CC 9667)
1740 Broadway, 16th Floor
New York, New York 10019-4315
HAYNES AND BOONE, L.L.P.
Robin E. Phelan
901 Main Street, Suite 3100
Dallas, TX 75201
with a copy to:
John D. Penn
Haynes and Boone, L.L.P.
201 Main Street, Suite 2200
Fort Worth, TX 76102-3126
<PAGE> 25
Dated: _____________, 1998
MORRIS, NICHOLS, ARSHT & TUNNELL
_________________________________
William H. Sudell, Jr.(No. 463)
Robert J. Dehney (No.3578)
Derek C. Abbott (No.3376)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
and
CAMHY KARLINSKY & STEIN LLP
David Neier (DN 5391)
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attorneys for Debtors
<PAGE> 26
EXHIBIT "A" TO THE PLAN
LIQUIDATING TRUST AGREEMENT DATED JUNE 24, 1998
<PAGE> 1
LIQUIDATING TRUST AGREEMENT
This draft assumes that Class 4 accepts the plan and that there
are two classes of beneficiaries.
THIS LIQUIDATING TRUST AGREEMENT ("Agreement") dated as
of , 1998, by and between Fruehauf Trailer Corporation,
Maryland Shipbuilding & Drydock Company, F.G.R., Inc.,
Jacksonville Shipyards, Inc., Fruehauf International
Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings,
Inc., and E.L. Devices, Inc. ("Fruehauf" and/or
"Debtors"), whose address is 1111 Bayside Drive, Suite 100,
Corona del Mar, California 92625-1755, IBJ Schroeder Bank &
Trust Company, the Indenture Trustee for Fruehauf's 14.75%
Secured Senior Notes due 2002 (the "Indenture Trustee"), for
the sole purpose of conveying the Foreclosed Assets to the
Beneficial Interestholders who will thereafter transfer them
to the Liquidating Trust, and Chriss W. Street ("Trustee"),
whose address is 1111 Bayside Drive, Suite 100, Corona del
Mar, California 92625-1755.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the premises and
the mutual agreements of the parties hereinafter contained,
and in order fully to set forth certain obligations of the
parties hereto, as contemplated by the Plan, the parties hereto
agree as follows:
1. Definitions:
- -----------------
1.1 Defined Terms. All terms used herein which are
defined in the Plan shall have the same meaning herein unless
otherwise defined herein or the context otherwise requires.
1.2 Additional Defined Terms. As used herein,
the following terms shall have the meanings set out below,
unless the context otherwise requires:
(a) "Beneficial Interest" or "Beneficial
Interests" shall mean the respective rights and interests
of each of the Class A or Class B Beneficial
Interestholders in and to the Liquidating Trust and the
Trust Estate.
(b) "Beneficial Interestholder" shall mean the
holder of a Beneficial Interest.
(c) "Beneficial Interestholders" shall mean the
Class A Beneficial Interestholders and the Class B
Beneficial Interestholders.
(d) "Class A Beneficial Interestholder" shall mean
an individual or entity holding an Allowed Class 2 Claim or
an Allowed Class 4 Claim and their successors and assigns.
(e) "Class B Beneficial Interestholder" shall mean
an individual or entity holding an Allowed
Administrative Claim, an Allowed Pre-Petition Tax Claim
or an Allowed Priority Claim and its successors and
assigns.
<PAGE> 2
(f) "Distribution Fund" shall mean the portion of
the Debtors' Cash on the Effective Date which shall
be transferred to the Liquidating Trust, on behalf of and
for the benefit of the holders of Allowed
Administrative, Priority and Pre-Petition Tax Claims. The
amount of Cash in the Distribution Fund shall equal the
aggregate of (a) the allowed amount of all Administrative
Claims, Pre-Petition Tax Claims and Priority Claims; and
(b) the asserted amount or court-estimated amount of
Disputed or undetermined (i) Administrative Expense
Claims, (ii) Pre-Petition Tax Claims, and (iii) Priority
Claims. With respect to Administrative Claims for
compensation and reimbursement of expenses of
professionals or other persons pursuant to sections 328,
330, 331 and 503(b) of the Bankruptcy Code, the amount of
Cash to be deposited shall be the amount sought or the
maximum amount estimated to be sought for such compensation
and expenses. The Distribution Fund shall not include
interest earned on the Distribution Fund after the Effective
Date.
(g) "Indebtedness" shall mean, with respect to
each Beneficial Interestholder, the outstanding amount of
his Allowed Claim, giving rise to a beneficial interest in
the Liquidating Trust and Trust Estate.
(h) "Initial Term" shall have the meaning set out in
Section 9.1 hereof.
(i) "Register" shall have the meaning set out in
Section 3.2 hereof.
(j) "Remaining Assets" shall mean the assets of the
Liquidating Trust, including only that portion of the
Distribution Fund remaining after payment of Allowed
Administrative, Priority and Pre-Petition Tax Claims.
(k) "Renewal Period" shall have the meaning set out
in Section 9.1 hereof.
(l) "Liquidating Trust" shall have the meaning set
out in Section 2.1 hereof.
(m) "Trust Advisory Committee" shall be two
designated representatives of the holders of the Senior Notes
and their successors, if any. The initial members of
the Trust Advisory Committee shall be selected by the
Unofficial Committee of Senior Note Holders. If a
Trust Advisory Committee member resigns, no longer owns or
controls Trust Certificates or is no longer able to carry
out the duties as a member, the Bankruptcy Court (upon
motion by either a Trust Certificate Holder or the Trustee)
shall appoint a replacement member. Any such replacement
member must own one or more Trust Certificates.
(n) "Trust Certificates" shall mean the
certificates issued by the Liquidating Trust to the
Beneficial Interestholders to reflect all of the Class A
Beneficial Interests in the Liquidating Trust.
(o) "Trust Estate" shall mean all of the property
held from time to time by the Trustee pursuant to this Agreement.
2. Authority of and Certain Directions to Trustee: Declaration of Liquidating
Trust.
- -------------------------------------------------------------------------------
2.1 Creation of the Liquidating Trust. The Debtor,
on behalf of the Beneficial Interestholders who are entitled
to receive assets pursuant to the Plan, hereby creates the
Fruehauf Liquidating Trust (the "Liquidating Trust") for the
benefit of its Beneficial Interestholders. The Trustee may,
but shall not be required to, transact the business and
affairs of the Liquidating Trust in that name.
<PAGE> 3
2.2 Property of the Liquidating Trust. Upon
execution hereof, the Debtor and the Indenture Trustee, on
behalf of the Beneficial Interestholders, shall grant,
convey, transfer and assign to the Liquidating Trust the
property described on Exhibit "A" attached hereto and made a
part hereof. Legal title to the Trust Estate shall be held
either in the name of the Liquidating Trust, or in the name of
the Trustee on behalf of the Liquidating Trust, as the
Trustee may from time to time determine. The Trustee shall
hold such property in Liquidating Trust to be administered
and disposed of by him pursuant to the terms of the Plan and
this Agreement.
2.3 Purpose of Liquidating Trust. This Liquidating
Trust is organized for the sole purpose of conserving and
liquidating the Trust Estate for the benefit of the
Beneficial Interestholders as herein set out, with no objective
to engage in the conduct of a trade or business (although
companies whose stock is owned by the Liquidating Trust may
operate a business). Pursuant to this express purpose, the
Trustee is hereby authorized and directed to take all
reasonable and necessary actions to conserve and protect the
Trust Estate and to sell, lease, or otherwise dispose of
the Trust Estate, and to distribute the net proceeds of
such disposition, as hereinafter set out, in as prompt,
efficient and orderly a fashion as possible in accordance
with the provisions of Section Six hereof and the Plan.
3. Beneficial Interests.
- --------------------------
3.1 Class A Beneficial Interests.
----------------------------------
3.1.1 Beneficial Interests of Holders of
Allowed Class 2 Claims. Each Class A Beneficial Interestholder
that is the holder of an Allowed Class 2 Claim shall have a
Beneficial Interest in a pro rata distribution (based upon the
amount of its Class 2 Claim) of 94.5% of the Remaining Assets
and the Trust Certificates evidencing such Beneficial
Interest. The Liquidating Trust shall deliver all of the
Trust Certificates for holders of Allowed Class 2 Claims to the
Indenture Trustee on the Effective Date.
3.1.2 Beneficial Interests of Holders of
Allowed Class 4 Claims. Each Class A Beneficial Interestholder
that is the holder of an Allowed Class 4 Claim shall have a
Beneficial Interest in a pro rata distribution (based upon the
amount of its Class 4 Claim) of 5.5% of the Remaining Assets
and the Trust Certificates evidencing such Beneficial
Interest. The Trust Certificates representing the Beneficial
Interests of holders of Allowed Class 4 Claims shall be
distributed to such holders after all Disputed Class 4 Claims
have been resolved as provided in the Plan.
3.2 Class B Beneficial Interests. Each Class B
Beneficial Interestholder shall be deemed to have a Beneficial
Interest in the Liquidating Trust's interest in the
Distribution Fund to the extent of the amount of such
Beneficial Interestholder's Allowed Administrative, Priority or
Pre-Petition Tax Claims.
3.3 Transfer and Exchange. The Trustee shall cause to
be kept, at his offices, or at such other place or places as
shall be designated by him from time to time, a register
("Register") to register the ownership and the transfer of
ownership of Trust Certificates, subject to the provisions of
Section 3.3 hereof. The Trustee may require such
documentation of the transfer of Trust Certificates as he
deems advisable in his discretion. For good cause shown,
Class A Beneficial Interestholders and their duly authorized
representatives shall have the right, upon reasonable prior
written notice to the Trustee, and in accordance with reasonable
regulations prescribed by the Trustee and at the expense of
such Class A Beneficial Interestholder, to inspect and make
copies of the Register.
<PAGE> 4
3.4 Absolute Owners. The Trustee may deem and treat
each Beneficial Interestholder reflected as the owner of a
Beneficial Interest on the Register as the absolute owner
thereof for the purpose of receiving the distributions and
payments on account thereof and for all other purposes
whatsoever, and until any transfer of ownership is recorded
in the Register, the Trustee shall not be charged with having
received notice of any claim or demand of any other person to
such Beneficial Interest or the rights, titles, and interests
therein. All notices of a change of ownership of Trust
Certificates shall be forwarded to the Trustee by registered
or certified mail as set out in Section 10.3.
3.5 Place of Payment. The amounts payable to
the Beneficial Interestholders pursuant to Section Six hereof
as of the record date determined by the Trustee will be
payable either by mailing a check payable to such Beneficial
Interestholder at the address set forth in the Schedules or
the address set forth on the Proof of Claim filed by such
Beneficial Interestholder or at such address as such
Beneficial Interestholder shall have specified by written
notice to the Trustee.
4. Delivery and Acceptance of Trust Estate.
- ---------------------------------------------
4.1 Conveyance by Debtors and Indenture Trustee.
The Debtors and the Indenture Trustee are executing and
delivering to the Trustee conveyance instruments of the
property described on Exhibit "A" attached hereto, as
contemplated in the Plan and the Confirmation Order. At any
time and from time to time after the date hereof, at the
Trustee's request and without further consideration, the
Debtors and the Indenture Trustee shall execute and
deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and will cooperate and take such
other actions as the Trustee may reasonably deem necessary
or desirable to more effectively transfer, convey, and assign
the property described on Exhibit "A" to the Liquidating Trust.
The Debtors and the Indenture Trustee shall have no further
interest in the Trust Assets subsequent to their
conveyance to the Liquidating Trust.
4.2 Acceptance of Conveyance. The Trustee is
hereby directed to, and the Trustee agrees that he will:
(a) accept delivery from the Debtors and the
Indenture Trustee, on behalf of and for the benefit of the
Beneficial Interestholders, of the property described on
Exhibit "A" on behalf of the Liquidating Trust;
(b) accept from the Debtors and the Indenture
Trustee, on behalf of and for the benefit of the
Beneficial Interestholders, all conveyance instruments
required to be delivered by the Debtors to the Trustee
with respect to the property described on Exhibit "A"
pursuant to or in connection with the Plan, the Order,
and this Agreement; and
(c) take such other action as may be required of
the Trustee or the Liquidating Trust hereunder, including
the receipt and acceptance as part of the property
transferred into the Liquidating Trust of any property
or rights, including, without limitation, notes and other
negotiable instruments which the Trustee may receive in
connection with or in consideration of the property
transferred into the Liquidating Trust.
5. Administration of Trust Estate.
- ------------------------------------
5.1 Liquidating Trust Expenses. Upon execution hereof,
and continuing for so long as the Liquidating Trust
remains in existence, the Trustee may reserve such amounts as
the Trustee deems advisable for the payment of all expenses,
debts, charges, liabilities, and obligations with respect to
the Trust Estate, including all taxes of the Liquidating Trust
as determined by the Trustee in the Trustee's sole and
absolute discretion. Upon expiration of this Agreement,
any remaining cash in the Liquidating Trust after the
payment of all expenses, debts, charges, liabilities, and
obligations intended to be paid therefrom, shall be
distributed to the Class A Beneficial Interestholders as
provided in the Plan and in Section Six.
<PAGE> 5
5.2 Powers of Trustee. Subject to the provisions
of Section Two and of Section 5.5 hereof, in administering
the Liquidating Trust, the Trustee shall have the following
powers to be exercised in his discretion in the
administration of the Liquidating Trust: (i) to receive the
Trust Estate; (ii) to conserve, manage, sell, operate,
lease, or otherwise dispose of the Trust Estate for such
price and upon such terms and conditions as the Trustee
may deem appropriate and to execute such deeds, bills of
sale, assignments and other instruments in connection
therewith; (iii) to determine and collect payments to and
other income of the Liquidating Trust; (iv) to collect the
proceeds of the sale of property out of the Trust Estate; (v)
to collect, receive, compromise and settle notes and other
claims and receivables of the Liquidating Trust; (vi) to
assert, prosecute, litigate, compromise and settle claims and
causes of action included within the Trust Estate; (vii) to
discharge, compromise and settle any unascertained,
unliquidated or contingent debts, liabilities or obligations
of the Liquidating Trust, including objecting to claims filed
in the Bankruptcy Case; (viii) to distribute the net income
and proceeds of the Trust Estate conveyed or transferred, and
any balance remaining in the Distribution Fund, to the
Beneficial Interestholders in accordance with the Plan as
provided herein; (ix) to bring suit on behalf of or defend any
suit against the Liquidating Trust or the Trustee on behalf of
the Liquidating Trust; (x) to retain such legal counsel,
public accountants and other experts as the Trustee may deem
advisable in connection with the administration of the
Liquidating Trust or the exercise of his other powers set out
herein; (xi) to object to the Claim of any Beneficial
Interestholder under the Plan, and to compromise and
settle objections with respect to such Claims, (xii) to
open bank accounts on behalf of and in the name of the
Liquidating Trust; (xiii) to pay all taxes (without
objections), to make all tax withholdings, and to file tax
returns and tax information returns and make tax elections by
and on behalf of the Liquidating Trust; (xiv) to pay all lawful
expenses, debts, charges and liabilities of the Liquidating
Trust, including, without limitation, the reasonable expenses
of the Indenture Trustee; and (xv) to exercise such
other powers and duties as necessary or appropriate, in
the discretion of the Trustee to accomplish the purposes of the
Liquidating Trust as set out herein.
5.3 Additional Powers of Trustee. Subject to the
express limitations contained herein, the Trustee shall have,
and may exercise with respect to the Trust Estate, or any part
thereof, and in the administration and distribution of the
Trust Estate, all powers now or hereafter conferred on trustees
by the Texas Trust Code. The powers conferred by this Section
in no way limit any power conferred on the Trustee by any
other Section hereof but shall be in addition thereto;
provided, always, that the powers conferred by this
Section are conferred and may be exercised only and solely
within the limitations and for the limited purposes imposed
and expressed in Section Two hereof.
5.4 Limitations on Trustee; Investments.
-----------------------------------------
5.4.1 Actions Requiring Approval of Trust
Advisory Committee. The Liquidating Trustee must obtain prior
approval of the Trust Advisory Committee to:
(a) borrow money in excess of $500,000 or grant liens on
any part of the Trust Estate in excess of $500,000;
(b) sell assets of the Trust Estate with a value in excess
of $500,000;
(c) modify the Plan;
<PAGE> 6
(d) initiate and prosecute litigation, including but not
limited to claim objections with expected fees and costs in
excess of $250,000;
(e) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of $500,000;
and
(f) forego or defer the annual distribution to
Certificate Holders required by Section 6.2 hereof.
Approval will have been deemed to have been given ten (10)
days after the Trustee makes a written proposal to the Trust
Advisory Committee, unless a member of the Trust Advisory
Committee delivers a written objection to the Trustee.
5.4.2 Court Approval. In the event there is
not unanimous agreement by the Trust Advisory Committee members
and a dispute exists between the members of the Trust
Advisory Committee with respect to any actions described in
5.4.1 proposed by the Liquidating Trustee, and the dispute
cannot be resolved by agreement, the Liquidating Trustee shall
seek Bankruptcy Court approval of the proposed course of
action. All objections to the proposed course of action shall
be preserved and may be presented to the Bankruptcy Court for
resolution. In this event, the Liquidating Trustee shall pay
the professional fees and expenses incurred by the objecting
Committee member, up to but not exceeding the maximum
amount of $25,000 per Committee member during the term of the
Liquidating Trust.
5.4.3 Actions Requiring Approval of Class
A Beneficial Interestholders. The Trustee may not modify the
terms of this Liquidating Trust Agreement unless the
Liquidating Trustee secures the written approval of such
modification from Class A Beneficial Interestholders holding
over 50% of the Class A Beneficial Interests.
5.4.4 No Trade or Business. The Trustee
shall carry out the purposes of the Liquidating Trust
and the directions contained herein and shall not at any time
enter into or engage in any trade or business,
including, without limitation, the purchase of any asset or
property (other than such assets or property as are necessary
to preserve, conserve, and protect the Trust Estate and to
carry out the purposes of Section Two, Section Seven, and
this Section Five) on behalf of the Trust Estate or the
Beneficial Interestholders.
5.4.5 Investments. Other than funds maintained
in operating accounts in an amount deemed appropriate by
the Liquidating Trust to pay the current costs, expenses
and obligations of the Liquidating Trust, the Trustee shall
invest any monies held at any time as a part of the Trust
Estate, including without limitation, the Distribution Fund and
any other reserve or escrow established pursuant to the
terms of this Agreement or the Plan, only in
interest-bearing deposits, certificates of deposit, or
repurchase obligations of any federally insured banking
institution with a combined capital and surplus of at least
$50,000,000, or short term investments and obligations of, and
unconditionally guaranteed as to payment by, the United
States of America and its agencies or
instrumentalities, pending the need to make disbursements
thereof in payment of costs, expenses, and liabilities of the
Liquidating Trust or to make a distribution to the
Beneficial Interestholders. The Trustee shall be
restricted to the collection and holding of such monies
and to the payment and distribution thereof for the purposes
set forth in this Agreement and to the conservation and
protection of the Trust Estate in accordance with the
provisions hereof.
5.5 Transferee Liabilities. Except to the extent set
out in the Plan and in the Conveyance Instruments of the Trust
Estate from the Debtors and the Indenture Trustee to the
Liquidating Trust, the Liquidating Trust shall have no liability
for, and the Trust Estate shall not be subject to, any Claim
arising by, through, or under the Debtors. In no event shall
the Trustee have any personal liability for such Claims. If
any liability shall be asserted against the Liquidating Trust
or the Trustee as the transferees of the Trust Estate on
account of any claimed liability of, through, or under the
Debtors, the Trustee may use such part of the Trust Estate as
may be necessary to contest any such claimed liability and
to pay, compromise, settle or discharge same on terms
reasonably satisfactory to the Trustee. In no event shall
the Trustee be required to use his personal funds or assets or
the funds or assets of his firm or partnership for such purposes.
<PAGE> 7
5.6 Administration of Liquidating Trust. Subject to
the express limitations contained herein, in administering
the Liquidating Trust, the Trustee is authorized and directed
to do and perform all such acts and to execute and deliver
such deeds, bills of sale, assignments, instruments of
conveyance, and other documents as he may deem necessary or
advisable to carry out the purposes of the Liquidating Trust.
The Trustee shall effect such registrations and take all such
actions as are required to comply with state and federal
securities laws.
5.7 Payment of Expenses and Other Liabilities. The
Trustee shall pay from the Trust Estate all expenses,
charges, liabilities, and obligations of the Liquidating Trust,
including, without limiting the generality of the
foregoing, interest, taxes, assessments, and public charges of
every kind and nature. The Trustee, in his discretion and
judgment, may from time to time make provision by reserve or
otherwise out of the Trust Estate or the proceeds thereof
in such reasonable amount or amounts as the Trustee in
his discretion and judgment may determine to be necessary
or advisable to meet unascertained, unliquidated or contingent
liabilities of the Liquidating Trust. Notwithstanding anything
in this paragraph to the contrary, the Distribution Fund
shall be the sole Liquidating Trust asset in which Class B
Beneficial Interestholders hold a Beneficial Interest. The
Beneficial Interest of any Class B Beneficial Interestholder
in the Liquidating Trust is limited to the Allowed amount of
such Class B Beneficial Interestholders'
Administrative, Priority or Pre-Petition Tax Claim.
5.8 Fiscal Year. The Liquidating Trust's fiscal year
shall end on December 31 of each year unless the Trustee
deems it advisable to establish some other date on which the
fiscal year of the Liquidating Trust shall end.
5.9 Reports to Beneficial Interestholders. The
Trustee shall prepare, deliver, and file, as the case may be:
(a) with the Trust Advisory Committee, as soon
as practicable after the end of each calendar quarter,
a quarterly unaudited report for such quarter, commencing
with the first complete calendar quarter following the
date of this Agreement reflecting (i) the specific assets
of the Trust Estate disposed of or liquidated during such
calendar quarter; (ii) the gross receipts and any selling
expenses associated therewith; (iii) any other income
received or expense, disbursement, or reserve made or
established during such calendar quarter; (iv) the
borrowings of the Liquidating Trust during such
calendar quarter and the amount remaining owing on
such borrowings; and (v) all litigation commenced by
the Trustee on behalf of the Liquidating Trust;
(b) to such Class A Beneficial Interestholders who
so request in writing, within 120 days after the end of
each calendar year, at such Class A Beneficial
Interestholder's expense, an annual report for such
calendar year commencing with the first full calendar year
following the date of this Agreement reflecting (i) the
specific assets of the Trust Estate disposed of or
liquidated during such calendar year; (ii) the gross
receipts and any selling expenses associated therewith;
(iii) any other income received or expense,
disbursement, or reserve made or established during such
calendar year; (iv) the borrowings of the Liquidating Trust
during such calendar year and the amount remaining owing on
such borrowings; and (v) all litigation commenced by the
Trustee on behalf of the Liquidating Trust;
<PAGE> 8
(c) to each Class A Beneficial
Interestholder receiving a distribution in such year, a
summary of the information required in 5.9(b) above for
such year;
(d) income tax information returns, tax returns,
or other reports to Beneficial Interestholders and
applicable taxing authorities as may be required by law or
as may be requested in writing by a Beneficial
Interestholder at such Beneficial Interestholders' expense;
and
(e) within 120 days after the termination
or expiration of the Liquidating Trust, a final
financial report reflecting the final disposition of Trust
Estate and the final distribution to the Class A
Beneficial Interestholders who so request the delivery of
such report in writing and at such Class A Beneficial
Interestholders' expense.
6. Source of Payments, Distributions Among Beneficial Interestholders
- ----------------------------------------------------------------------
6.1 Payments from Trust Estate. All payments to be made
by the Trustee to any Beneficial Interestholder shall be made
only from the assets, income and proceeds of the Trust Estate
and only to the extent that the Trustee shall have received
sufficient assets, income, or proceeds of the Trust Estate to
make such payments in accordance with the terms of this Section
Six. Each Beneficial Interestholder shall look solely to
the assets, income, and proceeds of the Trust Estate for
distribution to such Beneficial Interestholder as herein
provided. Payments to Class B Beneficial Interestholders
shall be made solely from the Distribution Fund.
Payments to Class A Beneficial Interestholders may be
made in kind as well as in cash.
6.2 Frequency and Amounts of Payments. The frequency
and amounts of payments shall be determined by the Trustee.
However, unless waived or deferred by the Trust Advisory
Committee, the Trustee shall make distributions to Class
A Beneficial Interestholders no less frequently than annually
(on a calendar year basis). Until such time as all Disputed
Claims that are Administrative, Priority or Pre-Petition Tax
Claims have been Allowed or Disallowed by Final Order, the
Trustee may, but shall not be required to, make
distributions to Class B Beneficial Interestholders.
6.3 Tax Provisions.
-------------------
6.3.1 Income Tax Status. For all purposes of
the Tax Code, the Debtors shall be deemed to have transferred
the Liquidating Trust assets to the Beneficial
Interestholders pursuant to the Plan and the Beneficial
Interestholders shall be deemed to have transferred their
share of the Liquidating Trust assets to the Liquidating
Trust. For all federal income tax purposes, consistent
valuations shall be used by the Liquidating Trust and the
Beneficial Interestholders for the transferred Liquidating
Trust Assets. The Liquidating Trust is intended to be
treated as a liquidating trust pursuant to Treasury
Regulations 301.7701-4(d), and as a grantor trust subject
to the provisions of Subchapter J, Subpart E of the Tax Code,
owned by the Beneficial Interestholders as grantors. Any
items of income, deduction, credit, or loss of the Liquidating
Trust shall be allocated for federal, state and local income
tax purposes among the Beneficial Interestholders pro rata on
the basis of their Beneficial Interests; provided, however,
that to the extent that any item of income cannot be allocated
in the taxable year in which it arises, the Liquidating Trust
shall pay the federal, state and local taxes attributable to
such income (net of related deductions) and the amount of such
taxes shall be treated as having been received by, and paid
on behalf of, the Beneficial Interestholders receiving such
allocations when such allocations are ultimately made. The
Liquidating Trust is authorized to take any action that may be
necessary or appropriate to minimize any potential tax
liability of the Beneficial Interestholders arising out of the
operations of the Liquidating Trust.
<PAGE> 9
6.3.2 Tax Returns and Reports. In accordance
with Treasury Regulation 1.671-4(a), the Liquidating Trust
shall cause to be prepared and filed, at the cost and expense
of the Liquidating Trust, an annual information tax return
(Form 1041) with the Internal Revenue Service, with a
schedule attached showing the item of income, deduction, and
credit attributable to the Liquidating Trust and detailing the
allocation of such items of income, deduction, and credit
among the Beneficial Interestholders as required
pursuant to the Form 1041 instructions for grantor
trusts. Copies of such Form 1041 and attached schedules will
be delivered promptly to each Beneficial Interestholder. In
addition, the Liquidating Trust shall cause to be prepared
and filed in a timely manner, such other state or local tax
returns as are required by applicable law by virtue of the
existence and operation of the Liquidating Trust and shall pay
any taxes shown as due thereon. Within thirty (30) days
after the end of each calendar year, the Liquidating Trust
shall cause to be prepared and mailed to a Beneficial
Interestholder such other information as may be requested by
such Beneficial Interestholder in writing to enable
such Beneficial Interestholder to complete and file his,
her, or its federal, state and local income and other tax
returns.
6.3.3 Withholding. The Liquidating Trust
may withhold from the amount distributable from the Liquidating
Trust at any time such sum or sums as may be sufficient to pay
any tax or taxes or other charge or charges which have been or
may be imposed on the distributee or upon the Liquidating
Trust with respect to the amount distributable or to be
distributed under the income tax laws of the United States
or of any state or political subdivision or entity by reason
of any distribution provided for any law, regulation, rule,
ruling, directive, or other governmental requirement.
6.3.4 Tax Identification Numbers. The
Liquidating Trust may require any Beneficial
Interestholder or other distributee to furnish to the
Liquidating Trust its Employer or Taxpayer Identification
Number as assigned by the Internal Revenue Service and
the Liquidating Trust may condition any distribution to
any Beneficial Interestholder or other distributee upon
receipt of such identification number.
6.3.5 Tax Year. The taxable year of
the Liquidating Trust shall, unless otherwise required by
the Internal Revenue Code, be the calendar year.
7. Other Duties of the Trustee.
- ---------------------------------
7.1 Management of Trust Estate. With respect to assets
of the Trust Estate from time to time, the Trustee shall, and
is hereby directed:
7.1.1 If sufficient funds are available to
purchase and maintain in existence, such insurance as the
Trustee deems reasonable, necessary, or appropriate from
time to time to protect the Liquidating Trust's, the
Trustee's, and the Beneficial Interestholders' interests in
the Trust Estate.
7.1.2 To take such actions as shall be necessary
or advisable to preserve, maintain, and protect the Trust Estate
for the Beneficial Interestholders' benefit consistent with
the purposes of the Liquidating Trust.
7.2 No Implied Duties. The Trustee shall not
manage, control, use, sell, dispose, collect or otherwise deal
with the Trust Estate or otherwise take any action hereunder,
except as expressly provided herein, and no implied duties or
obligations shall be read into this Agreement in favor of or
against the Trustee; provided, however, that this provision
shall not limit the powers conferred on trustees by Delaware
law, without regard to conflicts of laws principles, except to
the extent any such power may conflict with any of the
provisions and purposes of this Agreement.
<PAGE> 10
8. Concerning the Trustee.
- ----------------------------
8.1 Acceptance by Trustee. The Trustee accepts
the Liquidating Trust hereby created for the benefit of
the Beneficial Interestholders and agrees to perform the same
upon the terms and conditions herein set out.
Notwithstanding any term or provision hereof to the contrary,
the Trustee shall have and exercise the rights and powers
herein granted and shall be charged with the performance of
the duties herein declared on the part of the Trustee to be
had and exercised or to be performed. The Trustee also agrees
to receive and disburse all monies actually received by him
constituting part of the Trust Estate pursuant to the terms
of this Agreement. The Trustee shall not be personally liable
for any action taken or omitted to be taken by him except for
his own gross negligence or willful misconduct.
8.2 Discretionary Submission of Questions to the
Court. The Trustee, in his discretion and judgment, may submit
to the Court any question or questions regarding which the
Trustee may desire to have explicit approval of the Court for
the taking of any specific action proposed to be taken by
the Trustee with respect to the Trust Estate, or any
part thereof, or the administration and distribution of the
Trust Estate. The Court shall approve or disapprove any such
proposed action after motion and hearing. Any such proposed
action submitted to the Court for approval will be approved
by the Court if no Beneficial Interestholder objects to
such motion within the time specified by the applicable
Bankruptcy Rule. If a Beneficial Interestholder objects
to such action by the Trustee, the Court shall approve or
disapprove such action after hearing. Upon approval of a
proposed action by the Court by Final Order, the Trustee
shall be authorized to take the proposed action without
liability with respect thereto. If such action is not
approved by the Court, the Trustee shall not take such action.
All costs and expenses incurred by the Trustee in the
exercise of any right, power or authority conferred by this
Section shall be costs and expenses of the Trust Estate.
Any party desiring notice of matters submitted to the Court
must send the Trustee a written request for notice of
post-confirmation pleadings.
8.3 Liability of the Trustee.
------------------------------
8.3.1 Limitation on Liability. No provision
of this Agreement shall be construed to impart any liability
upon the Trustee unless it shall be proved in a court of
competent jurisdiction that the Trustee's actions or omissions
constituted gross negligence or willful misconduct in the
exercise of or failure to exercise any right, power or duty
vested in him under this Agreement. The Trustee shall have no
personal liability for any of the rights, obligations, duties,
or liabilities of the Debtor, Debtor's bankruptcy estate, or
the Liquidating Trust.
8.3.2 Reliance on Orders, Statements,
Certificates or Opinions. In the absence of gross
negligence or willful misconduct on the part of the
Trustee, the Trustee may conclusively rely, as to the
truth of the statements and correctness of the opinions
expressed therein, upon any orders, statements, certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Agreement.
8.3.3 Discretion of Trustee. Within
the limitations and restrictions expressed and imposed herein,
the Trustee may act freely with respect to the exercise of any
or all of the rights, powers, and authority conferred hereby
in all matters concerning the Trust Estate after forming
his best judgment based upon the circumstances without the
necessity of obtaining the consent or permission or
authorization of the Beneficial Interestholders or of the
Court, any other court, official, or officer. The
rights, powers, and authority conferred on the Trustee by
this Agreement are conferred in contemplation of such freedom
of prudent judgment and action by the Trustee, within the
limitations and restrictions so expressed and imposed.
Further, the Trustee shall not be liable for any act or
omission in connection with the administration of this
Liquidating Trust, or the exercise of any right, power,
or authority conferred upon him hereunder, unless it shall be
proved that such Trustee was grossly negligent or acted in a
manner which constituted willful misconduct.
<PAGE> 11
8.3.4 Delegation of Duties. The Trustee shall
have power over and be solely responsible for the
management and administration of the Liquidating Trust.
Notwithstanding the foregoing, the Trustee may engage the
services of and delegate such of his powers and duties
(but not any of his responsibilities), upon such terms
and conditions as are satisfactory to the Trustee, to
such employees, agents, attorneys, accountants,
appraisers, consultants and other persons, including,
without limitation, where appropriate, any of the Beneficial
Interestholders and their respective agents and employees, as
he may deem necessary or advisable to carry out the purposes of
the Liquidating Trust.
8.3.5 Retention and Payment of Professionals.
The Trustee may consult with legal counsel and with such
public accountants and other professionals as may be retained
by the Trustee. The Trustee may pay from the Trust Estate the
fees and expenses of such professionals monthly at such rates
as may be agreed upon by the Trustee and such professionals.
The Trustee shall not be liable for any action taken or
suffered by him or omitted to be taken by him without gross
negligence or willful misconduct in reliance on any opinion or
certification of such accountants or in accordance with the
advice of such counsel or experts.
8.4 Reliance on Trustee. No person dealing with
the Trustee shall be obligated to see to the application of
any monies, securities, or other property paid or delivered to
him, or to inquire into the expediency or propriety of any
transaction or the right, power, or authority of the Trustee to
enter into or consummate the same upon such terms as the
Trustee may deem advisable. Persons dealing with the Trustee
shall look only to the Trust Estate to satisfy any liability
incurred by the Trustee to such persons, and, except as
otherwise expressly provided herein, the Trustee shall have
no personal obligation to satisfy any such liability.
8.5 Parties Acting on Behalf of Liquidating Trust.
---------------------------------------------------
8.5.1 Indemnification. The Liquidating Trust
shall indemnify any person who becomes a party, or is threatened
to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal,
administrative, or investigative by reason of the fact that he
is or was a Trustee, employee, or agent of the Liquidating
Trust, or is or was serving on behalf of the Liquidating Trust
at the request of the Trustee as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including
attorneys' fees), judgments, tax obligations, liabilities or
penalties, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action,
suit or proceeding, including appeals thereof, if he acted
without gross negligence or willful misconduct, in the
exercise and performance of any power or duty of a
Trustee, employee or agent of the Liquidating Trust, as the case
may be, under this Agreement.
8.5.2 Payment of Expenses. Expenses
(including attorneys' fees) incurred by the Trustee or any
employee or agent of the Trustee in defending any action, suit
or proceeding may be paid by the Liquidating Trust in advance of
the final disposition of such action, suit or proceeding, upon
an undertaking by the Trustee, or such employee or agent, to
repay such amount to the Liquidating Trust, unless it shall
ultimately be determined that he is or was entitled to be
indemnified with respect thereto.
<PAGE> 12
8.6 Compensation of Trustee. The Trustee shall be
entitled to receive from the Trust Estate compensation for his
services as Trustee in accordance with terms set forth on
Exhibit C to this Liquidating Trust. The Trust Estate shall
also reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by him in the performance
of his duties hereunder, including the reasonable
out-of-pocket expenses of the Trustee, and the Trustee's
employees, attorneys, agents, accountants, appraisers,
consultants, and other persons retained by the Trustee
pursuant to the terms of this Agreement.
8.7 Resignation and Removal.
-----------------------------
8.7.1 Resignation. The Trustee may resign and
be discharged from any future obligations hereunder by
filing written notice thereof with the Bankruptcy Court and
serving the notice on the Trust Advisory Committee at least
thirty (30) days prior to the effective date of such
resignation. Such resignation shall become effective on the
later of (i) thirty (30) days after the giving of such
notice, or (ii) after appointment of a permanent or interim
successor trustee.
8.7.2 Removal. Any person serving as Trustee
may be removed at any time, for cause, upon entry of a Final
Order of the Bankruptcy Court removing the Trustee and
acceptance by a successor Trustee of his appointment.
8.7.3 Appointment of a Successor Trustee. If
the Trustee gives notice of his intent to resign pursuant to
Section 8.7.1 hereof or is removed pursuant to Section 8.7.2
hereof or dies or becomes incapable of acting, the Trust
Advisory Committee shall select a successor Trustee to act under
this Agreement and such successor shall be approved by the
Bankruptcy Court.
8.7.4 Reserve Fund, Tax Reports, Winding
Up. Notwithstanding his resignation or removal, the Trustee
shall be entitled to complete and file any and all tax returns
and reports and pay any and all taxes for periods during which
the Trustee served on behalf of the Liquidating Trust. The
Liquidating Trust shall pay the taxes and the Trustee's
expenses incurred with respect to the foregoing.
8.8 Acceptance of Appointment by Successor Trustee.
Any successor Trustee appointed hereunder shall execute an
instrument accepting such appointment in the form set out on
Exhibit "B" and shall deliver one counterpart thereof to the
Court. Thereupon, such successor Trustee shall, without any
further act, become vested with all the rights, titles,
interests, estates, properties, rights, powers, trusts, and
duties of his predecessor in the Liquidating Trust hereunder
with like effect as if originally named herein.
8.9 Posting of Bond. The Trustee shall not be required
to post a bond.
9. Term and Termination of Liquidating Trust.
- -----------------------------------------------
9.1 Term. The Liquidating Trust shall continue and
remain in effect until the first to occur of the following:
(a) three years after the Effective Date ("Initial Term"),
provided, the term of the Liquidating Trust shall automatically
be renewed for two periods of one (1) year each ("Renewal
Period") in the event any portion of the Trust Estate has not
been fully liquidated and the proceeds thereof distributed
in accordance with this Agreement by the end of the Initial
Term or at the end of any Renewal Period and the term of
the Liquidating Trust may be extended beyond five (5) years
after the Effective Date if the Trustee secures Court approval
of the extended term no later than six (6) months after the
beginning of the extended term; or (b) the Trust Estate has
been fully liquidated and the proceeds thereof distributed in
accordance with this Agreement.
<PAGE> 13
9.2 Determination of Liquidation. The Trustee may
request that the Bankruptcy Court find that the Trustee has
disposed of such of the Trust Estate that it has effectively
been liquidated. If the Bankruptcy Court so finds, the
Liquidating Trust shall be deemed terminated pursuant to Section
9.1(b).
9.3 Termination. Upon termination of the
Liquidating Trust, if the Trustee reasonably determines that the
remainder of the Trust Estate, other than funds necessary to
pay amounts then owing to the Trustee, is of such a small amount
that it would not be economical or prudent to make any
further distributions to Certificate Holders then such funds
shall be distributed to The American Cancer Society or other
similar charity.
9.4 Winding Up. For the purpose of winding up the
affairs of the Liquidating Trust at its termination, the
Trustee shall continue to act as Trustee until his duties
have been fully discharged. After so doing, the Trustee
shall have no further duties or obligations hereunder. Upon
motion by the Trustee, the Court, if it determines it
appropriate, may enter an order relieving the Trustee of any
further duties hereunder.
10. Miscellaneous.
- -------------------
10.1 Title to Trust Estate. No Beneficial
Interestholder shall have title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of the
right and interest of any Beneficial Interestholder in and
to the Trust Estate or hereunder shall operate to terminate
this Agreement or the trust hereunder or entitle any
successor or transferee of such Beneficial Interestholder
to an accounting with respect to the Trust Estate or to the
transfer to him of title to any part of the Trust Estate.
10.2 Sales of Trust Estate. Any sale or other conveyance
of the Trust Estate, or part thereof, by the Trustee made
pursuant to the terms of this Liquidating Trust Agreement shall
bind the Beneficial Interestholders and shall be effective to
transfer or convey all rights, titles and interests of the
Trustee and the Beneficial Interestholders in and to such
Trust Estate or part thereof.
10.3 Notices. Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in
writing and shall be given by posting same in the United
States mails, certified or registered mail, return receipt
requested, postage prepaid, addressed to the party to whom
directed, as follows:
If to the Trustee to:
Chriss W. Street
Chriss Street & Company
1111 Bayside Drive, Suite 100
Corona del Mar, CA 92625-1755
If to the Trust Advisory Committee to:
and if to any Beneficial Interestholder, addressed to its
address appearing on the Register or at such other address
as such Beneficial Interestholder shall have given by written
notice to the other parties. All such notices shall be
deemed delivered three (3) days after the posting thereof in
such mails. 10.4 Severability. Any provision of this
Agreement which is invalid or unenforceable shall be
ineffective to the extent of such invalidity or
unenforceability without affecting the validity or
enforceability of any other provisions hereof.
<PAGE> 14
10.5 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall constitute
an original, but all of which together shall constitute one and
the same instrument.
10.6 Binding Agreement. All covenants and
agreements contained herein shall be binding upon, and inure to
the benefit of, the Trustee and his respective successors and
assigns, any successor trustee provided for in Section Eight,
his respective successors and assigns, and the Beneficial
Interestholders, and their respective successors and assigns.
Any request, notice, direction, consent, waiver, or other
instrument or action by any Beneficial Interestholder shall
bind its successors and assigns.
10.7 No Personal Liability of Beneficial
Interestholders. The Beneficial Interestholders shall not
incur any personal liability through their ownership or
possession of the Beneficial Interests, except for taxes
imposed on the Beneficial Interestholders pursuant to
applicable provisions of federal, state, or local law with
respect to their Beneficial Interests in or distributions from
the Liquidating Trust. Liabilities of the Liquidating Trust
are to be satisfied in all events (including the exhaustion of
the Trust Estate) exclusively from the Trust Estate. If the
Trustee determines that it is appropriate or necessary to
obtain a return of sums distributed to the Beneficial
Interestholders out of the Trust Estate to pay the expenses,
debts or liabilities of the Liquidating Trust
(including, but not limited to, tax liabilities), the
Trustee shall have the right to demand that the
Beneficial Interestholders return to the Trustee sums
distributed to such Beneficial Interestholders out of the
Trust Estate. If the Trustee makes such a demand on the
Beneficial Interestholders, the Beneficial Interestholders
shall return to the Trustee such sums distributed to them out
of the Trust Estate as the Trustee demands.
10.8 Headings. The heading of the various Sections
herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
10.9 Construction. Except where the context
otherwise requires, words importing the masculine gender shall
include the feminine and the neuter, if appropriate; words
importing the singular number shall include the plural number
and vice versa; and words importing persons shall
include partnerships, associations, and corporations. The
words herein, hereof, hereby, hereunder, and words of
similar import, refer to this instrument as a whole and
not to any particular Section or Subsection hereof.
10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF , EXCLUSIVE OF ITS LAWS RELATING TO CONFLICT OF
LAWS.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
<PAGE> 15
DEBTOR:
FRUEHAUF TRAILER CORPORATION,
MARYLAND SHIPBUILDING & DRYDOCK
COMPANY, F.G.R., INC., JACKSONVILLE
SHIPYARDS, INC., FRUEHAUF
INTERNATIONAL, LIMITED, FRUEHAUF
CORPORATION, THE MERCER CO.,
DEUTSCHE-FRUEHAUF HOLDING
CORPORATION, MJ HOLDINGS, INC.,
and E. L. DEVICES, INC.
By:______________________________
Chriss W. Street,
Their Chairman, President and
Chief Executive Officer
TRUSTEE:
_______________________________
Chriss W. Street
<PAGE> 16
EXHIBIT "A"
PROPERTY TO BE TRANSFERRED TO LIQUIDATING TRUST
Fruehauf Trailer Corporation, Maryland Shipbuilding
& Drydock Company, F.G.R., Inc., Jacksonville Shipyards,
Inc., Fruehauf International Limited, Fruehauf Corporation, The
Mercer Co., Deutsche-Fruehauf Holding Corporation, MJ
Holdings, Inc., and E.L. Devices, Inc. transfer to the
Liquidating Trust, on behalf of and for the benefit of the
Beneficial Interestholders, all property, of any type, in which
it has a legal or equitable interest including, but not
limited to, all money, deposit accounts, accounts, general
intangibles, inventory, equipment, fixtures, goods,
instruments, chattel paper, documents, books and records,
customer lists, stock, bonds, certificates of deposits, letters
of credit, rights to refunds, promissory notes, real
property, the Distribution Fund, any interest in the
Foreclosed Assets and causes of action, including causes of
action under Chapter 5 of Title 11 of the United States Code
and excluding the Wabash Securities.
The Indenture Trustee for the Senior Notes, on behalf of
and for the benefit of the Beneficial Interestholders, shall
transfer to the Liquidating Trust all of its rights, title and
interest in the Foreclosed Assets.
<PAGE> 17
EXHIBIT "B"
ACCEPTANCE OF APPOINTMENT
The undersigned,
___________________________________________, having been
appointed to serve as successor Trustee of the Liquidating
Trust created pursuant to that certain Liquidating Trust
Agreement ("Agreement") dated , 199 , by and
between Fruehauf Trailer Corporation, Maryland Shipbuilding
& Drydock Company, F.G.R., Inc., Jacksonville Shipyards,
Inc., Fruehauf International Limited, Fruehauf Corporation, The
Mercer Co., Deutsche-Fruehauf Holding Corporation, MJ
Holdings, Inc., and E.L. Devices, Inc. and Chriss W. Street,
Trustee, hereby accepts such appointment and agrees to serve as
successor Trustee under the Agreement as set out in Section 8.7
thereof.
Executed this ____ day of ___________________, 1998.
Successor Trustee:
By:_________________________
