IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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: Chapter 11
In re :
:
Diamond Brands Operating : Case No. 01-1825 (RJN)
Corp., et al., :
:
Debtors. : Jointly Administered
:
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TECHNICAL MODIFICATIONS TO JOINT PLAN OF REORGANIZATION
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The Joint Plan of Reorganization of Diamond Brands Operating Corp. and
its Debtor Affiliates Proposed by the Debtors and Jarden Corporation (the
"Plan"), and the Asset Purchase Agreement annexed to the Plan (the "Purchase
Agreement") are hereby modified by these Modifications dated as of January 29,
2003 (the "Modifications") by the above-captioned debtors and
debtors-in-possession (the "Debtors"),(1) pursuant to section 1127(a) of the
Bankruptcy Code, Rule 3019 of the Bankruptcy Rules, and Section 11.4 of the
Plan, as follows:
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(1) Capitalized terms not otherwise defined herein have the meanings given to
them in the Plan.
1. The Definition of "ADDITIONAL CONSIDERATION" in Article I of the
Plan and Section 1.1 of the Purchase Agreement is amended and restated in its
entirety as follows:
"ADDITIONAL CONSIDERATION" means, at the Purchaser's(2) election, (i)
$6,000,000 in cash payable by wire transfer of immediately available funds or
(ii) freely tradeable shares of the Jarden Corporation's Common Stock with an
aggregate Fair Market Value of $6,000,000 as of the date of delivery, which
shares prior to their issuance shall be listed for trading on the New York Stock
Exchange like all other shares of Jarden Corporation, and either: (a) registered
for resale under the Securities Act of 1933, or (b) exempt from registration
under the Securities Act of 1933, as amended, and state securities laws and Blue
Sky laws, pursuant to Section 1145 of the Bankruptcy Code, and Purchaser shall
have received a "No-Action Letter" from the Division of Corporate Finance (the
"Division") of the Securities and Exchange Commission (the "SEC") to the effect
that the Division will not recommend enforcement action to the SEC because (1)
the Purchaser issued such shares pursuant to the Plan without registration under
the Securities Act of 1933; or (2) such shares are resold without registration
under the Securities Act of 1933 by selling security holders who are neither
affiliates of Purchaser nor underwriters within the meaning of section
1145(b)(1) of the Bankruptcy Code, and the certificates representing such shares
shall not contain a legend indicating the existence of restrictions on the
resale of such shares.
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(2) The term "Purchaser" is used synonymously with the term "Buyer" in the
Purchase Agreement for purposes of the Modifications.
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2. The Definition of "DBI INTERESTS" in Article I of the Plan is
amended and restated in its entirety as follows:
"DBI INTERESTS" means the common stock of Diamond Brands Incorporated,
together with any other options, warrants, conversion rights, rights of first
refusal, or other rights, contractual or otherwise, to acquire or receive any
common or preferred stock or other equity interest in DBI, and any contracts,
subscriptions, commitments or agreements pursuant to which a party was or could
have been entitled to receive shares, securities, or other ownership interests
in DBI.
3. The Definition of "OLD INDENTURES" in Article I of the Plan is
amended and restated in its entirety as follows:
"OLD INDENTURES" means (a) the Indenture, dated as of April 21, 1998,
between Diamond Brands Operating Corp. and State Street Bank and Trust Company,
as Indenture Trustee for the 10 1/8% Senior Subordinated Notes due 2008 issued
by DBOC; and (b) the Indenture, dated as of April 21, 1998, between Diamond
Brands, Inc. and State Street Bank and Trust Company, as predecessor Indenture
Trustee, pursuant to which HSBC Bank USA is the successor Indenture Trustee for
the 12 7/8% Senior Discount Notes due 2009 issued by DBI.
4. The Definition of "PLAN ADMINISTRATOR" in Article I of the Plan is
amended and restated in its entirety as follows:
"PLAN ADMINISTRATOR" means the person designated by the Debtors and the
Creditors' Committee prior to the Confirmation Date and approved by the
Bankruptcy Court pursuant to the Confirmation Order to administer the Plan (and,
as appropriate, serve as liquidating
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trustee for any of the Reorganized Debtors) in accordance with the terms of the
Plan and the Plan Administrator Agreement and to take such other actions as may
be authorized under the Plan Administration Agreement, and any successor
thereto.
5. The Definition of "REORGANIZED DEBTOR(S)" in Article I of the Plan
is amended and restated in its entirety as follows:
"REORGANIZED DEBTOR(S)" means, individually, any Reorganized Debtor
(and any successor thereto, including, without limitation, any liquidating trust
or similar liquidating vehicle established with respect to the Debtors,
excluding Jarden Corporation) and, collectively, all Reorganized Debtors, on or
after the Effective Date.
6. The Definition of "SHARING PERCENTAGE" in Article I of the Plan is
amended and restated in its entirety as follows:
"SHARING PERCENTAGE" means 50% of Allowed Administrative Claims paid
after the date of the Purchase Agreement in Cash by the Purchaser at Closing to
the Debtors in excess of $3,000,000 but only up to $4,700,000; provided,
however, that (a) any such amounts not used by the Debtors or the Reorganized
Debtors within fifteen (15) months after Closing shall be returned to the
Purchaser and (b) the Debtors or Reorganized Debtors will provide the Purchaser
with a monthly accounting by the fifth day of each month that indicates (i) the
identity of the holder of the Administrative Claim paid; (ii) the date such
Administrative Claim is paid; and (iii) the method of such payment.
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7. Section 4.2(a) of the Plan is amended and restated in its entirety
as follows:
The Purchase Price will be distributed as follows:
(a) CASH CONSIDERATION
After the Debtors have used all of their Cash at Closing to reduce
their outstanding obligations under the DIP Loan Agreement, the Cash
Consideration will be paid directly to the DIP Lenders to the extent of the
Debtors' remaining outstanding indebtedness obligations, including all fees,
expenses, and charges as set forth in the DIP Loan Agreement, but excluding all
accrued interest (which interest will be paid from the Debtors' Cash). Any
remaining Cash Consideration will be paid to the Debtors which will make all
payments (including the setting aside of reserves to pay Disputed Claims and
Allowed Claims which are to be paid after the Effective Date) required to be
made under this Plan by the Debtors or the Disbursing Agent. On the Effective
Date, the Interest Rate Swap Agreement shall be terminated as of the close of
the market on the Effective Date, and the Purchaser shall pay all amounts owing
under and in connection with the Interest Rate Swap Agreement (provided that the
Termination Amount as defined in the Interest Rate Swap Agreement shall be
determined as follows: (i) prior to the Confirmation Date, the Purchaser and
Wells Fargo Bank, National Association shall select five (5) national leading
commercial banks (the "Confirmation Banks") which each shall be directed to
provide the parties with the Termination Amount as of the close of the market
(12:00 noon, Pacific Standard Time) on the Effective Date, (ii) the highest and
lowest figures provided by the Confirmation Banks shall be disregarded, and the
remaining three figures shall be averaged, (iii) the average of the three
remaining figures provided by the Confirmation Banks as provided in (ii) herein
shall be conclusively accepted by the parties as the Termination Amount to be
paid by Purchaser), including fees, expenses and charges, including legal
expenses.
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8. Section 4.4 of the Plan is amended and restated in its entirety as
follows:
SECTION 4.4 CONTINUED CORPORATE EXISTENCE
Subject to the provisions of Section 4.1 of this Plan, and the
Restructuring Transactions contemplated in Section 4.7 of this Plan, the
Reorganized Debtors shall continue to exist after the Effective Date as separate
corporate entities, in accordance with the applicable law in the respective
jurisdictions in which they are incorporated and pursuant to their respective
certificates or articles of incorporation and by-laws in effect prior to the
Effective Date, except to the extent such certificates or articles of
incorporation and by-laws are amended by the Plan or the Purchase Agreement, for
the limited purposes of (a) distributing all of the assets of the Debtors'
Estates that are not Acquired Assets or Acquired Product Lines and (b) providing
the Purchaser with transition service pursuant to section 8.7 of the Purchase
Agreement. As soon as practicable after the Plan Administrator exhausts the
assets of the Debtors' Estates by making the final distribution of Cash under
this Plan and the Plan Administrator Agreement, the Plan Administrator shall (a)
effectuate the dissolution of each Reorganized Debtor in accordance with the
laws of the state of its incorporation and (b) resign as the sole officer and
sole director of each Reorganized Debtor. Notwithstanding the foregoing, the
Plan Administrator shall not effectuate such dissolution of the Reorganized
Debtors before the earlier of (a) such time the Reorganized Debtors satisfy any
obligations under section 8.7 to provide the Purchaser with transition service
and (b) one year after the Closing. Notwithstanding the foregoing, the
Reorganized Debtors may be dissolved for tax purposes and form liquidating
trusts or similar vehicles.
9. Section 7.3(c) of the Plan is amended and restated in its entirety
as follows:
On the Effective Date, the distributions to be made under the Plan to
holders of Old Note Claims shall be made to the respective Indenture Trustee, or
where appropriate, to the Plan Administrator. Distributions to holders of Old
Note Claims shall be made by the respec-
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tive Indenture Trustees (or, where appropriate, by the Plan Administrator),
subject to the right of each Indenture Trustee to assert its Charging Lien
against such distributions. All payments to holders of Old Note Claims shall
only be made to such holders after the surrender by each such holder of the Old
Note certificates representing such Old Note Claim, or in the event that such
certificate is lost, stolen, mutilated or destroyed, upon the holder's
compliance with the requirements set forth in Section 7.7(b). Upon surrender of
such Old Note certificates, the Indenture Trustees (or, where appropriate, the
Plan Administrator) shall cancel and destroy the pertinent Old Notes. As soon as
practicable after surrender of the Old Note certificates evidencing Old Note
Claims, the respective Indenture Trustees (or, where appropriate, the Plan
Administrator) shall distribute to the holder thereof such holder's Pro Rata
share of the distribution, but subject to the rights of each Indenture Trustee
to assert its Charging Lien against such distribution. Upon full satisfaction of
each of the Indenture Trustee's Fees, the pertinent Indenture Trustee's Charging
Lien shall be released. Nothing herein shall be deemed to impair, waive or
discharge either Indenture Trustee's Charging Lien for any unpaid fees and
expenses. To the extent that either Indenture Trustee provides services related
to distributions pursuant to the Plan, such Indenture Trustee will receive from
the Reorganized Debtors, without further court approval, reasonable compensation
for such services and reimbursement of reasonable expenses incurred in
connection with such services. These payments will be made on terms agreed to
between the pertinent Indenture Trustee and the Reorganized Debtors.
With respect to the Additional Consideration, with the consent of the
Plan Committee, any securities distributed by the Purchaser may, subsequent to
their distribution, be liquidated by the Plan Administrator into Cash and
distributed in lieu of such securities in the discretion of the Plan
Administrator.
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10. The Plan is amended and restated to include the addition of Section
7.3(d) as follows:
Notwithstanding any other provision of the Plan or the Plan
Administrator Agreement, the Plan Administrator (a) shall have no obligation to
make distributions or payments of fractions of dollars, and whenever any payment
of a fraction of a dollar under the Plan would otherwise be called for, the
actual payment made shall reflect a rounding of such fraction to the nearest
whole dollar (up or down), with half dollars being rounded down and (b) except
as specifically required otherwise in any order of the Bankruptcy Court, shall
have no obligation to make a distribution on account of an Allowed Claim from
any reserve or account (i) to any hodler of an Allowed Claim if the aggregate
amount of all distributions authorized to be made from all such Reserves or
accounts on the Quarterly Distribution Date in question is less than $250,000,
in which case such distributions shall be deferred to the next Quarterly
Distribution Date, or (ii) to a specific holder of an Allowed Claim if the
amount to be distributed to that holder on the particular Distribution Date is
less than $50.00, unless such distribution constitutes the final distribution
to such holder.
11. Section 7.9 of the Purchase Agreement is amended and restated in
its entirety as follows:
7.9 EXCLUDED REAL PROPERTY
The Debtors agree that the covenants contained in Section 7.1 hereof
shall apply to the Excluded Real Property. The Debtors further agree that the
Buyer shall have the right to cause the Debtors to dispose of the Excluded Real
Property on or prior to four (4) months (the "Gap Period") after the Closing and
to control all aspects of such disposition including, without limitation, (i)
the hiring of real estate brokers, (ii) the negotiation of price and other terms
of sale for any parcel of the Excluded Real Property, and (iii) directing a
donation of any parcel of the Excluded Real Property. Any proceeds received by
the Debtors in connection with the disposition of any of the Excluded Real
Property whether by sale, condemnation or
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otherwise and whether received prior to or after the Closing, shall be Acquired
Assets for all purposes of this Agreement. At the Buyer's direction, the Debtors
will promptly execute any documents the Buyer reasonably requests to effectuate
the disposition of the Excluded Real Property, including, without limiation,
purchase and sale agreements, deeds, transfer declarations and closing
statement. In addition, the Debtors shall obtain all necessary sale orders from
the Bankruptcy Court to effectuate such dispositions of the Excluded Real
Property. If on or prior to four (4) months after the Closing (the "Subject
Date") the Excluded Real Property is not disposed of pursuant to this Agreement,
at the Debtors' request, the Buyer shall take title to the Excluded Real
Property within ten (10) Business Days of the Subject Date. The Buyer shall use
commercially reasonable efforts to cause the Reorganized Debtors to dispose of
the Excluded Real Property on or prior to the Subject Date, and the Reorganized
Debtors shall use reasonable cooperation with the Buyer with respect to these
efforts.
With respect to the Gap Period, the Debtors and the Buyer shall enter
into agreements (including, without limitation, leases) on or prior to Closing
which provide that the Buyer shall be liable for all taxes, insurance, day to
day operations and shutdown costs, and liabilities (including, without
limitation, environmental liabilities) with respect to the Excluded Real
Property during the Gap Period, but only to the extent such liabilities are
incurred and arise during the Gap Period. In addition, the Buyer shall assume
all wages and wage equivalents (including severance obligations, if any) with
respect to employees employed by the Buyer at the Excluded Real Property
locations.
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12. Section 11.20(a) of the Plan is amended and restated in its
entirety as follows:
11.20 TERMINATION OF LITIGATION
(a) Interest Rate Swap Agreement Adversary Proceeding.
As of the Effective Date, the Confirmation Order shall constitute a
final, non-appealable judgment in favor of Wells Fargo Bank, N.A. in the
adversary proceeding commenced by Wells Fargo against DBOC seeking reformation
of that certain Interest Rate Swap Agreement dated May 7, 1998 (Adversary Case
No. 01-8981). This Plan operates to dismiss with prejudice on the Effective Date
all Claims, complaints, objections, litigation and Causes of Action against
Wells Fargo Bank, N.A., and the other Lenders arising out of or related to the
Interest Rate Swap Agreement.
13. All references to schedule 2.1.1.5 in Sections 6.1(a), 6.2 and 6.3
of the Plan shall be modified by Exhibit A to the Debtors' Motion for Order
Approving the Form and Manner of Notice of the Proposed
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Assumptions and Proposed Cure Amounts, filed on December 30, 2002.
Dated: Wilmington, Delaware
January 29, 2003
Timothy R. Pohl
Rena M. Samole
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
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/s/ Patricia A. Widdoss
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Gregg M. Galardi (I.D. No. 2991)
Patricia A. Widdoss (I.D. No. 3786)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
Attorneys for Diamond Brands
Operating Corp. and its
Debtor Affiliates.
(Continued on Next Page)
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JARDEN CORPORATION CONSENT
TO THE MODIFICATIONS:
/s/ Rachel L. Werkheiser,
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Laura Davis Jones, Esq. (I.D. No. 2436)
Rachel L. Werkheiser, Esq. (I.D. No. 3753)
Pachulski, Stang, Ziehl, Young
& Jones, P.C.
919 North Market Street
Suite 1600
Wilmington, DE 19801
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Gary R. Silverman, Esq.
Matthew N. Kleiman, Esq.
Geoffrey Richards, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Co-Counsel for Jarden Corporation.
(Continued on Next Page)
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CREDITORS' COMMITTEE CONSENT
TO THE MODIFICATIONS:
/s/ Elio Battista, Jr.
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Elio Battista, Jr. (I.D. No. 3814)
Blank Rome LLP
Chase Manhattan Center
1201 Market Street, Suite 800
Wilmington, DE 19801
(302) 425-6400
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Raymond L. Shapiro
Michael B. Schaedle
Blank Rome LLP
One Logan Square
Philadelphia, PA 19103
(215) 569-5500
Counsel to the Statutory Committee of
Unsecured Creditors of Diamond Brands,
Incorporated, et al.
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