EXHIBIT 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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:
In re: : Chapter 11
:
MASTER GRAPHICS, INC., et al., : Case No. 00-2929(PJW)
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:
Debtors. : Jointly Administered
:
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FIRST AMENDED JOINT PLAN OF REORGANIZATION OF
MASTER GRAPHICS, INC. AND PREMIER GRAPHICS, INC.
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John Wm. Butler, Jr.
George N. Panagakis
Mark A. McDermott
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
-and-
Mark S. Chehi (I.D. No. 2885)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
Dated: December 19, 2000
TABLE OF CONTENTS
PAGE
INTRODUCTION
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
A. Definitions..................................................... A - 1
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1.1 "Administrative Claim"............................... A - 1
1.2 "Administrative Convenience Claim"................... A - 1
1.3 "Allowed"............................................ A - 1
1.4 "Allowed Claim"...................................... A - 1
1.5 "Avoidance Claims"................................... A - 2
1.6 "Ballot"............................................. A - 2
1.7 "Bankruptcy Code".................................... A - 2
1.8 "Bankruptcy Court"................................... A - 2
1.9 "Bankruptcy Rules"................................... A - 2
1.10 "Bar Date"........................................... A - 2
1.11 "Bar Date Order"..................................... A - 2
1.12 "Business Day"....................................... A - 2
1.13 "Cash"............................................... A - 2
1.14 "Causes of Action"................................... A - 2
1.15 "Certificates of Incorporation and By-Laws".......... A - 2
1.16 "Chapter 11 Cases"................................... A - 2
1.17 "Chief Executive Officer"............................ A - 2
1.18 "Claim".............................................. A - 3
1.19 "Claims Objection Deadline".......................... A - 3
1.20 "Class".............................................. A - 3
1.21 "Collateral"......................................... A - 3
1.22 "Confirmation Date".................................. A - 3
1.23 "Confirmation Hearing"............................... A - 3
1.24 "Confirmation Order"................................. A - 3
1.25 "Core Divisions"..................................... A - 3
1.26 "Creditors' Committee"............................... A - 3
1.27 "Creditors' Trust"................................... A - 3
1.28 "Cure"............................................... A - 3
1.29 "Debtor" or "Debtors"................................ A - 3
1.30 "DIP Agent".......................................... A - 3
1.31 "DIP Credit Agreement"............................... A - 3
1.32 "DIP Facility"....................................... A - 3
1.33 "DIP Facility Claim"................................. A - 3
1.34 "DIP Facility Order"................................. A - 4
1.35 "DIP Lenders"........................................ A - 4
1.36 "Disallowed Claim"................................... A - 4
1.37 "Disbursing Agent"................................... A - 4
1.38 "Disclosure Statement"............................... A - 4
1.39 "Disputed Claim"..................................... A - 4
1.40 "Distribution Reserve"............................... A - 4
1.41 "Division"........................................... A - 4
1.42 "Effective Date"..................................... A - 4
1.43 "Estates"............................................ A - 4
1.44 "Exchange Act"....................................... A - 4
1.45 "Exhibit"............................................ A - 4
1.46 "Exhibit Filing Date"................................ A - 4
PAGE
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1.47 "Existing Securities"................................ A - 4
1.48 "Exit Facility"...................................... A - 4
1.49 "Face Amount"........................................ A - 5
1.50 "Final Order"........................................ A - 5
1.51 "GE Capital"......................................... A - 5
1.52 "General Unsecured Claim"............................ A - 5
1.53 "Impaired"........................................... A - 5
1.54 "Indemnitee"......................................... A - 5
1.55 "Indemnification Rights"............................. A - 5
1.56 "Indenture".......................................... A - 5
1.57 "Indenture Trustee".................................. A - 5
1.58 "Interest"........................................... A - 5
1.59 "IRC"................................................ A - 5
1.60 "IRS"................................................ A - 5
1.61 "Master Graphics".................................... A - 5
1.62 "Master Graphics Senior Notes Guaranty".............. A - 5
1.63 "Net Proceeds"....................................... A - 5
1.64 "New Holding Company"................................ A - 5
1.65 "New Holding Company Common Stock"................... A - 6
1.66 "New Operating Company".............................. A - 6
1.67 "New Operating Company Common Stock"................. A - 6
1.68 "New Warrant Put Note"............................... A - 6
1.69 "New Warrant Put Note Guaranty Agreement"............ A - 6
1.70 "Non-Core Divisions"................................. A - 6
1.71 "Non-Core Assets".................................... A - 6
1.72 "Old Common Stock"................................... A - 6
1.73 "Old Preferred Stock"................................ A - 6
1.74 "Other Priority Claim"............................... A - 6
1.75 "Other Secured Claim"................................ A - 6
1.76 "Person"............................................. A - 6
1.77 "Petition Date"...................................... A - 6
1.78 "Plan"............................................... A - 6
1.79 "Plan Schedules"..................................... A - 6
1.80 "Premier Graphics"................................... A - 6
1.81 "Prepetition Administrative Agent"................... A - 6
1.82 "Prepetition Credit Agreement"....................... A - 7
1.83 "Prepetition Lenders"................................ A - 7
1.84 "Priority Tax Claim"................................. A - 7
1.85 "Pro Rata"........................................... A - 7
1.86 "Professional"....................................... A - 7
1.87 "Professional Claim"................................. A - 7
1.88 "Professional Fee Order"............................. A - 7
1.89 "Record Date"........................................ A - 7
1.90 "Registration Rights Agreement"...................... A - 7
1.92 "Reorganized Debtor" or "Reorganized Debtors"........ A - 7
1.91 "Released Parties"................................... A - 7
1.93 "Scheduled".......................................... A - 7
1.94 "Schedules".......................................... A - 7
1.95 "Secured Lender Claim"............................... A - 7
1.96 "Securities Act"..................................... A - 7
1.97 "Seller"............................................. A - 8
1.98 "Seller Earn-Out Claim".............................. A - 8
1.99 "Seller Note Claim".................................. A - 8
1.100 "Senior Note Claim".................................. A - 8
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1.101 "Senior Notes".................................................... A - 8
1.102 "Trustee"......................................................... A - 8
1.103 "Unimpaired Claim"................................................ A - 8
1.104 "Voting Record Date".............................................. A - 8
1.105 "Warrant Put Note"................................................ A - 8
1.106 "Warrant Put Note Claim".......................................... A - 8
1.107 "Warrant Put Note Guaranty Agreement"............................. A - 8
1.108 "Warrant Put Note Guaranty Agreement Claim"....................... A - 8
B. Rules of Interpretation...................................................... A - 8
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C. Computation of Time.......................................................... A - 9
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ARTICLE II
ADMINISTRATIVE EXPENSES AND PRIORITY TAX CLAIMS
2.1 Administrative Claims.................................................... A - 9
2.2 Priority Tax Claims...................................................... A - 9
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
3.1 Premier Graphics......................................................... A - 10
3.2 Master Graphics.......................................................... A - 10
ARTICLE IV
IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED BY THE PLAN
4.1 Unimpaired Classes of Claims............................................. A - 10
4.2 Impaired Classes of Claims and Interests................................. A - 10
ARTICLE V
PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
5.1 Premier Graphics......................................................... A - 11
5.2 Master Graphics.......................................................... A - 12
5.3 Special Provision Regarding Unimpaired Claims............................ A - 13
ARTICLE VI
ACCEPTANCE OR REJECTION OF THE PLAN
6.1 Classes Entitled to Vote................................................... A - 13
6.2 Acceptance by Impaired Classes............................................. A - 13
6.3 Presumed Acceptances by Unimpaired Classes................................. A - 13
6.4 Classes Deemed to Reject Plan.............................................. A - 13
6.5 Summary of Classes Voting on the Plan...................................... A - 13
6.6 Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code............ A - 13
6.7 Confirmability and Severability of a Plan.................................. A - 13
PAGE
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ARTICLE VII
MEANS FOR IMPLEMENTATION OF THE PLAN
7.1 Corporate Existence................................................... A - 14
7.2 Vesting, Retention, and Disposition of Assets......................... A - 14
7.3 Directors and Officers of the Reorganized Debtors..................... A - 14
7.4 Certificates of Incorporation and By-laws............................. A - 15
7.5 Corporate Action...................................................... A - 15
7.6 Cancellation of Existing Securities................................... A - 15
7.7 Issuance of New Securities and Related Documentation.................. A - 15
7.8 Sources of Cash for Plan Distributions................................ A - 16
7.9 Exemption from Certain Transfer Taxes................................. A - 16
7.10 Effectuating Documents; Further Transactions.......................... A - 16
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
8.1 Assumption of Executory Contracts and Unexpired Leases................ A - 16
8.2 Rejection of Executory Contracts and Unexpired Leases................. A - 17
8.3 Cure of Defaults of Assumed Executory Contracts and Unexpired Leases.. A - 17
8.4 Claims Based on Rejection of Executory Contracts or Unexpired Leases.. A - 17
ARTICLE IX
PROVISIONS GOVERNING DISTRIBUTIONS
9.1 Time of Distributions................................................. A - 17
9.2 Interest on Claims.................................................... A - 17
9.3 Disbursing Agent...................................................... A - 17
9.4 Delivery of Distributions............................................. A - 18
9.5 Record Date for Distributions......................................... A - 18
9.6 Surrender of Securities and Instruments............................... A - 18
9.7 Services of Indenture Trustees, Agents and Servicers.................. A - 18
9.8 Allocation of Plan Distributions Between Principal and Interest....... A - 19
9.9 Withholding and Reporting Requirements................................ A - 19
9.10 Means of Cash Payment................................................. A - 19
9.11 Fractional Shares..................................................... A - 19
9.12 Setoffs............................................................... A - 19
ARTICLE X
PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS
10.1 Claims Administration Responsibility.................................. A - 19
10.2 Objection Deadline; Prosecution of Objections......................... A - 19
10.3 No Distributions Pending Allowance.................................... A - 20
10.4 Disputed Claims Reserve............................................... A - 20
10.5 Distributions After Allowance......................................... A - 20
ARTICLE XI
ALLOWANCE AND PAYMENT OF CERTAIN
ADMINISTRATIVE CLAIMS
11.1 DIP Facility Claim....................................... A - 20
11.2 Professional Claims...................................... A - 21
11.3 Other Administrative Claims.............................. A - 21
ARTICLE XII
CONFIRMATION AND CONSUMMATION OF THE PLAN
12.1 Conditions to Confirmation............................... A - 21
12.2 Conditions to Effective Date............................. A - 21
12.3 Waiver of Conditions..................................... A - 22
ARTICLE XIII
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
13.1 Discharge of the Debtors................................. A - 22
13.2 Compromises and Settlements.............................. A - 22
13.3 Setoffs.................................................. A - 22
13.4 Satisfaction of Subordination Rights..................... A - 23
13.5 Exculpation and Limitation of Liability.................. A - 23
13.6 Indemnification Obligations.............................. A - 22
13.7 Releases by Debtors and Debtors in Possession............ A - 23
13.8 Release by Holders of Claims and Interests............... A - 24
13.9 Injunction............................................... A - 24
13.10 Federal and State Regulatory Agencies.................... A - 24
ARTICLE XIV
RETENTION OF JURISDICTION
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Binding Effect........................................... A - 26
15.2 Payment of Statutory Fees................................ A - 26
15.3 Amendment or Modification of the Plan.................... A - 26
15.4 Revocation, Withdrawal or Non-Consummation............... A - 26
15.5 Notice................................................... A - 26
15.6 Governing Law............................................ A - 27
15.7 Tax Reporting and Compliance............................. A - 27
15.8 Committees............................................... A - 27
15.9 Term of Injunctions or Stays............................. A - 27
15.10 No Waiver or Estoppel.................................... A - 27
INTRODUCTION
Master Graphics, Inc. and its wholly-owned operating subsidiary, Premier
Graphics, Inc., debtors and debtors-in-possession in the above-captioned chapter
11 cases, hereby propose the following joint plan of reorganization for the
resolution of the outstanding claims against and interests in the Debtors.
Capitalized terms used herein shall have the meanings ascribed to such terms in
Article I.
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These reorganization cases have been consolidated for procedural purposes
only and are being jointly administered pursuant to an order of the Bankruptcy
Court. This Plan does not contemplate the substantive consolidation of the
Debtors. Each Debtor is a proponent of a Plan contained herein within the
meaning of section 1129 of the Bankruptcy Code. For voting and distribution
purposes, the Plan contemplates separate classes for each Debtor. The
distributions to be made to the claimant in each of such classes are set forth
herein.
Under section 1125(b) of the Bankruptcy Code, a vote to accept or reject
the Plan cannot be solicited from the holder of a claim or interest until such
time as the Disclosure Statement has been approved by the Bankruptcy Court and
distributed to claim and interest holders. In this case, the Disclosure
Statement was approved by the Bankruptcy Court by order entered on December 19,
2000, and has been distributed simultaneously with this Plan to all parties
whose votes are being solicited. The Disclosure Statement contains, among other
things, a discussion of the Debtors' history, business, properties and
operations, projections for those operations, risk factors, a summary and
analysis of the Plan, and certain related matters including, among other things,
the securities to be issued under the Plan. ALL CLAIM HOLDERS 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 Fed. R. Bankr. P. 3019 and those restrictions on
modifications set forth in Article XV of this Plan, each of the Debtors
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expressly reserves its respective rights to alter, amend, modify, revoke or
withdraw this Plan with respect to such Debtor, one or more times, prior to its
substantial consummation.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
A. Definitions
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As used herein, capitalized terms have the meanings set forth below. Any
term that is not otherwise defined herein, but that is used in the Bankruptcy
Code or the Bankruptcy Rules, will have the meaning given to that term in the
Bankruptcy Code or the Bankruptcy Rules, as applicable.
1.1 "Administrative Claim" means a Claim for payment of an
administrative expense of a kind specified in section 503(b) of the Bankruptcy
Code and entitled to priority pursuant to section 507(a)(1) of the Bankruptcy
Code, including, but not limited to, DIP Facility Claims, the actual and
necessary costs and expenses, incurred after the Petition Date, of preserving
the Estates and operating the business of the Debtors (including wages,
salaries, or commissions for services rendered after the Petition Date),
Professional Claims, all fees and charges assessed against the Estates under
chapter 123 of title 28, United States Code, and 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 "Administrative Convenience Claim" means a Claim which would
otherwise be a General Unsecured Claim which is in an amount equal to or less
than $10,000.
1.3 "Allowed" means with respect to a Claim or Interest an Allowed
Claim or an Allowed Interest (as the case may be) in a particular Class or
category specified.
1.4 "Allowed Claim" means a Claim or any portion thereof (a) that
has been allowed by a Final Order, or (b) as to which (i) no proof of claim has
been timely 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) as to which a proof of
claim in a liquidated amount has been timely filed with the Bankruptcy Court
pursuant to the Bankruptcy
A -1
Code, any Final Order of the Bankruptcy Court or other applicable bankruptcy
law, and 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.
1.5 "Avoidance Claims" means Causes of Action arising under
sections 502, 510, 541, 542, 544, 545, 547 through 551 or 553 of the Bankruptcy
Code, or under similar or related state or federal statutes and common law,
including fraudulent transfer laws, whether or not litigation is commenced to
prosecute such Causes of Action.
1.6 "Ballot" means each of the ballot forms distributed with the
Disclosure Statement to holders of Claims in Classes that are Impaired under the
Plan and entitled to vote under Article VI hereof in connection with the
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solicitation of acceptances of the Plan.
1.7 "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended and codified in title 11 of the United States Code, 11 U.S.C. (S)(S)
101-1330.
1.8 "Bankruptcy Court" means the Bankruptcy Court of the United
States District Court for the District of Delaware or such other court as may
have jurisdiction over the Chapter 11 Cases.
1.9 "Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure and the Official Bankruptcy Forms, as amended, 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" means the deadline for filing proofs of claim
established by Bankruptcy Court as November 15, 2000, pursuant to the Bar Date
Order and any supplemental bar dates established by the Bankruptcy Court
pursuant to the Bar Date Order or other Final Order.
1.11 "Bar Date Order" means the order entered by the Bankruptcy
Court on September 12, 2000, which established the Bar Date.
1.12 "Business Day" means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)), on which commercial
banks are open for business in New York City.
1.13 "Cash" means legal tender of the United States of America and
equivalents thereof .
1.14 "Causes of Action" means any and all actions, causes of action,
suits, accounts, controversies, agreements, promises, rights to legal remedies,
rights to equitable remedies, rights to payment and claims, whether known,
unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, secured or
unsecured and whether asserted or assertable directly or derivatively, in law,
equity or otherwise, including Avoidance Claims.
1.15 "Certificates of Incorporation and By-Laws" means the
certificates of incorporation and by-laws of New Holding Company and New
Operating Company, in substantially the form of Exhibits A and B.
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1.16 "Chapter 11 Cases" means the chapter 11 cases of the Debtors
pending in the Bankruptcy Court and being jointly administered with one another
under Case No. 00-2929(PJW), and the phrase "Chapter 11 Case" when used with
reference to a particular Debtor shall mean the particular case under Chapter 11
of the Bankruptcy Code commenced by such Debtor in the Bankruptcy Court.
1.17 "Chief Executive Officer" means at any time prior to the
Effective Date, the Person holding the title of chief executive officer of the
Debtors, and at any time after the Effective Date, the Person holding the title
of chief executive officer of the Reorganized Debtors.
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1.18 "Claim" means a claim against one of the Debtors, whether or
not asserted, as defined in section 101(5) of the Bankruptcy Code.
1.19 "Claims Objection Deadline" means the day that is the later of
(a) 120 days after the Effective Date (unless such day is not a Business Day, in
which case the Claims Objection Deadline shall be the next Business Day
thereafter), or (b) as to a particular Claim, 60 days after the filing of a
proof of claim for, or request for payment of, such Claim or (c) such later date
as may be established by the Bankruptcy Court for cause shown by the Reorganized
Debtors.
1.20 "Class" means a category of holders of Claims or Interests as
described in Articles II and III of the Plan.
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1.21 "Collateral" means any property or interest in property of the
Estates that is subject to a valid and enforceable lien to secure a Claim.
1.22 "Confirmation Date" means the date of entry of the Confirmation
Order.
1.23 "Confirmation Hearing" means the hearing before the Bankruptcy
Court held to consider confirmation of this Plan, as such hearing may be
adjourned or continued from time to time.
1.24 "Confirmation Order" means the order entered by the Bankruptcy
Court confirming this Plan.
1.25 "Core Divisions" means those Divisions listed as "Core
Divisions" on Plan Schedule 1.41, as may be amended on or before the Effective
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Date.
1.26 "Creditors' Committee" means the Official Committee of
Unsecured Creditors appointed pursuant to section 1102(a) of the Bankruptcy Code
in the Chapter 11 Cases.
1.27 "Creditors' Trust" means that certain trust that may be created
at the election of the Committee on or before the Effective Date and as
described in Plan Schedule 1.27, to serve as Disbursing Agent, to pursue Causes
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of Action, and/or to review and object to Claims.
1.28 "Cure" means the distribution within a reasonable period of
time following the Effective Date 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 or assumption and assignment 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 extent such obligations are enforceable under the Bankruptcy Code
and applicable bankruptcy law.
1.29 "Debtor" or "Debtors" means Master Graphics and Premier
Graphics, individually or collectively.
1.30 "DIP Agent" means GE Capital, in its capacity as administrative
and collateral agent under the DIP Credit Agreement.
1.31 "DIP Credit Agreement" means that certain Secured Super-
Priority Debtor in Possession Loan and Security Agreement dated as of November
13, 2000, among Premier Graphics, as borrower; Master Graphics, Inc., as
guarantor; the DIP Agent, as administrative and collateral agent; and the DIP
Lenders, as such agreement may have been amended, supplemented or modified from
time to time.
1.32 "DIP Facility" means the $12 million debtor-in-possession
secured financing facility provided to the Debtors by the DIP Lenders pursuant
to the DIP Credit Agreement as authorized by the DIP Facility Order.
1.33 "DIP Facility Claim" means all Administrative Claims of the DIP
Agent and the DIP Lenders arising under the DIP Facility or the DIP Facility
Order.
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1.34 "DIP Facility Order" means, collectively, the interim order
that was entered by the Bankruptcy Court on August 3, 2000, the supplemental
order with respect thereto entered on October 3, 2000, and the final order
entered on November 9, 2000, authorizing and approving the DIP Financing, the
DIP Credit Agreement and related agreements thereto.
1.35 "DIP Lenders" means those entities identified as "Lenders" in
the DIP Credit Agreement and their respective successors and assigns.
1.36 "Disallowed Claim" means a Claim, or any portion thereof, that
(a) has been disallowed by a Final Order, or (b) (i) is Scheduled at zero or as
contingent, disputed or unliquidated and (ii) as to which a Bar Date has been
established but no proof of claim has been filed or deemed timely filed with the
Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of
the Bankruptcy Court or otherwise deemed timely filed under applicable law.
1.37 "Disbursing Agent" means the Reorganized Debtors with respect
to any Cash distributions under the Plan and the Reorganized Debtors or such
other entity as may be designated by the Reorganized Debtors, including the
Trustee, to serve as disbursing agent with respect to all other distributions
under the Plan.
1.38 "Disclosure Statement" means the written disclosure statement
that relates to this Plan, as approved by the Bankruptcy Court pursuant to
section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure
statement may be amended, modified or supplemented from time to time.
1.39 "Disputed Claim" means a Claim, or any portion thereof, that is
neither an Allowed Claim nor a Disallowed Claim, and includes, without
limitation, Claims that (a) have not been Scheduled by the Debtors or have been
Scheduled at zero, or as contingent, unliquidated or disputed or (b) are the
subject of an objection filed in the Bankruptcy Court and which objection has
not been withdrawn or overruled by a Final Order of the Bankruptcy Court.
1.40 "Distribution Reserve" means the property for distribution to
holders of Allowed Claims to be reserved pending allowance of Disputed Claims in
accordance with Article X of the Plan.
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1.41 "Division" means any operating division or unit of Premier
Graphics, including, but not limited to, any division or unit currently and/or
formerly identified, whether formally or informally, by any of the names listed
on Plan Schedule 1.41.
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1.42 "Effective Date" means a Business Day determined by the Debtors
after all of the conditions to the effectiveness of the Plan set forth in
Section 12.2 of the Plan have been satisfied or waived as provided in Section
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12.3 of the Plan.
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1.43 "Estates" means the bankruptcy estates of the Debtors as
created under section 541 of the Bankruptcy Code.
1.44 "Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
1.45 "Exhibit" means an exhibit annexed to either this Plan or as an
appendix to the Disclosure Statement.
1.46 "Exhibit Filing Date" means the date on which Exhibits and Plan
Schedules shall be filed with the Bankruptcy Court, which date shall be at least
five days prior to the Voting Deadline.
1.47 "Existing Securities" means the Senior Notes, Seller Notes,
Seller Earn-Out Agreements, Old Master Graphics Common Stock, Old Master
Graphics Preferred Stock, and Old Premier Graphics Common Stock, including any
such securities that have been authorized but not issued.
1.48 "Exit Facility" means the financing facility to be provided
pursuant to Section 7.8 of this Plan on the terms and conditions set forth in
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the final documentation to be filed with the Bankruptcy Court on or before the
Effective Date.
A -4
1.49 "Face Amount" means (a) when used in reference to a Disputed or
Disallowed Claim, the full stated amount claimed by the Claim holder 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.
1.50 "Final Order" means an order or judgment, 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.
1.51 "GE Capital" means General Electric Capital Corporation, a New
York corporation.
1.52 "General Unsecured Claim" means a Claim (including a Senior
Note Claim, a Seller Earn-Out Claim, and intercompany Claims between the
Debtors) that is not a Secured Lender Claim, an Other Secured Claim, an
Administrative Claim, a Priority Tax Claim, an Other Priority Claim or an
Administrative Convenience Claim.
1.53 "Impaired" refers to any Claim or Interest that is impaired
within the meaning of section 1124 of the Bankruptcy Code.
1.54 "Indemnitee" means all present and former directors, officers,
employees, agents or representatives of a Debtor who are entitled to assert
Indemnification Rights.
1.55 "Indemnification Rights" means any obligations or rights of any
of the Debtors to indemnify or contribute to the losses, liabilities or expenses
of an Indemnitee pursuant to such Debtor's certificate of incorporation, bylaws
or policy of providing employee indemnification, or applicable state law or
specific agreement in respect of any claims, demands, suits, causes of action or
proceedings against an Indemnitee based upon any act or omission related to an
Indemnitee's service with, for or on behalf of such Debtor.
1.56 "Indenture" means that certain Indenture dated as of December
11, 1998, as amended, between Premier Graphics and the Indenture Trustee.
1.57 "Indenture Trustee" means United States Trust Company of New
York, as trustee pursuant to the terms of the Indenture.
1.58 "Interest" means the rights of any current or former holder or
owner of any shares of Old Common Stock, Old Preferred Stock or any other equity
securities of any of the Debtors authorized and issued prior to the Confirmation
Date.
1.59 "IRC" means the Internal Revenue Code of 1986, as amended.
1.60 "IRS" means Internal Revenue Service of the United States of
America.
1.61 "Master Graphics" means Master Graphics, Inc., a Tennessee
corporation.
1.62 "Master Graphics Senior Notes Guaranty" means Master Graphics'
guaranty of Premier Graphics' obligations under the Senior Notes.
1.63 "Net Proceeds" means all proceeds from the sale of an asset
minus all reasonable out-of-pocket direct costs, fees and expenses incurred in
- -----
connection with such sale and provisions for any sales or other tax due and
owing as a consequence of such sale.
1.64 "New Holding Company" means a corporation to be created
pursuant to the terms of the Plan to hold 100% of the New Operating Company
Common Stock.
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1.65 "New Holding Company Common Stock" means shares of common stock
of New Holding Company authorized under Section 7.7 of the Plan and under the
-----------
Certificate of Incorporation of New Holding Company.
1.66 "New Operating Company" means a corporation to be created
pursuant to the terms of the Plan to be wholly-owned by New Holding Company.
1.67 "New Operating Company Common Stock" means shares of common
stock of New Operating Company authorized under Section 7.7 of the Plan and
-----------
under the Certificate of Incorporation of New Operating Company.
1.68 "New Warrant Put Note" means a new note to be issued by New
Holding Company to GE Capital in full satisfaction of all Claims arising under
or related to the Warrant Put Note or related documents, containing the terms
and conditions summarized in Plan Schedule 1.68.
------------------
1.69 "New Warrant Put Note Guaranty Agreement" means a new guaranty
agreement to be executed by New Operating Company for the benefit of GE Capital
in full satisfaction of all Claims arising under or related to the Warrant Put
Note Guaranty Agreement or related documents, containing the terms and
conditions summarized in Plan Schedule 1.69.
------------------
1.70 "Non-Core Divisions" means those Divisions listed as "Non-Core
Divisions" on Plan Schedule 1.41, as may be amended on or before the Effective
------------------
Date.
1.71 "Non-Core Assets" means all of the assets related to the
operations of the Non-Core Divisions and any and all proceeds of the foregoing
and interest accruing with respect thereto.
1.72 "Old Common Stock" means, with respect to each Debtor, shares
of common stock of such Debtor and all options, warrants or rights, contractual
or otherwise, if any, to acquire any such common stock.
1.73 "Old Preferred Stock" means, with respect to each Debtor, all
shares of preferred stock of such Debtor and all options, warrants or rights,
contractual or otherwise, if any, to acquire any such preferred stock.
1.74 "Other Priority Claim" means a Claim that is entitled to
priority pursuant to section 507(a) of the Bankruptcy Code other than an
Administrative Claim or Priority Tax Claim.
1.75 "Other Secured Claim" means a Claim that is secured by a lien
on property in which a Debtor's 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 Claimholder's interest in the applicable Estate's interest in such property
or to the extent of the amount subject to setoff, as applicable, as determined
pursuant to section 506(a) of the Bankruptcy Code or, in the case of setoff,
pursuant to section 553 of the Bankruptcy Code.
1.76 "Person" means an individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, limited
liability partnership, trust, estate, unincorporated organization or other
entity.
1.77 "Petition Date" means July 7, 2000, the date on which the
Debtors filed their petitions for relief in the Bankruptcy Court commencing the
Chapter 11 Cases.
1.78 "Plan" means this first amended chapter 11 plan of
reorganization for the Debtors as herein proposed, including all supplements,
appendices and schedules thereto, either in its present form or as the same may
be further altered, amended or modified from time to time in accordance with the
Bankruptcy Code.
1.79 "Plan Schedules" means a schedule annexed to either this Plan
or as an appendix to the Disclosure Statement.
1.80 "Premier Graphics" means Premier Graphics, Inc., a Delaware
corporation.
1.81 "Prepetition Administrative Agent" means GE Capital as
administrative and collateral agent under the Prepetition Credit Agreement.
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1.82 "Prepetition Credit Agreement" means that certain Third Amended
and Restated Loan and Security Agreement dated as of March 15, 1999, as amended,
among Premier Graphics, as borrower, Master Graphics, as guarantor, and the
Prepetition Lenders.
1.83 "Prepetition Lenders" means the entities identified as
"Lenders" under the Prepetition Credit Agreement and their respective successors
and assigns.
1.84 "Priority Tax Claim" means a Claim entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
1.85 "Pro Rata" means with respect to a distributions regarding a
particular Class, the proportion that (a) the Face Amount of a Claim in a
particular Class bears to (b) the aggregate Face Amount of all Claims (including
Disputed Claims, but excluding Disallowed Claims) in such Class, unless the Plan
provides otherwise .
1.86 "Professional" means those Persons employed in the Chapter 11
Cases pursuant to section 327 and 1103 of the Bankruptcy Code or otherwise.
1.87 "Professional Claim" means an Administrative Claim of a
Professional for compensation for services rendered or reimbursement of costs,
expenses or other charges, expenses incurred after the Petition Date and prior
to and including the Effective Date.
1.88 "Professional Fee Order" means the order entered by the
Bankruptcy Court on August 11, 2000, authorizing the interim payment of
Professional Claims, as may be amended from time to time prior to the entry on
the docket of the Confirmation Order.
1.89 "Record Date" means the record date for purposes of making
distributions under the Plan on account of Allowed Claims, which date shall be
the Effective Date .
1.90 "Registration Rights Agreement" means the agreement, in
substantially the form attached as Exhibit C to this Plan, whereby the
---------
Reorganized Debtors shall be obligated to register certain shares of New Holding
Company Common Stock pursuant to the terms and conditions of such agreement.
1.91 "Released Parties" means, collectively, the Persons identified
in Section 13.7 of the Plan.
------------
1.92 "Reorganized Debtor" or "Reorganized Debtors" means New
Operating Company and New Holding Company, individually or collectively.
1.93 "Scheduled" means with respect to all Claim or Interest, the
status and amount, if any, of such Claim or Interest as set forth in the
Schedules.
1.94 "Schedules" means the schedules of assets and liabilities and
the statements of financial affairs filed in the Bankruptcy Court by the
Debtors, as such schedules have been or may be further modified, amended or
supplemented from time to time in accordance with Rule 1009 of the Bankruptcy
Rules or Orders of the Bankruptcy Court.
1.95 "Secured Lender Claim" means individually, a Claim of a
Prepetition Lender under the Prepetition Credit Agreement and, collectively, the
Claims of the Prepetition Lenders under the Prepetition Credit Agreement,
including Claims for principal, plus accrued but unpaid interest through the
Effective Date, and unpaid reasonable fees and expenses incurred by the
Prepetition Lenders, the Prepetition Administrative Agent, and their respective
professionals prior to and subsequent to the Petition Date.
1.96 "Securities Act" means the Securities Act of 1933, 15 U.S.C.
(S)(S) 77c-77aa, as now in effect or hereafter amended.
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1.97 "Seller" means any Person who sold any entity to either Debtor
prior to the Petition Date, including those entities that comprised the
Divisions as of the Petition Date.
1.98 "Seller Earn-Out Claim" means any Claim arising out of any
agreement between either of the Debtors and any Seller providing for payment of
performance-based consideration to such Seller for the sale of any entity by
such Seller to either Debtor prior to the Petition Date, including, but not
limited to, any and all notes, instruments, or other documents issued or
executed in connection therewith.
1.99 "Seller Note Claim" means any Claim arising out of any note
issued by Master Graphics to any Seller as consideration to such Seller for the
sale of any entity by such Seller to either Debtor prior to the Petition Date.
1.100 "Senior Note Claim" means any Claim arising out of a Senior
Note.
1.101 "Senior Notes" means those certain 11 1/2% Senior Notes due
2005 issued by Premier Graphics pursuant to the terms of the Indenture.
1.102 "Trustee" means the trustee of the Creditors' Trust.
1.103 "Unimpaired Claim" means a Claim that is not impaired within
the meaning of Section 1124 of the Bankruptcy Code.
1.104 "Voting Record Date" means the date established by the
Bankruptcy Court as the date for determining those holders of Claims against the
Debtors entitled to vote on the Plan.
1.105 "Warrant Put Note" means that certain Demand Promissory Note,
dated April 3, 2000, issued by Master Graphics to GE Capital.
1.106 "Warrant Put Note Claim" means any Claim arising out of or
relating to the Warrant Put Note.
1.107 "Warrant Put Note Guaranty Agreement" means that certain
Company Guaranty Agreement dated September 26, 1997, executed by Premier
Graphics in favor of GE Capital.
1.108 "Warrant Put Note Guaranty Agreement Claim" means any Claim
arising out of or relating to the Warrant Put Note Guaranty Agreement.
B. Rules of Interpretation
-----------------------
For purposes of this Plan, unless otherwise provided herein: (a)
whenever from the context it is appropriate, each term, whether stated in the
singular or the plural, will include both the singular and the plural; (b)
unless otherwise provided in this Plan, any reference in this Plan to a
contract, instrument, release or other agreement or document being in a
particular form or on particular terms and conditions means that such document
will be substantially in such form or substantially on such terms and
conditions; (c) any reference in this Plan to an existing document or schedule
filed or to be filed means such document or schedule, as it may have been or may
be amended, modified or supplemented pursuant to this Plan; (d) any reference to
an entity as a holder of a Claim or Interest includes that entity's successors
and assigns; (e) all references in this Plan to Sections, Articles and Plan
Schedules are references to Sections, Articles and Plan Schedules of or to this
Plan; (f) the words "herein," "hereunder" and "hereto" refer to this Plan in its
entirety rather than to a particular portion of this Plan; (g) captions and
headings to Articles and Sections are inserted for convenience of reference only
and are not intended to be a part of or to affect the interpretation of this
Plan; (h) subject to the provisions of any contract, certificates of
incorporation, by-laws, instrument, release or other agreement or document
entered into in connection with this Plan, the rights and obligations arising
under this Plan shall be governed by, and construed and enforced in accordance
with, federal law, including the Bankruptcy Code and Bankruptcy Rules; and (i)
the rules of construction set forth in section 102 of the Bankruptcy Code will
apply.
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C. Computation of Time
-------------------
In computing any period of time prescribed or allowed by this Plan,
unless otherwise expressly provided for, the provisions of Bankruptcy Rule
9006(a) shall apply.
ARTICLE II
ADMINISTRATIVE EXPENSES
AND PRIORITY TAX CLAIMS
-----------------------
2.1 Administrative Claims. Subject to the provisions of Article XI
----------
of this Plan, on, or as soon as reasonably practicable after, the later of (a)
the Effective Date, or (b) the date on which an Administrative Claim becomes an
Allowed 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, (i) Cash equal to the unpaid
portion of such Allowed Administrative Claim, (ii) such other treatment as to
which the relevant Debtor or Reorganized Debtor and such Claim holder shall have
agreed upon in writing or (iii) as otherwise may be provided under applicable
law; provided, however, that Allowed Administrative Claims against a Debtor with
respect to liabilities incurred in the ordinary course of business during the
Chapter 11 Cases shall be paid in the ordinary course of business in accordance
with the terms and conditions of any agreements relating thereto.
2.2 Priority Tax Claims. On, or as soon as reasonably practicable
after, the later of (a) the Effective Date, or (b) the date on which a Priority
Tax Claim becomes an Allowed Priority Tax Claim, each holder of an Allowed
Priority Tax Claim against a Debtor shall receive in full satisfaction,
settlement, release and discharge of and in exchange for such Allowed Priority
Tax Claim, at the sole option of the relevant Debtor, (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, (ii) such other treatment agreed to by the
Allowed Priority Tax Claim holder and the applicable Debtor or Reorganized
Debtor, provided, however, such treatment is on more favorable terms to the
applicable Debtor than the treatment set forth in clause (i) hereof, or (iii)
payment in full in Cash; provided, further, however, that any Priority Tax Claim
that is not an Allowed Claim, including any Allowed Priority Tax Claim not due
and owing on the Effective Date will be paid in accordance with this section
when such Claim becomes due and owing.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to section 1122 of the Bankruptcy Code, set forth below is a
designation of classes of Claims against and Interests in each of the Debtors.
All Claims and Interests, except 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, Administrative Claims and Priority Tax Claims, have not
been classified and their treatment is set forth in Article II above.
----------
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 or Interest
is also placed in a particular Class only for the purpose of voting on, and
receiving distributions pursuant to, the Plan only to the extent that such Claim
or Interest is an Allowed Claim or an Allowed Interest in that Class and such
Claim or Interest has not been paid, released or otherwise settled prior to the
Effective Date. Classes designated with a "P" refer to Classes of Claims against
and Interests in Premier Graphics. Classes designated with an "M" refer to
Classes of Claims against and Interests in Master Graphics.
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3.1 Premier Graphics
(a) Class P-1. Class P-1 consists of all Secured Lender Claims
against Premier Graphics.
(b) Class P-2. Class P-2 consists of the Warrant Put Note
Guaranty Agreement Claim against Premier Graphics.
(c) Class P-3. Class P-3 consists of all Other Secured Claims
against Premier Graphics.
(d) Class P-4. Class P-4 consists of all Other Priority Claims
against Premier Graphics.
(e) Class P-5. Class P-5 consists of all General Unsecured
Claims against Premier Graphics.
(f) Class P-6. Class P-6 consists of all Administrative
Convenience Claims against Premier Graphics.
(g) Class P-7. Class P-7 consists of all Interests in Premier
Graphics.
3.2 Master Graphics
(a) Class M-1. Class M-1 consists of all Secured Lender Claims
against Master Graphics.
(b) Class M-2. Class M-2 consists of the Warrant Put Note Claim
against Master Graphics .
(c) Class M-3. Class M-3 consists of all Other Secured Claims
against Master Graphics.
(d) Class M-4. Class M-4 consists of all Other Priority Claims
against Mater Graphics.
(e) Class M-5. Class M-5 consists of all General Unsecured
Claims against Master Graphics.
(f) Class M-6. Class M-6 consists of all Interests in Master
Graphics.
ARTICLE IV
IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED BY THE PLAN
4.1 Unimpaired Classes of Claims. The Classes listed below are
Unimpaired by the Plan:
Class P-3 Class M-3
Class P-4 Class M-4
4.2 Impaired Classes of Claims and Interests. The Classes listed
below are Impaired by the Plan, provided, however, that to the extent that the
holders of Class P-1 or Class M-1 Secured Claims receive Cash in full
satisfaction of the Allowed amount of their Claims on the later of the Effective
Date or the date that such Claims are Allowed, such Secured Lender Claims are
Unimpaired under the Plan:
Class P-1 Class M-1
Class P-2 Class M-2
Class P-5 Class M-5
Class P-6 Class M-6
Class P-7
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ARTICLE V
PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
5.1 Premier Graphics
(a) Class P-1 (Secured Lender Claims against Premier Graphics).
On, or as soon as reasonably practicable after, the later of (a) the Effective
Date, or (b) the date on which the Secured Lender Claims against Premier
Graphics become Allowed Secured Lender Claims, the Prepetition Agent shall
receive (on behalf of and for further distribution to the Prepetition Lenders in
accordance with the Prepetition Credit Agreement), in full satisfaction,
settlement, release and discharge of, and in exchange for, the Secured Lender
Claims against Premier Graphics, (i) Cash, up to the full amount of the Allowed
Secured Lender Claims against Premier Graphics, from the proceeds of the Exit
Facility, other than proceeds required by the Reorganized Debtors for working
capital and other purposes, and (ii) to the extent such proceeds from the Exit
Facility are not sufficient to pay the Allowed Secured Lender Claims in full,
Cash to be realized from the Net Proceeds of the Non-Core Assets that comprise
Collateral of the Secured Lenders in accordance with the provisions of Section
-------
7.2 of the Plan up to the remaining unpaid amount of the Allowed Secured Lender
- ---
Claims.
(b) Class P-2 (Warrant Put Note Guaranty Agreement). On, or as
soon as reasonably practicable after, the later of (a) the Effective Date, or
(b) the date on which the Warrant Put Note Guaranty Agreement Claim becomes an
Allowed Warrant Put Note Guaranty Agreement Claim, GE Capital shall receive, in
full satisfaction, settlement, release and discharge of, and in exchange for,
all Warrant Put Note Guaranty Agreement Claims, the New Warrant Put Note
Guaranty Agreement.
(c) Class P-3 (Other Secured Claims against Premier Graphics).
The legal, equitable and contractual rights of the holders of Allowed Other
Secured Claims against Premier Graphics, if any, are unaltered by the Plan. On,
or as soon as reasonably practicable after, the later of (a) the Effective Date,
or (b) the date on which such Other Secured Claim becomes an Allowed Other
Secured Claim, each holder of an Allowed Other Secured Claim against Premier
Graphics shall receive, in full satisfaction, settlement and release of, and in
exchange for, such Allowed Other Secured Claim, at the election of Premier
Graphics or the Reorganized Debtors, (i) Cash equal to the amount of such
Allowed Other Secured Claim; (ii) such other less favorable treatment as to
which Premier Graphics or the Reorganized Debtors and the holder of such Allowed
Other Secured Claim shall agree upon in writing; or (iii) such other treatment
that will not impair the holder of such Allowed Other Secured Claim pursuant to
Section 1124 of the Bankruptcy Code; provided, however, that any Allowed Other
Secured Claim that is not an Allowed Claim on the Effective Date, including any
Allowed Other Secured Claim not due and owing on the Effective Date will be paid
in accordance with this section if and when such Claim becomes Allowed or is due
and owing. Any default that existed with respect to any Other Secured Claim
immediately prior to the Petition Date shall be deemed cured upon the Effective
Date.
(d) Class P-4 (Other Priority Claims against Premier
Graphics). The legal and equitable rights of the holders of Other Priority
Claims against Premier Graphics are unaltered by the Plan. On, or as soon as
reasonably practicable after, the later of (a) the Effective Date, or (b) the
date on which such Other Priority Claim becomes an Allowed Other Priority Claim,
each holder of an Allowed Other Priority Claim shall receive, in full
satisfaction, settlement and release of, and in exchange for, such Allowed Other
Priority Claim, at the election of Premier Graphics or New Operating Company,
(i) Cash equal to the amount of such Allowed Other Priority Claim; (ii) such
other less favorable treatment as to which the Premier Graphics or the
Reorganized Debtors and the holder of such Allowed Other Priority Claim have
agreed upon in writing; or (iii) such Claim will be otherwise treated in any
other manner such that it will not be impaired pursuant to section 1124 of the
Bankruptcy Code; provided, however, that any Allowed Other Priority Claim that
is not an Allowed Claim on the Effective Date, including any Allowed Other
Priority Claim not due and owing on the Effective Date will be paid in
accordance with this section when such Claim becomes due and owing. Any default
with respect to any Other Priority Claim that existed immediately prior to the
Petition Date will be deemed cured on the Effective Date.
(e) Class P-5 (General Unsecured Claims against Premier
Graphics). On the Effective Date, or as soon thereafter as is reasonably
practicable, the Disbursing Agent shall receive on behalf of each holder of an
Allowed General Unsecured Claim against Premier Graphics, in full satisfaction,
settlement, release and discharge of, and in exchange for, each and every
General Unsecured Claim against Premier Graphics, its Pro Rata share of the New
Holding Company
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Common Stock to be distributed Pro Rata by the Disbursing Agent to holders of
Allowed General Unsecured Claims against Premier Graphics, at such times and in
the manner provided in the Plan.
(f) Class P-6 (Administrative Convenience Claims against
Premier Graphics). On, or as soon as reasonably practicable after, the later of
(a) the Effective Date, or (b) the date on which an Administrative Convenience
Claim becomes an Allowed Administrative Convenience Claim, each holder of an
Allowed Administrative Convenience Claim against Premier Graphics shall receive,
in full satisfaction, settlement and release of, and in exchange for, such
Allowed Administrative Convenience Claim, at the election of Premier Graphics or
New Operating Company, (i) Cash in an amount equal to 25% of the amount of such
Allowed Administrative Convenience Claim if the Debtors have sufficient Allowed
Cash and Cash reserves to make Cash payments; or (ii) the same treatment as is
afforded to holders of Allowed Class P-5 General Unsecured Claims against
Premier Graphics if the Debtors determine that there are insufficient Cash and
Cash reserves to make Cash payments pursuant to clause (i). If the latter
election is made, holders of Administrative Convenience Claims shall be deemed
holders of Class P-5 General Unsecured Claims for all purposes (including voting
and distributions) under the Plan. Such election shall be made by the Debtors on
or before the Effective Date.
(g) Class P-7 (Interests in Premier Graphics). On the
Effective Date, the Old Common Stock of Premier Graphics and all other Interests
in Premier Graphics will be cancelled and the holders thereof shall not receive
or retain any distribution on account of such Interests.
5.2 Master Graphics
(a) Class M-1 (Secured Lender Claims against Master
Graphics). On, or as soon as reasonably practicable after, the later of (a) the
Effective Date, or (b) the date on which the Secured Lender Claims against
Master Graphics become Allowed Secured Lender Claims, the holders of Allowed
Secured Lender Claims against Master Graphics shall receive, in full
satisfaction, settlement, release and discharge of, and in exchange for, all
Secured Lender Claims against Master Graphics, the distributions determined
pursuant to Section 5.1(a) of the Plan.
--------------
(b) Class M-2 (Warrant Put Note Claims). On, or as soon as
reasonably practicable after, the later of (a) the Effective Date, or (b) the
date on which the Warrant Put Note Claim becomes an Allowed Warrant Put Note
Claim, GE Capital shall receive, in full satisfaction, settlement, release and
discharge of, and in exchange for, all Claims under the Warrant Put Note, the
New Warrant Put Note.
(c) Class M-3 (Other Secured Claims against Master
Graphics). The legal, equitable and contractual rights of the holders of Allowed
Other Secured Claims, if any, against Master Graphics are unaltered by the Plan.
On, or as soon as reasonably practicable after, the later of (a) the Effective
Date, or (b) the date on which such Other Secured Claim becomes an Allowed Other
Secured Claim, each holder of an Allowed Other Secured Claim against Master
Graphics shall receive, in full satisfaction, settlement and release of, and in
exchange for, such Allowed Other Secured Claim, at the election of the Debtors
or the Reorganized Debtors, (i) Cash equal to the amount of such Allowed Other
Secured Claim; (ii) such other less favorable treatment as to which the Debtors
or the Reorganized Debtors and the holder of such Allowed Other Secured Claim
shall agree upon in writing; or (iii) such other treatment that will not impair
the holder of such Allowed Other Secured Claim pursuant to section 1124 of the
Bankruptcy Code; provided, however, that any Allowed Other Secured Claim that is
not an Allowed Claim on the Effective Date, including any Allowed Other Secured
Claim not due and owing on the Effective Date, will be paid in accordance with
this section if and when such Claim becomes Allowed or is due and owing. Any
default that existed with respect to any Other Secured Claim immediately prior
to the Petition Date shall be deemed cured upon the Effective Date.
(d) Class M-4 (Other Priority Claims). The legal and
equitable rights of the holders of Other Priority Claims, if any, are unaltered
by the Plan. On, or as soon as reasonably practicable after, the later of (a)
the Effective Date, or (b) the date on which such Other Priority Claim becomes
an Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim
shall receive, in full satisfaction, settlement and release of, and in exchange
for, such Allowed Other Priority Claim, at the election of the Debtors or the
Reorganized Debtors, (i) Cash equal to the amount of such Allowed Other Priority
Claim; (ii) such other less favorable treatment as to which the Debtors or the
Reorganized Debtors and the holder of such Allowed Other Priority Claim have
agreed upon in writing; or (iii) such Claim will be otherwise treated in any
other manner such that it will not be impaired pursuant to section 1124 of the
Bankruptcy Code; provided, however, that any Allowed Other Priority Claim that
is not an Allowed Claim on the Effective Date, including any Allowed Other
Priority Claim not due
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and owing on the Effective Date will be paid in accordance with this section if
and when such Claim becomes Allowed or is due and owing. Any default with
respect to any Other Priority Claim that existed immediately prior to the
Petition Date will be deemed cured on the Effective Date.
(e) Class M-5 (General Unsecured Claims against Master
Graphics). The holders of General Unsecured Claims against Master Graphics shall
not receive or retain any distribution of property under the Plan on account of
such Claims and all such Claims shall be cancelled and extinguished on the
Effective Date.
(f) Class M-6 (Interests in Master Graphics). On the
Effective Date, the Old Common Stock of Master Graphics and all other Interests
in Master Graphics will be cancelled and the holders thereof shall not receive
or retain any distribution on account of such Interests.
5.3 Special Provision Regarding Unimpaired Claims. Except as
otherwise provided in the Plan, nothing shall affect the Debtors' or the
Reorganized Debtors' rights and defenses, both legal and equitable, with respect
to any Unimpaired Claims, including, but not limited to, all rights with respect
to legal and equitable defenses to setoffs or recoupments against Unimpaired
Claims.
ARTICLE VI
ACCEPTANCE OR REJECTION OF THE PLAN
6.1 Classes Entitled to Vote. Subject to Sections 6.3 and 6.4
------------ ---
of the Plan, 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. Votes
will be separately tabulated by each of the Debtors with respect to each Plan
that is contained in this joint Plan.
6.2 Acceptance by Impaired Classes. 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.
6.3 Presumed Acceptances by Unimpaired Classes. Classes P-3,
P-4, M-3 and M-4 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.
6.4 Classes Deemed to Reject Plan. Classes P-7, M-5 and M-6 are
not entitled to receive or retain any property under the Plan. Under section
1126(g) of the Bankruptcy Code, Claim holders and Interest holders in such
Classes are deemed to reject the Plan, and the votes of such Claim holders and
Interest holders will not be solicited.
6.5 Summary of Classes Voting on the Plan As a result of the
provisions of Sections 6.1, 6.3 and 6.4 of this Plan, the votes of holders of
------------ --- ---
Claims in the following Classes will be solicited with respect to this Plan:
P-1, P-2, P-5, P-6, M-1, and M-2, provided, however, that to the extent that the
holders of Class P-1 or Class M-1 Secured Claims receive Cash in full
satisfaction of the Allowed amount of their Claims on the later of the Effective
Date or the date that such Claims are Allowed, such Secured Lender Claims are
Unimpaired and shall be deemed to have accepted the Plan
6.6 Confirmation Pursuant to Section 1129(b) of the Bankruptcy
Code. To the extent that any Impaired Class entitled to vote rejects the Plan or
is deemed to have rejected the Plan, the Debtors will request confirmation of
the Plan, as it may be modified from time to time, under section 1129(b) of the
Bankruptcy Code.
6.7 Confirmability and Severability of a Plan. The confirmation
requirements of section 1129 of the Bankruptcy Code must be satisfied separately
with respect to each Debtor. The Debtors reserve the right to alter, amend,
modify, revoke or withdraw the Plan as it applies to any particular Debtor or
any Exhibit or Plan Schedule. A determination by the Bankruptcy Court that the
Plan, as it applies to any particular Debtor, is not confirmable pursuant to
section 1129 of the Bankruptcy Code shall not limit or affect: (a) the
confirmability of the Plan as it applies to any other Debtor, or (b) the
Debtors' ability to modify the Plan, as it applies to any particular Debtor, to
satisfy the confirmation requirements of section 129 of the Bankruptcy Code.
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ARTICLE VII
MEANS FOR IMPLEMENTATION OF THE PLAN
7.1 Corporate Existence.
(a) On, or as soon as reasonably practicable after, the
Effective Date, all appropriate actions shall be taken, in accordance with the
terms of Section 7.7 of the Plan, to (i) wind-up and terminate the corporate
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existence of Master Graphics under the laws of Tennessee; (ii) form New Holding
Company and New Operating Company pursuant to the Certificates of Incorporation
and By-laws; (iii) transfer all of the assets of Premier Graphics, other than
the Non-Core Assets and Causes of Action, to a creditor representative
designated by the Debtors, who shall in turn transfer such assets to New Holding
Company, which shall in turn transfer such assets to New Operating Company, and
(iv) issue all of the New Operating Company Common Stock to New Holding Company.
(b) Notwithstanding anything to the contrary in this Plan,
the Unimpaired Claims of a particular Debtor shall remain the obligations solely
of such Debtor and shall not become obligations of any other Debtor by virtue of
the Plan, the Chapter 11 Cases, or otherwise.
7.2 Vesting, Retention, and Disposition of Assets
(a) The Non-Core Assets and Causes of Action shall remain
property of the Estate of Premier Graphics, provided, however, that, if agreed
to by the Debtors, the Committee, and, to the extent there is insufficient Cash
to pay in full the Secured Lender Claims, the Prepetition Lenders, the Non-Core
Assets and Causes of Action may be transferred to a disposition trust, limited
liability company or other entity to be controlled by New Operating Company. The
Estate or such other entity, at the direction of the Reorganized Debtors, shall
have full authority, to take any steps necessary to investigate and prosecute
the Causes of Action and to dispose of the Non-Core Assets consistent with
procedures approved by the Bankruptcy Court and sections 363 and 365 of the
Bankruptcy Code, including, without limitation, the duty and obligation to make
distributions to the holders of Allowed Claims in Classes P-1 and M-1. All liens
and security interests, if any, in the Non-Core Assets and Causes of Action
shall remain intact and attach to the Net Proceeds therefrom to the same extent,
validity and relative priority as existed on the Effective Date. Any property or
proceeds remaining in the estate or such other entity after satisfaction of all
Allowed Secured Lender Claims shall be transferred to the New Operating Company.
(b) Upon the making of such Cash payments or the provision
of such other treatment as may be mutually agreed upon by the Debtors and the
Prepetition Lenders, the Prepetition Credit Agreement shall be terminated and
any notes issued thereunder shall be cancelled. To the extent that any
termination statements, instruments of satisfaction, or other similar releases
of interests necessary to terminate or otherwise remove from title or record any
filed financing statements, mortgages, or other documents or agreements
evidencing a security interest in the Debtors assets shall not have been
delivered to the Reorganized Debtors in proper form for filing and executed by
the appropriate parties prior to, or in connection with, such satisfaction of
the Secured Lender Claims, then the Reorganized Debtors are hereby authorized to
(a) execute and file such statements, instruments, releases or other documents
on behalf of the Prepetition Agent or Secured Lenders with respect to the
encumbered assets and (b) to file, register, or otherwise record a certified
copy of the Confirmation Order, which, once filed, registered or otherwise
recorded, shall constitute conclusive evidence of the release of all security
interests in the Debtors' assets of any kind or nature whatsoever.
(c) On and after the Effective Date, the Reorganized
Debtors may operate their businesses and may use, acquire and dispose of
property and compromise or settle any claims or interests arising or becoming
due on or after the Effective Date without supervision of or approval by the
Bankruptcy Court and free and clear of any restrictions of the Bankruptcy Code
or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan
or the Confirmation Order. Without limiting the foregoing, the Reorganized
Debtors may pay the reasonable charges that they incur on or after the Effective
Date for Professionals' fees, disbursements, expenses or related support
services without application to the Bankruptcy Court.
7.3 Directors and Officers of the Reorganized Debtors. Subject
to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5)
of the Bankruptcy Code, as of the Effective Date, the initial boards of
directors of the
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Reorganized Debtors shall each have five (5) directors. The Chief Executive
Officer shall serve as chairman of the boards of directors and shall be entitled
to appoint one additional director. The Chief Executive Officer, chief financial
officer, and those directors not chosen initially by the Chief Executive Officer
shall be appointed by the Creditors' Committee in consultation with the Debtors
and shall be reasonably acceptable to the Chief Executive Officer. The Debtors
shall file with the Bankruptcy Court written notice of the identities of the
Chief Executive Officer, the other initial officers of the Reorganized Debtors
and the members of the boards of directors on a date that is not less than five
(5) days prior to the Confirmation Hearing. Notwithstanding the foregoing, if
and to the extent that the Creditors' Committee does not designate one or more
of the foregoing officers or directors within five (5) days prior to the
Confirmation Hearing, the Debtors shall designate and appoint such Persons by
announcing their identities at the Confirmation Hearing. The current boards of
directors of the Debtors will be deemed to have resigned on the Effective Date
without further action on the part of such boards or the Debtors.
7.4 Certificates of Incorporation and By-laws. The certificates
of incorporation and by-laws of each of the Reorganized Premier Graphics and New
Operating Company shall be structured or amended as necessary to satisfy the
provisions of the Plan and the Bankruptcy Code, substantially in the form of
Exhibits A and B and in form and substance reasonably satisfactory to the
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Creditors' Committee, and shall include, among other things, (a) 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; and (b) provisions authorizing the issuance
of New Operating Company Common Stock and New Holding Company Common Stock in
amounts not less than the amounts necessary to permit the distributions thereof
required or contemplated by the Plan. After the Effective Date, the Reorganized
Debtors may amend and restate the Certificates of Incorporation and By-laws as
permitted by applicable law.
7.5 Corporate Action. On the Effective Date, the adoption of the
Certificates of Incorporation or similar constituent documents, the adoption of
the By-laws, the selection of directors and officers for the Reorganized
Debtors, and all other actions contemplated by the Plan shall be authorized and
approved in all respects (subject to the provisions of the Plan). All matters
provided for in the Plan involving the corporate structure of the Debtors or the
Reorganized Debtors, and any corporate action required by the Debtors or the
Reorganized Debtors in connection with the Plan, shall, as of the Effective
Date, be deemed to have occurred and shall be effective as provided herein, and
shall be authorized and approved in all respects without any requirement of
further action by the security holders or directors of the Debtors and the
Reorganized Debtors.
7.6 Cancellation of Existing Securities. On the Effective Date,
except as otherwise provided for in the Plan, (a) the Existing Securities and
any other notes, bonds (with the exception of surety bonds outstanding),
indentures or other instruments or documents evidencing or creating any
indebtedness or obligations 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 cancelled without any further
action, provided, however, that such notes or other instruments shall remain
valid solely to the extent necessary to establish ownership for purposes of the
distributions under the Plan, and (b) the obligations of, and/or Claims against,
the Debtors under or relating to any agreements, indentures or certificates of
designation governing the Existing Securities and any other notes, bonds,
indentures or other instruments or documents evidencing or creating any
indebtedness or obligations 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 discharged;
provided, however, that each indenture or other agreement that governs the
rights of the Claim holder and that is administered by an indenture trustee, an
agent or a servicer shall continue in effect solely for the purposes of allowing
such indenture trustee, agent or servicer to make the distributions to be made
on account of such Claims under the Plan as provided in Article IX of the Plan
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and with respect to rights solely between the Claim holders and the respective
indenture trustees, agents or servicers (such as an indenture trustee charging
liens); provided, further, that this proviso shall not affect the discharge of
the Debtors' or the Reorganized Debtors' liabilities under the Bankruptcy Code
and the Confirmation Order or result in any expense or liability to the
Reorganized Debtors.
7.7 Issuance of New Securities and Related Documentation. On the
Effective Date, the Reorganized Debtors shall issue (i) for distribution in
accordance with the terms of the Plan, the New Holding Company Common Stock to
the Disbursing Agent for the benefit of the holders of Allowed Class P-5 Claims,
and (ii) the New Operating Company Common Stock to New Holding Company. The
issuance of the New Holding Company Common Stock and the distribution thereof to
holders of Allowed Class P-5 Claims shall be exempt from registration under
applicable securities laws pursuant to section 1145(a) of the Bankruptcy Code.
Without limiting the effect of section 1145 of the Bankruptcy Code, not earlier
than the first anniversary of the Effective Date, New Holding Company will enter
into a Registration Rights Agreement, substantially in the form of Exhibit C to
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be filed on or before the Exhibit Filing Date, with each holder of an Allowed
Class P-5 Claim (a) who by
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virtue of holding New Holding Company Common Stock to be distributed under the
Plan and/or its relationship with New Holding Company could reasonably be deemed
to be an "affiliate" (as such term is used within the meaning of applicable
securities laws) of New Holding Company, and (b) who requests in writing that
New Holding Company execute such agreement. The Registration Rights Agreements
shall contain certain shelf, demand and piggyback registration rights for the
benefit of the signatories thereto.
7.8 Sources of Cash for Plan Distributions. Except as otherwise
provided in the Plan or the Confirmation Order, all Cash necessary for the
Reorganized Debtors to make payments pursuant to the Plan shall be obtained from
existing Cash balances, the operations of the Debtors and the Reorganized
Debtors, the proceeds from the disposition of the Non-Core Assets, and the
proceeds from the Exit Facility. The principal documents with respect to the
Exit Facility shall be filed by the Debtors with the Bankruptcy Court no later
than the Exhibit Filing Date. In the Confirmation Order, the Bankruptcy Court
shall approve the Exit Facility and all documents to be executed in connection
therewith in substantially the form filed with the Bankruptcy Court (and with
such changes as to which the Debtors and Lenders may agree) and authorize the
Debtors to execute same together with such other documents as the Debtors and
the lenders may reasonably require in order to effectuate the treatment afforded
to such parties under the Exit Facility.
7.9 Exemption from Certain Transfer Taxes. Pursuant to section
1146(c) of the Bankruptcy Code, any transfers from the Debtors to the
Reorganized Debtors or otherwise pursuant to the Plan shall not be subject to
any document recording tax, stamp tax, conveyance fee, intangibles or similar
tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax
or other similar tax or governmental assessment, and the Confirmation Order
shall direct the appropriate state or local governmental officials or agents to
forgo the collection of any such tax or governmental assessment and to accept
for filing and recordation any of the foregoing instruments or other documents
without the payment of any such tax or governmental assessment.
7.10 Effectuating Documents; Further Transactions. On the
Effective Date, the Chief Executive Officer and other executive officers of the
Reorganized Debtors shall be authorized and directed to issue, execute, deliver
file or record the contracts, instruments, securities, releases, and other
agreements or documents contemplated by the Plan in the name of and on behalf of
the Reorganized Debtors. The secretary or assistant secretary of the Reorganized
Debtors shall be authorized to certify or attest to any of the foregoing
actions.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
8.1 Assumption of Executory Contracts and Unexpired Leases.
Each executory contract or unexpired lease as to which any of the Debtors is a
party, including those listed in Plan Schedule 8.1, shall be deemed
-----------------
automatically assumed in accordance with the provisions and requirements of
sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, unless
such executory contract or unexpired lease (i) shall have been previously
rejected by the Debtors by order of the Bankruptcy Court, (ii) is the subject of
a motion to reject pending on or before the Effective Date, (iii) is listed on
Plan Schedule 8.2 attached hereto, or (iv) is otherwise rejected pursuant to
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the terms of the Plan. Entry of the Confirmation Order by the Bankruptcy Court
shall constitute approval of such assumptions and rejections pursuant to
sections 365 and 1123 of the Bankruptcy Code. Each executory contract and
unexpired lease assumed pursuant to this Section 8.1 shall vest in and be fully
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enforceable by the Reorganized Debtors in accordance with its terms, except as
modified by the provisions of the Plan, or any order of the Bankruptcy Court
authorizing and providing for its assumption or applicable federal law.
Each executory contract and unexpired lease that is assumed and
relates to the use, ability to acquire or occupancy of real property shall
include (a) all modifications, amendments, supplements, restatements or other
agreements made directly or indirectly by any agreement, instrument or other
document that in any manner affect such executory contract or unexpired lease
and (b) 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
and any other interests in real estate or rights in rem related to such
premises, unless any of the foregoing agreements has been rejected pursuant to a
Final Order of the Bankruptcy Court or is otherwise rejected as a part of this
Plan.
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8.2 Rejection of Executory Contracts and Unexpired Leases. The
executory contracts and unexpired leases specifically listed on Plan Schedule
-------------
8.2 of the Plan as rejected as of the Effective Date shall be deemed
- ---
automatically rejected as of the Effective Date and the remaining executory
contracts and leases identified on Plan Schedule 8.2 shall be deemed rejected
-----------------
ten (10) days after the Debtors or the Reorganized Debtors serve written notice
on the parties to such executory contracts and unexpired leases of the effective
date of the rejection of such executory contracts and unexpired leases. As to
those rejected executory contracts an unexpired leases rejected effective after
the Effective Date, the Reorganized Debtors shall continue to perform their
obligations thereunder until the effective date of such rejections. The Debtors
reserve the right to (a) file a motion on or before the Confirmation Date to
reject an executory contract or unexpired lease that (i) is not listed on Plan
----
Schedule 8.2, or (ii) has not been previously rejected by Final Order of the
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Bankruptcy Court, and (b) modify or supplement Plan Schedule 8.2 at any time
-----------------
prior to the Effective Date, including, without limitation, the right to add any
executory contract or unexpired lease to, or delete any executory contract or
unexpired lease from, Plan Schedule 8.2.
-----------------
8.3 Cure of Defaults of Assumed Executory Contracts and
Unexpired Leases. Any monetary amounts by which each executory contract and
unexpired lease to be assumed under the Plan may be in default shall be
satisfied, under section 365(b)(1) of the Bankruptcy Code by Cure. In the event
of a dispute regarding (a) the nature or the amount of any Cure, (b) the ability
of the applicable Reorganized Debtor or any assignee to provide "adequate
assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed, or (c) any other
matter pertaining to assumption, Cure shall occur following the entry of a Final
Order resolving the dispute and approving the assumption.
8.4 Claims Based on Rejection of Executory Contracts or
Unexpired Leases . 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
Debtors, the Reorganized Debtor, or the properties of any 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, if served after the
Effective Date, counsel to the Reorganized Debtors (a) entry of the Confirmation
Order with respect to executory contracts and unexpired leases listed on Plan
----
Schedule 8.2 as rejected as of the Effective Date, or (b), within thirty (30)
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days after service of notice of the effective date of rejection of any other
executory contract or unexpired lease listed on Plan Schedule 8.2. To the extent
-----------------
a proof of claim is timely filed in connection with the rejection of an
executory contract or unexpired lease, such Claim will be, and will be treated
as, a General Unsecured Claim as to the respective Debtor, subject to any
limitation on allowance of such Claims under section 502(b) of the Bankruptcy
Code or otherwise.
ARTICLE IX
PROVISIONS GOVERNING DISTRIBUTIONS
9.1 Time of Distributions. Except as otherwise provided for
herein or ordered by the Bankruptcy Court, distributions under the Plan on
account of an Allowed Claim shall be made on the later to occur of (a) the
Effective Date (or as soon thereafter as is practicable), or (b) as soon as
reasonably practicable after such Claim becomes an Allowed Claim, or as
otherwise provided by this Plan.
9.2 Interest on Claims. Unless otherwise specifically provided
for in the Plan, the Confirmation Order, or required by applicable bankruptcy
law, postpetition interest shall not accrue or be paid on Claims, and no Claim
holder shall be entitled to interest accruing on or after the Petition Date on
any Claim. To the extent provided for in the Plan, the Confirmation Order, or
required by applicable bankruptcy law, postpetition interest shall accrue on
Claims at the applicable non-default rate. Interest shall not accrue or be paid
upon any Disputed Claim in respect of the period from the Petition Date to the
Effective Date, but shall accrue from the Effective Date until such time that
the Disputed Claim becomes an Allowed Claim.
9.3 Disbursing Agent. The Disbursing Agent shall make all
distributions required under this Plan, except that (a) the Indenture Trustee,
as agent or servicer, shall make distributions of New Holding Company Common
Stock and proceeds, if any, from Causes of Action to holders of Allowed Senior
Note Claims in accordance with the Indenture, and (b) the Prepetition
Administrative Agent shall make distributions to holders of Allowed Secured
Lender Claims from the proceeds of sale of the Non-Core Assets. The Disbursing
Agent shall reasonably cooperate with the Indenture Trustee, as agent or
servicer, and the Prepetition Administrative Agent in making distributions in
accordance with this Plan.
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9.4 Delivery of Distributions. Distributions to Allowed Claim
holders shall be made by the Disbursing Agent (including the Trustee under the
Creditors' Trust, if applicable), the Indenture Trustee (as agent or servicer),
or the Prepetition Administrative Agent (for purposes of this paragraph, the
"applicable disbursing agent") (a) at the addresses set forth on the proofs of
claim filed by such Claim holders (or at the last known addresses of such Claim
holders if no proof of claim is filed or if the Debtors have been notified of a
change of address), (b) at the addresses set forth in any written notices of
address changes delivered to the applicable disbursing agent after the date of
any related proof of claim, (c) at the addresses reflected in the Schedules if
no proof of claim has been filed and the applicable disbursing agent has not
received a written notice of a change of address, or (d) in the case of a Claim
holder whose Claim is governed by the Indenture or other agreement and is
administered by the Indenture Trustee, at the addresses contained in the
official records of the Indenture Trustee, including as set forth in any ballots
cast with respect to such Claims. Distributions made to holders of Claims by the
Indenture Trustee or the Prepetition Administrative Agent shall be subject to
the rights of the Indenture Trustee and the Prepetition Administrative Agent
under the Indenture, Prepetition Credit Agreement, or similar contract or
agreement to enforce any charging liens thereunder. If any Claim holder's
distribution is returned as undeliverable, no further distributions to such
Claim holder shall be made unless and until the applicable disbursing agent is
notified of such Claim holder's then current address, at which time all missed
distributions shall be made to such Claim holder without interest. Amounts in
respect of undeliverable distributions shall be returned to (x) the Indenture
Trustee, with respect to Senior Note Claims or (y) New Operating Company with
respect to distributions made by any other applicable disbursing agent, until
such distributions are claimed. All claims for undeliverable distributions shall
be made on or before the first (1st) anniversary of the Effective Date. After
such date, all unclaimed property relating to distributions shall revert to New
Operating Company and any New Holding Company Common Stock held for distribution
on account of such Claim shall be cancelled and of no further force or effect
and all the other unclaimed property shall revert to New Operating Company, free
of any restrictions thereon and notwithstanding any federal or state escheat
laws to the contrary. Nothing contained in the Plan shall require any of the
applicable disbursing agents to attempt to locate any holder of an Allowed Claim
or Interest.
9.5 Record Date for Distributions. At the close of business on
the Record Date, the transfer ledgers of the Indenture Trustee, or other agents
and servicers of the Senior Notes shall be closed, and there shall be no further
changes in the record holders of the Senior Notes. The Reorganized Debtors, the
Indenture Trustee, and any other agents and servicers for the Senior Notes shall
have no obligation to recognize any transfer of the Senior Notes occurring after
the Record Date. The Reorganized Debtors, the Indenture Trustee, and any other
agents and servicers for the Senior Notes shall be entitled instead to recognize
and deal for all purposes hereunder with only those record holders stated on the
transfer ledgers as of the close of business on the Record Date.
9.6 Surrender of Securities and Instruments. On or before the
date that distributions are first made by the Disbursing Agent, each holder of
an instrument evidencing a Claim on account of Senior Notes (a "Certificate")
shall surrender such Certificate to the Indenture Trustee who shall then deliver
such Certificate to the Disbursing Agent in accordance with written instructions
to be provided to such holder by the Indenture Trustee as promptly as
practicable following the Effective Date, and such Certificate shall be
cancelled. Such instructions shall specify that delivery of such Certificate
will be effected, and risk of loss and title thereto will pass, only upon the
proper delivery of such Certificate with a letter of transmittal in accordance
with such instructions. No distribution of property hereunder shall be made to
or on behalf of any such Claim holder unless and until such Certificate is
received by the Disbursing Agent or the unavailability of such Certificate is
reasonably established to the satisfaction of the Disbursing Agent. Any such
Claim holder who fails to surrender or cause to be surrendered such Certificate
or fails to execute and deliver an affidavit of loss and indemnity holding the
Reorganized Debtors, the Disbursing Agent, the Indenture Trustee, or any other
applicable agent or servicer, harmless from any damages, liabilities or costs
incurred in treating such individual as a holder of an Allowed Claim and
otherwise reasonably satisfactory to the Reorganized Debtors, the Disbursing
Agent, the Indenture Trustee, or any other applicable agent or servicer, prior
to the first (1st) anniversary of the Effective Date, shall be deemed to have
forfeited, and shall be forever barred from asserting, any and all rights and
Claims in respect of such Certificate and shall not participate in any
distribution hereunder, and all property in respect of such forfeited
distribution, including interest accrued thereon, shall revert to New Operating
Company notwithstanding any federal or state escheat laws to the contrary. Upon
compliance with this Section 9.6 by a holder of a Claim evidenced by a Senior
-----------
Note, such holder shall, for all purposes under the Plan, be deemed to have
surrendered such note or other Security.
9.7 Services of Indenture Trustees, Agents and Servicers. The
services, with respect to consummation of the Plan, of the Indenture Trustee,
including the reasonable fees and expenses of its counsel, under the Indenture
and other agreements that govern the rights of holders of the Senior Notes,
shall be as set forth elsewhere in this Plan. Notwithstanding
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the foregoing, New Operating Company shall reimburse the Indenture Trustee and
any other agent or servicer for reasonable and necessary services performed by
them as contemplated in this Plan.
9.8 Allocation of Plan Distributions Between Principal and
Interest. To the extent that any Allowed Claim entitled to a distribution under
the Plan is comprised of indebtedness and accrued but unpaid interest thereon,
such distribution shall, for federal income tax purposes, be allocated to the
principal amount of the Claim first and then, to the extent the consideration
exceeds the principal amount of the claim, to the portion of such Claim
representing accrued but unpaid interest.
9.9 Withholding and Reporting Requirements. The Reorganized
Debtors and the Disbursing Agent (including the Trustee of the Creditors' Trust,
if applicable), as the case may be, shall be authorized to take any and all
actions that may be necessary or appropriate to comply with all withholding and
reporting requirements imposed by any federal, state, local or foreign taxing
authority and all distributions hereunder shall be subject to such withholding
and reporting requirements. All entities holding Claims or Interests shall be
required to provide any information necessary to effect the withholding of such
taxes. Notwithstanding any other provision of the Plan (i) each holder of an
Allowed Claim that is to receive a distribution of New Holding Company Common
Stock 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 (ii) 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 Reorganized Debtors and the Disbursing Agent,
as the case may be, for the payment and satisfaction of such tax obligations.
Any New Holding Company Common Stock to be distributed pursuant to the Plan
shall, pending the implementation of such arrangements, be treated as an
undeliverable distribution pursuant to the Plan.
9.10 Means of Cash Payment. Payments of Cash made pursuant to
the Plan shall be in U.S. dollars and shall be made, at the option and in the
sole discretion of the Reorganized Debtors, by (a) checks drawn on, or (b) wire
transfer from a domestic bank selected by the Reorganized Debtors. Cash payments
to foreign creditors may be made, at the option of the Reorganized Debtors, in
such funds and by such means as are necessary or customary in a particular
foreign jurisdiction. Notwithstanding the foregoing, payments of Allowed DIP
Facility Claims and Allowed Secured Lender Claims shall be made by wire
transfer.
9.11 Fractional Shares. Any other provision of the Plan
notwithstanding, payments of fractions of shares of New Holding Company Common
Stock shall not be made. Whenever any payment of a fraction of a share of New
Holding Company Common Stock under the Plan would otherwise be called for, the
actual payment made shall reflect a rounding of such fraction to the nearest
whole share (up or down), with half shares being rounded down.
9.12 Setoffs. The Reorganized Debtors may, pursuant to section
553 of the Bankruptcy Code or applicable nonbankruptcy laws, but shall not be
required to, set off against any 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, the Reorganized Debtors, may have against the
holder of such Claim; provided, however, that neither the failure to do so nor
the allowance of any Claim hereunder shall constitute a waiver or release by the
Debtors or the Reorganized Debtors of any such claim that the Debtors or the
Reorganized Debtors may have against such holder.
ARTICLE X
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
10.1 Claims Administration Responsibility. Each Reorganized
Debtor (or such other Person designated by the Reorganized Debtors to act on
their behalf, including the Trustee) shall retain responsibility for
administering, disputing, objecting to, compromising or otherwise resolving and
making distributions on account of the respective Claims of such Debtor.
10.2 Objection Deadline; Prosecution of Objections. No later
than the Claims Objection Deadline (as may be extended by an order of the
Bankruptcy Court), the Debtors or the Reorganized Debtors shall file objections
to Claims with the Bankruptcy Court and serve such objections upon the holders
of each of the Claims to which objections are made, provided, however, the
Debtors and the Reorganized Debtors shall not object to Claims specifically
Allowed pursuant to the
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Plan. Nothing contained herein, however, shall limit the right of the
Reorganized Debtors to object to Claims, if any, filed or amended after the
Claims Objection Deadline. The Debtors and the Reorganized Debtors shall be
authorized to, and shall, resolve all Disputed Claims by withdrawing or settling
such objections thereto, or by litigating to judgment in the Bankruptcy Court or
such other court having jurisdiction the validity, nature and/or amount thereof.
10.3 No Distributions Pending Allowance. No payments or
distributions will be made with respect to all or any portion of a Disputed
Claim unless and until all objections to such Disputed Claim have been settled
or withdrawn or have been determined by a Final Order, and the Disputed Claim
has become an Allowed Claim. All objections to Claims must be filed on or before
the Claims Objection Deadline.
10.4 Disputed Claims Reserve. The Disbursing Agent shall
withhold the Distribution Reserve from the property to be distributed to
particular classes under the Plan based upon the Face Amount of Disputed Claims
as directed by the Reorganized Debtors. The Disbursing Agent shall withhold such
amounts or property as may be necessary from property to be distributed to other
Classes of Claims under the Plan based upon the Face Amount of such Claims. The
Reorganized Debtors or their designated Disbursing Agent may request estimation
for any Disputed Claim that is contingent or unliquidated, and the Disbursing
Agent will withhold the applicable Distribution Reserve based upon the estimated
amount of each such Claim as estimated by the Bankruptcy Court. If the
Reorganized Debtors or their designated Disbursing Agent elects not to request
such an estimation from the Bankruptcy Court with respect to a Disputed Claim
that is contingent or unliquidated, the Disbursing Agent shall withhold the
applicable Distribution Reserve based upon the good faith estimate of the
Reorganized Debtors or their designated Disbursing Agent of such Claim. The
Disbursing Agent shall also place in the applicable Distribution Reserve any
dividends, payments or other distributions made on account of, as well as any
obligations arising from, the property withheld as the applicable Distribution
Reserve, to the extent that such property continues to be withheld as the
applicable Distribution Reserve at the time such distributions are made or such
obligations arise. If practicable, the Disbursing Agent will invest any Cash
that is withheld as the applicable Distribution Reserve in a manner that will
yield a reasonable net return, taking into account the safety of the investment.
Nothing in this Plan or the Disclosure Statement shall be deemed to entitle the
holder of a Disputed Claim to postpetition interest on such Claim.
10.5 Distributions After Allowance. Payments and distributions
from the Distribution Reserve shall be made as appropriate to the holder of any
Disputed Claim that has become an Allowed Claim, as soon as practicable after
the date such Disputed Claim becomes an Allowed Claim. Such distributions shall
be based upon the cumulative distributions that would have been made to the
holder of such Claim under the Plan if the Disputed Claim had been Allowed on
the Effective Date and shall not be limited by the Disputed Claim Amounts
previously reserved with respect to such Disputed Claim to the extent that
additional amounts are available therefor, but only to the extent that such
additional amounts have not yet been distributed to holders of Allowed Claims.
Upon such distribution, the reserve shall be reduced by an amount equal to the
amount reserved with respect to such Disputed Claim. After a Final Order has
been entered, or other final resolution has been reached, with respect to all
Class P-5 Disputed Claims, any remaining New Holding Company Common Stock shall
be distributed, Pro Rata, to Allowed Class P-5 Claims.
ARTICLE XI
ALLOWANCE AND PAYMENT OF CERTAIN
ADMINISTRATIVE CLAIMS
11.1 DIP Facility Claims. On or as soon as reasonably
practicable after the Effective Date, the Allowed DIP Facility Claims shall be
paid in full in Cash. Any disputes as to the Allowed amount of such DIP Facility
Claims shall be resolved by the Bankruptcy Court as soon as reasonably
practicable upon motion by the Debtors after notice to the DIP Lenders;
provided, however, that any amount of such Claims that is not disputed shall be
paid by the Debtors in full in Cash on the Effective Date and only the balance
of such Claims, if any, shall be treated as a Disputed Claim. Upon compliance
with the foregoing, all liens and security interests granted to secure the DIP
Facility Claims shall be deemed cancelled and shall be of no further force or
effect. To the extent that any termination statements, instruments of
satisfaction, or other similar releases of interests necessary to terminate or
otherwise remove from title or record any filed financing statements, mortgages,
or other documents or agreements evidencing a security interest in the Debtors
assets shall not have been delivered to the Debtors or the Reorganized Debtors
in proper form for filing and executed by the appropriate parties prior to, or
in connection with, such satisfaction of the DIP Facility Claims, then the
Debtors and the Reorganized Debtors are hereby authorized to (a) execute and
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file such statements, instruments, releases or other documents on behalf of the
Postpetition Agent or the DIP Lenders with respect to the encumbered assets and
(b) to file, register, or otherwise record a certified copy of the Confirmation
Order, which, once filed, registered or otherwise recorded, shall constitute
conclusive evidence of the release of all security interests in the Debtors' and
the Reorganized Debtors' assets of any kind or nature whatsoever.
11.2 Professional Claims.
(a) On the Effective Date, the Debtors shall pay all
amounts owing to Professionals for all outstanding amounts relating to prior
periods through the Effective Date approved by the Bankruptcy Court in
accordance with the Professional Fee Order; provided, however, that
Professionals shall continue to prepare monthly fee applications in accordance
with the Professionals Fee Order up to the Effective Date. Professionals shall
estimate fees and expenses the Effective Date. On the Effective Date, the
Reorganized Debtors shall fund an escrow account in an amount equal to the
aggregate amount of outstanding fee applications not ruled upon by the
Bankruptcy Court as of the Effective Date plus the aggregate amount of all
estimated fees and expenses due for periods that have not been billed as of the
Effective Date. Such escrow account shall be used by the Reorganized Debtors to
pay the remaining Professional Claims owing to the Professionals as and when
Allowed by the Bankruptcy Court. When all Professional Claims have been paid in
full, amounts remaining in such escrow account, if any, shall be returned to the
Reorganized Debtors.
(b) All Professionals or other entities requesting
compensation or reimbursement of expenses pursuant to sections 327, 328, 330,
331, 503(b) and 1103 of the Bankruptcy Code for services rendered before the
Effective Date (including compensation for making a substantial contribution in
any of the Chapter 11 Cases) shall file with the Bankruptcy Court and serve such
applications on counsel for the Debtors, the Creditors' Committee, the United
States Trustee and as otherwise required by the Bankruptcy Court and the
Bankruptcy Code an application for final allowance of compensation and
reimbursement of expenses no later than forty-five (45) days after the Effective
Date. Objections to applications of Professionals and other entities for
compensation and reimbursement of expenses must be filed with the Bankruptcy
Court no later than sixty-five (65) days after the Effective Date. All
compensation and reimbursement of expenses allowed by the Bankruptcy Court shall
be paid ten (10) days after the entry of an Order allowing such fees and
expenses, or as soon thereafter as practicable.
11.3 Other Administrative Claims. All other requests for
payment of an Administrative Claim, including fees for the Indenture Trustee and
its counsel (other than as set forth in Section 11.2 of this Plan), must be
filed with the Bankruptcy Court and served on counsel for the Debtors and/or the
Reorganized Debtors no later than 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 that the Debtors object 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.
ARTICLE XII
CONFIRMATION AND CONSUMMATION OF THE PLAN
12.1 Conditions to Confirmation. The following are conditions
precedent to confirmation of the Plan that may be satisfied or waived in
accordance with Section 12.2 of the Plan:
------------
(a) The Bankruptcy Court shall have approved by Final Order
a Disclosure Statement with respect to the Plan in form and substance reasonably
acceptable to the Debtors.
(b) The Confirmation Order shall be in form and substance
reasonably acceptable to the Debtors.
12.2 Conditions to Effective Date. The following are conditions
precedent to the occurrence of the Effective Date:
(a) The Debtors shall have entered into the Exit Facility
and all conditions precedent to the consummation thereof shall have been waived
or satisfied in accordance with the terms thereof.
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(b) The Debtors or the Reorganized Debtors shall have Cash
on hand sufficient to pay all Allowed Claims and to make any other payments
required to be paid under this Plan by the Debtors or the Reorganized Debtors on
or as soon as practicable after the Effective Date.
(c) The Confirmation Order shall be in form and substance
acceptable to the Debtors and shall have been entered by the Bankruptcy Court
and shall be a Final Order, and no request for revocation of the Confirmation
Order under section 1144 of the Bankruptcy Code shall have been made, or, if
made, shall remain pending.
(d) Any order necessary to satisfy any condition to the
effectiveness of the Plan shall have become a Final Order and all documents
provided for under the Plan shall have been executed and delivered by the
parties thereto.
12.3 Waiver of Conditions. The conditions set forth in Sections
--------
12.1 and 12.2 of the Plan may be waived, in whole or in part, by the Debtors in
- ---- ----
their sole discretion without notice to any other parties in interest or the
Bankruptcy Court and without a hearing. The failure to satisfy or waive any
condition to the Confirmation Date or the Effective Date may be asserted by the
Debtors in their sole discretion regardless of the circumstances giving rise to
the failure of such condition to be satisfied (including any action or inaction
by the Debtors in their sole discretion). The failure of the Debtors in their
sole discretion to exercise any of the foregoing rights shall not be deemed a
waiver of any other rights, and each such right shall be deemed an ongoing
right, which may be asserted at any time.
ARTICLE XIII
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
13.1 Discharge of the Debtors.
(a) Pursuant to sections 524 and 1141(d) of the Bankruptcy
Code, and except as otherwise specifically provided in this Plan or in the
Confirmation Order, the distributions and rights that are provided in this Plan
shall be in complete satisfaction, discharge and release, effective as of the
Confirmation Date (but subject to the occurrence of the Effective Date), of
Claims and Causes of Action, whether known or unknown, against, liabilities of,
liens on, obligations of and Interests in the Debtors, the Reorganized Debtors,
or any of their assets or properties, regardless of whether any property shall
have been distributed or retained pursuant to the Plan on account of such
Claims, including, but not limited to, demands and liabilities that arose before
the Petition Date, any liability (including withdrawal liability) to the extent
such Claims relate to services performed by employees of the Debtors prior to
the Confirmation Date and that arise from a termination of employment or a
termination of any employee or retiree benefit program regardless of whether
such termination occurred prior to or after 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 (i) a proof of claim based upon such debt is filed or
deemed filed under section 501 of the Bankruptcy Code, (ii) a Claim based upon
such debt is Allowed under section 502 of the Bankruptcy Code, or (iii) the
Claim holder of such a Claim accepted the Plan. The Confirmation Order shall be
a judicial determination of the discharge of all liabilities of the Debtors,
subject to the Effective Date occurring.
13.2 Compromises and Settlements. Pursuant to section 1123(b)(3)
of the Bankruptcy Code and Bankruptcy Rule 9019(a), the Debtors may compromise
and settle various Claims against them and claims that they 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. Except as provided in
Section 13 of this Plan, after the Effective Date, the Reorganized Debtors may
- ----------
compromise and settle any Claims against them and claims they may have against
other Persons without approval from the Bankruptcy Court.
13.3 Setoffs. Each Debtor may, but shall not be required to,
setoff against any 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 such Debtor may have against such Claim holder; but neither the failure to
do so nor the allowance of any Claim hereunder shall constitute a waiver or
release by a Debtor of any such claim that such Debtor may have against such
Claim holder.
13.4 Satisfaction of Subordination Rights. All Claims against
the Debtors and all rights and claims between or among Claim holders relating in
any manner whatsoever to Claims against the Debtors, based upon any claimed
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subordination rights (if any), shall be deemed satisfied by the distributions
under the Plan to Claim holders having such subordination rights, and such
subordination rights shall be deemed waived, released, discharged and terminated
as of the Effective Date. Distributions to the various Classes of Claims
hereunder shall not be subject to levy, garnishment, attachment or like legal
process by any Claim holder by reason of any claimed subordination rights or
otherwise, so that each Claim holder shall have and receive the benefit of the
distributions in the manner set forth in the Plan.
13.5 Exculpation and Limitation of Liability. Except as otherwise
specifically provided in this Plan, the Debtors, the Reorganized Debtors, the
DIP Lenders, the DIP Agent, the Creditors' Committee, the members of the
Creditors' Committee in their representative capacity, any of such parties'
respective present or former members, officers, directors, employees, advisors,
attorneys, representatives, financial advisors, investment bankers or agents and
any of such parties' successors and assigns, shall not have or incur, and are
hereby released from, any claim, obligation, Cause of Action or liability to one
another or to any holder of any Claim or 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, or arising out of the
Chapter 11 Cases, the pursuit of confirmation of the Plan, the consummation of
the Plan, the administration of the Plan or the property to be distributed under
the Plan, except for their gross negligence or willful misconduct, and in all
respects shall be entitled to reasonably rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan.
Notwithstanding any other provision of this Plan, no Claim holder or
Interest holder, or other party in interest, none of their respective agents,
employees, representatives, financial advisors, attorneys or affiliates, and no
successors or assigns of the foregoing, shall have any right of action against
the Debtors, the Reorganized Debtors, the DIP Lenders, the DIP Agent, the
Creditors' Committee, the members of the Creditors' Committee in their
representative capacity, or any of such parties' respective present or former
members, officers, directors, employees, advisors, attorneys, representatives,
financial advisors, investment bankers or agents or such parties' successors and
assigns, for any act or omission in connection with, relating to or arising out
of the Chapter 11 Cases, the pursuit of confirmation of the Plan, the
consummation of the Plan, the administration of the Plan or the property to be
distributed under the Plan, except for their gross negligence or willful
misconduct.
13.6 Indemnification Obligations. In satisfaction and compromise of
any obligations or rights of any of the Indemnitees' Indemnification Rights, (a)
all Indemnification Rights except (i) all Indemnification Rights of an
Indemnitee who is also a Released Party, and (ii) those based solely upon any
act or omission arising out of or relating to any Indemnitee's service with, for
or on behalf of a Debtor on or after the Petition Date (collectively, the
"Continuing Indemnification Rights"), shall be released and discharged on and as
of the Effective Date; provided that the Continuing Indemnification Rights shall
remain in full force and effect on and after the Effective Date and shall not be
modified, reduced, discharged or otherwise affected in any way by the Chapter 11
Cases, (b) the Debtors or the Reorganized Debtors, as the case may be, covenant
to purchase and maintain director and officer insurance providing coverage for
those Indemnitees with Continuing Indemnification Rights for a period of two
years after the Effective Date insuring such parties in respect of any claims,
demands, suits, causes of action or proceedings against such Indemnitees based
upon any act or omission related to such Indemnitee's service with, for or on
behalf of the Debtors in at least the scope and amount as currently maintained
by the Debtors (the "Insurance Coverage"), and (c) the Debtors or the
Reorganized Debtors, as the case may be, hereby indemnify Indemnitees with
Continuing Indemnification Rights and agree to pay for any deductible or
retention amount that may be payable in connection with any claim covered by
either under the foregoing Insurance Coverage or any prior similar policy.
13.7 Releases by Debtors and Debtors in Possession.
(a) Pursuant to section 1123(b)(3) of the Bankruptcy Code,
effective as of the Effective Date, each Debtor, in its individual capacity and
as a Debtor in Possession, for and on behalf of its Estate, shall release and
discharge: (i) all current officers of each of the Debtors (which, unless
covered by clauses (ii) or (iii) below, specifically excludes any Division
president), all current directors of each of the Debtors, and all current
employees providing services at the corporate level, (ii) any former officer or
director of the Debtors or any current or former employee of the Debtors
(including any Division president) who has, or through an entity controlled by
such Person has, consummated the purchase of a Non-Core Division which has been
approved by Final Order entered by the Bankruptcy Court but only to the extent
of any release or discharge approved by such Final Order of the Bankruptcy Court
in connection with such purchase, (iii) all current employees of Core Divisions,
but only to the extent provided in, and subject to any additional terms or
conditions set forth in, a written employment agreement between the Reorganized
Debtors and any such current employees, (iv) agents, attorneys, accountants,
management consultants, financial advisors, investment bankers or other
Professionals of the Debtors retained by order of the Bankruptcy
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Court in the Chapter 11 Cases, (v) the Creditors' Committee and all members of
the Creditors' Committee in their representative capacity, including all
Professionals retained by the Creditors' Committee, (vi) the DIP Lenders, the
DIP Agent and all professionals retained by the DIP Lenders and the DIP Agent,
and (vii) the Prepetition Lenders, the Prepetition Administrative Agent, the
Prepetition Revolving Credit Agent, and all of their respective professionals
(except to the extent any rights have been reserved by the Debtors or the
Committee pursuant to prior Court order until such rights are waived or
otherwise lapse) (each of such Persons referred to in the foregoing clauses (i)
through (vii), a "Released Person") for and from (but subject to the limitations
of clauses (ii) and (iii)) any and all (x) claims or Causes of Action existing
as of the Effective Date in any manner arising from, based on or relating to, in
whole or in part, the Debtors, the subject matter of, or the transactions or
events giving rise to, any Claim or Interest that is treated in the Plan, the
business or contractual arrangements between any Debtor or any Released Person,
the restructuring of Claims and Interests prior to or in the Chapter 11 Cases,
or any act, omission, occurrence or event in any manner related to any such
Claims, Interest, restructuring or the Chapter 11 Cases and (y) Avoidance
Actions.
(b) No provision of this Plan or of the Confirmation Order,
including without limitation, any release or exculpation provision, shall
modify, release or otherwise limit the liability of any Person not specifically
released hereunder, including without limitation, any Person that is a co-
obligor or joint tortfeasor of a Released Person or that otherwise is liable
under theories of vicarious or other derivative liability.
(c) The Reorganized Debtors and any newly-formed entities that
will be continuing the Debtors' businesses after the Effective Date shall be
bound, to the same extent the Debtors are bound, by all of the releases set
forth above.
13.8 Release by Holders of Claims and Interests. Each Person that
votes to accept the Plan (each, a "Release Obligor"), shall have conclusively,
absolutely, unconditionally, irrevocably and forever, released and discharged
each Released Person from any claim or Cause of Action existing as of the
Effective Date arising from, based on or relating to, in whole or in part, the
subject matter of, or the transaction or event giving rise to, the Claim or
Interest of such Release Obligor, and any act, omission, occurrence or event in
any manner related to such subject matter, transaction or obligation; provided,
however, that this Section 13.8 shall not release any Released Person from any
------------
Claim or Cause of Action existing as of the Effective Date, based on (i) the
Internal Revenue Code or other domestic state, city or municipal tax code, (ii)
the environmental laws of the United States or any domestic state, city or
municipality, (iii) any criminal laws of the United States or any domestic
state, city or municipality, (iv) the Employee Retirement Income Security Act of
1974, as amended, and (v) violation of federal securities laws.
13.9 Injunction. The satisfaction, release and discharge pursuant
to this Article XIII of this Plan shall also act as an injunction against any
------------
Person commencing or continuing any action, employment of process, or act to
collect, offset or recover any Claim or Cause of Action satisfied, released or
discharged under this Plan to the fullest extent authorized or provided by the
Bankruptcy Code, including, without limitation, to the extent provided for or
authorized by sections 524 and 1141 thereof.
13.10 Federal and State Regulatory Agencies. Nothing in this Plan
will restrict any federal or state government regulatory agency from pursuing
regulatory or police enforcement action against the Release Parties other than
any action or proceeding of any type to recover monetary claims, damages or
penalties against such parties for an act, omission or event occurring prior to
the Effective Date.
ARTICLE XIV
RETENTION OF JURISDICTION
Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, the
Bankruptcy Court shall have exclusive jurisdiction of all matters arising out
of, and related to, the Chapter 11 Cases and the Plan, including, among other
things, the following matters:
(a) to hear and determine pending motions for the assumption
or rejection of executory contracts or unexpired leases or the assumption and
assignment, as the case may be, of executory contracts or unexpired leases to
which any of the Debtors are a party or with respect to which any of the Debtors
may be liable, and to hear and determine the allowance of Claims resulting
therefrom including the amount of Cure, if any, required to be paid to such
Claim holders;
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(b) to adjudicate any and all Causes of Action adversary
proceedings, applications and contested matters that have been or hereafter are
commenced or maintained in or in connection with the Chapter 11 Cases or the
Plan, including, without limitation, any adversary proceeding or contested
matter, proceedings to adjudicate the allowance of Disputed Claims, and all
controversies and issues arising from or relating to any of the foregoing;
(c) to ensure that distributions to Allowed Claim holders are
accomplished as provided herein;
(d) to hear and determine any and all objections to the
allowance or estimation of Claims filed, both before and after the Confirmation
Date, including any objections to the classification of any Claim or Interest,
and to allow or disallow any Claim, in whole or in part;
(e) to enter and implement such orders as may be appropriate if
the Confirmation Order is for any reason stayed, revoked, modified and/or
vacated;
(f) to issue orders in aid of execution, implementation or
consummation of the Plan;
(g) to consider any modifications of the Plan with respect to
any Debtor, to cure any defect or omission, or to reconcile any inconsistency in
any order of the Bankruptcy Court, including, without limitation, the
Confirmation Order;
(h) to hear and determine all matters involving claims or Causes
of Action involving any of the Debtors or their property;
(i) to hear and determine all applications for allowance of
compensation and reimbursement of Professional Claims under the Plan or under
sections 330, 331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy Code;
(j) to hear and determine all motions or objections regarding
compensation and reimbursement of expenses made by any professionals, including,
without limitation, the ability of the Bankruptcy Court to enter an order to
show cause and commence a hearing to examine any issue concerning the fees and
expenses of any professionals;
(k) to determine requests for the payment of Claims entitled to
priority under section 507(a)(1) of the Bankruptcy Code, including compensation
of and reimbursement of expenses of parties entitled thereto;
(l) to hear and determine disputes arising in connection with
the interpretation, implementation or enforcement of the Plan, including
disputes arising under agreements, documents or instruments executed in
connection with this Plan;
(m) to hear and determine all suits or adversary proceedings to
recover assets of any of the Debtors and property of their Estates, wherever
located;
(n) to hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
Code;
(o) to hear any other matter not inconsistent with the
Bankruptcy Code;
(p) to hear and determine all disputes involving the existence,
nature or scope of the Debtors' discharge, including any dispute relating to any
liability arising out of the termination of employment or the termination of any
employee or retiree benefit program, regardless of whether such termination
occurred prior to or after the Effective Date;
(q) to enter a final decree closing the Chapter 11 Cases;
(r) to enforce all orders previously entered by the Bankruptcy
Court; and
(s) to authorize and approve the Sales of the remaining Non-Core
Assets;
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Notwithstanding anything contained herein to the contrary, the Bankruptcy Court
retains exclusive jurisdiction to hear and determine disputes concerning Claims
and any motions to compromise or settle such disputes. Despite the foregoing,
if the Bankruptcy Court is determined not to have jurisdiction with respect to
the foregoing, or if the Reorganized Debtors choose to pursue any Claim (as
applicable) in another court of competent jurisdiction, the Reorganized Debtors
will have authority to bring such action in any other court of competent
jurisdiction.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Binding Effect. The Plan shall be binding upon and inure to
the benefit of the Debtors, the Reorganized Debtors, all present and former
holders of Claims and Interests, other parties in interest and their respective
successors and assigns.
15.2 Payment of Statutory Fees. All fees payable pursuant to
section 1930 of title 28, United States Code, as determined by the Bankruptcy
Court at the Confirmation Hearing, shall be paid on the Effective Date.
15.3 Amendment or Modification of the Plan. The Debtors may alter,
amend or modify the Plan with respect to any Debtor or any Plan Schedules or
Exhibits thereto under section 1127(a) of the Bankruptcy Code at any time prior
to the Confirmation Hearing with the consent of the Creditors' Committee (such
consent not to be unreasonably withheld). After the Confirmation Date and prior
to substantial consummation of the Plan with respect to any Debtor as defined in
section 1101(2) of the Bankruptcy Code, the Debtors or the Reorganized 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 with respect to such Debtor or Reorganized Debtor,
the Disclosure Statement or the Confirmation Order, and such matters as may be
necessary to carry out the purposes and effects of the Plan, so long as such
proceedings do not materially adversely affect the treatment of Claim holders or
Interest holders 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.
15.4 Revocation, Withdrawal or Non-Consummation. The Debtors
reserve the right to revoke or withdraw the Plan prior to the Confirmation Date
and to file subsequent plans of reorganization. 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 Interest or Class of Claims or Interests), assumption or
rejection of executory contracts or leases affected by the Plan, and any
document or agreement executed pursuant to the Plan, shall be deemed null and
void, and (c) nothing contained in the Plan shall (i) constitute a waiver or
release of any Claims by or against, or any Interests in, such Debtors or any
other Person, (ii) prejudice in any manner the rights of such Debtors or any
other Person, or (iii) constitute an admission of any sort by the Debtors or any
other Person.
15.5 Notice. All notices, requests and demands to or upon the
Debtors or the Reorganized Debtors to be effective shall be in writing and,
unless otherwise expressly provided herein, shall be 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:
MASTER GRAPHICS, INC.
70 Timber Creek Drive
Suite 5
Cordova, TN 38018
Telephone: (901) 685-2020
Facsimile: (901) 685-3600
Attn: Chief Executive Officer
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with copies to:
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
Attn: John Wm. Butler, Jr.
George N. Panagakis
15.6 Governing Law. Except to the extent the Bankruptcy Code, the
Bankruptcy Rules or other federal law is applicable, or to the extent an exhibit
or schedule to the Plan provides otherwise, the rights and obligations arising
under this Plan and any agreements, documents and instruments executed in
connection with the Plan shall be governed by, and construed and enforced in
accordance with, the laws of Delaware, without giving effect to the principles
of conflicts of law of such jurisdiction.
15.7 Tax Reporting and Compliance. In connection with the Plan and
all instruments issued in connection therewith and distributions thereof, the
Debtors and the Reorganized Debtors, as the case may be, shall comply with all
withholding and reporting requirements imposed by any federal, state, local or
foreign taxing authority and all distributions hereunder shall be subject to any
such withholding and reporting requirements. The Reorganized Debtors are hereby
authorized, on behalf of each of the Debtors, to request an expedited
determination under section 505(b) of the Bankruptcy Code of the tax liability
of the Debtors for all taxable periods ending after the Petition Date through,
and including, the Effective Date.
15.8 Committees. As of the Effective Date, the Creditors' Committee
shall dissolve whereupon its members, professionals and agents shall be released
from any further duties and responsibilities in the Chapter 11 Cases and under
the Bankruptcy Code, except with respect to applications for Professional
Claims. The Professionals retained by the Creditors' Committee and the members
thereof shall not be entitled to compensation and reimbursement of expenses for
services rendered after the Effective Date, except for services rendered in
connection with (i) the implementation of the transactions contemplated to occur
on the Effective Date hereunder and (ii) applications for allowance of
compensation and reimbursement of expenses pending on the Effective Date or
filed after the Effective Date pursuant to Section 11.2(b) of this Plan.
---------------
15.9 Term of Injunctions 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, shall remain in full force and effect until
the Effective Date.
15.10 No Waiver or Estoppel. Each Claim holder or Interest holder
shall be deemed to have waived any right to assert that its Claim or Interest
should be Allowed in a certain amount, in a certain priority, secured or not
subordinated by virtue of an agreement made with the Debtors and/or their
counsel, the Creditors' Committee and/or its counsel, or any other party, if
such agreement was not disclosed in the Plan, the Disclosure Statement or papers
filed with the Bankruptcy Court.
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Dated: December 19, 2000
Respectfully submitted,
MASTER GRAPHICS, INC. and
PREMIER GRAPHICS, INC.
By: /s/ Michael B. Bemis
-------------------------------------------
Michael B. Bemis
Chairman and Chief Executive Officer
Counsel:
/s/ John Wm. Butler, Jr.
--------------------------------------------------------
John Wm. Butler, Jr.
George N. Panagakis
Mark A. McDermott
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Mark S. Chehi (I.D. No. 2885)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
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Plan Schedules and Exhibits
Plan Schedule 1.27 - Terms of Creditors' Trust
Plan Schedule 1.41 - Listing of Divisions and Designation as Core or Non-Core
Plan Schedule 1.68 - Terms of New Warrant Put Note
Plan Schedule 1.69 - Terms of New Warrant Put Note Guaranty Agreement
Plan Schedule 8.1 - Schedule of Assumed Leases and Executory Contracts
Plan Schedule 8.2 - Exclusive Schedule of Rejected Leases and Executory
Contracts
Exhibit A - Form of Articles of Incorporation of New Holding Company
Exhibit B - Form of Articles of Incorporation of New Operating Company
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Creditors Trust Agreement
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PLAN SCHEDULE 1.27
Creditors' Trust
Transfer of Trust Assets. On or after the Effective Date, the Reorganized
Debtors shall have the option of transferring to the Trust the "Trust Assets"
for and on behalf of the beneficiaries of the Trust, with no reversionary
interest in the Reorganized Debtors. The "Trust Assets" may include the New
Holding Company Common Stock and Causes of Action.
Appointment of Trustee. The Trustee may be designated by the Reorganized
Debtors. The Trustee shall have and perform all of the duties,
responsibilities, rights and obligations set forth in any trust agreement
governing the Trust (the "Trust Agreement").
The Trust.
The Trustee may have full authority to take any steps necessary to administer
the Trust Agreement, including, without limitation, the duty and obligation to
pursue Causes of Action, to liquidate assets transferred thereto, to make
distributions therefrom to the holders of Allowed Claims in Class P-5 and, if
designated by the Reorganized Debtors to file, prosecute, and settle objections
to Class P-5 Claims.
All costs and expenses associated with the administration of the Trust shall be
the responsibility of and paid by the Trust. Notwithstanding the foregoing, the
Reorganized Debtors shall make available to the Trustee reasonable access during
normal business hours, upon reasonable notice, to personnel and books and
records of the Reorganized Debtors to representatives of the Trust to enable the
Trustee to perform the Trustee's tasks under the Trust Agreement and the Plan;
provided, however, that the Reorganized Debtors will not be required to make
expenditures in response to such requests determined by them to be unreasonable
and provided further that the Trust shall pay the Indenture Trustee's reasonable
costs and fees in accordance with the Indenture in responding to such requests.
The Reorganized Debtors shall be entitled to compensation or reimbursement
(including reimbursement for professional fees) with respect to fulfilling their
obligations as set forth in this Section. The Bankruptcy Court shall retain
jurisdiction to determine the reasonableness of either a request for assistance
and/or a related expenditure. The Reorganized Debtors shall not be required to
provide any such assistance that shall, in their reasonable view, interfere with
the Reorganized Debtors' business operations.
The Trustee may retain such law firms, experts, advisors, consultants, other
professionals as it may deem necessary (collectively, the "Trustee
Professionals"), in its sole discretion, to aid in the performance of its
responsibilities pursuant to the terms of the Plan including, without
limitation, pursuing Causes of Action and liquidating and distributing Trust
Assets.
The Reorganized Debtors shall vote any shares of the New Holding Company Common
Stock not yet distributed by the Trustee, including those held in any reserves
maintained by the Trustee in the same proportion as the shares of the New
Holding Company Common Stock outstanding are voted by the holders thereof.
The Trust Advisory Board.
The Trust may be governed by a Trust Advisory Board comprised of at least three
(3) members designated by the Reorganized Debtors. The Trustee shall consult
regularly with the Trust Advisory Board when carrying out the purpose and intent
of the Trust. Members of the Trust Advisory Board shall be entitled to
compensation in accordance with the Trust Agreement and to reimbursement of the
reasonable and necessary expenses incurred by them in carrying out the purpose
of the Trust Advisory Board. Reimbursement of the reasonable and necessary
expenses of the members of the Trust Advisory Board and their compensation to
the extent provided for in the Trust Agreement shall be payable by the Trust.
In the case of an inability or unwillingness of any member of the Trust Advisory
Board to serve, such member shall be replaced by designation of the remaining
members of the Trust Advisory Board. If any position on the Trust Advisory
Board remains vacant for more than thirty (30) days, such vacancy shall be
filled within fifteen (15) days thereafter by the designation of the Trustee
without the requirement of a vote by the other members of the Trust Advisory
Board.
Upon the certification by the Trustee that all Trust assets have been
distributed, abandoned or otherwise disposed of, the members of the Trust
Advisory Board shall resign their positions, whereupon they shall be discharged
from further duties and responsibilities.
A-30
The Trust Advisory Board may, by majority vote, authorize the Trustee to file
judicial or administrative proceedings on Trust Claims and approve all
settlements of Trust Claims which the Trustee or any member of the Trust
Advisory Boards may propose, provided, however, that (i) no member of the Trust
Advisory Board may cast a vote with respect to any Trust Claim to which it is a
party; and (ii) the Trustee may seek Bankruptcy Court approval of a settlement
of a Trust Claim if the Trust Advisory Board fails to act on a proposed
settlement of such Trust Claim within thirty (30) days of receiving notice of
such proposed settlement by the Trustee or as otherwise determined by the
Trustee.
The Trust Advisory Board may, by majority vote, authorize the Trustee to invest
any cash in the Trust in prudent investments in addition to those described in
section 345 of the Bankruptcy Code.
The Trust Advisory Board may remove the Trustee in its discretion. In the event
the requisite approval is not obtained, the Trustee may be removed by the
Bankruptcy Court for cause shown. In the event of the resignation or removal of
the Trustee, the Trust Advisory Board shall, by majority vote, designate a
person to serve as successor Trustee.
Notwithstanding anything to the contrary in the Plan, neither the Trust Advisory
Board nor any of its members, designees, counsel, financial advisors or any duly
designated agents or representatives of any such party shall be liable for the
act, default or misconduct of any other member of the Trust Advisory Board, nor
shall any member be liable for anything other than such member's own gross
negligence or willful misconduct. The Trust Advisory Board may, in connection
with the performance of its duties, and in its sole and absolute discretion,
consult with its counsel, accountants or other professionals, and shall not be
liable for anything done or omitted or suffered to be done in accordance with
such advice or opinions. If the Trust Advisory Board determines not to consult
with its counsel, accountants or other professionals, it shall not be deemed to
impose any liability on the Trust Advisory Board, or its members and/or
designees.
The Trust Advisory Board shall govern its proceedings through the adoption of
by-laws, which the Trust Advisory Board may adopt by majority vote. No
provision of such by-laws shall supersede any express provision of the Plan.
Distributions of Trust Assets. The Trustee shall distribute shares of the New
Holding Company Common Stock to the Indenture Trustee, for further distribution
to holders of Claims arising out of the Senior Notes pursuant to the terms of
the Indenture, as the Trustee determines, in consultation with the Trust
Advisory Board, is reasonable based on the amount of General Unsecured Claims
and Disputed Claims against Premier Graphics. Except as provided in the Plan,
the Trustee shall make additional distributions of Trust proceeds as follows:
first, to pay the Trust's expenses; second, to repay amounts, if any, borrowed
by the Trustee in accordance with the Trust Agreement; and, third, Pro Rata to
holders of Allowed Claims in Class P-5. Distributions to holders of Allowed
Class P-5 Claims shall be made at least semi-annually beginning with a calendar
quarter that is not later than the end of the second calendar quarter after the
Effective Date; provided, however, that the Trustee shall not be required to
make any such semi-annual distribution in the event that the aggregate proceeds
and income available for distribution to such Claim holders is not sufficient,
in the Trustee's discretion (after consultation with the Trust Advisory Board)
to distribute monies to the holders of Allowed Claims. The Trustee will make
continuing efforts to prosecute or settle the Avoidance Claims and Causes of
Action, make timely distributions, and shall not unduly prolong the duration of
the Trusts.
A-31
PLAN SCHEDULE 1.41
Core Divisions of Premier Graphics, Inc.
----------------------------------------
(i) Argus Press
(ii) B&M Printing
(iii) Golden Rule
(iv) Harperprints
(v) Jones Printing
(vi) Lithograph Printing
(vii) McQuiddy Printing
(viii) Sutherland Printing
(ix) Thomasson Printing
(x) White Arts/TPC
(xi) Woods Lithographics
Non-Core Divisions of Premier Graphics, Inc.
--------------------------------------------
(i) Columbia Graphics
(ii) Eagle Direct
(iii) Hederman Brothers
(iv) Phillips Litho
(v) Phoenix Communications
(vi) Stephenson Printing
(vii) Technigrafiks
A-32
PLAN SCHEDULE 1.68
Terms of New Warrant Put Note
-----------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A-33
PLAN SCHEDULE 1.69
Terms of New Warrant Put Note Guaranty Agreement
------------------------------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A - 34
PLAN SCHEDULE 8.1
Assumed Leases and Executory Contracts
--------------------------------------
All Leases and Executory Contracts not listed in Plan Schedule 8.2
A - 35
PLAN SCHEDULE 8.2
Rejected Leases and Executory Contracts
---------------------------------------
Schedule 6 to Master Equipment Lease by and between Heidelberg Print Finance
America, Inc. with respect to that certain Heidelberg Speedmaster Press located
at the Debtors' Lithograph Division.
Schedule 14 to Master Equipment Lease by and between Heidelberg Print Finance
America, Inc. with respect to that certain Heidelberg Speedmaster Press located
at the Debtors' Phillips Division.
Real Estate Lease dated as of March 1, 1998, between Phil Phillips, as lessor,
and the Debtors, as lessees, for that certain property located at 1845 Turnbow,
Springdale, Arkansas, from which the Debtors operated their Phillips Litho
Division. The effective date of rejection of this lease shall be ten (10) days
after the Reorganized Debtors provide written notice of such rejection to the
lessor.
Real Estate Lease between RFTA Associates, Limited, as lessor, and the Debtors,
as lessees, for that certain property located at 5664 New Peachtree Road,
Atlanta, Georgia, from which the Debtors operated their Phoenix Communications
Division. The effective date of rejection of this lease shall be ten (10) days
after the Reorganized Debtors provide written notice of such rejection to the
lessor.
Real Estate Lease between RSH Properties, as lessor, and the Debtors, as
lessees, for that certain property located at 5588 New Peachtree Road, Atlanta,
Georgia, from which the Debtors operated their Phoenix Communications Division.
The effective date of rejection of this lease shall be ten (10) days after the
Reorganized Debtors provide written notice of such rejection to the lessor.
Equipment Lease between Safeco Credit Company, as lessor, and the Debtors, as
lessees, for that certain DuPont Digital Waterproof System and Xante Laser
Printer previously utilized by the Thomasson Printing Division. The effective
date of the rejection of this lease shall be the Effective Date.
Equipment Lease between JLA Credit Corporation, as lessor, and the Debtors, as
lessees, for that certain Scitex Equipment previously utilized at the Debtors'
Technigrafiks Division. The effective date of the rejection of this lease shall
be the Effective Date.
A - 36
PLAN EXHIBIT A
FORM OF ARTICLES OF INCORPORATION OF NEW HOLDING COMPANY
--------------------------------------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A - 37
PLAN EXHIBIT B
FORM OF ARTICLES OF INCORPORATION OF REORGANIZED PREMIER GRAPHICS
-----------------------------------------------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A - 38
PLAN EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A - 39
PLAN EXHIBIT D
FORM OF CREDITORS TRUST AGREEMENT
---------------------------------
TO BE FILED ON OR BEFORE
THE EXHIBIT FILING DATE
A - 40
Appendix B
LIQUIDATION ANALYSIS
Appendix B
Liquidation Analysis
------------------------------- --------------------------------
STATEMENT OF ASSETS Book Value as
($ in thousands) of September Hypothetical Percentage
30, 2000 Recovery Estimated Value Note
------------------------------- --------------------------------
(Note A) Reference
(Unaudited) Low High Low High
------------- -------------- -------------- --------------- ---------------
[1] [2] [3] [1] * [2] = [4] [1] * [3] = [5]
Cash and Cash Equivalents $ 1,663 100% 100% $ 1,663 $ 1,663 B
Accounts Receivable, Net 36,487 76% 83% 27,645 30,176 C
Inventory 11,004 25% 28% 2,743 3,134 D
Prepaid Expenses 3,226 0% 0% 0 0 E
Fixed Assets 59,211 58% 70% 34,354 41,499 F
Other Assets 8,517 0% 0% 0 0 E
Non-Core Divisions 81% 81% G
--------- --------- --------
17,667 14,223 14,223
--------- --------- --------
Total Assets
========= ========= ========
$ 137,775 $ 80,628 $ 90,695
========= ========= ========
Assets and Other Items Available for Distribution ---------- --------
$ 80,628 $ 90,695
---------- --------
Operating Costs Associated with Liquidation (11,570) (11,570) H
Sales Costs Associated with Liquidation (2,518) (5,350)
Chapter 7 Trustee Fees (2,822) (4,535)
Chapter 7 Professional Fees
---------- --------
(3,120) (3,120)
---------- --------
Total Costs Associated with Liquidation $ (20,030) $(24,575)
--------------- ---------------
Net Estimated Liquidation Proceeds Available for Distribution
========= ========
$ 60,598 $ 66,121
========= ========
The accompanying notes are an integral part of the Liquidation analysis
B-1
----------------------------------
DISTRIBUTION ANALYSIS SUMMARY Estimated Value
($ in thousands) ----------------------------------
Note
Low High Reference
------------ ------------ -------------
Net Estimated Proceeds Available for Distribution $ 60,598 $ 66,121
Less Secured Claims
---------- ----------
(58,910) (58,910) I
---------- ----------
Net Estimated Liquidation Proceeds Available After Secured Claims 1,688 7,211
Less: Administrative and Priority Claims
---------- ----------
$ (10,500) (10,500) J
---------- ----------
Net Estimated Liquidation Proceeds Available for Unsecured Creditors (8,812) (3,289)
Less General Unsecured Claims K
Trade Claims (13,653) (13,653)
Unsecured Note Claims (2,384) (2,384)
Senior Notes
---------- ----------
(137,450) (137,450)
---------- ----------
Total General Unsecured Claims -153,487 -153,487
Net Estimated Deficiency to Unsecured Claims
========== ==========
$ (153,487) $ (153,487)
========== ==========
Hypothetical Recovery (%) 0.0% 0.0%
The accompanying notes are an integral part of the Liquidation Analysis
B-2
Notes to Liquidation Analysis
The Liquidation Analysis reflects the Debtors' estimate of the proceeds
that would be realized if the Debtors were to be liquidated in accordance with
Chapter 7 of the Bankruptcy Code. Underlying the Liquidation Analysis are a
number of estimates and assumptions that, although developed and considered
reasonable by management and Lazard Freres, are inherently subject to
significant business, economic and competitive uncertainties and contingencies
beyond the control of Master Graphics and its management, and upon assumptions
with respect to the liquidation decisions which could be subject to change.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE VALUES REFLECTED IN THE
LIQUIDATION ANALYSIS WOULD BE REALIZED IF THE DEBTORS WERE, IN FACT, TO UNDERGO
SUCH A LIQUIDATION, AND ACTUAL RESULTS COULD VARY MATERIALLY FROM THOSE SHOWN
HERE.
The Liquidation Analysis assumes a liquidation period of sixteen months
during which a two-phase approach to the liquidation would occur.
Phase I would entail a four month period in which contracts, leases,
inventory, property and equipment, and employees at all operating units would be
transferred through sale or otherwise to other commercial printers or liquidated
and/or terminated as appropriate. Division operations would be expected to
substantially cease in any event within a four month period. This time period
would allow for an orderly transfer of work load to competitors and could be
expected to minimize litigation from customers for breach of contract.
Phase II would entail a twelve month wrap-up period following cessation of
operations. The Debtors' remaining assets, including receivables, property and
equipment and miscellaneous assets, would be collected and/or liquidated.
Certain corporate personnel, such as those in financial, treasury and management
information system areas, would be retained as necessary to support the
completion of the liquidation process.
The following notes describe the significant assumptions reflected in the
Liquidation Analysis.
Note A - Book Values as of September 30, 2000
The book values used in this Liquidation Analysis are the unaudited book
values as of September 30, 2000, and are assumed to be representative of the
Debtors' assets and liabilities as of the Effective Date.
Note B - Cash and Cash Equivalents
The Liquidation Analysis assumes that operations during the liquidation
period would not generate additional cash available for distribution except for
net proceeds from the disposition of non-cash assets. It is assumed that cash
and cash equivalents held at each of the Divisions would be 100% collectible and
would be offset by the Debtors' current outstanding checks to pay post-petition
payables.
Note C - Accounts Receivable
Trade accounts receivable consists primarily of accounts receivable from
third party customers for work that was previously completed. Based upon the
age of the receivables and the concentration by Division, liquidation recovery
rates are as follows: current - 90%-95%; 30-60 days - 80%-90%; 60-90 days - 70%-
80%; 90+ days - 20%-30%.
Note D - Inventory
Inventory consists primarily of paper and dies and other items used in the
printing industry. Raw materials and finished goods were estimated to have
liquidation recovery values consistent with secured financing advance rates that
would be available to the Debtors (70%-80% for raw materials; 70%-80% for
finished goods). It was assumed that work in process would not be completed in
a Chapter 7 liquidation and accordingly has been estimated to have no value.
B-3
Note E - Prepaid Expenses, Other Assets, Capitalized Leases
Prepaid expenses, other assets and capitalized leases have been
estimated to have no liquidation recovery value. It is assumed that capitalized
leases would be rejected in a Chapter 7 liquidation with no resulting recovery
to the estate.
The major items included in other assets are capitalized deferred
financing costs, non-compete covenants, and capitalized organizational costs.
Note F - Fixed Assets, Net
Fixed assets consist primarily of plant equipment, furniture and
fixtures, office equipment, and leasehold improvements. Liquidation values for
plant equipment and machinery are based on liquidation analyses prepared during
the second quarter of 2000 at the direction of the Prepetition Lenders and other
potential secured lenders, as modified to reflect estimated depreciation since
the appraisals. A discount of 15%--20% was then taken from the estimates to
reflect the lesser value that would accrue to the estate due to the large volume
of printing equipment that would be offered for sale at one time. Liquidation
values for other fixed assets, including automobiles, are based on the Debtor's
knowledge of these assets and general market conditions.
Note G - Non-Core Divisions
It is assumed that the Chapter 7 Trustee would sell the Columbia
Graphics, EagleDirect, and Hederman Brothers Divisions pursuant to the terms of
Asset Purchase Agreements that have been or will be filed with the Bankruptcy
Court.
Note H - Costs Associated with Liquidation
During Phase I, contracts, leases, inventory, property and equipment,
and employees at all Divisions would be transferred or liquidated through sale.
During this period, it is assumed that the uncertainty caused by the liquidation
process would result in diminished Division profitability. Management estimates
that Division operations would be expected to generate a loss of approximately
$7.25 million during this four-month period and a loss of $360,000 per month
during Phase II, primarily reflecting salaries to necessary employees,
utilities, and rent.
Corporate payroll and operating costs during liquidation are based upon
the assumption that corporate functions would be required to oversee the Phase I
liquidation process, but would be significantly reduced toward the end of Phase
I. Any remaining corporate functions would phase out over the Phase II wind-
down.
Other liquidation costs consist of costs required to liquidate
machinery and equipment and other fixed assets. These costs are estimated at 5%-
10% of liquidation value, plus $50,000--$75,000 per location with respect to
machinery and equipment. Costs with respect to machinery and equipment are based
on estimates contained in the liquidation appraisals prepared by current and
potential lenders.
Chapter 7 trustee fees include those fees associated with the
appointment of a Chapter 7 trustee in accordance with Section 326 of the
Bankruptcy Code. Trustee fees are estimated based on historical experience in
other similar cases and are calculated at 3.5% to 5.0% of the total cash
generated during the liquidation.
Chapter 7 professional fees include consulting, legal and accounting
fees incurred during the twelve-month liquidation period. Monthly professional
fees are assumed to be $450,000 per month during the first phase of the Chapter
7 and decline to $110,000 per month during the second phase.
Note I - Secured Creditor Claims
For purposes of the Liquidation Analysis, management believes that the
only significant secured claims are those held by the Prepetition Lenders. As of
the date of this analysis, there were no borrowings under the DIP Facility.
Note J - Administrative and Priority Claims
For purposes of the Liquidation Analysis, management has assumed
$10,500,000 in Administrative and Priority Claims, consisting of $2,000,000 in
accrued professional fees and post-petition accounts payable in the amount of
$8,500,000.
B-4
Note K - Unsecured Claims
General Unsecured Claims include primarily Trade Claims and Senior Note
Claims. The Liquidation Analysis does not estimate amounts for lease rejection
and employment agreement rejection claims.
B-5
Appendix C
PRO FORMA PROJECTIONS
MASTER GRAPHICS, INC.
PROJECTED BALANCE SHEET
CORE DIVISIONS
FOR THE YEARS ENDING DECEMBER 31,
2001 2002 2003
---- ---- ----
ASSETS
Cash 5,043 4,125 4,731
Accounts Receivable 23,149 24,168 25,231
Inventory:
Raw Materials 2,534 2,646 2,762
Work in Process 4,994 5,214 5,444
Finished Goods 274 286 298
------ ------ ------
Total Inventory 7,802 8,146 8,504
Prepaid Expense/Other Assets 853 891 930
Total Current Assets 36,847 37,330 39,396
Property, Plant and Equipment 35,258 32,786 30,014
------ ------ ------
72,105 70,116 69,410
====== ====== ======
LIABILITIES
Accounts Payable 7,761 8,061 8,375
Accrued Expenses 5,719 5,970 6,233
Senior Secured Financing 22,623 15,623 8,123
Capitalized Lease Payments 8,732 7,904 7,112
Other Liabilities 2,000 2,000 2,000
------ ------ ------
Total Liabilities 46,835 39,558 31,843
------ ------ ------
Shareholders' Equity 25,270 30,558 37,567
------ ------ ------
72,105 70,116 69,410
====== ====== ======
C-1
MASTER GRAPHICS, INC.
PROJECTED BALANCE SHEET
CORE DIVISIONS
FOR THE YEARS ENDING DECEMBER 31,
2001 2002 2003
---- ---- ----
Revenue 168,301 175,706 183,436
Materials 70,621 73,729 76,971
------- ------- -------
Value Added 97,680 101,977 106,465
Factory Costs 60,201 62,225 64,340
------- ------- -------
Gross Profit 37,479 39,752 42,125
------- ------- -------
Administrative Expenses 16,265 15,996 16,069
Selling Expenses 15,226 15,894 16,592
------- ------- -------
Total SG&A 31,491 31,890 32,661
------- ------- -------
Operating Income 5,988 7,862 9,464
------- ------- -------
Interest Expense (2,792) (1,953) (864)
Other Income 833 871 909
------- ------- -------
Total Other Income (Interest Expense) (1,959) (1,082) 45
------- ------- -------
Pre-Tax Income 4,029 6,780 9,509
Income Tax Expense (2,100) (3,750) (4,750)
------- ------- -------
Net Income 1,929 3,030 4,759
------- ------- -------
ADD:
Depreciation/Amortization 5,172 5,480 5,772
Income Taxes 2,100 3,750 4,750
Interest 2,792 1,953 864
------- ------- -------
TOTAL 10,064 11,183 11,386
------- ------- -------
EBITDA 11,993 14,213 16,145
======= ======= =======
C-2
MASTER GRAPHICS, INC.
PROJECTED BALANCE SHEET
CORE DIVISIONS
FOR THE YEARS ENDING DECEMBER 31,
2001 2002 2003
---- ---- ----
NET INCOME 1,929 3,030 4,759
ADD:
Depreciation 5,172 5,480 5,772
CHANGES IN WORKING CAPITAL
Decrease (Increase) Accounts Rec. (1,619) (1,019) (1,063)
Decrease (Increase) Raw Materials (239) (112) (116)
Decrease (Increase) WIP (324) (220) (230)
Decrease (Increase) Finished Goods (4) 912) 912)
Decrease (Increase) Pre Paids (138) (38) (39)
Decrease (Increase) Accounts Payable (289) 300 314
Decrease (Increase) Accruals 228 251 263
------ ------ ------
CASH FLOW FROM OPERATIONS 4,716 7,660 9,648
------ ------ ------
INVESTING ACTIVITIES
(Increase) Decrease PP&E (750) (750) (750)
Cash Effects from Disposition of Assets 0 0 0
------ ------ ------
CASH FLOW FROM INVESTING (750) (750) (750)
------ ------ ------
FINANCING ACTIVITIES
Increase (Decrease) Secured Senior
Financing (5,131) (7,000) (7,500)
Increase (Decrease) Capitalized Leases (792) (828) (792)
Increase (Decrease) Other Liabilities 0 0 0
------ ------ ------
CASH FLOW FROM FINANCING (5,923) (7,828) (8,292)
TOTAL INCREASE (DECREASE) IN CASH (1,957) (918) 606
CASH - BEGINNING BALANCE 7,000 5,043 4,125
CASH - ENDING BALANCE 5,043 4,125 4,731
C-3
MASTER GRAPHICS, INC.
ASSUMPTIONS USED IN FINANCIAL FORECAST
BALANCE SHEET
The opening Balance Sheet reflects restructuring based on the retention of all
assets of the Core Divisions.
Liabilities reflect assumption of capitalized lease obligations associated with
retained assets, estimates of post petition trade accounts payable and ordinary
accrued liabilities.
Secured debt is carried forward based on the current debt structure of the
Prepetition Lenders after reflecting forecasted reductions from net liquidation
proceeds derived from the Non-Core Divisions.
Equity has been adjusted to reflect the compromise of all debt not associated
with the above assumptions.
INCOME STATEMENT
Operations are reflective of the results forecast to be achieved by each Core
Division as reflected in the Business Plan.
No additional restructuring charges are included in the 2001 Plan. Income taxes
are calculated using a 38% composite rate and reflects differences in forecast
book and tax depreciation.
STATEMENT OF CASH FLOWS
Cash flow changes result from forecast changes in the respective balance sheet
accounts. Reduction of the Secured Lender Claims is related to forecasted
availability of cash.
C-4
Appendix D
REORGANIZATION VALUATION
Appendix D
REORGANIZATION VALUES
The Debtors have been advised by Lazard Freres, their financial advisor,
with respect to the reorganization value of the reorganized Debtors (the
"Reorganized Debtors") on a going concern basis. Solely for purposes of the
Plan, and assuming that the Non-Core Divisions will be sold or liquidated, the
estimated range of reorganization value of the Reorganized Debtors is assumed to
be approximately $80,650,000 to $94,650,000 (with a midpoint value of
$87,650,000) as of an assumed Effective Date of December 31, 2000. This value
includes estimated proceeds from sales or liquidations of Non-Core Divisions of
$32,650,000.
The proceeds from each Non-Core Division were estimated according to
whether the Division was likely to be sold or liquidated. Columbia Graphics,
EagleDirect, Hederman Brothers, the three Non-Core Divisions with respect to
which the Debtors have executed, or expect to execute, Asset Purchase
Agreements, were estimated at $9,723,000, $3,000,000, and $4,500,000,
respectively. These figures reflect the anticipated net proceeds to the Debtors
from the sales of these Divisions. Phillips Litho, Phoenix Communications, and
Stephenson Printing are valued according to the mid-point percentage recovery
from the Liquidation analysis in Appendix B. Technigrafiks, which, as of the
----------
date this analysis was prepared, had already been substantially liquidated, was
valued according to the net proceeds the Debtors anticipate receiving in the
remaining liquidation process. In total, sale plus liquidation proceeds of the
seven Non-Core Divisions equals $37,757,000. Assuming estimated liquidation
costs of $5,107,000, the Non-Core Divisions should yield estimated net proceeds
of $32,650,000.
The assumed range of the reorganization value, as of an assumed effective
date of December 31, 2000, reflects work performed by Lazard Freres on the basis
of information in respect of the business and assets of the Debtors available to
Lazard Freres as of November 9, 2000.
Based upon the assumed range of the reorganization value of the Reorganized
Debtors of between $80,650,000 and $94,650,000 and an assumed total secured debt
of approximately $58,910,000, the Debtors have employed an imputed estimate of
the range of equity value for the Reorganized Debtors of between $21,740,000 and
$35,740,000, with a mid-point value of $28,740,000. Assuming a distribution of
5,000,000 shares of New Holding Company Common Stock pursuant to the Plan, the
imputed estimate of the range of equity value on a per share basis for New
Holding Company is between $4.35 and $7.15 per share, with a midpoint value of
$5.75 per share.
The foregoing estimate of the reorganization value of the Reorganized
Debtors is based on a number of assumptions, including that the Non-Core
Divisions will be sold or liquidated, a successful reorganization of the
Debtors' business, the ability to obtain financing in a timely manner, the
implementation of the Reorganized Debtors' business plan, the achievement of the
forecasts reflected in the Projections, market conditions as of November 9, 2000
continuing through the assumed Effective Date of December 31, 2000, and the Plan
becoming effective in accordance with the estimates and other assumptions
discussed herein.
In estimating the range of the reorganization value of the Reorganized
Debtors, Lazard Freres: (i) reviewed certain historical financial information of
the Debtors for recent years and interim periods; (ii) reviewed certain internal
financial and operating data of the Debtors, including financial projections
prepared and provided by management relating to their business and their
prospects; (iii) met with certain members of senior management of the Debtors
and Carl Marks to discuss the Debtors' operations and future prospects; (iv)
reviewed publicly available financial data and considered the market value of
public companies which Lazard Freres deemed generally comparable to the
operating business of the Debtors; (v) considered certain economic and industry
information relevant to the operating business; and (vi) conducted such other
studies, analysis inquiries, and investigations as it deemed appropriate.
Although Lazard Freres conducted a review and analysis of the Debtors' business,
operating assets and liabilities and the Reorganized Debtors' business plans, it
assumed and relied on the accuracy and completeness of all (i) financial and
other information furnished to it by the Debtors, and (ii) publicly available
information. In addition, Lazard Freres did not independently verify
management's projections in connection with such estimates of the reorganization
value, and no independent valuations or appraisals of the Debtors were sought or
obtained in connection herewith.
Estimates of the reorganization value do not purport to be appraisals or
necessarily reflect the values which may be realized if assets are sold as a
going concern, in liquidation, or otherwise.
D-1
In the case of the Reorganized Debtors, the estimates of the reorganization
value prepared by Lazard Freres represent the hypothetical reorganization
enterprise value of the Reorganized Debtors. Such estimates were developed
solely for purposes of the formulation and negotiation of a plan of
reorganization and the analysis of implied relative recoveries to creditors
thereunder. Such estimates reflect computations of the range of the estimated
reorganization enterprise value of the Reorganized Debtors through the
application of various valuation techniques and do not purport to reflect or
constitute appraisals, liquidation values or estimates of the actual market
value that may be realized through the sale of any securities to be issued
pursuant to the plan, which may be significantly different than the amounts set
forth herein.
The value of an operating business is subject to numerous uncertainties and
contingencies which are difficult to predict, and will fluctuate with changes in
factors affecting the financial condition and prospects of such a business. As
a result, the estimate of the range of the reorganization enterprise value of
the Reorganized Debtors set forth herein is not necessarily indicative of actual
outcomes, which may be significantly more or less favorable than those set forth
herein. Because such estimates are inherently subject to uncertainties, neither
Debtors, Lazard Freres, nor any other person assumes responsibility for their
accuracy. In addition, the valuation of newly-issued securities is subject to
additional uncertainties and contingencies, all of which are difficult to
predict. Actual market prices of such securities at issuance will depend upon,
among other things, prevailing interest rates, conditions in the financial
markets, the anticipated initial securities holdings of prepetition creditors,
some of which may prefer to liquidate their investment rather than hold it on a
long-term basis, and other factors which generally influence the prices of
securities.
The Reorganized Debtors may, in its discretion, seek to list its Common
Stock for trading. There can be no assurance, however, that the stock will be
so listed and, if so listed, that an active trading market would develop.
CORE DIVISIONS
Valuation Methodology
Lazard performed a variety of analyses and considered a variety of factors
in preparing the valuation of the Debtors' core business. While several
generally accepted valuation techniques for estimating the Debtors' enterprise
value were used, Lazard primarily relied on three methodologies: comparable
public company analysis, discounted cash flow analysis, and precedent
transactions analysis. Lazard placed different weights on each of these
analyses and made judgements as to the relative significance of each analysis in
determining the Debtors' indicated enterprise value range. Lazard's valuation
must be considered as a whole and selecting just one methodology or portions of
the analyses, without considering the analyses as a whole, could create a
misleading or incomplete conclusion as to the Debtors' enterprise value. Lazard
derived the value of the Debtors' core business according to this methodology.
Comparable Public Company Analysis
A comparable public company analysis estimates value based on a comparison
of the target company's financial statistics with the financial statistics of
public companies that are similar to the target company. It establishes a
benchmark for asset valuation by deriving the value of "comparable" assets,
standardized using a common variable such as EBITDA, EBIT, revenues, earnings
and cash flows. The analysis includes a detailed multi-year financial
comparison of each company's income statement, balance sheet and cash flow. In
addition, each company's performance, profitability, margins, leverage and
business trends are also examined. Based on these analyses, a number of
financial multiples and ratios are calculated to gauge each company's relative
performance and valuation. Lazard placed different weights on each of these
multiples and ratios and made judgements as to the relative significance of each
in determining the Debtors' enterprise value range. Comparable public company
analysis is generally a historic or "backward looking" technique. It relies on
the fact that the price that an investor is willing to pay in the public markets
for securities of similar publicly traded companies represents the Debtors'
current and future prospects as well as the rate of return required on the
investment.
A key factor to this approach is the selection of companies with relatively
similar business and operational characteristics to the target company.
Criteria for selecting comparable companies include, among other relevant
characteristics, similar lines of businesses, business risks, growth prospects,
maturity of businesses, market presence, size and scale of operations. The
selection of truly comparable companies is often difficult and subject to
interpretation. However, the underlying concept is to develop a premise for
relative value, which when coupled with other approaches, presents a foundation
for determining firm value.
D-2
Due to the localized nature of the general commercial printing business,
each of the Debtors' Divisions competes primarily with substantially smaller
private companies for which financial information is not publicly available.
Furthermore, the array of printing services offered by and geographic
distribution of the Debtors' facilities do not directly reflect those of any
comparable public companies. Lazard selected five comparable public companies -
Banta Corporation, Consolidated Graphics, R.R. Donnelley & Sons, Mail-Well, Inc.
and Quebecor World, Inc. -- after examining all public companies in the general
commercial printing industry. The size and products offered by these five
companies vary in significant ways, both from the Debtors and from each other.
Accordingly, public comparable company analysis may not be a wholly accurate
measure of the Debtors' relative value.
Discounted Cash Flow Approach ("DCF")
The discounted cash flow ("DCF") valuation methodology relates the value of
an asset or business to the present value of expected future cash flows to be
generated by that asset or business. The DCF methodology is a "forward looking"
approach that discounts the expected future cash flows by a theoretical or
observed discount rate determined by calculating the average cost of debt and
equity for publicly traded companies that are similar the Debtors and adjusting
the average cost of equity with an appropriate factor to reflect the turn-around
risk inherent in the Debtors' projections.
This approach relies on the company's ability to project future cash flows
with some degree of accuracy. Since the Debtors' projections reflect
significant assumptions made by the Debtors' management concerning anticipated
results, the assumptions and judgments used in the projections may or may not
prove correct and therefore, no assurance can be provided that projected results
are attainable or will be realized. Lazard cannot and does not make any
representations or warranties as to the accuracy or completeness of the Debtors'
projections.
Precedent Transactions Analysis
Precedent transaction analysis estimates value by examining public merger
and acquisition transactions. An analysis of the disclosed purchase price as a
multiple of various operating statistics reveals industry multiples for
companies in similar lines of businesses to the Debtors. Lazard placed
different weights on each of these multiples and made judgments as to their
relative significance in determining the Debtors' enterprise value range. These
transaction multiples are calculated based on the purchase price (including any
debt assumed) paid to acquire companies that are comparable to the Debtors.
These multiples are then applied to the Debtors' key operating statistics to
determine the total enterprise value or value to a potential strategic buyer.
Precedent transaction analysis explains other aspects of value. Unlike the
comparable public company analysis, the valuation in this methodology includes a
"control" premium, representing the purchase of a majority or controlling
position in a company's assets. Thus, this methodology generally produces
higher valuations than the comparable public company analysis. Other aspects of
value that manifest itself in a precedent transaction analyses include: (i)
circumstances surrounding a merger transaction may introduce "noise" into the
analysis (e.g. an additional premium may be extracted from a buyer in the case
of a competitive bidding contest); (ii) the market environment is not identical
for transactions occurring at different periods of time; and (iii) circumstances
pertaining to the financial position of a company may have an impact on the
resulting purchase price (e.g. a company in financial distress may receive a
lower price due to perceived weakness in its bargaining leverage)
Since precedent transaction analysis explains other aspects of value besides the
inherent value of a company and may be predicated on a limited number of
transactions occurring under variable market conditions, there are significant
limitations as to its usage in the Debtors' valuation.
NON-CORE DIVISIONS
The proceeds from each Non-Core Division were estimated according to
whether the Division was likely to be sold or liquidated. The valuation placed
upon Columbia Graphics and Hederman Brothers, Divisions with respect to which
the Debtors have executed or expect to execute Asset Purchase Agreements,
reflect the anticipated net proceeds to the Debtors from the sales of these
Divisions. EagleDirect, Phillips Litho, Phoenix Communications and Stephenson
Printing were valued according to the mid-point percentage recovery liquidation
methodology used in the Liquidation Analysis in Appendix B. Liquidation costs
----------
were estimated according to the mid-point percentage liquidation costs used in
Appendix B, excluding such costs as would pertain exclusively to Chapter 7
- ----------
liquidations. Technigrafiks, which, as of the date this analysis was prepared,
had already been substantially liquidated, was valued according to the net
proceeds the Debtors anticipates receiving in the remaining liquidation process.
D-3
THE ESTIMATES OF THE REORGANIZATION VALUE DETERMINED BY LAZARD FRERES
REPRESENT ESTIMATED REORGANIZATION VALUES AND DO NOT REFLECT VALUES THAT COULD
BE ATTAINABLE IN PUBLIC OR PRIVATE MARKETS. THE IMPUTED ESTIMATE OF THE RANGE
OF THE REORGANIZATION EQUITY VALUE OF REORGANIZED THE DEBTORS ASCRIBED IN THE
ANALYSIS DOES NOT PURPORT TO BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET
TRADING VALUE. ANY SUCH TRADING VALUE MAY BE MATERIALLY DIFFERENT FROM THE
IMPUTED ESTIMATE OF THE REORGANIZATION EQUITY VALUE RANGE FOR THE REORGANIZED
DEBTORS ASSOCIATED WITH LAZARD FRERES' VALUATION ANALYSIS.
D-4