EXHIBIT 2.1
RICHARD M. PACHULSKI, ESQ., (State Bar #90073)
JAMES I. STANG, ESQ., (State Bar #94435)
BRAD R. GODSHALL, ESQ., (State Bar #105438)
DEBRA GRASSGREEN, ESQ., (State Bar #169978)
RACHELLE S. VISCONTE, ESQ., (State Bar #182158)
PACHULSKI, STANG, ZIEHL & YOUNG P.C.
10100 Santa Monica Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: (310) 277-6910
Attorneys for Debtor and Debtor in Possession
SCOTT McNUTT, ESQ. (State Bar #104696)
REBECCA LITTENEKER, ESQ. (State Bar #111744)
SEVERSON & WERSON
1 Embarcadero Center, 25th Floor
San Francisco, CA 94111
Telephone: (415) 398-3344
Special Counsel for Debtor and Debtor in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re:
SIZZLER RESTAURANTS INTERNATIONAL, INC.,
SIZZLER INTERNATIONAL, INC., COLLINS
PROPERTIES, INC., TENLY ENTERPRISES, INC.,
and BUFFALO RANCH STEAKHOUSES, INC.,
Debtors.
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__ Affects all Debtors
__ Affects SRI Only
X Affects SII Only
--
__ Affects Collins Only
__ Affects Tenly Only
__ Affects Buffalo Ranch Only
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Case No. SV 96-16075-AG
(Jointly administered with:
Case Nos: SV 96 -16076-AG
SV 96 -16077-AG
SV 96 -16078-AG
SV 96 -16079-AG)
Chapter 11 cases
SIZZLER INTERNATIONAL, INC.'S SIXTH AMENDED PLAN OF REORGANIZATION AS MODIFIED
Disclosure Statement Hearing:
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Date: April 29, 1997
Time: 9:00 a.m.
Place: Courtroom "302"
21041 Burbank Blvd.
Woodland Hills, CA 91367
Confirmation Hearing:
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Date: June 2, 1997
Time: 9:00 a.m.
Place: Courtroom "302"
21041 Burbank Blvd.
Woodland Hills, CA 91367
ARTICLE I DEFINITIONS............................................................... 1
A. Definitions............................................................... 1
B. Rules of Interpretation, Computation of Time and Governing Law............ 21
1. Rules of Interpretation.............................................. 21
2. Computation of Time.................................................. 22
3. Governing Law........................................................ 22
ARTICLE II ADMINISTRATIVE AND TAX CLAIMS............................................ 23
A. Treatment of Administrative Claims........................................ 23
1. Bar Date for Administrative Tax Claims............................... 23
2. Bar Date for All Other Administrative Claims......................... 23
3. Payment of Administrative Claims, Administrative Tax
Claims and Priority Tax Claims...................................... 24
4. Statutory Fees....................................................... 25
ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS AND
DESIGNATION OF IMPAIRMENT................................................. 26
A. Nature of Class Designations.............................................. 26
B. Class Overview............................................................ 26
1. Priority Non-Tax Claims.............................................. 27
2. Secured Claims....................................................... 27
3. Bank Claims.......................................................... 27
4. Large Unsecured Claims............................................... 27
5. Damage Claims........................................................ 27
6. Affiliate Claims..................................................... 27
7. SERP Claims.......................................................... 27
8. Small Unsecured Claims............................................... 28
9. Workers' Compensation Claims......................................... 28
10. Non-Vested Retirement Claims......................................... 28
11. Interests............................................................ 28
ARTICLE IV DESIGNATION AND TREATMENT OF CLASSES..................................... 28
A. Treatment of Allowed Secured Claims: Class 2(a) and 2(b).................. 28
1. Class 2 Subclasses................................................... 28
2. Treatment............................................................ 28
B. Treatment of Unsecured Claims............................................. 29
1. Class 1 - Priority Non-Tax Claims.................................... 29
2. Class 3 - Bank Claims................................................ 30
3. Class 4 - Large Unsecured Claims..................................... 31
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4. Class 5 - Damage Claims.............................................. 33
5. Class 6 - Affiliate Claims........................................... 34
6. Class 7 - SERP Claims................................................ 34
7. Class 8 - Small Unsecured Claims..................................... 34
8. Class 9 - Workers' Compensation Claims............................... 35
9. Class 10 - Non-Vested Retirement Claims.............................. 35
C. Treatment of Equity - Class 11............................................ 35
ARTICLE V VARIOUS MECHANICS FOR PAYMENT OF CLASS 3 AND 4 GENERAL UNSECURED CLAIMS... 36
A. The Indenture............................................................. 36
B. The Notes................................................................. 36
C. Term of Notes............................................................. 37
D. Interest Accrual Under the Notes.......................................... 37
E. Amortization Payments..................................................... 37
F. Affiliate Guarantees/Collateral........................................... 41
G. Covenants Under the Indenture............................................. 42
H. Dividend Purchase......................................................... 45
I. The Reserve Agent......................................................... 47
J. Approved Reserve Agent Expenses........................................... 48
K. Reserve Agent Indemnification/Expenses Upon Default....................... 48
L. The Attorneys Fee Fund.................................................... 48
M. Controlling Nature of the Indenture....................................... 50
N. Cash Election or Termination of the Indenture............................. 50
ARTICLE VI CONDITIONS TO EFFECTIVENESS.............................................. 51
ARTICLE VII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES................... 53
A. Assumption................................................................ 53
B. Assignment................................................................ 54
C. Rejection................................................................. 54
D. Claims Arising From Rejection of Contracts................................ 55
ARTICLE VIII MEANS FOR IMPLEMENTATION OF PLAN/RESERVES.............................. 55
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A. Effective Date Transactions............................................... 55
1. Incorporation of Sizzler USA Holdings and Sizzler USA and
Sizzler International Marks......................................... 56
2. Assignment of International Licensing Assets to Sizzler
International Marks................................................. 56
3. International Licensing Assets Payment............................... 56
B. Global Interestate Settlement............................................. 56
C. Distributions and Plan Funding............................................ 57
1. Source of Plan Funding............................................... 57
2. The ADR.............................................................. 57
3. Rounding of Amounts.................................................. 57
4. Name and Address of Holder........................................... 57
5. Corporate Governance................................................. 58
6. Execution of Plan Agreements......................................... 58
7. Disputed Claims Reserves............................................. 58
8. Unclaimed Property................................................... 61
9. De Minimis Distributions/Return of Undistributed Funds............... 62
D. Services by and Fees for Professionals.................................... 62
1. Services by Professionals and Certain Parties after the
Effective Date...................................................... 62
2. Fees for Professionals and Certain Parties........................... 62
E. Dissolution of Committees................................................. 63
F. Litigation................................................................ 63
ARTICLE IX MODIFICATION............................................................. 64
ARTICLE X EFFECT OF CONFIRMATION.................................................... 64
A. Binding Effect of Confirmation............................................ 64
B. Vesting of Assets Free and Clear of Liens, Claims and Interests........... 64
C. Good Faith................................................................ 65
D. No Limitations on Effect of Confirmation.................................. 66
E. Continuation of ADR - Permanent Injunction for Damage Claims.............. 66
F. Discharge of Claims and Termination of Interests.......................... 66
G. Judicial Determination of Discharge....................................... 67
H. Injunction................................................................ 67
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ARTICLE XI SUCCESSORS AND ASSIGNS................................................... 68
ARTICLE XII RETENTION OF JURISDICTION............................................... 68
ARTICLE XIII MISCELLANEOUS......................................................... 69
A. Severability.............................................................. 69
B. Release of Avoidance Actions.............................................. 69
C. Amendment, Withdrawal or Revocation of the Plan........................... 69
D. Headings.................................................................. 70
E. Successors and Assigns.................................................... 70
F. Statutory Fees............................................................ 70
G. Amendment to Charter...................................................... 70
ARTICLE XIV CONFIRMATION REQUEST.................................................... 71
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Exhibits:
A. Form of Affiliate Guarantee
B. Assumed and Assigned Executory Contracts
C. Form of Indenture
D. Assumed Executory Contracts
E. List of Encumbered Properties
F. Form of LUC Note
G. Sandwich Lease Properties
H. SERP Guarantee
I. Form of Bank Note
J. Form of SII Stock Pledge Agreement
K. Form of SII Security Agreement
L. [Intentionally Omitted]
M. Form of Letter of Credit Note
N. List of International Licensing Assets
O. List of CPI Properties
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Sizzler International, Inc., a Delaware corporation, debtor and debtor in
possession herein, hereby proposes the following Plan of Reorganization ("Plan")
pursuant to Bankruptcy Code (S) 1121:
ARTICLE I
DEFINITIONS
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A. DEFINITIONS
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The following definitions will apply with respect to this Plan and the
Disclosure Statement, as those terms are defined below.
1. "ADMINISTRATIVE AND PRIORITY CLAIMS RESERVE". The Administrative and
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Priority Claim reserve of the Debtor for Disputed Administrative and Priority
Claims and projected and actual Administrative Claims which have not been
disallowed by the Bankruptcy Court.
2. "ADMINISTRATIVE CLAIM". A Claim for payment of an administrative
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expense of a kind specified in Bankruptcy Code (S) 503(b) and referred to in
Bankruptcy Code (S) 507(a)(1), including, without limitation, the actual,
necessary costs and expenses of preserving the Estate and operating the business
of the Debtor, including wages, salaries, and commissions for services rendered
after the commencement of the Case; obligations for goods and services procured
after the commencement of the Case; compensation for legal and other services
and reimbursement of expenses awarded under Bankruptcy Code (S)(S) 328, 330(a)
and 331; and all fees and charges assessed against the Estate under Chapter 123
of Title 28 of the United States Code.
3. "ADMINISTRATIVE TAX CLAIM". An unsecured Claim by a governmental unit
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for taxes (and for interest or penalties related
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to such taxes) for any tax year or period, all or a portion of which occurs or
falls within the period from and including the Petition Date through and
including the Effective Date.
4. "ADR". The alternative dispute resolution procedure which will be
---
implemented pursuant to an order of the Bankruptcy Court prior to the Effective
Date for the liquidation of Damage Claims. The ADR will provide an orderly
mechanism for the settlement, mediation or arbitration of Damage Claims and, in
some instances, the payment of Damage Claims without further order of the
Bankruptcy Court.
5. "AFFILIATE". Any direct or indirect wholly or partially owned
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subsidiary of SII other than a subsidiary in which SII and all direct or
indirect wholly or partially owned subsidiaries of SII combined hold less than a
fifty-one percent (51%) interest.
6. "AFFILIATE CLAIM". Any Claim held by an Affiliate against the Debtor.
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7. "AFFILIATE GUARANTEES". The guarantees executed by all Affiliates of
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Debtor, other than SRI Affiliates and CFI Insurers Ltd., of Debtor's obligations
under this Plan and the Notes. The Affiliate Guarantees shall be in
substantially the form of Exhibit "A" hereto.
8. "AFFILIATE TRUST DEEDS". The deeds of trust or mortgages to be given
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by CFI Pty., CPI and SA Pty on the Encumbered Properties.
9. "AFFILIATED DEBTORS". The Debtor, together with Buffalo Ranch, SRI,
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Collins and Tenly, all of which are debtors in related chapter 11 cases.
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10. "ALLOWED". When used in respect of a Claim or Interest or group of
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Claims or Interests, means --
(a) if no proof of Claim or Interest has been timely filed, such
amount of the Claim or Interest, or group of Claims or Interests, which has been
scheduled by the Debtor as liquidated in amount and not disputed or contingent
and as to which no party in interest has filed an objection within the time
required under this Plan, or otherwise fixed by the Bankruptcy Court, and which
Claim or Interest is not disallowed under Bankruptcy Code (S)(S) 502(d) or (e);
or
(b) if a proof of Claim or Interest has been filed by the Claims Bar
Date, or is deemed timely filed by the Bankruptcy Court, such amount of the
Claim or Interest, or group of Claims or Interests, as to which any party in
interest has not filed an objection within the time required under this Plan, or
otherwise fixed by the Bankruptcy Court, and which Claim or Interest is not
disallowed under Bankruptcy Code (S)(S) 502(d) or (e); or
(c) such amount of the Claim or Interest, or group of Claims or
Interests, which is allowed by a Final Order of the Bankruptcy Court; or
(d) such amount of the Claim or Interest or group of Claims or
Interests, which is allowed under this Plan.
11. "ALLOWED AMOUNT". The amount in which a Claim is Allowed.
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12. "ALLOWED CLAIM". A Claim which is Allowed.
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13. "ALLOWED CLASS ... CLAIM". An Allowed Claim in the particular Class
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described.
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14. "ALLOWED INTEREST". An Interest which is Allowed.
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15. "ASSETS". All "property of the estate" as described in Bankruptcy
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Code (S) 541.
16. "ASSUMED AND ASSIGNED EXECUTORY CONTRACTS". Those executory contracts
----------------------------------------
to be assumed and assigned to SRI on the Effective Date as identified on Exhibit
"B" hereto.
17. "ASSUMED EXECUTORY CONTRACTS". Those executory contracts to be assumed
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on the Effective Date as identified on Exhibit "D" hereto.
18. "ATTORNEYS FEE FUND". That certain fund to be established with Cash in
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the amount of $245,000 held in a separate account by the Debtor together with
any interest thereon for application on any and all Allowed Claims for
professional fees or expenses which are not disputed by the Debtor or which are
Allowed in respect of any Large Unsecured Claim, as provided in Section V.L. of
this Plan.
19. "AVAILABLE CASH". All Cash available for Plan payments calculated
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using the methodology described in connection with the cash flow projections
annexed as Exhibit "7" to the Disclosure Statement.
20. "AVOIDANCE ACTIONS". All avoiding powers, and all rights and remedies
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under, relating to, or similar to Bankruptcy Code (S)(S) 544, 545, 547, 548,
549, 551, or any fraudulent conveyance, fraudulent transfer or preference laws
as addressed in Section XIII.B. of this Plan.
21. "BANK EFFECTIVE DATE PAYMENT". Cash payable to the Holders of Allowed
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Bank Claims on the Effective Date in the sum of
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all accrued interest and pre-Petition Date and post-Petition Date fees and
expenses (other than pre- and post-Petition Date professional fees and expenses)
which are a portion of the total Bank Claims payable under this Plan.
22. "BANK CLAIMS". Any Claim against the Debtor arising under or related
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to that certain Revolving Credit Agreement dated as of March 22, 1995 between
and among SII, CFI Insurers, Ltd., the banks named therein and Bank of New York,
as agent, as such agreement may have subsequently been amended or restated
whether held by such banks or their assignees.
23. "BANK NOTES". The registered Notes, substantially in the form of
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Exhibit "I" to this Plan, to be issued by the Debtor pursuant to the Indenture
to the Holders of the Bank Claims.
24. "BANK PROFESSIONAL FEE PAYMENT". Cash in the amount of $750,000 to be
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paid on the Effective Date to the Holders of Allowed Bank Claims in full
satisfaction of pre- and post-Petition Date professional fees and expenses that
are a portion of the Bank Claims.
25. "BANKRUPTCY CODE". The Bankruptcy Code, as codified in Title 11 of
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the United States Code, 11 U.S.C. (S) 101 et seq., including all amendments
thereto, to the extent such amendments are applicable to the Case.
26. "BANKRUPTCY COURT". The United States Bankruptcy Court for the Central
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District of California.
27. "BANKRUPTCY RULES". The Federal Rules of Bankruptcy Procedure, as now
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in effect or hereafter amended and applicable to the Case.
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28. "BUFFALO RANCH". Buffalo Ranch Steakhouses, Inc., a California
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corporation, an Affiliate which is a debtor in a related chapter 11 case filed
on June 2, 1996.
29. "BUSINESS DAY". Any day other than a Saturday, Sunday or a legal
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holiday (as defined in Bankruptcy Rule 9006(a)).
30. "CAPITAL LEASE OBLIGATIONS". Obligations arising under leases which
-------------------------
are required to be capitalized under GAAP.
31. "CASE". The case under Chapter 11 of the Bankruptcy Code commenced by
----
the Debtor on June 2, 1996, pending in the Bankruptcy Court and bearing Case No.
SV 96-16076-AG.
32. "CASH". Cash or cash equivalents including, but not limited to, bank
----
deposits, checks or other similar items.
33. "CFI ACCOUNTING AFFILIATES". CFI Pty and all other Affiliates as of
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or after the Effective Date which are consolidated into CFI Pty for accounting
purposes pursuant to GAAP, including, without limitation, the following
corporations: Sizzler International Marks, Inc., Collins International, Inc.,
Restaurant Concepts International, Inc., Sizzler Franchise Development, Collins
Food Australia Pty Ltd, CFI Insurers, Ltd., Collins Finance & Management Pty,
Ltd, Collins Property Development Pty Ltd, Gulliver's Australia Pty Ltd, Sizzler
Australia Pty Ltd, Buffalo Ranch Australia Pty Ltd, Italian Oven Australia Pty
Ltd, Restaurant Concepts Australia Pty Ltd, Sizzler New Zealand Limited, Sizzler
Restaurant Services, Inc., Sizzler South Pacific Pty Ltd, Sizzler South East
Asia Inc., Furnace Concepts International, Inc., and Furnace Concepts Australia
Corp.
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34. "CFI PTY". Collins Food International, Pty Ltd., a Nevada corporation,
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Debtor's wholly owned subsidiary.
35. "CFI STOCK". The shares representing Debtor's one hundred percent (100%)
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equity interest in CFI Pty.
36. "CLAIM". (a) Any right to payment from the Debtor, whether or not such
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right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) any right to an equitable remedy for breach of performance if
such breach gives rise to a right of payment from the Debtor, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
37. "CLAIMS BAR DATE". The date by which proof of a Claim or Interest was or
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is required to be filed. This date was previously determined by the Bankruptcy
Court for most Claims or Interests to be October 15, 1996 and October 22, 1996
for Claims dated prior to October 15, 1996 other than with respect to executory
contracts or unexpired leases for which an order rejecting such contract or
lease is entered after September 15, 1996, and certain tax claims.
38. "CLASS". A class of Claims or Interests described in Article III of this
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Plan.
39. "COLLATERAL AGREEMENTS". The Affiliate Trust Deeds and all other
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security agreements, pledges, and mortgages to be granted to the Indenture
Trustee by the Affiliates.
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40. "CPI REAL ESTATE". That real property owned or leased by CPI and to be
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transferred to Sizzler USA on the Effective Date as identified on Exhibit "O" to
the Plan.
41. "COMMITTEE". The Official Committee of Creditors Holding Unsecured
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Claims appointed in the Case by the U.S. Trustee pursuant to Bankruptcy Code (S)
1102.
42. "CONFIRMATION". The entry of the Confirmation Order.
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43. "CONFIRMATION DATE". The date upon which the Bankruptcy Court enters the
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Confirmation Order.
44. "CONFIRMATION ORDER". The order of the Bankruptcy Court confirming
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this Plan pursuant to Bankruptcy Code (S) 1129.
45. "CONSOLIDATED NET INCOME". For any fiscal year beginning with fiscal
-----------------------
year 1998, shall mean the consolidated net income (or loss) of the CFI
Accounting Affiliates determined in accordance with GAAP and adjusted so as to
eliminate the impact of: (i) discontinued operations; (ii) extraordinary items;
and (iii) changes in accounting principles.
46. "COPELCO SECURED CLAIM". The Secured Claim of Copelco Capital, Inc.
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47. "COVERAGE". Any insurance coverage provided by an unrelated third-party
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that is available for the payment of Damage Claims.
48. "CPI". CPI Properties, Inc., a Delaware corporation, an Affiliate of the
---
Debtor and a debtor in a related chapter 11 case filed on June 2, 1996.
49. "CPI ENCUMBERED PROPERTIES". Those Encumbered Properties owned by CPI.
-------------------------
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50. "CREDITOR". The Holder of a Claim against the Debtor.
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51. "DAMAGE CLAIM". A Claim for personal injury or property damage allegedly
------------
caused by the tortious acts of the Debtor or its agents or employees, other than
uninsured Claims for property damage asserted by landlords or former landlords
of the Debtor.
52. "DEBTOR OR SII". Sizzler International, Inc., a Delaware corporation,
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whether as debtor or as debtor in possession, prior to the commencement of the
Case, during the pendency of the Case, or following the Effective Date, as the
case may be.
53. "DISCLOSURE STATEMENT". The "Disclosure Statement in Support of Debtor's
--------------------
Amended Plan of Reorganization" filed by the Debtor in support of this Plan
which has been approved by the Bankruptcy Court, and any and all amendments and
exhibits to the Disclosure Statement. A copy of the Disclosure Statement shall
be distributed concurrently with this Plan to all Holders of Claims and
Interests entitled to vote on this Plan.
54. "DISPUTED CLAIM OR DISPUTED ... CLAIM". A Claim in a particular Class as
-------------------------------------
to which a proof of Claim has been filed or is deemed to have been filed under
applicable law, or an Administrative Claim, as to which a timely objection has
been or is filed by the Committee, the Debtor, or any other party in interest in
accordance with this Plan, the Bankruptcy Code, the Bankruptcy Rules, or the
Local Rules, which objection has not been withdrawn or determined by a Final
Order. When a Disputed Claim is disallowed by a Final Order, such Claim shall
no longer be considered a Claim for any purpose under this Plan. Once an
objection has been or is filed, for the purposes of this Plan, a
9
Claim or Interest shall be considered a Disputed Claim to the extent that: (i)
the amount of a Claim or Interest specified in a proof of claim exceeds the
amount of any corresponding Claim scheduled by the Debtor in its Schedules; (ii)
any corresponding Claim scheduled by the Debtor in its Schedules has been
scheduled as disputed, contingent or unliquidated, irrespective of the amount
scheduled; or (iii) no corresponding Claim has been scheduled by the Debtor in
its Schedules.
55. "DISPUTED CLAIMS RESERVES". Accounts in which (a) the Reserve Agent is
------------------------
to hold payments set aside for Disputed Large Unsecured Claims in accordance
with and to the extent set forth in this Plan, and (b) the Debtor is to hold
payments set aside for all other Disputed Claims, in accordance with and to the
extent set forth in this Plan.
56. "DISTRIBUTION". Any transfer under this Plan or any Plan Agreement of
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Cash or other property or instruments to either a Holder of an Administrative
Claim or a Holder of an Allowed Claim.
57. "DIVIDEND PURCHASE PERIOD". The period from and including the Effective
------------------------
Date to and including the date of the first scheduled quarterly Distribution of
principal on account of the Notes, pursuant to Article V.E.3. of this Plan.
58. "EBITDA". Consolidated Net Income plus the following expenses incurred
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by CFI Accounting Affiliates: (i) income taxes; (ii) net interest; and (iii)
depreciation and amortization; minus, any provision for income tax benefit
recognized by the CFI Accounting Affiliates.
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59. "EFFECTIVE DATE". The later of (a) eleven days following the
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Confirmation Date or (b) the first date, up to ninety days after the
Confirmation Date upon which the conditions to effectiveness are satisfied;
provided, however, that as long as all applicable conditions have been satisfied
the Debtor may elect, in its sole and exclusive discretion, to shorten the
period between Confirmation and the Effective Date, in which event the Effective
Date will be the date specified in a written Notice of Effective Date, filed by
the Debtor with the Bankruptcy Court and served upon all Creditors and parties
in interest.
60. "ENCUMBERED PROPERTIES". Those parcels of real estate owned by SA Pty,
---------------------
CFI Pty or CPI listed on Exhibit "E" hereto to be encumbered by the Affiliate
Trust Deeds.
61. "EQUITY SECURITY OR INTEREST". A share in the ownership of the
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Debtor, whether or not transferable or denominated "stock," and any warrant or
right to purchase, sell, or subscribe to such share.
62. "EQUITY COMMITTEE". The Official Committee of Equity Security Holders
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appointed by the Office of the United States Trustee pursuant to Bankruptcy Code
(S) 1102.
63. "ESTATE". The estate in the Case created pursuant to Bankruptcy Code (S)
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541(a).
64. "EXCESS CASH FLOW." With respect to the CFI Accounting Affiliates, shall
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mean for fiscal years beginning with the fiscal year ended April 1998, seventy
percent (70%) of the following: EBITDA less (i) income taxes paid (including
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amounts paid by SII) during the fiscal year in respect of the tax liability
incurred
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during the fiscal year for which the calculation is being performed; less (ii)
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income taxes paid (including amounts paid by SII) during the fiscal year in
respect of the tax liability related to prior fiscal years (to the extent such
amounts were not previously deducted for purposes of making the Excess Cash Flow
calculation); less (iii) income taxes paid (including amounts paid by SII)
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during the ninety (90) day period following the fiscal year end in respect of
the tax liability incurred during the fiscal year for which the calculation is
being performed; less (iv) all interest, principal and lease payments made in
respect of the Funded Debt (including any payment made by SII in respect of the
Notes); less (v) capital expenditures paid; less (vi) Cash paid for items
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chargeable to reserves already established on the books of the CFI Accounting
Affiliates (or SII) on the Effective Date (e.g. payments for temporary personnel
handling bankruptcy related matters for which a reserve has been established) or
for items not reflected in the Consolidated Net Income for fiscal years ending
after the Effective Date (such as distributions to the SERP Creditors and any
future participants under SII's retirement program (which shall be deemed to
have been paid by CFI Pty)); less (vii) any gain resulting from the disposition
of assets; less (viii) International Licensing Assets Payment; and less (ix) to
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the extent not already included in the amounts referenced above, any
Distributions; less (x) any costs associated with repatriating funds necessary
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to make the Excess Cash Flow payment for the fiscal year for which it is being
calculated; plus (xi) write-downs required by FASB pronouncements that do not
----
result in the
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expenditure of Cash (e.g. FAS 121); provided, however, that for the purpose of
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calculating Excess Cash Flow (i) SII corporate general and administrative cash
expenditures allocable by SII to the CFI Accounting Affiliates shall not be
higher than the lesser of $2,500,000 or two percent (2%) of the CFI Accounting
Affiliates annual revenue for the fiscal year for which the calculation is being
performed; (ii) incremental operating losses generated by SA Pty shall be
disregarded to the extent they cause SA Pty's contribution to EBITDA to be less
favorable than <$1,000,000> for fiscal year 1998, <$500,000> for fiscal year
1999, and $0 for fiscal year 2000 and thereafter; and (iii) any tax benefits
derived as a result of any incremental losses excluded from the calculation of
EBITDA as outlined in proviso (ii) shall be adjusted for so as to eliminate the
impact of such tax benefits in determining income taxes paid. To the extent any
amounts used for the purpose of calculating Excess Cash Flow are not denominated
in US ($) Dollars, such amounts shall be converted to US ($) Dollars by using
the exchange rate in effect as of five business days prior to the date of
payment.
65. "FINAL ORDER". An order, decree or judgment of the Bankruptcy Court, the
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operation or effect of which has not been reversed, stayed, modified or amended,
and as to which order, decree or judgment (or any revision, modification or
amendment thereof), the time to appeal or seek review or rehearing has expired
and as to which no appeal or petition for review or rehearing has been taken or
is pending.
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66. "FINOVA SECURED CLAIM". The Secured Claim of Finova Capital Corporation,
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in the amount Allowed by the Bankruptcy Court.
67. "FUNDED DEBT". Indebtedness for money borrowed or for financing the
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acquisition of fixed assets, including Purchase Money Obligations, Capital Lease
Obligations and the Notes.
68. "GAAP". Generally accepted accounting principles, consistently applied,
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(i) in accordance with the opinions, pronouncements, statements, bulletins,
guides and interpretations, as appropriate, of the Financial Accounting
Standards Board ("FASB") the Accounting Principles Board ("APB") and the
American Institute of Certified Public Accountants ("AICPA"), or (ii) pursuant
to such other guidance by such entities as may be accepted and applied by a
significant segment of the accounting profession, and (iii) in each as
applicable to the circumstances and as of the date of determination.
69. "GENERAL UNSECURED CLAIM". Any Claim against the Debtor, however
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arising, which is not an Administrative Claim, Priority Tax Claim, Priority Non-
Tax Claim, SERP Claim, Damage Claim, Affiliate Claim, Workers' Compensation
Claim or Secured Claim.
70. "HOLDER". The holder of a Claim against or Interest in the Debtor.
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71. "IMMATERIAL AFFILIATES". Those Affiliates (excluding CFI Pty, SA Pty,
---------------------
CPI Finance and Management Pty, Ltd. and Sizzler South East Asia, Inc.) with
(a)(i) individual tangible asset value including Cash of less than $500,000, and
(ii) annual licensing fees received by such subsidiary less than $100,000 and
(b)(i) an aggregate tangible
14
asset value including Cash for all such subsidiaries less than $2,000,000, and
(ii) aggregate annual licensing fees received by all such subsidiaries less than
$750,000.
72. "INDENTURE". The indenture agreement executed by the Debtor in favor of
---------
the Indenture Trustee, in substantially the form of Exhibit "C" hereto, pursuant
to which the Debtor shall issue the Notes.
73. "INDENTURE TRUSTEE". The trustee under the Indenture.
-----------------
74. "INTERNATIONAL LICENSING ASSETS". Those Assets relating to the
------------------------------
International licensing of the "Sizzler" trademark, including the International
Licensing Executory Contracts, which are identified on Exhibit "N" of this Plan.
75. "INTERNATIONAL LICENSING ASSETS PAYMENT". The payment of $1,000,000 to
--------------------------------------
the "Creditor Trust" created pursuant to the SRI Plan by Sizzler International
Marks and the transfer to Sizzler USA of the CPI Real Estate on the Effective
Date in return for the International Licensing Assets.
76. "INTERNATIONAL LICENSING EXECUTORY CONTRACTS". Those executory contracts
--------------------------------------------
relating to the international licensing of the "Sizzler" trademark identified on
Exhibit "O" to this Plan.
77. "KFC ASSETS". All assets of CFI Pty or SA Pty used in respect of or
----------
related to CFI Pty's operation of "KFC" restaurants in Australia including,
without limitation, the real property upon which such restaurants are operated,
the personal property used in the operation of such restaurants and any
development agreement, license agreement or master license agreement pursuant to
which such restaurants are operated.
15
78. "LARGE UNSECURED CLAIM". Any General Unsecured Claim which is Allowed in
---------------------
an amount greater than $17,000 which (a) is not a Bank Claim, and (b) is not
voluntarily reduced in Allowed Amount to $17,000 and treated as a Small
Unsecured Claim under the Plan.
79. "LETTER OF CREDIT NOTE". The unregistered note, substantially in the
---------------------
form of Exhibit "M" to this Plan, to be executed by Debtor and CFI Insurers Ltd.
to reflect the conditional obligation to pay that portion of the Bank Claims
which constitutes an Undrawn LC Claim.
80. "LITIGATION". Any and all claims, demands, rights, defenses, actions,
----------
causes of action, suits, contracts, agreements, obligations, accounts, defenses,
offsets, powers, privileges, licenses and franchises of any kind or character
whatsoever, known or unknown, suspected or unsuspected, whether arising prior
to, on or after the Petition Date, in contract or in tort, at law or in equity,
or under any other theory of law, of the Debtor or its Estate, including but not
limited to (i) rights of setoff, counterclaim, or recoupment, and claims on
contracts or for breaches of duties imposed by law, (ii) the right to object to
Claims or Interests, (iii) claims pursuant to Bankruptcy Code (S)(S) 362, (iv)
such claims and defenses as fraud, mistake, duress and usury and (v) all
Avoidance Actions.
81. "LOCAL RULES". The Local Bankruptcy Rules for the Bankruptcy Court, as
-----------
may be amended from time to time and which apply to the Case.
82. "LUC NOTES". The registered Notes, substantially in the form of Exhibit
---------
"F" to this Plan, to be issued by the Debtor
16
pursuant to the Indenture to the Holders of Allowed Large Unsecured Claims.
83. "NET PROCEEDS". The proceeds received upon the sale or exchange of an
------------
asset, minus (a) the amount of any debt secured by the asset and satisfied by
payment from such amount, and (b) the costs of sale, including, without
limitation, any fees, expenses, commissions or taxes of any kind (including
income and transfer taxes) with respect thereto.
84. "NON-VESTED RETIREMENT CLAIM". A Claim by any Person under the SERP
---------------------------
Agreement which is not vested as of the Effective Date.
85. "NOTES". Collectively, the Bank Notes and LUC Notes (but excluding the
------
Letter of Credit Note).
86. "OPERATING CASH FLOW". The sum of EBITDA (as defined herein) and the
-------------------
general and administrative expenses allocated to CFI Accounting Affiliates by
SII less any losses recognized (for accounting purposes) as a result of assets
sold by the CFI Accounting Affiliates.
87. "PERMITTED RESERVE AMOUNT". "Permitted Reserve Amount" has the meaning
------------------------
given that term in Section VIII.C.7.c of this Plan.
88. "PERSON". An individual, partnership, corporation, an association,
------
a joint stock company, a joint venture, an estate, a trust, an unincorporated
organization, or any government or other political subdivision thereof or other
entity.
89. "PETITION DATE". June 2, 1996.
-------------
17
90. "PLAN". This Plan of Reorganization, including any amendments and
----
modifications to this Plan, as approved by Final Order of the Bankruptcy Court.
91. "PLAN AGREEMENT". Any of the Exhibits hereto and any other agreement to
--------------
be executed by any Person under this Plan.
92. "POLICIES". The Debtor's insurance policies that provide Coverage for
--------
Damage Claims related to acts that occurred or are alleged to have occurred
prior to the Petition Date.
93. "PRIORITY NON-TAX CLAIM". A Claim against the Debtor that is not a
----------------------
Secured Claim and is specified as having priority in Bankruptcy Code (S)(S)
507(a)(3), 507(a)(4), 507(a)(5) or 507(a)(6), respectively.
94. "PRIORITY TAX CLAIM". A Claim entitled to priority under Bankruptcy Code
------------------
(S) 507(a)(8).
95. "PRO RATA". With respect to any Distribution: (a) to a particular Class
--------
of Allowed Claims or Interests, the ratio that the Allowed Amount of a
particular Allowed Claim or Allowed Interest in the Class bears to the total
Allowed Amount of Allowed Claims or Allowed Interests in the Class; (b) to be
made to more than one particular Class of Claims, the ratio that the total
Allowed Amount of Claims in a particular Class bears to the total Allowed Amount
of Allowed Claims and the Permitted Reserve Amount in respect of all relevant
Classes; or (c) to be made to the holders of Notes (and the Letter of Credit
Note if such instrument is payable at the time of and through such Distribution)
and the Reserve Agent in respect of Disputed Large Unsecured Claims, the ratio
that the face amount of any given Note or the Permitted Reserve Amount bears to
18
the aggregate face amount of the Notes and the Permitted Reserve Amount.
96. "PURCHASE MONEY OBLIGATIONS". Indebtedness incurred in connection with
--------------------------
the acquisition of equipment, real property or any other fixed asset.
97. "REFERENCE RATE". The rate announced by Bank of America National Trust
--------------
and Savings Association from time to time as its "reference", "base" or "prime"
lending rate or, if the Bank of America fails to announce a "reference rate" or
"base rate", the "reference rate" or "prime rate" as articulated by three of the
money center banks as published in the United States edition of the Wall Street
Journal from time to time.
98. "RESERVE AGENT". The Holder of the Disputed Claims Reserve who shall
-------------
initially be Robert A. Berger.
99. [INTENTIONALLY OMITTED]
100. "SANDWICH LEASE PROPERTIES". The parcels of real properties listed on
-------------------------
Exhibit "G" hereto.
101. "SA PTY". Sizzler Australia Pty Ltd., an Australian corporation.
------
102. "SCHEDULES". The Debtor's Schedules of Assets and Liabilities, filed on
---------
July 9, 1996, as amended from time to time thereafter.
103. "SECURED CLAIM". Any Claim that is secured by a lien on property in
-------------
which the Estate has an interest or that is subject to setoff under Bankruptcy
Code (S) 553, to the extent of the value of the Claim Holder's interest in the
Estate's interest in such
19
property or to the extent of the amount subject to setoff, as applicable, as
determined pursuant to Bankruptcy Code (S) 506(a).
104. "SECURED NON-TAX CLAIM". Any Secured Claim not owing on account of a
---------------------
tax.
105. "SECURED TAX CLAIM". Any Secured Claim owing on account of a tax.
-----------------
106. "SELLING HOLDERS". All Holders of Allowed Class 4 Large Unsecured Claims
---------------
as of July 16, 1997.
107. "SERP CLAIM". Any Claim held by a SERP Creditor under the SERP Plan.
----------
108. "SERP CREDITORS". Rushton O. Backer, Robert Barrett, Richard P.
--------------
Bermingham, Lee Clancy, Thomas L. Gregory, Michael Minchin, William R. Scarpino,
James A. Collins and Benjamin Stone.
109. "SERP GUARANTEE". The guarantee executed by CFI Pty, of Debtor's
--------------
obligations to the SERP Creditors under this Plan in substantially the form of
Exhibit "H" hereto.
110. "SERP PLAN". The Sizzler International Executive Supplemental Benefit
---------
Plan as of May 1, 1985, as subsequently amended.
111. "SII SECURITY AGREEMENT". The agreement of SII encumbering essentially
----------------------
all of its Assets in favor of the Indenture Trustee in substantially the form of
Exhibit "K" hereto.
112. "SII STOCK PLEDGE AGREEMENT". The agreement of Debtor pledging the CFI
--------------------------
Stock in favor of the Indenture Trustee in substantially the form of Exhibit "J"
hereto.
20
113. "SIZZLER INTERNATIONAL MARKS". Sizzler International Marks, Inc., a
---------------------------
corporation to be formed pursuant to the Plan to hold the International
Licensing Assets.
114. "SIZZLER USA". Sizzler USA Real Property, Inc., a Delaware corporation
-----------
to be formed pursuant to this Plan, the stock of which will be held by Sizzler
USA Holdings.
115. "SIZZLER USA HOLDINGS". Sizzler USA, Inc., a Delaware corporation to be
--------------------
formed pursuant to this Plan, the stock of which will be held by Debtor.
116. "SMALL UNSECURED CLAIM". Any General Unsecured Claim which is not
---------------------
subject to dispute in whole or in part by Debtor and is Allowed in an Amount of,
or is voluntarily reduced to, $17,000 or less, which voluntary election becomes
effective pursuant to the Plan.
117. "SRI". Sizzler Restaurants International, Inc., a Delaware corporation,
---
the Debtor's indirect subsidiary and a debtor in a related chapter 11 case filed
on June 2, 1996.
118. "SRI AFFILIATES". Collectively, SRI, Sizzler USA, Sizzler USA Holdings,
--------------
Tenly and Buffalo Ranch and any other subsidiaries owned by SRI.
119. "SRI PLAN". The plan of reorganization filed by SRI in the SRI chapter
--------
11 case to be confirmed contemporaneously with the Confirmation of this Plan.
120. "TENLY". Tenly Enterprises, Inc., a Pennsylvania corporation, an
-----
Affiliate of the Debtor and a debtor in a related chapter 11 case filed on June
2, 1996.
21
121. "UNCLAIMED PROPERTY". Any funds or property distributed to Creditors or
------------------
Holders of Interests (together with any interest earned thereon) which are
unclaimed as of 180 days after the Distribution. Unclaimed Property will
include, without limitation, Cash and any other property which is to be
distributed pursuant to this Plan which has been returned as undeliverable
without a proper forwarding address, or which was not mailed or delivered
because of the absence of a proper address to which to mail or deliver such
property.
122. "UNDRAWN LC CLAIM". That portion of an Allowed Bank Claim which relates
----------------
to any letter of credit issued by the Holder, to the extent such letter of
credit remains undrawn (in whole or in part) as of the Effective Date.
123. "U.S. TRUSTEE". The United States Trustee, or its representative.
------------
124. "WORKERS' COMPENSATION". Any Claim against the Debtor governed by the
---------------------
Workers' Compensation laws of California or any other applicable jurisdiction.
B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW
--------------------------------------------------------------
1. RULES OF INTERPRETATION. For purposes of this Plan: (a) whenever from
-----------------------
the context it is appropriate, each term, whether stated in the singular or the
plural, will include both the singular and the plural; (b) any reference in this
Plan to a contract, instrument, release or other agreement or document being in
a particular form or on particular terms and conditions means that such
agreement or document will be substantially in such form or substantially on
such terms and conditions; (c) any reference in this Plan to an existing
document or exhibit filed or to be filed
22
means such document or exhibit, as it may have been or may be amended, modified
or supplemented; (d) unless otherwise specified, all references in this Plan to
sections, articles and exhibits are references to sections, articles and
exhibits of or to this Plan; (e) the words "herein" and "hereto" refer to this
Plan in its entirety rather than to a particular portion of this Plan; (f)
captions and headings to articles and sections are inserted for convenience of
reference only and are not intended to be a part of, or to affect, the
interpretation of this Plan; (g) "after notice and a hearing," or a similar
phrase has the meaning ascribed in Bankruptcy Code (S) 102; (h) "includes" and
"including" are not limiting; (i) "may not" is prohibitive, and not permissive;
(j) "or" is not exclusive; and (k) U.S. Trustee includes a designee of the U.S.
Trustee.
2. COMPUTATION OF TIME. In computing any period of time prescribed or
-------------------
allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) will apply.
3. GOVERNING LAW. Except to the extent that the Bankruptcy Code, Bankruptcy
-------------
Rules or Local Rules are applicable, and subject to the provisions of any
contract, note, deed of trust, security agreement, instrument, release or other
agreement or document entered into in connection with this Plan, the rights and
obligations arising under this Plan will be governed by, and construed and
enforced in accordance with, the laws of the State of California without giving
effect to the principles of conflict of laws thereof to the same extent that a
valid and binding contract to be governed by, construed, and enforced in
accordance with the laws of the State of California without giving effect to the
23
principles of conflict of laws thereof would be so governed, construed, and
enforced.
24
ARTICLE II
ADMINISTRATIVE AND TAX CLAIMS
-----------------------------
A. TREATMENT OF ADMINISTRATIVE CLAIMS. Notwithstanding the following, the
----------------------------------
Holder of an Administrative Claim and the Debtor may agree to less favorable
treatment of the Administrative Claim. Holders of Large Unsecured Claims
seeking professional fees or expenses pursuant to Bankruptcy Code (S) 503(b)
shall be conclusively deemed by this Plan to have consented to have such Claims
treated solely by recourse to the Attorneys' Fee Fund governed by Section V.L.
of this Plan.
1. BAR DATE FOR ADMINISTRATIVE TAX CLAIMS. All requests for payment of
--------------------------------------
Administrative Tax Claims and for which no earlier bar date has been or is
established outside of this Plan, such as may be established by requesting an
expedited audit under Bankruptcy Code (S) 505, must be filed on or before the
later of (i) sixty days following the Effective Date; and (ii) sixty days
following the filing of any required tax return for such taxes for such year or
period with the applicable governmental unit. Any Holder of any Administrative
Tax Claim that is required to file a request for payment of such taxes and does
not file such a request by the applicable bar date will be forever barred from
asserting any such Administrative Tax Claim against the Debtor, whether any such
Administrative Tax Claim is deemed to arise prior to, on, or subsequent to the
Effective Date.
2. BAR DATE FOR ALL OTHER ADMINISTRATIVE CLAIMS. Requests for payment of
--------------------------------------------
Administrative Claims (other than Administrative Tax Claims and statutory fees
as described below) must be filed and served on the Debtor, the Committee, and
the U.S. Trustee no later
25
than sixty days after the Effective Date. Professionals or other entities
requesting compensation or reimbursement of expenses pursuant to Bankruptcy Code
(S)(S) 327, 328, 330, 331, 503(b) and 1103 for services rendered prior to the
Effective Date will file and serve on all parties entitled to notice thereof, an
application for final allowance of compensation and reimbursement of expenses no
later than ninety days after the Effective Date in accordance with the various
orders of the Bankruptcy Court establishing procedures for submission and review
of such applications. All such requests for payment of Administrative Claims
and applications for final allowance of compensation and reimbursement of
expenses will be subject to the authorization and approval of the Bankruptcy
Court. Holders of Administrative Claims (including, without limitation,
professionals) requesting compensation or reimbursement of expenses that do not
file such requests by the applicable bar date will be forever barred from
asserting such claims against the Debtor, Estate, or its property. The Debtor
shall have 120 days from the date an Administrative Claim is served in
accordance herewith to bring an objection to such Claim.
3. PAYMENT OF ADMINISTRATIVE CLAIMS, ADMINISTRATIVE TAX CLAIMS AND
---------------------------------------------------------------
PRIORITY TAX CLAIMS.
-------------------
(i) Subject to the bar dates and other provisions set forth above, each
Holder of an unpaid Administrative Claim or Administrative Tax Claim will
receive Cash equal to the Allowed amount of such Claim, on the latest of (w) the
Effective Date, (x) the date such Claim would be payable in the ordinary course
of business, (y) 120 days from the date the Claim is served in
26
accordance herewith, and (z) if a timely objection is made, the date such Claim
becomes an Allowed Claim. Any Administrative Claim based on a guarantee issued
by Debtor during the Bankruptcy Case shall not be discharged on the Effective
Date and such guarantee will be honored by Debtor if and when an amount is
payable thereunder.
(ii) Each Allowed Priority Tax Claim shall be paid not later than six
years after such Claim was assessed. Principal payments shall be made semi-
annually in the amount of 1/12 of the Allowed Amount of such Claim, with the
full Amount of such Claim due and payable not later than the earlier of October
1, 2003 or the date that is six years from the date of assessment. Each such
Claim shall accrue interest thereon from the year such tax claim is assessed.
Payments shall be made on October 1 and April 1 of each year following the year
such Tax Claim is assessed. Interest shall accrue on the unpaid principal
amount of Allowed Priority Tax Claims at the legal rate after the Effective
Date. No Priority Tax Claim shall include interest unmatured and accrued
subsequent to the Petition Date and prior to the Effective Date in excess of the
Reference Rate unless ordered by the Court prior to the Confirmation. The
amount of each Priority Tax Claim may be prepaid, in whole or in part, at any
time without penalty of any kind. If any such Claim is disputed or subject to
Bankruptcy Court approval, the payment will be made on the first date on which
there is a Final Order awarding such Claim.
4. STATUTORY FEES. On or as soon as practicable after the Effective Date,
--------------
all Holders of Administrative Claims for fees payable pursuant to (S) 1930 of
Title 28 of the United States Code,
27
28 U.S.C. (S) 1930, will receive Cash in the amount of such Administrative
Claim.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS AND
------------------------------------------
DESIGNATION OF IMPAIRMENT
-------------------------
A. NATURE OF CLASS DESIGNATIONS.
----------------------------
The following is a designation of the Classes of Claims and Interests under
this Plan. Administrative Claims, Administrative Tax Claims and Priority Tax
Claims have not been classified and are excluded from the following Classes in
accordance with Bankruptcy Code (S) 1123(a)(1). A Claim or Interest will be
deemed classified in a particular Class only to the extent that the Claim or
Interest qualifies within the description of that Class and, unless otherwise
provided in this Plan, will be deemed classified in a different Class to the
extent that any remainder of the Claim or Interest qualifies within the
description of such different Class. A Claim or Interest is classified in a
particular Class only to the extent that the Claim or Interest is an Allowed
Claim or Allowed Interest in that Class and has not been paid, released or
otherwise satisfied before the Effective Date. Notwithstanding the following
descriptions of the treatment of Claims, Interests, and Classes, the Holder of a
Claim or Interest which is not an Allowed Claim or Allowed Interest may not vote
upon or receive a Distribution under this Plan in respect to such Claims or
Interests unless otherwise ordered by the Bankruptcy Court after notice and a
hearing.
B. CLASS OVERVIEW.
--------------
28
This Plan contains the following Classes of Claims or Interests:
29
1. PRIORITY NON-TAX CLAIMS.
-----------------------
Class 1: Priority Non-Tax Claims. Class 1 Priority Non-Tax Claims are
unimpaired under the Plan.
2. SECURED CLAIMS.
--------------
Class 2: Secured Claims, if any, against the Debtor, with each Secured
Claim being deemed a separate subclass of Class 2. The Debtor believes that the
only Secured Claims against the Debtor are the Finova Secured Claim (which
Debtor has classified in Class 2(a)), and the Copelco Secured Claim (which
Debtor has classified in Class 2(b)). Class 2 Secured Claims are unimpaired
under the Plan.
3. BANK CLAIMS.
-----------
Class 3: Bank Claims. Class 3 Bank Claims are impaired under the Plan.
4. LARGE UNSECURED CLAIMS.
----------------------
Class 4: Large Unsecured Claims. Class 4 Large Unsecured Claims are
impaired under the Plan.
5. DAMAGE CLAIMS.
-------------
Class 5: Damage Claims, but only to the extent that such Claims are to
be paid from the Coverage. To the extent that a Damage Claim is not covered by
the Policies, then such uncovered portion of the Damage Claim will be treated as
a Large Unsecured Claim. Class 5 Damage Claims are impaired under the Plan.
6. AFFILIATE CLAIMS.
----------------
Class 6: Affiliate Claims. Class 6 Affiliate Claims are impaired under
the Plan.
7. SERP CLAIMS.
-----------
30
Class 7: SERP Claims. Class 7 SERP Claims are unimpaired under the Plan.
8. SMALL UNSECURED CLAIMS.
----------------------
Class 8: Small Unsecured Claims. Class 8 Small Unsecured Claims are
impaired under the Plan.
9. WORKERS' COMPENSATION CLAIMS.
----------------------------
Class 9: Workers' Compensation Claims. Class 9 Workers' Compensation
Claims are unimpaired under the Plan.
10. NON-VESTED RETIREMENT CLAIMS.
----------------------------
Class 10: Non-Vested Retirement Claims. Class 10 Non-Vested Retirement
Claims are unimpaired under the Plan.
11. INTERESTS.
---------
Class 11: Interests in the Debtor. Class 11 Interests are unimpaired
under the Plan.
ARTICLE IV
DESIGNATION AND TREATMENT OF CLASSES
------------------------------------
A. TREATMENT OF ALLOWED SECURED CLAIMS: CLASS 2(a) AND 2(b).
--------------------------------------------------------
1. CLASS 2 SUBCLASSES. Each Allowed Class 2 Claim will be in its own
------------------
subclass and will be treated as being in a separate Class for voting and
confirmation purposes.
2. TREATMENT. Each Allowed Class 2 Claim will receive one of two forms of
---------
treatment described in subpart a and b below under this Plan in respect of its
Allowed Class 2 Claim, unless an Allowed Class 2 Claim Holder and the Debtor
agree to less favorable treatment. The Debtor prior to the Effective Date will
select which treatment each Holder is to receive, and shall file a notice
indicating its selection and serve it on the Holder of the Claim no later than
thirty days prior to the Effective Date (or, if the
31
Claim is a Disputed Claim as of the Effective Date, within thirty days after the
Claim becomes an Allowed Claim). If no form of treatment is so selected, the
alternative described in subpart a below will be applicable.
a. PRESENT FULL PAYMENT. Each Holder of an Allowed Class 2 Claim will
--------------------
receive Cash in the amount of its Allowed Claim. For payment of the Class 2
Claim, (i) if the Claim is Allowed, the payment will be made by the Debtor on
the Effective Date and (ii) if the Claim is a Disputed Claim, the Holder will
retain its liens securing its Secured Claim pending payment and payment will be
made by the Debtor on the first date on which there is a Final Order providing
that such Claim is Allowed; provided, however, that the Debtor will be free to
sell the collateral securing such Claim pursuant to Bankruptcy Code (S) 363 or
other applicable law.
b. ABANDONMENT OF COLLATERAL. Each Holder of an Allowed Class 2 Claim
-------------------------
will receive its collateral in full satisfaction of its Class 2 Claim no later
than ten (10) Business Days after the Debtor elects application of this
treatment for such Claim in the manner set forth above. Pending return of the
collateral for the Claim of such Holder, such Holder will retain its liens
securing its Allowed Secured Claim.
B. TREATMENT OF UNSECURED CLAIMS.
-----------------------------
1. CLASS 1 - PRIORITY NON-TAX CLAIMS. Each Holder of an Allowed Class 1
---------------------------------
Priority Non-Tax Claim shall be paid in full by the Debtor on the later of the
Effective Date or the date that is not more than thirty (30) days after the date
on which such Claim becomes an Allowed Claim. The Allowed Amount of each Class 1
Priority Non-Tax Claim shall include interest from the date such
32
Claim was payable until the date of the Distribution to the Holder at the
Reference Rate plus 1%.
2. CLASS 3 - BANK CLAIMS.
---------------------
(a) On the Effective Date, the aggregate amount of Bank Claims (including
the Undrawn Letter of Credit Claim and all fees and expenses) shall be Allowed
in the Amount of $44,277,343, or such other amount as is agreed upon by the
Debtor and the Holders of Bank Claims as of April 15, 1997 plus interest on any
letter of credit drawn between March 22, 1997 and the Effective Date. To the
extent the Effective Date is later than April 15, 1997, the aggregate amount of
Allowed Bank Claims shall increase by $10,638.55 per diem as adjusted to account
for any changes in the Reference Rate after April 15, 1997.
(b) The aggregate Allowed Amount of Class 3 Bank Claims shall be
allocated among the Holders thereof pursuant to the mutual agreement of the
Holders, as provided in writing to the Debtor prior to the Confirmation Date,
or, in the absence of such a writing, shall be delivered to the law firm of
O'Melveny & Myers to be held in trust for such Holders.
(c) Unless the Holder and the Debtor agree to a less favorable treatment,
each Holder of an Allowed Class 3 Bank Claim shall receive the following
Distributions:
(i) On the Effective Date, a Pro Rata portion of the Bank Effective
Date Payment. The Bank Effective Date Payment shall constitute a principal
payment on the Bank Notes.
(ii) Not later than thirty days following the Effective Date, Cash
(including post-Effective Date interest at
33
Reference Rate plus 3-1/4%) or a Bank Note in an amount calculated as set forth
below.
(iii) In respect of an Undrawn LC Claim, the Letter of Credit Note,
to be issued solely to the issuer of the undrawn letter of credit in question.
Such Letter of Credit Note shall provide for payment in full of such Note within
thirty days of the date that such letter of credit is drawn upon by the
beneficiary thereof. Interest shall accrue on the Letter of Credit Note at the
Reference Rate plus 3 1/4% from the date of such draw until such Claim is paid
in full by Debtor. An Undrawn Letter of Credit Claim shall not include or accrue
any pre-Petition Date interest, post-Petition Date interest or any post-
Effective Date interest prior to the draw (if any) on such letter of credit.
(iv) The Letter of Credit Note shall be secured by the same
collateral that secures the Notes or disputed Class 4 Claims (if no Notes are
issued) on a pari passu basis.
(v) On the Effective Date, a portion of the Bank Professional Fee
Payment allocated by the Holders of the Bank Claims such that the Holders
collectively shall receive the entire Bank Professional Fee Payment.
(d) The amount of each Bank Note shall be the Allowed Amount of the
Holder's Class 3 Bank Claim (as allocated by the Holders) minus the sum of
the following amounts:
(i) The Bank Professional Fee Payment received by such Holder; and
(ii) Any portion of such Claim which constitutes an Undrawn LC
Claim.
34
(e) Each Bank Note shall accrue interest and be repayable in accordance
with Article V of this Plan, the Indenture and the terms of the Bank Note.n
3. CLASS 4 - LARGE UNSECURED CLAIMS.
--------------------------------
(a) Unless the Holder and the Debtor agree to a less favorable treatment,
each Holder of an Allowed Large Unsecured Claim shall receive the following
Distributions:
(i) On the later of (a) the Effective Date or (b) the date not later
than thirty days after the date on which such Claim becomes an Allowed Claim, a
Pro Rata Distribution of: all of the Debtor's Available Cash as of the Effective
Date less the sum of all other payments required to be paid or reserved under
this Plan on the Effective Date, until such time as the Holders of the LUC Notes
have received Pro Rata payment on such Notes equivalent to the payment on the
Bank Notes by reason of the Bank Effective Date Payment, with any excess
Available Cash to be paid Pro Rata to the Holders of the Notes and the Reserve
Agent on account of the Disputed Claims.
(ii) Upon the later of (a) the Effective Date or (b) the date not
later than thirty days after the date on which such Claim becomes an Allowed
Claim, Cash (plus post-Effective Date interest at Reference Rate plus 3-1/4%) or
a LUC Note in the Allowed Amount of the Holder's Large Unsecured Claim.
(b) The following terms shall apply to the calculation of the Allowed
Amount of Large Unsecured Claims and the treatment of such Claims under this
Plan:
35
(i) The Allowed Amount of any Large Unsecured Claim based upon an
obligation of Debtor which was due and payable prior to the Petition Date under
applicable non-bankruptcy law shall include interest from the date such
obligation was payable to the Petition Date at the lesser of (x) the rate
provided for in the Holder's contract (excluding, with respect to any contract
with a non-default rate, any increase in such rate following a default), if any,
or (y) the Reference Rate plus 1%.
(ii) The Allowed Amount of any Large Unsecured Claim which is based
on an obligation which was payable by Debtor prior to the Effective Date shall
accrue interest from the Petition Date to the Effective Date at the Reference
Rate plus 1%.
(iii) Except as expressly provided above, no Large Unsecured Claim
shall include interest as of the Effective Date.
(iv) Except as provided in this paragraph, the Allowed Amount of any
Large Unsecured Claim shall not include any professional fees or expenses. Any
such Claim for professional fees or expenses shall be satisfied in its entirety
from the Attorneys Fees Fund in accordance with the procedures set forth in
Section V.L. hereof.
(c) Each LUC Note shall accrue interest and be repayable in accordance
with Article V of this Plan, the Indenture and the terms of the LUC Note.
4. CLASS 5 - DAMAGE CLAIMS.
-----------------------
a. LIQUIDATION. Damage Claims will be subjected to the ADR process,
-----------
either prior to or after the Effective Date, which is designed to produce a
settlement with respect to such Damage Claim. If the ADR does not produce a
settlement, the Holder of a Damage
36
Claim may seek relief from the Bankruptcy Court to pursue the Damage Claim in an
appropriate non-bankruptcy forum.
b. PAYMENT. In accordance with the ADR, if a Damage Claim becomes an
-------
Allowed Claim, it will be paid first from third party sources, including any
applicable Coverage from which Holders of Damage Claims may be entitled to
recover all or part of the Allowed Amount of their Claims. The Allowed Amount of
any Damage Claim shall not include interest that accrues on such Claim prior to
the liquidation thereof. Thereafter, Class 5 Damage Claims shall accrue interest
in accordance with applicable law until paid in full. To the extent that the
Coverage ultimately proves insufficient, any deficiency will receive treatment
as a Class 4 Large Unsecured Claim and in such event, interest will accrue in
accordance with this Plan.
5. CLASS 6 - AFFILIATE CLAIMS. The Holders of Class 6 Claims shall receive no
--------------------------
Distribution on account of the Affiliate Claims under the Plan.
6. CLASS 7 - SERP CLAIMS.
---------------------
a. Distributions. SERP Claims are unimpaired under the Plan. On the
-------------
Effective Date Debtor shall cure any default that occurred prior to the
Effective Date in respect of any SERP Claim. The SERP Creditors shall retain all
of their rights and benefits under the SERP Plan.
b. SERP GUARANTEE. The SERP Guarantee will be executed with respect
--------------
to all Allowed SERP Claims.
7. CLASS 8 - SMALL UNSECURED CLAIMS.
--------------------------------
a. PAYMENT. Each Holder of an Allowed Class 8 Small Unsecured Claim
-------
shall be paid in full by Debtor on the later of the
37
Effective Date or the date that is not more than thirty (30) days after the date
on which such Claim becomes an Allowed Claim. The Allowed Amount of each Small
Unsecured Claim shall include interest from the date such Claim was payable
until the date of the Distribution to the Holder at the Reference Rate plus 1%,
but shall exclude any Claim for professional fees and expenses.
b. ELIGIBILITY. Creditors holding Allowed General Unsecured Claims in
-----------
an amount in excess of $17,000 may elect to have their Claim treated as a Small
Unsecured Claim by making such election on the ballot provided for voting upon
the Plan. In the event that, by reason of such election, the amount which would
otherwise be distributable with respect to Class 8 Small Unsecured Claims would
exceed $500,000, priority will be given to the Holders of the Claims which have
agreed to accept the greatest discount, as determined by the Debtor, and only
the elections of such Holders shall be effective.
8. CLASS 9 - WORKERS' COMPENSATION CLAIMS. Workers' Compensation Claims are
--------------------------------------
unimpaired under the Plan. Each Holder of a Worker's Compensation Claim shall be
entitled to all legal, equitable and contractual rights to which the Worker's
Compensation Claim entitles the Holder of such Claim. As such, the Holders shall
receive no Distribution under the Plan on account of Workers' Compensation
Claims.
9. CLASS 10 - NON-VESTED RETIREMENT CLAIMS. Non-Vested Retirement Claims are
---------------------------------------
unimpaired under the Plan. Each Holder of a Non-Vested Retirement Claim shall be
entitled to all legal, equitable and contractual rights to which the Non-Vested
Retirement Claim entitles the Holder of such Claim. As such, the Holders
38
shall receive no Distributions under the Plan on account of Non-Vested
Retirement Claims.
C. TREATMENT OF EQUITY - CLASS 11.
------------------------------
The Holders shall retain their Interests under the Plan.
39
ARTICLE V
VARIOUS MECHANICS FOR PAYMENT OF CLASS 3 AND 4
----------------------------------------------
GENERAL UNSECURED CLAIMS
------------------------
The primary mechanism for the payment of Bank Claims and Large Unsecured
Claims under this Plan is the payment in full in Cash or the issuance of and
payment on the Notes pursuant to the Indenture. In the event Bank Claims and
Large Unsecured Claims are not paid in full in Cash by the dates set forth in
Section IV.B.2 and IV.B.3 respectively, the mechanics of the foregoing shall be
as follows:
A. THE INDENTURE.
-------------
As soon as practicable following the Effective Date, the Debtor shall execute
the Indenture or pay Class 3 and Class 4 Claims in Cash.
B. THE NOTES.
---------
1. Not later than thirty days after the later of the Effective Date or when
any Disputed Large Unsecured Claim becomes an Allowed Claim, Debtor shall either
(a) execute and deliver a Bank Note or LUC Note (as applicable) governed by the
Indenture to the Holder in respect of each Allowed Bank Claim and Large
Unsecured Claim, or (b) satisfied in full pursuant to Section VIII.7.b. of this
Plan if the Indenture has been previously terminated in accordance with Section
V.N. The amount of each Bank Note and LUC Note shall be the Allowed Amount of
such Claim as of the Effective Date, including interest accrual calculated in
accordance with this Plan, and excluding any professional fees and expenses and
any Undrawn LC Claim. Any Distribution by Debtor to the Holder of a Bank Note
or a LUC Note prior to the issuance of
40
such Note, other than the Bank Professional Fees Payment, Distributions from the
Attorneys Fee Fund, or in regard to the Letter of Credit Note, shall be deemed
to be a principal payment on the relevant Note.
2. In the Distribution of any Note, the record date upon which the Debtor
may rely as to the Holder of a Bank Claim or Large Unsecured Claim shall be the
earlier of (a) the date the Note is sent to the Holder, or (b) thirty days prior
to the Effective Date. Debtor shall be under no obligation to recognize any
transfer of a Bank Claim or Large Unsecured Claim after such date for the
purposes of the issuance of a Bank Note or LUC Note.
C. TERM OF NOTES.
-------------
The term of each Note shall be two and one-half years from the Effective Date;
provided, however, that absent notice of a default under the Indenture, SII may
- -------- -------
extend the maturity of the Notes to five years from the Effective Date upon
written notice to the Indenture Trustee any time between two years and three
months after the Effective Date and the original maturity date of the Notes.
D. INTEREST ACCRUAL UNDER THE NOTES.
--------------------------------
Interest shall accrue under the Notes at an adjustable rate equal to (a) the
Reference Rate plus 3-1/4%, payable monthly in arrears or (b) Reference Rate
plus 2-3/4%, payable monthly in arrears in the event Debtor is able to obtain a
lien on the KFC Assets prior to the Confirmation Date in form and substance
satisfactory to the Committee and the Banks. Any change in the Reference Rate
shall be effective on the next succeeding Business Day.
E. Amortization Payments.
---------------------
41
1. Except for the Bank Effective Date Payment as expressly set forth in
subsection V.E.2 below, all principal payments shall be made Pro Rata to the
Holders of the Bank Notes, Holders of the LUC Notes, and the Disputed Claims
Reserve in respect of Disputed Large Unsecured Claims. The amount of each
Distribution payable to the Disputed Claims Reserve shall be calculated in
accordance with Section VIII.A.7 of this Plan.
2. Notwithstanding the foregoing, no principal shall be payable on the
Bank Notes following the Bank Effective Date Payment until the Holders of the
LUC Notes and the Reserve Agent for the benefit of Holders of Disputed Large
Unsecured Claims have received Pro Rata payments equivalent to that previously
made in respect of the Bank Notes by reason of the Bank Effective Date Payment.
3. Debtor shall make Pro Rata principal payments to the Holders of the Notes
and the Reserve Agent for the benefit of the Holders of Disputed Claims on or
before the last day of the third full calendar month following the Effective
Date and at the end of each successive three month period thereafter, until the
maturity date of the Notes in the amount of $2,125,000 minus the lesser of (a)
$25,000 or (b) one-twenty fourth of the Allowed Amount of the principal amount
of all Allowed Priority Tax Claims; provided, however, that if the Allowed
-------- -------
Amount of all Bank Claims and Large Unsecured Claims is determined by Final
Order to exceed $70,000,000, the principal amortization will increase by the
percentage that the Allowed Amount of such Claims exceeds $70,000,000; and,
provided, further, that the principal amortization, effective upon the next
- -------- -------
quarterly payment, will
42
increase prospectively to the extent that the Debtor or CFI Pty receives tax
benefits on Cash paid by CFI Pty to Debtor, Holders of Notes or the Reserve
Agent. Any unpaid principal shall be due upon the maturity of the Notes.
4. All Net Proceeds from the sale of CPI Encumbered Properties shall be
payable as a Distribution on the Notes. Net Proceeds from the sale of CPI
Encumbered Properties to a maximum aggregate amount of $8,674,000 following the
Effective Date may be part or all of the mandatory amortization set forth in
Subsection V.E.3 above. Any additional Net Proceeds from the sale of CPI
Encumbered Properties shall be paid Pro Rata upon such sale as mandatory
principal payments on the Notes (with a Pro Rata Distribution payable to the
Reserve Agent on account of Disputed Large Unsecured Claims in accordance with
Section VIII.C.7 of this Plan) in the inverse order of maturity, assuming a five
year term.
5. Debtor shall make additional, mandatory principal prepayments on the
Notes and to the Reserve Agent as follows:
(i) upon the sale by a CFI Accounting Affiliate, outside the ordinary
course of business, of a KFC Asset other than to another CFI Accounting
Affiliate for a price in excess of $50,000, 75% of the Net Proceeds of the sale,
are to be applied Pro Rata against principal owing under the Notes in inverse
order of maturity, assuming a five year term (with a Pro Rata Distribution
payable to the Reserve Agent on account of Disputed Large Unsecured Claims in
accordance with Section VIII.C.7 of this Plan) Claims;
(ii) upon the sale by a CFI Accounting Affiliate, outside of the ordinary
course of business, of any fixed asset (other than
43
a KFC Asset) other than to another CFI Accounting Affiliate for a price in
excess of $50,000, 75% of the Net Proceeds of the sale, to be applied Pro Rata
against principal owing under the Notes in the natural order of maturity (with a
Pro Rata portion of such Distribution payable to the Reserve Agent on account of
Disputed Large Unsecured Claims in accordance with Section VIII.C.7 of this
Plan);
(iii) upon such time as the Net Proceeds retention by the CFI Accounting
Affiliates from fixed asset sales governed by subparagraphs (i) and (ii) above
exceeds $7,000,000 in respect of the sale of KFC Assets, or $10,000,000 in
aggregate Net Proceeds (including Net Proceeds from the sale of KFC Assets), the
percentage of Net Proceeds payable pursuant to subsections (i) and (ii) above
shall increase from 75% to 100%;
(iv) upon the sale of the stock of SRI, Sizzler USA or Sizzler USA
Holdings, following the satisfaction of all indebtedness owing to the Holders of
Claims under the SRI Plan, and upon any debt or equity offering by SII or any
CFI Accounting Affiliate (other than indebtedness permitted under Section V.G.
of this Plan), 100% of the Net Proceeds shall be applied Pro Rata against the
principal owing under the Notes in the natural order of the maturity of such
payments (with a Pro Rata portion of such Distribution payable to the Reserve
Agent on account of Disputed Large Unsecured Claims in accordance with Section
VIII.C.7 of this Plan).
(v) within ninety days of the close of each of Debtor's fiscal years, all
Excess Cash Flow generated during such year shall
44
be applied Pro Rata against the scheduled principal payments remaining under the
Notes (assuming Debtor exercises its right to extend the maturity to five years
from the Effective Date); provided, however, that the portion of Excess Cash
-------- -------
Flow which would be payable solely by reason of the proviso in the definition of
Excess Cash Flow shall be payable within 180 days of the close of Debtor's
fiscal year. For the purposes of this calculation, until the Allowed Amount of
all Bank Claims and Large Unsecured Claims has been determined, it will be
assumed that the principal amount of Allowed Bank Claims and Large Unsecured
Claims will be $60,000,000, but in all events, Holders of Bank Notes, Holders of
LUC Notes and the Reserve Agent on account of Disputed Large Unsecured Claims in
accordance with Section VIII.C.7 shall receive Pro Rata Distributions except for
the Bank Effective Date Payment and as set forth in Subsection V.E.2 above.
F. AFFILIATE GUARANTEES/COLLATERAL.
-------------------------------
1. Each Affiliate other than the SRI Affiliates and CFI Insurers Ltd.
(unless and until CFI Insurers Ltd. receives any assets from another CFI
Accounting Affiliate pursuant to a asset transfer permitted under the Indenture
or under this Plan) shall participate with the Debtor in this Plan by executing
an Affiliate Guarantee in respect of the Notes.
2. Debtor shall secure its repayment of the Notes with a pledge of the CFI
Stock pursuant to the SII Stock Pledge Agreement and grant a lien on essentially
all of its Assets pursuant to the SII Security Agreement.
45
3. CPI, SA Pty and CFI Pty shall secure their obligations under their
respective Affiliate Guarantees by recording the Affiliate Deeds of Trust on the
Encumbered Properties.
4. Each Affiliate other than the SRI Affiliates, CFI Insurers Ltd. and the
Immaterial Affiliates shall execute appropriate Collateral Agreements in form
and substance satisfactory to the Committee and the Holders of the Bank Claims
generally encumbering all of the assets of such Affiliates; provided, however,
-------- -------
that no such lien shall be granted in respect of the KFC Assets and any
purported lien on such KFC Assets shall be ineffectual and legally void to the
extent such lien is prohibited by any master license agreement, master franchise
agreement, license agreement or development agreement; and provided, further,
-------- -------
that no such lien or security interest shall be granted upon any other asset
owned by any other Affiliate if prohibited by applicable law or any contractual
relationship of such Affiliate with any third party, as scheduled by the Debtor
prior to the approval of the Disclosure Statement. If any Affiliate shall at any
time cease to be an Immaterial Affiliate, it shall promptly execute Collateral
Agreements as set forth above.
G. COVENANTS UNDER THE INDENTURE.
-----------------------------
The Indenture shall include, without limitation, covenants consistent with the
following:
1. Debtor shall use its best efforts to cause CPI to sell all CPI Encumbered
Properties, other than Sandwich Lease Properties, in a diligent fashion. Debtor
will maintain an open broker listing on its headquarters building.
46
2. Debtor will not guarantee any obligations of any entity except as
permitted in the Indenture.
3. Debtor will not permit any of its Affiliates to grant any pledge, lien or
security interest on any asset; provided, however, that Affiliates may grant
liens securing purchase money indebtedness on newly acquired assets which fall
within the indebtedness limitations as set forth below.
4. CFI Accounting Affiliates shall not be permitted to have outstanding at
any one time indebtedness in excess of $10,000,000 (including capital leases)
excluding (a) the Notes, (b) any other Allowed Claims payable under this Plan,
the SERP Guarantee, and the Affiliate Guarantees, (c) current payables, (d)
inter-CFI Accounting Affiliate indebtedness, (e) indebtedness owing by CFI
Insurers Ltd. to the Holders of the Bank Claims, and (f) capital leases and
indebtedness secured by purchase money liens on new KFC units required to be
acquired or be built by CFI Pty under CFI Pty's KFC development agreement with
Kentucky Fried Chicken Pty. Limited.
5. Debtor shall not permit any loan or distribution of any funds or assets
from SII or the CFI Accounting Affiliates to the SRI Affiliates following the
Effective Date of this Plan and the SRI Plan other than in conjunction with
ordinary course overhead and similar allocations.
6. Debtor shall make no dividends on account of Equity Securities and shall
not repurchase any Equity Securities other than in conjunction with restricted
stock cancellations in lieu of tax payments or the repurchase of restricted
stock held by
47
employees upon vesting or upon termination of employment. Such repurchases shall
not exceed $500,000 in any fiscal year.
7. Debtor, Sizzler USA, SRI, CFI Pty and SA Pty shall be operated in a
manner consistent with the corporate separateness of each of those entities. SA
Pty and CFI Pty shall observe all appropriate corporate formalities.
8. Debtor and the CFI Accounting Affiliates, on the one hand,
and the SRI Affiliates, on the other hand, shall be operated in a manner
consistent with the corporate separateness of Debtor and the CFI Accounting
Affiliates from each of the entities comprising the SRI Affiliates. SII shall
observe all appropriate corporate formalities.
9. The CFI Accounting Affiliates shall maintain Operating Cash Flow as
follows to be allocated and measured quarterly (or, if the Committee and the
Banks have not agreed to the amount of such allocations by the Confirmation
Date, Operating Cash Flow measured quarterly as found to be reasonable by the
Court at the Confirmation Hearing):
Fiscal Year 1998
----------------
Quarter 1 $4,000,000
Quarter 2 $4,500,000
Quarter 3 $6,500,000
Quarter 4 $5,000,000
Fiscal Year 1999
----------------
Quarter 1 $4,800,000
Quarter 2 $5,400,000
Quarter 3 $7,800,000
48
Quarter 4 $6,000,000
Fiscal Year 2000
----------------
Quarter 1 $5,200,000
Quarter 2 $5,980,000
Quarter 3 $8,320,000
Quarter 4 $6,500,000
Fiscal Year 2001
----------------
Quarter 1 $5,200,000
Quarter 2 $5,980,000
Quarter 3 $8,320,000
Quarter 4 $6,500,000
Fiscal Year 2002
----------------
Quarter 1 $5,600,000
Quarter 2 $6,440,000
Quarter 3 $8,960,000
Quarter 4 $7,000,000
10. With respect to the covenant set forth in Section V.G.9 above, an event
of default shall occur under the Indenture only if the benchmark is missed for
two consecutive quarters.
11. The CFI Accounting Affiliates shall not expend funds for capital
expenditures in excess of the following amounts, with 25% of any amount not
expended during any fiscal year available for expenditure in any succeeding
years:
Fiscal Year 1998 $8,900,000
Fiscal Year 1999 $4,100,000
Fiscal Year 2000 $6,100,000
49
Fiscal Year 2001 $9,000,000
Fiscal Year 2002 $9,300,000
H. DIVIDEND PURCHASE.
-----------------
The Indenture shall further provide for the purchase by Holders of Class 3
Bank Claims of up to $1,200,000 in amount of certain of the Distributions of
principal payable to the Selling Holders as follows:
1. The Holders of the Class 3 Bank Claims shall purchase the right to
certain Distributions of the Selling Holders as follows.
2. After receipt of the Bank Effective Date Payment and the Bank
Professional Fee Payment, any principal Distribution by the Debtor on the Bank
Notes received by the Holders of Class 3 Bank Claims during the Dividend
Purchase Period shall be transferred to and distributed Pro Rata amongst the
Selling Holders, up to a maximum of $1,200,000. The amount of such transfer
shall be referred to herein as the "Purchased Amount". Notwithstanding the
foregoing, in the event that a purchase takes place before the deadline for
objecting to Claims has passed, the payment of the Purchased Amount shall be
made to the Reserve Agent on behalf of the Selling Holders and such payment
shall be deemed a payment to such Selling Holders for all purposes including for
purposes of calculating interest due to Holders of Class 3 Bank Claims on
account of the Selling Holders' Claims.
3. Upon receipt of any portion of the Purchased Amount, by the Selling
Holders, or, if applicable, by the Reserve Agent, on behalf of the Selling
Holders, the Selling Holders shall be deemed to absolutely transfer, sell and
assign to the Holders of the Class
50
3 Bank Claims the right to receive any and all Distributions of principal and
interest thereon until such time as the amount of principal Distributions so
transferred and received by Holders of the Class 3 Bank Claims equals the
portion of the Purchased Amount received by the Selling Holders or the Reserve
Agent on behalf of the Selling Holders.
4. Any purchase of Distributions provided for hereunder shall be effected by
the Debtor through the payment of the Purchased Amount Pro Rata on the date of
purchase to the Selling Holders, or, if prior to July 16, 1997, to the Reserve
Agent for the benefit of the Selling Holders.
5. Any Holder of an Allowed Class 4 Large Unsecured Claim as of the
Effective Date shall be conclusively presumed to have consented to being a
Selling Holder and to receiving the benefits of the dividend sale.
I. THE RESERVE AGENT.
-----------------
1. The Reserve Agent shall hold in appropriate interest bearing accounts (1)
the Disputed Claims Reserve discussed in Article VIII of this Plan for the
benefit of the Holders of Disputed Class 4 Large Unsecured Claims, and (2) the
Purchased Amount which would otherwise be payable to the Selling Holders. The
Reserve Agent shall be required to post a bond in an amount satisfactory to the
Court.
2. In the event of the resignation of the Reserve Agent, or removal by the
Bankruptcy Court for cause shown, the Debtor will promptly seek Bankruptcy Court
approval of a successor.
51
3. The Reserve Agent may perform any of its duties under this Plan by or
through its agents or employees.
4. The Reserve Agent shall make Distributions from the Disputed Claims
Reserve only in accordance with Section VIII.A.7 of this Plan.
5. As soon as practicable after July 16, 1997, the Reserve Agent shall pay
any portion of the Purchased Amount received by the Reserve Agent Pro Rata to
the Selling Holders.
6. With respect to any acts or approvals which are not required of the
Reserve Agent under this Plan, the Reserve Agent may at all times act (a) in
accordance with its own business judgement, or (b) in accordance with the
instructions of the Holders of 51% in amount of the Allowed Class 4 Large
Unsecured Claims. The Reserve Agent may at any time request instructions
from the Holders of Class 4 Large Unsecured Claims with respect to any
discretionary actions or approvals under the terms of this Plan.
7. To the extent the Reserve Agent requests instructions with respect to
discretionary acts or approvals, the Reserve Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person. The Reserve Agent shall also be entitled to
rely upon the advice of legal counsel, independent accountants and other experts
selected by it in its sole discretion.
J. APPROVED RESERVE AGENT EXPENSES. [INTENTIONALLY OMITTED]
-------------------------------
K. RESERVE AGENT INDEMNIFICATION/EXPENSES UPON DEFAULT.
---------------------------------------------------
52
1. The Reserve Agent shall have no liability to any Holder of any Large
Unsecured Claim or the Debtor absent gross negligence, intentional misconduct or
breach of this Plan.
2. The Debtor shall indemnify the Reserve Agent hereunder and hold the
Reserve Agent harmless from and against (i) all costs, expenses, reasonable
counsel fees, claims and liabilities (collectively, "Costs") resulting from any
action of the Reserve Agent under this Plan, provided, however, that in each
instance, this indemnity shall not apply to any Costs arising out of the gross
negligence or willful misconduct of the Reserve Agent. This indemnity shall
survive the payment of all amounts owing to the Holders of Class 4 Large
Unsecured Claims under this Plan.
L. THE ATTORNEYS FEE FUND.
----------------------
1. The Attorneys' Fee Fund shall be the exclusive source of recovery, from
the Debtor or Affiliates, for any Holder of any Allowed Large Unsecured Claim to
recover professional fees or expenses pursuant to contract, Bankruptcy Code (S)
503(b) or on any other basis. The establishment of the Attorneys' Fee Fund
constitutes a compromise agreed upon by the Debtor and the Committee with
respect to the issue of whether professional fees and expenses can properly be
included in the Allowed Amount of Class 4 Large Unsecured Claims in this Case.
2. The Debtor's total contribution into the Attorneys' Fee Fund shall be
$245,000 minus any amount payable by the Debtor to any Holder of an Allowed
Class 4 Large Unsecured Claim based upon a "substantial contribution" theory
pursuant to Bankruptcy Code (S) 503(b). In the event any Cash remains following
the liquidation
53
of all Claims against the Attorneys' Fee Fund, the Debtor may use the remaining
Cash for general operating purposes. In the event that the Allowed Claims
against the Attorneys' Fee Fund exceed the amount of the Attorneys' Fee Fund,
the claimants against the Fund shall share the proceeds thereof Pro Rata with
all other successful Claimants against the Attorneys Fee Fund.
3. In respect of any Claim for professional fees or expenses by a Holder of
an Allowed Class 4 Large Unsecured Claim to be paid from the Attorneys' Fee
Fund, Debtor waives all arguments that such fees or expenses are not payable per
---
se by reason of such Creditor's status as the Holder of a General Unsecured
- --
Claim.
4. Any Claim for professional fees or expenses by a Holder of a Class 4
Large Unsecured Claim must be made by written notice, supported by detailed
documentation, to the Debtor and the Committee prior to the Confirmation Date.
In the event that the Debtor or Committee objects to the Claim and the Claim is
not resolved by agreement of the Holder, Debtor and the Committee prior to
twenty-one days after notice of such objection, the Holder shall be required to
file a motion with the Court to resolve the Claim.
5. No amounts shall be distributed from the Attorneys' Fee Fund until all
Claims against the Fund have been resolved by the Bankruptcy Court and been the
subject of a Final Order.
M. CONTROLLING NATURE OF THE INDENTURE.
-----------------------------------
In the event of any conflict between the terms of the Indenture and the terms
of Article V of this Plan, the terms of the Indenture shall control, although
this Plan may amplify or clarify
54
terms of the Indenture that are not in conflict with the Plan. As to all other
Articles, the terms of this Plan shall control.
N. CASH ELECTION OR TERMINATION OF THE INDENTURE.
---------------------------------------------
1. If the Debtor elects to satisfy Allowed Class 3 and 4 Claims in Cash
pursuant to Article IV hereof, or elects to satisfy all Notes in full and
terminate the Indenture, the Debtor shall (a) deposit with the Reserve Agent
Cash in an amount sufficient to pay in full the Letter of Credit Note upon
redemption of the LC Note and all Notes outstanding at the time of such deposit
including all unpaid principal and interest due or to become due as of the date
of redemption and otherwise necessary to satisfy its obligation under Section
8.01 of the Indenture, plus (b) deliver to the Reserve Agent Cash in an amount
sufficient to pay in full in Cash Allowed Claims or upon redemption additional
Notes in an aggregate principal amount equal to the Undrawn Letter of Credit
Claim plus the Permitted Reserve Amount (as if such additional Notes had been
issued on the Effective Date) less any Cash already held by the Reserve Agent in
the Disputed Claim Reserve pursuant to Section VIII.7.b. of this Plan.
2. Debtor's election to satisfy Allowed Class 3 and 4 Claims in Cash
pursuant to Article IV hereof may only be exercised in respect of all Allowed
Class 3 and 4 Claims. Debtor may not make the Cash payment election solely as
to Class 3 or Class 4 Claims.
ARTICLE VI
CONDITIONS TO EFFECTIVENESS
---------------------------
Confirmation of this Plan is conditioned upon the events described below and,
where applicable, the Bankruptcy Court
55
entering the following orders and findings with respect to the Claims filed
herein against the Debtor:
A. Debtor and each Affiliate participating with the Debtor in this Plan have
executed all Plan Agreements required to be executed by Debtor and such
Affiliate, to be held in escrow pending the Effective Date.
B. The Debtor, the Committee and the Holders of the Bank Claims shall have
agreed upon the form and substance of the Collateral Agreements or, in the
absence of such agreements, such Collateral Agreements shall have been approved
as in conformity with the Plan by the Court.
C. The Court shall have found that the Debtor is not required to make and is
not making more than $175,000 in "cure payments" with respect to executory
contracts excluding employment and employee compensation or bonus agreements,
and further excluding "cure" payments which are payable as Allowed Claims under
the Plan.
D. Each of the SRI Affiliates shall have affirmatively released SII and all
CFI Accounting Affiliates from all claims arising prior to the Effective Date
with such release being held in trust pending the Effective Date and the
Effective Date under the SRI Plan.
E. The Effective Date in respect of the SRI Plan shall have occurred.
F. Unless waived by Debtor, the Holders of the Bank Claims and SII shall
have reached a mutual agreement concerning the
56
release by the Holders of the Bank Claims of CFI Insurers Ltd. upon the
occurrence of certain negotiated events.
G. Other than as necessary to effectuate the terms of this Plan, the Debtor
shall have released any claims against Affiliated Debtors, other than CPI, and
the Debtor shall have waived any distribution from the Buffalo Ranch and Tenly
bankruptcy cases.
H. Sizzler USA Holdings and Sizzler International Marks shall be formed
under Delaware corporate law and the Debtor shall cause CFI Pty to transfer the
stock of SRI to Sizzler USA Holdings. All issued and outstanding stock of
Sizzler International Marks shall be owned by SII.
I. CPI and CFI Pty or Sizzler International Marks shall make the
International Licensing Assets Payment.
J. SRI shall have assigned all International Licensing Assets (including the
International Licensing Executory Contracts) to Sizzler International Marks.
K. The Holders of Bank Claims shall have notified the Debtor of their mutual
agreement regarding allocation of the Allowed Bank Claims among such Holders;
provided however, that in the event all other conditions are met and the Debtor
- -------- -------
has not received such notification within thirty days of the Confirmation Date,
the Debtor shall use the allocation as set forth in the proofs of claim filed by
Holders of Bank Claims.
L. SII reserves the right to withdraw this Plan prior to Confirmation in the
event it is not accepted by the Holders of Class 3 and Class 4 Claims.
ARTICLE VII
57
TREATMENT OF EXECUTORY CONTRACTS
--------------------------------
AND UNEXPIRED LEASES
--------------------
A. ASSUMPTION.
----------
To the extent any such contracts or leases remain executory or unexpired on
the Effective Date, the executory contracts and unexpired leases listed on
Exhibits "B" and "D" to this Plan shall be deemed assumed as of the Effective
Date and the amounts, if any, which are necessary to cure defaults (if any)
under such executory contracts and unexpired leases pursuant to Bankruptcy Code
(S) 365 shall be as identified on the applicable Exhibit. Debtor reserves the
right to amend Exhibits "B" and "D" at any time prior to the Confirmation Date.
A reference on Exhibit "B" or "D" to a type or class of executory contract or
unexpired lease shall constitute an assumption of all executory contracts with
such Person included within such type or class, as all such contracts and
unexpired leases with a particular contracting party may have been amended or
modified. The Confirmation Order shall constitute an order of the Bankruptcy
Court (a) approving the assumption of the executory contracts and unexpired
leases listed on Exhibits "B" or "D" to this Plan as of the Effective Date; (b)
fixing the "cure" amount with respect to such defaults by Debtor under such
contracts prior to Confirmation, and (c) establishing that Debtor (rather than
any Affiliate) is the contracting party under such contract or lease. In the
event that the non-debtor party to an assumed executory contract or unexpired
lease does not timely object, the Confirmation Order shall be binding on such
Person as to (a) the amount of any default under such contract or lease and (b)
as to
58
whether Debtor (rather than any Affiliate) is the contracting party under such
contract or lease. The absence of a cure amount on Exhibit "B" or "D" relating
to any executory contract manifests Debtor's position that no amount is owing by
Debtor under such contract. Any monetary amounts found by the Bankruptcy Court
to be in default shall be satisfied, pursuant to Bankruptcy Code (S) 365(b), by
payment by Debtor of the default amount in Cash no earlier than the Effective
Date and no later than thirty days following the Effective Date. In the event of
any dispute concerning any conditions to assumption of an executory contract or
unexpired lease established by Bankruptcy Code (S) 365, the cure payments with
respect to such contract or lease required by the Bankruptcy Code shall be made
only following the entry of a Final Order resolving the dispute.
B. ASSIGNMENT.
----------
On the Effective Date, the Assumed and Assigned Executory Contracts shall be
assigned to SRI. Debtor will have no further obligation under any Assumed and
Assigned Executory Contract following such assignment.
C. REJECTION.
---------
On the Effective Date, all executory contracts and leases to which the Debtor
or the Estate was a party on or prior to Confirmation, and which have not been
assumed by the Debtor or assumed by the Debtor and assigned to a third party
pursuant to Bankruptcy Code (S) 365, will be rejected pursuant to Bankruptcy
Code (S)(S) 365 and 1123, to the extent, if any, that such contract or lease
constitutes an executory contract or unexpired lease, and without
59
conceding that such contracts or leases constitute executory contracts or
unexpired leases or that the Debtor has any liability thereunder. The
Confirmation Order will constitute an order of the Bankruptcy Court approving
all such rejections, pursuant to Bankruptcy Code (S) 365, as of the date of
Confirmation.
D. CLAIMS ARISING FROM REJECTION OF CONTRACTS.
------------------------------------------
Any Claim for damages arising from the rejection hereunder or under Bankruptcy
Code (S) 365 of an executory contract or unexpired lease of the Debtor that has
not been assumed pursuant to a prior order of the Bankruptcy Court, pursuant to
this Plan or under Bankruptcy Code (S) 365: (1) will be determined and allowed
or disallowed under Bankruptcy Code (S) 502(g), and, to the extent Allowed, will
be classified in the appropriate Class; and (2) will be unenforceable against
the Debtor, the Reserve Agent or the Estate and their respective property and
will be forever barred from receiving any Distribution under this Plan unless a
proof of such Claim is filed prior to the later of (1) the Claims Bar Date and
(2) the first business day that is thirty (30) days after the entry of an order
rejecting an executory contract or unexpired lease. Notwithstanding the
rejection of any executory contract or unexpired lease at any time during this
Case, the Debtor reserves all rights and defenses which the Debtor or Estate may
have or have had against the parties to such contracts and leases.
ARTICLE VIII
MEANS FOR IMPLEMENTATION OF PLAN/RESERVES
-----------------------------------------
A. EFFECTIVE DATE TRANSACTIONS.
---------------------------
60
As soon as practicable on or following the Effective Date, the following shall
occur in implementation of this Plan:
1. INCORPORATION OF SIZZLER USA HOLDINGS AND SIZZLER USA AND SIZZLER
-----------------------------------------------------------------
INTERNATIONAL MARKS. Each of Sizzler USA Holdings, Sizzler USA and Sizzler
- -------------------
International Marks shall be formed under Delaware corporate law. All issued
and outstanding stock of Sizzler USA Holdings shall be owned by SII. All issued
and outstanding stock of Sizzler International Marks shall be owned by CFI Pty.
All issued and outstanding stock of SRI and Sizzler USA shall be owned by
Sizzler USA Holdings.
2. ASSIGNMENT OF INTERNATIONAL LICENSING ASSETS TO SIZZLER INTERNATIONAL
---------------------------------------------------------------------
MARKS. SRI shall assign all International Licensing Assets (including the
- -----
International Licensing Executory Contracts) to Sizzler International Marks.
3. INTERNATIONAL LICENSING ASSETS PAYMENT. CPI and CFI Pty or Sizzler
--------------------------------------
International Marks shall make the International Licensing Assets Payment.
B. GLOBAL INTERESTATE SETTLEMENT.
-----------------------------
The Plan and the SRI Plan each incorporate a motion pursuant to Bankruptcy
Rule 9019(a) for approval of a global interestate settlement described below
(the "Global Interestate Settlement"). As one aspect of the Global Interestate
Settlement, SRI proposed the sale of the International Licensing Assets to
Sizzler International Marks in exchange for the International Licensing Asset
Payment. SRI and the Committee, which includes representatives from both SRI and
SII estates, agreed to this sale and payment in exchange for the release of all
intercompany Claims
61
between SRI and its direct and indirect subsidiaries, on the one hand, and SII
and the direct and indirect subsidiaries of CFI Pty, on the other hand, on
account of, inter alia, the allocation of overhead between Affiliates, the
licensing of trademarks between Affiliates, the commingling of Cash of
Affiliates, and the making of intercompany loans between Affiliates.
C. DISTRIBUTIONS AND PLAN FUNDING.
------------------------------
1. SOURCE OF PLAN FUNDING. Such funding as may be necessary to fully
----------------------
perform the Debtor's obligations under this Plan will be provided from the
Debtor's Available Cash on the Effective Date, the operations of Debtor's
Affiliates and, for Class 5 Damage Claims only, the Coverage.
2. THE ADR. The Debtor, together with SRI, CPI, Buffalo Ranch and Tenly,
-------
has requested that the Bankruptcy Court establish the ADR for the liquidation
and payment of Damage Claims. The ADR has been implemented during the Case and
will continue after Confirmation. It is anticipated that, under the ADR, each
Damage Claim will be subjected to a process designed to produce a settlement
with respect to such Claim. If unsuccessful, the Holder of a Damage Claim may
then obtain relief from the Bankruptcy Court to pursue the Claim in an
appropriate non-bankruptcy forum.
3. ROUNDING OF AMOUNTS. Notwithstanding anything to the contrary in this
-------------------
Plan, or any Plan Agreement, any Person responsible for Distributions may round
all amounts for Distributions of Cash to the nearest whole dollar amount.
62
4. NAME AND ADDRESS OF HOLDER. For purposes of all Distributions, the
--------------------------
Person responsible for such Distributions will be entitled to rely on the name
and address of the Holder of each Allowed Claim or Interest as shown on any
timely filed proof of Claim and, if none, as shown on Schedules, except to the
extent that the payor first receives adequate written notice of a transfer or
change of address, from the United States Postal Service or properly executed by
the Holder or its authorized agent.
5. CORPORATE GOVERNANCE. On the Effective Date, Debtor's existing articles
--------------------
of incorporation and bylaws shall remain as currently in effect, except for the
inclusion of a prohibition on the issuance of non-voting securities.
6. EXECUTION OF PLAN AGREEMENTS. On or before the Effective Date, Debtor
----------------------------
and each Affiliate shall execute the Plan Agreements with respect to Allowed
Claims.
7. DISPUTED CLAIMS RESERVES.
------------------------
a. After the Effective Date, Debtor shall have the authority to object
to Claims, including Claims against the Attorneys' Fee Fund. Any objections to
Claims and Interests must be filed with the Bankruptcy Court on or before the
later of (a) July 15, 1997, (b) 120 days after the service of the proof of Claim
on Debtor's counsel in this Case or (c) if such proof of Claim was not served on
counsel for the Debtor, 120 days after a copy of such proof of Claim was
delivered to counsel for the Debtor from the Bankruptcy Court.
b. Except as otherwise set forth below, unless and until Class 4 Large
Unsecured Claims are Allowed in an aggregate
63
amount which exceeds $20,000,000 or the Bankruptcy Court, upon motion by the
Debtor, establishes a lower estimated Claim amount, Debtor shall establish
Disputed Claim Reserves in an amount (the "Permitted Reserve Amount") based on
the assumption that the Allowed Amount of all Class 4 Large Unsecured Claims
will be $20,000,000. Until all Disputed Class 4 Large Unsecured Claims are
resolved by Final Order, the Debtor shall make a Pro Rata Distribution to the
Reserve Agent (to be held as a Disputed Claims Reserve) of that portion of any
Distribution which equals the Distribution to which the Holders of Disputed
Class 4 Large Unsecured Claims and would be entitled based on the foregoing
Permitted Reserve Amount.
c. Following the Effective Date, the Debtor may file a request that the
Bankruptcy Court determine, by estimating the Claims or otherwise, that an
Assumed Allowed Amount of Class 4 Large Unsecured Claims less than $20,000,000
is to be used for calculating the amounts to be placed in the Disputed Claims
Reserves; provided, however, that any such estimation shall include an
estimation of the interest accrued and to be accrued under the Plan on such
Disputed Claims.
d. From and after the Effective Date, the Debtor may periodically
file requests that the Bankruptcy Court confirm, determine, supplement or amend
prior determinations of the Permitted Reserve Amounts (which determinations may
require estimations of certain Claims).
e. Inasmuch as Class 5 Damage Claims are covered by the Policies, no
reserves will be established for Disputed Class 5
64
Damage Claims. The Debtor will establish an Administrative and Priority Claims
Reserve for Disputed Priority Tax Claims and projected or actual Administrative
Claims which have not been Allowed by the Bankruptcy Court. The Distributions
due in respect of Disputed Administrative Claims will be reserved for the
Holders of Disputed and Administrative Claims and deposited in the
Administrative and Priority Claims Reserve.
f. After an objection to a Disputed Claim is withdrawn or determined by
Final Order, the Distributions due on account of any Claim will be paid by the
appropriate Person hereunder.
g. In the event an objection to a Disputed Class 4 Large Unsecured
Claim is withdrawn or determined by Final Order prior to the termination of the
Indenture, the Reserve Agent shall make the Distribution due on account of such
Claim to the extent sufficient funds exist in the Disputed Claims Reserve. To
the extent insufficient funds exist in the Disputed Claims Reserve established
by the Reserve Agent, the Debtor shall fund any remaining Distribution owing to
such Holder directly to the Holder. In each case, the Distribution shall be
made no later than the time provided in this Plan for the next regularly
scheduled principal payment on the Notes or, if there is no such further
scheduled time, within forty-five days of the date the Disputed Claim becomes an
Allowed Claim or authorized Administrative Claim. Subject to the increase in
principal amortization possible under the Notes as set forth in Section V.E.2.
hereof, any such payment or any such Distribution by the Debtor by reason of
insufficient Disputed Claims Reserves shall not increase the principal required
65
to be amortized under the Notes prior to the maturity date of such Notes.
h. In the event monies are held by the Reserve Agent in a Disputed
Claims Reserve at any time in an amount which exceeds the amount of Cash which
would be necessary to make the required Distributions to the Holders of all
Disputed Class 4 Large Unsecured Claims (as of the date of calculation) if such
Disputed Claims were subsequently Allowed in full, the Reserve Agent shall pay
such excess amount Pro Rata to Holders of the Notes (net of the Pro Rata portion
allocable to remaining Disputed Claims); provided, however, that any such
-------- -------
Distribution shall not increase the principal required to be amortized under the
Notes, so that (i) any principal portion of such Distribution shall be allocated
Pro Rata to Holders of such Notes and (ii) any interest portion of such
Distribution shall be applied to the next scheduled quarterly principal payment.
Notwithstanding the foregoing, if all Allowed Bank Claims and Large Unsecured
Claims have been satisfied in full pursuant to the terms of this Plan, and the
amount of Cash which would be necessary to make the required Distributions to
Holders of any Disputed Large Unsecured Claims if such Claims were subsequently
Allowed in full, then the Reserve Agent shall promptly return the excess monies
held in such Disputed Claims Reserve to the Debtor.
i. In the event that, following the termination of the Indenture
pursuant to Section V.E.6. or if the Debtor has elected on or before the
Effective Date to satisfy Allowed Class 3 and Class 4 Claims in Cash in
accordance with Article IV of this Plan,
66
either (y) the Undrawn LC Claim becomes payable by reason of a draw upon the
letter of credit in question or (z) an objection to a Disputed Class 4 Large
Unsecured Claim is withdrawn or determined by Final Order, then the Reserve
Agent shall make a Distribution in the Allowed Amount of such Claim (plus any
interest which may be payable on such Claim pursuant to this Plan) to the extent
sufficient funds exist in the Disputed Claims Reserve. To the extent
insufficient funds exist in the Disputed Claims Reserve established by the
Reserve Agent, the Debtor shall fund any remaining Distribution owing to such
Holder directly to the Holder. In each case, the Distribution shall be made
within five days of the date the Disputed Claim becomes an Allowed Claim.
8. UNCLAIMED PROPERTY. Any Unclaimed Property will be deemed paid to such
------------------
entitled Person, for the purpose of determining that Person's rights. Any
Person that does not claim its Distribution within 180 days will receive no
future distribution under the Plan.
9. DE MINIMIS DISTRIBUTIONS/RETURN OF UNDISTRIBUTED FUNDS. Notwithstanding
------------------------------------------------------ ---------------
anything to the contrary contained in this Plan, neither the Debtor nor the
- -----------------------------------------------
Reserve Agent need disburse Cash to the Holder of an Allowed Claim if the amount
of Cash otherwise due is less than Five Dollars ($5.00). Cash not so distributed
may be reserved for the Claim Holder until in excess of Five Dollars ($5.00) is
owed such Claim Holder. When and if the Reserve Agent determines in good faith
that nothing more is due hereunder to the Holders of Bank Claims and Large
Unsecured Claims, then such undisbursed funds will be promptly returned by the
Reserve Agent to the Debtor.
67
D. SERVICES BY AND FEES FOR PROFESSIONALS.
--------------------------------------
1. SERVICES BY PROFESSIONALS AND CERTAIN PARTIES AFTER THE EFFECTIVE DATE.
----------------------------------------------------------------------
The Debtor, Equity Committee and the Committee retained professionals who
provided services and incurred expenses during the Case. After the Effective
Date, the professionals retained by the Debtor may be among the Persons
assisting in the effectuation of this Plan.
2. FEES FOR PROFESSIONALS AND CERTAIN PARTIES.
------------------------------------------
a. PRIOR TO THE EFFECTIVE DATE.
---------------------------
(1) GENERALLY. Fees and expenses for the professionals retained by
---------
the various committees or the Debtor for services rendered and costs incurred
after the Petition Date and prior to the Effective Date, will be fixed by the
Bankruptcy Court after notice and a hearing and such fees and expenses will be
paid (less deductions for any and all amounts thereof already paid to such
Persons) after approval by the Bankruptcy Court to the extent so approved and as
provided in this Plan.
b. FROM THE EFFECTIVE DATE. Fees owing for services rendered and costs
-----------------------
incurred and owing on and after the Effective Date by the professionals retained
by the Debtor, the Equity Committee or the Committee, and any fees and costs
incurred by the Reserve Agent or relating to prosecution of Litigation will be
paid by the Debtor from the funds held by the Debtor twenty (20) days after
submission of a bill therefor to the Debtor, if there is no objection within
such time. If there is such an objection, the fees and expenses will be fixed
by the Bankruptcy Court after notice and a hearing. The Bankruptcy Court will
retain
68
jurisdiction until the Case is closed, to determine disputed post-Effective Date
fees of professionals.
E. DISSOLUTION OF COMMITTEES.
-------------------------
The Committee shall continue in existence following the Effective date solely
for the purpose of monitoring the consummation of the transactions required to
take place on or about the Effective Date of this Plan. Ninety days after the
Effective Date, the Committee and Equity Committee shall be deemed dissolved.
F. LITIGATION.
----------
a. The Debtor may commence or advance any Litigation following the Effective
Date.
b. Except as otherwise set forth in this Plan, the Debtor may, but will not
be required to, set off against any Claim and the Distributions to be made in
respect of such Claim, any Litigation it may have against the Holder of the
Claim, but neither the failure to do so nor the allowance of any Claim hereunder
will constitute a waiver or release of any such Litigation, setoff or recoupment
which the Debtor may have against such Holder.
c. Unless threatened or pending Litigation against a Creditor or other
person is expressly waived, relinquished, released, compromised or settled in
this Plan or in a Final Order, all rights with respect to such Litigation are
reserved and the Debtor may pursue such Litigation.
ARTICLE IX
MODIFICATION
------------
69
Pursuant to the provisions of Bankruptcy Code (S) 1127, the Debtor reserves
the right to modify or alter the provisions of this Plan at any time prior or
subsequent to Confirmation.
ARTICLE X
EFFECT OF CONFIRMATION
----------------------
A. BINDING EFFECT OF CONFIRMATION.
------------------------------
Confirmation will bind the Debtor, all Creditors, Interest Holders and
other parties in interest to the provisions of this Plan whether or not the
Claim or Interest of such Creditor or Interest Holder is impaired under this
Plan and whether or not such Creditor or Interest Holder has accepted this Plan.
B. VESTING OF ASSETS FREE AND CLEAR OF LIENS, CLAIMS AND INTERESTS
---------------------------------------------------------------
Except as otherwise provided in this Plan or in the Confirmation Order,
upon the Effective Date, title to all Assets and property of the Debtor, and all
property of the Estate, including, pursuant to Bankruptcy Code (S)
1123(b)(3)(b), each and every claim, demand or cause of action which the Debtor
had or had power to assert immediately prior to Confirmation, will revest in the
Debtor, free and clear of all liens, Claims and Interests of Holders of Claims
and Interests. Thereafter, the Debtor will hold these Assets without further
jurisdiction, restriction or supervision of the Bankruptcy Court.
C. GOOD FAITH.
----------
Confirmation of the Plan shall constitute a finding that: (i) this Plan
has been proposed in good faith and in compliance with applicable provisions of
the Bankruptcy Code; and (ii) the solicitation of acceptances or rejections of
this Plan by all Persons
70
and the offer, issuance, sale, or purchase, of a security offered or sold under
the Plan has been in good faith and in compliance with applicable provisions of
the Bankruptcy Code. Accordingly, on the Effective Date each of the officers and
directors of the Debtor, the Holders of the Bank Claims, the members of the
Committee, and the members of the Equity Committee and each of their respective
advisors and attorneys, effective as of the Effective Date, will be deemed
exculpated by Holders of Claims against and Interests in the Debtor and other
parties in interest to the Case, from any and all claims, causes of action and
other assertions of liability (including, without limitation, breach of
fiduciary duty), arising out of or related to the Debtor, the Case or the
exercise by such entities of their functions as members of or advisors to or
attorneys for any such individuals or committee or otherwise under applicable
law, in connection with or related to the Case and the formulation, negotiation,
preparation, dissemination, Confirmation and consummation of this Plan and any
agreement, instrument or other document issued hereunder or related hereto;
provided, however, that this Section X.C shall have no effect on liability for
any act or omission of the officers and directors of the Debtor, the Holders of
the Bank Claims, the members of the Committee, and the members of the Equity
Committee and each of their respective advisors and attorneys to the extent that
such act or omission is ultra vires or constitutes gross negligence or willful
misconduct.
D. NO LIMITATIONS ON EFFECT OF CONFIRMATION.
----------------------------------------
Nothing contained in this Article IX will limit the effect of Confirmation
as described in Bankruptcy Code (S) 1141.
71
E. CONTINUATION OF ADR - PERMANENT INJUNCTION FOR DAMAGE CLAIMS.
------------------------------------------------------------
Notwithstanding Confirmation, the Holder of any Damage Claim that is
unliquidated in amount must first exhaust the remedies in the ADR before making
a request, from the Bankruptcy Court, to pursue liquidation of its Claim in an
appropriate non-bankruptcy forum.
The Confirmation Order will constitute a permanent injunction (1) enjoining
the Holders of Damage Claims from commencing, continuing or in any way pursuing
their claims, including but not limited to enjoining the Holders of Damage
Claims from prosecuting their Claims against the Affiliated Debtors' insurers in
any manner other than as proscribed in the Plan and (2) requiring all Holders of
Damage Claims to participate in the ADR prior to seeking relief from the
Bankruptcy Code (S) 1141(d) discharge injunction to pursue liquidation of their
Claims in an appropriate nonbankruptcy forum.
F. DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS.
------------------------------------------------
The rights afforded under the Plan and the treatment of Claims under the
Plan will be in exchange for and in complete satisfaction, discharge, and
release of all Claims. Confirmation of the Plan shall discharge Debtor from all
Claims that arose before the Confirmation Date and all Claims of all kinds
specified in Bankruptcy Code (S)(S) 502(g), (h) and (i), whether or not a proof
of Claim is filed or deemed filed (or the Holder of a Claim based on such debt
has accepted the Plan).
G. JUDICIAL DETERMINATION OF DISCHARGE.
-----------------------------------
As of the Confirmation Date, except as provided in the Plan, all Persons
shall be precluded from asserting against Debtor any other or further Claims,
debts, rights, causes of action, liabilities, or
72
equity interests based on any act, omission, transaction or other activity of
any kind or nature that occurred before the Confirmation Date, and the
Confirmation Order shall be a judicial determination of discharge of all Claims
against Debtor pursuant to Bankruptcy Code (S)(S) 524 and 1141, and shall void
any judgment obtained or entered against Debtor at any time, to the extent the
judgment relates to discharged Claims.
H. INJUNCTION.
----------
As of the Confirmation Date, all Persons that have held, currently hold or
may hold a Claim or other debt or liability that is discharged or an Interest or
other right of an Equity Security Holder that is terminated pursuant to the Plan
are permanently enjoined from taking any of the following actions on account of
such discharged Claims, debts, or liabilities or terminated Interests or rights:
(a) commencing or continuing in any manner any action or other proceeding
against Debtor or its property, (b) enforcing, attaching, collecting or
recovering in any manner any judgment, award or decree against Debtor or its
property, (c) creating, perfecting or enforcing any lien or encumbrance against
Debtor or its property, (d) asserting a right of subrogation or recoupment of
any kind against any debt, liability or obligation due to Debtor or its
property, and (e) commencing or continuing any action that does not comply with
or is inconsistent with the provisions of the Plan.
ARTICLE XI
SUCCESSORS AND ASSIGNS
----------------------
This Plan and the provisions hereof will be binding upon the Debtor and its
successors and assigns.
ARTICLE XII
73
RETENTION OF JURISDICTION
-------------------------
Notwithstanding Confirmation, the Bankruptcy Court will retain jurisdiction
for all of the following purposes plus such other purposes as may be provided by
the Bankruptcy Code:
1. The determination of the allowability and amount of Claims;
2. The determination of requests for payment of Claims entitled to
priority under Bankruptcy Code (S) 507(a)(1);
3. The resolution of any disputes regarding the interpretation,
enforcement, breach, performance and/or a default under this Plan;
4. The implementation, execution or consummation of the provisions of
this Plan (and any dispute with regard thereto) and entry of orders in aid of
consummation or enforcement of this Plan, including without limitation,
appropriate orders to effect the provisions of this Plan and to protect the
Debtor from Creditors' actions;
5. The modification of this Plan pursuant to Bankruptcy Code (S) 1127;
6. The adjudication of any cause of action or claim for relief brought by
the Debtor;
7. The consideration of requests by Holders of Damage Claims to liquidate
their Claims in an appropriate non-bankruptcy forum in the event that such
Holders of Damage Claims cannot resolve their Claims through the ADR;
8. The implementation of the ADR;
9. The adjudication of disputes in respect of the Indenture;
74
10. The sale of property by the Debtor free and clear of liens, security
interests or interests of others pursuant to Bankruptcy Code (S) 363;
11. The determination of cure amounts under Bankruptcy Code (S) 365; and
12. The entry of a final decree closing this Case.
ARTICLE XIII
MISCELLANEOUS
-------------
A. SEVERABILITY.
------------
Should the Bankruptcy Court determine, prior to the Confirmation Date, that
any provision of the Plan is illegal as written or as applied to any Claim or
Interest, such provision shall be either unenforceable generally or as applied
to such Claim or Interest, as the case may be. A determination of
unenforceability shall in no respect limit or affect the enforceability and
operative effect of any other provision of the Plan or of that provision as
applied to other Claims or Interests.
B. RELEASE OF AVOIDANCE ACTIONS.
----------------------------
All Avoidance Actions under Bankruptcy Code (S) 547 shall be deemed
released on the Effective Date.
C. AMENDMENT, WITHDRAWAL OR REVOCATION OF THE PLAN.
-----------------------------------------------
Debtor reserves the right to amend, revoke or withdraw the Plan prior to
the Confirmation Date. If Debtor should revoke or withdraw the Plan, then the
Plan shall be null and void, and nothing contained in the Plan shall constitute
a waiver or release of any Claims by or against, or any Interests in Debtor, or
prejudice in any manner the rights of Debtor or any Affiliate.
D. HEADINGS.
--------
75
The heading of the Articles and sections of the Plan are for convenience
only and shall in no way affect the interpretation of its provisions.
E. SUCCESSORS AND ASSIGNS.
----------------------
The rights, benefits and obligations of any Person referred to in the Plan
shall be binding on, and shall inure to the benefit of, the heirs, executors,
administrators, successors and assigns of such Persons.
F. STATUTORY FEES.
--------------
All fees payable pursuant to 28 U.S.C. (S) 1930 as determined at the
hearing on Confirmation shall be paid by Debtor on or before the Effective Date.
Debtor will pay all post-Effective Date fees (if any) legally required to be
paid under 28 U.S.C. (S) 1930.
G. AMENDMENT TO CHARTER.
--------------------
Debtor shall amend its charter to prohibit the issuance of nonvoting equity
securities.
ARTICLE XIV
CONFIRMATION REQUEST
--------------------
The Debtor hereby requests that the Bankruptcy Court confirm this Plan
pursuant to Bankruptcy Code (S) 1129(a), and, if necessary, pursuant to
Bankruptcy Code (S) 1129(b).
Dated: August 26, 1997 SIZZLER INTERNATIONAL, INC.,
a Delaware corporation
--------------------------------
CHRISTOPHER R. THOMAS
President and Chief
Financial Officer
PRESENTED BY:
PACHULSKI, STANG, ZIEHL & YOUNG, P.C.
76
- -------------------------------------
BRAD R. GODSHALL,
Attorneys for Debtor and Debtor
in Possession
77
PROOF OF SERVICE
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
I am employed in the county of Los Angeles, State of California. I am over
the age of 18 and not a party to the within action; my business address is:
10100 Santa Monica Boulevard, Suite 1100, Los Angeles, California 90067.
- ------------------------------------------------------------------------
On October 6, 1997, I served the foregoing documents described as SIZZLER
--------------- -------
INTERNATIONAL, INC.'S FIFTH AMENDED PLAN OF REORGANIZATION on interested parties
- ---------------------------------------------------------- ------------------
in this action
XXX by placing true copies thereof enclosed in sealed envelopes addressed
------- as stated on the attached mailing list;
XXX (BY FEDERAL EXPRESS) By sending by Federal Express to the addressee(s)
------- as indicated on the attached list.
Executed on October 6, 1997, at Los Angeles, California.
--------------- -----------
XXX (FEDERAL) I declare that I am employed in the office of a member of
------- the bar of this court at whose direction the service was made.
___________________________________
Gini L. Downing
78