-----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, Tk7CtDQfDp5i0FZjnQkk7IsUJx6ngECU4NtGomEP5EbSu/NTrUfnVJJu8Du0itss up0+gKaqaKVqZWyV+GHqeg== 0000835582-96-000022.txt : 19960801 0000835582-96-000022.hdr.sgml : 19960801 ACCESSION NUMBER: 0000835582-96-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960615 FILED AS OF DATE: 19960731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOMELAND HOLDING CORP CENTRAL INDEX KEY: 0000835582 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 731311075 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11555 FILM NUMBER: 96601812 BUSINESS ADDRESS: STREET 1: 400 N E 36TH ST CITY: OKLAHOMA CITY STATE: OK ZIP: 73105 BUSINESS PHONE: 4055575500 MAIL ADDRESS: STREET 1: 400 N E 36TH CITY: OKLAHOMA CITY STATE: OK ZIP: 73125 FORMER COMPANY: FORMER CONFORMED NAME: SWO HOLDING CORP DATE OF NAME CHANGE: 19901017 FORMER COMPANY: FORMER CONFORMED NAME: SWO ACQUISTION CORP DATE OF NAME CHANGE: 19890716 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: June 15, 1996 OR Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file No.: 33-48862 HOMELAND HOLDING CORPORATION (Exact name of registrant as specified in its charter) Delaware 73-1311075 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2601 Northwest Expressway Oil Center-East, Suite 1100 Oklahoma City, Oklahoma 73112 (Address of principal executive offices) (Zip Code) (405) 879-6600 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock as of July 15, 1996. Class A Common Stock, including redeemable common stock: 32,599,707 shares Class B Common Stock: None HOMELAND HOLDING CORPORATION FORM 10-Q FOR THE TWELVE WEEKS AND TWENTY-FOUR WEEKS ENDED JUNE 15, 1996 INDEX Page PART I FINANCIAL INFORMATION ITEM 1. Financial Statements......................... 1 Consolidated Balance Sheets June 15, 1996 and December 30, 1995......... 1 Consolidated Statements of Operations Twelve Weeks Ended June 15, 1996 and June 17, 1995........................... 3 Consolidated Statements of Operations Twenty-Four Weeks Ended June 15, 1996 and June 17, 1995........................... 4 Consolidated Statements of Stockholders Equity (Deficit) Twelve Weeks Ended June 15, 1996 and June 17, 1995.............................. 5 Consolidated Statements of Cash Flows Twenty-Four Weeks Ended June 15, 1996 and June 17, 1995............................... 6 Notes to Consolidated Financial Statements June 15, 1996............................... 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 9 PART II OTHER INFORMATION ITEM 5. Other Information............................ 14 ITEM 6. Exhibits and Reports on Form 8-K............. 14 i PART I - FINANCIAL INFORMATION Item 1. Financial Statements HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) ASSETS June 15, December 30, 1996 1995 Current assets: Cash and cash equivalents $ 6,854 $ 6,357 Receivables, net of allowance for uncollectible accounts of $1,848 and $2,661 7,502 8,051 Inventories 39,476 42,830 Prepaid expenses and other current assets 2,055 2,052 Total current assets 55,887 59,290 Property, plant and equipment: Land 9,810 9,919 Buildings 22,219 22,101 Fixtures and equipment 43,935 44,616 Land and leasehold improvements 22,582 23,629 Software 3,012 1,991 Leased assets under capital leases 27,079 29,062 Construction in progress 2,697 4,201 131,334 135,519 Less accumulated depreciation and amortization 64,874 63,827 Net property, plant and equipment 66,460 71,692 Other assets and deferred charges 6,749 6,600 Total assets $129,096 $137,582 Continued The accompanying notes are an integral part of these consolidated financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS, Continued (In thousands, except share and per share amounts) (Unaudited) LIABILITIES AND STOCKHOLDERS' DEFICIT June 15, December 30, 1996 1995 Current liabilities: Accounts payable - trade $ 17,501 $ 17,732 Salaries and wages 1,556 1,609 Taxes 5,146 4,876 Accrued interest payable 6,540 2,891 Other current liabilities 13,119 14,321 Long-term obligations in default classified as current 97,053 100,467 Current portion of obligations under capital leases 2,746 2,746 Current portion of restructuring reserve 3,062 3,062 Total current liabilities 146,723 147,704 Long-term obligations: Obligations under capital leases 6,141 9,026 Other noncurrent liabilities 5,224 6,133 Noncurrent restructuring reserve 2,455 2,808 Total long-term obligations 13,820 17,967 Commitments and contingencies - - Redeemable common stock, Class A, $.01 par value, 1,720,718 shares at June 15, 1996 and at December 30, 1995, at redemption value 17 17 Stockholders' deficit: Common stock Class A, $.01 par value, authorized - 40,500,000 shares, issued - 33,748,482 shares at June 15, 1996 and at December 30, 1995, outstanding - 30,878,989 shares 337 337 Additional paid-in capital 55,886 55,886 Accumulated deficit (83,546) (80,188) Minimum pension liability adjustment (1,327) (1,327) Treasury stock, 2,869,493 shares at June 15, 1996 and at December 30, 1995, at cost (2,814) (2,814) Total stockholders' deficit (31,464) (28,106) Total liabilities and stockholders' deficit $129,096 $137,582 The accompanying notes are an integral part of these consolidated financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited) 12 weeks 12 weeks ended ended June 15, June 17, 1996 1995 Sales, net $121,981 $147,059 Cost of sales 91,703 110,530 Gross profit 30,278 36,529 Selling and administrative 27,442 36,039 Operating profit 2,836 490 Interest expense 2,051 3,899 Income (loss) before reorganization items, income taxes and extraordinary items 785 (3,409) Reorganization items 1,800 - Loss before income taxes and extraordinary items (1,015) (3,409) Income tax expense - - Loss before extraordinary items (1,015) (3,409) Extraordinary items - (2,330) Net loss $ (1,015) $ (5,739) Loss before extraordinary items per common share $ (.03) $ (.10) Extraordinary items per common share - (.07) Net loss per common share $ (.03) $ (.17) Weighted average shares outstanding 33,599,707 33,264,305 The accompanying notes are an integral part of these consolidated financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited) 24 weeks 24 weeks ended ended June 15, June 17, 1996 1995 Sales, net $246,331 $325,068 Cost of sales 185,910 246,015 Gross profit 60,421 79,053 Selling and administrative 55,422 76,008 Operating profit 4,999 3,045 Interest expense 5,207 8,310 Loss before reorganization items, income taxes and extraordinary items (208) (5,265) Reorganization items 3,150 - Loss before income taxes and extraordinary items (3,358) (5,265) Income tax expense - - Loss before extraordinary items (3,358) (5,265) Extraordinary items - (2,330) Net loss $ (3,358) $ (7,595) Loss before extraordinary items per common share $ (.10) $ (.15) Extraordinary items per common share - (.07) Net loss per common share $ (.10) $ (.22) Weighted average shares outstanding 32,599,707 33,957,711 The accompanying notes are an integral part of these consolidated financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (In thousands, except share and per share amounts) (Unaudited) Minimum Class A Additional Pension Total Common Stock Paid-in Accumulated Liability Treasury Stock Stockholders' Shares Amount Capital Deficit Adjustment Shares Amount Equity (Deficit) Balance, December 31, 1994 31,604,989 $316 $53,896 $(48,398) $ - 726,000 $(1,743) $ 4,071 Purchase of treasury stock 2,116,183 21 1,037 - - 2,116,183 (1,058) - Net loss - - - (7,595) - - - (7,595) Balance, June 17, 1995 33,721,172 $337 $54,933 $(55,993) $ - 2,842,183 $(2,801) $ (3,524) Balance, December 30, 1995 33,748,482 $337 $55,886 $(80,188) $(1,327) 2,869,493 $(2,814) $(28,106) Net loss - - - (3,358) - - - (3,358) Balance, June 15, 1996 33,748,482 $337 $55,886 $(83,546) $(1,327) 2,869,493 $(2,814) $(31,464)
The accompanying notes are an integral part of these consolidated financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share and per share amounts) (Unaudited) 24 weeks 24 weeks ended ended June 15, June 17, 1996 1995 Cash flows from operating activities: Net loss $(3,358) $(7,595) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 3,282 6,460 Amortization of financing costs 315 585 Write-off of financing costs on long term debt retired - 1,424 Gain on disposal of assets (41) (146) Amortization of beneficial interest in operating leases 59 105 Change in assets and liabilities: Decrease in receivables 549 2,920 Decrease in receivable for taxes - 719 Decrease in inventories 3,354 17,374 Decrease (increase) in prepaid expenses and other current assets (3) 3,723 Decrease (increase) in other assets and deferred charges (540) 26 Decrease in accounts payable - trade (231) (14,146) Increase (decrease) in salaries and wages (53) 418 Increase (decrease) in taxes 270 (472) Increase (decrease) in accrued interest payable 3,649 (808) Decrease in other current liabilities (1,201) (5,771) Decrease in restructuring reserve (353) (10,338) Decrease in other noncurrent liabilities (872) (938) Net cash provided by (used in) operating activities 4,826 (6,460) Cash flows from investing activities: Capital expenditures (1,404) (409) Cash received from sale of assets 1,729 73,038 Net cash provided by investing activities 325 72,629 Cash flows from financing activities: Payments under senior secured floating rate notes - (9,375) Payments under senior secured fixed rate notes - (15,625) Borrowings under revolving credit loans 60,423 34,582 Payments under revolving credit loans (63,838) (56,644) Net payments under swing loans - (1,500) Principal payments under notes payable - (750) Principal payments under capital lease obligations (1,239) (5,612) Payments to acquire treasury stock - (1,058) Net cash used by financing activities (4,654) (55,982) Net increase in cash and cash equivalents 497 10,187 Cash and cash equivalents at beginning of period 6,357 339 Cash and cash equivalents at end of period $ 6,854 $10,526 Supplemental information: Cash paid during the period for interest $ 1,287 $ 8,533 The accompanying notes are an integral part of these financial statements. HOMELAND HOLDING CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Preparation of Consolidated Financial Statements: The accompanying unaudited consolidated financial statements of Homeland Holding Corporation ("Holding") and its Subsidiary, Homeland Stores, Inc. ("Stores" and together with Holding, the "Company"), reflect all adjustments consisting only of normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the consolidated financial position and the consolidated results of operations and cash flows for the periods presented. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the 52 weeks ended December 30, 1995 and the notes thereto. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments to the assets or liabilities that may result from the outcome of the bankruptcy proceedings. 2. Accounting Policies: The policies of the Company are summarized in the consolidated financial statements of the Company for the 52 weeks ended December 30, 1995 and the notes thereto. 3. Operational Restructuring: On April 21, 1995, the Company sold 29 of its stores and its distribution center to Associated Wholesale Grocers, Inc. ("AWG"), pursuant to a strategic plan approved by the Board of Directors in December 1994. In connection with the plan, the Company closed 14 underperforming stores in 1995, sold one store and closed one store in the second quarter of 1996. The Company closed one final store in July 1996 pursuant to such plan. During the first 24 weeks ended June 15, 1996, the Company incurred expenses associated with the operational restructuring as follows: Payments applied against operational Operational restructuring Operational restructuring reserve for restructuring reserve at the 24 weeks ended reserve at December 30, 1995 June 15, 1996 June 15, 1996 Expenses associated with the planned store closings, primarily occupancy costs from closing date to lease termination or sublease date $4,860 $ (350) $4,510 Expenses associated with the AWG transaction, primarily service and equipment contract cancellation fees 58 - 58 Estimated severance costs associated with the AWG transaction 927 5 932 Legal and consulting fees associated with the AWG transaction 25 (8) 17 Operational restructuring reserve $5,870 $ (353) $5,517
The separately identifiable revenue and store contribution to operating profit related to the stores sold to AWG or closed and expenses related to the warehouse facility are as follows: 24 weeks 24 weeks ended ended June 15, June 17, 1996 1995 Sales, net $6,429 $81,079 Store contribution to operating profit before allocation of administrative and advertising expenses (394) 2,407 Warehouse expenses - 3,853 4. Reorganization: On May 13, 1996, the Company filed chapter 11 petitions with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Simultaneous with the filing of such petitions, the Company filed a plan of reorganization and a disclosure statement, which sets forth the terms of a proposed restructuring of the Company. On June 13, 1996, the Company filed a first amended plan of reorganization and disclosure statement. The Company's plan of reorganization was confirmed by the Bankruptcy Court on July 19, 1996. As a result of the chapter 11 filings, certain claims against the Company that existed prior to the filing date are stayed and will be subject to compromise. Liabilities subject to compromise as of June 15, 1996, are as follows (dollars in thousands): June 15, 1996 (unaudited) Long-term obligation in default classified as current $ 95,000 Other 43,732 $138,732 Resolution of the above liabilities subject to compromise is contingent upon the approval of the Bankruptcy Court. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Comparison of Twelve and Twenty-Four Weeks Ended June 15, 1996 with Twelve and Twenty-Four Weeks Ended June 17, 1995. Net sales for the 12 weeks and 24 weeks ended June 15, 1996 decreased 17.1% and 24.2% respectively, over the net sales of the corresponding periods of 1995. The decrease in net sales was due primarily to the sale of 29 stores to AWG on April 21, 1995 and the closing of 14 stores in 1995, 5 of which occurred during the first quarter of 1995, 2 during the second quarter of 1995, and the remainder over the balance of 1995. Comparable store sales for the 12 weeks ended June 15, 1996 decreased by 0.2% compared to the corresponding period of 1995. The decrease in comparable store sales was primarily due to higher 1995 general merchandise sales resulting from certain continuity programs that did not recur in 1996. Gross profit as a percentage of sales for both the 12 weeks ended June 15, 1996 and the corresponding period of 1995 amounted to 24.8%. Gross profit as a percentage of sales for the 24 weeks ended June 15, 1996 increased to 24.5% compared to 24.3% for the corresponding period of 1995. The improvement was primarily due to higher vendor allowances and rebates, which were lower in 1995 due to the pending sale of the Company's distribution center and 29 stores to AWG. The higher vendor allowances and rebates are somewhat offset by the higher cost of goods purchased through AWG versus self-supply. Selling and administrative expenses for the 12 weeks ended June 15, 1996 decreased to 22.5% compared to 24.5% for the corresponding period of 1995. For the 24 weeks ended June 15, 1996, selling and administrative expenses decreased to 22.5% from 23.4%. The decrease in expenses was due to a reduction in health and welfare costs and lower corporate office expenses. Interest expense for the 12 weeks ended June 15, 1996 decreased to $2.1 million from $3.9 million in the corresponding period of 1995. Interest expense for the 24 weeks ended June 15, 1996 decreased to $5.2 million from $8.3 million in the corresponding period of 1995. The decrease in interest expense is primarily a result of the Company filing chapter 11 petitions with the Bankruptcy Court on May 13, 1996. The filing stayed the Company's interest obligation on the Senior Notes. Additionally, interest expense decreased due to the redemption of $25.0 million of Senior Secured Notes on June 1, 1995. The Company incurred $1.8 million of reorganization expenses for the 12 weeks ended June 15, 1996. For the 24 weeks ended June 15, 1996, reorganization expenses were $3.2 million. The reorganization expenses were primarily professional fees. Extraordinary items for the 12 weeks and 24 weeks ended June 17, 1995 consisted of refinancing costs associated with the Company's sale of 29 stores and its distribution center to AWG on April 21, 1995. Liquidity and Capital Resources The primary sources of liquidity for the Company's operations have been borrowings under credit facilities and internally generated funds. In March 1992, the Company refinanced its indebtedness by entering into an Indenture with United States Trust Company of New York, as trustee, pursuant to which the Company had outstanding as of July 15, 1996, $59.4 million of Series C Senior Secured Fixed Rate Notes due 1999, $26.1 million of Series D Senior Secured Floating Rate Notes due 1997 and $9.5 Series A Senior Secured Floating Rates Notes due 1997 (collectively the "Senior Notes"). On April 21, 1995, the Company entered into a Revolving Credit Agreement (the "Revolving Credit Agreement") with National Bank of Canada, ("NBC"), as agent and as lender, Heller Financial, Inc. The Revolving Credit Agreement permits borrowings up to $25 million, subject to a borrowing base, for working capital needs including certain letters of credit. On May 13, 1996, the Company filed chapter 11 petitions with the Bankruptcy Court. Simultaneous with the filing of such petitions, the Company filed a "pre-arranged" plan of reorganization and a disclosure statement, which sets forth the terms of a proposed restructuring of the Company. On June 13, 1996, the Company filed its first amended plan of reorganization (the "Plan") and first amended disclosure statement. The restructuring is designed to reduce substantially the Company's debt service obligations and labor costs and to create a capital and cost structure that will allow the Company to maintain and enhance the competitive position of its business and operations. The restructuring was negotiated with, and is supported by, the lenders under the Company's existing revolving credit facility, the adhoc noteholders committee and the Company's labor unions. As part of the restructuring, the $95 million of Homeland's outstanding Senior Notes, plus accrued interest of approximately $6.6 million, will be canceled and such noteholders will receive (in the aggregate) $60 million face amount of new senior subordinated notes and $1.5 million in cash. The new senior subordinated notes will mature in 2003, bear interest semi-annually at a rate of 10% per annum and will not be secured. Additionally, it is anticipated that the noteholders and the Company's general unsecured creditors will receive approximately 60% and 35%, respectively, of the equity of the reorganized Holding (assuming total unsecured claims of approximately $63 million, including noteholders's unsecured claims). Holding's existing equity holders will receive 5% of the new equity, plus five-year warrants to purchase an additional 5% of such equity. An integral part of the restructuring is the Company's previously-announced deal with its labor unions to modify certain elements of the Company's existing collective bargaining agreements. The modified collective bargaining agreements will provide for, among other things, wage and benefit modifications, the buyout of certain employees and the issuance and purchase of new equity to a trust acting on behalf of the unionized employees. The modified collective bargaining agreements are conditioned on, and will become effective upon, the consummation of the restructuring. On May 13, 1996, the Company also entered into an interim debtor-in-possession lending facility ("DIP Facility"), with its existing bank group to provide up to $27 million of working capital financing. The Bankruptcy Court issued an order approving the DIP facility on June 7, 1996. The DIP Facility permits the Company to borrow up to the lesser of $27 million and the Borrowing Base. The borrowings under the DIP Facility bear interest at a rate equal to the prime rate announced publicly by NBC from time to time in New York, New York plus two percent. Interest is payable quarterly in arrears on the last day of March, June, September and December, commencing on June 30, 1996. The DIP Facility will mature on the earlier of (1) one year from the date of filing of the Company's voluntary petition under Chapter 11 of the United States Federal Bankruptcy Code, and (2) the effective date of the Plan. Management believes that the DIP Facility will be adequate to meet the Company's working capital requirements while it is operating under the auspices of the Bankruptcy Court. The DIP Facility provides that NBC, on behalf of itself and as agent for the lenders under the DIP Facility, will have liens on, and security interests in, all of the pre-petition and post-petition property of the Company (other than the collateral under the Indenture), which liens and security interests will have priority over substantially all other liens on, and security interests in, the Company's property (other than properly perfected liens and security interests which existed prior to the date of filing of the Company's voluntary petition under the Bankruptcy Code). The DIP Facility includes certain customary restrictive covenants, including restrictions on acquisitions, asset dispositions, capital expenditures, consolidations and mergers, distributions, divestitures, indebtedness, liens and security interests and transactions with affiliates. The DIP Facility also requires the Company to comply with certain financial maintenance and other covenants. At July 15, 1996, the net unused and available amount under the DIP Facility was $14.4 million. On July 19, 1996, the Bankruptcy Court confirmed the Plan. It is expected that the Plan will become effective on the first business day on which all of the conditions to the effective date contained in the Plan are satisfied or waived as provided in the Plan. The Company currently anticipates that the effective date of the Plan will occur on or about August 2, 1996. On the effective date of the Plan, the Company intends to enter into a loan agreement (the "Loan Agreement") with NBC, as agent and lender, and two other lenders, Heller Financial, Inc. and IBJ Schroder Bank and Trust Company, under which those lenders will provide (a) a working capital and letter of credit facility and (b) a term loan. The Company has received and executed a commitment letter from these lenders. The commitment letter is subject to the approval of the Bankruptcy Court. The Loan Agreement will permit the Company to borrow, under the working capital and letter of credit facility, up to the lesser of (a) $27.5 million and (b) the applicable borrowing base. Funds borrowed under such facility will be available for general corporate purposes of the Company. The Loan Agreement will also provide the Company a $10.0 million term loan, which will be used to fund certain obligations of the Company under the plan of reorganization, including an employee buyout offer and a health and welfare plan required by the modified collective bargaining agreements, professional fees and "cure amounts" which must be paid in connection with executory contracts, secured financings and unexpired leases. The interest rate under the Loan Agreement will be based on the prime rate publicly announced by National Bank of Canada from time to time in New York, New York plus a percentage which varies based on a number of factors, including (a) the amount which is part of the working capital and letter of credit facility and the amount which is part of the term loan, (b) the time period (c) whether the Company elects to use a London Interbank Offered Rate, and (d) the earnings of the Company before interest, depreciation and amortization expenses. The indebtedness under the Loan Agreement will mature three years from the effective date of the Plan. The obligations of the Company under the Loan Agreement will be secured by liens on, and security interests in, substantially all of the assets of Homeland and will be guaranteed by Holding, with a pledge of its Homeland stock to secure its obligation. The collateral will include the assets which, prior to the effective date of the Plan, secured the obligations of the Company to the holders of the Senior Notes. The Company anticipates that the Loan Agreement will include certain customary restrictions on acquisitions, asset dispositions, capital expenditures, consolidations and mergers, distributions, divestitures, indebtedness, liens and security interests and transactions with affiliates. The Company also anticipates that the Loan Agreement will require the Company to comply with certain financial and other covenants. Consummation of the Plan is subject to a number of contingencies. The Company believes that the restructuring under the Plan will have a favorable effect on the Company's liquidity. However, there can be no assurance that the Company's operations will yield positive net cash flows or that the restructuring will be successful. If the Company is not able to generate positive net cash flows from its operations or if the restructuring is not consummated successfully, management believes that this could have a material adverse effect on the Company's business and the continuing viability of the Company. PART II - OTHER INFORMATION Item 5. Other Information On the effective date of the Plan, the current members of the Company's board of directors are expected to resign their positions except for Mr. James A. Demme and Mr. John A. Shields. On and after the effective date of the Plan, the following individuals will also become members of the Company's board of directors: Mr. Gene Burris, Mr. Edward B. Krekeler, Ms. Laurie M. Shahon, Mr. William B. Snow and Mr. David N. Weinstein. Item 6. Exhibits and Reports on Form 8-K (a) Exhibit: The following exhibit are filed as part of this report: Exhibit No. Description 2b First Amended Plan of Reorganization of Homeland Stores, Inc. and Homeland Holding Corporation. 99h Press release issued by Homeland Stores, Inc. on July 19, 1996. 27 Financial Data Schedule. (b) Report on Form 8-K: The following report on Form 8-K was filed during the quarter ended June 15, 1996. Date Description May 31, 1996 The filing of chapter 11 petitions by Homeland Holding Corporation and Homeland Stores, Inc. on May 13, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HOMELAND HOLDING CORPORATION Date: July 30, 1996 By: /s/ James A. Demme James A. Demme, President, Chief Executive Officer and Director (Principal Executive Officer) Date: July 30, 1996 By: /s/ Larry W. Kordisch Larry W. Kordisch, Executive Vice President/Finance, Treasurer, Chief Financial Officer and Secretary (Principal Financial Officer) Date: July 30, 1996 By: /s/ Terry M. Marczewski Terry M. Marczewski, Chief Accounting Officer, Assistant Treasurer and Assistant Secretary (Principal Accounting Officer) EX-2 2 188893 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE IN RE: ) ) HOMELAND STORES, INC., ) Case No. 96-747(PJW) ) Chapter 11 Debtor. ) IN RE: ) ) HOMELAND HOLDING CORPORATION, ) Case No. 96-748(PJW) ) Chapter 11 Debtor. ) Jointly Administered FIRST AMENDED JOINT PLAN OF REORGANIZATION OF HOMELAND STORES, INC. AND HOMELAND HOLDING CORPORATION Homeland Stores, Inc., a Delaware corporation ("Company"), and Homeland Holding Corporation, a Delaware corporation ("Holding" and, together with the Company, the "Debtors"), hereby propose this First Amended Joint Plan of Reorganization of Homeland Stores, Inc. and Homeland Holding Corporation ("Plan") to resolve claims against, and interests in, the Company and Holding. The Debtors are the proponents of the Plan within the meaning of Section 1129 of the United States Bankruptcy Code, as amended ("Bankruptcy Code"). The First Amended Disclosure Statement for Plan of Reorganization of Homeland Stores, Inc. and Homeland Holding Corporation ("Disclosure Statement") provides certain information with respect to the Debtors and the Plan. Nothing in the Plan should be construed as constituting a solicitation of acceptances of the Plan unless and until the Disclosure Statement has been approved and distributed to all holders of claims and interests to the extent required by Section 1125 of the Bankruptcy Code. All holders are encouraged to read the Disclosure Statement and the Plan in their entirety before voting to accept or to reject the Plan. ARTICLE I DEFINED TERMS AND RULES OF INTERPRETATION A. Defined Terms. The following terms used in the Plan shall have the respective meanings specified. 1. Administrative Claim. The term "Administrative Claim" means a Claim for administrative expenses allowed under Section 503(b) of the Bankruptcy Code and entitled to priority in payment under Section 507(a)(1) of the Bankruptcy Code, including, without limitation, any actual and necessary costs and expenses of preserving the respective Estates and operating the businesses of the Debtors during the Cases, any indebtedness or obligations incurred by either Debtor during the pendency of the Cases in connection with the conduct of the business of, the acquisition or the lease of property by, or the rendition of services to, such Debtor, all allowances of compensation for legal and other professional services and reimbursement of expenses to the extent allowed under Section 330 or 503 of the Bankruptcy Code and all Statutory Fees. 2. Affiliated Released Party. The term "Affiliated Released Party" means each officer, director, shareholder, affiliate, employee, consultant, attorney, accountant, agent and other representative of the Debtors. 3. Allowed Claim. The term "Allowed Claim" means any Claim against either Debtor, proof of which has been filed with the Bankruptcy Court, or, if no proof of Claim is filed, which Claim has been or hereafter is listed by such Debtor in its Schedules as liquidated in amount, not disputed and not contingent, and in all cases, as to which no objection to the allowance thereof, or motion for estimation thereof, has been interposed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court, or as to which an objection or motion for estimation has been interposed, following which such Claim has been allowed in whole or in part by a Final Order or otherwise settled as provided in Article VII. 4. Allowed . . . Claim. The term "Allowed . . . Claim" means an Allowed Claim of the type described or in the Class described, as the case may be. 5. Allowed Interest. The term "Allowed Interest" means an Interest registered as of the Record Date in the stock register maintained by, or on behalf of, Holding or the Company, as the case may be. 6. Allowed . . . Interest. The term "Allowed . . . Interest" means an Allowed Interest of the type described or in the Class described, as the case may be. 7. Amended Holding Charter. The term "Amended Holding Charter" means the amended and restated certificate of incorporation of the Company containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 8. Amended Homeland Charter. The term "Amended Homeland Charter" means the amended and restated certificate of incorporation of the Company containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 9. Bankruptcy Code. The term "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended, as set forth in Title 11 of the United States Code. 10. Bankruptcy Court. The term "Bankruptcy Court" means the United States Bankruptcy Court for the District of Delaware or, if the United States Bankruptcy Court for the District of Delaware ceases to exercise jurisdiction over the Cases, the court that exercises jurisdiction over the Cases in lieu of the United States Bankruptcy Court for the District of Delaware. 11. Bankruptcy Rules. The term "Bankruptcy Rules" means, collectively, the Federal Rules of Bankruptcy Procedure, as amended, and the Local Bankruptcy Rules for the United States Bankruptcy Court for the District of Delaware, as amended. 12. Business Day. The term "Business Day" means any day, other than a Saturday, a Sunday or a "legal holiday," as defined in Rule 9006(a) of the Bankruptcy Rules. 13. Case. The term "Case" means the Homeland Case or the Holding Case. 14. Cash Amount. The term "Cash Amount" means the cash sum of $1,500,000. 15. Claim. The term "Claim" means any right to payment from either Debtor arising before the Effective Date, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or any right arising or incurred before the Effective Date of the Plan to an equitable remedy for breach of performance if such breach gives rise to a right to payment from either Debtor, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 16. Class. The term "Class" means a class of Claims against, or Interests in, a Debtor as defined in Article II of the Plan. 17. Company. The term "Company" means Homeland Stores, Inc., a Delaware corporation. 18. Confirmation. The term "Confirmation" means the entry of the Confirmation Order entered by the Bankruptcy Court with respect to the Plan pursuant to Section 1129 of the Bankruptcy Code. 19. Confirmation Date. The term "Confirmation Date" means the date on which the Bankruptcy Court enters the Confirmation Order on its docket. 20. Confirmation Hearing. The term "Confirmation Hearing" means the hearing before the Bankruptcy Court on the confirmation of the Plan pursuant to Section 1129 of the Bankruptcy Code. 21. Confirmation Order. The term "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan pursuant to Section 1129 of the Bankruptcy Code. 22. Debtor. The term "Debtor" means either Homeland Stores, Inc., a Delaware corporation, or Homeland Holding Corporation, a Delaware corporation, in their respective individual corporate or other capacity and in their respective capacity as debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code. 23. Disclosure Statement. The term "Disclosure Statement" means the First Amended Disclosure Statement for Joint Plan of Reorganization of Homeland Stores, Inc. and Homeland Holding Corporation relating to the Plan, as such statement is amended, supplemented or modified from time to time, that is prepared and distributed pursuant to Sections 1125, 1126(b) and 1145 of the Bankruptcy Code and Bankruptcy Rule 3018. 24. Disputed Claim. The term "Disputed Claim" means any Claim against either Debtor (a) listed on the schedules of either Debtor as unliquidated, disputed or contingent, or (b) as to which either 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, which objection or request has not been withdrawn or determined by a Final Order or otherwise settled as provided in Article VII. 25. Disputed Class 5 Claims Reserve. The term "Disputed Class 5 Claims Reserve" means the reserve established by the Debtors on the Effective Date for the account of each a holder of a Disputed Claim which, if allowed, would be a Class 5 Claim. 26. Disputed Interest. The term "Disputed Interest" means any asserted Interest (other than an Allowed Interest) in either Debtor as to which either Debtor or any other party in interest has interposed a timely objection in accordance with the Bankruptcy Code and the Bankruptcy Rules, which objection or request has not been withdrawn or determined by a Final Order or otherwise settled as provided in Article VII. 27. Distribution Agent. The term "Distribution Agent" means the Person selected by the Reorganized Debtors to make distributions pursuant to the Plan, which Person may be a Reorganized Debtor and shall be employed on such terms as may be determined by the Reorganized Debtors, in their sole discretion. 28. District Court. The term "District Court" means the United States District Court for the District of Delaware. 29. Effective Date. The term "Effective Date" means the first Business Day on which all of the conditions to the Effective Date set forth in Article VIII have been satisfied or waived as provided in Article VIII. 30. Equity Registration Rights Agreement. The term "Equity Registration Rights Agreement" means the Equity Registration Rights Agreement, dated as of the Effective Date, executed by Reorganized Holding in favor of the holders of the Old Common Stock containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 31. Estate. The term "Estate" means the Homeland Estate or the Holding Estate. 32. Estate Release. The term "Estate Release" means the release of the Debtors referred to in Article IV(J). 33. Excluded Claims. The term "Excluded Claims" means any Claim, obligation, right, cause of action or liability relating to: (a) any indebtedness of any Affiliated Released Party or any such entity for money borrowed; (b) any set-off or any counterclaim which the Debtors, or either of them, may have or assert against an Affiliated Released Party, provided that the aggregate amount thereof shall not exceed the aggregate amount of any Claims held or asserted by such Affiliated Released Party against the Debtors; (c) the uncollected amount of any Claim made by the Debtors, or either of them, (whether in a filed pleading, by letter or otherwise) prior to the Effective Date against an Affiliated Released Party, which Claim has not been adjudicated to Final Order, settled or compromised; or (d) any Claim arising from the fraud, willful misconduct or gross negligence of an Affiliated Released Party. 34. Fee Claim. The term "Fee Claim" means any Claim asserted by a Person retained or requesting compensation in the Cases pursuant to Section 327, Section 328, Section 330, Section 331, Section 503(b), Section 1103 or Section 1129(a)(4) of the Bankruptcy Code. 35. Filing Date. The term "Filing Date" means May 13, 1996, the date on which the petitions for relief under Chapter 11 of the Bankruptcy Code with respect to the Debtors were filed. 36. Final Order. The term "Final Order" means an order of the Bankruptcy Court, as entered by the clerk of the Bankruptcy Court on a docket in, or related to, the Cases, or an order of another court of competent jurisdiction that the Bankruptcy Court has specifically permitted to proceed to enter such order, as entered by the clerk of such court on the appropriate docket, as to which the time to appeal or to seek certiorari has expired and no appeal or petition for certiorari has been timely taken or as to which any appeal that has been or may be taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order was appealed or from which certiorari was sought and the time to appeal or any extension thereof or to seek certiorari of such appellate order has expired. 37. Financing Order. The term "Financing Orders" means (a) the Joint Stipulation and Agreed Order Authorizing Interim Financing, Granting Senior Liens and Providing Administrative Expense Status, Providing for Adequate Protection, Modifying the Automatic Stay, and Authorizing Debtors to Enter into Agreements with Lenders and Agent, (b) the Joint Stipulation and Agreed Order Extending Interim Financing, Granting Senior Liens and Priority Administrative Expense Status, Providing for Adequate Protection and Modifying Automatic Stay and (c) the Joint Stipulation and Agreed Order Authorizing Final Financing, Granting Senior Liens and Providing Administrative Expense Status, Providing for Adequate Protection, Modifying the Automatic Stay, and Authorizing Debtors to Enter into Agreements with Lenders and Agent. 38. Holding. The term "Holding" means Homeland Holding Corporation, a Delaware corporation. 39. Holding Case. The term "Holding Case" means the case styled In re Homeland Holding Corporation, Debtor, Case No. 96-748(PJW), pending before the Bankruptcy Court. 40. Holding Charter. The term "Holding Charter" means the certificate of incorporation of Holding as in effect on the Filing Date. 41. Holding Estate. The term "Holding Estate" means the estate created for Holding pursuant to Section 541 of the Bankruptcy Code upon commencement of the Holding Case. 42. Homeland Case. The term "Homeland Case" means the case styled In re Homeland Stores, Inc., Debtor, Case No. 96-747(PJW), pending before the Bankruptcy Court. 43. Homeland Charter. The term "Homeland Charter" means the certificate of incorporation of the Company as in effect on the Filing Date. 44. Homeland Common Stock. The term "Homeland Common Stock" means the shares of Common Stock, par value $.01 per share, of the Company issued and outstanding on the Filing Date. 45. Homeland Estate. The term "Homeland Estate" means the estate created for the Company pursuant to Section 541 of the Bankruptcy Code upon commencement of the Homeland Case. 46. Indemnification Agreements. The term "Indemnification Agreements" means, collectively, (a) the Indemnification Agreement, dated as of August 14, 1990, by and among Holding, the Company, Clayton & Dubilier, Inc. and The Clayton & Dubilier Private Equity Fund III Limited Partnership and (b) the Indemnification Agreement, dated as of March 4, 1992, by and among Holding, the Company, Clayton & Dubilier, Inc., The Clayton & Dubilier Private Equity Fund III Limited Partnership and The Clayton & Dubilier Private Equity Fund IV Limited Partnership. 47. Indemnitees. The term "Indemnitees" means those Persons named as "Indemnitees" in the Indemnification Agreements. 48. Insured Claim. The term "Insured Claim" means any Claim arising from an incident or an occurrence that is covered, in whole or in part, under a contract of insurance between the Debtor and an Insurer. 49. Insurer. The term "Insurer" means any Person that provides insurance to a Debtor pursuant to a contract of insurance. 50. Interest. The term "Interest" means any right or equity interest in either Debtor represented by the Homeland Common Stock, the Old Common Stock or the Old Warrants. 51. Management Stock Option Plan. The term "Management Stock Option Plan" means the management stock option plan of Reorganized Holding. 52. Modified Union Agreements. The term "Modified Union Agreements" means the separate collective bargaining agreements, dated no later than the Effective Date, described in the Disclosure Statement under "DESCRIPTION OF MODIFIED UNION AGREEMENTS" and containing terms substantially similar to the terms summarized therein. 53. New Common Stock. The term "New Common Stock" means the shares of Common Stock, par value $.01 per share, of Reorganized Holding to be issued by Reorganized Holding pursuant to the Plan and the Amended Holding Charter. 54. New Credit Agreement. The term "New Credit Agreement" means an agreement, dated as of the Effective Date, among the Reorganized Debtors and certain financial institutions, pursuant to which the Reorganized Debtors shall have, among other things, credit availability from and after the Effective Date. Such agreement may be an amendment and restatement of the Old Credit Agreement. 55. New Indenture. The term "New Indenture" means the Indenture, dated as of the Effective Date, among the Reorganized Company, as issuer, Reorganized Holding, as guarantor, and the New Trustee containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 56. New Notes. The term "New Notes" means the 10% Senior Subordinated Notes due 2003 to be issued in an aggregate principal amount of $60,000,000 by the Reorganized Company pursuant to the Plan and the New Indenture. 57. New Securities. The term "New Securities" means, collectively, the New Notes, the New Common Stock and the New Warrants. 58. New Trustee. The term "New Trustee" means the indenture trustee with respect to the New Notes. 59. New Warrant Agent. The term "New Warrant Agent" means the warrant agent with respect to the New Warrants. 60. New Warrant Agreement. The term "New Warrant Agreement" means the Warrant Agreement, dated as of the Effective Date, by and between Reorganized Holding and the New Warrant Agent containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 61. New Warrants. The term "New Warrants" means the Warrants to purchase up to 263,150 shares of New Common Stock to be issued by Reorganized Holding pursuant to the Plan and the New Warrant Agreement. 62. Noteholder Advisor. The term "Noteholder Advisor" means Paul, Weiss, Rifkind, Wharton & Garrison, Houlihan, Lokey, Howard & Zukin and Potter, Anderson & Corroon. 63. Noteholder Registration Rights Agreement. The term "Noteholder Registration Rights Agreement" means the Noteholder Registration Rights Agreement, dated as of the Effective Date, executed by the Reorganized Debtors in favor of the holders of Class 5 Claims who were the holders of the Old Notes, containing substantially the terms summarized in the Disclosure Statement and contained in the Plan Supplement. 64. Noteholders' Committee. The term "Noteholders' Committee" means the ad hoc committee representing certain holders of Old Notes. 65. Official Committee. The term "Official Committee" means any official committee appointed in the Cases pursuant to Section 1102 of the Bankruptcy Code. 66. Old Agent. The term "Old Agent means National Bank of Canada, in its capacity as agent under the Old Credit Agreement. 67. Old Banks. The term "Old Banks" means Heller Financial, Inc. and National Bank of Canada, in their capacity as lenders, under the Old Credit Agreement. 68. Old Class B Common Stock. The term "Old Class B Common Stock" means Holding's Class B Common Stock, par value $.01 per share. 69. Old Common Stock. The term "Old Common Stock" means the shares of Class A Common Stock, par value $.01 per share, of Holding issued and outstanding as of the Filing Date. 70. Old Credit Agreement. The term "Old Credit Agreement" means the Amended and Restated Revolving Credit Agreement, dated as of April 21, 1995, as amended, by and among the Reorganized Debtors, the Old Banks and the Old Agent. 71. Old Indenture. The term "Old Indenture" means the Indenture, dated as of March 4, 1992, as supplemented, among the Company, as issuer, Holding, as guarantor, and the Old Trustee. 72. Old Notes. The term "Old Notes" means the Series A Senior Secured Floating Rate Notes due 1997, the Series C Senior Secured Fixed Rate Notes due 1999 and the Series D Senior Secured Floating Rate Notes due 1997, in each case issued by the Company pursuant to the Old Indenture. 73. Old Trustee. The term "Old Trustee" means United States Trust Company of New York, in its capacity as trustee and collateral trustee under the Old Indenture. 74 Old Trustee Expenses. The term "Old Trustee Expenses" means any unpaid Old Trustee's fees, and reasonable unpaid out-of-pocket costs or expenses incurred through the Effective Date by the Old Trustee, including, without limitation, reasonable out- of-pocket costs and expenses and reasonable fees of legal counsel to the Old Trustee, which are secured or which are entitled to be secured under the Old Indenture by a lien or other priority in payment against distributions to be made to holders of Claims under the Old Indenture. 75. Old Warrants. The term "Old Warrants" means the warrants to purchase Old Common Stock issued and outstanding as of the Filing Date. 76. Other Released Party. The term "Other Released Party" means, collectively, (a) any Official Committee and, solely in their capacity as members or representatives of such Official Committee, each member, consultant, attorney, accountant or representative of such Official Committee, (b) the Unofficial Committee and, solely in their capacity as members or representatives of such Official Committee, each member, consultant, attorney, accountant or representative of such Unofficial Committee, (c) the Old Agent, the Old Banks and each consultant, attorney, accountant or other representative of the Old Agent and/or the Old Banks and (d) the Old Trustee and each consultant, attorney, accountant or other representative of the Old Trustee. 77. Person. The term "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a joint venture, a limited liability company, an estate, a trust, an unincorporated organization, a government or any public subdivision thereof or other entity. 78. Plan. The term "Plan" means the First Amended Joint Plan of Reorganization of Homeland Stores, Inc. and Homeland Holding Corporation as set forth herein, as the same may be amended or modified by the Debtors from time to time pursuant to the Plan, the Bankruptcy Code or the Bankruptcy Rules. 79. Plan Documents. The term "Plan Documents" means the New Indenture, the New Warrant Agreement and the Registration Rights Agreements, substantially in the form contained in the Plan Supplement. 80. Plan Supplement. The term "Plan Supplement" means the supplement which shall be filed as soon as practicable after the Filing Date with the clerk of the Bankruptcy Court, containing the Plan Documents. 81. Priority Tax Claim. The term "Priority Tax Claim" means a Claim entitled to priority pursuant to Section 507(a)(8) of the Bankruptcy Code, but only to the extent such Claim is entitled to such priority. 82. Ratable Share. The term "Ratable Share" means a number (expressed as a percentage) equal to the proportion that an Allowed Claim or an Allowed Interest, as the case may be, in a particular Class bears to the aggregate amount of all Allowed Claims or all Allowed Interests, as the case may be, in such Class as of the date of determination. 83. Record Date. The term "Record Date" means the Confirmation Date. 84. Registration Rights Agreements. The term "Registration Rights Agreements" means, collectively, the Equity Registration Rights Agreement and the Noteholder Registration Rights Agreement. 85. Released Parties. The term "Released Parties" means , collectively, (a) the Affiliated Released Parties and (b) the Other Released Parties. 86. Reorganized Company. The term "Reorganized Company" means the Company on and after the Effective Date. 87. Reorganized Debtor. The term "Reorganized Debtor" means the Reorganized Company or Reorganized Holding. 88. Reorganized Holding. The term "Reorganized Holding" means Holding on and after the Effective Date. 89. Schedules. The term "Schedules" means the respective statements of assets and liabilities and statements of financial affairs filed by the Debtors with the Bankruptcy Court pursuant to Section 521 of the Bankruptcy Code and Bankruptcy Rule 1007. 90. Secured Claim. The term "Secured Claim" means a Claim that is secured by a lien on, or a security interest in, property in which an Estate has an interest or that is subject to setoff under Section 553 of the Bankruptcy Code to the extent of the value of the holder's interest in the interest of such Estate in such property or to the extent of the amount subject to setoff, as the case may be, as determined pursuant to Section 506(a) of the Bankruptcy Code. 91. Secured Noteholder Claims. The term "Secured Noteholder Claims" means the Secured Claims of the holders of the Old Notes against either Debtor, arising from, under, or in connection with, the issuance or the ownership of the Old Notes or any guarantee thereof. 92. Statutory Fees. The term "Statutory Fees" means all of the fees payable to the United States Trustee pursuant to 28 U.S.C. 1930. 93. Unsecured Claim. The term "Unsecured Claim" means any Claim that is not an Administrative Claim, a Priority Tax Claim or a Secured Claim. 94. Unsecured Noteholder Claims. The term "Unsecured Noteholder Claims" means the Unsecured Claims of the holders of the Old Notes against either Debtor, arising from, under, or in connection with, the issuance or the ownership of, the Old Notes or any guarantee thereof. B. Rules of Interpretation. The following rules shall be used in construing and interpreting the Plan: 1. Application of Section 102 of the Bankruptcy Code. The rules of construction contained in Section 102 of the Bankruptcy Code apply to the construction and the interpretation of the Plan. 2. Article and Section References. Unless otherwise expressly stated in the Plan, all references to Articles and Sections shall refer to the Articles and the Sections of the Plan. 3. Calculation of Time. Any period of time under the Plan shall be computed in accordance with Rule 9006(a) of the Bankruptcy Rules. 4. Singular and Plural Terms. Whenever the context is appropriate, each term, whether stated in the singular or the plural, shall include both the singular and the plural. 5. Use of Article and Section Headings. Headings for Articles and Sections have been inserted in the Plan solely for convenience of reference and are not intended to be a part of, or to affect the construction or the interpretation of, the Plan. C. Plan Supplement. Forms of the New Indenture, the New Warrant Agreement, the Registration Rights Agreements, the Amended Holding Charter and the Amended Homeland Charter shall be contained in a separate Plan Supplement which shall be filed with the Bankruptcy Court as soon as practicable after the Filing Date. The Plan Supplement may be inspected after such filing in the office of the clerk of the Bankruptcy Court during normal office hours of the clerk of the Bankruptcy Court. Holders of Claims and Interests may obtain a copy of the Plan Supplement upon written request to the Debtors. The Plan Supplement is incorporated into, and is a part of the Plan, as if set forth in full herein, and all references herein to the Plan shall refer to the Plan together with the Plan Supplement. ARTICLE II CLASSES OF CLAIMS AND INTERESTS A. Classification of Claims and Interests in the Debtors. All Claims against, and Interests in, the Debtors (other than Administrative Claims and Priority Tax Claims) are classified in the following Classes: 1. Class 1 - Allowed Priority Claims. Class 1 consists of Allowed Claims which are entitled to priority under Section 507(a) of the Bankruptcy Code (other than Administrative Claims and Priority Tax Claims). 2. Class 2 - Allowed Secured Claims of the Old Banks. Class 2 consists of the Allowed Secured Claims of the Old Banks under the Old Credit Agreement. 3. Class 3 - Allowed Secured Noteholder Claims. Class 3 consists of the Allowed Secured Noteholder Claims. The aggregate amount of the Allowed Secured Noteholder Claims shall be equal to $61,500,000. 4. Class 4 - Allowed Miscellaneous Secured Claims. Class 4 consists of Allowed Secured Claims (other than Class 2 Claims and Class 3 Claims). Class 4 Claims include, without limitation, Claims secured by equipment in connection with equipment financings and Claims secured by mechanic's, materialmen's and artisan's liens on miscellaneous personal and/or real property. Each Class 4 Claim is treated for all purposes under the Bankruptcy Code and the Plan as a separate sub-Class. 5. Class 5 - General Unsecured Claims. Class 5 consists of all Allowed Unsecured Claims (other than Administrative Claims, Priority Tax Claims and Claims otherwise classified). Class 5 Claims shall include, without limitation, Allowed Unsecured Noteholder Claims. The aggregate amount of Allowed Unsecured Noteholder Claims shall be equal to $40,100,000. 6. Class 6 - Allowed Interests of Holding as Sole Shareholder of Homeland Common Stock. Class 6 consists of the Allowed Interests of Holding as the sole holder of the Homeland Common Stock. 7. Class 7 - Allowed Interests of Holders of Old Common Stock. Class 7 consists of the Allowed Interests of holders of the Old Common Stock. 8. Class 8 - Allowed Interests of Holders of Old Warrants. Class 8 consists of the Allowed Interests of holders of the Old Warrants. A Claim or an Interest is classified in a Class only to the extent that Claim or that Interest falls within the description of that Class and is classified in another Class to the extent that Claim or that Interest falls within the description of the other Class. For purposes of receiving a distribution under the Plan, a Claim or an Interest is classified in a Class only to the extent that the Claim or the Interest is an Allowed Claim or an Allowed Interest in that Class and only to the extent the Claim or the Interest has not been otherwise satisfied prior to the date on which any distribution is to be made under the Plan. B. Unclassified Claims. Administrative Claims and Priority Tax Claims against the Company and Holding are not classified under the Plan. ARTICLE III TREATMENT OF CLAIMS AND INTERESTS A. Treatment of Administrative Claims. Unless otherwise agreed to by a holder of an Allowed Administrative Claim, each such holder shall be paid in full, in cash, in an amount equal to such holder's Allowed Administrative Claim on the later of (1) the Effective Date and (2) the date on which such Claim becomes an Allowed Claim; provided, however, that (a) all Statutory Fees shall be paid in accordance with applicable law and (b) Administrative Claims which represent liabilities incurred by a Debtor in the ordinary course of business (including, without limitation, Administrative Claims owed to suppliers that have sold products or furnished goods or services to either Debtor after the Filing Date) shall be paid by the relevant Debtor when due in accordance with the terms of the particular transaction and agreements relating thereto. The Reorganized Debtors shall pay the reasonable fees and expenses incurred on or after the Effective Date by the Noteholder Advisors (without application by, or on behalf of, any such Noteholder Advisor to the Bankruptcy Court and without notice and a hearing, unless specifically ordered by the Bankruptcy Court upon request of a party in interest) as an Administrative Claim (unless any such Noteholder Advisor has been retained by a Official Committee pursuant to Sections 327 or 1103 of the Bankruptcy Code). If the Reorganized Debtors and any Noteholder Advisor cannot agree on the amount of fees and expenses to be paid to such Noteholder Advisor, the amount of such fees and expenses shall be determined by the Bankruptcy Court. Notwithstanding anything else contained in the Plan and notwithstanding the confirmation of the Plan, the secured Administrative Claims held by the Old Banks in connection with post-petition advances and other financial accommodations given by the Old Banks under the Financing Orders shall be entitled to all of the liens, protections, benefits and priorities granted them in the Financing Orders All such liens, protections, benefits and priorities granted to the Old Banks in such orders shall continue until their Administrative Claims are indefeasibly paid in full, which Administrative Claims, by reason of the Financing Orders, (1) are allowed and payable in their entirety, (2) include unpaid principal and accrued but unpaid interest through the date of full payment of the Administrative Claims of the Old Banks and (3) are secured by the reason of the first, valid, prior and perfected liens and security interests granted under, or in connection with the Old Credit Agreement and confirmed by the Financing Orders. The Old Banks' secured Administrative Claims shall be paid in full on the Effective Date through advances made under the New Credit Agreement. B. Priority Tax Claims. Unless otherwise agreed to by a holder of an Allowed Priority Tax Claim, each such holder shall (at the option of the Reorganized Debtors), (1) be paid in full, in cash, on the later of (a) the Effective Date and (b) the date on which such Allowed Priority Tax Claim becomes an Allowed Claim or (2) be paid deferred cash payments over a period not exceeding six years after the date of assessment equal to (in the aggregate) the amount of the Allowed Priority Tax Claim, including an interest component as required by Section 1129(a)(9)(C). In fixing such interest component, the Debtors shall use the federal judgment rate in effect on the Confirmation Date, unless the Bankruptcy Court determines otherwise. Notwithstanding anything else contained herein, the interest rate payable with respect to the Allowed Priority Tax Claim of the Internal Revenue Service and the Allowed Priority Tax Claim of the Texas Comptroller of Public Accounts shall be 8.7% per annum. If a Reorganized Debtor elects to make deferred cash payments, the Reorganized Debtor shall make six equal annual principal payments, with accrued interest, commencing on the later of (1) the Effective Date and (2) the date on which such Allowed Priority Tax Claim becomes an Allowed Claim; provided, however, the Reorganized Debtors may elect to make payments on a more frequent basis. The Reorganized Company shall be deemed to have elected to pay the Allowed Priority Tax Claim of the Internal Revenue Service and the Allowed Priority Tax Claim of the Texas Comptroller of Public Accounts in twenty- four quarterly payments commencing on the later of (1) the Effective Date and (2) the date on which such Allowed Priority Tax Claim becomes an Allowed Claim and continuing on each quarterly anniversary thereof. To the extent that a Reorganized Debtor elects to make deferred cash payments on any Allowed Priority Tax Claim, the Reorganized Debtor may prepay the remaining amount of such Allowed Priority Tax Claim at any time, without penalty or premium. Notwithstanding anything to the contrary in this Plan, a failure by either Reorganized Debtor to make a timely deferred cash payment to the Texas Comptroller of Public Accounts pursuant to the Plan shall constitute an event of default. The Reorganized Debtor shall have five days from the receipt of written notice from the Texas Comptroller of Public Accounts to cure the event of default. If the event of default is not cured within that period, the Texas Comptroller of Public Accounts may (1) enforce the entire amount of the balance of the Claim then existing, (2) pursue any and all remedies available to it under applicable non-bankruptcy law and/or (3) seek such relief as may be appropriate in the Bankruptcy Court. C. Treatment of Unimpaired Classes. Claims in Class 1, Class 2, Class 4, Class 6 and Class 8 are not impaired under the Plan. Therefore, pursuant to Section 1126(f) of the Bankruptcy Code, the holders of Claims and Interests in such Classes are conclusively presumed to have accepted the Plan. The unimpaired Claims against, and Interests in, the Debtors will be treated in the following manner under the Plan: 1. Class 1 - Allowed Priority Claims. Unless otherwise agreed to by a holder of a Class 1 Claim, each such holder shall be paid in full, in cash, in an amount equal to such holder's Class 1 Claim on the later of (a) the Effective Date and (b) the date on which such Class 1 Claim becomes an Allowed Claim. 2. Class 2 - Allowed Claims of the Old Banks. Each Class 2 Claim shall be (a) paid in full, in cash, or (b) satisfied by the execution and the delivery of the New Credit Agreement by, among other Persons, the Old Banks and the modification of the Old Credit Agreement in accordance with the terms of the New Credit Agreement (in which case, the Class 2 Claims, as so modified, shall continue to be secured by the collateral which secured the Class 2 Claims on the Filing Date and shall also be secured by certain additional collateral described in the Disclosure Statement). Notwithstanding anything else contained in the Plan and notwithstanding the confirmation of the Plan, the Old Banks holding Class 2 Claims shall be entitled to all of the liens, the protections, the benefits and the priorities granted them in, or confirmed by, the Financing Orders. All such liens, protections, benefits and priorities granted to the Old Banks in such orders shall continue until their Class 2 Claims are indefeasibly paid in full, which Class 2 Claims, by reason of the Financing Orders, (a) are allowed and payable in their entirety, (b) include unpaid principal and accrued but unpaid interest through the date of full payment of the Class 2 Claims of the Old Banks and (iii) are secured by the reason of the first, valid, prior and perfected liens and security interests granted under, or in connection with, the Old Credit Agreement and confirmed by the Financing Orders. Moreover, the contingent Class 2 Claims of the Old Banks, to the extent that they become non-contingent, shall be paid in full on the earlier of May 12, 1997, or the Effective Date. 3. Class 4 - Allowed Miscellaneous Secured Claims. At the option of the relevant Debtor, each Allowed Claim in any subclass of Class 4 shall (unless the holder of any such Class 4 Claim agrees to a different treatment) (a) be unaltered as to the legal, equitable and contractual rights to which such Class 4 Claim entitles the holder thereof or (b) be treated in another manner that will not result in the impairment of such Class 4 Claim under Section 1124 of the Bankruptcy Code. Each Class 4 Claim shall be treated for all purposes of the Plan and the Bankruptcy Code as a separate subclass. The Plan does not alter the rights of any holder of a Class 4 Claim in any collateral securing the Class 4 Claim as of the Filing Date and the liens and the security interests securing each Class 4 Claim are ratified and affirmed. 4. Class 6 - Allowed Interests of Holding as Sole Holder of Homeland Common Stock. The legal, equitable and contractual rights of the holder of Class 6 Interests shall not be altered by the Plan. 5. Class 8 - Allowed Interests of the Holders of the Old Warrants. The legal, equitable and contractual rights of each holder of a Class 8 Interest shall not be altered by the Plan. D. Treatment of Impaired Classes. Claims and Interests in Class 3, Class 5 and Class 7 are impaired. Therefore, the holders of Claims and Interests in such Classes are entitled to vote to accept or to reject the Plan. The impaired Classes of Claims against, and Interests in, the Debtors will be treated in the following manner under the Plan: 1. Class 3 - Allowed Secured Noteholder Claims. Unless otherwise agreed to by a holder of a Class 3 Claim, each such holder shall receive its Ratable Share of (a) the New Notes and (b) the Cash Amount. The Debtors shall pay to the Old Trustee an amount equal to the amount of the Old Trustee Expenses. Payment of such expenses shall constitute distributions on account of Class 3 Claims, in addition to the distributions provided for under the Plan to holders of Class 3 Claims; and distributions otherwise provided under the Plan to holders of Allowed Secured Noteholder Claims shall not be reduced on account of such payment of Old Trustee Expenses. Notwithstanding anything in the Plan to the contrary, the Debtors' obligation to pay the Old Trustee Expenses shall be subject to the bar date and dispute resolution provisions set forth in the Plan. 2. Class 5 - General Unsecured Claims. Unless otherwise agreed to by a holder of a Class 5 Claim, each such holder shall receive its Ratable Share of 4,450,000 shares of New Common Stock on the later of (a) the Effective Date and (b) the date on which such Claim becomes an Allowed Claim. Any covered portion of any Class 5 Claim which is an Insured Claim shall be paid by the applicable Insurer to the extent of such coverage. The Debtors reserve the right to consent to the modification of the automatic stay imposed by Section 362 of the Bankruptcy Court so as to permit the prosecution of Insured Claims solely to the extent of such coverage. 3. Class 7 - Allowed Interests of Holders of Old Common Stock. Unless otherwise agreed to by a holder of a Class 7 Interest, each such holder shall receive its Ratable Share of (a) 250,000 shares of New Common Stock and (b) the New Warrants. ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN . Operation as Debtor-in-Possession Until the Effective Date. Until the Effective Date, the Debtors shall operate their respective businesses as debtors- in-possession pursuant to Section 1107 and Section 1108 of the Bankruptcy Code. After the Effective Date, the Reorganized Debtors shall operate their businesses and may buy, use, acquire and dispose of their assets free of any restrictions contained in the Bankruptcy Code or imposed by the Bankruptcy Court, except as provided in the Plan, the Plan Supplement and the Confirmation Order. B. Issuance of New Securities. Reorganized Holding shall be deemed to have authorized and, on the Effective Date, shall issue the requisite shares of New Common Stock and the requisite New Warrants. The Reorganized Company shall be deemed to have authorized and, on the Effective Date, shall issue the New Notes. C. Listing of New Common Stock; Exchange Act Filing. Reorganized Holding shall use its best efforts to (1) cause, as promptly as practicable after the Effective Date, the shares of New Common Stock to be listed on the NASDAQ National Market System (or, in the event Reorganized Holding fails to meet the listing requirements of the NASDAQ National Market System, on such other exchange or system on which the New Common Stock may be listed) and (2) (a) file, within 60 days of the Effective Date, a Form 10 registration statement with respect to the New Common Stock under the Securities Act of 1934, as amended, and (b) cause such registration statement to remain effective until the earlier of (x) the seventh anniversary of the Effective Date and (y) the first date on which less than 10% of the outstanding New Common Stock is publicly held. D. Effectiveness of Agreements. On the Effective Date, the following agreements shall become effective: (1) the New Credit Agreement; (2) the New Indenture; (3) the New Warrant Agreement; (4) the Registration Rights Agreements; and (5) the Modified Union Agreements. E. Charter Amendments. On the Effective Date, (1) the Holding Charter shall be amended and restated to eliminate the Old Common Stock and the Old Class B Common Stock, to authorize the issuance of the New Common Stock and to include a provision that prohibits the issuance of nonvoting securities to the extent required by Section 1123(a)(6) of the Bankruptcy Code and (2) the Homeland Charter shall be amended and restated to include a provision that prohibits the issuance of nonvoting securities to the extent required by Section 1123(a)(6) of the Bankruptcy Code. F. Management/Boards of Directors. The executive officers of the Company and Holding immediately before confirmation of the Plan shall continue to serve in their respective capacities after confirmation of the Plan. On the Effective Date, the Board of Directors of each Reorganized Debtor shall consist of (1) James A. Demme, (2) John A. Shields, (3) one Person designated by the United Food and Commercial Workers Union of North America and (4) four Persons designated by the Unofficial Committee. Prior to confirmation of the Plan, in accordance with Section 1129(a)(5) of the Bankruptcy Code, the Company and Holding shall disclose (a) the identity and affiliations of any individual proposed to serve, after confirmation of the Plan, as a director of the Company or Holding, as the case may be, and (b) the identity of any "insider" (as such term is defined in Section 101(31) of the Bankruptcy Code) who shall be employed and retained by the Company or Holding, and the nature of any compensation for such insider. On and after the Effective Date, each officer and director shall hold his or her office on the terms, and subject to the conditions, set forth in the Amended Homeland Charter, the Amended Holding Charter and the amended and restated bylaws of the relevant Reorganized Debtor. G. Management Stock Option Plan. On the Effective Date, 263,158 shares of New Common Stock shall be reserved for issuance under the Management Stock Option Plan. The terms and the conditions of the Management Stock Option Plan (including the identity of the participants and the number of options to be granted) shall be determined by the Board of Directors of Reorganized Holding. H. Retiree Benefits. From and after the Effective Date, to the extent required by Section 1129(a)(13) of the Bankruptcy Code, the Reorganized Debtors shall continue to pay all retiree benefits (as defined in Section 1114 of the Bankruptcy Code), if any, established or maintained by the Debtors prior to the Effective Date. Notwithstanding anything else contained in the Plan, in the event that the Homeland Stores, Inc. Employees' Retirement Plan does not terminate prior to the Confirmation Date of the Plan, all Claims of, or with respect to, such retirement plan (including the contingent Claim of the Pension Benefit Guaranty Corporation pursuant to 29 U.S.C. 1362(b) for unfunded benefit liabilities of such retirement plan and the contingent Claim of the Pension Benefit Guaranty Corporation pursuant to 29 U.S.C. 1362(c) for due and unpaid employer contributions owing to such retirement plan) shall not be affected by the confirmation of the Plan, and such Claims shall not be discharged or released or otherwise affected by the Plan or the Cases. I. Workers' Compensation Claims under Prior Self-Insurance Program. The Company's obligations with respect to its self-insurance program in existence prior to July 1994, for Oklahoma workers' compensation purposes were secured by a $2 million letter of credit payable to the Oklahoma Workers' Compensation Court. On May 22, 1996, the Oklahoma Workers' Compensation Court drew down the letter of credit in full and is holding the $2 million cash proceeds, together with interest accruing thereon from the draw date, to pay workers' compensation claims, and expenses related thereto, with respect to the period that the Company maintained such self-insurance program. The Company expects that it will consent to the modification of the automatic stay provision of Section 362(a) of the Bankruptcy Code so as to permit workers' compensation claimants to prosecute their workers' compensation claims with respect to such self- insurance period in the Oklahoma Workers' Compensation Court under Oklahoma law. To the extent the proceeds from such letter of credit are insufficient to pay all Oklahoma workers' compensation claims with respect to the period that the Company maintained such self- insurance program, such excess claims shall be classified and treated as Class 5 Claims. In addition, to the extent that, upon the liquidation and the payment of all of the Oklahoma workers' compensation claims with respect to the period that the Company maintained a self-insurance program, there are any proceeds then remaining available from such letter of credit, the Company shall have the right to direct the Oklahoma Workers' Compensation Court to pay such remaining proceeds to the Reorganized Company. J. Releases. On the Effective Date, each Reorganized Debtor shall release unconditionally each Released Party from any and all Claims, obligations, rights, causes of action and liabilities, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Effective Date in any way relating to such Released Party, the Debtors, the Cases and the Plan other than, in the case of an Affiliated Released Party, any Excluded Claims. On the Effective Date, each holder of a Claim or an Interest who (1) has accepted the Plan, (2) whose Claim or Interest is in a Class that has accepted or been deemed to have accepted the Plan, or (3) who may be entitled to receive a distribution of property pursuant to the Plan, shall be deemed to have released unconditionally each Released Party from any and all Claims, obligations, rights, causes of action and liabilities, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, based in whole or in part upon any act or omission, transaction or other occurrence taking place on or prior to the Effective Date in any way relating to such Released Party, the Debtors, the Cases or the Plan. Notwithstanding the foregoing, if and to the extent that the Bankruptcy Court concludes that the Plan cannot be confirmed with any portion of the foregoing releases, then the Plan may be confirmed with that portion excised so as to give maximum effect to the foregoing releases without precluding confirmation of the Plan. Notwithstanding anything else contained in this Article IV (J) or elsewhere in the Plan, nothing contained in this Plan shall limit or restrict the ability of the Internal Revenue Service or the Texas Comptroller of Public Accounts to collect tax claims from Persons (other than the Debtors) in accordance with applicable non-bankruptcy law. K. Final Order. Any requirement of the Plan for a Final Order may be waived in the sole and absolute discretion of the Debtors upon written notice to the Bankruptcy Court; provided, however that nothing contained herein or elsewhere in the Plan shall prejudice the right of any party in interest to seek a stay pending appeal with respect to such Final Order. L. Term of Injunction or Stays. Unless otherwise provided, all injunctions or stays provided for in the Cases pursuant to Section 105 and Section 362 of the Bankruptcy Code or otherwise and in effect on the Confirmation Date shall remain in full force and effect until the Effective Date. The Confirmation Order shall provide that the distributions and transfers of property to be made pursuant to the terms of the Plan are made free and clear of all Claims (except as otherwise provided in, and governed by, the Plan) and that upon the confirmation of the Plan (except as otherwise provided in, and governed by, the Plan) all holders of Claims and Interests shall be permanently enjoined from, and restrained against, commencing or continuing any suit, action or proceeding or asserting against either Reorganized Debtor or its assets any Claim, interest or cause of action based upon any Claim or Interest that arose or existed before the Confirmation Date. M. Waiver and Rescissions. Except as otherwise provided in, , and governed by, the Plan or in the Confirmation Order, the entry of the Confirmation Order by the Bankruptcy Court shall operate as a waiver of all defaults and events of default and any accelerations that have been declared or occurred with respect to any such events of default through the Effective Date. N. Corporate Action. On the Effective Date, all actions contemplated by the Plan shall be authorized and approved in all respects (subject to the provisions of the Plan), including, without limitation, the following: (1) the adoption and the filing with the Secretary of State of the State of Delaware of the Amended Holding Charter and the Amended Homeland Charter; (2) the issuance by Reorganized Holding of the New Common Stock and New Warrants; (3) the issuance by the Reorganized Company of the New Notes; and (4) the execution, the delivery and the performance of the New Credit Agreement, the New Indenture, the New Warrant Agreement, the Registration Rights Agreements, the Modified Union Agreements and all documents and agreements relating to any of the foregoing. All matters provided for under the Plan involving the corporate structure of the Debtors and/or the Reorganized Debtors in connection with the Plan and any corporate action required by the Debtors and/or the Reorganized Debtors in connection with the Plan shall be deemed to have occurred and shall be in effect pursuant to Section 303 of the Delaware General Corporation Law and the Bankruptcy Code, without any requirement of further action by the shareholders or the directors of the Debtors and/or the Reorganized Debtor. On the Effective Date, the appropriate officers of the relevant Reorganized Debtors are authorized and directed to execute and to deliver the agreements, documents and instruments contemplated by the Plan, the Plan Supplement and the Disclosure Statement in the name and on behalf of such Reorganized Debtor. O. Further Actions. The Debtors and the Reorganized Debtors may make and may cause their respective officers to make such other filings, to execute and to deliver such other documents and instruments and take such other actions as may be appropriate or advisable in connection with the Plan and the transactions contemplated by the Plan and as are not inconsistent with the Plan. ARTICLE V EXECUTORY CONTRACTS AND UNEXPIRED LEASES A. Assumption. All executory contracts and unexpired leases shall be deemed assumed by the relevant Debtor pursuant to Section 1123(b)(2) of the Bankruptcy Code unless expressly rejected or subject to a motion by such Debtor to reject them filed on or prior to 4:30 p.m., Wilmington, Delaware time, on July 10, 1996. All cure payments that may be required under Section 365(b)(1) of the Bankruptcy Code in connection with such assumption shall be made on the Effective Date. In the event of a dispute concerning (1) the amount of any cure payment, (2) the ability of the relevant Debtor to provide "adequate assurance of future performance" (within the meaning of Section 365 of the Bankruptcy Code) under the executory contract or the unexpired lease to be assumed or (3) any other matter pertaining to the assumption of an executory contract or an unexpired lease, such Debtor shall make such cure payment or provide such assurance, as required, in accordance with Final Orders of the Bankruptcy Court. To the extent that the personal property lease of Homeland with Sanwa Business Credit, Inc. is rejected, Homeland shall return the personal property covered thereby to Sanwa Business Credit Corporation. within 60 days of the date on which the order approving such rejection is entered. Homeland shall timely perform all of its obligations under the personal property lease which first arise from and after 60 days after the Petition Date in accordance with Section 365 of the Bankruptcy Code and, on the Effective Date, shall pay the Administrative Claim (based on the amounts owed under the personal property lease) of Sanwa Business Credit Corporation for the period from the Filing Date to the date on which Homeland resumes performance of its obligations under Section 365 of the Bankruptcy Code. B. Rejection. An Allowed Claim under an executory contract or an unexpired lease that has been rejected, if any, shall constitute a Class 4 Claim, if secured, or a Class 5 Claim, if unsecured. Any proof of Claim with respect to Claims arising from the rejection of an executory contract or an unexpired lease must be filed with the Bankruptcy Court within 30 days after the rejection by the relevant Debtor of such contract or such lease. C. Indemnification Obligations. The obligations of the Debtors to indemnify (1) their respective present and former directors and officers against any obligations pursuant to their certificate of incorporation, by-laws, applicable state law, specific agreements or any combination of the foregoing and (2) the Indemnitees under the Indemnification Agreements, shall survive Confirmation, remain unaffected thereby, and not be discharged, irrespective of whether indemnification is owed in connection with an event occurring before, on or after the Filing Date. ARTICLE VI DISTRIBUTIONS A. Distributions. The Distribution Agent shall be responsible for making all of the distributions required to be made by the Reorganized Debtors under the Plan. All costs and expenses in connection with such distributions, including, without limitation, the fees and the expenses, if any, of the Distribution Agent, shall be borne by the Reorganized Debtor required to make such distributions. Neither a Reorganized Debtor nor the Distribution Agent shall be required to provide any bond in connection with the making of any distributions pursuant to the Plan. B. Date of Distribution. The Distribution Agent shall make each required distribution by the date stated in the Plan with respect to such distribution. Any distribution required to be made on the Effective Date or the date on which a Claim becomes an Allowed Claim shall be deemed to be made on such date if made as soon as practicable after such date and, in any event, within 30 days after such date. C. Undeliverable Distributions. If a distribution is returned to the Distribution Agent as undeliverable, the Distribution Agent shall hold such distribution and shall not be required to take any further action with respect to the delivery of the distribution unless and until the earlier of (1) the date on which the Distribution Agent is notified in writing of the then current address of the holder entitled to receive the distribution and (2) the date on which the distribution reverts to a Reorganized Debtor in accordance with the Plan. If the Distribution Agent is notified in writing of the then current address of the holder prior to date on which the distribution reverts to a Reorganized Debtor, the Distribution Agent shall promptly make the distribution required by the Plan to the holder at the then current address. The Distribution Agent shall not be entitled to vote any securities which the Distribution Agent holds as undeliverable. D. Surrender and Cancellation of Instruments. As a condition to receiving any distribution pursuant to the Plan, each holder of an Old Note, share certificate, or other instrument evidencing a Claim or Interest (other than certificates representing the Homeland Common Stock or the Old Warrants) as of the Record Date must surrender such Old Note, share certificate or other instrument to the Distribution Agent or deliver to the Reorganized Debtors or the Distribution Agent, as the case may be, an affidavit of loss and indemnity (in form and substance satisfactory to the Reorganized Debtors), in all cases, in proper form for transfer. In accordance with the provisions of Section 1143 of the Bankruptcy Code, any holders of such Claims or Interests as of such Record Date that fail to surrender such Old Notes, share certificates or other instruments within five years from the Confirmation shall be deemed to have forfeited all rights, Claims and Interests and shall not participate in any distribution under the Plan. On the Effective Date, (1) all such Old Notes, share certificates or other instruments shall be canceled and (2) the Company's obligations under such Old Notes, share certificates and other instruments (together with, in the case of the Old Notes, the Old Indenture and the other agreements governing such Old Notes) shall be discharged. On the Effective Date, the lien and the security interest of the Old Trustee in the Old Indenture collateral shall be released and the Old Trustee shall be authorized and directed to release any collateral or other property of the Debtors (including without limitation, any cash collateral) held by the Old Trustee and to take such actions as may be requested by the Reorganized Debtors to evidence the release of such liens and the security interests, including, without limitation, the execution, the delivery and the filing and/or the recording of such releases as may be requested by the Reorganized Debtors. E. Manner of Payment. At the option of the Reorganized Debtors, distributions may be made in cash, by wire transfer or by a check drawn on a money center bank. Distributions of New Securities shall be made by the issuance and, in the case of the New Notes, the authentication of such New Notes. F. Fractional Shares. No fractional shares of New Common Stock shall be issued under the Plan. Each holder otherwise entitled to an amount of the New Common Stock that includes fractional amounts shall receive either one whole share (if such fraction is equal to, or greater than, one-half) or no share (if such fraction is less than one-half) in lieu of fractional amount. No New Warrants to purchase fractional shares of New Common Stock shall be issued under the Plan. Each holder otherwise entitled to a New Warrant that includes fractional amounts of New Common Stock shall receive a New Warrant that has been rounded down to the next whole number of shares (if such fraction is less than one-half) or rounded up to the next whole number of shares (if such fraction is equal to, or greater than, one-half). G. Compliance with Tax Requirements. The Reorganized Debtors shall comply with all withholding and reporting requirements imposed by federal, state or local taxing authorities in connection with making distributions pursuant to the Plan. In connection with each distribution with respect to which the filing of an information return (such as an Internal Revenue Service Form 1099 or 1042) and/or withholding is required, the Reorganized Debtors shall file such information return with the Internal Revenue Service and provide any required statements in connection therewith to the recipients of such distribution, and/or effect any such withholding and deposit all moneys so withheld to the extent required by law. With respect to any Person from whom a tax identification number, certified tax identification number or other tax information required by law to avoid withholding has not been received by the Reorganized Debtors (or the Distribution Agent), the Reorganized Debtors may, at their sole option, withhold the amount required and distribute the balance to such Person or decline to make such distribution until the information is received; provided, however, the Reorganized Debtors shall not be obligated to liquidate New Securities to perform such withholding. H. Allocation Between Principal and Interest. The consideration paid to holders of Old Notes shall be allocated first to accrued but unpaid interest and next to principal on the Old Notes. I. Distribution of Unclaimed Property. If any Person entitled to receive cash or New Securities pursuant to the Plan does not present itself on the Effective Date or on such other date on which such Person becomes eligible for distribution of such cash or securities, such cash or New Securities shall be set aside and (in the case of cash) held in a segregated interest-bearing fund to be maintained by the Distribution Agent. If such Person presents itself within five years following the Confirmation Date, such cash or New Securities, together with any interest or dividends earned thereupon, shall be paid or distributed to such Person. If such Person does not present itself within five years following the Confirmation Date, any such cash or securities and accrued interest or dividends thereon shall become the property of, and shall be released to, the relevant Reorganized Debtor. Nothing contained in the Plan shall require the Reorganized Debtors to attempt to locate such Persons. J. Setoff. Each Reorganized Debtor may, but is not be required to, setoff against any Claim and the payment to be made pursuant to the Plan in respect of such Claim, any Claims of any nature which the Reorganized Debtor may not have against the holder of such Claim. Neither the failure by a Reorganized Debtor to effect such a setoff nor the allowance of any Claim shall constitute a waiver or a release of any Claim which the Reorganized Debtors may have against the holder of a Claim. K. Record Date. Only holders of Old Notes and Old Common Stock as of the Record Date will be entitled to receive distributions under the Plan. As of the close of business on the Record Date, the Old Note and Old Common Stock transfer ledger as maintained by, or on behalf of, the Debtors shall be closed and the Reorganized Debtors and the Old Trustee shall have no obligation to recognize any transfer of the Old Common Stock or the Old Notes occurring thereafter. ARTICLE VII PROCEDURES FOR RESOLVING CLAIMS AND INTERESTS A. Bar Dates for Claims Generally. Each holder of a Claim (other than an Administrative Claim) shall file, or shall have filed, a proof of Claim with the Bankruptcy Court (1) no later than July 1, 1996, or (2), to the extent such holders were not subject to such bar date, (a) within 30 days after the Effective Date or (b) by such other date as may be established by the Bankruptcy Court. Any holder who does not file a proof of Claim within the applicable time period shall be forever barred from asserting its Claim unless, and to the extent such Claim is listed by the Debtors in their respective Schedules as liquidated in amount, not disputed and not contingent. B. Bar Dates for Administrative Claims. All requests for payment of Administrative Claims shall be filed with the Bankruptcy Court in the following manner: 1. Fee Claims. Each holder of a Fee Claim shall be entitled to file an application for allowance of final compensation and reimbursement of expenses for services rendered on or before the Effective Date. All applications in respect of such Fee Claims shall be filed not later than 45 days after the Effective Date. If a holder of a Fee Claim fails to file an application with respect to its Fee Claim within such 45-day period, such holder shall be forever barred from asserting its Fee Claim. 2. Other Administrative Claims. Except as otherwise provided by Article III(A), all requests for payment of Administrative Claims, other than Fee Claims and Administrative Claims incurred and paid in ordinary course, must be filed with the Bankruptcy Court within 30 days after the Effective Date. Any holder of such an Administrative Claim that does not file a request for payment within such a 30-day period shall be forever barred from asserting its Administrative Claim. C. Prosecution of Objections. Each Reorganized Debtor and any other party in interest shall have the authority (1) to object to Claims against, and Interests in, such Reorganized Debtor, and (2) to litigate any Claim or any Interest to Final Order, to settle or to compromise any Claim or any Interest or to withdraw any objection to any Claim or any Interest (other than a Claim or an Interest that is deemed to be allowed pursuant to the Plan or a Final Order). Unless another date is established by the Bankruptcy Court or the Plan, any objection to a Claim or an Interest shall be filed with the Bankruptcy Court and served on the holder of such Claim or Interest within 90 days after the later of (1) the Effective Date and (2) in the case of a Claim, the date that a proof of Claim with respect to such Claim is filed or is deemed to have been filed with the Bankruptcy Court. The relevant Reorganized Debtor shall have the right to petition the Bankruptcy Court for an extension of such date if a complete review of such Claim or Interest cannot be completed by such date. Except as otherwise provided by Section III(A), any objection to a Fee Claim shall be filed within the later of (1) 60 days after the Effective Date and (2) 30 days after the date on which the application is filed with respect to such Fee Claim. If no objection has been filed to a Claim or an Interest (other than a Fee Claim which shall be allowed only by order of the Bankruptcy Court) within the applicable period, the Claim or the Interest shall be treated as an Allowed Claim or an Allowed Interest, as the case may be, to the extent that the Claim or the Interest has not been previously allowed or disallowed by the Bankruptcy Court. D. Treatment of Disputed Claims and Disputed Interests. Disputed Claims and Disputed Interests shall be treated in the following manner: 1. No Distribution Pending Allowance. If any portion of a Claim is a Disputed Claim, no payment or distribution provided under the Plan shall be made on account of the portion of such Claim that is a Disputed Claim unless and until such Disputed Claim becomes an Allowed Claim but the payment or distribution provided for under the Plan shall be made on account of the portion of such Claim that is an Allowed Claim. 2. Disputed Class 5 Claims Reserve. Notwithstanding anything else to the contrary in this Article VII(D), on the Effective Date, the Reorganized Debtors shall deposit into the Disputed Class 5 Claims Reserve, the New Common Stock that would otherwise have been distributed to holders of Disputed Claims which, if allowed on the Effective Date, would have been Class 5 Claims (each, a "Disputed Class 5 Claim") in accordance with the Plan as if such Disputed Class 5 Claims were Allowed Claims. No interest or other amounts shall accrue on New Common Stock held in the Disputed Class 5 Claims Reserve. In calculating the amount to be held in the Disputed Class 5 Claims Reserve, the Reorganized Debtors shall (a) treat all liquidated Disputed Class 5 Claims as if allowed in full and (b) make a good faith estimate of the amounts, if any, likely to be allowed in respect of contingent or unliquidated Class 5 Claims. If, and to the extent, any such Disputed Class 5 Claim becomes an Allowed Claim, the property so reserved for the creditor holding such Claim shall be distributed to such creditor within thirty days of the date that such Disputed Class 5 claim becomes an Allowed Claim. In the event that, after the Effective Date, a Disputed Claim is disallowed in whole or in part, the relevant Reorganized Debtor shall distribute (or cause the Distribution Agent to distribute) the property held in reserve for the disallowed portion of such Disputed Class 5 Claim as follows: (a) such property shall be distributed to holders of Allowed Class 5 Claims; (b) such distribution shall be based on the applicable Ratable Share of each such holder, as adjusted to take into account the disallowance or the allowance of all Disputed Claims since the Effective Date; and (c) such distribution shall be made on December 31, 1996, and on June 30 and December 31 of each following year (each such date, a "Distribution Date"), to the extent a Disputed Class 5 claim has been disallowed in whole or in part since the Effective Date or the last Distribution Date, as the case may be, until the earlier of (i) the date on which all Disputed Class 5 Claims have been resolved and (ii) less than 5,000 shares of New Common Stock are on deposit in the Disputed Class 5 Claims Reserve. If, at any time after the Effective Date, the number of shares of New Common Stock held in the Disputed Class 5 Claims Reserve is less than 5,000, the remaining shares of Common Stock held in such reserve shall, at the option of the Reorganized Debtors, be canceled or treated as treasury stock. 3. No Other Reserves. The Reorganized Debtors shall not be required to establish a reserve with respect to any class of Disputed Claims or Disputed Interests other than Class 5 Disputed Claims. 4. Method of Resolution - General. Each Disputed Claim (other than a Disputed Claim which involves a personal injury, property damage or wrongful death claim) and each Disputed Interest shall be resolved by the Bankruptcy Court. 5. Method of Resolution - Personal Injury and Wrongful Death Claims. Each Disputed Claim involving a personal injury, property damage or wrongful death claim shall be resolved in the following manner: a. Information Assembly. Within 30 days after the Effective Date, the relevant Reorganized Debtor shall mail to each holder of such a Disputed Claim a form prepared by such Reorganized Debtor, requesting such information as such Reorganized Debtor believes is necessary to evaluate such Disputed Claim. No later than 30 days after each holder of such a Disputed Claim receives such form, the holder shall return the completed form to such Reorganized Debtor and any Insurer on such Claim. The completed form must be signed, under penalty of perjury, by the holder and the holder's counsel, if any, and the signature of the holder must be notarized. Each form must have the following documentation attached to such form: (i) For personal injuries and wrongful death claims: (A) copies of all medical bills, (B) copies of all medical reports, (C) copies of all expert reports, (D) copies of all tax returns for the last five years, (E) copies of all x-rays, (F) copies of all MRI's, (G) copies of all wage statements, W-2 forms, W-4 forms, and 1099 forms for the past five years, (H) copies of all pictures of any accident scene, (I) an executed SSA-7004-SM, Social Security Administration Request for Earnings and Benefit Statement, designating a Person specified by such Reorganized Debtor as addressee, (J) an executed IRS 4506 Form, Request for Copy of Transcript of Tax Form, designating a Person specified by such Reorganized Debtor as the recipient of the documents, and (K), in the case of wrongful death claims, copies of all autopsy reports. (ii) For property damage claims, (A) copies of all repair invoices and records and (B) copies of all expert reports. If the form is not returned in accordance herewith within the required 30-day period, the Disputed Claim shall be deemed disallowed. Within 90 days from the date on which such Reorganized Debtor and the Insurer, if any, receive a form returned in accordance herewith, such Reorganized Debtor or, if there is an Insurer, the Insurer shall: (i) offer to settle the Disputed Claim; (ii) deny the Disputed Claim; or (iii) request additional information from the holder of the Disputed Claim, including, without limitation, for personal injury claims, submission to an independent medical examination. If an offer of settlement is made, the holder must accept or reject the offer of settlement within 30 days after the offer of settlement is made. If the offer of settlement is not accepted or rejected within such 30-day period, the Disputed Claim shall be deemed disallowed. If the holder accepts the offer of settlement, the Disputed Claim shall be deemed allowed on the date on which such Reorganized Debtor or the Insurer, as the case may be, receives notice of such acceptance. If additional information is requested, the holder must provide such additional information within 30 days of the request. If the holder fails to provide such additional information within such 30-day period, the Disputed Claim shall be deemed disallowed. If the requested additional information is provided within such 30-day time period, such Reorganized Debtor or, if there is an Insurer, the Insurer must make an offer of settlement or deny a Disputed Claim within 90 days after it receives such additional information. If a holder of a Disputed Claim rejects an offer of settlement within 30 days after the offer of settlement is made or the Disputed Claim is denied, the holder shall notify such Reorganized Debtor and the Insurer, if any, that mediation is requested. If a holder fails to request mediation, the Disputed Claim shall be deemed disallowed. b. Mediation. Each such Disputed Claim for which mediation is requested shall be submitted to mediation by a mediator assigned by the Bankruptcy Court. Such mediator shall work with all Persons involved, including, without limitation, any Insurer, to negotiate a mutually satisfactory resolution with respect to the Disputed Claim. Within 30 days of the date on which a mediator is appointed, the mediator shall schedule a mediation conference in Oklahoma City, Oklahoma at which all Persons involved shall either (i) appear personally or (ii) be represented by a Person authorized to enter into a binding settlement agreement on behalf of such involved Person. The mediator shall give each such involved Person at least 10 days prior written notice of the date, the time and the place of the conference. If any Person which has received notice of such mediation (or his, her or its designated representative) fails to appear at such mediation conference, any other Person may petition the Bankruptcy Court for an award of costs, including, without limitation, reasonable attorneys' fees against the non-attending Person. In addition, if the holder or the holder's counsel, if any, fails to attend, the Disputed Claim shall be deemed disallowed. At the conclusion of the mediation conference, each Person (or its designated representative) shall sign before the mediator a statement to the effect that (i) the Disputed Claim has been resolved by mutual agreement (subject to approval of the Bankruptcy Court) and the basis of such resolution, (ii) that the Disputed Claim shall be submitted to binding arbitration or (iii) that the Disputed Claim shall proceed before the District Court. c. Arbitration. If a Disputed Claim is submitted to binding arbitration, the Disputed Claim shall be resolved by binding arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association. No Person involved in such arbitration shall be permitted to appeal any award except as expressly permitted by Section 10 of the Federal Arbitration Act, as amended, and there shall be no right to a de novo trial subsequent to the arbitration. d. Trial. Upon compliance with the procedures set forth in this Article VII(D)(5), the holder of a Disputed Claim subject to this Article VII(D)(5) shall have the right to pursue such Disputed Claim in a federal district court in accordance with 28 U.S.C. 157(b)(5) and the Federal Rules of Civil Procedure. Any case filed prior to the Filing Date shall be transferred from the forum in which it is pending to the District Court and, regardless of whether a case has been filed prior to the Filing Date, the District Court shall transfer the case to the federal district court for the district in which the Disputed Claim arose. The Disputed Claim shall be prosecuted in the federal district court to which it is transferred by the District Court. ARTICLE VIII CONDITIONS PRECEDENT TO CONSUMMATION OF THE PLAN Conditions to Consummation. The Plan shall not become effective unless and until each of the following conditions have been satisfied or have been waived in accordance with this Article VIII: A. Entry of the Confirmation Order. The Plan shall have been confirmed by the Bankruptcy Court and the Confirmation Order shall not have been vacated, reversed or stayed. B. New Credit Agreement. The New Credit Agreement shall have been entered into and all conditions to the effectiveness thereof shall have been satisfied or waived by the lenders as required thereunder. C. Other Agreements. All other agreements contemplated by, or entered into pursuant to, the Plan, including, without limitation, the Plan Documents, shall have been duly and validly executed and delivered by the parties thereto and all conditions to their effectiveness shall have been satisfied or waived. The Reorganized Debtors may waive at any time, without notice, leave or order of the Bankruptcy Court, and without any formal action other than proceeding to consummate the Plan, any condition precedent to consummation and effectiveness of the Plan; provided, however, that the Debtors may not waive the condition precedent specified in Article VIII(C) insofar as it relates to the execution, delivery and effectiveness of the New Indenture and the Noteholder Registration Rights Agreement without the consent of the Noteholders' Committee. ARTICLE IX CONFIRMABILITY AND SEVERABILITY OF A PLAN AND CRAMDOWN If all of the applicable requirements for confirmation of the Plan are met as set forth in Section 1129(a) of the Bankruptcy Code except paragraph (8) thereof, the Debtors may, at their option, amend the Plan as necessary to request the Bankruptcy Court to confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code, notwithstanding the requirements of paragraph (8) of Section 1129(a) of the Bankruptcy Code, provided that the Plan, as so amended, is fair and equitable and does not discriminate unfairly with respect to any impaired Class or Classes that have not accepted the Plan. The right of the Debtors to modify the Plan under this Article IX does not limit the ability of the Debtors to modify the Plan under Article XII(A). ARTICLE X EFFECTS OF THE CONFIRMATION OF THE PLAN A. Binding Effect. The provisions of the Plan shall bind all holders of Claims and Interests, whether or not any such holder has accepted the Plan. B. Discharge. Except as otherwise expressly provided herein, the confirmation of the Plan shall, provided the Effective Date shall have occurred, discharge all Claims and Interests to the fullest extent authorized or provided by the Bankruptcy Code, including, without limitation, to the fullest extent authorized or provided for by Section 524 of the Bankruptcy Code. C. Vesting of Assets; Reservation of Claims. Except as expressly provided in, and governed by, the Plan or the Confirmation Order, on the Effective Date, the assets and property of each Debtor's Estate shall vest in the relevant Reorganized Debtor free and clear of all Claims, liens, encumbrances, charges and interests. Except as provided in the Estate Release, all causes of action arising under Chapter 5 of the Bankruptcy Code (other than fraudulent conveyance and preference claims, if any, of the Debtors against the holders of the Old Notes), all Claims against third parties, and all other causes of action against third parties, and all other causes of action and rights belonging to or in favor of the Debtors, including, without limitation, under Section 502, Section 544, Section 545, Section 547, Section 548 and Section 549 of the Bankruptcy Code, are hereby preserved and retained for assertion and enforcement solely and exclusively by, and in the discretion of, the Reorganized Debtors and shall revest in the relevant Reorganized Debtor on the Effective Date. D. Injunction. Except as otherwise expressly provided in, and governed by, the Plan, the entry of the Confirmation Order shall, provided that the Effective Date shall have occurred, permanently enjoin all Persons that have held, currently hold or may hold a Claim, or other debt or liability that is discharged pursuant to the Plan or who have held, currently hold or may hold an Interest that is terminated pursuant to the Plan from taking any of the following actions in respect of such discharged Claim, debt or liability or such terminated Interest: (1) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding of any kind against the Reorganized Debtors or the property of the Reorganized Debtors; (2) enforcing, levying, attaching, collecting or recovering in any manner or by any means, whether directly or indirectly, any judgment, award, decree or order against the Reorganized Debtors or the property of the Reorganized Debtors; (3) creating, perfecting or enforcing in any manner, directly or indirectly, any lien or any security interest of any kind against the Reorganized Debtors or the property of the Reorganized Debtors; (4) asserting a setoff, right of subrogation or recoupment of any kind, directly or indirectly, against any debt, liability or obligation due to the Reorganized Debtors or the property of the Debtors; or (5) commencing or continuing any action in any manner or in any place that does not comply with, or is inconsistent with, the Plan. Notwithstanding anything else contained in the Plan, to the extent that a Reorganized Debtor makes a claim for refund against the Texas Comptroller of Public Accounts for the period prior to the Confirmation Date, the Texas Comptroller of Public Accounts shall be permitted to assert any setoff or recoupment in accordance with applicable non- bankruptcy law. E. Insured Claims. Confirmation of the Plan shall not discharge the duty of any Insurer under any contract of insurance to continue to provide coverage to all parties covered under the contract of insurance in accordance with the terms and subject to the conditions of the contract of insurance. ARTICLE XI RETENTION OF JURISDICTION Notwithstanding entry of the Confirmation Order or the Effective Date having occurred, the Bankruptcy Court shall retain jurisdiction over the Cases and any proceedings arising from, or relating to, the Cases pursuant to Section 1142 of the Bankruptcy Code and Section 1334 of Title 28 of the United States Code to the fullest extent permitted by the Bankruptcy Code and any other applicable law, including, without limitation, such jurisdiction as is necessary to ensure that the purpose and the intent of the Plan are carried out. Without limiting the generality of the foregoing, the Bankruptcy Court shall retain the following jurisdiction: A. Executory Contract and Lease Determinations. The Bankruptcy Court shall retain the jurisdiction to hear and to determine any motions pending before the Bankruptcy Court on the Effective Date to reject any executory contract or unexpired lease to which a Debtor is a party or with respect to which a Debtor may be liable and to hear and to determine the allowance of any Claim resulting therefrom. B. Pending Motions and Adversary Proceedings. The Bankruptcy Court shall retain the jurisdiction to determine any adversary proceedings, applications, contested matters and other litigated matters that are pending on the Effective Date or that may be commenced thereafter as provided in the Plan. C. Distributions. The Bankruptcy Court shall retain the jurisdiction to ensure that distributions to the holders of Allowed Claims and Allowed Interests are accomplished as provided in the Plan. D. Claim Determinations. The Bankruptcy Court shall retain the jurisdiction to hear and determine objections to, or requests for estimation of, Claims, including, without limitation, any objections to the classification of any Claim, in whole or in part. E. Stay Matters. The Bankruptcy Court shall retain the jurisdiction to enter and to implement such orders as may be appropriate in the event that the Confirmation Order is for any reason stayed, revoked, modified or vacated. F. Support of Plan. The Bankruptcy Court shall retain the jurisdiction to issue appropriate orders in aid of the execution of the Plan and to enforce the Confirmation Order and/or the discharge, or the effect of the discharge, provided to the Reorganized Debtors. G. Modifications. The Bankruptcy Court shall retain the jurisdiction to hear and to determine any applications to modify the Plan, to cure any defect or any omission in any order of the Bankruptcy Court or in the Plan, including, without limitation, the Confirmation Order, and to reconcile any inconsistency in any order entered by the Bankruptcy Court and the Plan, including, without limitation, the Confirmation Order. H. Compensation and Expense Determinations. The Bankruptcy Court shall retain the jurisdiction to hear and to determine any applications for compensation and reimbursement of expenses of professionals and members of any Official Committee (and, if applicable, the Unofficial Committee) under Section 330, Section 331, Section 503(b), Section 1103 and/or Section 1129(a)(4) of the Bankruptcy Code. I. Resolution of Controversies. The Bankruptcy Court shall retain the jurisdiction to hear and to determine resolve any disputes arising in connection with the interpretation, the implementation or the enforcement of the Plan. J. Other Plan-Related Matters. The Bankruptcy Court shall retain the jurisdiction to hear and to determine other issues presented by, arising under, or related to, the Plan and other matters related to the Plan and not inconsistent with the Bankruptcy Code. K. Final Decree. The Bankruptcy Court shall retain the jurisdiction to enter a final decree closing the Cases. L. Recovery of Assets. The Bankruptcy Court shall retain the jurisdiction to enter such orders as may be appropriate in connection with the recovery of the assets of the Debtors and the Estates wherever located. M. Tax Related Matters. The Bankruptcy Court shall retain the jurisdiction to hear and to determine any motions or contested matters involving taxes, tax refunds, tax attributes and tax benefits and similar or related matters with respect to the Debtors arising prior to the Effective Date or relating to the administration of the Cases, including, without limitation, matters involving federal, state and local taxes in accordance with Section 346, Section 505 and Section 1146 of the Bankruptcy Code. N. Other Determinations. The Bankruptcy Court shall retain the jurisdiction to determine any other matter not inconsistent with the Bankruptcy Code. ARTICLE XII MISCELLANEOUS PROVISIONS A. Modification of the Plan. The Plan may be modified at any time or from time to time by the Debtors before or after the Effective Date, whether or not the Plan has been substantially consummated, upon such notice and hearing and other requirements as shall be required by the Bankruptcy Code and applicable law. B. Revocation and Withdrawal of Plan. The Debtors reserve the right to revoke or to withdraw the Plan at any time before the Confirmation Date. If the Debtors revoke or withdraw the Plan prior to the Confirmation Date, or if the Confirmation Date or the Effective Date does not occur, then the Plan shall be deemed null and void. In such event, nothing contained herein or in the Disclosure Statement shall be deemed to constitute an admission of the validity, waiver or release of any Claims by or against the Debtors or any other Person or to prejudice in any manner the rights of the Debtors or any Person in any proceeding involving the Debtors. C. Exculpation. Neither the Reorganized Debtors, the Old Banks and the Agent, any Official Committee, the Unofficial Committee, nor any of their respective members, officers, directors, shareholders, employees, agents, attorneys, accountants or other advisors, shall have or incur any liability to any holder of a Claim or Interest for any act or failure to act in connection with, or arising out of, the pursuit of confirmation of the Plan, the consummation of the Plan or the administration of the Plan or the property to be distributed under the Plan, except for any act or failure to act that constitutes willful misconduct or recklessness as determined pursuant to a Final Order, and in all respects, such Persons (1) shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan, and shall be fully protected from liability in acting or in refraining from action in accordance with such advice and (2) shall be fully protected from liability with respect to any act or failure to act that is approved or ratified by the Bankruptcy Court. D. Payment Dates. Whenever any payment to be made under the Plan is due on a day other than a Business Day, such payment shall instead be made, without interest, on the next following Business Day. E. Payment of Statutory Fees. All fees payable pursuant to Section 1930 of Title 28 of the United States Code, shall be paid as required by the Bankruptcy Code. F. Payment of Post-Petition Interest or Attorney Fees. Unless otherwise expressly provided in the Plan, or allowed by order of the Bankruptcy Court, the Debtors shall not be required to pay any holder of a Claim any interest occurring on or after the Filing Date, or any attorneys' fees, with respect to such Claim. G. Section 1146 Exemption. Pursuant to Section 1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of any security under the Plan or the making or delivery of any instrument of transfer pursuant to, in implementation of, or as contemplated by, the Plan or the revesting, transfer or sale of any real or personal property of the Debtors pursuant to, in implementation of, or as contemplated by, the Plan shall not be taxed under any state or local law imposing a stamp tax, transfer tax or similar tax or fee. H. Dissolution of Committees. On the Effective Date, each Official Committee shall automatically dissolve and all members of such committees shall be discharged from all rights and all duties arising from, or related to, the Cases. I. Governing Law. Except to the extent that the Bankruptcy Code or the Bankruptcy Rules are applicable, the Plan shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of Delaware. J. Notices. After the Effective Date, any notice or other communication to the Reorganized Debtors required or permitted under the Plan shall be in writing and shall be hand delivered or sent by certified or registered mail, postage pre-paid, return receipt requested, as follows: Homeland Stores, Inc. or Homeland Holding Corporation 2601 Northwest Expressway Oklahoma City, Oklahoma 73112 Attn: President Telephone: (405)879-6600 Telecopy: (405) 879-4605 with copies to: Crowe & Dunlevy, A Professional Corporation 1800 Mid-America Tower 20 North Broadway Oklahoma City, Oklahoma 73102 Attn: Judy Hamilton Morse Telephone: (405) 235-7700 Telecopy: (405) 239-6651 Young, Conaway, Stargatt & Taylor Eleventh Floor, Rodney Square North 1100 North Market Street Wilmington Trust Center 19801 Attn: James L. Patton, Jr. Telephone: (302) 571-6600 Telecopy: (302) 571-1253 Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 Attn: Robert D. Drain Telephone: (212) 373-3000 Telecopier: (212) 757-3990 Hahn & Hessen, L.L.P. Empire State Building 350 Fifth Avenue New York, New York 10118 Attn: Jeffrey L. Schwartz Telephone: (212) 736-1000 Telecopier: (212) 594-7167 Hughes & Luce, L.L.P, 1717 Main Street, Suite 2800 Dallas, Texas 75201 Attn: David Weitman Telephone: (214) 939-5500 Telecopier: (214) 939-6100 After the Effective Date, any notice or other communication to a holder of a Claim or an Interest required or permitted under the Plan shall be hand delivered or shall be sent by certified or registered mail, postage pre-paid, return receipt requested, to the holder at the address set forth on any proof of claim filed by the holder or, if the holder has not filed or been deemed to have filed a proof of claim, at the last known address of the holder as reflected by the records of the relevant Reorganized Debtor. A notice or other communication sent pursuant to this Article XII(J) shall be deemed given and received upon delivery if hand delivered and three business days after deposited in the United States mail if sent by registered or certified mail. K. Successors and Assigns. The rights of any Person named or referred to in the Plan shall inure to the benefit of, and the obligations of any Person named or referred to in the Plan shall be binding on, any heir, executor, administrator, successor or assign of such Person. L. Severability. To the extent that any provision of the Plan would, by its inclusion of the Plan, prevent or preclude the Bankruptcy Court from entering the Confirmation Order, the Bankruptcy Court, on the request of the Debtors, may modify or amend, or permit the Debtors to modify or amend such provision, in whole or in part as necessary to cure any defect or remove any impediment to the confirmation of the Plan existing by reason of such provision. M. Objections to Claims or Interests. The failure by the Debtors to object to or examine any Claim or Interest for purposes of voting shall not be deemed a waiver of the Debtors' right to object to or re-examine such Claim or Interest, in whole or in part. [REST OF PAGE INTENTIONALLY OMITTED] Dated: June 13, 1996. HOMELAND STORES, INC. By: /s/ James A.Demme James A. Demme President and Chief Executive Officer HOMELAND HOLDING CORPORATION. By: /s/ James A. Demme James A. Demme President and Chief Executive Officer CROWE & DUNLEVY, A PROFESSIONAL CORPORATION By: /s/ Judy Hamilton Morse Judy Hamilton Morse, OBA #6450 Kenni B. Merritt, OBA #6147 Roger A. Stong, OBA #11710 William H. Hoch, OBA #15788 1800 Mid-America Tower 20 North Broadway Oklahoma City, Oklahoma 73102 (405) 235-7700 COUNSEL TO HOMELAND STORES, INC. AND HOMELAND HOLDING CORPORATION YOUNG, CONAWAY, STARGATT & TAYLOR By: /s/ James L. Patton, Jr. James L. Patton, Jr. Rodney Square North, 11th Floor Wilmington, Delaware 19899 (302) 571-6600 LOCAL COUNSEL TO HOMELAND STORES, INC. AND HOMELAND HOLDING CORPORATION EX-27 3
5 1,000 6-MOS DEC-28-1996 JUN-15-1996 6,854 0 7,502 0 39,476 2,055 131,334 64,874 129,096 146,723 0 0 0 337 (31,801) 129,096 121,981 121,981 91,703 91,703 29,242 0 2,051 (1,015) 0 (1,015) 0 0 0 (1,015) (.03) (.03)
EX-99 4 IMMEDIATE RELEASE NEWS Contact: Thomas C. Franco Rohit J. Menezes (212) 229-2222 HOMELAND WINS COURT APPROVAL OF REORGANIZATION PLAN ___________________________________________________________ OKLAHOMA CITY, OK, July 19, 1996 -- Homeland Stores, Inc., a private company, announced today that the United States Bankruptcy Court for the District of Delaware confirmed Homeland's plan of reorganization. Court confirmation of the plan, which follows overwhelming approval by the company's creditors, stockholders and labor unions, clears the way for the reorganized Homeland to exit from Chapter 11, which the company expects will occur in the first week of August, 1996. Pursuant to the restructuring, the $95 million of Homeland's senior secured bonds currently outstanding (plus accrued interest) will be canceled, and the bondholders will receive (in the aggregate) $60 million face amount of new senior subordinated notes and $1.5 million in cash. The new senior subordinated notes will mature in 2003, bear interest semi-annually at a rate of 10% per annum, and will not be secured. In addition, the bondholders and the company's general unsecured creditors will receive approximately 60% and 35% respectively, of the equity of the reorganized Homeland (assuming total unsecured claims of approximately $63 million,including bondholder unsecured claims). Homeland's existing equity holders will receive the remaining 5% of the new equity, together with 5-year warrants to purchase an additional 5% of equity. The company will use its best efforts to have the equity listed on the NASDAQ National Market System or on such other exchange or system on which the equity may be listed. July 19, 1996 is the record date for purposes of determining bondholders and stockholders entitled to receive distributions under the plan. Homeland is the leading supermarket chain in Oklahoma, southern Kansas, and the Texas panhandle region, operating a total of 65 stores. The company operates in four distinct marketplaces: Oklahoma City, Oklahoma; Tulsa, Oklahoma; Amarillo, Texas; and certain rural areas of Oklahoma, Kansas and Texas. # # # -----END PRIVACY-ENHANCED MESSAGE-----