-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UOLQDA5NVkoNIDPURYjCh2FfMA5q9uKVVL+AxNJJkIUB8V7xf3jxgTFI5dMBl/Jp lyfA/U2wnzp052TMal/OqQ== 0000950131-02-000256.txt : 20020414 0000950131-02-000256.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950131-02-000256 CONFORMED SUBMISSION TYPE: T-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20020125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: T-3 SEC ACT: 1939 Act SEC FILE NUMBER: 022-28560 FILM NUMBER: 02517747 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848880 MAIL ADDRESS: STREET 1: CHIQUITA BRANDS INTERNATIONAL, INC. STREET 2: 250 EAST FIFTH STREET CITY: CINCINNATI STATE: OH ZIP: 45202 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 T-3 1 dt3.txt FORM T-3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-3 FOR APPLICATION FOR QUALIFICATION OF INDENTURES UNDER THE TRUST INDENTURE ACT OF 1939 CHIQUITA BRANDS INTERNATIONAL, INC. (Name of applicant) 250 East Fifth Street Cincinnati, Ohio 45202 (Address of principal executive offices) Securities to be Issued Under the Indenture to be Qualified Title of Class Amount -------------- ------ Senior debt securities as authorized An unlimited aggregate principal from time to time amount of senior debt securities may be issued under the indenture (__% Senior Notes due 2009 will be issued (up to $300,000,000 aggregate initially (the "Notes")) principal amount of the Notes may be issued) Approximate date of proposed public offering: Upon the effective date under the applicant's Plan of Reorganization, presently anticipated to be on or about March 15, 2002. Name and address of agent for service: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attn: Robert W. Olson, Senior Vice President, General Counsel and Secretary with copies to: -------------- Kirkland & Ellis 200 E. Randolph Drive Chicago, Illinois 60601 Attn: Michael H. Kerr, P.C. The applicant hereby amends this application for qualification on such date or dates as may be necessary to delay its effectiveness until: (i) the 20/th/ day after the filing of a further amendment which specifically states that it shall supercede this amendment, or (ii) such date as the Commission, acting pursuant to Section 307(c) of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), may determine upon the written request of the applicant. GENERAL 1. General information. (a) The applicant, Chiquita Brands International, Inc. (the "Applicant" or the "Company"), is a corporation. (b) The Applicant is organized under the laws of the state of New Jersey. 2. Securities Act exemption applicable. On November 28, 2001 (the "Petition Date"), the Applicant filed a petition for reorganization under Chapter 11 of Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Ohio, Western Division (the "Bankruptcy Case"). The Applicant proposes to issue, as part of the Plan of Reorganization of the Applicant (as the same may be further modified, the "Plan"), $250 million of the Notes. The Notes will be issued as a series of senior debt securities under an indenture to be entered into between the Applicant and the Trustee to be named therein (the "Trustee"), a form of which is attached as Exhibit T3C-1 (as supplemented and amended from time to time, the "Indenture"). The terms of the Notes will be set forth in a Certificate of Terms to be approved by or pursuant to delegated authority of the Applicant's Board of Directors, a form of which is attached as Exhibit T3C-2. The Notes will be general unsecured obligations of the Applicant and will rank equally with the Applicant's current or future senior unsecured indebtedness. The Notes will mature on March 15, 2009 and will bear interest at the Senior Note Interest Rate. The "Senior Note Interest Rate" will be fixed on the effective date of the Plan (the "Effective Date") at a rate equal to the sum of: (i) the yield for actively traded U.S. Treasury securities having a maturity closest to seven years as of the day prior to the Effective Date, (ii) the Bear Stearns BB Index Spread (as defined below) and (iii) 100 basis points (i.e., 1.0%). The "Bear Stearns BB Index Spread" is the spread over comparable maturity U.S. Treasury securities of BB rated high yield debt securities as measured in the Bear Stearns Relative Value Analysis (Global High Yield Research) as of the most recent report prior to the Effective Date. However, to the extent that the Bear Stearns BB Index Spread has increased or decreased by more than 100 basis points (i.e., 1.0%) from the immediately prior weekly report, the spread used in clause (b) above will be the average of the Bear Stearns BB Index Spread for the four-week period prior to the Effective Date. By way of example only, the Notes would bear interest at 10.4% if they had been issued on January 11, 2002. Pursuant to the Plan, on or as soon as practicable after the Effective Date, the Notes will be issued to the holders of allowed Old Senior Note Claims (as defined below), subject to adjustment as a result of the Subclass 4B Note Election described below. "Old Senior Note Claims" consist of claims for principal or interest through the Petition Date under the Applicant's existing 9 5/8% Senior Notes due 2004, 9 1/8% Senior Notes due 2004, 10 1/4% Senior Notes due 2006 and 10% Senior Notes due 2009 (collectively, the "Old Senior Notes"). Each holder of an allowed Old Subordinated Note Claim (as defined below) shall have the right to receive its pro rata share of up to $10 million of the Notes, which Notes would otherwise be distributed to the holders of Old Senior Note Claims in lieu of receiving common stock which they would otherwise receive under the Plan (the "Subclass 4B Note Election"). "Old Subordinated Note Claims" consist of claims for principal or interest through the Petition Date under the Applicant's outstanding 7% Convertible Subordinated Debentures due 2001. If holders of Old Subordinated Note Claims elect to receive any Notes pursuant the Subclass 4B Note Election, the principal amount of Notes to be received by holders of Old Senior Note Claims will be reduced on a pro rata basis by such amount and the holders of Old Senior Note Claims will receive common stock of the Applicant equal to the amount of common stock forsaken by the holders of Old Subordinated Note Claims in place of Notes. The Applicant believes that the issuance of the Notes is exempt from the registration requirements of the Securities Act of 1933 (the "Securities Act") pursuant to Section 1145(a)(1) of the Bankruptcy Code. Generally, Section 1145(a)(1) of the Bankruptcy Code exempts the issuance of securities from the -2- registration requirements of the Securities Act and equivalent state securities and "blue sky" laws if the following conditions are satisfied: (i) the securities are issued by a debtor, an affiliate participating in a joint plan of reorganization with the debtor, or a successor of the debtor under a plan of reorganization, (ii) the recipients of the securities hold a claim against, an interest in, or a claim for an administrative expense against, the debtor, and (iii) the securities are issued entirely in exchange for the recipient's claim against or interest in the debtor, or are issued "principally" in such exchange and "partly" for cash or property. The Applicant believes that the issuance of securities contemplated by the Plan will satisfy the aforementioned requirements. AFFILIATIONS 3. Affiliates. (a) As of December 31, 2000, the major subsidiaries of the Applicant and the percent of voting securities owned by the immediate parent corporation of each subsidiary were as follows: Percent of Voting Securities Owned by Immediate Parent ---------------- Chiquita Brands, Inc. 100% American Produce Company 100% Chiquita Banana Company B.V. 100% Chiquita Finland Oy 100% Chiquita Italia, S.p.A. 100% Chiquita Tropical Fruit Company B.V. 100% Chiquita Brands Company, North America 100% CB Containers, Inc. 100% OV Containers, Inc. 100% Chiquita Citrus Packers, Inc. 80% Chiquita Compagnie des Bananes 100% Chiquita Frupac Inc. 100% Chiquita Gulf Citrus, Inc. 100% Chiquita International Trading Company 100% Chiquita Far East Holdings B.V. 100% Chiquita International Limited 100% Compania Bananera Atlantica Limitada 100% Great White Fleet Ltd. 100% BVS Ltd. 100% CDV Ltd. 100% CDY Ltd. 100% CRH Shipping Ltd. 100% Danfund Ltd. 100% Danop Ltd. 100% DSF Ltd. 100% GPH Ltd. 100% Great White Fleet (US) Ltd. 100% NCV Ltd. 100% Norvel Ltd. 100% Tela Railroad Company Ltd. 100% M.M. Holding Ltd. 100% Chiquita Tropical Products Company 100% Chiriqui Land Company 100% Compania Agricola del Guayas 100% Compania Agricola de Rio Tinto 100% Compania Mundimar, S.A. 100% -3- Friday Holdings, L.L.C. 100% Chiquita Processed Foods, L.L.C. 100% Maritrop Trading L.L.C. 100% Progressive Produce Corporation 100% The names of approximately 200 subsidiaries have been omitted. In the aggregate these subsidiaries, after excluding approximately 100 foreign subsidiaries whose immediate parents are listed above and which are involved in fresh foods operations, do not constitute a significant subsidiary. The consolidated financial statements of the Applicant include the accounts of the Applicant and controlled majority-owned subsidiaries. (b) See Item 4 for directors and executive officers of the Applicant, some of whom may be deemed to be affiliates of the Applicant by virtue of their position, and Item 5 for owners of more than 10% of our voting securities, who may be deemed affiliates of the Applicant by virtue of their stock ownership. MANAGEMENT AND CONTROL 4. Directors and executive officers. (a) Current directors and executive officers. The following table sets forth the names of and offices held by all current executive officers (as defined in Sections 303(5) and 303(6) of the Trust Indenture Act) of the Applicant. Name Position - ----------------------- -------------------------------------------------- Carl H. Lindner Chairman of the Board Keith E. Lindner Vice Chairman of the Board Steven G. Warshaw President and Chief Executive Officer Robert W. Olson Senior Vice President, General Counsel and Secretary James B. Riley Senior Vice President and Chief Financial Officer William A. Tsacalis Vice President and Controller Robert F. Kistinger President and Chief Operating Officer of Chiquita Fresh Group and Chiquita Fresh Group - North America Peter A. Horekens President and Chief Operating Officer of Chiquita Fresh Group - Europe The following are the current directors of Debtor: Carl H. Lindner, Keith E. Lindner, Rohit Manocha, Fred J. Runk, Gregory C. Thomas, William W. Verity, and Steven G. Warshaw. The mailing address for each director and executive officer is c/o Chiquita Brands International, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202. (b) Directors and executive officers as of the Effective Date. Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the initial principal officers of the Applicant shall be the principal officers of the Applicant immediately prior to the Effective Date. Following the Effective Date, the Applicant -4- will have a seven person board of directors, initially consisting of Carl H. Lindner, Steven G. Warshaw, Morten Arntzen, Jeffrey D. Benjamin, Robert Fisher, Cyrus Friedheim and Roderick Hills. 5. Principal owners of voting securities. As of December 31, 2001 the following persons owned an aggregate of 26,144,036 shares of common stock, constituting 33.4% of the common stock. Carl H. Lindner Carl H. Lindner III S. Craig Lindner Keith E. Lindner American Financial Group, Inc. and its Subsidiaries ("AFG") One East Fourth Street Cincinnati, Ohio 45202 Of this amount, 23,996,295 shares are owned by AFG; 2,130,406 shares are owned by Carl H. Lindner individually or in a trust for the benefit of his family (including 20,000 shares which Mr. Lindner has the right to acquire pursuant to vested stock options); and 17,335 shares are owned individually by Keith E. Lindner. Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E. Lindner and trusts for their benefit (collectively, the "Lindner Family") beneficially own approximately 43.5% of AFG's common stock and shares with AFG the power to vote and dispose of the Applicant's common stock owned by AFG. Based on the Applicant's limited knowledge of present holdings of interested claimants in the Bankruptcy Case, there is no person presently known to the Applicant who will own 10% or more of the Applicant's voting securities following the Effective Date. UNDERWRITERS 6. Underwriters. (a) The following persons acted as underwriters of the Applicant's 10% Senior Notes due 2009 issued in June 1999, which persons are the only underwriters of the Applicant's securities within the three years prior to the date of the filing of this Application: Lehman Brothers Inc. Salomon Smith Barney Inc. Banc Boston Robertson Stephens Inc. ING Baring Furman Selz LLC J.P. Morgan Securities Inc. Prudential Securities Incorporated Warburg Dillon Read LLC The mailing address for each of the underwriters named in connection with that offering was c/o Lehman Brothers Inc., Re: Chiquita Brands International, Inc. The current address of Lehman Brothers, Inc. is c/o Lehman Brothers, Sheraton Manhattan, 790 7th Avenue, New York, New York 10019. (b) No person is acting, or proposed to be acting, as principal underwriter of the securities proposed to be offered pursuant to the Indenture. -5- CAPITAL SECURITIES 7. Capitalization. (a) As of December 31, 2001, the Applicant had the following securities authorized and outstanding:
Title of Class Amount Authorized Amount Outstanding - -------------- ----------------- ------------------ Common Stock, $.01 par value ................................. 200,000,000 78,273,183 Cumulative Preference Stock issuable in series, without par value (4,000,000 authorized) ................................. $2.50 Convertible Preference Stock, Series C ............... 84,371 75,650 Non-Voting Cumulative Preferred Stock, issuable in series, without par value (10,000,000 authorized)............. $2.875 Non-Voting Cumulative Preferred Stock, Series A ..... 2,875,000 1,653,930 $3.75 Convertible Preferred Stock, Series B ................ 2,300,000 1,168,700 9 5/8% Senior Notes due 2004 ................................. $250,000,000 $250,000,000 9 1/8% Senior Notes due 2004 ................................. $175,000,000 $175,000,000 10 1/4% Senior Notes due 2006 ................................ $150,000,000 $150,000,000 10% Senior Notes due 2009 .................................... $275,000,000 $200,000,000 7% Convertible Subordinated Debentures due 2009 .............. $138,000,000 $ 85,890,000
Following the Effective Date, the Applicant will have the following securities authorized and outstanding:
Title of Class Amount Authorized Amount Outstanding - -------------- ----------------- ------------------ Common Stock, par value $.01 /(1)(2)/ ........................ 150,000,000 40,000,000/(3)/ Notes ........................................................ $300,000,000 $250,000,000
_________________________ (1) Pursuant to the Plan, on or as soon as practicable after the Effective Date, Warrants to purchase 13,333,333 shares of common stock will be issued. The Warrants will be exercisable at a price per share equal to the "Solvency Value". The Solvency Value is the value per share of the post-reorganization common stock that, when multiplied by the number of shares of common stock distributed to Holders of Old Senior Note Claims and Old Subordinated Note Claims (collectively, "Claims") (and after adding such amount to the face amount of the Notes), will equal the amount of such Claims for principal plus interest on such principal through the Effective Date. If the Effective Date had been December 31, 2001, the estimated exercise price of the Warrants would have been $18.76. The Solvency Value will be higher due to an increase in calculated interest on Claims because the Effective Date will be later than December 31, 2001 and will increase by approximately $0.18 per Warrant share for each month between December 31, 2001 and the Effective Date. (2) Pursuant to the Plan, following the Effective Date, it is anticipated that employee stock options exercisable for 5,925,926 shares of common stock will be outstanding. (3) Of the 40,000,000 shares, 39,200,000 shares will be issued on the Effective Date and 800,000 shares will be issued pursuant to an agreement that provides for deferred delivery of these shares. -6- (b) Common Stock. Holders of common stock (prior to and following the Effective Date) are entitled to one vote per share for the election of directors and for other matters submitted to a vote of shareholders. Shares of Common Stock do not have cumulative voting rights. Preferred Stock. The Series A and Series B shares are non-voting. The holders of Series C shares have one vote per share, voting with the common stock in the election of directors and for other matters submitted to a vote of shareholders. If the Company fails to pay quarterly dividends on Series A, B and C shares for six quarters, the holders of such shares, voting as a class, have the right to elect two directors in addition to the regular directors. INDENTURE SECURITIES 8. Analysis of Indenture Provisions. The following is a general description of certain provisions of the Indenture. The description is qualified in its entirety by reference to the form of the Indenture filed as Exhibit T3C-1 hereto. Capitalized terms used below and not defined herein have the meanings given to such terms in the Indenture. (a) Events of Default; Withholding of Notice The following events are defined in the Indenture as "Events of Default" with respect to each series of Senior Debt Securities to be issued under the Indenture, including the Notes: (i) default in the payment of any installment of interest on any notes in such series for 30 days after becoming due; (ii) default in the payment of the principal of (or premium, if any, on) any notes in such series when due; (iii) default in the performance of any other covenant contained in the terms of the notes in such series or the Indenture for a period of 60 days after written notice of such failure, requiring the Applicant to remedy the same, shall have been given to the Applicant by the Trustee or to the Applicant and the Trustee by the holders of 25% in aggregate principal amount of the notes in such series then outstanding; (iv) default shall have occurred under any agreements, indentures or instruments under which the Applicant or certain of its Subsidiaries then has outstanding Indebtedness in excess of $10 million in the aggregate and, if not already matured in accordance with its terms, such Indebtedness shall have been accelerated and such acceleration shall not have been rescinded or annulled within ten days after notice thereof shall have been given to the Applicant by the Trustee or to the Applicant and the Trustee by the holders of at least 25% in aggregate principal amount of the notes in such series then outstanding, provided, that if, prior to the entry of -------- ---- judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by the Applicant or its Subsidiary, or waived by the applicable percentage of holders of such Indebtedness, then the Event of Default under the Indenture shall be deemed likewise to have been remedied, cured or waived; and provided, further, that if such default results -------- ------- from an action of the United States government or a foreign government which prevents the Applicant or its Subsidiary from performing their obligations under such agreement, indenture or instrument, the occurrence of such default will not be an Event of Default under the Indenture; (v) one or more judgments, orders or decrees for the payment of money in excess of $10 million, either individually or in the aggregate, shall be entered against the Applicant or certain of its Subsidiaries and shall not be discharged, there shall have been a period of 60 days during which a stay of enforcement of such judgment or order, by reason of an appeal or otherwise, shall not be in effect and there shall have been given written notice of the default to the Applicant by the Trustee or to the Applicant and the Trustee by the holders of 25% in aggregate principal amount of the notes in such series then outstanding; (vi) certain events of bankruptcy, insolvency or reorganization with respect to the Applicant or certain of its Subsidiaries shall have occurred; or (vii) failure by the Applicant to comply with its obligations under "Consolidation, Merger and Sale of Assets". If an Event of Default shall occur and be continuing with respect to a series of Senior Debt Securities, either the Trustee or the holders of at least 25% in principal amount of the outstanding notes in such series may declare the entire principal amount of the notes in such series to be immediately due and payable. If an Event of Default specified in clause (vi) above occurs with respect to the Applicant, the entire principal amount of the notes in such series shall ipso facto become due and payable. -7- Under the Indenture, the Applicant is required to furnish the Trustee annually a statement by certain officers of the Applicant to the effect that, to the best of their knowledge, the Applicant is not in default in the fulfillment of any of its obligations under the Indenture, or, if there has been a default in the fulfillment of any such obligation, specifying each such default. The Indenture provides that the Trustee shall, within 90 days after the occurrence of a default with respect to any series of Senior Debt Securities, give the holders of the notes in such series notice of such default known to it (the term default to mean the events specified above without grace periods); provided that, except in the case of a default in the payment of principal of - -------- ---- (or premium, if any) or interest, if any, on any of the notes in such series, the Trustee shall be protected in withholding such notice if it in good faith determines the withholding of such notice is in the interest of the holders of the notes in such series. The holders of a majority in principal amount of the notes in any series of Senior Debt Securities outstanding have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such series or exercising any trust or power conferred on the Trustee, and to waive certain defaults. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee shall exercise such of its rights and powers under the 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. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of notes in any series of Senior Debt Securities unless they shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request. (b) Authentication and Delivery of Notes; Use of Proceeds The Debt Securities shall be executed by or on behalf of the Applicant by its Chairman of the Board, a Vice Chairman of the Board, or its President or one of its Vice Presidents. The signatures of any of these officers may be manual or facsimile. If an Officer whose signature is on a Debt Security no longer holds that office at the time such Debt Security is authenticated, such Debt Security shall be valid nevertheless. A Debt Security shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that a Debt Security has been authenticated in accordance with the terms of the Indenture. The Trustee, upon a Company Order, shall authenticate the Debt Securities to be issued under the Plan for original issue up to an aggregate principal amount of $300,000,000. The Notes shall be issuable only in denominations of $1,000 and integral multiples thereof. If the Applicant shall establish pursuant to Section 301 of the Indenture that the Debt Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Applicant shall execute and the Trustee shall, in accordance with Section 303 and the Applicant Order with respect to such series, authenticate and deliver one or more Global Securities in temporary or permanent form that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the U.S. Depositary for such Global Security or Securities or the nominee of such depositary, and (iii) shall bear a legend substantially to the following effect: "This Debt Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary, unless and until this Debt Security is exchanged in whole or in part for Debt Securities in definitive form" and such other legend as may be required by the U.S. Depositary. There will be no proceeds (and therefore no application of such proceeds) from the issuance of the Notes because the Notes will be issued, as part of an exchange, as provided in the Plan. (c) Release and Substitution of Property Subject to the Lien of the Indenture -8- The Notes are unsecured and, therefore, no property of the Applicant is subject to lien under the Indenture. (d) Satisfaction and Discharge The Indenture provides that the Applicant shall be discharged from its obligations under the Notes (with certain exceptions) at any time prior to the stated maturity or redemption thereof when (i) the Applicant has deposited with the Trustee, in trust, sufficient funds to pay the principal of (and premium, if any) and interest, if any, to stated maturity (or to redemption date) on, the Notes, (ii) the Applicant has paid all other sums payable with respect to the Notes and (iii) certain other conditions are met. Upon such discharge, the holders of the Notes shall no longer be entitled to the benefits of the Indenture, except for certain rights, including registration of transfer and exchange of the Notes, and shall look only to such deposited funds. (e) Evidence Required to be Furnished by the Applicant to the Trustee as to Compliance with the Conditions and Covenants Contained in the Indenture The Applicant shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement signed by specified officers of the Applicant stating that a review of the activities of the Applicant during the preceding fiscal year has been made under the supervision of the signing officers, and further stating, as to each such officer, that to the best of his or her knowledge the Applicant is not in default in the fulfillment of any of its obligations under the Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and the nature and status thereof). In addition, the Applicant shall file such annual and periodic reports and certificates with the Trustee and/ or with the Commission and/or the holders of the Notes as are required by Section 314(a) of the Trust Indenture Act. 9. Other obligors. The Applicant is the sole obligor of the Notes. Contents of application for qualification. This application for qualification comprises (a) pages numbered 1 to 9, consecutively, (b) the statement of eligibility of the trustee under the indenture to be qualified, and (c) the following exhibits in addition to those filed as part of the statement of eligibility and qualification of the trustee. The Company is not incorporating any of such exhibits by reference into any of its filing under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended. T3A Second Restated Certificate of Incorporation of Chiquita Brands International, Inc., filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, as amended by: (1) the Certificate of Amendment establishing the terms of the Series B Preferred Stock, filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; (2) the Second Certificate of Amendment establishing the terms of the Series C Preference Stock, filed as Exhibit 3.1 to Current Report on Form 8-K dated September 15, 1997; (3) the Third Certificate of Amendment increasing the number of authorized shares and changing the title and par value of the common stock, filed as Exhibit 4 to Amendment No. 1 to Form 8-A dated June 18, 1998; and (4) the Fourth Certificate of Amendment reducing the number of shares designated as Series C Preference Stock, filed as Exhibit 5 to Amendment No. 1 to Form 8-A dated June 18, 1998. T3B By-laws of Chiquita Brands International, Inc., filed as Exhibit 3-b to Annual Report on Form 10-K for the year ended December 31, 1992. T3C-1 Form of Indenture, to be dated as of March 15, 2002, by and between Chiquita Brands International, Inc. and the Trustee to be named therein. T3C-2 Certificate of Terms, to be dated as of the Effective Date, adopted by Chiquita Brands International, Inc. relating to the Notes (to be filed by amendment). -9- T3D Not applicable. T3E-1 First Amended Disclosure Statement For Plan of Reorganization of Chiquita Brands International, Inc. under Chapter 11 of the Bankruptcy Code. T3E-2 First Amended Plan of Reorganization of Chiquita Brands International, Inc. T3F A cross-reference sheet showing the location in the Indenture of the provisions therein pursuant to Section 310 through 313(a), inclusive, of the Trust Indenture Act (to be included in Exhibit T3C-1). -10- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the applicant, Chiquita Brands International, Inc., a corporation organized and existing under the laws of the State of New Jersey, has duly caused 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 Cincinnati and State of Ohio, on the 25th day of January, 2002. (Seal) By /s/ Robert W. Olson ----------------------------------------- Robert W. Olson Senior Vice President, General Counsel and Secretary By /s/ William A. Tsacalis ---------------------------------------- William A. Tsacalis Vice President and Controller -11- Exhibit Index Exhibit Number Description - ------ ----------- T3A Second Restated Certificate of Incorporation of Chiquita Brands, International, Inc., filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, as amended by: (1) the Certificate of Amendment establishing the terms of the Series B Preferred Stock, filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; (2) the Second Certificate of Amendment establishing the terms of the Series C Preference Stock, filed as Exhibit 3.1 to Current Report on Form 8-K dated September 15, 1997; (3) the Third Certificate of Amendment increasing the number of authorized shares and changing the title and par value of the common stock, filed as Exhibit 4 to Amendment No. 1 to Form 8-A dated June 18, 1998; and (4) the Fourth Certificate of Amendment reducing the number of shares designated as Series C Preference Stock, filed as Exhibit 5 to Amendment No. 1 to Form 8-A dated June 18, 1998. T3B By-laws of Chiquita Brands International, Inc., filed as Exhibit 3-b to Annual Report on Form 10-K for the year ended December 31, 1992. T3C-1 Form of Indenture, to be dated as of March 15, 2002, by and between Chiquita Brands International, Inc. and the Trustee to be named therein. T3C-2 Certificate of Terms, to be dated as of the Effective Date, adopted by Chiquita Brands International, Inc. relating to the Notes (to be filed by amendment). T3D Not applicable. T3E-1 Disclosure Statement For Plan of Reorganization of Chiquita Brands International, Inc. under Chapter 11 of the Bankruptcy Code. T3E-2 Plan of Reorganization of Chiquita Brands International, Inc. T3F A cross-reference sheet showing the location in the Indenture of the provisions therein pursuant to Section 310 through 313(a), inclusive, of the Trust Indenture Act (to be included in Exhibit T3C-1). 25.1 Statement of Eligibility of Trustee on Form T-1 (to be filed by amendment). EX-99.T3C.1 3 dex99t3c1.txt FORM OF INDENTURE EXHIBIT T3C-1 ================================================================================ CHIQUITA BRANDS INTERNATIONAL, INC. and [_________________________], Trustee _____________ INDENTURE Dated as of March 15, 2002 _____________ Senior Debt Securities ================================================================================ CHIQUITA BRANDS INTERNATIONAL, INC. Reconciliation and tie showing the location in the Indenture dated as of March 15, 2002 of the provisions inserted pursuant to Sections 310 to 318(a), inclusive, of the Trust Indenture Act of 1939. Trust Indenture Act Section Indenture - ------- --------- Section 310 (a)(1) ................................................609 (a)(2) ................................................609 (a)(3) .....................................Not Applicable (a)(4) .....................................Not Applicable (b) ................................................608 .............................................610(d) (c) .....................................Not Applicable Section 311 (a) ................................................613 (b) ................................................613 (c) .....................................Not Applicable Section 312 (a) ................................................701 (b) ................................................702 (c) ................................................702 Section 313 (a) ................................................703 (b) ................................................703 (c) ................................................703 (d) ................................................703 Section 314 (a) ................................................704 (b) .....................................Not Applicable (c) ................................................102 (c)(1) ................................................102 (c)(2) ................................................102 (c)(3) ................................................102 (d) .....................................Not Applicable (e) ................................................102 (f) .....................................Not Applicable Section 315 (a) .............................................601(a) (b) ................................................602 (c) .............................................601(b) (d) .............................................601(c) Section 316 (a)(1)(A) ........................................502 and 512 (a)(1)(B) ................................................513 (a)(2) .....................................Not Applicable (b) ................................................508 (c) .....................................Not Applicable Section 317 (a)(1) ................................................503 (a)(2) ................................................504 (b) ...............................................1003 Section 318 (a) ................................................107 ______________________ NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS
Page ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS GENERAL APPLICATION..................... 1 SECTION 101. Definitions.............................................................. 1 SECTION 102. Compliance Certificates and Opinions..................................... 9 SECTION 103. Form of Documents Delivered to Trustee................................... 10 SECTION 104. Acts of Holders.......................................................... 10 SECTION 105. Notices, Etc., to Trustee and Company.................................... 12 SECTION 106. Notice to Holders; Waiver................................................ 12 SECTION 107. Conflict with Trust Indenture Act........................................ 13 SECTION 108. Effect of Headings and Table of Contents................................. 13 SECTION 109. Successors and Assigns................................................... 13 SECTION 110. Separability Clause...................................................... 13 SECTION 111. Benefits of Indenture.................................................... 13 SECTION 112. Governing Law............................................................ 13 SECTION 113. Non-Business Day......................................................... 14 SECTION 114. Immunity of Incorporators, Stockholders, Officers and Directors.......... 14 SECTION 115. Judgment Currency........................................................ 14 ARTICLE TWO DEBT SECURITY FORM....................................................... 15 SECTION 201. Form of Debt Securities.................................................. 15 SECTION 202. Form of Trustee's Certificate of Authentication.......................... 16 SECTION 203. Debt Securities in Global Form........................................... 16 ARTICLE THREE THE DEBT SECURITIES...................................................... 16 SECTION 301. Title; Payment and Terms................................................. 16 SECTION 302. Denominations............................................................ 19 SECTION 303. Execution, Authentication, Delivery and Dating........................... 19 SECTION 304. Temporary Debt Securities and Exchange of Debt Securities................ 20 SECTION 305. Registration of Transfer and Exchange.................................... 21 SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities.................... 24 SECTION 307. Payment of Interest; Interest Rights Preserved........................... 25 SECTION 308. Persons Deemed Owners.................................................... 26 SECTION 309. Cancellation............................................................. 26 SECTION 310. Computation of Interest.................................................. 27 ARTICLE FOUR SATISFACTION AND DISCHARGE............................................... 27 SECTION 401. Satisfaction and Discharge of Debt Securities of any Series.............. 27 SECTION 402. Application of Trust Money............................................... 29 SECTION 403. Satisfaction and Discharge of Indenture.................................. 29 SECTION 404. Reinstatement............................................................ 30
Page ---- ARTICLE FIVE REMEDIES........................................................................... 30 SECTION 501. Events of Default.................................................................. 30 SECTION 502. Acceleration of Maturity; Rescission and Annulment................................ 33 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.................... 34 SECTION 504. Trustee May File Proofs of Claim................................................... 35 SECTION 505. Trustee May Enforce Claims Without Possession of Debt Securities................... 36 SECTION 506. Application of Money Collected..................................................... 36 SECTION 507. Limitation on Suits................................................................ 37 SECTION 508. Unconditional Right of Holders to Receive Principal (and Premium, if any) and Interest, if any.......................................................... 37 SECTION 509. Restoration of Rights and Remedies................................................. 38 SECTION 510. Rights and Remedies Cumulative..................................................... 38 SECTION 511. Delay or Omission Not Waiver....................................................... 38 SECTION 512. Control by Holders................................................................. 38 SECTION 513. Waiver of Past Defaults............................................................ 39 SECTION 514. Waiver of Stay or Extension Laws................................................... 39 ARTICLE SIX THE TRUSTEE........................................................................ 39 SECTION 601. Certain Duties and Responsibilities................................................ 39 SECTION 602. Notice of Defaults................................................................. 40 SECTION 603. Certain Rights of Trustee.......................................................... 41 SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities........................ 41 SECTION 605. May Hold Debt Securities........................................................... 42 SECTION 606. Money Held in Trust................................................................ 42 SECTION 607. Compensation and Reimbursement..................................................... 42 SECTION 608. Disqualification; Conflicting Interests............................................ 43 SECTION 609. Corporate Trustee Required, Different Trustees for Different Series; Eligibility................................................................ 43 SECTION 610. Resignation and Removal; Appointment of Successor.................................. 43 SECTION 611. Acceptance of Appointment by Successor............................................. 45 SECTION 612. Merger, Conversion, Consolidation or Succession to Business........................ 46 SECTION 613. Preferential Collection of Claims Against Company.................................. 46 SECTION 614. Authenticating Agents.............................................................. 47 ARTICLE SEVEN HOLDERS' REPORTS BY TRUSTEE AND COMPANY............................................ 49 SECTION 701. Preservation of Information; Company to Furnish Trustee Names and Addresses of Holders............................................. 49 SECTION 702. Communications to Holders.......................................................... 49 SECTION 703. Reports by Trustee................................................................. 49 SECTION 704. Reports by Company................................................................. 49
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Page ---- ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER......................... 50 SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.................. 50 SECTION 802. Successor Corporation Substituted..................................... 52 ARTICLE NINE SUPPLEMENTAL INDENTURES............................................... 52 SECTION 901. Supplemental Indentures Without Consent of Holders.................... 52 SECTION 902. Supplemental Indentures With Consent of Holders....................... 53 SECTION 903. Execution of Supplemental Indentures.................................. 55 SECTION 904. Effect of Supplemental Indentures..................................... 55 SECTION 905. Conformity With Trust Indenture Act................................... 55 SECTION 906. Reference in Debt Securities to Supplemental Indentures............... 55 SECTION 907. Revocation and Effect of Consents..................................... 55 ARTICLE TEN COVENANTS............................................................. 56 SECTION 1001. Payment of Principal (and Premium, if any) and Interest, if any....... 56 SECTION 1002. Maintenance of Office or Agency....................................... 56 SECTION 1003. Money for Debt Securities Payments to Be Held in Trust................ 57 SECTION 1004. Payment of Taxes and Other Claims..................................... 58 SECTION 1005. Maintenance of Properties............................................. 59 SECTION 1006. Statements as to Compliance........................................... 59 SECTION 1007. Corporate Existence................................................... 60 SECTION 1008. Waiver of Certain Covenants........................................... 60 ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES......................................... 60 SECTION 1101. Applicability of This Article......................................... 60 SECTION 1102. Election to Redeem; Notice to Trustee................................. 60 SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed................ 61 SECTION 1104. Notice of Redemption.................................................. 61 SECTION 1105. Deposit of Redemption Price........................................... 62 SECTION 1106. Debt Securities Payable on Redemption Date............................ 62 SECTION 1107. Debt Securities Redeemed in Part...................................... 63 ARTICLE TWELVE SINKING FUNDS......................................................... 63 SECTION 1201. Applicability of This Article......................................... 63 SECTION 1202. Satisfaction of Sinking Fund Payments With Debt Securities............ 63 SECTION 1203. Redemption of Debt Securities for Sinking Fund........................ 64 ARTICLE THIRTEEN ADDITIONAL AMOUNTS.................................................... 64 SECTION 1301. Applicability of this Article......................................... 64 ARTICLE FOURTEEN SECURITIES IN FOREIGN CURRENCIES...................................... 65 SECTION 1401. Applicability of Article.............................................. 65
iii This is an INDENTURE dated as of March 15, 2002, between Chiquita Brands International, Inc., a corporation duly incorporated and existing under the laws of New Jersey and having its principal office at 250 East Fifth Street, Cincinnati, Ohio (hereinafter called the "Company"), and [_________________________], a [_________] banking corporation, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company deems it necessary to issue from time to time for its lawful purposes securities (hereinafter called the "Debt Securities") evidencing its unsecured indebtedness and has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of the Debt Securities, unlimited as to principal amount, to have such titles, to bear such rates of interest, to mature at such time or times and to have such other provisions as shall be fixed as hereinafter provided. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done, and the Company proposes to do all things necessary to make the Debt Securities, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company as hereinafter provided. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debt Securities or any series thereof, as follows: ARTICLE One DEFINITIONS AND OTHER PROVISIONS GENERAL APPLICATION SECTION 101. Definitions. ----------- For all purposes of this Indenture and all Debt Securities issued hereunder, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such generally accepted accounting principles as in effect and as implemented by the Company on the date of this Indenture; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Three and Article Six, are defined in those Articles. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Additional Amounts" means any Additional Amounts which are required hereby or by the terms of any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and 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 to the foregoing. "Authenticating Agent" means any Person authorized to authenticate and deliver Debt Securities on behalf of the Trustee for the Debt Securities of any series pursuant to Section 614. "Authorized Newspaper" means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication. "Board of Directors" means the board of directors of the Company or any duly authorized committee of that board or any director or directors and/or officer or officers of the Company to whom that board or committee shall have duly delegated its authority. "Board Resolution" means (1) a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, or 2 (2) a certificate signed by the director or directors or officer or officers to whom the Board of Directors of the Company shall have duly delegated its authority, and delivered to the Trustee for the Debt Securities of any series. "Business Day", when used with respect to any particular Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law to close, and shall otherwise mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions, at the place where any specified act pursuant to this Indenture is to occur, are authorized or obligated by law to close. ["Capital Stock" means any and all shares of the common stock, par value $.01 per share, of the Company and of any class or series of preferred or preference stock of the Company, whether now outstanding or issued after the date of this Indenture.]/1/ "Capitalized Lease Obligation" means ____________./2/ "Certificate of a Firm of Independent Public Accountants" means a certificate signed by any firm of independent public accountants of recognized standing selected by the Company. The term "independent" when used with respect to any specified firm of public accountants means such a firm which (1) is in fact independent, (2) does not have any direct financial interest or any material indirect financial interest in the Company or in any Affiliate of the Company, and (3) is not connected with the Company or any Affiliate of the Company as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions, but such firm may be the regular auditors employed by the Company. Whenever it is herein provided that any Certificate of a Firm of Independent Public Accountants shall be furnished to the Trustee for Debt Securities of any series, such Certificate shall state that the signer has read this definition and that the signer is independent within the meaning hereof. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. ________________________ /1/ This term is not used in this document (except in the definition of "Common Stock"). Consider moving to certificate. /2/ Definition from certificate to be inserted. 3 ["Common Stock" means the common stock, par value $.01 per share, of the Company.]/3/ "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by (1) the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, or (2) by any two Persons designated in a Company Order previously delivered to the Trustee for the Debt Securities of any series by any two of the foregoing officers and delivered to the Trustee for the Debt Securities of such series. "Corporate Trust Office" means the office of the Trustee for Debt Securities of any series at which at any particular time its corporate trust business shall be principally administered, which office of [_____________________], at the date of the execution of this Indenture, is located at [__________________________________]. "corporation" includes corporations, associations, joint stock companies and business trusts. "currency" or "money", with respect to any payment, deposit or other transfer in respect of the principal of or any premium or interest on any security, means the unit or units of legal tender for the payment of public and private debts (or any composite thereof) in which such payment, deposit or other transfer is required to be made by or pursuant to the terms hereof and, with respect to any other payment, deposit or transfer pursuant to or contemplated by the terms hereof, means Dollars. "Debt Securities" means securities, including Global Securities (unless the context indicates otherwise), evidencing unsecured indebtedness of the Company authenticated and delivered under this Indenture. "Debt Security Register" and "Debt Security Registrar" have the respective meanings specified in Section 305. "Defaulted Interest" has the meaning specified in Section 307. "Discounted Debt Security" means any Debt Security which provides for an amount (excluding any amounts attributable to accrued but unpaid interest thereon) less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. _____________________ /3/ Definition not used. Consider moving to certificate. 4 "Dollars" and the sign "$" mean the currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Global Security" means a Debt Security in global form established pursuant to Section 203. "Government Obligations", with respect to any Security, means (i) direct obligations of the government or governments which issued the currency in which the principal of or any premium or interest on such Security shall be payable, in each case where the payment or payments thereunder are supported by the full faith and credit of such government or governments or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of such government or governments, in each case where the payment or payments thereunder are unconditionally guaranteed as a full faith and credit obligation by such government or governments, and which, in the case of (i) or (ii), are not callable or redeemable at the option of the issuer or issuers thereof, and shall also include a Depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or other amount with respect to any such Government Obligation held by such custodian for the account of the holder of a Depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such Depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest on or principal of or other amount with respect to the Government Obligation evidenced by such Depository receipt. "Holder", when used with respect to any Debt Security, means the Person in whose name a Debt Security is registered in the Debt Security Register. "Indebtedness" means ________________./4/ "Indenture" means this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of a particular series of Debt Securities established as contemplated by Section 301. "Interest", when used with respect to a Discounted Debt Security which by its terms bears interest only after Maturity, means interest payable after Maturity. ______________________ /4/ To be conformed to the term that is used in the Description of Notes. 5 "Interest Payment Date", when used with respect to any Debt Security, means the Stated Maturity of an installment of interest on such Debt Security. "Judgment Currency" has the meaning specified in Section 115. "Legal Holiday", with respect to any Place of Payment or other location, means a Saturday, a Sunday or a day on which banking institutions or trust companies in such Place of Payment or other location are not authorized or obligated to be open. "Maturity", when used with respect to any Debt Security, means the date on which the principal of that Debt Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, request for redemption or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President (any reference to a Vice President of the Company herein shall be deemed to include any Vice President of the Company whether or not designated by a number or a word or words added before or after the title "Vice President"), and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee for the Debt Securities of any series. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel to the Company or may be other counsel satisfactory to the Trustee for the Debt Securities of any series. "Outstanding", when used with respect to Debt Securities, means, as of the date of determination, all Debt Securities theretofore authenticated and delivered under this Indenture, except: (1) Debt Securities theretofore canceled by the Trustee for such Debt Securities or delivered to such Trustee for cancellation; (2) Debt Securities or portions thereof for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee for such Debt Securities or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Debt Securities (including Debt Securities with respect to which the Company has effected satisfaction and discharge as provided in Article Four, except to the extent provided in such Article); provided, however, that, if such Debt Securities or portions thereof are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture, or provision therefor satisfactory to such Trustee has been made; and (3) Debt Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Debt Securities have been authenticated and delivered pursuant to this Indenture, other than any such Debt Securities in respect of 6 which there shall have been presented proof satisfactory to the Trustee for such Debt Securities that any such Debt Securities are held by bona fide purchasers in whose hands the Debt Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Debt Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (a) Debt Securities owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee for such Debt Securities shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which such Trustee knows to be so owned shall be so disregarded, provided, that Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of such Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Company or any Affiliate of the Company and (b) the principal amount of a Discounted Debt Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration pursuant to Section 502. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest, if any, on any Debt Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Debt Securities of any particular series, means the place or places where the principal of (and premium, if any) and interest, if any, on the Debt Securities of that series are payable, as contemplated by Section 301. "Predecessor Debt Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by that particular Debt Security, and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 306 in lieu of a mutilated, destroyed, lost or stolen Debt Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Debt Security. "Redemption Date", when used with respect to any Debt Security to be redeemed or purchased in whole or in part, means the date fixed for such redemption or purchase by or pursuant to this Indenture and such Debt Security. "Redemption Price", when used with respect to any Debt Security to be redeemed or purchased, means the price at which it is to be redeemed or purchased pursuant to this Indenture and such Debt Security. 7 "Regular Record Date" for the interest payable on any Interest Payment Date on the Debt Securities of any series, means the date, if any, specified for that purpose as contemplated by Section 301. "Required Currency" has the meaning specified in Section 115. "Responsible Officer", when used with respect to the Trustee for any series of Debt Securities, means the chairman or vice chairman of the board of directors, the chairman or vice chairman of the executive committee of the board of directors, the president, any vice president (whether or not designated by a number or a word or words added before or after the title "vice president"), the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of such Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. A "series" of Debt Securities means all Debt Securities denoted as part of the same series authorized by or pursuant to a particular Board Resolution. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such Regulation is in effect on the date of this Indenture. "Special Record Date" for the payment of any Defaulted Interest on the Debt Securities of any series means a date fixed by the Trustee for such series pursuant to Section 307. "Stated Maturity", when used with respect to any security or any installment of principal thereof or interest thereon, means the date specified in such security representing such installment of interest as the fixed date on which the principal of such security or such installment of principal or interest is due and payable. "Subsidiary" means any corporation of which at least a majority of all outstanding stock having ordinary voting power in the election of directors of such corporation is at the time, directly or indirectly, owned by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument and, subject to the provisions of Article Six hereof, shall also include its successors and assigns as Trustee hereunder. If there shall be at one time more than one Trustee hereunder, "Trustee" shall mean each such Trustee and shall apply to each such Trustee only with respect to those series of Debt Securities with respect to which it is serving as Trustee. 9 "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and in force at the date as of which this Indenture was executed, except as provided in Section 905 hereof and except that any rules and regulations subsequently prescribed by the Commission pursuant to Section 314(a) of that Act shall apply. "U.S. Depositary" or "Depositary" means, with respect to any Security issuable or issued in the form of one or more Global Securities, the Person designated as U.S. Depositary or Depositary by the Company in or pursuant to this Indenture which Person must be, to the extent required by applicable law or regulation, a clearing agency registered under the Exchange Act, or any successor thereto, which shall in either case be designated by the Company pursuant to Section 301, until a successor U.S. Depositary or Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "U.S. Depositary" or "Depositary" shall mean or include each Person who is then a U.S. Depositary or Depositary hereunder, and if at any time there is more than one such Person, "U.S. Depositary" or "Depository" as used with respect to the Debt Securities of any series shall mean the U.S. Depository or Depository with respect to the Debt Securities of that series. "U.S. Government Obligations" means securities which are (i) direct obligations of the government of the United States or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the government of the United States, the payment of which is unconditionally guaranteed by such government, which, in either case, are full faith and credit obligations of such government and are not callable or redeemable at the option of the issuer thereof. "United States" means the United States of America (including the States and the District of Columbia), its territories, possessions and other areas subject to its jurisdiction (including the Commonwealth of Puerto Rico). "Yield to Maturity", when used with respect to any Discounted Debt Security, means the yield to maturity, if any, set forth on the face thereof. SECTION 102. Compliance Certificates and Opinions. ------------------------------------ Upon any application or request by the Company to the Trustee for any series of Debt Securities to take any action under any provision of this Indenture, the Company shall furnish to such Trustee (i) an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, and (iii) if appropriate, a Certificate of a Firm of Independent Public Accountants; provided, that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: 9 (1) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (2) 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; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. -------------------------------------- In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows that the certificate or opinion or representations with respect to matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. --------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such 10 instrument or instruments are delivered to the Trustee for the appropriate series of Debt Securities and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Debt Security, shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee for the appropriate series of Debt Securities and the Company and any agent of such Trustee or the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or association or a member of a partnership, or an official of a public or governmental body, on behalf of such corporation, association, partnership or public or governmental body or by a fiduciary, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee for the appropriate series of Debt Securities deems sufficient. (d) The principal amount and serial numbers of Debt Securities held by any Person, and the date of holding the same, shall be proved by the Debt Security Register. (e) In determining whether the Holders of the requisite principal amount of Outstanding Debt Securities have given any request, demand, authorization, direction, notice, consent or waiver under this Indenture, the principal amount of a Discounted Debt Security that may be counted in making such determination and that shall be deemed to be Outstanding for such purpose shall be equal to the amount of the principal thereof that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 at the time the taking of such action by the Holders of such requisite principal amount is evidenced to the Trustee for such Debt Securities. (f) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Debt Security shall bind every future Holder of the same Debt Security and the Holder of every Debt Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee for such Debt Securities, the Debt Security Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Debt Security. 11 SECTION 105. Notices, Etc., to Trustee and Company. ------------------------------------- Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee for a series of Debt Securities by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with such Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by such Trustee or by any Holder shall be sufficient for every purpose hereunder (except as provided in paragraphs (3), (4) and (5) of Section 501) if in writing and mailed, first class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to such Trustee by the Company. SECTION 106. Notice to Holders; Waiver. ------------------------- Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) to Holders if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at his address as it appears in the Debt Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If a series of Debt Securities is listed on any stock exchange outside the United States and such stock exchange so requires, such notice shall also be given by publication in an Authorized Newspaper in such city and on such days or by such other means as the Company shall advise the Trustee that such stock exchange so requires. In any case where notice to Holders of Debt Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed in the manner prescribed by this Indenture shall be deemed to have been given whether or not received by any particular Holder. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee for such Debt Securities shall constitute a sufficient notification for every purpose hereunder. Neither the failure to give notice by publication in an Authorized Newspaper or as otherwise required by a stock exchange outside the United States, nor any defect in such notice as published or otherwise given, shall affect the sufficiency of any notice mailed to Holders of Debt Securities as provided above. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after 12 the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee for such Debt. Securities, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 107. Conflict with Trust Indenture Act. --------------------------------- If any provision hereof limits, qualifies or conflicts with the duties imposed by any of Sections 310 through 317, inclusive, of the Trust Indenture Act through the operation of Section 318(c) thereof, such imposed duties shall control. SECTION 108. Effect of Headings and Table of Contents. ---------------------------------------- The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. ---------------------- All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. ------------------- In any case any provision in this Indenture or in the Debt Securities 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. SECTION 111. Benefits of Indenture. --------------------- Nothing in this Indenture or in the Debt Securities, expressed or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Debt Security Registrar and their successors hereunder and the Holders of Debt Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. ------------- THIS INDENTURE AND THE DEBT SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGORS IN RESPECT OF THE DEBT SECURITIES AND (BY THEIR ACCEPTANCE OF THE DEBT SECURITIES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING 13 ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE DEBT SECURITIES. SECTION 113. Non-Business Day. ------------ In any case where any Interest Payment Date, Redemption Date or Stated Maturity of a Debt Security of any particular series shall not be a Business Day at any Place of Payment with respect to Debt Securities of that series, then (notwithstanding any other provision of this Indenture or of the Debt Securities) payment of principal of (and premium, if any) and interest, if any, with respect to such Debt Security need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. SECTION 114. Immunity of Incorporators, Stockholders, Officers and Directors. --------------------------------------------------------------- No recourse shall be had for the payment of the principal of (and premium, if any), or the interest, if any, on any Debt Security of any series, or for any claim based thereon, or upon any obligation, covenant or agreement of this Indenture, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or indirectly through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment of penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Debt Securities of each series are solely corporate obligations, and that no personal liability whatever shall attach to, or is incurred by, any incorporator, stockholder, officer or director, past, present or future, of the Company or of any successor corporation, either directly or indirectly through the Company or any successor corporation, because of the incurring of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Debt Securities of any series, or to be implied herefrom or therefrom; and that all such personal liability is hereby expressly released and waived as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Debt Securities of each series. SECTION 115. Judgment Currency. ----------------- The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of, or premium or interest, if any, on the Debt Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the spot rate of exchange into the Judgment Currency for the Required Currency and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency 14 other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. ARTICLE TWO DEBT SECURITY FORM SECTION 201. Form of Debt Securities. ----------------------- The Debt Securities of each series shall be in such fully registered form as shall be established by or pursuant to a Board Resolution, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law, with any rule or regulation made pursuant thereto, with any rules of any securities exchange or to conform to usage, as may, consistent herewith, be determined by the officers executing such Debt Securities, as evidenced by their execution of such Debt Securities. Prior to the delivery of a Debt Security of any series in any such form to the Trustee for the Debt Securities of such series for authentication, the Company shall deliver to such Trustee the following: (1) The Board Resolution by or pursuant to which such form of Debt Security has been approved; (2) An Officers' Certificate dated the date such Certificate is delivered to such Trustee stating that all conditions precedent provided for in this Indenture relating to the authentication and delivery of Debt Securities in such form have been complied with; and (3) An Opinion of Counsel stating that Debt Securities in such form, when (a) completed by appropriate insertions and executed and delivered by the Company to such Trustee for authentication in accordance with this Indenture, (b) authenticated and delivered by such Trustee in accordance with this Indenture within the authorization as to aggregate principal amount established from time to time by the Board of Directors and (c) sold in the manner specified in such Opinion of Counsel, will be the legal, valid and binding obligations of the Company, subject to applicable bankruptcy, reorganization, insolvency and other similar laws generally affecting creditors' rights, to general equitable principles and to such other qualifications as such counsel shall conclude do not materially affect the rights of Holders of such Debt Securities. 15 The definitive Debt Securities shall be printed, lithographed or engraved or produced by any combination of these methods on a steel engraved border or steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by their execution thereof. SECTION 202. Form of Trustee's Certificate of Authentication. ----------------------------------------------- The Certificate of Authentication on all Debt Securities shall be in substantially the following form: "This is one of the Debt Securities, of the series designated herein, described in the within-mentioned __________________________, as Trustee By:________________________ Authorized Officer" SECTION 203. Debt Securities in Global Form. ------------------------------ If any Debt Security of a series is issuable in global form, such Debt Security may provide that it shall represent the aggregate amount of Outstanding Debt Securities from time to time endorsed thereon and may also provide that the aggregate amount of outstanding Debt Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Debt Securities represented thereby shall be made by the Trustee and in such manner as shall be specified in such Global Security. Any instructions by the Company with respect to a Global Security, after its initial issuance, shall be in writing but need not comply with Section 102. Global Securities may be issued in either temporary or permanent form. None of the Company, the Trustee, any Paying Agent or the Debt Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. ARTICLE THREE THE DEBT SECURITIES SECTION 301. Title; Payment and Terms. ------------------------ The aggregate principal amount of Debt Securities which may be authenticated and delivered and outstanding under this Indenture is unlimited. The Debt 16 Securities may be issued up to the aggregate principal amount of Debt Securities from time to time authorized by or pursuant to a Board Resolution. The Debt Securities may be issued in one or more series, each of which shall be issued pursuant to a Board Resolution. With respect to any particular series of Debt Securities, the Board Resolution relating thereto shall specify: (1) the title of the Debt Securities of that series (which shall distinguish the Debt Securities of that series from all other series of Debt Securities); (2) any limit upon the aggregate principal amount of the Debt Securities of that series which may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of that series pursuant to Section 304, 305, 306, 906 or 1107 or otherwise pursuant to any covenant permitting the purchase of a portion of the Debt Securities of that series); (3) the date or dates (or manner of determining the same) on which the principal of the Debt Securities of that series is payable (which, if so provided in such Board Resolution, may be determined by the Company from time to time and set forth in the Debt Securities of the series issued from time to time); (4) the rate or rates (or the manner of calculation thereof) at which the Debt Securities of that series shall bear interest (if any), the date or dates from which such interest shall accrue (which, in either case or both, if so provided in such Board Resolution, may be determined by the Company from time to time and set forth in the Debt Securities of the series issued from time to time), the Interest Payment Dates on which such interest shall be payable (or manner of determining the same) and the Regular Record Date for the interest payable on any Debt Securities on any Interest Payment Date whether and under what circumstances Additional Amounts on Debt Securities of that series shall be payable; (5) the place or places where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest, if any, on Debt Securities of that series shall be payable, any Debt Securities of that series may be surrendered for registration of transfer, any Debt Securities of that series may be surrendered for exchange, and notices and demands to or upon the Company in respect of the Debt Securities of that series and this Indenture may be served; (6) the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities of that series may be redeemed, in whole or in part, at the option of the Company; (7) the obligation, if any, of the Company to redeem or purchase Debt Securities of that series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof, and the period or periods within which, the price or prices at 17 which and the terms and conditions upon which, Debt Securities of that series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (8) if other than U.S. Dollars, the currency or currencies or units based on or related to currencies in which the Debt Securities of such series shall be denominated and in which payments of principal of (and premium, if any) and interest, if any, on such Debt Securities shall or may be payable; (9) if the principal of (and premium, if any) or interest, if any, on the Debt Securities of a series are to be payable, at the election of the Company or a Holder thereof, in a currency or currencies or units based on or related to currencies other than that in which the Debt Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (10) if the amount of payments of principal of (and premium, if any) and interest, if any, on the Debt Securities of a series may be determined with reference to an index based on (i) a currency or currencies or units based on or related to currencies other than that in which the Debt Securities are stated to be payable, (ii) changes in the price of one or more other securities or groups or indexes of securities or (iii) changes in the prices of one or more commodities or groups or indexes of commodities, or any combination of the foregoing, the manner in which such amounts shall be determined; (11) the denominations in which any Debt Securities of that series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof; (12) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of that series which shall be payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502; (13) any addition to, or modification or deletion of, any Events of Default or covenants of the Company with respect to the Debt Securities of that series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (14) if a Person other than [____________________] is to act as Trustee for the Debt Securities of that series, the name and location of the Corporate Trust Office of such Trustee; (15) if other than as set forth in Section 401, provisions for the satisfaction and discharge of this Indenture with respect to the Debt Securities of that series; (16) any provision relating to the defeasance of the obligations of the Company in connection with the Debt Securities of that series; (17) any provisions regarding exchangeability or conversion of the Debt Securities of that series; 18 (18) whether the Debt Securities of the series shall be issued in whole or in part in the form of one or more Global Securities and, in such case, the U.S. Depositary for such Global Security or Securities; whether such global form shall be permanent or temporary; the manner in which and the circumstances under which Global Securities representing Debt Securities of the series may be exchanged for Debt Securities in definitive form, if other than, or in addition to, the manner and circumstances specified in Section 305 hereof; the extent to which, or the manner in which, any interest payable on any Global Security on an Interest Payment Date will be paid, if other than in the manner provided in Section 307; the manner in which the principal of, or premium, if any, on, any Global Security will be paid, if other than as set forth elsewhere herein; and (19) any other terms of that series (which terms shall not be inconsistent with the provisions of this Indenture). All Debt Securities of any particular series shall be substantially identical except as to denomination, rate of interest, Stated Maturity and the date from which interest, if any, shall accrue, and except as may otherwise be provided in or pursuant to such Board Resolution relating thereto. The terms of such Debt Securities, as set forth above, may be determined by the Company from time to time if so provided in or established pursuant to the authority granted in a Board Resolution. All Debt Securities of any one series need not be issued at the same time, and unless otherwise provided, a series may be reopened for issuance of additional Debt Securities of such series. SECTION 302. Denominations. ------------- Unless otherwise provided with respect to any series of Debt Securities as contemplated by Section 301, all Debt Securities of a series shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. ---------------------------------------------- The Debt Securities shall be executed on behalf of the Company by its Chairman of the Board, a Vice Chairman of the Board, or its President or one of its Vice Presidents. The signature of any of these officers on the Debt Securities may be manual or facsimile. Debt Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debt Securities or did not hold such offices at the date of such Debt Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Debt Securities of any series executed by the Company to the Trustee for the Debt Securities of such series for authentication, together with a Company Order for the authentication and delivery of such Debt Securities, and 19 such Trustee, in accordance with the Company Order, shall authenticate and deliver such Debt Securities. If all the Debt Securities of any one series are not to be issued at one time and if a Board Resolution relating to such Debt Securities shall so permit, such Company Order may set forth procedures acceptable to the Trustee for the issuance of such Debt Securities, including, without limitation, procedures with respect to interest rate, Stated Maturity, date of issuance and date from which interest, if any, shall accrue. Notwithstanding any contrary provision herein, if all Debt Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Board Resolution, Officers' Certificate and Opinion of Counsel otherwise required pursuant to Sections 102 and 201 at or prior to the time of authentication of each Debt Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Debt Security of such series to be issued. Each Debt Security shall be dated the date of its authentication. No Debt Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Debt Security a certificate of authentication substantially in the form provided for herein manually executed by the Trustee for such Debt Security or on its behalf pursuant to Section 614, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and delivered hereunder. If the Company shall establish pursuant to Section 301 that the Debt Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 303 and the Company Order with respect to such series, authenticate and deliver one or more Global Securities in temporary or permanent form that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the U.S. Depositary for such Global Security or Securities or the nominee of such depositary, and (iii) shall bear a legend substantially to the following effect: "This Debt Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary, unless and until this Debt Security is exchanged in whole or in part for Debt Securities in definitive form" and such other legend as may be required by the U.S. Depositary. SECTION 304. Temporary Debt Securities and Exchange of Debt Securities. --------------------------------------------------------- Pending the preparation of definitive Debt Securities of any particular series, the Company may execute, and upon Company Order the Trustee for the Debt Securities of such series shall authenticate and deliver, in the manner specified in Section 303, temporary Debt Securities which are printed, lithographed, typewritten, photocopied or otherwise produced, in any denomination, with like terms and conditions 20 as the definitive Debt Securities of like series in lieu of which they are issued, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debt Securities may determine, as evidenced by their execution of such Debt Securities. If temporary Debt Securities of any particular series are issued, the Company will cause definitive Debt Securities of that series to be prepared without unreasonable delay. After the preparation of such definitive Debt Securities, the temporary Debt Securities of such series shall be exchangeable for such definitive Debt Securities and of a like Stated Maturity and with like terms and provisions upon surrender of the temporary Debt Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debt Securities of any particular series, the Company shall execute and (in accordance with a Company Order delivered at or prior to the authentication of the first definitive Debt Security of such series) the Trustee for the Debt Securities of such series shall authenticate and deliver in exchange therefor a like principal amount of definitive Debt Securities of authorized denominations of the same series and of a like Stated Maturity and with like terms and provisions. Until exchanged as hereinabove provided, the temporary Debt Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities of the same series and with like terms and conditions authenticated and delivered hereunder. SECTION 305. Registration of Transfer and Exchange. ------------------------------------- The Company shall keep or cause to be kept for the Debt Securities of each series a register (the register maintained in such office being herein sometimes referred to as the "Debt Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of transfer and exchange of Debt Securities. The Depository Trust Company is hereby initially appointed "Debt Security Registrar" for such purposes. Upon surrender for registration of transfer of any Debt Security of any particular series at the office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee for the Debt Securities of each series shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Debt Securities of any authorized denominations, and of a like Stated Maturity and of a like series and aggregate principal amount and with like terms and conditions. Except as set forth below, at the option of the Holder, Debt Securities of any particular series may be exchanged for other Debt Securities of any authorized denominations, and of a like Stated Maturity and of a like series and aggregate principal amount and with like terms and conditions, upon surrender of the Debt Securities to be exchanged at such office or agency. Whenever any Debt Securities are so surrendered for exchange, the Company shall execute, and the Trustee for such Debt Securities shall authenticate and deliver, the Debt Securities which the Holder making the exchange is entitled to receive. 21 All Debt Securities issued upon any registration of transfer or exchange of Debt Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such registration of transfer or exchange. Every Debt Security presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Trustee for such Debt Security) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Debt Security Registrar for such series duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Debt Securities, other than exchanges pursuant to Section 304, 906, 1013 or 1107 not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange Debt Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Debt Securities of that series selected for redemption under Section 1104 and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Debt Security so selected for redemption as a whole or in part, except the unredeemed portion of any Debt Security being redeemed in part. Each Global Security representing a Debt Security shall be registered in the name of the U.S. Depositary designated for such series of Debt Security or a nominee thereof and delivered to such Depositary or nominee thereof or custodian therefor, and each such Global Security shall constitute a single Debt Security for all purposes of this Indenture. Notwithstanding any other provision of this Section, unless and until it is exchanged in whole or in part for Debt Securities in definitive form, a Global Security representing all or a portion of the Debt Securities of a series may not be transferred except as a whole by the U.S. Depositary for such series to a nominee of such U.S. Depositary or by a nominee of such U.S. Depositary to such depositary or another nominee of such U.S. Depositary or by such U.S. Depositary or any other such nominee to a successor U.S. Depositary for such series or a nominee of such successor U.S. Depositary. If at any time the U.S. Depositary for the Debt Securities of a series notifies the Company that it is unwilling or unable to continue as U.S. Depositary for the Debt Securities of such series or if at any time the U.S. Depositary for Debt Securities of such series shall no longer be a clearing agency registered and in good standing under the Exchange Act or other applicable statute or regulation, the Company shall appoint a successor U.S. Depositary with respect to the Debt Securities of such series. If a 22 successor U.S. Depositary for the Debt Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. The Company may at any time and in its sole discretion determine that the Debt Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. If the Debt Securities of any series shall have been issued in the form of one or more Global Securities and if an Event of Default with respect to the Debt Securities of such series shall have occurred and be continuing, the Company will promptly execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver Debt Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. If specified by the Company pursuant to Section 301 with respect to the Debt Securities of a series, the U.S. Depositary for such series of Debt Securities may surrender a Global Security for such series of Debt Securities in exchange in whole or in part for Debt Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such U.S. Depositary. Thereupon, the Company shall execute and the Trustee shall authenticate and deliver, without charge: (i) to each Person specified by the U.S. Depositary a new Debt Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (ii) to the U.S. Depositary a new Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of the Debt Securities delivered to Holders thereof. Upon the exchange of a Global Security for Debt Securities in definitive form, such Global Security shall be canceled by the Trustee. Definitive Debt Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the U.S. Depositary for such Global 23 Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such definitive Debt Securities to the Persons in whose names such Debt Securities are so registered. SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities. ----------------------------------------------------- If (i) any mutilated Debt Security is surrendered to the Trustee for such Debt Security, or the Company and the Trustee for a Debt Security receive evidence to their satisfaction of the destruction, loss or theft of any Debt Security, and (ii) there is delivered to the Company and such Trustee such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or such Trustee that such Debt Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request such Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Debt Security or in exchange for such mutilated Debt Security, a new Debt Security of the same series and in a like principal amount and of a like Stated Maturity and with like terms and conditions and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Debt Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debt Security, pay such Debt Security (without surrender thereof except in the case of a mutilated Debt Security) if the applicant for such payment shall furnish to the Company and the Trustee for such Debt Security such security or indemnity as may be required by them to save each of them harmless, and in case of destruction, loss or theft, evidence satisfactory to the Company and such Trustee and any agent of either of them of the destruction, loss or theft of such Debt Security and the ownership thereof. Upon the issuance of any new Debt Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including all fees and expenses of the Trustee for such Debt Security) connected therewith. Every new Debt Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security or in exchange for any mutilated Debt Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities of the same series, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities. 24 SECTION 307. Payment of Interest; Interest Rights Preserved. ---------------------------------------------- Interest on any Debt Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall, if so provided in such Debt Security, be paid to the Person in whose name that Debt Security (or one or more Predecessor Debt Securities) is registered at the close of business on the Regular Record Date for such interest payment. Unless otherwise provided with respect to the Debt Securities of any series, payment of interest may be made at the option of the Company by check mailed or delivered to the address of the Person entitled thereto as such address shall appear in the Debt Security Register or by transfer to an account maintained by the payee with a bank located inside the United States. Any interest on any Debt Security of any particular series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Debt Securities of that series (or their respective Predecessor Debt Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee for the Debt Securities of such series in writing of the amount of Defaulted Interest proposed to be paid on each Debt Security of that series and the date of the proposed payment, and at the same time the Company shall deposit with such Trustee an amount of money (except as otherwise specified pursuant to Section 301 for the Debt Securities of such series) equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to such Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon such Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall not be more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by such Trustee of the notice of the proposed payment. Such Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Debt Securities of that series at such Holder's address as it appears in the Debt Security Register not less than 10 days prior to such Special Record Date. Such Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper published in the English language customarily on each Business Day and of general circulation in New York, New York, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed 25 payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Debt Securities of that series (or their respective Predecessor Debt Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on Debt Securities of any particular series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debt Securities may be listed, and upon such notice as may be required by such exchange, if, after notice is given by the Company to the Trustee for the Debt Securities of such series of the proposed manner of payment pursuant to this clause, such manner of payment shall be deemed practicable by such Trustee. Subject to the foregoing provisions of this Section and Section 305, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debt Security. SECTION 308. Persons Deemed Owners. --------------------- Prior to due presentment of a Debt Security for registration of transfer, the Company, the Trustee for such Debt Security and any agent of the Company or such Trustee may treat the Person in whose name any such Debt Security is registered as the owner of such Debt Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest, if any, on such Debt Security and for all other purposes whatsoever, whether or not such Debt Security be overdue, and neither the Company, such Trustee nor any agent of the Company or such Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. ------------ All Debt Securities surrendered for payment, redemption, registration of transfer or exchange, or delivered in satisfaction of any sinking fund payment, shall, if surrendered to any Person other than the Trustee for such Debt Securities, be delivered to such Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for Debt Securities of a series for cancellation any Debt Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debt Securities so delivered shall be promptly canceled by such Trustee. Notwithstanding any other provision of this Indenture to the contrary, in the case of a series, all the Debt Securities of which are not to be originally issued at one time, a Debt Security of such series shall not be deemed to have been Outstanding at any time hereunder if and to the extent that, subsequent to the authentication and delivery thereof, such Debt Security is delivered to the Trustee for such Debt Security for cancellation by the Company or any agent thereof upon the failure of the original purchaser thereof to make payment therefor against delivery thereof, and any Debt Security so delivered to such Trustee shall be promptly canceled by it. No Debt 26 Securities shall be authenticated in lieu of or in exchange for any Debt Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Debt Securities held by the Trustee for such Debt Securities shall be disposed of by such Trustee in accordance with its standard procedures and a certificate of disposition evidencing such disposition of Debt Securities shall be provided to the Company by such Trustee. SECTION 310. Computation of Interest. ----------------------- Except as otherwise specified as contemplated by Section 301 for Debt Securities of any particular series, interest on the Debt Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Debt Securities of any Series. ----------------------------------------------------------- (a) The Company shall be deemed to have satisfied and discharged the entire indebtedness on all the Debt Securities of any particular series and, so long as no Event of Default shall be continuing, the Trustee for the Debt Securities of such series, upon Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of such indebtedness, when: (1) either: (A) all Debt Securities of such series theretofore authenticated and delivered (other than (i) any Debt Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Debt Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in the last paragraph of Section 1003) have been delivered to such Trustee for cancellation; or (B) all Outstanding Debt Securities of such series described in (A) above not theretofore so delivered to the Trustee for the Debt Securities of such series for cancellation: (i) have become due and payable; or (ii) will become due and payable at their Stated Maturity within one year; or (iii) are to be called for redemption within one year under arrangements satisfactory to the 27 Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense of the Company; and the Company has deposited or caused to be deposited with such Trustee as obligations in trust such amount of United States dollars, U.S. Government Obligations or a combination thereof as will as evidenced by a Certificate of a Firm of Independent Public Accountants delivered to such Trustee, together with the predetermined and certain income to accrue thereon (without consideration of any reinvestment thereof), be sufficient to pay and discharge when due the entire indebtedness on all such Outstanding Debt Securities of such series for unpaid principal (and premium, if any) and interest, if any, to the Stated Maturity or any Redemption Date as contemplated by Section 402, as the case may be; or (2) the Company has paid or caused to be paid all other sums payable with respect to the Debt Securities of such series; (3) the Company has delivered to such Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the entire indebtedness on all Debt Securities of such series have been complied with; (4) [the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;]/5/ (5) [the Company delivers to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred.] (b) Upon the satisfaction of the conditions set forth in this Section 401 with respect to all the Debt Securities of any series, the terms and conditions of such series, including the terms and conditions with respect thereto set forth in this Indenture, shall no longer be binding upon, or applicable to, the Company, and the Holders of the Debt Securities of such series shall look for payment only to the funds or obligations deposited with the Trustee pursuant to Section 401(a)(1)(B); provided, however, that in no event shall the Company be discharged from (i) any payment obligations (including Additional Amounts) in respect of Debt Securities of such series which are deemed not to be Outstanding under clause (3) of the definition thereof if such obligations continue to ____________________ /5/ Discuss whether subsections 4&5 are needed. 28 be valid obligations of the Company under applicable law, (ii) from any obligations under Sections 402(b), 607 and 610 and (iii) from any obligations under Sections 305 and 306 (except that Debt Securities of such series issued upon registration of transfer or exchange or in lieu of mutilated, destroyed, lost or stolen Debt Securities shall not be obligations of the Company) and Sections 701, 1002 and Article Thirteen; and provided, further, that in the event a petition for relief under the Bankruptcy Act of 1978 or Title 11 of the United States Code or a successor statute is filed and not discharged with respect to the Company within 91 days after the deposit, the entire indebtedness on all Debt Securities of such series shall not be discharged, and in such event the Trustee shall return such deposited funds or obligations as it is then holding to the Company upon Company Request. SECTION 402. Application of Trust Money. -------------------------- (a) Subject to the provisions of the last paragraph of Section 1003, all money and obligations deposited with the Trustee for any series of Debt Securities pursuant to Section 401 shall be held irrevocably in trust and applied by such Trustee, in accordance with the provisions of the Debt Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as such Trustee may determine, to the Persons entitled thereto, of the principal of (and premium, if any) and interest, if any, on the Debt Securities for the payment of which such money and obligations have been deposited with such Trustee. (b) [The Company shall pay and shall indemnify the Trustee for any series of Debt Securities against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant to Section 401 or the interest and principal received in respect of such U.S. Government Obligations other than any such tax, fee or other charge which by law is payable by or on behalf of Holders. The obligation of the Company under this Section 402(b) shall be deemed to be an obligation of the Company under Section 607(2).]/6/ (c) [Anything in this Article Four to the contrary notwithstanding, the Trustee for any series of Debt Securities shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 401 which, as expressed in a Certificate of a Firm of Independent Public Accountants delivered to such Trustee, are in excess of the amount thereof which would then have been required to be deposited for the purpose for which such money or U.S. Government Obligations were deposited or received provided such delivery can be made without liquidating any U.S. Government Obligations.] SECTION 403. Satisfaction and Discharge of Indenture. --------------------------------------- Upon compliance by the Company with the provisions of Section 401 as to the satisfaction and discharge of each series of Debt Securities issued hereunder, and if ______________________ /6/ Discuss whether subsections (b) and (c) are needed. 29 the Company has paid or caused to be paid all other sums payable under this Indenture, this Indenture shall cease to be of any further effect (except as otherwise provided herein). Upon Company Request and receipt of an Opinion of Counsel and an Officers' Certificate complying with the provisions of Section 102, the Trustees for all series of Debt Securities (at the expense of the Company) shall execute proper instruments acknowledging satisfaction and discharge of this Indenture. Notwithstanding the satisfaction and discharge of this Indenture, any obligations of the Company under Sections 304, 305, 306, 402(b), 607, 610, 701 and 1002 and the obligations of the Trustee for any series of Debt Securities under Section 402 shall survive. SECTION 404. Reinstatement. ------------- If the Trustee for any series of Debt Securities is unable to apply any of the amounts (for purposes of this Section 404, "Amounts") or U.S. Government Obligations, as the case may be, described in Section 401(a)(1)(B)(i) or (ii), respectively, in accordance with the provisions of Section 401 by reason of any legal proceeding or 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 Debt Securities of such series shall be revived and reinstated as though no deposit had occurred pursuant to Section 401 until such time as the Trustee for such series is permitted to apply all such Amounts or U.S. Government Obligations, as the case may be, in accordance with the provisions of Section 401; provided, however, that if, due to the reinstatement of its rights or obligations hereunder, the Company has made any payment of principal of (or premium, if any) or interest, if any, on such Debt Securities, the Company shall be subrogated to the rights of the Holders of such Debt Securities to receive payment from such Amounts or U.S. Government Obligations, as the case may be, held by the Trustee for such series. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. ----------------- "Event of Default" wherever used herein with respect to any particular series of Debt Securities, unless otherwise specified in the Debt Security or the Board Resolution with respect to that series of Debt Securities, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any installment of interest, or any Additional Amounts with respect to any Debt Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or 30 (2) default in the payment of the principal of (or premium, if any, on) any Debt Security of that series at its Maturity; or (3) default in the performance of, or breach of, any covenant or warranty of the Company in respect of any Debt Security of that series contained in this Indenture or in such Debt Securities (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which expressly has been included in this Indenture solely for the benefit of Debt Securities of a series other than that series) or in the applicable Board Resolution under which such series is issued as contemplated by Section 301 and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee for the Debt Securities of such series or to the Company and such Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) if an event of default or events of default with respect to any other series of Debt Securities or as defined in any mortgage, indenture, security agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company or any of its Subsidiaries for money borrowed in excess of $10 million principal amount, either individually or in the aggregate, whether such Indebtedness now exists or shall hereafter be created, shall happen and, if such Indebtedness is not already matured in accordance with its terms, shall result in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not have been rescinded or annulled or such Indebtedness shall not have been discharged, in either case, within a period of ten days after there has been given, by registered or certified mail in the manner set forth in Section 105, to the Company by the Trustee for the Debt Securities of that particular series referred to in the first clause of this Section 501 or to the Company and such Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of that particular series referred to in the first clause of this Section 501 a written notice specifying such event of default and requiring the Company or its Subsidiary to cause such acceleration to be rescinded or annulled or to cause such Indebtedness to be discharged and stating that such notice is a "Notice of Default" hereunder; provided, that if prior to the entry of judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by the Company or its Subsidiary or waived by the holders of such Indebtedness, then the Event of Default hereunder shall be deemed likewise to have been remedied, cured or waived; and provided, further, that, if such default results from an action of the United States government or a foreign government which prevents the Company or its Subsidiary from performing their obligations under such agreement, indenture or instrument, the occurrence of such default will not be an Event of Default hereunder; and provided, further, however, that, subject to the provisions of Sections 601 and 602, such Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of such Trustee assigned to its Corporate Trustee Administration Department shall have actual knowledge of such default or (B) the Trustee shall have 31 received written notice thereof from the Company, from the Holders of 10% or more in principal amount of the Outstanding Debt Securities of such other series, from the holder of any such Indebtedness or from the trustee under any such mortgage, indenture, security agreement or other instrument; or (5) the entry against the Company or any of its Subsidiaries of one or more judgments, decrees or orders by a court having jurisdiction in the premises from which no appeal may be or is taken for the payment of money, either individually or in the aggregate, in excess of $10 million (or its equivalent in any currency or currencies) and the continuance of such judgment, decree or order unsatisfied and in effect for any period of 60 consecutive days without a stay of execution and there has been given, by registered or certified mail in the manner set forth in Section 105, to the Company by the Trustee for the Debt Securities of such series or to the Company and such Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series a written notice specifying such entry and continuance of such judgment, decree or order and stating that such notice is a "Notice of Default" hereunder; provided, however, that subject to the provisions of Sections 601 and 602, such Trustee shall not be deemed to have knowledge of such entry and continuance of such judgment, decree or order unless either (A) a Responsible Officer of such Trustee assigned to its Corporate Trustee Administration Department shall have actual knowledge thereof or (B) the Trustee shall have received written notice thereof from the Company or from the Holders of 10% or more in principal amount of the Outstanding Debt Securities of such series; or (6) the Company, a Significant Subsidiary of the Company or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary of the Company, shall (A) commence any case or proceeding seeking to have an order for relief entered on its behalf as debtor or to adjudicate it as bankrupt or insolvent or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; (B) shall apply for a receiver, custodian or trustee (other than any trustee appointed as a mortgagee or secured party in connection with the issuance of indebtedness for borrowed money of the Company or such Subsidiary) of it or for all or a substantial part of its property; (C) shall make a general assignment for the benefit of creditors; or (D) shall take any corporate action in furtherance of any of the foregoing; or (7) any case or proceeding against the Company, a Significant Subsidiary of the Company or any group of Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary of the Company, shall be commenced seeking to have an order for relief entered against it or to adjudicate it as bankrupt or insolvent or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; or a receiver, custodian or trustee (other than any trustee appointed as a mortgagee or secured party in connection with the issuance of 32 indebtedness for borrowed money of the Company or such Subsidiary) of the Company or such Subsidiary or for all or a substantial part of its property shall be appointed in any such case or proceeding; and such case or proceeding (A) results in the entry of an order for relief or a similar order against it or (B) shall continue unstayed and in effect for a period of 60 consecutive days; or (8) failure by the Company to comply with its obligations under Article 8; or (9) any other Event of Default provided with respect to the Debt Securities of that series. SECTION 502. Acceleration of Maturity; Rescission and Annulment. --------------------------------------------------- If an Event of Default (other than an Event of Default specified in clause (6) or (7) of Section 501) with respect to any particular series of Debt Securities occurs and is continuing, then and in every such case either the Trustee for the Debt Securities of such series or the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of that series may declare the entire principal amount (or, in the case of Discounted Debt Securities, such lesser amount as may be provided for in the terms of that series) of all the Debt Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to such Trustee if given by Holders), and upon any such declaration of acceleration such principal or such lesser amount, as the case may be, together with accrued interest and all other amounts owing hereunder, shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived. If an Event of Default specified in clause (6) or (7) of Section 501 occurs, the principal on such lesser amount, as the case may be, together with accrued interest and all amounts outstanding hereunder, shall ipso facto become and be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee for the Debt Securities of any series as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Debt Securities of that series, by written notice to the Company and such Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with such Trustee a sum sufficient to pay (except as otherwise specified pursuant to Section 301 for the Debt Securities of such series) 33 (A) all overdue interest on all Debt Securities of that series; (B) the principal of (and premium, if any, on) any Debt Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon from the date such principal became due at a rate per annum equal to the rate borne by the Debt Securities of such series (or, in the case of Discounted Debt Securities, the Debt Securities' Yield to Maturity), to the extent that the payment of such interest shall be legally enforceable; (C) to the extent that payment of such interest is lawful, interest upon overdue interest at a rate per annum equal to the rate borne by the Debt Securities of such series (or, in the case of Discounted Debt Securities, the Debt Securities' Yield to Maturity); and (D) all sums paid or advanced by such Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel and all other amounts due to such Trustee under Section 607; and (2) all Events of Default with respect to the Debt Securities of such series, other than the nonpayment of the principal of Debt Securities of that series which has become due solely by such acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by ------------------------------------------------------- Trustee. - ------- The Company covenants that if: (1) default is made in the payment of any interest upon any Debt Security of any series when such interest becomes due and payable and such default continues for a period of 30 days; or (2) default is made in the payment of the principal of (or premium, if any, on) any Debt Security of any series at its Maturity; the Company will, upon demand of the Trustee for the Debt Securities of such series, pay to it, for the benefit of the Holders of such Debt Securities, the whole amount then due and payable on such Debt Securities for principal (and premium, if any) and interest, if any, with interest upon the overdue principal (and premium, if any) and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installments of interest at a rate per annum equal to the rate borne by such Debt Securities (or, in the case of Discounted Debt Securities, the Debt Securities' Yield to Maturity); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of 34 collection, including the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel and all other amounts due to such Trustee under Section 607. If the Company fails to pay such amounts forthwith upon such demand, such Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceedings to judgment or final decree, and may enforce the same against the Company and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated. If an Event of Default with respect to Debt Securities of any particular series occurs and is continuing, the Trustee for the Debt Securities of such series may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Debt Securities of that series by such appropriate judicial proceedings as such Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. -------------------------------- In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the Company or the property of the Company or its creditors, the Trustee for the Debt Securities of any series (irrespective of whether the principal (or lesser amount in the case of Discounted Debt Securities) of any Debt Security of such series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether such Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise (i) to file and prove a claim for the whole amount of principal (or lesser amount in the case of Discounted Debt Securities) (and premium, if any) and interest, if any, owing and unpaid in respect of the Debt Securities of such series and to file such other papers or documents as may be necessary or advisable in order to have the claims of such Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel and all other amounts due to such Trustee under Section 607) and of the Holders of the Debt Securities of such series allowed in such judicial proceeding; (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and (iii) unless prohibited by law or applicable regulations, to vote on behalf of the Holders of the Debt Securities of such series in any election of a trustee in bankruptcy or other person performing similar functions; 35 and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder of Debt Securities to make such payments to such Trustee, and in the event that such Trustee shall consent to the making of such payments directly to the Holders of Debt Securities, to pay to such Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel, and any other amounts due such Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee for the Debt Securities of any series to authorize or consent to or accept or adopt on behalf of any Holder of a Debt Security any plan of reorganization, arrangement, adjustment or composition affecting the Debt Securities of such series or the rights of any Holder thereof, or to authorize the Trustee for the Debt Securities of any series to vote in respect of the claim of any Holder in any such proceeding, except as aforesaid, for the election of a trustee in bankruptcy or other person performing similar functions. SECTION 505. Trustee May Enforce Claims Without Possession --------------------------------------------- of Debt Securities. ------------------ All rights of action and claims under this Indenture or the Debt Securities of any series may be prosecuted and enforced by the Trustee for the Debt Securities of any series without the possession of any of the Debt Securities of such series or the production thereof in any proceeding relating thereto, and any such proceeding instituted by such Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel and all other amounts due to such Trustee under Section 607, be for the ratable benefit of the Holders of the Debt Securities of such series in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. ------------------------------ Any money collected by the Trustee for the Debt Securities of any series pursuant to this Article with respect to the Debt Securities of such series shall be applied in the following order, at the date or dates fixed by such Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, if any, upon presentation of the Debt Securities of such series and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: To the payment of all amounts due such Trustee under Section 607; Second: To the payment of the amounts then due and unpaid upon the Debt Securities of such series for principal of (and premium, if any) and interest, if any, on such Debt Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Debt Securities for principal (and premium, if any) and interest, if any, respectively; and 36 Third: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. ------------------- No Holder of any Debt Security of any particular series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) an Event of Default with respect to that series shall have occurred and be continuing and such Holder shall have previously given written notice to the Trustee for the Debt Securities of such series of such default and the continuance thereof; (2) the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of that series shall have made written request to the Trustee for the Debt Securities of such series to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to such Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) such Trustee for 60 days after its receipt of such notice, request and offer of security or indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to such Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Debt Securities of that series; it being understood and intended that no Holder or Holders of Debt Securities of that series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Debt Securities of that series, or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Debt Securities of that series. SECTION 508. Unconditional Right of Holders to Receive Principal (and -------------------------------------------------------- Premium, if any) and Interest, if any. ------------------------------------- Notwithstanding any other provision in this Indenture, the Holder of any Debt Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest, if any, on such Debt Security on the respective Stated Maturities expressed in such Debt Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. 37 SECTION 509. Restoration of Rights and Remedies. ---------------------------------- If the Trustee for the Debt Securities of any series or any Holder of a Debt Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Trustee or to such Holder, then and in every such case the Company, such Trustee and the Holders of Debt Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of such Trustee and such Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. ------------------------------ Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee for the Debt Securities of any series or to the Holders of Debt Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. ---------------------------- No delay or omission of the Trustee for the Debt Securities of any series or of any Holder of any Debt Security of such series to exercise any right or remedy accruing upon any Event of Default with respect to the Debt Securities of such series shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to such Trustee for the Debt Securities of any series or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. ------------------ The Holders of a majority in principal amount of the Outstanding Debt Securities of any particular series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee for the Debt Securities of such series with respect to the Debt Securities of that series or exercising any trust or power conferred on such Trustee with respect to such Debt Securities, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture; and 38 (2) such Trustee may take any other action deemed proper by such Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. ----------------------- The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any particular series may on behalf of the Holders of all the Debt Securities of that series waive any past default hereunder with respect to that series and its consequences, except: (1) a default in the payment of the principal of (or premium, if any) or interest, if any, on any Debt Security of that series; or (2) a default with respect to a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of that series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Waiver of Stay, Extension or Usury 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 or any usury or similar law, wherever enacted, now or at any time hereafter in force, which may affect the covenants or 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 for any series of Debt Securities, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. ----------------------------------- (a) Except during the continuance of an Event of Default with respect to the Debt Securities of any series for which the Trustee is serving as such, (1) such Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against such Trustee; and 39 (2) in the absence of bad faith on its part, such Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to such Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to such Trustee, such Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to a series of Debt Securities has occurred and is continuing, the Trustee for the Debt Securities of such series 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. (c) No provision of this Indenture shall be construed to relieve the Trustee for Debt Securities of any series from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that no provision of this Indenture shall require the Trustee for any series of Debt Securities 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) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee for any series of Debt Securities shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. ------------------ Within 90 days after the occurrence of any default hereunder with respect to Debt Securities of any particular series, the Trustee for the Debt Securities of such series shall give to Holders of Debt Securities of that series, in the manner set forth in Section 106, notice of such default known to such Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest or Additional Amounts, if any, on any Debt Security of that series, or in the deposit of any sinking fund payment with respect to Debt Securities of that series, such Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of such Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Debt Securities of that series; and provided, further, that in the case of any default of the character specified in Section 501(3) with respect to Debt Securities of that series no such notice to Holders shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Debt Securities of that series. 40 SECTION 603. Certain Rights of Trustee. ------------------------- Except as otherwise provided in Section 601: (a) the Trustee for any series of Debt Securities may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture such Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, such Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) such Trustee may consult with counsel and the written 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; (e) such Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Debt Securities of any series pursuant to this Indenture for which it is acting as Trustee, unless such Holders shall have offered to such Trustee security or indemnity reasonably satisfactory to such Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) such Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but such Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters at it may see fit, and, if such Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) such Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and such Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities. ----------------------------------------------------------- The recitals contained herein and in the Debt Securities, except the Trustee's certificates of authentication thereof, shall be taken as the statements of the 41 Company, and neither the Trustee for any series of Debt Securities, nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee for any series of Debt Securities makes no representations as to the validity or sufficiency of this Indenture or of the Debt Securities of any series. Neither the Trustee for any series of Debt Securities nor any Authenticating Agent shall be accountable for the use or application by the Company of Debt Securities or the proceeds thereof. SECTION 605. May Hold Debt Securities. ------------------------ The Trustee for any series of Debt Securities, any Authenticating Agent, Paying Agent, Debt Security Registrar or any other agent of the Company or such Trustee, in its individual or any other capacity, may become the owner or pledgee of Debt Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not such Trustee, Authenticating Agent, Paying Agent, Debt Security Registrar or other agent. SECTION 606. Money Held in Trust. ------------------- Money held by the Trustee for any series of Debt Securities in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee for any series of Debt Securities shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. ------------------------------ The Company agrees: (1) to pay to the Trustee for any series of Debt Securities from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee for any series of Debt Securities upon its request for all reasonable expenses, disbursements and advances incurred or made by such Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify such Trustee for, and to hold it harmless against, any loss, liability or 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 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. As security for the performance of the obligations of the Company under this Section the Trustee for any series of Debt Securities shall have a lien prior to the 42 Debt Securities upon all property and funds held or collected by such Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest, if any, on any particular series Debt Securities. Such lien shall survive satisfaction and discharge of this Indenture. SECTION 608. Disqualification; Conflicting Interests. --------------------------------------- The Trustee for any series of Debt Securities shall be subject to and comply with the provisions of Section 310(b) of the Trust Indenture Act during the period of time required thereby. Nothing herein shall prevent the Trustee for any series of Debt Securities from filing with the Commission the application referred to in the penultimate paragraph of Section 310(b) of the Trust Indenture Act. In determining whether the Trustee for any series of Debt Securities has a conflicting interest as defined in Section 310(b) of the Trust Indenture Act, the Debt Securities of any other series of Debt Securities shall be excluded. SECTION 609. Corporate Trustee Required, Different Trustees for Different ------------------------------------------------------------ Series; Eligibility. ------------------- There shall at all times be a Trustee hereunder for the Debt Securities of each series which satisfies the requirements of Trust Indenture Act Sections 310(a)(1), 310(a)(2) and 310(a)(5), has a combined capital and surplus of at least $50,000,000 and is subject to supervision or examination by Federal, State or District of Columbia authority. A different Trustee may be appointed by the Company for each series of Debt Securities prior to the issuance of such Debt Securities. If the initial Trustee for any series of Debt Securities is to be other than [_____________], the Company and such Trustee shall, prior to the issuance of such Debt Securities, execute and deliver an indenture supplemental hereto, which shall provide for the appointment of such Trustee as Trustee for the Debt Securities of such series and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee. If at any time the Trustee for the Debt Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee for the Debt Securities of any series and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. (b) The Trustee for the Debt Securities of any series may resign at any time with respect to the Debt Securities of such series by giving written notice thereof to 43 the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee for the Debt Securities of such series within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (c) The Trustee for the Debt Securities of any series may be removed at any time with respect to the Debt Securities of such series by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, delivered to such Trustee and to the Company. (d) If at any time: (1) the Trustee for the Debt Securities of any series shall fail to comply with Section 310(b) of the Trust Indenture Act pursuant to Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months unless the Trustee's duty to resign is stayed in accordance with Section 310(b) of the Trust Indenture Act, or (2) such Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) such Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of such Trustee or of its property shall be appointed or any public officer shall take charge or control of such Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove such Trustee or (ii) any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee and the appointment of a successor Trustee. (e) If the Trustee for the Debt Securities of any series shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for the Debt Securities of any series for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Debt Securities of such series and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Debt Securities of such series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee for the Debt Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee for the Debt Securities of such series 44 shall have been so appointed by the Company or the Holders and shall have accepted appointment in the manner required by Section 611, and if such Trustee is still incapable of acting, any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Debt Securities of any series and each appointment of a successor Trustee with respect to the Debt Securities of any series to all Holders of such series of Debt Securities in the manner and to the extent provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Debt Securities of that series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. -------------------------------------- (a) Every such successor Trustee appointed hereunder with respect to the Debt Securities of any series shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject to the lien provided for in Section 607. (b) In case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Debt Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Debt Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and each Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the 45 resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in Subsections (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee for the Debt Securities of any series shall be qualified and eligible under this Article. (e) Notwithstanding replacement of the Trustee pursuant to Section 610, the Company's obligations under Section 607 shall continue for the benefit of the retiring Trustee with respect to expenses, losses and liabilities incurred by it prior to such replacement. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. ----------------------------------------------------------- Any corporation into which the Trustee or the Authenticating Agent, as the case may be, for the Debt Securities of any series may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Trustee or such Authenticating Agent, as the case may be, shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of such Trustee, shall be the successor of such Trustee or such Authenticating Agent, as the case may be, hereunder, provided such successor corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto or the Trustee, the Authenticating Agent or their respective successor corporations. In case any Debt Securities shall have been authenticated, but not delivered, by the Trustee or the Authenticating Agent for such series then in office, any successor by merger, conversion or consolidation to such authenticating Trustee or Authenticating Agent, as the case may be, may adopt such authentication and deliver the Debt Securities so authenticated with the same effect as if such successor Trustee or successor Authenticating Agent had itself authenticated such Debt Securities. SECTION 613. Preferential Collection of Claims Against Company. ------------------------------------------------- The Trustee for any particular series of Debt Securities shall comply with Section 311(a) of the Trust Indenture Act for that particular series of Debt Securities, 46 excluding any creditor relationship listed in Section 311(b) of that Act. If the Trustee for any particular series of Debt Securities shall resign or be removed as Trustee for that particular series of Debt Securities, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. SECTION 614. Authenticating Agents. --------------------- From time to time the Trustee for the Debt Securities of any series may, subject to its sole discretion, appoint one or more Authenticating Agents with respect to the Debt Securities of such series, which may include the Company or any Affiliate of the Company, with power to act on the Trustee's behalf and subject to its discretion in the authentication and delivery of Debt Securities of such series in connection with transfers and exchanges hereunder, including but not limited to those pursuant to Sections 304, 305, 306 and 1107, as fully to all intents and purposes as though such Authenticating Agent had been expressly authorized by those Sections of this Indenture to authenticate and deliver Debt Securities of such series. For all purposes of this Indenture, the authentication and delivery of Debt Securities of such series by an Authenticating Agent for such Debt Securities pursuant to this Section shall be deemed to be authentication and delivery of such Debt Securities "by the Trustee" for the Debt Securities of such series. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal, State or District of Columbia authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or the requirements of such supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent for any series of Debt Securities shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any Authenticating Agent for any series of Debt Securities may resign at any time by giving written notice of resignation to the Trustee for such series and to the Company. The Trustee for any series of Debt Securities may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company in the manner set forth in Section 105. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent for any series of Debt Securities shall cease to be eligible under this Section, the Trustee for such series may appoint a successor Authenticating Agent, shall give written notice of such appointment to the Company and shall give written notice of such appointment to all Holders of Debt Securities of such series in the manner set forth in Section 106. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. 47 No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee for the Debt Securities of each series agrees to pay to any Authenticating Agent for such series from time to time reasonable compensation for its services, and such Trustee shall be entitled to be reimbursed for such payments, subject to Section 607. If an appointment with respect to one or more series of Debt Securities is made pursuant to this Section, the Debt Securities of such series may have endorsed thereon, in addition to the Trustee's certification of authentication, an alternate certificate of authentication in the following form: "This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. _______________________________ By:____________________________ As Authenticating Agent By:___________________________ Authorized Officer" 48 ARTICLE SEVEN HOLDERS' REPORTS BY TRUSTEE AND COMPANY SECTION 701. Preservation of Information; Company to Furnish Trustee Names and ----------------------------------------------------------------- Addresses of Holders. -------------------- The Trustee for any particular series of Debt Securities shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of the Debt Securities of that series. Neither the Company nor such Trustee shall be under any responsibility with regard to the accuracy of such list. With respect to each series of Debt Securities, the Company, in furnishing information regarding such Holders to such Trustee, and such Trustee, will satisfy the requirements imposed upon each of them by Section 312(a) of the Trust Indenture Act. SECTION 702. Communications to Holders. ------------------------- Holders of any particular series of Debt Securities may communicate with other Holders of Debt Securities of that series with respect to their rights under this Indenture or under such series of Debt Securities pursuant to Section 312(b) of the Trust Indenture Act. The Company and the Trustee for any particular series of Debt Securities and any and all other Persons benefitted by this Indenture shall have the protection afforded by Section 312(c) of the Trust Indenture Act. SECTION 703. Reports by Trustee. ------------------ Within 60 days after November 15 of each year commencing with the year following the first issuance of Debt Securities, the Trustee for the Debt Securities of each series shall transmit by mail to all Holders of the Debt Securities of such series a brief report dated as of such date that complies with Section 313(a) of the Trust Indenture Act, but only if such report is required in any year under such Section 313(a) of the Trust Indenture Act. With respect to each series of Debt Securities, the Trustee shall also comply with Sections 313(b) and 313(c) of the Trust Indenture Act. At any time a report is mailed to the Holders of any particular series of Debt Securities, a copy of such report shall be filed with the Commission and with each securities exchange, if any, on which the Debt Securities of such series are listed. With respect to each series of Debt Securities, the Company will notify the applicable Trustee when such series of Debt Securities is listed on any securities exchange. SECTION 704. Reports by Company. ------------------ The Company shall file such annual and/or periodic reports and certificates with the Trustees for each series of Debt Securities and/or with the Commission and/or with the Holders of each series of Debt Securities as are required by the provisions of Section 314(a) of the Trust Indenture Act. 49 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. ---------------------------------------------------- The Company shall not consolidate with or merge into any other corporation or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to any Person unless: (1) (a) either (i) the Company shall be the continuing corporation or (ii) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquired by sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company as an entirety (the "Surviving Entity") (x) shall be a Person organized under the laws of the United States of America or any State thereof or the District of Columbia, or the Bahamas, Barbados, Bermuda, the British Virgin Islands, the Cayman Islands, any of the Channel Islands, the Netherlands Antilles or such other jurisdiction, if any, as may be set forth in the Board Resolution establishing the Debt Securities of a particular series and (y) shall expressly assume by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium and Additional Amounts, if any) and interest on all Debt Securities and the performance and observance of every covenant of this Indenture on the part of the Company to be performed or observed and (b) in the event that the Company or the Surviving Entity is organized in a jurisdiction other than the United States of America or any State thereof or the District of Columbia that is different from the jurisdiction in which the obligor on the Notes was organized immediately before giving effect to the transaction: (i) the Company or the Surviving Entity shall deliver to the Trustee under the Indenture an Opinion of Counsel stating that (x) the obligations of the Company or the Surviving Entity under the Indenture are enforceable under the laws of the new jurisdiction of its formation, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law and (y) the Holders of Debt Securities will not recognize any income, gain or loss for U. S. federal income tax purposes as a result of the transaction and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such transaction had not occurred; (ii) the Company or the Surviving Entity shall agree in writing to (x) (1) submit to the jurisdiction of any court of the State of New York or any United States Federal court sitting, in each case, in the Borough of Manhattan, the City of New York, New York, United States of America and any appellate court from any thereof, (2) waive any immunity from the jurisdiction of such courts over any suit, action or 50 proceeding that may be brought in connection with the Indenture or the Debt Securities and (3) agree that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company or the Surviving Entity and may be enforced in any court the jurisdiction of which the Company or the Surviving Entity is subject to by a suit upon such judgment; provided that service of process is effected in the manner provided in clause (y) below; and (y) shall (1) irrevocably appoint an agent for the service of process in the Borough of Manhattan, the City of New York, New York, United States of America, for so long as any of the Debt Securities are outstanding or the Company or the Surviving Entity irrevocably appoints a successor, (2) represent and warrant to the Trustee the acceptance of such appointment by such agent, (3) take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect and (4) agree that service of process upon such agent and written notice of such service to the Company or the Surviving Entity shall be deemed, in every respect, effective service of process upon the Company; (iii) the Company or the Surviving Entity shall agree in writing to pay Additional Amounts with respect to the Company, except that such Additional Amounts shall relate to any withholding tax whatsoever regardless of any change of law, subject to exceptions substantially similar to those contained in the Indenture; and (iv) the Board of Directors of the Company or the Surviving Entity shall determine, which determination shall be conclusive and evidenced by a Board Resolution delivered to the Trustee, in good faith that such transaction will have no material adverse effect on any Holder of Notes. (2) immediately after giving effect to such transaction (and treating any Indebtedness not previously an obligation of the Company or a Subsidiary which becomes the obligation of the Company or any of its Subsidiaries in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; (3) such other conditions, if any, as may be set forth in the Board Resolution establishing the Debt Securities of that particular series are met or complied with; and (4) the Company has delivered to the Trustee for each series of Debt Securities an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 51 SECTION 802. Successor Corporation Substituted. --------------------------------- Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or 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 corporation had been named as the Company herein and thereafter the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Debt Securities and, in the event of any such consolidation, merger, conveyance or transfer, the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up, or liquidated. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders. -------------------------------------------------- Without the consent of any Holders of Debt Securities, the Company, when authorized by a Board Resolution, and the Trustee for the Debt Securities of any or all series, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to such Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Debt Securities contained; or (2) to add to the covenants of the Company, for the benefit of the Holders of all or any particular series of Debt Securities (and, if such covenants are to be for the benefit of fewer than all series of Debt Securities, stating that such covenants are being included solely for the benefit of such series), or to surrender any right or power herein conferred upon the Company; or (3) to add any additional Events of Default with respect to any or all series of Debt Securities (and, if any such Event of Default applies to fewer than all series of Debt Securities, stating each series to which such Event of Default applies); or (4) to add to, change or eliminate any of the provisions of this Indenture, provided, however, that any such addition, change or elimination shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision and as to which such supplemental indenture would apply; or 52 (5) to evidence and provide for the acceptance of appointment hereunder of a Trustee other than [________________] as Trustee for a series of Debt Securities and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 609; or (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or (7) to establish the conditions, limitations and restrictions on the authorized amount, form, terms or purposes of issue, authentication and delivery of Debt Securities, as herein set forth, and other conditions, limitations and restrictions thereafter to be observed; or (8) to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the satisfaction and discharge of any series of Debt Securities pursuant to Section 401; provided, however, that any such action shall not adversely affect the interests of the Holders of Debt Securities of such series or any other series of Debt Securities in any material respect; or (9) to add to or change or eliminate any provisions of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act; or (10) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, to convey, transfer, assign, mortgage or pledge any property to or with the Trustee for the Debt Securities of any series or to surrender any right or power herein conferred upon the Company, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Debt Securities of any particular series in any material respect. SECTION 902. Supplemental Indentures With Consent of Holders. ----------------------------------------------- The Company, when authorized by a Board Resolution, and the Trustee for the Debt Securities of any or all series may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of such Debt Securities under this Indenture, but only with the consent of the Holders of more than 50% in aggregate principal amount of the Outstanding Debt Securities of each series of Debt Securities then Outstanding affected thereby, in each case by Act of said Holders of Debt Securities of each such series delivered to the Company and the Trustee for Debt Securities of each such series; 53 provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debt Security affected thereby: (1) reduce the principal of or change the Stated Maturity of any Debt Security; (2) reduce the rate of or change the time for payment of interest on any Debt Security; (3) reduce the principal amount or any premium payable upon the redemption of any Debt Security or change the time at which a Debt Security may be redeemed; (4) reduce the amount of the principal of a Discounted Debt Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502; (5) change the Place of Payment; (6) impair the right of a Holder to receive payment of principal of and interest on such Holder's Debt Securities on or after the due dates thereof; (7) change the currency in which the principal of or any premium or interest (including Additional Amounts) on any Debt Security is payable; (8) reduce the percentage in principal amount of the Outstanding Debt Securities of any particular series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture; (9) modify any of the provisions of this Section or Section 513 or 1008, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Debt Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder of a Debt Security with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1008, or the deletion of this proviso, in accordance with the requirements of Sections 609, 611(b), 901(6) and 901(7); (10) modify or change any provision of the Indenture or the related definitions affecting the ranking of any Debt Security in a manner which affects the Holders in any material respect; or (11) make any change in the foregoing amendment and waiver provisions. 54 A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities, or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. ------------------------------------ In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee for any series of Debt Securities shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith and that such supplemental indenture has been duly authorized, executed and delivered by the Company and that, subject to standard exceptions, it will be valid and binding upon the Company and enforceable against the Company in accordance with its terms. The Trustee for any series of Debt Securities may, but shall not be obligated to, enter into any such supplemental indenture which affects such Trustee's own rights, liabilities, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. --------------------------------- Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Debt Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity With Trust Indenture Act. ----------------------------------- Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Debt Securities to Supplemental Indentures. ------------------------------------------------------- Debt Securities of any particular series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee for the Debt Securities of such series, bear a notation in form approved by such Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debt Securities of any series so modified as to conform, in the opinion of the Trustee for the Debt Securities of such series and the Board of Directors, to any such supplemental indenture may be prepared and executed by 55 the Company and authenticated and delivered by such Trustee in exchange for Outstanding Debt Securities of such series. SECTION 907. Revocation and Effect of Consents. --------------------------------- Until an amendment or waiver becomes effective, a consent to it by a Holder of a Debt Security is a continuing consent by the Holder and every subsequent Holder of such Debt Security or portion of such Debt Security that evidences the same debt as the consenting Holder's Debt Security, even if notation of the consent is not made on any Debt Security. However, any such Holder or subsequent Holder may revoke the consent as to his or her Debt Security if the Trustee receives written notice of revocation before the date the waiver or amendment becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the series of such Debt Security. The Company may fix a record date for determining which Holders must consent to such amendment or waiver. If the Company fixes a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 701, or (ii) such other date as the Issuers shall designate. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal (and Premium, if any) and Interest, if any. --------------------------------------------------------------- The Company agrees, for the benefit of each particular series of Debt Securities, that it will duly and punctually pay (except as otherwise specified pursuant to Section 301 for the Debt Securities of such series) the principal of (and premium, if any) and interest, if any, on that series of Debt Securities in accordance with the terms of the Debt Securities of such series and this Indenture. SECTION 1002. Maintenance of Office or Agency. ------------------------------- The Company will maintain in each Place of Payment for a series of Debt Securities an office or agency where Debt Securities of that series may be presented or surrendered for payment, where Debt Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company with respect to the Debt Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee for the Debt Securities of that series of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in respect of any series of Debt Securities or shall fail to furnish the Trustee for the Debt Securities of that series with the address thereof, such presentations (to the extent permitted by law) and surrenders of Debt Securities of that series may be made and notices and demands may be made or served at the Corporate Trust Office of such 56 Trustee, and the Company hereby appoints the same as its agent to receive such respective presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside the Place of Payment) where the Debt Securities of one or more series may be presented or surrendered for any or all of the purposes specified above in this Section and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for such purpose. The Company will give prompt written notice to the Trustee for the Debt Securities of each series so affected of any such designation or rescission and of any change in the location of any such office or agency. SECTION 1003. Money for Debt Securities Payments to Be Held in Trust. ------------------------------------------------------ If the Company shall at any time act as its own Paying Agent with respect to any particular series of Debt Securities, it will, on or not more than one Business Day before each due date of the principal of (and premium, if any) or interest, if any, on any of the Debt Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum (except as otherwise specified pursuant to Section 301 for the Debt Securities of such series) sufficient to pay the principal (and premium, if any) and interest, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee for the Debt Securities of such series of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any particular series of Debt Securities, it will, prior to each due date of the principal of (and premium, if any) or interest, if any, on any such Debt Securities, deposit with a Paying Agent for the Debt Securities of such series a sum sufficient to pay the principal (and premium, if any) and interest, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee for the Debt Securities of such series) the Company will promptly notify such Trustee of its action or failure so to act. The Company will cause each Paying Agent for any particular series of Debt Securities other than the Trustee for the Debt Securities of such series to execute and deliver to such Trustee an instrument in which such Paying Agent shall agree with such Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest, if any, on Debt Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give such Trustee notice of any default by the Company in the making of any payment of principal (or premium, if any) and interest, if any, on Debt Securities of that series; 57 (3) at any time during the continuation of any such default, upon the written request of such Trustee, forthwith pay to such Trustee all sums so held in trust by such Paying Agent; and (4) acknowledge, accept and agree to comply in all respects with the provisions of this Indenture relating to the duties, rights and disabilities of such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee for the Debt Securities of any series all sums held in trust by the Company or such Paying Agent, such sums to be held by such Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to such Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee for the Debt Securities of any series or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) and interest, if any, on any Debt Security of any particular series and remaining unclaimed for two years after such principal (and premium, if any) and interest, if any, has become due and payable shall, unless otherwise required by mandatory provisions of applicable escheat, abandoned or unclaimed property law, be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trusts; and the Holder of such Debt Security shall, thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of such Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that such Trustee or such Paying Agent, before being required to make any such repayment may mail written notice to each such Holder of such Debt Security in the manner set forth in Section 106, or may, in its discretion, in the name and at the expense of the Company, cause to be published at least once in a newspaper published in the English language customarily on each Business Day and of general circulation in the Borough of Manhattan, the City of New York, notice, that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such money then remaining will, unless otherwise required by mandatory provisions of applicable escheat, abandoned or unclaimed property law, be repaid to the Company. SECTION 1004. Payment of Taxes and Other Claims. --------------------------------- The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon it or upon its income, profits or property, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon its property; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim 58 whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1005. Maintenance of Properties. ------------------------- The Company shall cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Holders. SECTION 1006. Statements as to Compliance. --------------------------- (a) The Company shall deliver to the Trustee for each series of Debt Securities, within 120 days after the end of each fiscal year, a written statement signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President and by the Treasurer, a Deputy Treasurer, an Assistant Treasurer, the Controller or an Assistant Controller of the Company, stating, as to each signer thereof, that: (1) a review of the activities of the Company during such year and of performance under this Indenture has been made under his supervision; and (2) to the best of his knowledge, based on such review, the Company is not in default in the fulfillment of any of its obligations under this Indenture with respect to the Debt Securities of such series, or specifying each such default known to him and the nature and status thereof. For purposes of this Subsection, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. (b) When any event has occurred and is continuing which is, or after the giving of notice or lapse of time or both would become, an Event of Default, or if the Trustee or any Holder of Debt Securities of any series or the trustee for or the holder of any other evidence of Indebtedness of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed default (other than with respect to Indebtedness in the principal amount of less than $10,000,000), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action within five Business Days of its occurrence. 59 SECTION 1007. Corporate Existence. ------------------- Subject to Article Eight, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any right or 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; and provided, further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or any of its assets in compliance with the terms of this Indenture. SECTION 1008. Waiver of Certain Covenants. --------------------------- The Company may omit in any particular instance to comply with any covenant or condition set forth in Sections 1004 to 1007, inclusive, or set forth in any Board Resolution establishing the Debt Securities of a series, if before or after the time for such compliance the Holders of more than 50% in principal amount of the Outstanding Debt Securities of each series of Debt Securities affected by the omission shall, in each case by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee for the Debt Securities of each series with respect to any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of This Article. ----------------------------- Redemption of Debt Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by any form of Debt Security issued pursuant to this Indenture shall be made in accordance with such form of Debt Security and this Article; provided, however, that if any provision of any such form of Debt Security shall conflict with any provision of this Article, the provision of such form of Debt Security shall govern. SECTION 1102. Election to Redeem; Notice to Trustee. ------------------------------------- The election of the Company to redeem any Debt Securities of any series shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all of the Debt Securities of any particular series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee for the Debt Securities of such series) notify such Trustee by Company Request of such Redemption Date and of the 60 principal amount of Debt Securities of that series to be redeemed and shall deliver to such Trustee such documentation and records as shall enable such Trustee to select the Debt Securities to be redeemed pursuant to Section 1103. In the case of any redemption of Debt Securities of any series prior to the expiration of any restriction on such redemption provided in the terms of such Debt Securities or elsewhere in this Indenture, the Company shall furnish the Trustee for Debt Securities of such series with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed. ------------------------------------------------------ If less than all the Debt Securities are to be redeemed, the Company may select the series to be redeemed, and if less than all the Debt Securities of any series are to be redeemed, the particular Debt Securities of that series to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee for the Debt Securities of such series, from the Outstanding Debt Securities of that series not previously called for redemption, by such method as such Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Debt Securities of that series, or any integral multiple thereof) of the principal amount of Debt Securities of that series of a denomination larger than the minimum authorized denomination for Debt Securities of that series pursuant to Section 302. The Trustee for the Debt Securities of any series to be redeemed shall promptly notify the Company in writing of the Debt Securities of such series selected for redemption and, in the case of any Debt Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities shall relate, in the case of any Debt Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Securities which has been or is to be redeemed. SECTION 1104. Notice of Redemption. -------------------- Notice of redemption shall be given in the manner provided in Section 106 not later than the thirtieth day and not earlier than the sixtieth day prior to the Redemption Date, to each Holder of Debt Securities to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Debt Securities of a particular series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Debt Securities to be redeemed, 61 (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Debt Security or portion thereof, and that, unless the Company defaults in making such payment pursuant to the terms of this Indenture on the form of such Debt Security, interest thereon, if any, shall cease to accrue on and after said date, (5) the place or places where such Debt Securities, are to be surrendered for payment of the Redemption Price, and the name and address of the Paying Agent or Paying Agents, and (6) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Debt Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee for such Debt Securities in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. --------------------------- Prior to the opening of business on any Redemption Date, the Company shall deposit with the Trustee for the Debt Securities to be redeemed or with a Paying Agent for such Debt Securities (or, if the Company is acting as its own Paying Agent for such Debt Securities, segregate and hold in trust as provided in Section 1003) an amount of money (except as otherwise specified pursuant to Section 301 for the Debt Securities of such Series) sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any accrued interest on, all the Debt Securities which are to be redeemed on that date. SECTION 1106. Debt Securities Payable on Redemption Date. ------------------------------------------ Notice of redemption having been given as aforesaid, the Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (except as otherwise provided pursuant to Section 301 for the Debt Securities of such series) and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Debt Securities shall cease to bear interest. Upon surrender of such Debt Security for redemption in accordance with said notice, such Debt Security or specified portions thereof shall be paid by the Company at the Redemption Price; provided, however, that unless otherwise specified as contemplated by Section 301, installments of interest on Debt Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Debt Securities, or one or more Predecessor Debt Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the Redemption Date at a rate per annum equal to the 62 rate borne by the Debt Security (or, in the case of Discounted Debt Securities, the Debt Security's Yield to Maturity). SECTION 1107. Debt Securities Redeemed in Part. -------------------------------- Any Debt Security which is to be redeemed only in part shall be surrendered at the Place of Payment (with, if the Company or the Trustee for such Debt Security so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Debt Security Registrar for such Debt Security duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute and such Trustee shall authenticate and deliver to the Holder of such Debt Security without service charge, a new Debt Security or Debt Securities, of any authorized denomination as requested by such Holder, of the same series and having the same terms and provisions and in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of This Article. ----------------------------- Redemption of Debt Securities through operation of a sinking fund as permitted or required by any form of Debt Security issued pursuant to this Indenture shall be made in accordance with such form of Debt Security and this Article; provided, however, that if any provision of any such form of Debt Security shall conflict with any provision of this Article, the provision of such form of Debt Security shall govern. The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any particular series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Debt Securities of any particular series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Debt Securities of any particular series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Debt Securities of any particular series as provided for by the terms of Debt Securities of that series. SECTION 1202. Satisfaction of Sinking Fund Payments With Debt Securities. ---------------------------------------------------------- The Company (1) may deliver Outstanding Debt Securities of a series (other than any previously called for redemption), and (2) may apply as a credit Debt Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Debt Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Debt Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Debt Securities of such series required to be made pursuant to the terms of such Debt 63 Securities as provided for by the terms of such series; provided, however, that such Debt Securities have not been previously so credited. Such Debt Securities shall be received and credited for such purpose by the Trustee for such Debt Securities at the principal amount thereof and the amount of such sinking fund payment shall be reduced accordingly. SECTION 1203. Redemption of Debt Securities for Sinking Fund. ---------------------------------------------- Not less than 60 days prior to each sinking fund payment date for any particular series of Debt Securities, the Company will deliver to the Trustee for the Debt Securities of such series an Officers' Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash (except as otherwise specified pursuant to Section 301 for the Debt Securities of that series) and the portion thereof, if any, which is to be satisfied by delivering and crediting Debt Securities of that series pursuant to Section 1202 and shall state the basis for such credit and that such Debt Securities have not previously been so credited and will also deliver to such Trustee any Debt Securities to be so delivered. Such Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106 and 1107. ARTICLE THIRTEEN ADDITIONAL AMOUNTS SECTION 1301. Applicability of this Article. ----------------------------- If any series of Debt Securities provides for the payment of Additional Amounts, the Company agrees to pay to the Holder of any such Debt Security Additional Amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Debt Security of any series or the net proceeds received on the sale or exchange of any Debt Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to this Indenture, if the Debt Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to such series of Debt Securities (or if the Debt Securities of such series shall not bear interest prior to Maturity, the first day on 64 which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of or interest on the Debt Securities of such series shall be made to Holders of Debt Securities of such series who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Debt Securities of such series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Debt Securities, and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Debt Securities. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. ARTICLE FOURTEEN SECURITIES IN FOREIGN CURRENCIES SECTION 1401. Applicability of Article. ------------------------ If any series of Debt Securities is denominated in a currency other than that of the United States and unless otherwise provided in the terms of such series of Debt Securities, whenever this Indenture provides for any action by, the determination of the rights of, or any distribution to, Holders of Debt Securities of such series, the amount of such Debt Securities shall be deemed to be that amount of United States Dollars that could be obtained for such amount of Debt Securities on the basis of the spot rate of exchange into United States Dollars for the currency in which such Debt Securities are denominated (as evidenced to the Trustee by an Officer's Certificate) as of the date of such action, determination of rights or distribution (as evidenced to the Trustee by an Officer's Certificate). 65 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture dated as of March 15, 2001 to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the 15th day of March, 2001. CHIQUITA BRANDS INTERNATIONAL, INC. By:_____________________________________ Name: Title: [_____________________________________], Trustee By:_____________________________________ Name: Title: 66 EX-99.T3E.1 4 dex99t3e1.txt DISCLOSURE STATEMENT Exhibit T3E-1 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re: ) Chapter 11 ) CHIQUITA BRANDS INTERNATIONAL, INC., ) Case No. 01-18812 ) Debtor. ) )
- -------------------------------------------------------------------------------- FIRST AMENDED DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION OF CHIQUITA BRANDS INTERNATIONAL, INC. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE - -------------------------------------------------------------------------------- IMPORTANT DATES ------------------ . Date by which Ballots must be received: February 28, 2002 . Date by which objections to Confirmation of the Plan must be filed and served: February 21, 2002 . Hearing on Confirmation of the Plan: March 8, 2002 - -------------------------------------------------------------------------------- James H.M. Kim Martin LewisDINSMORE Sprayregen Matthew N. & SHOHL LLP1900 Chemed Kleiman KIRKLAND & Center255 East Fifth ELLIS 200 East StreetCincinnati, Ohio Randolph 45202(513) 977-8200 Drive Chicago, Illinois 60601 (312) 861-2000 Co-Counsel for Chiquita Brands International, Inc. Dated: January 18, 2002 THE SECURITIES DESCRIBED HEREIN WILL BE ISSUED WITHOUT REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY SIMILAR FEDERAL, STATE OR LOCAL LAW, GENERALLY IN RELIANCE ON THE EXEMPTIONS SET FORTH IN SECTION 1145 OF THE BANKRUPTCY CODE. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED THEREIN. FOR NON U.S. HOLDERS ONLY: THE DISTRIBUTION OF THIS DISCLOSURE STATEMENT AND THE ISSUE OR TAKING UP OF THE SECURITIES DESCRIBED IN THIS DISCLOSURE STATEMENT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES. IN AN EFFORT TO COMPLY WITH LOCAL JURISDICTIONAL REQUIREMENTS GOVERNING THE OFFER AND ISSUANCE OF SECURITIES, DEBTOR HAS MADE REASONABLE EFFORTS TO ASCERTAIN THE JURISDICTIONS WHERE DEBTOR'S SECURITIES ARE CURRENTLY HELD AND IN WHICH THE SECURITIES OF REORGANIZED DEBTOR WILL BE HELD AFTER THE EFFECTIVE DATE. HOWEVER, DEBTOR WAS UNABLE TO ACCURATELY ASSESS SUCH JURISDICTIONS, PARTICULARLY DUE TO THE FACT THAT A MAJORITY OF THE SECURITIES WHICH ARE THE SUBJECT OF THE SUBCLASS 4B CLAIMS ARE HELD IN BEARER FORM. DEBTOR BELIEVES THAT THE AUTOMATIC ISSUANCE OF NEW COMMON STOCK PURSUANT TO THE PLAN SHOULD QUALIFY FOR A PRIVATE PLACEMENT EXEMPTION FROM APPLICABLE LOCAL OFFERING REQUIREMENTS ON THE BASIS OF THE CHARACTERISTICS OF THE SECURITY HOLDERS, THE NATURE AND AMOUNT OF THE SECURITIES HELD, OR OTHER SALIENT FACTS REGARDING THE SECURITIES AND SECURITY HOLDERS IN EACH RELEVANT JURISDICTION. NO ACTION HAS BEEN TAKEN BY DEBTOR THAT WOULD PERMIT AN OFFER OF ANY SECURITIES ISSUED UNDER THE PLAN OR POSSESSION OR DISTRIBUTION OF THIS DISCLOSURE STATEMENT IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS DISCLOSURE STATEMENT COMES ARE REQUIRED BY DEBTOR TO INFORM THEMSELVES ABOUT AND TO OBSERVE SUCH RESTRICTIONS. IN ADDITION, DEBTOR RECOMMENDS THAT HOLDERS OR POTENTIAL HOLDERS OF SECURITIES UNDER THE PLAN CONSULT WITH THEIR OWN ADVISORS CONCERNING ANY LIMITATIONS ON THEIR RIGHT TO TRANSFER SUCH SECURITIES. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR ISSUE, OR THE SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES BY ANY PERSON IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. TO THE EXTENT THAT DEBTOR IS REQUIRED TO COMPLY WITH CERTAIN REQUIREMENTS OF JURISDICTIONS IN WHICH HOLDERS OF SECURITIES OF DEBTOR RESIDE DUE TO THE PARTICIPATION OF HOLDERS IN SUCH JURISDICTIONS IN ANY VOTE OR ELECTION WITH RESPECT TO THE PLAN, DEBTOR SHALL NOT BE REQUIRED TO TAKE SUCH PARTICIPATION INTO ACCOUNT. THIS DISCLOSURE STATEMENT CONTAINS A SUMMARY OF CERTAIN PROVISIONS OF THE PLAN AND CERTAIN OTHER DOCUMENTS AND FINANCIAL INFORMATION. DEBTOR BELIEVES THAT THESE SUMMARIES ARE FAIR AND ACCURATE. THE SUMMARIES OF THE FINANCIAL INFORMATION AND THE DOCUMENTS WHICH ARE ATTACHED HERETO ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THOSE DOCUMENTS. IN THE EVENT OF ANY INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN, OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION INCORPORATED HEREIN BY REFERENCE, THE PLAN SHALL GOVERN FOR ALL PURPOSES. THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED HEREIN HAVE BEEN MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND EQUITY INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER AT THE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH HEREIN UNLESS SO SPECIFIED. EACH HOLDER OF AN IMPAIRED CLAIM OR IMPAIRED EQUITY INTEREST SHOULD CAREFULLY REVIEW THE PLAN, THIS DISCLOSURE STATEMENT AND THE EXHIBITS TO BOTH DOCUMENTS IN THEIR ENTIRETY BEFORE CASTING A BALLOT. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. ANY PERSONS DESIRING ANY SUCH ADVICE OR OTHER ADVICE SHOULD CONSULT WITH THEIR OWN ADVISORS. NO PARTY IS AUTHORIZED TO GIVE ANY INFORMATION WITH RESPECT TO THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT. NO REPRESENTATIONS CONCERNING DEBTOR OR THE VALUE OF ITS PROPERTY HAVE BEEN AUTHORIZED BY DEBTOR OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT OR, SUBSEQUENT TO A FILING BY DEBTOR UNDER THE BANKRUPTCY CODE, BY THE BANKRUPTCY COURT. ANY INFORMATION, REPRESENTATIONS OR INDUCEMENTS MADE TO OBTAIN YOUR ACCEPTANCE OF THE PLAN WHICH ARE OTHER THAN OR INCONSISTENT WITH THE INFORMATION CONTAINED HEREIN AND IN THE PLAN SHOULD NOT BE RELIED UPON BY ANY HOLDER OF A CLAIM OR EQUITY INTEREST. ALTHOUGH DEBTOR HAS USED ITS BEST EFFORTS TO ENSURE THE ACCURACY OF THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT, THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED, EXCEPT FOR THE FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K INCLUDED AS EXHIBIT D HERETO. THE PROJECTIONS PROVIDED IN THIS DISCLOSURE STATEMENT HAVE BEEN PREPARED BY DEBTOR'S MANAGEMENT WITH THE ASSISTANCE OF THE BLACKSTONE GROUP, L.P. THESE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE, INDUSTRY, REGULATORY, MARKET AND FINANCIAL UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND REORGANIZED DEBTOR'S CONTROL. DEBTOR CAUTIONS THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE PROJECTIONS OR TO REORGANIZED DEBTOR'S ABILITY TO ACHIEVE THE PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE. FURTHER, EVENTS AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY, MAY HAVE BEEN UNANTICIPATED, AND THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN A MATERIALLY ADVERSE OR MATERIALLY BENEFICIAL MANNER. THE PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR. SEE ARTICLE V OF THIS DISCLOSURE STATEMENT, "RISK FACTORS", FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH A DECISION BY A HOLDER OF AN IMPAIRED CLAIM OR IMPAIRED EQUITY INTEREST TO ACCEPT THE PLAN. TABLE OF CONTENTS
Page ---- SUMMARY............................................................................................... 1 I. GENERAL INFORMATION.............................................................................. 9 A. DESCRIPTION OF DEBTOR'S BUSINESS............................................................... 9 1. Corporate Structure........................................................................ 9 2. The Company's Business..................................................................... 9 B. SUMMARY OF CAPITAL STRUCTURE................................................................... 10 C. EVENTS LEADING TO THE CHAPTER 11 CASE.......................................................... 11 D. THE PREPETITION NOTEHOLDER COMMITTEES.......................................................... 12 E. THE LOCK UP AGREEMENT.......................................................................... 12 F. PURPOSE OF THE PLAN............................................................................ 14 G. ASSETS AND LIABILITIES OF DEBTOR............................................................... 14 H. TERMS OF SECURITIES TO BE ISSUED PURSUANT TO THE PLAN.......................................... 14 1. New Notes.................................................................................. 14 2. New Warrants............................................................................... 14 3. New Common Stock........................................................................... 14 I. BOARD OF DIRECTORS OF REORGANIZED DEBTOR....................................................... 15 J. LIQUIDATION ANALYSIS........................................................................... 15 K. FINANCIAL PROJECTIONS AND VALUATION ANALYSIS................................................... 15 1. Financial Projections...................................................................... 16 2. Valuation.................................................................................. 17 L. REORGANIZED DEBTOR AND THE POST-CONFIRMATION ESTATE............................................ 18 II. THE CHAPTER 11 CASE.............................................................................. 19 MOTIONS FILED.................................................................................. 19 1. Applications for Retention of Debtor's Professionals....................................... 19 2. Motions to Approve Manner of Notice of the Disclosure Statement and Confirmation Hearing, and to Schedule Disclosure Statement Hearing and Confirmation Hearing............. 19 3. Motion to Continue Using Existing Bank Accounts and Business Forms......................... 19 4. Motion for Authority to Pay Prepetition General Unsecured Claims........................... 20 5. Motion for Authority to Pay Prepetition and Postpetition Employee Wages and Associated Benefits................................................................................... 20 6. Motion for Authority to Preclude the Conversion of Old Preferred Stock into Old Common Stock...................................................................................... 20 7. Motion for Authority to Implement a Management Retention Program........................... 20 III. THE PLAN OF REORGANIZATION...................................................................... 20 A. OVERVIEW OF CHAPTER 11......................................................................... 21 B. OVERALL STRUCTURE OF DEBTOR'S PLAN............................................................. 21
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Page ---- C. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS................................ 22 1. Administrative Expense Claims.......................................................... 22 2. Priority Tax Claims.................................................................... 22 3. Class 1: Other Priority Claims (Not Impaired).......................................... 22 4. Class 2: Secured Claims (Not Impaired)................................................. 23 5. Class 3: General Unsecured Claims (Not Impaired)....................................... 23 6. Class 4: Old Senior Note Claims and Old Subordinated Note Claims (Impaired)............ 24 7. Class 5: Old Preferred Stock (Impaired)................................................ 26 8. Class 6: Old Common Stock (Impaired)................................................... 28 9. Class 7: Other Securities Claims (Impaired)............................................ 28 D. PROVISIONS GOVERNING DISTRIBUTIONS UNDER THE PLAN.......................................... 29 1. Sources of Cash for Plan Distribution.................................................. 29 2. Distributions for Claims and Equity Interests Allowed as of the Effective Date......... 29 3. Distributions by Reorganized Debtor.................................................... 29 4. Delivery and Distributions; Undeliverable or Unclaimed Distributions................... 30 5. Distribution Record Date............................................................... 31 6. Timing and Calculation of Amounts to Be Distributed.................................... 31 7. Minimum Distribution................................................................... 31 8. Setoffs................................................................................ 31 9. Cancellation of Old Notes, Old Preferred Stock, Old Common Stock and Stock Options..... 32 10. Surrender of Canceled Instruments or Securities........................................ 32 11. Lost, Stolen, Mutilated or Destroyed Securities........................................ 33 E. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS................................................................. 33 1. Resolution of Disputed Claims.......................................................... 33 2. Allowance of Claims and Equity Interests............................................... 34 3. Controversy Concerning Impairment...................................................... 34 F. MEANS FOR IMPLEMENTATION OF THE PLAN....................................................... 34 1. Continued Corporate Existence and Vesting of Assets in Reorganized Debtor.............. 34 2. Corporate Governance, Directors and Officers, and Corporate Action..................... 34 3. Restated Certificate of Incorporation and By-laws...................................... 36 4. Corporate Action....................................................................... 36 5. Issuance of New Securities; Execution of Related Documents............................. 36 G. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES...................................... 58 1. Assumption of Executory Contracts and Unexpired Leases................................. 58 2. Claims Based on Rejection of Executory Contracts or Unexpired Leases................... 58 3. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed.................. 58 4. Indemnification of Directors, Officers and Employees................................... 59 5. Compensation and Benefit Programs...................................................... 59
-ii- H. CONFIRMATION AND EFFECTIVENESS OF THE PLAN.................................. 60 1. Condition Precedent to Confirmation..................................... 60 2. Conditions Precedent to Consummation.................................... 60 3. Waiver of Conditions.................................................... 61 4. Effect of Non-occurrence of Conditions to Consummation.................. 61 I. EFFECT OF PLAN CONFIRMATION................................................. 62 1. Subordination........................................................... 62 2. Limited Releases by Debtor.............................................. 62 3. Limited Releases by Holders of Claims or Equity Interests............... 62 4. Exculpation............................................................. 63 5. Preservation of Rights of Action........................................ 63 6. Discharge of Claims and Termination of Equity Interests................. 63 7. Injunction.............................................................. 64 J. SUMMARY OF OTHER PROVISIONS OF THE PLAN..................................... 64 1. Exemption from Certain Transfer Taxes................................... 64 2. Effectuating Documents, Further Transactions and Corporation Action..... 64 3. Retention of Jurisdiction............................................... 64 4. Revocation, Withdrawal or Non-consummation.............................. 65 5. Section 1145 Exemption.................................................. 65 6. Amendment or Modification of Plan....................................... 65 7. Dissolution of Creditors Committee...................................... 66 8. Payment of Statutory Fees............................................... 66 IV. VOTING AND CONFIRMATION PROCEDURE.............................................. 66 A. VOTING INSTRUCTIONS......................................................... 66 B. VOTING TABULATION........................................................... 68 C. VOTING PROCEDURES........................................................... 70 1. Beneficial Holders...................................................... 70 2. Nominees................................................................ 71 D. THE CONFIRMATION HEARING.................................................... 72 E. STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN......................... 72 1. Best Equity Interests of Creditors Test/Liquidation Analysis............ 73 2. Financial Feasibility................................................... 74 3. Acceptance by Impaired Classes.......................................... 74 4. Confirmation Without Acceptance by All Impaired Classes................. 74 V. RISK FACTORS................................................................... 76 A. CERTAIN BANKRUPTCY CONSIDERATIONS........................................... 76 B. FACTORS AFFECTING THE VALUE OF THE SECURITIES TO BE ISSUED UNDER THE PLAN........................................................................ 77 C. RISKS RELATING TO THE OPERATIONS OF REORGANIZED DEBTOR...................... 79
-iii- VI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................................... 82 A. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES TO THE HOLDERS OF CLAIMS AND EQUITY INTERESTS........................................................ 82 1. Consequences to Holders of Old Notes........................................... 82 2. Consequences to Holders of Equity Interests.................................... 87 B. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES TO REORGANIZED DEBTOR................. 87 1. Cancellation of Indebtedness and Reduction of Tax Attributes................... 87 2. Limitation of Net Operating Loss Carryovers and Other Tax Attributes........... 88 3. Effect of Issue Price on Debtor's Interest Deductions.......................... 89 4. Deductibility of Amounts Paid Pursuant to the Management Incentive Program..... 89 C. BACKUP WITHHOLDING................................................................. 90 VII. MISCELLANEOUS PROVISIONS............................................................. 90 A. PENDING LITIGATION................................................................. 90 B. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEES........................ 90 C. SUCCESSORS AND ASSIGNS............................................................. 91 D. RESERVATION OF RIGHTS.............................................................. 91 E. SERVICE OF DOCUMENTS............................................................... 91 VIII. RECOMMENDATION...................................................................... 92
EXHIBITS Exhibit A - First Amended Plan of Reorganization Exhibit B - Liquidation Analysis Exhibit C - Projections Exhibit D - Annual Report on Form 10-K for the year ended December 31, 2000 Exhibit E - Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001 Exhibit F - Lock Up Agreement dated as of November 9, 2001 -iv- SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements contained elsewhere in this Disclosure Statement. Chiquita Brands International, Inc. ("Debtor", and together with its subsidiaries, the "Company"), through its subsidiaries, is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods sold under the "Chiquita" and other brand names. Debtor is a parent holding company that does not have any business operations of its own. On November 28, 2001 (the "Petition Date"), Debtor filed a petition for reorganization under Chapter 11 of Title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio (the "Chapter 11 Case"). Debtor's primary direct operating subsidiary is Chiquita Brands, Inc. ("CBI"). Neither CBI nor any of the other direct or indirect subsidiaries of Debtor is a party to the Chapter 11 Case or any related bankruptcy, reorganization or liquidation proceedings. Debtor's subsidiaries, which are independent legal entities that generate their own cash flow and have access to their own credit facilities, will continue to operate normally and without interruption during the Chapter 11 Case. Throughout the pendency of the Chapter 11 Case, the Company intends to operate its business in the ordinary course, and the Company's customers will continue to receive shipments normally and its suppliers will continue to be paid in full according to normal terms. In this regard, the Company's operating businesses will not be affected by the Chapter 11 Case. This Disclosure Statement is being furnished by Debtor as proponent of the Plan of Reorganization of Chiquita Brands International, Inc. (the "Plan," a copy of which is attached hereto as Exhibit A), pursuant to section 1125 of the United States Bankruptcy Code (the "Bankruptcy Code") and in connection with the solicitation of votes (the "Solicitation") for the acceptance or rejection of the Plan, as it may be amended or supplemented from time to time in accordance with the Bankruptcy Code and the Bankruptcy Rules. Capitalized terms used herein but not otherwise defined herein shall have the meanings given to such terms in the Plan. This Disclosure Statement describes certain aspects of the Plan, the Company's operations, the Company's projections and other related matters, including the treatment of holders (each, a "Holder" and collectively, the "Holders") of Debtor's four series of existing senior notes (the "Old Senior Notes"), its subordinated debentures (the "Old Subordinated Notes", and together with the Old Senior Notes, the "Old Notes"), its three series of preferred stock (the "Old Preferred Stock") and its common stock (the "Old Common Stock"). Debtor's general unsecured creditors (other than the Holders of Old Senior Notes, Old Subordinated Notes, Other Securities Claims, Old Preferred Stock and Old Common Stock) and its assets, strategy and ongoing operations will be unaffected by the Chapter 11 Case. Events Leading to the Chapter 11 Case In 1993, the European Union ("EU") implemented a discriminatory quota and licensing regime governing the importation of bananas into the EU that violated the EU's international trade obligations. This regime significantly decreased the Company's banana volume sold into Europe and resulted in significantly diminished operating results for the Company as compared to years prior to the regime's implementation. Although the Company has made significant improvements in production and logistics costs, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. Principally due to these factors, the Company experienced financial losses in seven of the nine years preceding 2001 and had evolved into a highly leveraged position, with consolidated debt of approximately $1.3 billion and a ratio of debt to EBITDA (as defined in Exhibit C attached hereto) of 9.3 as of December 31, 2000. Under these circumstances, the Company faced the need to obtain new financing in order to meet debt maturities and seasonal working capital requirements during the first quarter of 2001. However, during the second half of 2000 the Company encountered an increasingly severe tightening of the bank credit and other capital markets previously accessed by the Company. In early 2001, CBI was able to secure a new three-year $120 million credit facility which, combined with existing credit facilities of indirect subsidiaries of Debtor, enabled all of Debtor's operating subsidiaries to meet their upcoming debt maturities and seasonal working capital needs. However, Debtor was not able to obtain financing which would permit it to repay the $87 million of Old Subordinated Notes maturing in March 2001. These factors led to Debtor's announcement in January 2001 that it would seek to regain its financial health by proposing a restructuring of the $862 million principal amount of outstanding Old Notes through the conversion of a substantial portion of the Old Notes into common equity. As part of this initiative, Debtor discontinued all future interest and principal payments on the Old Notes. Debtor also announced that it had retained The Blackstone Group, L.P. ("Blackstone") as its financial advisor to assist it in negotiating such a restructuring with Holders of the Old Notes. Debtor negotiated the terms of the Plan with the Prepetition Noteholder Committees (as defined herein), and on November 9, 2001 members of the Prepetition Noteholder Committees entered into agreements (the "Lock Up Agreements") with Debtor to support the Plan. The members of the Prepetition Noteholder Committees have informed Debtor that they collectively hold or control 28.42% of the outstanding principal amount of the Old Senior Notes and 34.48% of the outstanding principal amount of the Old Subordinated Notes. Debtor commenced the Chapter 11 Case in accordance with the Lock Up Agreements in order to implement the Plan and the financial restructuring contemplated thereby. MEMBERS OF THE PREPETITION NOTEHOLDER COMMITTEES SUPPORT THE PROPOSED FINANCIAL RESTRUCTURING AND HAVE AGREED TO VOTE TO ACCEPT THE PLAN. The purpose of the Plan is to restructure Debtor's public debt to provide Debtor with a capital structure that can be supported by the cash flow of its operating subsidiaries. To this end, the Plan will reduce Debtor's debt and accrued interest by more than $700 million and its future annual interest expense by approximately $60 million. Debtor believes that the reorganization contemplated by the Plan is in the best interests of its creditors and equity holders. If the Plan is not confirmed, Debtor believes that it will be forced to either file an alternate plan of reorganization or liquidate under chapter 7 of the Bankruptcy Code. In either event, Debtor believes that the Company's unsecured creditors (including the holders of the Old Notes) and equity holders would realize a less favorable distribution of value, or, in certain cases, none at all, for their Claims or Equity Interests under an alternative plan or liquidation. See the Liquidation Analysis set forth in Exhibit B attached hereto. Treatment of Claims and Equity Interests The table on the next page summarizes the classes of Claims and Equity Interests under the Plan, projected aggregate amounts of such Classes, the treatment of such Classes, and the projected recoveries of such Classes both in connection with the Plan and in a liquidation under chapter 7 of the Bankruptcy Code. The projected recoveries (if the Plan is approved) are based upon certain assumptions contained in the Valuation Analysis developed by Blackstone set forth in Section I.K hereof, including an assumed reorganization value of the New Common Stock equal to $14.39 per share and an assumed reorganization value of the New Warrants equal to $3.10 per New Warrant. As more fully described herein, such reorganization values of the New Common Stock and the New Warrants were derived from commonly accepted valuation techniques and are not estimates of trading values for such securities. 2
Class/Type Projected Projected of Claim or Equity Projected Recovery Recovery Interest Claims/Interests Plan Treatment of Class Under Plan Under Chapter 7 ------------------ ------------------- -------------------------------------------------- ---------- --------------- Administrative Expense $0/1/ Paid in full 100.0% 100.0% Claims Priority Tax Claims $3.1 million Paid in full 100.0% 100.0% Class 1--Other $0.6 million Paid in full 100.0% 100.0% Priority Claims Class 2--Secured Claims $2.4 million/2/ Paid in full 100.0% 100.0% Class 3--General $24.3 million/3/ Paid in full 100.0% 43.2%/4/ Unsecured Claims Subclass 4A--Old Senior $863.5 million/5/ Holders will receive $250 million in New Notes 87.4% 43.2%/4/ Notes and 35,100,000 shares of New Common Stock (i.e., 87.75% of the New Common Stock)/6, 7/ Subclass 4B--Old $95.9 million/5/ Holders will receive 3,100,000 shares of New 46.5% 0.0%/9/ Subordinated Notes Common Stock (i.e., 7.75% of the New Common Stock)/6, 7, 8/ Class 5--Old 2.9 million shares Holders will receive 241,749 shares of New $16.0 mm $0 Preferred Stock Common Stock (i.e., 0.60% of the New Common Stock)/6/ and 4,029,152 New Warrants exercisable into an equal number of shares of New Common Stock, representing 7.55% of the New Common Stock/10/ Class 6--Old 78.3 million shares Holders will receive 558,251 shares of New $36.9 mm $0 Common Stock Common Stock (i.e., 1.40% of the New Common Stock)/6/ and 9,304,181 New Warrants exercisable into an equal number of shares of New Common Stock, representing 17.45% of the New Common Stock/10/ Class 7--Other Securities N/A Not entitled to receive any distribution or retain $0 $0 Claims any property under the Plan
In the table above, the amounts in the column entitled "Projected Claims/Interests" represent amounts outstanding on the Petition Date, except that the number of outstanding shares of Old Preferred Stock and Old Common Stock are as of January 8, 2002, the last date on which Old Preferred Stock was convertible at the option of the holder into Old Common Stock. - -------- /1/ Assumes all Administrative Expenses are paid in full as and when due. /2/ Secured Claims primarily consist of Debtor's estimate of its workers compensation reimbursement liability to its insurance carrier. /3/ General Unsecured Claims primarily consist of employee compensation and benefit obligations. /4/ In a liquidation under Chapter 7 of the Bankruptcy Code, Holders of General Unsecured Claims and Old Senior Notes are assumed to share a pro rata distribution of remaining assets after payment in full of secured and priority creditors. /5/ These Projected Claims include unpaid interest on the outstanding principal balance through the Petition Date. /6/ Ownership percentages represented by the New Common Stock are subject to dilution by the New Warrants and the Management Options. /7/ The distributions to Holders of Old Senior Notes and Old Subordinated Notes may change if and to the extent any Holder of Old Subordinated Notes elects to purchase New Notes or New Common Stock pursuant to the Subclass 4B Note Election and Subclass 4B Equity Purchase described in Section III.C.6 below. /8/ Subject to certain conditions, each Holder of Old Subordinated Notes may also have the right to participate in the Subclass 4B Note Election, Subclass 4B Equity Purchase and Subclass 4B Supplemental Distribution, as described in Section III.C.6 below. /9/ In a liquidation under Chapter 7 of the Bankruptcy Code, Holders of Old Subordinated Notes are assumed to receive no distribution unless and until Holders of Old Senior Notes receive a 100% recovery, as required by the Old Subordinated Note Indenture. /10/ Ownership percentages represented by the New Warrants are subject to dilution by the Management Options. 3 In accordance with the preceding table and as provided in the Plan:
For a Holder of ...of this series of Debtor's securities this amount... - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- $10,000 principal Old Senior Notes amount (plus 9 5/8% Senior Notes due 2004 unpaid interest) 9 1/8% Senior Notes due 2004 101/4% Senior Notes due 2006 10% Senior Notes due 2009 - ---------------------------------------------------------------------------- $10,000 principal Old Subordinated Notes amount (plus 7% Convertible Subordinated Debentures due 2001 unpaid interest) /3/ - ---------------------------------------------------------------------------- 1,000 shares Old Preferred Stock $2.875 Non-Voting Cumulative Preferred Stock, Series A $3.75 Convertible Preferred Stock, Series B $2.50 Convertible Preference Stock, Series C - ---------------------------------------------------------------------------- 1,000 shares Old Common Stock
...of this series of Debtor's securities The Holder would be entitled to receive these securities of Reorganized Debtor under the Plan/ 1/ - ---------------------------------------------------------------------------------------------------------------- New Notes New Common Stock New Warrants - --------------------------------------------------------------------------------------------------------------- Old Senior Notes 9 5/8% Senior Notes due 2004 $3,276.99/2/ 460.1 shares/2/ 9 1/8% Senior Notes due 2004 $3,224.14 452.7 shares 101/4% Senior Notes due 2006 $3,215.22 451.4 shares 10% Senior Notes due 2009 $3,171.22 445.2 shares None - --------------------------------------------------------------------------------------------------------------- Old Subordinated Notes 7% Convertible Subordinated Debentures due 2001 None/4/ 360.9 shares/4/ None - --------------------------------------------------------------------------------------------------------------- Old Preferred Stock $2.875 Non-Voting Cumulative Preferred Stock, Series A None 75.4 shares 1,257.0 shares $3.75 Convertible Preferred Stock, Series B None 95.3 shares 1,587.8 shares $2.50 Convertible Preference Stock, Series C None 74.9 shares 1,248.1 shares - --------------------------------------------------------------------------------------------------------------- Old Common Stock None 7.1 shares 118.9 shares
- -------- /1/ New Notes will be issued in denominations of $1,000 and integral multiples thereof. No fractional shares of New Common Stock, or New Warrants exercisable into fractional shares of New Common Stock, will be issued. See Section III.D.7 below for a description of the treatment of portions of New Notes less than $1,000, fractional shares of New Common Stock, and New Warrants exercisable into fractional shares of New Common Stock. /2 /The variance of distributions among the Holders of Old Senior Notes reflects different levels of unpaid interest. These distributions are subject to change to the extent Holders of Old Subordinated Note Claims elect to participate in the Subclass 4B Note Election and Subclass 4B Equity Purchase. /3/ Assuming that accrued but unpaid pre-petition interest claims are distributed pro-rata as to the principal amount of Old Subordinated Notes held by Holders of Subclass 4B Claims. /4 /Subject to certain conditions, each Holder of Old Subordinated Notes may also have the right to participate in the Subclass 4B Note Election, Subclass 4B Equity Purchase and Subclass 4B Supplemental Distribution, as described in Section III.C.6 below. Based upon an implied reorganization value of Debtor of $1.28 billion, Holders of Old Preferred Stock and Old Common Stock would receive no distribution and would retain no property in a restructuring if the reorganization value were distributed on an absolute priority basis. However, in order to achieve a consensual Plan, the Prepetition Noteholder Committees agreed to vote in favor of a Plan that allocates a portion of distributions under the Plan to the Old Preferred Stock and Old Common Stock. Notwithstanding the foregoing, the Plan provides that if Class 5 and/or Class 6 rejects the Plan, Debtor may seek to confirm the Plan utilizing the "cram down" provisions of section 1129(b) of the Bankruptcy Code. In the event that Class 5 and/or Class 6 rejects the Plan, Debtor reserves the right to seek to have a Plan confirmed in which the rejecting Class or Classes will each receive only 50% of the New Common Stock and 50% of the New Warrants that it would have received if such Class had approved the Plan. For a more detailed description of the "cram down" provisions of the Plan, see Section IV.E.4 herein. In order to provide appropriate incentives to key executives, the Plan also provides for a management incentive program, pursuant to which: . Carl H. Lindner, the current Chairman of the Board of Debtor, will receive a restricted stock award of 800,000 shares of New Common Stock (i.e., 2.0% of the New Common Stock, subject to dilution by the New Warrants and the Management Options), and Steven G. Warshaw, the current President and Chief Executive Officer of Debtor (and such other employees of Debtor and its subsidiaries as he may designate prior to the Effective Date) will receive a restricted stock award of 200,000 shares of New Common Stock (i.e., 0.5% of the New Common Stock, subject to dilution by the New Warrants and the Management Options); and . the new board of directors of Reorganized Debtor shall award stock options to management pursuant to Reorganized Debtor's 2002 Stock Option Plan for 5,925,926 shares, representing 10% of the New Common Stock on a fully diluted basis. 4 Reorganized Debtor's new board of directors will consist of Morten Arntzen, Jeffrey D. Benjamin, Robert Fisher, Cyrus Freidheim, Roderick Hills, Carl H. Lindner and Steven G. Warshaw. Description of New Securities to be Issued Under the Plan New Notes. The New Notes will be issued as a series of senior debt securities under an Indenture to be dated as of March 15, 2002 and to be entered into between Reorganized Debtor and a trustee to be determined. The New Notes will be general unsecured obligations of Reorganized Debtor and will rank equally with Reorganized Debtor's future senior unsecured indebtedness. The New Notes will mature on March 15, 2009 and will bear interest at the Senior Note Interest Rate. The "Senior Note Interest Rate" will be fixed at the Effective Date at a rate equal to the sum of: (a) the yield for actively traded U.S. Treasury securities having a maturity closest to seven years as of the day prior to the Effective Date, (b) the Bear Stearns BB Index Spread (as defined below) and (c) 100 basis points (i.e., 1.0%). The "Bear Stearns BB Index Spread" is the spread over comparable maturity U.S. Treasury securities of BB rated high yield debt securities as measured in the Bear Stearns Relative Value Analysis (Global High Yield Research) as of the most recent report prior to the Effective Date. However, to the extent that the Bear Stearns BB Index Spread has increased or decreased by more than 100 basis points (i.e., 1.0%) from the immediately prior weekly report, the spread used in clause (b) above will be the average of the Bear Stearns BB Index Spread for the four-week period prior to the Effective Date. By way of example only, the New Notes would bear interest at 10.4% if they had been issued on January 11, 2002. Reorganized Debtor will pay interest on the New Notes on March 15 and September 15 of each year, commencing September 15, 2002, to each registered holder of the New Notes at the close of business on the first day of the month in which the interest payment will be made. The New Notes will be issued only in fully registered form through one global note in denominations of $1,000 and integral multiples of $1,000. Debtor intends to apply to list the New Notes on the New York Stock Exchange, and has applied to list the New Notes on the Luxembourg Stock Exchange in order to facilitate the Subclass 4B Note Election outside of the United States. The New Notes will be redeemable at the option of the Reorganized Debtor, in whole or in part, at any time on not less than 30 nor more than 60 days' notice. In the case of redemption in the first, second or third year after issuance, the redemption shall be for an amount equal to the greater of (i) 100% of the principal amount of the New Notes to be redeemed, and (ii) the sum of the present value of (A) the redemption amount at the beginning of the fourth year and (B) interest payments from the date of redemption through the beginning of the fourth year (discounted in each case at a rate equal to the yield to maturity for comparable maturity U.S. Treasury securities plus 0.25%). In the case of any redemption thereafter, the redemption shall be for the following amounts in addition to any accrued and unpaid interest at the time of redemption: (i) if redeemed in the fourth year after issuance, at par plus 1/2 of the Senior Note Interest Rate; (ii) if redeemed in the fifth year after issuance, at par plus /3//\\8\\ of the Senior Note Interest Rate; (iii) if redeemed in the sixth year after issuance, at par plus 1/4 of the Senior Note Interest Rate; and (iv) if redeemed in the seventh year after issuance, at par. For a more detailed description of the terms of the New Notes, see Section III.F.5 herein. New Warrants. The New Warrants will be exercisable for 13,333,333 shares of the New Common Stock (i.e., 25% of the New Common Stock on a fully diluted basis, prior to dilution by grants under the 2002 Stock Option Plan), and will expire seven years after the Effective Date. The New Warrants will have customary anti-dilution protection for stock splits, stock dividends, stock combinations and similar transactions. Debtor intends to apply to list the New Warrants on the New York Stock Exchange. The exercise price of the New Warrants will be set at a price per share equal to the "Solvency Value". The Solvency Value is the value per share of the New Common Stock that, when multiplied by the number of shares of New Common Stock distributed to Holders of Class 4 Claims (and after adding such amount to the face amount of the New Notes), will equal the amount of Class 4 Claims for principal plus interest on such principal through the Effective Date. If the Effective Date had been December 31, 2001, the estimated exercise price of the 5 New Warrants would be $18.76. The Solvency Value will be higher due to an increase in calculated interest on Class 4 Claims to the extent that the Effective Date is later than December 31, 2001 and will increase by approximately $0.18 per New Warrant share for each month between December 31, 2001 and the Effective Date. In the event of a merger or tender offer, all or partially for cash or other property (other than common equity securities), New Warrant Holders will have the right to elect (as an alternative to exercising some or all of the New Warrants) to receive cash or other property (other than common equity securities) in the same proportion as Holders of New Common Stock for such New Warrants equivalent to a Black/Scholes valuation of such New Warrants as of the date such merger or tender offer is consummated. New Common Stock. As of the Effective Date, Reorganized Debtor will have 150,000,000 authorized shares of New Common Stock, of which 40,000,000 shares will be issued (39,200,000 issued on the Effective Date and 800,000 management shares subject to restricted delivery, as described in Section III.F.5 herein). Assuming the exercise of all New Warrants and Management Options, there will be 59,259,259 shares of New Common Stock issued and outstanding. Holders of New Common Stock will be entitled to one vote per share on the election of directors and all other matters submitted to a vote of shareholders. Debtor intends to apply to list the New Common Stock on the New York Stock Exchange. Voting and Confirmation Each Holder of a Claim or Equity Interest in Classes 4, 5 and 6 is entitled to vote either to accept or to reject the Plan. Class 4 (holders of Old Note Claims) shall have accepted the Plan if (i) the Holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in such Class have voted to accept the Plan and (ii) the Holders of more than one-half in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. Classes 5 and 6 (holders of Equity Interests) shall have accepted the Plan if the Holders of at least two-thirds of the shares of Allowed Equity Interests actually voting in each such Class have voted to accept the Plan. Assuming the requisite acceptances are obtained, Debtor intends to seek confirmation of the Plan at the Confirmation Hearing (as defined in Section IV.D herein) scheduled for March 8, 2002 before the Bankruptcy Court. Notwithstanding the foregoing, the Plan provides that if Class 5 and/or Class 6 rejects the Plan, Debtor may seek to confirm the Plan utilizing the "cram down" provisions of section 1129(b) of the Bankruptcy Code. In addition, in the event that Class 5 and/or Class 6 rejects the Plan, Debtor reserves the right to seek to have a Plan confirmed in which the rejecting Class or Classes will only receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if such Class had approved the Plan. This "cram down" procedure is described in more detail in Section IV.E.4 herein. Article IV of the Disclosure Statement specifies the deadlines, procedures and instructions for voting to accept or reject the Plan and the applicable standards for tabulating Ballots. The Bankruptcy Court has established January 8, 2002 (the "Record Date") as the date for determining, in the case of registered securities, which Holders of Claims and Equity Interests are eligible to vote on the Plan. Ballots will be mailed to all registered Holders of Claims or Equity Interests as of the Record Date. An appropriate return envelope will be included with your Ballot. Please use the envelope provided to return your Ballot. Beneficial owners of Old Senior Notes, Old Subordinated Notes, Old Preferred Stock and Old Common Stock who receive a return envelope addressed to their bank, brokerage firm or other nominee (or its agent) (each, a "Nominee") should allow enough time for their vote to be received by the Nominee and processed on a Master Ballot before the Voting Deadline, as defined below. 6 Debtor has engaged the Solicitation Agent to assist in the voting process. The Solicitation Agent will answer questions, provide additional copies of all materials and oversee the voting tabulation. The Solicitation Agent will also process and tabulate ballots for the Old Common Stock, Old Preferred Stock and Old Senior Notes. The Exchange Agent will process ballots and all elections relating to the Old Subordinated Notes and forward the results to the Solicitation Agent for final tabulation. Although all holders of Old Subordinated Notes (in bearer or registered form) are encouraged submit their ballots and elections to the Exchange Agent, Debtor has also engaged the Luxembourg Agent to receive and forward to the Exchange Agent ballots and elections relating to Old Subordinated Notes held in bearer form.
The Luxembourg Agent (for The Exchange Agent (for Subclass Subclass 4B Old Subordinated Notes in The Solicitation Agent is: 4B Old Subordinated Notes only) is: bearer form only) is: - --------------------------------------- ----------------------------------- ------------------------------------- Innisfree M&A Incorporated Securities Transfer Company BNP Paribas Luxembourg 501 Madison Avenue, 20th Floor One East Fourth Street Attention: Global Corporate Trust New York, NY 10022 12th Floor, Room 1201 10A Boulevard Royal (877) 750-2689 (toll free) Cincinnati, OH 45202 L2093 Luxembourg (Banks and brokers call (212) 750-5833) (800) 368-3417 (toll free) Tel: +352 46 461 (513) 579-2414 Fax: +352 46 46 91 95
SOME HOLDERS OF OLD SUBORDINATED NOTES HOLD NOTES IN BEARER FORM EITHER DIRECTLY OR INDIRECTLY THROUGH A CUSTODIAN, AND WILL BE SOLICITED UNDER A SPECIAL PROCEDURE. IF YOU ARE A HOLDER OF OLD SUBORDINATED NOTES HELD IN BEARER FORM, PLEASE REVIEW YOUR BALLOT FOR SPECIAL VOTING PROCEDURES AND DEADLINES. TO BE COUNTED, YOUR BALLOT (OR THE MASTER BALLOT OF YOUR NOMINEE HOLDER) INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE RECEIVED BY THE SOLICITATION AGENT (OR, IN THE CASE OF SUBCLASS 4B CLAIMS, THE EXCHANGE AGENT OR THE LUXEMBOURG AGENT) NO LATER THAN 4:00 P.M., EASTERN TIME, ON FEBRUARY 28, 2002 (THE "VOTING DEADLINE") UNLESS DEBTOR, IN ITS SOLE DISCRETION, EXTENDS OR WAIVES THE PERIOD DURING WHICH VOTES WILL BE ACCEPTED BY DEBTOR, IN WHICH CASE THE TERM "VOTING DEADLINE" FOR SUCH SOLICITATION SHALL MEAN THE LAST TIME AND DATE TO WHICH SUCH SOLICITATION IS EXTENDED. ANY EXECUTED BALLOT OR COMBINATION OF BALLOTS REPRESENTING CLAIMS OR EQUITY INTERESTS IN THE SAME CLASS OR SUBCLASS HELD BY THE SAME BENEFICIAL HOLDER THAT DOES NOT INDICATE EITHER AN ACCEPTANCE OR REJECTION OF THE PLAN OR THAT INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN SHALL BE DEEMED TO CONSTITUTE AN ACCEPTANCE OF THE PLAN. ANY BALLOT RECEIVED AFTER THE VOTING DEADLINE MAY NOT BE COUNTED IN THE DISCRETION OF DEBTOR. THE BOARD OF DIRECTORS OF DEBTOR BELIEVES THAT THE PLAN IS IN THE BEST INTERESTS OF ALL CREDITORS AND EQUITY HOLDERS. THE BOARD OF DIRECTORS OF DEBTOR RECOMMENDS THAT ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN DEBTOR WHOSE VOTES ARE BEING SOLICITED SUBMIT BALLOTS TO ACCEPT THE PLAN. IN ADDITION, MEMBERS OF THE PREPETITION NOTEHOLDER COMMITTEES SUPPORT THE PROPOSED FINANCIAL RESTRUCTURING PROVIDED FOR BY THE PLAN AND HAVE AGREED TO VOTE TO ACCEPT THE PLAN. 7 Consummation of the Plan Following Confirmation of the Plan, it will be consummated on the date selected by Debtor which is a business day after the Confirmation Date on which: (a) no stay of the Confirmation Order is in effect, and (b) all conditions to consummation of the Plan have been (i) satisfied or (ii) waived (the "Effective Date"). Distributions of New Notes, New Common Stock, and New Warrants will be made on or as soon after the Effective Date as practicable. See Section III.D below. It is a condition to Consummation of the Plan that Debtor has either (a) obtained a waiver or amendment of CBI's financing arrangements with Foothill Capital Corporation, as agent, and the lenders thereunder, in order to permit distributions by CBI to Reorganized Debtor for the payment of interest and principal on the New Notes and waive any other defaults that would result from implementation of the Plan, or (b) negotiated a replacement financing facility, in order to service Reorganized Debtor's indebtedness under the New Notes. Risk Factors Prior to deciding whether and how to vote on the Plan, each Holder of Impaired Claims and Impaired Equity Interests should consider carefully all of the information in this Disclosure Statement, especially the Risk Factors described in Article V hereof. 8 I. GENERAL INFORMATION A. DESCRIPTION OF DEBTOR'S BUSINESS 1. Corporate Structure Debtor is a New Jersey corporation and is a parent holding company which does not have any business operations of its own. As a parent holding company, with publicly held debt and equity securities, Debtor's business activities include investor relations, public communications, and maintaining legal, accounting, treasury, tax, internal audit and corporate secretarial staff departments to enable it to comply with the requirements of being a publicly held company. These staff and executive functions, as well as human resources, risk management, management information systems and office support services groups, also provide advice and assistance to Debtor's many operating subsidiaries. Operating through its subsidiaries, the Company is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods sold under the "Chiquita" and other brand names. Debtor's primary direct operating subsidiary is CBI, a Delaware corporation. None of Debtor's subsidiaries is involved in this Chapter 11 Case or in any related bankruptcy, reorganization or liquidation proceedings. The Plan does not directly affect any of the Company's subsidiaries, all of whose creditors will continue to be paid in the ordinary course. 2. The Company's Business The Company has capitalized on its "Chiquita" and other premium brand names by building on its reputation for quality and worldwide leadership position in the marketing, distribution and sourcing of bananas and other fresh produce. In addition, the Company has processed fruit and vegetable operations, primarily vegetable canning. Fresh Produce. In the Fresh Produce segment, the Company markets an extensive line of fresh fruits and vegetables sold under the "Chiquita" and other brand names. The Company's fresh fruits and vegetables include bananas, berries, citrus, grapes, lettuce, melons, mushrooms, onions, potatoes, stone fruit, tomatoes and a wide variety of other fresh produce. Fresh Produce sales, as a percent of the Company's consolidated net sales, amounted to 79% in 2000, 80% in 1999, and 82% in 1998. In 2000, approximately 55% of Fresh Produce sales were in North America and the remainder were in European and other international markets. The core of the Company's Fresh Produce operations is the marketing, distribution and sourcing of bananas. Sales of bananas accounted for approximately two-thirds of Fresh Produce net sales in each of the last three years, and the Company believes it is the largest producer of bananas in the world. Bananas are distributed and marketed internationally in a highly competitive environment. While smaller companies, including growers' cooperatives, are a competitive factor, the Company's primary competitors are a limited number of other international banana importers and exporters. For other types of fresh produce, typically no single competitor has a dominant market share. However, as consolidation has increased among domestic and international food retailers in recent years, wholesalers and retailers are seeking fewer suppliers of a wide range of fresh produce. The Company believes that it derives competitive benefits in the marketing, distribution and sourcing of fresh produce through highly recognized brand names and strong brand management; a reputation for quality, superior service, and environmental and social responsibility; strong market positions in North America and Europe, its principal markets; a modern, cost-efficient transportation system; an industry-leading position in terms of number and geographic diversity of major sources of bananas; the sourcing of certain types of seasonal produce in both the northern and southern hemispheres in order to increase availability throughout the year; state-of-the-art banana ripening techniques; and best demonstrated agricultural practices. These characteristics enhance the Company's ability to provide customers with premium quality products on a consistent basis. 9 Processed Foods. The Company's Processed Foods segment includes private-label and branded canned vegetables sold in North America and abroad; processed bananas and other fruits sold primarily in North America, Europe and the Far East under the "Chiquita" brand; and other consumer products (primarily edible oils) sold in Honduras under the "Clover" and other brand names. Processed Foods sales, as a percent of the Company's consolidated net sales, amounted to 21% in 2000, 20% in 1999 and 18% in 1998. Sales of canned vegetables accounted for 83% of Processed Foods net sales in 2000, 80% in 1999 and 81% in 1998. The Company's vegetable canning operations are conducted by CBI's subsidiary, Chiquita Processed Foods, L.L.C. ("CPF"). CPF is the largest processor of private-label canned vegetables in the U.S. and enjoys the largest share of the U.S. private-label canned vegetable business. Although the canned vegetable market as a whole has remained relatively static in the last five years, the private-label segment has exhibited consistent growth. Given the higher margins for the retailer on these products relative to brand names, retailers continue to provide these products greater and more visible shelf space and have begun to focus on creating their own broad brand image. For further information about the Company's business operations, refer to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 attached as Exhibit D hereto, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001, attached as Exhibit E hereto. B. SUMMARY OF CAPITAL STRUCTURE Senior Notes In 1991, Debtor issued $250,000,000 of 9 5/8% Senior Notes due 2004 (the "Old 9 5/8% Senior Notes") pursuant to an Indenture (as amended or supplemented from time to time, the "Old 9 5/8% Senior Note Indenture"), dated as of November 30, 1991, by and between Debtor and The Fifth Third Bank, as Trustee (the "Old Senior Note Trustee"). In 1994, Debtor issued $175,000,000 of 9 1/8% Senior Notes due 2004 (the "Old 9 1/8% Senior Notes") pursuant to an Indenture (as amended or supplemented from time to time, the "Old Master Senior Note Indenture", and together with the Old 9 5/8% Senior Note Indenture, the "Old Senior Note Indentures"), dated as of June 15, 1994, by and between Debtor and the Old Senior Note Trustee. In 1996, Debtor issued $150,000,000 of 101/4% Senior Notes due 2006 (the "Old 101/4% Senior Notes") pursuant to the Old Master Senior Note Indenture. In 1999, Debtor issued $200,000,000 of 10% Senior Notes due 2009 (the "Old 10% Senior Notes", and together with the Old 9 5/8% Senior Notes, Old 9 1/8% Senior Notes and Old 101/4% Senior Notes, the "Old Senior Notes") pursuant to the Old Master Senior Note Indenture. All of the Old Senior Notes are currently outstanding, and as of November 28, 2001, there was an aggregate of $88.5 million of unpaid interest on the Old Senior Notes. Subordinated Notes In 1991, Debtor issued $138,000,000 of 7% Convertible Subordinated Debentures due 2001 (the "Old Subordinated Notes", and together with the Old Senior Notes, the "Old Notes") pursuant to an Indenture (the "Old Subordinated Note Indenture," and together with the Old Senior Note Indentures, the "Old Note Indentures"), dated as of March 28, 1991, by and between Debtor and Manufacturers Hanover Trust Company, as Trustee, whose successor in interest is JP Morgan Chase Bank (the "Old Subordinated Note Trustee", and together with the Old Senior Note Trustee, the "Old Note Trustees"). There are $85,890,000 of Old Subordinated Notes outstanding, and as of November 28, 2001, there was an aggregate of $10.0 million of unpaid interest on the Old Subordinated Notes. Preferred Stock and Common Stock Debtor has three series of preferred stock outstanding: (a) $2.875 Non-Voting Cumulative Preferred Stock, Series A (the "Old Series A Preferred Stock"), (b) $3.75 Convertible Preferred Stock, Series B (the "Old Series B Preferred Stock") and (c) $2.50 Convertible Preference Stock, Series C (the "Old Series C Preferred Stock"). The 10 Old Series A Preferred Stock, Old Series B Preferred Stock and Old Series C Preferred Stock are referred to herein as the "Old Preferred Stock". As of January 8, 2002, there were 1,653,930 shares of Old Series A Preferred Stock, 1,168,700 shares of Old Series B Preferred Stock and 75,650 shares of Old Series C Preferred Stock outstanding. As of January 8, 2002, Debtor had 78,273,183 shares of common stock, par value $.01 per share (the "Old Common Stock") outstanding. C. EVENTS LEADING TO THE CHAPTER 11 CASE In 1993, the European Union ("EU") implemented a discriminatory quota and licensing regime governing the importation of bananas into the EU that violated the EU's international trade obligations. This regime significantly decreased the Company's banana volume sold into Europe and resulted in significantly diminished operating results for the Company as compared to years prior to the regime's implementation. Although the Company has made significant improvements in production and logistics costs, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. Principally due to these factors, the Company experienced financial losses in seven of the nine years preceding 2001 and had evolved into a highly leveraged position with consolidated debt of approximately $1.3 billion and a ratio of debt to EBITDA (as defined in Exhibit C attached hereto) of 9.3 as of December 31, 2000. Under these circumstances, the Company faced the need to obtain new financing in order to meet debt maturities and seasonal working capital requirements during the first quarter of 2001. However, during the second half of 2000 the Company encountered an increasingly severe tightening of the bank credit and other capital markets previously accessed by the Company. In early 2001, CBI was able to secure a new three-year $120 million credit facility which, combined with existing credit facilities of indirect subsidiaries of Debtor, enabled all of Debtor's operating subsidiaries to meet their upcoming debt maturities and seasonal working capital needs. However, Debtor was not able to obtain financing which would permit it to repay the $87 million of Old Subordinated Notes maturing in March 2001. These factors led to Debtor's announcement in January 2001 that it would seek to regain its financial health by proposing a restructuring of the $862 million principal amount of outstanding Old Notes through the conversion of a substantial portion of the Old Notes into common equity. As part of this initiative, beginning January 16, 2001 Debtor discontinued all interest and principal payments on the Old Notes. Debtor also announced that it had retained Blackstone as its financial advisor to assist it in negotiating such a restructuring with Holders of the Old Notes. The Old Notes are obligations of Debtor, which, as described above, is a holding company without any business operations of its own. Debtor's subsidiaries, which continue to meet their obligations with their own cash flow and credit facilities (including the $120 million credit facility obtained in early 2001) are not involved in the restructuring or the Chapter 11 Case. In April 2001, the European Commission agreed to reform the EU banana import regime effective July 1, 2001. This reform is expected to result in a partial recovery in future periods of the EU market opportunities available to the Company prior to 1993. However, the reform will not compensate the Company for the financial losses caused by the EU's banana regime over the past nine years. Although the Company filed a lawsuit in January 2001 seeking to recover approximately $500 million from the European Commission for certain damages caused by the EU's banana regime, it cannot predict the outcome or timing of an ultimate decision in that lawsuit. For further information about the matters discussed above, see the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 attached as Exhibit D hereto, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001 attached as Exhibit E hereto. The exhibits to these filings are available on the Securities and Exchange Commission's internet website at http://www.sec.gov. 11 D. THE PREPETITION NOTEHOLDER COMMITTEES In February 2001, the Company commenced discussions with certain Holders of the Old Senior Notes (the "Prepetition Senior Noteholder Committee") and certain Holders of the Old Subordinated Notes (the "Prepetition Subordinated Noteholder Committee", and together with the Prepetition Senior Noteholder Committee, the "Prepetition Noteholder Committees"), to discuss the financial condition of the Company and the proposed restructuring. The members of the Prepetition Senior Noteholder Committee as of January 11, 2002 include CFSC Wayland Advisers, Inc., Varde Partners, Inc., Oaktree Capital Management, LLC, Tudor Investment Corp and Funds, Northeast Investors Trust, OZ Master Fund, Ltd., and OZF Credit Opportunities Master Fund, Ltd. The members of the Prepetition Subordinated Noteholder Committee as of January 11, 2002 include Van Moer Santerre Luxembourg, Delta Dividend Group, Van Moer Santerre Cie and Mariner Investment Group, Inc. The members of the Prepetition Noteholder Committees have informed Debtor that they collectively hold or control 28.42% of the outstanding principal amount of the Old Senior Notes and 34.48% of the outstanding principal amount of the Old Subordinated Notes. The Prepetition Senior Noteholder Committee retained Paul, Weiss, Rifkind, Wharton & Garrison ("Paul Weiss") as its legal advisor and Houlihan Lokey Howard & Zukin ("Houlihan") as its financial advisor. The Prepetition Subordinated Noteholder Committee retained Schulte Roth & Zabel LLP ("Schulte Roth") as its legal advisor, and a separate financial advisor was not retained. Any creditors committee appointed in the Chapter 11 Case commenced by Debtor which is comprised in whole or in part by any Holders of Old Senior Note Claims, Old Subordinated Note Claims, or either of the Old Note Trustees, is referred to herein as the "Creditors Committee". The Company engaged in extensive, arms' length negotiations with the Prepetition Noteholder Committees regarding the terms of a consensual restructuring of the Company. On November 9, 2001, shortly before the filing of the Chapter 11 Case and the Plan, these negotiations resulted in an agreement between these parties on the terms of a restructuring, which was formalized in the Lock Up Agreement described below. While members of the Prepetition Noteholder Committees have agreed to support and vote in favor of the Plan, they have not proposed the Plan. The Debtor is the proponent of the Plan. E. THE LOCK UP AGREEMENT On November 9, 2001, the Company and members of the Prepetition Noteholder Committees (the "Lock Up Holders") entered into a Lock Up, Voting and Consent Agreement (the "Lock Up Agreement") with respect to the terms of the Company's proposed plan of reorganization. A copy of both the Lock Up Agreement and the underlying term sheet attached thereto as Exhibit A (the "Term Sheet") have been filed with the United States Securities and Exchange Commission and are attached hereto as Exhibit F. Pursuant to the Lock Up Agreement, the parties agreed that each Lock Up Holder would support a Plan with the following terms: . Holders of the Old Senior Notes would receive under the Plan $250 million in New Notes (subject to the Subclass 4B Note Election) and 35,100,000 shares of New Common Stock (subject to the Subclass 4B Note Election and the Subclass 4B Equity Purchase), representing 87.75% of the New Common Stock, subject to dilution by exercise of the New Warrants and the Management Options; . Holders of the Old Subordinated Notes would receive under the Plan 3,100,000 shares of New Common Stock, representing 7.75% of the New Common Stock, subject to dilution by exercise of the New Warrants and the Management Options; subject to certain conditions, the Holders of the Old Subordinated Notes would also have the right to participate in (a) the Subclass 4B Note Election, (b) the Subclass 4B Equity Purchase and (c) the Subclass 4B Supplemental Distribution; . Holders of Old Series A Preferred Stock would receive 124,742 shares of New Common Stock, representing .312% of the New Common Stock (subject to dilution by exercise of the New Warrants and the Management Options), and 2,079,039 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.898% of the New Common Stock (subject to dilution by the Management Options), in each case as adjusted to reflect conversions of Old Series A Preferred Stock after October 31, 2001; 12 . Holders of Old Series B Preferred Stock would receive 111,342 shares of New Common Stock, representing .278% of the New Common Stock (subject to dilution by exercise of the New Warrants and the Management Options), and 1,855,693 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.479% of the New Common Stock (subject to dilution by the Management Options), in each case as adjusted to reflect conversions of Old Series B Preferred Stock after October 31, 2001; . Holders of Old Series C Preferred Stock would receive 5,665 shares of New Common Stock, representing .014% of the New Common Stock (subject to dilution by exercise of the New Warrants and the Management Options), and 94,420 New Warrants exercisable into an equal number of shares of New Common Stock, representing 0.177% of the New Common Stock (subject to dilution by the Management Options), in each case as adjusted to reflect conversions of Old Series C Preferred Stock after October 31, 2001; . Holders of Old Common Stock would receive 558,251 shares of New Common Stock, representing 1.396% of the New Common Stock (subject to dilution by exercise of the New Warrants and the Management Options), and 9,304,181 New Warrants exercisable into an equal number of shares of New Common Stock, representing 17.445% of the New Common Stock (subject to dilution by the Management Options), in each case as adjusted to reflect conversions of Old Preferred Stock after October 31, 2001; . As part of a management incentive program, (1) options will be granted to management employees to acquire 5,925,926 shares of New Common Stock, at exercise prices equivalent to the average closing prices of the New Common Stock during a 30-day period preceding the grant date and (2) 800,000 shares of New Common Stock will be granted to Carl H. Lindner, the current Chairman of the Board of Debtor, and 200,000 shares will be granted to Steven G. Warshaw, the current President and Chief Executive Officer of Debtor, and to such other employees of Debtor and its subsidiaries as he may designate prior to the Effective Date. . Reorganized Debtor will use reasonable efforts to have the New Common Stock and New Warrants listed on a nationally recognized market or exchange, and the New Common Stock and New Warrants will be subject to customary demand and piggyback or other agreed upon registration rights for the benefit of holders whose resale of such New Common Stock or New Warrants would be limited or restricted by federal securities law. . Reorganized Debtor will have a seven person board of directors, initially consisting of Carl H. Lindner, Steven G. Warshaw and five directors appointed by the Creditors Committee, or if no Creditors Committee has been appointed, the Prepetition Noteholder Committees voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee. In addition, pursuant to the Lock Up Agreement, each Lock Up Holder agreed: . to vote its Claims in favor of the Plan and to support Confirmation of the Plan, including confirmation without acceptance by all impaired Classes; . to forbear from enforcement of any existing defaults or defaults that might occur (including any defaults caused by the commencement of the Chapter 11 Case) until the Plan is confirmed; . to grant the releases and exculpations described in this Disclosure Statement and not to object to the entry of an order by the Bankruptcy Court approving the releases; and . to support the confirmation of the Plan utilizing, if necessary, the "cram down" provisions of section 1129(b) of the Bankruptcy Code, as described in Section IV.E.4 hereof. The obligations of the parties under the Lock Up Agreement terminate upon the occurrence of any one of certain conditions, including: (a) the Plan provides or is modified to provide for treatment of a Holder of Old Senior Notes or Old Subordinated Notes which is materially adverse to the treatment described in the Term Sheet; (b) the Plan provides or is modified without the consent of the Holders of Old Senior Notes to provide for treatment of the Holders of the Old Subordinated Notes, Old Preferred Stock or Old Common Stock that increases the aggregate recoveries for such Old Subordinated Notes, Old Preferred Stock and Old Common Stock as a whole versus the recovery contemplated by the Term Sheet, or the Plan is modified in a manner which 13 substantially decreases the likelihood that the Plan will be confirmed, (c) the Plan provides or is modified without the consent of the Holders of Old Subordinated Notes to provide for treatment of the Holders of the Old Senior Notes, Old Preferred Stock or Old Common Stock that increases the aggregate recoveries for such Old Senior Notes, Old Preferred Stock and Old Common Stock as a whole versus the recovery contemplated by the Term Sheet, or the Plan is modified in a manner which substantially decreases the likelihood that the Plan will be confirmed, (d) the date that the Bankruptcy Court approves the Disclosure Statement is not within 75 days from the date that Debtor commences the Chapter 11 Case (i.e., February 11, 2002); (e) the confirmation date of the Plan is not within the later of (i) 120 days from the date that Debtor commences the Chapter 11 Case (i.e., March 28, 2002) and (ii) 135 days from the date that public announcement is made regarding execution of the Lock Up Agreement (i.e., March 27, 2002) and (f) official public announcement that the relevant European Union authority has decided to enact a change which would take effect prior to 2006 in the European Union's current banana import regime that is materially adverse to the business or financial condition of the Company. F. PURPOSE OF THE PLAN The purpose of the Plan is to restructure Debtor's public debt to provide Debtor with a capital structure that can be supported by the cash flow of its operating subsidiaries. To that end, the Plan will reduce Debtor's debt and accrued interest by more than $700 million and its future annual interest expense by approximately $60 million. Parties other than Holders of the Old Notes, Other Securities Claims, Old Preferred Stock and Old Common Stock will not be impaired under the Plan. Debtor believes that the reorganization contemplated by the Plan is in the best interests of its creditors and equity holders. If the Plan is not confirmed, Debtor believes that it will be forced to either file an alternate plan of reorganization or liquidate under Chapter 7 of the Bankruptcy Code. In either event, Debtor believes that the Company's unsecured creditors (including the Holders of the Old Notes) and equity holders would realize a less favorable distribution of value, or in certain cases, none at all, for their Claims or Equity Interests. See the Liquidation Analysis set forth in Exhibit B attached hereto. G. ASSETS AND LIABILITIES OF DEBTOR Debtor's assets, as described in the Liquidation Analysis set forth in Exhibit B attached hereto, principally consist of the common stock of CBI. Debtor's liabilities are set forth more fully in the Liquidation Analysis, but principally consist of its indebtedness under the Old Notes. H. TERMS OF SECURITIES TO BE ISSUED PURSUANT TO THE PLAN 1. New Notes On the Effective Date, Reorganized Debtor will issue an aggregate principal amount of $250 million in New Notes, to be distributed to Holders of Subclass 4A Claims (subject to the Subclass 4B Note Election). The terms of the New Notes and the New Note Indenture are more fully described in Section III.F.5 herein. 2. New Warrants On the Effective Date, Reorganized Debtor will issue 13,333,333 New Warrants, with a term of seven years, to purchase an equal number of shares of New Common Stock at an exercise price equal to the "Solvency Value," estimated to be $18.76 per share, based on an Effective Date of December 31, 2001. The Solvency Value will be higher, due to an increase in calculated interest on Class 4 Claims, to the extent that the Effective Date is later than December 31, 2001 and will increase by approximately $0.18 per New Warrant share for each month between December 31, 2001 and the Effective Date. The New Warrants will be issued to the Holders of Class 5 Equity Interests and Class 6 Equity Interests. The terms of the New Warrants and the New Warrant Agreement are more fully described in Section III.F.5 herein. 3. New Common Stock Reorganized Debtor will issue 40,000,000 shares of New Common Stock (39,200,000 shares issued on the Effective Date and 800,000 management shares subject to restricted delivery, as described in Section III.F.5 14 below), representing 100% of the equity value of Reorganized Debtor on the Effective Date (subject to dilution by the New Warrants and the Management Options) to Holders of Class 4 Claims, Class 5 Equity Interests, Class 6 Equity Interests and certain executives and employees of Reorganized Debtor and its subsidiaries. The New Common Stock is more fully described in Section III.F.5 herein. I. BOARD OF DIRECTORS OF REORGANIZED DEBTOR Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the principal officers of Debtor immediately prior to the Effective Date shall be the officers of Reorganized Debtor. Reorganized Debtor will have a seven person board of directors, initially consisting of Morten Arntzen, Jeffrey D. Benjamin, Robert Fisher, Cyrus Freidheim, Roderick Hills, Carl H. Lindner and Steven G. Warshaw. J. LIQUIDATION ANALYSIS Pursuant to section 1129(a)(7) of the Bankruptcy Code (sometimes called the "Best Interests Test"), the Bankruptcy Code requires that each Holder of an Impaired Claim or Impaired Equity Interest either (a) accepts the Plan or (b) receives or retains under the Plan property of a value, as of the Effective Date, that is not less than the value such Holder would receive or retain if Debtor was liquidated under chapter 7 of the Bankruptcy Code on the Effective Date. The first step in meeting this test is to determine the proceeds that would be generated from the hypothetical liquidation of Debtor's assets and properties in the context of a chapter 7 liquidation case. The gross amount of cash and cash equivalents ("Cash") available would be the sum of the proceeds from the disposition of Debtor's assets and the Cash held by Debtor at the time of the commencement of the chapter 7 case. Such amount is reduced by the amount of any Claims secured by such assets, the costs and expenses of the liquidation, and such additional administrative expenses and priority claims that may result from the termination of Debtor's business and the use of chapter 7 for the purposes of a hypothetical liquidation. Any remaining net Cash would be allocated to creditors and stockholders in strict priority in accordance with section 726 of the Bankruptcy Code. Debtor believes that the Plan will produce a greater recovery for Holders of Claims and Equity Interests than would be achieved in a chapter 7 liquidation. Blackstone, financial advisor to the Company, prepared a liquidation analysis with the assistance of management on behalf of Debtor, set forth in Exhibit B attached hereto, to assist Holders of Claims and Equity Interests to reach a determination as to whether to accept or reject the Plan. This liquidation analysis estimates the proceeds to be realized if Debtor were to be liquidated under chapter 7 of the Bankruptcy Code. The Liquidation Analysis is based upon projected assets and liabilities of Debtor as of January 1, 2002 and incorporates estimates and assumptions developed by Debtor which are subject to potentially material changes with respect to economic and business conditions, as well as uncertainties not within Debtor's control. It has been assumed that creditor recoveries would not be affected by proceeds from causes of action, if any, including fraudulent conveyance and other avoidance claims, or any litigation that Debtor is or may be capable of asserting, including the Company's lawsuit against the European Commission described in Section I.C hereof. The Liquidation Analysis set forth in Exhibit B attached hereto does not, therefore, include any estimate of the necessary expenses to litigate such claims. K. FINANCIAL PROJECTIONS AND VALUATION ANALYSIS In conjunction with the allocation of distributions under the Plan, Debtor determined that it was necessary to estimate post-confirmation reorganization values of the equity of Reorganized Debtor to provide for equitable distribution among Classes of Claims and Equity Interests. Accordingly, Debtor directed Blackstone to prepare a valuation analysis of Reorganized Debtor. That valuation is set forth in Section 2 below. 15 In order to assess the value of Reorganized Debtor generally, and specifically the reorganization value of the New Common Stock to be distributed under the Plan, Debtor and Blackstone developed a set of financial projections, summarized below and in Exhibit C attached hereto (the "Projections"). In addition, Debtor and Blackstone have developed a recovery analysis set forth in Exhibit B attached hereto describing the estimated recoveries to Holders of certain Allowed Claims and Allowed Equity Interests. The recoveries and projections set forth below and in Exhibit B and Exhibit C are based on a number of significant assumptions including, among other things, the successful reorganization of Debtor, an assumed Effective Date of December 31, 2001, Debtor's ability to achieve the operating and financial results included in the Projections, Debtor's ability to maintain adequate liquidity to fund operations and the assumption that capital and equity market conditions remain consistent with current conditions. THE PROJECTIONS ARE BASED UPON A NUMBER OF SIGNIFICANT ASSUMPTIONS. ACTUAL OPERATING RESULTS AND VALUES MAY VARY SIGNIFICANTLY FROM THE PROJECTIONS. 1. Financial Projections As a condition to confirmation of a plan, the Bankruptcy Code requires, among other things, the Bankruptcy Court to determine that confirmation is not likely to be followed by a liquidation or the need for further reorganization of Debtor. In connection with the development of the Plan, and for purposes of determining whether the Plan satisfies feasibility standards, Debtor's management, with the assistance of Blackstone, has, through the development of the Projections, analyzed the ability of Reorganized Debtor to meet its obligations under the Plan to maintain sufficient liquidity and capital resources to conduct its business. The Projections were also prepared to assist each Holder of a Claim or Equity Interest in determining whether to accept or reject the Plan. The Projections were prepared in good faith based upon estimates and hypothetical assumptions made by Debtor's management. These include, but are not limited to, estimates and assumptions with respect to product sales volume and pricing by market, product sourcing, foreign exchange rates, production costs, logistics costs, capital spending and working capital levels, some of which are described in more detail in Exhibit C attached hereto. The Projections were developed by Debtor in March 2001 in connection with negotiations with the Prepetition Noteholder Committees and subsequently updated in May 2001 to reflect estimated cost reductions expected to result from the reform of the EU banana import regime. Although the Company has not prepared a full, five-year update of the EBITDA projection, it believes that, as a result of current business, economic, competitive, regulatory, market and financial conditions, EBITDA before reorganization costs, fresh start adjustments, and other unusual items for 2001 may be in the range of $155-$165 million. The Projection estimates and assumptions, while considered reasonable by management, may not be realized and are inherently subject to uncertainties and contingencies, and are based on factors such as industry performance, general business, economic, competitive, regulatory, market and financial conditions, all of which are difficult to predict and generally beyond the Company's control. They do not take into account the potential effect of the terrorist actions in the United States or elsewhere on or after September 11, 2001. Because future events and circumstances may well be different from those assumed and unanticipated events or circumstances may occur, it is expected that there will be differences between actual and projected results and actual results may be materially greater or less than those contained in the Projections. No representations can be made as to the accuracy of these financial projections or Reorganized Debtor's ability to achieve the projected results; therefore, the Projections may not be relied upon as a guaranty or other assurance of the actual results that will occur. The inclusion of the Projections herein should not be regarded as an indication that the Company considered or considers the Projections to be a reliable prediction of future performance. The Projections are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and recent developments. The Company does not intend to update or otherwise revise the Projections to reflect the occurrence of future events even in the event that assumptions underlying the Projections are not borne out. 16 The Projections should be read in conjunction with the assumptions and qualifications set forth herein, the historical consolidated financial information (including the notes and schedules thereto) and other information set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 attached as Exhibit D hereto, and the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2001, June 30, 2001 and September 30, 2001 attached as Exhibit E hereto. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARDS COMPLYING WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. DEBTOR'S INDEPENDENT AUDITOR HAS NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAS NOT EXPRESSED AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO. DEBTOR DOES NOT, AS A MATTER OF COURSE, PUBLISH PROJECTIONS OF ITS ANTICIPATED FINANCIAL POSITION, RESULTS OF OPERATIONS OR CASH FLOWS. ACCORDINGLY, NEITHER DEBTOR NOR REORGANIZED DEBTOR INTENDS TO, AND EACH DISCLAIMS ANY OBLIGATION TO, (A) FURNISH UPDATED PROJECTIONS TO HOLDERS OF ALLOWED CLAIMS OR EQUITY INTERESTS PRIOR TO THE EFFECTIVE DATE OR TO HOLDERS OF NEW NOTES, NEW COMMON STOCK, NEW WARRANTS OR ANY OTHER PARTY AFTER THE EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION IN ANY DOCUMENTS THAT MAY BE REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR (C) OTHERWISE MAKE SUCH UPDATED INFORMATION PUBLICLY AVAILABLE. DEBTOR PERIODICALLY ISSUES PRESS RELEASES REPORTING FINANCIAL RESULTS AND HOLDERS OF CLAIMS AND EQUITY INTERESTS ARE URGED TO REVIEW ANY SUCH PRESS RELEASES WHEN AND AS ISSUED. 2. Valuation Two methodologies were used to derive the reorganization value of Debtor based on the Projections: (a) the application of public market valuation multiples to Debtor's historical and projected financial results (the "Comparable Analysis"), and (b) a calculation of the present value of the free cash flows under the Projections, including an assumption for a terminal value (the "DCF Analysis"). The Comparable Analysis involves identifying a group of publicly traded companies whose businesses or product lines are comparable to those of Debtor as a whole or significant portions of Debtor's operations, and then calculating ratios of various financial results to the public market values of these companies. The ranges of ratios derived are then applied to Debtor's historical and projected financial results to derive an implied reorganization value of Reorganized Debtor. The DCF Analysis involves deriving the unlevered free cash flows that Debtor would generate assuming the Projections were realized. These cash flows and an estimated value of the Company at the end of the projected period (the "Terminal Value") were discounted to December 31, 2001 at Debtor's estimated post-restructuring weighted average cost of capital to determine the reorganization value of Reorganized Debtor at that date. ESTIMATES OF VALUE INCLUDED HEREIN DO NOT PURPORT TO BE APPRAISALS NOR DO THEY REFLECT THE VALUES THAT MAY BE REALIZED IF REORGANIZED DEBTOR OR ALL OR A PORTION OF THE ASSETS OF REORGANIZED DEBTOR ARE SOLD. THE ESTIMATES OF VALUE REPRESENT HYPOTHETICAL REORGANIZED ENTERPRISE VALUES ASSUMING THE REALIZATION OF THE PROJECTIONS AS WELL AS OTHER SIGNIFICANT ASSUMPTIONS. SUCH ESTIMATES WERE DEVELOPED SOLELY FOR PURPOSES OF FORMULATING AND NEGOTIATING A PLAN OF REORGANIZATION AND ANALYZING THE PROJECTED RECOVERIES THEREUNDER. 17 Based upon the methods described above, the estimated reorganization value for Reorganized Debtor is approximately $1,280 million. After deducting from Reorganized Debtor's reorganization value the estimated long-term indebtedness of Reorganized Debtor at the hypothetical Effective Date of December 31, 2001, consisting of (i) $250 million of New Notes and (ii) an estimated $413 million of net subsidiary debt, the estimated total equity value of Reorganized Debtor is approximately $617 million. To derive the reorganization value of the New Common Stock, the estimated value of the New Warrants is deducted. Using the Black-Scholes option pricing method, Debtor has estimated the value of the New Warrants to be $41 million ($3.10 per New Warrant). The valuation of the New Warrants was based upon, among other things, estimates of volatility of the New Common Stock. Therefore, assuming that 40,000,000 shares of New Common Stock will be issued or committed to be issued on the hypothetical Effective Date of December 31, 2001, the reorganization value of such stock is estimated to be $576 million, or $14.39 per share. Set forth below is a summary of the projected recoveries to Holders of Claims and Equity Interests that result from such reorganization values and projected recoveries to Holders of Claims and Equity Interests pursuant to a liquidation of Debtor under chapter 7 of the Bankruptcy Code:
Summary of Projected Recoveries ------------------------------- Description Class No. Under the Plan Chapter 7 ----------------------------- ----------- -------------- --------- Administrative Expense Claims -- 100.0% 100.0% Priority Tax Claims.......... -- 100.0% 100.0% Other Priority Claims........ Class 1 100.0% 100.0% Secured Claims............... Class 2 100.0% 100.0% General Unsecured Claims..... Class 3 100.0% 43.2% Senior Note Claims........... Subclass 4A 87.4% 43.2% Subordinated Note Claims..... Subclass 4B 46.5% 0.0% Old Preferred Stock.......... Class 5 $16.0 million $0.0 Old Common Stock............. Class 6 $36.9 million $0.0 Other Securities Claims...... Class 7 $0.0 $0.0
THE ESTIMATED REORGANIZATION VALUE IS HIGHLY DEPENDENT UPON ACHIEVING THE FUTURE FINANCIAL RESULTS SET FORTH IN THE PROJECTIONS AS WELL AS THE REALIZATION OF CERTAIN OTHER ASSUMPTIONS THAT ARE NOT GUARANTEED. THE VALUATIONS SET FORTH HEREIN REPRESENT ESTIMATED REORGANIZATION VALUES AND DO NOT NECESSARILY REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE MARKETS. THE ESTIMATED EQUITY VALUE ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET TRADING VALUE. SUCH MARKET TRADING VALUE, IF ANY, MAY BE MATERIALLY DIFFERENT FROM THE ESTIMATED REORGANIZATION EQUITY VALUE ASSOCIATED WITH THE VALUATION ANALYSIS. L. REORGANIZED DEBTOR AND THE POST-CONFIRMATION ESTATE Debtor shall continue to exist as Reorganized Debtor after the Effective Date as a separate corporate entity, with all the powers of a corporation and without prejudice to any right to alter or terminate such existence (whether by merger or otherwise) under applicable state law. Except as otherwise provided in the Plan, the New Notes, or any agreement, instrument or indenture relating thereto, on or after the Effective Date, all property of Debtor and any property acquired by Debtor or Reorganized Debtor under the Plan, shall vest in Reorganized Debtor, free and clear of all Claims, liens, charges, or other encumbrances and Equity Interests existing prior to the Effective Date. On and after the Effective Date, Reorganized Debtor may operate its business and may use, acquire or dispose of property and compromise or settle any Claims or Equity Interests, without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and the Confirmation Order. In accordance with section 1109(b) of the Bankruptcy Code, nothing herein shall preclude any party in interest from appearing and being heard on any issue in the Chapter 11 Case. 18 II. THE CHAPTER 11 CASE On November 28, 2001 (the "Petition Date"), Debtor filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code. At such time, all actions and proceedings against Debtor and all acts to obtain property from Debtor were stayed under section 362 of the Bankruptcy Code. Debtor will continue to conduct its business and manage its properties as debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Debtor does not expect the Chapter 11 Case to be protracted. To expedite its emergence from chapter 11, on the Petition Date, Debtor filed, in addition to the Disclosure Statement and the Plan, motions seeking the relief detailed below, among other relief, from the Bankruptcy Court. Such relief has been granted by the Bankruptcy Court and will facilitate the administration of the Chapter 11 Case. MOTIONS FILED 1. Applications for Retention of Debtor's Professionals The Bankruptcy Court approved Debtor's request to retain certain professionals to represent it and assist it in connection with the Chapter 11 Case. These professionals were intimately involved with the negotiation and development of the Plan. These professionals include, among others: (a) Kirkland & Ellis, as counsel for Debtor, (b) Blackstone, as financial advisor for Debtor, (c) Bankruptcy Management Corporation, as notice agent for Debtor, (d) Dinsmore & Shohl LLP, as co-counsel for Debtor, (e) Ashurst Morris Crisp, as special international securities counsel for Debtor, (f) Weber Shandwick Worldwide, as public relations advisor for Debtor, and (g) Innisfree M&A Incorporated, as Solicitation Agent. 2. Motions to Approve Manner of Notice of the Disclosure Statement and Confirmation Hearing, and to Schedule Disclosure Statement Hearing and Confirmation Hearing The Bankruptcy Court approved Debtor's request to schedule a hearing on the Disclosure Statement, set for January 18, 2002. In addition, the Bankruptcy Court approved Debtor's request to schedule a Confirmation Hearing on the Plan, which is scheduled for March 8, 2002. Pursuant to the Bankruptcy Rules, Debtor provided notice of the hearing to approve the Disclosure Statement and confirmation of the Plan to creditors and equity holders. Where possible, Holders entitled to distributions under the Plan received personal notice by mail. Because several classes of Claims, with a number of creditors, are not impaired under the Plan and will pass through the Chapter 11 Case unaffected, and because one class, with an unknown number of Holders, is not entitled to receive any distribution nor retain any property under the Plan, the Bankruptcy Court approved Debtor's request that publication notice of the events set forth above in several newspapers of national circulation to such Holders would be sufficient notice for such purposes. Additionally, Debtor has received the Bankruptcy Court's approval of Debtor's proposed solicitation procedures, including use of this Disclosure Statement to solicit acceptances of the Plan from Holders of Class 4 Claims and Class 5 and Class 6 Equity Interests. 3. Motion to Continue Using Existing Bank Accounts and Business Forms As described above, Debtor is a holding company with no operations of its own. All of the cash needs of Debtor are processed and paid by CBI, which has sufficient cash flow to fund Debtor's cash needs, as well as availability under its existing credit facility. Generally, the types of expenses Debtor incurs include: salaries for its approximately 200 employees, bonuses, payroll and other taxes, employee benefits, reimbursements, consulting and professional fees, retirement benefits, insurance premiums, expenses to support investor relations, 19 and fees associated with Debtor's Board of Directors. Debtor does not have a separate account used to process such obligations. Rather, CBI processes substantially all of Debtor's payment obligations in its books and charges Debtor for the expenses by means of an intercompany charge. The Bankruptcy Court has authorized Debtor to continue using this cash management system. 4. Motion for Authority to Pay Prepetition General Unsecured Claims The Bankruptcy Court granted Debtor's request to pay, in its sole discretion, Unimpaired Unsecured Claims in the ordinary course of its business when and as due, notwithstanding provisions of the Bankruptcy Code that would otherwise require Debtor to defer payment of Unimpaired Unsecured Claims until the Effective Date. 5. Motion for Authority to Pay Prepetition and Postpetition Employee Wages and Associated Benefits Debtor believes that its employees are a valuable asset and that any delay in paying prepetition or postpetition compensation or benefits to its employees would destroy Debtor's relationship with employees and irreparably harm employee morale at a time when the dedication, confidence and cooperation of Debtor's employees is most critical. The Bankruptcy Court granted Debtor's request for authority to pay all compensation and benefits owed to employees, including the authority to honor existing bonus, incentive, severance and deferred compensation plans in the ordinary course of Debtor's business. The authority granted allows Debtor to compensate its employees for obligations payable as of the Petition Date, as well as obligations that come due after the Petition Date. 6. Motion for Authority to Preclude the Conversion of Old Preferred Stock into Old Common Stock In order to establish finality for purposes of fixing the recoveries of the Class 5 and 6 Equity Interests under the Plan, the Bankruptcy Court granted Debtor's request to suspend the rights of the holders of Old Preferred Stock to exercise their right, after the Record Date, to convert at their option Old Preferred Stock into Old Common Stock pursuant to the terms of Debtor's Second Restated Certificate of Incorporation, as amended to date. 7. Motion for Authority to Implement a Management Retention Program Debtor believes that it is imperative to stabilize its workforce at this critical juncture of the Chapter 11 Case to ensure that the necessary complement of employees required to proceed with Debtor's reorganization are in place. The Bankruptcy Court granted Debtor's request for authority to implement, and approved the terms of, a management retention program. III. THE PLAN OF REORGANIZATION The primary objectives of the Plan are to (a) alter Debtor's debt and capital structures to permit it to emerge from the Chapter 11 Case with a viable capital structure; (b) improve the value of the ultimate recoveries to all creditor and equityholder groups, on a fair and equitable basis, compared to the value they would receive in a liquidation; and (c) settle, compromise or otherwise dispose of certain Claims and Equity Interests on terms that Debtor believes to be fair and reasonable and in the best interests of its Estate and its creditors. Debtor believes that (a) through the Plan, Holders of Allowed Claims and Allowed Equity Interests will obtain a greater recovery from the estate of Debtor than the recovery they would receive if the assets of Debtor were liquidated under chapter 7 of the Bankruptcy Code, and (b) the Plan will afford Debtor the opportunity and ability to continue its business as a viable going concern. 20 The statements contained in this Disclosure Statement include summaries of the provisions contained in the Plan and in documents referred to therein. The statements contained in this Disclosure Statement do not purport to be precise or complete statements of all the terms and provisions of the Plan or documents referred to herein, and reference is made to the Plan, attached hereto as Exhibit A, and to such documents for the full and complete statements of such terms and provisions. The Plan itself and the documents referred to therein control the actual treatment of Claims against and Equity Interests in Debtor in the reorganization and will, upon the Effective Date, be binding upon all Holders of Claims against and Equity Interests in Debtor and its Estate, the Reorganized Debtor and other parties in interest. In the event of any conflict between this Disclosure Statement, on the one hand, and the Plan or any other operative document, on the other hand, the terms of the Plan and such other operative document are controlling. A. OVERVIEW OF CHAPTER 11 Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. Under chapter 11 of the Bankruptcy Code, a debtor is authorized to reorganize its business for the benefit of itself, its creditors and interest holders. Another goal of chapter 11 is to promote equality of treatment for similarly situated creditors and similarly situated interest holders with respect to the distribution of a debtor's assets. The commencement of a chapter 11 case creates an estate that is comprised of all of the legal and equitable interests of the debtor as of the filing date. The Bankruptcy Code provides that the debtor may continue to operate its business and remain in possession of its property as a "debtor-in-possession." The consummation of a plan of reorganization is the principal objective of a chapter 11 case. A plan of reorganization sets forth the means for satisfying claims against and interests in a debtor. Confirmation of a plan of reorganization by the Bankruptcy Court makes the plan binding upon the debtor, any issuer of securities under the plan, any person or entity acquiring property under the plan and any creditor of or equity holder in the debtor, whether or not such creditor or equity holder (a) is impaired under or has accepted the plan or (b) receives or retains any property under the plan. Subject to certain limited exceptions and other than as provided in the plan itself or the confirmation order, the confirmation order discharges the debtor from any debt that arose prior to the date of confirmation of the plan and substitutes therefor the obligations specified under the confirmed plan. A chapter 11 plan may specify that certain classes of claims or equity interests are either to be paid in full upon effectiveness of the plan or are to remain unchanged by the reorganization effectuated by the plan. Such classes are referred to as "unimpaired" and, because of such favorable treatment, are deemed to accept the plan. Accordingly, it is not necessary to solicit votes from the holders of claims or equity interests in such classes. A chapter 11 plan also may specify that certain classes will not receive any distribution of property or retain any claim against a debtor. Such classes are deemed not to accept the plan and, therefore, need not be solicited to vote to accept or reject the plan. Any classes that are receiving a distribution of property under the plan but are not "unimpaired" will be solicited to vote to accept or reject the plan. B. OVERALL STRUCTURE OF DEBTOR'S PLAN Debtor believes that the Plan provides the best and most prompt possible recovery to Holders of Claims and Equity Interests. Under the Plan, Claims against and Equity Interests in Debtor are divided into different classes. Under the Bankruptcy Code, "claims" and "equity interests" are classified rather than "creditors" and "shareholders" because such entities may hold claims or equity interests in more than one class. For purposes of this Disclosure Statement, the term "Holder" refers to the holder of a Claim or Equity Interest, respectively, in a particular Class under the Plan. If the Plan is confirmed by the Bankruptcy Court and consummated, then on the Effective Date or as soon as practicable thereafter, Debtor will make distributions in respect of certain Classes of 21 Claims and Equity Interests as provided in the Plan. The Classes of Claims against and Equity Interests in Debtor created under the Plan, the treatment of those Classes under the Plan and distributions to be made under the Plan are described below. C. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS The categories of Claims and Equity Interests and their treatment listed below classify Claims and Equity Interests for all purposes, including voting, confirmation and distribution pursuant to the Plan, except as otherwise provided herein, and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest shall be deemed classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Equity Interest qualifies within the description of such different Class. A Claim or Equity Interest is in a particular Class only to the extent that such Claim or Equity Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date. The classification of Claims and Equity Interests against Debtor pursuant to the Plan is as follows:
Class Status Voting Rights ----------------------------------------- ---------- -------------------- Class 1 -- Other Priority Claims Unimpaired not entitled to vote Class 2 -- Secured Claims Unimpaired not entitled to vote Class 3 -- General Unsecured Claims Unimpaired not entitled to vote Class 4 -- Old Senior Note Claims and Old Subordinated Note Claims Impaired entitled to vote Class 5 -- Old Preferred Stock Impaired entitled to vote Class 6 -- Old Common Stock Impaired entitled to vote Class 7 -- Other Securities Claims Impaired not entitled to vote
1. Administrative Expense Claims Subject to the provisions of section 330(a) and 331 of the Bankruptcy Code, each Holder of an Allowed Administrative Expense Claim will be paid the full unpaid amount of such Allowed Administrative Expense Claim in Cash (i) on the Effective Date, (ii) if such Claim is Allowed after the Effective Date, on the date such Claim is Allowed or (iii) upon such other terms as may be agreed upon by such Holder and Reorganized Debtor or otherwise upon an order of the Bankruptcy Court; provided that Allowed Administrative Expense Claims representing obligations incurred in the ordinary course of business or otherwise assumed by Debtor pursuant to the Plan will be assumed on the Effective Date and paid or performed by Reorganized Debtor when due in accordance with the terms and conditions of the particular agreements governing such obligations. 2. Priority Tax Claims On the Effective Date or as soon as practicable thereafter, each Holder of a Priority Tax Claim due and payable on or prior to the Effective Date shall be paid, at the option of Debtor, (a) Cash in an amount equal to the amount of such Allowed Claim, or (b) Cash over a six-year period from the date of assessment as provided in section 1129(a)(9)(C) of the Bankruptcy Code, with interest payable at a rate of 81/4% per annum or such other rate as may be required by the Bankruptcy Code. The amount of any Priority Tax Claim that is not an Allowed Claim or that is not otherwise due and payable on or prior to the Effective Date, and the rights of the Holder of such Claim, if any, to payment in respect thereof shall (x) be determined in the manner in which the amount of such Claim and the rights of the Holder of such Claim would have been resolved or adjudicated if the Chapter 11 Case had not been commenced, (y) survive the Effective Date and Consummation of the Plan as if the Chapter 11 Case had not been commenced, and (z) not be discharged pursuant to section 1141 of the Bankruptcy Code. In accordance with section 1124 of the Bankruptcy Code, the Plan shall leave unaltered the legal, equitable, and contractual rights of each Holder of a Priority Tax Claim. 3. Class 1: Other Priority Claims (Not Impaired) Under the Plan, Class 1 consists of all Claims against Debtor accorded priority and right of payment under section 507(a) of the Bankruptcy Code (including priority employee salary and wage claims to the extent not paid prior to confirmation pursuant to the first-day orders authorizing payment of prepetition wage, salary and benefits 22 claims), other than a Priority Tax Claim or an Administrative Expense Claim. The legal, equitable and contractual rights of the Holders of Class 1 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 1 Claim shall receive one of the following alternative treatments, at the election of Debtor: (a) to the extent then due and owing on the Effective Date, such Claim will be paid in full in Cash by Reorganized Debtor; (b) to the extent not due and owing on the Effective Date, such Claim (i) will be paid in full in Cash by Reorganized Debtor on the Effective Date or (ii) will be paid in full in Cash by Reorganized Debtor when and as such Claim becomes due and owing in the ordinary course of business; or (c) such Claim will be otherwise treated in any other manner so that such Claims shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Class 1 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured by virtue of payments made upon the Effective Date. Class 1 is not impaired and the Holders of Class 1 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 1 are not entitled to vote to accept or reject the Plan. 4. Class 2: Secured Claims (Not Impaired) A secured claim is (a) a Claim against Debtor held by any person or entity, including a judgment creditor of Debtor, secured by a lien on any asset of Debtor, which lien is valid, perfected and enforceable under applicable law, and is not subject to avoidance under the Bankruptcy Code or applicable non-bankruptcy law, but only to the extent of the value of any interest in property of the Estate securing such Claim; or (b) a Claim Allowed under the Plan as a Secured Claim. Under the Plan, Class 2 consists of all Secured Claims against Debtor. For voting and distribution purposes, each Holder of a Class 2 Claim is deemed to be classified in a separate subclass. The legal, equitable and contractual rights of the Holders of Class 2 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 2 Claim shall receive one of the following alternative treatments, at the election of Debtor: (a) the legal, equitable and contractual rights to which such Claim entitles the Holder thereof shall be unaltered by the Plan; (b) Debtor shall surrender all collateral securing such Claim to the Holder thereof, without representation or warranty by or recourse against Debtor or Reorganized Debtor; or (c) such Claim will be otherwise treated in any other manner so that such Claim shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Class 2 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date. Class 2 is not impaired and the Holders of Class 2 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 2 are not entitled to vote to accept or reject the Plan. 5. Class 3: General Unsecured Claims (Not Impaired) Under the Plan, Class 3 consists of any unsecured Claim against Debtor that is not a Secured Claim, Administrative Claim, Priority Tax Claim, Other Priority Claim, Subclass 4A Claim, Subclass 4B Claim or Class 7 Other Securities Claim. The legal, equitable and contractual rights of the Holders of Class 3 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 3 Claim shall receive one of the following alternative treatments, at the election of Debtor: (a) to the extent then due and owing on the Effective Date, such Claim will be paid in full in Cash by Reorganized Debtor; (b) to the extent not due and owing on the Effective Date, such Claim (i) will be paid in full in Cash by Reorganized Debtor on the Effective Date or (ii) will be paid in full in Cash by Reorganized Debtor when and as such Claim becomes due and owing in the ordinary course of business; or (c) such Claim will be otherwise treated in any other manner so that such Claim shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. 23 Any default with regard to any Class 3 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date. Class 3 is not impaired and the Holders of Class 3 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 3 are not entitled to vote to accept or reject the Plan. Notwithstanding the foregoing, Debtor has received authority from the Bankruptcy Court to pay general unsecured claims in the ordinary course of business during the pendency of the Chapter 11 Case. 6. Class 4: Old Senior Note Claims and Old Subordinated Note Claims (Impaired) Under the Plan, Class 4 consists of any Claim for principal or interest through the Petition Date under the Old Senior Notes or the Old Subordinated Notes. For distribution purposes only, Class 4 is divided into (a) Subclass 4A (consisting of any Claim for principal or interest under the Old Senior Notes), and (b) Subclass 4B (consisting of any Claim for principal or interest under the Old Subordinated Notes). Class 4 does not include any claims arising from the purchase or sale of the Old Senior Notes or the Old Subordinated Notes, for rescission of any purchase, or for damages arising from the purchase or sale, of the Old Senior Notes or the Old Subordinated Notes, or any other Claim related to the Old Senior Notes or the Old Subordinated Notes other than a Claim for principal and interest thereon. On or as soon as practicable after the Effective Date, each Holder of an Allowed Old Senior Note Claim shall receive, in full and final satisfaction of such Claim, a distribution of its pro rata share of $250 million aggregate principal amount of New Notes and its pro rata share of 35,100,000 shares of New Common Stock, representing 87.75% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by exercise of the New Warrants and the Management Options). The aggregate principal amount of New Notes and shares of New Common Stock to be received by Subclass 4A is subject to adjustment by the Subclass 4B Note Election and Subclass 4B Equity Purchase described below. On or as soon as practicable after the Effective Date, each Holder of an Allowed Old Subordinated Note Claim shall receive, in full and final satisfaction of such Claim, its pro rata share of 3,100,000 shares of New Common Stock, representing 7.75% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by exercise of the New Warrants and the Management Options). These distributions are summarized in the table below:
For a Holder of this ...of this series of Old Notes The Holder would be entitled to receive these amount... securities of Reorganized Debtor under the Plan/1/ - ------------------------------------------------------------------------------------------------------- New Common New New Notes Stock Warrants - ------------------------------------------------------------------------------------------------------ $10,000 principal Old Senior Notes 460.1 shares/2/ None amount (plus unpaid 9 5/8% Senior Notes due 2004 $3,276.99/2/ 452.7 shares interest) 9 1/8% Senior Notes due 2004 $3,224.14 451.4 shares 10 1/4% Senior Notes due 2006 $3,215.22 445.2 shares 10% Senior Notes due 2009 $3,171.22 - ------------------------------------------------------------------------------------------------------ $10,000 principal Old Subordinated Notes None/4/ 360.9 shares/4/ None amount (plus unpaid 7% Convertible Subordinated interest)/3/ Debentures due 2001
- -------- /1/ New Notes will be issued in denominations of $1,000 and integral multiples thereof. No fractional shares of New Common Stock, or New Warrants exercisable into fractional shares of New Common Stock, will be issued. See Section III.D.7 below for a description of the treatment of portions of New Notes less than $1,000, fractional shares of New Common Stock, and New Warrants exercisable into fractional shares of New Common Stock. /2 /The variance of distributions among the Holders of Old Senior Notes reflects different levels of unpaid interest. These distributions are subject to change to the extent Holders of Old Subordinated Note Claims elect to participate in the Subclass 4B Note Election and Subclass 4B Equity Purchase. /3/ Assuming that accrued but unpaid pre-petition interest claims are distributed pro-rata as to the principal amount of Old Subordinated Notes held by Holders of Subclass 4B Claims. /4 /Subject to certain conditions, each Holder of Old Subordinated Notes may also have the right to participate in the Subclass 4B Note Election, Subclass 4B Equity Purchase and Subclass 4B Supplemental Distribution, as described below. 24 Subclass 4B Note Election. In lieu of receiving all or a portion of such Holder's share of the New Common Stock allocated to Subclass 4B, each Holder of an Allowed Subclass 4B Claim has the right to receive its share of $10 million in New Notes (which New Notes would otherwise be distributed to Subclass 4A) (the "Subclass 4B Note Election"), subject to an aggregate minimum subscription requirement of $500,000 principal amount of New Notes. Each Holder electing to receive all or any of its respective share of New Notes shall receive $1,000 principal amount of New Notes for each lot of 101.14 shares of New Common Stock such Holder elects not to receive. If more than $10 million in New Notes are subscribed for pursuant to the foregoing, each electing Holder will be entitled to receive an amount of New Notes in lieu of New Common Stock equal to (a) $10 million, multiplied by (b) a fraction, (i) the numerator of which is the amount of Subclass 4B Claims held by such Holder in respect of which such Holder has elected to receive New Notes and (ii) the denominator of which is the aggregate amount of Subclass 4B Claims in respect of which such Holders have elected to receive New Notes; provided that Reorganized Debtor shall not be obligated in any event to issue New Notes other than in denominations of $1,000 or integral multiples thereof. If Holders of Allowed Subclass 4B Claims elect to receive any New Notes pursuant to the Subclass 4B Note Election, the principal amount of New Notes to be received by Holders of Allowed Subclass 4A Claims shall be reduced on a pro rata basis by such amount, and the New Common Stock to be received by Holders of Allowed Subclass 4A Claims shall be increased on a pro rata basis by the amount of New Common Stock forsaken by Holders of Subclass 4B Claims in lieu of New Notes. Any Holder of Subclass 4B Claims who is not a resident of the United States will be required to represent to the satisfaction of Debtor in its sole discretion that it satisfies certain qualifications in order to be permitted to participate in the Subclass 4B Note Election. Subclass 4B Equity Purchase. At the time of voting on the Plan, except as otherwise provided herein, each Holder of an Allowed Subclass 4B Claim shall also have the right to purchase for Cash its pro rata share of 2,306,644 shares of New Common Stock (i.e., 5.77% of the New Common Stock to be issued pursuant to the Plan, subject to dilution by the New Warrants and the Management Options), at a price of $17.85 per share (subject to an aggregate minimum purchase requirement of $500,000 by the Holders of Subclass 4B Claims). To the extent any Holders of Allowed Subclass 4B Claims elect to purchase any of such New Common Stock, (a) an amount equal to the cash proceeds received by Debtor in consideration for such New Common Stock shall be distributed to the Holders of Allowed Subclass 4A Claims on a pro rata basis on the Effective Date or as soon thereafter as practicable and (b) the amount of New Common Stock to be received by Allowed Subclass 4A Claims shall be reduced on a pro rata basis by the number of shares of the Subclass 4B Equity Purchase. Any Holder of Subclass 4B Claims who is not a resident of the United States shall not be permitted to participate in the Subclass 4B Equity Purchase (unless it can demonstrate an exemption from applicable local securities laws). Subclass 4B Supplemental Distribution. Upon (a) the sale of, and/or consummation of a tender offer resulting in the purchase of, substantially all of the New Common Stock of Reorganized Debtor (a "Stock Sale"), (b) the merger of Reorganized Debtor (whether or not Reorganized Debtor is the surviving entity) in which the securities of Reorganized Debtor outstanding immediately prior to such merger do not represent at least 50% of the combined voting power of the securities of Reorganized Debtor, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger (a "Merger") or (c) the sale of all or substantially all of the assets of Reorganized Debtor (other than to a direct or indirect subsidiary of Debtor) (an "Asset Sale"), in each case prior to the third anniversary of the Effective Date of the Plan, each Holder of a Subclass 4B Claim will be entitled to its proportionate share of a one-time distribution (the "Subclass 4B Supplemental Distribution") from Reorganized Debtor upon the consummation of such transaction. The Supplemental Distribution shall be determined as follows: 25
- -------------------------------------------------------------------------------------- Supplemental Distribution (non-cumulative) Purchase Price Per Share Implied Total Enterprise Value - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- $0 less than $17.64 less than $1.45 billion - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- $15 million $17.64 - $19.61 greater than or equal to $1.45 billion but less than $1.55 billion - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- $20 million $19.62 - $21.57 greater than or equal to $1.55 billion but less than $1.65 billion - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- $25 million $21.58 - $23.52 greater than or equal to $1.65 billion but less than $1.75 billion - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- $30 million $23.53 and greater $1.75 billion and greater - --------------------------------------------------------------------------------------
The "Purchase Price Per Share" (as adjusted for stock splits, stock dividends, reverse stock splits and the like) is used to determine the amount of the Subclass 4B Supplemental Distribution in the case of a Stock Sale or Merger. The "Implied Total Enterprise Value" is the implied aggregate value of the Company on a consolidated basis as if it had no debt and is used to determine the amount of the Subclass 4B Supplemental Distribution in the case of an Asset Sale. The Subclass 4B Supplemental Distribution shall be paid in the same form, whether cash, stock or other securities, as the consideration received by the Holders of the New Common Stock (in the case of a Stock Sale or Merger) or by Reorganized Debtor (in the case of an Asset Sale). The right of a Holder of a Subclass 4B Claim to receive its proportionate share of the Subclass 4B Supplemental Distribution shall not be assignable or transferable, other than by the laws of descent and distribution. Holders of Subclass 4B Claims who hold Old Subordinated Notes in bearer form will be required to provide certain identifying information to Debtor in order to be permitted to participate in the Subclass 4B Supplemental Distribution as set forth in the applicable Ballot. Each Class 4 Claim shall be Allowed in the amount of the outstanding principal amount of such Class 4 Claim, plus simple interest accrued on the principal through the Petition Date. In the aggregate, Subclass 4A Claims are Allowed in the amount of $863.5 million and Subclass 4B Claims are Allowed in the amount of $95.9 million. Class 4 is impaired and the Holders of Claims in Class 4 are entitled to vote for or against the Plan. 7. Class 5: Old Preferred Stock (Impaired) Under the Plan, Class 5 consists of the Old Preferred Stock. On the Effective Date or as soon as practicable thereafter: (a) Holders of Allowed Old Series A Preferred Stock will receive a pro rata distribution of 124,742 shares of New Common Stock, representing .312% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the New Warrants and the Management Options), and 2,079,039 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.898% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the Management Options); (b) Holders of Allowed Old Series B Preferred Stock will receive a pro rata distribution of 111,342 shares of New Common Stock, representing .278% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the New Warrants and the Management Options), and 1,855,693 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.479% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the Management Options); and 26 (c) Holders of Allowed Old Series C Preferred Stock will receive a pro rata distribution of 5,665 shares of New Common Stock, representing .014% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the New Warrants and the Management Options), and 94,420 New Warrants exercisable into an equal number of shares of New Common Stock, representing .177% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the Management Options). Based upon an implied reorganization value of Debtor of $1.28 billion, Holders of Old Preferred Stock would receive no distribution and would retain no property in a restructuring if the reorganization value were distributed on an absolute priority basis. However, in order to achieve a consensual Plan, the Prepetition Noteholder Committees agreed to vote in favor of a plan that allocates the following distributions under the Plan to the Old Preferred Stock:
For a Holder of 1,000 shares of this series of The Holder would be entitled to receive these securities of Old Preferred Stock . . . Reorganized Debtor under the Plan - ----------------------------------------------------------------------------------------------------------- New Notes New Common Stock New Warrants - ---------------------------------------------------------------------------------------------------------- $2.875 Non-Voting Cumulative Preferred Stock, Series A None 75.4 shares 1,257.0 shares - ---------------------------------------------------------------------------------------------------------- $3.75 Convertible Preferred Stock, Series B None 95.3 shares 1,587.8 shares - ---------------------------------------------------------------------------------------------------------- $2.50 Convertible Preference Stock, Series C.. None 74.9 shares 1,248.1 shares
The Plan provides that (i) 800,000 shares of New Common Stock and (ii) 13,333,333 New Warrants exercisable into an equal number of shares of New Common Stock (together, the "Distributable Value") are available in the aggregate for distribution to the Old Preferred Stock and Old Common Stock in Classes 5 and 6. Debtor and its advisors have estimated that the Distributable Value has a value of approximately $52.9 million. Debtor and its advisors have developed the following method of allocating the Distributable Value, which Debtor believes is a fair and equitable treatment of the Old Preferred Stock and Old Common Stock. Allocation Methodology. As of January 8, 2002, 1,653,930 shares of Old Series A Preferred Stock, 1,168,700 shares of Old Series B Preferred Stock, and 75,650 shares of Old Series C Preferred Stock were outstanding. The Old Series A Preferred Stock and the Old Series C Preferred Stock are convertible at the option of Debtor at any time into Old Common Stock at a ratio of 10 shares of Old Common Stock for each share of Old Series A Preferred Stock or Old Series C Preferred Stock. The Old Series B Preferred Stock is not currently convertible into Old Common Stock at the option of Debtor. Debtor believes that these conversion provisions, as well as the higher conversion (at the Holder's option) and dividend rates applicable to the Old Series B Preferred Stock, have contributed to the Old Series B Preferred Stock having historically traded at a market premium to the Old Series A Preferred Stock. On November 8, 2001, the last full trading day before Debtor's public announcement of the terms of the Plan, the market trading values of the Old Series A Preferred Stock and Old Series B Preferred Stock were $4.75 per share and $6.00 per share, respectively. These prices reflected a 26% trading premium of the Old Series B Preferred Stock over the Old Series A Preferred Stock. Further, for the period beginning June 25, 2001 and ending November 8, 2001, the average daily trading prices of the Old Series A Preferred Stock and Old Series B Preferred Stock reflected the same 26% premium. The Plan allocation of Distributable Value among the Old Preferred Stock and the Old Common Stock (a) takes into account the conversion feature at the option of Debtor which is applicable to the Old Series A Preferred Stock and Old Series C Preferred Stock; and (b) provides to the Old Series B Preferred Stock 26% more Distributable Value, on a per share basis, than the Old Series A Preferred Stock and Old Series C Preferred Stock. On this basis, and using the reorganization values assigned to the New Common Stock and New Warrants 27 in Section I.K above, holders of Old Preferred Stock would receive under the Plan a Distributable Value of $4.98 per share of Old Series A Preferred Stock, $6.29 per share of Old Series B Preferred Stock and $4.94 per share of Old Series C Preferred Stock. The aggregate number of shares of New Common Stock and New Warrants to be distributed to Class 5 and Class 6 are subject to adjustment in the event that one or both of Classes 5 and 6 are non-accepting Classes. In the event that Class 5 rejects the Plan, Debtor reserves the right to seek to have a Plan confirmed in which Holders of Old Preferred Stock will only receive 50% of the New Common Stock and 50% of the New Warrants that they would have received if Class 5 had approved the Plan. For a more detailed description of "cram down" provisions of the Plan, see Section IV.E.4 herein. Each Class 5 Equity Interest shall be Allowed in the amount of the number of shares of Old Preferred Stock held by each applicable Holder as of the Record Date. Class 5 is impaired and the Holders of Old Preferred Stock are entitled to vote for or against the Plan. 8. Class 6: Old Common Stock (Impaired) Under the Plan, Class 6 consists of the Old Common Stock, of which 78,273,183 shares were outstanding as of January 8, 2002. On or as soon as practicable after the Effective Date, each Holder of an Allowed Class 6 Equity Interest shall receive, in full and final satisfaction of such Equity Interest, a pro rata portion of 558,251 shares of New Common Stock, and a pro rata share of New Warrants exercisable into 9,304,181 shares of New Common Stock. With respect to any employee pension benefit plan (as defined under Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that contains Old Common Stock, the Debtor, at its election (after consultation with the Prepetition Noteholder Committees), may exchange with such plan(s) Cash in an amount equal to the value on the Effective Date of the New Warrants otherwise distributable to such plan(s) on account of the Old Common Stock held therein in lieu of such New Warrants. Based on an implied reorganization value of $1.28 billion, Holders of Old Common Stock would receive no distribution and would retain no property in a restructuring if the reorganization value were distributed on an absolute priority basis. However, in order to achieve a consensual Plan, the Prepetition Noteholder Committees agreed to vote in favor of a Plan that allocates the following distributions to the Old Common Stock:
---------------------------------------------------------------------------------- For a Holder of 1,000 shares of Old Common Stock, the Holder would be entitled to receive these securities of Reorganized Debtor under the Plan ---------------------------------------------------------------------------------- --------------------------------------------------------------------------------- New Notes New Common Stock New Warrants --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- None 7.1 shares 118.9 shares ---------------------------------------------------------------------------------
In the event that Class 6 rejects the Plan, Debtor reserves the right to seek to have a Plan confirmed in which Holders of Class 6 Claims will only receive 50% of the New Common Stock and 50% of the New Warrants that they would have received if Class 6 had approved the Plan. For a more detailed description of "cram down" provisions of the Plan, see Section IV.E.4 hereof. Each Class 6 Equity Interest shall be Allowed in the amount of the number of shares of Old Common Stock held by each applicable Holder as of the Record Date. Class 6 is impaired and the Holders of Old Common Stock are entitled to vote for or against the Plan. 9. Class 7: Other Securities Claims (Impaired) Under the Plan, Class 7 consists of (a) any Equity Interest of Debtor (other than Equity Interests of Debtor classified in Class 5 or Class 6 above), including, but not limited to, any warrants, options, conversion privileges 28 or contract rights to purchase or acquire the equity securities of Debtor at any time, and (b) any Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, currently existing or hereafter arising, in law, equity or otherwise, arising from rescission of a purchase or sale of a security of Debtor (including the Old Notes, Old Preferred Stock and Old Common Stock), for damages arising from the purchase, sale or holding of such securities, or for reimbursement, indemnification (except as set forth in Section VI.D of the Plan) or contribution allowed under section 502 of the Bankruptcy Code on account of such a Claim. Class 7 is impaired, but because no distributions will be made to Holders of Class 7 Claims nor will such Holders retain any property, such Holders are deemed to reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. Class 7 is not entitled to vote for or against the Plan. D. PROVISIONS GOVERNING DISTRIBUTIONS UNDER THE PLAN 1. Sources of Cash for Plan Distribution All Cash necessary for Reorganized Debtor to make payments pursuant to the Plan shall be obtained from existing Cash balances, if any, and Cash received from CBI through existing cash management systems as advances, dividends or payment for services. 2. Distributions for Claims and Equity Interests Allowed as of the Effective Date Except as otherwise provided in Section VII.A of the Plan or as may be ordered by the Bankruptcy Court, distributions to be made as of the Effective Date on account of Claims and Equity Interests that are allowed as of the Effective Date and are entitled to receive distributions under the Plan shall be made (i) on the Effective Date, or as soon as practicable thereafter for Holders who hold their Claims or Equity Interests through The Depository Trust Company ("DTC"), Euroclear, Clearstream or any similar clearing house, or for direct Holders of Old Senior Notes or Old Preferred Stock, and (ii) in the case of all Holders of Subclass 4B Claims in bearer form who hold Old Subordinated Notes directly or through a Nominee who does not hold such Notes through Clearstream or Euroclear and Class 6 Equity Interests, as soon as practicable following the later of the Effective Date or the receipt by the Exchange Agent or the Luxembourg Agent, as appropriate, of a properly executed letter of transmittal surrendering the certificates or instruments evidencing such Subclass 4B Claims or Class 6 Equity Interests, as the case may be. For purposes of determining the accrual of interest or rights in respect of any other payment from and after the Effective Date, the New Notes, New Common Stock and New Warrants to be issued under the Plan shall be deemed issued as of the Effective Date regardless of the date on which they are actually dated, authenticated or distributed; provided that Reorganized Debtor shall withhold any actual payment until such distribution is made and no interest shall accrue or otherwise be payable on any such withheld amounts. For tax purposes, distributions received in respect of Allowed Claims will be allocated first to unpaid interest that accrued on such Claims with any excess allocated to the principal amount of Allowed Claims. See Section VI.A, "Certain U.S. Federal Income Tax Consequences to the Holders of Claims and Equity Interests". 3. Distributions by Reorganized Debtor Except as provided in the Plan, Reorganized Debtor shall make all distributions required under the Plan. Notwithstanding the provisions of Section V.B of the Plan regarding the cancellation of the Old Note Indentures, the Old Note Indentures shall continue in effect to the extent necessary to allow the Old Note Trustees to provide information to the Exchange Agent or the Luxembourg Agent, as appropriate, to permit distributions of the New Notes and the New Common Stock to Holders of Old Subordinated Notes and, if requested by Reorganized Debtor, to receive New Notes and New Common Stock on behalf of the Holders of the Old Notes and make distributions pursuant to the Plan on account of the Old Notes as agent for Reorganized Debtor. The Old Note 29 Trustees providing services related to distributions to the Holders of Allowed Old Note Claims shall receive, from Reorganized Debtor, reasonable compensation for such services and reimbursement of reasonable expenses incurred in connection with such services and upon the presentation of invoices to Reorganized Debtor. 4. Delivery and Distributions; Undeliverable or Unclaimed Distributions (a) Delivery of Distributions in General Distributions to Holders of Allowed Claims and Allowed Equity Interests shall be made at the address of the Holder of such Claim or Equity Interest as indicated on Debtor's records or, if such Holder holds such Claims or Equity Interests in Nominee form through DTC, Euroclear or Clearstream, distributions with respect to such Claims or Equity Interests will be made to DTC, Euroclear or Clearstream (as applicable) and DTC, Euroclear or Clearstream (as applicable) will, in turn, make appropriate book entries to reflect such distributions to such Holders, except that distributions to direct Holders of Allowed Subclass 4B Claims and Allowed Class 6 Equity Interests shall be made after the Effective Date as soon as practicable following the Exchange Agent's or Luxembourg Agent's receipt of a properly executed letter of transmittal surrendering the certificates or instruments evidencing such Claims or Equity Interests. Except as otherwise provided by the Plan or the Bankruptcy Code with respect to undeliverable distributions, distributions to Holders of Old Senior Notes and Old Subordinated Notes shall be made in accordance with the provisions of the applicable Old Note Indenture, and distributions to Holders of Equity Interests will be made to Holders of record as of the Distribution Record Date. (b) Undeliverable Distributions (i) Holding of Undeliverable Distributions. If any distribution to a Holder of an Allowed Claim or Allowed Equity Interest is returned to Reorganized Debtor as undeliverable, no further distributions shall be made to such Holder unless and until Reorganized Debtor is notified in writing of such Holder's then-current address. Undeliverable distributions shall remain in the possession of Reorganized Debtor pursuant to Section VII.C of the Plan until such time as a distribution becomes deliverable. Undeliverable Cash (including interest and principal on the New Notes) shall not be entitled to any interest, dividends or other accruals of any kind. As soon as reasonably practicable, Reorganized Debtor shall make all distributions that become deliverable. (ii) Failure to Claim Undeliverable Distributions. In an effort to ensure that all Holders of valid Allowed Claims and Allowed Equity Interests receive their allocated distributions, not later than sixty (60) days after the Effective Date, Debtor will file with the Bankruptcy Court a listing of unclaimed distribution holders. This list will be maintained for as long as the bankruptcy case stays open. Any Holder of an Allowed Claim or Allowed Equity Interest (irrespective of when a Claim or Equity Interest became an Allowed Claim or Allowed Equity Interest) that does not assert a Claim or Equity Interest pursuant to the Plan for an undeliverable distribution (regardless of when not deliverable) within one year after the Effective Date (or, with respect to the Subclass 4B Supplemental Distribution only, one year after the date on which each Holder of a Subclass 4B Claim becomes entitled to its proportionate share thereof) shall have its Claim or Equity Interest for such undeliverable distribution discharged and shall be forever barred from asserting any such Claim or Equity Interest against Reorganized Debtor or its property. In such cases: (i) any Cash held for distribution on account of such Claims or Equity Interests shall be property of Reorganized Debtor, free of any restrictions thereon; and (ii) any New Notes, New Common Stock or New Warrants held for distribution on account of such Claims or Equity Interests shall be canceled and of no further force or effect. Nothing contained in the Plan shall require Reorganized Debtor to attempt to locate any Holder of an Allowed Claim or Allowed Equity Interest. (iii) Compliance with Tax Requirements. In connection with the Plan, to the extent applicable, Reorganized Debtor shall comply with all tax withholding and reporting requirements imposed on it by any governmental unit, and all distributions pursuant to the Plan shall be subject to such withholding and reporting requirements. 30 5. Distribution Record Date As of the close of business on the Distribution Record Date, the transfer register for the Old Notes as maintained by Debtor, the Old Note Trustees, or their respective agents, and the transfer register for the Old Equity Interests, as maintained by Debtor or its agent, shall be closed and there shall be no further changes in the record Holders of any Old Notes, Old Preferred Stock or Old Common Stock. Moreover, Reorganized Debtor shall have no obligation to recognize the transfer of any Old Notes, Old Preferred Stock or Old Common Stock occurring after the Distribution Record Date, and shall be entitled for all purposes herein to recognize and deal only with those Holders of record as of the close of business on the Distribution Record Date. There is no Record Date or Distribution Record Date for Holders of Old Subordinated Notes held in bearer form. 6. Timing and Calculation of Amounts to Be Distributed On the Effective Date or as soon as practicable thereafter and, if applicable, as soon as practicable after the Exchange Agent's or Luxembourg Agent's receipt of a letter of transmittal from direct Holders of Subclass 4B Claims and Class 6 Equity Interests and any document or deliveries to be made therewith, each Holder of an Allowed Claim against or Allowed Equity Interest in Debtor shall receive the full amount of the distributions that the Plan provides for Allowed Claims or Allowed Equity Interests in the applicable Class. If and to the extent that there are Disputed Claims or Disputed Equity Interests, beginning on the date that is 20 calendar days after the end of the calendar quarter following the Effective Date and 20 calendar days after the end of each calendar quarter thereafter, distributions shall also be made, pursuant to Section VII.E of the Plan, to Holders of Disputed Claims or Disputed Equity Interests in any Class whose Claims or Equity Interests were allowed during the preceding calendar quarter. Such quarterly distributions shall also be in the full amount that the Plan provides for Allowed Claims or Allowed Equity Interests in the applicable Class. 7. Minimum Distribution The New Notes will be issued in denominations of $1,000 and integral multiples thereof, and no New Note will be issued in any other denomination other than $1,000 or an integral multiple thereof. The New Common Stock and New Warrants will be issued in whole number lots and for whole shares. If a registered record Holder of an Allowed Claim is entitled to the distribution of an amount of New Notes that is not an integral multiple of $1,000 or the Holder of an Allowed Claim or Allowed Equity Interest is entitled to the distribution of a fractional share of New Common Stock or a New Warrant exercisable into a fractional share of New Common Stock, unless otherwise determined and approved by the Bankruptcy Court, the fractional distribution to which such Holder would be entitled shall be aggregated with all other such similar distributions by Debtor (or its agent), and as soon as practicable after the Effective Date, sold by Debtor (or its agent) in a commercially reasonable manner. Upon the completion of such sale, the net proceeds thereof shall be distributed (without interest) pro rata (a) in the case of the New Notes, to the Holders of Allowed Claims, based upon the fraction of a New Note each such Holder would have been entitled to receive or deemed to hold had Debtor issued New Notes in denominations smaller than $1,000 and (b) in the case of New Common Stock and New Warrants, to the Holders of Allowed Claims and Allowed Equity Interests, based upon the fractional share of New Common Stock or New Warrants each such Holder would have been entitled to receive or deemed to hold had Debtor issued fractional shares of New Common Stock or New Warrants exercisable into fractional shares of New Common Stock. Such distributions shall be in lieu of any other distribution. However, if Euroclear and/or Clearstream are unable or unwilling to facilitate the proposed sale of fractional shares of New Common Stock cleared through such system, the distributions to each Holder holding Claims through Clearstream or Euroclear (either directly or through a Nominee) will be rounded up or down to the nearest whole share of New Common Stock. 8. Setoffs Reorganized Debtor may, pursuant to section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off against any Allowed Claim or Allowed Equity Interest and the distributions to be made pursuant to 31 the Plan on account of such Claim or Equity Interest (before any distribution is made on account of such Claim or Equity Interest), the Claims, Equity Interests, rights and causes of action of any nature that Debtor or Reorganized Debtor may hold against the Holder of such Allowed Claim or Allowed Equity Interest; provided that neither the failure to effect such a setoff nor the allowance of any Claim or Equity Interest hereunder shall constitute a waiver or release by Debtor or Reorganized Debtor of any such Claims, Equity Interests, rights and causes of action that Debtor or Reorganized Debtor may possess against such Holder, except as specifically provided herein regarding the Release. 9. Cancellation of Old Notes, Old Preferred Stock, Old Common Stock and Stock Options On the Effective Date, except to the extent provided otherwise in the Plan, all notes, instruments, certificates, and other documents evidencing (a) the Old Notes, (b) the Old Preferred Stock, (c) the Old Common Stock and (d) any stock options, warrants or other rights to purchase Old Common Stock shall be canceled and the obligations of Debtor thereunder or in any way related thereto shall be discharged. On the Effective Date, except to the extent provided otherwise in the Plan, any indenture relating to any of the foregoing, including, without limitation, the Old Note Indentures, shall be deemed to be canceled, as permitted by section 1123(a)(5)(F) of the Bankruptcy Code, and the obligations of Debtor thereunder, except for the obligation to indemnify the Old Note Trustees, shall be discharged; provided that the indentures that govern the rights of the Holder of a Claim and that are administered by either of the Old Note Trustees, an agent or servicer shall continue in effect solely for the purposes of (x) allowing each Old Note Trustee, agent or servicer to make the distributions to be made on account of such Claims under the Plan, if requested by Debtor and (y) permitting each Old Note Trustee, agent or servicer to maintain any rights or liens it may have for fees, costs and expenses under such indenture or other agreement. Any fees or expenses due to any such Old Note Trustee shall be paid directly by Debtor and shall not be deducted from any distributions to the Holders of Claims and Equity Interests. 10. Surrender of Canceled Instruments or Securities Except as set forth in Section VII.H of the Plan, as a condition precedent to receiving any distribution pursuant to the Plan on account of an Allowed Subclass 4B Claim or Allowed Class 6 Equity Interest evidenced by the instruments, securities or other documentation canceled pursuant to Section III.D.9 above, the Holder of such Subclass 4B Claim or Class 6 Equity Interest shall transmit the applicable instruments, securities or other documentation evidencing such Subclass 4B Claim or Class 6 Equity Interest to the Exchange Agent or the Luxembourg Agent, as appropriate. Any New Notes, New Common Stock or New Warrants to be distributed pursuant to the Plan on account of any such Subclass 4B Claim or Class 6 Equity Interest shall, pending such surrender, be treated as an undeliverable distribution pursuant to Section VII.C of the Plan. (a) Old Subordinated Notes and Old Common Stock Each Holder of an Allowed Claim relating to the Old Subordinated Notes held directly in bearer form shall transmit its Old Subordinated Notes relating to such Allowed Claim (it being understood that Euroclear and Clearstream will transmit Old Subordinated Notes in bearer form cleared through each respective system on behalf of their respective customers), and each record Holder of an Allowed Equity Interest representing Old Common Stock shall transmit the certificates representing its Old Common Stock, to the Exchange Agent in accordance with written instructions to be provided to such Holders by Reorganized Debtor as promptly as practicable following the Effective Date. Such instructions shall specify that delivery of such Old Subordinated Notes or stock certificates representing Old Common Stock will be effected, and risk of loss and title thereto will pass, only upon the proper delivery of such Old Subordinated Notes or stock certificates with a letter of transmittal in accordance with such instructions. All surrendered Old Subordinated Notes and stock certificates shall be marked as canceled. If any Holder of Old Subordinated Notes in bearer form submits bearer bonds without coupons or coupons only, Debtor will adjust the consideration exchanged therefor appropriately. (b) Failure to Surrender Canceled Instruments or Certificates Any Holder of Allowed Claims relating to the Old Subordinated Notes held directly in bearer form or a Holder of Allowed Equity Interests relating to Old Common Stock that fails to surrender or is deemed to have 32 failed to surrender its Old Subordinated Notes or certificates representing its Old Common Stock required to be tendered hereunder within one year after the Effective Date shall have its claim for a distribution pursuant to the Plan on account of such Allowed Claim or Allowed Equity Interests discharged and shall be forever barred from asserting any such Claim or Equity Interest against Reorganized Debtor or its properties. In such cases, any New Notes, New Common Stock or New Warrants held for distribution on account of such Claim or Equity Interest shall be disposed of pursuant to the provisions set forth in Section VII.C of the Plan. 11. Lost, Stolen, Mutilated or Destroyed Securities In addition to any requirements under the Old Subordinated Note Indenture or Debtor's Second Restated Certificate of Incorporation, as amended to date, or Debtor's By-laws, any Holder of a Claim evidenced by an Old Subordinated Note held in bearer form or an Equity Interest evidenced by an Old Common Stock certificate evidenced by a certificate that has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such Old Subordinated Note or stock certificate, deliver to Reorganized Debtor: (a) an affidavit of loss reasonably satisfactory to Reorganized Debtor setting forth the unavailability of the Old Subordinated Note held in bearer form or stock certificate; and (b) such additional security or indemnity as may be reasonably required by Reorganized Debtor to hold Reorganized Debtor harmless from any damages, liabilities or costs incurred in treating such individual as a Holder of an Allowed Class 4B Claim or Class 6 Equity Interest. Upon compliance with this procedure by a Holder of a Claim evidenced by an Old Subordinated Note in bearer form or an Equity Interest evidenced by an Old Common Stock certificate, such Holder shall, for all purposes under the Plan, be deemed to have surrendered such bearer note or certificate. E. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS 1. Resolution of Disputed Claims (a) Prosecution of Objections to Claims After the Effective Date, Debtor and Reorganized Debtor shall have the exclusive authority, on or before the Claims Objection Bar Date, to file objections, settle, compromise, withdraw or litigate to judgment objections to Claims or Equity Interests. From and after the Effective Date, Debtor and Reorganized Debtor may settle or compromise any Disputed Claim or Equity Interest without approval of the Bankruptcy Court. Debtor also reserves the right to resolve any Disputed Claims or Equity Interests outside the Bankruptcy Court under applicable governing law. (b) Estimation of Claims and Equity Interests Debtor or Reorganized Debtor may, at any time, request that the Bankruptcy Court estimate any contingent or unliquidated Claim or Equity Interest pursuant to section 502(c) of the Bankruptcy Code regardless of whether Debtor or Reorganized Debtor has previously objected to such Claim or Equity Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim or Equity Interest at any time during litigation concerning any objection to any Claim or Equity Interest, including during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount will constitute either the allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on such Claim, Debtor or Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate payment on such Claim. All of the aforementioned Claims or Equity Interests and objection, estimation and resolution procedures are cumulative and not necessarily exclusive of one another. Claims and Equity Interests may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court. (c) Payments and Distributions on Disputed Claims and Equity Interests Notwithstanding any provision in the Plan to the contrary, except as otherwise agreed by Reorganized Debtor in its sole discretion, no partial payments and no partial distributions will be made with respect to a 33 Disputed Claim or Equity Interest until the resolution of such disputes by settlement or Final Order. On the date, or if such date is not a business day, on the next successive business day, that is 20 calendar days after the end of the calendar quarter in which a Disputed Claim or Equity Interest becomes an Allowed Claim or Allowed Equity Interest, the Holder of such Allowed Claim or Allowed Equity Interest will receive all payments and distributions to which such Holder is then entitled under the Plan. Notwithstanding the foregoing, any Person or Entity who holds both an Allowed Claim(s) and a Disputed Claim(s) (or an Allowed Equity Interest(s) and a Disputed Equity Interest(s)) will not receive the appropriate payment or distribution on the Allowed Claim(s) (or Allowed Equity Interest(s)), except as otherwise agreed by Reorganized Debtor in its sole discretion, until the Disputed Claim(s) or Disputed Equity Interest(s) are resolved by settlement or Final Order. In the event there are Disputed Claims or Equity Interests requiring adjudication and resolution, Debtor reserves the right, or upon order of the Court, to establish appropriate reserves for potential payment of such Claims or Equity Interests. 2. Allowance of Claims and Equity Interests Except as expressly provided in the Plan or any order entered in the Chapter 11 Case prior to the Effective Date (including the Confirmation Order), no Claim or Equity Interest shall be deemed Allowed, unless and until such Claim or Equity Interest is deemed Allowed under the Bankruptcy Code or the Bankruptcy Court enters a Final Order in the Chapter 11 Case allowing such Claim or Equity Interest. Except as expressly provided in the Plan or any order entered in the Chapter 11 Case prior to the Effective Date (including the Confirmation Order), Reorganized Debtor after confirmation will have and retain any and all rights and defenses Debtor had with respect to any Claim or Equity Interest as of the date Debtor filed its petition for relief under the Bankruptcy Code. All Claims of any Person or Entity that owes money to Debtor shall be disallowed unless and until such Person or Entity pays the amount it owes Debtor in full. 3. Controversy Concerning Impairment If a controversy arises as to whether any Claims or Equity Interests, or any Class of Claims or Equity Interests, are Impaired under the Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy before the Confirmation Date. F. MEANS FOR IMPLEMENTATION OF THE PLAN 1. Continued Corporate Existence and Vesting of Assets in Reorganized Debtor Debtor shall, as Reorganized Debtor, continue to exist after the Effective Date as a separate corporate entity, with all the powers of a corporation under the laws of the State of New Jersey and without prejudice to any right to alter or terminate such existence (whether by merger or otherwise) under such applicable state law. Except as otherwise provided in the Plan, the New Notes, or any agreement, instrument or indenture relating thereto, on and after the Effective Date, all property of the Estate, and any property acquired by Debtor or Reorganized Debtor under the Plan, shall vest in Reorganized Debtor, free and clear of all Claims, liens, charges, or other encumbrances. On and after the Effective Date, Reorganized Debtor may operate its business and may use, acquire or dispose of property and compromise or settle any Claims or Equity Interests, without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and the Confirmation Order. 2. Corporate Governance, Directors and Officers, and Corporate Action Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the principal officers of Debtor immediately prior to the Effective Date shall be the officers of Reorganized Debtor. The following table sets forth the name and title of the current principal officers of Debtor. 34
Name Position - ------------------- -------------------------------------------------------------- Carl H. Lindner.... Chairman of the Board Keith E. Lindner... Vice Chairman of the Board Steven G. Warshaw.. President and Chief Executive Officer Robert W. Olson.... Senior Vice President, General Counsel and Secretary James B. Riley..... Senior Vice President and Chief Financial Officer Carla A. Byron..... Vice President, Corporate Planning Joseph W. Bradley.. Vice President, Taxation Jeffrey T. Klare... Vice President, Information Systems Steven M. Kreps.... Vice President, Internal Audit Barry H. Morris.... Vice President, Human Resources William A. Tsacalis Vice President and Controller Jeffrey M. Zalla... Corporate Responsibility Officer and Vice President, Corporate Communications
The following are the current directors of Debtor: Carl H. Lindner, Keith E. Lindner, Rohit Manocha, Fred J. Runk, Gregory C. Thomas, William W. Verity, and Steven G. Warshaw. In accordance with the terms of the Lock Up Agreement, Reorganized Debtor will have a seven person board of directors, initially consisting of Carl H. Lindner, Steven G. Warshaw and the following five directors appointed by the Prepetition Noteholder Committees: Morten Arntzen, Jeffrey D. Benjamin, Robert Fisher, Cyrus Freidheim and Roderick Hills. Mr. Arntzen (age 46) is the Chief Executive Officer of American Marine Advisors, a leading merchant banking boutique focused on the global shipping industry. Prior to joining AMA, Mr. Arntzen spent over 17 years at Chase Manhattan Bank (and its predecessors Chemical Bank and Manufacturers Hanover Trust Company) in a variety of corporate positions, including the last 6 years as Head of the Global Transportion Group at Chase Manhattan Bank and Chemical Bank. Mr Arntzen has been involved in the broader transportation industry since 1979. Mr. Arntzen is also a director of IM Skaugen Shipping, Essar Shipping, and TBS Shipping. Mr. Benjamin (age 40) became a Managing Director, as of January 1, 2002, of Libra Securities LLC, an investment banking firm. Mr. Benjamin previously served as Co-Chief Executive Officer of U. S. Bancorp Libra, a division of U. S. Bancorp Investments, Inc., and its predecessor Libra Investments, Inc., investment banking firms since May 1998. From May 1996 to May 1998, Mr. Benjamin was Managing Director at UBS Securities LLC, a securities investment firm. Mr. Benjamin has also been a director of EXCO Resources, an independent oil and natural gas company, since August 1998. Mr. Fisher (age 63) is a private investor. Previously, Mr. Fisher served as Chief Operating Officer of The Noboa Group's banana operations (world's largest private banana company) from 1991 to 1993 and 1996 to 1998 and President and Director of Geest Banana Company from 1993 to 1995. Prior to joining The Noboa Group, Mr. Fisher spent 25 years at Dole Food Company, including the last four years as President. Mr. Freidheim (age 66) currently serves as Vice Chairman of Booz, Allen & Hamilton, Inc., with which he has been affiliated since 1966. He is also a Director of Security Capital Group, Inc., Household International, Inc., a Chair and a Trustee of Thunderbird American Graduate School of Institutional Management and a Trustee of the Brookings Institution. Mr. Hills (age 70) serves as the Chairman of Hills Enterprises, Ltd. (formerly the Manchester Group), an investment consulting firm, a position he has held since 1987. He has also practiced law as a partner in Hills & Sterns since 1995. Mr. Hills is also a director of Orbital Sciences, Inc. and Regional Market Makers, Inc. He served as a director of Federal-Mogul Corporation 1977-02; Oak Industries, Inc. 1985-00; Waste Management, Inc. 1997-00; and Per-Se Technologies, Inc. 1998-01. He served as Counsel to President Ford and was Chairman of the Securities and Exchange Commission 1975-77. 35 Mr. Lindner (age 82) has been Chairman of the Board a of Debtor since 1984 and a director since 1976. He was Chief Executive Officer of Debtor from 1984 until August 2001. He is also Chairman of the Board and Chief Executive Officer of American Financial Group, Inc. ("AFG") which, through its subsidiaries, is engaged primarily in property and casualty insurance businesses and in the sale of annuities, life and health insurance. For more than 40 years, Mr. Lindner has been Chairman of the Board and Chief Executive Officer of American Financial Corporation ("AFC"), which became an AFG subsidiary in 1995. Mr. Lindner also serves as Chairman of the Board of Great American Financial Resources, Inc., which is over 80% owned by AFG. Mr. Warshaw (age 48) has been Debtor's President and Chief Executive Officer since August 2001. Prior thereto, he had served as President and Chief Operating Officer of Debtor since 1997. He has been a director of Debtor since 1997. He served as Chief Financial Officer from 1994 to 1998 and as Executive Vice President and Chief Administrative Officer from 1990 to 1997. He has served the Debtor in various capacities since 1986. To the extent any such Person is an "Insider" (as defined in the Bankruptcy Code), the nature of any compensation for such Person will also be disclosed. Each such director and officer shall serve from and after the Effective Date pursuant to the terms of Debtor's Third Restated Certificate of Incorporation, other constituent documents or the New Jersey Business Corporation Act. 3. Restated Certificate of Incorporation and By-laws On the Effective Date, Reorganized Debtor will file its Third Restated Certificate of Incorporation with the Secretary of State of the State of New Jersey in accordance with Sections 14A:9-1 and 14A:14-24 of the New Jersey Business Corporation Act. The Third Restated Certificate of Incorporation and the Restated By-laws will, among other things, (a) authorize 150,000,000 shares of New Common Stock, (b) authorize 20,000,000 shares of preferred stock, with voting rights and with other such designations, preferences, rights, qualifications, limitations or restrictions as determined by Reorganized Debtor's board of directors, (c) prohibit shareholder action by written consent other than unanimous written consent, (d) require shareholders to provide advance notice of any nominations or other business they intend to bring before an annual or special meeting of shareholders, (e) permit only the board of directors or the president of Reorganized Debtor (and not the shareholders, except as otherwise permitted by New Jersey law) to call special shareholder meetings, (f) prohibit removal of directors without cause, (g) eliminate supermajority voting for mergers and certain other transactions and (h) move provisions relating to indemnification, director nominations and business brought before shareholder meetings from the By-laws to the Certificate of Incorporation. After the Effective Date, Reorganized Debtor may amend and restate its Third Restated Certificate of Incorporation and other constituent documents as permitted by New Jersey law. 4. Corporate Action On the Effective Date, the adoption and filing of the Third Restated Certificate of Incorporation, the restatement of Debtor's By-laws, the appointment of directors and officers for Reorganized Debtor, the adoption of the 2002 Stock Option Plan, and all actions contemplated by the Plan shall be authorized and approved in all respects (subject to the provisions of the Plan). All matters provided for in the Plan involving the corporate structure of Debtor or Reorganized Debtor, and any corporate action required by Debtor or Reorganized Debtor in connection with the Plan, shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders or directors of Debtor or Reorganized Debtor. On the Effective Date, the appropriate officers of Reorganized Debtor and members of the board of directors of Reorganized Debtor are authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by the Plan in the name of and on behalf of Reorganized Debtor. 5. Issuance of New Securities; Execution of Related Documents On or immediately after the Effective Date, Reorganized Debtor shall issue all securities, notes, instruments, certificates, and other documents of Reorganized Debtor required to be issued pursuant to the Plan, including, without limitation, the New Notes, the New Common Stock and the New Warrants, each of which shall be distributed as provided in the Plan. Reorganized Debtor shall execute and deliver such other agreements, 36 documents and instruments, including the New Note Indenture, the Warrant Agreement and the Registration Rights Agreements as are required to be executed pursuant to the terms of the Plan. The principal terms of the New Notes, the New Warrants, the New Common Stock and the 2002 Stock Option Plan are as follows: The New Notes/1/ General Description. The notes will be issued as a series of Senior Debt Securities under an Indenture, to be dated as of March 15, 2002 and to be entered into between Reorganized Debtor and a trustee to be determined. All references to "Reorganized Debtor" in this description of the New Notes shall mean Debtor, before and during the pendency of the Chapter 11 Case, and Reorganized Debtor, after the Effective Date. The series of Senior Debt Securities which will include the New Notes (the "First Senior Series") will be limited in aggregate principal amount to $300 million, of which $250 million will be issued pursuant to the Plan as the New Notes. Although the following description relates only to the New Notes, if and to the extent that any additional notes in the First Senior Series are issued, they will have the same terms as the New Notes, except to the extent required as a result of a later issue date. The New Notes will be general unsecured obligations of Reorganized Debtor and will rank equally with Reorganized Debtor's future senior unsecured indebtedness. The New Notes will mature on March 15, 2009 and will bear interest at the Senior Note Interest Rate. The "Senior Note Interest Rate" will be fixed at the Effective Date at a rate equal to the sum of: (a) the yield for actively traded U.S. Treasury securities having a maturity closest to seven years as of the day prior to the Effective Date, (b) the Bear Stearns BB Index Spread (as defined below) and (c) 100 basis points (i.e., 1.0%). The Bear Stearns BB Index Spread is the spread over comparable maturity U.S. Treasury securities of BB rated high yield debt securities as measured in the Bear Stearns Relative Value Analysis (Global High Yield Research) as of the most recent report prior to the Effective Date. However, to the extent that the Bear Stearns BB Index Spread has increased or decreased by more than 100 basis points (i.e., 1.0%) from the immediately prior weekly report, the spread used in clause (b) above will be the average of the Bear Stearns BB Index Spread for the four-week period prior to the Effective Date. Reorganized Debtor will pay interest on the New Notes on March 15 and September 15 of each year, commencing September 15, 2002, to each registered Noteholder at the close of business on the first day of the month in which the interest payment will be made. Interest will be computed based on a 360-day year of twelve 30-day months. The New Notes will be issued only in fully registered form through one global note in denominations of $1,000 and integral multiples of $1,000. Optional Redemption. The New Notes will be redeemable at the option of Reorganized Debtor, in whole or in part, at one time or from time to time, upon not less than 30 nor more than 60 days' notice at the prices described below. Redemption beginning in 2005. If Reorganized Debtor chooses to redeem the New Notes on or after March 15, 2005, the amount that Reorganized Debtor will pay upon redemption will equal the percentage of the principal amount set forth below plus accrued and unpaid interest to the redemption date. All New Notes redeemed during the 12-month period beginning on March 15 of the years indicated below will be redeemed at the corresponding redemption amount:
Year Percentage ---- ---------- 2005 100.000% plus 1/2 of the Senior Note Interest Rate 2006 100.000% plus 3/8 of the Senior Note Interest Rate 2007 100.000% plus 1/4 of the Senior Note Interest Rate 2008 100.000%
Makewhole Redemption. In the case of redemption before March 15, 2005, Reorganized Debtor must pay a redemption price equal to the greater of (a) 100% of the principal amount of the New Notes to be redeemed, or (b) the sum of the present value of (i) the redemption price of the New Notes at March 15, 2005 (as set forth in - -------- /1/ This following is a general description of the principal terms and definitions of the New Notes. The final provisions of the New Notes and New Note Indenture will be filed with the Bankruptcy Court prior to the Voting Deadline. 37 the applicable table appearing above under the caption "Optional Redemption - Beginning in 2005") and (ii) interest payments from the date of redemption through March 15, 2005, in each case discounted to the redemption date on a semiannual basis at the Makewhole Rate, plus 0.25 percent; plus, in the case of either clause (a) or (b) above, any accrued and unpaid interest to the redemption date (subject to appropriate adjustment for interest paid when an interest payment date falls after a redemption notice is mailed and before the redemption date). "Makewhole Rate" means, for any redemption date, the annual rate equal to the yield to maturity, compounded semi-annually, of a selected Comparable Treasury Issue, assuming a yield for the selected Comparable Treasury Issue equal to the Comparable Treasury Yield for the particular redemption date. "Comparable Treasury Issue" means a particular United States treasury security selected by Reorganized Debtor as having a maturity comparable to the earliest optional redemption of the New Notes that would be utilized in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the earliest optional redemption. "Comparable Treasury Yield" means, for any redemption date: (a) the yield for the Comparable Treasury Issue on the third business day preceding the redemption date, as set forth under the heading which represents the average for the immediately prior week, appearing in the most recently published statistical release designated "H.15(519)" (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities" or (b) if that release (or any successor release) is not published or does not contain the applicable prices on the applicable business day, the average of the reference quotations for the Comparable Treasury Issue for that redemption date made by an independent investment banking firm of national standing selected by Reorganized Debtor. Redemption with the Proceeds of Public Equity Offerings. Before March 15, 2005, Reorganized Debtor may redeem in the aggregate up to a maximum of 35% of the original aggregate principal amount of the New Notes with the proceeds of one or more Public Equity Offerings, at a redemption price equal to a percentage of the principal amount of the New Notes equal to 100% plus the Senior Note Interest Rate, plus accrued and unpaid interest, if any, to the redemption date (subject to appropriate adjustment for interest paid when an interest payment date falls after a redemption notice is mailed and before the redemption date). Immediately after each such redemption, at least 65% of the original aggregate principal amount of the New Notes must remain outstanding. Any redemption must be made within 75 days of the applicable Public Equity Offering. "Public Equity Offering" means an underwritten primary public offering of New Common Stock pursuant to an effective registration statement under the Securities Act. Notice of Redemption. Reorganized Debtor must provide each affected New Noteholders with notice of any redemption at least 30 but not more than 60 days before the date set for redemption. The notice must specify the date fixed for redemption. Reorganized Debtor must certify to the trustee the actual redemption price, calculated as described in the notice, at least two business days before the redemption date. Sinking Fund. The New Notes will not be subject to any sinking fund payment obligations. Consolidation, Merger and Sale of Assets. Reorganized Debtor will agree not to consolidate or merge with or into any other entity, or sell, lease or convey all or substantially all of its assets to any other entity in any one or more transactions unless the following conditions are met: (1) the resulting, surviving or transferee Person (the "Surviving Entity") is organized under the laws of the United States of America or any state or the District of Columbia, the Bahamas, Barbados, Bermuda, the British Virgin Islands, the Cayman Islands, any of the Channel Islands or the Netherlands Antilles and the Surviving Entity (if not Reorganized Debtor) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of Reorganized Debtor's obligations under the New Notes and the Indenture; (2) immediately after giving effect to the transaction (and treating any indebtedness which becomes an obligation of the Surviving Entity or 38 any Subsidiary as a result of such transaction as having been incurred by such Surviving Entity or such Subsidiary at the time of such transaction), no Default or Event of Default under the Indenture may have occurred and be continuing; (3) immediately after giving effect to the transaction (and treating any indebtedness which becomes an obligation of the Surviving Entity or any Subsidiary as a result of such transaction as having been incurred by such Surviving Entity or such Subsidiary at the time of such transaction), either (a) the Surviving Entity would be able to incur at least $1.00 of Indebtedness under the Fixed Charge Coverage Ratio described below under "Limitation on Indebtedness," determined on a pro forma basis as if such transaction had occurred at the beginning of the immediately preceding four-quarter period; or (b) the Fixed Charge Coverage Ratio for the Surviving Entity, determined on a pro forma basis as if such transaction had occurred at the beginning of the immediately preceding four-quarter period, would be greater than the actual Fixed Charge Coverage Ratio for the Reorganized Debtor for the most recently completed four-quarter period prior to the transaction, (4) if the Surviving Entity is organized in a jurisdiction other than (a) the United States or (b) the jurisdiction in which the predecessor obligor on the New Notes was organized immediately before the transaction, then: (i) the obligations of the Surviving Entity relating to the New Notes and under the Indenture must be enforceable under the laws of the new jurisdiction, subject to customary exceptions; (ii) the U.S. federal income tax status of the holders of the New Notes must not be adversely affected; and (iii) the Surviving Entity must agree in writing to submit to jurisdiction and appoint an agent for service of process each under the same terms as the predecessor obligor had been required; (5) the board of directors of the Surviving Entity must determine in good faith that the transaction will not have a material adverse effect on the holders of New Notes; and (6) Reorganized Debtor must deliver to the Trustee an Officer's Certificate and Legal Opinion covering certain conditions. If Reorganized Debtor is not the Surviving Entity and the transaction meets the above conditions, the Surviving Entity will be substituted for Reorganized Debtor and after that Reorganized Debtor will no longer have any obligations under the Indenture or the New Notes except in the case of a conveyance, transfer or lease to an affiliate of Reorganized Debtor. Notwithstanding the foregoing, if Reorganized Debtor effects a consolidation, merger or sale, conveyance, assignment, transfer, lease or other disposition of substantially all of its assets, the condition set forth in clause (3) of the paragraph above shall not apply to a transaction involving a Surviving Entity which is otherwise subject to the foregoing provisions if (i) the Surviving Entity (1) was formed for the purpose of effecting such transaction, (2) did not engage in any business prior to such transaction, (3) immediately prior to such transaction had no indebtedness or liabilities, contingent or otherwise, of any kind whatsoever, (4) immediately after such transaction had no additional "indebtedness" or "liabilities," contingent or otherwise, of any kind whatsoever in excess of that which the Reorganized Debtor had immediately prior to such transaction and (5) immediately after such transaction was engaged in the same business as Reorganized Debtor was engaged in immediately prior to such transaction and (ii) the holders of the outstanding voting shares of Reorganized Debtor immediately prior to the transaction own, directly or indirectly, the outstanding voting shares of the Surviving Entity immediately after the transaction in substantially the same proportion as before the transaction. Certain Covenants Relating to the New Notes. The Indenture contains the covenants summarized below, among others. Limitation on Indebtedness. Reorganized Debtor will not, and will not permit any Subsidiary to, create, incur, assume or guarantee the payment of any Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness or Refinancing Indebtedness and Reorganized Debtor will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of Disqualified Stock to any Person other than Reorganized Debtor or its Subsidiaries unless, after giving effect to the transaction, its Fixed Charge Coverage Ratio for the four full fiscal quarters immediately preceding the transaction for which internal financial statements are available immediately preceding the date of such transaction, taken as a single period, is (a) if, at the Calculation Date (as defined in the definition of Fixed Charge Coverage Ratio), the most recent fiscal quarter for which internal financial statements are available ended on or prior to December 31, 2002, 2.0 to 1 or greater, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the 39 beginning of such four-quarter period and (b) if at the Calculation Date the most recent fiscal quarter for which internal financial statements are available ended on or after March 31, 2003, 2.5 to 1 or greater, determined on the same pro forma basis. For purposes of determining any particular amount of Indebtedness, obligations which constitute Indebtedness of more than one entity only need to be counted once. For purposes of determining compliance with this covenant: if an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness or Refinancing Indebtedness, Reorganized Debtor may classify the Indebtedness into a category in its sole discretion, and only needs to include the Indebtedness in one category. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, contingent or otherwise, in respect of: (1) borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) banker's acceptances; (4) representing Capital Lease Obligations; (5) the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (6) representing any Hedging Obligations; if and to the extent any of the preceding (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) (the amount of such Indebtedness as of any date being deemed to be the lesser of the value of such property or assets as of such date or the principal amount of such Indebtedness of such other Person) and, to the extent not otherwise included, the guarantee by such Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (2) other agreements or arrangements designed to protect against fluctuations in interest rates, currency exchange rates or specific financial and other similar risks (including commodity risks). "Permitted Indebtedness" means Indebtedness that falls into any of the following categories: (1) Indebtedness of Reorganized Debtor or any of its direct or indirect Subsidiaries outstanding on the Effective Date (including, for this purpose, the maximum $120 million of credit under the Credit Agreement and the maximum credit under any other revolving credit facility of any such Subsidiary, whether or not drawn on or available on such date) (other than Indebtedness described in clause (2) below); (2) the New Notes; (3) up to an aggregate of $250 million of Indebtedness of Reorganized Debtor or any of its Subsidiaries under revolving credit, term loan or other facilities (other than publicly traded or privately placed transferable securities issued by Reorganized Debtor or CBI), reduced by the maximum amount of Indebtedness that may be borrowed under the Credit Agreement, as it may be amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time; provided that the proceeds of this Indebtedness must be invested in, or used in connection with, Food-Related Businesses; (4) Acquired Indebtedness of a Subsidiary incurred in the acquisition of a Food-Related Business; provided that (a) Reorganized Debtor has not guaranteed it and is not otherwise legally liable for it; (b) such Indebtedness is not incurred in contemplation of the acquisition or in connection therewith, or to provide all or any portion of the funds or credit support used to consummate the transaction or series of transactions pursuant to which such Food-Related Business was acquired by Reorganized Debtor or one of its Subsidiaries; and (c) Reorganized Debtor's Fixed Charge Coverage Ratio for the four full fiscal quarters 40 immediately preceding the acquisition, taken as a single period and adjusted to give effect to the pro forma acquisition, is not less than Reorganized Debtor's actual Fixed Charge Coverage Ratio for the same period (provided that this clause (c) shall not be applicable to the incurrence of Indebtedness of Exportadora Chiquita-Enza Chile Ltda. in the event that such entity becomes a Subsidiary of Reorganized Debtor; (5) Indebtedness of Reorganized Debtor or any Subsidiary which is either (a) denomi-nated in or measured by the currency of any country other than the United States, and incurred for hedging purposes in the ordinary course of business consistent with past practice or (b) a guaranty or letter of credit support obligation, not incurred for borrowed money, for Subsidiary Indebtedness incurred for hedging purposes as described in clause (a); (6) Intercompany Debt Obligations between or among Reorganized Debtor and any of its Subsidiaries; provided that any Intercompany Debt Obligations of Reorganized Debtor incurred after the Effective Date other than in connection with Refinancing Indebtedness must be evidenced by an intercompany note; provided, further, that (i) any subsequent issuance or transfer of any Equity Interests that results in such Indebtedness being held by a Person other than Reorganized Debtor or a Subsidiary and (ii) any sale or other transfer of such Indebtedness to a Person other than Reorganized Debtor or a Subsidiary shall each be deemed to be an incurrence of Indebtedness by the obligor if and to the extent that it is Reorganized Debtor or a continuing Subsidiary of Reorganized Debtor; (7) guarantees by a Subsidiary of Indebtedness of an unrelated third party which is involved in a commercial relationship with Reorganized Debtor or a Subsidiary in the ordinary course of business, such as a supplier, customer or service-provider; provided that (a) Reorganized Debtor has not guaranteed it and is not otherwise legally liable for it, (b) the indebtedness guaranteed under this clause does not exceed an aggregate amount outstanding at any time of $15 million, and (c) the proceeds of the underlying Indebtedness are or have been used by the borrower in Food-Related Businesses; (8) Hedging Obligations that are incurred in the ordinary course of business for the purpose of fixing or hedging interest rate risk, foreign currency risk or specific financial and other similar risks (including commodity risks); and (9) additional Indebtedness (including Acquired Indebtedness) of Reorganized Debtor and its direct and indirect Subsidiaries up to a maximum aggregate amount outstanding at any time of $50 million. "Refinancing Indebtedness" means any renewals, extensions, deferrals, amendments, supplements, modifications, exchanges, refundings or other refinancings, whether or not by the same obligor (collectively, "Refinancing") of: (1) any Indebtedness of Reorganized Debtor or any of its Subsidiaries outstanding on the Effective Date, including for this purpose the maximum credit under any revolving credit facility of any such Subsidiary, whether or not drawn or available on such date or (2) other Indebtedness permitted to be incurred by Reorganized Debtor or any of its Subsidiaries pursuant to the terms of the New Notes (including the New Notes), but only to the extent that (a) the aggregate amount of Indebtedness is not increased by the refinancing, (b) such Refinancing Indebtedness has a final maturity date later than the final maturity date of and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being refinanced, (c) such Indebtedness (other than Indebtedness incurred in exchange for, refunding or refinancing of the New Notes) is subordinated in right of payment to the New Notes to the same extent as the Indebtedness being refinanced and (d) in the case of any Refinancing of the New Notes, Reorganized Debtor is the sole obligor on such Refinancing Indebtedness. "Acquired Indebtedness" means Indebtedness of an entity (1) existing at the time the entity becomes a Subsidiary or (2) assumed in connection with the acquisition of the entity's assets. "Credit Agreement" means that certain $120,000,000 Credit Agreement, dated as of March 7, 2001, by and among Chiquita Brands, Inc., as Borrower, each of the Lenders thereto and Foothill Capital Corporation, as Arranger and Administrative Agent, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Food-Related Businesses" means businesses or operations involving food or food products, including any business related, ancillary or complementary thereto; provided that if in the case of any business acquired or joint venture entered into by Reorganized Debtor or any of its Subsidiaries after the Effective Date, such business or joint venture is primarily engaged in one or more Food-Related Businesses, then such acquired business or joint venture shall be deemed to be engaged in Food-Related Businesses. 41 "Intercompany Debt Obligations" means any Indebtedness of Reorganized Debtor or any of its Subsidiaries which is owed to a different member of the group of Reorganized Debtor and its Subsidiaries. A "Related Party" means: (1) any individual or entity who directly or indirectly holds 10% or more of any class of Reorganized Debtor's capital stock, (2) any officer or director of Reorganized Debtor or (3) any relative of a Person described in (1) or (2) who is related by blood, marriage or adoption, not more remote than a first cousin. An "Affiliate" of any specified individual or entity means any other individual or entity who directly or indirectly controls or is controlled by or is under direct or indirect common control with the specified individual or entity. For the purposes of this definition, "control" of an entity means having the power to direct the management and policies of the entity directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. "GAAP" means generally accepted accounting principles as in effect in the United States on the Effective Date. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (1) the consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued; including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings and net payments, if any, pursuant to Hedging Obligations; plus (2) the consolidated interest of such Person and its Subsidiaries that was capitalized during such period; plus (3) all dividend payments, on any series of preferred stock of such Person or any of its Subsidiaries, other than (a) dividend payments to Reorganized Debtor or its Subsidiaries or (b) dividend payments on such preferred stock payable solely in Equity Interests of such Person (other than Disqualified Stock) or to such Person or a Subsidiary of such Person. "Fixed Charge Coverage Ratio" means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Subsidiaries for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Subsidiaries incurs, assumes, guarantees, redeems or acquires any Indebtedness (other than revolving credit borrowings) or issues, redeems or acquires preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption or acquisition of Indebtedness, or such issuance, redemption or acquisition of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio (1) acquisitions that have been made by the specified Person or any of its Subsidiaries, including through the purchase of assets or stock, mergers, liquidations or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated giving pro forma effect to the transactions taken and without giving effect to any cost savings realized or to be realized in connection therewith resulting from operational synergies; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date; and (4) with respect to any calculation involving any periods prior to the Effective Date, the determination of the Fixed Charge Coverage Ratio and the elements thereof shall be made on a pro forma basis as if the New Notes had been issued, and all other transactions contemplated in connection with the consummation of the reorganization of Reorganized Debtor had occurred on, the first day of such period. 42 "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus: (1) an amount equal to any provision for taxes based on income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (2) consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings and net payments, if any, pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus (3) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses, write-downs, charges or accruals of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses, write-downs, charges or accruals were deducted in computing such Consolidated Net Income; plus (4) all reorganization costs and fresh-start accounting charges recognized by Reorganized Debtor in connection with its reorganization being consummated on the Effective Date; minus (5) non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business, minus (6) cash paid in such period to pay expenses for which non-cash reserves were established in a prior period, in each case, on a consolidated basis and determined in accordance with GAAP. "Effective Date" means the date on which the New Notes are issued. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consoli-dated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Subsidiary thereof; and (2) the cumulative effect of a change in accounting principles, any extraordinary gains or losses and any gains or losses realized in connection with an asset sale shall be excluded. Notwithstanding the foregoing, for purposes of clause (3) of the covenant described under "Certain Covenants-Limitation on Restricted Payments" only, there shall be excluded from Consolidated Net Income that portion, if any, of the Net Income of any Subsidiary that is not permitted, directly or indirectly, to be paid by way of dividend, distribution or loan to stockholders of such Subsidiary by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders. "Net Income" means, with respect to any Person, the net income (loss) of such Person and its Subsidiaries, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends. "Disqualified Stock" means any capital stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the New Notes are or become due. Notwithstanding the preceding sentence, any capital stock that would constitute Disqualified Stock solely because the holders thereof have the right to require Reorganized Debtor to repurchase such capital stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such capital stock provide that the Reorganized Debtor may not repurchase or redeem any such capital stock pursuant to such provisions until after the Reorganized Debtor complies with the covenants described above under the captions "Purchase of New Notes upon a Change of Control" or "Asset Sales." 43 "Subsidiary" shall mean, as to any Person, any corporation or other entity more than fifty percent (50%) of whose Equity Interests having by the terms thereof, at that time, ordinary voting power to elect a majority of the directors (or comparable positions) of such entity is at the time owned by such Person directly or indirectly through Subsidiaries (it being understood that, in the case of Reorganized Debtor, unless the context otherwise indicates, "Subsidiary" shall mean any direct or indirect Subsidiary of Reorganized Debtor). Limitation on Liens. Reorganized Debtor will not, and will not permit any Subsidiary to, create, assume, incur or permit any lien upon any of their assets without providing for the New Notes to be secured equally and ratably with the Indebtedness or other obligations being secured by the Lien, except for (1) Permitted Liens and (2) Liens, not including Permitted Liens, which at any time secure Indebtedness in an amount up to $50 million; provided that the amount available for these Liens, must be reduced by the aggregate "value" of Sale and Leaseback Transactions referred to in clause (3) of the section describing the Limitations on Sale and Leaseback Transactions. In no case will the amount set forth in clause (2) be reduced below zero. "Lien" means any mortgage, lien, pledge, security interest, conditional sale or other title retention agreement, charge or other security interest or encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease in the nature thereof; any option or other agreement to sell or give a security interest therein and any filing of, or agreement to file, any financing statement under the Uniform Commercial Code (or equivalent statutes of any jurisdiction). "Permitted Liens" means Liens that fit into any of the following categories: (1) any Liens on assets of Reorganized Debtor or any Subsidiary existing on the Effective Date; (2) Liens on assets acquired after the Effective Date that were existing at the time of the acquisition by the Reorganized Debtor or any Subsidiary thereof; provided, such liens were in existence prior to the contemplation of such acquisition; (3) Liens on assets to secure the purchase price of assets to be acquired, which Liens cover only the assets acquired with such Indebtedness; (4) Liens on properties of any Subsidiary which secure such Subsidiary's Indebtedness used for working capital purposes or capital expenditures relating to Food-Related Businesses which Indebtedness is permitted under the covenant "Limitation on Indebtedness"; (5) Liens securing Indebtedness of Reorganized Debtor or any Subsidiary to the extent permitted under clauses (3) and (6) of the definition of Permitted Indebtedness; (6) Liens on an entity or its assets existing at the time the entity becomes a Subsidiary or is merged with Reorganized Debtor or any of its Subsidiaries or assumed in connection with the acquisition of its assets; provided that such Liens were in existence prior to the contemplation of such acquisition or merger and do not extend to any assets other than those of the Person that becomes a Subsidiary or is merged with Reorganized Debtor; (7) Liens on working capital assets which secure Indebtedness that is permitted under the covenant "Limitation on Indebtedness"; (8) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens (a) arising in the ordinary course of business and (b) for amounts not overdue for more than 90 days or being contested in good faith by appropriate proceedings; (9) judgment Liens and other similar Liens arising in the ordinary course of business, provided that (a) the enforcement of the Liens is stayed, (b) the claims secured by the Liens are being actively contested, in good faith and by appropriate proceedings; and (c) the judgment would not otherwise constitute a Default or Event of Default under the Indenture; (10) Liens securing Intercompany Debt Obligations; (11) Liens for taxes not yet due and payable or being contested in good faith, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (12) Liens on property of a foreign Subsidiary to secure Indebtedness of that foreign Subsidiary that is otherwise permitted under the terms of the New Notes; (13) liens in accordance with customary banking practice to secure Indebtedness in connection with foreign trade; (14) easements, rights-of-way, restrictions and other similar encumbrances to the extent they are incurred in the ordinary course of business; (15) pledges or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (16) deposits to secure letters of credit and bank guarantees and the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds, interest rate, foreign exchange and commodity hedging transactions and other similar obligations incurred in the ordinary course of business; and (17) any extension, 44 renewal or replacement, or successive extensions, renewals or replacements, in whole or in part, of any of the foregoing; providedthat the Lien so extended, renewed or replaced does not extend to any additional property or assets unless otherwise permitted under this covenant. Limitation on Asset Sales. Reorganized Debtor will not, and will not permit any of its Subsidiaries to, consummate an Asset Sale unless (1) Reorganized Debtor (or the Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; (2) if the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of is greater than $25 million, the Asset Sale is approved by Reorganized Debtor's board of directors; and (3) at least 75% of the consideration therefor received by Reorganized Debtor or such Subsidiary is in the form of cash. For purposes of this provision, each of the following shall be deemed to be cash: (a) any liabilities (as shown on Reorganized Debtor's or such Subsidiary's most recent balance sheet), of Reorganized Debtor or any Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the New Notes) that are assumed by the transferee of any such assets; and (b) any securities, notes or other obligations received by Reorganized Debtor or any such Subsidiary from such transferee that are converted by Reorganized Debtor or such Subsidiary into cash within 90 days thereafter (to the extent of the cash received in that conversion). Within 360 days after the receipt of any Net Proceeds from an Asset Sale, Reorganized Debtor or any of its Subsidiaries may apply such Net Proceeds at their option (1) to permanently repay indebtedness under any credit facility of Reorganized Debtor or any of its Subsidiaries; (2) to purchase, or commit to purchase, the assets of, or a majority of the voting Equity Interests of, a Food-Related Business; (3) to make, or commit to make, a capital expenditure; or (4) to acquire, or commit to acquire, other assets that are used or useful in, or ancillary to, a Food-Related Business that is owned by Reorganized Debtor or any of its Subsidiaries; provided that if any such commitment terminates for any reason, Reorganized Debtor shall, within 45 days after such termination, apply such Net Proceeds in accordance with the provisions of this or the following paragraph. Pending the final application of any such Net Proceeds, Reorganized Debtor or any of its Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the terms of the New Notes. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph, other than any such Net Proceeds held by a Subsidiary of Reorganized Debtor to the extent that such Subsidiary is restricted, by law, its charter or other governing instruments or any agreement, from transferring such Net Proceeds to Reorganized Debtor or any of its Subsidiaries, whether by dividend or otherwise, will constitute Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds $25 million, Reorganized Debtor will make an offer (an "Asset Sale Offer") to all holders of New Notes, and all holders of other Indebtedness that is pari passu with the New Notes containing provisions similar to those set forth in the terms of the New Notes with respect to offers to purchase or redeem with the proceeds of sales of assets, to purchase the maximum principal amount of New Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Reorganized Debtor may use such Excess Proceeds for any purpose not otherwise prohibited by the terms of the New Notes. If the aggregate principal amount of New Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the New Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. "Asset Sale" means: (1) the sale, conveyance or other disposition of any assets, other than sales of inventory in the ordinary course of business consistent with past practices; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Reorganized Debtor and its Subsidiaries taken as a whole will be governed by the provisions of the terms of the New Notes described below under the caption "--Purchase of New Notes Upon a Change of Control Triggering Event" and/or the provisions described above under the caption "--Consolidation, Merger and Sale of Assets" and not by the provisions of the Asset Sale covenant; or 45 (2) the issuance of Equity Interests by any of Reorganized Debtor's Subsidiaries or the sale of Equity Interests in any of its Subsidiaries, other than such an issuance or sale to Reorganized Debtor or one or more of its Subsidiaries. Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales: (1) any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $5.0 million; or (b) results in Net Proceeds to Reorganized Debtor and its Subsidiaries of less than $5.0 million; (2) a transfer of assets between or among Reorganized Debtor and any one or more of its Subsidiaries, (3) an issuance or transfer of Equity Interests by a Subsidiary to Reorganized Debtor or to another Subsidiary; (4) a Restricted Payment that is permitted by the covenant described below under the caption "--Restricted Payments"; (5) an exchange of assets used in Food-Related Businesses that complies with clauses (1) and (2) of the first paragraph of this covenant, except to the extent of any cash when and as received by Reorganized Debtor or any Subsidiary; (6) contribution of assets or stock to, or a merger with, another entity that complies with clauses (1) and (2) of the first paragraph of this covenant, if immediately after such transaction Reorganized Debtor will own, directly or indirectly, more than 20% of the total stock or other Equity Interests of such entity), except to the extent of any cash when and as received by Reorganized Debtor or any Subsidiary; and (7) the sale of farm or other real property and improvements used in agricultural production that complies with clauses (1) and (2) of the first paragraph of this covenant, except to the extent of any cash when and as received by Reorganized Debtor or any Subsidiary. "Equity Interests" means capital stock, limited liability company interests, partnership interests or other equity interests or equity securities, and all warrants, options or other rights to acquire such securities (but excluding any debt security that is convertible into, or exchangeable for, such equity interests or equity securities). "Net Proceeds" means the aggregate cash proceeds received by Reorganized Debtor or any of its Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements and amounts used to repay Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale. Limitation on Sale and Leaseback Transactions. Reorganized Debtor will not, and will not permit any of its Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that Reorganized Debtor or any of its Subsidiaries may enter into a Sale and Leaseback Transaction if (1) Reorganized Debtor or such Subsidiary, as applicable, could have (a) incurred Indebtedness under the Fixed Charge Coverage Ratio test in the covenant "Limitation on Indebtedness" in an amount equal to the Indebtedness required to be recorded under GAAP relating to such Sale and Leaseback Transaction and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "--Limitation on Liens"; and (2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the fair market value, which, with respect to Sale and Leaseback Transactions of $10 million or more shall be set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of such Sale and Leaseback Transaction. "Sale and Leaseback Transaction" means any arrangement with any Person providing for the lease by Reorganized Debtor or any of its Subsidiaries of property, which property has been or is to be sold or transferred by Reorganized Debtor or such Subsidiary to such Person in contemplation of such leasing; provided that the definition of "Sale and Leaseback Transaction" shall not include any transaction in which Reorganized Debtor or any of its Subsidiaries sells, and then leases back, (1) any assets with a lease term of three years or less and with the intent that the use of such assets by Reorganized Debtor or its Subsidiaries will be discontinued by the expiration of such period, (2) individual or related items of property that have an aggregate fair market value of $5 million or less or (3) ships, trucks, containers or other similar equipment purchased by Reorganized Debtor or its Subsidiaries from a Person other than Reorganized Debtor or one its Subsidiaries if within one hundred twenty (120) days of the such acquisition a sale and leaseback is consummated. 46 Limitation on Restricted Payments. Reorganized Debtor will not, and will not permit any Subsidiary, directly or indirectly, to make any Restricted Payment unless, at the time and after giving effect to the proposed Restricted Payment, the following conditions are met: (1) no Default or Event of Default under the Indenture shall have occurred and be continuing (or would result therefrom), (2) at the time of and after giving effect to any proposed Restricted Payment, Reorganized Debtor would be able to incur at least $1.00 of Indebtedness under the Fixed Charge Coverage Ratio described above under "Limitation on Indebtedness," (3) such payment, along with the aggregate amount of all Restricted Payments declared or made on or after the Effective Date may not exceed the sum of (a) 50% of Reorganized Debtor's total Consolidated Net Income accrued on a cumulative basis during the period beginning on the first day of the fiscal quarter in which the Effective Date occurs and ending on the last day of its last fiscal quarter ending prior to the date of the proposed Restricted Payment for which internal financial statements are available (or if such aggregate cumulative Consolidated Net Income is a loss, minus 100% of such loss); plus (b) the aggregate net cash proceeds received by Reorganized Debtor on or after the Effective Date (i) as capital contribu-tions or (ii) from the issuance and sale of (x) Equity Interests of Reorganized Debtor to any Person or entity other than a Subsidiary, excluding the issuance or sale of Disqualified Stock or (y) any other securities of Reorganized Debtor which (A) are convertible into or exchangeable or exercisable for Equity Interests of Reorganized Debtor, other than Disqualified Stock and (B) have been converted, exchanged or exercised; plus (c) to the extent that any Restricted Investment that was made after the Effective Date is sold for cash, the lesser of (i) the cash return of (and on) capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment. The provisions of the preceding paragraph shall not prohibit the following (the "Excluded Payments"): (a) so long as no Default or Event of Default shall have occurred and be continuing (or would result therefrom), any Restricted Payment which, together with all other Restricted Payments made pursuant to this subsection (a) on or after the Effective Date, does not exceed $25 million; (b) the payment of any dividend, within 60 days after it was declared, if at the date it was declared, the payment would have been permitted; (c) the making of any Investment or the redemption, repurchase, retirement, defeasance or other acquisition of any Equity Interests of Reorganized Debtor (or subordinated Indebtedness of Reorganized Debtor or its Subsidiaries) in exchange for, or out of the proceeds of the sale (other than to a Subsidiary of Reorganized Debtor) of, any Equity Interests of Reorganized Debtor (other than any Disqualified Stock); provided that, in each such case, the amount of any such net cash proceeds that are so utilized shall be excluded from clause (3)(b) of the preceding paragraph; (d) the payment of any dividend by a Subsidiary of Reorganized Debtor to the holders of its common Equity Interests on a pro rata basis, (e) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Reorganized Debtor held by any current or former director, officer, employee or agent of Reorganized Debtor (or any of its Subsidiaries) pursuant to any management equity subscription agreement, stock option agreement or other employee benefit plan or arrangement in effect on the Effective Date or adopted or approved thereafter by Reorganized Debtor's board of directors; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $5 million in any twelve-month period; (f) the periodic purchase of Equity Interests of Reorganized Debtor for contribution to employee benefit plans not to exceed $5 million in any twelve-month period; (g) the purchase of Equity Interests of Reorganized Debtor deemed to occur upon the exercise of stock options or warrants if such Equity Interests represent all or a portion of the exercise price of (or taxes in respect of the exercise of) such options or warrants, (h) the payment of the Black Scholes Payment Amount (as defined in the Warrant Agreement), (i) the payment of the Subclass 4B Supplemental Distribution (as defined in the Plan), (j) a Subsidiary of Reorganized Debtor declaring or making payment of a dividend on, or making of any distribution in respect of, its Equity Interests that are not made on a pro rata basis to all holders of its Equity Interests; provided that such dividend or distribution is consistent with the priority and proportionate to the amount of the corresponding investment in such Subsidiary's Equity Interest or (k) a Subsidiary of Reorganized Debtor purchasing, redeeming or retiring for value Equity Interests of such Subsidiary; provided that the amount of Equity Interests purchased, redeemed or retired under this clause does not exceed an amount yet to be determined. A "Restricted Payment" occurs if Reorganized Debtor or any of its Subsidiaries, directly or indirectly, does any of the following: (1) either (a) declares or pays any dividend on or makes any distribution in respect of 47 Reorganized Debtor's or any of its Subsidiaries' Equity Interests or to the direct or indirect holders of Reorganized Debtor's or any of its Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Reorganized Debtor or any of its Subsidiaries or to Reorganized Debtor or any of its Subsidiaries) or (b) purchases, redeems or retires for value Equity Interests of Reorganized Debtor or any of its Subsidiaries (other than Equity Interests owned by Reorganized Debtor or any of its Subsidiaries); (2) make any principal payment on or with respect to, or redeem, repurchase, defease or otherwise acquire or retire for value prior to its scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness that is subordinated to the New Notes or (3) make any Restricted Investment. A "Restricted Investment" is an Investment made after the Effective Date other than Permitted Investments. If a Restricted Payment is not made in cash, its value must be determined by Reorganized Debtor's board of directors as evidenced by a resolution of the board of directors. Not later than five days after the making of a Restricted Payment (other than Excluded Payments) which exceeds $5.0 million, Reorganized Debtor shall deliver to the Trustee an Officer's Certificate stating that the Restricted Payment is permitted and setting forth the basis upon which the calculations required by this covenant were computed. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, to the extent that such items are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided, however, that the advancement of funds by Reorganized Debtor or any of its Subsidiaries in the ordinary course of business to growers or suppliers of food-related products as advances against payment for such products shall not constitute an Investment. Notwithstanding the foregoing, the interest of Reorganized Debtor or any of its Subsidiaries in an entity that ceases to be a Subsidiary of Reorganized Debtor shall not constitute an Investment. "Permitted Investments" means, for any Person, Investments made on or after the Effective Date consisting of: (i) Investments by the Reorganized Debtor, or by a Subsidiary thereof, in Reorganized Debtor or a Subsidiary or in a Person, if as a result of such Investment (a) such Person becomes a Subsidiary of Reorganized Debtor or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Reorganized Debtor or any Subsidiary thereof; (ii) Temporary Cash Investments; (iii) an Investment that is made as a result of the receipt of non-cash consideration from an asset sale (including the contribution of assets to a joint venture) that was made pursuant to, and in compliance with, the covenant "Limitation on Asset Sales" by a third party to either or both of Reorganized Debtor or a Subsidiary solely as partial consideration for the consummation of an asset sale that is otherwise permitted hereby; (iv) Investments consisting of (a) purchases and acquisitions of inventory, supplies, materials and equipment, or (b) licenses or leases of intellectual property and other assets, in each case in the ordinary course of business; (v) Investments consisting of (a) loans and advances to employees for reasonable travel, relocation and business expenses in the ordinary course of business not to exceed $5,000,000 in the aggregate at any one time outstanding, (b) loans to employees of Reorganized Debtor or its Subsidiaries for the sole purpose of purchasing equity of Reorganized Debtor, (c) extensions of trade credit in the ordinary course of business, (d) prepaid expenses incurred in the ordinary course of business, and (e) loans made pursuant to agreements and arrangements entered into in connection with the issuance of New Common Stock pursuant to the Plan; 48 (vi) Investments existing on the Effective Date; (vii) Investments of Reorganized Debtor in connection with hedging obligations that are incurred in the ordinary course of business for the purpose of fixing or hedging interest rate risk or foreign currency risk; (viii) Investments consisting of endorsements for collection or deposit in the ordinary course of business; (ix) Investments in suppliers or customers that are in bankruptcy, receivership or similar proceedings or as a result of foreclosure on a secured Investment in a third party received in exchange for or cancellation of an existing obligation of such supplier or customer to Reorganized Debtor or a Subsidiary; (x) Investments paid for solely with Equity Securities (other than Disqualified Stock) of Reorganized Debtor; (xi) Investments paid for in cash in Food-Related Businesses, provided that such Investments along with the amount of all other Investments made pursuant to this clause (xi) shall not exceed 10% of Adjusted Consolidated Assets at such time; (xii) Investments permitted pursuant to clause (8) of the definition of "Permitted Indebtedness"; (xiii) Investments (other than investments specified in clauses (i) through (xii) above) in an aggregate amount, as valued at the time each such Investment is made, not exceeding $10,000,000 at any time after the Effective Date. "Adjusted Consolidated Assets" on any date means the amount of all assets of Reorganized Debtor and its Subsidiaries on a consolidated basis (excluding applicable depreciation, amortization and other valuation reserves) less (1) all current liabilities of Reorganized Debtor and its Subsidiaries (excluding intercompany items) and (2) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, each determined as of the last day of the immediately preceding fiscal quarter in accordance with GAAP. "Temporary Cash Investments" means (i) investments in marketable direct obligations issued or guaranteed by the United States of America, or of any governmental agency or political subdivision thereof, maturing within 365 days of the date of purchase; (ii) invest-ments in certificates of deposit issued by a bank organized under the laws of the United States of America or any state thereof or the District of Columbia, in each case having capital and unimpaired surplus totaling more than $500,000,000 and rated at least A by Standard & Poor's Corporation and A-2 by Moody's Investor Services, Inc. (any such bank, an "Approved Bank") maturing within 365 days of purchase; (iii) repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in clauses (i) and (ii) above entered into with any Approved Bank, (iv) commercial paper or finance company paper issued by any Person incorporated under the laws of the United States or any state thereof and rated at least A by Standard & Poor's Corporation and A-2 by Moody's Investors Service, Inc., in each case maturing within 365 days of purchase; (v) Investments not exceeding 365 days in duration in money market funds that invest substantially all of such funds' assets in the Investments described in the preceding clauses (i) through (iv); and (vi) in the case of Reorganized Debtor's non-U.S. Subsidiaries, short-term investments made in the ordinary course of business and consistent with past practice. Dividend and Other Payment Restrictions Affecting Subsidiaries. Reorganized Debtor will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or agree to any encumbrance or restriction on the ability of any Subsidiary to (1) pay dividends or make any other distributions on its capital stock to Reorganized Debtor or any of Reorganized Debtor's Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to Reorganized Debtor or any of Reorganized Debtor Subsidiaries; or (2) make loans or advances to Reorganized Debtor or any of Reorganized Debtor's Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of (1) existing Indebtedness as in effect on the Effective Date; (2) the Indenture and the New Notes; (3) applicable law; (4) any agreement or instrument applicable to or binding on a Person acquired by Reorganized Debtor or any of its Subsidiaries as in effect at the time of such acquisition (except to the extent such agreement or instrument was entered into in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of such acquired Person's Indebtedness, such Indebtedness was permitted to be incurred by the terms of the New Notes; (5) any agreement for the sale or other disposition of a Subsidiary that restricts distributions by such Subsidiary pending 49 its sale or other disposition; (6) Refinancing Indebtedness if (A) the encumbrances or restrictions, taken as a whole, are not materially more restrictive than is customary in comparable financings (as determined in good faith by Reorganized Debtor); (B) any such encumbrances or restrictions will not materially adversely affect Reorganized Debtor's ability to make principal or interest payments on the New Notes (as determined in good faith by Reorganized Debtor) and (C) Reorganized Debtor delivers an Officer's Certificate to the Trustee stating that incurring such Indebtedness complies with this clause; (7) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; and (8) restrictions on cash or other deposits or net worth under contracts entered into in the ordinary course of business. Business Activities. Reorganized Debtor will not, and will not permit any Subsidiary to, engage in any business other than Food-Related Businesses. Payments for Consent. Reorganized Debtor will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of New Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the New Notes unless such consideration is offered to be paid and is paid to all holders of the New Notes that consent, waive or agree to amend such terms and provisions in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Reports. Whether or not required by the Commission, so long as any New Notes are outstanding, Reorganized Debtor will file with the Commission (or, if the Commission will not accept such filings, furnish to the Trustee) within the time periods specified in the Commission's rules and regulations (1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if Reorganized Debtor were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by Reorganized Debtor's certified independent accountants; and (2) all current reports that would be required to be filed with the Commission on Form 8-K if Reorganized Debtor were required to file such reports. Transactions With Related Persons. Reorganized Debtor will not, and will not permit any Subsidiary to, directly or indirectly enter into any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Related Person unless the following conditions are met: (1) the transaction or series of transactions must be on terms which are as favorable to Reorganized Debtor or the Subsidiary as would be available in a comparable transaction with an unrelated third party; (2) if the transaction or series of transactions involves aggregate payments of $5 million or more, then Reorganized Debtor must, within 20 days, deliver an Officer's Certificate to the Trustee for the New Notes certifying that the transaction complies with clause (1) above; (3) if the transaction or series of transactions involves aggregate payments of $10 million or more, then the transaction or series of transactions must be approved by Reorganized Debtor's board of directors, including the approval of a majority of directors who are not Related Persons in connection with the transaction or transactions being approved and (4) if the transaction or series of transactions involves aggregate payments of $25 million or more, then Reorganized Debtor must deliver to the Trustee an opinion as to the fairness from a financial point of view to Reorganized Debtor and its Subsidiaries, taken as a whole of such transaction or series of transactions issued by an accounting, appraisal or investment banking firm of national standing. However, this provision does not apply to (1) any employment arrangement or transactions relating to benefit plans with any employee, consultant or director of Reorganized Debtor or any Subsidiary that is entered into by Reorganized Debtor or any Subsidiary in the ordinary course of business and consistent with past practices of Reorganized Debtor or such Subsidiary; (2) payment of reasonable directors' fees; (3) loans and advances to employees of Reorganized Debtor or any Subsidiary in the ordinary course of business otherwise permitted pursuant to the term of the New Notes; (4) Restricted Payments that are permitted by the terms of the New Notes described under the caption "Limitation on Restricted Payments"; 50 (5) issuances of Equity Interests by Reorganized Debtor; and (6) any transaction between or among Reorganized Debtor and one or more Subsidiaries of Reorganized Debtor or among one or more Subsidiaries of Reorganized Debtor entered into in the ordinary course of business. Purchase of New Notes upon a Change of Control. If a Change of Control occurs, each holder of New Notes will have the right, at his or her option, to require Reorganized Debtor to purchase all or any part of his or her New Notes (in integral multiples of $1,000) on the "Purchase Date" at a Purchase Price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the Purchase Date (the "Purchase Price"). A "Change of Control" means an event or series of events by which any of the following occurs: (1) any "Person" is or becomes the "beneficial owner" directly or indirectly, of more than 50% of the total voting power of all outstanding classes of voting capital stock of Reorganized Debtor; (2) Reorganized Debtor consolidates with or merges into another entity or conveys, transfers or leases all or substantially all of its assets in one or a series of transactions to any entity, or any entity consolidates with or merges into Reorganized Debtor and, in connection with the transaction, the outstanding voting shares of Reorganized Debtor are changed into or exchanged for cash, securities or other property, other than a consolidation or merger (a) between Reorganized Debtor and a Subsidiary or (b) in which the holders of the outstanding voting shares of Reorganized Debtor immediately prior to the transaction own, directly or indirectly, not less than a majority of the outstanding voting shares of the surviving entity immediately after the transaction in substantially the same proportion as before the transaction; (3) Reorganized Debtor or any Subsidiary purchases or otherwise acquires, directly or indirectly, beneficial ownership of 40% or more of Reorganized Debtor's capital stock within any 12-month period; (4) the adoption of a plan relating to the liquidation or dissolution of Reorganized Debtor or (5) on any date, a majority of Reorganized Debtor's Board of Directors does not consist of Persons (a) who were directors at the Effective Date ("Continuing Directors") or (b) whose election or nomination as directors was approved by at least 2/3 of the directors then in office who are Current Directors or whose election or nomination was previously so approved. In the definition of Change of Control, "Person" has the same meaning given to it in Sections 13(d) and 14(d) of the Exchange Act, and "beneficial owner" or "beneficially owned" have the same meaning given to these terms in Rules l3d-3 and l3d-5 under the Exchange Act, except that a Person is deemed to have "beneficial ownership" of all shares that Person has the right to acquire, whether the right is exercisable immediately or only after the passage of time. "Purchase Date" means a date fixed by Reorganized Debtor that is no earlier than 30 days after and no later than 60 days after the mailing of notice to holders of New Notes of a Change of Control. Reorganized Debtor is obligated to give notice to holders of New Notes and the Trustee within 30 days following the occurrence of a Change of Control. The notice must specify (1) that a Change of Control has occurred and that such New Noteholder has the right to require Reorganized Debtor to purchase such New Noteholder's New Notes at the Purchase Price, together with such information that Reorganized Debtor deems relevant or as may be required to be disclosed pursuant to applicable securities or other laws, (2) the place at which the New Notes are to be presented and surrendered for purchase, (3) that interest accrued to the Purchase Date will be paid upon presentation and surrender, and (4) that interest will cease to accrue as of the Purchase Date on all New Notes timely surrendered for purchase. In order for a holder of New Notes to properly put his or her New Notes to Reorganized Debtor for purchase, he or she must present and surrender the New Notes to Reorganized Debtor at the place specified in its notice at least 15 days prior to the purchase date. Any tender by a holder of New Notes will be irrevocable. After a Change of Control has occurred and Reorganized Debtor has complied with the provisions described above, if there is a subsequent Change of Control, Reorganized Debtor is not obligated to (1) notify holders of New Notes which remain outstanding or (2) purchase any New Note. Rating. Reorganized Debtor shall use its reasonable best efforts obtain a rating from the New Notes from either Moody's Investor Services, Inc. or Standard & Poor's Corporation. In the event that no such rating is 51 obtained within one year of the Effective Date, the Senior Note Interest Rate shall increase by 0.50% until such rating is obtained. Events of Default Applicable to All Series of Senior Debt Securities Under the Indenture. The following events are defined in the Indenture as "Events of Default" with respect to each series of Senior Debt Securities to be issued under the Indenture, including the New Notes: (i) default in the payment of any installment of interest on any notes in such series for 30 days after becoming due; (ii) default in the payment of the principal of (or premium, if any, on) any notes in such series when due; (iii) default in the performance of any other covenant contained in the terms of the notes in such series or the Indenture for a period of 60 days after written notice of such failure, requiring Reorganized Debtor to remedy the same, shall have been given to Reorganized Debtor by the Trustee or to Reorganized Debtor and the Trustee by the holders of 25% in aggregate principal amount of the notes in such series then outstanding; (iv) default shall have occurred under any agreements, indentures or instruments under which Reorganized Debtor or certain of its Subsidiaries then has outstanding Indebtedness in excess of $10 million in the aggregate and, if not already matured in accordance with its terms, such Indebtedness shall have been accelerated and such acceleration shall not have been rescinded or annulled within ten days after notice thereof shall have been given to Reorganized Debtor by the Trustee or to Reorganized Debtor and the Trustee by the holders of at least 25% in aggregate principal amount of the notes in such series then outstanding, provided, that if, prior to the entry of judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by Reorganized Debtor or its Subsidiary, or waived by the applicable percentage of holders of such Indebtedness, then the Event of Default under the Indenture shall be deemed likewise to have been remedied, cured or waived; and provided, further, that if such default results from an action of the United States government or a foreign government which prevents Reorganized Debtor or its Subsidiary from performing their obligations under such agreement, indenture or instrument, the occurrence of such default will not be an Event of Default under the Indenture; (v) one or more judgments, orders or decrees for the payment of money in excess of $10 million, either individually or in the aggregate, shall be entered against Reorganized Debtor or certain of its Subsidiaries and shall not be discharged, there shall have been a period of 60 days during which a stay of enforcement of such judgment or order, by reason of an appeal or otherwise, shall not be in effect and there shall have been given written notice of the default to Reorganized Debtor by the Trustee or to Reorganized Debtor and the Trustee by the holders of 25% in aggregate principal amount of the notes in such series then outstanding; (vi) certain events of bankruptcy, insolvency or reorganization with respect to Reorganized Debtor or certain of its Subsidiaries shall have occurred; or (vii) failure by Reorganized Debtor to comply with its obligations under "Consolidation, Merger and Sale of Assets". If an Event of Default shall occur and be continuing with respect to a series of Senior Debt Securities, either the Trustee or the holders of at least 25% in principal amount of the outstanding notes in such series may declare the entire principal amount of the notes in such series to be immediately due and payable. If an Event of Default specified in clause (vi) above occurs with respect to Reorganized Debtor, the entire principal amount of the notes in such series shall ipso facto become due and payable. Under the Indenture, Reorganized Debtor is required to furnish the Trustee annually a statement by certain officers of Reorganized Debtor to the effect that, to the best of their knowledge, Reorganized Debtor is not in default in the fulfillment of any of its obligations under the Indenture, or, if there has been a default in the fulfillment of any such obligation, specifying each such default. The Indenture provides that the Trustee shall, within 90 days after the occurrence of a default with respect to any series of Senior Debt Securities, give the holders of the notes in such series notice of such default known to it (the term default to mean the events specified above without grace periods); provided that, except in the case of a default in the payment of principal of (or premium, if any) or interest, if any, on any of the notes in such series, the Trustee shall be protected in withholding such notice if it in good faith determines the withholding of such notice is in the interest of the holders of the notes in such series. The holders of a majority in principal amount of the notes in any series of Senior Debt Securities outstanding have the right, subject to certain limitations, to direct the time, method and place of conducting any 52 proceeding for any remedy available to the Trustee with respect to such series or exercising any trust or power conferred on the Trustee, and to waive certain defaults. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee shall exercise such of its rights and powers under the Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circum-stances in the conduct of his or her own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of notes in any series of Senior Debt Securities unless they shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request. Satisfaction and Discharge. The Indenture provides that Reorganized Debtor shall be discharged from its obligations under any series of Senior Debt Securities (with certain exceptions) at any time prior to the stated maturity or redemption thereof when (a) Reorganized Debtor has deposited with the Trustee, in trust, sufficient funds to pay the principal of (and premium, if any) and interest, if any, to stated maturity (or redemption) on, the notes in such series, (b) Reorganized Debtor has paid all other sums payable with respect to the notes in such series and (c) certain other conditions are met. Upon such discharge, the holders of the notes in such series shall no longer be entitled to the benefits of the Indenture, except for certain rights, including registration of transfer and exchange of such notes, and shall look only to such deposited funds. Modification and Waiver. Certain modifications and amendments (which, generally, either benefit or do not adversely affect the holders of outstanding notes of any series of Senior Debt Securities) of the Indenture may be made by Reorganized Debtor and the Trustee without the consent of holders of the New Notes. Other modifications and amendments of the Indenture or of the terms of any such series require the consent of the holders of more than 50% in principal amount of the notes of such series or of each series outstanding affected by the modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding note affected thereby, (a) reduce the principal of or change the stated maturity of any note, (b) reduce the rate of or change the time for payment of interest on any note, (c) reduce the principal amount or any premium payable upon the redemption of any note or change the time at which a note may be redeemed, (d) reduce the amount of the principal of a discounted note that would be due and payable upon a declaration of acceleration of the maturity thereof, (e) change the place of payment, (f) impair the right of a holder to receive payment of principal of and interest on such holder's notes on or after the due dates thereof, (g) change the currency in which the principal of or any premium or interest (including additional amounts) on any note is payable, (h) reduce the percentage in principal amount of the outstanding notes of any particular series, the consent of whose holders is required for any such supplemental indenture, or the consent of whose holders is required for any waiver (of compliance with certain provisions of the Indenture or certain defaults thereunder and their consequences) provided for in the Indenture, (i) modify or change any provision of the Indenture or the related definitions affecting the ranking of any note in a manner which affects the holders in any material respect, or (j) make any change in the foregoing amendment and waiver provisions. The holders of not less than a majority in principal amount of the outstanding notes of any series of Senior Debt Securities may on behalf of the holders of all notes in such series waive compliance by Reorganized Debtor with certain restrictive provisions of the Indenture or the terms of such series. The holders of not less than a majority in principal amount of the outstanding notes in any series may on behalf of the holders of all notes in such series waive any past default under the Indenture, except a default in the payment of the principal of (or premium, if any) and interest, if any, on any note in such series or in respect of a provision which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding note in such series affected. Defeasance of Certain Obligations. The terms of the New Notes provide that Reorganized Debtor does not have to comply with the restrictive covenants described above under the headings Limitation on Indebtedness; Limitation on Liens; Limitation on Asset Sales; Limitation on Sale and Leaseback Transactions; Limitation on Restricted Payments; Dividend and Other Payment Restrictions Affecting Subsidiaries; Business Activities; 53 Payments for Consent; Reports; Transactions with Related Persons; Purchase of New Notes Upon a Change of Control and clause (3) of Consolidation, Merger and Sale of Assets if, among other conditions, Reorganized Debtor (1) deposits with the trustee an amount of cash and U.S. government securities, in any combination, sufficient to pay all amounts owing on the New Notes for unpaid principal, premium, if any, and interest to maturity or any applicable redemption date and (2) provides an opinion of independent tax counsel that holders of New Notes will not be adversely affected for U.S. federal income tax purposes by the defeasance. Even if Reorganized Debtor does this, its obligations under the Indenture and the New Notes other than in connection with the above covenants will remain in full force and effect. Paying Agent. The registrar, paying and transfer agent for the New Notes will be American Security Transfer Company, Limited Partnership d/b/a Securities Transfer Company, Cincinnati, Ohio. Securities Transfer Company is an affiliate of Reorganized Debtor. New Warrants/2 / General Description. The New Warrants will be exercisable for 13,333,333 shares of the New Common Stock (i.e., 25% of the New Common Stock on a fully diluted basis, prior to dilution by grants under the 2002 Stock Option Plan), and shall expire 7 years after the Effective Date (in 2009). The New Warrants will have customary anti-dilution protection for stock splits, stock dividends, stock combinations and similar transactions. Debtor intends to apply to list the New Warrants on the New York Stock Exchange. Exercise Price. The exercise price of the New Warrants will be set at a price per share equal to the "Solvency Value". The Solvency Value is the value per share of the New Common Stock that, when multiplied by the number of shares of New Common Stock distributed to Holders of Class 4 Claims (and after adding such amount to the face amount of the New Notes), will equal the amount of Class 4 Claims for principal plus interest on such principal through the Effective Date. If the Effective Date were December 31, 2001, the estimated exercise price would be $18.76. The Solvency Value will be higher due to an increase in interest on Class 4 Claims to the extent that the Effective Date is later than December 31, 2001 and will increase by approximately $0.18 per New Warrant share for each month between December 31, 2001 and the Effective Date. Merger or Tender Offer. In the event of a merger or tender offer in which any part of the consideration being paid or exchanged consists of cash or other property other than Qualifying Common Equity Securities ("Other Property"), New Warrant Holders will have the right to elect (as an alternative to exercising some or all of the New Warrants) to receive Other Property in the same proportion as Holders of New Common Stock for such New Warrants equivalent to a Black/Scholes valuation of such New Warrants as of the date such merger or tender offer is consummated. "Qualifying Common Equity Securities" shall mean the regular common stock of the surviving entity in the merger or tender offer, except that if the surviving entity has a parent corporation, it shall be the common stock of the parent corporation. For purposes of calculating such value, (a) the term of the New Warrants will be the remaining time to the expiration of the New Warrants, (b) the assumed volatility will be 25%, (c) the assumed risk-free rate shall equal the yield on U.S. Treasury securities with comparable maturity to the remaining term of the New Warrants and (d) the share price of the New Common Stock in such merger or tender offer will be equal to the cash proceeds or the fair market value of the Other Property received for such share of New Common Stock in such merger or tender offer. In the event of a stock-for-stock merger or exchange offer in which the consideration to be received is all or partially common equity securities, the New Warrants will be exchanged for replacement warrants of the surviving entity which will include similar terms and conditions, including similar Black/Scholes valuation protection in the event of a subsequent merger or tender offer. New Common Stock Reorganized Debtor will have 150,000,000 authorized shares of New Common Stock, of which 40,000,000 shares will be issued (39,200,000 issued on the Effective Date and 800,000 management shares subject to - -------- /2/ The following is a general description of the principal terms and definitions of the New Warrants. The final provisions of the New Warrants will be filed with the Bankruptcy Court prior to the Voting Deadline. 54 restricted delivery). Assuming the exercise of all New Warrants and Management Options, 59,259,259 shares of New Common Stock would be issued and outstanding. Holders of New Common Stock will be entitled to one vote per share on the election of directors and all other matters submitted to a vote of shareholders. Shares of New Common Stock will not have cumulative voting rights. Holders of New Common Stock will be entitled to receive dividends when, as and if declared by Reorganized Debtor's Board of Directors, out of funds legally available therefor; provided that all dividends on any preferred stock which may be issued in the future must be fully paid or declared and set apart before any dividends can be paid or declared and set apart with respect to the New Common Stock. Upon liquidation, dissolution or winding-up of Reorganized Debtor, the Holders of New Common Stock will be entitled to share ratably in the assets of Reorganized Debtor remaining after the payment of its obligations and liabilities and after payment of any liquidation preference due the Holders of Reorganized Debtor's preferred stock. Holders of New Common Stock will have no preemptive or other rights to subscribe for or purchase additional securities of Reorganized Debtor. All outstanding shares of New Common Stock will be fully paid and nonassessable. Debtor intends to apply to list the New Common Stock on the New York Stock Exchange. Management Incentive Program Management New Common Stock. As set forth in the Lock Up Agreement and in order to provide appropriate incentives to key executives, Carl H. Lindner, the current Chairman of the Board of Debtor ("Lindner"), will receive or have the right to receive 800,000 shares of New Common Stock (i.e., 2.0% of the New Common Stock, subject to dilution by the New Warrants and the Management Options) and Steven G. Warshaw, the current President and Chief Executive Officer of Debtor ("Warshaw"), and such other key employees of Debtor or its subsidiaries as he may designate prior to the Effective Date, will receive or have the right to receive an aggregate of 200,000 shares of New Common Stock (i.e., 0.5% of the New Common Stock, subject to dilution by the New Warrants and the Management Options) (the "Management Incentive Shares"). Lindner will receive 800,000 shares of New Common Stock pursuant to a stock unit agreement to be entered into between Reorganized Debtor and Lindner. Under the Agreement, Lindner will be granted an aggregate of 800,000 Stock Units as of the Effective Date which will be credited to a bookkeeping account maintained by Debtor (the "Account"). Each Stock Unit will represent Lindner's right to receive one share of New Common Stock. The Stock Units are not transferable (other than by the laws of descent and distribution) unless otherwise approved by the Compensation Committee of Reorganized Debtor's Board of Directors. On the Delivery Date (as defined in the next sentence), Debtor will deliver to Lindner the number of shares of New Common Stock equal to the number of Stock Units credited to his Account on the Delivery Date free of all restrictions (the "Settlement Shares"), and the Account will terminate. The "Delivery Date" will be the one-year anniversary of the Effective Date; provided that Lindner may elect to defer the Delivery Date for all the Settlement Shares for six months thereafter by written notice to Debtor no less than 90 days prior to the otherwise scheduled Delivery Date. Lindner may exercise this deferral election for all the Settlement Shares one additional time with similar 90 day notice prior to the last extended date. Notwithstanding the foregoing, the Delivery Date will be accelerated to the first to occur of: (a) the date as of which the average closing price per share of New Common Stock over any five consecutive trading days is 25% or more below the "average price" of the New Common Stock on the Effective Date; (b) the date as of which the previous day's closing price per share of New Common Stock is 40% or more below the "average price" of the New Common Stock on the Effective Date; (c) the date immediately prior to the date of a Change in Control of Reorganized Debtor; and (d) the date as of which Lindner's membership on the board of directors of Reorganized Debtor terminates for any reason. Lindner will have the right to request registration under the Securities Act of the New Common Stock delivered to him on the Delivery Date; provided that Reorganized Debtor shall not be obligated to keep such registration in effect for more than 90 days. For purposes of this stock unit agreement, "Change in Control" means (a) any person becoming the beneficial owner, directly or indirectly, of securities representing 25% or more of the combined voting power of 55 Reorganized Debtor's outstanding securities, or (b) there is consummated a merger or consolidation of Reorganized Debtor or any direct or indirect subsidiary of Reorganized Debtor with any other corporation, or there is consummated a sale of all or substantially all of the assets of Reorganized Debtor or a similar transaction, and in any such case the voting securities of Reorganized Debtor outstanding immediately prior to such transaction do not represent at least 50% of the combined voting power of the securities of Reorganized Debtor or, if Reorganized Debtor does not survive, at least 50% of the combined voting power of the surviving or acquiring entity, or any parent thereof, outstanding immediately after such transaction. At the time of grant of the Stock Units, Lindner will be responsible for payment of the FICA withholding taxes then due. At the time of distribution of the Settlement Shares, Lindner will be responsible for payment of income and other tax withholding then due by reason of the distribution by either: (a) a check from Lindner payable to Debtor or (b) a three-year loan from Debtor (secured by Settlement Shares which, as of the Delivery Date, have a value equal to the principal amount of such loan), and subject to other conditions. With respect to Warshaw and such other key employees of Debtor or its subsidiaries as he may designate prior to the Effective Date (collectively referred to as the "Executives"), Debtor, through the Grantor Trust (as defined below), will agree to deliver to the Executives in the future 200,000 shares of New Common Stock (the "Award Shares"). Debtor will deposit the Award Shares into a grantor trust (the "Grantor Trust") on the Effective Date, and Executives' rights to the Award Shares shall be contingent upon the consummation of the Plan. No Executive may be credited with more than 200,000 Award Shares as of the Effective Date. The Grantor Trust will be managed by an independent fiduciary of Debtor. The Grantor Trust will deliver to the Executives (a) 50% of the Award Shares on the first anniversary of the Effective Date and (b) 50% of the Award Shares on the second anniversary of the Effective Date. Notwithstanding the foregoing, 100% of the Award Shares to which he or she is entitled will be delivered to each Executive promptly after the date of termination of such Executive's employment with Debtor for any reason. On the Effective Date, the Executives will be responsible for payment of the FICA withholding taxes. At the time of the delivery of the Award Shares to which he or she is entitled, each Executive will be responsible for payment of income and other tax withholding then due by reason of the delivery. The obligation to pay the withholding amounts at the date of delivery of the Award Shares may be satisfied by either (a) a check from each Executive payable to Debtor or (b) by surrender to Debtor of a number of Award Shares that have a fair market value on the date of surrender equal to the amount of payroll withholding taxes due. Approval of the Plan by the Bankruptcy Court shall constitute approval of the Management Incentive Shares. 2002 Stock Option Plan. Under the 2002 Stock Option Plan, Reorganized Debtor may issue up to an aggregate of 5,925,926 shares of New Common Stock (i.e., 10% of the New Common Stock on a fully diluted basis) as awards. The number of shares of Common Stock which may be subject to awards granted under the 2002 Stock Option Plan to any individual may not exceed 2,000,000 in any calendar year. The terms of any awards granted under the 2002 Stock Option Plan (including vesting) will be determined by the board of directors of Reorganized Debtor (or the Compensation Committee referred to below) in its sole discretion; provided that all options granted thereunder on or shortly after the Effective Date will have an exercise price set at the average closing price of the New Common Stock over the first 30 trading days following the Effective Date (or over such other 30-day period shortly after the Effective Date as the board of directors of Reorganized Debtor or the Compensation Committee (as defined below) determines). The 2002 Stock Option Plan will be administered by a committee (the "Compensation Committee") comprised of two or more outside directors. Employees (including officers), directors and certain advisors and consultants of Reorganized Debtor and its subsidiaries will be eligible to participate in the 2002 Stock Option Plan. There will be no limit to the number of participants and participation will be based on managerial level and performance. Form of Awards. The 2002 Stock Option Plan provides for the grant of the following types of awards: 1. Stock options (including Incentive Stock Options, Non-Qualified Stock Options and Replacement Options). Options to purchase shares of New Common Stock permit the holder to purchase a fixed 56 number of shares at a fixed price. At the time the option is granted, the Compensation Committee shall determine the number of shares subject to the option, the term of the option (up to 10 years), the manner and time of the option's exercise and the exercise price; provided that all options granted on or shortly after the Effective Date will have an exercise price set at the average closing price of the New Common Stock over the first 30 trading days following the Effective Date or such other 30-day period shortly after the Effective Date as the board of directors of Reorganized Debtor or the Compensation Committee approves (or an exercise price that, in the judgment of the board of directors or the Compensation Committee, is substantially similar to an exercise price determined in such a manner). The exercise price for a stock option may be paid in cash or in shares of New Common Stock owned by a participant for at least six months. The Compensation Committee may in its sole discretion authorize the payment of the exercise price, in full or in part, by reducing the number of shares to be issued upon the exercise of the option or the holder may elect a "cashless exercise" and elect to pay the exercise price upon exercise by authorizing a broker to sell all or a portion of the shares to be issued upon exercise and remit to Reorganized Debtor a sufficient portion of the sale proceeds to pay for the exercise price and any applicable tax withholding amounts. The Compensation Committee may also grant replacement options (each, a "Replacement Option") to any employee who exercises an option granted under the 2002 Stock Option Plan using then-owned New Common Stock as payment for the purchase price. A Replacement Option grants the employee the right to purchase, at the fair market value as of the date of exercise of the original option, a number of shares of New Common Stock not to exceed the number of shares used by the employee to satisfy the exercise price. A replacement option may not be exercised for one year following the date of grant, and its term may not extend beyond the term of the original option. No "Incentive Stock Options" (within the meaning of Code (S)422) will be awarded to any person who at the time of the award possesses more than 10% of the total combined voting power of all classes of stock of Reorganized Debtor and its subsidiaries. 2. Stock awards (including restricted and unrestricted awards of stock). Stock awards are grants of shares of New Common Stock which may be restricted (i.e., subject to a holding period and/or other conditions) or unrestricted. The Compensation Committee will determine the amount, terms and conditions of the awards, including the price to be paid, if any, for restricted awards and contingencies related to the attainment of specified performance goals or continued employment. 3. Performance awards. Performance awards are the right to receive either New Common Stock or cash of an equivalent value, or fixed dollar amount payable in cash, shares, or both, at the end of a specified performance period. The Compensation Committee may condition the Awards based upon the performance of an individual, Debtor or an operating unit or division of Debtor or the increase in value of the New Common Stock, or other factors as determined by the Compensation Committee. The above awards may be granted singly, in combination or in tandem. Vesting. Unless the Compensation Committee determines otherwise with respect to any of the following, awards may vest early or be forfeited in certain circumstances. An award may be forfeited upon a termination of employment for cause or if following termination, the participant engages in an act which would have warranted a termination for cause. Unless the Compensation Committee determines otherwise, in the event of death, disability or retirement, awards will vest in full and be exercisable for one year or until expiration of the original term of the award, whichever is shorter. In the event of termination of employment for any other reason (excluding a change of control, merger or sale), vested awards must be exercised within 90 days after the date of termination or upon expiration of the original term of the award, whichever is shorter, unless the Compensation Committee determines otherwise. In the event of a Change of Control (as defined in the 2002 Stock Option Plan), all awards outstanding will become fully vested. If a participant's employment is terminated by Debtor or any of its subsidiaries for any reason other than cause, within one year after a Change of Control, all vested stock 57 options held by such employee upon termination will be exercisable for one year or until expiration of the original term, whichever is shorter. In the event of a merger, consolidation, reorganization, liquidation or sale of substantially all of Debtor's assets that results in the conversion of the New Common Stock into stock of another company or into cash, if provisions are not made for the surviving entity to assume outstanding stock awards, such awards will become fully vested, but will terminate to the extent not exercised prior to the completion of the transaction. Amendment; Termination. The board of directors of Reorganized Debtor may amend the plan at any time but may not adopt any amendment which would impair participants' rights with respect to awards granted prior to the amendment, without the consent of the participants. In addition, no amendment may be made which would increase the maximum number of shares available for awards under the 2002 Stock Option Plan or which may be awarded to any individual without shareholder approval. The 2002 Stock Option Plan will continue in effect indefinitely until terminated by the board of directors of Reorganized Debtor. Termination of the 2002 Stock Option Plan would not impair the status of any awards outstanding at the date of termination. Approval of the Plan by the Bankruptcy Court shall constitute approval of the 2002 Stock Option Plan. G. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES 1. Assumption of Executory Contracts and Unexpired Leases Immediately prior to the Effective Date, except as otherwise provided herein, all executory contracts or unexpired leases of Reorganized Debtor will be deemed assumed in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, except those executory contracts and unexpired leases that (a) have been rejected by order of the Bankruptcy Court, (b) are the subject of a motion to reject pending on the Effective Date, (c) are identified on a list to be filed with the Bankruptcy Court on or before the Confirmation Date, as to be rejected, (d) that relate to the purchase or other acquisition of Equity Interests, or (e) are rejected pursuant to the terms of the Plan. Notwithstanding anything herein to the contrary, (x) immediately prior to the Effective Date, Debtor shall assume that certain letter agreement, dated March 21, 2001, with Houlihan pursuant to which, among other things, Debtor agreed to pay to Houlihan certain fees for advisory services rendered to the Prepetition Senior Noteholder Committee and (y) on the Effective Date, Debtor shall make the payments set forth in such letter agreement. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions and rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code. 2. Claims Based on Rejection of Executory Contracts or Unexpired Leases All proofs of Claim with respect to Claims arising from the rejection of executory contracts or unexpired leases, if any, must be filed with the Bankruptcy Court within thirty (30) days after the date of entry of an order of the Bankruptcy Court approving such rejection. Any Claims arising from the rejection of an executory contract or unexpired lease not filed within such time will be forever barred from assertion against Debtor or Reorganized Debtor, their Estates and property unless otherwise ordered by the Bankruptcy Court or provided in this Plan, and all such Claims for which proofs of Claim are required to be filed will be, and will be treated as, General Unsecured Claims subject to the provisions of Section III.B.3 of the Plan. 3. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed Any monetary amounts by which each executory contract and unexpired lease to be assumed pursuant to the Plan is in default shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in Cash on the Effective Date or on such other terms as the parties to such executory contracts or unexpired leases may otherwise agree. In the event of a dispute regarding: (a) the amount of any cure payments, (b) the ability of Reorganized Debtor or any assignee to provide "adequate assurance of future performance" 58 (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (c) any other matter pertaining to assumption, the cure payments required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order resolving the dispute and approving the assumption. 4. Indemnification of Directors, Officers and Employees The obligations of Debtor to indemnify any Person serving at any time on or prior to the Effective Date as one of its directors, officers or employees by reason of such Person's service in such capacity, or as a director, officer or employee of any other corporation or legal entity, to the extent provided in Debtor's constituent documents, by a written agreement with Debtor or under New Jersey corporate law, shall be deemed and treated as executory contracts that are assumed by Reorganized Debtor pursuant to the Plan and section 365 of the Bankruptcy Code as of the Effective Date. Accordingly, such indemnification obligations shall be treated as General Unsecured Claims, and shall survive unimpaired and unaffected by entry of the Confirmation Order, irrespective of whether such indemnification is owed for an act or event occurring before or after the Petition Date. 5. Compensation and Benefit Programs Except as otherwise expressly provided hereunder, all employment and severance agreements and policies, and all compensation and benefit plans, policies, and programs of Debtor applicable to its employees, former employees, retirees and non-employee directors and the employees, former employees and retirees of its subsidiaries, including, without limitation, all savings plans, retirement plans, health care plans, disability plans, severance benefit agreements and plans, incentive plans, deferred compensation plans and life, accidental death and dismemberment insurance plans are treated as executory contracts under the Plan and on the Effective Date will be assumed pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code. Each change of control severance agreement (collectively, the "COC Agreements") which Debtor entered into with a number of key executives (including each of the officers listed in Section III.F.2 hereof) shortly after announcement in January 2001 of the proposed restructuring, in order to encourage the retention and continued dedication of its key management, will be assumed to the extent that the Waiver Condition (defined below) is satisfied. Under these agreements the participants are entitled to certain benefits in the event they are involuntarily terminated without "cause" or resign for "good reason" within three years after a "change-of-control" of Debtor. If such an involuntary termination or resignation occurs within two years after a "change-of-control", a participating executive would receive a lump sum severance payment ranging from 1.75 to 3 times (depending on the particular executive) the sum of his or her then current annual salary and annual bonus target (or, in the case of Mr. Steven G. Warshaw, $4.5 million, if greater). If it occurs during the third year after a "change of control", the payment would be one times such sum. Participating executives would also receive the following severance benefits: (a) pro rata annual bonus for the year employment terminates; (b) immediate vesting of outstanding stock options, restricted stock awards and employer contributions under Debtor's Savings and Investment Plan and Capital Accumulation Plan; (c) continued medical, life, disability and accident insurance at Debtor's expense for a number of years equivalent to the multiple used in calculating the executive's severance payments; and (d) if severance benefits exceeded the maximum amount payable without incurring excise tax under Section 280G of the Internal Revenue Code by 10% or more, Debtor's payment of such excise tax plus any additional taxes resulting from such payment (if such benefits exceeded such maximum by less than 10%, the benefits would be reduced to the maximum amount). For further information regarding the COC Agreements, including the definitions of "change-of-control", "cause" and "good reason", see the Company's Annual Report on Form 10-K for the year ended December 31, 2000, attached hereto as Exhibit D. In addition, Debtor entered into a further agreement with Mr. Warshaw that would provide him with certain benefits in the event he was involuntarily terminated without cause or resigned for "good reason" prior to the occurrence of a "change-of-control". His benefits in the event of such termination or resignation would be the same as set forth in the his COC Agreement, except that his lump sum severance payment would be equal to 2.5 59 times his Annual Compensation. The defined terms generally conform to those described above with respect to the COC Agreements. Upon the occurrence of a "change-of-control", Mr. Warshaw's additional agreement would be superseded by his COC Agreement. Included as an event which would constitute a "change-of-control" in the COC Agreements is if at any time less than a majority of Debtor's Board of Directors consists of persons other than those (a) who were directors at November 15, 2000 ("Current Directors") or (b) whose election or nomination as directors was approved by at least 2/3 of the directors then in office who are Current Directors or whose election or nomination was previously so approved (other than in settlement of a proxy contest). The Plan, as approved by Debtor's board of directors, provides for the appointment of a seven member Board with five new directors as of the Effective Date of the Plan. With respect to the COC Agreements, the "Waiver Condition" is satisfied if either (x) the five new directors to be appointed to Reorganized Debtor's board of directors have been approved by at least two-thirds of the Current Directors so as to avoid such appointment giving rise to a "change-of-control" or (y) in the case of each COC Agreement, the executive counterparty to such COC Agreement consents to the modification of his or her COC Agreement to provide that the appointment of the five new directors under the Plan does not constitute a "change-of-control" of Debtor. The result of satisfaction of the Waiver Condition is that Consummation of the Plan will not give rise to a "change-of-control" under any of the COC Agreements. Also included in the plans to be assumed is an arrangement which, in order to encourage employee retention during and after the Chapter 11 Case, provides that employees of Debtor and its subsidiaries eligible for annual bonuses who remain employed through the later of the three month anniversary of the Effective Date or June 30, 2002 (the "Stay Date") will receive promptly after the Stay Date a payment equal to 50% of their "target" annual bonus for 2002. The amount of this payment to any employee will be deducted from the annual bonus, if any, for 2002 otherwise payable to such employee in early 2003 under Debtor's annual bonus program. H. CONFIRMATION AND EFFECTIVENESS OF THE PLAN 1. Condition Precedent to Confirmation It shall be a condition to Confirmation of the Plan that all provisions, terms and conditions of the Plan are approved in the Confirmation Order. In addition, the entry of the Confirmation Order shall be deemed an approval of the 2002 Stock Option Plan and the Management Incentive Shares. 2. Conditions Precedent to Consummation It shall be a condition to Consummation of the Plan that the following conditions shall have been satisfied or waived pursuant to the provisions of Section IX.C of the Plan: (a) the Confirmation Order confirming the Plan, as the Plan may have been modified, shall have been entered and become a Final Order in form and substance reasonably satisfactory to Debtor and the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) and shall provide that: (i) Debtor and Reorganized Debtor are authorized and directed to take all actions necessary or appropriate to enter into, implement and consummate the contracts, instruments, releases, leases, indentures and other agreements or documents created in connection with the Plan; (ii) the provisions of the Confirmation Order are nonseverable and mutually dependent; (iii) Reorganized Debtor is authorized to issue the New Notes, New Common Stock, New Warrants, and Management Options and is authorized to enter into the New Note Indenture; and (iv) the New Notes, New Common Stock, and New Warrants issued under the Plan in exchange for Claims against and Equity Interests in Debtor are exempt from registration under the Securities Act 60 pursuant to section 1145 of the Bankruptcy Code, except to the extent that Holders of the New Notes, New Common Stock and New Warrants are "underwriters," as that term is defined in section 1145 of the Bankruptcy Code. (b) the following agreements, in form and substance satisfactory to Reorganized Debtor and the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) shall have been tendered for delivery and all conditions precedent thereto shall have been satisfied/:3/ (i) the Third Restated Certificate of Incorporation and Restated By-laws of Reorganized Debtor; (ii) the New Note Indenture and all similar documents provided for therein or contemplated thereby; (iii) the New Warrant Agreement, and all similar documents provided for therein or contemplated thereby; (iv) Registration Rights Agreements (if any); and (v) the 2002 Stock Option Plan. (c) the Third Restated Certificate of Incorporation of Reorganized Debtor shall have been filed with the Secretary of State of the State of New Jersey. (d) all actions, documents and agreements necessary to implement the Plan shall have been effected or executed. (e) the new board of directors of Reorganized Debtor shall have been appointed. (f) the Trustee under the New Note Indenture shall have been qualified under the Trust Indenture Act. (g) Reorganized Debtor shall have received a waiver or amendment of CBI's financing arrangements with Foothill Capital Corporation, as agent for the lenders thereunder, in order to permit distributions by CBI to Debtor for the payment of principal and interest on the New Notes and waive any other defaults that would result from implementation of the Plan, or shall have negotiated a replacement financing facility, in order to service Reorganized Debtor's indebtedness under the New Notes. 3. Waiver of Conditions Except as otherwise required by the Lock Up Agreement, Debtor, in its sole discretion (but in the case of any condition that adversely affects the treatment or rights of Holders of Class 4 Claims, subject to the approval of the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) (not to be unreasonably withheld, delayed or denied)), may waive any of the conditions to Confirmation of the Plan and/or to Consummation of the Plan set forth in Article IX of the Plan at any time, without notice, without leave or order of the Bankruptcy Court, and without any formal action other than proceeding to confirm and/or consummate the Plan. 4. Effect of Non-occurrence of Conditions to Consummation If the Consummation of the Plan does not occur, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall: (a) constitute a waiver or release of any Claims by or against, or any Equity Interests in, Debtor; (b) prejudice in any manner the rights of Debtor or (c) constitute an admission, acknowledgment, offer or undertaking by Debtor in any respect. - -------- /3 /Copies of these agreements, which will be filed with the Bankruptcy Court prior to the Voting Deadline, can be obtained upon written request to the Solicitation Agent. 61 I. EFFECT OF PLAN CONFIRMATION 1. Subordination The classification and manner of satisfying all Claims and Equity Interests and the respective distributions and treatments under the Plan take into account and/or conform to the relative priority and rights of the Claims and Equity Interests in each Class in connection with any contractual, legal and equitable subordination rights relating thereto whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code or otherwise, and any and all such rights are settled, compromised and released pursuant to the Plan. The Confirmation Order shall permanently enjoin, effective as of the Effective Date, all Persons and Entities from enforcing or attempting to enforce any such contractual, legal and equitable subordination rights satisfied, compromised and settled in this manner. 2. Limited Releases by Debtor Except as otherwise specifically provided in the Plan, for good and valuable consideration, including the obligations and undertakings of the Noteholder Releasees set forth in the Plan, the agreement of the Prepetition Noteholder Committees to their treatment set forth in the Lock Up Agreement, and the service of the D&O Releasees to facilitate the expeditious reorganization of Debtor and the implementation of the restructuring contemplated by the Plan, the D&O Releasees and the Noteholder Releasees, on and after the Effective Date, are released by Debtor and Reorganized Debtor from any and all Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that Debtor or its subsidiaries would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Equity Interest or other Person or Entity, based in whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date, other than Claims or liabilities (a) in respect of ordinary commercial relationships between Debtor and any such Person or (b) in respect of any act or omission of such Person, Entity or Professional that is determined in a Final Order not to have been taken in good faith and in a manner believed to be in or not opposed to the best interests of the Company; and in the case of D&O Releasees, for Claims or liabilities (x) in respect of any loan, advance or similar payment by Debtor or its subsidiaries to any such Person or (y) in respect of any contractual obligation owed by such Person to Debtor or its subsidiaries. No portion of the limited releases by Debtor in any way impairs (other than as provided in Article X of the Plan) any cause of action or Claim of any person or entity against Debtor or any other party not specifically released by the Plan. Debtor is not generally aware of any specific potential cause or causes of action, including avoidance actions, against the Noteholder Releasees or the D&O Releasees, that would be extinguished by the limited releases provided in the Plan. Debtor believes that the release and exculpation provisions of the Plan are permissible under the Bankruptcy Code but acknowledges that arguments exist that certain case law would permit a contrary conclusion. Parties with standing may object to such provisions in the Bankruptcy Court proceeding. 3. Limited Releases by Holders of Claims or Equity Interests On and after the Effective Date, each Holder of a Claim or Equity Interest (a) who has accepted the Plan or (b) who is entitled to receive a distribution of property in connection with the Plan shall be deemed to have unconditionally released the D&O Releasees from any and all Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, including any derivative claims asserted on behalf of Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Person or Entity would have been legally entitled to assert (whether individually or collectively), based in whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date in any way relating or pertaining to (w) the purchase or sale, or the recission of a purchase or sale, or the holding of any security of Debtor, (x) Debtor or Reorganized Debtor, (y) the Chapter 11 Case, or (z) the negotiation, formulation and preparation of the Plan, the Lock Up Agreement or any related agreements, instruments or other documents. 62 No portion of the limited releases by the Holders of Claims or Equity Interests in any way impairs (other than as provided in Article X of the Plan) any cause of action or Claim against any party (i) not specifically released by the Plan or (ii) in respect of any act or omission that is determined in a Final Order not to have been taken in good faith and in a manner believed to be in or not opposed to the best interests of the Company. Debtor is not generally aware of any specific potential cause or causes of action, including avoidance actions, against the D&O Releasees, that would be extinguished by the limited releases provided in the Plan. Debtor believes that the release and exculpation provisions of the Plan are permissible under the Bankruptcy Code but acknowledges that arguments exist that certain case law would permit a contrary conclusion. Parties with standing may object to such provisions in the Bankruptcy Court proceeding. 4. Exculpation Debtor, Reorganized Debtor, the D&O Releasees, the Prepetition Noteholder Committees and the Creditors Committee (if any) and their members and professionals (acting in such capacity) shall neither have nor incur any liability to any Person or Entity for any act taken or omitted to be taken in connection with or related to the formulation, preparation, dissemination, implementation, administration, Confirmation or Consummation of the Plan, the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the Lock Up Agreement, or any other act taken or omitted to be taken in connection with or in contemplation of any restructuring of the Old Notes, the Old Preferred Stock and/or the Old Common Stock; provided that the provisions of Section X.D of the Plan shall have no effect on the liability of any Person, Entity or Professional that results from any such act or omission that is determined in a Final Order not to have been taken in good faith and in a manner believed to be in or not opposed to the best interests of (x) the Company or (y) in the case of the Prepetition Noteholder Committees or the Creditors Committee, the applicable Old Notes. Debtor believes that the release and exculpation provisions of the Plan are permissible under the Bankruptcy Code but acknowledges that arguments exist that certain case law would permit a contrary conclusion. Parties with standing may object to such provisions in the Bankruptcy Court proceeding. 5. Preservation of Rights of Action Except as otherwise provided in the Plan or in any contract, instrument, release, indenture or other agreement entered into in connection with the Plan, in accordance with section 1123(b) of the Bankruptcy Code, Reorganized Debtor shall retain and may exclusively enforce and settle any Claims, rights and causes of action that Debtor or the Estate may hold against any Person or Entity. Reorganized Debtor may pursue such retained Claims, rights or causes of action, as appropriate, in accordance with the best interests of Reorganized Debtor. On the Effective Date, Reorganized Debtor shall be deemed to waive and release any Claims, rights or Causes of Action arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy Code held by Reorganized Debtor against any Person or Entity. 6. Discharge of Claims and Termination of Equity Interests Except as otherwise provided in the Plan: (a) the rights afforded in the Plan and the treatment of all Claims and Equity Interests therein, shall be in exchange for and in complete satisfaction, discharge and release of Claims and Equity Interests of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, against Debtor or any of its assets or properties, (b) on the Effective Date, all such Claims against, and Equity Interests in, Debtor shall be satisfied, discharged and released in full and (c) all Persons and Entities shall be precluded from asserting against Reorganized Debtor, its successor or its assets or properties any other or further Claims or Equity Interests based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Confirmation Date. Except as expressly provided therein (including in those Sections relating to the Class 7 Equity Claims), the Plan does not impair the rights of any Holders of Class 3 Claims, including but not limited to: (i) Holders of Claims under executory and nonexecutory contracts and leases (other than any contractual rights to purchase or otherwise acquire Equity Interests); (ii) Persons or Entities entitled to contractual or common law rights of indemnity, contribution and reimbursement; (iii) claims of any party or entity relating to any environmental condition as to which Debtor is or may be liable; or (iv) any Persons or Entities involved in litigation with Debtor. 63 7. Injunction From and after the Effective Date, all Persons and Entities holding Claims or Interests in Classes 4, 5, 6 and 7 will be permanently enjoined from commencing or continuing in any manner, any suit, action or other proceeding, on account of or respecting any Claim, obligation, debt, right, Cause of Action, remedy or liability released or to be released pursuant to the Plan. J. SUMMARY OF OTHER PROVISIONS OF THE PLAN 1. Exemption from Certain Transfer Taxes Pursuant to section 1146(c) of the Bankruptcy Code, any transfers of property pursuant to the Plan shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax or other similar tax or governmental assessment in the United States, and the Confirmation Order shall direct the appropriate state or local governmental officials or agents to forgo the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment. 2. Effectuating Documents, Further Transactions and Corporation Action Each of Debtor and Reorganized Debtor is authorized to execute, deliver, file or record such contracts, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan and the notes and securities issued pursuant to the Plan. Prior to, on or after the Effective Date (as appropriate), all matters provided for under the Plan that would otherwise require approval of the shareholders or directors of Debtor or Reorganized Debtor shall be deemed to have occurred and shall be in effect prior to, on or after the Effective Date (as appropriate) pursuant to the applicable general corporation law of the State of New Jersey without any requirement of further action by the shareholders or directors of Debtor or Reorganized Debtor. 3. Retention of Jurisdiction Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the Chapter 11 Case after the Effective Date as legally permissible, including jurisdiction to: . allow, disallow, determine, liquidate, classify, estimate or establish the priority or secured or unsecured status of any Claim or Equity Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the allowance or priority of Claims or Equity Interests; . grant or deny any applications for allowance of compensation or reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan, for periods ending on or before the Effective Date; . resolve any matters related to the assumption, assumption and assignment or rejection of any executory contract or unexpired lease to which Debtor is party or with respect to which Debtor may be liable and to hear, determine and, if necessary, liquidate, any Claims arising therefrom, including those matters related to the amendment after the Effective Date pursuant to Article VI of the Plan to add any executory contracts or unexpired leases to the list of executory contracts and unexpired leases to be rejected; . ensure that distributions to Holders of Allowed Claims and Allowed Equity Interests are accomplished pursuant to the provisions of the Plan; 64 . decide or resolve any motions, adversary proceedings, contested or litigated matters and any other matters and grant or deny any applications involving Debtor that may be pending on the Effective Date; . enter such orders as may be necessary or appropriate to implement or consummate the provisions of the Plan and all contracts, instruments, releases, indentures and other agreements or documents created in connection with the Plan or the Disclosure Statement; . resolve any cases, controversies, suits or disputes that may arise in connection with the Consummation, interpretation or enforcement of the Plan or any Person's or Entity's obligations incurred in connection with the Plan; . issue injunctions, enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any Person or Entity with Consummation or enforcement of the Plan, except as otherwise provided herein; . resolve any cases, controversies, suits or disputes with respect to the releases, injunction and other provisions contained in Article X of the Plan and enter such orders as may be necessary or appropriate to implement such releases, injunction and other provisions; . enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked or vacated; . determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order or any contract, instrument, release, indenture or other agreement or document created in connection with the Plan or the Disclosure Statement; and . enter an order and/or final decree concluding the Chapter 11 Case. 4. Revocation, Withdrawal or Non-consummation Debtor reserves the right to revoke or withdraw the Plan prior to the Confirmation Date and to file subsequent plans of reorganization. If Debtor revokes or withdraws the Plan, or if Confirmation or Consummation does not occur, then (a) the Plan shall be null and void in all respects, (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Equity Interest or Class of Claims or Equity Interests), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void, and (c) nothing contained in the Plan shall (i) constitute a waiver or release of any Claims by or against, or any Equity Interests in, such Debtor or any other Person, (ii) prejudice in any manner the rights of such Debtor or any other Person, or (iii) constitute an admission of any sort by Debtor or any other Person. 5. Section 1145 Exemption Pursuant to section 1145(a) of the Bankruptcy Code, the offer, issuance, transfer or exchange of any security under the Plan, or the making or delivery of an offering memorandum or other instrument of offer or transfer under this Plan, shall be exempt from section 5 of the Securities Act or any similar state or local law requiring the registration for offer or sale of a security or registration or licensing of an issuer or a security. 6. Amendment or Modification of Plan Subject to the limitations contained in the Plan and the Lock Up Agreement, (a) Debtor reserves the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan 65 prior to the entry of the Confirmation Order and (b) after the entry of the Confirmation Order, Debtor or Reorganized Debtor, as the case may be, may (with the consent of the Creditors Committee (or if no Creditors Committee has been appointed, by the Prepetition Noteholder Committees voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) (not to be unreasonably withheld, delayed or denied)), upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. 7. Dissolution of Creditors Committee Upon the entry of an order or final decree concluding the Chapter 11 Case, the Creditors Committee (if any) shall dissolve and members shall be released and discharged from all rights and duties arising from, or related to, the Chapter 11 Case. 8. Payment of Statutory Fees All fees payable pursuant to section 1930 of Title 28 of the United States Code, as determined by the Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid on the earlier of when due or the Effective Date, or as soon thereafter as practicable, but prior to the closing of the Chapter 11 Case, with respect to any such fees due after the Effective Date. IV. VOTING AND CONFIRMATION PROCEDURE The following is a brief summary regarding the acceptance and confirmation of the Plan. Holders of Claims and Equity Interests are encouraged to review the relevant provisions of the Bankruptcy Code and/or to consult their own attorneys. Additional information regarding voting procedures is set forth in the Notice accompanying this Disclosure Statement. Special voting procedures for Holders of Subclass 4B Claims outside the United States are set forth in the relevant Ballot. A. VOTING INSTRUCTIONS This Disclosure Statement, accompanied by a Ballot to be used for voting on the Plan, is being distributed to Holders of Claims and Equity Interests in Classes 4, 5 and 6. Only Holders in these Classes are entitled to vote to accept or reject the Plan and may do so by completing the Ballot and returning it in the envelope provided. Beneficial owners who receive a return envelope addressed to their Nominee should allow enough time for their vote to be received by the Nominee and processed on a Master Ballot. In light of the benefits of the Plan for each Class of Claims and Equity Interests, Debtor recommends that Holders of Claims and Equity Interests in each of the Impaired Classes vote to accept the Plan and return the Ballot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n order to vote to accept or reject the Plan, any Holder of Old Subordinated Notes in bearer form must follow one of the four procedures set forth in Section IV.C.1 below, depending on how such Old Subordinated Notes are held. On or before January 28, 2002, Debtor will publish a notice in the Financial Times, the Luxemburger Wort and the Wall Street Journal which will contain the voting deadline, the procedures for requesting Solicitation Materials as well as the date, time and place of the Confirmation Hearing, in order to provide notification to Holders of Old Subordinated Notes in bearer form either directly or in "street name" through Nominees that do not have an account with Clearstream or Euroclear. Debtor will also provide similar notices to the major European financial clearing houses, Euroclear and Clearstream, in order to notify Holders who hold Old Subordinated Notes through Clearstream or Euroclear (either directly or through a Nominee). For all Holders: By signing and returning a Ballot, each Holder of a Class 4 Claim or Class 5 or Class 6 Equity Interest will also be certifying to the Bankruptcy Court and Debtor that, among other things, . such Holder has received and reviewed a copy of the Disclosure Statement and related Ballot and/or Master Ballot and acknowledges that the solicitation is being made pursuant to the terms and conditions set forth therein; . such Holder has cast the same vote on every Ballot completed by such Holder with respect to holdings of such Class of Claims or Equity Interests; . no other Ballots with respect to such Class of Claims or Equity Interests have been cast or, if any other Ballots have been cast with respect to such Class of Claims or Equity Interests, such earlier Ballots are thereby revoked; 67 . Debtor has made available to such Holder or its agents all documents and information relating to the Plan and related matters reasonably requested by or on behalf of such Holder; and . except for information provided by Debtor in writing, and by its own agents, such Holder has not relied on any statements made or other information received from any person with respect to the Plan. By signing and returning a Ballot, each Holder of a Class 4 Claim or Class 5 or Class 6 Equity Interest also acknowledges that the securities being distributed pursuant to the Plan are not being distributed pursuant to a registration statement filed with the Securities and Exchange Commission or with any securities authority outside of the United States and represents that any such securities will be acquired for its own account and not with a view to any distribution of such securities in violation of the Securities Act. It is expected that when issued pursuant to the Plan, such securities will be exempt from the registration requirements of the Securities Act by virtue of section 1145 of the Bankruptcy Code and may be resold by the Holders thereof subject to the provisions of such section 1145. Debtor has applied to list the New Notes on the Luxembourg Stock Exchange and may take other actions it deems necessary to qualify the New Notes in Europe; otherwise, no action has been taken by Debtor outside the United States with respect to the qualification of the securities in any jurisdiction. With respect to Old Subordinated Notes in bearer form which are held through Euroclear and Clearstream, Holders of such Notes will also be confirming that they have delivered or authorized their Nominees to deliver an individual, matching blocking instruction in respect of such notes to Euroclear and/or Clearstream, as applicable, preventing the transfer of such notes until such time that the Plan becomes effective or is rejected. B. VOTING TABULATION In tabulating votes, the following procedure shall be used in determining the Claim amount or Equity Interest amount associated with a Holder's vote: (a) in the case of Old Senior Notes, Old Subordinated Notes held in registered form, Old Preferred Stock and Old Common Stock, the principal amount or number of shares according to the records of the individual trustee or transfer agent, DTC and the individual Nominee Holders holding through the DTC, as of the Record Date, except that in no event shall a Nominee Holder be permitted to vote in excess of the position at the DTC as of the Record Date; and (b) in the case of the Old Subordinated Notes held in bearer form (i) for direct Holders and for Holders who hold through a Nominee that does not hold such Notes through an account with Clearstream or Euroclear, the amount of the Claims as evidenced by the serial numbers of the Old Subordinated Notes in question shall be the Claim amount for voting purposes and (ii) for Claims held through Clearstream or Euroclear (either directly or through a Nominee), the principal amount according to the records of the individual trustee or transfer agent, Clearstream and/or Euroclear and the individual Nominee Holders, as applicable, at the time that blocking instructions are received by Euroclear and/or Clearstream, except that in no event shall a Nominee be permitted to vote in excess of the position at Euroclear and/or Clearstream, respectively. The Claim amount or Equity Interest amount established through this process controls for voting purposes only and does not constitute the Allowed amount of any Claim or Equity Interest. Further, the designation of a Claim or Equity Interest as disputed, contingent or unliquidated on Debtor's schedules will not be used to disqualify any vote. To ensure that its vote is counted, each Holder of a Claim or Equity Interest must (a) complete a Ballot, (b) indicate the Holder's decision either to accept or reject the Plan in the boxes provided in Item 4 of the Ballot, (c) in the case of a Holder of an Allowed Subclass 4B Claim, indicate the Holder's decision to participate or not participate in the Subclass 4B Note Election and/or Subclass 4B Equity Purchase in the boxes provided in Items 4 and 5 of such Ballot and (d) sign and return the Ballot to the address set forth in the Ballot or on the enclosed prepaid envelope (if included). Holders of Old Subordinated Notes in bearer form must also (i) either authorize instructions to block their securities from trading or transmit their securities to the Exchange Agent at the time of the vote and (ii) indicate the Holder's decision to participate in the Subclass 4B Supplemental Distribution in the box provided in Item 6 of such Ballot. 68 The Ballot is not a letter of transmittal (except certain Subclass 4B Ballots) and may not be used for any purpose other than to vote to accept or reject the Plan, to determine the alleged amount of a beneficial Holder's Claim or Equity Interest and, if applicable, to make elections pursuant to the Plan, except that Ballots for Holders of Old Subordinated Notes in bearer form will (a) also be utilized for certifying the authorization of blocking instructions, in the case of Old Subordinated Notes in bearer form held through Clearstream or Euroclear (either directly or through a Nominee), and (b) be required to be submitted with a letter of transmittal accompanying tendered Old Subordinated Notes in the case of Old Subordinated Notes held directly in bearer form, in each case as more fully described in the Voting Instructions accompanying the Subclass 4B Ballot. Accordingly, at the time the Ballot is transmitted, Holders of Old Notes, Old Preferred Stock and Old Common Stock should not surrender certificates or instruments representing or evidencing their Claims or Equity Interests (other than as instructed in the Subclass 4B Ballot), and neither the Company nor the Solicitation Agent or Exchange Agent will accept delivery of such certificates or instruments surrendered together with a Ballot (except as set forth in the Subclass 4B Ballot). The remittance of Old Subordinated Notes or Old Common Stock may only be made by a Holder and will not be accepted unless certificates or instruments representing Claims or Equity Interests (in proper form for transfer) are delivered together with a letter of transmittal that will be furnished as provided under the Plan or as notified following confirmation of the Plan by the Bankruptcy Court. The Ballot does not constitute, and shall not be deemed to be, a Proof of Claim or Equity Interest or an assertion or admission of a Claim or Equity Interest. If a Holder holds Claims or Equity Interests in more than one Class under the Plan, the Holder may receive more than one Ballot coded for each Class of Claims or Equity Interests held by such Holder. Except to the extent Debtor so determines or as permitted by the Bankruptcy Court, Ballots received after the Voting Deadline will not be accepted or counted by Debtor in connection with Debtor's request for confirmation of the Plan. The method of delivery of Ballots to be sent to the Solicitation Agent, the Exchange Agent or the Luxembourg Agent is at the election and risk of each Holder of a Claim or Equity Interest. Except as otherwise provided herein, such delivery will be deemed made only when the original executed Ballot is actually received by the Solicitation Agent, or, in the case of Subclass 4B Claims, the Exchange Agent or Luxembourg Agent, as appropriate. For Holders of Subclass 4B Claims, instead of effecting delivery by mail, it is recommended, though not required, that such Holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. It is further recommended that Holders of Subclass 4B Claims in bearer form send Ballots, Master Ballots, Letters of Transmittal and certificates or instruments directly to the Exchange Agent rather than the Luxembourg Agent. However, the Luxembourg Agent is permitted to receive such documents as a convenience to European Holders. Delivery of a Ballot by facsimile, e-mail or any other electronic means will not be accepted. No Ballot should be sent to Debtor, any indenture trustee, or Debtor's financial or legal advisors. Debtor expressly reserves the right to amend, at any time and from time to time, the terms of the Plan (subject to compliance with the requirements of section 1127 of the Bankruptcy Code). If Debtor makes a material change in the terms of the Plan or if Debtor waives a material condition, Debtor will disseminate additional solicitation materials and will extend the solicitation, in each case to the extent required by law. If multiple Ballots are received from an individual Holder of Claims or Equity Interests with respect to the same Claims or Equity Interests prior to the Voting Deadline, the last Ballot timely received will supersede and revoke any earlier received Ballot. If a Ballot is signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should indicate such capacity when signing and, unless otherwise determined by Debtor, must submit evidence satisfactory to Debtor to so act on behalf of a beneficial interest holder. 69 In the event a designation is requested under section 1126(e) of the Bankruptcy Code, any vote to accept or reject the Plan cast with respect to such Claim or Equity Interest will not be counted for purposes of determining whether the Plan has been accepted or rejected, unless the Bankruptcy Court orders otherwise. Any Holder of Impaired Claims or Equity Interests who has delivered a valid Ballot voting on the Plan may withdraw such vote solely in accordance with Rule 3018(a) of the Federal Rules of Bankruptcy Procedure. Subject to any contrary order of the Bankruptcy Court, Debtor reserves the absolute right to reject any and all Ballots not proper in form, the acceptance of which would, in the opinion of Debtor or its counsel, not be in accordance with the provisions of the Bankruptcy Code. Subject to contrary order of the Bankruptcy Court, Debtor further reserves the right to waive any defects or irregularities or conditions of delivery as to any particular Ballot unless otherwise directed by the Bankruptcy Court. Debtor's interpretation of the terms and conditions of the Plan (including the Ballot and the Voting Instructions), unless otherwise directed by the Bankruptcy Court, shall be final and binding on all parties. Unless waived or as ordered by the Bankruptcy Court, any defects or irregularities in connection with deliveries of Ballots must be cured within such time as Debtor (or the Bankruptcy Court) determine. Neither Debtor nor any other person or entity will be under any duty to provide notification of defects or irregularities with respect to deliveries of Ballots nor will any of them incur any liabilities for failure to provide such notification. Unless otherwise directed by the Bankruptcy Court, delivery of such Ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots previously furnished (and as to which any irregularities have not theretofore been cured or waived) will not be counted. C. VOTING PROCEDURES The Record Date for determining which Holders of Old Senior Notes, Old Subordinated Notes held through Nominees through an account of DTC, Old Preferred Stock and Old Common Stock are entitled to vote on the Plan is January 8, 2002. The Record Date will not apply to Old Subordinated Notes that are held in bearer form. Such Holders will be notified of the opportunity to vote and the procedures for requesting Solicitation Materials through newspaper announcements in the Wall Street Journal, the Luxemburger Wort and the Financial Times and through similar notices sent through the major European clearing houses, Euroclear and Clearstream. The Old Note Trustees will not vote on behalf of the Holders of Old Notes. Holders must submit their own Ballots. 1. Beneficial Holders Any Beneficial Holder of Old Senior Notes, Old Preferred Stock and Old Common Stock holding as a record holder in its own name should vote on the Plan by completing and signing the enclosed Ballot and returning it directly to the Solicitation Agent. Any Beneficial Holder of Old Senior Notes, Old Preferred Stock or Old Common Stock who holds in "street name" through a Nominee should vote on the Plan either (a) if the Nominee has provided a prevalidated Ballot, by completing and signing the prevalidated Ballot and returning it directly to the Solicitation Agent or (b) by promptly completing and signing the Ballot and returning it to the Nominee in sufficient time to allow the Nominee to process the Ballot and return a Master Ballot to the Solicitation Agent by the Voting Deadline. Any Beneficial Holder of Old Subordinated Notes holding as a record holder in its own name, or, in the case of Old Subordinated Notes issued in bearer form, holding such Old Subordinated Notes directly, should vote on the Plan by completing and signing the Ballot and Letter of Transmittal and returning such documents along with the certificate(s) representing its Old Subordinated Notes to the Exchange Agent or Luxembourg Agent, as appropriate, by the Voting Deadline. Any Beneficial Holder of Old Subordinated Notes held in "street name" through a Nominee (including any Beneficial Holder of Old Subordinated Notes issued in bearer form who holds such Old Subordinated Notes 70 through an account at Clearstream or Euroclear) should vote on the Plan by promptly completing and signing the Ballot and Election Instruction Form and returning it to the Nominee in sufficient time to allow the Nominee to process the Ballot, return a Master Ballot to the Exchange Agent or Luxembourg Agent, as appropriate, and take such other steps as required by the Master Ballot to "block" the Old Subordinated Notes from trading (in the case of Old Subordinated Notes held through Clearstream or Euroclear) or submit the Old Subordinated Notes to the Exchange Agent through the ATOP system of The Depository Trust Company. Any Beneficial Holder of Old Subordinated Notes issued in bearer form and held in "street name" through the Beneficial Holder's own account with Clearstream or Euroclear should vote on the Plan by promptly completing and signing the Ballot and Election Instruction Form and returning it to the Exchange Agent or Luxembourg Agent, as appropriate, by the Voting Deadline and taking the steps outlined on the Ballot to instruct Clearstream or Euroclear to "block" the Old Subordinated Notes from trading. Any Beneficial Holder of Old Subordinated Notes issued in bearer form and held in "street name" through a Nominee that does not have an account with Clearstream or Euroclear may either obtain the underlying certificate(s) and follow the procedures outlined above for a Beneficial Holder holding as a record holder in its own name, or deposit the certificate(s) with a Nominee that does have an account with Clearstream or Euroclear and follow the procedures outlined above for Holders who hold Old Subordinated Notes through Clearstream or Euroclear. Any Ballot returned to a Nominee by a Beneficial Holder will not be counted for purposes of accepting or rejecting the Plan until such Nominee properly completes and delivers to the Solicitation Agent (or, in the case of Subclass 4B Claims, to the Exchange Agent or Luxembourg Agent, as appropriate) a Master Ballot that reflects the vote of the Beneficial Holder. 2. Nominees Because of the complexity and difficulty associated with reaching beneficial owners of publicly traded securities, many of which hold their securities in brokerage accounts and through several layers of ownership, Debtor is distributing a Ballot (a) to each record holder of the Old Notes held in registered form, Old Preferred Stock and Old Common Stock as of the Record Date (as discussed in Section IV.C.1 above) and (b) an appropriate number of copies to each bank or brokerage firm (or the agent or other Nominee therefor) identified by the Solicitation Agent as an entity through which beneficial owners hold the Old Notes, Old Preferred Stock and Old Common Stock. Each Nominee will be requested to immediately distribute a copy of this Disclosure Statement and accompanying materials including the Ballots to all Beneficial Holders for which it holds the Old Notes, Old Preferred Stock or Old Common Stock. Each Nominee must summarize the individual votes of its respective individual Beneficial Holders from their individual Beneficial Holders Ballots on a Master Ballot and shall return such Master Ballot to the Solicitation Agent (or, in the case of Subclass 4B Claims, to the Exchange Agent or the Luxembourg Agent, as appropriate). These procedures will enable Debtor to transmit materials to the Holders of its publicly traded securities and affords Beneficial Holders of the Old Notes, Old Preferred Stock and Old Common Stock a fair and reasonable opportunity to vote. In order for votes to be counted, all Ballots and Master Ballots received from Debtor must be returned to the Solicitation Agent (or, in the case of Subclass 4B Claims, to the Exchange Agent or the Luxembourg Agent, as appropriate) by the Voting Deadline as indicated on the Ballots. A Nominee may also pre-validate a Ballot for Holders of Old Senior Notes, Old Preferred Stock and Old Common Stock by completing all the information to be entered on the Ballot (the "Pre-Validated Ballot") and forwarding the Pre-Validated Ballot to the Beneficial Holder for voting. The Ballot may then be delivered directly to the Solicitation Agent in the return envelope provided with the Ballot. If a Beneficial Holder holds Old Notes, Old Preferred Stock or Old Common Stock or any combination thereof through more than one Nominee, including Old Subordinated Notes held directly in bearer form or through a Nominee holding them in an account at Clearstream or Euroclear, such Beneficial 71 Holder may receive more than one Ballot. Each such Beneficial Holder should execute a separate Ballot for each block of Old Notes, Old Preferred Stock or Old Common Stock that it holds through any Nominee and return the Ballot to the respective Nominee that holds the Old Notes, Old Preferred Stock or Old Common Stock in record name. If a Beneficial Holder holds a portion of its Old Notes, Old Preferred Stock or Old Common Stock through a Nominee and another portion directly (in the case of Old Subordinated Notes held in bearer form) or in its own name as the record holder, such Beneficial Holder should follow the procedures described in Section IV.C.1 above to vote the portion held in its own name and the procedures described in Section IV.C.2 above to vote the portion held by the Nominee or Nominees. D. THE CONFIRMATION HEARING Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after notice, to hold a hearing on confirmation of the Plan (the "Confirmation Hearing"). Section 1128(b) of the Bankruptcy Code provides that any party-in-interest may object to confirmation of the Plan. The Bankruptcy Court has scheduled the Confirmation Hearing for March 8, 2002, at 10:00 a.m. Eastern Time, before the Honorable J. Vincent Aug, Jr., United States Bankruptcy Judge, in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, Atrium Two, Suite 800, 221 East Fourth Street, Cincinnati, Ohio 45202. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for an announcement of the adjourned date made at the Confirmation Hearing or any adjournment thereof. Objections to confirmation of the Plan must be filed and served on or before February 21, 2002 in accordance with the Notice accompanying this Disclosure Statement. UNLESS OBJECTIONS TO CONFIRMATION ARE TIMELY SERVED AND FILED IN COMPLIANCE WITH THE APPROVAL ORDER, THEY WILL NOT BE CONSIDERED BY THE BANKRUPTCY COURT. E. STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN At the Confirmation Hearing, the Bankruptcy Court shall determine whether the requirements of section 1129 of the Bankruptcy Court have been satisfied. If so, the Bankruptcy Court shall enter the Confirmation Order. Debtor believes that the Plan satisfies or will satisfy the applicable requirements, as follows: . The Plan complies with the applicable provisions of the Bankruptcy Code. . Debtor, as Plan proponent, will have complied with the applicable provisions of the Bankruptcy Code. . The Plan has been proposed in good faith and not by any means forbidden by law. . Any payment made or promised under the Plan for services or for costs and expenses in, or in connection with, this Bankruptcy Case, or in connection with the Plan and incident to the case, has been disclosed to the Bankruptcy Court, and any such payment made before the confirmation of the Plan is reasonable, or if such payment is to be fixed after the confirmation of the Plan, such payment is subject to the approval of the Bankruptcy Court as reasonable. . With respect to each Class of Impaired Claims or Equity Interests, either each Holder of a Claim or Equity Interest of such Class has accepted 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 Debtor was liquidated on such date under Chapter 7 of the Bankruptcy Code. 72 . Each Class of Claims or Equity Interests that is entitled to vote on the Plan has either accepted the Plan or is not impaired under the Plan, or the Plan can be confirmed without the approval of each voting Class pursuant to section 1129(b) of the Bankruptcy Code. . Except to the extent that the Holder of a particular Claim will agree to a different treatment of such Claim, the Plan provides that Allowed Administrative, Allowed Priority Tax Claims and Allowed Other Priority Claims will be paid in full on the Effective Date, or as soon thereafter as practicable. . At least one Class of Impaired Claims or Equity Interests will accept the Plan, determined without including any acceptance of the Plan by any insider holding a Claim of such Class. . Confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of Debtor or any successor to Debtor under the Plan, unless such liquidation or reorganization is proposed in the Plan. . All fees of the type described in 28 U.S.C. (S) 1930, including the fees of the United States Trustee, will be paid as of the Effective Date. Debtor believes that (a) the Plan satisfies or will satisfy all of the statutory requirements of Chapter 11 of the Bankruptcy Code, (b) it has complied or will have complied with all of the requirements of Chapter 11 and (c) the Plan has been proposed in good faith. 1. Best Equity Interests of Creditors Test/Liquidation Analysis Before the Plan may be confirmed, the Bankruptcy Court must find (with certain exceptions) that the Plan provides, with respect to each Class, that each Holder of a Claim or Equity Interest in such Class either (a) has accepted the Plan or (b) will receive or retain under the Plan property of a value, as of the Effective Date, that is not less than the amount that such person would receive or retain if Debtor liquidated under chapter 7 of the Bankruptcy Code. In chapter 7 liquidation cases, unsecured creditors and interest holders of a debtor are paid from available assets generally in the following order, with no lower Class receiving any payments until all amounts due to senior Classes have been paid fully or payment provided for: . Secured creditors (to the extent of the value of their collateral). . Priority creditors. . Unsecured creditors. . Debt expressly subordinated by its terms or by order of the Bankruptcy Court. . Equity Interest Holders. As described in more detail in the Liquidation Analysis set forth on Exhibit B attached hereto, Debtor believes that the value of any distributions in a chapter 7 case would be less than the value of distributions under the Plan because, among other reasons, such distributions in a chapter 7 case may not occur for a longer period of time thereby reducing the present value of such distributions. In this regard, it is possible that distribution of the proceeds of a liquidation could be delayed for a period in order for a chapter 7 trustee and its professionals to become knowledgeable about the Bankruptcy Case and the Claims against Debtor. In addition, proceeds received in a chapter 7 liquidation are likely to be significantly discounted due to the distressed nature of the sale, and the fees and expenses of a chapter 7 trustee would likely exceed those of the Estate Representative (thereby further reducing Cash available for distribution). 73 2. Financial Feasibility The Bankruptcy Code requires the Bankruptcy Court to find, as a condition to confirmation, that confirmation is not likely to be followed by the liquidation of Debtor or the need for further financial reorganization, unless such liquidation is contemplated by the Plan. For purposes of showing that this Plan meets this feasibility standard, Debtor and Blackstone have analyzed the ability of Reorganized Debtor to meet its obligations under the Plan and to retain sufficient liquidity and capital resources to conduct its businesses. Debtor believes that with a significantly deleveraged capital structure, its business will be able to return to viability. The decrease in the amount of debt on Debtor's balance sheet will substantially reduce Debtor's interest expense, improving its cash flow. Based on the terms of the Plan, at emergence Reorganized Debtor will have $250 million of debt in contrast to more than $950 million of debt and accrued interest prior to the restructuring. To support its belief in the feasibility of the Plan, Debtor, with the assistance of Blackstone, has prepared the Projections set forth in Exhibit C to the Disclosure Statement. The Projections indicate that Reorganized Debtor should have sufficient cash flow to pay and service its debt obligations, including the New Notes, and to fund its operations. Accordingly, Debtor believes that the Plan complies with the financial feasibility standard of section 1129(a)(11) of the Bankruptcy Code. 3. Acceptance by Impaired Classes The Bankruptcy Code requires, as a condition to confirmation, that each Class of Claims or Equity Interests that is impaired under the Plan accept the Plan, with the exception described in the following section. A Class that is not "impaired" under a plan of reorganization is deemed to have accepted the plan and, therefore, solicitation of acceptances with respect to such Class is not required. A Class is "impaired" unless the plan (a) leaves unaltered the legal, equitable and contractual rights to which the Claim or Equity Interest entitles the Holder of such Claim or Equity Interest; (b) cures any default and reinstates the original terms of the obligation; or (c) provides that on the consummation date, the Holder of the Claim or Equity Interest receives Cash equal to the allowed amount of such Claim or, with respect to any interest, any fixed liquidation preference to which the interest holder is entitled or any fixed price at which the debtor may redeem the security. 4. Confirmation Without Acceptance by All Impaired Classes Section 1129(b) of the Bankruptcy Code allows a Bankruptcy Court to confirm a plan, even if such plan has not been accepted by all Impaired Classes entitled to vote on such plan, provided that such plan has been accepted by at least one Impaired Class. Section 1129(b) of the Bankruptcy Code states that notwithstanding the failure of an Impaired Class to accept a plan of reorganization, the plan shall be confirmed, on request of the proponent of the plan, in a procedure commonly known as "cram-down," so long as the plan does not "discriminate unfairly," and is "fair and equitable" with respect to each Class of Claims or Equity Interests that is impaired under, and has not accepted, the plan. In general, a plan does not discriminate unfairly if it provides a treatment to the class that is substantially equivalent to the treatment that is provided to other classes that have equal rank. In determining whether a plan discriminates unfairly, courts will take into account a number of factors, including the effect of applicable subordination agreements between parties. Accordingly, two classes of unsecured creditors could be treated differently without unfairly discriminating against either class. 74 The condition that a plan be "fair and equitable" with respect to a non-accepting Class of secured claims includes the requirements that (a) the Holders of such secured claims retain the liens securing such Claims to the extent of the allowed amount of the Claims, whether the property subject to the liens is retained by Debtor or transferred to another entity under the plan and (b) each Holder of a secured claim in the Class receives deferred Cash payments totaling at least the allowed amount of such Claim with a present value, as of the effective date of the plan, at least equivalent to the value of the secured claimant's interest in the debtor's property subject to the liens. The condition that a plan be "fair and equitable" with respect to a non-accepting Class of unsecured claims includes the following requirement that either: (a) the plan provides that each Holder of a Claim of such Class receive or retain on account of such Claim property of a value, as of the effective date of the plan, equal to the allowed amount of such Claim; or (b) the Holder of any Claim or Equity Interest that is junior to the Claims of such Class will not receive or retain under the plan on account of such junior Claim or Equity Interest any property. The condition that a plan be "fair and equitable" with respect to a non-accepting Class of Equity Interests includes the requirements that either: (a) the plan provide that each Holder of an Equity Interest in such Class receive or retain under the plan, on account of such Equity Interest, property of a value, as of the effective date of the plan, equal to the greater of (i) the allowed amount of any fixed liquidation preference to which such Holder is entitled, (ii) any fixed redemption price to which such Holder is entitled or (iii) the value of such interest; or (b) if the Class does not receive such an amount as required under (a), no Class of Equity Interests junior to the non-accepting Class may receive a distribution under the plan. The Plan provides that if Class 5 and/or Class 6 rejects the Plan, Debtor reserves the right to seek to confirm the Plan utilizing the "cram down" provisions of section 1129(b) of the Bankruptcy Code. In the event that Class 5 rejects the Plan and Class 6 accepts the Plan, (a) Classes 5 and 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Classes 5 and 6 under the Plan shall be distributed by Class 4 as follows: (i) Class 5 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan and (ii) Class 6 will receive, in addition to the amounts described in Section III.C.8 above, the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 5 if Class 5 had approved the Plan (such amount, the "Reduction Amount"). In the event that Class 5 accepts the Plan and Class 6 rejects the Plan, (a) Class 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Class 6 under the Plan shall be distributed by Class 4 as follows: (i) Class 6 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan and (ii) Class 5 will receive, in addition to the amounts described in Section III.C.7 above, the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 6 if Class 6 had approved the Plan. In the event that both Class 5 and Class 6 reject the Plan, (a) Classes 5 and 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Classes 5 and 6 under the Plan shall be distributed by Class 4 as follows: (1) Class 5 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan, and the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 5 if Class 5 had approved the Plan shall not be issued, and (2) Class 6 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan, and the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 6 if Class 6 had approved the Plan shall not be issued. If the Bankruptcy Court does not confirm the Plan due to the distribution of the Reduction Amount to the Holders of Class 6 Equity Interests, Debtor will use its commercially reasonable efforts to confirm the Plan, as modified solely to provide that such Reduction Amount would be canceled instead of being distributed to the Holders of Class 6 Equity Interests. 75 V. RISK FACTORS ALL IMPAIRED HOLDERS SHOULD READ AND CAREFULLY CONSIDER THE FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED IN THIS DISCLOSURE STATEMENT, PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN. A. CERTAIN BANKRUPTCY CONSIDERATIONS Parties in interest may object to Debtor's classification of Claims. Section 1122 of the Bankruptcy Code provides that a plan of reorganization may place a class or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests in such class. Debtor believes that the classification of claims and interests under the Plan complies with the requirements set forth in the Bankruptcy Code. However, there can be no assurance that the Bankruptcy Court will reach the same conclusion. The bankruptcy filing may disrupt the Company's operations. The impact, if any, that the Chapter 11 Case may have on the operations of Reorganized Debtor and its subsidiaries cannot be accurately predicted or quantified. Since Debtor's announcement of its intention to seek a restructuring of its capital structure in January 2001 and its filing of the Chapter 11 Case, it has not suffered significant disruptions in or an adverse impact on its or its subsidiaries' operations. Nonetheless, the continuation of the Chapter 11 Case, particularly if the Plan is not approved or confirmed in the time frame currently contemplated, could adversely affect the Company's relationship with its customers, suppliers and employees. Debtor believes that the Chapter 11 Case and consummation of the Plan in an expeditious manner will have a minimal adverse impact on relationships with customers, employees and suppliers of the Company, especially in view of the fact that the Plan is supported by the Prepetition Noteholder Committees and the fact that Debtor's subsidiaries are not parties to the Chapter 11 Case. If confirmation and consummation of the Plan do not occur expeditiously, the Chapter 11 Case could adversely affect the Company's relationships with its customers, employers and suppliers and could result in, among other things, increased costs for professional fees and similar expenses. In addition, a prolonged Chapter 11 Case may make it more difficult for Debtor to retain and attract management and other key personnel and would require senior management to spend an excessive amount of time and effort dealing with Debtor's financial problems instead of focusing on the operation of its businesses. Debtor may not be able to secure confirmation of the Plan. There can be no assurance that the requisite acceptances to confirm the Plan will be received. Even if the requisite acceptances are received, there can be no assurance that the Bankruptcy Court will confirm the Plan. A non-accepting creditor or equity holder of Debtor might challenge the adequacy of this Disclosure Statement or the balloting procedures and results as not being in compliance with the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determined that the Disclosure Statement and the balloting procedures and results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for confirmation had not been met, including that the terms of the Plan are fair and equitable to non-accepting Classes. Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation and requires, among other things, a finding by the Bankruptcy Court that the Plan "does not unfairly discriminate" and is "fair and equitable" with respect to any non-accepting Classes, confirmation of the Plan is not likely to be followed by a liquidation or a need for further financial reorganization and the value of distributions to non-accepting Holders of claims and interests within a particular class under the Plan will not be less than the value of distributions such Holders would receive if Debtor were liquidated under chapter 7 of the Bankruptcy Code. While there can be no assurance that these requirements will be met, Debtor believes that the Plan will not be followed by a need for further financial reorganization and that non-accepting Holders within each Class under the Plan will receive distributions at least as great as would be received following a liquidation under chapter 7 of the Bankruptcy Code when taking into consideration all administrative claims and costs associated with any such chapter 7 case. Debtor believes that Holders of Equity Interests in Debtor would receive no distribution under either a liquidation pursuant to chapter 7 or chapter 11. 76 The confirmation and consummation of the Plan are also subject to certain conditions as described in Section III.H hereof. If the Plan is not confirmed, it is unclear whether a restructuring of Debtor could be implemented and what distributions Holders of Claims or Equity Interests ultimately would receive with respect to their Claims or Equity Interests. If an alternative reorganization could not be agreed to, it is possible that Debtor would have to liquidate its assets, in which case it is likely that Holders of Claims and Equity Interests would receive substantially less favorable treatment than they would receive under the Plan. Debtor may object to the amount or classification of a Claim. Debtor reserves the right to object to the amount or classification of any Claim or Equity Interest. The estimates set forth in this Disclosure Statement cannot be relied on by any creditor or equityholder whose Claim or Equity Interest is subject to an objection. Any such Claim or Equity Interest Holder may not receive its specified share of the estimated distributions described in this Disclosure Statement. B. FACTORS AFFECTING THE VALUE OF THE SECURITIES TO BE ISSUED UNDER THE PLAN Reorganized Debtor may not be able to achieve its projected financial results. Reorganized Debtor, including its subsidiaries, may not be able to meet its projected financial results or achieve the revenue or cash flow that it has assumed in projecting its future business prospects. If Reorganized Debtor, including its subsidiaries, does not achieve these projected revenue or cash flow levels, it may lack sufficient liquidity to continue operating as planned after the Effective Date. Debtor's financial projections represent management's view based on current known facts and hypothetical assumptions about Reorganized Debtor's future operations. However, the Projections set forth on Exhibit C attached hereto do not guarantee Reorganized Debtor's future financial performance. Reorganized Debtor may not be able to meet its post-reorganization debt obligations, and finance all of its operating expenses, working capital needs and capital expenditures. Debtor is currently highly leveraged, and is a parent holding company that has no operations of its own. Although Reorganized Debtor will be substantially less leveraged, it will rely on distributions from CBI to fund its working capital needs, to service indebtedness and to pay operating expenses. Most of Debtor's subsidiaries have access to borrowing capacity under CBI's Credit Agreement with Foothill Capital Corporation ("Foothill"), as agent, and the lenders thereunder. The Foothill Agreement prohibits upstream payments by CBI to Debtor to pay interest or principal on indebtedness of Debtor. Therefore, it is a condition to Consummation of the Plan that Debtor has either (a) obtained a waiver from the lenders regarding these restrictions on distributions and a waiver of any other defaults that would result from implementation of the Plan, or (b) negotiated a replacement financing facility, in order to service Reorganized Debtor's indebtedness under the New Notes. There can be no assurance that the lenders will agree to such waiver or that Debtor will be able to obtain a replacement facility. In addition, certain other subsidiaries have credit facilities which restrict their ability to upstream payments to their respective parents. Debtor's subsidiaries hold most of the Company's assets and conduct the Company's operations. The Company's operations are conducted through Debtor's direct and indirect subsidiaries. Therefore, Debtor, the parent company, which is the issuer of the New Notes, depends on the cash flow of its subsidiaries to meet its obligations. Because the creditors of these subsidiaries have direct claims on the subsidiaries and their assets, the claims of Holders of the New Notes will be "structurally subordinated" to any existing and future liabilities of its subsidiaries, including trade payables. This means that the creditors of the subsidiaries will have priority in their claims on the assets of the particular subsidiaries over the creditors of Debtor, including holders of the New Notes. Moreover, as discussed above, Debtor will need to obtain a waiver with the lenders under the Foothill facility regarding upstream distributions by CBI, or negotiate a replacement financing facility, in order to service Reorganized Debtor's indebtedness under the New Notes. The New Notes will not be secured by any of Reorganized Debtor's assets. The New Notes will be general unsecured obligations of Reorganized Debtor, and will not be secured by any of its assets. If Reorganized Debtor becomes insolvent or is liquidated, or if payment under secured obligations of Reorganized Debtor, if any exist at 77 the time, are accelerated, the obligees with respect to such secured obligations will be entitled to exercise the remedies available to a secured lender under applicable law and the applicable agreements and instruments. Accordingly, such lenders will have a prior claim with respect to such assets and there may not be sufficient assets remaining to pay amounts due on the New Notes then outstanding. A liquid trading market for the New Notes, New Common Stock and New Warrants may not develop. Although the Company intends to apply to list the New Notes, New Common Stock and the New Warrants on the New York Stock Exchange and has applied to list the New Notes on the Luxembourg Stock Exchange in order to facilitate the Subclass 4B Note Election outside of the United States, there can be no assurance that such listings will be obtained or, even if such listings are obtained, as to the liquidity of the markets for the New Notes, New Common Stock or New Warrants or to the prices at which any sales of those securities may occur. The liquidity of any market for the New Notes, New Common Stock or New Warrants will depend, among other things, upon the number of Holders of the New Notes, New Common Stock and New Warrants, Reorganized Debtor's financial performance, and the market for similar securities, none of which can be determined or predicted. Also, the market for non-investment grade debt like the New Notes has been subject to substantial price swings. Therefore, it is not certain that an active trading market will develop or, if a market develops, what the liquidity or pricing characteristics of that market will be. The trading price for the New Notes, New Common Stock and New Warrants may be depressed following the Effective Date. Assuming consummation of the Plan, the New Notes, New Common Stock and New Warrants will be issued substantially simultaneously to Holders of Claims and Equity Interests who had originally purchased other securities of Debtor or who purchased such securities after the need for the financial restructuring of Debtor became manifest. Following the Effective Date, such Holders may seek to dispose of the New Notes, New Common Stock and New Warrants in an effort to obtain liquidity, which could cause the initial trading prices for these securities to be depressed, particularly in light of the lack of established trading markets for these securities. The estimated valuation of Reorganized Debtor and the New Common Stock and New Warrants, and the estimated recoveries to Holders of Claims and Equity Interests, is not intended to represent the trading values of the New Notes, New Common Stock or New Warrants. The estimated valuation of Reorganized Debtor set forth in Section I.K hereof, prepared by Blackstone and based on the Projections developed by management of Reorganized Debtor, is based on commonly accepted valuation analysis and is not intended to represent the trading values of Reorganized Debtor's securities in public or private markets. The estimated recoveries to Classes 4, 5 and 6 are based on this theoretical valuation analysis. This valuation analysis is based on numerous assumptions (the realization of many of which is beyond the control of Reorganized Debtor), including, among other things, the successful reorganization of Debtor, an assumed Effective Date of December 31, 2001, Debtor's ability to achieve the operating and financial results included in the Projections, Debtor's ability to maintain adequate liquidity to fund operations and the assumption that capital and equity markets remain consistent with current conditions. Even if Reorganized Debtor achieves the Projections, the trading market values for the New Notes, New Common Stock or New Warrants could be adversely impacted by the lack of trading liquidity for such securities, the lack of institutional research coverage and concentrated selling by recipients of such securities. The exercise price of the New Warrants is expected to be substantially above the market price of the New Common Stock as of the Effective Date. The exercise price of the New Warrants is expected to be substantially above the market price of the New Common Stock as of the Effective Date. The market price of the New Common Stock following the Consummation of the Plan will reflect the performance of Reorganized Debtor, including its ability to satisfy its continuing debt service obligations, and industry and market conditions generally. There can be no assurance that the market price of the New Common Stock will exceed the strike price of the New Warrants at any time prior to their expiration on the seventh anniversary of the Effective Date. 78 The New Common Stock and New Warrants will be issued in odd lots. Holders of Allowed Claims and Allowed Equity Interests may receive odd lot (less than 100 shares) distributions of New Common Stock, and distributions of New Warrants which are exercisable to purchase odd lots of New Common Stock. Holders may find it more difficult to dispose of odd lots in the marketplace and may face increased brokerage charges in connection with any such disposition. Reorganized Debtor does not expect to pay any dividends on the New Common Stock for the foreseeable future. The terms of the New Note Indenture will limit Reorganized Debtor's ability to pay dividends, and it is not anticipated that any cash dividends will be paid on the New Common Stock for the foreseeable future. Certain tax implications of Debtor's bankruptcy and reorganization may increase the tax liability of Reorganized Debtor. The U.S. federal income tax consequences of consummation of the Plan to Holders of Claims or Equity Interests are complex and subject to uncertainty. Certain U.S. tax attributes of Debtor, including net operating loss carryovers, may be reduced or eliminated as a consequence of the Plan. The elimination or reduction of net operating loss carryovers and such other tax attributes may increase the amount of tax payable by Reorganized Debtor following the consummation of the Plan as compared with the amount of tax payable had no such reduction been required. See Article VI, "Certain Federal Income Tax Consequences" below for discussion of the U.S. federal income tax consequences for creditors, equity holders and Debtor resulting from the consummation of the Plan. The Exchange Ratio for the Subclass 4B Note Election is not as favorable as the Exchange Ratio for New Common Stock. Each Holder electing to participate in the Subclass 4B Note Election will receive U.S. $1,000 principal amount of New Notes for each lot of 101.14 shares of New Common Stock the Holder elects not to receive. For other purposes of the Plan, including the projected reorganization value of recoveries for the Holders of Old Subordinated Notes under the Plan, the enterprise value of Reorganized Debtor is assumed to be U.S. $1.28 billion. However, for the purposes of the Subclass 4B Note Election, the Holders of the Subclass 4A Claims and the Holders of the Subclass 4B Claims have negotiated the exchange ratio based on an enterprise value of $1.10 billion. Thus, assuming the $1.28 billion enterprise value upon which the Plan is based, the Subclass 4B Note Election would imply that each Holder will receive $1,000 principal amount of New Notes for each $1,455 of New Common Stock that the Holder elects not to receive. Participants in the Subclass 4B Equity Purchase must pay a premium for New Common Stock. As described in Section III.C.6 herein, certain Holders of Allowed Subclass 4B Claims have the right to purchase for Cash their pro rata share of 2,306,644 shares of New Common Stock (i.e., 5.77% of the New Common Stock to be issued pursuant to the Plan, subject to dilution by the New Warrants and the Management Options), at a price of $17.85 per share (subject to an aggregate minimum purchase requirement of $500,000 by the Holders of Subclass 4B Claims). However, for most other purposes of the Plan, including the projected reorganization value of recoveries for the Holders of Old Subordinated Notes under the Plan, the enterprise value of Reorganized Debtor is assumed to be U.S. $1.28 billion, and each share of New Common Stock is assumed to have a reorganization value of U.S. $14.39. Therefore, participants in the Subclass 4B Equity Purchase will pay a premium to purchase New Common Stock. C. RISKS RELATING TO THE OPERATIONS OF REORGANIZED DEBTOR The Company has incurred significant losses in recent years. The Company incurred losses in seven of the nine years preceding 2001. As discussed below, in 1993, the EU implemented a banana quota and licensing regime which has significantly affected the worldwide banana industry and severely burdened the Company's operations. Although the Company has significantly reduced operating costs since 1993, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. Although the EU regime was reformed in 2001, and under the Plan, Debtor's annual interest expense would be decreased by approximately $60 million, there can be no assurance that Reorganized Debtor will be, or of the extent to which it will be, profitable. 79 There is uncertainty regarding the EU banana import regime. In 1993, the EU implemented a discriminatory quota and licensing regime governing the importation of bananas into the EU that violated the EU's international trade obligations. This regime significantly decreased the Company's banana volume sold into Europe and resulted in significantly decreased operating results for the Company as compared to years prior to the regime's implementation. In April 2001, the European Commission agreed to reform the EU banana import regime. This reform is expected to result in a partial recovery in future periods of the EU market opportunities available to the Company prior to 1993. The agreement contemplates a partial redistribution of licenses for the import of Latin American bananas under a tariff rate quota system for historical operators. The reformed system took effect on July 1, 2001 and is to continue through 2005. The agreement also contemplates movement to a tariff-only system starting in 2006, which will require future consultations between the EU and the banana supplying interests. The Projections set forth in this Disclosure Statement assume that the reformed tariff rate quota system continues through 2005 and results in reduced costs to the Company. However, there can be no assurance that the tariff rate quota system will remain unchanged through 2005 or that a tariff-only system will be implemented after 2005 (or that, if implemented, the tariff levels established will not be adverse to marketers of Latin American bananas, such as the Company). The Company's financial results may be adversely affected by fluctuations in certain foreign currency exchange rates. The Company's operations involve transactions in a variety of currencies. Accordingly, its operating results may be significantly affected by fluctuations in currency exchange rates. These fluctuations affect the Company's operations because many of its costs are incurred in currencies different from those received from the sale of its products. In addition, there is normally a time lag between the incurrence of production costs and collection of the related sales proceeds. The Company's policy is to exchange local currencies for dollars immediately upon receipt, thus reducing exchange risk. The Company also engages in various hedging activities to further reduce potential losses on cash flows originating in currencies other than the U.S. dollar. Nevertheless, in recent years, operating results have been adversely affected by the continued weakness of major European currencies against the U.S. dollar. Adverse weather conditions and crop disease in countries where fruit and vegetables are grown can impose significant costs and losses on the Company's business. Fresh produce is vulnerable to adverse weather conditions including windstorms, floods, drought and temperature extremes, which are quite common but difficult to predict. On occasion, these conditions result in extremely severe damage. Fresh produce is also vulnerable to crop disease and pests. Any of these conditions may restrict the availability of fresh produce and result in increased prices. However, these factors may result in lower sales volume and increased costs. In addition, competing producers and distributors may be affected differently, depending upon the extent of loss they suffer and their ability and the cost to obtain alternate supplies. The Company operates in a competitive environment and the pricing of its products is substantially dependent on market forces. Approximately two-thirds of the Company's consolidated net sales in the Fresh Produce segment in 1998, 1999 and 2000 were attributable to the sale of bananas. Bananas are distributed and marketed internationally in a highly competitive environment. While smaller companies, including growers' cooperatives, are a competitive factor, the Company's primary competitors are a limited number of other international banana importers and exporters. The Company sells approximately one-fourth of all bananas imported into North America and Europe, its principal markets. To compete successfully, the Company must be able to source bananas of uniformly high quality and, on a timely basis, transport and distribute them to worldwide markets. Fresh Produce is highly perishable and must be brought to market and sold generally within 30 to 60 days after harvest. Some items, such as lettuce and berries, must be sold more quickly, while other items, such as apples and pears, can be held in cold storage for longer periods of time. The selling price received for each type of produce depends on several factors, including the availability and quality of the produce item in the market, and the availability and quality of competing types of produce. For example, although banana production tends to be relatively stable throughout the year, banana pricing is seasonal. This is because bananas compete against 80 other fresh fruit, a major portion of which comes to market beginning in the summer. However, even if market prices are unfavorable, produce items which are ready to be, or have been, harvested must be brought to market promptly. Labor problems can increase costs or even disrupt production of crops. The Company has approximately 30,000 employees. Approximately 22,000 of these employees are employed in Central and South America, including 18,000 workers covered by 35 labor contracts. Contracts covering approximately 10,000 employees are currently being renegotiated or expire through the end of 2002. Strikes or other labor-related actions are sometimes encountered when labor contracts expire or during the term of the contracts. These may result in increased costs or decreased crop quality as a result of a temporary curtailment of agricultural practices. When prolonged strikes or other labor actions occur, growing crops may be damaged as a result of the disruption of irrigation, disease and pest control and other agricultural practices. In the third quarter of 2001, the Company closed farms that represented about 20% of its Armuelles, Panama banana production division because they were not cost competitive in world markets in part due to inefficient labor practices and contracts. This resulted in $9 million of charges in the third quarter of 2001. There are political and other risks of international operations. The Company's operations are heavily dependent upon products grown and purchased in Central and South American countries; at the same time, the Company's operations are a significant factor in the economies of many of these countries. These activities are subject to risks that are inherent in operating in these countries, including government regulation, currency restrictions and other restraints, risks of expropriation and burdensome taxes. The Company's operations in some Central and South American countries are dependent upon leases and other agreements with the governments of these countries. For example, the Company leases all the land it uses in Panama from the Republic of Panama under two long-term leases. There is also a risk that legal or regulatory requirements will be changed or that administrative policies will change. The Company's worldwide operations and products are highly regulated in the areas of food safety and protection of human health and the environment. The Company's worldwide operations and products are subject to numerous governmental regulations and inspections by environmental, food safety and health authorities, including those relating to the use and disposal of agrichemicals. These regulations directly affect day-to-day operations. The Company believes it is substantially in compliance with applicable regulations. However, actions by regulators in the past have required, and in the future may require, operational modifications or capital improvements at various locations. In addition, if violations occur, regulators can impose fines, penalties and other sanctions, and the Company may be subject to private lawsuits alleging personal injury or property damage. THESE RISK FACTORS CONTAIN CERTAIN STATEMENTS THAT ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE SUBJECT TO A NUMBER OF ASSUMPTIONS, RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY, INCLUDING THE IMPLEMENTATION OF THE PLAN, THE IMPLEMENTATION OF THE ANNOUNCED U.S.-EU AGREEMENT REGARDING THE EU'S BANANA IMPORT REGIME, THE CONTINUING AVAILABILITY OF SUFFICIENT BORROWING CAPACITY OR OTHER FINANCING TO FUND OPERATIONS, THE PRICES AT WHICH THE COMPANY CAN SELL ITS PRODUCTS, THE COSTS AT WHICH IT CAN PURCHASE OR GROW (AND AVAILABILITY OF) FRESH PRODUCE AND OTHER RAW MATERIALS, CURRENCY EXCHANGE RATE FLUCTUATIONS, NATURAL DISASTERS AND UNUSUAL WEATHER CONDITIONS, TERRORIST ACTIONS OR ACTS OF WAR, OPERATING EFFICIENCIES, LABOR RELATIONS, ACTIONS OF GOVERNMENTAL BODIES, AND OTHER MARKET AND COMPETITIVE CONDITIONS. HOLDERS OF CLAIMS AND EQUITY INTERESTS ARE CAUTIONED THAT THE FORWARD-LOOKING STATEMENTS SPEAK AS OF THE DATE MADE AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS OR DEVELOPMENTS MAY DIFFER MATERIALLY FROM THE EXPECTATIONS EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE ANY SUCH STATEMENTS. 81 VI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a summary of certain U.S. federal income tax consequences of the Plan to Debtor and Holders of Old Notes and Equity Interests. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations thereunder, and administrative and judicial interpretations and practice, all as in effect on the date hereof and all of which are subject to change, with possible retroactive effect. Due to the lack of definitive judicial and administrative authority in a number of areas, substantial uncertainty may exist with respect to some of the tax consequences described below. No opinion of counsel has been obtained, and Debtor does not intend to seek a ruling from the Internal Revenue Service (the "IRS") as to any of such tax consequences, and there can be no assurance that the IRS will not challenge one or more of the tax consequences of the Plan described below. This summary does not apply to Holders of Old Notes and Old Equity Interests that are not United States persons (as defined in the Code) or that are otherwise subject to special treatment under U.S. federal income tax law (including, for example, banks, governmental authorities or agencies, financial institutions, insurance companies, pass-through entities, tax-exempt organizations, brokers and dealers in securities, mutual funds, small business investment companies, and regulated investment companies). The following discussion assumes that Holders of Old Notes and Old Equity Interests hold their Old Notes and Old Equity Interests as "capital assets" within the meaning of Code (S)1221. Moreover, this summary does not purport to cover all aspects of U.S. federal income taxation that may apply to Debtor and Holders of Old Notes and Old Equity Interests based upon their particular circumstances. Additionally, this summary does not discuss any tax consequences that may arise under state, local, or foreign tax law. The following summary is not a substitute for careful tax planning and advice based on the particular circumstances of each Holder of Old Notes and Old Equity Interests. All Holders are urged to consult their own tax advisors as to the U.S. federal income tax consequences, as well as any applicable state, local, and foreign consequences of the Plan. A. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES TO THE HOLDERS OF CLAIMS AND EQUITY INTERESTS 1. Consequences to Holders of Old Notes (a) Exchange of Old Notes for New Common Stock, New Notes and Cash Whether Holders of Old Notes will recognize gain or loss on the exchange of Old Notes for New Common Stock, New Notes (if any) and cash (if any) depends on whether (a) the exchange qualifies as a tax-free reorganization, (b) the Old Notes and New Notes are treated as "securities" for purposes of the reorganization provisions of the Code, and (c) Holders of the Old Notes receive cash pursuant to the Plan. Whether an instrument constitutes a "security" is determined based on all the facts and circumstances, but most authorities have held that the length of the term of a debt instrument is an important factor in determining whether such instrument is a security for federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are numerous other factors that could be taken into account in determining whether a debt instrument is a security, including among others, the security for payment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote or otherwise participate in the management of the obligor, convertibility of the instrument into an equity interest of the obligor, whether payments of interest are fixed, variable or contingent, and whether such payments are made on a current basis or accrued. The Old 9 5/8% Senior Notes (issued in 1991 and maturing in 2004) have a term of approximately thirteen years and thus, based on their term to maturity and other features, will be treated as securities for federal income tax purposes. The Old 9 1/8% Senior Notes (issued in 1994 and maturing in 2004) have a term of approximately ten years and thus, based on their term to maturity and other features, should be treated as securities for federal 82 income tax purposes. The Old 101/4% Senior Notes (issued in 1996 and maturing in 2006) have a term of approximately ten years and thus, based on their term to maturity and other features, should be treated as securities for federal income tax purposes. The Old 10% Senior Notes (issued in 1999 and maturing in 2009) have a term of approximately ten years and thus, based on their term to maturity and other features, should be treated as securities for federal income tax purposes. The Old Subordinated Notes (issued in 1991 and maturing in 2001) have a term of approximately ten years and thus, based on their term to maturity and other features, should be treated as securities for federal income tax purposes. The New Notes will have a term of seven years and thus, based on their term to maturity and other features, should be treated as securities for federal income tax purposes. If the Old Notes and New Notes are both treated as securities, the exchange of Old Notes for New Common Stock, New Notes (if any) and cash (if any) should be treated as a recapitalization (and therefore, a tax-free reorganization), and Holders of the Old Notes should not recognize any gain or loss on the exchange, except that Holders may recognize (a) capital gain (subject to the "market discount" rules described below) to the extent of the lesser of (i) the amount of gain realized from the exchange or (ii) the amount of cash received, and (b) ordinary income to the extent that the New Notes, the New Common Stock or cash are treated as received in satisfaction of accrued but untaxed interest on the Old Notes. See "Accrued But Untaxed Interest" below. Such Holder should obtain a tax basis in the New Notes (including in any Fractional Note Interest (as defined below)) and New Common Stock (including in any Fractional Stock Interest (as defined below)) equal to the tax basis of the Old Notes surrendered therefor (increased by the amount of any gain recognized and decreased by the amount of cash received) and should have a holding period for the New Notes (including for any Fractional Note Interest) and New Common Stock (including for any Fractional Stock Interest) that includes the holding period for the Old Notes; provided that the tax basis of any New Note or share of New Common Stock treated as received in satisfaction of accrued interest should equal the amount of such accrued interest, and the holding period for such New Note or share of New Common Stock should not include the holding period of the Old Notes. If the Old Notes, but not the New Notes, are treated as securities, the exchange of Old Notes for New Common Stock, New Notes (if any) and cash (if any) should be treated as a recapitalization (and therefore, a tax-free reorganization), and Holders of the Old Notes should not recognize any gain or loss on the exchange, except that Holders may recognize (a) capital gain (subject to the "market discount" rules described below) to the extent of the lesser of (i) the amount of gain realized from the exchange or (ii) the amount of cash received plus the issue price as of the Effective Date of the New Notes and (b) ordinary income to the extent that the New Notes, the New Common Stock or cash are treated as received in satisfaction of accrued but untaxed interest on the Old Notes. See "Accrued But Untaxed Interest" below. Such Holder should obtain a tax basis in the New Common Stock (including in any Fractional Stock Interest) equal to the tax basis of the Old Notes surrendered therefor (increased by the amount of any gain recognized and decreased by the amount of cash and the issue price of the New Notes received on the exchange) and should have a holding period for New Common Stock (including for any Fractional Stock Interest) that includes the holding period for the Old Notes; provided that the tax basis of any share of New Common Stock treated as received in satisfaction of accrued interest should equal the amount of such accrued interest, and the holding period for such New Common Stock should not include the holding period of the Old Notes. A Holder should obtain a tax basis in the New Notes (including in any Fractional Note Interest) equal to the issue price of the New Notes and should begin a holding period for the New Notes (including for any Fractional Note Interest) on the day following the Effective Date. If the Old Notes are not treated as securities, Holders of Old Notes will be treated as exchanging their Old Notes for New Common Stock, New Notes (if any) and cash (if any) in a taxable exchange under Section 1001 of the Code. Accordingly, Holders of the Old Notes should recognize gain or loss equal to the difference between (i) the fair market value of New Common Stock, the issue price of the New Notes and the amount of cash (if any) received therefor as of the Effective Date that is not allocable to accrued but untaxed interest and (ii) the Holder's basis in the Old Notes. Such gain or loss should be capital in nature (subject to the "market discount" rules described below) and should be long-term capital gain or loss if the Old Notes were held for more than one year. 83 To the extent that a portion of the New Notes, New Common Stock or cash received in exchange for the Old Notes is allocable to accrued but untaxed interest, the Holder may recognize ordinary income. See "Accrued But Untaxed Interest" below. A Holder's tax basis in New Common Stock (including in any Fractional Stock Interest) received should equal the fair market value of the New Common Stock as of the Effective Date and a Holder's tax basis in a New Note (including in any Fractional New Note Interest) will equal its issue price. A Holder's holding period for the New Notes (including for any Fractional Note Interest) and for New Common Stock (including for any Fractional Stock Interest) should begin on the day following the Effective Date. (b) Amounts Received in Lieu of Fractional Interests in New Notes and in New Common Stock A Holder of an Old Note who is entitled to receive an interest in a New Note which is not an integral multiple of $1,000 (a "Fractional Note Interest") or an interest in a fraction of a share of New Common Stock (a "Fractional Stock Interest") should recognize gain or loss upon the sale by Debtor or its agent of such Fractional Note Interest and Fractional Stock Interest in an amount equal to the difference between the Holder's tax basis in the Fractional Note Interest or Fractional Stock Interest, as the case may be (each determined as described above) and the amount received therefor. Such gain or loss should generally (subject to the "market discount" rules described below) be capital gain or loss and should be long-term gain or loss if the Holder's holding period for the Fractional Note Interest or for the Fractional Stock Interest exceeds one year. (c) Accrued But Untaxed Interest To the extent that any amount received by a Holder of an Old Note under the Plan is attributable to accrued but untaxed interest, such amount should be taxable to the Holder as interest income, if such accrued interest has not been previously included in the Holder's gross income for U.S. federal income tax purposes. Conversely, a Holder of an Old Note may be able to recognize a deductible loss (or, possibly, a write-off against a reserve for bad debts) for such purposes to the extent that any accrued interest was previously included in the Holder's gross income but was not paid in full by Debtor. The extent to which New Common Stock, New Notes and/or cash received by a Holder of an Old Note will be attributable to accrued but untaxed interest is unclear. Treasury Regulations generally treat payments under a debt instrument first as a payment of accrued and unpaid interest and then as a payment of principal. The terms of the Plan provide that the issue price of the New Notes, the fair market value of New Common Stock and any cash received by Holders of Old Notes will be applied first to accrued and unpaid interest on the Old Notes and then to the principal amount of such Old Notes. In its information filings to the Holders of Old Notes and the IRS Debtor intends to report interest income with respect to the Old Notes consistent with the above allocation. (d) Market Discount Holders of Old Notes who exchange Old Notes for New Common Stock, New Notes and cash (if any) may be affected by the "market discount" provisions of Code Sections 1276 through 1278. Under these rules, some or all of the gain realized by a Holder of Old Notes may be treated as ordinary income (instead of capital gain), to the extent of the amount of "market discount" on such Old Notes. In general, a debt instrument is considered to have been acquired with "market discount" if its holder's adjusted tax basis in the debt instrument is less than (i) the sum of all remaining payments to be made on the debt instrument, excluding "qualified stated interest" or, (ii) in the case of a debt instrument issued with original issue discount ("OID"), its adjusted issue price, by at least a de minimis amount (equal to 0.25 percent of the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, multiplied by the number of remaining whole years to maturity). Any gain recognized by a Holder on the taxable disposition of Old Notes (determined as described above) that had been acquired with market discount should be treated as ordinary income to the extent of the market 84 discount that accrued thereon while the Old Notes were considered to be held by a Holder (unless the Holder elected to include market discount in income as it accrued). To the extent that the Old Notes that had been acquired with market discount are exchanged in a tax-free transaction for other property (as may occur here), any market discount that accrued on the Old Notes but was not recognized by the Holder is carried over to the property received therefor and any gain recognized on the subsequent sale, exchange, redemption or other disposition of such property is treated as ordinary income to the extent of the accrued but unrecognized market discount with respect to the exchanged debt instrument. In addition, if both the Old Notes and New Notes are treated as "securities," as discussed above, and if the Old Notes have market discount that has not yet been accrued, the New Notes will be treated as issued with market discount (unless the market discount is less than a de minimis amount as described above) equal to the excess (if any) of (i) the issue price of the New Notes over the Holder's basis in the New Notes immediately following the exchange if the issue price of the New Notes is less than their stated redemption price at maturity or (ii) the principal amount of the New Notes over the Holder's basis in the New Notes immediately following the exchange if the issue price of the New Notes equals or exceeds their stated redemption price at maturity. If a Holder of a New Note sells, exchanges or otherwise disposes of the New Note at a gain, such gain will be ordinary income to the extent of the accrued amount of such market discount at the time of the sale, exchange or disposition. As described above, a Holder may instead elect to accrue the market discount as ordinary income on a current basis over the term of the New Notes. (e) Subclass 4B Supplemental Distribution As described above in Section III.C.6, the Subclass 4B Supplemental Distribution entitles Holders of Old Subordinated Notes to receive during the three-year period following the Effective Date a one-time supplemental distribution of additional specified property in an amount determined by a formula provided in the Plan, payable under certain conditions. The tax consequences of the right to receive and of the receipt (if any) of property pursuant to the Subclass 4B Supplemental Distribution are uncertain, and may depend, among other things, on the timing of the distribution and the nature of the property received. It is possible that the receipt of property pursuant to the Subclass 4B Supplemental Distribution would be a taxable event to the Holders of Old Subordinated Notes at the time the property is received; however, it is also possible that the IRS could seek to treat the right to receive property pursuant to the Subclass 4B Supplemental Distribution as property received at the time of the exchange, and tax it in the same manner as cash or other property received on the exchange. Alternatively, the Holders of Old Subordinated Notes could be treated as purchasing the right to receive property pursuant to the Subclass 4B Supplemental Distribution in exchange for a portion of Old Subordinated Notes. Finally, a portion of any amount of property received pursuant to the Subclass 4B Supplemental Distribution may be treated as interest income to the Holder of Old Subordinated Notes. In light of these substantial uncertainties, Holders of Old Subordinated Notes are urged to consult their tax advisors regarding the tax consequences of the right to receive and of the receipt (if any) of property pursuant to the Subclass 4B Supplemental Distribution. (f) Original Issue Discount In general, a debt instrument is considered for federal income tax purposes to be issued with OID if the "stated redemption price at maturity" of the instrument exceeds the instrument's "issue price" by at least a de minimis amount (0.25 percent of the stated redemption price at maturity multiplied by the number of complete years from the issue date to the maturity date). The stated redemption price at maturity of a debt instrument is the aggregate of all payments due to the Holder under such debt instrument at or before its maturity date, other than stated interest that is actually and unconditionally payable in cash or other property (other than debt instruments of the issuer) at fixed intervals of one year or less during the entire term of the instrument at certain specified rates ("qualified stated interest"). All of the interest payable with respect to the New Notes should be treated as qualified stated interest and therefore the New Notes will be issued with OID only if their principal amount exceeds their issue price by at least a de minimis amount. 85 The determination of the "issue price" of the New Notes will depend, in part, on whether the New Notes or the Old Notes, for which the New Notes are exchanged, are traded on an "established securities market" at any time during the 60-day period ending 30 days after the Effective Date. In general, a debt instrument (or the property exchanged therefor) will be treated as traded on an established market if (a) it is listed on (i) the New York Stock Exchange or certain other qualifying national securities exchanges, (ii) certain qualifying interdealer quotation systems, (iii) certain qualifying foreign securities exchanges; (b) it appears on a system of general circulation that provides a reasonable basis to determine fair market value; or (c) the price quotations are readily available from dealers, brokers or traders. The issue price of a debt instrument that is traded on an established market or that is issued for another debt instrument so traded would be the fair market value of such debt instrument or such other debt instrument, as the case may be, on the issue date as determined by such trading. The issue price of a debt instrument that is neither so traded nor issued for another debt instrument so traded would be its stated principal amount. Based on the nature of the trading that Reorganized Debtor anticipates will occur with respect to the New Notes and Reorganized Debtor's intent to list the New Notes on the New York Stock Exchange, Reorganized Debtor presently expects that the New Notes will be treated as traded on an established securities market. Therefore, the issue price of the New Notes could be less than the stated redemption price at maturity of the New Notes (possibly, by at least the de minimis amount) and thus the New Notes could be treated as issued with OID. In that event, Holders will be required to include the amount of OID in income on a constant yield method, based on the original yield to maturity of the New Notes calculated by reference to their issue price, regardless of the Holder's method of accounting. Accordingly, if the New Notes are treated as issued with OID, the Holder of the New Notes will be required to take OID into income prior to the receipt of cash payments with respect to the New Notes. In addition, Reorganized Debtor will be required to furnish annually to the IRS and to each Holder information regarding the amount of OID attributable to that year with respect to the New Notes. If the New Notes are treated as issued with OID, it is also possible that the New Notes could constitute "applicable high yield discount obligations." In general, an applicable high yield discount obligation is any debt instrument with "significant original issue discount," a maturity date more than five years from the issue date and a yield to maturity at least five percentage points higher than the applicable federal rate. If the New Notes constitute applicable high yield discount obligations, Debtor may be denied a deduction for a certain portion of the original issue discount on the New Notes and may claim an interest deduction as to the remainder of the original issue discount only when the cash with respect to such original issue discount is paid. To the extent that Debtor is denied a deduction for a portion of the original issue discount, the denied portion may be treated as a dividend and certain corporate Holders may be entitled to a dividend received deduction. Even though the New Notes are expected to be treated as traded on an established securities market, if such New Notes trade at par value or at a price approximately equal to par value, then the issue price of the New Notes will equal or approximately equal the stated redemption price at maturity of the New Notes. In that event, the New Notes will not be deemed to be issued with OID, and Holders of the New Notes will be required to recognize interest income on the New Notes only as the stated interest on the New Notes is received. In addition, in that case, the New Notes will not be treated as "applicable high yield discount obligations" and the tax consequences described in the paragraph above would not be applicable to the Holders and Debtor. (g) Acquisition Premium If an initial Holder's tax basis in a New Note exceeds the New Note's stated redemption price at maturity, such Holder would be considered to have purchased the New Note at a "premium" equal to such excess amount. As a result, such Holder will not be required to include any OID in income with respect to such security. In addition, if a proper election is made, such Holder may be able to amortize any premium over the term of the New Note. See "Amortizable Bond Premium." If an initial Holder's tax basis in the New Note exceeds its adjusted issue price (but does not exceed the New Note's stated redemption price at maturity), then such Holder would be considered to have purchased the 86 New Note at an "acquisition premium" equal to such excess. As a consequence, such Holder may reduce its OID accruals with respect to the New Note by a ratable portion of the "acquisition premium." (h) Amortizable Bond Premium If the tax basis of the exchanging Holder's New Note exceeds the stated redemption price at maturity of the New Note, then such excess may be amortizable by the Holder as an offset to interest payments on the New Note. This "bond premium" would be amortizable on a constant interest rate basis over the term of the New Note, subject to certain limitations. Such treatment is available only if the Holder makes (or has made) a timely election under Code (S)171. If a Holder of the New Note makes an election to amortize bond premium, the tax basis of the New Note must be reduced by the amount of the aggregate amortization deductions allowable for the bond premium. Any such election to amortize bond premium would apply to all debt instruments held or subsequently acquired by the electing Holder and cannot be revoked without permission from the IRS. 2. Consequences to Holders of Equity Interests (a) Receipt of New Common Stock and New Warrants A Holder of any Equity Interest that receives New Common Stock and New Warrants will recognize no gain or loss on the receipt of New Common Stock and New Warrants (unless such Holder had previously claimed a worthless stock deduction with respect to any Old Preferred Stock or Old Common Stock). Such Holder should obtain a tax basis in the New Common Stock (including in any Fractional Stock Interest) and in New Warrants (including in any Fractional Warrant Interest (as defined below)) equal to the tax basis of the Old Equity Interests surrendered therefor (allocated in proportion to the fair market value of the New Common Stock and New Warrants, respectively) and should have a holding period for the New Common Stock (including for any Fractional Stock Interest) and New Warrants (including for any Fractional Warrant Interest) that includes the holding period for the Old Equity Interest surrendered. (b) Amounts Received in Lieu of Fractional Interests in New Common Stock and New Warrants Exercisable into Fractional Interests in New Common Stock A Holder of an Equity Interest who is entitled to receive a Fractional Stock Interest or a New Warrant exercisable into a Fractional Stock Interest (a "Fractional Warrant Interest") should recognize gain or loss upon the sale by Debtor or its agent of such Fractional Stock Interest and a Fractional Warrant Interest in an amount equal to the difference between the Holder's tax basis in the Fractional Stock Interest or the Fractional Warrant Interest, as the case may be (each determined as described above), and the amount received therefor. Such gain or loss should generally be capital gain or loss and should be long-term gain or loss if the Holder's holding period for the Fractional Stock Interest or for the Fractional Warrant Interest exceeds one year. B. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES TO REORGANIZED DEBTOR 1. Cancellation of Indebtedness and Reduction of Tax Attributes As a result of the anticipated exchange of Old Notes for New Notes and Common Stock (and cash, if any), the amount of Debtor's aggregate outstanding indebtedness will be substantially reduced. In general, absent an exception, a debtor will realize and recognize cancellation of indebtedness income ("COD Income") upon satisfaction of its outstanding indebtedness for an amount less than its adjusted issue price. The amount of COD Income, in general, is the excess of (a) the adjusted issue price of the indebtedness satisfied, over (b) the sum of the issue price of any new indebtedness of the taxpayer issued, the amount of cash paid and the fair market value of any new consideration (including stock of Debtor) given in satisfaction of such indebtedness at the time of the exchange. 87 A debtor will not, however, be required to include any amount of COD Income in gross income if Debtor is under the jurisdiction of a court in a Title 11 bankruptcy proceeding and the discharge of debt occurs pursuant to that proceeding. Instead, as a price for such exclusion, a debtor must (as of the first day of the next taxable year) reduce its tax attributes by the amount of COD Income which it excluded from gross income. In general, tax attributes will be reduced in the following order: (a) net operating losses ("NOLs"), (b) tax credits and capital loss carryovers, and (c) tax basis in assets. Because, under the Plan, Holders of Old Notes will receive the New Notes and a substantial amount of the New Common Stock, the amount of COD Income, and accordingly the amount of tax attributes required to be reduced, will depend on the fair market value of the New Common Stock and the issue price of the New Notes to be issued to such noteholders. This stock value and issue price of the New Notes cannot be known with certainty until after the Effective Date. Furthermore, because of the Subclass 4B Note Election and the Subclass 4B Equity Purchase rights, the exact composition of the consideration to be received by holders of the Old Notes will not be known until the Effective Date. Thus, although it is expected that a reduction of tax attributes will be required, the exact amount of such reduction cannot be predicted. To the extent that a reduction of tax attributes is required, Debtor anticipates that it will reduce the amount of its NOL carryforward and then reduce its other tax attributes, primarily the tax basis of its assets. Any reduction in tax attributes (other than the reduction of NOLs) should apply to reduce tax attributes solely of Debtor, and should not affect the tax attributes other members of Debtor's consolidated group. However, with respect to a required reduction of NOLs, the IRS has taken inconsistent positions as to whether such reduction will be applied solely to the NOLs of Debtor or to the consolidated NOLs of Debtor's entire consolidated group. Initially, the IRS held in a private letter ruling that where a member of a consolidated group is permitted to exclude COD income such member is required to reduce only its own separate company tax attributes (including NOLs) without having to reduce the tax attributes of any other member of the consolidated group. In a recent field service advice, however, the IRS concluded that Debtor member was required to treat all of a group's consolidated NOLs as a tax attribute of Debtor member, and thus determined that all of the group's consolidated NOLs were subject to reduction. Although such private rulings and field service advice may not be relied upon by other taxpayers as binding authority, they do provide some indication of the IRS's position. Despite these inconsistent positions, Debtor believes, and intends to take the position, that any attribute reduction (including the reduction of NOLs) should be applied on a separate company basis. Following this approach, NOLs of Debtor would be reduced or eliminated and then the other tax attributes of Debtor, primarily tax basis of Debtor's assets, would be reduced. In the event, however, that NOLs were required to be reduced on a consolidated basis, the NOLs of both Debtor and its affiliates would first be eliminated or reduced, and then asset basis and other attributes of Debtor would be reduced. 2. Limitation of Net Operating Loss Carryovers and Other Tax Attributes Code Section 382 generally limits a corporation's use of its NOLs (and may limit a corporation's use of certain built-in losses if such built-in losses are recognized within a five-year period following an ownership change) if a corporation undergoes an "ownership change." This discussion describes the limitation determined under Code Section 382 in the case of an "ownership change" as the "Section 382 Limitation". The Section 382 Limitation on the use of pre-change losses (the NOLs and built-in losses recognized within the five year post-ownership change period) in any "post change year" is generally equal to the product of the fair market value of the loss corporation's outstanding stock immediately before the ownership change and the long term tax-exempt rate (which is published monthly by the Treasury Department and most recently was approximately 4.82%) in effect for the month in which the ownership change occurs. Code Section 383 applies a similar limitation to capital loss carryforward and tax credits. As discussed below, however, special rules may apply in the case of a corporation which experiences an ownership change as the result of a bankruptcy proceeding. In general, an ownership change occurs when the percentage of the corporation's stock owned by certain "5 percent shareholders" increases by more than 50 percentage points over the lowest percentage owned at any 88 time during the applicable "testing period" (generally, the shorter of (a) the three-year period proceeding the testing date or (b) the period of time since the most recent ownership change of the corporation). A "5 percent shareholder" for these purposes includes, generally, an individual or entity that directly or indirectly owns 5 percent or more of a corporation's stock during the relevant period, and may include one or more groups of shareholders that in the aggregate own less than 5 percent of the value of the corporation's stock. Under applicable Treasury Regulations, an ownership change with respect to an affiliated group of corporations filing a consolidated return that have consolidated NOLs is generally measured by changes in stock ownership of the parent corporation of the group. The issuance of New Common Stock of Reorganized Debtor pursuant to the Plan will cause an ownership change to occur with respect to Debtor, and consequently with respect to Debtor's consolidated group, on the Effective Date. As a result, the Section 382 Limitation will be applicable to the utilization by Debtor and Debtor's consolidated group of their NOLs and built-in losses following the Effective Date. This limitation is independent of, and in addition to, the reduction of tax attributes described in the preceding section resulting from the exclusion of COD Income. Similarly, the ability of Debtor and Debtor's consolidated group to use any remaining capital loss carryforwards and tax credits will also be limited. As noted above, the Section 382 Limitation is generally determined by reference to the fair market value of the loss corporation's outstanding stock immediately before the ownership change. Code Section 382(l)(6) provides, however, that in the case of an ownership change resulting from a bankruptcy proceeding of Debtor, the value of Debtor's stock for the purpose of computing the Section 382 Limitation will generally be calculated by reference to the net equity value of Debtor's stock immediately after the ownership change. Accordingly, under this provision the Section 382 Limitation would generally reflect the increase in the value of Debtor's stock resulting from the conversion of debt to equity in the proceeding. Although, as previously noted, it is not possible to know with certainty what the fair market value of the stock of Reorganized Debtor will be following the Effective Date (and accordingly what the amount of the Section 382 Limitation would be), Debtor believes that the Code Section 382(l)(6) rule could be of significant benefit with respect to its ability to utilize any remaining tax attributes following the Effective Date. Accordingly, Debtor currently intends to elect the application of this rule. 3. Effect of Issue Price on Debtor's Interest Deductions If, as described above in Section VI.A.1.f, "Original Issue Discount," the "issue price" of the New Notes is less than the principal amount of such notes by an amount sufficient to cause the New Notes to be treated as applicable high yield discount obligations, Debtor may be denied a deduction for a certain portion of the OID on such notes and may claim an interest deduction as to the remainder only when cash is paid with respect to the OID (generally at maturity). On the other hand, if the issue price of the New Notes is greater than their principal amount, such excess would constitute bond issuance premium to the issuer. Debtor would be required to allocate the amount of bond issuance premium to each accrual period using a constant yield method and to reduce its interest deduction for each accrual period by the amount of premium so allocated. 4. Deductibility of Amounts Paid Pursuant to the Management Incentive Program Subject to the limitation discussed below, Reorganized Debtor should be entitled to deduct, for federal income tax purposes, amounts paid to its employees in the form of the Management Incentive Shares and pursuant to the 2002 Stock Option Plan (including amounts paid in the form of New Common Stock, options to acquire New Common Stock, stock awards and performance awards) at the time when the employees of Reorganized Debtor recognize ordinary income as a result of the receipt of such amounts. An income tax deduction will generally be unavailable for annual compensation in excess of $1 million paid to any of the five most highly compensated officers of a public corporation. However, amounts that constitute performance-based compensation are not counted toward the $1 million limit, provided certain other conditions are satisfied. It is expected that options granted under the 2002 Stock Option Plan should satisfy the requirements for performance- 89 based compensation, although this result is not certain. Debtor also intends to treat the Management Incentive Shares as performance-based compensation. C. BACKUP WITHHOLDING Debtor will withhold all amounts required by law to be withheld from payments of interest and dividends. Debtor will comply with all applicable reporting requirements of the Code. THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH HOLDER'S CIRCUMSTANCES AND INCOME TAX SITUATION. ALL HOLDERS OF THE OLD NOTES AND EQUITY INTERESTS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX LAWS. VII. MISCELLANEOUS PROVISIONS Certain additional miscellaneous information regarding the Plan and the Chapter 11 Case is set forth below. A. PENDING LITIGATION Debtor is involved from time to time in routine litigation that is incidental to its business. Debtor does not believe that the outcome of any such litigation will have a material adverse effect upon Debtor. Debtor expressly reserves its rights to, among other things, enforce, pursue, prosecute and settle (or decline to do any of the foregoing) all claims, defenses or causes of action, among other things, that arise from or relate in any way to the operation of its business. The Plan does not impair the rights of a person or entity involved in any currently pending litigation with Debtor of which it has knowledge. B. FEES AND EXPENSES OF THE PREPETITION NOTEHOLDERS COMMITTEES Debtor entered into a letter agreement, dated March 15, 2001, with Paul Weiss pursuant to which Debtor agreed to pay the reasonable legal fees and expenses of Paul Weiss in connection with its representation of the Prepetition Senior Noteholder Committee. The letter agreement is terminable at will by Debtor on five business days prior written notice provided to Paul Weiss. Through January 11, 2002, Debtor has paid approximately $530,366 to Paul Weiss in respect of such arrangements. Debtor entered into a letter agreement, dated March 21, 2001, with Houlihan pursuant to which, among other things, Debtor agreed to pay to Houlihan certain fees in consideration of Houlihan's agreement to render financial advisory services on behalf of the Prepetition Senior Noteholder Committee in connection with the proposed restructuring of Debtor. As compensation for its services, Debtor agreed to pay Houlihan $160,000 per month (the "Monthly Fee") from February 16, 2001, as well as a transaction fee (the "Transaction Fee") equal to (a) 2/3rds of 1% of the fair market value of the New Notes and New Common Stock received by the Holders of the Old Senior Notes under the Plan less (b) 50% of 15/16th of the Monthly Fees paid to Houlihan after August 16, 2001. The letter agreement is terminable by Debtor upon fifteen days prior written notice; provided that Debtor must pay the Transaction Fee to Houlihan if the transactions contemplated by the Plan are consummated less than six months after the termination of the letter agreement. Debtor entered into a letter agreement, dated March 23, 2001, with Schulte Roth pursuant to which Debtor agreed to pay the reasonable legal fees and expenses of Schulte Roth in connection with its representation of the 90 Prepetition Subordinated Noteholder Committee. The letter agreement is terminable at will by Debtor on five business days prior written notice provided to Schulte Roth. Through January 11, 2002, Debtor has paid approximately $157,635 to Schulte Roth in respect of such arrangements. The reasonable fees and expenses incurred after the Petition Date by Debtor's and the Prepetition Noteholders Committees' counsel and financial advisors (together with the reasonable fees and expenses of local counsel) through the Effective Date shall be paid (without application by or on behalf of any such professionals to the Bankruptcy Court and without notice and a hearing) by Reorganized Debtor as an Administrative Claim under the Plan. If Reorganized Debtor and any such professional retained by the Prepetition Noteholders Committees cannot agree on the amount of fees and expenses to be paid to such professionals, the amount of any such fees and expenses shall be determined by the Bankruptcy Court. C. SUCCESSORS AND ASSIGNS The rights, benefits and obligations of any Person or Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign of such Person or Entity. D. RESERVATION OF RIGHTS Except as expressly set forth in the Plan, the Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order. None of the filing of the Plan, any statement or provision contained herein, or the taking of any action by Debtor with respect to the Plan shall be or shall be deemed to be an admission or waiver of any rights of Debtor with respect to the Holders of Claims or Equity Interests prior to the Effective Date. E. SERVICE OF DOCUMENTS Except as otherwise provided by order of the Bankruptcy Court, any pleading, notice or other document required by the Plan to be served on or delivered to Reorganized Debtor shall be sent by first class U.S. mail, postage prepaid to: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attn: Robert W. Olson, Senior Vice President, General Counsel and Secretary with copies to: Kirkland & Ellis 200 E. Randolph Drive Chicago, Illinois 60601 Attn: Matthew N. Kleiman, Esq. Dinsmore & Shohl LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, Ohio 45202 Attn: Kim Martin Lewis, Esq. Tim J. Robinson, Esq. 91 Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attn: Alan W. Kornberg, Esq. Andrew N. Rosenberg, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attn: Jeffrey S. Sabin, Esq. Mark A. Broude, Esq. VIII. RECOMMENDATION In the opinion of Debtor, the Plan is preferable to the alternatives described herein because it provides for a larger distribution to the Holders than would otherwise result in a liquidation under Chapter 7 of the Bankruptcy Code. In addition, any alternative other than confirmation of the Plan could result in extensive delays and increased administrative expenses resulting in smaller distributions to the Holders of Claims and Equity Interests. Accordingly, Debtor recommends that Holders of Claims and Equity Interests entitled to vote on the Plan support confirmation of the Plan and vote to accept the Plan. Dated: January 18, 2002 Respectfully Submitted, CHIQUITA BRANDS INTERNATIONAL, INC. /s/ ROBERT W. OLSON By: _______________________________ Name: Robert W. Olson Title: Senior Vice President, General Counsel and Secretary Prepared by: James H.M. Sprayregen Matthew N. Kleiman KIRKLAND & ELLIS 200 East Randolph Drive Chicago, Illinois 60601 (312) 861-2000 and Kim Martin Lewis DINSMORE & SHOHL LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, Ohio 45202 (513) 977-8200 CO-COUNSEL TO DEBTOR AND DEBTOR IN POSSESSION 92 EX-99.T3E.2 5 dex99t3e2.txt PLAN OF REORGANIZATION Exhibit T3E-2 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In re: ) Chapter 11 ) CHIQUITA BRANDS INTERNATIONAL, INC., ) Case No. 01-18812 ) Debtor. ) )
- -------------------------------------------------------------------------------- FIRST AMENDED PLAN OF REORGANIZATION OF CHIQUITA BRANDS INTERNATIONAL, INC. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE - -------------------------------------------------------------------------------- James H.M. Sprayregen Kim Martin Lewis Matthew N. Kleiman DINSMORE & SHOHL LLP KIRKLAND & ELLIS 1900 Chemed Center 200 East Randolph Drive 255 East Fifth Street Chicago, Illinois 60601 Cincinnati, Ohio 45202 (312) 861-2000 (513) 977-8200 Co-Counsel for Chiquita Brands International, Inc. Dated: January 18, 2002 Exhibit A -- First Amended Plan of Reorganization TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW............................................................................. 1 A. Rules of Interpretation, Computation of Time and Governing Law......................... 1 B. Defined Terms.......................................................................... 1 ARTICLE II. ADMINISTRATIVE AND PRIORITY TAX CLAIMS........................................... 9 A. Administrative Claims.................................................................. 9 B. Priority Tax Claims.................................................................... 10 ARTICLE III. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS................................................................................. 10 A. Summary................................................................................ 10 B. Classification and Treatment........................................................... 10 C. Special Provision Governing Unimpaired Claims.......................................... 15 ARTICLE IV. ACCEPTANCE OR REJECTION OF THE PLAN.............................................. 15 A. Voting Classes......................................................................... 15 B. Acceptance by Impaired Classes......................................................... 15 C. Presumed Acceptance of Plan............................................................ 15 D. Presumed Rejection of Plan............................................................. 15 E. Non-Consensual Confirmation............................................................ 16 ARTICLE V. MEANS FOR IMPLEMENTATION OF THE PLAN.............................................. 16 A. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor.......... 16 B. Cancellation of Old Notes, Old Preferred Stock, Old Common Stock and Stock Options..... 16 C. Issuance of New Securities; Execution of Related Documents............................. 17 D. Corporate Governance, Directors and Officers, and Corporate Action..................... 17 E. Sources of Cash for Plan Distribution.................................................. 18 ARTICLE VI. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES............................ 18 A. Assumption of Executory Contracts and Unexpired Leases................................. 18 B. Claims Based on Rejection of Executory Contracts or Unexpired Leases................... 18 C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed.................. 19 D. Indemnification of Directors, Officers and Employees................................... 19 E. Compensation and Benefit Programs...................................................... 19 ARTICLE VII. PROVISIONS GOVERNING DISTRIBUTIONS.............................................. 19 A. Distributions for Claims and Equity Interests Allowed as of the Effective Date......... 19 B. Distributions by the Reorganized Debtor; Distributions with Respect to Debt Securities. 20 C. Delivery and Distributions and Undeliverable or Unclaimed Distributions................ 20 D. Distribution Record Date............................................................... 21 E. Timing and Calculation of Amounts to be Distributed.................................... 21 F. Minimum Distribution................................................................... 21 G. Setoffs................................................................................ 22 H. Surrender of Canceled Instruments or Securities........................................ 22 I. Lost, Stolen, Mutilated or Destroyed Debt Securities................................... 23 ARTICLE VIII. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS................................................... 23 A. Resolution of Disputed Claims.......................................................... 23 B. Allowance of Claims and Equity Interests............................................... 24 C. Controversy Concerning Impairment...................................................... 24
Exhibit A -- First Amended Plan of Reorganization
Page ---- ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN............................................................... 24 A. Condition Precedent to Confirmation................................. 24 B. Conditions Precedent to Consummation................................ 25 C. Waiver of Conditions................................................ 26 D. Effect of Non-occurrence of Conditions to Consummation.............. 26 ARTICLE X. RELEASE, INJUNCTIVE AND RELATED PROVISIONS..................... 26 A. Subordination....................................................... 26 B. Limited Releases by Debtor.......................................... 26 C. Limited Releases by Holders of Claims or Equity Interests........... 27 D. Exculpation......................................................... 27 E. Preservation of Rights of Action.................................... 27 F. Discharge of Claims and Termination of Equity Interests............. 27 G. Injunction.......................................................... 28 ARTICLE XI. RETENTION OF JURISDICTION..................................... 28 ARTICLE XII. MISCELLANEOUS PROVISIONS..................................... 29 A. Effectuating Documents, Further Transactions and Corporation Action. 29 B. Dissolution of Committee(s)......................................... 29 C. Payment of Statutory Fees........................................... 29 D. Modification of Plan................................................ 29 E. Revocation of Plan.................................................. 30 F. Successors and Assigns.............................................. 30 G. Reservation of Rights............................................... 30 H. Section 1146 Exemption.............................................. 30 I. Further Assurances.................................................. 30 J. Service of Documents................................................ 30 K. Filing of Additional Documents...................................... 31
Exhibit A -- First Amended Plan of Reorganization - -------------------------------------------------------------------------------- PLAN OF REORGANIZATION OF CHIQUITA BRANDS INTERNATIONAL, INC. UNDER CHAPTER 11 OF THE BANKRUPTCY CODE - -------------------------------------------------------------------------------- Pursuant to Title 11 of the United States Code, 11 U.S.C. (S)(S) 101 et seq., Chiquita Brands International, Inc., debtor and debtor-in-possession in the above-captioned and numbered case, hereby respectfully proposes the following Plan of Reorganization under Chapter 11 of the Bankruptcy Code: ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW A. Rules of Interpretation, Computation of Time and Governing Law 1. For purposes herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and the neuter gender; (b) any reference herein to a contract, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions; (c) any reference herein to an existing document or exhibit Filed, or to be Filed, shall mean such document or exhibit, as it may have been or may be amended, modified or supplemented; (d) unless otherwise specified, all references herein to Sections, Articles and Exhibits are references to Sections, Articles and Exhibits hereof or hereto; (e) the words ''herein,'' "hereof" and ''hereto'' refer to the Plan in its entirety rather than to a particular portion of this Plan; (f) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation hereof; (g) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; and (h) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to such term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be. 2. In computing any period of time prescribed or allowed hereby, the provisions of Bankruptcy Rule 9006(a) shall apply. 3. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, and subject to the provisions of any contract, instrument, release, indenture or other agreement or document entered into in connection herewith, the rights and obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without giving effect to the principles of conflict of laws thereof. B. Defined Terms Unless the context otherwise requires, the following terms shall have the following meanings when used in capitalized form herein: 1. "2002 Stock Option Plan" means the plan pursuant to which Reorganized Debtor will be authorized to issue options exercisable for up to an aggregate of 5,925,926 shares of New Common Stock as awards to the Reorganized Debtor's management. 2. "Administrative Claim" means a Claim for costs and expenses of administration under section 503(b), 507(b) or 1114(e)(2) of the Bankruptcy Code, including, but not limited to: (a) the actual and necessary costs and expenses incurred after the Petition Date of preserving the Estate and operating the business of Debtor (such as wages, salaries or commissions for services and payments for goods and other services and leased premises); (b) compensation for legal, financial advisory, accounting and other services and reimbursement of expenses awarded or allowed under sections 328, 330(a) or 331 of the Bankruptcy Code or otherwise; and (c) all fees and charges assessed against the Estate under chapter 123 of title 28 United States Code, 28 U.S.C. (S)(S) 1911-1930. Exhibit A -- First Amended Plan of Reorganization 3. "Allowed" means, with respect to any Claim or Equity Interest, except as otherwise provided herein: (a) a Claim or Equity Interest that has been scheduled by Debtor in its schedule of liabilities as other than disputed, contingent or unliquidated and as to which Debtor or other party in interest has not Filed an objection by the Claims Objection Bar Date; (b) a Claim or Equity Interest that either is not a Disputed Claim or Equity Interest or has been allowed by a Final Order; (c) a Claim or Equity Interest that is allowed: (i) in any stipulation of amount and nature of Claim executed prior to the Confirmation Date and approved by the Bankruptcy Court; (ii) in any stipulation with Debtor of amount and nature of Claim or Equity Interest executed on or after the Confirmation Date; or (iii) in or pursuant to any contract, instrument, indenture or other agreement entered into or assumed in connection herewith; (d) a Claim or Equity Interest relating to a rejected executory contract or unexpired lease that either (i) is not a Disputed Claim or Equity Interest or (ii) has been allowed by a Final Order, in either case only if a proof of Claim or Equity Interest has been Filed by the Claims Objection Bar Date or has otherwise been deemed timely Filed under applicable law; or (e) a Claim or Equity Interest that is allowed pursuant to the terms hereof. 4. "Allowed Claim" means an Allowed Claim in the particular Class described. 5. "Allowed Interest" means an Allowed Equity Interest in a particular Class described. 6. "Asset Sale" shall mean the sale of all or substantially all of the assets of the Reorganized Debtor (other than to a direct or indirect subsidiary of Debtor). 7. "Ballots" mean the ballots accompanying the Disclosure Statement upon which Holders of Impaired Claims or Impaired Interests entitled to vote shall indicate their acceptance or rejection of the Plan in accordance with the Plan and the Voting Instructions. 8. "Bankruptcy Code" means Title I of the Bankruptcy Reform Act of 1978, as amended from time to time, as set forth in sections 101 et seq. of Title 11 of the United States Code, and applicable portions of Titles 18 and 28 of the United States Code. 9. "Bankruptcy Court" means the United States District Court having jurisdiction over the Chapter 11 Case and, to the extent of any reference made pursuant to section 157 of Title 28 of the United States Code and/or the General Order of such District Court pursuant to section 151 of title 28 of the United States Code, the bankruptcy unit of such District Court. 10. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended from time to time, as applicable to the Chapter 11 Case, promulgated under 28 U.S.C. (S) 2075 and the General, Local and Chambers Rules of the Bankruptcy Court. 11. "Bear Stearns BB Index Spread" means, as used herein, the spread over comparable maturity U.S. Treasury securities of BB rated high yield debt securities as measured in the Bear Stearns Relative Value Analysis (Global High Yield Research) as of the most recent report prior to the Effective Date. However, to the extent that the Bear Stearns BB Index Spread has increased or decreased by more than 100 basis points (i.e., 1.0%) from the immediately prior weekly report, the spread used in the New Note Interest Rate will be the average of the Bear Stearns BB Index Spread for the four-week period prior to the Effective Date. 12. "Beneficial Holder" means the Person or Entity holding the beneficial interest in a Claim or Equity Interest. 13. "Business Day" means any day, other than a Saturday, Sunday or "legal holiday" (as defined in Bankruptcy Rule 9006(a)). 14. "Cash" means cash and cash equivalents. 2 Exhibit A -- First Amended Plan of Reorganization 15. "Cause of Action" means any cause of action or Claim of any person or entity against Debtor or any other party (i) not specifically released hereby or (ii) in respect of any act or omission that is determined in a Final Order to have constituted gross negligence or willful misconduct. 16. "CBI" means Chiquita Brands, Inc., a wholly-owned subsidiary of Debtor. 17. "Chapter 11 Case" means the chapter 11 bankruptcy proceeding filed by Debtor on November 28, 2001, in the United States Bankruptcy Court for the Southern District of Ohio. 18. "Claim" means a claim (as defined in section 101(5) of the Bankruptcy Code) against Debtor, including, but limited to: (a) any right to payment from Debtor whether or not such right is reduced to judgment, liquidated, unliquidated, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (b) any right to an equitable remedy for breach of performance if such performance gives rise to a right of payment from Debtor, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 19. "Claim Holder" or "Claimant" means the Holder of a Claim. 20. "Claims Objection Bar Date" means the bar date, to the extent set, for Filing of proofs of claim with respect to executory contracts and unexpired leases which are rejected pursuant to this Plan or otherwise pursuant to section 365 of the Bankruptcy Code which shall be 120 days after the Effective Date. 21. "Class" means a category of Holders of Claims or Equity Interests as set forth in Article III herein. 22. "Clearstream" means Clearstream international, societe anonyme. 23. "COC Agreement" means any of those certain severance agreements which Debtor entered into with a number of key executives pursuant to which such executives are entitled to certain benefits in the event they are involuntarily terminated without "cause" or resign for "good reason" within three years after a "change of control" of Debtor. 24. "Committee" or "Committees" means a statutory official committee (or committees, if more than one) appointed in the Chapter 11 Case pursuant to section 1102 of the Bankruptcy Code, if any. 25. "Confirmation" means the entry of the Confirmation Order, subject to all conditions specified in Article IX herein having been (i) satisfied or (ii) waived pursuant to Article IX herein. 26. "Confirmation Date" means the date upon which the Confirmation Order is entered by the Bankruptcy Court in its docket, within the meaning of Bankruptcy Rules 5003 and 9021. 27. "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code. 28. "Consummation" means the occurrence of the Effective Date. 29. "Creditor" means any Holder of a Claim. 30. "Creditors Committee" means a statutory official creditors committee appointed in the Chapter 11 Case which is comprised in whole or in part of any Holders of Old Senior Note Claims, Old Subordinated Note Claims, or either of the Old Note Trustees. 31. "D&O Releasees" means all officers, directors, employees, attorneys, financial advisors, accountants, investment bankers, agents and representatives of Debtor and its subsidiaries, in each case in their capacity as such. 3 Exhibit A -- First Amended Plan of Reorganization 32. "Debtor" means Chiquita Brands International, Inc., as debtor in the Chapter 11 Case. 33. "Debtor in Possession" means Chiquita Brands International, Inc., as debtor in possession in the Chapter 11 Case. 34. "Disclosure Statement" means the First Amended Disclosure Statement for Plan of Reorganization of Chiquita Brands International, Inc. under Chapter 11 of the Bankruptcy Code dated January 18, 2002, as amended, supplemented, or modified from time to time, describing the Plan, that is prepared and distributed in accordance with sections 1125, 1126(b) and/or 1145 of the Bankruptcy Code and Bankruptcy Rule 3018 and/or other applicable law. 35. "Disputed" means, with respect to any Claim or Equity Interest, any Claim or Equity Interest: (a) listed on the Schedules as unliquidated, disputed or contingent; (b) as to which Debtor or any other party in interest has interposed a timely objection or request for estimation in accordance with the Bankruptcy Code and the Bankruptcy Rules or (c) is otherwise disputed by Debtor in accordance with applicable law, which objection, request for estimation or dispute has not been withdrawn or determined by a Final Order. 36. "Distribution Record Date" means the date for determining, in the case of registered securities, which Holders of Claims and Equity Interests are eligible to receive distributions hereunder, and shall be the Confirmation Date. 37. "DTC" means The Depository Trust Company. 38. "Effective Date" means the date selected by Debtor which is a Business Day after the Confirmation Date on which: (a) no stay of the Confirmation Order is in effect, and (b) all conditions specified in Article IV herein have been (i) satisfied or (ii) waived pursuant to Section IX.C. 39. "Entity" means an entity as defined in section 101(15) of the Bankruptcy Code. 40. "Equity Interest" means any equity interest of Debtor, including, but not limited to, all issued, unissued, authorized or outstanding shares or stock (including the Old Common Stock and the Old Preferred Stock), together with any warrants, options or contract rights to purchase or acquire such interests at any time. 41. "Estate" means the estate of Debtor created by section 541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case. 42. "Euroclear" means Euroclear Bank. 43. "Exchange Agent" means American Security Transfer Company, Limited Partnership, d/b/a Securities Transfer Company, One East Fourth Street, 12/th/ Floor, Room 1201, Cincinnati, Ohio 45202. 44. "File" or "Filed" means file or filed with the Bankruptcy Court in the Chapter 11 Case. 45. "Final Decree" means the decree contemplated under Bankruptcy Rule 3022. 46. "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction with respect to the subject matter, which has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought. 4 Exhibit A -- First Amended Plan of Reorganization 47. "General Unsecured Claims" means any unsecured Claim against Debtor that is not a Secured Claim, Administrative Claim, Priority Tax Claim, Other Priority Claim, Subclass 4A Claim, Subclass 4B Claim or Class 7 Other Securities Claim. 48. "Holder" and collectively, "Holders" mean a Person or Entity holding an Equity Interest or Claim, including a holder or the Old Senior Notes, the Old Subordinated Notes, the Old Preferred Stock or the Old Common Stock, and with respect to a vote on the Plan or the Subclass 4B Supplemental Distribution, means the Beneficial Holder as of the Record Date or any authorized signatory who has completed and executed a Ballot or on whose behalf a Master Ballot has been completed and executed in accordance with the Voting Instructions. 49. "Houlihan" means Houlihan Lokey Howard & Zukin of New York, New York, the Senior Noteholder Committee's financial advisor. 50. "Impaired" means with respect to any Class of Claims or Equity Interests, which Claims or Equity Interests will not be paid in full upon the effectiveness of this Plan or will be changed by the reorganization effectuated hereby. 51. "Impaired Claim" means a Claim classified in an Impaired Class. 52. "Impaired Class" means each of Classes 4, 5, 6 and 7 as set forth in Article III herein. 53. "Lindner" means Carl H. Lindner, the current Chairman of the Board of Debtor. 54. "Lock Up Agreement" means that certain agreement executed on November 9, 2001, between Debtor and members of the Prepetition Noteholder Committees, a copy of the form of which is attached to the Disclosure Statement as Exhibit F. 55. "Luxembourg Agent" means BNP Paribas Luxembourg, 10A Boulevard Royal, L2093 Luxembourg. 56. "Management Incentive Shares" means that certain equity incentive program (the terms of which shall be filed on or before the Confirmation Date), pursuant to which Lindner shall receive or have the right to receive 800,000 shares of New Common Stock (i.e., 2.0% of the New Common Stock to be issued pursuant hereto, subject to dilution by the New Warrants and the Management Options) and Warshaw, and such other key employees of Debtor or its subsidiaries as Warshaw may designate prior to the Effective Date, will receive or have the right to receive an aggregate 200,000 shares of New Common Stock (i.e., 0.5% of the New Common Stock to be issued pursuant hereto, subject to dilution by the New Warrants and the Management Options). 57. "Management Options" means those certain options to be issued to Debtor's management on or after the Effective Date for the purchase of shares of New Common Stock pursuant to the 2002 Stock Option Plan. 58. "Master Ballots" mean the master ballots accompanying the Disclosure Statement upon which Holders of Impaired Claims or Impaired Interests shall indicate their acceptance or rejection of the Plan in accordance with the Voting Instructions. 59. "Merger" means the merger of the Reorganized Debtor (whether or not the Reorganized Debtor is the surviving entity) in which the securities of the Reorganized Debtor outstanding immediately prior to such merger do not represent at least 50% of the combined voting power of the securities of Reorganized Debtor, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger. 60. "New Common Stock" means the 150,000,000 shares of Reorganized Debtor's common stock, par value $.01 per share, to be authorized pursuant to the Third Restated Certificate of Incorporation of which up to 40,000,000 shares shall be initially issued pursuant hereto and an aggregate of up to 59,259,259 shares shall be issued pursuant hereto. 5 Exhibit A -- First Amended Plan of Reorganization 61. "New Note Indenture" means that certain indenture to be entered into between Reorganized Debtor and the New Note Trustee required to be executed in accordance with the Plan, the form of which will be filed on or before the Confirmation Date. 62. "New Note Interest Rate" means the interest rate fixed at the Effective Date equal to the sum of: (i) the yield for actively traded U.S. Treasury securities having a maturity closest to seven years as of the day prior to the Effective Date, (ii) the Bear Stearns BB Index Spread and (iii) 100 basis points (i.e., 1.0%). 63. "New Notes" means those certain notes to be issued as a series of senior notes with an aggregate principal amount of $250,000,000 under and with the terms specified in the New Notes Indenture bearing interest at the Senior Note Interest Rate. 64. "New Notes Trustee" means the trustee for the New Notes under the New Note Indenture, as required by the Plan and the Trust Indenture Act. 65. "New Warrants" means those certain warrants exercisable for 13,333,333 shares of the New Common Stock expiring 7 years after the Effective Date. 66. "Nominee" means any Beneficial Holder whose securities were registered or held of record in the name of his broker, dealer, commercial bank, trust company, savings and loan or other nominee. 67. "Noteholder Releasees" means the members of the Prepetition Noteholder Committees, together with their officers, directors, employees, attorneys, financial advisors, accountants, investment bankers, agents and representatives in each case in their capacity as such. 68. "Old Common Stock" means all of the issued and outstanding shares of Debtor's common stock, $.01 par value per share. 69. "Old Master Senior Note Indenture" means that certain Indenture dated as of June 15, 1994, by and between Debtor and the Old Senior Note Trustee. 70. "Old Note Indentures" means the Old Senior Note Indentures and the Old Subordinated Note Indenture. 71. "Old Note Trustees" means the Old Senior Note Trustee and the Old Subordinated Note Trustee. 72. "Old Notes" means the Old Senior Notes and the Old Subordinated Notes. 73. "Old Preferred Stock" means all of the issued and outstanding shares of Debtor's: (i) Old Series A Preferred Stock, (ii) Old Series B Preferred Stock and (iii) Old Series C Preferred Stock. 74. "Old Senior Note Indentures" means the Old Master Senior Note Indenture and the Old 9 5/8% Senior Note Indenture. 75. "Old Senior Note Trustee" means The Fifth Third Bank. 76. "Old 9 5/8% Senior Notes" means Debtor's 9 5/8% Senior Notes due 2004 issued pursuant to the Old 9 5/8% Senior Note Indenture. 77. "Old 9 1/8% Senior Notes" means Debtor's 9 1/8% Senior Notes due 2004 issued pursuant to the Old Master Senior Note Indenture. 6 Exhibit A -- First Amended Plan of Reorganization 78. "Old 9 5/8% Senior Note Indenture" means that certain Indenture dated as of November 30, 1991, by and between Debtor and the Old Senior Note Trustee. 79. "Old 101/4% Senior Notes" means Debtor's 101/4% Senior Notes due 2006 issued pursuant to the Old Master Senior Note Indenture. 80. "Old 10% Senior Notes" means Debtor's 10% Senior Notes due 2009 issued pursuant to the Old Master Senior Note Indenture. 81. "Old Senior Notes" means the (i) Old 9 5/8% Senior Notes; (ii) Old 9 1/8% Senior Notes; (iii) Old 101/4% Senior Notes; and (iv) Old 10% Senior Notes. 82. "Old Series A Preferred Stock" means all of the rights under and interests in Debtor's $2.875 Non-Voting Cumulative Preferred Stock, Series A. 83. "Old Series B Preferred Stock" means all of the rights under and interests in Debtor's $3.75 Convertible Preferred Stock, Series B. 84. "Old Series C Preferred Stock" means all of the rights under and interests in Debtor's $2.50 Convertible Preference Stock, Series C. 85. "Old Stock" means the Old Preferred Stock and the Old Common Stock. 86. "Old Subordinated Note Indenture" means that certain Indenture dated as of March 28, 1991, by and between Debtor and the Old Subordinated Note Trustee. 87. "Old Subordinated Note Trustee" means JP Morgan Chase Bank, as successor in interest to Manufacturers Hanover Trust Company. 88. "Old Subordinated Notes" means Debtor's 7% Convertible Subordinated Debentures due 2001 pursuant to the Old Subordinated Indenture. 89. "Other Priority Claims" means any Claim accorded priority in right of payment under section 507(a) of the Bankruptcy Code, other than a Priority Tax Claim or an Administrative Claim. 90. "Other Securities Claims" means (a) any Equity Interest of Debtor (other than Old Preferred Stock or Old Common Stock), including, but not limited to, any warrants, options, conversion privileges or contract rights to purchase or acquire any equity securities of Debtor at any time, and (b) any Claims, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, currently existing or hereafter arising, in law, equity or otherwise arising from rescission of a purchase or sale of a security of Debtor (including the Old Notes, Old Preferred Stock and Old Common Stock), for damages arising from the purchase, sale or holding of such securities, or for reimbursement, indemnification (except as set forth in Section VI.D. herein) or contribution allowed under section 502 of the Bankruptcy Code on account of such a Claim. 91. "Participating Nominee" means an institutional Nominee that deposits Old Subordinated Notes with Euroclear or Clearstream. 92. "Person" means a person as defined in section 101(41) of the Bankruptcy Code. 93. "Petition Date" means the date on which Debtor filed its petition for relief commencing the Chapter 11 Case. 7 Exhibit A -- First Amended Plan of Reorganization 94. "Plan" means this Chapter 11 Plan of Reorganization, either in its present form or as it may be altered, amended, modified or supplemented from time to time in accordance with the Plan, the Bankruptcy Code and the Bankruptcy Rules. 95. "Prepetition Noteholder Committees" means the Prepetition Senior Noteholder Committee and the Prepetition Subordinated Noteholder Committee. 96. "Prepetition Senior Noteholder Committee" means the ad hoc committee of those certain Holders of the Old Senior Notes that executed the Lock Up Agreement. 97. "Prepetition Subordinated Noteholder Committee" means the ad hoc committee of those certain Holders of the Old Subordinated Notes that executed the Lock Up Agreement. 98. "Priority Tax Claim" means a Claim of a governmental unit of the kind specified in section 507(a)(8) of the Bankruptcy Code. 99. "Professional", or collectively "Professionals" means a Person or Entity (a) employed pursuant to a Final Order in accordance with sections 327 and 1103 of the Bankruptcy Code and to be compensated for services rendered prior to the Effective Date, pursuant to sections 327, 328, 329, 330 and 331 of the Bankruptcy Code, or (b) for which compensation and reimbursement has been allowed by the Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code. 100. "Record Date" means January 8, 2002. 101. "Registration Rights Agreement" means those certain registration rights agreements as required to be executed in accordance with the Plan, the forms of which shall be Filed prior to the Confirmation Date. 102. "Reorganized Debtor" means Debtor and Debtor in Possession, or any successor thereto, by merger, consolidation, or otherwise, on and after the Effective Date. 103. "Restated By-laws" means the restated by-laws of the Reorganized Debtor the form of which shall be Filed on or before the Confirmation Date. 104. "Schedules" mean the schedules of assets and liabilities, schedules of executory contracts, and the statement of financial affairs as the Bankruptcy Court requires Debtor to file pursuant to section 521 of the Bankruptcy Code, the Official Bankruptcy Forms and the Bankruptcy Rules, as they may be amended and supplemented from time to time. 105. "Secured Claim" means (a) a Claim that is secured by a lien on property in which the Estate has an interest, which lien is valid, perfected and enforceable under applicable law or by reason of a Final Order, or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim Holder's interest in the Estate's interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code, or (b) a Claim Allowed under this Plan as a Secured Claim. 106. "Securities Act" means the Securities Act of 1933, 15 U.S.C. sections 77a-77aa, as now in effect or hereafter amended, or any similar federal, state or local law. 107. "Stock Sale" shall mean the sale of, and/or consummation of a tender offer resulting in the purchase of, substantially all of the New Common Stock of the Reorganized Debtor. 108. "Subclass 4B Equity Purchase" means the one-time right of certain Holders of Allowed Subclass 4B Claims to purchase for cash a pro rata share of 2,306,644 shares of New Common Stock (i.e., 5.77% of the New Common Stock to be issued pursuant hereto, subject to dilution by the New Warrants and the Management Options), at a price of $17.85 per share (subject to an aggregate minimum purchase requirement of $500,000 by the Holders of Subclass 4B Claims) on the terms and conditions set forth in Article III herein. 8 Exhibit A -- First Amended Plan of Reorganization 109. "Subclass 4B Note Election" means the right of certain Holders of Allowed Subclass 4B Claims to receive its share of $10 million in New Notes (which New Notes would otherwise be distributed to Subclass 4A and subject to an aggregate minimum subscription requirement of $500,000 principal amount of New Notes), in lieu of receiving all or a portion of such Holder's share of the New Common Stock allocated to Subclass 4B on the terms and conditions set forth in Article III herein. 110. "Subclass 4B Supplemental Distribution" means the one-time distribution, if any, from the Reorganized Debtor in an amount set forth in Section III.B. herein upon (a) a Stock Sale, (b) a Merger or (c) an Asset Sale, in each case occurring prior to the third anniversary of the Effective Date hereof payable upon or promptly following the consummation of such transaction. 111. "Third Restated Certificate of Incorporation" means that certain Third Restated Certificate of Incorporation of the Reorganized Debtor which, pursuant hereto, is to be filed with the Secretary of State of the State of New Jersey in accordance with Section 14A:9-1 of the New Jersey Business Corporation Act, the form of which shall be Filed on or before the Confirmation Date. 112. "Trust Indenture Act" means the Trust Indenture Act of 1939, 15 U.S.C. section 77aaa, as now in effect or hereafter amended. 113. "Unimpaired Claims" means Claims in an Unimpaired Class. 114. "Unimpaired Class" means an unimpaired Class within the meaning of section 1124 of the Bankruptcy Code. 115. "Unsecured Claim" means any Claim against Debtor that is not a Secured Claim, Administrative Claim, Priority Tax Claim, Other Priority Claim or an Other Securities Claim. 116. "Voting Deadline" means the date stated in the Voting Instructions by which all Ballots must be received. 117. "Voting Instructions" mean the instructions for voting on the Plan contained in the section of the Disclosure Statement entitled "SOLICITATION; VOTING PROCEDURES" and in the Ballots and the Master Ballots. 118. "Waiver Condition" means the occurrence of either of the following: (i) the five new directors to be appointed to Reorganized Debtor's board of directors have been approved by at least two-thirds of the members of Debtor's Board of Directors as of November 15, 2000 so as to avoid such appointment giving rise to a "change of control", or (ii) in the case of each COC Agreement, the executive counterparty to such COC Agreement consents to the modification of his or her COC Agreement to provide that the appointment of the five new directors under the Plan does not constitute a "change of control" of Debtor. 119. "Warrant Agreement" means that certain warrant agreement pursuant to which the New Warrants will be issued as required to be executed in accordance with the Plan, the form of which shall be Filed on or before the Confirmation Date. 120. "Warshaw" means Steven G. Warshaw, the current President and Chief Executive Officer of Debtor. ARTICLE II. ADMINISTRATIVE AND PRIORITY TAX CLAIMS A. Administrative Claims Subject to the provisions of section 330(a) and 331 of the Bankruptcy Code, each Holder of an Allowed Administrative Claim will be paid the full unpaid amount of such Allowed Administrative Claim in Cash (i) on the Effective Date, (ii) or if such Claim is Allowed after the Effective Date, on the date such Claim is Allowed, or (iii) upon such other terms as may be agreed upon by such Holder and Reorganized Debtor or otherwise upon an order of the Bankruptcy Court; provided that Allowed Administrative Claims representing obligations incurred in the ordinary course of business or otherwise assumed by Debtor pursuant hereto will be assumed on the Effective Date and paid or performed by Reorganized Debtor when due in accordance with the terms and conditions of the particular agreements governing such obligations. 9 Exhibit A -- First Amended Plan of Reorganization B. Priority Tax Claims On the Effective Date or as soon as practicable thereafter, each Holder of a Priority Tax Claim due and payable on or prior to the Effective Date shall be paid, at the option of Debtor, (a) Cash in an amount equal to the amount of such Allowed Claim, or (b) Cash over a six-year period from the date of assessment as provided in section 1129(a)(9)(C) of the Bankruptcy Code, with interest payable at a rate of 81/4% per annum or such other rate as may be required by the Bankruptcy Code. The amount of any Priority Tax Claim that is not an Allowed Claim or that is not otherwise due and payable on or prior to the Effective Date, and the rights of the Holder of such Claim, if any, to payment in respect thereof shall (x) be determined in the manner in which the amount of such Claim and the rights of the Holder of such Claim would have been resolved or adjudicated if the Chapter 11 Case had not been commenced, (y) survive the Effective Date and Consummation of the Plan as if the Chapter 11 Case had not been commenced, and (z) not be discharged pursuant to section 1141 of the Bankruptcy Code. In accordance with section 1124 of the Bankruptcy Code, the Plan shall leave unaltered the legal, equitable, and contractual rights of each Holder of a Priority Tax Claim. ARTICLE III. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS A. Summary The categories of Claims and Equity Interests listed below classify Claims and Equity Interests for all purposes, including voting, confirmation and distribution pursuant hereto and pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Equity Interest shall be deemed classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Equity Interest qualifies within the description of such different Class. A Claim or Equity Interest is in a particular Class only to the extent that such Claim or Equity Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.
Class Status Voting Rights ----- ---------- -------------------- Class 1 -- Other Priority Claims Unimpaired -- not entitled to vote Class 2 -- Secured Claims Unimpaired -- not entitled to vote Class 3 -- General Unsecured Claims Unimpaired -- not entitled to vote Class 4 Old Senior Note Claims and Old Impaired -- entitled to vote -- Subordinated Note Claims Class 5 -- Old Preferred Stock Impaired -- entitled to vote Class 6 -- Old Common Stock Impaired -- entitled to vote Class 7 -- Other Securities Claims Impaired -- not entitled to vote
B. Classification and Treatment 1. Class 1--Other Priority Claims (a) Classification: Class 1 consists of all Other Priority Claims. (b) Treatment: The legal, equitable and contractual rights of the Holders of Class 1 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 1 Claim shall receive one of the following alternative treatments, at the election of Debtor: (i) to the extent then due and owing on the Effective Date, such Claim will be paid in full in Cash by the Reorganized Debtor; 10 Exhibit A -- First Amended Plan of Reorganization (ii) to the extent not due and owing on the Effective Date, such Claim (A) will be paid in full in Cash by the Reorganized Debtor on the Effective Date, or (B) will be paid in full in Cash by the Reorganized Debtor when and as such Claim becomes due and owing in the ordinary course of business; or (iii) such Claim will be otherwise treated in any other manner so that such Claim shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Class 1 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date. (c) Voting: Class 1 is not impaired and the Holders of Class 1 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 1 are not entitled to vote to accept or reject the Plan. 2. Class 2--Secured Claims (a) Classification: Class 2 consists of all Secured Claims. For purposes of voting and distribution, each Holder of a Secured Claim shall be deemed to be classified in a separate subclass of Class 2. (b) Treatment: The legal, equitable and contractual rights of the Holders of Class 2 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 2 Claim shall receive one of the following alternative treatments, at the election of Debtor: (i) the legal, equitable and contractual rights to which such Claim entitles the Holder thereof shall be unaltered by the Plan; (ii) Debtor shall surrender all collateral securing such Claim to the Holder thereof, without representation or warranty by or recourse against Debtor or the Reorganized Debtor; or (iii) such Claim will be otherwise treated in any other manner so that such Claims shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Class 2 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date. (c) Voting: Class 2 is not impaired and the Holders of Class 2 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 2 are not entitled to vote to accept or reject the Plan. 3. Class 3--General Unsecured Claims (a) Classification: Class 3 consists of all General Unsecured Claims. (b) Treatment: The legal, equitable and contractual rights of the Holders of Class 3 Claims are unaltered by the Plan. Unless the Holder of such Claim and Debtor agree to a different treatment, each Holder of an Allowed Class 3 Claim shall receive one of the following alternative treatments, at the election of Debtor: (i) to the extent then due and owing on the Effective Date, such Claim will be paid in full in Cash by the Reorganized Debtor; (ii) to the extent not due and owing on the Effective Date, such Claim (A) will be paid in full in Cash by the Reorganized Debtor on the Effective Date, or (B) will be paid in full in Cash by the Reorganized Debtor when and as such Claim becomes due and owing in the ordinary course of business; or (iii) such Claim will be otherwise treated in any other manner so that such Claim shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Class 3 Claim that existed immediately prior to the filing of the Chapter 11 Case shall be deemed cured upon the Effective Date. 11 Exhibit A -- First Amended Plan of Reorganization (c) Voting: Class 3 is not impaired and the Holders of Class 3 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Claims in Class 3 are not entitled to vote to accept or reject the Plan. 4. Class 4--Old Notes Claims (a) Classification: Class 4 consists of the Claims of Holders of Old Senior Notes or Old Subordinated Notes. For distribution purposes only, Class 4 is divided into (a) Subclass 4A (consisting of any Claim for principal or interest through the Petition Date under the Old Senior Notes), and (b) Subclass 4B (consisting of any Claim for principal or interest under the Old Subordinated Notes). Class 4 does not include any claims arising from the purchase or sale of the Old Senior Notes or the Old Subordinated Notes, for rescission of any purchase, or for damages arising from the purchase or sale, of the Old Senior Notes or the Old Subordinated Notes, or any other Claim related to the Old Senior Notes or the Old Subordinated Notes other than a Claim for principal and interest thereon. (b) Treatment: Subclass 4A Distribution. On or as soon as practicable after the Effective Date, each Holder of an Allowed Old Senior Note Claim shall receive, in full and final satisfaction of such Claim, a distribution of its pro rata share of $250 million aggregate principal amount of New Notes and its pro rata share of 35,100,000 shares of New Common Stock, representing 87.75% of the New Common Stock to be issued pursuant hereto (subject to dilution by exercise of the New Warrants and the Management Options). The aggregate principal amount of New Notes and shares of New Common Stock to be received by Subclass 4A is subject to adjustment by the Subclass 4B Note Election and Subclass 4B Equity Purchase described below. Subclass 4B Distribution. On or as soon as practicable after the Effective Date, each Holder of an Allowed Old Subordinated Note Claim shall receive in full and final satisfaction of such Claim its pro rata share of 3,100,000 shares of New Common Stock, representing 7.75% of the New Common Stock to be issued pursuant hereto (subject to dilution by exercise of the New Warrants and the Management Options): Subclass 4B Note Election. In lieu of receiving all or a portion of such Holder's share of the New Common Stock allocated to Subclass 4B, except as otherwise provided herein, each Holder of an Allowed Subclass 4B Claim shall have the right as exercisable pursuant to the Ballot for such Holder to receive a share of $10 million in New Notes, subject to an aggregate minimum subscription requirement of $500,000 principal amount of New Notes. Each Holder electing to receive all or any of its respective share of New Notes shall receive $1,000 principal amount of New Notes for each lot of 101.14 shares of New Common Stock such Holder elects not to receive. If more than $10 million in New Notes are subscribed for pursuant to the foregoing, each electing Holder will be entitled to receive an amount of New Notes in lieu of New Common Stock equal to (1) $10 million, multiplied by (2) a fraction, (a) the numerator of which is the amount of Subclass 4B Claims held by such Holder in respect of which such Holder has elected to receive New Notes and (b) the denominator of which is the aggregate amount of Subclass 4B Claims in respect of which Holders have elected to receive New Notes; provided that Reorganized Debtor shall not be obligated in any event to issue New Notes other than in denominations of $1,000 or integral multiples thereof. If Holders of Allowed Subclass 4B Claims elect to receive any New Notes pursuant to the Subclass 4B Note Election, the principal amount of New Notes to be received by Holders of Allowed Subclass 4A Claims shall be reduced on a pro rata basis by such amount, and the New Common Stock to be received by Holders of Allowed Subclass 4A Claims shall be increased on a pro rata basis by the amount of New Common Stock forsaken by Holders of Subclass 4B Claims in lieu of New Notes. Limitation on Exercise of Subclass 4B Note Election. Any Holder of Subclass 4B Claims who is not a resident of the United States will be required to represent, to the satisfaction of Debtor in its sole discretion, that it satisfies certain qualifications in order to be permitted to participate in the Subclass 4B Note Election. 12 Exhibit A -- First Amended Plan of Reorganization Subclass 4B Equity Purchase. At the time of voting on the Plan, except as otherwise provided herein, each Holder of an Allowed Subclass 4B Claim shall also have the right to purchase for Cash its pro rata share of 2,306,644 shares of New Common Stock (i.e., 5.77% of the New Common Stock to be issued pursuant hereto, subject to dilution by the New Warrants and the Management Options), at a price of $17.85 per share (subject to an aggregate minimum purchase requirement of $500,000 by the Holders of Subclass 4B Claims). To the extent any Holders of Allowed Subclass 4B Claims elect to purchase any of such New Common Stock, (1) an amount equal to the cash proceeds received by Debtor in consideration for such New Common Stock shall be distributed to the Holders of Allowed Subclass 4A Claims on a pro rata basis on the Effective Date or as soon thereafter as practicable and (2) the amount of New Common Stock to be received by Allowed Subclass 4A Claims shall be reduced on a pro rata basis by the number of shares of the Subclass 4B Equity Purchase. Limitation on Exercise of Subclass 4B Equity Purchase. Any Holder of Subclass 4B Claims who is not a resident of the United States shall not be permitted to participate in the Subclass 4B Equity Purchase (unless it can demonstrate an exemption from applicable local securities laws). Subclass 4B Supplemental Distribution. Upon (a) a Stock Sale, (b) a Merger or (c) an Asset Sale, in each case prior to the third anniversary of the Effective Date hereof, each Holder of an Allowed Subclass 4B Claim will be entitled to its pro rata share of the Subclass 4B Supplemental Distribution from Reorganized Debtor upon the consummation of such transaction. The consideration to be paid pursuant to the Subclass 4B Supplemental Distribution, if any, shall be determined as follows:
Supplemental Distribution Purchase Price Per Share Implied Total Enterprise Value - ------------------------- ------------------------ ------------------------------ (non-cumulative) - ----------------------------------------------------------------------------------------- $0 less than $17.64 less than $1.45 billion - ----------------------------------------------------------------------------------------- $15 million $17.64--$19.61 greater than or equal to $1.45 billion but less than $1.55 billion - ----------------------------------------------------------------------------------------- $20 million $19.62--$21.57 greater than or equal to $1.55 billion but less than $1.65 billion - ----------------------------------------------------------------------------------------- $25 million $21.58--$23.52 greater than or equal to $1.65 billion but less than $1.75 billion - ----------------------------------------------------------------------------------------- $30 million $23.53 and greater $1.75 billion and greater
The "Purchase Price Per Share" (as adjusted for stock splits, stock dividends, reverse stock splits and the like) shall be used to determine the amount of the Subclass 4B Supplemental Distribution in the case of a Stock Sale or Merger. The "Implied Total Enterprise Value" shall be used to determine the amount of the Subclass 4B Supplemental Distribution in the case of an Asset Sale. The Subclass 4B Supplemental Distribution shall be paid in the same form, whether cash, stock or other securities, as the consideration received by the Holders of the New Common Stock (in the case of a Stock Sale or Merger) or by Reorganized Debtor (in the case of an Asset Sale). The right of a Holder of a Subclass 4B Claim to receive its proportionate share of the Subclass 4B Supplemental Distribution shall not be assignable or transferable, other than by the laws of descent and distribution. Holders of Allowed Subclass 4B Claims who hold Old Subordinated Notes in bearer form will be required to provide certain identifying information at the Effective Date, to the satisfaction of Debtor in its sole discretion, in order to be eligible to participate in the Subclass 4B Supplemental Distribution. Limitation on Subclass 4B Supplemental Distribution. Any Holder of Subclass 4B Claims who is not a resident of the United States will be required to provide certain identifying information to Debtor as set forth in the applicable Ballot in order to be permitted to participate in the Subclass 4B Supplemental Distribution. Each Class 4 Claim shall be Allowed in the amount of the outstanding principal amount of such Class 4 Claim, plus simple interest accrued on the principal through the Petition Date. In the aggregate, Subclass 4A Claims are Allowed in the amount of $863.5 million and Subclass 4B Claims are Allowed in the amount of $95.9 million. 13 Exhibit A -- First Amended Plan of Reorganization (c) Voting: Class 4 is impaired and the Holders of Allowed Class 4 Claims are entitled to vote to accept or reject the Plan. 5. Class 5--Old Preferred Stock (a) Classification: Class 5 consists of all Old Preferred Stock. Class 5 does not include Other Securities Claims. (b) Treatment: If Class 5 accepts the Plan, on the Effective Date or as soon as practicable thereafter: (i) Each Holder of an Allowed Old Series A Preferred Stock Equity Interest shall receive in full and final satisfaction of such Equity Interests, a distribution of its pro rata share of (i) 124,742 shares of New Common Stock, representing .312% of the New Common Stock to be issued pursuant hereto (subject to dilution by the New Warrants and the Management Options), and (ii) 2,079,039 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.898% of the New Common Stock to be issued pursuant hereto (subject to dilution by the Management Options); (ii) Each Holder of an Allowed Old Series B Preferred Stock Equity Interest shall receive in full and final satisfaction of such Equity Interests, a distribution of its pro rata share of (i) 111,342 shares of New Common Stock, representing .278% of the New Common Stock to be issued pursuant hereto (subject to dilution by the New Warrants and the Management Options), and (ii) 1,855,693 New Warrants exercisable into an equal number of shares of New Common Stock, representing 3.479% of the New Common Stock to be issued pursuant hereto (subject to dilution by the Management Options); and (iii) Each Holder of Allowed Old Series C Preferred Stock shall receive in full and final satisfaction of such Equity Interests, a distribution of its pro rata share of (i) 5,665 shares of New Common Stock, representing .014% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the New Warrants and the Management Options), and (ii) 94,420 New Warrants exercisable into an equal number of shares of New Common Stock, representing .177% of the New Common Stock to be issued pursuant to the Plan (subject to dilution by the Management Options). The proposed treatment of Class 5 is subject to adjustment in the event that Class 5 and/or Class 6 rejects the Plan, as set forth in Section IV.E. below. Each Class 5 Equity Interest shall be Allowed in the amount of the number of shares of Old Preferred Stock held by each applicable Holder as of the Record Date. (c) Voting: Class 5 is impaired and Holders of Allowed Class 5 Equity Interests are entitled to vote to accept or reject the Plan. In the event Class 5 rejects the Plan, Debtor reserves the right to seek confirmation pursuant to section 1129(b) of the Bankruptcy Code as set forth in Section IV.E. below. 6. Class 6--Old Common Stock (a) Classification: Class 6 consists of all Old Common Stock. Class 6 does not include Other Securities Claims. (b) Treatment: On or as soon as practicable after the Effective Date, each Holder of an Allowed Old Common Equity Interest shall receive, in full and final satisfaction of such Equity Interest, a pro rata portion of (i) 558,251 shares of New Common Stock, and (ii) New Warrants exercisable into 9,304,181 shares of New Common Stock. With respect to any employee pension benefit plan (as defined under Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that contains Old Common Stock, the Debtor, at its election (after consultation with the Prepetition Noteholder Committees), may exchange with such plan(s) Cash in an amount equal to the value on the Effective Date of the New Warrants otherwise distributable to such plan(s) on account of the Old Common Stock held therein in lieu of such New Warrants. 14 Exhibit A -- First Amended Plan of Reorganization The proposed treatment of Class 6 is subject to adjustment in the event that Class 5 and/or Class 6 rejects the Plan, as set forth in Section IV.E. below. Each Class 6 Equity Interest shall be Allowed in the amount of the number of shares of Old Common Stock held by each applicable Holder as of the Record Date. (c) Voting: Class 6 is impaired and Holders of Allowed Class 6 Equity Interests are entitled to vote to accept or reject the Plan. In the event Class 6 rejects the Plan, Debtor reserves the right to seek confirmation pursuant to section 1129(b) of the Bankruptcy Code as set forth in Section IV.E. below. 7. Class 7--Other Securities Claims (a) Classification: Class 7 consists of Other Securities Claims. (b) Treatment: On the Effective Date, the Holders of Other Securities Claims shall neither receive any distributions nor retain any property under the Plan. (c) Voting: Class 7 is impaired, but because no distributions will be made to Holders of Class 7 Claims nor will such Holders retain any property, such Holders are deemed to reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. Class 7 is not entitled to vote to accept or reject the Plan. C. Special Provision Governing Unimpaired Claims Except as otherwise provided in the Plan, including as provided in Article X, nothing under the Plan shall affect Debtor's or the Reorganized Debtor's rights in respect of any Unimpaired Claims, including, but not limited to, all rights in respect of legal and equitable defenses to or setoffs or recoupments against such Unimpaired Claims. ARTICLE IV. ACCEPTANCE OR REJECTION OF THE PLAN A. Voting Classes Each Holder of an Allowed Claim or Allowed Interest in Classes 4, 5, or 6 shall be entitled to vote to accept or reject the Plan. B. Acceptance by Impaired Classes An Impaired Class of Claims shall have accepted the Plan if (a) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually voting in such Class have voted to accept the Plan and (b) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of more than one-half in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. An Impaired Class of Interests shall have accepted the Plan if Holders (other than any Holder designated under Section 1126(e) of the Bankruptcy Code) that hold at least two-thirds in amount of the Allowed Interests actually voting in such Class have voted to accept the Plan. C. Presumed Acceptance of Plan Classes 1, 2, and 3 are unimpaired under the Plan, and, therefore, are presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. D. Presumed Rejection of Plan Class 7 is impaired and shall receive no distributions, and, therefore, is presumed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. 15 Exhibit A -- First Amended Plan of Reorganization E. Non-Consensual Confirmation Debtor reserves the right to seek Confirmation of the Plan under section 1129(b) of the Bankruptcy Code, to the extent applicable, in view of the deemed rejection by Class 5 and/or Class 6. In the event that Class 5 and/or Class 6 fails to accept the Plan in accordance with section 1129(a)(8) of the Bankruptcy Code, Debtor reserves the right (a) to request that the Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code and/or (b) to modify the Plan in accordance with Section XII.E. hereof. In the event that Class 5 rejects the Plan and Class 6 accepts the Plan, (a) Classes 5 and 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Classes 5 and 6 under the Plan shall be distributed by Class 4 as follows: (1) Class 5 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan and (2) Class 6 will receive, in addition to the amounts described in Section III.B. above, the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 5 if Class 5 had approved the Plan (such amount, the "Reduction Amount"). In the event that Class 5 accepts the Plan and Class 6 rejects the Plan, (a) Class 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Class 6 under the Plan shall be distributed by Class 4 as follows: (1) Class 6 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan and (2) Class 5 will receive, in addition to the amounts described in Section III.B. above, the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 6 if Class 6 had approved the Plan. In the event that both Class 5 and Class 6 reject the Plan, (a) Classes 5 and 6 shall receive no consideration under the Plan and (b) Class 4 shall be deemed to have entered into a settlement pursuant to which the New Common Stock and New Warrants that were to have been distributed to Classes 5 and 6 under the Plan shall be distributed by Class 4 as follows: (1) Class 5 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan, and the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 5 if Class 5 had approved the Plan shall not be issued, and (2) Class 6 will receive 50% of the New Common Stock and 50% of the New Warrants that it would have received if it had approved the Plan, and the remaining 50% of the New Common Stock and the remaining 50% of the New Warrants that would have been distributed to Class 6 if Class 6 had approved the Plan shall not be issued. ARTICLE V. MEANS FOR IMPLEMENTATION OF THE PLAN A. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor Debtor shall, as Reorganized Debtor, continue to exist after the Effective Date as a separate corporate entity, with all the powers of a corporation under the laws of the State of New Jersey and without prejudice to any right to alter or terminate such existence (whether by merger or otherwise) under such applicable state law. Except as otherwise provided in the Plan, the New Notes, or any agreement, instrument or indenture relating thereto, on and after the Effective Date, all property of the Estate, and any property acquired by Debtor or Reorganized Debtor under the Plan, shall vest in Reorganized Debtor, free and clear of all Claims, liens, charges, or other encumbrances. On and after the Effective Date, Reorganized Debtor may operate its business and may use, acquire or dispose of property and compromise or settle any Claims or Equity Interests, without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and the Confirmation Order. B. Cancellation of Old Notes, Old Preferred Stock, Old Common Stock and Stock Options On the Effective Date, except to the extent otherwise provided herein, all notes, instruments, certificates, and other documents evidencing (a) the Old Notes, (b) the Old Preferred Stock, (c) the Old Common Stock and (d) any stock options, warrants or other rights to purchase Old Common Stock shall be canceled and the obligations of Debtor thereunder or in any way related thereto shall be discharged. On the Effective Date, except 16 Exhibit A -- First Amended Plan of Reorganization to the extent otherwise provided herein, any indenture relating to any of the foregoing, including, without limitation, the Old Note Indentures, shall be deemed to be canceled, as permitted by section 1123(a)(5)(F) of the Bankruptcy Code, and the obligations of Debtor thereunder, except for the obligation to indemnify the Old Note Trustees, shall be discharged; provided that the indentures that govern the rights of the Holder of a Claim and that are administered by either of the Old Note Trustees, an agent or servicer shall continue in effect solely for the purposes of (y) allowing each Old Note Trustee, agent or servicer to make the distributions to be made on account of such Claims under the Plan and (z) permitting each Old Note Trustee, agent or servicer to maintain any rights or liens it may have for fees, costs and expenses under such indenture or other agreement. Any fees or expenses due to any such Old Note Trustees shall be paid directly by Debtor and shall not be deducted from any distributions to the Holders of Claims and Equity Interests. C. Issuance of New Securities; Execution of Related Documents On or immediately after the Effective Date, Reorganized Debtor shall issue all securities, notes, instruments, certificates, and other documents of Reorganized Debtor required to be issued pursuant hereto, including, without limitation, the New Notes, the New Common Stock and the New Warrants, each of which shall be distributed as provided herein. Reorganized Debtor shall execute and deliver such other agreements, documents and instruments, including the New Note Indenture, the Registration Rights Agreements and the Warrant Agreement as are required to be executed pursuant to the terms hereof. D. Corporate Governance, Directors and Officers, and Corporate Action 1. Restated Certificate of Incorporation and By-laws On the Effective Date, Reorganized Debtor will file its Third Restated Certificate of Incorporation with the Secretary of State of the State of New Jersey in accordance with Sections 14A:9-1 and 14A:14-24 of the New Jersey Business Corporation Act. The Third Restated Certificate of Incorporation and the Restated By-laws will, among other things, (1) authorize 150,000,000 shares of New Common Stock, (2) authorize 20,000,000 shares of preferred stock, with voting rights and with other such designations, preferences, rights, qualifications, limitations or restrictions as determined by Reorganized Debtor's board of directors, (3) prohibit shareholder action by written consent other than unanimous written consent, (4) require shareholders to provide advance notice of any nominations or other business they intend to bring before an annual or special meeting of shareholders, and (5) permit only the board of directors or the president of Reorganized Debtor (and not the shareholders, except as otherwise permitted by New Jersey law) to call special shareholder meetings, (6) prohibit removal of directors without cause, (7) eliminate supermajority voting for mergers and certain other transactions and (8) move provisions relating to indemnification, director nominations and business brought before shareholder meetings from the by-laws to the certificate of incorporation. After the Effective Date, Reorganized Debtor may amend and restate its Third Restated Certificate of Incorporation and other constituent documents as permitted by New Jersey law. 2. Directors and Officers of the Reorganized Debtor Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the principal officers of Debtor immediately prior to the Effective Date will be the officers of Reorganized Debtor. Pursuant to section 1129(a)(5), Debtor will disclose, on or prior to the Confirmation Date, the identity and affiliations of any Person proposed to serve on the initial board of directors of Reorganized Debtor. To the extent any such Person is an "Insider" under the Bankruptcy Code, the nature of any compensation for such Person will also be disclosed. Each such director, officer and member shall serve from and after the Effective Date pursuant to the terms of Debtor's Third Restated Certificate of Incorporation, other constituent documents or the New Jersey Business Corporation Act. Reorganized Debtor will have a seven person board of directors, initially consisting of Carl H. Lindner, Steven G. Warshaw and five directors appointed by the Creditors Committee, or if no Creditors Committee has been appointed, the Prepetition Noteholder Committees voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee. 17 Exhibit A -- First Amended Plan of Reorganization 3. Corporate Action On the Effective Date, the adoption and filing of the Third Restated Certificate of Incorporation, the approval of the Restated By-laws, the appointment of directors and officers for Reorganized Debtor, the adoption of the 2002 Stock Option Plan, and all actions contemplated hereby shall be authorized and approved in all respects (subject to the provisions hereof). All matters provided for herein involving the corporate structure of Debtor or Reorganized Debtor, and any corporate action required by Debtor or Reorganized Debtor in connection with the Plan, shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders or directors of Debtor or Reorganized Debtor. On the Effective Date, the appropriate officers of Reorganized Debtor and members of the board of directors of Reorganized Debtor are authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by the Plan in the name of and on behalf of Reorganized Debtor. E. Sources of Cash for Plan Distribution All Cash necessary for Reorganized Debtor to make payments pursuant hereto shall be obtained from existing Cash balances, if any, and Cash received from CBI through existing cash management systems as advances, dividends or payment for services. ARTICLE VI. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES A. Assumption of Executory Contracts and Unexpired Leases Immediately prior to the Effective Date, except as otherwise provided herein, all executory contracts or unexpired leases of Reorganized Debtor will be deemed assumed in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code except those executory contracts and unexpired leases that (1) have been rejected by order of the Bankruptcy Court, (2) are the subject of a motion to reject pending on the Effective Date, (3) are identified on a list to be filed with the Bankruptcy Court on or before the Confirmation Date, as to be rejected, (4) that relate to the purchase or other acquisition of Equity Interests, or (5) are rejected pursuant to the terms hereof. Notwithstanding anything herein to the contrary, (a) immediately prior to the Effective Date, Debtor shall assume that certain letter agreement, dated March 21, 2001, with Houlihan pursuant to which, among other things, Debtor agreed to pay to Houlihan certain fees for advisory services rendered to the Prepetition Senior Noteholder Committee, and (b) on the Effective Date, Debtor shall make the payments set forth in such letter agreement. Notwithstanding anything herein to the contrary, Debtor shall not assume any COC Agreement unless a Waiver Condition has occurred with respect to such COC Agreement. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions and rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code. B. Claims Based on Rejection of Executory Contracts or Unexpired Leases All proofs of Claims with respect to Claims arising from the rejection of executory contracts or unexpired leases, if any, must be filed with the Bankruptcy Court within thirty (30) days after the date of entry of an order of the Bankruptcy Court approving such rejection. Any Claims arising from the rejection of an executory contract or unexpired lease not filed within such time will be forever barred from assertion against Debtor or Reorganized Debtor, their Estates and property unless otherwise ordered by the Bankruptcy Court or provided herein. 18 Exhibit A -- First Amended Plan of Reorganization C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed Any monetary amounts by which each executory contract and unexpired lease to be assumed pursuant to the Plan is in default shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount in Cash on the Effective Date or on such other terms as the parties to such executory contracts or unexpired leases may otherwise agree. In the event of a dispute regarding: (1) the amount of any cure payments, (2) the ability of Reorganized Debtor or any assignee to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (3) any other matter pertaining to assumption, the cure payments required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order resolving the dispute and approving the assumption. D. Indemnification of Directors, Officers and Employees The obligations of Debtor to indemnify any Person serving at any time on or prior to the Effective Date as one of its directors, officers or employees by reason of such Person's service in such capacity, or as a director, officer or employee of any other corporation or legal entity, to the extent provided in Debtor's constituent documents, by a written agreement with Debtor or under New Jersey corporate law, shall be deemed and treated as executory contracts that are assumed by Reorganized Debtor pursuant hereto and section 365 of the Bankruptcy Code as of the Effective Date. Accordingly, such indemnification obligations shall be treated as General Unsecured Claims, and shall survive unimpaired and unaffected by entry of the Confirmation Order, irrespective of whether such indemnification is owed for an act or event occurring before or after the Petition Date. E. Compensation and Benefit Programs Except as otherwise expressly provided herein, all employment and severance agreements and policies, and all compensation and benefit plans, policies, and programs of Debtor applicable to its employees, former employees, retirees and non-employee directors and the employees, former employees and retirees of its subsidiaries, including, without limitation, all savings plans, retirement plans, health care plans, disability plans, severance benefit agreements and plans, incentive plans, deferred compensation plans and life, accidental death and dismemberment insurance plans shall be treated as executory contracts under the Plan and on the Effective Date will be deemed assumed pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code. ARTICLE VII. PROVISIONS GOVERNING DISTRIBUTIONS A. Distributions for Claims and Equity Interests Allowed as of the Effective Date Except as otherwise provided herein or as may be ordered by the Bankruptcy Court, distributions to be made on the Effective Date on account of Claims and Equity Interests that are allowed as of the Effective Date and are entitled to receive distributions under the Plan shall be made (i) on the Effective Date, or as soon as practicable thereafter for Holders who hold their Claims or Equity Interests through DTC, Euroclear, Clearstream or any similar clearing house or for direct Holders of Old Senior Notes or Old Preferred Stock, and (ii) in the case of all direct Holders of Subclass 4B Claims and Class 6 Equity Interests, as soon as practicable following the later of the Effective Date or the receipt by the Exchange Agent or Luxembourg Agent, as appropriate, of a properly executed Letter of Transmittal surrendering the certificates or instruments evidencing such Claims or Equity Interests. For purposes of determining the accrual of interest or rights in respect of any other payment from and after the Effective Date, the New Notes, New Common Stock and New Warrants to be issued under the Plan shall be deemed issued as of the Effective Date regardless of the date on which they are actually dated, authenticated or distributed; provided that Reorganized Debtor shall withhold any actual payment until such distribution is made and no interest shall accrue or otherwise be payable on any such withheld amounts. 19 Exhibit A -- First Amended Plan of Reorganization B. Distributions by the Reorganized Debtor; Distributions with Respect to Debt Securities Except as otherwise provided herein, Reorganized Debtor shall make all distributions required under the Plan. Notwithstanding the provisions of Section V.B. herein regarding the cancellation of the Old Note Indentures, the Old Note Indentures shall continue in effect to the extent necessary to allow the Old Note Trustees to provide information to the Exchange Agent or Luxembourg Agent, as appropriate, to permit distributions of the New Notes and the New Common Stock to Holders of Subclass 4B Old Notes Claims and, if requested by the Reorganized Debtor, to receive New Notes and New Common Stock on behalf of the Holders of the Old Notes and make distributions pursuant to the Plan on account of the Old Notes as agent for Reorganized Debtor. The Old Note Trustees providing services related to distributions to the Holders of Allowed Old Note Claims shall receive, from Reorganized Debtor, reasonable compensation for such services and reimbursement of reasonable expenses incurred in connection with such services and upon the presentation of invoices to Reorganized Debtor. C. Delivery and Distributions and Undeliverable or Unclaimed Distributions 1. Delivery of Distributions in General Distributions to Holders of Allowed Claims and Allowed Equity Interests shall be made at the address of the Holder of such Claim or Equity Interest as indicated on the records of Debtor or, if such Holder holds such Claims or Equity Interests through DTC, Euroclear or Clearstream, distributions with respect to such Claims or Equity Interests will be made to DTC, Euroclear or Clearstream (as applicable) and DTC, Euroclear or Clearstream (as applicable) will, in turn, make appropriate book entries to reflect such distributions to such Holders, except that distributions to direct Holders of Allowed Subclass 4B Claims and Allowed Class 6 Equity Interests shall be made after the Effective Date as soon as practicable following the Exchange Agent's or Luxembourg Agent's receipt, as appropriate, of a properly executed letter of transmittal surrendering the certificates or instruments evidencing such Claims or Equity Interests. Except as otherwise provided by the Plan or the Bankruptcy Code with respect to undeliverable distributions, distributions to Holders of Old Senior Note Claims and Old Subordinated Note Claims shall be made in accordance with the provisions of the applicable Old Note Indenture, and distributions to Holders of Equity Interests will be made to Holders of record as of the Distribution Record Date. 2. Undeliverable Distributions (a) Holding of Undeliverable Distributions. If any distribution to a Holder of an Allowed Claim or Allowed Equity Interest is returned to Reorganized Debtor as undeliverable, no further distributions shall be made to such Holder unless and until Reorganized Debtor is notified in writing of such Holder's then-current address. Undeliverable distributions shall remain in the possession of Reorganized Debtor subject to Section VII.C.(b) below until such time as a distribution becomes deliverable. Undeliverable Cash (including interest and principal on the New Notes) shall not be entitled to any interest, dividends or other accruals of any kind. As soon as reasonably practicable, Reorganized Debtor shall make all distributions that become deliverable. (b) Failure to Claim Undeliverable Distributions. In an effort to ensure that all Holders of valid Allowed Claims and Allowed Equity Interests receive their allocated distributions, sixty (60) days after the Effective Date, Debtor will file with the Bankruptcy Court a listing of unclaimed distribution holders. This list will be maintained for as long as the bankruptcy case stays open. Any Holder of an Allowed Claim or Allowed Equity Interest (irrespective of when a Claim or Equity Interest became an Allowed Claim or Allowed Equity Interest) that does not assert a Claim or Equity Interest pursuant hereto for an undeliverable distribution (regardless of when not deliverable) within one year after the Effective Date (or with respect to the Subclass 4B Supplemental Distribution only, one year after the date on which each Holder of a Subclass 4B Claim becomes entitled to a proportionate share thereof) shall have its Claim or Equity Interest for such 20 Exhibit A -- First Amended Plan of Reorganization undeliverable distribution discharged and shall be forever barred from asserting any such Claim or Equity Interest against Reorganized Debtor or its property. In such cases: (i) any Cash held for distribution on account of such Claims or Equity Interests shall be property of Reorganized Debtor, free of any restrictions thereon; and (ii) any New Notes, New Common Stock or New Warrants held for distribution on account of such Claims or Equity Interests shall be canceled and of no further force or effect. Nothing contained herein shall require Reorganized Debtor to attempt to locate any Holder of an Allowed Claim or Allowed Equity Interest. 3. Compliance with Tax Requirements/Allocations. In connection with the Plan, to the extent applicable, Reorganized Debtor shall comply with all tax withholding and reporting requirements imposed on it by any governmental unit, and all distributions pursuant hereto shall be subject to such withholding and reporting requirements. For tax purposes, distributions received in respect of Allowed Claims will be allocated first to unpaid interest that accrued on such Claims with any excess allocated to the principal amount of Allowed Claims. D. Distribution Record Date As of the close of business on the Distribution Record Date, the transfer register for the Old Notes as maintained by Debtor, the Old Note Trustees, or their respective agents, and the transfer register for the Old Stock, as maintained by Debtor or its agent, shall be closed and there shall be no further changes in the record Holders of any Old Notes or Old Stock. Moreover, Reorganized Debtor shall have no obligation to recognize the transfer of any Old Notes or Old Stock occurring after the Distribution Record Date, and shall be entitled for all purposes herein to recognize and deal only with those Holders of record as of the close of business on the Distribution Record Date. There is no Distribution Record Date for Holders of Old Subordinated Notes held in bearer form. E. Timing and Calculation of Amounts to be Distributed On the Effective Date or as soon as practicable thereafter and, if applicable, as soon as practicable after the Effective Date and the Exchange Agent's or Luxembourg Agent's receipt, as appropriate, of a letter of transmittal from direct Holders of Subclass 4B Claims and Class 6 Equity Interests and any document or deliveries to be made therewith, each Holder of an Allowed Claim against or Allowed Interest in Debtor shall receive the full amount of the distributions that the Plan provides for Allowed Claims or Allowed Interests in the applicable Class. If and to the extent that there are Disputed Claims or Disputed Equity Interests, beginning on the date that is 20 calendar days after the end of the calendar quarter following the Effective Date and 20 calendar days after the end of each calendar quarter thereafter, distributions shall also be made, pursuant hereto, to Holders of Disputed Claims or Disputed Equity Interests in any Class whose Claims or Equity Interests were allowed during the preceding calendar quarter. Such quarterly distributions shall also be in the full amount that the Plan provides for Allowed Claims or Allowed Interests in the applicable Class. F. Minimum Distribution The New Notes will be issued in denominations of $1,000 and integral multiples thereof, and no New Note will be issued in a denomination other than $1,000 or an integral multiple thereof. The New Common Stock and New Warrants will be issued in whole number lots and for whole shares. If a registered record Holder of an Allowed Claim is entitled to the distribution of an amount of New Notes that is not an integral multiple of $1,000 or the Holder of an Allowed Claim or Allowed Interest is entitled to the distribution of a fractional share of New Common Stock or a New Warrant exercisable into a fractional share of New Common Stock, unless otherwise determined and approved by the Bankruptcy Court, the fractional distribution to which such Holder would be entitled shall be aggregated with all other such similar distributions by Debtor (or its agent), and as soon as practicable after the Effective Date, sold by Debtor (or its agent) in a commercially reasonable manner. Upon the 21 Exhibit A -- First Amended Plan of Reorganization completion of such sale, the net proceeds thereof shall be distributed (without interest) pro rata (a) in the case of the New Notes, to the Holders of Allowed Claims, based upon the fraction of a New Note each such Holder would have been entitled to receive or deemed to hold had Debtor issued New Notes in denominations smaller than $1,000 and (b) in the case of New Common Stock and New Warrants, to the Holders of Allowed Claims and Allowed Interests, based upon the fractional share of New Common Stock or New Warrants each such Holder would have been entitled to receive or deemed to hold had Debtor issued fractional shares of New Common Stock or New Warrants exercisable into fractional shares of New Common Stock. Such distributions shall be in lieu of any other distribution. However, if Euroclear and/or Clearstream are unable or unwilling to facilitate the proposed sale of fractional shares of New Common Stock cleared through such system, the distributions to each Holder holding Claims through Clearstream or Euroclear (either directly or through a Nominee) will be rounded up or down to the nearest whole share of New Common Stock. G. Setoffs Reorganized Debtor may, pursuant to section 553 of the Bankruptcy Code or applicable non-bankruptcy law, set off against any Allowed Claim or Allowed Interest and the distributions to be made pursuant hereto on account of such Claim or Equity Interest (before any distribution is made on account of such Claim or Equity Interest), the Claims, Equity Interests, rights and causes of action of any nature that Debtor or Reorganized Debtor may hold against the Holder of such Allowed Claim or Allowed Interest; provided that neither the failure to effect such a setoff nor the allowance of any Claim or Equity Interest hereunder shall constitute a waiver or release by Debtor or Reorganized Debtor of any such Claims, Equity Interests, rights and causes of action that Debtor or Reorganized Debtor may possess against such Holder, except as specifically provided herein. H. Surrender of Canceled Instruments or Securities Except as set forth in Section VII.C. herein, as a condition precedent to receiving any distribution pursuant hereto on account of an Allowed Subclass 4B Claim relating to the Old Subordinated Notes held directly in bearer form or Allowed Class 6 Equity Interest evidenced by the instruments, securities or other documentation canceled pursuant to Section V.B. above, the Holder of such Subclass 4B Claim or Class 6 Equity Interest shall transmit the applicable instruments, securities or other documentation evidencing such Subclass 4B Claim or Class 6 Equity Interest to the Exchange Agent or Luxembourg Agent, as appropriate. Any New Notes, New Common Stock or New Warrants to be distributed pursuant hereto on account of any such Subclass 4B Claim or Class 6 Equity Interest shall, pending such surrender, be treated as an undeliverable distribution pursuant to Section VII.C. hereof. 1. Old Subordinated Notes and Old Common Stock Each record Holder of an Allowed Claim relating to the Old Subordinated Notes held directly in bearer form shall tender its Old Subordinated Notes relating to such Allowed Claim (it being understood that Euroclear and Clearstream will transmit Old Subordinated Notes in bearer form cleared through each respective system on behalf of their respective customers), and each record Holder of an Allowed Equity Interest representing Old Common Stock shall transmit the certificates representing its Old Common Stock to the Exchange Agent in accordance with written instructions to be provided to such Holders by Reorganized Debtor as promptly as practicable following the Effective Date. Such instructions shall specify that delivery of such Old Subordinated Notes or stock certificates representing Old Common Stock will be effected, and risk of loss and title thereto will pass, only upon the proper delivery of such Old Subordinated Notes or stock certificates with a letter of transmittal in accordance with such instructions. All surrendered Old Subordinated Notes and stock certificates shall be marked as canceled. If any Holder of Old Subordinated Notes in bearer form submits bearer bonds without coupons or coupons only, Debtor shall adjust the consideration exchanged therefor appropriately. 22 Exhibit A -- First Amended Plan of Reorganization 2. Failure to Surrender Canceled Instruments Any Holder of Allowed Claims relating to the Old Subordinated Notes held directly in bearer form or a Holder of Allowed Interests relating to Old Common Stock that fails to surrender or is deemed to have failed to surrender its Old Subordinated Notes or certificates representing its Old Common Stock required to be tendered hereunder within one year after the Effective Date shall have its claim for a distribution pursuant hereto on account of such Allowed Claim or Allowed Interests discharged and shall be forever barred from asserting any such Claim or Equity Interest against Reorganized Debtor or its properties. In such cases, any New Notes, New Common Stock or New Warrants held for distribution on account of such Claim or Equity Interest shall be disposed of pursuant to the provisions set forth in Section VII.C. above. I. Lost, Stolen, Mutilated or Destroyed Debt Securities In addition to any requirements under the Old Note Indentures or any related agreement or Debtor's Second Restated Certificate of Incorporation or By-laws, any Holder of a Claim evidenced by an Old Subordinated Note held in bearer form or an Equity Interest evidenced by an Old Common Stock certificate that has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such Old Subordinated Note or stock certificate, deliver to Reorganized Debtor: (a) an affidavit of loss reasonably satisfactory to Reorganized Debtor setting forth the unavailability of the Old Subordinated Note held in bearer form or stock certificate; and (b) such additional security or indemnity as may be reasonably required by Reorganized Debtor to hold Reorganized Debtor harmless from any damages, liabilities or costs incurred in treating such individual as a Holder of an Allowed Subclass 4B Claim or Allowed Class 6 Equity Interest. Upon compliance with this procedure by a Holder of a Claim evidenced by an Old Note or an Equity Interest evidenced by an Old Common Stock certificate, such Holder shall, for all purposes under the Plan, be deemed to have surrendered such bearer note or certificate. ARTICLE VIII. PROCEDURES FOR RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS OR EQUITY INTERESTS A. Resolution of Disputed Claims 1. Prosecution of Objections to Claims After the Effective Date, Debtor and Reorganized Debtor shall have the exclusive authority on or before the Claims Objection Bar Date to file objections, settle, compromise, withdraw or litigate to judgment objections to Claims or Equity Interests. From and after the Effective Date, Debtor and Reorganized Debtor may settle or compromise any Disputed Claim or Equity Interest without approval of the Bankruptcy Court. Debtor also reserves the right to resolve any Disputed Claims or Equity Interests outside the Bankruptcy Court under applicable governing law. 2. Estimation of Claims and Equity Interests Debtor or Reorganized Debtor may, at any time, request that the Bankruptcy Court estimate any contingent or unliquidated Claim or Equity Interest pursuant to section 502(c) of the Bankruptcy Code regardless of whether Debtor or Reorganized Debtor has previously objected to such Claim or Equity Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim or Equity Interest at any time during litigation concerning any objection to any Claim or Equity Interest, including during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim, that estimated amount will constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy 23 Exhibit A -- First Amended Plan of Reorganization Court. If the estimated amount constitutes a maximum limitation on such Claim, Debtor or Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate payment on such Claim. All of the aforementioned Claims or Equity Interests and objection, estimation and resolution procedures are cumulative and not necessarily exclusive of one another. Claims and Equity Interests may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court. 3. Payments and Distributions on Disputed Claims and Equity Interests Notwithstanding any provision herein to the contrary, except as otherwise agreed by Reorganized Debtor in its sole discretion, no partial payments and no partial distributions will be made with respect to a Disputed Claim or Equity Interest until the resolution of such disputes by settlement or Final Order. On the date or, if such date is not a business day, on the next successive business day that is 20 calendar days after the calendar quarter in which a Disputed Claim or Equity Interest becomes an Allowed Claim or Allowed Equity Interest, the Holder of such Allowed Claim or Allowed Equity Interest will receive all payments and distributions to which such Holder is then entitled under the Plan. Notwithstanding the foregoing, any Person or Entity who holds both an Allowed Claim(s) and a Disputed Claim(s) (or an Allowed Equity Interest(s) and a Disputed Equity Interest(s)) will not receive the appropriate payment or distribution on the Allowed Claim(s) (or Allowed Equity Interest(s)), except as otherwise agreed by Reorganized Debtor in its sole discretion, until the Disputed Claim(s) or Disputed Equity Interest(s) are resolved by settlement or Final Order. In the event there are Disputed Claims or Equity Interests requiring adjudication and resolution, Debtor reserves the right, or upon order of the Court, to establish appropriate reserves for potential payment of such Claims or Equity Interests. B. Allowance of Claims and Equity Interests Except as expressly provided herein or in any order entered in the Chapter 11 Case prior to the Effective Date (including the Confirmation Order), no Claim or Equity Interest shall be deemed Allowed, unless and until such Claim or Equity Interest is deemed Allowed under the Bankruptcy Code or the Bankruptcy Court enters a Final Order in the Chapter 11 Case allowing such Claim or Equity Interest. Except as expressly provided in the Plan or any order entered in the Chapter 11 Case prior to the Effective Date (including the Confirmation Order), Reorganized Debtor after confirmation will have and retain any and all rights and defenses Debtor had with respect to any Claim or Equity Interest as of the date Debtor filed its petition for relief under the Bankruptcy Code. All Claims of any Person or Entity that owes money to Debtor shall be disallowed unless and until such Person or Entity pays the amount it owes Debtor in full. C. Controversy Concerning Impairment If a controversy arises as to whether any Claims or Equity Interests, or any Class of Claims or Equity Interests, are Impaired under the Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy before the Confirmation Date. ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN A. Condition Precedent to Confirmation It shall be a condition to Confirmation hereof that all provisions, terms and conditions hereof are approved in the Confirmation Order. In addition, the entry of the Confirmation Order shall be deemed an approval of the 2002 Stock Option Plan and the Management Incentive Shares. 24 Exhibit A -- First Amended Plan of Reorganization B. Conditions Precedent to Consummation It shall be a condition to Consummation of the Plan that the following conditions shall have been satisfied or waived pursuant to the provisions of Section IX.C. herein: 1. The Confirmation Order confirming the Plan, as the Plan may have been modified, shall have been entered and become a Final Order in form and substance reasonably satisfactory to Debtor and the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) and shall provide that: (i) Debtor and Reorganized Debtor are authorized and directed to take all actions necessary or appropriate to enter into, implement and consummate the contracts, instruments, releases, leases, indentures and other agreements or documents created in connection with the Plan; (ii) the provisions of the Confirmation Order are nonseverable and mutually dependent; (iii) Reorganized Debtor is authorized to issue the New Notes, New Common Stock, New Warrants, and Management Options and is authorized to enter into the New Note Indenture; and (iv) the New Notes, New Common Stock, and New Warrants issued under the Plan in exchange for Claims against and Equity Interests in Debtor are exempt from registration under the Securities Act of 1933 pursuant to section 1145 of the Bankruptcy Code, except to the extent that Holders of the New Notes, New Common Stock and New Warrants are "underwriters," as that term is defined in section 1145 of the Bankruptcy Code. 2. The following agreements, in form and substance satisfactory to Reorganized Debtor and the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) shall have been tendered for delivery and all conditions precedent thereto shall have been satisfied: (a) the Third Restated Certificate of Incorporation and By-laws of Reorganized Debtor; (b) the New Note Indenture and all similar documents provided for therein or contemplated thereby; (c) the Warrant Agreement, and all similar documents provided for therein or contemplated thereby; (d) Registration Rights Agreements, if any; and (e) the 2002 Stock Option Plan. 3. The Third Restated Certificate of Incorporation of Reorganized Debtor shall have been filed with the Secretary of State of the State of New Jersey. 4. All actions, documents and agreements necessary to implement the Plan shall have been effected or executed. 5. The new board of directors of Reorganized Debtor shall have been appointed. 6. The Trustee under the New Note Indenture shall have been qualified under the Trust Indenture Act. 7. Reorganized Debtor shall have received a waiver or amendment of CBI's financing arrangements with Foothill Capital Corporation, as agent for the lenders thereto, in order to permit distributions by CBI to Debtor for the payment of principal and interest on the New Notes and waive any other defaults that would result from implementation of the Plan, or shall have negotiated a replacement financing facility, in order to service Reorganized Debtor's indebtedness under the New Notes. 25 Exhibit A -- First Amended Plan of Reorganization C. Waiver of Conditions Except as otherwise required by the Lock Up Agreement, Debtor, in its sole discretion (but in the case of any condition that adversely affects the treatment of Holders of Class 4 Claims, subject to the approval of the Creditors Committee (or if no Creditors Committee is appointed, the Prepetition Noteholder Committees, voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) (not to be unreasonably withheld, delayed or denied)), may waive any of the conditions to Confirmation of the Plan and/or to Consummation of the Plan set forth in this Article IX at any time, without notice, without leave or order of the Bankruptcy Court, and without any formal action other than proceeding to confirm and/or consummate the Plan. D. Effect of Non-occurrence of Conditions to Consummation If the Consummation of the Plan does not occur, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or release of any Claims by or against, or any Equity Interests in, Debtor; (2) prejudice in any manner the rights of Debtor or (3) constitute an admission, acknowledgment, offer or undertaking by Debtor in any respect. ARTICLE X. RELEASE, INJUNCTIVE AND RELATED PROVISIONS A. Subordination The classification and manner of satisfying all Claims and Equity Interests and the respective distributions and treatments hereunder take into account and/or conform to the relative priority and rights of the Claims and Equity Interests in each Class in connection with any contractual, legal and equitable subordination rights relating thereto whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code or otherwise, and any and all such rights are settled, compromised and released pursuant hereto. The Confirmation Order shall permanently enjoin, effective as of the Effective Date, all Persons and Entities from enforcing or attempting to enforce any such contractual, legal and equitable subordination rights satisfied, compromised and settled in this manner. B. Limited Releases by Debtor Except as otherwise specifically provided herein, for good and valuable consideration, including the obligations and undertakings of the Noteholder Releasees set forth in the Plan, the agreement of the Prepetition Noteholder Committees to their treatment set forth in the Lock Up Agreement, and the service of the D&O Releasees to facilitate the expeditious reorganization of Debtor and the implementation of the restructuring contemplated by the Plan, the D&O Releasees and the Noteholder Releasees, on and after the Effective Date, are released by Debtor and Reorganized Debtor from any and all Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that Debtor or its subsidiaries would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Equity Interest or other Person or Entity, based in whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date, other than Claims or liabilities (a) in respect of ordinary commercial relationships between Debtor and any such Person or (b) in respect of any act or omission of such Person, Entity or Professional that is determined in a Final Order not to have been taken in good faith and in a manner believed to be in or not opposed to the best interests of Debtor, including its subsidiaries, and in the case of D&O Releasees, for Claims or liabilities (y) in respect of any loan, advance or similar payment by Debtor or its subsidiaries to any such Person or (z) in respect of any contractual obligation owed by such Person to Debtor or its subsidiaries. No portion of the limited releases by Debtor in any way impairs (other than as provided in Article X herein) any cause of action or Claim of any person or entity against Debtor or any other party not specifically released hereby. 26 Exhibit A -- First Amended Plan of Reorganization C. Limited Releases by Holders of Claims or Equity Interests On and after the Effective Date, each Holder of a Claim or Equity Interest (a) who has accepted the Plan or (b) who is entitled to receive a distribution of property in connection with the Plan, shall be deemed to have unconditionally released the D&O Releasees from any and all Claims (as defined in section 101(5) of the Bankruptcy Code), obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, including any derivative claims asserted on behalf of Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Person or Entity would have been legally entitled to assert (whether individually or collectively), based in whole or in part upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date in any way relating or pertaining to (w) the purchase or sale, or the rescission of a purchase or sale, of any security of Debtor, (x) Debtor or Reorganized Debtor, (y) the Chapter 11 Case, or (z) the negotiation, formulation and preparation of the Plan, the Lock Up Agreement or any related agreements, instruments or other documents. No portion of the limited releases by the Holders of Claims or Equity Interests in any way impairs (other than as provided in this Article X) any cause of action or Claim of any person or entity against any party (i) not specifically released hereby or (ii) in respect of any act or omission that is determined in a Final Order not to have been taken in good faith and in a manner reasonably believed to be in or not opposed to the best interests of Debtor and its subsidiaries. D. Exculpation Debtor, Reorganized Debtor, the D&O Releasees, the Noteholder Releasees and the Creditors Committee (if any) and their members and professionals (acting in such capacity) shall neither have nor incur any liability to any Person or Entity for any act taken or omitted to be taken in connection with or related to the formulation, preparation, dissemination, implementation, administration, Confirmation or Consummation of the Plan, the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the Lock Up Agreement, or any other act taken or omitted to be taken in connection with or in contemplation of any restructuring of the Old Notes, the Old Preferred Stock and/or the Old Common Stock; provided that the provisions of this Section X.D. shall have no effect on the liability of any Person, Entity or Professional that results from any such act or omission that is determined in a Final Order not to have been taken in good faith and in a manner believed to be or not opposed to the best interests of (x) Debtor, including its subsidiaries, or (y) in the case of the Prepetition Noteholder Committees, the applicable Old Notes. E. Preservation of Rights of Action Except as otherwise provided herein or in any contract, instrument, release, indenture or other agreement entered into in connection with the Plan, in accordance with section 1123(b) of the Bankruptcy Code, Reorganized Debtor shall retain and may exclusively enforce and settle any Claims, rights and causes of action that Debtor or the Estate may hold against any Person or Entity. Reorganized Debtor may pursue such retained Claims, rights or causes of action, as appropriate, in accordance with the best interests of Reorganized Debtor. On the Effective Date, Reorganized Debtor shall be deemed to waive and release any Claims, rights or Causes of Action arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy Code held by Reorganized Debtor against any Person or Entity. F. Discharge of Claims and Termination of Equity Interests Except as otherwise provided herein: (1) the rights afforded herein and the treatment of all Claims and Equity Interests herein, shall be in exchange for and in complete satisfaction, discharge and release of Claims and Equity Interests of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, against Debtor or any of its assets or properties, (2) on the Effective Date, all such Claims against, and Equity Interests in, Debtor shall be satisfied, discharged and released in full and (3) all Persons and Entities shall be precluded from asserting against Reorganized Debtor, its successor or its assets or properties any other or 27 Exhibit A -- First Amended Plan of Reorganization further Claims or Equity Interests based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Confirmation Date. Except as expressly provided herein, the Plan does not impair the rights of any Holders of Class 3 Claims, including but not limited to: (i) Holders of Claims under executory and nonexecutory contracts and leases (other than any contractual rights to purchase or otherwise acquire Equity Interests); (ii) Persons or Entities entitled to contractual or common law rights of indemnity, contribution and reimbursement; (iii) claims of any party or entity relating to any environmental condition as to which Debtor is or may be liable; or (iv) any Persons or Entities involved in litigation with Debtor. G. Injunction From and after the Effective Date, all Holders of Claims or Equity Interests in Classes 4, 5, 6 and 7 will be permanently enjoined from commencing or continuing in any manner, any suit, action or other proceeding, on account of or respecting any Claim, obligation, debt, right, Cause of Action, remedy or liability released or to be released pursuant hereto. ARTICLE XI. RETENTION OF JURISDICTION Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain such jurisdiction over the Chapter 11 Case after the Effective Date as legally permissible, including jurisdiction to: 1. allow, disallow, determine, liquidate, classify, estimate or establish the priority or secured or unsecured status of any Claim or Equity Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the allowance or priority of Claims or Equity Interests; 2. grant or deny any applications for allowance of compensation or reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan, for periods ending on or before the Effective Date; 3. resolve any matters related to the assumption, assumption and assignment or rejection of any executory contract or unexpired lease to which Debtor is party or with respect to which Debtor may be liable and to hear, determine and, if necessary, liquidate, any Claims arising therefrom, including those matters related to the amendment after the Effective Date pursuant to Article VI herein to add any executory contracts or unexpired leases to the list of executory contracts and unexpired leases to be rejected; 4. ensure that distributions to Holders of Allowed Claims and Allowed Equity Interests are accomplished pursuant to the provisions hereof; 5. decide or resolve any motions, adversary proceedings, contested or litigated matters and any other matters and grant or deny any applications involving Debtor that may be pending on the Effective Date; 6. enter such orders as may be necessary or appropriate to implement or consummate the provisions hereof and all contracts, instruments, releases, indentures and other agreements or documents created in connection with the Plan or the Disclosure Statement; 7. resolve any cases, controversies, suits or disputes that may arise in connection with the Consummation, interpretation or enforcement of the Plan or any Person's or Entity's obligations incurred in connection with the Plan; 8. issue injunctions, enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any Person or Entity with Consummation or enforcement of the Plan, except as otherwise provided herein; 28 Exhibit A -- First Amended Plan of Reorganization 9. resolve any cases, controversies, suits or disputes with respect to the releases, injunction and other provisions contained in Article X hereof and enter such orders as may be necessary or appropriate to implement such releases, injunction and other provisions; 10. enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked or vacated; 11. determine any other matters that may arise in connection with or relate to this Plan, the Disclosure Statement, the Confirmation Order or any contract, instrument, release, indenture or other agreement or document created in connection with the Plan or the Disclosure Statement; and 12. enter an order and/or final decree concluding the Chapter 11 Case. ARTICLE XII. MISCELLANEOUS PROVISIONS A. Effectuating Documents, Further Transactions and Corporation Action Each of Debtor and Reorganized Debtor is authorized to execute, deliver, file or record such contracts, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions hereof and the notes and securities issued pursuant hereto. Prior to, on or after the Effective Date (as appropriate), all matters provided for hereunder that would otherwise require approval of the shareholders or directors of Debtor or Reorganized Debtor shall be deemed to have occurred and shall be in effect prior to, on or after the Effective Date (as appropriate) pursuant to the applicable general corporation law of the State of New Jersey without any requirement of further action by the shareholders or directors of Debtor or Reorganized Debtor. B. Dissolution of Committee(s) Upon the entry of an order or final decree concluding the Chapter 11 Case, the Creditors Committee (if any) shall dissolve and members shall be released and discharged from all rights and duties arising from, or related to, the Chapter 11 Case. C. Payment of Statutory Fees All fees payable pursuant to section 1930 of Title 28 of the United States Code, as determined by the Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid on the earlier of when due or the Effective Date, or as soon thereafter as practicable, but prior to the closing of the Chapter 11 Case, with respect to any such fees payable after the Effective Date. D. Modification of Plan Subject to the limitations contained in the Plan and the Lock Up Agreement, (1) Debtor reserves the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan prior to the entry of the Confirmation Order and (2) after the entry of the Confirmation Order, Debtor or Reorganized Debtor, as the case may be, may (with the consent of the Creditors Committee (or if no Creditors Committee has been appointed, by the Prepetition Noteholder Committees voting by the respective aggregate principal amounts represented by each such Prepetition Noteholder Committee) (not to be unreasonably withheld, delayed or denied)), upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. 29 Exhibit A -- First Amended Plan of Reorganization E. Revocation of Plan Debtor reserves the right to revoke or withdraw the Plan prior to the Confirmation Date and to file subsequent plans of reorganization. If Debtor revokes or withdraws the Plan, or if Confirmation or Consummation does not occur, then (a) the Plan shall be null and void in all respects, (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Equity Interest or Class of Claims or Equity Interests), assumption or rejection of executory contracts or leases affected by the Plan, and any document or agreement executed pursuant hereto, shall be deemed null and void, and (c) nothing contained in the Plan shall (i) constitute a waiver or release of any Claims by or against, or any Equity Interests in, such Debtor or any other Person, (ii) prejudice in any manner the rights of such Debtor or any other Person, or (iii) constitute an admission of any sort by Debtor or any other Person. F. Successors and Assigns The rights, benefits and obligations of any Person or Entity named or referred to herein shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign of such Person or Entity. G. Reservation of Rights Except as expressly set forth herein, this Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order. None of the filing of this Plan, any statement or provision contained herein, or the taking of any action by Debtor with respect to this Plan shall be or shall be deemed to be an admission or waiver of any rights of Debtor with respect to the Holders of Claims or Equity Interests prior to the Effective Date. H. Section 1146 Exemption Pursuant to section 1146(c) of the Bankruptcy Code, any transfers of property pursuant hereto shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax or other similar tax or governmental assessment in the United States, and the Confirmation Order shall direct the appropriate state or local governmental officials or agents to forgo the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment. I. Further Assurances Debtor, Reorganized Debtor and all Holders of Claims receiving distributions hereunder and all other parties in interest shall, from time to time, prepare, execute and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of this Plan. J. Service of Documents Any pleading, notice or other document required by the Plan to be served on or delivered to Reorganized Debtor shall be sent by first class U.S. mail, postage prepaid to: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attn: Robert W. Olson, Senior Vice President, General Counsel and Secretary with copies to: Kirkland & Ellis 200 E. Randolph Drive Chicago, Illinois 60601 Attn: Matthew N. Kleiman, Esq. Dinsmore & Shohl LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, Ohio 45202 Attn: Kim Martin Lewis, Esq. 30 Exhibit A -- First Amended Plan of Reorganization K. Filing of Additional Documents On or before the Effective Date, Debtor may file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions hereof. Respectfully Submitted, CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ ROBERT W. OLSON ------------------------------------ Name: Robert W. Olson Title: Senior Vice President, General Counsel and Secretary 31 Exhibit A -- First Amended Plan of Reorganization -----END PRIVACY-ENHANCED MESSAGE-----