SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
------------------
HOME HOLDINGS INC.
(Name of applicant)
c/o Risk Enterprise Management Limited
59 Maiden Lane
New York, New York 10038-4548
(Address of principal executive offices)
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SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLES OF CLASSES AMOUNT
[ ]% Senior Notes Due [June] __, 2006 $[ ]
Earn Out Notes, Series I 315,000 Units plus the
number of Units issued for
the Reserve
Approximate date of proposed public offering:
On or as soon as practicable after the Effective Date (as defined in
the Revised Third Amended and Restated Plan of Reorganization of
Home Holdings Inc. (the "Company" or the "Applicant") under Chapter
11 of the Bankruptcy Code, dated June 3, 1998 (the "Plan")).
Arthur D. Wilson
c/o Risk Enterprise; Management Limited
59 Maiden Lane
New York, New York 10038
Telephone No.: (212) 530-7000
(Name and address of agent for service)
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<PAGE>
2
The Applicant hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness until (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment, or (ii) such date as the Securities and Exchange
Commission, acting pursuant to Section 307(c) of the Trust Indenture Act of
1939, as amended (the "Act"), may determine upon the written request of the
applicant.
GENERAL
2. Securities Act Exemption Applicable. State briefly the facts relied upon by
the Applicant as a basis for the claim that registration of the indenture
securities under the Securities Act of 1933 is not required.
The Applicant proposes to issue under the Plan, the Senior Notes and up to
315,000 Units plus the number of Units issued for the Reserve (as defined in the
EONs).
<PAGE>
3
CONTENTS OF APPLICATION FOR QUALIFICATION. This application for
qualification comprises --
(a) Pages numbered 1 to __, consecutively.(10)
(b)(i) The statement of eligibility and qualification of the Senior
Notes Trustee under the Senior Notes Indenture.*
(b)(ii) The statement of eligibility and qualification of the EONs
Trustee under the EONs Indenture.*
(c) The following exhibits in addition to those filed as a part of
the statement of eligibility and qualification of the trustee.
Exhibit T3A.* Restated Certificate of Incorporation of the
Company filed with the Secretary of State of the State
of Delaware on May 28, 1997 under the name Home Holdings
Inc.
Exhibit T3B.* Amended By-Laws of the Company.
Exhibit T3C1. Form of Senior Notes Indenture including exhibits
thereto.
Exhibit T3C2. Form of EONs Indenture including exhibits thereto.
Exhibit T3D. Not Applicable.
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(10) Pursuant to Rule 309(a) of Regulation S-T, requirements as to sequential
numbering shall not apply to this electronic format document.
<PAGE>
4
Exhibit T3E1.* Notice of Chapter 11 Bankruptcy Case, Meeting
of Creditors & Deadlines.
Exhibit T3E2.* Notice of Last Date for Filing of Proofs of
Claim Against Home Holdings Inc. and Procedure
Therefor.
Exhibit T3E3.* Proof of Claim Form.
Exhibit T3E4.* Notice of (a) Hearing on Approval of Disclosure
Statement and (b) Deadlines and Procedures for
Filing Objections to Disclosure Statement.
Exhibit T3E5.* Amended Disclosure Statement with respect to the
Amended Plan of Reorganization, dated as of March 3,
1998.
Exhibit T3E6.* Amended Plan, dated as of March 3, 1998.
Exhibit T3E7.* Home Holdings Inc. Projected Financial
Information.
Exhibit T3E8.* Home Holdings Inc. Liquidation Analysis.
Exhibit T3E9.* Company's Annual Report on Form 10-K for the
year ended December 31, 1996, incorporated
herein by reference (SEC File No. 0-19349).
Exhibit T3E10.* Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, incorporated herein by
reference (SEC File No. 0-19349).
Exhibit T3E11.* Order (A) pursuant to 11 U.S.C. ss.1125 and
Bankruptcy Rule 3017(b), dated March 4, 1998, approving
Debtors' Disclosure Statement respecting the Amended
Plan and (B) approving Solicitation Letter of Official
Committee of Unsecured Creditors.
Exhibit T3E12.* Notice of (a) Hearing on Confirmation of
Amended Plan and (b) Deadlines and Procedures
for Filing Objections to Confirmation of
Amended Plan.
Exhibit T3E13.* Recommendation Letter from the Official
Committee of Unsecured Creditors.
Exhibit T3E14.* Recommendation Letter from the Unofficial
Committee of Holders of Home Holdings Inc. 7% Senior
Notes due in 1998, 7 7/8% Senior Sinking Fund Notes due
in 2003 and 7 7/8% Senior Notes due in 2003.
<PAGE>
5
Exhibit T3E15.* Individual Ballot for Class 4-A (for accepting or
rejecting the Amended Plan).
Exhibit T3E16.* Individual Ballot for Class 4-B (for accepting or
rejecting the Amended Plan).
Exhibit T3E17.* Individual Ballot for Class 4-C (for accepting
or rejecting the Amended Plan)
Exhibit T3E18.* Individual Ballot for Class 4-D (for accepting
or rejecting the Amended Plan)
Exhibit T3E19.* Individual Ballot for Class 4-E (for accepting
or rejecting the Amended Plan)
Exhibit T3E20.* Individual Ballot for Class 5 (for accepting or
rejecting the Amended Plan)
Exhibit T3E21.* Individual Ballot for Class 6 (for accepting or
rejecting the Amended Plan)
Exhibit T3E22.* Second Amended Plan dated as of April 29, 1998
Exhibit T3E23.* Notice of Motion Regarding Modification of Plan
of Reorganization under 11 U.S.C. ss.1127 and
Fed. R. Bankr. P. 3019, dated April 29, 1998.
Exhibit T3E24.* Motion under 11 U.S.C. ss.1127 and Fed. R.
Bankr. P. 3019 for Determination that
Modifications of Plan Shall Be Deemed Accepted
and that Disclosure Statement Contains Adequate
Information.
Exhibit T3E25. Findings of Fact and Conclusions of Law Relating to, and
Order Confirming, the Revised Third Amended and Restated
Chapter 11 Plan, together with Notice of Entry of Order
Confirming Revised Third Amended and Restated Plan.
Exhibit T3E26. Post Confirmation Order and Notice.
Exhibit T3F1.* See Cross Reference Sheet showing the location in
the Senior Notes Indenture of the provisions inserted
therein pursuant to Section 310 through 318(a),
inclusive, of the Trust Indenture Act of 1939 (included
in Exhibit T3C1 hereof).
Exhibit T3F2.* See Cross Reference Sheet showing the location in
the EONs Indenture of the provisions inserted therein
pursuant to Section 310 through 318(a), inclusive, of
the Trust Indenture Act of 1939 (included in Exhibit
T3C2 hereof).
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* Previously filed.
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6
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the applicant, Home Holdings Inc., a corporation organized and existing
under the laws of the State of Delaware, has duly caused Amendment No. 1 to this
application to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
New York, and State of New York, on the 2nd day of July, 1998.
(SEAL) HOME HOLDINGS INC.
By /s/ Arthur D. Wilson
-------------------------------------
Name: Arthur D. Wilson
Title: Treasurer (Principal Financial
and Accounting Officer
through the Services Agreement
with Risk Enterprise
Management Limited)
Attest /s/ Roger M. Moak
-----------------------------------
Name: Roger M. Moak
Title: Executive Vice President,
General Counsel & Corporate
Secretary of Risk
Enterprise Management
Limited
HOME HOLDINGS INC.,
ISSUER
AND
WILMINGTON TRUST COMPANY,
TRUSTEE
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INDENTURE
DATED AS OF JULY __, 1998
----------------
$[ ]
[ ]% SENIOR NOTES DUE July __, 2006
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Act Section Indenture Section
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310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.8, 7.10, 10.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 10.3
(c) 10.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6, 10.2
(d) 7.6
314(a) 3.2, 10.2
(b) N.A.
(c)(1) 10.4
(c)(2) 10.4
(c)(3) N.A.
(d) N.A.
(e) 10.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5, 10.2
(c) 7.1(a)
(d) 7.1(c)
(e) 6.11
316(a)(last sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
(b) 6.7
317(a)(1) 6.8
(a)(2) 6.9
(b) 2.4
318(a) 10.1
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
"N.A." means not applicable.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INCORPORATION
BY REFERENCE................................................. 2
Section 1.1 Definitions.................................................. 2
Section 1.2 Other Definitions............................................ 6
Section 1.3 Incorporation by Reference of Trust Indenture Act............ 6
Section 1.4 Rules of Construction........................................ 7
ARTICLE II THE NOTES.................................................... 7
Section 2.1 Form and Dating.............................................. 7
Section 2.2 Execution and Authentication; Payments-in-Kind............... 7
Section 2.3 Registrar and Paying Agent................................... 9
Section 2.4 Paying Agent to Hold Money in Trust.......................... 9
Section 2.5 Noteholder Lists............................................. 9
Section 2.6 Transfer and Exchange........................................10
Section 2.7 Replacement Notes............................................10
Section 2.8 Outstanding Notes............................................10
Section 2.9 Treasury Notes...............................................11
Section 2.10 Temporary Notes..............................................11
Section 2.11 Cancellation.................................................11
Section 2.12 Defaulted Interest...........................................11
Section 2.13 CUSIP Numbers................................................12
ARTICLE III COVENANTS................................................... 12
Section 3.1 Payment of Notes............................................ 12
Section 3.2 Commission Reports; Reports to Noteholders.................. 12
Section 3.3 Compliance Certificate...................................... 13
Section 3.4 Notice of Default........................................... 13
Section 3.5 Corporate Existence......................................... 13
Section 3.6 Taxes and Other Claims...................................... 14
Section 3.7 Change of Control........................................... 14
Section 3.8 Limitation on Liens......................................... 15
Section 3.9 Limitation on Disposition of Stock of Significant
Subsidiaries................................................ 15
Section 3.10 Limitation on Transactions with Affiliates.................. 16
Section 3.11 Limitation on Dividends, Redemptions and Loans.............. 17
ARTICLE IV SUCCESSORS.................................................. 17
Section 4.1 When Company May Merge, etc................................. 17
Section 4.2 Successor Corporation Substituted........................... 18
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Page
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ARTICLE V REDEMPTION................................................... 18
Section 5.1 Optional Redemption by the Company........................... 18
Section 5.2 Notice to Trustees........................................... 19
Section 5.3 Selection of Notes to be Redeemed............................ 19
Section 5.4 Notice of Redemption......................................... 19
Section 5.5 Effect of Notice of Redemption............................... 20
Section 5.6 Deposit of Redemption Price.................................. 20
Section 5.7 Notes Redeemed in Part....................................... 20
ARTICLE VI DEFAULTS AND REMEDIES........................................ 20
Section 6.1 Events of Default............................................ 20
Section 6.2 Acceleration................................................. 22
Section 6.3 Other Remedies............................................... 22
Section 6.4 Waiver of Past Defaults...................................... 23
Section 6.5 Control by Majority.......................................... 23
Section 6.6 Limitation on Suits.......................................... 23
Section 6.7 Rights of Holders to Receive Payment......................... 23
Section 6.8 Collection Suit by Trustee................................... 24
Section 6.9 Trustee May File Proofs of Claim............................. 24
Section 6.10 Priorities................................................... 24
Section 6.11 Undertaking for Costs........................................ 25
Section 6.12 Waiver of Stay or Extension Laws............................. 25
ARTICLE VII TRUSTEE...................................................... 25
Section 7.1 Duties of Trustee............................................ 25
Section 7.2 Rights of Trustee............................................ 26
Section 7.3 Individual Rights of Trustee................................. 27
Section 7.4 Trustee's Disclaimer......................................... 27
Section 7.5 Notice of Defaults........................................... 27
Section 7.6 Reports by Trustee to Holders................................ 27
Section 7.7 Compensation and Indemnity................................... 27
Section 7.8 Replacement of Trustee....................................... 28
Section 7.9 Successor Trustee by Merger, etc............................. 29
Section 7.10 Eligibility; Disqualification................................ 29
Section 7.11 Preferential Collection of Claims Against Company............ 29
ARTICLE VIII SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE................................................... 30
Section 8.1 Discharge of Liability on the Notes;
Legal and Covenant Defeasance................................ 30
Section 8.2 Satisfaction, Discharge of the Indenture and
Termination of the Company's Obligations upon
Cancellation of the Notes.................................... 31
Section 8.3 Survival of Certain Obligations.............................. 32
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Page
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Section 8.4 Acknowledgment of Discharge by Trustee...................... 32
Section 8.5 Application of Trust Money.................................. 32
Section 8.6 Repayment to Company........................................ 32
Section 8.7 Reinstatement............................................... 32
ARTICLE IX AMENDMENTS AND WAIVERS...................................... 33
Section 9.1 Without Consent of Holders.................................. 33
Section 9.2 With Consent of Holders..................................... 33
Section 9.3 Compliance with Trust Indenture Act......................... 34
Section 9.4 Revocation and Effect of Consents........................... 34
Section 9.5 Notation on or Exchange of Notes............................ 35
Section 9.6 Trustee To Sign Amendments, Etc............................. 35
ARTICLE X MISCELLANEOUS............................................... 36
Section 10.1 Trust Indenture Act Controls................................ 36
Section 10.2 Notices..................................................... 36
Section 10.3 Communications by Holders with Other Holders................ 37
Section 10.4 Certificate and Opinion as to Conditions Precedent.......... 37
Section 10.5 Statements Required in Certificate or Opinion............... 37
Section 10.6 Rules by Trustee and Agents................................. 38
Section 10.7 Legal Holidays.............................................. 38
Section 10.8 No Recourse Against Others.................................. 38
Section 10.9 Duplicate Originals......................................... 38
Section 10.10 Governing Law............................................... 38
Section 10.11 No Adverse Interpretation of Other Agreements............... 39
Section 10.12 Successors.................................................. 39
Section 10.13 Severability................................................ 40
iii
<PAGE>
INDENTURE dated as of July __, 1998 between HOME HOLDINGS INC., a
Delaware corporation (the "Company"), and WILMINGTON TRUST COMPANY, a Delaware
bank and trust company (the "Trustee").
WHEREAS, the Notes (as defined below) have the benefit of the
security interest granted under the Assignment and Security Agreement dated July
___, 1998, made by the Company in favor of Wilmington Trust FSB, a federal
savings bank, as collateral agent for holders of the Notes.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders (as defined below) of the
Company's [ ]% Senior Notes due July __, 2006 (the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions. As used in this Indenture, the following
terms shall have the following meanings:
"Affiliate" means, when used with reference to any Person, any
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, that Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct or cause the direction of the management or policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling"
and "controlled" have meanings correlative of the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee thereof.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of corporate stock or any and
all equivalent ownership interests in a Person (other than a corporation).
2
<PAGE>
"Change of Control" means an event or series of events pursuant to
which (i) any person or group (as such terms are defined for purposes of
Section 13 of the Exchange Act), other than Zurich, or any of its
Affiliates, becomes the beneficial owner (as defined in Rule 13d-3 of the
Exchange Act) of 50% or more of the total voting power (on a fully diluted
basis) of the Voting Stock (as defined below) of the Company, (ii) the
Company consolidates or merges with another Person or conveys, transfers
or leases all or substantially all of its assets to another person, or any
Person consolidates or merges with the Company, in any such event pursuant
to a transaction in which the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other
than any such transactions (A) with ZRNA or an Affiliate of ZRNA or (B) in
which the holders of a majority (on a fully diluted basis) of the Voting
Stock of the Company immediately prior to such transaction own, directly
or indirectly, not less than a majority (on a fully diluted basis) of the
Voting Stock of the surviving corporation immediately after such
transaction or (iii) the stockholders of the Company approve any plan of
liquidation or dissolution of the Company. For purposes of the foregoing
definition, "Voting Stock" of any Person means the Capital Stock of such
person that ordinarily has voting power for the election of directors (or
Persons performing similar functions), whether at all times or only so
long as no senior class of securities has such voting power by reason of
any contingency.
"Commission" means the Securities and Exchange Commission.
"Company" means Home Holdings Inc. until a successor replaces it and
thereafter means the successor.
"Default" means any event which is, or after notice or passage of
time would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" or "Noteholder" means a Person in whose name a Note is
registered.
"Indebtedness" means, with respect to any Person, (i) Indebtedness
for Borrowed Money of such Person, any other indebtedness of such Person,
including any indebtedness representing the balance deferred and unpaid of
the purchase price of any property or interest therein, and any guarantee,
endorsement or other contingent obligation of such Person in respect of
any indebtedness of another Person, (ii) obligations of such Person under
interest rate, commodity or currency swaps, caps, collars, options and
similar arrangements, (iii) obligations of such Person for the
reimbursement of any
3
<PAGE>
obligor on any letter of credit, banker's acceptance or similar credit
transaction and (iv) any amendments, modifications, refundings, renewals
or extensions of any indebtedness or other obligations described in the
foregoing clauses (i) through (iii).
"Indebtedness for Borrowed Money" means, with respect to any Person,
(i) the principal of and premium, if any, and interest, if any, on
indebtedness for borrowed money of such Person which is evidenced by
bonds, notes, debentures or similar instruments, and any guarantee by such
Person or letter of credit for the account of such Person in respect of
indebtedness for borrowed money of another Person which is evidenced by
bonds, notes, debentures or similar instruments, whether such
indebtedness, guarantee or letter of credit is outstanding on the date of
this Indenture or is thereafter created, assumed or incurred, (ii) lease
obligations of such Person which such Person capitalizes in accordance
with generally accepted accounting principles as in effect from time to
time and (iii) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or other obligations described in the
foregoing clauses (i) and (ii); provided that Indebtedness for Borrowed
Money shall not include any other obligation of such Person which is not
described in the foregoing clause (i), (ii) or (iii) (including, without
limitation, any sale or pledge of insurance receivables), whether or not
secured by any Lien on any property of such Person.
"Indenture" means this Indenture, as amended, supplemented or
otherwise modified from time to time.
"Notes" means the Notes described above and issued under this
Indenture, including any Additional Notes.
"Noteholder" or "Holder" means a Person in whose name a Note is
registered.
"Officer" means the Chairman of the Board of Directors, any
President, any Vice President, the Chief Financial Officer, the Treasurer,
the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer, Assistant Secretary or
Assistant Controller of the Company or of any other obligor upon the
Notes, as the case may be. One of the Officers signing an Officers'
Certificate pursuant to Section 3.3 shall be the Principal Executive
Officer, Principal Financial Officer or Principal Accounting Officer of
the Company.
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"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of
or counsel to the Company, any other obligor upon the Notes or the
Trustee.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal" of a debt security (including the Notes) means the
principal of the security.
"Reorganization Plan" means the Revised Third Amended and Restated
Plan of Reorganization of Home Holdings Inc. dated June 3, 1998, under
chapter 11 of title 11 of the United States Code, 11 U.S.C. ss. 101 et
seq., Case No. 98 B 40319 (JHG).
"Senior Indebtedness" means the Notes and any other Indebtedness
that ranks pari passu as to payment of principal or interest with the
Notes.
"Significant Subsidiary" means each Subsidiary which is an insurance
company permitted to write insurance in at least one state and with a
statutory surplus equal to or greater than $50 million.
"Subsidiary" of a Person means (i) a corporation at least a majority
of whose Capital Stock with voting power, under ordinary circumstances, to
elect directors is at the time, directly or indirectly, owned or
controlled, directly or indirectly, by such Person or (ii) any other
Person (other than a corporation) in which such Person, directly or
indirectly, at the date of determination thereof has at least a majority
ownership interest.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture
except as provided in Section 9.3 hereof.
"Trustee" means Wilmington Trust Company until a successor replaces
it and thereafter means the successor.
"Trust Officer" means any officer or assistant officer of the
corporate trust administration department of the Trustee or otherwise
assigned by the Trustee to administer its corporate trust matters.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment
of public and private debts and, except for purposes of Article VIII
hereof,
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includes a check of the Company or a bank check payable in U.S. Legal
Tender.
"ZRNA" means Zurich Reinsurance North America, an insurance company
organized under the laws of Connecticut.
"Zurich" means Zurich Insurance Company, a corporation organized and
existing under the laws of Switzerland.
Section 1.2 Other Definitions. Terms not otherwise defined herein
shall have the meanings assigned to them in the Notes. As used in this
Indenture, the following terms shall have the meanings assigned in the Sections
referred to opposite such terms below:
Term Defined in Section
---- ------------------
"Additional Notes" .........................................................2.2
"Bankruptcy Law"............................................................6.1
"Change of Control Offer"...................................................3.7
"Covenant Defeasance".......................................................8.1
"Custodian".................................................................6.1
"Event of Default"..........................................................6.1
"Interest Payment Date" .....................................Note (paragraph 1)
"Lien"......................................................................3.8
"Legal Defeasance"..........................................................8.1
"Legal Holiday"............................................................10.7
"Paying Agent"..............................................................2.3
"Registrar".................................................................2.3
"Regular Record Date" .......................................Note (paragraph 2)
"U.S. Government Obligations"...............................................8.1
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this Indenture.
The following terms used in this Indenture and defined in the Trust
Indenture Act have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
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"obligor" on the indenture securities means the Company and any
other obligor upon the Notes.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act by reference to another
statute or defined by Commission rule under the Trust Indenture Act have the
meanings assigned to them.
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles in
effect as of the date any determination hereunder is required;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE II
THE NOTES
Section 2.1 Form and Dating. The Notes shall be substantially in the
form of Exhibit A, which is part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication and shall be
printed, lithographed or engraved on steel-engraved borders or may be produced
in any other manner as determined by the Company.
Section 2.2 Execution and Authentication; Payments-in-Kind. (a) Two
Officers shall sign the Notes for the Company by manual or facsimile signature.
The Company's seal shall be reproduced on the Notes.
(b) If an Officer whose signature is on a Note no longer holds that
office at the time the Note is authenticated, the Note shall be valid
nevertheless.
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<PAGE>
(c) A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
(d) The Trustee shall authenticate Notes for original issue up to
the aggregate principal amount of not more than $___ million upon a written
order of the Company signed by two Officers. The aggregate principal amount of
Notes outstanding at any time may not exceed that amount except as provided in
Sections 2.2(e) and 2.7.
(e) (i) The Company may, at its option and in its sole discretion,
in lieu of a cash payment of any or all of the interest due on the Notes on any
Interest Payment Date (as defined in the Notes) up to and including July __,
2001, by giving notice to the Noteholders and the Trustee of such election not
less than 30 nor more than 60 days prior to a Regular Record Date of an interest
payment (as defined in the Notes), require the Trustee or an authenticating
agent (upon written order of the Company signed by two Officers, given not less
than 30 nor more than 60 days prior to the Interest Payment Date) on each such
Interest Payment Date as to which the Company has elected not to make interest
payments in cash, in full or in part, to authenticate for original issue and
deliver additional Notes ("Additional Notes"), in an aggregate principal amount
equal to the amount of cash interest not paid on each such Interest Payment
Date. Each issuance of Additional Notes in lieu of cash payment of interest on
the Notes shall be made pro rata with respect to the outstanding Notes,
provided, that Additional Notes shall be issuable only in denominations of
$1,000 or integral multiples thereof and the Company shall pay in cash to each
Noteholder the difference (if any) between the amount of interest payable to
such Noteholder on such interest payment date and the face value of Additional
Notes issued to such Noteholder by the Company pursuant to this Section
2.2(e)(i). Additional Notes shall bear interest from the interest payment date
with respect to which they are issued.
(ii) If the Company fails to give the notice required by Section
2.2(e)(i) to the Noteholders, such notice requirement with respect to the
Noteholders shall be deemed satisfied by the issuance and delivery to the
Noteholders of Additional Notes in lieu of cash on the relevant Interest Payment
Date. The Trustee shall authenticate and deliver such Additional Notes even if
the Company has failed to give the notice required by Section 2.2(e)(i) to the
Noteholders upon the Trustee's receipt of such notice. Failure to pay interest
in such manner on the Interest Payment Date following the failure to give the
notice required by Section 2.2(e)(i) to the Noteholders, or failure to give such
notice to the Trustee, shall obligate the Company to pay immediately the
interest due in cash, subject to the provisions of Section 6.1(a).
(f) The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes
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whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
(g) The Notes shall be issuable only in registered form without
coupons and only in denominations of $1,000 and integral multiples thereof.
Section 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar"), subject to such reasonable regulation as the
Company or the Registrar may prescribe, and an office or agency where Notes may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the Trust Indenture Act and the relevant provisions of
this Indenture and shall not otherwise be inconsistent with this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee of the name and address of any Agent
not a party to this Indenture. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Notes.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money and/or Additional Notes held by the Paying Agent for the payment of
principal of or interest on the Notes, and will notify the Trustee of any
default by the Company or any other obligor upon the Notes in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money and/or Additional Notes held by it to the Trustee. The
Company at any time may require a Paying Agent to pay all money and/or
Additional Notes held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company) shall have no further liability for
the money and/or Additional Notes. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold as a separate trust fund all money held by it
as Paying Agent.
Section 2.5 Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders. If the Trustee is not the Registrar,
the
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Company or any other obligor upon the Notes shall furnish to the Trustee on or
before each interest payment date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
Section 2.6 Transfer and Exchange. When Notes are presented to the
Registrar with a request to register a transfer or to exchange them for an equal
principal amount of Notes of other denominations, the Registrar shall register
the transfer or make the exchange if its or the Company's reasonable
requirements for such transactions are met. To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Notes at the Registrar's request. Any transfer or exchange shall be without
charge, except that the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto,
other than exchanges pursuant to Section 2.10 or 9.5.
Section 2.7 Replacement Notes. If the Holder of a Note claims that
the Note has been lost, destroyed or wrongfully taken, then, in the absence of
notice to the Company or the Trustee that such Note has been acquired by a bona
fide purchaser, the Company shall issue and the Trustee shall authenticate a
replacement Note if the requirements of the Trustee and the Company are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond, sufficient in the judgment of both the Company and the Trustee, to protect
the Company, the Trustee, any Paying Agent or any authenticating agent from any
loss which any of them may suffer if a Note is replaced. The Company may charge
for its reasonable expenses in replacing a Note lost, destroyed or wrongfully
taken (including the fees and expenses of the Trustee).
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
Section 2.8 Outstanding Notes. The Notes outstanding at any time are
all Notes authenticated and delivered by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. Additional Notes shall be deemed outstanding as of
the date with respect to which they are issued in lieu of cash interest.
Notes for whose payment or redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent in trust for
the Holders of such Notes shall be deemed not to be outstanding; provided, that,
if such Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor has been made in a manner
satisfactory to the Trustee.
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If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7.
Subject to Section 2.9, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.
Section 2.9 Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company, any other obligor upon the Notes or an
Affiliate of the Company or such obligor shall not be disregarded (including for
purposes of determining the outstanding principal amount of Notes); provided,
however, that for the purposes of the last sentence of subsection 316(a) of the
Trust Indenture Act in determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, any other obligor upon the Notes or an Affiliate of the Company
or such obligor shall be disregarded (including for purposes of determining the
outstanding principal amount of Notes); provided further, that for the purposes
of determining whether the Trustee shall be protected in relying on any such
latter direction, waiver or consent, only Notes which a Trust Officer of the
Trustee knows are so owned shall be so disregarded.
Section 2.10 Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company considers appropriate for temporary
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, such temporary Notes shall be entitled to the same rights, benefits
and privileges as the definitive Notes.
Section 2.11 Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee shall cancel and destroy all Notes surrendered for
transfer, exchange, payment, redemption or cancellation. The Trustee shall
deliver to the Company a certificate of destruction with respect thereto. The
Company may not issue new Notes to replace Notes that it has paid, purchased (on
the open market or otherwise) or otherwise acquired or delivered to the Trustee
for cancellation.
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Section 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest, plus, to
the extent lawful, any interest (which may be payable in Additional Notes for
the period permitted by Section 2.2(e)(i) hereof and Paragraph 1 of the Note)
payable on the defaulted interest, to the Persons who are Noteholders on a
subsequent special record date. The Company shall fix the special record date
and payment date in a manner reasonably satisfactory to the Trustee. At least 15
days before the special record date, the Company shall mail to Noteholders a
notice that states the special record date, payment date and amount of defaulted
interest to be paid. Notwithstanding the preceding two sentences, the Company
may pay defaulted interest in any other lawful manner.
Section 2.13 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers.
ARTICLE III
COVENANTS
Section 3.1 Payment of Notes. The Company shall pay the principal of
and interest on the Notes on the dates and in the manner provided in the Notes
and in this Indenture. Principal and interest shall be considered paid on the
date due if the Paying Agent (other than the Company or an Affiliate of the
Company) holds on that date money in immediately available funds and/or
Additional Notes sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the rate
borne by the Notes and the Company shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
Section 3.2 Commission Reports; Reports to Noteholders. (a) The
Company shall file with the Trustee, within 15 days after it files them with the
Commission, copies of the annual reports and the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 (other than Form
11-K) or 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of Section 314(a) of the Trust Indenture Act. If the Company is not
subject to the requirements of Section
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13 or 15(d) of the Exchange Act, it shall file with the Trustee, within 15 days
after it would have been required to file with the Commission, financial
statements, including any notes thereto (and with respect to annual reports, an
auditors' report by a nationally recognized firm of independent certified public
accountants) comparable to that which the Company would have been required to
include in such annual reports, information, documents or other reports if it
were subject to the requirements of Section 13 or 15(d) of the Exchange Act.
(b) So long as the Notes remain outstanding, the Company shall
cause its annual reports to stockholders and any quarterly or other financial
reports furnished by it to stockholders to be mailed to the Noteholders (no
later than ten days after the date such materials are mailed to the Company's
stockholders) at their addresses appearing in the register of Notes maintained
by the Registrar. If the Company is not required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, it shall cause its
financial statements referred to in subsection 3.2(a) above, including any notes
thereto (and with respect to annual reports, an auditors' report by a nationally
recognized firm of independent certified public accountants), to be so mailed to
the Holders within 120 days after the end of each of the Company's fiscal years
and within 60 days after the end of each of its first three fiscal quarters.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such reports
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.3 Compliance Certificate. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate complying with Section 314(a)(4) of the Trust Indenture
Act and stating whether or not the signers know of any Default that occurred
during such fiscal year. If they do, the Officers' Certificate shall describe
the Default and its status. Such compliance shall be determined without regard
to periods of grace or notice requirements.
Section 3.4 Notice of Default. The Company will deliver to the
Trustee an Officers' Certificate promptly upon becoming aware of any Event of
Default or a Default which could result in an Event of Default under subsection
6.1(d) and which Officers' Certificate will specify such Default or Event of
Default.
Section 3.5 Corporate Existence. Subject to Article IV, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
its Significant Subsidiaries in accordance with the respective organizational
documents of
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each such Subsidiary and the rights (charter and statutory) and corporate
franchises of the Company and each such Subsidiary; provided, however, that the
Company shall not be required to preserve, with respect to itself, any right or
corporate franchise; and with respect to such Significant Subsidiaries, any such
existence, right or corporate franchise if the Board of Directors, or the board
of directors of the Significant Subsidiary concerned, shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or such Subsidiary and that the loss thereof is not disadvantageous
in any material respect to the Holders.
Section 3.6 Taxes and Other Claims. The Company and each Significant
Subsidiary shall file all federal, state and local tax returns required to be
filed by it and shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all taxes, assessments and governmental
charges which are material to the Company and its Subsidiaries, on a
consolidated basis (including withholding taxes and any penalties, interest and
additions to taxes) levied or imposed upon the Company or its Subsidiaries or
upon the income, profits or property of the Company or any such Significant
Subsidiary, and (ii) all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which are material to the Company
and its Subsidiaries, on a consolidated basis and, if unpaid, might by law
become a lien upon the property of the Company or any such Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment or governmental charge or claim
whose amount, applicability or validity is being contested in good faith and for
which disputed amounts adequate reserves have been made in the opinion of the
Company's management or as required by generally accepted accounting principles.
Section 3.7 Change of Control. Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase each Holder's outstanding Notes at a purchase price in cash equal to
101% of the principal amount of such Holder's Notes, plus accrued and unpaid
interest, if any, to the date of purchase, in accordance with the following
terms.
Within 30 days following any Change of Control, the Company will
mail or cause the mailing of a notice to each Holder of a Note, at the address
of such Holder as it appears on the Note register, stating (i) that a Change of
Control has occurred and that such Holder has the right to require the Company
to repurchase all of such Holder's Notes at the applicable purchase price in
cash as provided above, plus accrued and unpaid interest, if any, to the date of
purchase, (ii) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect to pro forma
income, cash flow and capitalization after giving effect to such Change of
Control), (iii) the purchase date (which shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed) and (iv) the
instructions determined by the Company, consistent with the foregoing, that a
Holder of Notes must follow in order to have its Notes repurchased.
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Notwithstanding the foregoing, in the event that the Company is
required to make a Change of Control Offer, the Company will comply with the
provisions of Section 14(e), Rule 14e-1 and any other tender offer rules under
the Exchange Act which may then be applicable in connection with any Change of
Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 3.7, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations hereunder by virtue thereof.
Section 3.8 Limitation on Liens. The Company shall not, and shall
not permit any of its Significant Subsidiaries to, incur, issue, assume,
guarantee or permit to exist any Indebtedness for Borrowed Money secured by any
mortgage, pledge, lien or other encumbrance of any nature (collectively,
"Liens") on any property or assets of the Company or any of its Significant
Subsidiaries, or any shares of Capital Stock of any of its Significant
Subsidiaries, without effectively providing that the Notes (together with, if
the Company shall so determine, any other Senior Indebtedness) shall be secured
equally and ratably with such Indebtedness for Borrowed Money; provided,
however, that the foregoing restrictions shall not apply to (i) Liens existing
on the date of this Indenture; (ii) Liens existing on property or assets of, or
on any shares of Capital Stock of, any Person at the time such Person becomes a
Significant Subsidiary or consolidates or merges with the Company or any of its
Significant Subsidiaries; (iii) Liens upon real or personal property of the
Company or any of its Significant Subsidiaries, each of which Liens either (a)
existed on such property before the time of its acquisition or (b) was created
solely for the purpose of securing Indebtedness for Borrowed Money representing,
or incurred to finance, the cost of such property (provided that (x) no such
Lien shall extend to or cover any property of the Company or any Significant
Subsidiary other than the property acquired (and any fixtures or other
improvements thereafter made to such property) and (y) the principal amount (or
the aggregate amount which in conformity with generally accepted accounting
principles is required to be reported as a liability on the balance sheet of the
Company or any of its Significant Subsidiaries in respect of a capital lease of
such property) of such Indebtedness for Borrowed Money secured by such Lien
shall at no time exceed 80% of the fair market value of such property at the
time it was acquired); (iv) Liens securing Indebtedness for Borrowed Money of
the Company owed to any of its Subsidiaries; and (v) any extension, renewal or
replacement, as a whole or in part, of any Lien referred to in the foregoing
clauses (i) through (iv), provided, however, that (a) such extension, renewal or
replacement Lien is limited to all or a part of the same property or shares of
Capital Stock that secured the Lien extended, renewed or replaced and (b) the
Indebtedness for Borrowed Money secured by such Lien at such time is not
increased (except as otherwise permitted pursuant to the foregoing clauses (i)
through (iv)). For purpose of determining compliance with this Section 3.8, in
the event that an item of Indebtedness for Borrowed Money meets the criteria of
more than one of the types of Indebtedness for Borrowed Money described in
clauses (i) through (v) of this Section 3.8, the Company, in its sole
discretion, shall classify such item of Indebtedness for Borrowed
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Money and only be required to include the amount and type of such Indebtedness
for Borrowed Money under one of said clauses.
Section 3.9 Limitation on Disposition of Stock of Significant
Subsidiaries. Except as provided in Section 3.8, the Company shall not, and
shall not permit any Significant Subsidiary to, sell, transfer or otherwise
dispose of any shares of Capital Stock of any Significant Subsidiary unless such
disposition is effected for fair value as determined by the Board of Directors
of the Company acting in good faith and the Company makes an offer to purchase
Notes outstanding at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase, with
the proceeds of such disposition; provided that the Company or any Subsidiary
may sell, transfer or otherwise dispose of shares of Capital Stock of any
Subsidiary to the Company or a direct or indirect wholly owned Subsidiary of the
Company.
Within 30 days following any disposition of shares of Capital Stock
of any Significant Subsidiary, the Company will mail or cause the mailing of a
notice to each Holder of a Note, at the address of such Holder as it appears on
the Note register, stating (i) that such a disposition has occurred and that
such Holder has the right to require the Company to repurchase with the proceeds
of such disposition such Holder's Notes, pro rata with all Notes tendered by
other Holders of Notes, at the applicable purchase price in cash as provided
above, plus accrued and unpaid interest, if any, to the date of purchase, (ii)
the circumstances and relevant facts regarding such disposition (including, but
not limited to, information with respect to pro forma income, cash flow and
capitalization after giving effect to such disposition), (iii) the purchase date
(which shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed) and (iv) the instructions determined by the Company,
consistent with this Indenture, that such Holder must follow in order to have
its Notes repurchased.
The Company will comply with the provisions of Section 14(e), Rule
14e-1 and any other tender offer rules under the Exchange Act which may then be
applicable in connection with any offer by the Company to purchase Notes at the
option of the Holders thereof as described above. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 3.9, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
hereunder by virtue thereof.
Section 3.10 Limitation on Transactions with Affiliates. The Company
shall not, and shall not permit any of its Significant Subsidiaries to, enter
into any transaction or series of related transactions in an aggregate amount
exceeding $25 million with (i) any Affiliate of the Company or any of its
Significant Subsidiaries (other than the Company and its Subsidiaries whose
Voting Stock is wholly owned, directly or indirectly by the Company) or (ii) any
Person (or any Affiliate of such Person) holding 10% or more of any class of
Capital Stock of the
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Company or any of its Significant Subsidiaries (other than the Company and its
wholly owned Subsidiaries) except in each case on terms, determined by the Board
of Directors of the Company acting in good faith, that are either (x) equal and
ratable among all holders of the Company's equity securities or (y) no less
favorable to the Company or the relevant Significant Subsidiary than would be
obtainable at the time for a comparable transaction on an arm's-length basis
from an unrelated third party; provided that the foregoing restriction shall not
apply to the transactions contemplated by the Reorganization Plan.
Section 3.11 Limitation on Dividends, Redemptions and Loans. The
Company shall not, directly or indirectly: (i) declare or pay any dividends, in
cash or in kind, on account of any shares of any class of capital stock of the
Company now or hereafter outstanding beneficially owned by Zurich or its
Affiliates, its successors, assigns or transferees, or set aside or otherwise
deposit or invest any sums for such purpose, or redeem, retire, defease,
purchase or otherwise acquire any such shares (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration other than common
stock or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares so owned or
agree to do any of the foregoing, or (ii) make any loans or other forms of
credit accommodation to Zurich or its Affiliates, its successors, assigns or
transferees.
ARTICLE IV
SUCCESSORS
Section 4.1 When Company May Merge, etc. The Company shall not
consolidate or merge with any other Person or transfer (by lease, assignment,
sale or otherwise) all or substantially all of its assets, in a single
transaction or through a series of related transactions, to another Person or
group of affiliated Persons unless (i) the Company is the surviving or
continuing Person or, subject to Section 3.9, the Person (if other than the
Company) formed by such consolidation or merger or to which the assets of the
Company are transferred is a Person organized and existing under the laws of the
United States of America or any state thereof or the District of Columbia and
expressly assumes, by an indenture supplemental to this Indenture, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and this Indenture and (ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
or be continuing; provided that the transactions contemplated by the
Reorganization Plan shall not constitute a consolidation or a merger which is
subject to this Section 4.1. The Company shall deliver to the Trustee prior to
the consummation of any consolidation, merger or transfer of assets involving
the Company, an Officers' Certificate to the foregoing effect and an Opinion of
Counsel stating that the proposed transactions and such supplemental indenture
comply with this Indenture.
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In addition, the Company will not permit any Significant Subsidiary
to consolidate or merge with, or transfer all or substantially all of its assets
in a single transaction or through a series of related transactions to, another
Person or group of affiliated Persons unless such transaction is effected for
fair value as determined by the Board of Directors of the Company acting in good
faith and the Company makes an offer to purchase the Notes outstanding at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, with the proceeds of such
transaction; provided that any Subsidiary may consolidate or merge with or
transfer all or substantially all of its assets to the Company or a direct or
indirect wholly owned Subsidiary of the Company.
Within 30 days following any consolidation, merger or transfer of
assets involving a Significant Subsidiary, the Company will mail or cause the
mailing of a notice to each Holder of a Note, at the address of such Holder as
it appears on the Note register, stating (i) that such a transaction has
occurred and that such Holder has the right to require the Company to repurchase
with the proceeds of such transaction such Holder's Notes, pro rata with all
Notes tendered by other Holders of Notes, at the applicable purchase price in
cash as provided above, plus accrued and unpaid interest, if any, to the date of
purchase, (ii) the circumstances and relevant facts regarding such transaction
(including, but not limited to, information with respect to pro forma income,
cash flow and capitalization after giving effect to such transaction), (iii) the
purchase date (which shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed) and (iv) the instructions determined by the
Company, consistent with this Indenture, that such Holder must follow in order
to have its Notes repurchased.
The Company will comply with the provisions of Section 14(e), Rule
14e-1 and any other tender offer rules under the Exchange Act which may then be
applicable in connection with any offer by the Company to purchase Notes at the
option of the Holders thereof as described above. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.1, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
hereunder by virtue thereof.
Section 4.2 Successor Corporation Substituted. Upon any
consolidation, merger or transfer of assets involving the Company in accordance
with Section 4.1, any successor Person formed by such consolidation or merger or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as an original party
herein. When a successor Person assumes all of the obligations of the Company
hereunder and under the Notes, the Company shall be released from such
obligations.
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ARTICLE V
REDEMPTION
Section 5.1 Optional Redemption by the Company. If either (i) the
aggregate principal amount of Notes registered to Persons who are not Affiliates
of the Company is less than $___ million(1) or (ii) the Company has a
Significant Subsidiary, then the Company may redeem the Notes, in whole or in
part from time to time, at a redemption price equal to the principal amount of
the Notes plus accrued and unpaid interest, if any, to the redemption date.
Section 5.2 Notice to Trustees. If the Company elects to redeem any
or all of the Notes pursuant to Section 5.1, it shall notify the Trustee of the
redemption date and the principal amount of Notes to be redeemed. The Company
shall give such notice in an Officers' Certificate delivered at least 45 days
before the redemption date (unless a shorter period shall be satisfactory to the
Trustee).
Section 5.3 Selection of Notes to be Redeemed. If less than all of
the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed
on a pro rata basis, by lot or by such other method as the Trustee shall deem
fair and appropriate . In any proration, the Trustee shall make such
adjustments, reallocations and eliminations as it shall deem proper to the end
that the principal amount of each Note so prorated shall be equal to an
authorized denomination, by increasing or decreasing or eliminating the amount
which would be allocable to any Note on the basis of exact proportion by an
amount not exceeding $1,000. The Trustee shall make the selection from the Notes
outstanding and not previously called for redemption. The Trustee shall promptly
notify the Company in writing of such Notes selected for redemption and, in the
case of Notes selected for partial redemption, the principal amount to be
redeemed. The Trustee may select for redemption portions of the principal amount
of Notes that have denominations equal to $1,000 or integral multiples thereof.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 5.4 Notice of Redemption. At least 30 days but not more than
60 days before a redemption date, the Company shall mail a notice of redemption
to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
- --------
(1) Amount equal to 50% of the aggregate principal amount of Notes originally
issued.
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(b) the redemption price;
(c) the name and address of the Paying Agent;
(d) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(e) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(f) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
and upon surrender of such Note, a new Note or Notes will be issued having an
aggregate principal amount equal to the unredeemed portion thereof which shall
not be less than $1,000 or an integral multiple thereof; and
(g) the identification, including CUSIP number, of the
particular Notes (or portion thereof) to be redeemed, as well as the aggregate
principal amount of Notes to be redeemed and the aggregate principal amount of
Notes estimated to be outstanding after such redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
Section 5.5 Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
redemption date at the redemption price.
Section 5.6 Deposit of Redemption Price. On or before the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company is its own Paying Agent, the Company shall segregate and hold in trust)
money sufficient to pay the redemption price of all Notes to be redeemed on that
date.
Section 5.7 Notes Redeemed in Part. After the redemption date,
upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate and deliver to the Holder a new Note in an authorized denomination
equal in principal amount to the unredeemed portion of the Note surrendered.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
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(a) the Company defaults in the payment of interest (including
default in the payment of interest in Additional Notes in lieu of a cash
payment) on any Note when the same becomes due and payable and the default
continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of
any Note (including failure to make a payment pursuant to a Change of Control
Offer or other offer to purchase the Notes which is required to be made pursuant
to this Indenture) when the same becomes due and payable at maturity;
(c) the Company fails to comply with any of its other
covenants or agreements in the Notes or this Indenture and the default continues
for 60 days after notice to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Notes then
outstanding as specified below;
(d) there shall be a default under any evidence of
Indebtedness of the Company or any Significant Subsidiary, whether any such
Indebtedness exists on the date of this Indenture or shall hereafter be created,
in the amount, individually or in the aggregate, of $10 million, if the maturity
of such Indebtedness has been accelerated prior to its expressed maturity;
(e) a court of competent jurisdiction enters a final and
non-appealable judgment against the Company or any Significant Subsidiary in
which the Company or any such Significant Subsidiary is required to pay an
amount (calculated after the application of any proceeds of insurance policies
applicable to such loss), individually or in the aggregate, in excess of $10
million, and such final and non-appealable judgment remains unsatisfied for a
period of 60 days;
(f) the Company or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law (i) becomes insolvent, (ii) fails
generally to pay its debts as they become due, (iii) admits in writing its
inability to pay its debts generally as they become due, (iv) commences a
voluntary case or proceeding, (v) consents to, or acquiesces in, the institution
of a bankruptcy or an insolvency proceeding against it or the entry of a
judgment, decree or order for relief against it in an involuntary case or
proceeding, (vi) applies for, consents to or acquiesces in the appointment of or
taking possession by a Custodian of the Company or any Significant Subsidiary or
of all or substantially all of its property or (vii) makes a general assignment
for the benefit of its creditors; or
(g) a court of competent jurisdiction enters a judgment,
decree or order under any Bankruptcy Law which (i) is for relief against the
Company or any Significant Subsidiary in an involuntary case, (ii) appoints a
Custodian of the Company or any Significant Subsidiary or a Custodian for all or
substantially all of its property or (iii) orders the winding-up or liquidation
of the
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Company or any Significant Subsidiary; and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief, supervision, conservation, reorganization
or liquidation of debtors or for the benefit of creditors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under subsection 6.1(c) is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding notify the Company of the Default and the Company does not cure the
Default within the period specified in such subsection after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default". Such notice shall be given by
the Trustee if requested by the Holders of at least 25% in principal amount of
the Notes then outstanding.
Notwithstanding any Provision of this Indenture, none of the
transactions contemplated by the Reorganization Plan shall constitute an Event
of Default.
Section 6.2 Acceleration. If an Event of Default (other than an
Event of Default specified in subsection 6.1(f) or (g)) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the Notes then outstanding by notice to the Company and
the Trustee, may declare the unpaid principal of and accrued interest on all the
Notes to be due and payable. Upon such declaration, the principal of and accrued
interest on such Notes shall be due and payable immediately. If an Event of
Default specified in subsection 6.1(f) or (g) occurs, all unpaid principal of
and accrued interest on the Notes then outstanding shall automatically become
due and payable without any declaration or other act on the part of the Trustee
or any Noteholder. Upon payment of such principal amount and interest, all of
the Company's obligations under the Notes and this Indenture shall terminate.
The Holders of a majority in principal amount of the Notes by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration.
Section 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture. The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding. A delay or omission by the
Trustee or any Noteholder in exercising any right or remedy accruing upon an
Event of Default shall
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not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.4 Waiver of Past Defaults. Subject to Sections 6.2, 6.7
and 9.2, the Holders of a majority in principal amount of the Notes by notice to
the Trustee may waive an existing Default and its consequences except a Default
in the payment of the principal of or interest on any Note. When a Default or
Event of Default is waived, it is cured and ceases to exist.
Section 6.5 Control by Majority. The Holders of a majority in
principal amount of the Notes then outstanding may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, is unduly
prejudicial to the rights of other Noteholders or would involve the Trustee in
personal liability. The Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 6.6 Limitation on Suits. A Noteholder may pursue a remedy
with respect to this Indenture or the Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
Notes then outstanding make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(e) during such 60-day period, the Holders of a majority in
principal amount of the Notes do not give the Trustee a direction inconsistent
with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.7 Rights of Holders to Receive Payment. Notwithstanding
any other Provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of and interest on the Note, on or after the
respective due dates expressed in the Note, or to institute suit for the
enforcement of any such payment on
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or after such respective dates, shall not be impaired or affected without the
consent of the Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
specified in subsection 6.1(a) or (b) occurs and is continuing and without the
possession of any of the Notes or the production thereof in any proceeding
related thereto, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or any other obligor upon the Notes for
the whole amount of principal and interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate per annum borne by the Notes and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 7.7.
Section 6.9 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due under Section 7.7) and
the Noteholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute it, and any
Custodian in any such judicial proceedings is hereby authorized by each
Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
first, to the Trustee for amounts due under Section 7.7;
second, to Noteholders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
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third, to the Company or to whomever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any such payment to Noteholders in such manner
and procedure as the Trustee deems appropriate.
Section 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more
than 10% in principal amount of Notes then outstanding.
Section 6.12 Waiver of Stay or Extension Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which materially adversely affects the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(ii) In the absence of bad faith or negligence on its
part, the Trustee may conclusively rely, as to the truth of the statements
and
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the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(iv) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to subsections 7.1(a), (b) and (c).
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 Rights of Trustee. (a) The Trustee may rely on any
document reasonably believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Certificate or Opinion.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
Section 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes,
and it shall not be responsible for any statement contained herein or in the
Notes other than its certificates of authentication, all of which (except for
the certificates of authentication) shall be taken as the statements of the
Company.
Section 7.5 Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to
Noteholders a notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment on any Note, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
Section 7.6 Reports by Trustee to Holders. Within 60 days after each
May 1 beginning with May 1, 1999, the Trustee shall, if so required by Section
313(a) of the Trust Indenture Act, mail to each Noteholder to the extent
required by Section 313(c) of the Trust Indenture Act a brief report dated as of
such date that complies with Section 313(a) of the Trust Indenture Act. The
Trustee also shall comply with Section 313(b) of the Trust Indenture Act.
A copy of each report at the time of its mailing to Noteholders
shall be filed with the Commission and each stock exchange on which the Notes
are listed. The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
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Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time such compensation as the Company and the Trustee shall
agree in writing for its services. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred by it. Such expenses shall include the reasonable compensation
and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or reasonable expense incurred without negligence
or bad faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of and
interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event
of Default specified in subsection 6.1(f) or (g) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 7.8 Replacement of Trustee. A resignation or removal of the
Trustee and the appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Notes may remove the Trustee by so notifying
the removed Trustee and, with the Company's consent, may appoint a successor
Trustee. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and any other obligor upon the
Notes shall promptly appoint a successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the lien provided for in
Section 7.7. Notwithstanding replacement of the Trustee, the Company's
obligations under Section 7.7 shall continue for the benefit of the retiring
Trustee.
Section 7.9 Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. This Indenture shall
always have a trustee who satisfies the requirements of Section 310(a)(1) of the
Trust Indenture Act. The Trustee shall always have a combined capital and
surplus of at least $50 million as set forth in its most recent published annual
report of condition. The Trustee shall comply with Section 310(b) of the Trust
Indenture Act, including the optional provision permitted by the second sentence
of Section 310(b)(9) of the Trust Indenture Act.
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed is subject to Section 311(a) of the
Trust Indenture Act to the extent indicated.
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ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE
Section 8.1 Discharge of Liability on the Notes; Legal and Covenant
Defeasance. Subject to Section 8.3, the Company may terminate all of its
obligations under the Notes and this Indenture (a "Legal Defeasance"), or may
terminate its obligations under the covenants contained in Sections 3.7, 3.8,
3.9, 3.10, 3.11, 4.1 and 4.2 of this Indenture with respect to the outstanding
Notes (a "Covenant Defeasance"), if at any time:
(a) The Company irrevocably deposits in trust with the Trustee
or a bank or trust company which satisfies the requirements of Section 7.10
hereof, pursuant to an irrevocable trust and security agreement in form and
substance reasonably satisfactory to the Trustee, U.S. Legal Tender or direct
non-callable obligations of, or non-callable obligations guaranteed by, the
United States of America for the payment of which obligation or guarantee the
full faith and credit of the United States of America is pledged ("U.S.
Government Obligations") maturing as to principal and interest in such amounts
and at such times as are, without consideration of the reinvestment of such
interest and after payment of all federal, state and local taxes or other
charges or assessments in respect thereof payable by the Trustee, sufficient (in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee) to pay
the principal of and interest on the outstanding Notes on the dates on which any
such payments are due and payable in accordance with the terms of this Indenture
and of the Notes;
(b) Such deposits shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the Trust Indenture Act;
(c) No Default or Event of Default shall have occurred or be
continuing on the date of such deposit or shall occur on or before the
ninety-first day after the date of such deposit;
(d) Such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other instrument to which
the Company is a party or by which it or its property is bound;
(e) The Company shall deliver to the Trustee an Opinion of
Counsel, (A) in the case of a Legal Defeasance, to the effect that (i) the
Internal Revenue Service has published a ruling, (ii) the Company has received a
ruling from the Internal Revenue Service or (iii) since the date hereof, there
has been a change in applicable United States federal income tax law, in any
such case to the effect that, and based upon such opinion shall confirm that,
Holders of the Notes will not
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recognize income, gain or loss for federal income tax purposes as a result of
such deposit and the Legal Defeasance contemplated hereby, and will be subject
to federal income tax in the same amounts, in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred or, (B) in the case of a Covenant Defeasance, to the effect that the
Holders of Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and the Covenant Defeasance contemplated
hereby, and will be subject to federal income tax in the same amounts, in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred;
(f) The deposit shall not result in the Company, the Trustee
or the trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended;
(g) The Holders, or the Trustee on behalf of such Holders,
shall have a perfected security interest under applicable law in the monies or
U.S. Government Obligations deposited pursuant to Section 8.1(a) above; and
(h) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the Legal Defeasance or the Covenant
Defeasance, as applicable, contemplated by this Section 8.1 have been complied
with.
Notwithstanding the foregoing, after October __, 1998, the condition
in Section 8.1(e) above shall not be applicable to a Covenant Defeasance.
If the Company exercises its option to make a Legal Defeasance or a
Covenant Defeasance payment of the Notes may not be accelerated because of an
Event of Default.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to this Section 8.1 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Notes.
Section 8.2 Satisfaction, Discharge of the Indenture and Termination
of the Company's Obligations upon Cancellation of the Notes. In addition to its
rights under Section 8.1, the Company may satisfy and be discharged from all of
its obligations under this Indenture (subject to Section 8.3) when:
(a) All Notes theretofore authenticated and delivered (other
than Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.7) have been delivered to the Trustee
for cancellation;
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(b) The Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) The Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Section 8.3 Survival of Certain Obligations. Notwithstanding the
satisfaction and discharge of this Indenture and of the Notes referred to in
Section 8.1 or 8.2, the respective obligations of the Company, the Trustee and
the Paying Agent under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 3.1, 3.5, 7.7, 7.8, 8.6
and 8.7 shall survive until the Notes are no longer outstanding, and thereafter
the obligations of the Company, the Trustee and the Paying Agent under Sections
7.7, 8.5, 8.6 and 8.7 shall survive. Nothing contained in this Article VIII
shall abrogate any of the obligations or duties of the Trustee under this
Indenture.
Section 8.4 Acknowledgment of Discharge by Trustee. After the
conditions of Section 8.1 or 8.2 have been satisfied, the Trustee upon request
shall acknowledge in writing the discharge of those obligations that the Company
terminates.
Section 8.5 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to Section
8.1. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Notes.
Section 8.6 Repayment to Company. The Trustee and the Paying Agent
shall promptly pay to the Company upon written request any excess money or
securities held by them at any time. The Trustee and the Paying Agent shall pay
to the Company upon written request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
Company shall have first caused notice of such payment to be mailed to each
Noteholder entitled thereto no less than 30 days prior to such repayment. After
payment to the Company, Noteholders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned property
law designates another Person, and the Trustee shall have no further liability
with respect thereto.
Section 8.7 Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 8.5 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.1 until such
time
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as the Trustee or the Paying Agent is permitted to apply all such money in
accordance with Section 8.5; provided that, if the Company has made any payment
of interest on or principal of any Note because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or the
Paying Agent.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.1 Without Consent of Holders. The Company and the Trustee
may amend or supplement this Indenture or the Notes, in form satisfactory to the
Company and the Trustee, without the consent of any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article IV;
(c) to provide for uncertificated Notes in addition to
certificated Notes;
(d) to make any change that does not adversely affect the
rights of any Noteholder; or
(e) to comply with the Trust Indenture Act.
Section 9.2 With Consent of Holders. The Company and the Trustee may
amend or supplement any provision of either this Indenture or the Notes with the
written consent of the Holders of at least a majority in principal amount of the
Notes then outstanding without notice to any Noteholder. The Holders of a
majority in principal amount of the outstanding Notes may waive compliance by
the Company with any such provision without notice to any Noteholder. However,
without the consent of each Noteholder affected, an amendment, supplement or
waiver under this Section may not:
(a) change the maturity of the principal of or the date of
payment of any installment of interest on any Note;
(b) reduce the principal amount of or interest on any Note or
change the form of payment thereof (except as permitted in Section 2.2 hereof);
(c) impair the right to institute suit for the enforcement of
any payment on or with respect to any Note;
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<PAGE>
(d) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver; or
(e) make any change in Sections 6.4 or 6.7 or this Section
9.2.
The Company and the Trustee hereby agree to amend or supplement any
provision of either this Indenture or the Notes at any time after October __,
1998, upon receipt of a written direction indicating the approval of any
amendment or supplement by the Holders of at least a majority in principal
amount of the Notes then outstanding, without notice to any Noteholder;
provided, however, that any such change may not adversely affect the rights of
the Company or the Trustee, it being understood that the elimination of any or
all of Sections 3.7, 3.8, 3.9, 3.10, 3.11, 4.1 and 4.2 of this Indenture would
not constitute such a change; and provided further, that such amendment or
supplement may not make any of the changes specified in clauses (a) through (e)
of the first paragraph of this Section 9.2 without the consent of each
Noteholder affected.
Any amendment or supplement shall be effective upon certification to
the Trustee by the Company or an agent of the Company that such amendment or
supplement has been authorized by the Company and that either (i) the consent of
the majority of an aggregate principal amount of the Notes has been obtained or
(ii) the Company has received a written direction indicating the approval of the
majority of an aggregate principal amount of the Notes, unless such consent or
direction specifies that it shall become effective at a later date, in which
case such amendment or supplement shall become effective in accordance with the
terms of such consent or direction.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any amendment, supplement or waiver.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 9.3 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes or waiver of the provisions hereof or
thereof shall comply with the Trust Indenture Act as then in effect.
Section 9.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder and every subsequent Holder of a Note or
34
<PAGE>
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to his Note or portion of
a Note if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (a)
through (e) of Section 9.2. In that case, the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note.
Section 9.5 Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Section 9.6 Trustee To Sign Amendments, Etc. The Trustee shall sign
any amendment or supplement authorized pursuant to this Article IX if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplement, the
Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive and, subject to Section 7.1, shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplement is authorized or permitted
by this Indenture, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms.
35
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ARTICLE X
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the Trust Indenture Act, the
required provision shall control.
Section 10.2 Notices. Any notice or communication by the Company or
the Trustee to the other is duly given if in writing and delivered in person or
by facsimile or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
Home Holdings Inc.
One Chase Manhattan Plaza
New York, New York 10005
Attention: General Counsel
if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
receipt is acknowledged, if facsimiled; five calendar days after mailing if sent
by registered or certified mail; and, with respect to routine administrative
communications only, seve calender days after mailing, if sent by first class
mak (except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication to a Noteholder shall be mailed by
first-class mail or other equivalent means to his address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Noteholder
or any defect in it shall not affect its sufficiency with respect to other
Noteholders.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it. If the Company mails a notice or communication to Noteholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 10.3 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to Section 312(b) of the Trust Indenture
Act with other Noteholders with respect to their rights under this Indenture or
the Notes. The Company, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the Trust Indenture Act.
Section 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Section 10.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(a) a statement that each party making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such party, he or
she has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
37
<PAGE>
(d) a statement as to whether or not, in the opinion of each
such party, such condition or covenant has been complied with;
provided, however, that with respect to matters of law, an Officers' Certificate
may be based upon an Opinion of Counsel, unless the signers know, or in the
exercise of reasonable care should know, that such Opinion of Counsel is
erroneous, and provided, further, that with respect to matters of fact an
Opinion of Counsel may rely on an Officers' Certificate or certificates of
public officials, unless the signer knows, or in the exercise of reasonable care
should know, that any such document is erroneous.
Section 10.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Noteholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 10.7 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open either
in New York City or in the city where the principal corporate trust office of
the Trustee is located. If a payment date is a Legal Holiday at a place of
payment, payment may be made at such place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.8 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their creation
and if any liability does exist, such liability is waived and released as
provided in the Notes.
Section 10.9 Duplicate Originals. The Parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 10.10 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THIS INDENTURE AND THE NOTES, WITHOUT REGARD TO THE CONFLICTS
OF LAWS RULES THEREOF WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
NEW YORK CITY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATION TO THIS INDENTURE, AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT. THE COMPANY IRREVOCABLY
38
<PAGE>
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
Section 10.11 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 10.12 Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successors.
[Rest of page intentionally left blank]
39
<PAGE>
Section 10.13 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and delivered as of the date first above written.
HOME HOLDINGS INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
By:
--------------------------------
Name:
Title:
40
<PAGE>
EXHIBIT A
(Face of Note)
REGISTERED CUSIP No.__________
No.
HOME HOLDINGS INC.
[ ]% Senior Note due July __, 2006
Home Holdings Inc., a Delaware corporation (the "Company"), for value
received, promises to pay to _______________, or registered assigns, the
principal sum of ______________ Dollars on _____________________, and interest
on such principal sum, at the rate, on the dates and to the Persons specified on
the reverse hereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
or an authenticating agent under the Indenture referred to on the reverse
hereof.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
HOME HOLDINGS INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
(SEAL)
41
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-mentioned indenture.
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------
Authorized Signatory
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<PAGE>
(Back of Note)
HOME HOLDINGS INC.
[ ]% Senior Note due July __, 2006
1. Interest. Home Holdings Inc., a Delaware corporation (the
"Company"), promises to pay interest (a) on the principal amount of this Note
from July ___, 1998, payable semi-annually on January ___ and July ___ (each an
"Interest Payment Date") of each year, commencing on January __, 1998, at the
initial rate per annum of [ ]%, subject to adjustment as provided below, to
holders of record on the Regular Record Date (as defined in paragraph 2 below)
next preceding each Interest Payment Date, and (b) to the extent lawful, on any
interest payment due but unpaid on such principal amount at such rate per annum.
Interest on this Note will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from July __, 1998; provided
that, if there is no existing Default in the payment of interest and if this
Note is authenticated between a Regular Record Date and the next succeeding
Interest Payment Date, interest shall accrue from such Interest Payment Date.
Subject to the terms of this paragraph, the Company may, in its sole
discretion, issue Additional Notes (as hereinafter defined) in lieu of a cash
payment of any or all of the interest due on any Interest Payment Date up to and
including July ___, 2001. If the Company elects to issue Additional Notes in
lieu of cash payment of interest due on any Interest Payment Date pursuant to
the immediately preceding sentence, it shall, by giving notice to the
Noteholders and the Trustee of such election not less than 30 nor more than 60
days prior to the Regular Record Date for such Interest Payment Date, issue to
the person who is the registered holder of this Note, and shall instruct the
Trustee to authenticate, an additional Note (the "Additional Note"), dated the
date of such Interest Payment Date, in a principal amount equal to the amount of
cash interest due but not paid on such Interest Payment Date, and with a
maturity date, interest rate, and other terms of, and generally in the form of,
this Note. The issuance of such Additional Note shall constitute full payment of
such interest. If the Company fails to give the required notice of such election
to the Noteholders, the notice requirement shall be deemed satisfied by the
issuance and delivery of Additional Notes in lieu of cash on the relevant
Interest Payment Date. Failure to pay interest in such manner on the Interest
Payment Date following failure to give the required notice to the Noteholders,
or failure to give such notice to the Trustee, shall obligate the Company to pay
the interest due in cash. Each issuance of Additional Notes in lieu of cash
payment of interest on the Notes shall be made pro rata with respect to the
outstanding Notes; provided, that Additional Notes shall be issuable only in
denominations of $1000 or integral multiples thereof. The term "Notes" shall
include the Additional
<PAGE>
Notes that may be issued under the Indenture. After July ___, 2001, all interest
due on an Interest Payment Date shall be paid in cash.
The Company shall pay interest on overdue principal and interest on
overdue installments of interest to the extent lawful, at the rate per annum
borne by the Notes in cash or by issuance of Additional Notes up to and
including July ___, 2001, and, thereafter, in cash.
2. Regular Record Date. The record date for each payment of interest
on this Note on each Interest Payment Date shall be the close of business of the
Company's office in New York, New York on the June ___ or December ___ next
preceding such Interest Payment Date (a "Regular Record Date").
3. Method of Payment. The Company will pay interest on this Note
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the Regular Record Date for the next Interest
Payment Date even though Notes are canceled after such Regular Record Date and
on or before the Interest Payment Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. Up to and including July ___, 2001, and
subject to paragraph 1 above, the Company may, at its sole discretion, pay
interest in the form of Additional Notes, otherwise the Company will pay
principal and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. However, the
Company may pay principal and interest by check payable in such money. It may
mail an interest check to a Holder's registered address. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding Business Day, and no interest on the amount payable on such
payment date shall accrue for the intervening period.
4. Paying Agent and Registrar. Initially, Wilmington Trust Company,
a Delaware banking and trust company (the "Trustee"), will act as Paying Agent
and Registrar. The Company may appoint and change any Paying Agent and Registrar
or Co-Registrar at any time without notice. The Company or any Subsidiary of the
Company may act in any such capacity.
5. Indenture. The Company issued this Note under an Indenture dated
as of July ___, 1998 (the "Indenture") between the Company and the Trustee. The
terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of the Indenture. This
Note is subject to all such terms, and Noteholders are referred to the Indenture
and the Trust Indenture Act for a statement of such terms. Capitalized terms not
otherwise defined herein have the meaning attributed to them in the Indenture.
The Notes are general
2
<PAGE>
obligations of the Company limited in aggregate principal amount as provided in
the Indenture.
6. Optional Redemption and No Sinking Fund. If either (i) the
aggregate principal amount of Notes registered to Persons who are not Affiliates
of the Company is less than $___ million or (ii) the Company has a Significant
Subsidiary, then the Company may redeem the Notes, upon notice as provided
hereunder, in whole at any time or in part from time to time, at a redemption
price equal to the principal amount of the Notes plus accrued and unpaid
interest, if any, to the redemption date.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date of each Holder of Notes to be redeemed
at his registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. On and after the
redemption date interest ceases to accrue on Notes or portions of them called
for redemption unless the Company defaults in making this redemption payment.
The Notes do not provide for any mandatory sinking fund.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
9. Defeasance. Subject to certain conditions set forth in the
Indenture, the Company at any time may terminate some or all of its obligations
under the Notes and the Indenture if the Company deposits with the Trustee U.S.
Legal Tender or U.S. Government Obligations for the payment of principal of and
interest on the Notes at maturity.
10. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the Notes, and any existing Default may
be waived with the consent of the Holders of a majority in principal amount of
the Notes. Without the consent of any Noteholder, the Indenture or the Notes may
be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of Company obligations to Noteholders, to provide for uncertificated
Notes in addition to certificated Notes, to make any change that does not
adversely affect the rights of any Noteholder or to comply with the Trust
Indenture Act.
3
<PAGE>
After October ___, 1998, Holders of at least a majority in principal
amount of the Notes then outstanding may direct the Company and the Trustee to
amend or supplement the provisions of the Indenture or the Notes (including the
restrictive covenants described in paragraph 11 below).
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company and its Affiliates are not disregarded.
11. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company to, among other things, consolidate with or merge
with or into any other Person or transfer all or substantially all its
properties and assets to another Person. The Indenture also limits the ability
of the Company and its Significant Subsidiaries to incur Indebtedness secured by
Liens on properties, assets or Capital Stock of the Company or the Significant
Subsidiary (unless the Holders are secured equally and ratably thereunder) or to
dispose of Capital Stock of the Significant Subsidiaries or of any Subsidiaries
controlling a Significant Subsidiary.
12. Successor Corporation. When a successor corporation assumes all
of the obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article IV of the Indenture, the
predecessor corporation will be released from those obligations.
13. Defaults and Remedies. Under the Indenture, an Event of Default
occurs if: (i) the Company defaults in the payment of interest on any Note when
the same becomes due and payable and the default continues for a period of 30
days; (ii) the Company defaults in the payment of the principal of any Note
(including failure to make a payment pursuant to a Change of Control Offer or
other offer to purchase the Notes which is required to be made pursuant to the
Indenture) when the same becomes due and payable at maturity; (iii) the Company
fails to comply with any of its other covenants or agreements in the Notes or
the Indenture and the default continues for 60 days after notice to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25%
in principal amount of the Notes then outstanding as specified below; (iv) there
shall be a default under any evidence of Indebtedness of the Company or any
Significant Subsidiary, whether any such Indebtedness exists on the date of this
Indenture or shall hereafter be created, in the amount, individually or in the
aggregate, of $10 million, if the maturity of such Indebtedness has been
accelerated prior to its expressed maturity; (v) a court of competent
jurisdiction enters a final and non-appealable judgment against the Company or
any Significant Subsidiary in which the Company or such Significant Subsidiary
is required to pay an amount (calculated after the application of any proceeds
of insurance policies applicable to such loss), individually or in the
aggregate, in excess of $10 million, and such final and non-appealable judgment
remains unsatisfied for a period of 60 days; and (vi) certain events of
bankruptcy or insolvency of the Company or any Significant Subsidiary occur,
provided, however,
4
<PAGE>
that none of the transactions contemplated by the Reorganization Plan shall
constitute an Event of Default. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the Notes may
declare all the Notes to be due and payable immediately (other than certain
Events of Default relating to the bankruptcy or insolvency of the Company, which
do not require any such action to result in the Notes being due and payable
immediately). Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Noteholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Noteholder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Notes.
16. Unclaimed Money. If money and/or Additional Notes for the
payment of principal or interest remains unclaimed for two years, the Trustee or
Paying Agent shall pay the money and/or Additional Notes back to the Company at
its request unless an abandoned property law designates another person. After
any such payment, Holders entitled to the money and/or Additional Notes must
look only to the Company (unless an abandoned Property law designates another
person) and not to the Trustee for payment.
17. Abbreviations. Customary abbreviations may be used in the name
of a Noteholder or an assignee, such as: TEN COM (= as tenants in common), TEN
ENT (= as tenants by the entireties), JT TEN (= as joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES, WITHOUT REGARD TO THE CONFLICTS OF LAWS
RULES THEREOF WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION. THE COMPANY HEREBY
5
<PAGE>
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATION TO THE INDENTURE OR THE NOTES,
AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: I or we assign and transfer this
Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date:____________________ Your Signature ____________________________
(Sign exactly as your name appears on the other
side of this security)
--------------------------------------
Signature Guarantee
HOME HOLDINGS INC.,
ISSUER
AND
WILMINGTON TRUST COMPANY,
TRUSTEE
-----------------
INDENTURE
DATED AS OF ________ __, 1998
----------------
315,000 UNITS
EARN OUT NOTES
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.8, 7.10, 10.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 10.3
(c) 10.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6, 10.2
(d) 7.6
314(a) 3.2, 10.2
(b) N.A.
(c)(1) 10.4
(c)(2) 10.4
(c)(3) N.A.
(d) N.A.
(e) 10.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5, 10.2
(c) 7.1(a)
(d) 7.1(c)
(e) 6.11
316(a)(last sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
(b) 6.7
317(a)(1) 6.8
(a)(2) 6.9
(b) 2.4
318(a) 10.1
"N.A." means not applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INCORPORATION
BY REFERENCE............................................ 1
Section 1.1 Definitions............................................. 1
Section 1.2 Other Definitions....................................... 4
Section 1.3 Incorporation by Reference of Trust Indenture Act....... 4
Section 1.4 Rules of Construction................................... 4
ARTICLE II THE NOTES............................................... 5
Section 2.1 Form and Dating......................................... 5
Section 2.2 Execution and Authentication............................ 5
Section 2.3 Registrar and Paying Agent.............................. 6
Section 2.4 Paying Agent to Hold Money in Trust..................... 6
Section 2.5 Noteholder Lists........................................ 6
Section 2.6 Transfer and Exchange................................... 7
Section 2.7 Replacement Notes....................................... 7
Section 2.8 Outstanding Notes....................................... 7
Section 2.9 Treasury Notes.......................................... 7
Section 2.10 Temporary Notes......................................... 8
Section 2.11 CUSIP Numbers........................................... 8
ARTICLE III COVENANTS............................................... 8
Section 3.1 Payment of Notes........................................ 8
Section 3.2 Commission Reports; Reports to Noteholders.............. 8
Section 3.3 Compliance Certificate.................................. 9
Section 3.4 [Reserved].............................................. 10
Section 3.5 Corporate Existence..................................... 10
Section 3.6 Covenant of Good Faith.................................. 10
ARTICLE IV SUCCESSORS.............................................. 10
Section 4.1 When Company May Merge, etc............................. 10
Section 4.2 Successor Corporation Substituted....................... 10
ARTICLE V [RESERVED].............................................. 11
ARTICLE VI DEFAULTS AND REMEDIES................................... 11
Section 6.1 Events of Default....................................... 11
Section 6.2 [Reserved].............................................. 12
Section 6.3 Remedies................................................ 12
Section 6.4 Waiver of Past Defaults................................. 12
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Page
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Section 6.5 Control by Majority..................................... 12
Section 6.6 Limitation on Suits..................................... 12
Section 6.7 Rights of Holders to Receive Payment.................... 13
Section 6.8 Collection Suit by Trustee.............................. 13
Section 6.9 Trustee May File Proofs of Claim........................ 13
Section 6.10 Priorities.............................................. 14
Section 6.11 Undertaking for Costs................................... 14
Section 6.12 Waiver of Stay or Extension Laws........................ 14
ARTICLE VII TRUSTEE................................................. 14
Section 7.1 Duties of Trustee....................................... 14
Section 7.2 Rights of Trustee....................................... 16
Section 7.3 Individual Rights of Trustee............................ 16
Section 7.4 Trustee's Disclaimer.................................... 16
Section 7.5 Notice of Defaults...................................... 16
Section 7.6 Reports by Trustee to Holders........................... 16
Section 7.7 Compensation and Indemnity.............................. 17
Section 7.8 Replacement of Trustee.................................. 17
Section 7.9 Successor Trustee by Merger, etc........................ 18
Section 7.10 Eligibility; Disqualification........................... 18
Section 7.11 Preferential Collection of Claims Against Company....... 19
ARTICLE VIII [RESERVED].............................................. 19
ARTICLE IX AMENDMENTS AND WAIVERS.................................. 19
Section 9.1 Without Consent of Holders.............................. 19
Section 9.2 With Consent of Holders................................. 19
Section 9.3 Compliance with Trust Indenture Act..................... 20
Section 9.4 Revocation and Effect of Consents....................... 20
Section 9.5 Notation on or Exchange of Notes........................ 21
Section 9.6 Trustee To Sign Amendments, Etc......................... 21
ARTICLE X MISCELLANEOUS........................................... 21
Section 10.1 Trust Indenture Act Controls............................ 21
Section 10.2 Notices................................................. 21
Section 10.3 Communications by Holders with Other Holders............ 22
Section 10.4 Certificate and Opinion as to Conditions Precedent...... 22
Section 10.5 Statements Required in Certificate or Opinion........... 23
Section 10.6 Rules by Trustee and Agents............................. 23
Section 10.7 Legal Holidays.......................................... 23
Section 10.8 No Recourse Against Others.............................. 24
Section 10.9 Duplicate Originals..................................... 24
Section 10.10 Governing Law........................................... 24
Section 10.11 No Adverse Interpretation of Other Agreements........... 24
Section 10.12 Successors.............................................. 24
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Page
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Section 10.13 Severability............................................ 24
iii
<PAGE>
INDENTURE dated as of ________ __, 1998 between HOME HOLDINGS
INC., a Delaware corporation, as issuer (the "Company") and WILMINGTON TRUST
COMPANY, a Delaware banking and trust company, as trustee (the "Trustee").
WHEREAS, the Notes (as defined below) have the benefit of the
security interest granted under the Assignment and Security Agreement dated June
___, 1998, made by the Company in favor of ________, as collateral agent for
holders of the Notes.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders (as defined below) of
the Company's Earn Out Notes (the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions. As used in this Indenture, the
following terms shall have the following meanings:
"Affiliate" means, when used with reference to any Person, any
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, that Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct or cause the direction of the management or policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling"
and "controlled" have meanings correlative of the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee thereof.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of corporate
stock or any and all equivalent ownership interests in a Person (other
than a corporation).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means Capital Stock of the Company.
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"Company" means Home Holdings Inc. until a successor replaces
it and thereafter means the successor.
"Default" means any event which is, or after notice or passage
of time would be, an Event of Default.
"Effective Date" means the date on which the Plan becomes
effective.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" or "Noteholder" means a Person in whose name a Note
is registered.
"Indenture" means this Indenture, as amended, supplemented or
otherwise modified from time to time.
"Notes" means the Notes described above and issued under this
Indenture.
"Noteholder" or "Holder" means a Person in whose name a Note
is registered.
"Officer" means the Chairman of the Board of Directors, any
President, any Vice President, the Chief Financial Officer, the Treasurer,
the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer, Assistant Secretary
or Assistant Controller of the Company or of any other obligor upon the
Notes, as the case may be. One of the Officers signing an Officers'
Certificate pursuant to Section 3.3 shall be the Principal Executive
Officer, Principal Financial Officer or Principal Accounting Officer of
the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company, any other obligor upon the Notes or
the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
2
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"Plan" means the Plan of Reorganization of the Company filed
on January 15, 1998, under Chapter 11 of Title 11 of the United States
Code, 11 U.S.C. ss. 101 et seq., Case No. 98 B 40319 (JHG).
"Subsidiary" of a Person means (i) a corporation at least a
majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned or controlled, directly or indirectly, by such Person or (ii) any
other Person (other than a corporation) in which such Person, directly or
indirectly, at the date of determination thereof has at least a majority
ownership interest.
"Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of this
Indenture except as provided in Section 9.3 hereof.
"Trustee" means Wilmington Trust Company until a successor
replaces it and thereafter means the successor.
"Trust Officer" means any officer or assistant officer of the
corporate trust administration department of the Trustee or otherwise
assigned by the Trustee to administer its corporate trust matters.
"Unit" means a unit into which the Notes are denominated.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts and, except for purposes of Article
VIII hereof, includes a check of the Company or a bank check payable in
U.S. Legal Tender.
Section 1.2 Other Definitions. Terms not otherwise defined
herein shall have the meanings assigned to them in the Notes. As used in this
Indenture, the following terms shall have the meanings assigned in the Sections
referred to opposite such terms below:
Term Defined in Section
---- ------------------
"Bankruptcy Default"..............................................6.1
"Bankruptcy Law"..................................................6.1
"Custodian".......................................................6.1
"Event of Default"................................................6.1
"Legal Holiday"..................................................10.7
"Paying Agent"....................................................2.3
"Registrar".......................................................2.3
3
<PAGE>
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this Indenture.
The following terms used in this Indenture and defined in the Trust
Indenture Act have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company and any
other obligor upon the Notes.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by Trust Indenture Act by reference to another statute or
defined by Commission rule under the Trust Indenture Act have the meanings
assigned to them.
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles in
effect as of the date any determination hereunder is required;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular; and
(e) provisions apply to successive events and transactions.
4
<PAGE>
ARTICLE II
THE NOTES
Section 2.1 Form and Dating. The Notes shall be substantially in the
form of Exhibit A, which is part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication and shall be
printed, lithographed or engraved on steel-engraved borders or may be produced
in any other manner, as determined by the Company.
Section 2.2 Execution and Authentication. (a) Two Officers shall
sign the Notes for the Company by manual or facsimile signature. The Company's
seal shall be reproduced on the Notes.
(b) If an Officer whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall be valid
nevertheless.
(c) A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Note has been authenticated under this Indenture.
(d) The Trustee shall authenticate Notes for original issue up
to the total number of not more than 315,000 Units upon a written order of the
Company signed by two Officers. The total number of Units represented by Notes
outstanding at any time may not exceed that number except as provided in Section
2.7.
(e) The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
(f) The Notes shall be issuable only in registered form and
only in denominations of a whole Unit and integral multiples thereof.
Section 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar"), subject to such reasonable regulation as the
Company or the Registrar may prescribe, and an office or agency where Notes may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and
5
<PAGE>
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the Trust Indenture Act and the relevant provisions of
this Indenture and shall not otherwise be inconsistent with this Indenture. The
Company or any Subsidiary of the Company may act in any such capacity. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee of the name and address of any Agent
not a party to this Indenture. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Notes. The Company may appoint and change any
Paying Agent and Registrar or co-registrar at any time without notice.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money held by the Paying Agent for the payment of principal of or interest
on the Notes, and will notify the Trustee of any default by the Company or any
other obligor upon the Notes in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company) shall have no further liability for the money. If
the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold as
a separate trust fund all money held by it as Paying Agent.
Section 2.5 Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders. If the Trustee is not the Registrar,
the Company or any other obligor upon the Notes shall furnish to the Trustee on
or before each interest payment date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
Section 2.6 Transfer and Exchange. When Notes are presented to the
Registrar with a request to register a transfer or to exchange them for Notes
representing an equal number of Units in other denominations, the Registrar
shall register the transfer or make the exchange if its or the Company's
reasonable requirements for such transactions are met. To permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's request. Any transfer or exchange shall be
without charge, except that the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto, other than exchanges pursuant to Section 2.10 or 9.5.
6
<PAGE>
Notwithstanding the foregoing, the Company may restrict transfers as
provided in the Notes.
Section 2.7 Replacement Notes. If the Holder of a Note claims that
the Note has been lost, destroyed or wrongfully taken, then, in the absence of
notice to the Company or the Trustee that such Note has been acquired by a bona
fide purchaser, the Company shall issue and the Trustee shall authenticate a
replacement Note if the requirements of the Trustee and the Company are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond, sufficient in the judgment of both the Company and the Trustee, to protect
the Company, the Trustee, any Paying Agent or any authenticating agent from any
loss which any of them may suffer if a Note is replaced. The Company may charge
for its reasonable expenses in replacing a Note lost, destroyed or wrongfully
taken (including the fees and expenses of the Trustee).
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
Section 2.8 Outstanding Notes. The Notes outstanding at any time are
all Notes authenticated and delivered by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding.
If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7.
Subject to Section 2.9, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.
Section 2.9 Treasury Notes. In determining whether the Holders of
the required proportion of Units have concurred in any direction, waiver or
consent, Notes owned by the Company, any other obligor upon the Notes or an
Affiliate of the Company or such obligor shall be disregarded (including for
purposes of determining the number of outstanding Units); provided that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Trust Officer of the
Trustee knows are so owned shall be so disregarded.
Section 2.10 Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company considers appropriate for temporary
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate
7
<PAGE>
definitive Notes in exchange for temporary Notes. Until such exchange, such
temporary Notes shall be entitled to the same rights, benefits and privileges as
the definitive Notes.
Section 2.11 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers.
Section 2.12 Cancellation. All notes surrendered for transfer,
exchange, payment, redemption or cancellation shall be cancelled by the Trustee
and destroyed. The Trustee shall deliver to the Company a certificate of
destruction with respect thereto.
ARTICLE III
COVENANTS
Section 3.1 Payment of Notes. The Company shall pay the amounts
payable on the Notes on the dates and in the manner provided in the Notes.
Payments shall be considered paid on the date due if the Paying Agent (other
than the Company or an Affiliate of the Company) holds on that date money in
immediately available funds sufficient to pay all amounts due under the Notes.
For purposes of the Trustee's payment obligations hereunder, the Company's
determination of amounts due under the Notes shall be final.
Section 3.2 Commission Reports; Reports to Noteholders. (a) The
Company shall file with the Trustee, within 15 days after it files them with the
Commission, copies of the annual reports and the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 (other than Form
11-K) or 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of Section 314(a) of the Trust Indenture Act.
(b) So long as the Notes remain outstanding, if the Company is
required to furnish annual or quarterly reports to its stockholders pursuant to
the Exchange Act, the Company shall cause any annual reports to stockholders and
any quarterly or other financial reports furnished by it to stockholders to be
mailed to the Noteholders (no later than ten days after the date such materials
are mailed to the Company's stockholders) at their addresses appearing in the
register of Notes maintained by the Registrar. If the Company is not required
8
<PAGE>
to furnish annual or quarterly reports to its stockholders pursuant to the
Exchange Act, it shall cause its financial statements, including any notes
thereto, to be so mailed to the Holders within 120 days after the end of each of
the Company's fiscal years and within 60 days after the end of each of its first
three fiscal quarters. All financial statements delivered by the Company
pursuant to this Subsection (b) shall be prepared in accordance with generally
accepted accounting principles, consistently applied, and in the case of
year-end financials, shall include either (i) if the Company's financial
statements for such year were audited by independent certified public
accountants, a copy of such auditor's report or (ii) if the Company's financial
statements for such year were not audited, a certificate signed by an Officer
certifying that the financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly
present the financial position of the Company as of the date of, or for the
periods covered by, such financial statements. Upon the written request of the
Trustee or any broker-dealer who wishes to publish, or submit for publication,
any price quotation with respect to the Notes, the Company shall deliver
promptly in writing the information called for by items (i) through (xiii) of
Section 15c2-11(a)(5) of the Exchange Act.
Delivery of reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such reports shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.3 Compliance Certificate. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate complying with Section 314(a)(4) of the Trust Indenture
Act and stating whether or not the signers know of any Default that occurred
during such fiscal year. If they do, the Officers' Certificate shall describe
the Default and its status. Such compliance shall be determined without regard
to periods of grace or notice requirements.
Section 3.4 [Reserved]
Section 3.5 Corporate Existence. Subject to Article IV, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the rights (charter and statutory)
and corporate franchise of the Company; provided, however, that the Company
shall not be required to preserve any right or corporate franchise if the Board
of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 3.6 Covenant of Good Faith. The Company shall carry out the
covenant of good faith contained in the Note.
9
<PAGE>
ARTICLE IV
SUCCESSORS
Section 4.1 When Company May Merge, etc. The Company shall not
consolidate or merge with any other Person or transfer (by lease, assignment,
sale or otherwise) all or substantially all of its assets, in a single
transaction or through a series of related transactions, to another Person or
group of affiliated Persons unless (i) the Company is the surviving or
continuing Person or the Person (if other than the Company) formed by such
consolidation or merger or to which the assets of the Company are transferred
and expressly assumes, by an indenture supplemental to this Indenture, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and this Indenture and (ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
or be continuing; provided that the transactions contemplated by the Plan shall
not constitute a consolidation or a merger which is subject to this Section 4.1.
The Company shall deliver to the Trustee prior to the consummation of any
consolidation, merger or transfer of assets involving the Company, an Officers'
Certificate to the foregoing effect and an Opinion of Counsel stating that the
proposed transactions and such supplemental indenture comply with this
Indenture.
Section 4.2 Successor Corporation Substituted. Upon any
consolidation, merger or transfer of assets involving the Company in accordance
with Section 4.1, any successor Person formed by such consolidation or merger or
to which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as an original party
herein. When a successor Person assumes all of the obligations of the Company
hereunder and under the Notes, the Company shall be released from such
obligations.
ARTICLE V
[RESERVED]
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of any amount
specified in the Initial Certification, the Final Certification, the Initial
Deemed
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Certification or the Final Deemed Certification due on any Note when the same
becomes due and payable and the default continues for a period of 30 days;
(b) the Company fails to comply with any of its other
covenants or agreements in the Notes or this Indenture and the default continues
for 60 days after notice to the Company by the Trustee or to the Company and the
Trustee by the Holders of Notes representing at least 25% of the Units then
outstanding as specified below;
(c) the Company, pursuant to or within the meaning of any
Bankruptcy Law (i) becomes insolvent, (ii) fails generally to pay its debts as
they become due, (iii) admits in writing its inability to pay its debts
generally as they become due, (iv) commences a voluntary case or proceeding, (v)
consents to, or acquiesces in, the institution of a bankruptcy or an insolvency
proceeding against it or the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding, (vi) applies for, consents to
or acquiesces in the appointment of or taking possession by a Custodian of the
Company or of all or substantially all of its property or (vii) makes a general
assignment for the benefit of its creditors; or
(d) a court of competent jurisdiction enters a judgment,
decree or order under any Bankruptcy Law which (i) is for relief against the
Company in an involuntary case, (ii) appoints a Custodian of the Company or a
Custodian for all or substantially all of its property or (iii) orders the
winding-up or liquidation of the Company; and such judgment, decree or order
shall remain unstayed and in effect for a period of 90 consecutive days (a
"Bankruptcy Default").
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief, supervision, conservation, reorganization
or liquidation of debtors or for the benefit of creditors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under subsection 6.1(b) is not an Event of Default until
the Trustee or the Holders of Notes representing at least 25% of the Units then
outstanding notify the Company of the Default and the Company does not cure the
Default within the period specified in such subsection after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default". Such notice shall be given by
the Trustee if requested by the Holders of Notes representing at least 25% of
the Units then outstanding.
Notwithstanding any Provision of this Indenture, none of the
transactions contemplated by the Plan shall constitute an Event of Default.
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Section 6.2 [Reserved]
Section 6.3 Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payments payable on the Notes or to enforce the
performance of any provision of the Notes or this Indenture. The Trustee may
maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any
Noteholder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
Section 6.4 Waiver of Past Defaults. Subject to Sections 6.7 and
9.2, the Holders of Notes representing a majority of the Units then outstanding,
by notice to the Trustee, may waive an existing Default and its consequences
except a Default in the payment of the amounts payable on any Note. When a
Default or Event of Default is waived, it is cured and ceases to exist.
Section 6.5 Control by Majority. The Holders of Notes representing a
majority of the Units then outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture, is unduly prejudicial
to the rights of other Noteholders or would involve the Trustee in personal
liability. The Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.6 Limitation on Suits. A Noteholder may pursue a remedy
with respect to this Indenture or the Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of Notes representing at least 25% of the
Units then outstanding make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(e) during such 60-day period, the Holders of Notes
representing a majority of the Units then outstanding do not give the Trustee a
direction inconsistent with the request.
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A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.7 Rights of Holders to Receive Payment. Notwithstanding
any other Provision of this Indenture, the right of any Holder of a Note to
receive payment of amounts payable on the Note, on or after the respective due
dates expressed in the Note, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
specified in subsection 6.1(a) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor upon the Notes for amounts due under the Notes and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 7.7.
Section 6.9 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due under Section 7.7) and
the Noteholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute it, and any
Custodian in any such judicial proceedings is hereby authorized by each
Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
first, to the Trustee for amounts due under Section 7.7;
second, to Noteholders for amounts due and unpaid on the Notes,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes; and
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third, to the Company or to whomever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any such payment to Noteholders in such manner
and procedure as the Trustee deems appropriate.
Section 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of
Notes representing more than 10% of the Units then outstanding.
Section 6.12 Waiver of Stay or Extension Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which materially adversely affects the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(ii) In the absence of bad faith or negligence on its
part, the Trustee may conclusively rely, as to the truth of the statements
and the
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correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(iv) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to subsections 7.1(a), (b) and (c).
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 Rights of Trustee. (a) The Trustee may rely on any
document reasonably believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Certificate or Opinion.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
Section 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes,
and it shall not be responsible for any statement contained herein or in the
Notes other than its certificates of authentication, all of which (except for
the certificates of authentication) shall be taken as the statements of the
Company.
Section 7.5 Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to
Noteholders a notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment on any Note, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
Section 7.6 Reports by Trustee to Holders. Within 60 days after each
May 1 beginning with May 1, 1998, the Trustee shall mail to each Noteholder to
the extent required by Section 313(c) of the Trust Indenture Act a brief report
dated as of such date that complies with Section 313(a) of the Trust Indenture
Act. The Trustee also shall comply with Section 313(b) of the Trust Indenture
Act.
A copy of each report at the time of its mailing to Noteholders
shall be filed with the Commission and each stock exchange on which the Notes
are listed. The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
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Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time such compensation as the Company and the Trustee shall
agree in writing for its services. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred by it. Such expenses shall include the reasonable compensation
and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or reasonable expense incurred without negligence
or bad faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay amounts payable on
particular Notes.
When the Trustee incurs expenses or renders services after an Event
of Default specified in subsection 6.1(c) or (d) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 7.8 Replacement of Trustee. A resignation or removal of the
Trustee and the appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority of the Units may remove the Trustee by so notifying the removed Trustee
and, with the Company's consent, may appoint a successor Trustee. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or public officer takes charge of the Trustee
or its property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company and any other obligor upon the
Notes shall promptly appoint a successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% of the Units may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the lien provided for in
Section 7.7. Notwithstanding replacement of the Trustee, the Company's
obligations under Section 7.7 shall continue for the benefit of the retiring
Trustee.
Section 7.9 Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. This Indenture shall
always have a trustee who satisfies the requirements of Section 310(a)(1) of the
Trust Indenture Act. The Trustee shall always have a combined capital and
surplus of at least $50 million as set forth in its most recent published annual
report of condition. The Trustee shall comply with Section 310(b) of the Trust
Indenture Act, including the optional provision permitted by the second sentence
of Section 310(b)(9) of the Trust Indenture Act.
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed is subject to Section 311(a) of the
Trust Indenture Act to the extent indicated.
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ARTICLE VIII
[RESERVED]
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.1 Without Consent of Holders. The Company and the Trustee
may amend or supplement this Indenture or the Notes, in form satisfactory to the
Company and the Trustee, without the consent of any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article IV;
(c) to provide for uncertificated Notes in addition to
certificated Notes;
(d) to make any change that does not adversely affect the
rights of any Noteholder; or
(e) to comply with the Trust Indenture Act.
Section 9.2 With Consent of Holders. The Company and the Trustee may
amend or supplement any provision of either this Indenture or the Notes with the
written consent of the Holders of Notes representing a majority of the Units
then outstanding without notice to any Noteholder. The Holders of a majority of
the Units may waive compliance by the Company with any such provision without
notice to any Noteholder. However, without the consent of each Noteholder
affected, an amendment, supplement or waiver under this Section may not:
(a) change the due dates for payments on any Note;
(b) reduce the amounts payable on any Note or change the form
of payment thereof;
(c) impair the right to institute suit for the enforcement of
any payment on or with respect to any Note;
(d) reduce the percentage of Units whose Holders must consent
to an amendment, supplement or waiver; or
(e) make any change in Sections 6.4 or 6.7 or this Section
9.2.
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Any amendment or supplement shall be effective upon certification to
the Trustee by the Company or an agent of the Company that such amendment or
supplement has been authorized by the Company and that the consent of the
Holders of Notes representing a majority of the Units then outstanding has been
obtained, unless such consents specify that they shall become effective at a
later date, in which case such amendment or supplement shall become effective in
accordance with the terms of such consent.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any amendment, supplement or waiver.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 9.3 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes or waiver of the provisions hereof or
thereof shall comply with the Trust Indenture Act as then in effect.
Section 9.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to his Note or portion of
a Note if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (a)
through (e) of Section 9.2. In that case, the amendment, supplement or waiver
shall bind each Holder of a Note who has consented to it and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note.
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Section 9.5 Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Section 9.6 Trustee To Sign Amendments, Etc. The Trustee shall sign
any amendment or supplement authorized pursuant to this Article IX if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplement, the
Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive and, subject to Section 7.1, shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplement is authorized or permitted
by this Indenture, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms.
ARTICLE X
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the Trust Indenture Act, the
required provision shall control.
Section 10.2 Notices. Any notice or communication by the Company or
the Trustee to the other is duly given if in writing and delivered in person or
by facsimile or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
Home Holdings Inc.
59 Maiden Lane
New York, New York 10038
Attention: General Counsel
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if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Trustee
Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
receipt is acknowledged, if facsimiled; and five calendar days after mailing if
sent by registered or certified mail (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication to a Noteholder shall be mailed by
first-class mail or other equivalent means to his address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Noteholder
or any defect in it shall not affect its sufficiency with respect to other
Noteholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it. If the Company mails a notice or communication to Noteholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 10.3 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to Section 312(b) of the Trust Indenture
Act with other Noteholders with respect to their rights under this Indenture or
the Notes. The Company, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the Trust Indenture Act.
Section 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
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(a) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Section 10.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(a) a statement that each party making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such party, he or
she has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each
such party, such condition or covenant has been complied with;
provided, however, that with respect to matters of law, an Officers' Certificate
may be based upon an Opinion of Counsel, unless the signers know, or in the
exercise of reasonable care should know, that such Opinion of Counsel is
erroneous, and provided, further, that with respect to matters of fact an
Opinion of Counsel may rely on an Officers' Certificate or certificates of
public officials, unless the signer knows, or in the exercise of reasonable care
should know, that any such document is erroneous.
Section 10.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Noteholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 10.7 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open either
in New York City or in the city where the principal corporate trust office of
the Trustee is located. If a payment date is a Legal Holiday at a place of
payment, payment may be made at such place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
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Section 10.8 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their creation
and if any liability does exist, such liability is waived and released as
provided in the Notes.
Section 10.9 Duplicate Originals. The Parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section 10.10 Governing Law. The internal laws of the State of New
York shall govern this Indenture and the Notes, without regard to the conflicts
of laws rules thereof which would result in the application of the laws of any
other jurisdiction. The Company hereby irrevocably submits to the jurisdiction
of any federal or New York State court sitting in the Borough of Manhattan in
New York City in respect of any suit, action or proceeding arising out of or
relation to this Indenture, and irrevocably agrees that all claims in respect of
any such suit, action or proceeding may be heard and determined in any such
court. The Company irrevocably waives, to the fullest extent it may effectively
do so under applicable law, any objection which it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 10.11 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 10.12 Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successors.
Section 10.13 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and delivered as of the date first above written.
HOME HOLDINGS INC.,
as Issuer
By:____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By:____________________________________
Name:
Title:
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Exhibit A
[Form of Earn Out Note Series I to be attached]
26
<PAGE>
EARN OUT NOTES, SERIES I
EXHIBIT A
(Face of Note)
REGISTERED CUSIP No.__________
No. Number of Units: ________
HOME HOLDINGS INC.
Earn Out Note, Series I
Home Holdings Inc., a Delaware corporation (the "Company"), for
value received, promises to pay to _______________, or registered assigns, the
amounts payable on ________ Units on the dates and to the Persons specified on
the reverse hereof.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee or an authenticating agent under the Indenture referred to on the
reverse hereof.
Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
HOME HOLDINGS INC.
By:_____________________________
Name:
Title:
By:______________________________
Name:
Title:
(SEAL)
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-mentioned
indenture.
WILMINGTON TRUST COMPANY
Trustee
By:_______________________
Authorized Signatory
<PAGE>
(Back of Note)
[HOME HOLDINGS INC.]
Earn Out Note, Series I
1. Definitions. As used in this Note, the following terms shall have
the following meanings:
"Accrual Period" with respect to a Payment Date shall mean the
period commencing on the day following the Initial Certification Date of the
year preceding the year in which the Payment Date occurs and ending on the
Initial Certification Date of the year in which the Payment Date occurs.
"Accruals" means Initial Accruals, Final Accruals and Interest
Accruals.
"Actual Payment" means any actual payment made with respect to
the Note pursuant to Sections 2 and 3 herein.
"Adjusted Taxable Income" means taxable income (as defined in
Section 63 of the Code or, in the case of a consolidated group as defined in
Treas. Reg. ss. 1.1502-1(h), Treas. Reg. ss. 1.1502-11) of the Home Group,
excluding income against which the Specified NOL Carryovers may not be offset by
reason of Treas. Reg. ss. 1.1502-21T or any successor provision of the Treasury
Regulations, determined without taking into account any deduction for the
Specified NOL Carryovers.
"Adjusted Treasury Rate" with respect to a Taxable Year means
the sum of (i) the annual yield reported on page PXI of the Bloomberg Financial
Market Services Screen for the off-the-run 5-year Treasury Note on the Payment
Date with respect to such Taxable Year and (ii) 35 basis points.
"Aggregate Sharing Percentage" means 52% plus [(.52 * the sum
of the number of Units held in the Reserve and the number of Units issued from
the Reserve)/315,000].
"Allocated Participation" means, with respect to a Taxable
Year of the Company, the Aggregate Sharing Percentage of the Tax Savings
(including Tax Savings arising with respect to Deemed Taxable Income) for such
year.
"Business Day" means a day that is not a Legal Holiday.
<PAGE>
2
"Change of Law" means a change in any federal, state or local
statute, unappealable and final court decision, regulation, ruling or other
administrative practice or order, or any lapse or reinterpretation of existing
law.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute and references to Sections of the Code shall be deemed
to include successor provisions of the Code or any successor statute.
"Company" means Home Holdings Inc., a Delaware
corporation or, in the event that Home Holdings Inc. merges with another entity
in which Home Holdings Inc. is not the surviving entity, Company shall, from and
after the date of such merger, mean the successor to Home Holdings Inc. in such
merger or, except for purposes of Section 15 hereof and Section 4.3 of the
Indenture, if such successor is an entity that is disregarded as an entity
separate from its owner for Federal income tax purposes, the owner of such
entity.
"Cumulative Accruals" has the meaning given to such term in
Section 2(c).
"Cumulative Adjusted Taxable Income of the Home Group" as of
any date shall mean the sum of the Adjusted Taxable Income of the Home Group
(from time to time) for each Taxable Year from the Taxable Year that includes
the Effective Date through such date.
"Cumulative Target Payment Date Accruals" has the meaning
given to such term in Section 3(c)(iii).
"Deemed Accrual" means any amount that accrues pursuant to
Section 3(c) hereof.
"Deemed Tax Savings" has the meaning given such term in
Section 3(c)(i)A).
"Deemed Taxable Income" has the meaning given such term in
Section 3(c)(i)(A).
"Effective Date" means the date on which the Plan becomes
effective.
"Final Accrual" with respect to a Taxable Year has the meaning
given to such term in Section 2(b)(ii).
"Final Certification" with respect to the Tax Savings for a
Taxable Year has the meaning given to such term in Section 2(a)(ii).
<PAGE>
3
"Final Certification Date" with respect to the Tax Savings for
a Taxable Year has the meaning given to such term in Section 2(a)(ii).
"Final Deemed Accrual" with respect to a Target has the
meaning given to such term in Section 3(c)(ii)(B).
"Final Deemed Certification" with respect to a Target has the
meaning given to such term in Section 3(c)(i)(B).
"Final Deemed Certification Date" with respect to a Target has
the meaning given to such term in Section 3(c)(i)(B).
"Final Determination" means, with regard to any federal tax, a
determination as defined in Section 1313(a) of the Code; with respect to any
other tax, a "Final Determination" means any final determination of liability in
respect of tax, which, under applicable law, is not subject to further appeal,
review or modification through proceedings or otherwise, and shall include the
payment of tax by the Company with respect to any item disallowed by any taxing
authority.
"Final Payment Date" with respect to a Taxable Year means
October 15 following the Final Certification Date with respect to such Taxable
Year.
"Final Target Payment Date" with respect to a Target Date
means October 15 following the Final Deemed Certification Date with respect to
such Target Date.
"First Target" has the meaning given to such term in Section
3(b)(i).
"First Target Date" has the meaning given to such term in
Section 3(b)(i).
"Fourth Target" has the meaning given to such term in Section
3(b)(v).
"Fourth Target Date" was the meaning given such term in
Section 3(b)(v).
"Holder" means a person in whose name a Note is registered.
"Home Group" means the Company, and, with respect to any
period for which it joins in filing consolidated returns for Federal income tax
purposes, the consolidated group (as defined in Treas. Reg. Section 1.1502-1(h))
of which the Company is a member.
<PAGE>
4
"Indenture" has the meaning given to such term in Section 8.
"Initial Accrual" with respect to a Taxable Year has the
meaning given to such term in Section 2(b)(i).
"Initial Certification" with respect to the Tax Savings as
preliminarily calculated for a Taxable Year has the meaning given to such term
in Section 2(a)(i).
"Initial Certification Date" with respect to the Tax Savings
as preliminarily calculated for a Taxable Year has the meaning given to such
term in Section 2(a)(i).
"Initial Deemed Accrual" with respect to a Target has the
meaning given to such term in Section 3(c)(ii)(A).
"Initial Deemed Certification" with respect to a Target has
the meaning given such term in Section 3(c)(i)(A).
"Initial Deemed Certification Date" with respect to a Target
has the meaning given to such term in Section 3(c)(i)(A).
"Initial Target Payment Date" with respect to a Target Date
means October 15 following the Initial Deemed Certification Date with respect to
such Target Date.
"Interest Accrual" has the meaning given to such term in
Section 2(b)(ii).
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open either in New York City or in
the city where a Payment on the Note is to be made.
"Material Change of Law" means a Change of Law that prohibits
or effectively proscribes the Zurich Group from conducting its business in the
United States of America.
"Note" or "Notes" as used herein shall refer to the Company's
Earn Out Notes, Series I.
"Payment Date" means October 15 of each year.
"Plan" means the Revised Third Amended and Restated Plan of
Reorganization of the Company dated June 3, 1998 under Chapter 11 of
<PAGE>
5
Title 11 of the United States Code, Case No. 98 B 40319 (JHG), as amended,
modified and supplemented.
"Pro Rata Allocated Participation Allocation" means the
Allocated Participation multiplied by a fraction where the numerator is equal to
the number of units represented by this Note and the denominator is equal to
315,000 plus any additional units issued for the Reserve.
"Reserve" means the Reserve established under Section
5.3(h)(i) of the Plan.
"Second Target" has the meaning given such term in Section
3(b)(iii).
"Second Target Date" has the meaning given such term in
Section 3(b)(iii).
"Specified NOL Carryovers" shall mean the aggregate net
operating loss carryovers, as described in Section 172 of the Code and any
corresponding state and local income tax provisions, as the case may be,
available to the Company immediately after the Effective Date as set forth in
the Plan adjusted to take into account further reductions required as a result
of consummation of the Plan, including those reductions required pursuant to
Sections 108(b) and 382(l)(5) of the Code.
"Statute of Limitations" means the statutory period of
assessment for Federal taxes of the Company as set forth in Section 6501 of the
Code, and any corresponding provisions of state and local tax law.
"Supplemental First Target" has the meaning given such term in
Section 3(b)(ii).
"Supplemental First Target Date" has the meaning given such
term in Section 3(b)(ii).
"Target" has the meaning given to such term in Sections 3(a)
and (b).
"Target Date" means a date on which the First, Supplemental
First, Second, Third or Fourth Target occurs, as set forth in Section 3(b).
"Target Interest Accrual" has the meaning given such term in
Section 3(c)(ii)(B).
<PAGE>
6
"Target Payment" has the meaning given such term in Section
3(c).
"Target Payment Date" with respect to a Target has the meaning
given such term in Section 3(c)(iii).
"Target Payment Date Accruals" with respect to a Target
Payment Date has the meaning given such term in Section 3(c)(iii).
"Tax Returns" means, with respect to a Taxable Year of the
Company, the Federal, state and local income tax returns of the Company filed
with respect to such Taxable Year.
"Tax Savings" means, with respect to a Taxable Year of the
Company, the excess, if any, of (i) the Federal, state and local income taxes
that would have been payable by the Home Group if no deduction for the Specified
NOL Carryovers were available over (ii) actual Federal, state and local income
taxes payable by the Home Group in such Taxable Year. For this purpose, the term
"income taxes" shall include franchise taxes, alternative minimum taxes, and
other similar taxes.
"Taxable Year" means a taxable year of the Home Group that
ends after the Effective Date.
"Third Target" has the meaning given such term in Section
3(b)(iv).
"Third Target Date" has the meaning given such term in Section
3(b)(iv).
"Treas. Reg." means the Treasury Regulations promulgated under
the Code.
"Zurich Group" means the affiliated group of which Zurich
Insurance Company is the common parent. For this purpose, "affiliated group" has
the meaning given such term in Section 1504(a) of the Code (determined without
regard to the exceptions contained in Section 1504(b) of the Code).
2. Payments to Noteholders with respect to Tax Savings. The Company
promises to make payments on this Note in the amounts and at the times specified
in this Section.
(a) Computation And Certification of Tax Savings. The Tax
Savings shall be computed and certified as follows:
<PAGE>
7
(i) For each Taxable Year, the Company shall make a
preliminary calculation of all Tax Savings for such Taxable Year based
upon the Tax Returns as filed, and on or before September 25 of the year
following such Taxable Year, or on the next Business day if such date is a
Legal Holiday (an "Initial Certification Date"), the Chief Financial
Officer of the Company shall make an initial certification substantially
in the form attached hereto as Exhibit 1 (an "Initial Certification") of
such Tax Savings as so preliminarily calculated; and
(ii) For each Taxable Year with respect to which an
Initial Certification was made, within 10 days of the earlier to occur of
(A) the expiration of the Statute of Limitations with respect to all Tax
Returns to which the Initial Certification related and (B) a Final
Determination with respect to all Tax Savings to which the Initial
Certification related with respect to which the Statute of Limitations has
not expired (such earlier date, the "Final Certification Date"), the Chief
Financial Officer shall calculate the Tax Savings as finally determined,
and shall make a certification substantially in the form attached hereto
as Exhibit 2 (a "Final Certification") of such Tax Savings.
(b) Accruals. With respect to the taxable income of the
Company for each Taxable Year, the Company will, subject to the provisions of
Section 2(d) hereof, accrue the following amounts with respect to this Note to
be treated in accordance with the payment provisions of this Section:
(i) on the Initial Certification Date for each Taxable
Year, subject to Section 2(d), the Company shall accrue an amount equal to
(A) 35% of the Pro Rata Allocated Participation covered by such Initial
Certification if, and to the extent that the Cumulative Adjusted Taxable
Income of the Home Group is less than or equal to $200 million and (B) 20%
of the Pro Rata Allocated Participation covered by such Initial
Certification thereafter (the "Initial Accrual" with respect to such
taxable year); and
(ii) on the Final Certification Date with respect to any
Taxable Year, the Company shall accrue (x) an amount equal to the Pro Rata
Allocated Participation covered by such Final Certification minus the Pro
Rata Allocated Participation covered by the corresponding Initial Accrual
with respect to such Taxable Year (each a "Final Accrual", and
collectively, "Final Accruals") plus (y) interest thereon at the Adjusted
Treasury Rate with respect to such Taxable Year compounded annually
from the Payment Date through the Final Payment Date with respect to such
Taxable Year (each, an "Interest Accrual" and collectively, "Interest
Accruals").
<PAGE>
8
(c) Payments. On each Payment Date, the Company shall make a
payment with respect to the Note in an amount equal to the excess, if any, of
(i) the sum of (A) the Initial Accruals and Final Accruals pursuant to Section
2(b) (but not including Deemed Accruals, if any, with respect to Section 3(c))
that occur on or before September 25 of the year in which the Payment Date
occurs and (B) Interest Accruals with respect to Final Accruals described in
clause (c)(i)(A) that occur on or before September 25 of the year in which the
Payment Date occurs (the "Cumulative Accruals") through and including the
Payment Date over (ii) the total amount of Actual Payments previously made with
respect to the Note.
(d) Suspension of Accruals Due to Challenges. In the event
that the Internal Revenue Service (or, if applicable, any state or local taxing
authority) issues a notice of proposed adjustment (or any procedurally later
notice, such as a notice of proposed deficiency or a notice of deficiency)
which, if sustained, would disallow all or any portion of the Tax Savings
(including any Tax Savings that, but for this paragraph, would be taken into
account pursuant to Section 2 or treated under Section 3 hereof as arising with
respect to Deemed Taxable Income) for a Taxable Year, Initial Accruals and
Initial Deemed Accruals (pursuant to Section 2(b) or 3(c), as the case may be)
and related payments with respect to such challenged Tax Savings and any
correlative amounts for other Taxable Years may, at the option of the Company,
be suspended in their entirety until the Company receives a Final Determination
with respect to the challenged Tax Savings to which the Initial Accruals or
Initial Deemed Accruals relate; provided, however, that with respect to Tax
Savings relating to the first $200 million of Cumulative Adjusted Taxable Income
of the Home Group, Initial Accruals will not be suspended but shall be reduced
to 20% of the Pro Rata Allocated Participation until the Company receives a
Final Determination regarding such Tax Savings (at which time such Initial
Accruals shall be made taking into account such Final Determination), provided,
further, that the amount of any payment that is deferred by reason of this
Section 2(d) shall be increased by interest at the Adjusted Treasury Rate on the
amount of such payment as finally determined for the period of the suspension,
and provided, further, that this section shall not give the Company any right to
reclaim any payments previously made with respect to Initial Accruals that the
Company has not suspended.
(e) Penalty Interest. In the event that any payment due
hereunder is not made when due for any reason other than those set forth in
Section 2(d), the Company shall pay interest thereon at a rate of 8.31%,
accruing from the Payment Date to the date on which such payment is actually
made.
3. Minimum Cumulative Income Targets and Adjustments Thereto; Deemed
Accruals.
(a) Upon the terms and subject to the conditions set forth
herein and in the Indenture, the Company agrees to utilize its best efforts to
cause the Home Group to generate, after the Effective Date, Cumulative Adjusted
Taxable
<PAGE>
9
Income in amounts that are at least equal to the Minimum Cumulative Operating
Income Targets (the "Targets") set forth in (b) below.
(b) Targets. Subject to Section 3(d) below, the Targets are as
follows:
(i) From the Effective Date through December 31, 2000,
Cumulative Adjusted Taxable Income in an amount equal to (A) $200 million
multiplied by (B) a fraction, (x) the numerator of which is 731 minus the excess
of (i) the number of days after March 31, 1998 that the Effective Date occurs
over (ii) the number of days after May 1, 1998 that the Confirmation Date
occurs, and (y) the denominator of which is 731 (the "First Target");
(ii) $200 million of Cumulative Adjusted Taxable Income
(the "Supplemental First Target") from the Effective Date through December 31,
2001 (the "Supplemental First Target Date");
(iii) $400 million of Cumulative Adjusted Taxable Income
(the "Second Target") from the Effective Date through the end of the first
Taxable Year ending with or after the fifty-seventh month after the Effective
Date (the "Second Target Date");
(iv) $700 million of Cumulative Adjusted Taxable Income
(the "Third Target") from the Effective Date through the end of first Taxable
Year ending with or after the ninety-third month after the Effective Date (the
"Third Target Date");(1) and
(v) Cumulative Adjusted Taxable Income in an amount
equal to the lesser of $1 billion and 90% of the amount of Specified NOL
Carryovers (the "Fourth Target") from the Effective Date through the last year
of the NOL carryforward period of the Specified NOL Carryovers (the "Fourth
Target Date").(2)
(c) Target Payments. In the event that Cumulative Adjusted
Taxable Income of the Home Group through and including a Target Date is less
than the applicable Target, the sole remedy for the Holder shall be to receive a
payment on the Note (each a "Target Payment" and collectively "Target Payments")
determined as set forth below; provided that no payment shall be due pursuant to
this
- ----------
(1) Based on the current estimated amount of Specified NOL Carryovers, the
Third Target will effectively be reduced.
(2) Based on the current estimated amount of Specified NOL Carryovers, the
Fourth Target will not be operative.
<PAGE>
10
Section 3(c), and the Holder will have no remedy, in the event that a Target is
not met by reason of a Material Change in Law. No accruals or payments shall be
made pursuant to this Section 3(c) with respect to a Target if the Cumulative
Adjusted Taxable Income of the Home Group through and including a Target Date is
at least equal to such Target.
(i) Certification of Deemed Tax Savings. The Deemed Tax
Savings (as such term is defined below) for purposes of determining the amount
of any Target Payment shall be calculated as follows:
(A) On the Initial Certification Date following each
Target Date for which the Target is not met (an "Initial Deemed Certification
Date"), subject to Section 2(d), the Chief Financial Officer shall make an
initial certification in substantially the form attached hereto as Exhibit 3 (an
"Initial Deemed Certificate") of the Deemed Tax Savings for the Taxable Year
ended on such Target Date (an "Initial Deemed Certification") in an amount equal
to the amount that the Tax Savings would have been (the "Deemed Tax Savings"
with respect to such Target Date) if the Adjusted Taxable Income of the Home
Group for the Taxable Year ending on such Target Date were equal to the excess,
if any, of (x) the Target for such Target Date over (y) the Cumulative Adjusted
Taxable Income of the Home Group from the Effective Date through the end of the
Taxable Year of the Home Group immediately preceding the Taxable Year ending on
such Target Date (such excess with respect to such Target Date, the "Deemed
Taxable Income").
(B) For each Taxable Year for which an Initial Deemed
Certification was made, on a date (the "Final Deemed Certification Date") not
later than the date 10 days after the earlier to occur of: (x) the expiration of
the Statute of Limitations with respect to all Tax Returns for such Taxable
Year; or (y) a Final Determination with respect to the Specified NOL Carryovers
that were deemed utilized in calculating the Initial Deemed Certification with
respect to such Target Date; (a "Final Deemed Certification Date"), the Chief
Financial Officer shall calculate the Deemed Tax Savings with respect to such
Target Date as finally determined, and shall make a certification in
substantially the form attached hereto as Exhibit 4 (a "Final Deemed
Certification") of such Deemed Tax Savings; provided, however, in the event that
a Final Determination has previously occurred with respect to any later Taxable
Year(s), the Deemed Tax Savings as finally determined with respect to the
relevant Target Date shall be redetermined and reduced to the amount that would
have been so determined if the Deemed Taxable Income with respect to such Target
Date were reduced by an amount equal to the actual Adjusted Taxable Income for
such later Taxable Year(s).
(C) Characteristics of Deemed Income. Deemed Taxable
Income with respect to a Target Date shall be deemed to have the following
characteristics for purposes of Section 3(c):
<PAGE>
11
(x) to the extent of the actual Adjusted Taxable
Income for the taxable year that ends on the
Target Date, the same characteristics as such
actual Adjusted Taxable Income; and
(y) to the extent in excess of the amount described in
clause (x), the same characteristics as the actual
income of the Home Group from the Effective Date
through the relevant Target Date.
For avoidance of doubt, characteristics shall mean all characteristics relevant
to the taxation of an item of income, including, but not limited to, any
characteristics that may be relevant to the ability of The Home Group to utilize
the Specified NOL Carryovers to offset such item of income.
(ii) Accruals. Solely for purposes of this Section 3(c),
for any Taxable Year that includes a Target Date, the Company will accrue the
following amounts with respect to this Note:
(A) on the Initial Deemed Certification Date with
respect to a Target Date, the Company shall, subject to the provisions of
Section 2(d), accrue an amount equal to the Pro Rata Allocated Participation of
the amount that such Initial Accrual would have been if the Adjusted Taxable
Income for the Target Year had equaled the Deemed Taxable Income with respect to
such Target Date (each an "Initial Deemed Accrual" and collectively, "Initial
Deemed Accruals");
(B) on the Final Deemed Certification Date with respect
to any Target Date, the Company shall accrue (x) an amount equal to the Pro Rata
Allocated Participation of the amount that such Final Accrual would have been if
the Adjusted Taxable Income for the Target Year had equaled the Deemed Taxable
Income with respect to such Target Date (determined after taking into account
the proviso in clause 3(c)(i)(B) hereof), (each a "Final Deemed Accrual" and
collectively, "Final Deemed Accruals") plus (y) interest thereon at the Adjusted
Treasury Rate compounded annually with respect to such Target Date from the
Initial Target Payment Date with respect to such Target Date through the Final
Target Payment Date with respect to such Target Date (each, a "Target Interest
Accrual" and collectively, "Target Interest Accruals"). For purposes of
calculating Target Interest Accruals under this Section 3(c)(ii)(B), to the
extent that any redetermination and reduction of Deemed Taxable Income has been
made pursuant to the proviso in Section 3(c)(i)(B) (the "Proviso"), the Target
Interest Accrual shall be determined (i) without regard to such redetermination
and reduction of Deemed Taxable Income for the period from the Payment Date for
such Target Year through the Payment Date for the later Taxable Year referred to
in the Proviso, and (ii) taking into account such redetermination and reduction
thereafter.
<PAGE>
12
(iii) Payments. On each Payment Date with respect to
which an Initial Deemed Accrual or Final Deemed Accrual shall have occurred
pursuant to Section 3(b) hereof during the Accrual Period with respect to such
Payment Date (a "Target Payment Date"; such accruals with respect to a Target
Payment Date, the "Target Payment Date Accruals") the Company shall make a
payment with respect to the Note in an amount equal to the excess, if any, of
(A) the sum of (x) the Target Payment Date Accruals with respect to such Target
Payment Date and the Target Interest Accruals relating thereto plus (y) all
Initial Accruals and Final Accruals that occurred pursuant to Section 2 hereof
on or before September 25 preceding the Payment Date other than Initial or Final
Accruals that correspond to such Target Payment Date Accruals, together with any
related Interest Accruals (the "Cumulative Target Payment Date Accruals") with
respect to such Target Payment Date, over (B) the sum of (x) all Actual Payments
previously made with respect to the Note and (y) any Payments due pursuant to
Section 2 on such Payment Date with respect to the Note. For avoidance of doubt,
a Target Payment Date Accrual corresponds to an Initial Accrual or a Final
Accrual, as the case may be, if it is an Initial Deemed Accrual or Final Deemed
Accrual, as the case may be, that is calculated with respect to the same taxable
year as the Initial Accrual or Final Accrual, respectively.
(d) Reduction of Targets. In the event of the disallowance, in
whole or in part, of the deductibility of the Specified NOL Carryovers, or if,
as a result of a Change of Law, the deductibility of the Specified NOL
Carryovers is limited, any Target that exceeds the amount of Specified NOL
Carryovers that can be utilized by the Company to offset its income will be
adjusted so that it does not exceed such amount of Specified NOL Carryovers. In
addition, if at any time any Target otherwise exceeds the total amount of
Specified NOL Carryovers available to the Company to offset its income, such
Target will be reduced so that it does not exceed such amount of Specified NOL
Carryovers.
(e) Deemed Specified NOL Carryovers. In the event that the
Home Group fails to generate any Adjusted Taxable Income, for purposes of
calculating Target Payments due under this Section 3, the amount of the
Specified NOL Carryovers shall be deemed to equal the amount shown as such on
the Tax Returns of the Company for the first Taxable Year ending after the
Effective Date.
4. Accruals Following an Ownership Change Caused by Transfers of
Common Stock. In the event that holders of Common Stock of the Company transfer
more than 20% of such stock during the first two years following the Effective
Date, or any such stock thereafter, and such transfer causes an ownership change
within the meaning of Section 382 of the Code, the Company shall make payments
with respect to this Note with respect to the First, Supplemental First, Second,
Third and Fourth Target Dates, as applicable, that are no less than the amounts
that would have been due if such ownership change had not occurred, and, subject
to a Material Change of Law, taxable income in the taxable year ending on
<PAGE>
13
the relevant Target Date before deducting the Specified NOL Carryovers equaled
the excess of the respective Target (where appropriate) for such year over the
amount of taxable income with respect to which the Tax Savings have previously
been taken into account.
5. Method of Payment. The Company will make payments on this Note to
a registered Holder of each Note as of the close of business on the date
preceding any date on which a payment is to be made. The Company will make
payments in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
make payments by check payable in such money. It may mail a payment check to a
Holder's registered address. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding Business Day,
and no interest on the amount payable on such payment date shall accrue for the
intervening period. Amounts payable under the Notes shall be calculated based
upon the Pro Rata Allocated Participation Allocation of a single unit of Notes
(rounded to the nearest $0.01).
6. Covenant of Good Faith. In the preparation of the Tax Returns of
the Home Group or any proceeding related thereto, the Company will seek
realization of Tax Savings relating to the Specified NOL Carryovers in good
faith, provided however, that this covenant shall not give any Noteholders or
any other person any rights with respect to the preparation or filing of any Tax
Returns of the Home Group or the conduct of any proceeding with respect thereto
or any rights to confidential information of the Home Group or its affiliates.
7. Paying Agent and Registrar. Initially, Wilmington Trust Company,
a Delaware bank and trust company (the "Trustee"), Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, will act as Paying Agent
and Registrar. The Company may appoint and change any Paying Agent and Registrar
or Co-Registrar at any time without notice. The Company or any Subsidiary of the
Company may act in any such capacity.
8. Indenture. The Company issued this Note under an Indenture dated
as of July __, 1998 (the "Indenture") between the Company and the Trustee. The
terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of the Indenture. This
Note is subject to all such terms, and Noteholders are referred to the Indenture
and the Trust Indenture Act for a statement of such terms. Capitalized terms not
otherwise defined herein have the meaning attributed to them in the Indenture.
The Notes are obligations of the Company limited, in the aggregate, to the
Allocated Participation of the Tax Savings (based upon the Specified NOL
Carryovers).
<PAGE>
14
9. No Sinking Fund. The Notes do not provide for any mandatory
sinking fund.
10. Denominations, Transfer, Exchange. The Notes are in registered
form denominated in integral numbers of Units. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.
11. Transfer of Notes. The Notes will be transferable by Holders at
all times to the extent permitted by applicable securities laws; provided,
however, that the Company shall have the right to instruct the Trustee not to
register a proposed transfer of a Note if the Company has received a written
opinion of its counsel (a copy of which shall be delivered to the Trustee) to
the effect that such proposed transfer would cause an ownership change of the
Company within the meaning of Section 382(g) of the Code, and any such transfer
shall be deemed void ab initio.
12. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
13. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority of the Units then outstanding, and any existing Default may be
waived with the consent of the Holders of the Notes representing a majority of
the Units then outstanding. Without the consent of any Holder, the Indenture or
the Notes may be amended to cure any ambiguity, defect or inconsistency, to
provide for assumption of Company obligations to Noteholders, to provide for
uncertificated Notes in addition to certificated Notes, to make any change that
does not adversely affect the rights of any Holder or to comply with the Trust
Indenture Act.
14. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company to, among other things, consolidate with or merge
with or into any other Person or transfer all or substantially all its
properties and assets to another Person.
15. Successor Corporation. When a successor corporation or the
Parent (as defined in the Indenture) assumes all of the obligations of the
Company under the Notes and the Indenture and the transaction complies with the
terms of Article IV of the Indenture, the Company will be released from those
obligations.
16. Defaults and Remedies. Under the Indenture, an Event of Default
occurs if the Company defaults in the payment of amounts due on any Note
<PAGE>
15
when the same becomes due and payable and the default continues for a period of
___ days [certain events of bankruptcy or insolvency of the Company, provided,
however, that none of the transactions contemplated by the Reorganization Plan
shall constitute an Event of Default]. The Company must furnish an annual
compliance certificate to the Trustee.
17. Expiration. The Notes shall expire upon the final payment made
by the Company to the Holders with respect to the last Taxable Year of the NOL
carryforward period of the Specified NOL Carryovers if, but only if, all
payments required hereunder with respect to prior Taxable Years, together with
interest accrued thereon, have been paid in full.
18. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
19. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Notes.
20. Unclaimed Money. If money for the payment of amounts due under
the Note remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its request unless an abandoned property law
designates another person. After any such payment, Holders entitled to the money
must look only to the Company (unless an abandoned property law designates
another person) and not to the Trustee for payment.
21. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= as tenants in common), TEN ENT
(= as tenants by the entireties), JT TEN (= as joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
22. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES, WITHOUT REGARD TO THE CONFLICTS OF LAWS
RULES THEREOF WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK
CITY IN RESPECT OF ANY SUIT, ACTION OR
<PAGE>
16
PROCEEDING ARISING OUT OF OR RELATION TO THE INDENTURE OR THE NOTES, AND
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
<PAGE>
17
ASSIGNMENT FORM
To assign this Note, fill in the form below: I or we assign and transfer this
Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date:____________________ Your Signature ___________________________________
(Sign exactly as your name appears on the
other side of this security)
_________________________________________
Signature Guarantee
<PAGE>
EXHIBIT 1
EARN OUT NOTES, SERIES I
FORM OF CERTIFICATE
INITIAL CERTIFICATION OF TAX SAVINGS
I, [ ], the Chief Financial Officer of Home Holdings
Inc., a Delaware corporation (the "Company"), do hereby certify in such capacity
and on behalf of the Company, in my capacity as Chief Financial Officer of the
Company, that:
(i) The amount of the Tax Savings of the Company based on the Company's Tax
Returns as filed, as determined under Section 2(a) of the Note, for the
Taxable Year ended [ ] equals $_________.
(ii) The aggregate amount of Cumulative Accruals, as determined under Section
2(c) of the Note, with respect to the Notes to date equals $_________.
(iii) The aggregate amount of Actual Payments previously made by Company with
respect to the Notes equals $_________.
(iv) The net Payment due pursuant to Section 2 of the Note for the Taxable Year
ended [ ] equals $_______ (Line 2 minus Line 3), or $_______ per
Unit.
Dated: ______________
By:______________________________________
Name:
Title:
<PAGE>
EXHIBIT 2
EARN OUT NOTES, SERIES I
FORM OF CERTIFICATE
FINAL CERTIFICATION OF TAX SAVINGS
I, [ ], the Chief Financial Officer of Home Holdings Inc., a
Delaware corporation (the "Company"), do hereby certify in such capacity and on
behalf of the Company, in my capacity as Chief Financial Officer of the Company,
that:
(v) The amount of the Tax Savings of the Company based on the Company's Tax
Returns as filed, as finally determined under Section 2(a) of the Note,
for the Taxable Year to which this Final Certification relates, the
Taxable Year ended [ ], equals $________.
(vi) The aggregate amount of Cumulative Accruals, as determined under Section
2(c) of the Note (which includes all Interest Accruals that correspond to
the Tax Savings to which this Final Certification relates), with respect
to the Notes equals $_______.
(vii) The aggregate amount of Actual Payments previously made by the Company
with respect to the Notes equals $_______.
(viii) The net Payment due pursuant to Section 2(c) of the Note for the Taxable
Year ended [ ] equals $_______ (Line 2 minus Line 3), or $_______
per Unit.
Dated: ______________
By:______________________________________
Name:
Title:
<PAGE>
EXHIBIT 3
EARN OUT NOTES, SERIES I
FORM OF CERTIFICATE
INITIAL CERTIFICATION OF DEEMED TAX SAVINGS
I, [ ], the Chief Financial Officer of Home Holdings,
Inc., a Delaware corporation (the "Company"), do hereby certify in such capacity
and on behalf of the Company, in my capacity as Chief Financial Officer of the
Company, that:
(ix) The amount of the Deemed Tax Savings of the Company based on the
Company's Tax Returns as filed, as determined under Section 3(c) of the
Note, for the Taxable Year ended [ ] equals $_________.
(x) The aggregate amount of Cumulative Target Payment Date Accruals, as
determined under Section 3(c) of the Note, with respect to the Notes
equals $________.
(xi) The aggregate amount of the Actual Payments previously made by Company
with respect to the Notes equals $_________.
(xii) The amount of the simultaneous Payments to be made pursuant to Section 2
of the Note with respect to actual Tax Savings of the Company for the
Taxable Year ended [ ] equals $_________.
(xiii) The net Target Payment due pursuant to Section 3(c) of the Note for the
Taxable Year ended [ ] (Line 2 minus the sum of Lines 3 and 4)
equals $_______; or $_______ per Unit.
Dated: ______________
By:______________________________________
Name:
Title:
<PAGE>
EXHIBIT 4
EARN OUT NOTES, SERIES I
FORM OF CERTIFICATE
FINAL CERTIFICATION OF DEEMED TAX SAVINGS
I, [ ], the Chief Financial Officer of Home Holdings Inc., a
Delaware corporation (the "Company"), do hereby certify in such capacity and on
behalf of the Company, in my capacity as Chief Financial Officer of the Company,
that:
(xiv) The amount of the Deemed Tax Savings of the Company based on the
Company's Tax Returns as filed, as determined in accordance with Section
3(c) of the Note for the Taxable Year to which this Final Deemed
Certification relates, the Taxable Year ended [ ], equals
$__________.
(xv) The aggregate amount of Cumulative Target Payment Date Accruals, as
determined under Section 3(c) of the Note (which include Target Interest
Accruals that correspond to the Deemed Tax Savings to which this Final
Certification relates), with respect to the Notes equals $_______.
(xvi) The aggregate amount of Actual Payments made by the Company with respect
to the Notes equals $_______.
(xvii) The amount of the simultaneous Payments to be made pursuant to Section 2
of the Note with respect to actual Tax Savings of the Company for the
Taxable Year ended [ ] equals $__________.
(xviii) The net Target Payment due pursuant to Section 3(c) of the Note for the
Taxable Year ended [ ] (Line 2 minus the sum of Lines 3 and 4)
equals $_______, or $_______ per Unit.
Dated: ______________
By:______________________________________
Name:
Title:
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - x
In re :
HOME HOLDINGS INC., : Chapter 11
Case No. 98 B 40319 (JHG)
Debtor. :
- - - - - - - - - - - - - - - - x
FINDINGS OF FACT AND CONCLUSIONS OF LAW RELATING TO, AND
ORDER UNDER 11 U.S.C. ss. 1129(a) AND (b) CONFIRMING, THE
REVISED THIRD AMENDED AND RESTATED PLAN OF REORGANIZATION OF
HOME HOLDINGS INC. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
<PAGE>
RECITALS
WHEREAS, Home Holdings Inc., debtor and debtor-in-possession ("Home
Holdings" or the "Debtor"), filed with the Court its plan of reorganization,
dated January 15, 1998 (the "Original Plan"), and related disclosure statement,
dated January 15, 1998; and
WHEREAS, on January 15, 1998, the Court entered orders that (i)
approved the form of notice of the Confirmation Hearing (the "Confirmation
Hearing Notice"), (ii) established certain procedures for publication of the
Confirmation Hearing Notice and for filing and service of objections to the Plan
(as hereinafter defined), (iii) established solicitation, voting, and tabulation
procedures and deadlines (collectively, the "Procedures Orders"), and (iv) fixed
April 3, 1998 as the date for the hearing to consider confirmation of the
Original Plan; and
WHEREAS, on March 6, 1998, the Debtor filed with the Court its
Amended Plan of Reorganization, dated March 3, 1998 (the "First Amended Plan"),
and its Amended Disclosure Statement dated March 3, 1998 (the "Disclosure
Statement"); and
WHEREAS, notice of a hearing on the Disclosure Statement was served
upon all parties required by the
1
<PAGE>
Procedures Orders on January 23, 1998 and published in national editions of The
New York Times and the Wall Street Journal on January 30, 1998, as set forth in
the affidavits of Jeanne M. Carr, sworn to on January 29, 1998 and February 27,
1998, respectively; and
WHEREAS, on March 4, 1998, the Court entered an order that, among
other things, approved the Disclosure Statement pursuant to section 1125 of the
Bankruptcy Code (the "Disclosure Statement Order"); and
WHEREAS, the Confirmation Hearing Notice, the Disclosure Statement,
the First Amended Plan, and solicitation letters (the "Solicitation Letters")
from the Official Committee of Unsecured Creditors (the "Creditors' Committee")
and the prepetition committee of holders of Home Holdings' Senior Notes(1) (the
"Senior Noteholders' Committee") were transmitted on or before March 6, 1998 to
all holders of Claims (as defined in section 101(5) of the Bankruptcy Code) and
Equity Interests and other parties in interest in accordance with Bankruptcy
Rule 3017(d) and the Procedures Orders, as set forth in the affidavit of Jeanne
M. Carr,
- --------
(1) All capitalized terms are defined herein or in Appendix A hereto.
2
<PAGE>
Senior Vice President of MacKenzie Partners, the Debtor's Information and
Tabulation Agent, sworn to on May 15, 1998 (the "First Carr Affidavit"), and the
Confirmation Hearing Notice was published in the national editions of each of
the New York Times and the Wall Street Journal on March 6, 1998, as set forth in
the affidavit of publication, sworn to on May 29, 1998 (the "Publication
Certification"); and
WHEREAS, on or about March 27, 1998, Whitman Corporation ("Whitman")
filed with the Court a motion to intervene in the Chapter 11 Case (the "Motion
to Intervene"); and
WHEREAS, the Court held a hearing on the Motion to Intervene on
April 17, 1998; and
WHEREAS, the Court denied the Motion to Intervene by order dated
April 24, 1998 (the "April 24 Order") on the grounds that Whitman was not a
party in interest and had an adequate remedy in State Court; and
WHEREAS, on April 3, 1998, the Court fixed April 29, 1998 as the
adjourned date for the hearing to consider confirmation of the First Amended
Plan; and
WHEREAS, on April 17, 1998, Whitman filed an action in the Supreme
Court of the State of New York
3
<PAGE>
seeking, among other things, to enjoin The Home Insurance Company ("Home
Insurance") from participating in certain transactions under the Plan, which
action Home Insurance removed to the District Court for the Southern District of
New York on the grounds that it was related to this bankruptcy; and
WHEREAS, on April 19, 1998, the Plan Supplement was filed with the
Court and thereafter amended by the Amended Plan Supplement and the Second
Amended Plan Supplement, which were filed with the Court on May 15, 1998 and May
29, 1998, respectively, as amended on June 3, 1998 (as modified, supplemented or
amended, the "Plan Supplement"); and
WHEREAS, on April 29, 1998, the Debtor filed a motion under 11
U.S.C. ss. 1127 and Fed. R. Bankr. P. 3019 for an order determining that
modifications to the First Amended Plan should be deemed accepted by parties who
previously accepted the First Amended Plan, that the Disclosure Statement
contains adequate information for the modifications to the First Amended Plan,
and that no resolicitation of votes is required (the "Modification Motion"); and
4
<PAGE>
WHEREAS, on April 29, 1998, the Debtor filed with the Court its
Second Amended Plan of Reorganization, dated April 29, 1998 (the "Second Amended
Plan"); and
WHEREAS, on April 29, 1998, the Court fixed May 26, 1998 as the
adjourned date to consider confirmation of the Second Amended Plan; and
WHEREAS, the Modification Motion and the Second Amended Plan were
transmitted on April 29, 1998 to all holders of Claims and Equity Interests and
other parties in interest in accordance with the Procedures Orders, as set forth
in the affidavit of Jeanne M. Carr, Senior Vice President of MacKenzie Partners,
the Debtor's Information and Tabulation Agent, sworn to May 22, 1998 (the
"Second Carr Affidavit"); and
WHEREAS, Whitman filed a notice of appeal from the April 24 Order on
or about May 4, 1998, and requested a stay pending appeal at a hearing before
the Court on May 15, 1998, when the Court orally denied such motion and sua
sponte vacated the April 24 Order with the consent of the Plan Proponents
because Home Insurance's removal of Whitman's State Court action left Whitman
without a forum to be heard prior to the Confirmation Hearing; and
5
<PAGE>
WHEREAS, on May 15, 1998, the Debtor filed the First Carr Affidavit
certifying the results of the ballot and master ballot tabulation for the
classes of claims voting to accept or reject the First Amended Plan; and
WHEREAS, on May 22, 1998, the Debtor filed its Third Amended Plan
and served a copy thereof upon all parties which had filed notices under Fed. R.
Bankr. P. 2002 (the "2002 List"); and
WHEREAS, on May 26, 1998, the Court fixed June 1, 1998 as the
adjourned date for the hearing to consider confirmation of the Debtor's Third
Amended and Restated Plan, which plan was filed with the Court and served upon
the 2002 List on May 29, 1998; and
WHEREAS, on May 27, 1998, the Court entered an order vacating the
April 24 Order, granting the Motion to Intervene, and denying Whitman's motion
for a stay pending appeal as moot; and
WHEREAS, objections to confirmation of the Plan were filed by AmBase
Corporation ("AmBase"), Dr. Seymour Licht ("Licht"), the Pension Benefit
Guaranty Corporation ("PBGC"), The Bank of New York ("BNY"), James D. Weadock,
an
6
<PAGE>
individual shareholder of the Debtor ("Weadock"), and Whitman; and
WHEREAS, pursuant to section 1128(a) of the Bankruptcy Code, the
Court held a hearing commencing on June 1, 1998 (the "Confirmation Hearing") to
consider confirmation of the Debtor's Third Amended and Restated Plan; and
WHEREAS, at the Confirmation Hearing, AmBase, the PBGC, and BNY each
withdrew their respective objections to confirmation of the Plan; and
WHEREAS, at the Confirmation Hearing, the Court granted AmBase's
oral motion to change its vote to vote to accept the Plan as a holder of a Class
9 Claim; and
WHEREAS, on June 3, 1998, the Debtor filed its Revised Third Amended
and Restated Plan (as modified, supplemented, or amended, together with the Plan
Supplement, the "Plan").
NOW, THEREFORE, based upon the Court's review of the affidavits
previously filed with the Court, including the First Carr Affidavit, the Second
Carr Affidavit, and the Publication Certification; and upon the Modification
Motion; and upon the record of the Confirmation Hearing before the
7
<PAGE>
Court on June 1, 2, 3, and 4, 1998; and appearances having been noted on the
record of the Confirmation Hearing by (i) Skadden, Arps, Slate, Meagher & Flom,
LLP, counsel for Home Holdings, (ii) Paul, Weiss, Rifkind, Wharton & Garrison,
counsel for the Zurich Group, (iii) Anderson Kill & Olick, counsel for the
Creditors' Committee, (iv) Simpson Thacher & Bartlett, P.C., counsel for the
Trygg-Hansa Group, (v) Dewey Ballantine LLP, counsel for Home Insurance, (vi)
White & Case, counsel for the New Hampshire Department of Insurance, (vii) Roger
M. Moak, Esq., General Counsel of Risk Enterprise Management Limited, (viii)
Luskin & Stern, counsel for BNY, (ix) Kartar S. Khalsa, Esq. for the Office of
General Counsel of the PBGC, (x) Pryor, Cashman, Sherman & Flynn, counsel for
AmBase, (xi) Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P., counsel
for Whitman, and (xii) Paul Schwartzberg, Esq., for Carolyn S. Schwartz, Esq.,
the United States Trustee; and AmBase, BNY, and the PBGC having each withdrawn
their respective objections at the Confirmation Hearing; and the Court having
considered the memoranda in support of confirmation of the Plan filed by Home
Holdings and the Creditors' Committee, and the objections to confirmation to the
Plan filed by Whitman,
8
<PAGE>
Licht, and Weadock; and the Court having considered the testimony proffered or
adduced at the Confirmation Hearing in support of confirmation of the Plan,
including the proffer of Richard H. Hershman ("Hershman") and the testimony of
Hershman, Paul Eric Siegert, and David Nichols, the exhibits admitted into
evidence at the Confirmation Hearing, the evidence adduced at the Confirmation
Hearing by Whitman in opposition to confirmation of the Plan, including the
cross-examination of the aforesaid witnesses, and the arguments of counsel
presented at the Confirmation Hearing; and upon the entire record of the Chapter
11 Case; and after due deliberation thereon;
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IT IS HEREBY FOUND AND DETERMINED that(2)
1. Modification Motion.
The Modification Motion is deemed to apply to the Plan. The
modifications to the First Amended Plan as set
- --------
(2) Findings of fact shall be construed as conclusions of law and conclusions
of law shall be construed as findings of fact when appropriate. See Fed.
R. Bankr. P. 7052.
9
<PAGE>
forth in the Plan constitute changes that do not materially adversely affect any
creditor, Equity Interest holder, or other party in interest. As such, under
Bankruptcy Rule 3019, these modifications do not require additional disclosure
under section 1125 of the Bankruptcy Code or resolicitation of acceptances or
rejections of the Plan under section 1126 of the Bankruptcy Code, nor do they
require that holders of Claims or Equity Interests be afforded an opportunity to
change previously cast acceptances or rejections of the Plan.
2. Core Proceeding (28 U.S.C. ss. 157(b)(2)). Confirmation of the
Plan is a core proceeding under 28 U.S.C. ss. 157(b)(2).
3. Transmittal And Mailing Of Materials; Notice. The Disclosure
Statement, the First Amended Plan, the Ballots, the Confirmation Hearing Notice,
the Solicitation Letters, the Second Amended Plan, and the Modification Motion
were transmitted and served in compliance with the Procedures Orders and the
Bankruptcy Rules, and such transmittal and service were adequate and sufficient.
Adequate and sufficient notice of the hearing on the Disclosure Statement, the
Confirmation Hearing, the hearing
10
<PAGE>
on the Modification Motion, and hearings described in the Procedures Orders was
given in compliance with the Bankruptcy Rules and the Procedures Orders, and no
further notice is required.
4. Plan Compliance With Bankruptcy Code (11 U.S.C. ss. 1129(a)(1)).
The Plan complies with the applicable provisions of the Bankruptcy Code and the
Bankruptcy Rules, thereby satisfying 11 U.S.C. ss. 1129(a)(1).
(a) Proper Classification (11 U.S.C. ss.ss. 1122, 1123(a)(1)).
The Plan designates eight (8) Classes of Claims(3) and one (1) Class of Equity
Interests. The Claims and Equity Interests placed in each Class are
substantially similar to other Claims or Equity Interests, as the case may be,
in each such Class, and such classification is therefore consistent with section
1122 of the Bankruptcy Code. Valid business and legal reasons exist for the
various Classes of Claims and Equity Interests created under the Plan, and such
Classes do not unfairly discriminate between holders of Claims or Equity
Interests. Specifically, Classes 5, 6, and
- --------
(3) Class 4 consists of five subgroups constituting a single Class of Claims
designated as Group 4-A, 4-B, 4- C, 4-D, and 4-E. Class 9 consists of two
subgroups constituting a single Class of Claims designated as Group 9-A
and 9-B.
11
<PAGE>
7 are classified separately from other Unsecured Claims to take into account
contractual subordination provisions and to give effect to the negotiated
compromises achieved among the Debtor and the principal parties involved in the
formulation of the Plan. Class 9 is classified separately from other Unsecured
Claims because of the unique issues of AmBase pertaining to AmBase's Claims. In
addition, in accordance with section 1122(b) of the Bankruptcy Code, the Plan
provides for a Class of General Unsecured Claims of $2,000 or less. This Class
is reasonable and necessary for administrative convenience. Thus, valid legal
and business reasons exist for separate classification of Classes 5, 6, 7, and
9. Thus, the Plan satisfies section 1123(a)(1) of the Bankruptcy Code.
(b) Specified Treatment Of Unimpaired Classes (11 U.S.C. ss.
1123(a)(2)). The Plan specifies that Classes 1, 2, and 3 are not impaired under
the Plan, thereby satisfying section 1123(a)(2) of the Bankruptcy Code.
(c) Specified Treatment Of Impaired Classes (11 U.S.C. ss.
1123(a)(3)). Sections 3.4 (impaired Claims) and 3.5 (impaired Claims and Equity
Interests) and Article IV of the Plan specify the treatment of impaired Classes
4,
12
<PAGE>
5, 6, 7, 8, and 9, thereby satisfying section 1123(a)(3) of the Bankruptcy Code.
(d) No Discrimination (11 U.S.C. ss. 1123(a)(4)). The Plan
provides for the same treatment for each Claim or Equity Interest in each
respective Class unless the holder of a particular Claim or Equity Interest has
agreed to a less favorable treatment of such Claim or Equity Interest, thereby
satisfying section 1123(a)(4) of the Bankruptcy Code.
(e) Implementation Of The Plan (11 U.S.C. ss. 1123(a)(5)).
Article VIII of the Plan provides adequate and proper means for implementation
of the Plan, thereby satisfying section 1123(a)(5) of the Bankruptcy Code.
(f) Nonvoting Equity Securities (11 U.S.C. ss. 1123(a)(6)).
Pursuant to Section 7.4 of the Plan, Reorganized Home's Amended Certificate of
Incorporation prohibits the issuance of nonvoting equity securities, thereby
satisfying section 1123(a)(6) of the Bankruptcy Code. The holders of shares of
New Common Stock, after the Effective Date, will vote as a single class on the
basis of one vote per share of New Common Stock.
(g) Selection Of Officers And Directors
13
<PAGE>
(11 U.S.C. ss. 1123(a)(7)). The provisions of the Plan and the Amended
Certificate of Incorporation regarding the manner of selection of officers and
directors of Reorganized Home are consistent with the interests of creditors and
Equity Interest holders and with public policy, thereby satisfying section
1123(a)(7) of the Bankruptcy Code. Specifically, Section 7.3(a) of the Plan
provides that the initial Board of Directors of Reorganized Home shall consist
of two individuals, whose names were disclosed in the Plan Supplement filed on
April 19, 1998. Each of the members of such initial Board of Directors shall
serve until the first annual meeting of stockholders of Reorganized Home or
their earlier resignation or removal in accordance with the Amended Home
Certificate of Incorporation or Amended Home Bylaws, as the same may be amended
from time to time. Section 7.3(b) identifies the individuals who shall serve as
the initial officers of Reorganized Home on and after the Effective Date.
The board of directors shall have the responsibility for the
management, control, and operation of Reorganized Home after the Effective Date.
14
<PAGE>
(h) Impairment Of Classes (11 U.S.C. ss. 1123(b)(1)). In
accordance with section 1123(b)(1) of the Bankruptcy Code, Articles III and IV
of the Plan impair and leave unimpaired, as the case may be, each class of
Claims and Equity Interests under the Plan.
(i) The Assumption Of Executory Contracts (11 U.S.C. ss.
1123(b)(2)). The Plan constitutes a motion by the Debtor to assume, as of the
Effective Date, all executory contracts to which the Debtor is a party, except
for any executory contract (i) which has been assumed pursuant to an order of
the Court prior to the Confirmation Date, (ii) which has been rejected pursuant
to an order of the Court entered prior to the Confirmation Date, or (iii) which
is set forth in Schedule 6.1(a)(x) (executory contracts), which schedule is
included in the Plan Supplement. The Debtor's decision regarding the assumption
or rejection of the executory contracts is based on and is within the sound
business judgment of the Debtor, is in the best interests of the Debtor, its
estate, and its creditors and Equity Interest holders. The Plan accordingly
complies with section 1123(b)(2) of the Bankruptcy Code.
15
<PAGE>
(j) Retention, Enforcement And Settlement Of Claims Held By
The Debtor (11 U.S.C. ss. 1123(b)(3)). Pursuant to section 1123(b)(3) of the
Bankruptcy Code, Section 8.6 of the Plan provides that except as otherwise
provided in the Plan, Reorganized Home will retain and may prosecute any and all
causes of actions accruing to the Debtor and Debtor-in-Possession, including,
without limitation, actions under sections 544, 547, 548, 549, 550, 551, and 553
of the Bankruptcy Code for the benefit of Reorganized Home in accordance with
the provisions of the Plan. Reorganized Home may pursue such retained causes of
action as it shall determine in its sole and absolute discretion in accordance
with the provisions of the Plan.
5. The Debtor's Compliance With The Bankruptcy Code (11 U.S.C. ss.
1129(a)(2)). The Debtor has complied with the applicable provisions of the
Bankruptcy Code, thereby satisfying section 1129(a)(2) of the Bankruptcy Code.
Specifically:
(a) Home Holdings is a corporation organized under the laws of
the State of Delaware, and is a proper debtor under section 109 of the
Bankruptcy Code.
16
<PAGE>
(b) On January 15, 1998, Home Holdings filed a Chapter 11
petition pursuant to section 301 of the Bankruptcy Code.
(c) The Court has jurisdiction over this Chapter 11 case
pursuant to 28 U.S.C. ss. 1334.
(d) Venue of this case is proper in this district pursuant to
28 U.S.C. ss. 1408.
(e) Home Holdings is a proper proponent of the Plan pursuant
to section 1121(a) of the Bankruptcy Code.
6. Plan Proposed In Good Faith (11 U.S.C. ss. 1129(a)(3)). The
Debtor has proposed the Plan in good faith and not by any means forbidden by
law, thereby satisfying section 1129(a)(3) of the Bankruptcy Code.
7. Payments For Services Or Costs And Expenses (11 U.S.C. ss.
1129(a)(4)). Any payment made or to be made by the Debtor, or by a person
issuing securities or acquiring property under the Plan, for services or for
costs and expenses in or in connection with the Chapter 11 Case, or in
connection with the Plan and incident to the Chapter 11 Case, has been approved
by, or is subject to the approval of, the Court as reasonable, thereby
satisfying section 1129(a)(4) of the Bankruptcy Code.
17
<PAGE>
8. Directors, Officers, And Insiders (11 U.S.C. ss. 1129(a)(5)). The
Debtor has complied with section 1129(a)(5) of the Bankruptcy Code. To the
extent known at this time, the Debtor has disclosed the identity and
affiliations of any individual proposed to serve, after confirmation of the
Plan, as a director or officer of Reorganized Home.
9. No Rate Changes (11 U.S.C. ss. 1129(a)(6)). No governmental
regulatory commission has jurisdiction over the rates charged by Home Holdings.
Thus, the Plan does not provide for the change in any rates which require
regulatory approval, thereby satisfying section 1129(a)(6) of the Bankruptcy
Code.
10. Best Interests Of Creditors Test (11 U.S.C. ss. 1129(a)(7)). The
Plan satisfies section 1129(a)(7) of the Bankruptcy Code. Specifically:
(a) The liquidation analysis contained in the Disclosure
Statement and other evidence proffered or adduced at the Confirmation Hearing
have not been controverted by other evidence.
(b) Each holder of a Claim or holder of an Equity Interest in
each impaired Class either has accepted
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the Plan or will receive or retain under the Plan on account of such Claim or
Equity Interest property of a value, as of the effective date of the Plan, that
is not less than the amount that such holder would receive or retain if the
Debtor were liquidated under Chapter 7 of the Bankruptcy Code on such date. No
Class has made an election under section 1111(b)(2) of the Bankruptcy Code.
11. Acceptance By Certain Classes (11 U.S.C. ss. 1129(a)(8)). Except
for the Classes set forth in paragraph 18 below, each Class of Claims has
accepted the Plan, or is not impaired under the Plan and therefore is
conclusively presumed to have accepted the Plan without the need for
solicitation of acceptances or rejections with respect to such Class. Because
not all impaired Classes of Claims and Equity Interests have accepted the Plan
or are deemed to have accepted the Plan, the requirements of section 1129(a)(8)
have not been met, thus requiring application of section 1129(b) of the
Bankruptcy Code. The holder of Class 7 Senior Subordinated Note Claims, Zurich
Home Investments Limited ("ZHIL"), has consented to its treatment under the
Plan, providing that ZHIL will not
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receive or retain any property or interest in property on account of its Senior
Subordinated Note Claims.
12. Treatment Of Administrative And Tax Claims (11 U.S.C. ss.
1129(a)(9)). The treatment of Administrative Expense Claims and Other Priority
Claims under Sections 2.1 and 4.1 of the Plan satisfies the requirements of
section 1129(a)(9)(A) and (B) of the Bankruptcy Code, and the treatment of
Priority Tax Claims under Section 2.3 of the Plan satisfies the requirements of
section 1129(a)(9)(C) of the Bankruptcy Code.
13. Acceptance By Impaired Classes (11 U.S.C. ss. 1129(a)(10)). At
least one Class of Claims that is impaired under the Plan has accepted the Plan,
determined without including any acceptance of the Plan by any insider of the
Debtor holding a Claim in such Class, thereby satisfying section 1129(a)(10) of
the Bankruptcy Code.
14. Feasibility (11 U.S.C. ss. 1129(a)(11)). Based upon the evidence
proffered or adduced at or prior to the Confirmation Hearing, confirmation of
the Plan is not likely to be followed by the liquidation or the need for further
financial reorganization of Home Holdings or any successor
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to Home Holdings, thereby satisfying section 1129(a)(11) of the Bankruptcy Code.
15. Payment Of Fees (11 U.S.C. ss. 1129(a)(12)). All fees payable
under 28 U.S.C. ss. 1930 have been paid or will be paid as Administrative Claims
on the Effective Date pursuant to Section 12.8 of the Plan, thereby satisfying
section 1129(a)(12) of the Bankruptcy Code.
16. Continuation Of Retiree Benefits (11 U.S.C. ss. 1129(a)(13)).
Section 6.4 of the Plan satisfies section 1129(a)(13) of the Bankruptcy Code, to
the extent applicable. The Plan provides that, pursuant to the Pension Plan
Agreement, effective on the date of consummation of the Acquisition Agreement,
the Zurich Insurance Company shall assume The Home Insurance Company Retirement
Plan and its related trust and become the sole sponsor thereof for the purpose
of Title IV of the Employee Retirement Income Security Act of 1974, as amended.
17. Identification Of Plan Proponent (Fed. R. Bankr. P. 3016(a)). As
required by Bankruptcy Rule 3016(a), the Plan is dated and identifies the Plan
proponent.
18. Fair And Equitable; No Unfair Discrimination (11 U.S.C. ss.
1129(b)). Class 7 Senior Subordinated Note
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Claims is an impaired Class of Unsecured Claims. Pursuant to section 1129(b) of
the Bankruptcy Code, the Court finds that the Plan does not discriminate
unfairly, and is fair and equitable, with respect to Class 7 Senior Subordinated
Note Claims. Based on the evidence adduced or proffered at the Confirmation
Hearing, the Court finds that the holder of the Class 7 Senior Subordinated Note
Claims, ZHIL, has consented to the treatment of its Class 7 Senior Subordinated
Note Claims under the Plan and has waived its right to enforce the subordination
provisions against the Class 6 Junior Notes. Thus, there is no Claim or Interest
that is junior to the Claims of Class 7 Senior Subordinated Note Claims that is
receiving or retaining any property under the Plan on account of a junior Claim
or Interest.
Class 8 Equity Interests is an impaired Class of equity interests.
Pursuant to section 1129(b) of the Bankruptcy Code, the Court finds that the
Plan does not discriminate unfairly, and is fair and equitable, with respect to
Class 8 Equity Interests. No holder of Claims or Interests junior to the Equity
Interests of Class 8 Equity Interests will receive or retain any property under
the Plan on account of such junior Claims or Interests and no Class
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of Claims senior to Class 8 Equity Interests is receiving more than full payment
on account of the Claims in such Class.
Thus, the Plan satisfies section 1129(b) as to each of the Classes
described above. No other impaired Class has not accepted the Plan.
19. Principal Purpose Of Plan (11 U.S.C. ss. 1129(d)). The principal
purpose of the Plan is not the avoidance of taxes or the avoidance of the
application of Section 5 of the Securities Act of 1933 (15 U.S.C. ss. 77e), and
no governmental unit has objected to confirmation of the Plan other than PBGC,
whose objection has been resolved.
20. Objections. The objections to confirmation filed with the Court
by AmBase, BNY, and the PBGC have been withdrawn. The objections to confirmation
filed with the Court by Whitman, Licht, and Weadock are overruled by this Order.
21. Successor Of Home Holdings. Reorganized Home will be the
successor of Home Holdings.
22. Exemption From Securities Laws (11 U.S.C. ss. 1145(a)). The
issuance and distribution of (a) the New Common Stock, (b) the Earn Out Notes,
(c) the New Notes, and
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(d) the Membership Units have been duly authorized, and when issued as provided
in the Plan, will be validly issued, fully paid, and nonassessable. The offer
and sale of the items described in (a) through (d) above are in exchange for
Claims against the Debtor, or principally in such exchange and partly for cash
or property, within the meaning of section 1145(a)(1) of the Bankruptcy Code. In
addition, under section 1145 of the Bankruptcy Code, to the extent, if any, that
the above-listed items constitute "securities," (I) the offering of such items
is exempt and the issuance and distribution of such items will be exempt from
Section 5 of the Securities Act of 1933 and any state or local law requiring
registration prior to the offering, issuance, distribution, or sale of
securities, and (II) all of the above-described items other than the Membership
Units will be freely tradable by the recipients thereof, subject to (A) the
provisions of section 1145(b)(1) of the Bankruptcy Code relating to the
definition of an underwriter in Section 2(11) of the Securities Act of 1933, as
amended, and compliance with any rules and regulations of the Securities and
Exchange Commission, if any, applicable at the time of any future transfer of
such securities or instruments, and
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(B) the restrictions on the transferability of such securities and instruments.
23. Transfers Of Property. (a) The revesting of property in
Reorganized Home (i) is a legal, valid, and effective transfer of property, (ii)
vests Reorganized Home with good title to such property free and clear of all
liens, charges, claims, encumbrances, or interests, except as expressly provided
in the Plan or this Confirmation Order, (iii) does not constitute an avoidable
transfer under the Bankruptcy Code or under applicable nonbankruptcy law, and
(iv) does not and shall not subject Reorganized Home to any liability by reason
of such transfer under the Bankruptcy Code or under applicable nonbankruptcy
law, including, without limitation, any laws affecting successor or transferee
liability;
(b) The transfer by Home Holdings of the shares of stock of
Home Insurance to Home Insurance Holdings, LLC (i) is for fair consideration and
value, (ii) is a legal, valid and effective transfer of property, (iii) does not
and shall not constitute an avoidable transfer under the Bankruptcy Code or
under applicable nonbankruptcy law, (iv) does not and shall not subject
Reorganized Home to
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any liability by reason of such transfer under the Bankruptcy Code or under
applicable nonbankruptcy law, including, without limitation, any laws affecting
successor or transferee liability, (v) vests Home Insurance Holdings, LLC with
good title to such property free and clear of all liens, charges, claims,
encumbrances, or interests.
(c) The transfer by Home Holdings of trademarks to Home
Insurance (i) is for fair consideration and value, (ii) is a legal, valid and
effective transfer of property, (iii) does not and shall not constitute an
avoidable transfer under the Bankruptcy Code or under applicable nonbankruptcy
law, (iv) does not and shall not subject Reorganized Home to any liability by
reason of such transfer under the Bankruptcy Code or under applicable
nonbankruptcy law, including, without limitation, any laws affecting successor
or transferee liability, (v) vests Home Insurance with good title to such
property free and clear of all liens, charges, claims, encumbrances, or
interests.
24. Waiver Of Claims, Covenant Not To Sue, Injunction, And Releases.
This Court has jurisdiction under sections 1334(a) and (b) of title 28 of the
United States Code and section 105 of the Bankruptcy Code to approve the
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waiver of claims, covenant not to sue, injunction, and releases set forth in
Section 8.10 of the Plan.
On the basis of the written record of this Chapter 11 Case and the
evidence presented at the Confirmation Hearing, this Court finds and concludes
that it has jurisdiction to approve the waiver of claims, covenant not to sue,
the issuance of the injunction, and the releases set forth in Section 8.10 of
the Plan and that such provisions of the Plan are consistent with sections 105,
524, 1123 and 1129 of the Bankruptcy Code. This Court also finds and concludes
that the waiver of claims, covenant not to sue, the issuance of the injunction,
and the releases set forth in Section 8.10 of the Plan are essential to the
formulation and implementation of the Plan as provided in section 1123(a)(5) of
the Bankruptcy Code and that all parties released under the Plan have
contributed value to the Debtor's estate in consideration for such releases and
would not have contributed such value absent such releases.
25. No Liquidation. The Plan does not provide for the liquidation of
all or substantially all of the property of Home Holdings.
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26. Conditions To Effectiveness. Each of the conditions to
effectiveness set forth in Section 10.1 of the Plan has been satisfied, or may
be satisfied or waived.
27. Jurisdiction. The Court will retain jurisdiction over the
matters set forth in Article XI of the Plan and to interpret and enforce the
terms and provisions of the Class 4 Keepwell Agreement and the AmBase Keepwell
Agreement.
28. Waiver Of Federal Rule Of Civil Procedure 62(a). Fed. R. Civ. P.
62(a) shall not apply to this Confirmation Order.
DECREES
NOW, THEREFORE, IT IS HEREBY ORDERED THAT,
29. Modification Motion. (a) The Plan complies with the requirements
of sections 1122 and 1123 of the Bankruptcy Code. The Modification Motion is
granted in all respects and the Plan, as modified on June 3, 1998, is the
Debtor's plan of reorganization before the Court.
(b) The modifications to the First Amended Plan as set forth
in the Plan do not adversely change the
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treatment of any Claim of any creditor or the Equity Interest of any Equity
Interest holder and, therefore, no further solicitation of votes is required and
the Plan as modified is deemed accepted by all creditors and Equity Interest
holders who have previously accepted the First Amended Plan.
(c) No further disclosure regarding the Plan is required.
30. Confirmation. The Plan (with the Plan Supplement), a copy of
which was filed on June 3, 1998, is hereby confirmed, and all acceptances and
rejections previously cast for or against the First Amended Plan are hereby
deemed to constitute acceptances or rejections of the Plan; provided, however,
that AmBase's prior rejection of the First Amended Plan is hereby deemed to be
an acceptance of the Plan.
31. Objections. Each of the objections filed with the Court by
Whitman, Licht, and Weadock to the Modifications Motion or to confirmation of
the Plan and all reservations of rights included therein, are overruled.
32. Executory Contracts. All executory contracts assumed by the
Debtor under the Plan, which are listed on
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Exhibit A hereto, shall be assigned and transferred to, and remain in full force
and effect for the benefit of, Reorganized Home, notwithstanding any provision
in such contract (including those described in sections 365(b)(2) and (f) of the
Bankruptcy Code) that prohibits such assignment or transfer or that enables or
requires termination of such contract or lease.
33. Discharge, Releases, And Injunction.
(a) Except as otherwise expressly provided in the Plan,
including but not limited to Section 8.10(d) of the Plan, and in this
Confirmation Order, Home Holdings is discharged and released effective on the
Effective Date from any "debt" (as that term is defined in section 101(12) of
the Bankruptcy Code), and Home Holdings' liability in respect thereof is
extinguished completely, regardless of whether such debt was reduced to
judgment, liquidated or unliquidated, contingent or noncontingent, asserted or
unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed,
legal or equitable, or arising from any agreement of Home Holdings that has been
assumed or rejected in the Chapter 11 Case or pursuant to the Plan, including,
without limitation, the Home Insurance Claim. Except as
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otherwise expressly provided in the Plan and in this Confirmation Order, on the
Effective Date, any judgment at any time obtained, to the extent that such
judgment is a determination of liability of Home Holdings with respect to any
debt discharged hereunder, is hereby rendered null and void.
(b) The commencement or continuation of any action or the
employment of process with respect to any Claim or debt discharged hereunder, or
any act to collect, recover, or offset any debt discharged hereunder as a
liability of Home Holdings, or from properties of Home Holdings, shall be, and
hereby are, forever enjoined.
(c) Effective as of the Confirmation Date, but subject to the
occurrence of the Effective Date, and except as otherwise expressly provided in
the Plan, in accordance with Section 12.4 of the Plan, (i) any "50-percent
shareholder" of the Debtor within the meaning of section 382(g)(4)(D) of the
Internal Revenue Code of 1986, as amended (the "IRC"), is permanently enjoined
from claiming a worthless stock deduction with respect to its Equity Interest
for any taxable year of such shareholder ending prior to the Effective Date and
thereby causing an
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ownership change under section 382(g)(4)(D) of the IRC and (ii) Home Insurance
is permanently enjoined from claiming the benefit of net operating loss
carryovers reattributed from Home Insurance to the Debtor or Reorganized Home.
(d) In accordance with Section 8.1 of the Plan, except for any
injunctions provided for in, or as otherwise provided by, the Plan, all
injunctions or stays provided for in the Chapter 11 Case under section 105 or
362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation
Date shall remain in full force and effect until the Effective Date, but shall
be of no force and effect thereafter.
34. Termination Of Subordination-Related Rights. On the Effective
Date, all Subordination-Related Rights that the Senior Noteholders, Senior
Working Capital Noteholders, Senior Subordinated Noteholders, and Junior
Noteholders may have with respect to any distribution to be made pursuant to the
Plan shall be, and hereby are, discharged and terminated, and all actions
related to the enforcement of such Subordination-Related Rights shall be, and
hereby are, permanently enjoined. Accordingly, such distributions will not be
subject to levy, garnishment, attachment, or other
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legal process by a beneficiary of such terminated Subordination-Related Rights.
35. Binding Effect. Effective as of the Confirmation Date, but
subject to the occurrence of the Effective Date, in accordance with section
1141(a) of the Bankruptcy Code, the Plan, its provisions, and this Order shall
be binding upon: (i) the Debtor; (ii) any entity acquiring or receiving property
(including, without limitation, the New Notes, the Earn Out Notes, the
Membership Units, and the New Common Stock) under the Plan; (iii) any party to
an executory contract of the Debtor; (iv) any party to any document listed on
Exhibit G to the Plan or attached as an exhibit (or form of which is attached)
to the Plan or Disclosure Statement, or contained in the Plan Supplement, the
names of which parties are listed on Exhibit B hereto to the extent any such
party is not covered by clauses (i)-(iii) or (v) of this paragraph 35; and (v)
any creditor or Equity Interest holder of the Debtor, whether or not the Claim
or Equity Interest of such creditor or Equity Interest holder is impaired under
the Plan and whether or not such creditor or Equity Interest holder has accepted
the Plan.
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36. Revesting Of Property. In accordance with Section 8.5 of the
Plan, except as otherwise expressly provided in the Plan, on the Effective Date,
the Debtor will be vested with all of the property of the estate free and clear
of all Claims, liens, encumbrances, charges and other interests of creditors and
Equity Interest holders, and may operate its business free of any restrictions
imposed by the Bankruptcy Code or by the Court; provided, however, that the
Debtor shall continue as a debtor-in-possession under the Bankruptcy Code until
the Effective Date, and, thereafter, the Debtor may operate its business free of
any restrictions imposed by the Bankruptcy Code or the Court, except from
restrictions or any agreements set forth in the Plan.
37. Provisions Relating To AmBase. (a) AmBase shall be, and is
hereby, authorized to change its vote to accept the Plan and has voted to accept
the Plan as a holder of a Class 9 Claim. On the Effective Date, the AmBase Claim
shall be deemed an Allowed Claim in Group 9-A in the aggregate amount of $15.2
million.
(b) As expressly provided in the Plan, the Disputed Section
7.4(c)(iii) Claim shall not be discharged under section 1141(d)(1) of the
Bankruptcy Code.
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(c) On the Effective Date, any and all proofs of claim filed
in this Chapter 11 Case by AmBase with respect to the Disputed Section
7.4(c)(iii) Claim, and all objections thereto, shall be deemed to be withdrawn
and all proceedings in connection therewith dismissed.
(d) If the Disputed Section 7.4(c)(iii) Claim is due within 90
days after the Effective Date, AmBase shall not seek payment from Reorganized
Home of the Disputed Section 7.4(c)(iii) Claim unless ZRCH has funded
Reorganized Home under the AmBase Keepwell Agreement. Conversely, ZRCH shall
make any payments that are required under the AmBase Keepwell Agreement that may
be due within 90 days after the Effective Date.
(e) Pursuant to the AmBase Keepwell Agreement, the Court shall
retain jurisdiction to interpret and enforce the terms and provisions of the
AmBase Keepwell Agreement.
38. General Authorizations. The Debtor is hereby authorized and
empowered pursuant to section 1142(b) of the Bankruptcy Code to execute and
deliver, and take such action as is necessary to effectuate the terms of, the
instruments, securities, agreements, and documents contemplated by the
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Plan and related documents contemplated by the Plan and related documents in
substantially the form of such instruments, securities, agreements, or documents
attached as exhibits to the Plan or Disclosure Statement, or included in the
Plan Supplement, or to be filed with the Court on or before the Effective Date,
including all annexes and exhibits attached to those exhibits to the Plan or
Disclosure Statement, those documents included in the Plan Supplement, and any
other documents delivered in connection with those exhibits.
39. Cancellation Of Old Common Stock. Effective as of the Effective
Date, the Equity Interests shall be cancelled and be deemed null and void.
Effective as of the Record Date (as hereinafter defined), no further transfers
of the Senior Notes or the Equity Interests shall be recognized, and
distributions on the Initial Distribution Date shall be made in accordance with
the ownership records as of the close of business on February 16, 1998, the
record date established by the Procedures Order (the "Record Date").
40. Exemption From Stamp Taxes. (a) Pursuant to section 1146(c) of
the Bankruptcy Code, the issuance,
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transfer, or exchange of any security, or the making, delivery, filing, or
recording of any instrument of transfer under the Plan shall not be taxed under
any law imposing a recording tax, stamp tax, transfer tax, or similar tax.
(b) All filing or recording officers, wherever located and by
whomever appointed, are hereby directed to accept for filing or recording, and
to file or record upon presentation thereof, all instruments of transfer without
payment of any recording tax, stamp tax, transfer tax, or similar tax imposed by
federal, state, or local law. The Court specifically retains jurisdiction to
enforce the foregoing direction, by contempt or otherwise.
41. Plan Classification Controlling. The classification of Claims
and Equity Interests for purposes of payment of the distributions to be made
under the Plan is governed solely by the terms of the Plan.
42. Payment Of Administrative Claims. As provided in the Plan, each
holder of an Allowed Administrative Expense Claim entitled to priority under
section 507(a)(1) of the Bankruptcy Code shall receive Cash in an amount equal
to such Allowed Administrative Expense Claim on the later of the Effective Date
and the date such
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Administrative Expense Claim becomes an Allowed Administrative Expense Claim, or
as soon thereafter as is practicable, unless the holder of an Allowed
Administrative Claim has agreed to different treatment.
43. Payment Of Professional And Other Fees.
(a) Each professional retained in this Chapter 11 Case shall
serve and file its final fee application within the period specified in Section
2.2 of the Plan unless otherwise extended by the Court.
(b) Each other entity, including the Senior Noteholders'
Committee and BNY, as Indenture Trustee, seeking an award by the Bankruptcy
Court for allowance for reimbursement of its fees and expenses under section
503(b) of the Bankruptcy Court shall file and serve an application within the
period specified in Section 2.2 or 8.11 of the Plan, as applicable unless
otherwise extended by the Court; provided, however, that this provision is not a
finding that any party is entitled to allowance for reimbursement of its fees
and expenses under section 503(b) of the Bankruptcy Code.
44. Failure To Consummate Plan. In accordance with Section 10.2 of
the Plan, if the Effective Date does
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not occur, then (a) the Plan, (b) any settlement or compromise in connection
with the Plan (including the fixing or limiting to an amount certain any Claim
or Class of Claims), (c) assumption or rejection of executory contracts or
unexpired leases pursuant to the Plan, (d) any document or agreement executed
pursuant to the Plan, and (e) any actions, releases, waivers, or injunctions
authorized by this Confirmation Order or any order in aid of consummation of the
Plan shall be deemed null and void. In such event, nothing contained in this
Confirmation Order, any order in aid of consummation of the Plan, or the Plan,
and no acts taken in preparation for consummation of the Plan, (a) shall be
deemed to constitute a waiver or release of any Claims or Equity Interests by or
against Home Holdings or any other Person, to prejudice in any manner the rights
of Home Holdings or any Person in any further proceedings involving Home
Holdings or otherwise, or to constitute an admission of any sort by Home
Holdings or any other Person as to any issue, including, without limitation,
issues relating to the ownership by or the rights of Home Holdings in all or any
part of the property owned, sold, held by or in the
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possession of Home Holdings or (b) shall be construed as a finding of fact or
conclusion of law in respect thereof.
45. Tender Offer. As provided in the New Note Tender Offer
Undertaking and the Plan, ZRCH shall offer to purchase the New Notes, and the
New Note Tender Offer Undertaking is hereby approved.
46. Retention Of Jurisdiction. The Court shall retain jurisdiction
in accordance with the terms of Article XI of the Plan, the other provisions of
this Confirmation Order, section 1142 of the Bankruptcy Code, and the provisions
of the Class 4 Keepwell Agreement and the AmBase Keepwell Agreement. Until this
Chapter 11 Case is closed, any party in interest may commence a proceeding in
the Court in respect of any matter as to which jurisdiction has been retained.
47. Reference To Plan. Any document related to the Plan that refers
to a plan of reorganization of Home Holdings other than the Plan confirmed by
this Confirmation Order shall be, and it hereby is, deemed to be modified such
that such reference to a plan of reorganization of Home Holdings in such
document shall mean the Plan confirmed by this Confirmation Order.
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48. Inconsistency. In the event of an inconsistency between the Plan
and any other agreement, instrument, or document intended to implement the
provisions of the Plan, the provisions of the Plan shall govern unless otherwise
expressly provided for in such agreements, instruments, or documents. In the
event of any inconsistency between the Plan and any agreement, instrument, or
document intended to implement the Plan and this Confirmation Order, the
provisions of this Confirmation Order shall govern. This Confirmation Order
shall supersede any orders of the Court issued prior to the Effective Date that
may be inconsistent herewith.
49. Notice Of Entry Of Confirmation Order. In accordance with
Bankruptcy Rules 2002 and 3020(c), on or before the Effective Date, Home
Holdings (or its agents) shall give notice of the entry of this Confirmation
Order, in substantially the form of Exhibit C annexed hereto (the "Notice of
Confirmation"), together with a copy of this Confirmation Order in the form
entered by the Court, by United States first class mail postage prepaid, by
hand, or by overnight courier service to (a) the United States Trustee, (b)
counsel for the Creditors' Committee appointed
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in this Chapter 11 Case, (c) counsel for the Zurich Group, (d) counsel for the
Trygg-Hansa Group, (e) the Securities and Exchange Commission at Washington,
D.C., (f) the District Director of Internal Revenue (Manhattan), (g) the United
States Attorney for the Southern District of New York, (h) each department,
agency, or instrumentality of the United States that asserts a non-tax claim
against Home Holdings, (i) the United States Secretary of the Treasury, (j) the
entities who requested notice of amendments to the Plan, the Disclosure
Statement, and other documents or who objected to the Disclosure Statement or
confirmation of the Plan, (k) entities who requested notices under Bankruptcy
Rule 2002, (l) BNY (as the registrar, indenture trustee, subscription agent, or
paying agent of the Home Holdings' debt securities, the "Indenture Trustee"),
(m) all creditors who have filed proofs of claim in the Chapter 11 Case or who
are scheduled in Home Holdings' schedules of assets and liabilities, dated
January 15, 1998, or any amendment or modification thereto, (n) all holders of
Equity Interest of the Record Date, and (o) counsel for Whitman; provided
however, that the giving of notice of the entry of this Confirmation Order to
the holders of Claims (including
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beneficial holders) based on the debt securities of Home Holdings shall be
sufficient if the Notice of Confirmation is sent to holders of record, as of
such Record Date, of such debt securities and to the Indenture Trustee and
published as set forth in paragraph 56 below.
50. Returned Mail. Notwithstanding anything to the contrary
contained herein, no notice or service of any kind will be required to be mailed
or made upon any person to whom Home Holdings mailed a notice of the last date
for filing proofs of claim in this Chapter 11 Case, the notice of the Disclosure
Statement Hearing, or the various solicitation packages containing, among other
things, notice of the Confirmation Hearing, but received any of such notices
returned marked "undeliverable as addressed," "moved - left no forwarding
address," or "forwarding order expired," or similar reason, unless Home Holdings
has been informed in writing by such person of that person's new address.
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51. Publication Notice. The Debtor shall publish the Notice of
Confirmation within ten business days after the Confirmation Date once each in
the national editions of The New York Times and the Wall Street Journal in
accordance with Chambers Rules.
Dated: New York, New York
June 9, 1998
/s/ Jeffry H. Gallet
------------------------------
United States Bankruptcy Judge
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In re Home Holdings Inc., Chapter 11 Case No. 98 B 40319 (JHG)
APPENDIX A
TO
CONFIRMATION ORDER
Definitions
As used in this Confirmation Order, the following terms have the
respective meanings specified below, unless the context otherwise requires:
7% Senior Note Indenture means that certain Indenture, dated as of
December 28, 1993, between Home Holdings, as issuer, and the Indenture Trustee,
pursuant to which the 7% Senior Notes were issued, together with any amendments
or supplements thereto.
7% Senior Notes means the 7% Senior Notes, due 1998, of Home
Holdings, issued and outstanding under the 7% Senior Note Indenture.
7% Series A Senior Working Capital Notes means the 7% Series A
Senior Working Capital Notes of Home Holdings, issued and outstanding under the
Amended and Restated Standby Working Capital Agreement.
7% Series B Senior Working Capital Notes means the 7% Series B
Senior Working Capital Notes of Home Holdings, issued and outstanding under the
Amended and Restated Standby Working Capital Agreement.
7 7/8% Senior Note Indenture means that certain Indenture, dated as
of December 28, 1993, between Home Holdings, as issuer, and the Indenture
Trustee, pursuant to which the 7 7/8% Senior Notes were issued, together with
any amendments or supplements thereto.
7 7/8% Senior Notes means the 7 7/8% Senior Notes, due 2003, of Home
Holdings, issued and outstanding under the 7 7/8% Senior Note Indenture.
7 7/8% Senior Sinking Fund Note Indenture means that certain
Indenture, dated as of August 22, 1995, between Home Holdings, as issuer, and
the Indenture Trustee, pursuant to
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which the 7 7/8% Senior Sinking Fund Notes were issued, together with any
amendments or supplements thereto.
7 7/8% Senior Sinking Fund Notes means the 7 7/8% Senior Sinking
Fund Notes, due 2003, of Home Holdings, issued and outstanding under the 7 7/8%
Senior Sinking Fund Note Indenture.
12% Senior Subordinated Note Agreement means that certain Amended
and Restated Note Purchase Agreement, dated as of April 26, 1995, between Home
Holdings and ZCI Investments Limited.
12% Senior Subordinated Notes means the 12% Senior Subordinated
Notes, due 2004, of Home Holdings, issued and outstanding under the 12% Senior
Subordinated Note Agreement.
12% Senior Subordinated Working Capital Notes means the 12% Senior
Subordinated Working Capital Notes, due 2004, of Home Holdings, issued and
outstanding under the Amended and Restated Standby Working Capital Agreement.
Acquisition Agreement means the Stock Purchase Agreement, to be
dated on or before the Effective Date, between the Debtor and Home Insurance
Holdings, LLC, which shall be substantially in the form contained in the Plan
Supplement.
Administrative Expense Claim means any right to payment constituting
a cost or expense of administration of the Chapter 11 Case of a kind specified
under section 503(b) and entitled to priority under section 507(a)(1) of the
Bankruptcy Code, including, without limitation, any actual and necessary costs
and expenses of preserving the estate of the Debtor, any actual and necessary
costs and expenses of operating the business of the Debtor, any indebtedness or
obligations incurred or assumed by the Debtor-in-Possession in connection with
the conduct of its business, including, without limitation, for the acquisition
or lease of property or an interest in property or the rendition of services,
all compensation and reimbursement of expenses to the extent Allowed by the
Bankruptcy Court under sections 330 or 503 of the Bankruptcy Code, and any fees
or charges assessed against the estate of the Debtor under section 1930 of
chapter 123 of title 28 of the United States Code.
46
<PAGE>
Affiliate means as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
Allowed means, with reference to any Claim or Equity Interest, (a)
any Claim against or Equity Interest in the Debtor which has been listed by the
Debtor in its Schedules, as such Schedules may be amended by the Debtor from
time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount
and not disputed or contingent and with respect to which no contrary proof of
claim or interest has been filed, (b) any Claim or Equity Interest Allowed under
the Plan, (c) any Claim or Equity Interest which is not Disputed or (d) any
Claim or Equity Interest the amount or existence of which, if Disputed, (i) has
been determined by a final order of a court of competent jurisdiction other than
the Bankruptcy Court pursuant to the Plan or a final order of the Bankruptcy
Court, or (ii) has been Allowed by final order; provided, however, that any
Claims or Equity Interests allowed solely for the purpose of voting to accept or
reject the Plan pursuant to an order of the Bankruptcy Court shall not be
considered "Allowed Claims" or "Allowed Equity Interests" hereunder.
AmBase Claim means any and all Claims which AmBase may have against
the Debtor or Debtor-in-Possession other than the Disputed Section 7.4(c)(iii)
Claim or as expressly provided in the release by AmBase to Home Holdings in the
form annexed to the Plan as Exhibit I-1-A.
AmBase Keepwell Agreement means that certain Keepwell Agreement to
be entered into between Zurich Reinsurance Centre Holdings and Reorganized Home,
which shall be in a form acceptable to AmBase and the parties thereto and
contained in the Plan Supplement.
Amended and Restated Standby Working Capital Agreement means that
certain Amended and Restated Standby
47
<PAGE>
Working Capital Agreement, dated as of April 26, 1995, between Home Holdings and
ZCI Investments Limited.
Amended Home Bylaws means the amended and restated Bylaws of
Reorganized Home, which shall be substantially in the form contained in the Plan
Supplement.
Amended Home Certificate of Incorporation means the amended and
restated Certificate of Incorporation of Reorganized Home, which shall be
substantially in the form contained in the Plan Supplement.
Ballot means the form distributed to each holder of an impaired
Claim (other than to holders of impaired Claims deemed to have rejected the
Plan) upon which is to be indicated acceptance or rejection of the Plan.
Bankruptcy Code means title 11 of the United States Code, as amended
from time to time, as applicable to the Chapter 11 Case.
Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under section 2075 of title 28 of
the United States Code, and any local rules of the Bankruptcy Court, as the
context may require.
Cash means legal tender of the United States of America and
equivalents thereof.
Chapter 11 Case means the case under Chapter 11 of the Bankruptcy
Code commenced by the Debtor, styled In re Home Holdings Inc., Chapter 11 Case
No. 98 B 40319 (JHG).
Class means a category of holders of Claims or Equity Interests as
set forth in Article III of the Plan.
Class 4 Keepwell Agreement means that certain Keepwell Agreement to
be entered into between a member of the Zurich Group and Reorganized Home, which
shall be substantially in the form of Exhibit G contained in the Plan
Supplement.
48
<PAGE>
Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
Convenience Claim means any General Unsecured Claim in the amount of
$2,000 or less and any General Unsecured Claim that is reduced to $2,000 by the
election of the holder thereof on such holder's Ballot.
Debtor-in-Possession means the Debtor in its capacity as debtor in
possession in the Chapter 11 Case pursuant to sections 1101, 1107(a), and 1108
of the Bankruptcy Code.
Disputed means, with reference to any Claim or Equity Interest
(other than the Disputed Section 7.4(c)(iii) Claim), (a) any Claim or Equity
Interest proof of which was timely and properly filed and which either (i) has
been or hereafter is listed on the Schedules as unliquidated, disputed, or
contingent (and in such cases or, in the case of an Administrative Expense
Claim, any Administrative Expense Claim, Claim, or Equity Interest which is
disputed under the Plan) or (ii) as to which the Debtor or, if not prohibited by
the Plan, any other party in interest has interposed a timely objection and/or
request for estimation in accordance with section 502(c) of the Bankruptcy Code
and Bankruptcy Rule 3018, which objection and/or request for estimation has not
been withdrawn or determined by a Final Order, or (b) any Claim or Equity
Interest proof of which was required to be filed by order of the Bankruptcy
Court but as to which a proof of claim or interest was not timely or properly
filed.
Disputed Section 7.4(c)(iii) Claim means any contractual, legal, or
equitable claim by AmBase against Home Holdings arising under or based upon
Section 7.4(c)(iii) of the Stock Purchase Agreement.
Earn Out Notes means, collectively, the Earn Out Notes Series I,
Earn Out Notes Series II, and Earn Out Notes Series III.
Earn Out Notes Series I means the Earn Out Notes Series I authorized
and to be issued pursuant to the Plan on the terms and subject to the conditions
described in Exhibit A
49
<PAGE>
to the Plan, and which shall be substantially in the form contained in the Plan
Supplement.
Earn Out Notes Series II means the Earn Out Notes Series II
authorized and to be issued pursuant to the Plan on the terms and subject to the
conditions described in Exhibit B to the Plan, and which shall be substantially
in the form contained in the Plan Supplement.
Earn Out Notes Series III means the Earn Out Notes Series III
authorized and to be issued pursuant to the Plan on the terms and subject to the
conditions described in Exhibit C to the Plan, and which shall be substantially
in the form contained in the Plan Supplement.
Effective Date means the first Business Day on which the conditions
specified in Section 10.1 of the Plan have been satisfied or waived.
Equity Interest means any share of preferred stock or common stock
or other instrument evidencing an ownership interest in the Debtor, whether or
not transferable, and any option, warrant, or right, contractual or otherwise,
to acquire any such interest.
General Unsecured Claim means any Unsecured Claim other than a
Convenience Claim, a Senior Note Claim, a Senior Working Capital Note Claim, a
Senior Subordinated Note Claim, a Junior Note Claim, the Home Insurance Claim,
or AmBase's Claims.
Home Insurance Claim means any and all claims which Home Insurance
may have against the Debtor or Debtor-in-Possession arising out of that certain
Consolidated Group Tax Agreement, dated February 13, 1991, between Home Holdings
and Home Insurance.
Information and Tabulation Agent means MacKenzie Partners, Inc.
having offices at 156 Fifth Avenue, New York, New York 10010.
Initial Distribution Date means the Effective Date or as soon
thereafter as is practicable.
50
<PAGE>
Junior Note Claim means a Claim of a Junior Noteholder arising under
or as a result of the Junior Notes.
Junior Noteholder means a holder of Junior Notes.
Junior Notes means the 8% Junior Subordinated Notes, due 2004, of
Home Holdings, issued and outstanding under the Junior Subordinated Note
Agreement.
Junior Subordinated Note Agreement means that certain Amended and
Restated Note Exchange Agreement, dated as of April 26, 1995, between
Trygg-Hansa and Home Holdings.
Membership Units means the membership units in Home Insurance
Holdings, LLC.
New Common Stock means the common stock of Reorganized Home
authorized and to be issued pursuant to the Plan, having a par value of $.01 per
share and such rights with respect to dividends, liquidation, voting, and other
matters as are provided for by applicable nonbankruptcy law or in the Amended
Home Certificate of Incorporation and the Amended Home Bylaws.
New Notes means the Senior Notes due 2005 authorized and to be
issued pursuant to the Plan on the terms and subject to the conditions described
in Exhibit D to the Plan, and which shall be substantially in the form contained
in the Plan Supplement.
New Note Tender Offer Undertaking means the undertaking by Zurich
Reinsurance Centre Holdings, Inc. to purchase all of the New Notes on the terms
and conditions contained therein, a copy of which is annexed to the Plan as
Exhibit E.
Other Priority Claim means any Claim, other than an Administrative
Expense Claim and a Priority Tax Claim, entitled to priority in right of payment
under section 507(a) of the Bankruptcy Code.
Pension Plan Agreement means the agreement among the Pension Benefit
Guaranty Corporation, Zurich, Home Insurance, and Home Holdings under which, as
of the date of the
51
<PAGE>
consummation of the Acquisition Agreement, Zurich will assume the Home Insurance
Company Retirement Plan and its related trust and become the sole sponsor
thereof for the purposes of Title IV of the Employee Retirement Income Security
Act of 1974, as amended and the Internal Revenue Code.
Person means an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.
Plan Supplement means the forms of documents specified in Section
12.17 of the Plan.
Priority Tax Claim means any Claim of a governmental unit of the
kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
Reorganized Home means Home Holdings, or any successor thereto by
merger, consolidation, or otherwise, on and after the Effective Date.
Schedules means the schedules of assets and liabilities, the list of
holders of Equity Interests, and the statements of financial affairs filed by
the Debtor under section 521 of the Bankruptcy Code and Bankruptcy Rule 1007,
and all amendments and modifications thereto through the Confirmation Date.
Secured Claim means any Claim, to the extent reflected in the
Schedules or a proof of claim as a Secured Claim, which is secured by a lien on
collateral to the extent of the value of such collateral, as determined in
accordance with section 506(a) of the Bankruptcy Code, or, in the event that
such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the
extent of such setoff.
Senior Note Claim means a Claim of a Senior Noteholder arising under
the Senior Notes.
Senior Noteholder means a holder of one or more 7% Senior Notes,
7 7/8% Senior Sinking Fund Notes, or 7 7/8% Senior Notes.
52
<PAGE>
Senior Notes means, collectively, the 7% Senior Notes, 7 7/8% Senior
Sinking Fund Notes, and 7 7/8% Senior Notes.
Senior Subordinated Note Claim means a Claim of a Senior
Subordinated Noteholder arising under or as a result of the Senior Subordinated
Notes.
Senior Subordinated Noteholder means a holder of one or more 12%
Senior Subordinated Notes or 12% Senior Subordinated Working Capital Notes.
Senior Subordinated Notes means, collectively, the 12% Senior
Subordinated Notes and the 12% Senior Subordinated Working Capital Notes.
Senior Working Capital Note Claim means a Claim of a Senior Working
Capital Noteholder arising under the Senior Working Capital Notes.
Senior Working Capital Noteholder means a holder of one or more 7%
Series A Senior Working Capital Notes or 7% Series B Senior Working Capital
Notes.
Senior Working Capital Notes means, collectively, the 7% Series A
Senior Working Capital Notes and 7% Series B Senior Working Capital Notes.
Subordination Related Rights means all claims of the Senior
Noteholders, Senior Working Capital Noteholders, Senior Subordinated
Noteholders, and Junior Noteholders against the Debtor and all rights and claims
between and among the Senior Noteholders, Senior Working Capital Noteholders,
Senior Subordinated Noteholders, and Junior Noteholders relating in any manner
whatsoever to claimed subordination rights, rights to post-petition and default
interest, or similar rights, if any.
Trygg-Hansa means Trygg-Hansa AB.
Trygg-Hansa Group means Trygg-Hansa and each of its Affiliates.
53
<PAGE>
Unsecured Claim means any Claim that is not a Secured Claim,
Administrative Expense Claim, Priority Tax Claim, or Other Priority Claim.
Zurich means Zurich Insurance Company.
Zurich Group means Zurich and each of its Affiliates, including,
without limitation, Risk Enterprise Management Limited.
54
<PAGE>
In re Home Holdings Inc., Chapter 11 Case No. 98 B 40319 (JHG)
EXHIBIT A
TO
CONFIRMATION ORDER
The following agreements are being assumed by Home Holdings:
1. Services Agreement, dated as of June 12, 1995, among Risk Enterprise
Management Limited ("REM"), U.S. International Reinsurance, The Home
Insurance Company ("Home Insurance"), and Home Holdings Inc. Both REM and
Home Insurance were represented by counsel at the Confirmation Hearing.
2. Consolidated Group Tax Agreement, dated as of February 13, 1991, between
Maiden Lane Realty (a wholly owned subsidiary of Home Holdings) and Home
Holdings Inc.
3. Consolidated Group Tax Agreement, dated as of February 13, 1991, between
Home Insurance (prior to the Effective Date, a wholly owned subsidiary of
Home Holdings) and Home Holdings Inc. Home Insurance was represented by
counsel at the Confirmation Hearing.
4. Consolidated Group Tax Agreement, dated as of February 13, 1991, between
Home Group Funding Corporation (a wholly owned subsidiary of Home
Holdings) and Home Holdings Inc.
5. Consolidated Group Tax Agreement, dated as of February 13, 1991, between
Home Group Financial Services, Inc. (a wholly owned subsidiary of Home
Holdings) and Home Holdings Inc.
6. Director and Officer Liability Insurance Policy*, dated as of July 1,
1997, among Executive Risk Specialty Insurance Company, Reliance Insurance
Co., Underwriters at Lloyds, Liberty Mutual Insurance Company, Zurich
Insurance Company ("Zurich"), Gulf Insurance Company, XL Insurance
Company, Ltd., Federal Insurance Company, and Mount Hawley Insurance
Company. Zurich was represented by counsel at the Confirmation Hearing.
- --------
* To the extent such policy is considered an executory contract.
55
<PAGE>
In re Home Holdings Inc., Chapter 11 Case No. 98 B 40319 (JHG)
EXHIBIT B
TO
CONFIRMATION ORDER
Parties to documents listed on Exhibit G to the Plan or attached as an exhibit
to the Plan or Disclosure Statement or contained in the Plan Supplement are as
follows:
Zurich Reinsurance Centre Holdings, Inc.
Pension Benefit Guaranty Corporation
Zurich Insurance Company
Trygg-Hansa Holding B.V.
Zurich Centre Investments Limited
Centre Reinsurance (Bermuda) Limited
Insurance Partners Advisors, L.P.
Trygg-Hansa Forsakrings AB
ZCI Investments Limited
Home Insurance Holdings, LLC
56
<PAGE>
In re Home Holdings Inc., Chapter 11 Case No. 98 B 40319 (JHG)
EXHIBIT C
TO
CONFIRMATION ORDER
Notice of Entry of
Confirmation Order
57
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - x
In re :
:
HOME HOLDINGS INC., : Chapter 11
: Case No. 98 B 40319 (JHG)
Debtor. :
- - - - - - - - - - - x
NOTICE OF ENTRY OF ORDER CONFIRMING REVISED THIRD AMENDED AND RESTATED
PLAN OF REORGANIZATION OF HOME HOLDINGS INC.
TO ALL CREDITORS AND EQUITY SECURITY HOLDERS OF HOME HOLDINGS INC. AND OTHER
PARTIES IN INTEREST:
PLEASE TAKE NOTICE that on June 9, 1998 (the "Confirmation Date"), the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court") entered an order (the "Confirmation Order") confirming the
Revised Third Amended And Restated Plan Of Reorga nization Of Home Holdings Inc.
("Home Holdings"), dated June 3, 1998 (the "Plan") (unless otherwise defined,
capitalized terms used in this notice shall have the meanings ascribed to them
in the Plan).
PLEASE TAKE FURTHER NOTICE that pursuant to 11 U.S.C. ss. 1141(a), the
provisions of the Plan (including the exhibits to, and all documents and
agreements executed pursuant to, the Plan) and the Confirmation Order shall bind
(i) Home Holdings, (ii) all holders of Claims against and Interests in Home
Holdings, whether or not impaired under the Plan and whether or not, if
impaired, such holders accepted the Plan or received or retained any property
under the Plan, (iii) each person or entity issuing securities or acquiring
property under the Plan, (iv) any other party in interest, (v) any person or
entity appearing in this Chapter 11 case, and (vi) each of the foregoing's
heirs, successors, assigns, trustees, executors, administrators, affiliates,
officers, directors, agents, representatives, attorneys, beneficiaries, or
guardians.
PLEASE TAKE FURTHER NOTICE that pursuant to the Plan, all executory
contracts and unexpired leases of Home Holdings are deemed assumed except any
executory contract and unexpired lease which is set forth on Schedule 6.1(a)(x)
(executory contracts) or Schedule 6.1(a)(y) (unexpired leases) which are
included in the Plan Supplement filed with the Bankruptcy Court on April 19,
1998. If the rejection of executory contracts pursuant to the Plan results in a
Claim which is not already evidenced by a timely filed proof of Claim or a proof
of Claim that is deemed to be timely filed under applicable law, then such Claim
shall be forever barred and shall not be enforceable against Home Holdings,
Reorganized Home, or the properties of any of them unless a proof of Claim is
filed with the clerk of the Bankruptcy Court and served upon counsel to Home
Holdings at the address listed below, and Anderson Kill & Olick, P.C., 1251
Avenue of the Americas, New York, New York 10020, Att'n: Anthony Princi, Esq.,
counsel to the Official Committee of Unsecured Creditors of Home Holdings,
within thirty (30) days after the later of (i) notice of entry of an order
approving the rejection of such executory contract or unexpired lease, (ii)
notice of entry of the Confirmation Order, and (iii) notice of an amendment to
Schedule 6.1(a)(x) or 6.1(a)(y).
PLEASE TAKE FURTHER NOTICE that any party in interest wishing to obtain
copies of the Confirmation Order may request such copies at his or her own
expense by contacting Giorgio Bovenzi, Esq. at Skadden Arps, Slate, Meagher &
Flom LLP, (212) 735-2591. Copies of the Confirmation Order may also be reviewed
during regular business hours at the office of the clerk of the Bankruptcy Court
or by accessing the Bankruptcy Court's web site at www.nysb.uscourts.gov.
Dated: New York, New York BY ORDER OF THE BANKRUPTCY COURT
June 9, 1998
/s/ Jeffry H. Gallet
--------------------------------
United States Bankruptcy Judge
United States Bankruptcy Court
Southern District of New York
Alexander Hamilton Custom House
One Bowling Green, Room 528
New York, New York 10007
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
Attorneys for Home Holdings Inc.
Debtor and Debtor-in-Possession
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
Kayalyn A. Marafioti (KM 9362)
Stephanie R. Schwartz (SS 3000)
58
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - x
In re : Chapter 11
Case No. 98 B 40319 (JHG)
HOME HOLDINGS INC., :
Debtor. :
- - - - - - - - - - - - - - - - - x
POSTCONFIRMATION ORDER AND NOTICE
WHEREAS an order of confirmation has been issued by the court on June 9,
1998, confirming the Revised Third Amended and Restated Plan of Reorganization,
dated June 3, 1998 (the "Plan") of the debtor and debtor-in-possession in the
above-captioned Chapter 11 Case (the "Debtor"); and
WHEREAS, pursuant to Local Bankruptcy Rule 3021-1, it is the Debtor's
responsibility to inform the Court of the progress made towards (i) consummation
of the Plan under 11 U.S.C. ss. 1101(2), (ii) entry of a final decree under Rule
3022 of the Federal Rules of Bankruptcy Procedure, and (iii) closing of the
Debtor's Chapter 11 Case under 11 U.S.C. ss. 350.
IT IS NOW, THEREFORE, HEREBY ORDERED that the Debtor, or such other party
as the Court may direct (the "Responsible Party"), shall comply with the
following:
(1) Periodic Status Reports. Subject to the requirements set forth
in paragraph 5 of this Order and 11 U.S.C. ss. 1106(a)(7), the
Responsi ble Party shall file, within 45 days after the date of this
Order, a status report detailing the actions taken by the
Responsible Party and the progress made toward the consummation of
the plan. Reports shall be filed thereafter every January 15th,
April 15th, July 15th, and October 15th until a final decree has
been en tered.
(2) Notices. The Responsible Party shall mail a copy of the order
confirming the Plan and this Order to the Debtor, the attorney for
<PAGE>
the Debtor, all committees, the attorney for each committee, and all
parties who have filed a notice of appearance.
(3) Clerk's Charges And Report Information. Within 15 days of the
date of this Order, the Responsible Party shall submit a written
request to the Clerk to obtain the amount of any notice and excess
claim charges. The amount, if any, shall be paid in full within 15
days after receipt by the Debtor of the Clerk's responses to such
request.
(4) Closing Report And Final Decree. Within 15 days following the
distribution of any deposit required by the Plan, or, if no deposit
was required, upon the payment of the first distribution required
by the Plan, the Responsible Party shall file a closing report in
accordance with Local Bankruptcy Rule 3022-1 and an application for
a final decree.
(5) Case Closing. Unless the Court orders otherwise, the Responsible
Party shall submit the information described in paragraph 4 herein,
including a final decree closing the case, within six calendar
months from the date of the order confirming the Plan. If the
Responsible Party fails to comply with this Order, the Clerk shall
so advise the Judge and an order to show cause may be issued.
Dated: New York, New York
June 9, 1998
/s/ Jeffry H. Gallet
-------------------------------------
UNITED STATES BANKRUPTCY JUDGE
2
