EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
In re:
Case No. 01-52629
TALON AUTOMOTIVE GROUP, INC., Chapter 11
a Michigan corporation, D/B/A Hawthorne Hon. Steven W. Rhodes
Metal Products Company; Hawthorne Metal
Products Company - Talon Automotive
Group; J & R Manufacturing Inc.;
Production Stamping, Inc.; Talon
Automotive Group - Hawthorne Metal
Products Company; Talon Automotive
Group - Metal Stamping Division; F/K/A
JR Acquisition, Inc.; Production Acquisition,
Inc.; Production Systems International, Inc.;
TAG L.L.C.; Talon Automotive Group L.L.C.;
Veltri Holdings USA, Inc.
Tax ID# 38-3382174
Address: 900 Wilshire Drive, Suite 203
Troy, Michigan 48084
Debtor.
In re:
VS HOLDINGS, INC., Case No. 01-52631
a Michigan corporation, Chapter 11
F/K/A VS Holdings No. 2 Inc., Hon. Steven W. Rhodes
Tax ID# 38-3382174
Address: 900 Wilshire Drive, Suite 203
Troy, Michigan 48084
Debtor.
______________________________________/ Jointly Administered
DEBTORS' JOINT COMBINED SECOND AMENDED PLAN OF REORGANIZATION
AND SECOND AMENDED DISCLOSURE STATEMENT, DATED AUGUST 15, 2001
Prepared By:
CARSON FISCHER, P.L.C.
Joseph M. Fischer (P13452)
Robert A. Weisberg (P26698)
Lawrence A. Lichtman (P35403)
300 East Maple Road, Third Floor
Birmingham, Michigan 48009
(248) 644-4840
Attorneys for Debtors
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SECOND AMENDED PLAN OF REORGANIZATION OF TALON AUTOMOTIVE GROUP....................................................-1-
INTRODUCTION..............................................................................................-1-
ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW....................-2-
A. Scope of Definitions; Rules of Construction.............................................-2-
B. Definitions.............................................................................-2-
1.1 "Administrative Claim".........................................................-2-
1.2 "Allowed Claim"................................................................-3-
1.3 "Allowed"......................................................................-3-
1.4 "Allowed Class ___ Claim" .....................................................-3-
1.5 "Amended Articles of Incorporation and By-Laws"................................-4-
1.6 "Ballots"......................................................................-4-
1.7 "Bankruptcy Code" .............................................................-4-
1.8 "Bankruptcy Court".............................................................-4-
1.9 "Bankruptcy Rules".............................................................-4-
1.10 "Bar Date(s)"..................................................................-4-
1.11 "Business Day".................................................................-4-
1.12 "Canadian Plan"................................................................-5-
1.13 "CCAA Case"....................................................................-5-
1.14 "Chapter 11 Cases".............................................................-5-
1.15 "Claim" .......................................................................-5-
1.16 "Claims Objection Deadline"....................................................-5-
1.17 "Class"........................................................................-5-
1.18 "Collateral" ..................................................................-5-
1.19 "Confirmation".................................................................-5-
1.20 "Confirmation Date" ...........................................................-5-
1.21 "Confirmation Hearing".........................................................-5-
1.22 "Confirmation Order"...........................................................-6-
1.23 "Credit Agreement".............................................................-6-
1.24 "Creditor".....................................................................-6-
1.25 "Creditors' Committee".........................................................-6-
1.26 "Cure".........................................................................-6-
1.27 "Debtor(s)"....................................................................-6-
1.28 "Dilution".....................................................................-6-
1.29 "DIP Agent"....................................................................-7-
1.30 "DIP Facility".................................................................-7-
1.31 "DIP Facility Agreement".......................................................-7-
1.32 "DIP Facility Claim"...........................................................-7-
1.33 "Disbursing Agent".............................................................-7-
1.34 "Disclosure Statement".........................................................-7-
1.35 "Disputed Claim"...............................................................-8-
1.36 "Disputed Claim Amount"........................................................-8-
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1.37 "Distribution Date"............................................................-9-
1.38 "Distribution Record Date".....................................................-9-
1.39 "Effective Date"...............................................................-9-
1.40 "Estate(s)"....................................................................-9-
1.41 "Exit Facility"................................................................-9-
1.42 "Exit Lenders"................................................................-10-
1.43 "Face Amount".................................................................-10-
1.44 "Final Order".................................................................-10-
1.45 "Financial Restructuring".....................................................-10-
1.46 "Guaranty"....................................................................-11-
1.47 "General Unsecured Claim".....................................................-11-
1.48 "Impaired"....................................................................-11-
1.49 "Impaired Unsecured Claims"...................................................-11-
1.50 "Indenture"...................................................................-11-
1.51 "Indenture Trustee"...........................................................-11-
1.52 "Interest"....................................................................-11-
1.53 "Lenders".....................................................................-12-
1.54 "Lien" .......................................................................-12-
1.55 "Litigation Claims"...........................................................-12-
1.56 "Lockup Agreement"............................................................-12-
1.57 "Management Option Plan"......................................................-12-
1.58 "Management Option Plan Participants".........................................-12-
1.59 "Management Options"..........................................................-13-
1.60 "New Common Shares"...........................................................-13-
1.61 "New Securities"..............................................................-13-
1.62 "Notes".......................................................................-13-
1.63 "Note Claim"..................................................................-13-
1.64 "Noteholder Committee"........................................................-13-
1.65 "Old Common Shares"...........................................................-13-
1.66 "Other Priority Claim"........................................................-13-
1.67 "Other Secured Claim(s)"......................................................-13-
1.68 "Person"......................................................................-14-
1.69 "Petition Date"...............................................................-14-
1.70 "Plan" .......................................................................-14-
1.71 "Plan Exhibit"................................................................-14-
1.72 "Pre-Petition Credit Facility Agreement" .....................................-14-
1.73 "Priority Tax Claim"..........................................................-14-
1.74 "Products"....................................................................-14-
1.75 "Professional"................................................................-14-
1.76 "Professional Fee Claim" .....................................................-15-
1.77 "Pro Rata"....................................................................-15-
1.78 "Proof of Claim"..............................................................-15-
1.79 "Reorganized Debtor(s)".......................................................-15-
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1.80 "Reorganized Holdings"........................................................-15-
1.81 "Reorganized Products"........................................................-15-
1.82 "Reorganized Talon"...........................................................-15-
1.83 "Schedule of Impaired Unsecured Claims".......................................-15-
1.84 "Schedules"...................................................................-15-
1.85 "Secured Claim"...............................................................-16-
1.86 "Secured Lenders Claim".......................................................-16-
1.87 "Securities Act".............................................................-16-
1.88 "Unimpaired"..................................................................-16-
1.89 "Voting Deadline".............................................................-16-
1.90 "Voting Record Date"..........................................................-16-
1.91 "Warrants"....................................................................-16-
1.92 "William John Claim"..........................................................-16-
C. Rules of Interpretation................................................................-17-
D. Computation of Time....................................................................-17-
E. Governing Law..........................................................................-17-
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS.......................................................-18-
2.1 Introduction...........................................................................-18-
2.2 Classification of Unimpaired Claims and Interests......................................-18-
2.3 Classification of Impaired Claims and Interests........................................-19-
ARTICLE III TREATMENT OF CLAIMS AND INTERESTS...........................................................-19-
3.1 Unclassified Claims ...................................................................-19-
3.2 Unimpaired Classes of Claims and Interests ............................................-21-
3.3 Impaired Classes Of Claims and Interests ..............................................-22-
3.4 Reservation of Rights Regarding Claims ................................................-23-
ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN...........................................................-24-
4.1 Impaired Classes of Claims and Interests Entitled to Vote..............................-24-
4.2 Acceptance by an Impaired Class........................................................-24-
4.3 Presumed Acceptances by Unimpaired Classes. ..........................................-24-
4.4 Summary of Classes Voting on the Plan..................................................-25-
4.5 The Plan of Arrangement under the CCAA Case............................................-25-
ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN..........................................................-25-
5.1 Financial Restructuring................................................................-25-
5.2 Continued Corporate Existence..........................................................-28-
5.3 Cancellation of Old Common Shares and Agreements.......................................-28-
5.4 Articles of Incorporation and By-Laws..................................................-29-
5.5 Issuance of New Common Shares..........................................................-29-
5.6 Compensation And Benefit Programs......................................................-30-
5.7 Exit Facility..........................................................................-30-
5.8 Directors and Officers of Reorganized Debtors..........................................-30-
5.9 Revesting of Assets; Releases of Liens ................................................-31-
5.10 Preservation of Rights of Action ......................................................-31-
5.11 Effectuating Documents; Further Transactions...........................................-32-
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5.12 Exemption From Certain Transfer Taxes .................................................-32-
5.13 Releases and Related Matters...........................................................-32-
ARTICLE VI TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES........................................-34-
6.1 Assumed Contracts and Leases...........................................................-34-
6.2 Payments Related To Assumption Of Contracts and Leases.................................-35-
6.3 Rejected Contracts And Leases..........................................................-35-
6.4 Rejection Damages Bar Date.............................................................-36-
ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS..........................................................-36-
7.1 Distributions For Claims Allowed As Of The Effective Date..............................-36-
7.2 Interest on Claims ....................................................................-36-
7.3 Distribution by Disbursing Agent.......................................................-37-
7.4 Record Date For Distributions To Holders of Notes......................................-37-
7.5 Means of Cash Payment..................................................................-38-
7.6 Calculation of Distribution Amounts of New Common Shares...............................-38-
7.7 Delivery of Distributions .............................................................-38-
7.8 Surrender of Securities and Instruments................................................-40-
7.9 Withholding And Reporting Requirements.................................................-41-
7.10 Setoffs................................................................................-41-
ARTICLE VIII PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND
UNLIQUIDATED CLAIMS AND DISPUTED INTERESTS......................................................-42-
8.1 Prosecution of Objections .............................................................-42-
8.2 No Distributions Pending Allowance.....................................................-42-
8.3 Disputed Claim Distribution Reserve....................................................-42-
8.4 Distributions After Allowance of Disputed Claims.......................................-43-
ARTICLE IX WILLIAM JOHN CLAIM TRUST.....................................................................-43-
ARTICLE X CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN.............................-43-
10.1 Conditions to Confirmation.............................................................-43-
10.2 Conditions To Effective Date...........................................................-44-
10.3 Waiver of Conditions...................................................................-45-
ARTICLE XI RETENTION OF JURISDICTION....................................................................-45-
11.1 Retention of Jurisdiction..............................................................-45-
ARTICLE XII MISCELLANEOUS PROVISIONS ...................................................................-48-
12.1 Professional Fee Claims ...............................................................-48-
12.2 Administrative Claims Bar Date.........................................................-48-
12.3 Payment of Statutory Fees..............................................................-49-
12.4 Modifications and Amendments...........................................................-49-
12.5 Severability of Plan Provisions .......................................................-49-
12.6 Successors and Assigns.................................................................-50-
12.7 Compromises and Settlements ...........................................................-50-
12.8 Discharge of Claims....................................................................-50-
12.9 Injunction.............................................................................-52-
12.10 Committee..............................................................................-53-
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12.11 Exculpation and Limitation of Liability................................................-53-
12.12 Binding Effect.........................................................................-54-
12.13 Revocation, Withdrawal, or Non-Consummation............................................-55-
12.14 Plan and Disclosure Statement Exhibits.................................................-55-
12.15 Notices................................................................................-56-
12.16 Term of Injunction or Stays............................................................-57-
SECOND AMENDED DISCLOSURE STATEMENT ..............................................................................-58-
I. INTRODUCTION ...................................................................................-58-
II. A DESCRIPTION OF THE DEBTORS ...................................................................-61-
A. The Debtors' Corporate Status; Continuation of Business................................-61-
B. The Debtors' Principals. ..............................................................-62-
C. The Debtor's Business, Industry Group and Causes for the Chapter 11 Filings............-64-
III. POST-PETITION EVENTS OF SIGNIFICANCE ...........................................................-80-
A. Post-Petition Transfers Outside the Ordinary Course of Business; Contemplated
Financial Restructuring................................................................-80-
B. Post-Petition Financing. ..............................................................-81-
C. Litigation.............................................................................-82-
IV. ASSETS AND LIABILITIES..........................................................................-84-
A. Liquidation Analysis...................................................................-84-
B. Risks, Conditions and Assumptions Regarding the Stated Values..........................-84-
C. Potential Claims and Causes of Action..................................................-84-
D. Priority Claims, Including Anticipated Administrative Expense Claims. .................-85-
E. Non-Priority Unsecured Claims..........................................................-85-
F. Guarantors and Co-Debtors..............................................................-85-
V. DETAILS REGARDING IMPLEMENTATION OF THE PLAN....................................................-86-
A. Summaries of Financial Information.....................................................-86-
B. Management of the Reorganized Debtors; Compensation, Including Fringe Benefits.........-86-
C. Tax Ramifications If the Plan Is Confirmed.............................................-86-
VI. LEGAL REQUIREMENTS..............................................................................-89-
A. Voting Procedures......................................................................-89-
B. Acceptance.............................................................................-90-
C. Confirmation...........................................................................-90-
D. Modification...........................................................................-91-
E. Effect of Confirmation.................................................................-91-
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SECOND AMENDED PLAN OF REORGANIZATION OF
TALON AUTOMOTIVE GROUP, INC. AND VS HOLDINGS, INC.
INTRODUCTION
Talon Automotive Group, Inc. ("Talon"), a Michigan corporation, and its
wholly-owned subsidiary, VS Holdings, Inc., also a Michigan corporation
("Holdings") (Talon and Holdings are hereinafter referred to collectively as the
"Debtors"), hereby propose the following joint amended plan of reorganization
(the "Plan") for the resolution of their outstanding creditor Claims and equity
Interests. Among other things, the Plan will convert the interests of holders of
Notes (as hereinafter defined) to New Common Shares (as hereinafter defined).
Holders of most other unsecured claims will be paid in full according to the
terms of the Plan.
Contemporaneously herewith, Veltri Metal Products Company ("Products"),
a wholly-owned subsidiary of Holdings incorporated in the province of Nova
Scotia as an unlimited liability company and a guarantor of certain of the debt
obligations of the Debtors, has proposed an amended plan of arrangement under
Canadian law (the "Canadian Plan"). The Canadian Plan will have the effect of
extinguishing the Guaranty by Products of the Notes in return for issuance of
New Common Shares (as hereinafter defined) to the holders of the Notes. The
Canadian Plan will treat unsecured creditors of Products in a fashion which is
comparable and consistent with the treatment of the Impaired Unsecured Creditors
(as hereafter defined) of the Debtors under the Plan. No obligations or
liabilities of Products will be affected by the Canadian Plan other than the
obligations to the holders of the Notes under the Guaranty and the Indenture
pursuant to which the Notes were issued and the obligations of Products to the
other unsecured creditors of Products.
Please review the Disclosure Statement (as defined herein) portion of
this Combined Amended Plan of Reorganization and Amended Disclosure Statement
distributed contemporaneously herewith, for a discussion of the Debtors'
history, businesses, properties,
7
results of operations, projections for future operations, risk factors and
certain related matters, including the New Securities to be issued under the
Plan. The Debtors are the proponents of this Plan within the meaning of Section
1129 of the Bankruptcy Code.
All holders of Claims are encouraged to read this Plan and the
Disclosure Statement in their entirety before voting to accept or reject this
Plan. Subject to certain restrictions and requirements set forth in Section 1127
of the Bankruptcy Code and Bankruptcy Rule 3019 and Article XII of this Plan,
the Debtors reserve the right to alter, amend, modify, revoke or withdraw this
Plan prior to its substantial consummation.
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. SCOPE OF DEFINITIONS; RULES OF CONSTRUCTION
For purposes of this Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined shall
have the meanings ascribed to them in Article I of this Plan. Any term used in
this Plan that is not defined herein, but is defined in the Bankruptcy Code or
the Bankruptcy Rules, shall have the meaning ascribed to that term in the
Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such
terms shall include the plural as well as the singular number, the masculine
gender shall include the feminine, and the feminine gender shall include the
masculine.
B. DEFINITIONS
1.1 "ADMINISTRATIVE CLAIM" means a Claim for payment of an
administrative expense of a kind specified in Section 503(b) or 1114(e)(2) of
the Bankruptcy Code and entitled to priority pursuant to Section 507(a)(1) of
the Bankruptcy Code, including, but not limited to, (a) the actual, necessary
costs and expenses, incurred after the Petition Date, of preserving the Estates
and operating the businesses of the Debtors, including wages, salaries, or
commissions for services rendered after the commencement of the Chapter 11
Cases, (b)
8
Professional Fee Claims, (c) all fees and charges assessed against the Estates
under 28 U.S.C. ss. 1930 and (d) all Allowed Claims that are entitled to be
treated as Administrative Claims pursuant to a Final Order of the Bankruptcy
Court under Section 546(c)(2)(A) of the Bankruptcy Code.
1.2 "ALLOWED CLAIM" means a Claim or any portion thereof (a) that has
been allowed by a Final Order, or (b) as to which, on or by the Effective Date,
(i) no proof of claim has been filed with the Bankruptcy Court and (ii) the
liquidated and noncontingent amount of which is Scheduled, other than a Claim
that is Scheduled at zero, in an unknown amount, or as disputed, or (c) for
which a proof of claim in a liquidated amount has been timely filed with the
Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the
Bankruptcy Court or other applicable bankruptcy law and as to which either (i)
no objection to its allowance has been filed within the periods of limitation
fixed by the Plan, the Bankruptcy Code or by any order of the Bankruptcy Court
or (ii) any objection to its allowance has been settled or withdrawn, or has
been denied by a Final Order, or (d) that is expressly allowed in a liquidated
amount in this Plan.
1.3 "ALLOWED" means, when used in reference to a Claim or Interest
within a particular Class, an Allowed Claim or Allowed Interest of the type
described in such Class.
1.4 "ALLOWED CLASS ___ CLAIM" means an Allowed Claim in the particular
Class described.
1.5 "AMENDED ARTICLES OF INCORPORATION AND BY-LAWS" means the
Reorganized Debtors' respective articles of incorporation and by-laws, as
amended by or in furtherance of the Plan.
1.6 "BALLOTS" means each of the ballot forms distributed with the
Disclosure Statement to holders of Impaired Claims entitled to vote as specified
in Section 4.4 of the Plan, in connection with the solicitation of acceptances
of the Plan.
1.7 "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as
codified in
9
title 11 of the United States Code, 11 U.S.C.ss.ss.101-1330, as now in effect or
hereafter amended.
1.8 "BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Eastern District of Michigan, Southern Division.
1.9 "BANKRUPTCY RULES" means, collectively, the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended,
incorporating by reference applicable portions of the Federal Rules of Civil
Procedure, as amended, as applicable to the Chapter 11 Cases or proceedings
therein, and the Local Rules of the Bankruptcy Court, as applicable to the
Chapter 11 Cases or proceedings therein, as the case may be.
1.10 "BAR DATE(S)" means August 20, 2001, being the date, designated by
the Bankruptcy Court as the last date for filing proofs of Claim or Interest
against the Debtors; provided, however, that for the Lenders (hereinafter
defined) and for governmental units the Bar Date is September 7, 2001.
1.11 "BUSINESS DAY" means any day, excluding Saturdays, Sundays or
"legal holidays" (as defined in Bankruptcy Rule 9006(a)), on which commercial
banks are open for business in Detroit, Michigan.
1.12 "CANADIAN PLAN" means the amended plan of arrangement proposed
under the CCAA Case.
1.13 "CCAA CASE" means the proceeding commenced and maintained by
Products under the Canadian Companies' Creditors Arrangement Act in the Ontario
(Canada) Superior Court of Justice.
1.14 "CHAPTER 11 CASES" means the jointly administered Chapter 11 Cases
of the Debtors.
1.15 "CLAIM" means a claim against the Debtors, or either of them,
whether or not asserted, as defined in Section 101(5) of the Bankruptcy Code.
1.16 "CLAIMS OBJECTION DEADLINE" means the last day for filing
objections to Disputed Claims, which day shall be 90 days after the Effective
Date.
10
1.17 "CLASS" means a category of holders of Claims or Interests, as
described in Article II of this Plan.
1.18 "COLLATERAL" means any property or interest in the property of a
Debtor's Estate subject to a Lien to secure the payment or performance of a
Claim, which Lien is not subject to avoidance under the Bankruptcy Code or
otherwise invalid under the Bankruptcy Code or applicable state law.
1.19 "CONFIRMATION" means entry by the Bankruptcy Court of the
Confirmation Order.
1.20 "CONFIRMATION DATE" means the date of entry by the Clerk of the
Bankruptcy Court of the Confirmation Order.
1.21 "CONFIRMATION HEARING" means the hearing to consider confirmation
of the Plan under Section 1128 of the Bankruptcy Code.
1.22 "CONFIRMATION ORDER" means the order entered by the Bankruptcy
Court confirming the Plan.
1.23 "CREDIT AGREEMENT" shall mean the Amended and Restated Talon
Automotive Group, Inc. $100,000,000 Credit Agreement with Comerica Bank as
Agent, dated February 16, 2001.
1.24 "CREDITOR" means any Person who holds a Claim against either of
the Debtors.
1.25 "CREDITORS' COMMITTEE" means the official committee of unsecured
creditors appointed pursuant to Section 1102(a) of the Bankruptcy Code in the
Chapter 11 Cases.
1.26 "CURE" means the distribution of Cash, or such other property as
may be agreed upon by the parties or ordered by the Bankruptcy Court, with
respect to the assumption of an executory contract or unexpired lease, pursuant
to Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid
monetary obligations, without interest, or such other amount as may be agreed
upon by the parties, under such executory contract or unexpired lease, to the
11
extent such obligations are enforceable under the Bankruptcy Code and applicable
bankruptcy law.
1.27 "DEBTOR(S)" means, individually, Talon or Holdings, as the context
may require, and, collectively, Talon and Holdings, including in their capacity
as debtors-in-possession, pursuant to Sections 1107 and 1108 of the Bankruptcy
Code.
1.28 "DILUTION" means dilution subsequent to the Effective Date (a) to
the extent necessary to give effect to the exercise of the Warrants and/or
Management Options or (b) otherwise as a result of the duly authorized issuance
of additional common shares or of securities at any time convertible into, or
exercisable or exchangeable for, additional common shares, implementation of
other management incentive programs or other action taken by the board of
directors or shareholders, as applicable, of Reorganized Holdings.
1.29 "DIP AGENT" means Comerica Bank, in its capacity as administrative
agent under the DIP Facility Agreement.
1.30 "DIP FACILITY" means the debtor-in-possession working capital
credit facility to be provided to and for the benefit of the Debtors during the
Chapter 11 Cases, pursuant to the DIP Facility Agreement.
1.31 "DIP FACILITY AGREEMENT" means the post-petition financing
arrangements between Talon and Products, as borrowers, and Holdings, as
guarantor, and the Lenders, as post-petition lenders, as evidenced by such
post-petition financing order(s) entered by the Bankruptcy Court, the Second
Amended and Restated Talon Automotive Group, Inc. and Veltri Metal Products, Co.
as Debtors in Possession $100,000,000 Credit Agreement with Comerica Bank as
Agent [dated] June 29, 2001, and such other documents as may be executed in
furtherance thereof as authorized by such Bankruptcy Court order(s).
1.32 "DIP FACILITY CLAIM" means a Claim arising under or as a result of
the DIP Facility.
1.33 "DISBURSING AGENT" means Reorganized Holdings or any party
designated by
12
Reorganized Holdings, in its sole discretion, to serve as a disbursing agent
under the Plan.
1.34 "DISCLOSURE STATEMENT" means the written amended disclosure
statement that relates to and accompanies the Plan, as the same may be amended,
supplemented, or modified from time to time, and that is prepared and
distributed in accordance with Section 1125 of the Bankruptcy Code and
Bankruptcy Rule 3018.
1.35 "DISPUTED CLAIM" means any Claim which has not been Allowed
pursuant to the Plan or Final Order of the Bankruptcy Court, and
a. if no Proof of Claim has been, or is deemed to have been
filed, by the applicable Bar Date, which has been or hereafter is listed on the
Schedule of Impaired Unsecured Claims as unliquidated, contingent, or disputed,
and which has not been resolved by written agreement of the parties or an order
of the Bankruptcy Court.
b. if a Proof of Claim has been filed, or is deemed to have
been filed, by the applicable Bar Date (i) a Claim for which a corresponding
Claim has been listed on the Schedule of Impaired Unsecured Claims as
unliquidated, contingent or disputed; (ii) a Claim for which a corresponding
Claim has been listed on the Schedule of Impaired Unsecured Claims as other than
unliquidated, contingent or disputed, but the amount of such Claim as asserted
in the Proof of Claim varies from the amount of such Claim as listed in the
Schedule of Impaired Unsecured Claims; or (iii) as to which a Debtor has timely
filed an objection or request for estimation in accordance with the Plan, the
Bankruptcy Code, the Bankruptcy Rules, and any orders of the Bankruptcy Court,
or which is otherwise disputed by a Debtor in accordance with applicable law,
which objection, request for estimation or dispute has not been withdrawn, or
determined by a Final Order;
c. for which a Proof of Claim was required to be filed by
order of the Bankruptcy Court, but as to which a Proof of Claim was not timely
or properly filed; or
d. that is disputed in accordance with the provisions of this
Plan.
1.36 "DISPUTED CLAIM AMOUNT" means (a) if a liquidated amount is set
forth in the
13
Proof of Claim relating to a Disputed Claim, (i) the liquidated amount set forth
in the Proof of Claim relating to the Disputed Claim; (ii) an amount agreed to
by the Debtors and the holders of such Disputed Claim; or (iii) if a request for
estimation is filed by the Debtors, the amount at which such Claim is estimated
by the Bankruptcy Court; (b) if no liquidated amount is set forth in the Proof
of Claim relating to a Disputed Claim, (i) an amount agreed to by the Debtors
and the holder of such Disputed Claim or (ii) the amount estimated by the
Bankruptcy Court with respect to such Disputed Claim; or (c) if the Claim was
listed in the Schedule of Impaired Unsecured Claims as unliquidated, contingent
or disputed and no Proof of Claim was filed, or deemed to have been field, by
the applicable Bar Date and the Claim has not been resolved by written agreement
of the parties or an order of the Bankruptcy Court, zero.
1.37 "DISTRIBUTION DATE" shall be the Effective Date, being the date
upon which distributions are made by Reorganized Holdings to holders of Allowed
Class 5 and 6 Claims.
1.38 "DISTRIBUTION RECORD DATE" means the record date for purposes of
making distributions under the Plan on account of Allowed Class 5 and 6 Claims,
which date shall be the Confirmation Date or such other date designated in the
Confirmation Order.
1.39 "EFFECTIVE DATE" means the tenth (10th) Business Day after
conditions to the consummation of the Plan, as set forth in Section 10.2 of this
Plan, have been satisfied or waived, as provided in Section 10.3 of this Plan,
and is the effective date of the Plan.
1.40 "ESTATE(S)" means, individually, the estate of each Debtor in the
respective Chapter 11 Cases, and, collectively, the estates of both Debtors in
the Chapter 11 Cases, created pursuant to Section 541 of the Bankruptcy Code.
1.41 "EXIT FACILITY" means a new senior secured credit facility for the
benefit of Reorganized Holdings, in an amount to be determined by Reorganized
Holdings, which Reorganized Holdings shall close on, or to be effective as of,
the Effective Date in order to provide Reorganized Holdings with adequate
working capital subsequent to the Effective Date. The terms of the Exit Facility
shall be substantially the same as those contained in the
14
Pre-Petition Credit Facility Agreement (as hereinafter defined), including,
specifically, but without limitation, provisions no less favorable relating to
availability and advances, and with the borrowing base availability thereunder,
and with the definitive documentation for such financing arrangements, including
other covenants, terms and conditions, to be acceptable to the Noteholder
Committee. In the event that the Lenders are the lenders under the Exit
Facility, the maturity date thereof may be as early as July, 2002.
1.42 "EXIT LENDERS" means the secured lender(s) under the Exit
Facility.
1.43 "FACE AMOUNT" means (a) when used in reference to a Disputed
Claim, the full stated amount claimed by the holder of such Claim in any proof
of Claim timely filed with the Bankruptcy Court or otherwise deemed timely filed
by any Final Order of the Bankruptcy Court or other applicable bankruptcy law,
and (b) when used in reference to an Allowed Claim, the allowed amount of such
Claim.
1.44 "FINAL ORDER" means any order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket in the
Chapter 11 Cases, the operation or effect of which has not been stayed,
reversed, or amended and as to which order 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 was filed or, if filed, remains pending.
1.45 "FINANCIAL RESTRUCTURING" has the meaning ascribed thereto in
Section 5.1 of this Plan.
1.46 "GUARANTY" means the guaranty by Products of the Notes under the
terms of the Indenture.
1.47 "GENERAL UNSECURED CLAIM" means a Claim against the Debtors that
is not a DIP Facility Claim, Administrative Claim, Priority Tax Claim, Other
Priority Claim, Other Secured Claim, Secured Lender Claim, Impaired Unsecured
Claim, or Note Claim.
15
1.48 "IMPAIRED" means, when used with reference to a Claim or Interest,
a Claim or Interest that is impaired within the meaning of Section 1124 of the
Bankruptcy Code.
1.49 "IMPAIRED UNSECURED CLAIMS" means, collectively, the Claims listed
on the Schedule of Impaired Unsecured Claims, as the same may be amended or
supplemented, together with such other unsecured Claims as may be impaired by
virtue of the rejection of an executory contract or unexpired lease (in addition
to any listed on the Schedule of Impaired Unsecured Claims) to which either or
both of the Debtors is a party and as to which a motion to reject is pending or
has been approved on or before the date of the Confirmation Hearing.
1.50 "INDENTURE" means the Senior Subordinated Indenture, dated as of
April 28, 1998, between Talon (and Holdings and Products, as guarantors) and
U.S. Bank Trust National Association, as trustee, as amended or modified from
time to time, pursuant to which the Notes were issued and are outstanding.
1.51 "INDENTURE TRUSTEE" means U.S. Bank Trust National Association, or
its successor, in its capacity as trustee under the Indenture.
1.52 "INTEREST" means an interest as an equity security holder in
either Talon or Holdings, as applicable.
1.53 "LENDERS" means the pre-petition senior secured lending group to
Talon and Products, consisting of Comerica Bank; National Bank of Canada, New
York branch; B.P. Paribas; Michigan National Bank; Fleet Bank; Dresdner Bank AG,
New York and Grand Cayman branches; LaSalle Bank National Association, and their
respective Participants (as defined in the Pre-Petition Credit Facility
Agreement), successors and assigns, and for which Comerica Bank acts as
administrative agent.
1.54 "LIEN" means a charge against or interest in property to secure
payment of a debt or performance of an obligation.
1.55 "LITIGATION CLAIMS" means the claims, rights of action, suits, or
proceedings, whether in law or in equity, whether known or unknown, existing as
of the Petition Date, and
16
including all causes of action created by the filing of the Chapter 11 Cases,
pursuant to Chapter 5 of the Bankruptcy Code or otherwise, that the Debtors or
their Estates may hold against any Person (excluding the William John Claim),
which are to be retained by Reorganized Holdings pursuant to Section 5.10 of
this Plan.
1.56 "LOCKUP AGREEMENT" shall mean that certain Lockup Agreement, dated
as of May 30, 2001, and entered into by and among Talon, Holdings, Products, the
members of the Noteholder Committee, and the Insider Holders (as defined in the
Lockup Agreement). A copy of the Lockup Agreement is attached to the Disclosure
Statement.
1.57 "MANAGEMENT OPTION PLAN" means a stock option plan to be adopted
by Reorganized Holdings.
1.58 "MANAGEMENT OPTION PLAN PARTICIPANTS" means the management
employees of Reorganized Holdings entitled to participate in the Management
Option Plan.
1.59 "MANAGEMENT OPTIONS" means the options to be issued by Reorganized
Holdings to the Management Option Plan Participants representing rights to
purchase New Common Shares pursuant to the provisions of the Management Option
Plan.
1.60 "NEW COMMON SHARES" means the shares of new common stock of
Reorganized Holdings authorized to be issued under Section 5.5 of this Plan.
1.61 "NEW SECURITIES" means, collectively, the New Common Shares,
Warrants and Management Options.
1.62 "NOTES" means the 9.625% Senior Subordinated Notes of Talon due
May 1, 2008, issued and outstanding under the Indenture.
1.63 "NOTE CLAIM" means any Claim, of any kind or nature, arising from
the Notes or the Indenture or any related agreement, document or instrument,
including, without limitation, a Claim under the Guaranty.
1.64 "NOTEHOLDER COMMITTEE" shall mean the informal ad hoc committee of
certain holders of Notes, who were signatories to the Lockup Agreement, and
excluding the Insider Holders (as defined on the signature pages to the Lockup
Agreement).
17
1.65 "OLD COMMON SHARES" means the two classes of common shares of
Holdings issued and outstanding as of the Petition Date, together with any and
all options, warrants and other rights in respect of such common stock.
1.66 "OTHER PRIORITY CLAIM" means a Claim entitled to priority pursuant
to Section 507(a) of the Bankruptcy Code, other than a DIP Facility Claim,
Priority Tax Claim or an Administrative Claim.
1.67 "OTHER SECURED CLAIM(S)" means any and all Secured Claims against
either or both of the Debtors, as the case may be, other than the Secured
Lenders Claim.
1.68 "PERSON" means Person as defined in Section 101(41) of the
Bankruptcy Code.
1.69 "PETITION DATE" means the date on which the Debtors filed their
voluntary petitions to commence the Chapter 11 Cases.
1.70 "PLAN" means this amended Chapter 11 reorganization plan and any
and all exhibits and schedules annexed hereto or referenced herein, as the same
may be amended, modified or supplemented from time.
1.71 "PLAN EXHIBIT" means any exhibit or schedule attached hereto.
1.72 "PRE-PETITION CREDIT FACILITY AGREEMENT" means the pre-petition
loan and security documents, collectively, between Talon and Products, as
borrowers, and Talon, Holdings and Products, as guarantors, and Lenders, as
lenders, which existed and which were in force as of the Petition Date, and
including, without limitation, the Credit Agreement.
1.73 "PRIORITY TAX CLAIM" means a Claim that is entitled to priority
pursuant to Section 507(a)(8) of the Bankruptcy Code.
1.74 "PRODUCTS" means Veltri Metal Products Company, a Nova Scotia
unlimited liability company, which is a wholly-owned subsidiary of Holdings.
Products is the subject of a contemporaneous proceeding under the Companies'
Creditors Arrangement Act (the "CCAA") in the Ontario (Canada) Superior Court of
Justice.
18
1.75 "PROFESSIONAL" means any professional employed in the Chapter 11
Cases pursuant to Section 327 or 1103 of the Bankruptcy Code or otherwise and
any professionals seeking compensation or reimbursement of expenses in
connection with the Chapter 11 Cases pursuant to Section 503(b)(4) of the
Bankruptcy Code.
1.76 "PROFESSIONAL FEE CLAIM" means a Claim of a Professional for
compensation or reimbursement of costs and expenses relating to services
incurred after the Petition Date and prior to and including the Effective Date.
1.77 "PRO RATA" means, at any time, the proportion that the Face Amount
of a Claim in a particular Class bears to the aggregate Face Amount of all
Claims (including Disputed Claims) in such Class, unless the Plan provides
otherwise.
1.78 "PROOF OF CLAIM" means the proof of claim that must be filed by a
holder of an Impaired Unsecured Claim by the Bar Date.
1.79 "REORGANIZED DEBTOR(S)" means, individually, a Reorganized Debtor
and, collectively, all Reorganized Debtors, on or after the Effective Date.
1.80 "REORGANIZED HOLDINGS" means reorganized Holdings, or its
successor, on and after the Effective Date.
1.81 "REORGANIZED PRODUCTS" means reorganized Products, or its
successor, under the CCAA Case, on and after the Effective Date.
1.82 "REORGANIZED TALON" means reorganized Talon, or its successor, on
and after the Effective Date.
1.83 "SCHEDULE OF IMPAIRED UNSECURED CLAIMS" means a list of Impaired
Unsecured Claims attached hereto as Schedule 1, as the same may be amended or
supplemented.
1.84 "SCHEDULES" means the schedules of assets and liabilities and the
statements of financial affairs filed in the Chapter 11 Cases by the Debtors, as
such schedules or statements may be amended or supplemented from time to time in
accordance with Bankruptcy Rule 1009 or orders of the Bankruptcy Court.
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1.85 "SECURED CLAIM" means a Claim that is secured by a Lien on
property in which an Estate has an interest or that is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of the value of the claim
holder's interest in the Estate's interest in such property or to the extent of
the amount subject to setoff, as applicable, as determined pursuant to Section
506(a) of the Bankruptcy Code.
1.86 "SECURED LENDERS CLAIM" means the Secured Claim of the Lenders
arising under or as a result of the Pre-Petition Credit Facility Agreement.
1.87 "SECURITIES ACT" means the Securities Act of 1933, 15
U.S.C.ss.ss.77a - 77aa, as now in effect or hereafter amended.
1.88 "UNIMPAIRED" means, when used with reference to a Claim or
Interest, a Claim or Interest that is not impaired within the meaning of Section
1124 of the Bankruptcy Code.
1.89 "VOTING DEADLINE" means the voting deadline for voting to accept
or reject this Plan, as determined by the Bankruptcy Court.
1.90 "VOTING RECORD DATE" means the voting record date for voting to
accept or reject this Plan, as determined by the Bankruptcy Court.
1.91 "WARRANTS" means the warrants to be issued on the Distribution
Date to Reorganized Talon, which warrants shall represent rights to purchase New
Common Shares, as provided to be issued under and in furtherance of this Plan.
1.92 "WILLIAM JOHN CLAIM" means any and all claims asserted on behalf
of Talon in that certain civil action entitled Talon Automotive Group,
Inc., f/k/a Production Acquisition, Inc., Plaintiff, versus William H. John,
individually, and as Trustee of the William H. John Restated Revocable Trust
U/A/D 10/10/95; Story S. John, individually, and as Trustee of the Story S. John
Amended and Restated Revocable Trust U/A/D 12/8/95; and Melvyn S. Goldstein, as
Trustee of the John Irrevocable Gift Trust U/A/D 12/29/94; Defendants, Oakland
County (Michigan) Circuit Court Case No. 00-027881-CK.
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C. RULES OF INTERPRETATION
For purposes of the Plan (a) any reference in the Plan to a contract,
instrument, release, indenture, or other agreement or document being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions, (b) any reference in the Plan to an existing document or exhibit
filed or to be filed means such document or exhibit as it may have been or may
be amended, modified, or supplemented, (c) unless otherwise specified, all
references in the Plan to Sections, Articles, Schedules, and Exhibits are
references to Sections, Articles, Schedules, and Exhibits of or to the Plan, (d)
the words "herein" and "hereto" refer to the Plan in its entirety rather than to
a particular portion of the Plan, (e) 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 the Plan, and (f) the rules of
construction set forth in Section 102 of the Bankruptcy Code and in the
Bankruptcy Rules shall apply.
D. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.
E. GOVERNING LAW
Unless a rule of law or procedure is supplied by federal law (including
the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Michigan
shall govern the construction and implementation of the Plan and any agreements,
documents, and instruments executed in connection with the Plan.
21
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
2.1 INTRODUCTION
All Claims and Interests, except DIP Facility Claims, Administrative
Claims and Priority Tax Claims, are placed in the Classes set forth below. In
accordance with Section 1123(a) (1) of the Bankruptcy Code, DIP Facility Claims,
Administrative Claims and Priority Tax Claims have not been classified, and the
respective treatment of such unclassified claims is set forth in Section 3.1 of
this Plan.
A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class, and is
classified in other Classes to the extent that any portion of the Claim or
Interest falls within the description of such other Classes. A Claim is also
placed in a particular Class for the purpose of receiving distributions pursuant
to the Plan only to the extent that such Claim is an Allowed Claim in that Class
and such Claim has not been paid, released, or otherwise settled prior to the
Effective Date.
2.2 CLASSIFICATION OF UNIMPAIRED CLAIMS AND INTERESTS
(a) Class 1: Other Priority Claims
Class 1 consists of all Other Priority Claims.
(b) Class 2: Secured Lenders Claim
Class 2 consists of the Secured Lenders Claim.
(c) Class 3: Other Secured Claims
Class 3 consists of all Other Secured Claims secured
by a Lien upon property in which an Estate has an
interest.
2.3 CLASSIFICATION OF IMPAIRED CLAIMS AND INTERESTS.
(a) Class 4: General Unsecured Claims
Class 4 consists of General Unsecured Claims, with
the exception of the Note Claims and the Impaired
Unsecured Claims.
(b) Class 5: Note Claims and other Impaired Unsecured
Claims
Class 5 consists of all Note Claims and other
Impaired Unsecured Claims.
22
(c) Class 6: Holdings Interests
Class 6 consists of the Interests in Holdings.
(d) Class 7: Talon Interests
Class 7 consists of the Interests in Talon.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
3.1 UNCLASSIFIED CLAIMS
(A) DIP FACILITY CLAIM
On the Effective Date, the Lenders, on account of the Allowed
DIP Facility Claim, shall receive in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed DIP Facility Claim (i) cash equal
to the unpaid portion of such Allowed DIP Facility Claim (including such
interest and reasonable fees, costs and charges as to which the Lenders may be
entitled as provided under the DIP Facility), or (ii) such other treatment as to
which Reorganized Holdings and the Lenders shall have agreed upon in writing.
(B) ADMINISTRATIVE CLAIMS
Except as otherwise provided for herein, and subject to the
requirements of Article XII of this Plan, on the later of (i) the Effective
Date, (ii) the date such Administrative Claim becomes an Allowed Administrative
Claim, or (iii) the date such Administrative Claim becomes payable pursuant to
any agreement between a Debtor and the holder of such Administrative Claim, each
holder of an Allowed Administrative Claim shall receive in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed
Administrative Claim (x) cash equal to the unpaid portion of such Allowed
Administrative Claim or (y) such other treatment as to which Reorganized
Holdings and such holder shall have agreed upon in writing; provided, however,
that Allowed Administrative Claims with respect to liabilities incurred by a
Debtor in the ordinary course of business during the Chapter 11
23
Cases shall be paid in the ordinary course of business in accordance with the
terms and conditions of any agreements relating thereto.
(C) PRIORITY TAX CLAIMS
Each holder of an Allowed Priority Tax Claim, at the sole option of
Reorganized Holdings, shall be entitled to receive on account of such Allowed
Priority Tax Claim, in full satisfaction, settlement, release and discharge of
and in exchange for such Allowed Priority Tax Claim, (i) equal cash payments
made on the last Business Day of every three month period following the
Effective Date over a period not exceeding six years after the assessment of the
tax on which such Claim is based, totaling the principal amount of such Claim
plus simple interest on any outstanding balance from the Effective Date
calculated at the interest rate available on ninety (90) day United States
Treasuries on the Effective Date or (ii) such other treatment agreed to by the
Allowed Priority Tax Claim holder and Reorganized Holdings.
3.2 UNIMPAIRED CLASSES OF CLAIMS AND INTERESTS
(A) CLASS 1: OTHER PRIORITY CLAIMS
On the later of (i) the Effective Date, (ii) the date such Claim
becomes an Allowed Other Priority Claim, or (iii) the date such Other Priority
Claim becomes payable pursuant to any agreement between a Debtor and the holder
of such Other Priority Claim, each holder of an Allowed Other Priority Claim
shall receive in full satisfaction, settlement, release, and discharge of and in
exchange for such Allowed Other Priority Claim (x) cash equal to the unpaid
portion of such Allowed Other Priority Claim or (y) such other treatment as to
which Reorganized Holdings and such holder shall have agreed upon in writing.
(B) CLASS 2: SECURED LENDERS CLAIM
On the Effective Date, the Lenders, on account of the Secured Lenders
Claim, shall receive in full satisfaction, settlement, release, and discharge of
and in exchange for such Secured Lenders Claim (i) cash equal to the unpaid
portion of such Secured Lenders Claim, including interest, and any reasonable
fees, costs and charges to which Lenders may be
24
entitled, or (ii) such other treatment as to which Reorganized Holdings and the
Lenders shall have agreed upon in writing.
(C) CLASS 3: OTHER SECURED CLAIMS
On the Effective Date, the legal, equitable and contractual rights of
all holders of an Allowed Other Secured Claim shall be reinstated and paid, from
and after the Effective Date, in the ordinary course of business, without
acceleration based upon the filing of the Chapter 11 Cases, in accordance with
such agreements and terms as existed as of the Petition Date, which agreements
shall continue in full force and effect. The Debtors' failure to object to any
such Other Secured Claims in the Chapter 11 Cases shall be without prejudice to
Reorganized Holdings' right to contest or otherwise defend against such Claim in
the appropriate forum when and if such Claim is sought to be enforced by the
Other Secured Claim holder. Notwithstanding Section 1141(c) or any other
provisions of the Bankruptcy Code, all pre-petition Liens on property of any
Debtor held by or on behalf of the Other Secured Claim holders with respect to
such Claims shall survive the Effective Date and continue in accordance with the
contractual terms of the underlying agreements with such Claim holders until, as
to each such Claim holder, the Allowed Claims of such Other Secured Claim holder
are paid in full, subject to the provisions of Article VII of this Plan.
3.3 IMPAIRED CLASSES OF CLAIMS AND INTERESTS
(A) CLASS 4: GENERAL UNSECURED CLAIMS
On the later of (i) the 60th day after the Effective Date, (ii) the
date such General Unsecured Claim becomes an Allowed General Unsecured Claim,
(iii) the date such Claim becomes payable in the ordinary course of business
pursuant to any agreement entered into, prior to the Petition Date, between a
Debtor and the holder of such General Unsecured Claim (and without acceleration
based upon the filing of the Chapter 11 Cases ), or (iv) the date otherwise
agreed to between a Debtor and the holder of such General Unsecured Claim, each
holder of an Allowed General Unsecured Claim shall receive in full satisfaction,
release, and
25
discharge of and in exchange for such Allowed General Unsecured Claim cash equal
to the unpaid portion of such Allowed General Unsecured Claim.
(B) CLASS 5: NOTE CLAIMS AND OTHER IMPAIRED UNSECURED
CLAIMS
On the Distribution Date, each holder of an Allowed Class 5 Claim, in
full satisfaction, settlement, release, and discharge of and in exchange for
such Allowed Class 5 Claim, shall receive its Pro Rata share of ninety-seven
percent (97%) of the New Common Shares to be issued and outstanding on the
Distribution Date (subject to Dilution), and the Notes, the Note Claims, the
Indenture, and any and all guaranties of the Notes, including the Guaranty, the
Notes Claims, or the Indenture, and any and all rights and obligations of the
Debtors and Products under any of the foregoing, shall be deemed canceled,
extinguished, released and discharged.
(C) CLASS 6: HOLDINGS INTERESTS
On the Distribution Date, all of the Interests in Holdings, including,
but not necessarily limited to, the Old Common Shares, shall be deemed canceled,
extinguished, released and discharged. On the Distribution Date, Reorganized
Talon shall receive three percent (3%) of the New Common Shares, and the
Warrants to be issued and outstanding on the Distribution Date (subject to
Dilution). Reorganized Holdings shall continue to own, from and after the
Effective Date, one hundred percent (100%) of the Interests in Reorganized
Products.
(D) CLASS 7: TALON INTERESTS
The Interests in Talon shall be unaffected by Confirmation of the Plan
or the occurrence of the Effective Date or the Distribution Date.
3.4 RESERVATION OF RIGHTS REGARDING CLAIMS
Except as otherwise expressly provided in the Plan or in the DIP
Facility Agreement, nothing shall affect the Debtors' or Reorganized Debtors'
rights and defenses, both legal and equitable, with respect to any Claims,
including, but not limited to, all rights with respect to legal and equitable
defenses to alleged rights of setoff or recoupment.
26
ARTICLE IV
ACCEPTANCE OR REJECTION OF THE PLAN
4.1 IMPAIRED CLASSES OF CLAIMS AND INTERESTS ENTITLED TO VOTE.
Subject to Sections 4.3 and 4.4 of the Plan, only Claim and Interest
holders in each Impaired Class of Claims or Interests are entitled to vote as a
class to accept or reject the Plan.
4.2 ACCEPTANCE BY AN IMPAIRED CLASS.
In accordance with Section 1126(c) of the Bankruptcy Code, and except
as provided in Section 1126(e) of the Bankruptcy Code, an Impaired Class of
Claims shall have accepted the Plan if the Plan is accepted by the holders of at
least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number
of the Allowed Claims of such Class that have timely and properly voted to
accept or reject the Plan.
In accordance with Section 1126(d) of the Bankruptcy Code, and except
as provided in Section 1126(e) of the Bankruptcy Code, a class of Impaired
Interests shall have accepted the Plan if the Plan is accepted by the holders of
at least two-thirds (2/3) in amount of the Allowed Interests of such class held
by holders of such Interests, that have timely and properly voted to accept or
reject the Plan.
4.3 PRESUMED ACCEPTANCES BY UNIMPAIRED CLASSES.
Classes 1, 2, and 3 are Unimpaired by the Plan. Under Section 1126(f)
of the Bankruptcy Code, such Claim holders are conclusively presumed to accept
the Plan, and the votes of such Claim holders will not be solicited.
4.4 SUMMARY OF CLASSES VOTING ON THE PLAN.
As a result of the foregoing, the votes of holders of Claims in Class 4
and Class 5 and of Interests in Talon or Holdings with respect to Class 6 and
Class 7 will be solicited with respect to this Plan. For the purpose of counting
ballots evidencing votes on acceptance or rejection of this Plan, the Debtors
and the Bankruptcy Court shall rely on ballots cast by or for
27
the beneficial owners of the Notes with respect to Class 5 Claims and by or for
the beneficial holders of Interests in Holdings and Talon with respect to Class
6 and Class 7 Claims. The record date for determining which holders of Notes and
Interests are entitled to vote shall be the close of business on the Bar Date
unless the Bankruptcy Court specifies some other time and date. The transfer of
a Note or an Interest after the record date will not affect the validity of a
ballot cast by or for any Person that was the beneficial owner of the Note or
the Interest at the record date.
4.5 THE PLAN OF ARRANGEMENT UNDER THE CCAA CASE.
Under the Canadian Plan, pursuant to the CCAA Case, certain of the
holders of Claims in Class 5, being the holders of the Notes, as well as other
unsecured creditors of Products, will vote with respect to the Canadian Plan. It
is a condition of the acceptance of the Canadian Plan that the Plan has been
accepted by the Classes entitled to vote under the Plan.
ARTICLE V
MEANS FOR IMPLEMENTATION OF THE PLAN
5.1 FINANCIAL RESTRUCTURING
On the Effective Date, Talon shall irrevocably contribute, convey,
transfer and assign all of its assets, subject to its liabilities (except for
Note Claims) to Reorganized Holdings and Talon and Reorganized Talon shall be
deemed fully and forever released, acquitted and discharged from any and all
Claims (including, without limitation, Note Claims) and any and all other
liabilities, of any kind or nature, with respect thereto; the Notes, the Note
Claims, the Indenture, including the Guaranty, and any and all guaranties of the
Notes, the Note Claims or the Indenture, and any and all rights and obligations
thereunder, shall be deemed canceled, extinguished, released and discharged, all
of the Holdings Interests, including, but not necessarily limited to, the Old
Common Shares, shall be deemed canceled, released and discharged, and the New
Common Shares and Warrants shall be issued, as provided in Article III above and
as otherwise provided in this Plan (collectively, the "Financial
Restructuring").
28
Reorganized Talon will receive three series of warrants representing a
total of 20.0% of the fully diluted equity of Reorganized Holdings with exercise
prices pursuant to the schedule below.
Warrants: Reorganized Talon will receive three series of
Warrants. The Series A and Series B Warrants will
each represent 2.5% of the stock of Reorganized
Holdings. The Series C Warrants will represent 15.0%
of the stock of Reorganized Holdings. The exercise
price of each series of Warrants has been set in the
chart below at a level representing a recovery of the
face value of the Notes for the Noteholders, assuming
10,000,000 shares initially issued (300,000 to
Reorganized Talon; and 9,700,000 to the holders of
the Notes and any other Impaired Unsecured Claims
receiving Shares on their Claims), and taking into
account Dilution created by any preceding series of
Series A and B Warrants:
Warrants Percentage Recovery On Notes Strike Price Number of Shares
-------- ----------------------------- ------------ ----------------
Series A 70% $8.66 256,410
Series B 80% $9.89 262,985
Series C 93% $11.51 1,856,364
The Warrants: (i) shall have a five year term; (ii) shall contain
customary anti-Dilution provisions (but not covering Dilution resulting from the
issuance of equity securities to management under the Management Option Plan);
(ii) shall contain additional customary protections found in warrants to the
effect that in the event of any combination or subdivision of the outstanding
shares (including, but not limited to, in reverse stock splits), the Warrant
shares and cash exercise price shall be adjusted proportionately; and (iv) shall
not be subject to any future valuation or pricing premised upon the
Black-Scholes formula or any other valuation methodology. The actions to effect
the Financial Restructuring may include: (a) the execution and delivery of
appropriate agreements or other documents containing terms that are consistent
with the terms of the Plan and that satisfy the applicable requirements of
29
applicable state law and such other terms to which the applicable entities may
agree; (b) the execution and delivery of appropriate instruments of transfer,
assignment, assumption, or delegation of any asset, property, right, liability,
duty, or obligation on terms consistent with the terms of the Plan and having
such other terms to which the applicable entities may agree; (c) the filing of
appropriate certificates, articles or other documents pursuant to applicable
state law; and (d) all other actions that the applicable entities determine to
be necessary or appropriate, including making filings or recordings that may be
required by applicable state law, in connection with such transactions. The
Financial Restructuring shall include, in substantial part, as provided above,
all of the assets, properties, rights, liabilities (except Note Claims), duties,
and obligations of Talon vesting in Reorganized Holdings and Talon and
Reorganized Talon being fully and forever released, acquitted and discharged
from any and all Claims (including, without limitation, Note Claims) and any and
all other liabilities, of any kind or nature, with respect thereto. Subsequent
to the Financial Restructuring, Reorganized Holdings shall be deemed to have
assumed, and shall perform, those obligations of Talon which have been assigned
to Reorganized Holdings pursuant to and in furtherance of the Plan to pay or
otherwise satisfy the Allowed Claims against Talon.
5.2 CONTINUED CORPORATE EXISTENCE
Subject to the Financial Restructuring, the Reorganized Debtors shall
continue to exist after the Effective Date as separate corporate entities, in
accordance with applicable state law and pursuant to their respective articles
of incorporation and by-laws in effect prior to the Effective Date, except to
the extent such articles of incorporation and/or by-laws may be amended by or in
furtherance of this Plan. Under the Canadian Plan, there will be no change to
the corporate existence, articles or by-laws of Reorganized Products merely as a
result of the adoption of the Plan or the Canadian Plan.
5.3 CANCELLATION OF OLD COMMON SHARES AND AGREEMENTS
On the Distribution Date, except as otherwise provided for herein, (a)
the Old Common
30
Shares and any other notes, bonds, indentures, or other instruments or documents
evidencing or creating any indebtedness or obligation of a Debtor, except such
notes or other instruments evidencing indebtedness or obligations of a Debtor
that are reinstated or amended and restated under the Plan, shall be deemed
canceled, extinguished, released, and discharged and (b) the obligations of
Holdings under any agreements, indentures or certificates of designation
governing the Old Common Shares and any other notes, bonds, indentures or other
instruments or documents evidencing or creating any indebtedness or obligation
of a Debtor, except such notes or other instruments evidencing indebtedness or
obligations of a Debtor that are reinstated or amended and restated under the
Plan, as the case may be, shall be deemed canceled, extinguished, released, and
discharged.
5.4 ARTICLES OF INCORPORATION AND BY-LAWS
The articles of incorporation and by-laws of each Debtor shall be
amended as necessary to satisfy the provisions of the Plan and the Bankruptcy
Code and shall include, among other things, pursuant to Section 1123(a) (6) of
the Bankruptcy Code, a provision prohibiting the issuance of non-voting equity
securities, but only to the extent required by Section 1123(a)(6) of the
Bankruptcy Code. Under the Canadian Plan, there will be no change to the
corporate existence, articles or by-laws of Reorganized Products merely as a
result of the adoption of the Plan or the Canadian Plan.
5.5 ISSUANCE OF NEW COMMON SHARES
On the Distribution Date, Reorganized Holdings shall issue for
distribution in accordance with the terms of the Plan the New Common Shares to
the holders of Allowed Claims in Class 5 and to the holders of Allowed Interests
in Holdings (together with the Warrants) as provided in Class 6, and additional
New Common Shares may be thereafter issued pursuant to the Management Options
and/or the Warrants. The issuance of the New Common Shares and the distribution
thereof as provided in this Plan shall be exempt from registration under the
31
Securities Act and other applicable securities laws pursuant to Section 1145(a)
of the Bankruptcy Code. Also on the Distribution Date, Reorganized Holdings will
enter into a Registration Rights Agreement with the parties to the Lockup
Agreement which shall provide for (i) the filing of a shelf registration
statement by Reorganized Holdings, and (ii) certain other standard demand and
piggyback registration and transferability rights. Additionally, the Prepetition
and Postpetition Claims of the Indenture Trustee shall be paid in full.
5.6 COMPENSATION AND BENEFIT PROGRAMS
Except and to the extent previously assumed by an order of the
Bankruptcy Court on or before the Confirmation Date, all employee compensation
and benefit programs of the Debtors, including programs subject to Sections 1114
and 1129(a) (13) of the Bankruptcy Code, entered into before or after the
Petition Date and not since terminated, shall be deemed to be, and shall be
treated as though they are, executory contracts that are assumed under Section
6.1 of this Plan, and all employee compensation and benefit Claims shall be
Unimpaired under this Plan.
5.7 EXIT FACILITY
On or effective as of the Effective Date, Reorganized Holdings, as
borrower, shall enter into the Exit Facility, in order to (a) repay amounts
outstanding on the Effective Date under the DIP Facility, (b) make other
payments required to be made under the Plan pursuant to its Confirmation and the
occurrence of the Effective Date, including, but not limited to, any amounts
required to be paid to fully pay and satisfy any remaining outstanding balance
of the Allowed Secured Lenders Claim, and (c) provide such additional borrowing
capacity as is required by Reorganized Holdings following the Effective Date to
maintain its operations.
5.8 DIRECTORS AND OFFICERS OF REORGANIZED DEBTORS
The initial board of directors of Reorganized Holdings shall
consist of five (5) directors. The Noteholder Committee shall be entitled to
nominate three (3) directors. Old
32
Talon Equity shall be entitled to nominate one (1) director (three-year term).
The foregoing members of the board of Reorganized Holdings shall be identified
five (5) days prior to the Confirmation Hearing. The fifth member of the board
of Reorganized Holdings shall be the chief executive officer of Reorganized
Holdings. Reorganized Holdings, as the sole shareholder of Reorganized Products,
shall appoint to the board of Reorganized Products the same persons who comprise
the board of Reorganized Holdings. The appointments of the respective initial
boards of directors of Reorganized Holdings and Reorganized Products shall be
effective on the Effective Date.
5.9 REVESTING OF ASSETS; RELEASES OF LIENS
The property of each Debtor's Estate that is not specifically disposed
of pursuant to the Plan, shall revest in the applicable Debtor on the Effective
Date. Thereafter, each Debtor may operate its business and may use, acquire, and
dispose of property free of any restriction of the Bankruptcy Code, the
Bankruptcy Rules, and the Bankruptcy Court. As of the Effective Date, all
property of each Debtor shall be free and clear of all Claims and Interests,
except as specifically provided in the Plan or the Confirmation Order or in
connection with the Exit Facility. Without limiting the generality of the
foregoing, each Debtor may, without application to or approval by the Bankruptcy
Court, pay fees that it incurs after the Effective Date for reasonable
professional fees and expenses.
5.10 PRESERVATION OF RIGHTS OF ACTION
Except as otherwise provided in this Plan or the Confirmation Order, in
accordance with Section 1123(b) of the Bankruptcy Code, Reorganized Holdings
shall retain (or be deemed to have received in assignment from Talon, as the
case may be) and may enforce, sue on, settle, or compromise (or decline to do
any of the foregoing) all Litigation Claims that the Debtors or the Estates may
hold against any Person or entity. Reorganized Holdings may pursue such retained
Litigation Claims as appropriate, in accordance with the best interests of
Reorganized Holdings.
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5.11 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS
The chairman of the board of directors, chief executive officer,
president, any vice president, chief financial officer, or any other duly
authorized and appropriate officer of each of the respective Debtors or
Products, as the case may be, shall be authorized to execute, deliver, file, or
record such contracts, instruments, releases, indenture, and other agreements or
documents, and take such actions as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan and the
Canadian Plan. The secretary or assistant secretary of the applicable Debtor, as
the case may be, shall be authorized to certify or attest to any of the
foregoing actions.
5.12 EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to Section 1146(c) of the Bankruptcy Code, any transfers from
a Debtor to a Reorganized Debtor or any other Person or entity pursuant to the
Plan in the United States shall not be subject to any document recording tax,
stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act,
real estate transfer tax, mortgage recording tax or other similar tax or
governmental assessment, and the Confirmation Order shall direct the appropriate
state or local governmental officials or agents to forego the collection of any
such tax or governmental assessment and to accept for filing and recordation any
of the foregoing instruments or other documents without the payment of any such
tax or governmental assessment.
5.13 RELEASES AND RELATED MATTERS
(a) Releases by Debtors
On the Effective Date, for good and valuable consideration,
the adequacy of which is hereby confirmed, the Debtors and Reorganized Debtors
will be deemed to forever release, waive and discharge any and all claims and
causes of action existing as of the Effective Date, and all claims and causes of
action arising under Chapter 5 of the Bankruptcy Code and
34
created by the filing of the Chapter 11 Cases (and pertaining to claims and
causes of action existing as of the Petition Date), as against (i) the Lenders
and their respective agents, attorneys, employees, officers, directors,
successors and assigns, and (ii) current and former officers and directors of
the Debtors; provided, however, that such release, waiver and discharge, as to
current and former officers and directors of the Debtors, shall only apply to
claims based upon acts and omissions in their capacity as officers and directors
of either or both of the Debtors and further provided that such waiver, release
and discharge shall not be applicable to (i) avoidance actions listed in
Bankruptcy Code Section 550(a), (ii) money borrowed by such officers and
directors, (iii) employment contracts, (iv) consulting contracts, (v) the
receipt of transfers from either of Talon, Holdings or Products, directly or
indirectly, in connection with acquisitions of subsidiaries, business
enterprises or other material assets, and (vi) any acts or omissions that
constitute gross negligence, fraud, or willful misconduct.
(b) Injunction Related to Releases
As further provided in Article XII of this Plan, the Confirmation Order
shall enjoin, effective on the Effective Date of the Plan, the prosecution,
whether directly, derivatively or otherwise, of any Claim, obligation, suit,
judgment, damage, demand, debt, right, cause of action, liability or interest
released, discharged or terminated pursuant to the Plan.
ARTICLE VI
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
6.1 ASSUMED CONTRACTS AND LEASES
(a) Except as otherwise provided in the Plan, as of the
Effective Date, each Debtor shall be deemed to have assumed each executory
contract and unexpired lease to which it is a party (and, in the case of Talon,
any such assumed executory contracts or unexpired leases shall be deemed
assigned to Reorganized Holdings, Talon and Reorganized Talon shall be deemed
fully and forever released, acquitted and discharged from any liability therefor
and Reorganized Holdings shall be solely liable for any prospective obligations
thereunder), unless
35
such contract or lease (i) was previously assumed or rejected by such Debtor, or
is the subject of a motion as to the same which is pending before the Bankruptcy
Court as of the Confirmation Date and remains pending as of the Effective Date,
(ii) previously expired or terminated pursuant to its own terms, or (iii) is
listed on Schedule 6.3 attached hereto as being an executory contract or
unexpired lease to be rejected; provided, however, that the Debtors reserve
their right, at any time prior to the Confirmation Date, to amend Schedule 6.3
to delete an unexpired lease or executory contract therefrom. The Confirmation
Order shall constitute an order of the Bankruptcy Court under Section 365 of the
Bankruptcy Code approving the contract and lease assumptions and assignments
described above, as of the Effective Date.
(b) Each executory contract and unexpired lease that is
assumed and relates to the use, ability to acquire, or occupancy of real
property shall include (i) all modifications, amendments, supplements,
restatements, or other agreements made directly or indirectly by an agreement,
instrument, or other document that in any manner affect such executory contract
or unexpired lease and (ii) all executory contracts or unexpired leases
appurtenant to the premises, including all easements, licenses, permits, rights,
privileges, immunities, options, rights of first refusal, powers, uses,
reciprocal easement agreements, or franchises, and any other interest in real
estate or rights in rem related to such premises, unless any of the foregoing
agreements has been rejected pursuant to an order of the Bankruptcy Court.
6.2 PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES
Any monetary amounts by which each executory contract and unexpired
lease to be assumed pursuant to the Plan is in default shall be satisfied, under
Section 365(b)(1) of the Bankruptcy Code, at the option of Reorganized Holdings
by Cure. If there is a dispute regarding (a) the nature or amount of any Cure,
(b) the ability of Reorganized Holdings or any assignee to provide "adequate
assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed, or (c) any other
matter pertaining
36
to assumption, Cure shall occur following the entry of the Final Order resolving
the dispute and approving the assumption or assumption and assignment, as the
case may be.
6.3 REJECTED CONTRACTS AND LEASES
On the Effective Date, each executory contract and unexpired lease
listed on Schedule 6.3 to this Plan shall be rejected pursuant to Section 365 of
the Bankruptcy Code. Each contract or lease listed on Schedule 6.3 shall be
rejected only to the extent that any such contract or lease constitutes an
executory contract or unexpired lease; provided, however, that the Debtors
reserve their right, at any time prior to the Confirmation Date, to amend
Schedule 6.3 to delete an unexpired lease or executory contract therefrom.
Listing a contract or lease on Schedule 6.3 shall not constitute an admission by
Talon or Holdings nor Reorganized Talon or Reorganized Holdings that such
contract or lease is an executory contract or unexpired lease or that Talon or
Holdings or Reorganized Talon or Reorganized Holdings has any liability
thereunder. The Confirmation Order shall constitute an order of the Bankruptcy
Court approving such rejections, pursuant to Section 365 of the Bankruptcy Code,
as applicable, as of the Effective Date.
6.4 REJECTION DAMAGES BAR DATE
If the rejection by a Debtor, pursuant to the Plan or otherwise, of an
executory contract or unexpired lease results in a Claim, then such Claim shall
be forever barred and shall not be enforceable against any Debtor or Reorganized
Debtor or the properties of either of them unless a proof of claim is filed with
the Clerk of the Bankruptcy Court and served upon counsel to the Debtors,
counsel to the Creditors' Committee, and counsel to the Lenders, within thirty
(30) days after service of the earlier of (a) notice of the Confirmation Order,
or (b) other notice that the executory contract or unexpired lease has been
rejected.
37
ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
7.1 DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE
Except as otherwise provided herein or as ordered by the Bankruptcy
Court, all distributions to holders of Allowed Claims as of the Effective Date
shall be made on the Effective Date. Distributions on account of Claims that
first become Allowed Claims after the Effective Date shall be made pursuant to
Section 8.4 of this Plan.
7.2 INTEREST ON CLAIMS
Unless otherwise specifically provided for in this Plan or the
Confirmation Order, or a Final Order of the Court, or required by applicable
bankruptcy law, post-petition interest shall not accrue or be paid on Claims,
and no holder of a Claim shall be entitled to interest accruing on or after the
Petition Date on any Claim. Interest shall not accrue or be paid upon any
Disputed Claim in Classes 4 or 5 with respect to the period from the Petition
Date to the date of final distribution, if any, is made thereon.
7.3 DISTRIBUTION BY DISBURSING AGENT
(a) The Disbursing Agent shall make or otherwise arrange and
be responsible for the making of all distributions required under this Plan.
(b) If the Disbursing Agent is an independent third party
designated by Reorganized Holdings to serve in such capacity, such Disbursing
Agent shall receive, without further Bankruptcy Court approval, reasonable
compensation for distribution services rendered pursuant to the Plan and
reimbursement of reasonable out-of-pocket expenses incurred in connection with
such services from Reorganized Holdings on terms acceptable to Reorganized
Holdings. No Disbursing Agent shall be required to give any bond or surety or
other security for the performance of its duties unless otherwise ordered by the
Bankruptcy Court.
7.4 RECORD DATE FOR DISTRIBUTIONS TO HOLDERS OF NOTES
At the close of business on the Distribution Record Date, the transfer
records for the Notes shall be closed, and there shall be no further changes in
the record holders of the Notes. None of Reorganized Talon, Reorganized
Holdings, Reorganized Products, or the Disbursing
38
Agent, shall have any obligation to recognize any transfer of such Notes
occurring after the Distribution Record Date and shall be entitled instead to
recognize and deal for all purposes hereunder with only those record holders as
of the close of business on the Distribution Record Date.
7.5 MEANS OF CASH PAYMENT
Cash payments made pursuant to this Plan shall be in U.S. funds, by the
means agreed to by the payor and the payee, including by check or wire transfer,
or, in the absence of an agreement, such commercially reasonable manner as the
payor shall determine in its sole discretion.
7.6 CALCULATION OF DISTRIBUTION AMOUNTS OF NEW COMMON SHARES
No fractional shares of New Common Shares shall be issued or
distributed under the Plan or by Reorganized Holdings or the Disbursing Agent.
Each Person entitled to receive New Common Shares will receive the total number
of whole New Common Shares to which such Person is entitled. Whenever any
distribution to a particular Person would otherwise call for distribution of a
fraction of a share of New Common Shares, the actual distribution of shares of
such stock shall be rounded to the next higher or lower whole number as follows:
(a) fractions 1/2 or greater shall be rounded to the next higher whole number,
and (b) fractions of less than 1/2 shall be rounded to the next lower whole
number. The total number of New Common Shares to be distributed to a Class of
Claims or Interests shall be adjusted as necessary to account for the rounding
provided for in this Section 7.6. No consideration shall be provided in lieu of
fractional shares that are rounded down.
7.7 DELIVERY OF DISTRIBUTIONS
(a) Insofar as the Debtors, Reorganized Talon, Reorganized
Holdings, Reorganized Products and the Disbursing Agent are concerned, the only
Persons entitled to distributions of New Common Shares under this Plan on
account of the ownership or holding of Notes, Note Claims or guaranties of Notes
are the record holders of the Notes on the
39
Distribution Record Date as determined from the register of the Notes maintained
by the Registrar as defined in, and pursuant to, Section 2.03 of the Indenture.
The beneficial and equitable owners of Notes (if other than the record holders
thereof) must look solely to the record holders of their Notes for distributions
of New Common Shares distributable in respect of their ownership interests.
(b) Reorganized Holdings shall satisfy the obligation to
distribute New Common Shares to the record holders of the Notes by causing the
Disbursing Agent to deliver New Common Shares to such holders on the
Distribution Date. Such shares will be registered, upon delivery, to the record
holders of the Notes, in the names of such holders and to their addresses of
record, or in such other name(s) and to such other address(es) and in such
amounts as the record holder of any particular Notes shall have specified in
writing to Reorganized Holdings not later than one week before delivery. Until
so delivered, such shares will not be deemed to be issued or outstanding for any
purpose.
(c) Nothing in this Section 7.7 shall be construed to conflict
with the voting rights recognized and regulated by Section 4.4 of this Plan.
7.8 SURRENDER OF SECURITIES AND INSTRUMENTS
(a) Notes and Old Common Shares Except as provided in Section
7.8(b) of this Plan for lost, stolen, mutilated or destroyed Notes or Old Common
Shares, each holder of an Allowed Claim evidenced by Notes or Old Common Shares
shall tender such Notes or Old Common Shares, as the case may be, to Reorganized
Holdings. All surrendered Notes and Old Common Shares shall be marked as
canceled by Reorganized Holdings.
(b) Lost, Mutilated Or Destroyed Notes or Old Common Shares In
addition to any requirements under the applicable articles of incorporation or
bylaws of the applicable Debtor, any holder of a Claim evidenced by a Note or
Old Common Shares that has been lost, stolen, mutilated or destroyed shall, in
lieu of surrendering such Note, or
40
Old Common Shares, deliver to Reorganized Holdings evidence satisfactory to
Reorganized Holdings of the loss, theft, mutilation or destruction. Upon
compliance with this Section 7.8(b) by a holder of a Claim evidenced by a Note
or Old Common Shares, such holder shall, for all purposes under the Plan, be
deemed to have surrendered its Note or Old Common Shares, as applicable.
(c) Failure to Surrender Canceled Notes or Old Common Shares
Any holder of a Note or Old Common Shares that fails to
surrender or be deemed to have surrendered such Note or Old Common Shares by the
Effective Date shall have its claim for a distribution discharged and shall be
forever barred from asserting any such claim against either Reorganized Debtor
or their respective property.
7.9 WITHHOLDING AND REPORTING REQUIREMENTS
In connection with this Plan and all distributions hereunder, the
Disbursing Agent shall, to the extent applicable, comply with all tax
withholding and reporting requirements imposed by any federal, state,
provincial, local, or foreign taxing authority, and all distributions hereunder
shall be subject to any such withholding and reporting requirements. The
Disbursing Agent shall be authorized to take any and all actions that may be
necessary or appropriate to comply with such withholding and reporting
requirements. Notwithstanding any other provision of the Plan: (a) each holder
of an Allowed Claim that is to receive a distribution of New Securities pursuant
to the Plan shall have sole and exclusive responsibility for the satisfaction
and payment of any tax obligations imposed by any governmental unit, including
income, withholding and other tax obligations, on account of such distribution,
and (b) no distribution shall be made to or on behalf of such holder pursuant to
the Plan unless and until such holder has made arrangements satisfactory to the
Disbursing Agent for the payment and satisfaction of such tax obligations. Any
New Securities to be distributed pursuant to the Plan shall, pending the
implementation of such arrangements, be treated as an undeliverable distribution
pursuant to Section 7.7 of this Plan.
41
7.10 SETOFFS
The Reorganized Debtors may, but shall not be required to, set off
against any Claim except the Secured Lenders Claim, and the payments or other
distributions to be made pursuant to the Plan in respect of such Claim, claims
of any nature whatsoever that the Debtors or Reorganized Debtors may have
against the holder of such Claims; provided, however, that neither failure to do
so nor the allowance of any Claim hereunder shall constitute a waiver or release
by the Reorganized Debtors of any such claims that the Debtors or Reorganized
Debtors may have against such holder unless the order allowing such Claim
otherwise so provides.
ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT, AND UNLIQUIDATED CLAIMS AND DISPUTED INTERESTS
8.1 PROSECUTION OF OBJECTIONS
After the Confirmation Date, only Reorganized Holdings shall have the
authority to file objections, settle, compromise, withdraw or litigate to
judgment objections to Claims. From and after the Effective Date, Reorganized
Holdings may settle or compromise any Disputed Claim without approval of the
Bankruptcy Court.
8.2 NO DISTRIBUTIONS PENDING ALLOWANCE
Notwithstanding any other provisions of the Plan, no payments or
distributions shall be made with respect to all or any portion of a Disputed
Claim until the same has been settled or withdrawn or has been determined by
Final Order, and the Disputed Claim, or some portion thereof, has become an
Allowed Claim.
8.3 DISPUTED CLAIM DISTRIBUTION RESERVE
Prior to making any distributions, Reorganized Holdings shall establish
appropriate reserves for Disputed Claims, by, as applicable (i) reserving the
appropriate amount of New Common Shares to which the holders of Disputed Claims
would be entitled, if such Disputed
42
Claims became Allowed Claims entitled to receive New Common Shares under the
Plan in their Disputed Claim Amount; or (ii) withholding from any cash
distributions an amount in cash equal to 100% of distributions to which holders
of Disputed Claims would be entitled under the Plan as of such date, if such
Disputed Claims were Allowed Claims entitled to a cash distribution under the
Plan in their Disputed Claim Amount.
8.4 DISTRIBUTIONS AFTER ALLOWANCE OF DISPUTED CLAIMS
Reorganized Holdings shall make payments and distributions from the
reserve established for Disputed Claims to each holder of a Disputed Claim that
has become an Allowed Claim in accordance with the provisions of this Plan.
After the date that any Disputed Claim becomes an Allowed Claim, Reorganized
Holdings shall make distribution thereon or otherwise treat such Claim as
provided in the Plan and as if such Disputed Claim had been an Allowed Claim as
of the Effective Date.
ARTICLE IX
WILLIAM JOHN CLAIM TRUST
On the Distribution Date, the William John Claim shall be conveyed by
Reorganized Talon to a litigation trust (subject to the first and senior liens
and security interests of the Lenders in the William John Claim and the proceeds
thereof), pursuant to an agreement which shall be acceptable to the new board of
directors of Reorganized Holdings and the Lenders, and which litigation trust
shall provide generally for any and all proceeds of the William John Claim, net
of reasonable professional fees and expenses incurred in pursuing the William
John Claim, net of any reasonable administrative expenses of the litigation
trust, and after first satisfying in cash and in full the liens and security
interests of the Lenders, to be shared on a Pro Rata basis by the holders of New
Common Shares.
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ARTICLE X
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
10.1 CONDITIONS TO CONFIRMATION
The following are conditions precedent to the occurrence of the
Confirmation Date: (a) the entry of an order granting final approval to the
Disclosure Statement and finding that it contains adequate information pursuant
to Section 1125 of the Bankruptcy Code; and (b) the proposed Confirmation Order
shall be in form and substance mutually acceptable to the Debtors, the
Noteholder Committee, the Creditors' Committee, the Lenders and the DIP Agent.
10.2 CONDITIONS TO EFFECTIVE DATE
The following are conditions precedent to the occurrence of the
Effective Date, each of which must be satisfied or waived in accordance with
Section 10.3 of this Plan:
(a) The Confirmation Order shall have been entered and become a Final
Order in form and substance reasonably satisfactory to the Debtors, the
Noteholder Committee, the Creditors' Committee, the Lenders and the DIP Agent
and shall:
(i) provide that the Debtors and Reorganized Debtors are
authorized and directed to take any and all actions necessary or appropriate to
enter into, implement and consummate the contracts, instruments, releases,
leases, indentures, the issuance of the New Securities, the entry into the Exit
Facility, and any and all other agreements or documents contemplated in
connection with the Plan or the Financial Restructuring;
(ii) authorize the issuance of the New Securities; and
(iii) provide that the New Common Shares issued under the Plan
in exchange for Claims against the Debtors are exempt from registration under
the Securities Act pursuant to Section 1145 of the Bankruptcy Code, except to
the extent that holders of the New Common Shares are "underwriters", as that
term is defined in Section 1145 of the Bankruptcy Code.
(b) Reorganized Holdings shall have closed on the Exit Facility, which
shall be effective as of the Effective Date;
44
(c) The Canadian Plan shall have been approved and become effective in
the CCAA Case; and
(d) The DIP Facility Claim and the Secured Lenders Claims shall have
been paid in cash and in full.
10.3 WAIVER OF CONDITIONS
Each of the conditions set forth in Section 10.2 of this Plan may be
waived in whole or in part by the Debtors with the written consent of the
Noteholder Committee, the Creditors' Committee, the Lenders and the DIP Agent,
without any other notice to parties in interest or the Bankruptcy Court and
without a hearing.
ARTICLE XI
RETENTION OF JURISDICTION
11.1 RETENTION OF JURISDICTION.
Under Sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding entry of the Confirmation Order and occurrence of the Effective
Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters
arising out of, and related to, the Chapter 11 Cases and the Plan to the fullest
extent permitted by law, including, among other things, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify, estimate
or establish the priority or secured or unsecured status of any Claim or
Interest not otherwise allowed under the Plan, including the resolution of any
request for payment of any Administrative Claim and the resolution of any
objections of the allowance or priority of Claims or Interests;
(b) Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under Sections 330,
331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy Code; provided, however, that
from and after the Effective Date, the payment of the fees and expenses of the
retained Professionals of the Reorganized Debtors shall be made in the ordinary
course of business and shall not be subject to the approval of the Bankruptcy
Court;
45
(c) Hear and determine all matters with respect to the
assumption and rejection of any executory contract or unexpired lease to which a
Debtor is a party or with respect to which a Debtor may be liable, including, if
necessary, the nature or amount of any required Cure or the liquidation or
allowance of any Claims arising therefrom;
(d) Effectuate performance of and payments under the
provisions of the Plan;
(e) Hear and determine any and all adversary proceedings,
motions, applications, and contested or litigated matters arising out of, under,
or related to, the Chapter 11 Cases;
(f) Enter such orders as may be necessary or appropriate to
execute, implement, or consummate the provisions of the Plan and any and all
contracts, instruments, releases, and other agreements or documents created in
connection with the Plan, or the Confirmation Order;
(g) Hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including disputes arising under agreements, documents or instruments executed
in connection with the Plan;
(h) Consider any modifications of the Plan, cure any defect or
omission or reconcile any inconsistency in any order of the Bankruptcy Court,
including without limitation the Confirmation Order;
(i) Issue injunctions, enter and implement other orders, or
take such other actions as may be necessary or appropriate to restrain
interference by any entity with implementation, consummation, or enforcement of
the Plan or the Confirmation Order;
(j) Enter and implement such orders as may be necessary or
appropriate if the Confirmation Order is for any reason reversed, stayed,
revoked, modified, or vacated;
(k) Hear and determine any matters arising in connection with
or relating to
46
the Plan, the Disclosure Statement, the Confirmation Order, or any contract,
instrument, release, or other agreement or document created in connection with
the Plan, the Disclosure Statement or the Confirmation Order;
(l) Enforce all orders, judgments, injunctions, releases,
exculpations, indemnifications and rulings entered in connection with the
Chapter 11 Cases;
(m) Except as otherwise limited herein, recover all assets of
the Debtors and property of the Debtors' Estates, wherever located.
(n) Hear and determine matters concerning state, local, and
federal taxes, including the amount of any tax or penalty related thereto, in
accordance with Sections 346, 505, and 1146 of the Bankruptcy Code;
(o) Hear and determine all disputes involving the existence,
nature, or scope of the Debtors' discharge;
(p) Hear and determine such other matters as may be provided
in the Confirmation Order or as may be authorized under, or not consistent with,
provisions of the Bankruptcy Code; and
(q) Enter a final decree closing the Chapter 11 Cases.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 PROFESSIONAL FEE CLAIMS
All final requests for compensation or reimbursement of Professional
Fees pursuant to Sections 327, 328, 330, 331, 503(b) or 1103 of the Bankruptcy
Code for services rendered to the Debtors or the Creditors' Committee prior to
the Effective Date must be filed and served on the Reorganized Debtors and their
counsel no later than 60 days after the Effective Date, unless otherwise ordered
by the Bankruptcy Court. Objections to applications of such Professionals or
other entities for compensation or reimbursement of expenses must be filed and
served on the Reorganized Debtors and their counsel and the requesting
Professional or
47
other entity no later than 20 days (or such longer period as may
be allowed by order of the Bankruptcy Court) after the date on which the
applicable application for compensation or reimbursement was served.
12.2 ADMINISTRATIVE CLAIMS BAR DATE
All requests for payment of an Administrative Claim (other than as set
forth in Sections 3.1 and 12.1 of this Plan) must be filed with the Bankruptcy
Court and served on counsel for the Debtors no later then forty-five (45) days
after the Effective Date. Unless the Debtors object to an Administrative Claim
within forty-five (45) days after receipt, such Administrative Claim shall be
deemed allowed in the amount requested. In the event of an objection to an
Administrative Claim, the Bankruptcy Court shall determine the Allowed amount of
such Administrative Claim. Notwithstanding the foregoing, no request for payment
of an Administrative Claim need be filed with respect to an Administrative Claim
which is paid or payable by a Debtor in the ordinary course of business and the
Debtors may pay any such Administrative Claim according to its terms unless and
until an objection is filed.
12.3 PAYMENT OF STATUTORY FEES
All fees payable pursuant to Section 1930 of title 28 of the United
States Code, as determined by the Bankruptcy Court, shall be paid on or before
the Effective Date.
12.4 MODIFICATIONS AND AMENDMENTS
The Debtors may alter, amend, or modify the Plan or any Exhibits
thereto under Section 1127(a) of the Bankruptcy Code at any time prior to the
Confirmation Date, but only with the consent of the Noteholders Committee, the
Official Committee and the Lenders. After the Confirmation Date and prior to
substantial consummation of the Plan, as defined in Section 1101(2) of the
Bankruptcy Code, the Debtors may, under Section 1127(b) of the Bankruptcy Code,
institute proceedings in the Bankruptcy Court to remedy any defect or omission
or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the
Confirmation Order, and such matters as may be necessary to carry out the
purposes and
48
effects of the Plan so long as such proceedings do not materially adversely
affect the treatment of holders of Claims under the Plan; provided, however,
that prior notice of such proceedings shall be served in accordance with the
Bankruptcy Rules or order of the Bankruptcy Court.
12.5 SEVERABILITY OF PLAN PROVISIONS
If, prior to Confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court,
at the request of either Debtor, shall have the power to alter and interpret
such term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision shall then be
applicable as altered or interpreted. Notwithstanding any such holding,
alternation or interpretation, the remainder of the terms and provisions of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of the plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
12.6 SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any entity named or referred to
in the Plan shall be binding on, and shall inure to the benefit of, any heir,
executor, administrator, personal representative, successor or assign of such
entity.
12.7 COMPROMISES AND SETTLEMENTS
Pursuant to Bankruptcy Rule 9019 (a), the Debtors may compromise and
settle various Claims against them and/or claims that they may have against
other Persons. The Debtors expressly reserve the right (with Bankruptcy Court
approval, following appropriate notice and opportunity for a hearing) to
compromise and settle Claims against them and claims that they may have against
other Persons up to and including the Effective Date. After the Effective Date,
49
such right shall pass to Reorganized Holdings pursuant to Sections 5.9 and 5.10
of this Plan.
12.8 DISCHARGE OF CLAIMS
(a) Except as otherwise provided herein or in the Confirmation
Order, all consideration distributed under the Plan shall and, regardless of
whether any property shall have been distributed or retained pursuant to the
Plan on account of such Claims, upon the Effective Date, be in exchange for, and
in complete satisfaction, settlement, discharge, and release of, all claims of
any nature whatsoever against the Debtors or any of their assets or properties,
and regardless of whether any property shall have been distributed or retained
pursuant to the Plan on account of such Claims, upon the Effective Date, the
Debtors, and each of them, shall (i) be deemed discharged and released under
Section 1141(d)(1)(A) of the Bankruptcy Code from any and all Claims, including,
but not limited to, demands and liabilities that arose before the Confirmation
Date and all debts of the kind specified in Sections 502(g), 502(h), or 502(i)
of the Bankruptcy Code, whether or not (a) a proof of Claim based upon such debt
is filed or deemed filed under Section 501 of the Bankruptcy Code, (b) a Claim
based upon such debt is allowed under Section 502 of the Bankruptcy Code, or (c)
the holder of a Claim based upon such debt accepted the Plan and (ii) terminate
all Interests.
(b) As of the Effective Date, except as provided in the Plan
or the Confirmation Order, all entities shall be precluded from asserting
against, and shall be deemed to have released, waived and discharged claims
against, the Debtors, Reorganized Debtors, their current and former directors,
officers, employees and professionals, their successors or their property any
other or further claims, debts, rights, causes of action, liabilities or equity
interest relating to the Debtors based upon any act, omission, transaction or
other activity of any nature that occurred prior to the Confirmation Date;
provided, however, that such release, waiver and discharge, as to current and
former officers, directors, employees, professionals, or their successors or
assigns, of the Debtors, shall be expressly limited to claims and causes of
action based upon acts or omissions of such persons or entities in their
capacity as officers,
50
directors, employees or professionals of either or both of the Debtors and
further provided that such preclusion from filing claims and/or causes of
action, waiver, release and discharge shall in no event be applicable to (i)
avoidance actions listed in Bankruptcy Code Section 550(a), (ii) money borrowed
or obligations incurred by such officers, directors, employees or professionals
of either or both Debtors, (iii) employment contracts, (iv) consulting
contracts, (v) the receipt of transfers from either of Talon, Holdings, or
Products directly or indirectly, in connection with acquisitions of
subsidiaries, business enterprises or other material assets, and (vi) any acts
or omissions that constitute gross negligence, fraud, or willful misconduct.
12.9 INJUNCTION
(a) Except as provided in the Plan or the Confirmation Order,
as of the Effective Date, all entities 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
terms of the Plan are permanently enjoined from taking any of the following
actions against the Debtors, Reorganized Debtors, Reorganized Products, their
current and former directors, officers, employees and professionals, their
successors or their property on account of any such discharged Claims, debts or
liabilities or terminated interest or rights: (i) commencing or continuing, in
any manner or in any place, any action or other proceeding; (ii) enforcing,
attaching, collecting or recovering in any manner any judgment, award, decree or
order; (iii) creating, perfecting or enforcing any lien or encumbrance; (iv)
asserting a setoff, right of subrogation or recoupment of any kind against any
debt, liability or obligation due to the Debtors and (v) commencing or
continuing any action in any manner, in any place that does not comply with or
is inconsistent with the provisions of the Plan; provided, however, that such
injunction, as to current and former officers, directors, employees,
professionals, or their successors or assigns, of the Debtors, shall be
expressly limited to claims and causes of action based upon acts or omissions of
such persons or entities in their capacity as officers, directors, employees or
professionals of either or both of the
51
Debtors and further provided that such injunction shall in no event be
applicable to (i) avoidance actions listed in Bankruptcy Code Section 550(a),
(ii) money borrowed or obligations incurred by such officers, directors,
employees or professionals of either or both Debtors, (iii) employment
contracts, (iv) consulting contracts, (v) the receipt of transfers from either
of Talon, Holdings, or Products directly or indirectly, in connection with
acquisitions of subsidiaries, business enterprises or other material assets, and
(vi) any acts or omissions that constitute gross negligence, fraud, or willful
misconduct.
(b) by accepting distribution pursuant to the Plan, each
holder of an Allowed Claim or Allowed Interest receiving distributions pursuant
to the Plan will be deemed to have specifically consented to the injunctions set
forth in this Section 12.9.
12.10 COMMITTEE
Thirty (30) days after the Effective Date, the rights and duties of the
Creditors' Committee shall terminate.
12.11 EXCULPATION AND LIMITATION OF LIABILITY
(a) None of the Debtors, Products, DIP Agent, the Lenders, the
Reorganized Debtors, nor any statutory committee, the Noteholder Committee, the
Creditors' Committee, nor any of their respective present or former members,
officers, directors, employees, advisors, or attorneys shall have or incur any
liability to any holder of a Claim or an Interest, or any other party in
interest, or any of their respective agents, employees, representatives,
financial advisors, attorneys, or affiliates, or any of their successors or
assigns, for any act or omission in connection with, relating to, or arising out
of, the Chapter 11 Cases, the CCAA Case, formulating, negotiating or
implementing the Plan (or the Canadian Plan), the solicitation of acceptances of
the Plan (or the Canadian Plan), the pursuit of confirmation of the Plan (or the
Canadian Plan), the confirmation of the Plan (or the Canadian Plan), the
consummation of the Plan (or the Canadian Plan), or the administration of the
Plan (or the Canadian Plan) or the property to be distributed under the Plan (or
the Canadian Plan),
52
except for their willful misconduct, and in all respect shall be entitled to
reasonably rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan (or the Canadian Plan); provided, however, that
such release, waiver and discharge, as to current and former officers,
directors, employees, professionals, or their successors or assigns, of the
Debtors, shall be expressly limited to claims and causes of action based upon
acts or omissions of such persons or entities in their capacity as officers,
directors, employees or professionals of either or both of the Debtors and
further provided that such waiver, release and discharge shall in no event be
applicable to (i) avoidance actions listed in Bankruptcy Code Section 550(a),
(ii) money borrowed or obligations incurred by such officers, directors,
employees or professionals of either or both Debtors, (iii) employment
contracts, (iv) consulting contracts, (v) the receipt of transfers from either
of Talon , Holdings or Products directly or indirectly, in connection with
acquisitions of subsidiaries, business enterprises or other material assets, and
(vi) any acts or omissions that constitute gross negligence, fraud, or willful
misconduct.
(b) The foregoing exculpation and limitation on liability
shall not, however, limit, abridge, or otherwise affect the rights of the
Reorganized Debtors to enforce, sue on, settle, or compromise the Litigation
Claims retained pursuant to Sections 5.9 and 5.10 of this Plan except as
otherwise provided in the Plan or the Confirmation Order.
12.12 BINDING EFFECT
The Plan shall be binding upon and inure to the benefit of the Debtors,
all present and former holders of Claims against and Interests in the Debtors,
their respective successors and assigns, including, but not limited to, the
Reorganized Debtors, and all other parties-in-interest in these Chapter 11
Cases. The Canadian Plan shall be binding upon and inure to the benefit of
Products, all present and former holders of Notes, the Trustee, the unsecured
creditors of Reorganized Products, their respective successors and assigns and
all other persons having an interest in the CCAA Case.
53
12.13 REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan
at any time prior to the Confirmation Date and to file subsequent plans of
reorganization. Products has reserved the right to revoke or withdraw the
Canadian Plan at any time prior to the Confirmation Date and to file a
subsequent plan of arrangement. If the Debtors revoke or withdraw the Plan, or
if Confirmation or consummation does not occur, then (a) the Plan shall be null
and void in all respects; (b) any settlement or compromise embodied in the Plan
(including the fixing or limiting to an amount certain any Claim or Class of
Claims), assumption or rejection of executory contracts or leases effected by
the Plan, and any document or agreement executed pursuant to the Plan shall be
deemed null and void; and (c) nothing contained in the Plan shall (w) constitute
or be deemed to constitute a waiver or release of any Claims by or against, or
any Interest in, any Debtor or any other Person, (x) prejudice in any manner the
rights of any Debtor or any Person in any further proceedings involving a
Debtor, or (y) constitute an admission of any sort by any Debtor or any other
Person; and (d) the Canadian Plan shall be revoked and withdrawn by Products. If
Products revokes or withdraws the Canadian Plan or if the Canadian Plan is not
implemented or does not occur, then the Canadian Plan shall be null and void in
all respects.
12.14 PLAN AND DISCLOSURE STATEMENT EXHIBITS
Any and all Plan and Disclosure Statement Exhibits, or other lists or
schedules not filed with the Plan and Disclosure Statement shall be filed with
the Clerk of the Bankruptcy Court at least five (5) Business Days prior to date
of the commencement of the Confirmation Hearing. Upon such filing, such
documents may be inspected in the office of the Clerk of the Bankruptcy Court
during normal court hours. Holders of Claims or Interests may obtain a copy of
any such document upon written request to the Debtors in accordance with Section
12.15 of the Plan.
12.15 NOTICES
Any notice, request, or demand required or permitted to be made or
provided to or
54
upon a Debtor or Reorganized Debtor under the Plan shall be (a) in writing, (b)
served by (i) certified mail, return receipt requested,(ii) hand delivery, (iii)
overnight delivery service, (iv) first class mail, or (v) facsimile
transmission, and (b) deemed to have been duly given or made when actually
delivered or, in the case of notice by facsimile transmission, when received and
telephonically confirmed, addressed as follows:
Talon Automotive Group, Inc.
350 Talon Centre
Detroit, Michigan 48207
Fax: (313) 396-4300
Telephone: (313) 396-4314
Attention: Mr. Wayne C. Inman
VS Holdings, Inc.
900 Wilshire Drive
Suite 203
Troy, Michigan 48084
Fax: (248) 362-7612
Telephone: (248) 362-7600
Attention: Mr. David J. Woodward
with a copy to:
Carson Fischer, P.L.C.
300 East Maple Road, Third Floor
Birmingham, Michigan 48009
Fax: (248) 644-1832
Telephone: (248) 644-4840
Attention: Joseph M. Fischer, Esq.
Milbank, Tweed, Hadley & McCloy, LLP
601 South Figuerla Street
Los Angeles, CA 90017
Attention: Fred Neufeld, Esq.
55
12.16 TERM OF INJUNCTION OR STAYS
Unless otherwise provided herein or in the Confirmation Order, all
injunctions or stays provided for in the Chapter 11 Cases under Sections 105 or
362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date
(excluding any injunctions or stays contained in this Plan or the Confirmation
Order), shall remain in full force and effect until the Distribution Date.
TALON AUTOMOTIVE GROUP, INC.,
a Michigan corporation
By: /s/ David J. Woodward
------------------------------------
Its: Vice President
------------------------------------
VS HOLDINGS, INC.,
a Michigan corporation
By: /s/ David J. Woodward
------------------------------------
Dated: August 15, 2001 Its: Vice President
------------------------------------
56
SECOND AMENDED DISCLOSURE STATEMENT
I. INTRODUCTION
The purpose of this Disclosure Statement is to provide adequate
information, within the meaning of Bankruptcy Code ss.1125(a), of a kind, and in
sufficient detail, as far as is reasonably practicable in light of the nature
and history of the Debtors, to the Creditors and Equity Security Holders of the
Debtors, so that such Creditors and Equity Security Holders may make an informed
judgment about the Debtors' Plan. NO PERSON IS AUTHORIZED IN CONNECTION WITH THE
PLAN OR SOLICITATION OF ACCEPTANCES OF THE PLAN TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS DISCLOSURE
STATEMENT, ITS EXHIBITS AND ANY COURT- APPROVED SOLICITATION MATERIALS. IF SUCH
REPRESENTATIONS OR INFORMATION ARE GIVEN OR MADE, SUCH REPRESENTATIONS OR
INFORMATION SHOULD NOT BE RELIED UPON. THE DELIVERY OF THIS DISCLOSURE STATEMENT
WILL NOT UNDER ANY CIRCUMSTANCES IMPLY THAT ALL THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
THIS DISCLOSURE STATEMENT DESCRIBES VARIOUS TRANSACTIONS CONTEMPLATED
UNDER THE PLAN BUT IS NOT A SUBSTITUTE FOR THE PLAN. THE TERMS OF THE PLAN SHALL
GOVERN IN CASE OF ANY INCONSISTENCY BETWEEN THE PLAN AND THIS DISCLOSURE
STATEMENT. A COPY OF THE PLAN ACCOMPANIES THIS DISCLOSURE STATEMENT. THE
DEFINITIONS OF THE PLAN ARE INCORPORATED BY REFERENCE IN THIS DISCLOSURE
STATEMENT. DEFINED TERMS ARE CAPITALIZED.
57
YOU ARE URGED TO STUDY THE PLAN IN FULL AND TO CONSULT WITH YOUR LEGAL
COUNSEL AND TAX ADVISORS ABOUT THE PLAN AND ITS IMPACT UPON YOUR LEGAL RIGHTS,
INCLUDING POSSIBLE TAX CONSEQUENCES. PLEASE READ THIS DISCLOSURE STATEMENT AND
ITS EXHIBITS CAREFULLY BEFORE VOTING ON THE PLAN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF
THE DATE HEREOF, UNLESS ANOTHER TIME IS SPECIFIED HEREIN. DELIVERY OF THIS
DISCLOSURE STATEMENT IN CONNECTION WITH THE PLAN SHALL NOT CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE
OF THIS DISCLOSURE STATEMENT AND THE DATE THAT THE MATERIALS RELIED UPON IN
PREPARATION OF THIS DISCLOSURE STATEMENT WERE COMPILED.
THIS DISCLOSURE STATEMENT MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER
THAN TO DETERMINE WHETHER TO VOTE IN FAVOR OF OR AGAINST THE DEBTORS' PLAN, AND
NOTHING CONTAINED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR OF
LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTORS
OR INVOLVING ANY LEGAL EFFECT OF THE REORGANIZATION OF THE DEBTORS OR CLAIMANTS
HOLDING CLAIMS OR INTEREST HOLDERS HOLDING INTERESTS. CERTAIN OF THE INFORMATION
CONTAINED IN THIS DISCLOSURE STATEMENT, BY ITS NATURE, IS IN THE MANNER OF
PROJECTIONS, WHICH MAY PROVE TO BE DIFFERENT FROM ACTUAL RESULTS.
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN
SUBMITTED BY THE DEBTORS' MANAGEMENT, EXCEPT WHERE OTHER SOURCES ARE IDENTIFIED.
THE MANAGEMENT OF THE DEBTORS AUTHORIZE NO REPRESENTATIONS CONCERNING THE
DEBTORS OR THE PLAN OTHER THAN
58
THOSE IN THIS DISCLOSURE STATEMENT AND ACCOMPANYING DOCUMENTS. YOU SHOULD NOT
RELY ON ANY REPRESENTATIONS OR INDUCEMENTS MADE BY ANY PERSON TO SECURE YOUR
VOTE OTHER THAN THOSE CONTAINED IN THIS DISCLOSURE STATEMENT. THE MANAGEMENT OF
THE DEBTORS HAS TAKEN GREAT EFFORT TO BE ACCURATE IN THIS DISCLOSURE STATEMENT
IN ALL MATERIAL RESPECTS, AND BELIEVES THAT THE CONTENTS OF THIS DISCLOSURE
STATEMENT ARE COMPLETE AND ACCURATE. HOWEVER, NEITHER THE DEBTORS' MANAGEMENT,
NOR ANY OTHER PARTY THAT CONSENTS HERETO, CAN OR DOES WARRANT OR REPRESENT THAT
THE INFORMATION CONTAINED HEREIN IS WITHOUT INACCURACY. IN PARTICULAR, THE
FEASIBILITY OF THE PLAN IS SUBJECT TO A NUMBER OF ASSUMPTIONS, WHICH EVENTS AND
FORCES BEYOND THE DEBTORS' CONTROL MAY ALTER.
II. A DESCRIPTION OF THE DEBTORS
A. THE DEBTORS' CORPORATE STATUS; CONTINUATION OF BUSINESS.
Talon is a corporation incorporated under the laws of the
State of Michigan. Holdings is also a corporation incorporated under the laws of
the State of Michigan. Talon owns all of the issued and outstanding stock of
Holdings. Holdings owns all of the issued and outstanding stock of Products, a
Nova Scotia (Canada) Unlimited Liability Company. Products is the subject of a
concurrent proceeding under the Companies' Creditors Arrangement Act (the
"CCAA") in the Ontario (Canada) Superior Court of Justice.
Talon and Holdings will be effecting a corporate restructure,
reorganizing and continuing in business, as provided in the Plan. As of the
Petition Date, the respective officers and directors of each of Talon and
Holdings are as follows:
59
DIRECTORS OF EACH OF TALON AND HOLDINGS:
Randolph J. Agley
Michael T. Timmis
Wayne C. Inman
Michael T.J. Veltri
David J. Woodward
OFFICERS OF TALON:
Randolph J. Agley Chairman of the Board
Michael T. Timmis Vice Chairman of the Board
Michael T.J. Veltri President and Chief Executive Officer
Wayne C. Inman Secretary
David J. Woodward Vice President of Finance,
Chief Financial Officer and Treasurer
OFFICERS OF HOLDINGS:
Michael T. J. Veltri President and Chief Executive Officer
Wayne C. Inman Vice President/Secretary
David J. Woodward Vice President of Finance/Treasurer
Richard M. Miettinen Assistant Secretary
Further information, with respect to the officers and directors of the
Debtors, is provided in Section II. B below.
B. THE DEBTORS' PRINCIPALS.
a. Background of Debtor's Principals.
Randolph J. Agley is a principal shareholder and Chairman of the Board
of each of the Debtors. Since 1982, Mr. Agley also has served as Chairman of the
Board of Talon L.L.C., a privately-held affiliate of the Debtors in which Mr.
Agley is a principal equity holder.
Michael T. Timmis is a principal shareholder and Vice Chairman of the
Board of each of the Debtors. Mr. Timmis has been a partner in the law firm of
Timmis & Inman L.L.P. since 1971, which firm serves as general counsel to the
Debtors. Since 1982, Mr. Timmis has been Vice Chairman of the Board of Talon
L.L.C., a privately-held affiliate of the Debtors in which Mr. Timmis is a
principal equity holder.
Michael T. J. Veltri serves as President, Chief Executive Officer and
Director of each the Debtors, and as President of Products. Mr. Veltri joined
the Debtors in 1996, when Talon
60
acquired Veltri International, several affiliated stamping companies owned and
operated by Mr. Veltri since 1983.
Wayne C. Inman is a shareholder and serves as Secretary and Director of
each of the Debtors. Mr. Inman is also Vice President of Holdings. Since 1994,
Mr. Inman has served as President of Talon, L.L.C., a privately-held affiliate
of the Debtors in which Mr. Inman is an equity holder. Mr. Inman was formerly a
senior partner and of counsel in the law firm of Timmis & Inman L.L.P., which
serves as general counsel of the Debtors.
David J. Woodward serves as a Director of each of the Debtors. He is
Vice President of Finance, Chief Financial Officer and Treasurer of Talon. Mr.
Woodward is also Vice President of Finance and Treasurer of Holdings and
Products. Prior to joining the Debtors, Mr. Woodward held positions at American
Cyanamid Corporation, Union Carbide Corporation and KPMG Peat Marwick.
Richard M. Miettinen serves as Assistant Secretary of Holdings. Mr.
Miettinen is a partner in the law firm of Timmis & Inman L.L.P., which firm
serves as general counsel to the Debtors.
b. Annual Salary, Compensation, Draw or Other Remuneration,
Including Fringe Benefits of Debtors' Principals.
For calendar year ending December 31, 2001, the Debtors President and
Chief Executive Officer, Michael T. J. Veltri, will receive base compensation of
$490,000, retention payments, made or to be made, of $287,500, 2001 bonus plan
payment of $174,620 and auto and other compensation of $73,875. For calendar
year ending December 31, 2001, the Debtors Vice President and Chief Financial
Officer, David J. Woodward, will receive base compensation of $275,000,
retention payments, made or to be made, of $137,500, 2001 bonus plan payment of
$120,000 and auto and other compensation of $15,000. Other compensation includes
the cost to the Debtors of benefits provided, being health, life and disability
insurance coverages, as well as certain club memberships. Directors are not
compensated.
61
c. Legal Relationships of Debtors' Principals to Debtors.
The Debtors use the law firm of Timmis & Inman L.L.P. as their
general counsel. Michael T. Timmis, a shareholder and Vice Chairman of the Board
of each of the Debtors, is a partner in such law firm. Richard M. Miettinen,
Assistant Secretary of each of the Debtors, is also a partner in such law firm.
The Debtors have made and continue to make certain payments of legal fees to
Timmis & Inman L.L.P for legal services rendered.
Talon leases certain of its manufacturing facilities in Canada
from Maria Veltri, wife of Michael T. J. Veltri, the President and CEO, and a
Director, of each of the Debtors.
C. THE DEBTOR'S BUSINESS, INDUSTRY GROUP AND CAUSES FOR THE
CHAPTER 11 FILINGS.
a. The Debtors' Business. Talon (with its subsidiaries) is a
full-service Tier 1 designer and manufacturer of high-quality, stamped metal
components and assemblies used by North American automotive original equipment
manufacturers ("OEM's"). Certain statements made in this Section II.C may
include information which is ordinarily and customarily presented on a
consolidated basis on behalf of Talon and its Canadian operating subsidiary,
Products. Talon specializes in underbody/chassis and unexposed body structure
assemblies that are major structural components of passenger cars, light trucks,
and vans. Products include frame rails, inner quarter panels, rear back panels,
cross members, cowls, radiator/front-end supports and trailer hitch assemblies.
Talon's four largest OEM customers, DaimlerChrysler
Corporation ("DaimlerChrysler"), General Motors Corporation ("General Motors"),
Ford Motor Company ("Ford") and Honda Motor Co., Ltd. ("Honda") accounted for
approximately 44%, 28%, 8% and 6%, respectively, of net sales for the year ended
December 31, 2000. Given the concentration of DaimlerChrysler and General Motors
business, any downturn in their businesses, or in the North American automotive
OEM industry, in general, may have a
62
similar effect on Talon. Talon also sells products to targeted Tier 1 suppliers.
Platforms on which Talon had its most significant content in 2000 included:
Customer Platform
- -------- --------
DaimlerChrysler LH 300M/Concorde/Intrepid/LHS, RS Voyager/Town &
Country/Caravan Minivan, NPL Neon and AB Ram Van
General Motors GMT 800 Full-size Pickup/Tahoe Suburban, GMT 325/330
Blazer/Jimmy and M-Van/Astro/Safari
Ford UN105 Explorer, UPN207 Explorer Sport and SportTrac and
Lincoln Continental
Honda LS Accord, VC Civic and BM Odyssey Minivan
Talon has grown rapidly through a combination of strategic acquisitions
and new customer platform awards. Net sales have increased at a compound annual
growth rate of 38% from $56.8 million in 1995 to $284.4 million in 2000. At this
time, Talon is going through an integration phase and it closed several
facilities in 2001.
a. Business Strategy.
The North American market for body and chassis
stampings is dominated by the OEM captive suppliers and
approximately 20 major independent suppliers, including Talon.
Talon believes it is one of the leading independent suppliers
in its core product segment of underbody/chassis and unexposed
body structure assemblies. Talon's strategic objective is to
become the customer-preferred supplier in this market segment.
Talon believes OEM's are focusing their own internal
stamping operations on production of Class A exposed surface
panels. As a result, OEM's are increasingly relying on outside
suppliers with full-service
63
capabilities for underbody/chassis and unexposed body
structure assemblies and modules. Talon believes OEM's are
reducing their supply base by concentrating business with
suppliers, such as Talon, that can manufacture high
value-added assemblies/modules and supply technical expertise
in design and engineering.
Stamping parts are generally classified into five
categories:
i. unexposed underbody/chassis assemblies
(comprising the lower vehicle structure);
ii. unexposed body structure assemblies
(beneath the Class A surface panels, and
comprising the upper vehicle structure);
iii. Class A exposed surface panels;
iv. full truck frames (body-on-frame) and
engine cradles; and
v. powertrain, mechanical hardware and other
components.
Talon's strategy is to focus on underbody/chassis and unexposed body
structure assemblies (the first two categories above). Key elements of this
strategy are set forth below:
b. Supplying Complex High Value-Added Modules and Systems.
Value-added assemblies represented approximately 80%
of Talon's 2000 net sales. Talon seeks to gain new business of
modules and systems, which typically includes greater content
than value-added assemblies. Talon believes its capabilities,
combined with current industry trends, have created an
opportunity for Talon to supply certain systems comprising
multiple assemblies and integrated modules. Examples of these
systems are:
64
System Components
- ------ ----------
Front-end chassis Frame rails, bumpers, wheel house inner
panels, cross members, and shock towers
Front-end body Front fenders, cowl/plenum assemblies,
body reinforcements
Center floor plan Center floor pans, floor pan reinforcements,
and tunnel reinforcement assemblies
Rear chassis Rear frame rails, rear wheel houses, rear
floor pans and cross members
Rear body-side Body side panels, quarter panels, B/C
pillars, rear back panels
c. Enhancing Full-Service Engineering and Program Management
Capabilities.
Talon seeks to be a leader in its supply of design,
engineering, prototyping, program management, product
development and assembly capabilities to further strengthen
its preferred position with certain key customers. Talon
believes these capabilities will enable it to participate in
the product development process during the concept and
prototype development stages as well as throughout the design
and manufacturing stages. As OEMs continue to outsource
complex, unexposed stamped assemblies and modules to fewer
suppliers, Talon believes Tier 1 suppliers with proven
full-service capabilities will be better positioned to secure
such business.
d. Focusing on Key Customers.
As OEMs continue to consolidate their supplier base,
Talon believes strong customer relationships are increasingly
important. As a result, Talon focuses on a limited number of
customers to anticipate and better service those
65
customers' needs. Examples of Talon's close relationships
with key customers include:
i. Talon has been awarded a rear frame rail chassis
module for a future DaimlerChrysler vehicle which
will include the frame rails, cross members, and
floor plan. Talon believe that its advanced
engineering capabilities and prior Program successes
contributed to this award.
ii. Talon believes it is one of DaimlerChrysler's largest
independent suppliers of front frame rail assemblies.
iii. Talon received a Best Practices Award for delivery
performance and CAD/CAM Recognition Award from
DaimlerChrysler.
iv. Talon has been selected by Honda of America to
provide guest engineering support at Honda's North
American research center for a future Honda vehicle
platform.
v. Talon received a productivity improvement award from
Honda of America as a result of implementing cost
improvements.
e. Quality Commitment.
Talon believes its quality performance is a
significant competitive advantage. The OEM's largely evaluate
supplier quality by the number of defective parts per million
supplied ("PPM"). Talon's PPM performance with DaimlerChrysler
for the period ended December 2000 was 13 PPM. This was
favorable to DaimlerChrysler's benchmark of 50 PPM for world
class suppliers. Talon has received certain quality and
delivery awards from key OEM customers, including
DaimlerChrysler's Gold Pentastar Award in 1998, 1999 and 2000.
f. Strategic Opportunities.
Talon regularly evaluates strategic opportunities,
including, among other
66
things, alliances, joint ventures, mergers, acquisitions,
divestitures and recapitalizations. While Talon intends to
selectively pursue such opportunities as would allow it to
gain access to new customers and new technologies, Talon also
intends to continue to review the results and prospects of its
existing operations to determine whether any or all of them
should be sold or otherwise divested or refinanced to maximize
investment return.
g. Products.
Talon manufactures a broad range of complex products
on over 25 different platforms. Approximately 80% of the 2000
net sales were from value-added assemblies and core products
were generally classified as follows:
- UNDERBODY/CHASSIS
These products form the lower vehicle structure or
foundation of the vehicle and include large metal
stampings and assemblies such as frame rails,
wheelhouse panels, floor pans, suspension braces and
cross members.
- UNEXPOSED BODY STRUCTURES
These products form the basic body structure of the
vehicle and comprise large metal stampings and
assemblies such as body side panels, cowls, pillars,
roof rails, side sills, inner quarter panels, rear
back panels and fender reinforcement assemblies.
- OTHER
Talon manufactures certain other products, including
trailer hitch assemblies, air bag canisters, heat
shields, battery trays and other complex stampings
and assemblies. Talon also has the capability to
produce low volume production runs and prototype or
pre-production stamped assemblies. Often this
includes production utilizing a
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hydorforming process that was internally developed.
Talon's capabilities also include managing
mathematical data from the customer, building soft
tooling, stamping parts, laser trimming/piercing, and
final assembly/welding of all required components.
Talon believes that its prototype stamping operations
enhance Talon's ability to provide one-stop
engineering solutions to its customers.
h. Design and Advanced Engineering.
OEM's are increasingly focused on shortening design
cycles and reducing costs by involving suppliers earlier in
the process of designing a vehicle. Talon has invested
substantial resources in developing engineering capabilities
to meet these demands, including computer-aided design
terminals that support DaimlerChrysler, General Motors, Ford
and Honda language formats, structural and fatigue (finite
element or "FEA") analysis, computer simulated analysis of the
metal forming process, weld process simulation analysis and
electronic communication via automotive network exchange
("ANX"). These capabilities enable Talon to provide creative
product design and manufacturing services that result in cost
and quality improvements. The objective is to achieve a
competitive advantage through these product design,
engineering and development capabilities.
i. Customers and Marketing.
Talon primarily serves automotive OEM's in the North
American market. The four largest OEM customers are
DaimlerChrysler, General Motors, Ford and Honda. It also sells
products to targeted Tier 1 suppliers that in turn supply OEMs
in the North American market.
- DAIMLERCHRYSLER
Talon first developed expertise in frame rail
assemblies on the 1993 LH
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Concord/Intrepid/LHS and AB Ram Van vehicles. The
success with these programs led to increased content
on the 1998 LH for which Talon's sales increased over
50% per vehicle. In addition, business was awarded on
the 2000 NPL Neon, 2001 RS Voyager/Town &
Country/Caravan minivan, 2002 KJ Jeep Liberty, and
2003 model Chrysler, Citadel CS hybrid wagon. Talon
believes it is one of DaimlerChrysler's largest key
independent suppliers of front and rear frame rail
assemblies for passenger cars, vans and sport utility
vehicles.
- GENERAL MOTORS
In 1999, new business was launched on the GMT 800
Series Tahoe/Suburban and the 2000 model GMX 220/310
LeSabre/Bonneville. New products on the
Tahoe/Suburban include a trailer hitch assembly,
suspension tie bar and floor pan reinforcement
assembly. New products for the LeSabre/Bonneville
include a heat shield dash panel reinforcement and
frame rails reinforcement. In 2000, volume on the GMT
800 pickup and GMT 820/830 Tahoe Suburban trailer
hitch assemblies increased to reflect both higher
industry and higher option rate usage for trailer
hitches. Using the automated robotic welding system
that was successfully launched in 1999, Talon was
able to quickly respond to General Motors' request
for this increased production.
- FORD
Ford has been insourcing its stamping needs and may
further reduce the number of its outside suppliers.
Accordingly, Ford's future stamping strategy remains
uncertain and Talon continues to support Ford as a
full- service stamping supplier for certain current
and carryover parts.
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- HONDA
Talon believes it is one of Honda's leading
independent stamping suppliers. It currently supplies
24 parts on the LS Accord, 13 parts on the BM Odyssey
minivan and 9 parts on the VC Civic. It expects
business with Honda to increase as Honda increases
its export volumes and expands capacity in North
America. As an example of growth with Honda, business
was launched in 2000 on the Acura MDX, and Talon has
been sourced business on the Honda HP SUV, planned to
be launched in 2002.
j. Backlog.
In general, Talon does not manufacture products
against a backlog of orders. Production and inventory levels
are geared primarily to projections of future demand and the
level of incoming orders.
k. Raw Materials.
Talon's principal raw material is steel, representing
approximately 87% of raw material cost for 2000. The remaining
13% of raw material represents various purchased parts such as
tubular products, sealers, corrosion resistant coating,
aluminum and various fasteners.
Talon participates in steel purchase programs through
DaimlerChrysler, Ford, General Motors and Honda, wherein steel
is purchased by the OEM from the steel mill and sold to Talon
at a price fixed by the OEM. These purchase programs
substantially neutralize Talon's exposure to steel price
increases or decreases since price changes are absorbed by the
OEM prior to Talon purchasing the steel.
l. Competition.
Talon's competitors include both captive OEM
suppliers and external, non-captive suppliers. Talon competes
with a limited number of competitors
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that have the physical assets and technical resources to
produce large bed stampings, complex parts and sub-assemblies.
The number of competitors has decreased in recent years and is
expected to further decrease as the OEM supplier industry
continues to consolidate. Talon's competitors include Cosma
Body and Chassis Systems (a group within Magna International
Inc.); Tower Automotive, Inc.; Budd Company (a group within
ThyssenKrupp AG); A.G. Simpson Automotive, Inc.; Oxford
Automotive, Inc.; L&W Engineering; Trianon Industries Corp.;
The Narmco Group; and divisions of OEMs with internal stamping
and assembly operations. Competitive factors for products
include quality, cost, delivery, technical expertise,
engineering capability and customer service.
m. Employees.
As of December 31, 2001, Talon and Products had 1,912
employees, including 398 salaried and 1,514 hourly employees.
n. Unionized Workforce.
Substantially all of Talon's (and Products) hourly
employees are covered by collective bargaining agreements
("CBA") with either the United Automobile, Aerospace and
Agricultural Workers of America Union ("UAW"), the
International Union of Automobile, Aerospace and Agricultural
Implement Workers Union of Canada ("CAW") or the United Steel
Workers of America Union ("USWA"). At the present time Talon
believes that its relationship with these unions and employees
are good; however, there can be no assurance that this will
continue to be the case. Strikes or work stoppages could lead
to an adverse impact on Talon's relationship with customers
which could in turn have a material adverse effect on Talon's
financial condition or result of operations. Talon's CBAs with
the above unions expire at various dates to September 2002.
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There can be no assurance that Talon will be able to negotiate
CBAs acceptable to it in the future.
o. Properties.
Talon has conducted operations in 15 facilities in 12
locations, as summarized below:
- ------------------------------------------------------------------------------------------------------
LOCATION DESCRIPTION SQUARE OWNED/LEASED
FOOTAGE
- ------------------------------------------------------------------------------------------------------
Celina, Manufacturing 96,000 Leased
Tennessee
- ------------------------------------------------------------------------------------------------------
Harrison Manufacturing/Prototyping 86,000 Leased
Township, MI
- ------------------------------------------------------------------------------------------------------
New Baltimore, Manufacturing/Office 105,000 Leased*
MI
- ------------------------------------------------------------------------------------------------------
New Baltimore, Manufacturing/Warehouse 100,000 Leased*
MI
- ------------------------------------------------------------------------------------------------------
Rochester Hills, Sales and Engineering 9,480 Leased*
MI
- ------------------------------------------------------------------------------------------------------
Oxford, MI Manufacturing 62,000 Leased*
- ------------------------------------------------------------------------------------------------------
Troy, MI Corporate Headquarters, 18,000 Leased
Design and Engineering
- ------------------------------------------------------------------------------------------------------
Windsor, Manufacturing/Robotics 254,000 Leased
Ontario, Canada
- ------------------------------------------------------------------------------------------------------
Windsor, Tooling 20,000 Leased
Ontario, Canada
- ------------------------------------------------------------------------------------------------------
72
- ------------------------------------------------------------------------------------------------------
Windsor, Manufacturing/Robotics 105,000 Owned
Ontario, Canada
- ------------------------------------------------------------------------------------------------------
Royal Oak, MI Manufacturing/Office 250,000 Owned
- ------------------------------------------------------------------------------------------------------
Glencoe, Manufacturing/Robotics 51,000 Owned
Ontario, Canada
- ------------------------------------------------------------------------------------------------------
*Talon intends to or may reject these indicated leases.
The utilization and capacity of facilities fluctuates based upon the mix of
components and the vehicle models for which they are produced. Leases on
facilities have expiration dates ranging from 2001 through 2007. Certain
Windsor, Ontario, Canada facilities are leased from affiliated parties.
p. Foreign Operations.
Talon's Canadian operations are subject to risks
inherent in international business activities, including, in
particular, foreign currency exchange rate fluctuations,
compliance with a variety of foreign laws and regulations,
unexpected changes in regulatory requirement, overlap of
different tax structures, and general economic conditions.
q. Environmental Risks.
Talon's operations and properties are subject to
federal, state, local and foreign laws, regulations and
ordinances relating to the use, storage, handling, generation,
treatment, emission, release, discharge, and disposal of
certain materials, substances and wastes. In many
jurisdictions these laws are complex and change frequently.
Such laws, including but not limited to the Comprehensive
Environmental Response, Compensation & Liability Act
("CERCLA") may impose joint and several liability and apply to
remediation of contamination at properties presently or
formerly owned or operated by an
73
entity or its predecessors, as well as to conditions at
properties at which wastes or other contamination attributable
to an entity or its predecessors have been sent or otherwise
come to be located. The nature of Talon's operations expose it
to the risk of liabilities or claims with respect to
environmental matters, including off-site disposal matters,
and there can be no assurance that material costs will not be
incurred in connection with such liabilities or claims.
Based upon Talon's experience to date, Talon believes
that the future cost of compliance with existing environmental
laws, regulations and ordinances will not have a material
adverse effect on Talon's business, financial condition,
results of operations or liquidity. Compliance with more
stringent laws or regulations, as well as more vigorous
enforcement policies of regulatory agencies or stricter or
different interpretations of existing laws, may require
additional expenditures that may materially adversely affect
Talon, its business, financial condition or results of
operations.
b. THE DEBTORS' INDUSTRY GROUP.
a. Cyclicality; OEM Suppliers.
The automobile industry is highly cyclical, dependent
on consumer spending and subject to the impact of domestic and
international economic conditions. In addition, automotive
production and sales can be affected by labor relations
issues, regulatory requirements, trade agreements and other
factors. The automotive industry for which Talon supplies
components may experience downturns in the future. An economic
recession generally will impact substantially leveraged
companies such as Talon more than similarly situated companies
with less leverage. A decline in automotive sales or
production could materially affect Talon's business, financial
condition or results of operations.
74
b. Seasonality.
The automotive component supply industry in which
Talon operates is highly fragmented and highly competitive.
Talon's ability to compete is dependent upon successful
implementation of its current and future business strategies
and ability to successfully adopt new strategies in response
to changes in the marketplace. Talon's competitors include
companies that are larger and have substantially greater
resources than Talon as well as divisions of OEMs with
internal stamping and assembly operations. There can be no
assurance that Talon's business will not be adversely affected
by increased competition in the market in which it operates or
that Talon's products will be able to compete successfully
with those of its competitors.
c. Competition.
The automotive industry is characterized by a small
number of OEMs that are able to exert considerable pressure on
a larger number of smaller component suppliers to reduce costs
and improve quality. In the past, and continuing into the
present, OEMs have generally demanded and received price
reduction and measurable increases in quality by implementing
competitive selection processes, rating programs and various
other arrangements. Also, through increased partnering on
platform work, OEMs have generally required component
suppliers to provide more design and engineering input at
earlier stages of the product development process, the cost of
which, in some cases, has been absorbed by the suppliers.
There can be no assurance that Talon will be able to improve
or maintain its profit margins on sales to OEMs or that future
price reductions, increased quality standards or additional
design and engineering capabilities required by OEMs will not
have a material adverse effect on the business, financial
condition or results of operations of Talon.
75
Like other Tier 1 suppliers, Talon principally competes for
new business both at the beginning of the development of new
models and upon the redesign of existing models by its major
customers. New model development generally begins two to four
years prior to the marketing of such models to the public.
Although Talon has been successful in obtaining significant
new business on new models, there can be no assurance that
Talon will continue to be able to obtain such new business.
Furthermore, although the general trend of the OEMs is to
outsource component manufacturing, OEMs have, from time to
time, brought their stamping work back in-house. There can be
no assurance of the character and magnitude of the OEMs'
stamping work which will be outsourced in the future.
c. CAUSES FOR THE CHAPTER 11 FILINGS.
Due to liquidity concerns resulting from the performance of
the PSI division of Talon, sales declines with a major customer and capital
investment for new program launches, Talon elected not to make the November 1,
2000 interest payment on its $120 million 9.625% Senior Subordinated Notes due
May 1, 2008 (See Section IV. E below). The Notes were declared in default on
December 1, 2000 following the expiration of a 30-day grace period. On November
30, 2000, Talon's Secured Lenders formally exercised their right to block the
interest payment for a period of six months. Thereafter, Talon actively
negotiated with an informal committee representing the majority of the
Noteholders (as defined in the Plan, the "Noteholder Committee"), regarding an
exchange of existing outstanding Notes for a substantial majority (97%) of the
equity of what is to be Reorganized Holdings. These negotiations resulted in the
execution of the Lockup Agreement, a copy of which is attached to this
Disclosure Statement as Exhibit A. The Lockup Agreement provides for the
voluntary filing of the Debtors' instant Chapter 11 cases, as well as the
contemporaneous commencement of the CCAA Case of Products in Canada. The Term
Sheet, which is Schedule 1 to the
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Lockup Agreement, summarizes the proposed restructuring of the Debtors, which is
to be effected pursuant to the Debtors' Plan, and the elimination of the
Guaranty of Products, and as to which the Noteholder Committee has consented.
III. POST-PETITION EVENTS OF SIGNIFICANCE
A. POST-PETITION TRANSFERS OUTSIDE THE ORDINARY COURSE OF
BUSINESS; CONTEMPLATED FINANCIAL RESTRUCTURING
The Debtors have not made any post-petition transfers outside
the ordinary course of business. The Debtors intend, on the Petition Date, to
seek an order of the Bankruptcy Court authorizing the Debtors to pay
pre-petition obligations owed to critical trade vendors in the ordinary course
of business. The Debtors contemplate that, pursuant to their proposed Plan, they
shall effect the Financial Restructuring contemplated by the Plan, and
consistent with the pre-petition Term Sheet to the Lockup Agreement, which
Lockup Agreement was executed by and between the Debtors, their Canadian
subsidiary, Products, and those Noteholders who executed the Lockup Agreement.
To accomplish the Financial Restructuring, Talon shall
contribute all of its assets, subject to its liabilities (except the liabilities
arising under the Notes), to Holdings; the Noteholders shall receive in exchange
for their Notes ninety-seven percent (97%) of the New Common Shares of
Reorganized Holdings (minus any shares distributed under the Plan on account of
other unsecured Claims); the Notes, and the guaranties of the Notes, and all
rights and obligations thereunder, shall be extinguished; Reorganized Talon
shall receive three percent (3%) of the New Common Shares of Reorganized
Holdings; and Reorganized Holdings shall continue to own one hundred percent
(100%) of the equity in Reorganized Products.
B. POST-PETITION FINANCING.
The Lenders have agreed to provide the DIP Facility pursuant
to a post-petition financing order and related documents approved by the
Bankruptcy Court. The Final Order Authorizing Debtor to Obtain Secured and
Superpriority Credit and Grant Adequate
77
Protection, dated July 30, 2001, authorizing and approving the DIP Facility and
related documents is attached hereto as Exhibit B.
At this time, the Debtors do not have a commitment for the
Exit Facility. The Debtors have, however, begun discussions with the DIP Agent
and the Lenders, and other possible Lenders and Persons, about providing the
Exit Facility described in the Plan. Although there is no commitment to provide
an Exit Facility from anyone at this time, a condition of confirmation under
Section 10.1 of the Plan is the closing of the Exit Facility. In the event the
Exit Facility is provided by the Lenders, the maturity date of the Exit Facility
may be as early as July, 2002.
C. LITIGATION.
As of the Petition Date, Talon was involved in the following
litigation:
a. Liberty Bidco ("Bidco") v Talon Automotive Group
d/b/a Production Stamping, Inc.
Bidco allegedly received an assignment by Enamelcote of over
$350,000 in receivables allegedly owed by Talon four months after Enamelcote
filed suit against Talon. Enamelcote subsequently went out of business. Bidco
then filed suit against Talon in Wayne County Circuit Court, and Talon received
Summary Disposition of that suit and for sanctions against the opposing party,
which have been paid. Bidco has appealed the Summary Disposition. Briefs have
been field and the parties await the decision of the Michigan Court of Appeals.
b. Townsend v Talon Automotive Group, Inc.
Plaintiff, a former hourly production employee at Talon's
Production Stamping division in New Baltimore, has filed suit in Oakland County
Circuit Court alleging sexual harassment and discrimination with alleged damages
in excess of $25,000. Discovery has begun, but Talon does not believe the suit
has merit and will defend the same aggressively.
78
c. Macauley v Talon Automotive Group, Inc.
Plaintiff, a former quality control employee at Talon's Oxford
plant, has filed suit in Oakland County Circuit Court alleging sexual harassment
and discrimination with alleged damages in excess of $25,000. Discovery has
begun, but Talon does not believe the suit has merit and will defend the same
aggressively.
d. The William John Claim
The William John Claim is as defined in the Plan. Talon intends to
aggressively pursue such action.
Talon contemplates that the other parties to the above actions may seek
relief from the automatic stay to continue such actions outside the Bankruptcy
Court during the Chapter 11 Cases.
Talon and Holdings do not contemplate the commencement of any further
litigation during the Chapter 11 Cases. Resolution of Disputed Claims will
continue.
Talon received notice of certain "claims" against it prior to the
Petition Date, which had not resulted in litigation prior to the Petition Date,
as follows:
Environmental Claim. Royal Oak Community Credit Union asserted a
possible environmental claim against the Hawthorne Metal Products Division of
Talon in November, 1998 alleging migration of hydrocarbon-like contamination
from or near the property line shared by the Royal Oak Community Credit Union
and Hawthorne Metal Products Company. No Claim has been filed and Talon does not
believe that any such claim has any merit.
Lemelson Foundation Partnership. In 1998 and 1999, Talon received
various notices of patent infringement from attorneys for Lemelson Foundation
Partnership relating to various manufacturing applications. Talon is reviewing
these assertions to determine whether any of Talon's processes and applications
are affected thereby.
79
IV. ASSETS AND LIABILITIES
A. LIQUIDATION ANALYSIS.
See Liquidation Analysis attached hereto as Exhibit C.
B. RISKS, CONDITIONS AND ASSUMPTIONS REGARDING THE STATED VALUES.
See notes to Liquidation Analysis attached hereto as Exhibit
C.
C. POTENTIAL CLAIMS AND CAUSES OF ACTION.
In connection with the acquisition by Talon of certain of its
businesses, Talon has some continuing rights of indemnity for certain limited
periods of time with respect to breaches of certain representations, warranties
and indemnity matters which may be discovered by Talon and for which claims are
made by Talon within the applicable indemnity periods. Such potential rights of
indemnity are currently available under the following purchase agreements:
1. Asset Purchase Agreement, dated September 30, 1996, among
Talon, Theodore H. Dezenski, Roger H. Ducoffre and a corporation f/k/a J&R
Manufacturing, Inc.
2. Stock Purchase Agreement, dated October 17, 1997, as
amended, among Talon, William H. John as trustee u/t/a 10/10/95, Story S. John,
as trustee u/t/a 12/8/95 and Melvyn S. Goldstein, as trustee u/t/a 12/29/94.
This Agreement is the subject of the pending William John Claim, as defined in
and otherwise addressed in the Plan.
3. Stock Purchase Agreement, dated November 8, 1996, among
Veltri Metal Products Co., Michael Veltri and Maria Veltri.
Talon and Holdings do not contemplate asserting any
avoidance recovery actions because no viable claims are believed to exist. Trade
vendors are not believed to have received any avoidable preferential transfers,
as they have been paid in the ordinary course of business at all relevant times
prior to the Petition Date.
D. PRIORITY CLAIMS, INCLUDING ANTICIPATED ADMINISTRATIVE EXPENSE
CLAIMS.
This Disclosure Statement is filed as of the Petition Date. Projected
post-petition priority claims and administrative expenses are as set forth in
the Liquidation Analysis attached hereto as Exhibit C.
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E. NON-PRIORITY UNSECURED CLAIMS.
As scheduled by Talon, the total of all non-priority unsecured claims
equals $164,526,877.22. In addition, it is anticipated that parties to rejected
contracts and leases will have significant additional unsecured claims.
F. CLASS 4 CLAIMS.
The Debtors anticipate and intend to continue to have an ongoing
business relationship with the holders of Class 4 Claims including, but not
limited to, the Debtors' trade vendors. As provided in the Plan, based upon
these creditors interest in the future viability of the Reorganized Debtors,
holders of Class 4 Allowed Claims will receive cash equal to the unpaid portion
of their Allowed Claim.
G. CLASS 5 CLAIMS
Due to the nature of their Claims, the Debtors do not anticipate or
intend to have a continuing ongoing business relationship with the holders of
Class 5 Claims, including but not limited to, the Noteholders and parties with
Claims arising out of the rejection of an unexpired lease or executory contract.
As provided in the Plan, given the lack of a continuing trade relationship with
the Debtors, holders of Class 5 Allowed Claims will receive their Pro-Rata Share
of 97% of the New Common Shares to be issued and outstanding on the Distribution
Date.
F. GUARANTORS AND CO-DEBTORS.
Talon has guaranteed all indebtedness of Products to the Lenders.
Products has guaranteed all indebtedness of Talon to the Lenders.
Holdings has guaranteed all indebtedness of Talon and Products to the
Lenders.
Products and Holdings have guaranteed all indebtedness of Talon under
the Notes.
Talon has guaranteed certain obligations of Products under certain
equipment and tooling leases with ABN AMRO Bank Canada.
Talon has guaranteed certain obligations of Products under certain
equipment and tooling leases with Westcoast Capital Corporation.
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Talon has guaranteed the obligations of Products under its real
property lease for the Windsor, Ontario location.
V. DETAILS REGARDING IMPLEMENTATION OF THE PLAN
A. SUMMARIES OF FINANCIAL INFORMATION.
See Summaries of financial information for prior three years
and projections through fiscal year end 2003 attached hereto
as Exhibit D.
B. MANAGEMENT OF THE REORGANIZED DEBTORS; COMPENSATION, INCLUDING
FRINGE BENEFITS.
It is contemplated that the management of Reorganized Holdings, the new
operating entity, will be led by Messrs. Veltri and Woodward, with forward
compensation at least approximating that provided in fiscal year 2001 (See
Section II.B.2 above), together with benefits to be provided under the
Management Option Plan to be adopted. Management of Reorganized Talon is as yet
unascertained, but is not anticipated to have financial consequences to
creditors of Reorganized Holdings other than through the Warrants or as
otherwise specified in the Plan.
C. TAX RAMIFICATIONS IF THE PLAN IS CONFIRMED.
The following discussion summarizes certain of the federal income tax
consequences of the transactions described herein and in the Plan. This
discussion is for informational purposes only and is based upon the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations promulgated
thereunder (the "Tax Code"), judicial authority and current administrative
ruling and practice. Neither the impact on foreign holders of claims nor the tax
consequences of these transactions under state and local or foreign law is
discussed. Also, special tax considerations not discussed herein may be
applicable to certain classes of taxpayers, such as financial institutions,
broker-dealers, life insurance companies and tax-exempt organizations. No
opinion of counsel has been obtained and no ruling has been requested from the
Internal Revenue Service ("IRS") on these or any other tax issues.
82
HOLDERS OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS ARE THEREFORE URGED TO
CONSULT WITH THEIR TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN
TAX CONSEQUENCES OF THE TRANSACTIONS DESCRIBED HEREIN AND IN THE PLAN.
1. Federal Income Tax Consequences to Noteholders
The federal income tax consequences of the Plan to holders of
Notes will depend, among other things, upon the consideration received by the
Noteholders, the Noteholders' method of accounting for tax purposes, and how
long the Noteholders have held their Notes. Noteholders should consult their own
tax advisors as to the particular tax consequences of transactions contemplated
by the Plan.
A Noteholder will recognize gain or loss on the exchange of
such Note for Reorganized Holdings' stock. Noteholders should consult their own
tax advisors with respect to the determination and computation of their gain or
loss, if any, pursuant to the transactions contemplated by the Plan. A
Noteholder will recognize ordinary income to the extent the Noteholder receives
cash attributable to interest income not already included in such Noteholder's
income for federal income tax purposes. The proper allocation between principal
and interest of amounts received in exchange for Reorganized Holdings' stock is
unclear. A Noteholder who previously included in income accrued but unpaid
interest attributable to his/her Note will recognize a loss to the extent such
accrued but unpaid interest is not satisfied in full. Noteholders should consult
their own tax advisors as to the amount of consideration allocable to interest
and other tax consequences of their receipt of Reorganized Holdings' stock in
satisfaction of the Notes.
2. Federal Tax Consequences to Shareholders of Talon
Each existing shareholder of Talon should consult its own tax
advisors as to the consequences to them of the Plan.
83
3. Federal Income Tax Consequences to Holdings
Reorganized Holdings would be treated as a newly formed
corporation as of the date the New Common Shares are exchanged for Notes
pursuant to the Plan. Reorganized Holdings shall close its books effective the
first day prior to which Holdings' New Common Shares are exchanged for Notes
pursuant to the Plan, resulting in a Short Period. The "Short Period" for this
purpose shall mean the portion of the taxable year of Reorganized Holdings from
January 1, 2001 to the first day prior to the date that Reorganized Holdings'
New Common Shares are exchanged for the Notes pursuant to the Plan. The results
of the Short Period will be included in Talon's Federal income tax return.
Reorganized Holdings will file as a separate C Corporation for the period of
time from the day prior to the exchange of Reorganized Holdings' New Commons
Shares for Notes to the end of the tax year and thereafter.
4. Importance of Obtaining Professional Assistance
AS INDICATED ABOVE, THE FOREGOING IS INTENDED TO BE A
SUMMARY ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX
PROFESSIONAL. THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PLAN
ARE COMPLEX AND, IN SOME AREAS, UNCERTAIN. ACCORDINGLY, EACH PARTY IN INTEREST
IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR TAX
CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THE PLAN.
VI. LEGAL REQUIREMENTS
A. VOTING PROCEDURES.
Under the Bankruptcy Code, the only classes that are entitled
to vote to accept or reject a plan are classes of claims, or equity interest,
that are impaired under the plan. Accordingly, classes of claims or interests
that are not impaired are not entitled to vote on the Plan.
84
Creditors that hold claims in more than one impaired class are
entitled to vote separately in each class. Such a creditor will receive a
separate ballot for all of its claims in each class (in accordance with the
records of the Clerk of the Court) and should complete and sign each ballot
separately. A creditor who asserts a claim in more than one class and who has
not been provided with sufficient ballots may photocopy the ballot received and
file multiple ballots.
Votes on the Plan will be counted only with respect to claims:
(a) that are listed on the Debtors' Schedules of Assets and Liabilities other
than as disputed, contingent or unliquidated; or (b) for which a proof of claim
was filed on or before the bar date set by the Court for the filing of proofs of
claims (except for certain claims expressly excluded from that bar date or which
are allowed by Court order). However, any vote by a holder of a claim will not
be counted if such claim has been disallowed or is the subject of an unresolved
objection, absent an order of the Court allowing such claim for voting purposes
pursuant to 11 U.S.C ss. 502 and Bankruptcy Rule 3018.
Voting on the Plan by each holder of a claim or interest in an
impaired class is important. After carefully reviewing the Plan and Disclosure
Statement, each holder of such a claim or interest should vote on the enclosed
ballot either to accept or to reject the Plan, and then return the ballot by
mail to the Debtors' attorney by the deadline previously established by the
Court.
Any ballot that does not appropriately indicate acceptance or
rejection of the Plan will not be counted.
A ballot that is not received by the deadline will not be
counted.
If a ballot is damaged, lost, or missing, a replacement ballot
may be obtained by sending a written request to the Debtors' attorney.
B. ACCEPTANCE.
The Bankruptcy Code defines acceptance of a plan by an
impaired class of
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claims as acceptance by the holders of at least two-thirds in dollar amount, and
more than one-half in number, of the claims of that class which actually cast
ballots. The Bankruptcy Code defines acceptance of a plan by an impaired class
of equity interests as acceptance by holders of at last two-thirds in number of
the equity interests of that class that actually cast ballots. If no creditor or
interest holder in an impaired class votes, then that class has not accepted the
plan.
C. CONFIRMATION.
11 U.S.C.ss.1129(a) establishes conditions for the
confirmation of a plan. These conditions are too numerous and detailed to be
fully explained here. Parties are encouraged to seek independent legal counsel
to answer any questions concerning the Chapter 11 process.
Among the several conditions for confirmation of a plan under
11U.S.C ss. 1129(a) are these:
1. Each class of impaired creditors and interest must
accept the plan, as described in paragraph VI.B.,
above.
2. Either each holder of a claim or interest in a class
must accept the plan, or the plan must provide at
least as much value as would be received upon
liquidation under Chapter 7 of the Bankruptcy Code.
D. MODIFICATION.
The Debtors reserve the right to modify or withdraw the Plan
at any time before confirmation.
E. EFFECT OF CONFIRMATION.
If the Plan is confirmed by the Court:
1. Its terms are binding on the Debtors, all creditors,
shareholders and other parties in interest,
regardless of whether they have accepted the Plan.
2. Except as provided in the Plan:
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(a) All claims and interests will be discharged.
(b) Creditors and shareholders will be
prohibited from asserting their claims
against or interest in the Debtors or their
assets.
Dated: August 3, 2001
TALON AUTOMOTIVE GROUP, INC.,
a Michigan corporation
By: /s/ David J. Woodward
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Its: Vice President
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VS HOLDINGS, INC.,
a Michigan corporation
By: /s/ David J. Woodward
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Its: Vice President
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